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Daily Pivots: (S1) 1.3661; (P) 1.3686; (R1) 1.3721; More...

USD/CAD is still extending the sideway pattern from 1.3897 and intraday bias remains neutral. While another fall cannot be ruled out, downside should be contained by 38.2% retracement of 1.3091 to 1.3897 at 1.3589 to bring rebound. Break of 1.3897 is expected at a later stage to resume larger rally.

In the bigger picture, corrective pattern from 1.3976 (2022 high) should have completed with three waves down to 1.3091. Decisive break of 1.3976 high will confirm resumption of up trend from 1.2005 (2021 low). Next target is 61.8% projection of 1.2401 to 1.3976 from 1.3091 at 1.4064. This will remain the favored case as long as 1.3378 support holds.

Daily Pivots: (S1) 0.8684; (P) 0.8704; (R1) 0.8721; More....

Intraday bias in EUR/GBP stays neutral at this point. Another rally is still in favor with 0.8687 support holds. On the upside, break of 0.8764 will resume whole rebound from 0.8491. However, decisive break of 0.8687 will confirm short term topping, and turn bias back to the downside for 0.8648 support and below.

In the bigger picture, down trend from 0.9267 (2022 high) should have completed completed with three down to to 0.8491. Rise from 0.8491 is seen as another leg inside that pattern from 0.9499 (2020 high). Further rally should be seen to 0.8977 resistance and above. This will remain the favored case as long as 0.8648 support holds.

Daily Pivots: (S1) 1.6601; (P) 1.6626; (R1) 1.6653; More...

Intraday bias in EUR/AUD remains mildly on the downside for the moment. Deeper Deeper fall would be seen to 1.6449 support next. Firm break there will argue that the pattern from 1.6319 has completed at 1.6844 as a corrective move, and fall from 1.7062 is ready to resume through 1.6319. On the upside, above 1.6694 minor resistance will turn intraday bias neutral first.

In the bigger picture, while 1.7062 is a medium term top, there is no clear sign of trend reversal as EUR/AUD continues to draw strong support from the medium term trend line. Break of 1.7062 will resume the larger up trend from 1.4281 (2022 low) to 1.7691 fibonacci level. Nevertheless, break of 1.6449 support will argue that deeper correction is underway to 38.2% retracement of 1.4281 to 1.7062 at 1.6000.

Daily Pivots: (S1) 0.9627; (P) 0.9638; (R1) 0.9654; More...

Intraday bias in EUR/CHF remains neutral at this point. On the upside, decisive break of 0.9691 resistance will carry larger bullish implication, and target 0.9840 resistance next. However, break of 0.9620 support will indicate short term topping, and turn bias back to the downside for deeper pull back.

In the bigger picture, fall from 1.0095 (2023 high) might have completed at 0.9416, just ahead of 0.9407 support (2022 low). Sustained break of 0.9691 cluster resistance (38.2% retracement of 1.0095 to 0.9416 at 0.9675) will pave the way to 61.8% retracement at 0.9836 and above. However, rejection by 0.9691 will maintain medium term bearishness for another test on 0.9407 at least.

Daily Pivots: (S1) 186.64; (P) 187.12; (R1) 187.94; More...

As long as 186.19 minor support holds, GBP/JPY's rebound from 184.44 is still expected to continue to retest 188.26 high. Decisive break there will resume larger up trend. On the downside though, below 186.19 will extend the pattern from 188.26 with another fall to 184.44, and possibly further to 183.79 resistance turned support.

In the bigger picture, as long as 180.74 support holds, larger up trend from 123.94 (202 low) should still be in progress, next target is 195.86 (2015 high). However, firm break of 180.74 will now argue that a medium term top is formed, possibly in bearish divergence condition in D MACD, and bring deeper fall back to 178.02 support.

Daily Pivots: (S1) 162.63; (P) 162.91; (R1) 163.38; More....

With 162.08 minor support intact, EUR/JPY's rebound from 161.22 could extend further to retest 164.29 high. Firm break there will resume larger up trend. On the downside, however, break of 162.08 will turn bias back to the downside, to resume the fall from 164.29 through 161.22 towards 159.75 resistance turned support.

In the bigger picture, rise from 114.42 (2020 low) is in progress. Next target is 169.96 (2008 high). On the downside, break of 159.75 resistance turned support is needed to be the first sign of medium term topping. Otherwise, outlook will remain bullish even in case of deep pullback.

Trading activity is rather subdued in Asian session today, with most major currency pairs and crosses hovering within yesterday's range.

