News from Eurozone continues to drive markets up and down. This time,
sentiments were hurt by reports that France and Germany are clearly
still having diverged stance on the role of ECB in solving the debt
crisis. France is still pushing the proposal to have the EFSF turned
into a bank licensed with ECB for leveraging the capacity. But Germany
maintained its opposition to this idea. And European officials are
playing down the expectation for this weekend's EU summit. German
Chancellor Angela Merkel stated that 'it won't be the final point
where we regain the confidence of others, but it will be a stepping
stone, a marker on the road' and 'all of the sins of omission and
commission of the past cannot be undone by waving a magic wand'. EC
President Jose Barroso also said that 'even if we do arrive at a
political decision on everything that's on the table, which I hope we
will, that doesn't necessarily mean that there will not then have to
be an implementing phase'.
The US monthly Beige Book covering the period on the before October 7
indicated that many districts described the pace of growth as
'modest' or 'slight' and there was higher uncertainty for business
decision making, although economic activities continued to expand.
Consumer spending improved 'slightly' in most districts as driven by
auto sales and tourism. Business spending also increased due to the
rise in expenditure in construction and mining equipment and auto
dealer inventories. Yet, restraints in hiring and capital spending
remained. While the October report may be slightly better than the
previous one, economic outlook on the US remained uncertain and is
highly determined by global factors.
It's reported that Japan will set up a task force to tackle the
problems caused by yen's persistent strength. The task force will
involve vice cabinet ministers and a BoJ deputy governor. The fund
shifted to state-run Japan Bank for International Cooperation to help
exporters would be boosted by 25% from JPY 8T to JPY 10T. In addition,
there was also call for BoJ to use "bold" monetary policy in close
coordination with the government to manage the yen.
On the data front, UK retail sales will be a main feature in European
session, together with Swiss ZEW expectations. From US, initial jobless
claims are expected to remain elevated at 400k. Existing home sales is
expected to drop to 4.90m in September, leading indicator rose 0.2%.
Philly Fed survey is expected to improve to -9.5 in October.
EUR/JPY Daily Outlook
Daily Pivots: (S1) 105.15; (P) 105.84; (R1) 106.36;
At this point, we're still favoring the case that EUR/JPY's rebound
from 100.74 is finished at 107.67 already. Below 104.77 will extend the
fall from 107.67 to retest 100.74 low first. On the upside, though,
above 107.67 will invalidate this immediate bearish view and bring
another rise. But upside should be limited by 38.2% retracement of
123.31 to 100.74 at 109.36 to finish off the rebound.
In the bigger picture, whole down trend from 2008 high of 169.96 is
still in progress and is building up downside momentum again. Sustained
trading below 100 psychological level should pave the way to 100%
projection of 139.21 to 105.42 from 123.31 at 89.52, which is close to
88.96 all time low. On the upside, break of 111.93 resistance is needed
to be the first signal of medium term reversal. Otherwise, we'll stay
bearish.
Economic Indicators Update
MT | Ccy | Events | Actual | Consensus | Previous | Revised |
---|---|---|---|---|---|---|
0:30 | AUD | NAB Business Confidence Q3 | -4 | 6 | 5 | |
6:00 | EUR | German PPI M/M Sep | 0.30% | 0.20% | -0.30% | |
6:00 | EUR | German PPI Y/Y Sep | 5.50% | 5.50% | ||
6:00 | CHF | Trade Balance (CHF) Sep | 1.37B | 0.81B | ||
8:30 | GBP | Retail Sales M/M Sep | 0.20% | -0.10% | ||
8:30 | GBP | Retail Sales Y/Y Sep | 0.60% | -0.10% | ||
8:30 | GBP | Retail Sales w/Auto Fuel M/M Sep | 0.00% | -0.20% | ||
8:30 | GBP | Retail Sales w/Auto Fuel Y/Y Sep | 0.60% | 0.00% | ||
9:00 | CHF | ZEW Survey (Expectations) Oct | -75.7 | |||
12:30 | USD | Initial Jobless Claims | 400K | 404K | ||
12:30 | CAD | Wholesale Sales M/M Aug | 0.40% | 0.80% | ||
14:00 | EUR | Eurozone Consumer Confidence Oct A | -20.1 | -19.1 | ||
14:00 | USD | Existing Home Sales Sep | 4.90M | 5.03M | ||
14:00 | USD | Leading Indicators Sep | 0.20% | 0.30% | ||
14:00 | USD | Philly Fed Survey Oct | -9.5 | -17.5 | ||
14:30 | USD | Natural Gas Storage | 111B | 112B |
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