Dollar continues to consolidate in tight range in early US session as markets are lacking clear direction. Stocks open slightly lower and but resumes recent down trend soon after House price index in US beat expectation by rising 0.9% mom in May. Crude oil is also lifted mildly after breaching 64 level earlier. Sterling attempted a rebound earlier today after BoE minutes but fails to sustain momentum and is now back under pressure. Risk appetite/aversion will continue to be the major driving force in forex markets and we'll continue to be alerted of earlier than expected bottoming in dollar and yen.

BoE's minutes for July's meeting unveiled that policymakers voted unanimously to keep interest rate unchanged at 0.5% and maintain the existing 125B pound asset buying program. The MPC members saw improvement in market conditions in recent months and preferred to wait for the new set of economic forecasts in August before adopting new measures, if any. More details in BoE Minutes: Decision on QE Expansion Delayed

Canadian retail sales rose much more than expected by 1.2% mom in May while ex-auto sales rose 0.7% mom. Eurozone industrial new orders dropped -0.2% mom in May with yoy rate down -30.1%. UK CBI industrial trends expectedly worsened from -51 to -59. Australia CPI rose for the second quarter as expected by 0.5% qoq, 1.5% yoy.

USD/JPY Mid-Day Outlook

Intraday bias in USD/JPY remains mildly on the downside as earlier break of 93.25 support argues that recovery from 91.79 has completed at 94.78 already. Further fall is in favor to retest this resistance first. Break will continue to solidify the case that USD/JPY has topped out in medium term at 101.43 already and set the stage for retesting 81.72 low. On the upside, above 93.80 will turn intraday outlook neutral again. But after all, another fall is still in favor as long as 94.87 resistance holds.

In the bigger picture, we're still preferring the case that USD/JPY's medium term rebound has completed at 101.43 already. More importantly, USD/JPY is still staying below 55 weeks EMA, 38.2% retracement of 124.13 to 87.12 at 101.25, and long term falling trend line resistance (now at 99.89) too. In other words, whole down trend from 124.13 is still in progress. Hence, we'd look forward to at least a test of 87.12 low, with much odds of breaking through to resume the down trend.

However, note that sustained break of 94.87 resistance will firstly suggest that fall from 98.98 has completed. More importantly, it will also argue that whole decline from 101.43 has completed with three waves down to 91.79 too. Such corrective structure will in turn indicate that whole medium term rebound from 87.12 is resuming and another high above 101.43 might be seen in such case.


Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised
01:30AUDCPI Q/Q 2Q0.50%0.50%0.10% 
01:30AUDCPI Y/Y 2Q1.50%1.50%2.50% 
01:30AUDCPI RBA Trimmed Mean Q/Q 2Q0.80%0.70%1.00% 
08:30GBPBoE Meeting Minutes0--0--90--0--90--0--9 
09:00EUREurozone Industrial New Orders M/M May-0.20%1.90%-0.90%-0.70%
09:00EUREurozone Industrial New Orders Y/Y May-30.10%-27.90%-35.50%-35.30%
10:00GBPU.K. CBI Industrial Trends Total Orders 2Q-59-46-51 
12:30CADRetail Sales M/M May1.20%0.50%-0.80% 
12:30CADRetail Sales Less Autos M/M May0.70%0.40%-0.50% 
14:00USDHouse Price Index M/M May0.90%-0.20%-0.10% 
14:00USDFed's Bernanke Gives Monetary Policy Report Before Senate ---- 
14:30USDCrude Oil Inventories -1.9M-2.8M