By DailyFX - EURJPY - Manufacturing Upticks.Bolstering euro bidding in the near term, fundamental reports showed a revitalization of the region's services sector. According to...

... the Purchasing Manager's index by RBS/NTC, services grew the most in 16 months in November.


Coupled with the upbeat manufacturing sector
figures, the region's economic expansion may in fact top the third
quarter's performance of 0.6 percent. The composite report printed a
55.2 compared with earlier estimates of 54.7. This reading now lends
some strength to Euro Bulls as it shows that the latest decision by
European Central bankers may not be as unwarranted as some suggested.
However, although carry traders continued to bid the cross higher in the
day, the rather conflicting retail sales data may hint otherwise going
into the Asian session. Mostly in line with the monthly comparison,
rising 0.5 percent, the annualized sales figure dips to 0.4 percent,
considerably lower than the 1 percent expected. Ultimately, this may
spark some concern that domestic demand remains rather weak compared to
the upticks in manufacturing as exports seemed to have bounced slightly.
Separately, China's enormous Airbus order of 150 jets, worth over $9
billion, sparked earlier sentiment higher as parties will need physical
conversin on payment.

Technically Speaking
Penetrating through the upside trendline, the cross looks to finally be
taken over by short term weakness. Hitting a high of 141.28, the
currency has created a pinpoint turn with an imminent test at the next
floor of 142.22 (the 23.6 percent fib level form the session's move).
The level should hold temporarily with definitive capping at 141.93 (the
38.2 percent fib), where previous consolidation occurred. Probable
upside will see a break of the intraday high.

NZDUSD

Awaiting the RBNZ
Economic data was thin, providing little to spark such a momentous move
to the upside in the major currency as price action broke through 0.7150
and tested the 0.7200 handle. As a result, today's action makes one
entertain the idea of major bidding by individuals before the Reserve
Bank of New Zealand's overnight cash rate decision in two days time.
Hiking once again by another 25 basis points, central bank Governor Alan
Bollard looks to curb inflationary pressures which are expected to soar
above the 3 percent benchmark target. The higher rate would effectively
attract further carry trade speculation as it would increase the carry
spread, difference between economies, to 325 basis points. Kiwi
bullish, momentum may push the currency higher against the U.S. major in
the near term, however, may reverse recent strength if the decision is
otherwise stated.

Technically Speaking
The strong, nearly 3-week long kiwi rally is beginning to show signs of
indecision around 0.7200. After price action today took out a 61.8 fib
of the dollar's move against the kiwi between March and July, the repeat
support and resistance level at 0.7195 finally sobered bulls. If bulls
rally momentum for a push beyond this level, the next nearest level for
resistance lies with the 73.6 fib of the same dollar run at 0.7265. If
however, bears take this oppurtunity to make their move, real kiwi
bidding will not be present until 0.7215/20 where the confluence of the
lower bound of a rising trend channel and former resitance on the daily
chart meet.

CHFJPY

Carry Traders Bolster Move
Carry trade momentum yet again as no pertinent economic data for both
economies was released during the session. Captial spending lent
optimism in favor of the Japanese yen, which was unreflective in the
price action. Japanese firms increased their spending by 10.6 percent
in the third quarter. Soaring above the 6 percent expected, the rise is
suggestive of better outlooks by domestic firms as they beefed up
investments internally leading to bullish sentiment on yen denominated
assets. The Nikkei 225 soared past the 15,000 figure to close at 15,543
I nTokyo. However, comments by Finance Minister Tanigaki and Bank of
Japan Governor Fukui was the tour de force in pushing the USDJPY major
closer to 122. Commenting to reporters over the weekend Fukui stated
that the recently weaker yen "is not a problem" with Tanigaki
stating that the recent slide in the yen is reflective of current
economic performance. As a result, already falling 15 percent against
the dollar, the underlying spot price may have further to fall given the
these recent bearish comments along with no indication of government
concern or intervention efforts.

Technically Speaking
An ascending triangle in the CHFJPY pair that has been five years in
the making may have finally broken. Former resistance at 92.20 set back
in May of 2003, was breached in today's strong swissie bidding, which
has left price action floating at levels not seen since October of 1998.
The next true level of resitance comes in at 94.20 with the 61.8 fib of
yen move from late 1990 to late 2000. However, caution should be held
to ensure the break is legit. If the pair closes back below 92.20, the
break would be rendered invalid and a subsequent move to 91.50/5 could
be in order.


By DailyFX