After hitting a fresh record low of 75.94 last Friday, the greenback
finally rebounded this morning to a 1 ½ week high of 77.23 on active
buying by an U.S. name (on behalf of a Japanese institutional investor),
However, the currency pair ran into heavy offers by exporters and has
retreated back around 76.70/75 due to lack of real action from Japanese
officials. Although Ministry of Finance and even Japan's Prime Minister
both came out and warned about the one-sided move in Japanese yen, as
comments were pretty much the same as before, i.e. excessive Yen rise
has a negative impact on the economy and the government is ready to take
decisive action against any speculative and excessive moves if
necessary, not much effect on the FX market, Finance Minister Noda added
that it is too early to reach a conclusion on the BOJ/MOF intervention
earlier this month (4 Aug), however, traders need something more solid
in order to stop them from buying the Japanese yen. Over the weekend, a
report from Nikkei business daily (Nikkei Shimbun) suggested that the
Japanese government was considering intervention plus a comprehensive
set of policy measures to stop the rise in yen which is dampening the
nation's economy. The article indicated once Prime Minister Kan steps
down, new measures will be implemented, studied easing measures include
providing support to make high value-added product, expanding low
interest loans to small and mid-size businesses and third supplementary
budget. Another factor pushing the yen higher was risk aversion with
weakness in global equity markets last Friday (Hang Seng and Nikkei 225
are still in red zone). Although some traders expect the USD/JPY to
rally like the USD/CHF after the government announces new set of easing
policy and intervenes the currency market again this week, if the
intervention by BOJ/MOF remains unilateral, impact on the currency pair
will still be short-lived. At the moment, bids from importers and U.S.
banks are reported at 76.25-30 and 76.00 whilst offers from exporters
remain from 77.00 all the way up to 77.50.
Although aussie rose in tandem with euro last Friday to a high of
1.0482, the currency pair met good selling by an Asian fund and
pressured AUD/USD back to around today's low of 1.0363. Comments from
Australian Treasurer Wayne Swan also seen undermining aussie as he said
the high Australian dollar was placing tremendous pressure on trade
exposed industries. Risk aversion led selling in AUD/JPY also drag
aussie lower today with offers now reported in the region of 1.0440-60
(stops above 1.0475-85 and further out at 1.0520) whilst bids (also in
AUD/NZD and AUD/JPY) from Japanese marginal traders, European names and
real money investors are tipped at 1.0330 and 1.0300.
Against the European currencies, euro retreated from Friday's high of
1.4453 and locked in narrow range in part due to contradict comments
from EU officials. ECB's governing member Nowotny was quoted in an
Austrian magazine that he is fearing EMU states will not adopt EFSF
revisions by end of October. On the other hand, German Finance Minister
Schaeuble gave more upbeat remarks as he said the euro remains a stable
currency and market correction on the downside has been exaggerated,
there is no reason for lasting concerns. He also comments on German
economy, indicating there is no sign of a recession and the country's
labor market is very positive. This week's focus will be on peripheral
yields in particular Greece, countries including Netherlands and Austria
insisted on receiving collateral against their bailout loans. Once
again the Swiss newspaper, SonntagsZeitung claimed that the Swiss
government expects the Swiss National Bank to set the target for EUR/CHF
peg at 1.2000 or above. The report also suggested that there are
increasing pressure on SNB to take further action to weaken the Swiss
franc.
Despite rising to a 3 1/s month high of 1.6618 last Friday (on the
release of better-than-expected UK public finance data at -2.0 billion
GBP), cable then retreated and gave back most of Friday's gain on
speculation that Bank of England may expand the QEP. No data is due
today with a light orders book, bids from UK clearer are reported at
1.6430-40 whilst offers are noted quite far at 1.6540-50.
USD/JPY Daily Outlook
Daily Pivots: (S1) 75.99; (P) 76.48; (R1) 77.02;
The strong recovery today and break of 76.96 minor resistance
indicates that a temporary low is formed at 75.94 and intraday bias is
turned neutral. Some consolidations would be seen above 75.94 first and
stronger recovery might be seen. But after all, we'll stay bearish as
long as 80.23 and expect more downside ahead. Break of 75.94 will target
100% projection of 81.46 to 76.28 from 80.23 at 75.05 next.
In the bigger picture, USD/JPY is still staying well inside the
falling channel that started back in 2007 at 124.13. There is no
indication of trend reversal yet even though medium term downside
momentum is diminishing with bullish convergence condition in weekly
MACD. Such down trend is still in favor to continue to 70 psychological
level. In any case, break of 80.23 resistance is first needed to
indicate completion of fall from 85.51. Secondly, break of 85.51 is
needed to be the first signal of medium term reversal. Otherwise, we'll
stay cautiously bearish in the pair.
No comments:
Post a Comment