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Daily FX View: NOK, EUR Outperform, USD/JPY Rangebound

China mfg PMI disappointed, while Japan Tankan provides mixed picture, sentiment beats., while
capex misses.

• China flash mfg PMI for Dec. vs est. 50.9, causing general risk aversion during Asia session

• JPY
- USD/JPY -0.07% at 103.13, session range 102.65/103.33
- View: Neutral
-- Slipping from Fri. new high since 2008
-- Momentum down from recent highs despite recent rally, indicating negative divergence
- Tankan mixed
-- Lg. mfg. and svcs. indexes for 4Q beat: mfg. 16 vs est. 15, high since 4Q 2007, svcs. 20 vs est. 16, high since 3Q 2007, tied for 4th highest print since 1992
-- Mfg. and svcs. outlooks disappoint: mfg. 14. vs est. 17 though still high since 4Q 2007, svcs. 17 vs est. 19, though still high since 3Q 2007
-- Tankan all-industry capex 4.6%vs est. 5.5% from 5.1%; potentially topped 4Q 2012

• EUR
- EUR/USD +0.32% at 1.3788, set fresh session high 1.3789 in recent trade, overnight low 1.3727
- View: Bearish
-- Consolidating below Dec. 11 high since Oct.
-- Momentum indicators down from overbought levels consistent with EUR tops since Sept. 2012
- German mfg PMI for Dec. 54.2vs est. 53.0 from 52.7; high since June 2011, outweighs German svcs. PMI 54.0 vs est. 55.3, prior 55.7, disappointing French mfg. and svcs. PMIs: mfg. 47.1 vs est. 49.0, prior 48.4, svcs. 47.4 vs est. 48.7, prior 48.0, 3rd consecutive declines for both

• NOK outperforms all 23 major FX peers
- EUR/NOK -0.43% at 8.455, session range 8.4376/8.5191
- View: Negative
-- Slipping from 8.5459 Dec. 12 high since 2009
--Momentum overbought, turning lower

• BRL
- USD/BRL 0.15% at 2.3337, session range 2.3306/2.3347
- View: Neutral
-- Holding above 61.8% retracement of Nov.-Dec. rally
-- Unable to breach above 61.8% rebound of Aug.-Oct. decline
- IPC-S CPI thru Dec. 15 0.75%m/m vs est. 0.72%; time series trending upward from late-July

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