BoJ Governor Shirakawa said today that they bank is paying "due attention to the effects of the recent rapid appreciation of the yen on business sentiment." Also, he reemphasized that BoJ will "act promptly and decisively if judged necessary to ensure the stability of financial markets." Over the weekend, Prime Minister Hatoyama ordered cabinet ministers to include in a supplementary budget for fiscal 2009 measures aimed at coping with the surging yen and declining Japanese stocks. There will also be a meeting between Shirakawa and Hatoyama as early as Wednesday for a discussion on risks to the fragile recovery in the Japan economy. But after all, yen pays little attention to the rhetoric and remains steady in range.
Dollar's outlook remains quite mixed for the moment, except that it's clearly bearish against yen. As noted before, EUR/USD was kept above 1.4801 support last week and thus gave no indication of topping yet. Subsequent strong rebound from 1.4828 extends further today and is possibly on the way to challenge 1.5143 high. Similar situation was found in dollar index which rebound was limited below 75.88 support and a retest on 74.19 low cannot be ruled out. Developments in GBP/USD and AUD/USD both still favor more downside. However, the fall from 1.6875 and 0.9404 are not displaying five wave structures yet and could, in the end, turn out to be corrections only. Hence, firstly, we'll stay neutral in EUR/USD, USD/CHF and USD/CAD for the moment and bearish on GBP/USD and AUD/USD. However, secondly, we'll turn bearish on dollar in generally in case of a new high in EUR/USD, which should be accompanied by a new low in the dollar index.
On the data front, Japanese manufacturing PMI dropped to 52.3 in November. Industrial production rose less than expected by 0.5% mom in October. Housing starts dropped less than expected by -27.1% yoy in October. UK Gfk consumer confidence unexpectedly deteriorated from -13 to -17 in November. Looking ahead. main focus will be on Eurozone CPI, which is expected to turn positive to 0.4% yoy in November. Canadian GDP is expected to returned to 1.0% annualized growth in Q3. Canadian IPPI and RMPI as well ass US CHicago PMI will also be featured.
AUD/USD Daily Outlook
Daily Pivots: (S1) 0.8960; (P) 0.9047; (R1) 0.9149; More
AUD/USD's rebound from 0.8945 extended further to as high as 0.9192 today so far but lost some momentum after hitting 4 hours 55 EMA. While some more recovery cannot be ruled out, upside is still expected to be limited below 0.9321 resistance and bring fall resumption. Below 0.9050 minor support will flip intraday bias back to the downside and further break of 0.8945 will target 0.8915 support and then 161.8% projection of 0.9404 to 0.9060 from 0.9321 at 0.8764 next.
In the bigger picture, the sustained trading below the medium term channel support indicates that whole medium term rise from 0.6008 has made a top at 0.9404 with bearish divergence condition in daily MACD. Further break of 0.8915 support will confirm this case and bring sizeable correction towards 0.7702/0.8626 support zone but strong support should be seen there to bring rebound. On the upside, however, note that a break of 0.9321 resistance will indicate that fall form 0.9404 has completed. The corrective three wave structure will indicate that AUD/USD's up trend is not completed yet and another high should then be seen above 0.9404 before AUD/USD tops.
Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:00 CHF SNB Chairman Roth Speaks -- --
23:15 JPY Manufacturing PMI Nov 52.3 -- 54.3
23:30 AUD TD Securities Inflation M/M Nov 0.30% -- -0.30%
23:50 JPY Industrial Production M/M Oct P 0.50% 2.50% 1.40% 2.10%
23:50 JPY Industrial Production Y/Y Oct P -15.10% -13.40% -18.90%
0:01 GBP GfK Consumer Confidence Survey Nov -17 -11 -13
1:00 JPY BOJ Governor Masaaki Shirakawa to Speak in Nagoya -- --
5:00 JPY Housing Starts Y/Y Oct -27.10% -33.20% -37.00%
9:30 GBP Mortgage Approvals Oct 57.0K 56.2K
10:00 EUR Eurozone CPI Estimate Y/Y Nov 0.40% -0.10%
13:30 CAD GDP M/M Sep 0.4 -0.10%
13:30 CAD Quarterly GDP Annualized Q3 1.00% -3.40%
13:30 CAD Industrial Product Price M/M Oct 0.40% -0.50%
13:30 CAD Raw Materials Price Index M/M Oct 2.80% -1.10%
14:45 USD Chicago PMI Nov 53 54.2
