Better than expected GDP report was released in early US session but markets' reactions are so far mild. Dollar and yen are generally firm while stocks open nearly flat. Some noticeable strength is seen in commodity currencies together with a rebound in treasury yield as well as gold after the GDP report. However, the rebound is brief as gold quickly falls back to below 950 while crude oil resumes recent fall towards 70 level. After all, more upside in dollar and yen are still in favor in near term.

Preliminary GDP report in US was unexpectedly left unrevised at -1.0% contraction. Markets expected a downward revision to -1.4% annualized rate. In addition, the report showed that corporate profits rose by the biggest rate since Q1 2005 by 5.7%. Initial jobless claims fell to 570k, above expectation of 563k. Continuing claims continued to drop to 6.13M.

Germany Gfk consumer sentiment for Sep improved to 15 month high of 3.7 from revised 3.4 but fell short of expectation of 3.8. Germany prelim CPI rose 0.2% mom in Aug, versus expectation of 0%. Eurozone M3 money supply growth slowed for another month and more than expected to 3.0% yoy. Australia leading indicator rose 0.9% in June. New Zealand trade deficit narrowed to -163M in Jul.

EUR/JPY Mid-Day Outlook

Daily Pivots: (S1) 133.80; (P) 134.45; (R1) 135.01; More.

Intraday bias in EUR/JPY remains on the downside with 134.42 minor resistance intact. We continue to favor the case that corrective rise from 132.17 is already completed at 136.07. Below 132.90 will bring retest of 132.17 low and break there will confirm resumption of whole decline from 138.70 to 127.08 key support next. On the upside, though, above 134.42 minor resistance will indicate that consolidation is still in progress. But still, while another rise cannot be ruled out, we'd expect upside to be limited below 137.83 resistance and bring fall resumption finally.

In the bigger picture, note again that price actions from 113.63 are corrections in the larger down trend from 08 high of 169.96 only. We're slightly favoring the case that such correction has completed at 139.21 already on bearish divergence conditions in daily MACD and RSI. Break of 127.08 support will confirm this case as well as a head and shoulder top formation (ls: 137.38, h: 139.21, rs: 138.70). In such case, deeper decline should be seen that resume whole down trend from 169.96 to 112.10 low and beyond. On the upside, while another high above 139.21 cannot be ruled out, upside is expected to be limited by 141.73 cluster resistance (50% retracement of 169.96 to 113.63 at 141.79) and finally bring reversal.