It's a wild session today. The Japanese yen soars to new 14 year high against the greenback with USD/JPY accelerated lower after taking out 88.00 support level and reaches as low as 86.30 so far. The Japanese yen also manages to rally against other major currencies, in particular the higher yielders. Yen strength is boosted further by another day of decline in Nikkei and sharp, over 3% fall in Shanghai composite. At this moment there is no indication of intervention from Japan yet as Finance Minister Fujii just said he's watching closely on the situation and will take appropriate action against abnormal movements. Vice Finance Minister Noda said the government isn't considering intervention as Reuters reported. Markets are speculating that Japanese officials would tolerate some further gain in yen as exports are improving as data released earlier this week showed slowest decline in about twelve months.
The Swissy franc also rose sharply together with the Japanese yen today with EUR/CHF dropped to as low as 1.5009. However, the cross rebounds sharply just ahead of the magic 1.5 handle, possibly with SNB intervention. Dollar, on the other hand, managed to recover against major currencies except the yen even though Gold rises to another record high of 1195 on news that Sri Lana is buying 10 metric tons of Gold from IMF. Aussie is pressured by weakness in AUD/JPY cross as well as disappointing private capital expenditure data which showed -3.9% qoq fall in Q3.
BoJ minutes of Oct 30 meeting showed that the bank might reinstate the emergency-lending program after it expires in March. The minutes showed members agree to employ appropriate measures -- including reutilization of the special funds- supplying operations -- to facilitate corporate financing in a flexible and timely manner. Also the minutes showed members agreed to maintain the extremely accommodative financial environment by holding interest rates at their current low levels, and provide ample funds sufficient to meet demand in financial markets.
USD/JPY Daily Outlook
Daily Pivots: (S1) 86.82; (P) 87.72; (R1) 88.24; More.
USD/JPY's fall accelerates today after taking out 88.00 support and dives to as low as 86.30, just inch above mentioned target of 61.8% projection of 97.77 to 88.00 from 92.31 at 86.27. At this point, intraday bias remains on the downside and break of 86.27 will target 100% projection at 82.54 next. On the upside, above 87.48 will turn intraday bias neutral and bring recovery. But upside should be limited below 89.44 support turned resistance and bring fall resumption.
In the bigger picture, break of 87.12 low confirms that the long term down trend form 124.13 has resumed and USD/JPY should now be targeting key level of 1995 low at 79.75. On the upside, break of 92.31 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will remain bearish.
Economic Indicators Update
|23:50||JPY||BoJ Meeting Minutes||--||--|
|0:30||AUD||Private Capital Expenditure Q3||-3.90%||1.00%||3.30%||2.10%|
|2:00||NZD||NBNZ Business Confidence Nov||43.4||--||48.2|
|9:00||EUR||Eurozone M3 Y/Y Oct||0.80%||1.80%|
|11:00||GBP||U.K. CBI Quarterly Distributive Trades Nov||12||8|
|--||EUR||German CPI M/M Nov P||0.00%||0.10%|
|--||EUR||German CPI Y/Y Nov P||0.50%||0.00%|