Dollar pares much of yesterday's gain against Euro and Swissy as gold continued to make another record high close to 1150 level today. Crude oil also breached 80 level briefly. In addition, Libor for six-month dollar loans fell another basis point to 0.506% today and breaks Yen's six-month Libor for the first time in 16 years. Elsewhere, markets continue to stay in tight range without much progress.
Housing data from US was disappointing. Housing starts unexpected dropped -11% to 529k annualized rate in October, lowest level since April. Building permits also dropped to 552k annualized rate. The data was way below expectation of 598k and 580k respectively. Together with the poor NAHB index which stayed at 17 in November, the data suggests that recovery in the housing sector in US is continuing to lose momentum.
Headline CPI in US failed to turn positive even though it rose to -0.2% yoy in October. Core CPI, on the other han, rose more than expected to 1.7% yoy. Headline CPI in Canada turned positive for the first time in five months by rising 0.1% yoy in October. Nevertheless, the figure was below expectation of 0.2% yoy and CPI did record a monthly decline of -0.1% mom. Core CPI climbed to 1.8% yoy as markets expected.
The BOE minutes for November's meeting indicated that although the MPC members voted unanimously to keep the policy rate at 0.5%, there were 3 different opinions regarding extension of the asset purchase program. Moreover, the minutes also mentioned possibility of lowering remuneration rate on reserve as a means to ease monetary conditions. Sterling pares recent gain after the minutes as it signals some members still worried about UK's economic recovery and whether there will be further easing depends on data. After all, the minutes indicate that the path of recovery in the nation remains bumpy and uncertain.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.4788; (P) 1.4894; (R1) 1.4979; More
EUR/USD continues to stay in range of 1.4807/5047 even though it recovers strongly today. Intraday bias remains neutral for the moment and some more sideway trading might be seen. Nevertheless, rise from 1.4626 is still in favor to continue as long as 1.4807 holds. Break of 1.5047/5061 resistance zone will confirm that whole medium term rally has resumed and should target 123.6% projection of 1.2329 to 1.4719 from 1.2456 at 1.5410 next. However, break of 1.4807 will indicate that rise from 1.4626 has completed and deeper decline should be seen towards this support.
In the bigger picture, there is no clear indication of completion of medium term rise from 1.2456 yet. Such rise could still extend further to retest 1.6039 high on breaking of 1.5061 resistance. Nevertheless, upside momentum is diminishing as seen in bearish divergence condition in daily MACD. Hence, focus will remain on reversal in case of another rise and upside will likely be limited below 1.6039 high. On the downside, break of 1.4626 support will be an important signal of topping with a double top pattern (1.5061, 1.5047). In such case, deeper fall should be seen to 1.3747 support for confirmation.