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Bitcoin keeps pushing up after a strong collapse. Hourly support area is located around 10'775 (22/12/2017 low). In the short-term, the technical structure suggests a continued bearish momentum. Expected to show further decline.

In the long-term, the digital currency has had an exponential growth but also presented important downturns. There are decent likelihood that the currency reaches $15'000 (December 2017 levels) in 2018.

Gold reached a more than a four-month high of 1344 during the past week, after an aggressive bullish rally from the 1236 support level. However, over the last two daily sessions, the price bounced off on the aforementioned resistance obstacle and posted a bearish move. The short-term technicals seem to be negative and point to more weakness in the market.

Having a look at the short-term chart, the RSI indicator plunged below the overbought area, whilst the MACD oscillator is ready to create a bearish crossover with its trigger line in the positive territory, signaling** for further losses.

Upside moves are likely to find resistance at 1344. Clearing this key level would see additional gains towards the 1357 barrier, which is near the upper boundary of the weekly symmetrical triangle.

On the flip side, further losses should see the support of 1305 as this is also where the 20-day simple moving average is currently converging. A drop below the 20-day SMA would reinforce the bearish structure in the short-term and open the way towards the next key level – the 40-day SMA at 1288.

As a side note, in the long-term timeframe, the price has been developing within a symmetrical triangle over the past two years as it failed to post a higher top from 1,375 on June 2016. The price failed to extend its gains above the aforementioned level and has been creating a continuation pattern, indicating a breakdown as the previous tendency was a descending move.

EUR/USD

Current level - 1.2211

With the break through 1.2190 my outlook remains bearish, for a slide towards 1.2090 zone. Crucial on the upside is 1.2285 peak.

Resistance		Support
intraday	intraweek	intraday	intraweek
1.2285	1.2500	1.2160	1.2090
1.2320	1.2500	1.2090	1.1910

USD/JPY

Current level - 111.17

The break through 111.00 resistance is already a fact and the outlook remains positive, for a rise towards 112.00 area. Initial support is projected at 111.00 and crucial on the downside is 110.60.

Resistance		Support
intraday	intraweek	intraday	intraweek
111.50	112.00	111.00	109.50
112.00	113.75	110.60	109.50

GBP/USD

Current level - 1.3836

The reaction after 1.3940 peak signals a negative intraday bias, for another test at the key support at 1.3730. 

Resistance		Support
intraday	intraweek	intraday	intraweek
1.3850	1.4000	1.3730	1.3611
1.3940	1.4000	1.3650	1.3460

The pair remains in directionless mode on Thursday and forming the third straight Doji. Strong indecision signal was generated after Wednesday’s action ended in Doji candle with very long legs.

Overall structure is bearish and keeps focus shifted lower.

Key near-term support at 1.2355 (05 Jan low) is eyed for retest after the price spiked to 1.2360 low on Wednesday, but initial requirement is close below cracked 1.2389 support (Fibo 61.8% of 1.2061/1.2920 ascend) which would signal continuation of larger downtrend from 1.2920 (19 Dec peak).

Sustained break below 1.2355 pivot would signal bearish continuation and expose nect target at 1.2263 (Fibo 76.4% of 1.2061/1.2920).

Falling 10SMA continues to cap despite being cracked on Wednesday’s spike to 1.2536 and marks initial resistance at 1.2456.

Extended upticks should hold below descending 20SMA (1.2543) to keep near-term bearish bias intact.

