Yen remains firm today on broad based weakness in Asian stocks with Nikkei down another -0.54% to close at 0.9497. BoJ left rates unchanged at 0.1% as widely expected. The bank raised economic assessment and said that recovery is picking up due to various policy measures taken at home and abroad. Nevertheless, a self-sustaining recovery remains weak. Nevertheless, Japan Deputy Prime Minister Naoto Kan urged BoJ to extend support on monetary policy front in overcoming deflation or falling prices could pose risks to sustainable recovery.
Dollar continues to stay in established range against Euro today, so is the dollar index. As noted before, there is no clear indication of bottoming in dollar index yet as long as 75.76 resistance holds. Similar situation is found in EUR/USD with 1.4807 support intact. Another fall in dollar index cannot be ruled out but even in such case, we'd expect strong support between 74.31 and 74.68 to bring sizeable rebound. Meanwhile, above 75.76 will be a first indication that dollar index has bottomed out in medium term and will turn focus to 76.82 resistance for confirmation.
The economic calendar is light today. German PPI was flat mom, dropped -7.6% yoy in October versus consensus of 0.1% mom, -7.5% yoy. No other important economic data is scheduled to release.
GBP/USD Daily Outlook
Daily Pivots: (S1) 1.6598; (P) 1.6673; (R1) 1.6741; More
At this point, intraday bias in GBP/USD remains on the downside and further decline should be seen towards 1.6516 support next. As noted before, break there will confirm that whole rise from 1.5706 has completed at 1.6875 already and deeper decline should then be seen to 1.6250 support and below. On the upside, above 1.6700 minor resistance will turn intraday bias neutral again and argue that price actions from 1.6875 is possibly developing into sideway consolidations only. That is, another rise could be seen to 1.7043 resistance before GBP/USD tops.
In the bigger picture, loss of momentum ahead of 1.7043 resistance is mixing up the outlook again. Question remains on whether medium term rebound from 1.3503 has completed at 1.7043 already. In anyway, break of 1.5706 support will revive the case that such medium term rise has completed and the long term down trend from 2.1161 is possibly resuming for a test of 1.3503 low first. On the upside, above 1.7043 will indicate that GBP/USD is still in progress to resistance zone of 1.7332/8236 (50% and 61.8% retracement of 2.1161 to 1.3503) before concluding the medium term rise.
Economic Indicators Update
|3:30||JPY||BoJ Interest Rate Decision||0.10%||0.10%||0.10%|
|7:00||EUR||German PPI M/M Oct||0.00%||0.10%||-0.50%|
|7:00||EUR||German PPI Y/Y Oct||-7.60%||-7.50%||-7.60%|