Currency market. ASIA session review: Dollar retreats from five-year high vs. yen

Data released: 

01:45 GMT China HSBC Manufacturing PMI (Dec )Preliminar 50.5 50.8 

08:28 GMT Germany Markit Manufacturing PMI (Dec) Preliminar 54.2 53.0 52.7 

08:28 GMT Germany Markit Services PMI (Dec) Preliminar 54.0 55.5 55.7 

08:58 GMT EMU Markit Manufacturing PMI (Dec) Preliminar 52.7 51.9 51.6 

08:58 GMT EMU Markit PMI Composite (Dec) Preliminar 52.1 51.9 51.7 

08:58 GMT EMU Markit Services PMI (Dec) Preliminar 51.0 51.5 51.2 

10:00 GMT EMU Trade Balance s.a. (Oct) €14.5B _ €14.3B 

10:00 GMT EMU Trade Balance n.s.a. (Oct) €17.2B €10.8B €10.9B

The U.S. dollar retreated from a five-year high against its Japanese counterpart ahead of the Federal Reserve’s decision on what’s next for monetary policy.

Investors later Monday are slated to receive the Federal Reserve’s report on U.S. industrial production in November. Economists, on average, were looking for a 0.6% rise, compared with October’s decline of 0.1%. 

EURO

The euro rose a bit on Monday. 

Data showed German Manufacturing PMI was better forecasts at 54.2 (versus 53), but miss on Services at 54 (versus 55.5 expected). 

With the release of EU PMI, which shows better than expected Manufacturing and Composite, but weaker Services numbers, the euro has edged higher.

EUR/USD remains below $1.3800. Above resistance comes at $1.3830 (Oct 25 high). Support is around $1.3720 with a break below opens the way to support near $1.3620 ahead of $1.3600.

POUND

The pound retreats with all eyes will be focused on tomorrow’s line up with a plethora of UK numbers ranging from CPI, PPI and RPI.

GBP/USD recovered from Friday’s lows on $1.6260 and currently holds above $1.6300. Initial resistance is around $1.6400/15 (Dec 12 highs). Above resistance comes at $1.6520 and $1.6625 (August’2011 highs).

YEN

The U.S. currency on Friday rallied to its highest level since October 2008, propelled by a run of upbeat U.S. economic data which indicated to some investors that the Fed will begin to reduce the pace of monetary stimulus at its meeting this week.

The Japanese government plans to raise the national sales tax to 8% from 5% in April.

Yen strength eventually accelerated Monday after the closely watched tankan survey from the Bank of Japan showed improvement in Japanese business sentiment in the fourth quarter. The headline index of large manufacturers hit its highest level since December 2007.

USD/JPY challenged support line from Nov 7 at Y102.70 and currently recovers. Below Y102.70 support comes at Y102.20 (Dec 11 lows) and Y101.60/50 (Dec 5 lows). Initial resistance is around Y103.30 with a stronger one - at Y103.90/00 (Dec 13 highs).

DATA AHEAD:

ECB President Draghi's Speech will start at 14:00 GMT. At the same time US Net Long-Term TIC Flows will come out.

At 14:15 GMT US Industrial Production data will be published.

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