Res: 1.2456, 1.2500, 1.2543, 1.2570
Sup: 1.2427, 1.2396, 1.2355, 1.2300

Notes/Observations

Major Chinese data mixed with GDP YoY beating expectations (6.8% v 6.7%e). Thus GDP has registered an annual reading between 6.7-7.0% in every quarter since the start of 2015

US 10-year govt bond yield touches above 2.60% (highest since March)

Asia:

Australia Dec Employment Change registers its 15th consecutive monthly gain) (+34.7K v +15.0Ke) ; Unemployment Rate: 5.5% v 5.4%e

Bank of Korea (BOK)keeps 7-Day Repo Rate unchanged at 1.50% (as expected) to maintain its accommodative policy stance to ensure economic recovery continued and CPI stabilized at target in mid-term

Some at BOJ are said to see need for future normalization talks, see the market getting ahead of itself and agree that current stimulus needed for now

China FX regulator SAFE: Two-way yuan fluctuations will become a 'new normal'. Reiterated that China investment in US Treasury bonds are 'market driven' (**Note: Recent TIC data showed holdings at lowest level since July)

President Trump declined to confirm reports US was considering possible preemptive strike on North Korea; mulling big damages in probe over alleged China IP theft. Hopes there would not be trade war with China

Europe:

UK House of Commons approved the EU Withdrawal Bill in 3rd reading (as expected) with vote at 324 to 295. Bill to now be review by the House of Lords, which could ask for more changes

Bank of Italy says meetings with ECB's Nouy on lenders constructive but believed that ECB's Nouy was 'inflexible' in meeting with Italian banks

New Eurogroup Chief Centeno: Our common goal is to strengthen the euro; Key to reform is sequencing not quick fixes

Americas:

US Tic data shows China’s holdings of treasuries slumped to lowest level since July ($1.18T v $1.19B prior)

Fed's Beige Book: US economy, inflation growing at modest-to-moderate pace- "Most districts said that wages increased at a modest pace,"

White House says it supported short-term government funding bill

White House Chief of Staff Kelly believed Congress to pass stopgap bill; GOP leaders had votes to avert government shutdown

Reports that House Republicans were short of the votes they need to avoid a government shutdown

Fed's Mester (voter, hawk): US has returned to normal and policy is normalizing; gradual 2018 rate hikes are appropriate

Fed's Kaplan (moderate, non-voter): three rate rises in 2018 is unlikely to invert the yield curve

Tech name Apple [AAPL]: anticipates $38B in repatriation tax payments as required by tax bill; expected to invest $30B in capex in US over 5 years

Energy:

Weekly API Oil Inventories: Crude: -5.1M v -11.2M prior

Economic Data:

(NL) Netherlands Dec Unemployment Rate: 4.4% v 4.4% prior

(NL) Netherlands Nov Trade Balance: €6.0B v €4.9B prior

(CN) China Q4 GDP Q/Q: 1.6% v 1.7%e; Y/Y: 6.8% v 6.7%e; GDP YTD: 6.9% v 6.8%e

(CN) China Dec Industrial Production Y/Y: 6.2% v 6.1%e; Industrial Production YTD Y/Y: 6.6% v 6.6%e

(CN) China Dec Retail Sales Y/Y: 9.4% v 10.2%e; Retail Sales YTD Y/Y: 10.2% v 10.3%e

(CN) China Dec YTD Fixed Urban Assets Y/Y:7.2 % v 7.1%e

(HK) Hong Kong Dec Unemployment Rate: 2.9% v 3.0%e (lowest level in 20 years)

(IL) Israel Jan CPI 12-month Forecast: 0.7% v 0.7% prior

Fixed Income Issuance:

(AT) Austria Debt Agency (AFFA) opened its book to sell EUR-denominated 10-year; guidance seen -17bps to mid-swaps

(ES) Spain Debt Agency (Tesoro) sold total €4.09B vs. €3.5-4.5B indicated range in 2022, 2033 and 2046 bonds

Sold €1.05B in 0.45% Oct 2022 SPGB; Avg yield: 0.324% v 0.356% prior, Bid-to-cover: 3.60x v 2.55x prior

Sold €1.39B in 2.35% July 2033 SPGB; Avg Yield: 2.098% v 2.17% prior; Bid-to-cover: 1.54x v 1.78x prior

