Sample Category Title

Daily Pivots: (S1) 1.6621; (P) 1.6674; (R1) 1.6728; More...

EUR/AUD is still bounded in range below 1.6800 and intraday bias remains neutral. In case of another dip, strong support is expected from 38.2% retracement of 1.5963 to 1.6800 at 1.6480 to contain downside. On the upside, firm break of 1.6800 will resume the rally from 1.5963. However, sustained break of 1.6480 will bring deeper correction 61.8% retracement at 1.6283 instead.

In the bigger picture, EUR/AUD is holding on to 1.5996 key support (2024 low) despite brief breach. Larger up trend from 1.4281 (2022 low) is still in favor to resume through 1.7180 at a later stage. Nevertheless, sustained break of 1.5996 will indicate that such up trend has completed and deeper decline would be seen.

Daily Pivots: (S1) 161.27; (P) 162.38; (R1) 163.21; More...

Intraday bias in EUR/JPY stays neutral for the moment. Overall outlook is unchanged that corrective pattern from 154.40 could extend. On the upside, break of 164.07 will target 164.89 and above. On the downside, break of 160.94 minor support will bring deeper fall through 159.74 support.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). The range of consolidation should have been set between 38.2% retracement of 114.42 to 175.41 at 152.11 and 175.41 high. However, decisive break of 152.11 would argue that deeper correction is underway.

Daily Pivots: (S1) 191.98; (P) 193.31; (R1) 194.47; More...

GBP/JPY recovered above 192.05 minor support and intraday bias stays neutral for the moment. Overall outlook is unchanged that corrective pattern from 180.00 might extend. On the upside above 194.73 will target 198.94/197.79 resistance zone. On the downside, however, break of 192.05 minor support will turn bias back to the downside for 189.31 support instead.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

The sharp selloff in equities sparked by AI competition concerns appears to have run its course for now. While NASDAQ dropped more than -3% yesterday, the selling pressure did not intensify as the session progressed. DOW, on the other hand, demonstrated resilience, closing up 0.65%. This relatively stable market sentiment has led to reversal in safe-haven flows, with both Swiss Franc and Japanese Yen giving up most of their earlier gains and showing signs of returning to weakness.

Meanwhile, Dollar found fresh support from reports of new tariff measures. According to the Financial Times, Treasury Secretary Scott Bessant is pushing for a universal 2.5% tariff that would increase incrementally each month, potentially reaching as high as 20%.

US President Donald Trump hinted at an even more aggressive rate, emphasizing that higher tariffs on imports would be balanced by lower taxes for American workers and businesses. Trump also renewed his push for a corporate tax rate cut to 15%—down from 21%—for companies producing goods domestically.

In the currency markets, Yen continues to lead as the strongest performer this week, followed by Swiss Franc and Dollar. On the other end, commodity-linked currencies have come under significant pressure, with Aussie leading the declines, followed by Kiwi and Loonie. Euro and British Pound are trading in the middle of the pack.

While this still reflects a broadly risk-off sentiment, the picture could shift quickly albeit another swift in sentiment. U.S. durable goods orders and consumer confidence data are in focus today. But the spotlight will soon turn to key central bank decisions from BoC and FOMC tomorrow, and ECB on Thursday.

Technically, USD/CHF is well supported by the near term rising channel so far, as rally from 0.8374 remains intact. Break of 0.9107 minor resistance should bring rise resumption to through 0.9200 high to 0.9223 key medium term resistance. Reaction from there will decide whether the pair is already in larger bullish trend reversal.

Australia NAB business confidence rises to -2, price pressures persist

Australia's NAB Business Confidence showed slight improvement in December, rising from -3 to -2, but remains below the long-term average since early 2023. Business Conditions, on the other hand, posted a stronger gain, climbing from 3 to 6.

Breaking down the details, trading conditions improved from 6 to 9, profitability rose from 0 to 4, and employment conditions ticked up from 3 to 4.

Price pressures continue to persist, with purchase cost growth rising slightly to 1.5% in quarterly equivalent terms. Labour cost growth edged lower to 1.4%, but output price growth increased by 0.3 percentage points to 0.9%. Retail prices also ticked up to 0.7%.

According to NAB Chief Economist Alan Oster, “The uptick in purchase cost growth and final product prices reminds us that businesses continue to face some price pressures.”

SNB's Schlegel: Negative rates won't be taken lightly

SNB Chair Martin Schlegel said on Monday that while the central bank is reluctant to reintroduce negative interest rates, it cannot rule them out entirely.

