• Japanese yen is slightly weaker while USDJPY tests its key support
  • BoJ reduces its JGB purchases, Japanese manufacturing PMI improves
  • NZ dollar slides as well on the back of a miss seen in the trade data

The Asian session has been remarkably tepid so far as major indices are hovering close to their breakeven lines except the Hang Seng which is up 1.3%, however notice that it suffered severely yesterday. Looking at the FX front one may notice that the Japanese yen is the worst performer within the G10 basket being 0.3% down against the US dollar in early trading. It could be a little bit weird because of two factors. Firstly, manufacturing PMI from Japan picked up from 52.8 to 53.8 in November which is the highest value since March 2014. What’s more, there were faster rates seen in a majority of subindices which could bode well for Q4 GDP. On top of that the Bank of Japan decided today to slash the size of its JGB purchases by 10 billion JPY which on the surface should have been conducive to the Japan’s currency but it did not at all.

link do file download linkThe USDJPY has bounced off a crucial support area and it could continue marching north. In addition, it needs to spot that there has been a meaningful discrepancy between the pair and the US 10Y price (TNOTE on xStation5). Taking it into consideration we could second-guess a continuation of the ongoing move and bulls could eye 114.3. Source: xStation5

Besides, the NZ dollar is also among the weakest major currencies losing slightly more than 0.2% against the greenback. It could be ascribed to the trade data we knew on Thursday evening. The report showed a deficit at -871 million NZD whereas -760 million NZD had been anticipated. Both exports and imports grew much higher than expected but the latter was additionally accelerated by machinery purchases from abroad.

link do file download linkThe NZ economy had a larger than forecast trade deficit in October. Source: Bloomberg

link do file download linkGiven a technical view one may assume that the NZDUSD could go lower in the nearest future. The closest target sellers could aim for is placed at 0.6840 which being underpinned by a 50% retracement of the latest leg higher. Source: xStation5