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Japanese Yen Surges as Risk Goes on the Defensive- Loonie Heavy

Japanese Yen Surges as Risk Goes on the Defensive- Loonie Heavy

2011-10-13 16:28:00
Michael Boutros, Technical Strategist
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Daily Winners and Losers

Japanese_Yen_Surges_as_Risk_Goes_on_the_Defensive-_Loonie_Heavy_body_Picture_2.png, Japanese Yen Surges as Risk Goes on the Defensive- Loonie HeavyJapanese_Yen_Surges_as_Risk_Goes_on_the_Defensive-_Loonie_Heavy_body_Picture_3.png, Japanese Yen Surges as Risk Goes on the Defensive- Loonie HeavyJapanese_Yen_Surges_as_Risk_Goes_on_the_Defensive-_Loonie_Heavy_body_Picture_4.png, Japanese Yen Surges as Risk Goes on the Defensive- Loonie Heavy

The Japanese yen is the top performer against a stronger dollar early in North American trade with an advance of 0.72% by mid-day. Concerns about global growth have come back in focus after Chinese data overnight fueled speculation that the juggernaut economy may be slowing. September trade balance figures missed consensus estimates with a print of $14.5B, down from a previous print of $17.6B. Expectations were for a read of $16.30B. Exports and imports also slumped in September with both prints missing estimates. Subsequently risk appetite has gone on the defensive with classic haven flows supporting the dollar and the yen.

The pair broke back below the 23.6% Fibonacci extension taken from the September 9th and October 12th crests at the 77-figure before finding solace just above the 38.2% extension at 76.80. A break below this level eyes the 50% extension at 75.60 followed by the key 61.8% extension at 76.40. Topside resistance now stands at the figure with subsequent ceilings eyed at 77.40 and 77.70. The yen is likely to be well supported so long as equities and other risk assets remain under pressure. Overnight traders will be eyeing data out of Japan with the September print for domestic corporate goods prices index highlighting the docket.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

78.30

50-Day SMA

76.86

20-Day SMA

76.68

2011 JPY High

75.94

Upcoming Events

Date

GMT

Release

Expected

Previous

10/13

23:50

Domestic Corporate Goods Price Index (MoM) (SEP)

-0.2%

-0.2%

10/13

23:50

Domestic Corporate Goods Price Index (YoY) (SEP)

2.5%

2.6%

10/13

23:50

Japan Money Stock M2+CD (YoY) (SEP)

2.7%

2.7%

10/13

23:50

Japan Money Stock M3 (YoY) (SEP)

2.2%

2.2%

10/13

23:50

Japan Buying Foreign Bonds (Yen) (OCT 7)

-

972.8B

10/13

23:50

Japan Buying Foreign Stocks (Yen) (OCT 7)

-

132.9B

10/13

23:50

Foreign Buying Japan Bonds (Yen) (OCT 7)

-

258.8B

10/13

23:50

Foreign Buying Japan Stocks (Yen) (OCT 7)

-

-169.3B

Japanese_Yen_Surges_as_Risk_Goes_on_the_Defensive-_Loonie_Heavy_body_Picture_5.png, Japanese Yen Surges as Risk Goes on the Defensive- Loonie HeavyJapanese_Yen_Surges_as_Risk_Goes_on_the_Defensive-_Loonie_Heavy_body_Picture_6.png, Japanese Yen Surges as Risk Goes on the Defensive- Loonie Heavy

The loonie is the worst performing currency in afternoon trade in the New York, off by more than 0.6% against the greenback. The pair moved higher throughout European trade as risk assets and commodities sold off, with crude off by more than 2% in early US trade. Subsequently higher yielding, growth linked currencies have come under pressure with the USD/CAD pair breaking back above the 1.02-figure in pre-market trade. Interim resistance now stands at the 76.4% Fibonacci retracement taken from the September 27th advance at 1.0260 backed by the 1.03-handle and the key 61.8% retracement at 1.0335. A break below interim support eyes subsequent floors at the 100% retracement at 1.0140 and the 1.01-figure.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.9840

50-Day SMA

1.0013

20-Day SMA

1.0252

2011 CAD High

0.9405

Upcoming Events

Date

GMT

Release

Expected

Previous

10/12

12:30

Manufacturing Shipments (MoM) (AUG)

0.5%

2.7%

Written by Michael Boutros, Currency Analyst with DailyFX.com

To contact Michael emailmboutros@dailyfx.comor follow him on Twitter @MBForex.

To be added to Michael’s email distribution list, send an email with subject line “Distribution List” to mboutros@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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