Dollar is mildly soft as markets start another week of holidays. The economic calendar is rather light this week. Released today, Japan industrial production dropped -1.0% mom in November, retail sales dropped -1.0% yoy. Both were below expectations. Looking ahead, US data will be the main focus in the week. Trade balance, consumer confidence, pending home sales, jobless claims and Chicago PMI will be watched but are not expected to trigger much volatility. European calendar is near empty with only M3 money supply featured. China will release PMI manufacturing on Friday, which is January 1 holiday, and that could set the tone in risk markets next week.
- Tuesday: US trade balance, S&P Case Shiller house price, Consumer confidence
- Wednesday: Swiss UBS consumption indicator; Eurozone M3; US pending home sales
- Thursday: US jobless claims, Chicago PMI
- Friday: China PMI manufacturing
Talking about risk markets, US equities maintained a bullish outlook in spite of recent volatility. DJIA's price actions from 17977.84 near term top are clearly corrective. Downside was also supported comfortably above 38.2% retracement of 15370.33 to 17977.84 at 16981.77. The development suggests that we might have an upside breakout when traders are back from holidays. And a test on 18351.36 high would likely be seen in early January.
Looking at the bigger picture, the up trend from 2009 low of 6469.96 is expected to have at least up more up wave as the fifth before it makes an important top. Normally, the consolidative pattern from 18351.36 should extend a bit longer considering the relative brief wave 2 from 12876 to 10404.49. Nonetheless, the rise from 15370.33 is starting to show an impulsive structure, which could indeed be resuming the up trend. We'll pay close attention to reaction from 18351.36 at a later stage.
