Lack of data and no important news kept the FX market rangebound. BoJ comments today made only little impact, but we expect more downside in the Yen. EUR- and USD-crosses more or less unchanged.
MAJOR HEADLINES – PREVIOUS SESSION
JPY
The BoJ minutes was not very interesting as we expected. According to the BoJ, the economy is "likely to expand moderately'' and rateswill be "gradually'' pushed higher, said the minutes, released today. The yen has fallen against 15 of the 16 most-active currencies tracked by Bloomberg since the central bank lifted borrowing costs for the first time in almost six years on July 14, as investors cut bets on a second increase this year. BoJ Deputy Governor Mutu said that the timing of the next rate hike is completely open, leaving room for a hike in December as well as next year. We're still expecting to see JPY weakness againt the other major currencies - EURJPY made new highs yesterday at 151.67 and we expect the new base will be at 150.75 as written in the orderbook below. Tonight the Japanese merchandise trade balance will be released as well as the activity index. The markets as well as our expectations point towards lower figures in both, which could add further pressure on the yen.
Later today we have the Canadian leading indicators for October as well as retail sales for September. Any surprise in the figures, especially the leading indicators, as the retail sales are a very volatile time series, will affect the Canadian dollar.
From yesterday:
EUR
The outcome of the G10 meeting in Sydney was comments from Trichet, that "Strong Vigilance" still is needed to keep the European inflation in check as global growth in 2007, while slowing from this year, will "remain very, very dynamic." As BoJ Governor Fukui of Japan signalled the opposite in Japan a rally was sparked in EURJPY touching 2006 highs at 151.66. Higher-than-expected German PPI supported the increase in the EUR, that rose against most of the majors.
FX Orderbook
Euro/US Dollar
EURUSD (1.2814 @ 13:25 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.
1.2916
1.2870
1.2842
1.2814
1.2796
1.2778
1.2732
Support
British Pound/US Dollar
GBPUSD (1.8992 @ 13:25 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.
1.9080
1.9023
1.9000
1.8992
1.8943
1.8909
1.8852
Support
US Dollar/Japanese Yen
USDJPY (118.00 @ 13:25 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.
119.11
118.53
118.28
118.00
117.70
117.37
116.79
Support
