Last week saw US stocks mixed and Gold trading lower, taking the opposite side of the rising DXY index. In the FX markets, the USD found some strength sending the majors against the USD, obtained from positive economic dat a results, sending the majors against USD down during the last NY session. This week sees another round of important data for the majors including the ECB who are due to take the stage with their economic forecasts alongside focus on the US and possible tapering in the month ahead. Central banks such as the ECB, RBA and BOE will also release Interest Rate Decisions and offer insight into current domestic economic conditions with their Monetary Policy Statements.
GPBUSD
GU started the week opening at 161610 moving to a high of 162072 during the start of the Asia session, which met with strong rejection taking price down to a low of 161349 within the next 3 hourly candles. From here a new base was created, prompting a continuation with the attempt to form a bearish marubozu, but instead formed a bearish candle (high of 161431 and low of 160364). Rejecting at the low, GU then closed the candle higher at 160949. From here, GU then re-grouped at current levels forming another lower base around 160804, leading to a decline to a low of 160234. Price hovered in this area first before moving slightly higher, meeting once again with the bottom of the previous higher base on two occasions, creating a double top at 160681 on the 31st October. Following through from an inverted pinbar printed at the top, GU then broke lower through the 76% level (160532) in the form of a bearish marubozu. From here, price dropped even lower to DP (160326), aligning once again with the previous support level. The 1st November saw price create a bear move upon the formation of a bearish marubozu (high of 160389 and low of 160083), leading the way to a descent to DS1 and to target 1 at 160004. Price paused momentarily before continuing on in the form of another bearish marubozu (high of 160062 and low of 159520)indicating that the move was still in play, and a continuation lower was the next step. This saw GU then reach the next target at DS2 (159709). However this level still did not mark the completion of the move, as price once again paused for 2 candles before attempts to create support followed with a dip to 159320 (around DS3 and T3). Failing to hold, another surge of selling occurred taking GU to close the NY session just under this target at 159211.
The week commencing the 21st October, saw GU contained within a range between 162255 – 161143 following its decline from the double top formed on the 23rd October. The 4 hour, we can see the same pattern but in reverse, with GU commencing a decline from the 3rd October and finding support around 159578 (MP), to reversing back north on the 17th October, reaching a high of 162244 on the 18th October, in line with the previous peak. This also shows price suspended near the top region of price movement on both the 1 hour and 4 hour while the daily still reflects GU locked in a bull trend from the 10th July with price not making higher highs, but rather settling back in line with the previous peak formed at the beginning of October. The descent initiated on the 24th October shows price replicating the ascension from the 22nd October, with a complete fill of the whole bull move to the point of origin. This then saw price being locked within range following the rejection of the mid 162 area which subsequently led to a fall of nearly 100 pips the very next day, breaking the bullish momentum for the moment.
When looking at current price on the 4 hour chart we can see price has now made a complete retracement back to the previous base, completing a double top 162560, with price now aligned with the bottom at 159106. With price current poised around DP (159637), movement does seem to favour the downside in the more immediate time frames. Only a move back above 160 would place GU within a bullish view. However, a break below 159 will confirm further movement south, with price targeting the 158 (DS2). Looking at GU on the daily we can see the bull move instigated from the 9th June from a low of 148648 now reach the top base from the start of the decline on the 3rd January, having surpassed the 3 peaks and breached the 157 price level as it made its way back towards 160 and higher. This highly reflects the shift in sentiment driven by the output of positive economic data that has seen support the progress of the UK recovery since the reign of Mark Carney as the new BOE Governor.
Relating this to price movement, it does place GU within the context of a bullish view on the longer time frames and a breach over 162568 will see GU continue the bull run higher. However, in the interim, this does not hold the same view. When observing price movement on the 1 hour we can see GU in a clear decline from 162560 on the 23rd October once having broken lower through 161208 which confirmed the direction of price movement, which saw the steady decline back between 160130 - 160454, where price paused before resuming lower on the 1st November towards 159, reaching a low of 159106. Currently price sits just under DP and a break below 159405 followed by a break below 159081 will see GU test and attempt to break the 159 support level in an effort to reach the lower targets positioned in the 158 area. Given that the higher time frames are highly suggestive of a different perspective of price movement, I would expect that any move lower towards these new lows will be met with strong buying interest, especially if support from fundamentals remain in place. Confirmation will be reliant on a re-test and rejection of the lows which should push the pair back towards 160 with the highs back in view. However, this may take time, given the global uncertainty that looms and the highly reactive market which has seen price react impulsively to data first, then to the current market environment second.
