Yen crosses are generally higher following rally in European stocks as well as US stocks. DOW breaks out of this week's tight range and surges above 9100 level in early trading. Aussie is supported by risk appetite as well as flow from AUD/NZD. Sterling, on the other hand, is lifted by better than expected house price data and strengthens in general. Euro receive not much support from solid data from Eurozone and is under pressure in general except versus yen. Meanwhile, dollar's outlook is mixed, strengthen against yen and swissy but soft against Aussie and Sterling.

Data from US saw jobless claims rose back to 584k. Canadian IPPI unexpectedly rose 0.7% mom in June while RMPI rose 6.2% against expectation of 3.0% mom. Canadian dollar recovers mildly along with rebound in oil prices. German unemployment unexpectedly dropped -6k in Jul while unemployment rate was unchanged at 8.3% versus expectation of a rise to 8.4%. Eurozone confidence indicators generally showed more than expected improvements in July. Euro surges sharply against Swissy and yen but remains pressured elsewhere. UK nationwide house prices rose for a third month in July by 1.3% mom, following 1% mom rise in June. The rise is higher than market expectation of 0.1% mom. On annual biases, prices dropped -6.2%, smallest number since May 2008. Japanese industrial production rose 2.4% mom, dropped -23.4% yoy in June.

RBNZ announced to keep its cash rate unchanged at 2.5%. While this had been widely expected, what surprised us, as well as the market, was the more dovish accompanying statement and policymakers' main focus on NZD's strength. Kiwi remains until pressure since then and weakens against most major currencies.


GBP/JPY Mid-Day Outlook


GBP/JPY's break of 157.59 indicates that rise from 146.75 has resumed. At this point, intraday bias remains on the upside as long as 155.19 minor support holds and further rally should be seen targeting 160.24 resistance first. As discussed before, correction from 162.56 should have completed with three waves down to 146.75 already and medium term rally might now be resuming to a new high above 162.56. On the downside, below 155.19 will turn intraday outlook neutral and bring consolidation, but short term outlook will remain bullish as long as 152.29 support holds.

In the bigger picture, recent development suggests that whole medium term rise from 118.81 is possibly still in progress. Nevertheless, there is no change in the view that it's a correction in the larger down trend from 07 high of 251.90. Hence, while another high above 162.56 would probably be seen, upside is expected to be limited by 50% retracement of 215.87 to 118.81 at 167.34 to conclude such correction and bring reversal. However, note that GBP/JPY is still holding below medium term trend line support turned resistance. Break of 146.75 support will now be an important alert that GBP/JPY's rise from 118/81 has already completed and will turn outlook bearish for this low eventually.


Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised
21:00NZDRBNZ Rate Decision2.50%2.50%2.50% 
23:50JPYIndustrial Production M/M Jun P2.40%2.50%5.90%5.70%
23:50JPYIndustrial Production Y/Y Jun P-23.40%-23.60%-29.50% 
07:55EURGerman Unemployment Change Jul-6K44K31K 
07:55EURGerman Unemployment Rate Jul8.30%8.40%8.30% 
09:00EUREurozone Economic Confidence Jul7675.173.373.2
09:00EUREurozone Consumer Confidence Jul-23-24-25 
09:00EUREurozone Industrial Confidence Jul-30-30-32 
09:00EUREurozone Services Confidence Jul-18-19-20 
12:30CADIndustrial Product Price M/M Jun0.70%-0.10%-1.10% 
12:30CADRaw Materials Price Index M/M Jun6.20%3.00%2.20% 
12:30USDInitial Jobless Claims584K588K554K 
14:30USDNatural Gas Storage 71B66