He stated, "negative interest rates have served their purpose, but it is not something the SNB would do lightly," .

Schlegel also downplayed the risks of deflation, noting that occasional months of negative inflation "is not a problem".

"Our concept is price stability over the mid term," he emphasized.

Markets currently see 64% chance of SNB cutting rates from 0.5% to 0.25% in March, with a 27% likelihood of a further cut to 0% by June.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 191.98; (P) 193.31; (R1) 194.47; More...

GBP/JPY recovered above 192.05 minor support and intraday bias stays neutral for the moment. Overall outlook is unchanged that corrective pattern from 180.00 might extend. On the upside above 194.73 will target 198.94/197.79 resistance zone. On the downside, however, break of 192.05 minor support will turn bias back to the downside for 189.31 support instead.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

Australia's NAB Business Confidence showed slight improvement in December, rising from -3 to -2, but remains below the long-term average since early 2023. Business Conditions, on the other hand, posted a stronger gain, climbing from 3 to 6.

Breaking down the details, trading conditions improved from 6 to 9, profitability rose from 0 to 4, and employment conditions ticked up from 3 to 4..

Price pressures continue to persist, with purchase cost growth rising slightly to 1.5% in quarterly equivalent terms. Labour cost growth edged lower to 1.4%, but output price growth increased by 0.3 percentage points to 0.9%. Retail prices also ticked up to 0.7%.

According to NAB Chief Economist Alan Oster, “The uptick in purchase cost growth and final product prices reminds us that businesses continue to face some price pressures.”

Full Australia NAB business confidence release here.

SNB Chair Martin Schlegel said on Monday that while the central bank is reluctant to reintroduce negative interest rates, it cannot rule them out entirely.

He stated, "negative interest rates have served their purpose, but it is not something the SNB would do lightly," .

Schlegel also downplayed the risks of deflation, noting that occasional months of negative inflation "is not a problem".

"Our concept is price stability over the mid term," he emphasized.

Markets currently see 64% chance of SNB cutting rates from 0.5% to 0.25% in March, with a 27% likelihood of a further cut to 0% by June.

Markets

China’s DeepSeek R1 AI model sparked risk-off across the board. It was yesterday’s main trading theme in absence of other major news. Trained at a significantly lower cost and with inferior chip technology, R1 raised questions to the lofty valuations of US big tech. AI poster child Nvidia sank 17%, wiping out some $560bn in market capitalization. Others suffered to a lesser extent. Google parent Alphabet lost more than 4%. Microsoft gapped 5% lower but was picked up along the way. Meta Platforms even swapped a lower open for a record high. On an index level, the Nasdaq obviously underperformed. It lost some 3% compared to the slight 0.65% gain for the Dow. Core bonds enjoyed a safe haven bid. US Treasuries outperformed Bunds. Yields closed between 3.8 and 9.3 bps lower. German rates eased around 4 bps across the curve. The Japanese yen and Swiss franc scored well in the currency landscape. USD/JPY fell below the 155 mark to close at 154.5. EUR/CHF erased Fridays PMI-driven gain, back towards the 0.945 area. The US dollar lagged its haven peers during Asian and European dealings but got a better bid in US dealings. EUR/USD ended the day even marginally weaker around 1.05. The trade-weighted index (107.34) bounced back after touching 107 before finding new vigor this morning and attacking the 108 barrier. EUR/USD falls to 1.044. USD-strength followed on quotes from Trump in a response to Treasury Secretary Bessent’s approach to import tariffs. The Financial Times citing people familiar said Bessent favours a 2.5% universal tariff, to be raised by the same amount each month. Trump said he wants tariffs to be “much bigger” than that while also vowing to slap levies on foreign-produced chips, pharmaceuticals and metals such as steel, aluminum and copper.

The R1 bombshell came at a peculiar timing with Chinese markets starting today closed for a whole week (Lunar NY) and just ahead of the US earnings season shifting into higher gear. Microsoft and Meta report tomorrow, Intel and Apple on Thursday. For today, though, we’ll look out whether yesterday’s stock sell-off already lures some dip buyers. Futures in any case suggest the dust has settled a bit and core bond yields recoup some of the basis points lost yesterday. The eco calendar contains US durable goods orders and Conference Board consumer confidence but we don’t think they’ll move the market needle by a lot ahead of Wednesday’s FOMC and Thursday’s ECB meeting.

