Forex: Further Signs of Yen Reversal Ahead of BoJ; Euro Lifted by Nowotny

ASIA/EUROPE FOREX NEWS WRAP

The Japanese Yen continues to claw back its recent losses across the board, so much so that it is on the verge of shedding title of worst performing currency year to date, ceding that title to the British Pound or the Swiss Franc should the Yen market continue to firm. With additional hawkish rhetoric from the government out today – intended to sterilize the effects of the ultra-dovish commentary from Japanese Prime Minister Shinzo Abe – the Yen might be setting the stage for a reversal ahead of the January 22 meeting.

With the Bank of Japan set to replace the Federal Reserve as the liquidity pump for the market, a lot of attention has been brought about to this notion of “currency wars,” a term first coined by Brazilian Finance Minister Guido Mantega in September 2010. The gist: in an attempt to help their economies gain a competitive edge, the major central banks have embarked on a policy path that is directly aimed at devaluing their currencies. This is easily confirmed by comments from various central bankers the past few years, including Fed Chairman Ben Bernanke, who has suggested that a weak US Dollar would be beneficial for the economy; it is of no coincidence that the Fed has undertaken policies that reduce Treasury yields, and thus, the appeal of the US Dollar.

European policymakers have joined the conversation the past few days, with Jean-Claude Juncker, head of the group of Euro-zone finance ministers, saying yesterday that the Euro’s value was “extremely high,” leading to a decline in late trading Tuesday. But today, European Central Bank policymaker Ewald Nowotny said that he doesn’t find the Euro’s value to be of concern in the short-term (which has proved bullish today), but that he doesn’t anticipate it rising over the long-term. Bottom line: don’t expect the ECB to sit back and allow the Euro to appreciate.

Taking a look at European credit, peripheral yields are barely moved, offering neither support nor resistance to further Euro bullishness. The Italian 2-year note yield has decreased to 1.360% (-0.1-bps) while the Spanish 2-year note yield has decreased to 2.411% (-1.1-bps). On the contrary, the Italian 10-year note yield has increased to 4.210% (+0.4-bps) while the Spanish 10-year note yield has increased to 5.060% (+12.0-bps); higher yields imply lower prices.

RELATIVE PERFORMANCE (versus USD): 11:15 GMT

JPY: +0.62%

CHF: +0.32%

EUR: +0.11%

NZD:+0.04

AUD:-0.07%

GBP:-0.09%

CAD:-0.11%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.15% (-0.61% past 5-days)

ECONOMIC CALENDAR

Forex_Further_Signs_of_Yen_Reversal_Ahead_of_BoJ_Euro_Lifted_by_Nowotny_body_x0000_i1031.png, Forex: Further Signs of Yen Reversal Ahead of BoJ; Euro Lifted by Nowotny

See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.

TECHNICAL ANALYSIS OUTLOOK

Forex_Further_Signs_of_Yen_Reversal_Ahead_of_BoJ_Euro_Lifted_by_Nowotny_body_Picture_1.png, Forex: Further Signs of Yen Reversal Ahead of BoJ; Euro Lifted by Nowotny

EURUSD: No change, though the bearish candle yesterday would ideally see follow through on a close below 1.3280: “The pair has continued higher, cutting through the May 2012 high at 1.3280 and running into the next leg up, the March 2012 high at 1.3380/85. Last week I said: “the RSI downtrend on the daily chart has been broken, despite price holding below the May/December highs at 1.3280/3310. Coincidentally, focus is on buying dips.” This remains to be the case even as price has started to catch up to momentum. Support comes in 1.3280/3310, 1.3120/45, 1.3080/85 (50-EMA), and 1.3000 (January low). Resistance is 1.3380/85 (mid-March swing high) and 1.3485 (late-February swing high).”

Forex_Further_Signs_of_Yen_Reversal_Ahead_of_BoJ_Euro_Lifted_by_Nowotny_body_Picture_2.png, Forex: Further Signs of Yen Reversal Ahead of BoJ; Euro Lifted by Nowotny

USDJPY: No change: “The pair’s rally has continued to its highest level since June 2010, essentially leaving the door open for a run above 90.00. Given BoJ policy, any dips seen in the USDJPY are viewed as constructive for further bullish price action (though I would like to clarify that this view is only valid until the BoJ meeting on January 22; the market remains very net-short the JPY, so a near-term top marked by an event seems possible (think the US Dollar bottoming the day after QE3 was announced)). Resistance comes at 89.10/35 (daily high, weekly R1) and 90.10/15 (monthly R2). Support comes in at 88.40 (monthly R1) and 87.00/40 (weekly pivot).”

