Intraday Market Thoughts

Yen Slump Continues, Stocks Touch 6 Week Low

by Adam Button
Oct 22, 2012 23:41

USD/JPY rose for the eighth consecutive day on Monday, hitting the highest levels since July. The euro was the best performer while CAD was surprisingly resilient. The Asia-Pacific calendar is light but reports continue to surface about BOJ easing next week and the US Presidential debates conclude. More on the latest Premium Insights is found below.

USD/JPY rose to within a few pips of 80.00 and EUR/JPY rose near 104.50 as the relentless yen exodus continued after yesterdays soft export numbers. The worst levels for the yen came after Toyota made an offer to take over a US manufacturer in a deal thats worth less the $1 billion but continues then trend of Japanese M&A outflows.

Gold bounces off its 55-DMA (testing for first time in 2 months), while oil attempts to hold above its 200-WMA for the 4th consecutive week. Dow-30 trades below its 55-DMA for the 1st time since July. Look out for Wednesdays release of Oct IFO survey from Germany, whose anticipated improvement will likely boost EUR pairs. The index has a strong record in triggering EUR moves on upside surprises.

Even a round of risk aversion in the stock market could generate the normal flight to the yen. The S&P 500 touched the lowest since early September before rebounding to close unchanged.

The market is convinced the BOJ will act next week after another report, this time from Reuters, that said the BOJ is leaning toward further easing at the Oct 30 meeting. Another 10 trillion yen of QE is possible.

The euro rallied to the highest against the pound since April but was rangebound near 1.3060 against the dollar. Reports that Greece will get a two-year extension to complete its loan goals boosted EUR/USD to 1.3080 but it fell back when a German lawmaker said Greece is unlikely to receive an official haircut or more bailout funds.EURGBP tests its 200-DMA for the first time since 11/11/2011.

The latest Premium Insights section has details on multi-week breakout and the ensuing run-up in EURGBP halfway through the multi-year channel. Both EURUSD Premium trades are in progress. CADJPY hit all targets and so did 1 of 2 GBPUSD, with the other in progress. 1 of 2 EURJPY remaining in progress after missing the final target of 104.20 by 6 pips, while the other remaining unfilled (missed entry by 7 pips). USDJPY and AUDUSD were stopped out. EURGBP in progress. 1 of 2 gold in progress, the other stopped out and silver remaining in progress. US crude oil remains in progress. For direct access to these trades and the technical rationale to that featured EURGBP play and charts, click here: NONsubscribers can join here:



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