Yen is a touch softer today as BoJ held an emergency meeting and then announced to provide 10T JPY in a new fixed-rate operation to counter deflation and support the economy. But the selling in yen is so far mild as there was no measures announced against recent appreciation of the currency. Stocks in Asia rebounds further, with support of solid manufacturing data from China. RBA raised rates by 25bps to 3.75% as widely expected. Overall, the FX markets remain broadly in range.
After an emergency meeting BoJ said it will provide 10T yen to make three month loans at 0.1% interests. Eligible collateral will include Japanese government bonds, commercial paper and corporate bonds. The bank said that it's most effective at present to further spread the strong effect of monetary easing and encourage a further decline in longer-term interest rates in the money market through provision of ample longer-term funds at an extremely low interest rate. This is in response to the government's call to support the economy that's facing risk of deflation as well as strong appreciation of the Japanese yen.
RBA raised rate for the third consecutive months by 25bps to 3.75% today as widely expected. This is indeed the first time RBA has raised rates at three consecutive meetings. In the accompanying statement, RBA maintained the economy assessment that growth is 2010 will likely to be close to trend with inflation close to target. And the believe that recent adjustments will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead. Aussie is steadily in range after the announcement.
Data released today so far saw Swiss GDP grew 0.3% qoq, contracted -1.3% yoy in Q3. UK nationwide house prices rose 0.5% mom, 2.7% yoy in November. Manufacturing data will be the main focus with Swiss SVME PMI, finalized Eurozone manufacturing PMI and UK manufacturing PMI featured. Eurozone unemployment rate will also be released and is expected to climb slightly to 9.8%. From US, ISM manufacturing index is expected to ease slightly from 55.7 to 55 in October. Pending home sales and construction spending will also be released.
USD/CAD Daily Outlook
Daily Pivots: (S1) 1.0525; (P) 1.0569; (R1) 1.0606; More.
USD/CAD's fall from 1.0748 extends further to as low as 1.0511 so far today and at this point, intraday bias remains mildly on the downside as long as 1.0611 minor resistance holds. The deep fall from 1.0748 argues that price actions from 1.0416 might be part of the correction from 1.0851. A break below 1.0448 will target 100% projection of 1.0851 to 1.0416 from 1.0748 at 1.0313 to complete the correction pattern. On the upside, though, above 1.0611 will flip intraday bias back to the upside first. Further break of 1.0748 resistance will revive the case that rise from 1.0205 is already resuming for 1.1101 resistance.
In the bigger picture, a medium term bottom might be in place at 1.0205 with bullish convergence conditions in daily MACD. As noted before, fall from 1.3063 is viewed as a correction to long term rise from 0.9056. Such correction might have already completed with three waves down to 1.0205 already (1.0784, 1.1732, 1.0205). Break of 1.1101 resistance will confirm this case and target 61.8% retracement of 1.3063 to 1.0205 at 1.1971 at least. On the downside, break of 1.0205 will invalidate this view and bring down trend resumption to parity instead.
Economic Indicators Update
|0:30||AUD||Building Approvals M/M Oct||-0.60%||2.00%||2.70%||5.10%|
|3:30||AUD||RBA Rate Decision||3.75%||3.75%||3.50%|
|6:45||CHF||GDP Q/Q Q3||0.30%||0.30%||-0.30%|
|6:45||CHF||GDP Y/Y Q3||-1.30%||-1.50%||-2.00%||-2.40%|
|7:00||GBP||Nationwide House Prices M/M Nov||0.50%||0.40%||0.40%||-0.20%|
|7:00||GBP||Nationwide House Prices Y/Y Nov||2.70%||2.40%||2.00%|
|8:55||EUR||German PMI Manufacturing Nov F||52||52|
|8:55||EUR||German Unemployment Change Nov||5K||-26K|
|8:55||EUR||German Unemployment Rate Nov||8.10%||8.10%|
|9:00||EUR||Eurozone PMI Manufacturing Nov F||51||51|
|9:30||GBP||PMI Manufacturing Oct||54||53.7|
|10:00||EUR||Eurozone Unemployment Rate Nov||9.80%||9.70%|
|15:00||USD||ISM Manufacturing Oct||55||55.7|
|15:00||USD||ISM Prices Paid Oct||65.3||65|
|15:00||USD||Pending Home Sales M/M Nov||-0.50%||6.10%|
|15:00||USD||Construction Spending M/M Oct||-0.50%||0.80%|