Market Brief
In the FX market, it was a quiet start into the week as major currencies stabilised against the US dollar. The greenback was trading mostly lower this morning as it consolidated the last two weeks’ gains. The Swedish krona stood out as the best performer during the Asian session as USD/SEK tumbled on the key 9.3309 resistance level. The currency pair failed to break the multi-year high from March 2009. USD/SEK retraced to 9.2370, down 0.70% compared to Friday’s close.
The Japanese yen continued its freefall against the USD as USD/JPY hit 111.19 in Tokyo. Japanese exports printed in negative territory for a 13th straight month in October, contracting 10.3%y/y and missing the median forecast of -8.5%. Imports were also weaker than expected as they contracted 16.5%y/y versus -16.1% consensus. All in all, the trade balance improved to ¥474.3bn from ¥358.5bn in September. However, the rally in USD/JPY is running out of steam as investors wonder whether the dollar’s sharp appreciation is overdone. On the downside, a support area could be found at around 110, then 108.50. However, given the rapid debasement of the yen, those are weak levels. The closest strong support lies 107.50 (resistance from July this year, now support). On the upside, the high from March 25th at 111.91 remains the main resistance area. We believe that the dollar rally is coming to an end and that a retracement is more than likely, especially against the Japanese yen.
Crude oil prices were better bid this morning amid broad dollar weakness. The West Texas Intermediate climbed to $46.35 a barrel in Tokyo, while its North Sea counterpart, the Brent crude, rose 1.05% to $47.40. The prospect of a production cut deal amongst OPEC members has had a limited effect as the market is now doubtful that the oil cartel will be able to reach an agreement at its meeting on November 30th. Therefore, crude oil has been unable to escape its declining channel and is now treading water at around $46 for the WTI and $47 for the Brent.
Today traders will be watching total sight deposits from Switzerland; Chicago Fed Activity index and Fed member Fischer's speech from the US.
Currency Tech
EUR/USD
R 2: 1.1259
R 1: 1.0954
CURRENT: 1.0634
S 1: 1.0521
S 2: 1.0458
GBP/USD
R 2: 1.2857
R 1: 1.2674
CURRENT: 1.2344
S 1: 1.2302
S 2: 1.2083
USD/JPY
R 2: 113.80
R 1: 111.45
CURRENT: 110.92
S 1: 106.14
S 2: 104.97
USD/CHF
R 2: 1.0328
R 1: 1.0257
CURRENT: 1.0096
S 1: 0.9632
S 2: 0.9537