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Daily Report: Yen Rebounds on Risk Aversion, after Markets Reassess BoJYen, a to a lesser extent dollar, rebounded strongly in Asian session today on risk aversion as sentiments were somewhat weighed down by China economic data. The HSBC manufacturing PMI just improved slightly from 47.6 to 47.8 in September. That's the 11th straight month of contractionary reading and was the longest contraction streak of the reading in history. More PMI data will be released from Eurozone later today in addition to retail sales from UK and Philly Fed survey which could affirm the view of a gloomy global economic outlook. EUR/USD is back trading below 1.3 level for the moment and looks like deeper pull back would be seen in near term. Nonetheless, there is no change in the near term bullish outlook in the common currency in general. |
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| Featured Technical Report | |
GBP/JPY Daily OutlookDaily Pivots: (S1) 126.41; (P) 127.62; (R1) 128.30; More... Despite jumping to 128.82, GBP/JPY faced some resistance from a near term channel and retreated sharply. A short term top is likely in place and bias is turned neutral for some consolidations. Downside of the consolidation is expected to be contained by 124.41 support. But break of 128.82 is needed to confirm rally resumption. Or, we'll expect some more sideway trading first. And, above 128.82 will extend the rise from 118.82 to 133.48 resistance. |
| Special Reports |
BOE Minutes Signaled Members Favored Further EasingThe September BOE minutes unveiled that the MPC members voted unanimously to leave the Bank rate unchanged at 0.5% and the asset purchase program at 375B pound. While policymakers noted that inflation had been coming down more slowly than anticipated, the central bank should not be refrained from expanding the size of asset purchases as the pace of economic recovery remained subdued. We retain the view that the BOE would increase the quantity of program by another 50B pound in as soon as next month. BOJ Speeds Up Easing, Expands Asset Purchases After ECB And FEDThe BOJ accelerated the pace of monetary easing by doubling the size of asset purchases, in addition to leaving the uncollateralized overnight call rate at around 0 to 0.1%. Slowdown in global economic growth and recent tensions between China and Japan over territorial dispute are expected to delay Japan’s recovery as exports growth would be affected. According to the central bank, the move is expected to 'help ensure that Japan's economy resumes a sustainable growth path with price stability'. The move came in earlier than market expectations, sending Japanese yen lower, and Nikkei stock index and cash bonds higher. |
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Orders and Options Watch | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Session: Orders and Options WatchEUR: Despite staging a rebound from 1.2994 yesterday, the single currency faltered just below indicated offers at 1.3080-85 and renewed selling interests emerged this morning around 1.3055-60, price then dropped on risk aversion after weaker-than-expected China manufacturing output data, bids at 1.2990-00 and stops below there were cleared, price quickly fell to 1.2941-42 before recovering. At the moment, offers are still noted at 1.3000-10 and also from 1.3030 up to 1.3050 with stops building up above 1.3060 and 1.3090-00. On the downside, bids from Asian and Middle East names are tipped at 1.2940-45 and also in the region of 1.2900-20, followed by mixture of bids and stops in good size further out at 1.2850-60. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Trade Idea: GBP/USD – Sell at 1.6210Despite yesterday’s rebound from 1.6185, price faltered well below the Ichimoku cloud and dropped again this morning (unfortunately we missed our short entry), current breach of said support adds credence to our view that a temporary top has been formed at 1.6273 and bearishness remains for retracement of recent upmove to previous resistance at 1.6132 and possibly to 1.6100, however, reckon previous support at 1.6071 would hold from here, bring rebound later. Trade Idea: EUR/USD – Turn short at 1.3000Despite yesterday’s rebound from 1.2994, as renewed selling interests continued to emerge just below the Ichimoku cloud bottom, this morning’s selloff below said support shifts risk to downside and signal near term decline from 1.3172 top may bring a stronger retracement of recent upmove to 1.2900-05, however, reckon previous support at 1.2859 would hold from here due to near term oversold condition and bring rebound later. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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