The FX Trader: JPY and yields the focus.

Technical and other observations for key pairs.

• Dollar Index – at pivotal levels into the 99.00 area if we look at a trend line that has been challenged and the recent lows, though different USD pairs pulling in different directions. 100.00 needed to re-establish the choppy up-trend from the Sep. lows.
• EURUSD – has neutralized the attempt to establish a bear trend, but technical indeterminate here. The next upside hurdle is 1.1670 resistance.
• JPY pairs – it looks like the “coming 155-160 USDJPY showdown” scenario remains intact, especially as long as global yields remain on the rise, though the center of gravity is US treasury yields, so we are particularly likely to see “Game on!” if,say, the US 10-year yield rises above the 4.20-25% zone (currently 4.14%).
• GBPUSD and EURGBP – it is rather resilient of sterling that we haven’t headed lower with the big reaction in UK yields on Friday.
• AUDUSD and AUD – AUDUSD is mid-range. In AUDNZD, we got a big correction in the strong bull trend trade as the yield spread between AU and NZD has now tightened 7-8 basis points at the front end of the curve after blowing out further on the recent strong AU jobs report. But the trend to remain intact if 1.1400-1.1450 zone holds– but risk of a bigger sell-off if any strong NZ catalysts emerge. RBNZ up next Wednesday the 26^th.
• EURCHF- a big reversal on Friday that is partially sterling-linked, but EURCHF also critical after the huge 0.9200+ area support was taken out and then the move was rejected.
• Scandies – NOK and SEK sold off on the recent risk off event, with crude oil offering additional pressure on NOK – with this pressure easing at the start of the week, will EURNOK and EURSEK challenge the huge range support again?

Next steps

The market is hungry for US data. This week, we’re told we’ll get the September US employment report, but that the data wasn’t collected for October and we may have to wait for November data for a read on what is going on. Meantime, we’ll have a look at more timely weekly private ADP payrolls tomorrow. Other data highlights this week include the UK CPI up on Wednesday and the Eurozone and other flash November PMIs up on Friday.

Risk sentiment pivotal but what is transmission into FX? We got a stabilization move Friday, which could allow a comeback in more traditionally cyclically exposed currencies from AUD to SEK, but JPY pairs will likely show the most volatility if both equities and yields rise together from here, creating ever more tension if USDJPY rises well above 155.00.

FX Board of G10 and CNH trend evolution and strength.
Note: If unfamiliar with the FX board, please see a video tutorial for understanding and using the FX Board.

Few changes of note after a choppy session on Friday, with NZD vying for a comeback, while precious metals decompressed Friday.

Table: NEW FX Board Trend Scoreboard for individual pairs.
EURJPY hits 180 days in a positive trend – more than remarkable. USDCHF triggered a downtrend reading – but look at the chart and the big range that remains intact there before deciding that it is particularly relevant here. EURSEK is only interesting if the sub-10.90 levels break in coming sessions.