Daily Analysis

Surprisingly solid PPI and retail Sales data released yesterday in the United States boosted the dollar versus most currency counterparts yesterday, in a rally that brought the EUR/USD to a low of $1.4577 from a session high of $1.4736. The data reinforced the Fed’s views a regarding the overall strength of the American economy, and came as disappointment to many traders, who were hoping for more aggressive rate cuts early next year. For currency traders, this means that the hitherto popular carry trade pairs, such as the GBP/JPY and EUR/JPY may be vulnerable to further weakness before the end of the year.

Looking ahead, European and German CPI numbers will be released at 10:00 AM GMT. The U.S session opens with key CPI data (01:30 PM GMT), followed by Industrial Production and Capacity Utilization (02:15 PM GMT) 

Euro | Japanese Yen | British Pound | Swiss Franc

  
 
Euro
 
The EUR/USD opened the Asian trading session around $1.4625 after trading as low as 1.4577 in light of stronger than expected US Retail Sales and PPI data. The EUR/USD traded up to $1.4639 early in the trade, supported by EUR/JPY buying after the Japanese Tankan survey came in worse than expected. The EUR/USD then traded back to $1.4613 before settling between $1.4620 and $1.4630 for the remainder of the session. The EUR/USD currently trades at $1.4623, into the London session open.

Support: 1.4400, 1.4375, 1.4350 
Resistance: 1.4450, 1.4500, 1.4550 
 
Euro | Japanese Yen | British Pound | Swiss Franc

  
 
Japanese Yen
 
USD/JPY remained relatively supported overnight, aided by Japanese investment trust buying and a weak Tankan report. From an early low of ¥112.22, USD/JPY traded up to ¥112.66 before easing off. Resistance levels are seen at ¥112.75 and ¥113.00.

Support: 112.750, 112.50, 112.00 
Resistance: 113.00, 113.250, 113.50 
 
Euro | Japanese Yen | British Pound | Swiss Franc

  
 
British Pound
 
The GBP/USD opened the Asian session at around $2.0415 after recovering from a $2.0350 low marked earlier on the back of a slight recovery in the Dow Jones index. Japanese buying of GBP/JPY took the pair up to $2.0440 in the early session, before selling pressure drove it back down to $2.0402, after which it settled in a $2.0405 - $2.4025 for the balance of the session

The combination of a broadly stronger USD due to higher US bond yields and unwinding of carry-trades due to weak equity markets is weighing down on the GBP/USD at the moment. Analysts feel that if it becomes apparent that the Fed is unlikely to ease rates again, it could result in more GBP/USD losses in the days ahead. The next big event is US CPI later today and if it is as strong as the PPI was yesterday it will give further credence to the aforementioned scenario.  

Support: 2.0200, 2.0150, 2.0080 
Resistance: 2.0340, 2.0400, 2.0450 
 
Euro | Japanese Yen | British Pound | Swiss Franc 

 
Swiss Franc 

Support: 1.1400, 1.1350, 1.1300 
Resistance: 1.1440, 1.1500, 1.1550