Sold €1.65B in 2.90% Oct 2046 SPGB; Avg Yield: 2.691% v 2.836% prior; Bid-to-cover: 1.40x v 2.07x prior

(FR) France Debt Agency (AFT) sold total €7.497B vs. €6.5-7.5B indicated range in 2021, 2023 and 2024 bond

Sold €3.53B in 0.00% Feb 2021 Oat; Avg Yield: -0.24% v -0.39% prior; Bid-to-cover: 2.05x v 2.07x prior

Sold €2.68B in 0% Mar 2023 Oat; Avg Yield: +0.10% v -0.13% prior; bid-to-cover: 2.14x v 2.28x prior

Sold €1.287B in 2.25% May 2024 Oat; Avg Yield: 0.23% v 0.16% prior; Bid-to-cover: 2.48x v 1.78x prior

(SE) Sweden sold SEK 500M in 0.125% I/L 2026 bond; Avg Yield: -1.2792% v -1.4879% prior; Bid-to-cover: 2.33x v 2.57x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.1% at 398.5 , FTSE -0.3 at 7702, DAX +0.4% at 13235, CAC-40 +0.2% at 5504 , IBEX-35 -0.1% at 10463, FTSE MIB +0.3% at 23575 , SMI flat at 9439, S&P 500 Futures -0.1%]

Market Focal Points/Key Themes:

European Indices trade mixed with notable strength in Dax following on from a strong close on Wall Street overnight with the Dow settling above 26K for the first time.

Earnings continue to pick up with Carrefour trading higher in France after Q4 results, Swiss name Geberit trades over 4% higher after beating Rev forecasts. In the UK Associated British Foods trades lower after its trading update, with Royal mail also lower after reporting 9M results.

Elsewhere Countrywide trades sharply lower after lower profits and Revenue while Avanza Bank trades over 10% higher after Q4 results.

Looking ahead we continue to see key banking names report, including Morgan Stanley, Keycorp, BB&T and Bank of new York.

Movers

Consumer Discretionary [Carrefour [CA.FR] +.9% (Q4 results), ABF [ABF.UK] -.0% (Trading update), Royal Mail [RMG.UK] -1.8% (Trading update), Whitbread [WTB.UK] +1.3% (Trading update)]

Financial [Draper Esprit [GROW.UK] +6.6% (Invests in Ledger), Countrywide [CWD.UK] -16% (Trading update), Avanza Bank [AVA.SE] +14% (Earnings)]

Industrials [ Geberit [GEBN.CH] +4.9% (Earnings), Chemring [CHG.UK] -2.9% (Earnings, SFO investigation)]

Technology [Meyer Burger Tech [MBTN.CH] +2.4% (prelim earnings) ]

Speakers

ECB’s Weidmann (Germany): Increase in Germany's trade surplus a consequence of ultra-loose ECB monetary policy

Norway Central Bank Q4 Lending Survey: Household loan demand unchanged in quarter. Little changed seen in Q1 demand, credit standards or loan conditions

Thailand Central Bank: GDP growth reduces the need for further interest rate cuts; Reiterated monetary policy should remain accommodative for some time to facilitate economic growth. Headline inflation to rise gradually and return to lower end of the 1.0-4.0% target range in H1

Philippine Central Bank Deputy Gov Guinigundo stated that saw continued stability in PHP currency (Peso)

Currencies

USD was slightly weaker despite higher Treasury yields against the major pairs. The US 10-year moved above the 2.60% level for 11-month highs

EUR/USD hovered just above the 1.22 level in a quiet European session as dealers assessed the ECB’s recent rhetoric on the Euro. The pair was off its recent 3-year highs as market participants pondered whether ECB's Draghi would push back against euro strength during his press conference next week following the central bank’s policy meeting. One analyst noted that t would take more euro appreciation than seen so far for the ECB to go as far as adding "more EUR language" into the opening statement.

