USD marginally weaker, with EURUSD being well supported intra-day on cross EURJPY buying. We look for a close above 150.75 to confirm more upside for this currency pair.
MAJOR HEADLINES – PREVIOUS SESSION
UK
Halifax said although house prices were up a firm pace in October, there were actually some signs of a slowdown on the way for the months ahead. In particular it pointed to the deceleration of activity in RICS surveys and a drop in the numbers looking for a new home, based on data from the Home Builders Federation. Halifax outturn provides further evidence that the August rate hike has done little to dent the housing market, and is consistent with other surveys that also point to robust housing market activity and inflation. The pound has been well supported today especially against the JPY as rate differentials continue to favor the carry trade. GBPUSD has traded marginally showing little interest concerning the UK Trade balance, we are still looklng for a break of 1.9145 for more accelerated upside.
From earlier update:
JPY
Lately, the Japanese economy has shown several flaws that makes us believe a further weakening of the Yen. This was overnight confirmed in Mizuno's comments on the BoJ's semi-annual report. The possibility of a rate hike is more or less non-existent, mainly due to the soft figures in the CPI, but also the weakening on the consumer confidence and a disappointment in the retail figures has left the market believing that risk being short USDJPY/EURJPY is still low supported by USD-majors historical low vols. But we still believe to see a substantial upside move we need to see a break of 120.00 USDJPY and 150.75 EURJPY.
FX ORDERBOOK
Euro/US Dollar
EURUSD (1.2780 @ 12:06 GMT)
Support:
1. 1.2460 daily base which coincides with 1.2465 38% retracement
2. 1.2320 double top form march 2006
3. 1.2260 bull trend line from March 2006
4. 1.1635 38% retracement (0.8350-1.3667), also low from 2005.
Resistance:
1. 1.2825 top of the upper end of the bear channel from May 2006.
2. 1.2940 old top from August 2006.
3. 1.2980 long term inverse head-and-shoulder target.
4. 1.3175 upper bull trend channel from March 2006.
Resist.
1.2892
1.2831
1.2793
1.2780
1.2733
1.2709
1.2648
Support
British Pound/US Dollar
GBPUSD (1.9053 @ 12:06 GMT)
Support:
1. 1.8520 lower end of the bear channel from early August 2006.
2. 1.8500 daily base support.
3. 1.8325 wave high from March 2005.
4. 1.8090 wave support from July 2006.
5. 1.7330 long term bull trend support from 2001.
Resistance:
1. 1.9145 Old top from August.
2. 1.9215 old top from April 2005.
3. 1.9325 wave high from March 2005.
4. 1.9550 highs from december 2004.
Resist.
1.9236
1.9145
1.9099
1.9053
1.9008
1.8962
1.8871
Support
US Dollar/Japanese Yen
USDJPY (118.10 @ 12:05 GMT)
Support:
1. 116.50 wave low from late October.
2. 115.55 wave low from April (key level as it would take our weeky lower high/higher high, which would confirm accelerated downside)
3. 113.35 weekly base support.
4. 109.00 key support form confirmation of a monthly downward trend.
Resistance:
1. 119.20 choppy range base from early October.
2. 119.90 old top from mid-October.
3. 121.40 old top from December 2005.
4. 1250.00 50% retracement (form 147.63-101.67).
Resist.
118.99
118.37
118.10
118.10
117.48
117.12
116.50
Support
