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For the 24 hours to 23:00 GMT, the USD marginally declined against the CHF and closed at 0.9621.

In economic news, Switzerland’s total sight deposits advanced to a level of CHF574.6 billion in the week ended 19 January, from a level of CHF573.8 billion reported in the prior week.

In the Asian session, at GMT0400, the pair is trading at 0.9620, with the USD trading a tad lower against the CHF from yesterday’s close.

The pair is expected to find support at 0.9595, and a fall through could take it to the next support level of 0.9571. The pair is expected to find its first resistance at 0.9642, and a rise through could take it to the next resistance level of 0.9665.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.3% against the CAD and closed at 1.2447.

In the Asian session, at GMT0400, the pair is trading at 1.2456, with the USD trading 0.07% higher against the CAD from yesterday’s close.

The pair is expected to find support at 1.2431, and a fall through could take it to the next support level of 1.2406. The pair is expected to find its first resistance at 1.2485, and a rise through could take it to the next resistance level of 1.2514.

Amid no macroeconomic releases in Canada today, investor sentiment would be governed by global macroeconomic news.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

BOJ again voted 8-1 to leave the monetary policies unchanged in January. The targets for short- and long-term interest rates stay at -0.1% and around 0%, respectively while the guideline for JGB purchases remains at an annual pace of about 80 trillion yen. As a ritual since he has joined the Board in September 2017, Goushi Kataoka has dissented again. The central bank has turned more upbeat on the inflation outlook although the members left the GDP growth and inflation forecasts unchanged for fiscal years from 2017 to 2019. At this meeting, the members also voted unanimously to extend for one year new the applications for the fund provisioning measure to achieve certain the goals such as stimulating bank lending and supporting economic growth.

The central bank acknowledged that Japanese economy would continue to expand moderately. The members suggested that 'inflation expectations have moved sideways recently', compared with previous reference that 'inflation expectations have remained in a weakening phase'. The members maintained GDP growth estimate at +1.4% for FY 2018 (beginning in March) and +1.8% for the next year. They also kept the forecast that inflation would reach +2% fiscal year ending in March 2020.

Goushi Kataoka dissented again as he warned of 'risk factors such as the consumption tax hike and a possible economic downturn in the United States' and reiterated that 'the possibility of the year-over-year change in the CPI increasing toward 2% going forward is low at this point'. Kataoka added that 'if there was a delay in the timing of achieving the price stability target due to domestic factors, the Bank should take additional easing measures'.

Japanese yen’s strength against US dollar has accelerated since BOJ reportedly reduce JGB purchases on January 9. We expect Governor Kuroda to encounter at the press conference questions related to the central bank’s commitment in the asset purchase program. Meanwhile, the press conference would also focus on the side effects of the ultra-low interest rate policy as the BOJ is now the only major central banks committing to QE.

Daily Pivots: (S1) 0.7988; (P) 0.8007; (R1) 0.8037; More...

AUD/USD is staying in consolidation fro 0.8038 and intraday bias remains neutral. As long as 0.7874 support holds, further rally should be seen to 0.8124 high. Break there will resume whole medium term rebound from 0.6826 and target key fibonacci level at 0.8451. On the downside, break of 0.7874 will indicate short term topping and turn bias to the downside for 55 day EMA (now at 0.7781) and below.

In the bigger picture, current development suggests that medium term rebound from 0.6826 is still in progress and could be resuming. Such rise could target 38.2% retracement of 1.1079 (2011 high) to 0.6826 (2016 low) at 0.8451. As such rise is seen as a corrective move, we'd expect strong resistance from 0.8451 to limit upside and bring reversal.

Daily Pivots: (S1) 1.2420; (P) 1.2458; (R1) 1.2482; More...

USD/CAD is staying in consolidation from 1.2354 and intraday bias remains neutral. With 1.2623 support turned resistance intact, near term outlook remains mildly bearish. On the downside, break of 1.2354 will extend the decline from 1.2919 to retest 1.2061 low. Nonetheless, on the upside, sustained break of 1.2623 will argue that the fall has completed and turn bias back to the upside for 1.2919 resistance.

