Markets are rather quiet with most of Asian markets on Holiday today. Focus is turning to manufacturing data from UK and US. UK' manufacturing PMI is expected to have edged higher to 40 on April from 39.1 a month ago while mortgage approvals should have risen 40K in March from 38K in February. Moreover, M4 money supply in March will also be released today. In the previous month, M4 increased +17.6% on annual basis.

In the US, ISM manufacturing probably improved to 37.8 in April from 36.3 in March, indicating that the pace of contraction has moderated. The price component is also expected to have risen to 33.3 in April from 31 a month ago. University of Michigan confidence index is anticipated to have revised down to 61.5 in April from initial of 61.9 while factory orders in March probably contracted -0.7% from +1.8% a month ago due to sharp decline in shipment.

Released earlier, Japan CPI contracted -0.3% yoy in March, from -0.1% a month while core inflation eased to -0.1% during the month, the first annual decline since September 2007. As a leading indicator to the nation's inflation outlook, Tokyo CPI stayed flat in April, compared with consensus of +0.1% and +0.2% in March. Unemployment rate in Japan rose to 4.8% in March (consensus: 4.5%), the highest since 1967, from 4.4% a month ago. Deteriorated job market has weighed on consumption and household spending declines -3.7% yoy in March, worse than market expectation of -2.7% and -3.5% in the previous month.

The technical outlook in dollar index remains rather indecisive, primarily due to the lack of strength in the fall from 86.87 so far. Nevertheless, favor is still on the downside as long as 86.01 resistance holds and decline from 86.87 might extend further 82.63 and below.

Dollar

USD/JPY Daily Outlook

Daily Pivots: (S1) 97.51; (P) 98.25; (R1) 99.36; More .

USD/JPY's break of 98.92 resistance dampens the original bearish case and argues that fall from 101.43 is merely a correction in the larger rally. Intraday bias is flipped back to the upside for 101.43 high first. Break will will indicate that whole rise from 87.12 has resumed and will put focus on medium term trend line resistance at 102.44. On the downside, below 97.13 will turn intraday outlook neutral again first.

In the bigger picture, recent development, with USD/JPY rebounding strongly ahead of 93.53 support, dampens the bearish case that rise from 87.12 has completed. Nevertheless, while another rise could now be seen, we're still expecting strong resistance from the trend line resistance at 102.44 to bring resumption of the whole down trend from 124.13 (07 high). Below 95.61 support will now be the signal that rise from 87.12 has completed. However, strong break of the trend line resistance will serve as an important alert that such down trend from 124.13 has indeed completed and will put focus back to 110.65 resistance for confirmation.

USD/JPY

Economic Indicators Update