The pair has already charged to 97.42 in Asia today, with investors reacting to a stronger than expected core machinery orders reading from Japan (-2.7% versus -7.1%). Yen weakness has certainly resumed and we feel this is mainly due to the BoJ’s monetary policy meeting minutes released this morning. The July minutes revealed one member feels they need more time before describing Japan’s economy as recovering, given overseas uncertainty. This seems to have given USD/JPY some upside momentum as it has resulted in a weaker yen. The 97 level has turned into near term support and we expect to see some buying on any dips into that level.
While there isn’t anything else major out of Japan today, event risk ramps up on the US front later today, with retail sales set to be released and the market looking for a 0.4% rise ex-auto. We also have business inventories and import prices data due out later today. All these data points will be shaping tapering expectations and any beats would see USD/JPY extend its gains and spark and Nikkei recovery.
AUD/USD finally pulled back from the 0.92 level where it was hanging around for most of yesterday’s trade. The pair is now back at around 0.915 ahead of the NAB business confidence which is due out today.
EUR/USD is declining and now trading below 1.33 ahead of some data later today. We have the German ZEW economic sentiment readings and industrial production data due out. Investors will want to see further improvement in eurozone data in a bid to underpin the euro. Key moving averages for EUR/USD are pointing lower at the moment and suggesting the near term trend is downward. Near term support for EUR/USD is at 1.325. GBP/USD has been sideways at 1.546 for a while now but this might end later today when we get UK CPI, PPI and HPI which are all due out.