So this now bring us to the factors are responsible for the move. Firstly the US and the ramifications of recent events that have placed the US in a position of uncertainty as market participants opted against backing the US in light of rating downgrades, the recent fiscal crisis, government shutdown, weaker economic data figures i.e. NFP and of course the September tapering that did not go ahead. The lack of certainty behind the US recovery, has been the strongest catalyst more recently, responsible for the aggressive bullish moves against the USD, witnessed since the FOMC announced that they would not commence tapering in September as widely expected. However, will this change now that "tapering" has been brought back to the table? What will happen if the US Fed do actually commence tapering in December as some are already speculating? Will it re-ignite a backing for the USD? For certain, the movements in the US will play a key role in influencing direction as already seen with the overbearing weakness in the USD that fuelled the majors to these new highs not too long ago. For GU, this was just an added incentive on the back of stronger economic data such as the progressive improvement in the Claimant Change, reduction in public sector net borrowing (€9.368B vs. €10.808B), increase in Mortgage Approvals (43k vs. 38.6k) and improvements in retail sales and the GDP figures which showed an improvement from 0.8% from 0.7%.
Looking at the UK economy, the reign of new BOE Governor Mark Carney, has been well received as positive changes in the UK economy align with his arrival and show support to the UK recovery. The optimism behind the recovery has even brought speculation in regards to the nation actually meeting their targets ahead of their intended timeframe. The most recent minutes released by the BOE, reflected improvements in employment, household and businesses which was further supported by Governor Carney in one of his latter press conference speeches, he stated that the improvements of the economy over the last two quarters has helped in positioning the UK towards the "top end" of major economies. This does indicate not only the capability for the UK to meet its goals but also that external environmental factors have not been a major inhibitor in its recent progression. As such, this also strengthens the idea that the UK will consider increasing rates and adjusting stimulus in the near future. The conservative approach that the BOE has adopted in creating reforms to reshape their economy has also seen the UK adhere strictly to its own indicators as performance measures, rather than market expectancy or reliance of preliminary data to re-adjust their decision.
This is particularly seen with last figures, which once again saw the UK make no changes to the rate or asset purchasing program, affirming the UK's stance in holding the withdrawal of stimulus in light of stronger evidence of economic growth. This is, along with the 7% unemployment target remaining intact as the major indicator. Within the August forecast, a modest improvement was expected across both consumer borrowing and income growth despite more recent positive figures. In relation to the concerns regarding a "housing bubble" over the "Help to Buy" program, an initiative to assist with housing purchasing, it has been stated that the FPC have tools in place to address this, should the situation require action. However in a nutshell, according to Governor Carney " the UK economy is still just coming back to its level in 2008, growth, while it’s improved, while it’s strengthened, is still relatively modest relative to historic recovery". In regards to recent economic data, The October UK manufacturing PMI came in lower at 56.0 from 56.3 in September, however with production indices still on track combined with the recent 0.8% GDP growth recorded Q3 and of course the continuous improvements in employment, this lends favourably to the Pound. This week sees the BOE announce the new Interest Rate Decision and Asset Purchasing Facility which currently still stands at £375.
In regards to where GU sits on the charts. Having fallen back to the 159 price level and GU opening the week with limited movement between 23% and DP, it is highly suggestive of uncertainty which may be due to economic data due for the Pound later this week. If following previous event related movement, a positive reaction will see GU make its way back to 160. A break above 160130 will indicate bullish momentum that should take GU higher towards the 161 price level. However a continuation of this decline will be confirmed by a break of 159081 with targets towards 158.
EURUSD
EU opened the week at 138085 continuing within the consolidation at the highs from the previous NY session. This consolidation continued into the first day of trading for the new week before EU finally broke out topside (low of 137550 and high of 138130), however was immediately met with sellers upon the break of 138 to 138110 in the next candle which instigated the start of the reversal as price now found its direction upon the break lower from the consolidation period and follow through with the next candle to a low of 137390. This then saw EU range at current levels before attempting another break higher with a move back to 137677 and pause here throughout the 30th October until a break lower from 137814 tested a break through the 137 price level, reaching 136952, which again saw the candle close higher at 137266. This then saw price maintain at current levels (around 137302), aligning once again with the previous range before finally breaking lower to the 76% level (136996) on the 31st October. Price hovered here momentarily before a surge of selling set in upon the break of the 76% level which saw price create a 3 bearish candle move to 136372 (38%), where price paused before resuming with a steady decline, breaking the 23% level ( 136134) followed by a continued breach through the previous day low at 135743. This then saw price take a breath, before continuing in its descend , taking EU to DS1 (13526), closing the NY session at a final price of 134849.