Yen is showing a slight recovery, albeit in the context of mixed inflation and PMI data. While Japan's core CPI remains persistently above BoJ's target, the latest figures haven't provided a strong impetus for the central bank to shift away from its negative interest rate policy or to alter its yield curve control strategy. BoJ officials have emphasized the importance of a sustainable wage-price spiral, and they are likely to await the results of wage negotiations early next year before making significant policy decisions.

Throughout the week, New Zealand Dollar has emerged as the strongest currency, additionally supported by much better than expected retail sales data released today. Australian Dollar and British Pound Sterling are following as the second and third strongest.

On the other end of the spectrum, Euro is the weakest, closely followed by Dollar. However, it's worth noting that Euro's current position appears to be more about consolidating recent gains against Dollar, and EUR/USD maintains near-term bullish outlook. A reversal in Euro and Dollar's positions could occur once this consolidation phase concludes.

Yen, currently positioned as the third weakest, is in a phase of digesting its gains from the previous week. However, there is potential for Yen to ascend in the rankings before the week concludes. Canadian Dollar and Swiss Franc are displaying mixed performances.

From technical analysis standpoint, USD/JPY's recovery from 147.14 is so far still capped by 55 4H EMA. Fall from 151.89 is still in favor to continue, and break of 148.57 minor support will bring retest of 147.14 support first. However, sustained trading above the EMA will retain near term bullishness, and bring a test on 151.89 high. Market watchers will be looking to see if this scenario plays out this week or in the next.

In Asia, Nikkei closed up 0.55%. Hong Kong HSI is down -1.48%. China Shanghai SSE is down -0.63%. Singapore Strait Times is down -0.52%. Japan 10-year JGB yield is up 0.0431 at 0.774.

BoE's Pill stresses persistence in inflation fight

In a Financial Times interview, BoE Chief Economist Huw Pill emphasized the need for the MPC to avoid prematurely "declaring victory" in the fight against inflation, noting that CPI is still considerably above BoE's 2% target, currently at 4.6%.

Pill acknowledged UK's economic slowdown, noting "slower growth in activity and employment." However, he assessed that the current inflation scenario is "more supply-driven rather than demand-driven." Weakening in economic activity is not necessarily leading to a reduction in inflationary pressures, as might typically be expected.

Analyzing recent economic indicators, Pill observed more evidence of "sort of stubborn, high-level rates of inflation" and and growth that are "stronger" than being compatible with 2% inflation over the medium term.

He also argued that if the slowdown in economic activities and employment growth is linked to a decline in the economy's supply performance, rather than a drop in demand, it wouldn't create the necessary slack to ease domestically generated inflation.

Japan's CPI core rises to 2.9%, above BoJ target for 19th mth, services prices surge

Japan's core CPI, which excludes fresh food prices, rose slightly from 2.8% yoy to 2.9% yoy in October, falling just below expected 3.0% yoy. Notably, this core CPI has stayed above BoJ's target of 2% for the 19th consecutive month, indicating persistent inflationary pressures.

Headline CPI, which includes all items, accelerated from 3.0% yoy to 3.3% yoy. However, core-core CPI, which excludes both food and energy, showed a slight deceleration, dropping from 4.2% yoy to 4.0% yoy. Despite this decrease, core-core CPI has remained above 4.0% for seven consecutive months, highlighting sustained inflation in areas beyond just the volatile items.

Breaking down the details, energy prices saw a significant decrease of -8.5% yoy. In contrast, food prices continued to climb, recording a 7.6% yoy increase. Durable goods also experienced a price rise of 3.2% yoy. Notably, services prices surged by 2.1% yoy, marking the fastest gain since 1993. This sharp increase in services prices underscores the broadening of inflationary pressures within the Japanese economy.

Japan's PMIs: Manufacturing contracts, services slightly improve

Japan's PMI for November shows a continuing contraction in the manufacturing sector and a slight improvement in services.

Manufacturing PMI dropped from 48.7 to 48.1, falling below the expected 48.8 and marking another month below the crucial 50.0 threshold, which separates contraction from expansion. This ongoing contraction has been the trend since June.

Conversely, Services PMI saw a marginal increase, moving up from 51.6 to 51.7, indicating a slight expansion in this sector. However, Composite PMI, which combines both manufacturing and services, edged down from 50.5 to exactly 50.0, highlighting stagnation in overall private sector activity.

Usamah Bhatti, an economist at S&P Global Market Intelligenc said: "Activity at Japanese private sector firms stagnated midway through the fourth quarter of 2023." This stagnation is further reflected in the demand conditions, which Bhatti noted remained "muted in November and were little-changed from October."

New Zealand retail sales volume flat in Q3, value up 1.5% qoq

In New Zealand, Q3 2023 saw retail sales volumes remain unchanged at 0.0% qoq, defying expectations of a -0.8% decline.

