Dollar extends recent weakness as gold marches to new record high above 1180 level on speculations that Bank of India will buy more gold as for its currency reserves. Sold data from US lifts risk appetite and sends commodity currencies further higher against the greenback. Jobless claims fell sharply to 466k, lowest level since September 2008. Personal spending grew more than expected by 0.7% in October while income rose 0.2%. Though, durable goods orders are a dark spot in today's releases and dropped -0.6% in October while ex-transport orders dropped -1.3%.
Data released earlier today saw UK Q3 GDP revised slightly up to -0.3% qoq, -5.1%. German Gfk consumer sentiment unexpectedly dropped to 3.7 in December. Japan Corporate Services Price index dropped -2.2% yoy in October. Japanese Trade surplus came in wider than expected at 0.42T JPY in October.
Canadian dollar rises sharply today as Russian Central Bank said it will add the Lonnie to its reserve. A Bank Rossii official said that technical preparations for transactions in Canadian dollars are under way.
Strength in gold remains the main driver in dollar's down trend. Based on the current strength in gold, 1200 psychological resistance seems vulnerable in near term. Current impulsive rise in gold might extend further to 1258 projection target before halting.
Dollar index dropped through 74.8 support to as low as 74.40 today so far. Based on the strength of the current fall, 74.31 support looks vulnerable. In particular, further strength in gold will likely put additional pressure to the greenback in general. But near term support support will likely limit the momentum in dollar's fall unless we sees sharp accelerations in gold prices.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 88.21; (P) 88.64; (R1) 88.92; More.
USD/JPY's decline extends further as expected and dives to as low as 87.38 so far in early US session. The break of 88.00 support confirms medium term fall resumption. At this point, intraday bias remains on the downside as long as 88.17 minor resistance holds and further fall should be seen to 87.12 low first and then 61.8% projection of 97.77 to 88.00 from 92.31 at 86.27 next. On the upside, above 88.17 will indicate that an intraday low is in place and bring consolidations first.
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. On the upside, while some recovery might be seen, break of 92.31 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will remain bearish.