Risk aversion comes back to dominate the markets today as Greece's five-year sovereign credit default swaps jumped to new record high above 970 basis point today. Japanese yen is sharply higher with EUR/JPY breaks 110 level while USD/JPY also breaches 90 level. Dollar is mildly higher against other major currencies following yen. Sterling is also firm as supported by post BoE minutes strength as well as buying against Euro. European stocks are generally lower with major indices down around -1% while crude oil and gold are both soft.
Data released today saw durable goods orders dropped less than expected by -1.1% in May with ex-autos orders rose 0.9%. Jobless claims improved to 457k but remains elevated. Eurozone industrial new orders rose 0.9% mom in April. Australian leading indicator rose 0.1% in April. Japan corporate service price dropped -0.8% yoy in May. trade surplus narrowed to JPY 461.1b in May. New Zealand GDP rose 0.6% qoq, 1.9% yoy in Q1.
AUD/JPY's fall from 80.85 extends further today and the break of 77.50 support affirms our view that recovery from 71.86 has completed with three waves up to 80.85 already, after touching 100% projection of 71.86 to 78.99 from 73.65. Further decline should now be seen to 73.65 support next and break there will indicate that whole decline from 88.04 is resuming for another low below 71.86.
While AUD/JPY and NZD/JPY are the worst performers today, CAD/JPY is the weakest pair this week. The cross drops to as low as 85.48 so far today. Current decline is expected to continue to retest 82.23/38 support zone in near term. Decisive break there will confirm that whole fall fro 94.46 has resumed and should target 79.89 support and below.
Dollar index recovers today but it's still staying in range of 85.09 and 86.42. Outlook remains unchanged and correction from 88.70 would possibly extend further to medium term trend line support (now at 83.14). However, note that break of 86.42 resistance will argue that such correction might have completed at 85.09 already and stronger rebound would then be seen to retest 88.700 high.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 89.49; (P) 90.04; (R1) 90.34;
USD/JPY's fall extends further to as low as 89.24 so far today and intraday bias remains on the downside for 88.97 support. Break will will suggest that whole consolidations pattern from 88.25 is finished at 92.87 already and whole fall from 94.97 is resuming for 88.13 and below. On the upside, above 89.96 minor resistance will turn intraday bias neutral and bring consolidations but another fall will remain in favor as long as 91.46 resistance holds.
In the bigger picture, USD/JPY is still trading below a falling 55 weeks EMA and whole down trend from 124.13 is possibly not over yet. Break of 88.13 support will indicate that rebound from 84.81 has completed with three waves up to 94.97 already. The corrective structure will affirm the bearish case and pave the way to a new low below 84.81. On the upside, however, break of 94.97 will revive the case that 84.81 is already the long term bottom and will target 101.43/65 medium term resistance zone for confirming this bullish case.
Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised 22:45 NZD GDP Q/Q Q1 0.60% 0.50% 0.80% 0.50% 22:45 NZD GDP Y/Y Q1 1.90% 1.80% 0.40% 0.90% 23:50 JPY Trade Balance (JPY) May 416.1B 626.8B 729.1B 507.7B 23:50 JPY Corporate Service Price Y/Y May -0.80% -1.00% -1.10% 00:00 AUD Conference Board Leading Index Apr 0.10% -- 0.30% 09:00 EUR Eurozone Industrial New Orders s.a. M/M Apr 0.90% 1.60% 5.20% 5.70% 12:30 USD Durable Goods Orders May -1.10% -1.20% 2.90% 12:30 USD Durables Ex Transportation May 0.90% 1.10% -1.00% 12:30 USD Initial Jobless Claims 457K 460K 472K 14:30 USD Natural Gas Storage 80B 87B