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(BFW) FX Daily View: JPY Gains On Political Risk, Quarter End

JPY outperforms as U.S. government shutdown looms, Italian political uncertainty persists, quarter-end and fiscal 1H in Japan may be impacting positioning; GBP aided by BoE rhetoricl

• Key risks today from developments in U.S. budget/debt ceiling debate, data, Fedspeak
• Data:
• Personal income, Aug., est. 0.4% M/m from 0.1%, above 0.3% avg. since 2000
• Pers. spending., Aug, est. 0.3% from 0.1%; spending growth has been trending lower since 2011; some downside risk as top 10 forecasters submitting to Bloomberg are biased to downside
• PCE core deflator est. 1.3% Y/y, prior 1.2%; high since March.; remains benign
• Fedspeak: Evans (voter) on eco. 10:15, said earlier today fiscal restraint historically unusual, Fed wasn't quite ready to taper, unemployment may fall below 6.5% before rate hike
• Dudley (voter) on eco. 14:00, recent comments include would not rule out 2013 taper, fin. stability as important to monetary policy as economy

• USD/JPY lower overnight as JPY outperforms major FX on risk aversion, quarter-end, fiscal 1H end in Japan, Fin. Min. Aso damps corp tax cut prospects
• Daily chart: Cross holding near bottom of uptrend channel since August
• Support 98.45 bottom of channel, 98.27 Sept. 26 low, 97.75 Sept. 18 low
• Resistance 99.67 Sept. 20 high

• GBP/USD gains overnight, boosted by Carney ruling out stimulus expansion, better than expected Nationwide house prices for Sept., 0.9% M/m vs est. 0.5%
• Daily chart: GBP moving sideways in middle of uptrending channel in place since July

• EUR/USD modestly higher overnight, helped by better than expected euro area eco., industrial conf.; risk from German CPI, Sept. P, est. 0.0% M/m, 08:00
• Daily chart: EUR consolidating, trading both sides of 1.35 for 6th day; elevated technicals, options imp. vol. suggest eventual break lower
• Support 1.3462 Sept. 25 low, 1.3452 Aug. 20 low
• Resistance 1.3569 Sept. 19 high

• USD/BRL: Brazil risk today from Sept. FGV inflation, est. 1.45% M/m, 07:00, total outstanding loans, Aug., prior 2546b, 09:30
• Daily chart: Rebounding from low since June; resistance ~2.26 Aug. 12, Sept. 10 lows