Dollar retreats mildly in steady markets today. Traders are waiting on sidelines ahead of a flush of key economic data from US for the rest of the week, which will start of with ISM manufacturing index, ADP employment as well as Fed's Beige Book today. Sell off in stocks slowed as DOW managed to close above 11000 level despite another attempt to break through. The sharp fall in US treasury yield overnight is also limit dollar's strength and sent USD/JPY lower from this week's high of 84.39. Sentiments are also stabilized by solid PMI manufacturing data from China. Nevertheless, considering the event risks in the latter part of the week, including ECB meeting and Non-Farm Payroll, volatility would likely continue.
The story on Eurozone debt crisis goes on. Debt contagion accelerated further in the European periphery. In bond markets, US Treasuries and German bunds strengthened while Spanish and Italian yield spreads widened to record highs. Sovereign concerns about debt-ridden European countries remained elevated even though a bailout program of 85B euro for Ireland has been approved. The rescue program's impacts on easing worries were short-lived and the market soon began speculating Portugal as the next country following Ireland to seek help from EU/IMF. Look at bond markets, yield spreads between peripheral European bonds and German bunds continued to widen. While Greek and Irish spreads were the widest, Spanish and Italian spreads accelerated and reached record highs. A similar picture was seen in CDS spreads and we find it particularly interesting that Italian and Belgium spreads were widening fast.
One of the most important development this week is the acceleration in selloff in Euro across the board. Gold on Euro, XAUEUR managed to ride on the outflow of fund from Euro assets and jumps to new record high of 1070 so far. The current development suggests that XAU/EUR's rally is still in acceleration and should break through 1100 level to 161.8% projection at 1120.8 next.
Dollar index is losing some upside moment after hitting as high as 81.44. But further rise remains in favor for the moment. Current rally from 75.63 should target 100% projection of 75.63 to 79.46 from 77.97 at 81.80. Break will target 83.56 resistance next. On the downside, though, below 80.67 minor support will turn bias neutral and bring retreat. Nevertheless, downside should be contained above 77.97 support and bring another rise.
Daily Pivots: (S1) 129.28; (P) 130.26; (R1) 131.20;
Intraday bias in GBP/JPY remains on the downside for the moment and current decline from 134.19 should target 100% projection of 134.19 to 130.83 from 132.08 at 128.7 first. Break will bring retest of 126.42 low. On the upside, above 130.83 minor resistance will turn bias neutral. But another fall will remain in favor as long as 132.08 resistance holds. However, break of 132.08 will indicate that fall from 134.19 is finished and flip bias back to the upside for retesting this high.
In the bigger picture, the failure below 135.03 resistance dampens the view that GBP/JPY has bottomed and mixes up the outlook again. Nevertheless, the structure of the fall from 163.05 is still corrective looking and hence, the broader outlook doesn't change. That is, price actions from 118.81 are treated as consolidation in the larger down trend from 251.09, with first leg finished at 163.05. While the second leg from 163.05 might continue, strong support should be seen at 118.81 low to contain downside and bring another medium term rally as the third leg. Break of 137.75 resistance will turn outlook bullish for 163.05 and possibly above.
GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
0:30 | AUD | GDP Q/Q Q3 | 0.20% | 0.50% | 1.20% | |
0:30 | AUD | GDP Y/Y Q3 | 2.70% | 3.40% | 3.30% | |
7:00 | GBP | Nationwide House Prices M/M Nov | -0.30% | -0.40% | -0.70% | |
8:30 | CHF | SVME-PMIs Nov | 59.5 | 59.2 | ||
8:55 | EUR | German PMI Manufacturing Nov F | 58.9 | 58.9 | ||
9:00 | EUR | Eurozone PMI Manufacturing Nov F | 55.5 | 55.5 | ||
9:30 | GBP | PMI Manufacturing Nov | 54.7 | 54.9 | ||
12:30 | USD | Challenger Job Cuts Y/Y Nov | -- | -31.80% | ||
13:15 | USD | ADP Employment Change Nov | 65K | 43K | ||
13:30 | USD | Non-Farm Productivity Q3 F | 2.30% | 1.90% | ||
13:30 | USD | Unit Labor Costs Q3 F | -0.20% | -0.10% | ||
15:00 | USD | ISM Manufacturing Nov | 56.5 | 56.9 | ||
15:00 | USD | ISM Prices Paid Nov | 71 | 71 | ||
15:00 | USD | Construction Spending M/M Oct | -0.40% | 0.50% | ||
15:30 | USD | Crude Oil Inventories | -0.8M | 1.0M | ||
19:00 | USD | Fed's Beige Book | -- | -- |
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