The USD/JPY pair hovered around the lower 111 area. Some at BOJ were said to see need for future normalization talks

Fixed Income

Bund Futures trades down 14 ticks at 160.55 as the recent rally takes a break. Continued upside targets 162.00, while a move lower targets the159.56 low.

Gilt futures trade at 123.70 down 30 ticks as Gilts remained under pressure so far. Support continues to stand at 123.55 then 122.83, with upside resistance at 124.25 then 124.96.

Thursday’s liquidity report showed Wednesday’s excess liquidity fell to €1.861T from €1.871T prior. Use of the marginal lending facility fell to €135M from €401M prior.

Corporate issuance saw 5 issuers raise $9.8B in the primary market

Looking Ahead

(ID) Indonesia Central Bank (BI) Interest Rate Decision: Expected to leave 7-Day Reverse Repo rate unchanged at 4.25%

05:30 (UK) DMO to sell £2.5B in 0.75% July 2023 Gilts

05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds (3 tranches)

05:45 (IT) Italy Fin Min Padoan at event

05:50 (FR) France Debt Agency (AFT) to sell combined €1.25-1.75B in 2024, 2028 and 2030 Inflation-linked binds (Oatei)

06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave Benchmark Repurchase Rate unchanged at 8.00%

06:45 OPEC Monthly Report

06:45 (US) Daily Libor Fixing

08:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to leave Interest Rates unchanged at 6.75%

08:00 (RU) Russia Gold and Forex Reserve w/e Jan 12th: No est v $432.6B prior

08:05 (UK) Baltic Dry Bulk Index

08:30 (US) Dec Housing Starts: 1.28Me v 1.297M prior; Building Permits: 1.30Me v 1.303M prior (revised from 1.298M);

08:30 (US) Initial Jobless Claims: 249Ke v 261K prior; Continuing Claims: 1.90Me v 1.867M prior

08:30 (US) Philadelphia Fed Business Outlook: 25.0e v 27.9 prior (revised from 26.2)

08:30 (CA) Canada Dec ADP Employment Report: No est v -5.7K prior

09:30 (FR) ECB’s Coeure (France) on panel in Frankfurt

10:00 (CO) Colombia Nov Industrial Production Y/Y: -1.1%e v -0.3% prior

10:00 (CO) Colombia Nov Retail Sales Y/Y: -1.0%e v -0.6% prior

10:30 (US) Weekly EIA Natural Gas Inventories

11:00 (US) Weekly DOE Crude Oil Inventories

12:30 (FR) ECB’s Villeroy (France)

13:00 (US Treasury to sell $13B in 10-Year TIPS

13:00 (US Treasury announcement for upcoming 2-yea, 5-year and 7-year Notes for week of Jan 22nd

AUD/USD maintains positive momentum despite disappointing job report

It has been a quite week so far for the Australian dollar. The Aussie economic calendar was relatively light, while market participants mostly focused their attention on Trump comments and fears about an US government shutdown. Even though AUD/USD spent most of the week trading range bound - between 0.7930 and 0.8023 – the pair printed a 4-month high on Wednesday at 0.8023. The job report released earlier today didn’t changed anything. In December, the unemployment rate rose slightly to 5.5% from 5.4% in the previous month, while the participation rate inched up to 65.7%.

Since early December last year, the Aussie has surged across the board, appreciating against all G10 currencies, with the exception of the New Zealand dollar and the Norwegian krone (+1.25% and +0.85% versus the AUD since December 3rd, respectively). This positive momentum could be mainly explained by the recovery in the country’s interest rates. Indeed, over the last month, the entire yield curve has shifted higher with the 2-year sovereign yield rising 40bps to 2.10%, while on the longer end of the curve the 10-year one climbed 37bps to 2.83%.

