Yen spiked higher as the week open on broad based weakness in Asian equities. However, as Asian session goes, yen pares earlier gains and stocks recover mildly with help from the rebound in China stocks. The pessimism triggered by US markets last Friday was somewhat offset by the optimism from China, which released PMI on Sunday that showed a rise to 55.2 in October. The data suggests that recovery in China is picking and could help sustain the momentum in global recovery. Dollar lags being yen and weakens broadly today.

Manufacturing data is the main focus today. UK Manufacturing PMI will be the highlight in European session and is expected to rise from 49.5 to 50.1 in Oct. Sterling has been relatively resilient in last week's risk aversion trades. Nevertheless, today's data would probably trigger some volatility leading to the main event of BoE meeting later this week. Swiss SVME PMI is expected to improve from 54.3 to 55.1 in October. From Eurozone, Oct manufacturing PMI is expected to finalize at 50.7. Main highlight in US session will be ISM manufacturing index which is expected to rise from 52.6 to 53 in October, after brief setback in September. However, employment component would possibly remain weak and stay below 50. Pending home sales is expected to rise 0.4% in September. COnstruction spending is expected to drop -0.4% in September.


Looking at the dollar index, further rise is still in favor to retest 76.57 resistance in near term. Break there will confirm that whole rally from 74.94 has resumed for 77.47 to confirm medium term reversal. While some more sideway trading cannot be ruled out, outlook in the dollar index should remain bullish as long as 75.56 cluster support holds (61.8% retracement of 74.94 to 76.57).


EUR/JPY Daily Outlook

Daily Pivots: (S1) 131.34; (P) 133.63; (R1) 134.94; More.

EUR/JPY spikes lower to as low as 131.56 today btu recovers since then. Nevertheless, intraday bias remains on the downside as long as 133.80 minor resistance holds. Current decline is still expected to continue to 100% projection of 138.47 to 132.79 from 135.97 at 130.29 next. On the upside, touching of 133.80 will suggest that an intraday low is in place and bring consolidation. But break of 135.97 resistance is needed to indicate that fall from 138.47 has completed. Otherwise, outlook will remain bearish.

In the bigger picture, note that there is no confirmation that corrective rebound from 112.10 has completed yet as long as 124.35 support holds. Price actions from 137.38 might still turn out to be consolidations to rise from 112.10 only and break above 139.21 would bring another medium term rise before concluding the rise from 112.10. However, note that break of 129.02 will be the first indication that rise from 112.10 has completed and further break of 124.35 will confirm. in Such case, the whole long term down trend from 169.96 could possibly be resuming and retest of 112.10 should be seen next.


Economic Indicators Update

0:30AUDHouse Price Index Y/Y Q34.20%3.10%4.20% 
8:30CHFSVME PMI Oct 55.154.3 
8:55EURGerman PMI Manufacturing Oct F 51.151.1 
9:00EUREurozone PMI Manufacturing Oct F 50.750.7 
9:30GBPPMI Manufacturing Oct 50.149.5 
15:00USDISM Manufacturing Oct 5352.6 
15:00USDISM Prices Paid Oct 6463.5 
15:00USDPending Home Sales M/M Sep 0.40%6.40% 
15:00USDConstruction Spending M/M Sep -0.40%0.80%