Japanese yen spikes higher in Asia after release of stronger than expected machine orders data but the strength fades as the day goes after a mixed bag of data from China. Dollar stays in range against other major currencies, consolidating recent losses after dollar index dips to new low of 74.89. Main focus of the day will be on UK employment data as well as BoE Quarterly Inflation Report.

Data released so far saw Japanese machine orders rose strongly by 10.5% mom in September versus expectation of 4.1%. Australia Westpac consumer confidence dropped -2.5% in November. China industrial production rose strongly by 16.1% yoy versus consensus of 15.3% while retail sales also beat expectation by rising 16.2% yoy. However, fixed asset investment missed expectation and slowed to 33.1% ytd/y.

At the BOE meeting last week, policymakers kept interest rate unchanged at 0.5% and raised the asset purchase program by 25B pound to 200B pound. The MPC probably have revised downward the medium-term inflation outlook as declining inflationary pressure might have been a reason for policymakers to extend QE. Certainly, there are other possible reasons for the extension. We would like to see if they were stated in the report.

The pace of job decline in UK should have continued to slow in October. Recent economic indicators, such as PMI, BOE and KPMG reports, also showed improvement in the employment market. Claimant count is expected to have increased +20K in October after rising +20.8K in the previous month. This would have translated to unemployment rate of 5.1%. The more comprehensive ILO measure of employment probably show unemployment rate stayed at 7.9% in September.

Intraday downside momentum in dollar index is diminishing a bit today but after all, further fall is still in favor with 75.27 minor resistance intact. As noted before, medium term down trend form 89.62 is still in progress and could now extend to next key support level at 74.31. On the upside, above 75.27 will turn intraday outlook neutral and bring recovery. However, break of 76.82 resistance is still needed to indicate bottoming in the index. Otherwise, outlook remains bearish.

/

USD/JPY Daily Outlook

Daily Pivots: (S1) 89.60; (P) 89.89; (R1) 90.09; More.

USD/JPY's break of 89.44 suggests that fall form 92.31 is resuming and at this point, intraday bias remains on the downside as long as 90.26 minor resistance holds. Further decline should be seen to retest 88.00 low first. On the upside, above 90.26 will turn intraday bias neutral again. . Further break of 91.26 resistance will argue that choppy fall from 92.31 has completed already and will turn focus back to this resistance.

In the bigger picture, the bearish outlook remains unchanged. Fall from 101.43 is treated as resumption of the whole down trend from 124.13. Break of 87.12 low will confirm resumption of this down trend and should target next key level of 1995 low at 79.75. However, note that break of 92.31 resistance will firstly suggest that fall from 97.77 has completed. Additionally, this will raise the possibility that whole decline from 101.43 has finished with three waves down to 88.00 after meeting 100% projection of 101.43 to 91.73 from 97.77 at 88.07. The three wave structure will in turn indicate that rise from 87.12 is going to resume. Further break of 97.77 will target a retest of 101.43 instead.

/

Economic Indicators Update

GMTCcyEventsActualConsensusPreviousRevised
23:30AUDWestpac Consumer Confidence Nov-2.50%--1.70% 
23:50JPYMachine Orders M/M Sep10.50%4.10%0.50% 
23:50JPYMachine Orders Y/Y Sep-22.00%-26.20%-26.50% 
9:30GBPJobless Claims Change Oct 20.0K20.8K 
9:30GBPClaimant Count Rate Oct 5.10%5.00% 
9:30GBPILO Unemployment Rate (3M) Sep 8.00%7.90% 
10:30GBPBoE Quarterly Inflation Report ---- 
  US Canada Holiday