When looking at EU more closely, we can see price locked in a tight consolidation from the 17th October moving into the next week which saw EU breakout over 100 pips in a bullish 3 candle move from 136720 to 137850 on the 22nd October. From here we can see an attempt to sell from a double top formed on the 23rd October upon the approach to the 138 price level at 137922. Support was then found at 137410, springing the pair back north towards 138. However, the consolidation just under 138, reflects the hesitation in breaking above this level which it only managed to do on the 24th October but not with the same excessive momentum propelling EU from the upper 136 region. Moving towards the 138 region, we saw price movement reflect uncertainty as the pair hovered at highs, only managing to break the 76% level (138104) to reach resistance at 138247 around DR1. There are at least 3 notable attempts to short from 138 that rejected , keeping price sustained in this consolidation just under the 76% with the final rejection at DR1 finally succeeding as the session grew to a close. This saw price break back below DP (137927) to finding support at the 23% level (137782), bring EU back to DP with a final close around the 61% at 138012.
Moving to the daily, we can see the break of 134033 on the 18th September, paving the way for a bull run once it broke higher to 135415 on the 18th September. This saw price maintain above the mid 136 point, finding support at 134628, propelling another installment to the topside. The weekly also showed price breaking slightly above the previous peak top of 137105 and just below DR3 at 138516. This is combined with a small tick upward in the EURUSD strength meter, indicating marginal strength against the USD on the longer time frames. However, this was not reflective on the 1 hour, which showed the USD stronger than the Euro. On observation, we have seen the currency supported by the enthusiasm of the market participants as the Euro embarks on a clear ascension since breaking out from a low of 131041 on the 6th September. This is in high contrast to the bearish pessimism surrounding the Euro, that recently saw price move in an extended decline from a top of 149394 on the 4th September 2011 that from rejection from a double top created at 142465 (9th April 2011 and 30th October 2011) leading to an extended decline to a low of 120419 with a close of 123212 on the 22nd July 2012. Now that EU has rejected the 138 region, we have seen EU drop nearly 300 pips since last week as developments or non-developments in the Euro Zone start to take focus and the reality of the "Euro situation" sets in.
On the other side of the picture, to truly understand the situation regarding the Euro and its current position, let us regress back to the time that we saw the massive sell off in the Euro and its correlation to the Euro Crisis. Firstly, much of the waning pessimism regarding the Euro Zone was not really to do with European governments as such, but rather movements in the private sector in the areas of borrowing and interest rates. This consequently led to the emerging of recessions in Spain and Italy who then employed caution in spending in favour of debt repayment . Along with this, a surge in government borrowing amid the damage to European economies in the 2008 GFC also developed. The ramification of this financial crisis saw a rise in unemployment within European countries, reaching an unemployment rate over 20% at one time, while also affecting export markets. Looking at this from an investment perspective, panic erupted in the markets as the reality of a financial collapse due to economic stagnation set in. When relating this to the charts at the time, it can be seen that there was no relief for the Euro which saw traders and investors take every opportunity to sell the Euro at every retracement higher as positions were banked. Recalling back, this was rather a fascinating move, which saw economic data do very little to change the overbearing pessimism in the market even with the print of a positive figure.
Moving to the present, what I have just outlined, is what the Euro Zone has been working to overcome in an effort to reach new milestones for the major economy. There has been actions taken by the ECB in an effort to achieve their targets in relation to objectives such as price, structural and financial stability which also includes the introduction of the Banking Union as credit remains a priority. However, there are now other concerns that now sit on the table. The most notable being that Europe may be looking at following Japan on to a path of deflation with the possibility that the ECB may now have to consider cutting Interest Rates. To date, the ECB have left rates on hold at 0.5%, having already reduced the rate from 2.5% previously. With a rate that is already close to 0%, the pending question is, "will the ECB now do what they have to do in an effort to avoid a deflation scenario?" and will this be the next move made by the ECB? With Economic forecasts due this week, this may provide some insight in the ECB view of the economy and their actions.
No doubt the improvements in the Euro zone has seen a turn towards an economic recovery from facing the verge of a financial collapse a few years ago, but even still, we are still far from rejoicing in victory and even in its progression, the improvement to date is still not reflective of a smooth or rapid transition, as the Euro zone continue to face and battle the many internal challenges associated with the reconstruct of its major economy.
