Dollar recovers mildly earlier today as global stocks retreat. Stocks in US opens mildly lower and is possibly extending the pull back from yesterday's high, which would provide some further support to the greenback. Sterling softens a bit after disappointing retail sales report from UK but traders are still calm ahead of tomorrow's Q3 GDP report. Canadian dollar, drew little support from from stronger than expected retail sales report and weakens mildly. Data from US saw unexpected rise in jobless claims to 531k while house price index dropped -0.3% mom in August. Leading indicators, though, rose 1.0% in September.
Canadian retail sales rose more than expected by 0.8% mom in August up from prior month's -0.5% contraction. Ex-auto sales also managed to rise 0.5%, inline with consensus. Canadian dollar, though, receive little support from this positive data and continues to retreat against major currencies despite firmness in crude oil. Nevertheless, near term support against major currencies are remaining intact and thus, there is no practical change in the bearish outlook in Canadian dollar yet. For example, in EUR/CAD, the choppy corrective look of the rise from 1.5183 and the impulsive fall from 1.6090 still suggest more downside ahead in spite of the current strong rebound. A break of 1.5502 minor support will flip bias back to the downside for down trend resumption to 61.8% retracement of 1.3285 to 1.7499 at 1.4895. A break above 1.6090 resistance is still needed to indicate that EUR/CAD has bottomed.
UK retail sales was disappointing. Sales rose 0.0% mom 2.4% yoy in September versus consensus of 0.5% mom, 2.8% yoy growth. BoE Deputy Governor Paul Tucker said that expansion in the GBP 175b asset purchase program is possible if necessary. Sterling pares some of recent gains but there is no confirmation of reversal yet. Traders will likely remain cautious ahead of tomorrow's Q3 GDP report.
Other data released today saw Eurozone current account turned EUR -1.3b deficit in August. Swiss trade surplus widened to 1.92b CHF in September. Japan trade surplus narrowed to 0.06T JPY in September. All industry index rose 0.9% mom in August.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 90.54; (P) 90.91; (R1) 91.33; More.
Outlook in USD/JPY remains unchanged. Further rise is still in favor with 90.07 support intact and USD/JPY could possibly break 38.2% retracement of 97.77 to 88.00 at 91.73. But after all, upside is still expected to be limited by 92.52 resistance and bring fall resumption. Below 90.07 will argue that such rebound has completed and will flip intraday bias back to the downside for 88.00. Break there will target 87.12 key support. However, break of 92.52 resistance will indicate that whole fall from 97.77 has completed and stronger rebound should then be seen.
In the bigger picture, there is no change in the bearish outlook with 92.52 resistance intact. 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 92.52 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
|23:50||JPY||Trade Balance (JPY) Sep||0.06T||0.38T||0.24T||0.17T|
|04:30||JPY||All Industry Activity Index M/M Aug||0.90%||0.40%||0.50%||0.80%|
|06:15||CHF||Trade Balance Sep||1.92B||1.59B||1.79B||1.72B|
|08:00||EUR||Eurozone Current Account (EUR) Aug||-1.3B||1.9B||6.6B||3.7B|
|08:30||GBP||Retail Sales M/M Sep||0.00%||0.50%||0.00%|
|08:30||GBP||Retail Sales Y/Y Sep||2.40%||2.80%||2.10%||2.20%|
|12:30||CAD||Retail Sales M/M Aug||0.80%||0.20%||-0.60%|
|12:30||CAD||Retail Sales Less Autos M/M Aug||0.50%||0.50%||-0.80%|
|12:30||USD||Initial Jobless Claims||531K||520K||514K|
|14:00||USD||Leading Indicators Sep||1.0%||0.80%||0.60%|
|14:00||USD||House Price Index M/M Aug||-0.3%||0.30%||0.30%|
|14:30||CAD||BoC Monetary Policy Report||--||--|
|14:30||USD||Natural Gas Storage||22B||58B|
|14:30||USD||Fed's Rosengren Speaks in Massachusetts on Financial Stability||--||--|
|16:00||USD||Fed's Lockhart to Speak on Early Childhood Education in Miami||--||--|
|17:30||USD||Fed's Dudley Moderates Policy Panel at Boston Fed Event||--||--|
|20:00||USD||Fed's Evans Speaks on Panel in Ann Arbor; Michigan||--||--|