Dollar recovers mildly today but stays weak for the week, next to Sterling. Focus is turning to US president-elect Donald Trump’s first post election press conference tomorrow. Markets are looking for clues on whether Trump is prepared to deliver his election promises and push expansive fiscal policy after his inauguration on January 20. While the greenback weakens this week, it’s still holding on to key near term support levels. Thus, the pull back is still seen as a correction technically. Meanwhile, markets will also pay close attention to whether DJIA would power through 20000 handle, or bounce off from there. Meanwhile, Sterling remains on the weakest major currencies on Brexit worries.
On the data front, Canada building permits dropped -0.1% mom in November versus expectation of -5.0% mom. Housing starts rose to 208k in December, above expectation of 191.3k. Swiss unemployment rate was unchanged at 3.3% in December. UK BRC retail sales rose 1.0% yoy in December. Japan consumer confidence rose to 41.3 in December. Australia retail sales rose 0.2% mom in November.
Released earlier today, headline CPI in China eased mildly to 2.1%yoy in December, from 2.3% a month ago. The moderation was mainly driven by food price which decelerated to 2.4% yoy from November’s 4% yoy. Non-food inflation, however, picked up to 2% yoy from 1.8% yoy previously, resulting in steady core inflation (excluding food and energy) of 1.9% yoy. PPI soared to 5.5% yoy in December, from 3.3% yoy a month ago. The broadly based improvement marked the fastest increase in over 5 years, thanks to renminbi weakness and higher commodity prices.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 115.61; (P) 116.39; (R1) 117.72; More…
USD/JPY’s consolidation from 118.65 is still in progress and intraday bias stays neutral. Near term outlook remains bullish with 114.76 intact and further rise is expected. Above 118.65 will extend the whole rise from 98.97 to 125.85 key resistance next. However, sustained break of 114.76 will confirm short term topping and bring deeper pull back to 55 day EMA (now at 113.00) and below.
In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.05 and below will extend the consolidation with another falling leg before up trend resumption.
Economic Indicators Update
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 00:01 | GBP | BRC Retail Sales Monitor Y/Y Dec | 1.00% | 0.60% | ||
| 00:30 | AUD | Retail Sales M/M Nov | 0.20% | 0.40% | 0.50% | |
| 01:30 | CNY | CPI Y/Y Dec | 2.10% | 2.20% | 2.30% | |
| 01:30 | CNY | PPI Y/Y Dec | 5.50% | 4.60% | 3.30% | |
| 05:00 | JPY | Consumer Confidence Dec | 41.3 | 41.3 | 40.9 | |
| 06:45 | CHF | Unemployment Rate Dec | 3.30% | 3.30% | 3.30% | |
| 13:15 | CAD | Housing Starts Dec | 207K | 191.3k | 184.0k | 187K |
| 13:30 | CAD | Building Permits M/M Nov | -0.10% | -5.00% | 8.70% | 10.50% |
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