In the bigger picture, rebound from 1.2061 is likely completed completed at 1.2919, rejected by 55 week EMA (now at 1.2850) and kept below 38.2% retracement of 1.4689 to 1.2061 at 1.3065. The development also suggests that long term fall from 1.4689 is not completed yet. Decisive break of 1.2061 low will target 61.8% retracement of 0.9406 to 1.4689 at 1.1424. This will now be the favored case as long as 1.2919 resistance holds.

Daily Pivots: (S1) 1.2226; (P) 1.2248 (R1) 1.2284; More....

Consolidation from 1.2322 is still unfolding and intraday bias remains neutral in EUR/USD. As long as 1.2088 resistance turned support holds, near term outlook remains bullish and another rise is expected. Above 1.2322 will extend the medium term rise to next key fibonacci level at 1.2494/2516. We'd expect strong resistance from there to bring reversal. Meanwhile, break of 1.2088 will argue that EUR/USD has topped earlier than expected. In that case, intraday bias will be turned to the downside for 1.1915 support first.

In the bigger picture, rise from 1.0339 medium term bottom is still seen as a corrective move for the moment. Therefore, in case of further rally, we'd be expect 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 to limit upside and bring reversal. That is also close to 61.8% projection of 1.0569 to 1.2091 from 1.1553 at 1.2494. Break of 1.1553 support will confirm completion of the rise. However, sustained break of 1.2516 will carry larger bullish implication and target 61.8% retracement of 1.6039 to 1.0339 at 1.3862.

Daily Pivots: (S1) 1.3899; (P) 1.3944; (R1) 1.4033; More.....

GBP/USD's rally extends to as high as 1.4002 so far and intraday bias remains on the upside. Medium term channel resistance at 1.4139 is next target. Break will indicate acceleration to 100% projection of 1.2108 to 1.3651 from 1.3038 at 1.4581 next. On the downside,below 1.3838 minor support will turn intraday bias neutral first. But pullback should be contained above 1.3612 resistance turned support to bring another rise.

In the bigger picture, sustained break of 1.3835 key resistance level indicates that rebound from 1.1946 is at least correcting the long term down from from 2007 high at 2.1161. In that case, further rise should be seen back to 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466. Medium term outlook will now stay bullish as long as 1.3038 support holds.

Daily Pivots: (S1) 0.9594; (P) 0.9617; (R1) 0.9642; More....

Intraday bias in USD/CHF remains neutral as consolidative trading from 0.9535 continues. With 0.9698 support turned resistance intact, near term outlook remains mildly bearish. Break of 0.9535 will extend the fall from 1.0037 and target a test on 0.9420 low. Nonetheless, firm break of 0.9698 will be the first sign of near term reversal. And, intraday bias will be turned back to the upside for 0.9844 resistance for confirmation.

In the bigger picture, range trading continues between 0.9420/1.0342. At this point, 0.9420 appears to be a strong support level. Therefore, in case of decline attempt, we don't expect a firm break of this level. Nonetheless, strong break of 1.0342 is also needed to confirm upside momentum. Otherwise, medium term outlook will stay neutral.

Daily Pivots: (S1) 110.54; (P) 110.88; (R1) 111.27; More...

Intraday bias in USD/JPY remains neutral as it continues to stay in range of 110.18/111.47. On the upside, break of 111.47 will affirm the case that correction from 114.73 is finished with three waves down to 110.18. Intraday bias should then be turned back to the upside for 113.38 resistance for confirmation. However, below 110.18 will extend the correction lower. But we'd again look for bottoming signal in next fall.

In the bigger picture, we're holding on to the view that correction from 118.65 is completed at 107.31. And medium term rise from 98.97 (2016 low) is going to resume soon. Sustained break of 114.73 should affirm our view and send USD/JPY through 118.65. However, break of 107.31 will dampen this view and extend the medium term fall back to 98.97 low.

Yen spikes higher after BoJ turned slightly optimistic over the country's inflation outlook. But there is no follow through buying seen. USD/JPY is kept in middle of range of 110.18/114.17. Dollar also recovers mildly after US government reopens. But overall, the greenback is staying in near term down trend against all major currencies. In other markets, risk appetite stays strong. DOW hit another record by gaining 0.55% to 26214.60. S&P 500 and NASDAQ were even stronger, closed up 0.81% and 0.98% at record highs. 10 year yield extended recent rally by rising 0.028 to 2.665. A take on 3% handle is now having realistic possibility.

