BOJ Holds Monetary Stance, NFP Could Be Delayed, GBPUSD Waving Down - 4.10.2013

U.S government shut down continues for a fourth day spreading fears that Democrats and Republicans would be unable to agree on looming Debt Ceiling as well. No agreement on 2014 fiscal budget is reducing growth by 0.2% per week according to Goldman Sachs while there is an additional pressure by declining reduction as federal workers are not paid. Indirectly though economy could be further hurt by falling confidence in business and consumption.

The first signal of a damaged confidence came out yesterday by falling ISM Non-Manufacturing PMI to 54.4 in September, down from 58.6 in August and lower than expected at 57.2 and that increased pressure on the greenback which was losing against its most major currency pairs. The US dollar index is steady at recent low levels near 79.60. At the same time, US Jobless Claims came out at 308K for the previous week slightly higher than two weeks ago at 307K but less than expected at 315K although did not help much the greenback. The U.S Labor Department said the previous Friday that it would not issue NFP if the government is down and that seems the most likely scenario for today's expected news.

The Bank of Japan Earlier today at its monetary statement announced that is holding its monetary policy unchanged by targeting increase of its monetary base by 60-70 trillion yen per year. Additionally the central back reiterated that is aiming at a 2% price stability target. Earlier in the week Prime Minister Shinzo Abe increased retails sales tax from 5% to 8% to fight back rising debt levels. The Yen continue to incline against the greenback with the USDJPY plummeting to 96.92 mainly due to uncertainty over U.S. shut down and debt ceiling.

Lastly, the British pound against the US dollar started a downside development which was triggered by mildly weaker than projected Halifax HPI and Services PMI released yesterday. However, the macro data do not appear so bad for the UK economy to explain that sudden reversal in sentiment while the US dollar is weaker across the board.

The GBPUSD therefore is likely to have entered in longer term corrective move, in the hourly timeframe formed a double top between 1.6251/1.6161 short term range which was downwardly breached last night, the pair was lastly seen at 1.6128. We would expect a deep corrective move since the pair has been in bullish structure sine beginnings of July. The EURGBP bias swung to upside as the sterling was losing momentum while Euro was gaining momentum with the cross pair advancing by 1.27% from 0.8334 to 0.8439.