Yen recovers some ground today as Asians stocks dip after late selloff in US equities. Dollar follows by paring some of this week's losses as crude oil is back below 80 level while gold trades below 1090. Risk aversion would probably give the Japanese yen some further support as Japanese Nikkei closed below head and shoulder neckline support which should confirm medium term reversal. However, dollar's fate will continue to be tied between risk aversion and strength in gold.


FOMC statement overnight was largely inline with markets' expectations. Fed decided to leave the Fed funds rate unchanged at 0-0.25% and reiterated to keep it low for 'an extended period'. The Fed also listed conditions that warranted an unprecedentedly low level of interest rates: low rates of resource utilization, subdued inflation trends, and stable inflation expectations. In the meeting, policymakers also modestly upgraded its assessment of current conditions and reduced the amount of agency debt it purchased. These mildly positive factors partly offset the dovish tone of the post-meeting statement. More in FOMC Review: The Fed Disclosed Parameters For Making Rate Decisions

Main focus today will be on BoE and ECB meeting. The Bank of England will continue to keep its policy rate at 0.5%. However, the focus of the meeting is whether the central bank will extend the asset purchase program which was increased by 25B pound to 175B pound in August. The surprising contraction in 3Q09 GDP increased the likelihood of such an extension. More in BOE Preview: Focus on the Asset Purchase Program

As there's only one month to go for the release of a new set of staff projection in December, we will probably not get much new information from the ECB at November's meeting. Policymakers should leave the main refinancing rate unchanged at 1%. In the accompanying statement, it will be reiterated that growth and inflation risks are 'broadly balanced' and interest rates are 'appropriate'. More in ECB Preview: Trichet's Comments a Prelude for New Economic Projections in December

Released overnight, New Zealand unemployment rate rose more than expected to 6.5% in Q3. Australian trade deficit widened less than expected to -1.85b. Swiss CPI, UK industrial and manufacturing production, Eurozone retail sales, US non-farm productivity and Canadian Ivey PMI will be released later today.

Dollar index's sharp fall from 76.82 stabilizes a bit after hitting 61.8% retracement of 74.94 to 76.82 at 75.65. But intraday bias remains mildly on the downside as long as 76.23 minor resistance holds and further fall cannot be ruled out. Nevertheless, note that we'd still prefer the case that dollar index has bottomed out at 74.94 already. Downside of the current pull back should be contained well above 74.94 low. Above 76.23 will flip intraday bias back to the upside first.


EUR/JPY Daily Outlook

Daily Pivots: (S1) 133.01; (P) 134.36; (R1) 136.24; More.

EUR/JPY's rebound was limited at 135.60 and retreated sharply. Intraday bias is turned neutral for the moment. Note that with 135.97 resistance intact, fall from 138.47 is still expected to continue after completing the consolidation. Below 133.24 minor support will flip intraday bias back to the downside first. Further break of 131.56 will target 129.02 key support next. On the upside, however, break of 135.97 will indicate that whole decline from 138.47 has completed and will turn focus back to this high.

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

21:45NZDUnemployment Rate Q36.50%6.40%6.00% 
21:45NZDEmployment Change Q/Q Q3-0.80%-0.30%-0.40% 
21:45NZDEmployment Change Y/Y Q3-1.80%-1.30%-0.90% 
23:50JPYBoJ Meeting Minutes ---- 
0:30AUDTrade Balance (AUD) Sep-1.85B-2.13B-1.52B-1.65B
8:15CHFCPI M/M Oct -2.16B0.00% 
8:15CHFCPI Y/Y Oct -2.16B-0.90% 
9:30GBPIndustrial Production M/M Sep 1.3-2.50% 
9:30GBPIndustrial Production Y/Y Sep -10.2-11.20% 
9:30GBPManufacturing Production M/M Sep 1.2-1.90% 
9:30GBPManufacturing Production Y/Y Sep -9.5-11.30% 
10:00EUREurozone Retail Sales M/M Sep 0.3-0.20% 
10:00EUREurozone Retail Sales Y/Y Sep ---2.60% 
12:00GBPBoE Interest Rate Decision 0.50%0.50% 
12:00GBPBoE Asset Purchase Target 225B175B 
12:45EURECB Interest Rate Decision 1.00%1.00% 
13:30EURECB Press Conference ---- 
13:30CADBuilding Permits M/M Sep 1.30%7.20% 
13:30USDNon-Farm Productivity Q3 P 5.80%6.60% 
13:30USDUnit Labor Costs Q3 P -3.20%-5.90% 
13:30USDInitial Jobless Claims 519K530K 
15:00CADIvey PMI Oct 60.961.7 
15:30USDNatural Gas Storage 30B25B