Pre-New York Open: USD And JPY Higher On Risk Aversion

• USD advancing across the board on risk aversion flows. Global growth concerns, rising yields in the euro zone and expectations that the U.S. Congressional supercommittee will be unable to reach a deal to reduce the deficit have all weighed on risk sentiment and lifted the buck. European markets are significantly lower with the DAX currently down -2.65% and U.S. stock futures are down around -1.5% at time of writing. The Chicago Fed national activity index was lower than anticipated with a print of -0.13 from the prior -0.20 (cons. +0.19). Due out at 1000ET are existing home sales numbers for Oct. The Dollar Index rebounded from the top of the daily ichimoku cloud which is just below the 78.00 figure and has supported the pair.

• EUR is trading mixed – softer against USD, JPY,CHF and the Scandies while firmer against the commodity currencies and GBP. Spain elected Mariano Rajoy as PM and bonds yields rose as he stated that “hard times lie ahead”. The EU said that a written Greek commitment is required for the sixth aid payment, which opposition leader Samaras has been resisting. ECB Executive Board member Stark was on the wires and said that the debt crisis is likely to dampen near-term growth and the crisis is spreading to core countries. EUR/USD is trading below the daily cloud and under the 1.35 figure where a cluster of hourly SMA’s converge to provide near term resistance.

• JPY stronger against all of the G10 currencies on the back of safe haven flows. Economic data out of Japan showed the trade balance shifted to a deficit of -273.8B yen in Oct. from the prior surplus of +296.2B yen while the All Industry Activity index fell -0.9% in Sept. (prior -0.3%). USD/JPY remains rangebound but drifting lower as it is below the 55-day SMA and cloud base which is around the 76.90/95 level.

• GBP lower after the Nov. Rightmove house prices declined -3.1% from the prior +2.8%. GBP/USD is currently trading around 1.5625 after tumbling from session highs above 1.58 and GBP/JPY is approaching the 1.20 big figure as USD and JPY gain on risk aversion. EUR/GBP is currently testing the 21-day SMA around 0.8610/15 which may be near term resistance.

• CAD softer as equities and oil decline and after Canada’s Sept. wholesale sales come in weaker than expected with a print of 0.3% (cons. 0.7%). WTI crude is down by nearly -1.30% at time of writing and global equities are in the red. USD/CAD broke above the top of the daily ichimoku cloud and is currently testing the 1.0350 level.