Dollar extends decline versus swiss franc and yen in early US session as risk aversion continues to dominate the markets. Crude oil also jumped to as high as 103.41 on middle east unrest while gold stays firm above 1410. Mixed data from US provides little support to the greenback. Jobless claims improved more than expected to 391k. However, ex-transport durable goods orders dropped sharply by -3.6% in January. Headline durables also missed expectations and rose 2.7% only.

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Sterling dips sharply earlier today as CBI reported sales dropped sharply to 6 in February versus expectation of 30. The data indicates that retailers saying increased sales over a year outnumbered through reporting decline by 6% points only. Expectations gauge for March was at zero, meaning flat outlook. BoE official Miles urged not to rush into rate hike to prove that bank is tough on inflation. Miles said that inflation is deeply worrying but the upside risk of inflation are already reflected in the quarterly inflation report and emphasized it's risk that I don't think is most effectively handled by tightening policy at a rate faster than those.

Other data released today saw Australia conference board leading indicator rose 0.7% in December. Germany Q4 GDP was finalized at 0.4% qoq, 4.0% yoy. Swiss employment level rose slightly to 4.09M in Q4. Eurozone confidence indicators posted general improvements in February.

GBP/CHF's sharp decline this week indicates that rebound from 1.4399 has completed at 1.5689 already. The three wave corrective structure suggests that the long term down trend isn't over yet. 1.6003 resistance is still on hold and supports this view. We're cautiously bearish in the cross and break of 1.4850 support will target a test on 1.4399 low.

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USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 82.26; (P) 82.57; (R1) 82.83; More.

USD/JPY drops further to as low as 81.65 so far today and intraday bias remains on the downside for 80.93/81.12 support first. Decisive break there will strong suggests that consolidation pattern from 80.29 is completed at 83.96 already and should send USD/JPY through 80.29 low. On the upside, above 82.17 minor resistance will turn bias neutral to extend recent choppy sideway trading.

In the bigger picture, with 85.92 cluster resistance (38.2% retracement of 94.97 to 80.29 at 85.89) intact, there is no confirmation of reversal yet and the longer term down trend in USD/JPY is possibly still in progress for another test on 79.75 (1995 low). Decisive break of 79.75 will target 61.8% projection of 94.97 to 80.29 from 84.49 at 75.41 next. On the upside, break of 84.49 resistance, though, will argue that a medium term bottom is likely formed and will turn focus back to 85.92 cluster resistance for confirmation.

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Economic Indicators Update

GMTCcyEventsActualConsensusPreviousRevised
23:00AUDConference Board Leading Index Dec0.70% 0.30%0.20%
07:00EURGerman GDP Q/Q Q4 F0.40%0.40%0.40% 
07:00EURGerman GDP Y/Y Q4 F4.00%4.00%4.00% 
08:15CHFEmployment Level Q44.09M4.10M4.08M 
10:00EUREurozone Consumer Confidence Feb-10 -11.2 
10:00EUREurozone Economic Confidence Feb107.8106.8106.5106.8
10:00EUREurozone Industrial Confidence Feb6.50%6.56 
10:00EUREurozone Services Confidence Feb11.19.59.210
11:00GBPCBI Reported Sales Feb63037 
13:30USDInitial Jobless Claims391K405K410K 
13:30USDDurable Goods Orders Jan2.70%2.90%-2.30% 
13:30USDDurables Ex Transportation Jan-3.60%0.40%0.80% 
15:00USDNew Home Sales Jan 300K329K 
15:00USDHouse Price Index M/M Dec -0.20%0.00% 
15:30USDNatural Gas Storage -73B-233B 
16:00USDU.S. Crude Oil Inventories 1.1M0.9M 

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