US Dollar Gains against the Yen Due to Tapering Speculation - 12.11.2013

In yesterday trading the main movers in the FX market were the US dollar against the Japanese Yen and the Australian versus the US dollar. There is some speculation that the Fed may reduce slightly its monthly asset purchase program before March which is amounting now at $85 billion. The latter is a result of the unexpectedly better jobs report on Friday and supports the greenback. The US dollar index found resistance at 81.43 on Friday and eased to 81.00 yesterday morning while overnight remained between 81.43/81.00 range. We did not see many moves on Monday due to thin trading as Canada and USA were on holiday.

The US dollar against the Japanese jumped to almost 2-month high at 99.70 amid demand increase on greenback due to speculation of an earlier asset tapering. The USDJPY breached cap at 98.97 as well as break out of the symmetrical triangle. Based on that pattern, with previous up trend development, it is likely that positive configuration would continue and in the long term could achieve target at 109.00.

USDJPY

The Australian dollar weakened further against the US dollar as the recently established down trend suggested in previous trading. Nonetheless, fundamentally the National Australian Bank released its survey indicating that confidence dropped to +5 in October from +12 in September triggering some speculation the RBA could further cut rates, making the pair heavier. The AUDUSD violated support at 0.9355 on Monday and early on Tuesday drew support line at 0.9324, our expectation is that the kangaroo pair is more likely to continue its downward development to around key support at 0.9290.

On the data front there are not many events, we are focusing mainly on UK CPI which would be released in few minutes.