Forex_Further_Signs_of_Yen_Reversal_Ahead_of_BoJ_Euro_Lifted_by_Nowotny_body_Picture_3.png, Forex: Further Signs of Yen Reversal Ahead of BoJ; Euro Lifted by Nowotny

GBPUSD: No change: “The pair has fallen back from 1.6300, again, though with no follow through yet, my levels remain the same (they haven’t changed since early-December). However, the pair is now coming into ascending TL support off of the July and November lows at 1.6000. Support is there and 1.5900 (200-DMA). Resistance comes in at 1.6085/90 (50-EMA), 1.6180, and 1.6300/10 (post-QE3 announcement high in mid-September).” It should be added that a break below 1.6000 could accelerate through the 200-DMA towards the most recent swing low, at 1.5820/25 set in mid-November.

Forex_Further_Signs_of_Yen_Reversal_Ahead_of_BoJ_Euro_Lifted_by_Nowotny_body_Picture_5.png, Forex: Further Signs of Yen Reversal Ahead of BoJ; Euro Lifted by Nowotny

AUDUSD:No change: “The pair has broken the December highs and a break signals a push towards 1.0605/25. However, it’s worth noting that the daily RSI hasn’t pushed into overbought territory on any rally since February 2012. Accordingly, we’ll either see a move to new highs and with RSI confirming the breakout; or further consolidation/pullback is in order before the next leg higher. Support is at 1.0530/50 (weekly pivot, monthly R1), 1.0465/70 (weekly S1), and 1.0400/05 (weekly S2). Resistance is 1.0530/85 and 1.0605/25 (August and September highs).”

Forex_Further_Signs_of_Yen_Reversal_Ahead_of_BoJ_Euro_Lifted_by_Nowotny_body_Picture_6.png, Forex: Further Signs of Yen Reversal Ahead of BoJ; Euro Lifted by Nowotny

S&P 500: For the past several weeks I’ve maintained: “The S&P 500is back above a very significant zone of 1445/50 (descending trendline off of September and October highs, 100% Fibonacci extension off of the November 16 low, the November 23 high, and the November 28 low extension), and a move higher necessarily points to 1470/75.” With these levels to the upside breaking, a move above the September highs points to resistance at 1500 and 1520/25 (December 2007 high); a Bull Flag is potentially forming on lower timeframes (1H, 4H). Support comes in at 1450/55, 1425, 1400, and 1390 (200-DMA).

Forex_Further_Signs_of_Yen_Reversal_Ahead_of_BoJ_Euro_Lifted_by_Nowotny_body_Picture_7.png, Forex: Further Signs of Yen Reversal Ahead of BoJ; Euro Lifted by Nowotny

GOLD: No change: “Gold is at a make or break level right now, former Symmetrical Triangle support at 1630/40, and its lowest level since August, before the ECB and the Fed’s QE intervention hopes took hold. Additionally, when considering the move off of the September highs, a measured A-B=C-D (as expressed on the Daily) suggests that a bottom could be in place at these levels as well. Support is there at 1580. Resistance is 1690/95, 1735, 1755, and 1785/1805.”

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • Political Hotspots May Bubble Up on G-20 Sidelines in China Bloomberg - 42 minutes ago

    Last year’s summit in Turkey was overshadowed by Islamic State’s deadly attacks on Paris just days before. The previous year in Australia, talks were dominated by Russia’s occupation of Crimea and its alleged support for Ukraine separatists. The … More »

  • EU tax avoidance action could hurt foreign investment: U.S. Treasury Reuters - 46 minutes ago

    The actions of European regulators could hurt foreign investment, the U.S. Treasury said on Tuesday after the European Commission ruled Apple must pay up to 13 billion euros ($14.5 billion) in taxes plus interest to the Irish government. "The … More »

  • White House 'concerned' EU tax penalty on Apple may hit U.S. taxpayers Reuters - 46 minutes ago

    The White House said on Tuesday it was concerned about a European Commission order for Apple Inc to pay billions in unpaid taxes to Ireland because it seemed TO undermine joint U.S.-EU progress on creating a more fair international tax system. … More »

  • EU hits Apple with 13 billion euro Irish tax demand
    EU hits Apple with 13 billion euro Irish tax demand Reuters - 47 minutes ago

    BRUSSELS/DUBLIN (Reuters) - The European Commission ordered Apple Inc to pay Ireland unpaid taxes of up to 13 billion euros ($14.5 billion) on Tuesday as it ruled the firm had received illegal state aid. Apple and Dublin said the U.S. company's tax … More »