News & Views

Prices at UK shops dropped 0.4% M/M January compared to December, the British Retail Consortium reported. Prices were 0.7% lower y/y, but this was -1.0% in December. Non-food product prices were down -1.8% M/M and 0.9% lower Y/Y. Food price inflation accelerated to 0.5% M/M and 1.6% Y/Y. In a comment accompanying the release, BRC indicated heavy January discounting in some sectors including furniture and fashion. At the same time the consortium warned on a potential risk of more upside price pressures going forward. The trend of higher food prices might continue with the M/M rise the fastest since April last year. BRC also indicates that retailers might push up prices in response to higher social security contribution and higher (minimum) wages. UK headline CPI inflation slowed to 0.3% M/M and 2.5% Y/Y in December, but might rebound from that level.

Business confidence in Australia recovered modestly according to the confidence survey from National Australia Bank, with the index rising to -2 from -3 in December. The overall level remains low after a substantial decline in November. Business conditions, rising from 3 to 6, also reversed part of the sharp November decline. Trading sales picked up, as did profitability (4 from 0). The employment index also rose marginally (4 from 3). Cost price indicators still showed no consistent, broad-based downward trend. Firm’s purchases costs were seen at 1.5% Q/Q from 1.3% Q/Q. Prices rises of final products also rebounded (0.9% Q/Q from 0.6%). The labour cost index slowed further and at 1.4% Q/Q was materially lower than in summer of last year. The data come as markets are considering the start of the RBA easing cycle at the upcoming 18 February policy decision. A 80% chance of an inaugural 25 bps cut is discounted. The December and Q4 inflation data published tomorrow will be decisive. Disregarding the broader USD swings, the Aussie dollar (AUD/USD 0.626) continues to trade soft against other majors, including the euro and the yen.

In focus today

From the US, December durable goods orders and January consumer confidence index from Conference Board are due for release. We will follow the latter for gauging how consumers feel about the economy and inflation as Trump begins his second term in the White House.

In the euro area, the bank lending survey from the ECB is scheduled for release.

In Hungary, the central bank will announce its policy rate - we and markets expect the central bank to leave the policy rate unchanged at 6.5%.

Economic and market news

What happened overnight

In the US, President Trump described DeepSeek, the Chinese AI start-up, as a "wake-up call" for US industries. He emphasised that US tech companies should focus intently on competing to win - and his desire to "unleash" US tech companies and "dominate the future like never before". Concerns over DeepSeek's AI model caused US stocks, particularly AI stocks such as Nvidia and Broadcom, to tumble yesterday. The emergence of DeepSeek, which develops AI models with lower development costs and without using the most advanced chips for training, raises questions about the US's ability to maintain its lead over China in this field. It also challenges US AI bellwethers to continue developing competitive AI models without relying on the most advanced chips.

In politics, Scott Bessent won Senate confirmation as Treasury secretary with a 68-29 vote. Bessent has previously reiterated his support for extending the Tax Cuts and Jobs Act, while also declining to commit to raising taxes on the highest-earning individuals.
What happened yesterday

In Germany, the Ifo index recorded a small increase in January due to a better assessment of the current economy situation while expectations declined. The assessment of the current business situation rose to 86.1, which is the highest level in five months. This signals a possible bottoming out of activity following the previous years' declining trend like the PMIs that exceeded 50 last week. However, with Ifo expectations declining to the lowest level in a year we continue to expect the German economy to stagnate in the first half of this year and then start growing in the second half due to lower monetary policy rates and rising real incomes.

Equities: Global equities declined yesterday with significant dispersion. The Far East markets were higher, European markets remained largely unchanged, while the US markets suffered a substantial downturn. A closer look at US performance reveals notable differences, with the Dow rising by 0.7% and the Nasdaq falling by 3.1%. This highlights a micro-level narrative we mentioned yesterday, centred around DeepSeek. The Chinese AI maker's popular LLM model, R1, is potentially disrupting the AI world as we know it.

At company level, the biggest loser among the MAG 7 was Nvidia, which fell by 17%, while Meta, on the other hand, rose by 2%. Unsurprisingly, this is due to the initial analysis of which companies will potentially benefit from or be adversely affected by this development.

The next question that may gain attention in the coming days is whether this should be perceived as good or bad for equities overall. Yesterday, equities reacted negatively, but we argue that this development is incredibly positive from both an economic and inflation perspective and should therefore be seen as beneficial. Admittedly, many unknowns remain, and while we are not technical AI experts, based on the analysis we have seen so far, we confidently conclude that this will be net positive.

