Currency market. US session review:

Data released: 

13:30 US Initial Jobless Claims (Nov 15) 323K 335K 344K

13:30 US Continuing Jobless Claims (Nov 8) 2.876M 2.870M 2.810M

13:58 US Markit Manufacturing PMI (Nov)Preliminar 54.3 52.4 51.8 

14:00 US American Petroleum Institute Monthly Report (Oct) 

15:00 EMU Consumer Confidence (Nov)Preliminar -15.4 -14.0 -14.5 

15:00 US Philadelphia Fed Manufacturing Survey (Nov) 6.5 15.0 19.8

The euro rose as European Central Bank President Mario Draghi damped speculation of negative deposit rates. Japan’s currency fell versus most major peers after the Bank of Japan stuck to its pledge to expand the monetary base a day after the Federal Reserve signaled a reduction in asset purchases “in coming months.” The franc fell against the euro as a Swiss National Bank (SNBN) board member said the central bank will maintain the franc cap amid a sluggish global economic recovery.

The yen weakened past 101 per dollar for the first time since July as yields on U.S. securities rose to the highest relative to Japan’s since September amid the nations’ diverging monetary policies.

EURO

In France preliminary purchasing managers index for November showed a contraction in both the services and manufacturing sector. The manufacturing PMI fell to a six-month low of 47.8, while the services reading slid to a fourth-month low at 48.8.

The story was a bit brighter in Germany and the broader euro zone, however, where the manufacturing PMI climbed to a 29-month high both places.

ECB governor Mario Draghi said that market should not try to infer negative deposit rates. Speaking in Berlin, the ECB governor noted that negative rates were discussed in last policy meeting but there has been no news since then. 

EUR/USD rose after Draghi’s comments and set session high at $1.3478. Now support comes at $1.3400/90 (Nov 13 lows) and $1.3300/90 (Nov 7 lows). Initial resistance is around $1.3480 and $1.3580 (Nov 19 highs). Above $1.3600 resistance placed at $1.3620 (61.8% Fibo of the $1.3830 - $1.3300 decline).

POUND

The pound rallied toward a daily high of 1.6140 after data showed UK CBI industrial survey rose much more than expected in November. 

Data released also showed UK Public Sector Net Borrowing was at £6.383 billion in October, following £8.619 billion registered in September. Analysts expected £4.000 billion.

GBP/USD trades below recent highs on $1.6180 (initial resistance) with stronger resistance remains at $1.6200 (phycological level). Initial support is around $1.6070 (Asian lows) and $1.5900/90 (Nov 14 lows) with a break under widens losses to $1.5850 (Nov 12 lows).

YEN

Japan’s currency fell after the Bank of Japan kept its pledge to expand the monetary base by as much as 70 trillion yen a year at today’s meeting. 

BOJ’s Kuroda said today that the BOJ won’t hesitate to adjust policy if needed:

-expects US economy to pick up as downward pressure from fiscal stand-off decreases;

-BOJ still has steps available to respond to upside, downside risks;

-want to monitor market moves; 

-Japan’s economy moving in line with forecasts so it’s too early to talk of specific steps; 

-expects Japanese lending to graually increase as QE helps economy improve;

-outlook for overseas economies is brightening somewhat due to US/EU recoveries;

-some nations, inc some in Europe may be in disflationery phase;

-China’s economy likely to sustain stable growth.

USD/JPY tested Y101. Above resistance comes at Y101.50 (Jul 7 high). Initial support comes at Y100, then - at recent lows on Y99.40, below - near Y99.00 (Oct 17 highs).

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