Daily Report: Yen Lower as Obama Boosted Risk Appetite, Dollar Mixed
Yen is broadly lower in Asian today as stocks are lifted by US President Obama's first State of the Union address. Obama pledged to put job creation as the "number one" focus in 2010 and called for a new job bill. Obama also called for an extension of tax incentives of USD 38b over this yearand proposed to use $30b of money paid back from TARP to assist community banks that give loans to small businesses. Nikkei rebounded by jumping 1.68% to close at 10424. Aussie and Kiwi are the better performers on risk appetite.
Dollar, on the other hand, is mixed. The greenback is lifted by slightly more hawkish than expected FOMC statement overnight. The January FOMC statement showed slightly more hawkish tone on economic growth though the overall stance remained unchanged - the Fed funds rate will be kept at 0-0.25% and 'economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period'. Kansas City Fed President Thomas Hoenig's dissent to keep the 'extended period' phrase was also surprising and signaled there might more hawks appearing later this year.
New Zealand dollar is also lifted mildly after RBNZ rate announcement. As expected, the RBNZ left the OCR unchanged at 2.5%. The accompanying statement was a short one as much uncertainty about recovery was removed. Also, the central bank reiterated December' stance that removal of policy stimulus will start around the middle of 2010 if the economy continues to recover.
On the data front, Japan retail sales unexpectedly dropped by -0.3% yoy in December. Germany unemployment rate is expected to climb to 8.2% in January. Eurozone confidence indicators are expected to show general improvements in January. From US, durable goods orders are expected to rise 2.0% in December with ex-transport orders up 0.3%. Focus will also be on US Senate's vote on Bernanke's second term as Fed chairman. The vote requires a 60-vote majority in the 100-member Senate to overcome procedural obstacles from Bernanke's Senate critics.
Dollar index rose to 79.06 today and the break of 78.81 resistance confirms that whole rise from 74.19 has resumed. Upside momentum is not to convincing for the moment. But we'd still expect further rise as long as 78.35 minor support holds. Dollar should target 61.8% projection of 74.19 to 78.45 from 76.60 at 79.23 next. However, break of 78.35 support will argue that a short term top is at least formed and deeper pull back should be seen to below 78.03 support.
USD/JPY Daily Outlook
Daily Pivots: (S1) 89.39; (P) 89.74; (R1) 90.34;
USD/JPY's strong rebound from 89.13 and break of 89.76 minor resistance indicates that an intraday low is in place and turns bias neutral. Some consolidations could be seen but we'd expect 90.55 resistance holds and bring fall resumption. Below 89.13 will target 87.36 support next and break there will confirm that whole rise from 84.10 has completed with waves up to 93.74 already. Also, it will indicate that medium term down trend is resuming for another low below 84.81. However, sustained trading above 90.55 resistance will dampen this bearish view and turn focus back to 91.86/92.03 resistance zone instead.
In the bigger picture, USD/JPY is still trading below medium term trend line resistance at 94.71 and 55 weeks EMA at 94.07. Whole down trend from 124.13 is likely still in progress and a break of 84.81 will target 1995 low of 79.75. However, note bullish convergence condition is seen in weekly MACD. Sustained trading above the medium trend line resistance will be the first signal of medium term reversal and in such case, focus will turn to 101.43 resistance for confirmation.
Yen is broadly lower in Asian today as stocks are lifted by US President Obama's first State of the Union address. Obama pledged to put job creation as the "number one" focus in 2010 and called for a new job bill. Obama also called for an extension of tax incentives of USD 38b over this yearand proposed to use $30b of money paid back from TARP to assist community banks that give loans to small businesses. Nikkei rebounded by jumping 1.68% to close at 10424. Aussie and Kiwi are the better performers on risk appetite.
Dollar, on the other hand, is mixed. The greenback is lifted by slightly more hawkish than expected FOMC statement overnight. The January FOMC statement showed slightly more hawkish tone on economic growth though the overall stance remained unchanged - the Fed funds rate will be kept at 0-0.25% and 'economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period'. Kansas City Fed President Thomas Hoenig's dissent to keep the 'extended period' phrase was also surprising and signaled there might more hawks appearing later this year.
New Zealand dollar is also lifted mildly after RBNZ rate announcement. As expected, the RBNZ left the OCR unchanged at 2.5%. The accompanying statement was a short one as much uncertainty about recovery was removed. Also, the central bank reiterated December' stance that removal of policy stimulus will start around the middle of 2010 if the economy continues to recover.
On the data front, Japan retail sales unexpectedly dropped by -0.3% yoy in December. Germany unemployment rate is expected to climb to 8.2% in January. Eurozone confidence indicators are expected to show general improvements in January. From US, durable goods orders are expected to rise 2.0% in December with ex-transport orders up 0.3%. Focus will also be on US Senate's vote on Bernanke's second term as Fed chairman. The vote requires a 60-vote majority in the 100-member Senate to overcome procedural obstacles from Bernanke's Senate critics.
Dollar index rose to 79.06 today and the break of 78.81 resistance confirms that whole rise from 74.19 has resumed. Upside momentum is not to convincing for the moment. But we'd still expect further rise as long as 78.35 minor support holds. Dollar should target 61.8% projection of 74.19 to 78.45 from 76.60 at 79.23 next. However, break of 78.35 support will argue that a short term top is at least formed and deeper pull back should be seen to below 78.03 support.
USD/JPY Daily Outlook
Daily Pivots: (S1) 89.39; (P) 89.74; (R1) 90.34;
USD/JPY's strong rebound from 89.13 and break of 89.76 minor resistance indicates that an intraday low is in place and turns bias neutral. Some consolidations could be seen but we'd expect 90.55 resistance holds and bring fall resumption. Below 89.13 will target 87.36 support next and break there will confirm that whole rise from 84.10 has completed with waves up to 93.74 already. Also, it will indicate that medium term down trend is resuming for another low below 84.81. However, sustained trading above 90.55 resistance will dampen this bearish view and turn focus back to 91.86/92.03 resistance zone instead.
In the bigger picture, USD/JPY is still trading below medium term trend line resistance at 94.71 and 55 weeks EMA at 94.07. Whole down trend from 124.13 is likely still in progress and a break of 84.81 will target 1995 low of 79.75. However, note bullish convergence condition is seen in weekly MACD. Sustained trading above the medium trend line resistance will be the first signal of medium term reversal and in such case, focus will turn to 101.43 resistance for confirmation.
