Yen drops broadly following another day of rally in Japanese equities. Nikkei rose 343.58 pts, or 2.05% to 17124.11, hitting another seven year high. It's reported that prime minister Shinzo Abe might call a snap vote within this year if he decided to postpone the planned sales tax hike in October 2015. Also, BoJ said that JPY 38b in ETF was bought as part of the stimulus program. Released from Japan consumer confidence dropped to 38.9 in October, Eco Watchers current sentiment dropped to 44, machine tools orders rose 31.2% yoy. USD/JPY took out 115.57 near term resistance and resumed recent rally.
Dollar is being supported by job data ahead of today's Veterans Day holiday. Fed's latest Labor Market Conditions Index (LMCI), which includes data through the end of October, showed greater improvement in labor markets over the past 6 months than previously estimated. The reading stayed at 4 in October while that for September was revised to 4 from 2.5. The revised index has increased 9.9 points in Q3 (previous: 7.2). While more job data would be released throughout the week, (i.e. JOLTs on Thursday), improving employment conditions probably have raised speculation of Fed's tightening.
Aussie is back under some pressure as the lift from China data faded. NAB business confidence dropped to 4 in October. House price index rose 1.5% qoq in Q3, inline with expectations. While Aussie stays soft against dollar, it, like others, is overwhelmed by the weakness in yen. That's clearly seen in the sharp rise from 91.76 in AUD/JPY. Nonetheless, the larger outlook is unchanged. Choppy rebound from 86.40 is viewed as a corrective move. Further rally could be seen in the cross but we'd expect strong resistance well below 105.42 to limit upside. An eventual downside breakout is still expected at a later stage.
