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Yen Rises Broadly on Risk Aversion
Yen strengthens broadly in Asia today on concern of slowing global economic growth. China reported narrower than expected trade surplus in May, at $13.1b. Import growth accelerated from 21.8% yoy to 28.4% yoy. However, Export growth slowed sharply from 29.9% yoy to 19.4% yoy. Meanwhile, Bank of Korea raised its key interested for the third time this year, fifth time in less than 12 months, from 3% to 3.25%. The news sent Asian equities lower even though some markets recovered towards the end of the session.
Elsewhere, Euro remains weak against dollar for the moment as the post ECB selloff continued. While Trichet did signal a rate hike in July, the tone on inflation was not as strong as expected. And, markets are seeing some uncertainties on future rate path. Also, there are still uncertainties on how private investors will be involved in the second bailout of Greece, be it voluntary or involuntary.
On the data front, Japan tertiary industry index rose 2.6% mom in April, Domestics CGPI dropped -0.1% mom in May. UK industrial and manufacturing production will be released together with PPI. US import price index will also be featured. But main focus would be in Canadian employment which is expected to show 20k job growth and unemployment rate unchanged at 7.6% in May.
XAU/EUR drew strong support above 55 days EMA and the sharp rebound yesterday argues that retreat from 1087.85 has finished at 1046.41 already. Bias is back to the upside and further rise would possibly be seen to make a near record high towards 1100 level.
GBP/JPY Daily Outlook
Daily Pivots: (S1) 130.95; (P) 131.46; (R1) 132.00; More
GBP/JPY's sharp decline and break of 130.17/47 support zone today confirms that whole fall from 139.99 has resumed. Intraday bias is back on the downside and further fall should be seen towards 61.8% projection of 139.99 to 130.27 from 135.09 at 129.08 first. Break will target 100% projection at 125.37. On the upside, break of 132.05 resistance is needed to signal short term bottoming. Otherwise, outlook will remain bearish in near term.
In the bigger picture, choppy fall from 163.05 is treated as second leg of the consolidation pattern that started at 2009 low of 118.81. The failure to sustain above 55 weeks EMA provided no confirmation of reversal yet. Also, note that sustained break of 130.17 support will confirm that rebound from 122.40 has completed and will open up the case for a new low below 122.40. Nevertheless, even in such case, we'd be watching for reversal signal once again around 118.81 (2009 low). On the upside, break of 135.09 resistance will argue that fall from 139.99 has completed and will turn outlook bearish instead.
Market Overview | Written by ActionForex.com | Jun 10 11 07:42 GMT
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