USD/JPY tumbles

USD/JPY crashed after an early head-fake up following a very weak Q3 GDP report. Japan is technically in recession with growth off 0.4% q/q and 1.6% AR against expectations of rises of 0.5% and 2.1%. Up from an early Asia low of 116.36, it cruised through option barriers at 117.00 to 117.06. The market reversed fast once nearby stops were tripped with longs liquidating en masse. A smattering of Japanese exporter sales were noted above 117.00 but most of the flows were from offshore names. Brief stops were seen near the early low and then around 116.00 on its way to 115.45 before steadying. The Nikkei was also down over 450 pts and to just sub-17k. Although a delay in the April sales tax hike it almost a given, the also-expected December snap election could put the Abe administration on a more perilous footing what with the data pointing to the failure of Abenomics for many and growth dependent even more on BoJ QQE. It must be remembered the last ease was undertaken to alleviate any pain from another sales tax hike. The crosses too but by smaller amounts – EUR/JPY from 146.53 to 145.12, GBP/JPY from 183.34 to 181.42, AUD/JPY from 102.38 to 101.50 and NZD/JPY from 92.65 to 91.95.

EUR/USD opened in Asia at 1.2525 after completing a bullish outside day reversal Friday with heavy short-covering trumping better US data. It edged down to 1.2514 early before tracking higher as USD/JPY reversed lower. Stops above 1.2570 were tripped and a high of 1.2580 seen before EUR/USD eased off. The market remains very short and a correction towards 1.2685 could be seen, Fibo 61.8% retracement of the 1.2887-1.2358 move. Fundamentals remain negative some more balance in positions may be needed first.

GBP/USD legged up from an early Asia low of 1.5663 to 1.5737 on broad, USD/JPY-led USD weakness. Cable looks to attempting to make tracks away from the 1.5593 spike low Friday, the lowest since September ‘13. EUR/GBP consolidated gains to 0.8000 Friday, trading 0.7984-0.8003 in Asia.

USD/CHF fell a leg from 0.9598 to 0.9554 in sympathy with a crashing USD/JPY and resulting broad USD weakness before bouncing. EUR/CHF did little in Asia, holding between 1.2011-19 and the market still on the look-out for SNB action ahead of 1.2000.

AUD/USD in Asia at 0.8750 and, from an early low of 0.8747, rallied to 0.8765-75 resistance. AUD/JPY short-covering helped as the cross broke above 102. AUD/USD eventually offers at 0.8765-75 and ran a few stops above into the Japanese GDP release. A quick push down towards the early low was followed by an USD/JPY-led USD reversal which took AUD/USD up to 0.8796 and closing the gap created on the plunge post-China PMI on November 2.

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