[B]OPENING COMMENT[/B]
There have been no significant developments since the Asia open, but [B]currencies have managed to extend gains[/B] against the buck, with the [B]Yen[/B] surprisingly standing out as the big gainer, even in the face of improved risk appetite and higher equity futures. Some have attributed the fresh wave of greenback selling to [B]upbeat Chinese data[/B] overnight which help to fuel additional buying of risk. Elsewhere, [B]Japanese consumer confidence[/B] data showed an improvement for the eighth straight month and came in broadly in line with expectations. It is worth noting that technical studies all now show the USD oversold and we would now caution bears who are looking to add to short dollar positions. [B]ECB Bini Smaghi [/B]was out saying that the threat of deflation and outbreak of the global crisis seems to have disappeared. Looking ahead, the European economic calendar is extremely light, with only[B] UK PPI[/B] (1.0% expected) at 8:30GMT worth paying attention to.
[B]ANALYSIS OF SELECTED RATES
[/B]
[B]Usd/Jpy:[/B] Had been eyeing a break of 91.75 for some time before finally managing to take out the level on Thursday. The market has since accelerated declines with the price dropping towards 91.00. While the overall structure is grossly bearish, we had written this week that any dips below 91.75 would be used as a shorter-term counter-trend buy opportunity, with daily studies retreating into oversold territory. This morning’s setbacks have now officially forced the daily RSI below 30, making the potential for a necessary corrective bounce very real. Next support comes in by the figure at 91.00 and we will place a buy order just below in anticipation of an intraday break to clear out some sell-stops. As a side note, our “speculative sentiment index” has grown increasingly bearish the pair, with the ratio of long to short now at a staggering 4x. It seems as though this ratio is now overinflated as well, which helps to reaffirm our short-term bullish outlook. [B]STRATEGY: BUY @90.90 FOR AN OPEN OBJECTIVE, STOP @89.40. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE ON FRIDAY. [/B]
[B]Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
If you wish to receive Joel’s reports in a more timely fashion, e-mail [/B][B][email protected][/B] [B]and you will be added to the [/B][B]“distribution” [/B][B]list.[/B][B][/B]
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