However, the 2-year interest rate differential between Australian and US has been quite stable over the last few weeks, suggesting that the recent appreciation of the Aussie is rather due to the USD weakness. There is little chance this situation change in the short-term as market participants remain sceptical that Trump will deliver what was announced, while the battle is raging in the Congress. There is just too many uncertainties for investors to go long USD, even though the underlying economic indicators are all on green.

AUD/USD is on its way to test September’s high at 0.8125. Another key resistance can be found at 0.8295 (high from January 2015). The momentum is still positive for Aussie; however, the wind can quickly turn around, especially if investors’ confidence in Trump starts to build.

USA confirms its economic expansion and stays on line with expectations

The recent US economic releases boosted equity markets to higher ends yesterday while EU markets remained on the sidelines: Dow Jones Industrial Average: +1.25%, Nasdaq: +1.03%, S&P500: +0.94% and Euro Stoxx 50: -0.25%. The Federal Reserve published strong December US industrial production M/M data of 0.90%, above expectations (consensus at 0.50%), following a November revised value of -0.10%. The reaction on the market was a greater equity markets stimulation, at the expense of a 10-Year UST Note price that fell by -0.50% along with a yield valued at 2.59% (+2.10% 1-day increase). Later in the day we also had the Beige Book report that allowed investors to get a sharper insight on what the Fed’s monetary policy will look like in January 31st 2018 and confirmed: a “modest-to-moderate” growth; increasing difficulties to find qualified workers within the labor market; modest wage growth and moderate capital expenditure increase in manufacturing, construction and transportation in several localities. Waiting for the Federal Reserve’s decision that will take place in less than two weeks, we do believe that economic indicators, whether from a production, consumer spending, sales or salary standpoint remain at tolerable levels and are majorly anticipated by US monetary authorities.

The common European currency, as it was expected, broke the junior channel down pattern against the Pound. However, since the last review, more developments have taken place.

First of all the currency exchange rate has revealed a medium term channel up pattern. The channel is very wide, and this volatility is excellent for short term traders that would like to cash in on larger moves.

Most recently the pair bounced off the lower trend line and the 50.00% Fibonacci retracement level near the 0.8820 mark. Due to that reason Dukascopy analysts forecast a surge through various resistance levels up to the 0.8930 level.

After meeting with the lower trend line of a dominant channel up pattern the, GBP/JPY currency exchange rate began a surge. By the middle of the trading session of January 18 the pair had clearly revealed a small scale ascending channel pattern.

However, the pattern is too narrow. Due to that fact it is likely going to be broken in the future, and with that move a medium scale pattern will reveal itself.

Meanwhile, regarding the short term it can be seen that the currency exchange rate is set to approach the lower trend line of the junior channel. Afterwards an attempt to break the monthly R1 at 154.12 or a decline to the weekly R1 at 152.83 will occur.

The Euro's movement during the previous session reveals the strengthening of the bearish sentiment. After reaching a daily high of 1.2305 early on Wednesday, the pair managed to breach the 55– and 100-hour SMAs and the monthly R2.

As apparent on the chart, the Euro has formed a minor descending channel. In line with this pattern, the rate should edge higher towards 1.2240. Given that this area is reinforced by the aforementioned lines, a breakout might not occur. On the other hand, the southern barrier is set by the weekly PP, monthly R1 and the 200-hour SMA. This cluster is also likely to hold strong, thus stranding the rate in the 1.2230/15 area for the whole session.

The Sterling spent the first half of Wednesday's trading session with no significant changes against the US Dollar due to the support of the 55-hour SMA. Subsequently, bulls managed to push the rate towards the weekly R2 at 1.3932; however, these gains had already been lost by Thursday morning.

It seems that the bullish sentiment that guided the Pound last week has allayed. This assumption could point to soon prevalence of bears. Thus, it is likely that the pair continues pushing lower in this session. This attempt could be hindered by the 55– and 100-hour SMAs circa 1.3775. Even if this area is not breached, the Pound should not surpass the monthly R3 which is located at 1.3864.