INTRADAY MARKET ANALYSIS

Worse than expected Canadian data lifted USDCAD to important technical levels as the pair could make a breakout of the dynamic resistance generated in May. Canadian CPI (MoM) (Sept) missed by 0.1% the 0.3% consensus.  Weak CAD Retail Sales as well, with MoM (Aug) at -0.3% while financial analysts expected a +0.5%. 

FED Chairwoman Janet Yellen speech is going to be held when markets will be closed.  Japanese General Election, on Sunday 22th,  could give the mandate to Prime Minister Shinzo Abe to govern Japan until 2021. The Nikkei225 closed at 21,457.64. This level was reached the last time in the third quarter of 1996. The Nikkei225 has a P/E ratio of 19.39, lower than the S&P500 ratio, at 21.84 .Bank of Japan balance sheet as percentage of GDP is at its record high of 94.7%.  Data from the Economic and Social Institute in Japan gave a +1.4% YoY GDP growth on the end of June. 

Japanese shares do not seem thus overvalued but the massive quantitative easing implemeted by the BOJ could have created a much bigger wealth effect.  Japan GDP growth is still underperforming the G20 GDP growth, estimated at  +3.57% YoY.

Bank of Japan  Assets/GDP Ratio

the chart below show that BOJ asset purchase had direct consequences on the NIKKEI225 performance as the gauge was at 10,000 points in 2013.

 

NIKKEI225 (quarterly chart) 

The index could test the 50% retracement from its record high in area 22,980. Psychological selling pressure beneath 20,000 points.

 

USDCAD (daily chart) 

USDCAD could break the medium term supply line that links lower highs. The pair could rise to 1.2725; selling pressure below this week low  1.2470.

 

USDCHF (daily chart)

USDCHF is off its October high 0.9848 reached today as it found resistance against its 200 day MA. The pair is also trading at its 5 month high. Above this dynamic resistance there is the parity.

 

EURGBP (daily chart)

EURGBP could not rise above its daily 55 MA and slid below 0.9. The pair it may find support near 0.8890.