Yen surges as risk goes on the defensive

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

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

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
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About the Author
Michael Boutros Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.
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