Risk aversion is back driving the markets today. In particular, selloff in commodities has intensified again with gold dives to as low as 1175 so far while crude oil also resumes recent decline and reaches as low s 67.55. European equities give up earlier against with DAX and CAC dropping over -2% so far. US equities are set to open sharply lower too as unexpected rise in jobless claims do little to support investor sentiments. Weakness in Australian dollar has now broadened to Canadian dollar and New Zealand dollar. The Japanese yen is the main beneficiary this time and rises over 3.8% and 3.5% against Aussie and Loonie respectively. European majors are soft too but are somewhat supported by buying against commodity currencies and remain steady against the greenback.
Euro pares much of yesterday's gain against swissy and EUR/CHF is now back 1.417, way off yesterday's high above 1.43. Nevertheless, EUR/USD is steadily in range so far while EUR/GBP manages to clime above 0.86 level. EU Jean Claude Juncker said that while he's concerned with the rapidness of Euro's depreciation, he doesn't think there will be immediate action on intervention.
Economic data released today saw US jobless claims jumped to 471k. Canadian leading indicator rose 0.9% mom in April. Swiss ZEW dropped sharply from 53.4 to 40.5 in May. UK retail sales rose 0.3% mom in April. German PPI rose 0.8% mom, 0.6% yoy in April. Japanese GDP data was disappointing and showed only 1.2% qoq, 4.9% growth in Q1.
Let's look at the charts of two biggest losers today. AUD/JPY drops through previously mentioned 38.2% retracement of 55.11 to 88.04 at 75.46 and reaches as low as 74.69 so far. As noted before, medium term rise fro 55.11 has completed at 88.04 after missing 88.13 resistance. The choppy structure suggests that such rebound is merely a correction in the long term down trend from 2007 high of 107.86. Hence we'd expect the current fall to extend to 61.8% retracement at 67.58 in medium term and then 55.11 low. We're stay bearish as long as 81.71 resistance holds.
CAD/JPY also dives sharply to as low as 84.83 so far today. The development suggests that whole decline from 94.46 is possibly resuming and we'd anticipate a break of 82.23 low in near term. Also, such development will affirm the case that medium term rebound from 68.38 is finished at 94.46 already and would bring deeper fall to retest 68.38 low.
USD/CAD Mid-Day Outlook
Daily Pivots: (S1) 1.0362; (P) 1.0450; (R1) 1.0521;
USD/CAD jumps sharply to as high as 1.0672 so at today and at this point, intraday bias remains on the upside for 1.0734 resistance first. Break there will revive the case that 0.9929 is already the medium term bottom and will put focus on 1.0779 key resistance confirmation. On the downside, though, below 1.0438 support turned resistance will mix up the outlook again and turn bias neutral.
In the bigger picture, the strong rally in USD/CAD today is revive the case the whole medium term down trend from 1.3063 has completed at 0.9929 already and the trend is reversing. Decisive break of 1.0779 resistance will confirm this case and target 38.2% retracement of 1.3063 to 0.9929 at 1.1126 next. We'd slightly prefer this bullish case as long as 1.0438 support holds.
Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised 23:50 JPY GDP Q/Q Q1 P 1.20% 1.40% 0.90% 1.00% 23:50 JPY GDP Annualized Q1 P 4.90% 5.50% 3.80% 23:50 JPY GDP Deflator Y/Y Q1 P -3.00% -2.90% -2.80% -2.70% 01:00 AUD Consumer Inflation Expectation May 3.60% -- 4.10% 06:00 EUR German PPI M/M Apr 0.80% 0.60% 0.70% 06:00 EUR German PPI Y/Y Apr 0.60% 0.40% -1.50% 08:30 GBP Retail Sales M/M Apr 0.30% 0.20% 0.40% 0.50% 09:00 CHF ZEW Survey (Expectations) May 40.5 -- 53.4 12:30 CAD Leading Indicators M/M Apr 0.90% 0.70% 1.00% 12:30 USD Initial Jobless Claims 471K 440K 444K 14:00 USD Leading Indicators Apr 0.20% 1.40% 14:00 USD Philly Fed Survey May 22 20.2 14:00 EUR Eurozone Consumer Confidence May A -16 -15 14:30 USD Natural Gas Storage 79B 94B