However looking at the Euro specifically, among other things, a high Euro impacts its competitiveness with exportation which sits amid the greater issue of a global exportation slowdown, which has seen the World Trade Organisation reduce its forecast for world economic growth to 2.5% and the IMF to 2.9%.
Should the Euro rebound from the lows and appreciate further, this may reignite prevailing concerns over its effect on their recovery. Already, French Minister Arnaud Montebourg has been noted in urging the ECB to weaken the Euro, given the ramifications of its current travel to higher levels. In a recent comment he has stated that if the Euro depreciated by 10%, it would increase national wealth by 1.2% and create 120,000 jobs while also reducing the deficit by 12b euros. This has also been supported by other European officials also voicing their concerns. However on the other side of the coin, the appreciating Euro has also had some positive effects in regards to a macro economic perspective, which has seen the economy shift towards consumption with less reliance on exportation. According to the US Treasury Quarterly Currency Manipulation Report, European trade surpluses have become too large to sustain especially in light of European countries suffering from high unemployment. This then does lend favourably to the stronger Euro which has helped alleviate the focus on "outside demand" to re-adjusting focus on the internal demand within Europe. But even so, what does this mean for the Euro exactly? I don’t really think there is certainty around this. Currently, the Euro remains driven by events and speculation into the movements of the ECB in addressing the issues surrounding the Euro Zone recovery. In a market where "global uncertainty" looms, a heavy reliance will be placed on the fundamentals and movements from our political and financial leaders, to provide not only assurance but direction as to where we are going. Like all recovering economies, economic data still remains as the key in determining next steps while providing an indication of progression. Hence while news and events have always propelled movement, it is even more so the case now.
AUDUSD
AU opened the week at 95827, moving to high of 96222, which met with rejection taking AU to a low of 95554. This then saw AU maintain at current levels around 95723 before following through with a bearish break out candle (high of 95744 and low of 95347) Price once again formed a small base around 95308 before resuming with a steady decline to a low of 94582 where support was found, reversing direction back to 195156 which upon the breach of 95 saw sellers step in taking price back under 95 to 94840. However, this then saw price attempt another move north meeting once again with 95 as a resistance level which upon this attempt higher, saw AU sell off to a low of 94406. Still reluctant to complete a move lower, price then maintained around the 23% ( 94683), looking for direction, before a bullish break out candle formed (low of 94657 and 950007) taking AU back to the 76% level (95075) where price then attempted to reject once again, finding support upon a bullish pinbar formed around DP (94760). This gave AU the push i needed to make its move back to the upside, which saw price break through the 76% level reaching a high of 95251 on the 31st October.
However replaying the same move, price once again met with rejection at 95207, sending price down back to DP where an attempt to find support at DP failed, sending price straight through the 23% (94683) to a new low at 94521. Price then continued to saw at the lows before buyers entered upon an attempt to continue lower, forming a bullish pinbar. This then saw price move back up above DP to find resistance at the 50% level (94879). Shortly after, one last attempt to break higher was made, reaching 94840, before turning into an inverted pinbar as sellers pushed the price back down. This paved the way for another decline, which upon breaking the previous day low of 94507 (former support), saw AU make a new low at 94210 with price closing the NY session at 94350.
When looking at AU on the 4 hour chart, the bearish engulfing pattern formed on the 23rd October shows a rejection of the high of 97574 and then again a rejection of the pullback to 96700, placing AU within a bearish trend in the immediate time frames. The rejection of 96113 (76%) also saw AU capped from further movement higher and a re-test of 95842 with a low of 95715 brought AU back within range still capped at the 96113 level (high of 96222), which rejected sending AU lower, with a confirmation of continuation upon the break of 95720. A move back to 95156 created a double top which rejected on the 31st October sending AU back a low of 94415 before a pull back to 94890 and then further to a low of 94210. AU commenced this week re-testing the low in early Asia which met with strong rejection, producing a very notable bullish pinbar that has pushed price back over 95, where it has been ranging throughout most of the NY session. With the RBA on schedule for tomorrow, it is possible that AU is preparing for a move higher in response to no change to the rate. The daily chart does show the first sign of a pullback and a positive market reaction tomorrow could see AU re-test the 96 price level once again. A bullish continuation on this pair would prevail upon a break above 95990, which may see AU re-test 97 while trying to push forward from there. This is backed by the 1 hour chart which also sees price sitting within the top end of its recent range which, if price breaks above 95145, will see AU attempt to head north.
