Japanese yen is generally lower today on rally in Asian stocks as G20 agreed to continue to maintain stimulus. Meanwhile dollar also dropped further as gold made another record high at 1106. G20 Finance Ministers agreed to continue fiscal stimulus until sustainable recovery is clearly seen. G20 said that so far economic recovery was uneven and remains dependent on policy support. US Treasury Geithner said that unemployment rate of 10.2%showed it's still a very tough economic environment, the ultimate cost of early exit from stimulus will be greater Also, the finance ministers agreed to submit their economic plans for assessment by G20, IMF and the World Bank to ensure they're working for generating balanced growth.

Gold extends Friday's rally to another record high of 1106 today. So far, there is no clear sign of topping in gold yet and the current rally will possibly extend further to 61.8% projection of 681 to 1007.7 from 931.3 at 1133.2 before halting. A break of 1084.3 minor support is need to be first sign of loss of momentum. Otherwise, gold will remain bullish and should continue to pressure dollar.

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Dollar index drops sharply to as low as 75.34 so far today and at this point, intraday bias remains on the downside as long as 75.96 minor resistance holds. Current decline from 76.82 might extend further but strong support is still expected above 74.94 low and bring rebound. Above 75.96 will flip intraday bias back to the upside for 76.82 first. However, note that a break of 74.94 low will indicate that medium term down trend from 89.62 has resumed and should target next support at 74.31.

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On the data front, German trade balance, and industrial production, Eurozone Sentix Investor Confidence and Canadian housing starts will be featured today.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 148.21; (P) 149.48; (R1) 150.57; More

GBP/JPY continues to stay in range of 148.39/151.21 today and at this point, intraday bias turned neutral. On the downside, below 148.39 minor support will suggest that rise from 146.36 might have completed and flip intraday bias back to the downside for 146.36 and then 144.51. This will also reaffirm the case that rebound from 139.69 has completed at 153.21 already. On the upside, however, a break of 151.21 resistance will argue that choppy fall from 153.21 has completed and will turn outlook bullish for a retest of resistance zone of 153.21 and 154.13.

In the bigger picture, the bearish outlook remains unchanged with 61.8% retracement of 163.05 to 138.72 at 154.13 intact. Medium term rebound from 118.18, which is treated as correction to the larger down trend from 07 high of 251.90, has completed with a double top reversal pattern (162.56, 163.05). Fall from 163.05 is tentatively treated as resumption of the long term down trend and should target a new low below 118.81 after completing the rebound from 139.69. However, note that decisive break of 154.13 fibonacci resistance will argue that fall from 163.05 has completed at 139.72 already. This will in turn argue that it's probably just a correction to the medium term rise only. Another high above 163.05 might be seen in such case before rise from 118.81 concludes.

In the longer term picture, fall from 251.09 is treated as resumption of multi decade down trend. Note that the fall from 215.87 is not treated as the fifth wave, but the third wave inside the third wave that started at 241.35. On resumption, the down trend will extend to 61.8% projection of 215.87 to 118.81 from 163.05 at 103.03 next, which is close to 100 psychological support.

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Economic Indicators Update

GMTCcyEventsActualConsensusPreviousRevised
03:20AUDRBA Asst. Governor Lowe Speaks in Perth ---- 
07:00EURGerman Trade Balance (EUR) Sep 11.3B8.1B 
09:30EUREurozone Sentix Investor Confidence Nov -12-12.6 
11:00EURGerman Industrial Production M/M Sep 1.00%1.70% 
13:15CADHousing Starts Oct 156.8K150.1K