EUR, JPY Correction - 17.1.2013

The single currency remains under pressure against the US dollar. Yesterday the currency pair fell to a one-week low 1.3255 and remains below 1.3300 in Asian trading hours today. The drop began when Eurogroup chairman Jean-Claude Juncker said the euro was “dangerously high”. However the ECB’s Nowotny said yesterday the exchange rate was not a major concern. The short-term trend of the pair EURUSD is definitely upward sloping, being in place since July 2012. Therefore corrections may now become good opportunities to go long. The Australian dollar fell in Asian trading hours. Pair AUDUSD dropped from 1.0566 to 1.0496 after the Australian bureau of statistics posted a weak employment report. The total employment fell in December by 5.5 thousand workers, while full-time employment decreased by 13.8 thousand, lifting the unemployment rate from 5.3% to 5.4%. In these conditions interest rate cuts from the Reserve Bank of Australia in the following months may become possible, although the regulator said unemployment might increase only slightly. The yen remained under some corrective pressure against the majors yesterday. Pair USDJPY fell to a one-week low 87.78, but managed to regain some ground in the aftermath climbing above 88.00. Pair EURJPY also dropped to a one-week low on Wednesday – 116.46 and also rose above 117.00 some time later. In general the yen broader weakness dominates on the market and technical targets have not been reached yet. Next week the Bank of Japan holds its policy meeting on January 21-22. The outcome may determine short-term dynamics of the currency pairs. As for macroeconomic data the focus is on China tomorrow. Early in the morning pay attention to the 4th quarter GDP growth and December industrial production and retail sales data. The numbers are expected to be slightly better than the previous values. The reaction of risk-sensitive assets may be significant.