In regards to economic data, a fairly consistent flow has kept an optimistic view of the AUD and the idea that the RBA will begin looking at increasing interest rates in the next few months. Although, its transition into positive territory has also been backed by movements in the commodities markets which despite movements elsewhere, has not really faltered in demand for iron-ore, Australia's main export. Also in its favour has been stronger figures out of China such as the stronger PMI figure released by China towards the end of last week, which came in at 51.4 vs. 51.2, adding a little lift to the AUD, before the decline of the majors against the USD at the end of the week. Overall, we are still seeing an slow expansion across some sectors but a general improvement, which for those sectors at the bottom tier of performance, has been offset by better performance in other areas such as housing, which is to be expected given the current position of the Interest Rate. More recently, the treasury increased the debt ceiling from $A300b to $A500b on the 31st October.
In a recent speech given at the CFA Australia Investment Conference, it was highlighted that Australia has been keeping very close to its inflation targets and unlike other advanced countries, has been able to maintain an efficient banking system, while also experiencing an "investment boom" which has seen business investment reach over 18% of GDP, the highest within the last 50 years. Compared to other advanced countries, this places Australia in a much stronger position even despite the fact that mining investment has declined over the year as Australia moves away from the mining boom. When looking at the sentiment of domestic businesses, it has been noted that hesitation regarding expansion and investment still prevail as caution remains in light of global uncertainty, the high exchange rate and other factors both domestic and otherwise. Essentially, this means that the low interest rate although it has demonstrated its effectiveness in stimulating the economy in some areas, has not fully been maximised by all sectors, which in turn has contributed to the varied pace of the trends within the different sectors.
Looking at where this stands with the domestic currency, firstly, as mentioned with the Euro, the appreciating currency has most certainly had an adverse effect on exportation, making exports more expensive for trading partners. However, on the other hand, the higher dollar has made imports more cheaper, thus producing a positive outcome for businesses reliant on importation. In addition, this has also contributed positively to the cost of production for local exportation. However, while looking at the pros and cons, it is still worth mentioning here two things. Firstly, the RBA is still supportive of a lower currency to assist with a progressive economic recovery until otherwise stated. Secondly, looking back at the more recent RBA statements, the reliance on the depreciating currency to offer stimulus to the domestic currency has been most beneficial as an offset measure which has also played a part in the current position of the cash rate which has, in the last few rounds, been kept on hold. There has always been concern over the appreciation of the dollar, which has attracted investors at its lows and more recently at the dips. This has essentially kept the AUD afloat from a further decline and more poised now towards the upper end of the spectrum.
As the economy now starts to gain more confidence in line with their economic data figures, the proposal of another cash rate cut will seem more unlikely while the economy continues on this path of recovery. Hence why now we are seeing the AUD maintain a resilient stance on the charts in more recently times with interest from foreign investors and the like. This is a very big contrast to not long ago when really there was only one direction for the AUD and by that I do not mean up. Having said that, this does not mean that the AUD cannot fall or will not fall in between the efforts to take the currency to new highs. Remembering that AUD is not only easily influenced by not only its own data and by its counterparts, but is responsive to the other financial markets i.e. commodities (being a commodity currency). We should see the AUD fluctuate within the boundaries of its range before fully breaking out. For now, it is still important to remember that Australia still remains in recovery mode and the RBA is in favour of a lower currency to assist with "re-balancing" the economy while also depending on economic indicators such as inflation and employment to continually re-assess its position and determine the timing for adjustments in monetary policy.
When assessing the current position of AU, we are still looking at a scenario of making a clear break above 95, which so far since its efforts to move north since its decline has struggled to do. Therefore this still maintains in place as a strong resistance level having seen the pair sell from here a few times. In light of the RBA favouring weaker dollar, this will set in on the weaker economic data. The sentiment of the RBA will cap movement higher and should we break above 95 then 97 will be the top resistance area to re-test with the 96 range in full play. Though this will also require full clearance of the upper half of the 95 price level, which may also serve as a top. However, should price stay contained under the 95 price level, we should see AU make a move back to 94 and breaking this, extending a decline between 92500 and the 93 range.