  • S&P 500’s August Advance in Peril as Apple Slumps; Dollar Climbs Bloomberg - 51 minutes ago

    The S&P 500 Index dropped from near a record high as the iPhone maker was ordered to pay 13 billion euros ($14.5 billion) plus interest in a European Union tax crackdown. The dollar rose against most of its major peers, while Treasuries held onto … More »

  • Oil falls on strong dollar, crude glut; storms limit losses
    Oil falls on strong dollar, crude glut; storms limit losses Reuters - 1 hour 24 minutes ago

    Oil prices fell Tuesday, with Brent losing nearly 2 percent, as the dollar rallied and glut worries grew amid forecasts for higher U.S. crude stockpiles and Iran's remark that it was on target to reach peak production. News that energy firms in the … More »

  • Business Highlights Associated Press - 1 hour 27 minutes ago

    ___ EU orders Apple to pay up to 13B euros in back taxes Apple has to pay up to 13 billion euros ($14.5 billion) — plus billions more in interest — in back taxes to Ireland after the European Union found ... … More »

  • Wall St. weighed by Apple but banks shine on
    Wall St. weighed by Apple but banks shine on Reuters - 1 hour 28 minutes ago

    Apple Inc was the largest weight on U.S. stock indexes on Tuesday after antitrust regulators ordered the company to pay about $14.5 billion in back taxes to the Irish government, but gains in bank shares partly offset the decline. The S&P 500 fell … More »

  • Templeton’s Hasenstab Finds Haven in Emerging-Market Assets (1) Bloomberg - 1 hour 29 minutes ago

    In this new economic world, emerging markets are becoming a surprising haven, according to Franklin Templeton bond manager Michael Hasenstab, who beat almost all his peers for years until making wrong-way bets on the yen and Treasuries. While his … More »

  • Perceptron reports 4Q loss Associated Press - 1 hour 34 minutes ago

    The Plymouth, Michigan-based company said it had a loss of $1.66 per share. Earnings, adjusted for non-recurring costs, came to 8 cents per share. The industrial measurement and inspection company posted ... … More »

  • EU ruling on Apple stirs calls for U.S. tax reform
    EU ruling on Apple stirs calls for U.S. tax reform Reuters - 1 hour 39 minutes ago

    A European Commission order requiring Apple Inc (AAPL.O) to pay Ireland $13 billion euros ($14.5 billion) in unpaid taxes on Tuesday drew swift rebukes from the Obama administration and lawmakers in Congress, while reigniting calls for U.S. tax … More »

  • ICBC Halts Bad-Loan Increases With $6.3 Billion of Write-Offs Bloomberg - 1 hour 42 minutes ago

    ICBC wrote off 42 billion yuan ($6.3 billion) of loans in the first half, 35 percent more than a year earlier, an earnings statement showed Tuesday. “It’s a race of NPL formation against NPL disposal,” Yi Huiman, ICBC’s chairman, told analysts at a … More »

  • If Singapore Wants a Facebook, Dual-Class Shares Aren’t Enough Bloomberg - 1 hour 42 minutes ago

    Some of the world’s largest companies, including Facebook Inc. and Alphabet Inc., have multiple share classes, which usually are in place to allow minority shareholders to have majority voting rights. An independent body on Monday said it was in … More »

  • APNewsBreak: Ohio State tells alumni clubs to fall in line Associated Press - 1 hour 44 minutes ago

    Ohio State University is requiring its roughly 150 alumni clubs and societies to keep mum when it comes to disparaging comments about the school, or risk losing the money and other perks it provides them. ... … More »

  • How the Dow Jones industrial average fared on Tuesday Associated Press - 1 hour 55 minutes ago

    Stocks fell slightly on Tuesday in another quiet day on Wall Street as hesitant investors remained on the sidelines as a slow summer winds down. On Tuesday: The Dow Jones industrial average fell 48.49 ... … More »

  • US stocks mostly lower as investors wait for jobs report
    US stocks mostly lower as investors wait for jobs report Associated Press - 1 hour 58 minutes ago

    Stocks fell slightly on Tuesday in another quiet day on Wall Street as hesitant investors remained on the sidelines as a slow summer winds down. Shares of the candy company Hershey plunged after it walked ... … More »

  • Palo Alto forecasts revenue below estimates, shares drop
    Palo Alto forecasts revenue below estimates, shares drop Reuters - 1 hour 59 minutes ago

