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(BFW) Daily FX View: JPY, MXN Reflect U.S. Debt Paralysis, China Data

Narrowing ranges in USD/JPY, USD/MXN highlight lack of direction as market waits for Washington budget/debt resolution in holiday-thinned markets

• China data supports AUD, Brazil reacts to BRL strength

• U.S. closed for Columbus Day holiday, stocks open; Canada closed; overnight, Japan closed

• No movement in U.S. debt, shutdown negotiations; EIA now closed due to lack of funding
• USD/JPY weekly chart suggests pennant resolution in 1-2 weeks; on daily chart, consolidating in rebound from Oct. low
• Resistance 98.60 Oct. 11 high, 98.71 top of pennant
• Support 97.68 bottom of pennant, ~97 late-Aug., Oct. lows, 76.4% retracement of Aug.-Sept. rally
• USD/MXN weekly chart shows pennant resolution in 2-3 weeks; daily chart shows FX holding break below late-Sept., early-Oct. consolidation in ~13.10-13.20 range
• Support 12.9812 Oct. 11 low, 12.8615 bottom of weekly pennant, 12.5830 Sept. 19 low
• Resistance 13.1862 top of weekly pennant, 13.3440 Oct. 3 high
• China data indicate strength of China domestic economy relative to rest of world
• Domestic-demand driven data beat expectations: new yuan loans 787b vs est 675b; CPI 3.1%y/y vs est. 2.8%; imports 7.4%y/y vs est. 7.0%, remaining in steady range
• Exports -0.3%y/y vs est. +5.5%, 2nd lowest since 2009, in downtrend since 2010

• China reports retail sales, industrial production, fixed assets investment Oct. 17, 10:00pm ET
• AUD/USD higher overnight as China data offset Aug. Australia home loans -3.9% m/m vs est. -2.5%
• AUD pressing higher within Oct. uptrend
• Resistance 0.9485 Oct. 11 high, 0.9529 Sept. 18 high
• Support 0.9281 Sept. 20 low, ~0.9225 Aug. 19 high, Sept. 13 low

• USD/BRL weekly chart signals decline reaccelerating, on daily chart pushing through congested support around 2.16-2.17
• Brazil may extend FX intervention to 2014

• EUR/USD off lows after better than expected Aug. euro-area industrial production, 1.0% m/m vs est. 0.8%, prior revised to -1.0% from -1.5%
• On daily chart, EUR/USD at top of downtrending channel from Oct. 3; resistance 1.3571 top of channel, 1.3646 Oct. 3 high
• Support 1.3486 Oct. 9 low, 1.3460 bottom of channel

• NOTE: TJ Marta is an FX strategist who writes for First Word. The observations he makes are his own.