USDJPY
UY opened the week at 97727, gapping higher from its NY close at 97359. This then followed with UY contained within a range between 97455 - 97783, until a breakout to the upside (low of 97659 and high of 97956) saw UY set its direction with a higher base created around 97914 leading to another break higher to over the 98 price level reaching 98271 on the 29th October. Price then consolidated around this level moving into the 30th October which then saw UY break out with a surge of bullish momentum, producing a candle with a low of 98078 and high of 98672. This then saw the sellers step in, pushing price back down to DP (98303) and then lower, piercing the 23% level (98174) and to a low of 98077. This then saw price move back to DP where resistance was once again found, pushing UY back down through the previous day low on the 1st November, finding support at 97802.
This then followed with a reversal back north, appointing 97802 as the bottom, as price made its way back with another surge of bullish momentum to DP, where it paused before moving to the 76% level (97391). Breaking through the 76%, saw momentum increase as price moved higher through DR1 (98562), reaching a high of 98844 (DR2). This saw price pause at the high s around 98752, towards the end of the last NY session, with UY closing slightly lower at 98664.
When observing UJ on a daily chart, UJ is still positioned within a sideways trend that is yet to break with the last high at 100597 on the 11th September. A confirmed break above 100597 will promote a bullish extension with its sights set on 103 region which it has not managed to reach since early 2013. However, looking at this pair on an intraday level, there does not seem to be a clear path set as yet and such this may see UJ move into a consolidation or movement within a tight range until further confirmation has been obtained. Looking at UJ on the 4 hour chart, we can see a complete retracement back to the point previous top rejection at 98836, just under 99 with price poised towards the upper region of its range. This does suggest that UJ will be looking to reach higher targets once price clearly breaks over 98764 with first targets within the 99 price area before extending higher. However, should price stay contained below 99, a break back below 98164 will see UJ target the high higher 97 area and try to find support there. With price currently sitting between the previous day low and DP, we will need to see UJ to break above DP (98634) in order to attempt a bull move. If UJ stays capped in the more immediate time frames under 98601, the pair will be looking to test lower towards the lower 98 price region.
Since the September “Non-Taper”, the USD has suffered from extended weakness due to the following events in the US which dominated not only the headlines but market sentiment. This has given strength to the majors against the USD, which helped fuel the recent bull rallies witnessed over the last few weeks. However with the debt ceiling crisis now on the shelf until early 2014 and government workers back at work, focus has now diverted back to the “taper” with special attention to the US economic figures, as the market tries to digest information in an effort to find any indication towards potential decisions and actions by the US Fed. Interestingly the figures released after the government shutdown surprised the market somewhat, stumping the general expectation that the government shutdown would dampen the progress of US economy even despite the $24b that exited the US economy during that time. This was particularly evident in the ISM figure which came in at 56.4, beating the forecast of 55 and the previous figure 56.2, showing that US manufacturing still expanded even in light of the 16 days the US government was shutdown. Consequently the positive ISM figure boosted UJ which saw the pair reach a new high of 98.84.
So with the taper back on the radar, this has set another round of speculation with a split view on whether the US Fed will actually be ready this time. More recent data still remains a little mixed, which then leaves things a little uncertain on how the US Fed will interpret the current US economic position. In the time around the "September Taper", the last NFP result came in 148k vs. an expectation of 180k, accompanied by an improvement in the unemployment rate from 7.3% to 7.2%. This saw many to believe that this was enough of a justification to warrant a “mini taper”, thus holding strong expectations that the US Fed would uphold to this decision – which they did not. Therefore, it is reasonable to think the US Fed may employ the same rationale should the economic figures fail to sway once again more in favour of a progression since September. If it was not enough last time, it may not be enough this time, which will see this delayed until early next year. This week we have employment data due along with the NFP and unemployment rate. Current figures show NFP holding a weaker forecast of 130k vs. the previous 148k, while the unemployment rate is tipped to increase from 7.2% to 7.3%. Any surprises, or non surprises, should see movement in response to the strength/weakness brought to the USD following its economic data releases.
Moving on to Japan. It has been a long ride but according to the BOJ, all remains on track in meeting their inflation target of 2% in 2015. The improvements in the Japanese economy, have still kept the BOJ confident in meeting their targets and as such, further easing is most likely not necessary in the near term. However, this may not be the case in 2014, where BOJ Govenor Kuroda believes that additional easing may be necessary and they will do what is needed. In regards to the views on inflation, we could see Japan reach 1% by the end of this fiscal year. However this will not change the pace which still will remain slow even within its incline. Looking at the current position of UJ, this pair looks more appealing to the upside, which when coupled with USD strength, a break above the 99 price level will see UJ make its move back to the 100 region.
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