For too long, deflationary clouds hung over Japan's economy, supported partially by cronyism of the dominating LDP, keeping up a tight network of politics, business and finance, favouring their benefactors. Although not noticed in full by the world, this has clearly ended August 30th, when the DPJ took over in an avalanche-like election. The LDP is now in clear minority in the lower diet: 119 seats, compared to the DPJ's 308. This is directive. To what? First, the slightly left-wing DPJ will most probably present their own fiscal budget, made from scrap, pushing away all these crony-gift-filled proposals from the opposition. Although it might balloon the fiscal deficit further, they would not hesitate to increase expenditures in infrastructures, transport, schools, electricity, water, medical centres. Perhaps it is too early to say - Mr. Hatoyama, the new prime minister-elect on September 16, has not spoken yet, and little is known about him, as well about his entourage. But for Forex the message is clear: when the big deflation in Japan ends, and many signs of that are flashing behind the horizon, the Yen will tend lower, not only against the Dollar. We therefore prefer to take a selling stance towards the Yen over the next months in our intraday trades, with technically sharpened entry points, day by day.
Accordingly we put the details in the majors for today's trading as described below. For the Dollar's performance against its other majors, there is little more to say than it is defending its lows further, with some recovery moves intraday. Expect some more of market volatility coming up today as America starts after a long weekend, and approaches slowly the end of the summer holiday, although there are no market moving data scheduled for the day.
Intraday Market Outlook for Day Traders
EUR/USD
In an exuberant up move this European morning, the EUR/USD even managed to break the 1.4400 resistance line against the Dollar, currently trading at 1.4460. The up move has set in after the publication of favourable trade weighted data for the Euro zone for July - a matter we see only as a kind of short term influence. What's more - the market is now clearly overbought and running into even stiffer resistance zones now. We therefore do not expect much more upside potential today, rather correction moves down to the levels around 1.4370.
GBP/USD
In the wake of the EUR/USD Cable managed also to break important resistances against the Dollar, breaking the 1.6500 handle. Here also, a heavily overheated market on the upside exists, currently trading at 1.6550. We would not dare to enter further long positions here, rather waiting for a more promising point around the 1.6450 level.
USD/CHF
Currently trading at lows around 1.0480, still in lower volatility, the Dollar continues to fight its lower echelons against the Swiss Franc. With this market quite oversold now, we do not see further substantial weakness in today's trading, rather limited recovery moves towards the 1.0550 levels.
USD/JPY
The Dollar, tending weaker this European morning and currently trading at 92.15, has reached an interesting buying point. Short term oversold, up reactions could set in from here, transforming later in an uptrend today. We see levels around 92.90 tested today on the upside.
Accordingly we put the details in the majors for today's trading as described below. For the Dollar's performance against its other majors, there is little more to say than it is defending its lows further, with some recovery moves intraday. Expect some more of market volatility coming up today as America starts after a long weekend, and approaches slowly the end of the summer holiday, although there are no market moving data scheduled for the day.
Intraday Market Outlook for Day Traders
EUR/USD
In an exuberant up move this European morning, the EUR/USD even managed to break the 1.4400 resistance line against the Dollar, currently trading at 1.4460. The up move has set in after the publication of favourable trade weighted data for the Euro zone for July - a matter we see only as a kind of short term influence. What's more - the market is now clearly overbought and running into even stiffer resistance zones now. We therefore do not expect much more upside potential today, rather correction moves down to the levels around 1.4370.
GBP/USD
In the wake of the EUR/USD Cable managed also to break important resistances against the Dollar, breaking the 1.6500 handle. Here also, a heavily overheated market on the upside exists, currently trading at 1.6550. We would not dare to enter further long positions here, rather waiting for a more promising point around the 1.6450 level.
USD/CHF
Currently trading at lows around 1.0480, still in lower volatility, the Dollar continues to fight its lower echelons against the Swiss Franc. With this market quite oversold now, we do not see further substantial weakness in today's trading, rather limited recovery moves towards the 1.0550 levels.
USD/JPY
The Dollar, tending weaker this European morning and currently trading at 92.15, has reached an interesting buying point. Short term oversold, up reactions could set in from here, transforming later in an uptrend today. We see levels around 92.90 tested today on the upside.
