The election news has had a limited impact on the Dollar with USD/JPY currently trading back at the early European highs around 117.70. Fears that the Republican spending plans could be hit by the power struggle after the mid-terms has caused a squeeze higher in bonds but for the Dollar a more complete political picture is needed.
Away from the US story we are beginning to hear rumours that next week's Japanese Q3 GDP data could come in below forecast. This would run contra to the recent BOJ rhetoric but would add new life to the carry trade. Technically the market is losing firm direction. A spike to 117.27 last session strengthened the bear case but the Dollar staged a late rally and closed 50-points off its lows. Wednesday price highlights the market indecision with further tight open/close action.
There are the makings of a messy updraft on the daily chart despite Tuesday's sharp losses with a return to levels above 118.00 possible in the next 12-hours. A drop under 117.30 negates our tentative bull view.
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