The Japanese yen rises broadly in Asia today on risk aversion as Japanese Nikkei led Asian stocks lower in general. Nikkei dropped another -1.32% today to close at 9549 and is now farther away from previously mentioned head and shoulder top neckline. As noted before, the medium term rebound of Nikkei from 7021 has completed at 10767 and further downside should be seen to 9050 support and beyond. The bearish outlook in Nikkei is inline with general bearish view in yen crosses and we'd look forward to further break of last months lows in yen crosses going forward.
Dollar also strengthens mildly today but the rebound is still limited by persistent strength in gold and resilience in crude oil. Gold is consolidating around 1140/50 level for the moment and remains firm. Even though upside momentum in gold is diminishing mildly, there is no clear sign of topping yet as long as 1127 support holds. It will be difficult for the greenback to strike a noticeable rebound before gold tops. Looking at the dollar index, we'd maintain that outlook remains mildly bearish as long as 75.76 resistance holds and another fall could still be seen. Below 74.68 will target next key support of 74.31. However, downside momentum is expected to diminish on next fall and finally bring rebound after hitting 74.31. On the upside, a break above 75.76 will indicate that fall from 76.82 has completed and strong rise should be seen to retest this resistance first.
On the economic data front, UK retail sales will be the main focus in European session. Retail sales should have risen +0.5% mom in October after staying flat in the previous month. This would have translated annual growth of +2.9%. Both the BRC and CBI surveys suggested sales this month would be strong. Furthermore, September's reading might have been upgraded as the Statistics Office's readings for retail sales have been subject to revisions for the past 18 months. In US session, Canadian international securities transactions, wholesale sales and leading indicator will be featured. Also, US jobless claims, leading indicators and Philly Fed survey will be released.
GBP/JPY Daily Outlook
Daily Pivots: (S1) 149.18; (P) 149.75; (R1) 150.13; More
GBP/JPY dives sharply to as low as 148.48 today and at this point, intraday bias is cautiously on the downside for 148.23 support first. Break there will target 146.36 support first. This will also affirm our bearish view fall form 153.21 is still in progress. Break of 146.46 will confirm this case and target 144.51 support next. On the upside, above 150.30 minor resistance will turn intraday bias neutral again. Also, note that break of 151.72 resistance will dampen this bearish view and in turn indicates that choppy price actions from 153.21 are merely consolidations only and should have completed. In such case, retest of 153.21/154.13 resistance zone should be seen next.
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.
Economic Indicators Update
|4:30||JPY||All Industry Activity Index M/M Sep||-0.60%||-0.10%||0.90%|
|7:15||CHF||Trade Balance (CHF) Oct||2.46B||2.15B||1.92B||1.91B|
|9:30||GBP||Retail Sales M/M Oct||0.50%||0.00%|
|9:30||GBP||Retail Sales Y/Y Oct||2.90%||2.40%|
|9:30||GBP||M4 Money Supply M/M Oct P||1.00%||0.80%|
|9:30||GBP||M4 Money Supply Y/Y Oct P||9.90%||11.60%|
|9:30||GBP||Public Sector Net Borrowing (GBP) Oct||6.8B||14.8B|
|13:30||CAD||International Securities Transactions (CAD) Sep||--||5.082B|
|13:30||CAD||Wholesale Sales M/M Sep||0.40%||-1.40%|
|13:30||CAD||Leading Indicators M/M Oct||--||1.10%|
|13:30||USD||Initial Jobless Claims||502K||502K|
|15:00||USD||Leading Indicators Oct||0.40%||1.00%|
|15:00||USD||Philadelphia Fed. Nov||12||11.5|