We can expect a fairly quiet trading day in Asia ahead of tonight’s US Thanksgiving holiday which usually turns into a long weekend for their markets. HSBC flash PMI for China is the main event on an otherwise bare economic calendar. The Nikkei will probably get a boost from the continuation of the Yen fall and this might inspire some mild risk-on sentiment around the region.
EUR/JPY was the main mover yesterday, initially breaking above technical resistance at 104.80 before falling sharply after comments from the EZ FinMin meeting. These losses have been undone as speculative players pile into Yen shorts. The next resistance level to note is near 106.20, where the weekly trend-line sits (see chart).
USD/JPY has little in the way of technical resistance until 84.50/85.50 (see chart) and with 3 weeks still to go before the Japanese general election, we could easily see these levels. As Yen short positions grow, we will start to see much greater volatility so be prepared for sharp pullbacks from time to time.
EUR/USD is opening just above yesterday’s opening levels and whilst there are occasional headline driven moves, the majority of activity is being created by movement and flows in the cross pairings. Prices have been oscillating around the 200-day MA and this indicator seems to be losing its technical relevance (see chart) and a 1.2650/1.2900 containment range looks increasingly likely.
The AUD is also stuck between conflicting forces with bears happy to sell rallies ahead of an expected rate cut next month but bulls finding plenty of support from reserve managers as well as AUD/JPY activity.
Cable has moved up out of its tight range around 1.5900 and should at least be able to re-challenge the important psychological level at 1.6000. USD/CAD has not yet been able to trigger stops below .9950 but they do remain on the books.
Good luck today.