BoJ stands pat, kept economic forecasts unchanged

BoJ left monetary policies unchanged today as widely expected. The short term policy rate is held at -0.10%. And under the yield curve control framework, BoJ will continue with the JPY 80T a year asset purchase to keep 10 year JGB yield near zero. The vote was made with 8-1 vote with Goushi Kataoka dissented again. Kataoka continued to push for targeting yields on longer JGBs too. As noted in the accompanying statement, the members suggested that "inflation expectations have moved sideways recently", compared with previous reference that "inflation expectations have remained in a weakening phase".

In the quarterly outlook, BoJ pledged again to continue with "quantitative and qualitative monetary easing with yield curve control" for "as long as it is necessary" to achieve the 2% inflation target. Core CPI is projected to climb to 1.4% in fiscal 2018 and 1.8% in fiscal 2019, excluding effects of consumption tax hike. Real GDP is projected to grow 1.4% in fiscal 2018 and 0.8% in fiscal 2019. These projections are unchanged from October 2017 forecasts.

Also from Japan, all industry activity index rose 1.0% mom in November.

US government reopened through Feb 8

In the US, the Congress has finally passed the measures to reopen the government, but only through February 8. The breakthrough came after Senate Majority Leader Mitch McConnell agreed to address the demands of Democrats on the "dreamers" program. Senate Democratic Leader Chuck Schumer said afterwards that "the Republican majority now has 17 days to prevent the dreamers from being deported."

Marvin Goodfriend, a Carnegie Mellon University professor, attended a nomination hearing as Fed Governor before Senate Banking Committee. Goodfriend said that "guided by the goals of maximum sustainable employment, price stability, and financial stability, and with lessons from its past, the Federal Reserve must be alert to future challenges." And, "I intend to draw on my academic and professional experience to promote policies that would further increase transparency and accountability at the Federal Reserve." Goodfriend is President Donald Trumps' third nomination after Jerome Powell and Randal Quarles. He is also a former Richmond Fed policy adviser.

CBI urged to stay in EU customs union

In UK, the Confederation of British Industry heavily criticized the government Brexit approach and call for staying in EU customs union. CBI director general Carolyn Fairbairn also said yesterday that "there may come a day when the opportunity to fully set independent trade policies outweighs the value of a customs union with the EU; a day when investing in fast-growing economies elsewhere eclipses the value of frictionless trade in Europe. But that day hasn't yet arrived."

Fairbairn also called for having a clear transitional EU trade deal by April, or "firms will have no choice but to trigger their plan Bs". Also "more jobs and investment will leave our shores and future generations will pay the price."

IMF raised global growth forecasts

At its latest forecasts, the IMF raised the 2018 global growth forecast by 0.2 percentage point to 3.9%, led by acceleration in the US (GDP growth up by 0.4 percentage point to 2.7%) and Eurozone (up by 0.3 percentage point to 2.2%). While the world lender upgraded US growth because of the tax reform plan, it warned that the deal is negative to growth in the long term.

The IMF downgraded UK's growth outlook, by -0.1 percentage point, to 1.5% for 2019, while leaving the growth forecast for this year (also at 1.5%) unchanged. The main reason is the uncertainty of Brexit negotiations and the future trade relations between the UK and the EU after the "divorce". However, this has not affected the pound. Rather, GBPUSD has rallied to a post-referendum high as French President Emmanuel Macron noted that the might be "special deal" for Britain.

Looking ahead

German ZEW economic sentiment is the main feature today. Eurozone consumer confidence, UK public sector net borrowings will also be released.

USD/JPY Daily Outlook

Daily Pivots: (S1) 110.54; (P) 110.88; (R1) 111.27; More...

Intraday bias in USD/JPY remains neutral as it continues to stay in range of 110.18/111.47. On the upside, break of 111.47 will affirm the case that correction from 114.73 is finished with three waves down to 110.18. Intraday bias should then be turned back to the upside for 113.38 resistance for confirmation. However, below 110.18 will extend the correction lower. But we'd again look for bottoming signal in next fall.

In the bigger picture, we're holding on to the view that correction from 118.65 is completed at 107.31. And medium term rise from 98.97 (2016 low) is going to resume soon. Sustained break of 114.73 should affirm our view and send USD/JPY through 118.65. However, break of 107.31 will dampen this view and extend the medium term fall back to 98.97 low.

Economic Indicators Update