Dollar recovers further today as stocks consolidates while crude oil dips below 79 level but there is no decisive buying to reverse the short term bearish outlook yet. There is some support to the greenback from comments from Chinese Premier Wen Jaibao that the a total recovery in the world economy will be a slow and bumpy process. Data from US saw initial jobless claims dropped more than expected to 502K, a 10 month low. Continuing claims also dropped to 5.63m.
ECB Monthly bulletin showed upward revised GDP forecasts from -4.5% to -3.9% in 2009. For 2010, growth is expected to be 0.1%, up from 0.3% in prior projection. Regarding inflation, it's also revised up from 1.1% to 1.2% in 2010. Eurozone industrial production rose less than expected by 0.3% mom in September. Swiss ZEW Expectations deteriorated to 56.4 in November.
Aussie was lifted by strong employment data earlier today but fails to hold on to the gains. The Australian job market expanded for another month by 24.5k in in October versus expectation of -10.1k contraction. Though, unemployment rate climbed from 5.7% to 5.8% as expected. New Zealand retail sales missed expectation and was flat in September. Japan Domestic CGPI dropped -6.7% yoy in Oct.
Looking at the dollar index, recovery from 74.78 extends further today and could continue towards 75.99 resistance. But a break there is needed to be the first signal that the index has bottomed. In such case stronger rise should be seen to 76.82 for confirming a double bottom reversal pattern. However, before that, outlook will remain bearish. Failure below 75.99, followed by break of 74.78, will bring medium term fall resumption to next support level at 74.31.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 89.40; (P) 89.72; (R1) 90.16; More.
USD/JPY's rebound from 89.28 extends further today and the break of 90.26 minor resistance is taken as the first signal that fall fro m92.31 has completed. Intraday bias is mildly on the upside as long as 89.64 minor support holds. Break of 92.16 will confirm that fall from 92.31 has completed and will target a retest of 92.31 next. On the downside, however, below 89.64 will indicate that fall form 92.31 is likely still in progress and will turn intraday bias back to the downside for 89.28 and then 88.00.
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.