Traditional correlations didn’t really work overnight when falling oil prices saw the GBP edge higher and the Yen fall, when usually it’s exactly the opposite. The fall in the AUD is of course a more logical outcome. Markets seemed to work independent of each other, with EUR and GBP staying quiet and driven by light flows and the Yen fall can be attributed to more intervention rumours.
We’ve heard rumours of possible MOF/BOJ action many times in the last few months and in fact a big Japanese bank released a note at the end of last week saying that the threat of actual intervention was lessening. Nevertheless, traders reported that corporate offers were virtually non-existent (usually a sign that they know something) and the traders put two and two together! It was a Japanese holiday yesterday which could easily explain why the corporate offers were cancelled.
GBP/JPY briefly spiked above important resistance levels at 127.85, a 61.8% retracement and prior pivot, (see chart), but it’s closing right on the level and this pair should be worth watching today.
There are sell orders reported in USD/JPY starting at 79.00 through 79.20 and if they don’t eventuate then maybe we should start giving some heed to the intervention chatter.
EUR/USD has now stalled twice at 1.3165 (see chart) raising the possibility of a double-top. I’d expect further range-trading during the Asian session and we can expect EUR/JPY to lead the way.
The technical target for EUR/JPY is 104.60/80 (see chart) with support levels starting at 101.60.
The AUD was steady above 1.0500 until the oil price started falling and with precious metals also sagging sentiment turned quickly bearish. Today’s release of the latest RBA minutes may provide some intraday interest but the main focus will be on commodity prices, mining stocks and Chinese economic reports. Support should be very solid near 1.0400 and yesterday’s support levels near 1.0515/20 are the obvious resistance levels.
Good luck today.