However, a contrasting trend emerged in the sales value, which increased by 1.5% qoq, indicating a disparity between the number of goods sold and their monetary value.

On an annual basis, there was a -3.4% yoy decrease in sales volume, whereas sales value saw 1.1% yoy increase.

These divergences should be reflective of inflationary pressures and corresponding shift in consumer purchasing patterns.

Looking ahead

Germany Q3 GDP final and Ifo business climate will be released in European session. Later in the day, Canada retail sales and US PMIs will be featured.

EUR/JPY Daily Outlook

Daily Pivots: (S1) 162.63; (P) 162.91; (R1) 163.38; More....

With 162.08 minor support intact, EUR/JPY's rebound from 161.22 could extend further to retest 164.29 high. Firm break there will resume larger up trend. On the downside, however, break of 162.08 will turn bias back to the downside, to resume the fall from 164.29 through 161.22 towards 159.75 resistance turned support.

In the bigger picture, rise from 114.42 (2020 low) is in progress. Next target is 169.96 (2008 high). On the downside, break of 159.75 resistance turned support is needed to be the first sign of medium term topping. Otherwise, outlook will remain bullish even in case of deep pullback.

Economic Indicators Update

In a Financial Times interview, BoE Chief Economist Huw Pill emphasized the need for the MPC to avoid prematurely "declaring victory" in the fight against inflation, noting that CPI is still considerably above BoE's 2% target, currently at 4.6%.

Pill acknowledged UK's economic slowdown, noting "slower growth in activity and employment." However, he assessed that the current inflation scenario is "more supply-driven rather than demand-driven." Weakening in economic activity is not necessarily leading to a reduction in inflationary pressures, as might typically be expected.

Analyzing recent economic indicators, Pill observed more evidence of "sort of stubborn, high-level rates of inflation" and and growth that are "stronger" than being compatible with 2% inflation over the medium term.

He also argued that if the slowdown in economic activities and employment growth is linked to a decline in the economy's supply performance, rather than a drop in demand, it wouldn't create the necessary slack to ease domestically generated inflation.

Key Highlights

• USD/JPY is attempting a fresh increase from the 147.15 zone.
• A connecting bearish trend line is forming with resistance near 150.00 on the 4-hour chart.
• EUR/USD is showing positive signs above the 1.0850 support.
• GBP/USD could extend its rally above the 1.2550 resistance.

USD/JPY Technical Analysis

The US Dollar declined heavily from the 151.90 zone against the Japanese Yen. USD/JPY declined below 150.00 and 149.20 before the bulls took a stand.

Looking at the 4-hour chart, the pair traded as low as 147.14 before it started a decent recovery wave. There was a move above the 148.40 and 148.50 resistance levels. The pair even tested the 50% Fib retracement level of the downward move from the 151.90 swing high to the 147.14 low.

However, the pair is still below the 150.00 barrier, the 100 simple moving average (red, 4 hours), and the 200 simple moving average (green, 4 hours).

There is also a connecting bearish trend line forming with resistance near 150.00 on the same chart. The next key resistance is near the 150.20 level. The main resistance is now near the 150.50 level. A close above the 150.50 zone could open the doors for more upsides. The next stop for the bulls might be 152.00.

If not, the pair might start a fresh decline below the 148.80 support. The first major support is now forming near the 148.50 level. The next key support sits at 148.00, below which the pair could test the 147.50 pivot level in the near term.

Looking at GBP/USD, the pair gained strength above the 1.2500 level and it could even climb toward the 1.2620 resistance.

Economic Releases

• US Manufacturing PMI for Nov 2023 (Preliminary) – Forecast 49.8, versus 50.0 previous.
• US Services PMI for Nov 2023 (Preliminary) – Forecast 50.4, versus 50.6 previous.

Japan's core CPI, which excludes fresh food prices, rose slightly from 2.8% yoy to 2.9% yoy in October, falling just below expected 3.0% yoy. Notably, this core CPI has stayed above BoJ's target of 2% for the 19th consecutive month, indicating persistent inflationary pressures.

Headline CPI, which includes all items, accelerated from 3.0% yoy to 3.3% yoy. However, core-core CPI, which excludes both food and energy, showed a slight deceleration, dropping from 4.2% yoy to 4.0% yoy. Despite this decrease, core-core CPI has remained above 4.0% for seven consecutive months, highlighting sustained inflation in areas beyond just the volatile items.

Breaking down the details, energy prices saw a significant decrease of -8.5% yoy. In contrast, food prices continued to climb, recording a 7.6% yoy increase. Durable goods also experienced a price rise of 3.2% yoy. Notably, services prices surged by 2.1% yoy, marking the fastest gain since 1993. This sharp increase in services prices underscores the broadening of inflationary pressures within the Japanese economy.