USD Stabilizes Ahead of IP & Flattening Capacity Util

German manufacturing PMI disappointed but service sector expanded; Eurozone PMIs slightly better and CPI slows; Japan's LDP could form a government. Focus turns to CPI, Markit PMI, capacity utilization and Industrial production. The latest on our Wednesday Premium Insights, 1 of 2 EURJPY longs hit all targets (other unfilled), 1 of 2 EURUSD longs hit all targets (other awaits final target).

The buck is stronger across the board in the ongoing session. European equity indices are trading nearly unchanged and USD leads while NZD lags.

The common currency weakened after German manufacturing PMI disappointed as it declined in December to 46.3 from previous 46.8 while analysts anticipated a rise to 47.1. However, the service sector expanded at the fastest pace in nine months as the PMI rose to 52.1 from previous, upwardly revised 49.7.

Eurozone data also showed that manufacturing PMI rose marginally to 46.3 from 46.2 and services PMI increased to 47.8 from 46.7. Meanwhile, retail inflation slowed in November to 1.4% from 1.5% but core inflation was steady at 2.2% y/y.

JPY is choppy ahead of Sunday's election. Current forecasts suggest that Abe's LDP could get enough votes to be able to form a government on their own. EURJPY rally stalled just shy of 110 barrier and USDJPY so far was unable to break above 84.00.

A busy US session kicks off at 8:30 am ET with November CPI that is expected to slow to 1.9% from 2.2% while the core figure is seen steady at 2.0% y/y.

Markit manufacturing PMI will flash on screens at 9:00 am and it is anticipated to slow slightly in December to 52.6 from 52.8. November capacity utilization and industrial production are due 15 minutes later and they are seen higher at 77.9% and 0.3% respectively. Capacity utilization chart shows a series of lower highs and constant failure to pull back off the 200-DMA.

1 of 2 EURJPY hit all targets (other unfilled), 1 of 2 EURUSD hit all targets (other awaits final target). 1 of 2 USDJPY longs hit all targets (awaits final target at 84.00) Both AUDUSD and both GBPUSD in progress. Silver stopped out, while US crude oil remain in progress. Full access to these trades is found here: http://ashraflaidi.com/products/sub01/access/?a=700 Non subscribers can join here http://ashraflaidi.com/products/sub01