    (Reuters) - Cyber security firm Palo Alto Networks Inc forecast current-quarter revenue and profit below analysts' estimates, sending its shares down 3 percent in extended trading on Tuesday. However, ... … More »

  • CM posts 4Q profit Associated Press - 2 hours 4 minutes ago

    The New York-based company said it had profit of 29 cents per share. Earnings, adjusted for investment costs, were 32 cents per share. The specialty finance company posted revenue of $7.8 million in the ... … More »

  • Ooma reports 2Q loss Associated Press - 2 hours 16 minutes ago

    On a per-share basis, the Palo Alto, California-based company said it had a loss of 19 cents. Losses, adjusted for stock option expense and amortization costs, came to 5 cents per share. The results exceeded ... … More »

  • Kurdish-backed fighters in Syria agree Turkey truce
    Kurdish-backed fighters in Syria agree Turkey truce AFP News - 2 hours 18 minutes ago

    Kurdish-backed militias in Syria agreed Tuesday to a US initiative to stop fighting Turkish forces whose week-old incursion in the country has stoked tensions between Washington and Ankara. The truce was announced separately by a senior US defence … More »

  • Matrix Service beats 4Q profit forecasts Associated Press - 2 hours 20 minutes ago

    The Tulsa, Oklahoma-based company said it had profit of 34 cents per share. The results beat Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for ... … More »

  • Markets Right Now: US markets end lower in quiet trading Associated Press - 2 hours 37 minutes ago

    The latest on developments in global financial markets (all times local): 4:00 p.m. Stocks are closing slightly lower as a summer slowdown continues on Wall Street. Hershey slumped 11 percent and Mondelez ... … More »

  • Potash Corp, Agrium talk merger; competition scrutiny expected
    Potash Corp, Agrium talk merger; competition scrutiny expected Reuters - 2 hours 39 minutes ago

    WINNIPEG, Manitoba/WASHINGTON (Reuters) - Canada's Agrium Inc (AGU.TO) and Potash Corp of Saskatchewan Inc (POT.TO) said on Tuesday they are in talks to merge, a deal that would create a fertiliser and farm retailing giant worth more than $25 … More »

  • Deals of the day- Mergers and acquisitions Reuters - 2 hours 50 minutes ago

    ** Canada's Agrium Inc and Potash Corp of Saskatchewan Inc said on Tuesday they are in talks to merge, a tie-up that would create a global fertilizer and farm retailing giant as the agriculture sector struggles with soft crop prices. ** … More »

  • Grain lower, livestock higher Associated Press - 2 hours 59 minutes ago

    Grain futures were lower Tuesday on the Chicago Board of Trade. Wheat for Sept. fell 7.25 cents at $3.6325 a bushel; Sept. corn lost 7.75 cents to 3.04 a bushel; Sept. oats was off .25 cent at $1.6175 ... … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.123-0.001-0.81%
    N21.SI
    0.3550.0000.00%
    E5H.SI
    0.235-0.005-2.08%
    5ME.SI
    0.725-0.010-1.36%
    G13.SI
    0.315+0.005+1.61%
    5OT.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.55+0.12+27.91%
    BJZ.SI
    0.45+0.09+25.00%
    BFK.SI
    0.46+0.06+15.00%
    M05.SI
    0.23+0.03+12.20%
    BTJ.SI
    0.525+0.055+11.70%
    BQD.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.13-0.02-13.33%
    5TI.SI
    0.20-0.03-13.04%
    AWI.SI
    0.176-0.024-12.00%
    A04.SI
    0.166-0.022-11.70%
    AWS.SI
    0.155-0.020-11.43%
    5WD.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3633-0.0005-0.04%
    USDSGD=X
    1.5200+0.0004+0.03%
    EURSGD=X
    1.7838+0.0004+0.02%
    GBPSGD=X
    75.45800.000.00%
    SGDJPY=X
    5.6876+0.0028+0.05%
    SGDHKD=X
    2.97120.000.00%
    SGDMYR=X
    9,766.3584+6.3438+0.06%
    SGDIDR=X
    4.8961-0.0008-0.02%
    SGDCNY=X
    1.0245+0.0001+0.01%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,314.70-1.80-0.14%
    GCZ16.CMX
    18.59+0.02+0.10%
    SIU16.CMX
    91.84-5.09-5.25%
    ^XAU
    2.070.00+0.02%
    HGU16.CMX
    46.19-0.16-0.35%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.180.00
    ^FVX
    1.570.00
    ^TNX
    2.23+0.02
    ^TYX