An increasing focus on China, whilst USD remains under pressure

Global markets were dealt a heavy blow in Wednesday’s Asian trading session as a soft China CPI release of 1.6% y/y failed to meet expectations. The failed expectations resulted in a renewed wave of risk aversion from anxious investors who took into account that there was a possibility that the world’s second-largest economy was cooling more rapidly than earlier predicted. This has translated to Asian equities taking a beating with most venturing into red territory and the Shanghai Composite Index concluding -0.93% lower. With sentiment for the China markets already bearish, this recent chain of soft data from China only fuel assumptions that further monetary easing and fiscal support may be forthcoming in the near future.

Dollar vulnerability coupled with a renewed risk-off environment that has been derived from soft China data has resulted in gold surging to a three and a half month high. This precious metal has breached the 1170.0 resistance and currently approaches the daily 200 SMA. Investor anxieties mixed with renewed concerns about the global markets have acted as factors which have allowed gold to retain some of its safe haven glimmer. Currently technically bullish, ongoing USD weakness may invite a further incline to the next relevant resistance at 1185.0

The lingering effect of yesterday’s UK deflationary CPI figure continues to add downwards pressures on the Sterling. A potential decline in economic momentum in the UK combined with the fact that the BoE may likely push back the interest rate increase deep into 2016 has left the GBP sensitive. An unemployment rate in the UK which fell to 7 year lows did inspire some upwards momentum in the Sterling in the European session. Despite this, the average earnings and claimant count which both missed expectations may suggest the potential decline in economic momentum within the UK. This may expose the GBP to additional losses against its counterparts in the near future.

The next major focus on Wednesday will be the retail sales for the States which will be released in the US trading session. If both core retail and retail sales fail to meet expectations, this may add to the recent rope of soft US economic data from October which will result in additional downward pressures on the USD.

EURJPY
The EURJPY is technically bullish on the daily timeframe. Prices are trading above the 20 daily SMA and the MACD has crossed to the upside. As long as prices can keep above the new higher low of 136.00, a further incline to the next relevant resistance at 137.30 maybe expected.

GBPCHF
The GBPCHF is technical bearish on the daily timeframe. Prices have breached the 1.4650 support which may now act as a dynamic resistance. The candlesticks are below the daily 20 SMA and the MACD has crossed to the downside. The next relevant support is based at 1.4450.

CADJPY
The CADJPY has turned technically bullish on the daily timeframe. Price has breached above the daily 20 SMA and the MACD has crossed to the upside. A sharp incline above the 93.00 resistance is needed before any additional upside momentum can be achieved.

GBPJPY
The GBPJPY remains bearish as long as prices can keep below the new 184.50 resistance. The candlesticks are trading below the daily 20 SMA and the MACD trades to the downside. The next relevant support is based at 181.00 followed by 180.00.