In the US yesterday, the Dow rose by 0.7%, the S&P 500 fell by 1.5%, the Nasdaq dropped by 3.1%, and the Russell 2000 decreased by 1.0%. Asian markets are mixed this morning, with Japan declining, while mainland markets in China are closed for the Lunar New Year. European futures are marginally higher this morning, while US futures are mixed, with the Nasdaq being slightly higher.

FI: Global bond markets took its cue from the equity market and the DeepSeek introduction as a catalyst for the global risk-off sentiment yesterday. The front end and the belly of the curve outperformed the long end with the 5y point down about 5bp in Europe and 9bp in the US. 10y Bund ASW widened 1.5bp to turn positive again for the first time in two weeks.

FX: EUR/USD was off to a strong start during yesterday's session breaching the 1.0500 mark, as easing tariff risk premia fuelled broad-based USD weakness. The recent risk-off sentiment, triggered by the tech sector sell-off, has favoured JPY and CHF over the USD, as declining US yields, narrowing rate differentials between the US and the rest of the G10, and equity outflows from the US weighed on the USD. Overnight, however, more broad-based universal tariffs were flagged by the Trump administration, pushing EUR/USD firmly back towards the 1.0400 mark, highlighting the cross' sensitivity to tariffs news. GBP was in for another day of gains as the fiscal induced risk premium slowly continues to fade. Oil prices fell sharply yesterday and have dropped firmly from recent highs putting additional pressure on oil-FX.

Key Highlights

• Bitcoin price started a fresh decline from the $109,939 high.
• BTC traded below a key contracting triangle with support at $103,750 on the 4-hour chart.
• Ethereum price also declined after the bears were active near the $3,500 zone.
• Gold rallied toward $2,785 before the bears appeared.

Bitcoin Price Technical Analysis

Bitcoin price failed to remain in a positive zone above $105,000 against the US Dollar. BTC started a fresh decline below $104,000 and $103,500.

Looking at the 4-hour chart, the price traded below a key contracting triangle with support at $103,750. There was a move below the 50% Fib retracement level of the upward move from the $89,108 swing low to the $109,939 high.

The price even spiked below the 100 simple moving average (red, 4-hour) and tested the 200 simple moving average (green, 4-hour). It is now consolidating losses above the 61.8% Fib retracement level of the upward move from the $89,108 swing low to the $109,939 high.

On the upside, the price could face resistance near the $102,000 level. The next key resistance is $103,500. A successful close above $103,500 might start another steady increase. In the stated case, the price may perhaps rise toward the $105,000 level.

Immediate support is near the $98,500 level. The next key support sits at $97,000. A downside break below $97,000 might send Bitcoin toward the $94,000 support. Any more losses might send the price toward the $92,000 support zone.

Looking at Ethereum, the bears remained active below the $3,500 resistance zone, resulting in a fresh decline.

Today’s Economic Releases

• US Housing Price Index for Nov 2024 (MoM) - Forecast +0.2%, versus +0.4% previous.
• US Durable Goods Orders for Dec 2024 – Forecast +0.2% versus -1.2% previous.

The NZDUSD pair has lost its recent gains and is trading near 0.5680 on Monday as market sentiment turns cautious. This pressure comes from reports that former US President Trump's advisers are pushing for 25% tariffs on Mexico and Canada starting February 1, with no plans for negotiations. Meanwhile, tensions with Colombia eased after the country agreed to US terms regarding deportation flights.

The US Dollar Index (DXY) has recovered from its monthly low and is trading near 107.70, adding to the Kiwi's struggles. Additionally, weaker-than-expected Chinese manufacturing data and the limited impact of China's new economic stimulus measures have further weighed on the New Zealand Dollar, given New Zealand's reliance on trade with China.

NZDCAD – D1 Timeframe

Crossing the 100-day moving average below the 200-day moving average is the initial factor leaning towards a bearish sentiment. In addition to that, however, we see the trendline resistance aligning well within the range of the rally-base-drop supply zone highlighted on the daily timeframe chart of NZDCAD. Since the price has already mitigated the Fair Value Gap (FVG) area, retesting the supply zone would be necessary to complete the puzzle.

NZDCAD – H4 Timeframe

On the 4-hour timeframe chart, we discover that there are two resistance trendlines – not just one – and both intersect right within the region of the supply zone. The multiple bearish breaks of structure and the price's expected reaction from the supply zone would confirm a bearish entry.

Analyst's Expectations:

• Direction: Bearish
• Target: 0.80706
• Invalidation: 0.82582