Saxo Bank | Jun 28, 2013 07:29AM ET
Japan’s data was generally positive, though the inflation data doesn’t show any definitive evidence just yet that Abenomics is beginning to move the needle on inflation – which will clearly take at least another three months before we can decide whether a trend is developing anyway. Some of the other data was encouraging however, such as the Manufacturing PMI and the Retail Trade Data, and the Housing Starts number was the strongest in years. The Nikkei jumped higher and the JPY weakened again overnight (see my brief post on the technical areas of interest for the moment in USDJPY.)
Other notes:
EURCHF is trying to get something going after yesterday’s rally from the lower range that saw the pair testing the 200-day moving average. Would suspect the direction there will follow the direction of the major JPY crosses.
EURGBP tried to get something going again yesterday, but we’re still buried in the longer term range and need to push the envelope beyond 0.8600 to the upside and below 0.8470 to the downside. If the tail risks for Europe continue to come in, the upside could be the side of least resistance, but we’ll know one way or another after next week’s BoE (first with Carney at the helm) and ECB meetings.
It’s surprising to see AUDUSD in a relatively quiet range despite the massive drop in gold prices in recent days, as gold touched below . One supposes that the strong comeback in carry trades in recent days is acting as a kind of counterbalance, though I don’t see the weak Aussie story fading anytime soon.
Looking ahead
Remember that today is end of month and end of quarter.
Look out for the Norwegian Retail Sales and employment data up shortly. NOK is looking for short term direction after the shock developments at last week’s Norges Bank meeting, when Olsen performed an about face and indicated an easing bias. Looking at EURNOK, if the rally is going to hold, I would look for support ahead of 7.800 for another go above 8.00, while USDNOK is more interesting, with the 6.00 area an obvious one for support to come in, though the pair could slip to 5.95 without threatening a full reversal. Looking ahead, wondering if 6.20 will soon fall for a try higher still.
Chart: USDNOK
Next week should bring plenty of fireworks, with all of the standard first week of the month economic data and both BoE and ECB meetings set for Thursday.
Economic Data Highlights
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