GBPUSD took another leg lower on disappointing CPI data, but still trades above key intra-week support at 1.8950. Tomorrow's inflation report should set the short term trend.
MAJOR HEADLINES – PREVIOUS SESSION
JPY
Finally some impressive data out of Japan. The economy grew by 0.5% in Q3 compared to 0.2% in Q2. This should set the BOJ on a path of hikes looking ahead into 2007. For comparison the Euro-Zone Q3 GDP release today came out at 0.5%, the same as Japan. So we with an employment reading of 4.2% in Japan and rates at 0.25%, it should be a clear cut case for the BOJ in 2007 to begin to "normalize rates" as long as core CPI and labor costs continue to rebound. Technically we still look for a break of 115.55 in USDJPY and 147.55 in EURJPY to change the technical picture medium term.
NZD
The Kiwi remains under pressure from more then one front. NZDJPY has been "the" carry trade looking back over the past years, but we do not expect this to continue. As the Japanese recovery continues we expect unwinding of theses trade to start being in focus looking towards the end of 2006. Producer Prices input/output disappointed and we do not expect retail sales tonight of out of New Zealand to particular impressive either. Also next week's data event's should bring more selling interest to the NZD as kiwi trade balance and RBNZ cash rate decision should not be supportive. We are short NZDJPY from 78.15 and we look to add to this short if we see a break of 77.40.
FX ORDERBOOK
Euro/US Dollar
EURUSD (1.2828 @ 13:11 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. 1.2940 old top from August 2006.
2. 1.2980 long term inverse head-and-shoulder target.
3. 1.3175 upper bull trend channel from March 2006.
Resist.
1.2992
1.2909
1.2857
1.2828
1.2774
1.2743
1.2660
Support
British Pound/US Dollar
GBPUSD (1.8975 @ 13:11 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.
1.9368
1.9211
1.9110
1.8975
1.8953
1.8897
1.8740
Support
US Dollar/Japanese Yen
USDJPY (117.61 @ 13:11 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.
120.20
119.03
118.59
117.61
117.43
116.69
115.53
Support
