Mid-Day Report: Swissy and Yen Firm in Quite Trading

Swiss Franc and Japanese yen remain firm but momentum is diminishing mildly as we're approaching year end. Risk aversion is supporting both currencies somewhat. China PBoC raised interest rate charges banks on some funding facilities. The one-year refinancing rate was raised by 0.52% to 3.85%. Also, the rediscount rate was raised by 0.45% to 2.25%. This came rise after PboC raised deposit and lending rates by a quarter-point over the weekend. Reactions to the news is so far mild.

Swiss KOF leading indicator slipped from revised 2.13 to 2.1 in December, inline with expectation. The KOF institute said in a statement that the indicator remains at a "high level". Markets perceive the solid reading as reflecting robust recovery in the Swiss economy despite strength in the Franc. Other data released today saw Eurozone M3 Money supply rose 1.9% yoy in November versus expectation of 1.6%. German CPI rose 1.1% mom, 1.8% yoy in December versus consensus of 0.9% mom, 1.5% yoy.

While we talked about GBP/AUD earlier today, outlook in EUR/AUD is also quite bearish. The cross dropped to new record low of 1.3181 so far today. Recent decline is still expected to continue further as long as 1.3510 resistance holds and EUR/AUD should now target 1.3 psychological level next.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 81.84; (P) 82.34; (R1) 82.87; More.

USD/JPY continues to consolidate above 81.81 temporary low for the moment and intraday bias remains neutral. Stronger recovery might be seen but upside should be limited by 4 hours 55 EMA (now at 83.01) and bring fall resumption. As noted before, whole rebound from 80.29 should have finished at 84.49 already. Below 81.81 will target a test on 80.29 low.

In the bigger picture, with 85.92 cluster resistance (38.2% retracement of 94.97 to 80.29 at 85.89) intact, there is no confirmation of reversal yet and the longer term down trend in USD/JPY is possibly still in progress for another test on 79.75 (1995 low). Again, note that downside momentum is clearly diminishing with bullish convergence condition in weekly MACD. We'll continue to focus on reversal signal on next fall.

Economic Indicators Update

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