Australia’s labor market has eased very slightly, rising to 4.3% in October from 4.2% the prior month. While the rise was not expected September’s unemployment level marked a 33 year low and remains steady in the continuing robust economy. October saw a rise of 15.7K in unemployment to 478.5K. The workforce participation rate remained steady at 65.0 percent. Japan’s Core Machine Orders crashed heavily in September by -7.6%, way below consensus forecasts of -1.8%. This brings the annual rate to -7.0% YoY versus forecasts of -0.9%. August saw a drop of -7.7% MoM. The losses come on the back of the steep drop in housing starts which is threatening to undermine the domestic economy further. However, given that this is a volatile series seen on a broader measurement, as far as the 3rd quarter is concerned, July 17% gain implies net gains of 3.7% QoQ which is close to the cabinet offices estimate. Forecasts are for a 3.1% gain over Q4 but there must be a few raised eyebrows of concern given the past two month’s plunge. Japan’s M2+CD Money Supply put in a healthy month in October recovering to rise by +2.0% YoY and above forecasts of +1.7%. Broad Liquidity eased lower slightly to +3.6% YoY and below forecasts of +4.1%. There shouldn’t be a big reaction to this except for a few breaths of relief from the BOJ who are still struggling to find justification for the next rate hike.
The following economic releases are due today:
German September Current Account EUR 12.1bn Japan October Eco Watchers Survey: Current
Japan October Eco Watchers Survey: Outlook
U.S. October Continuing Claims (27th) U.S. November Initial Jobless Claims (3rd) 330K The ECB and BOE are due to announce their rate decisions
Whew… My long term targets have already been met. This is 4-6 weeks before I had expected and provokes the question of whether the bearish cycles will take the Dollar even lower. It’s not impossible, but I’ll keep an open mind.
I can see classic key reversal sentiment mixed up in all this. There has been acceleration in bearishness which has seen quite frenetic Dollar selling that appears more panic than pragmatic. The charts boast a few spike reversal patterns also – the Canadian Dollar is probably the most clear. Well, that is my observation but standing in the way of a steam train shouting “I say, would you mind stopping for me, there’s a good chap.” isn’t recommended though death is pretty damn quick I guess… So let’s take this step by step. It is unlikely any recovery in the Dollar will be very swift and there is a lot of space in the charts that traders like to go and fill so we should be prepared for deeper pullbacks lower at the very least. New lows? Again let’s not rule them out but I suspect, given the degree of the pullback from the lows in the short term patterns, that the long terms targets will hold for now. One point I did note was the deep pullback in Euro-Yen came nicely to the 50% pullback of the last larger rally and while I can’t rule out a more complex correction this does seem to suggest that we should see further gains. Of course this could be driven by a higher Dollar-Yen or Euro, and maybe both, but while Dollar-Yen has done its utmost to upset me I still think it won’t go below the August weekly cycle low at 111.57…
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 114.40-44 1.4729-50 1.1452-00 2.1133-74
Res: 113.07-38 1.4668-84 1.1350-94 2.1030-70 Spt: 112.07-30 1.4594-12 1.1256-78 2.0950-72
Spt: 111.57-75 1.4470-97 1.1183-18 2.0846-71 | 
