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Daily Pivots: (S1) 135.17; (P) 135.58; (R1) 136.00; More....

Intraday bias in EUR/JPY remains neutral as it's staying in range of 133.03/136.63. Near term outlook stays mildly bullish with 133.03 support intact and further rally is in favor. Break of 136.63 will resume medium term up trend. However, below 133.03 will turn focus to 132.04. Firm break there will indicate medium term reversal.

In the bigger picture, medium term rise from 109.03 (2016 low) is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). It should be targeting 141.04/149.76 resistance zone. On the downside, break of 132.04 support is needed to indicate medium term reversal. Otherwise, outlook will stay bullish in case of deep pull back.

Daily Pivots: (S1) 1.1741; (P) 1.1771; (R1) 1.1790; More...

Intraday bias in EUR/CHF remains neutral for the moment. Medium term rise is still in progress and could extend higher. However, considering relatively weak upside momentum as seen in daily MACD we'd still expect strong resistance below 1.2 handle to limit upside and bring medium term reversal. But break of 1.1683 support is needed to indicate short term topping first. Otherwise, outlook will remain mildly bullish in case of retreat.

In the bigger picture, while a medium term top could be around the corner, there is no change in the larger outlook. That is, long term rise from SNB spike low back in 2015 is still in progress and would extend. As long as 1.1198 resistance turned support holds, we'll hold on to this bullish view and expect another to prior SNB imposed floor at 1.2000. Though, we'll reassess the outlook if 1.1198 is firmly taken out.

Daily Pivots: (S1) 1.2132; (P) 1.2228 (R1) 1.2279; More....

Intraday bias in EUR/USD remains neutral for consolidation below 1.2322 temporary top. But, as long as 1.2088 resistance turned support stays intact, near term outlook remains bullish. Current medium term rally would target 1.2494/2516 key resistance zone next. At this point, we'd expect strong resistance from there to limit upside and bring reversal. On the downside, 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 another 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 38.2% retracement of 1.6039 to 1.0339 at 1.3862.

Daily Pivots: (S1) 1.3741; (P) 1.3841; (R1) 1.3927; More.....

GBP/USD spikes higher to 1.3942 but fails to sustain above 1.3835 key resistance yet. Intraday bias remains neutral first. We'd still expect strong resistance from 1.3835 to limit upside to complete the medium term rally from 1.1946. Break of 1.3612 resistance turned support will be the first sign of reversal and turn bias back to the downside for 1.3457 support. However, sustained break of 1.3835 will carry larger bullish implication and target long term fibonacci level at 1.5466.

In the bigger picture, the break of long term trend line resistance from 1.7190 (2014 high) is seen as a sign of long term reversal. However, rise from 1.1946 (2016 low) is not impulsive looking. And the pair is limited below 1.3835 key resistance. Hence, we won't turn bullish yet and would continue to monitor the development. On the downside, break of 1.3038 support will now indicate that rebound from 1.1946 has completed and turn outlook bearish. Meanwhile, sustained break of 1.3835 should at least send GBP/USD to 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.

Daily Pivots: (S1) 0.9596; (P) 0.9627; (R1) 0.9683; More....

Intraday bias in USD/CHF remains neutral for consolidation above 0.9571 temporary low. As long as 0.9698 support turned resistance holds, deeper fall could be seen to 0.9420 low. Nonetheless, break of 0.9698 will indicate short term bottoming. Intraday bias would then be turned back to the upside for 0.9844 key near term resistance next.

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) 110.55; (P) 110.94; (R1) 110.70; More...

Break of 111.26 minor resistance now argues that USD/JPY has bottomed at 110.18, ahead of 61.8% retracement of 107.31 to 114.73 at 110.14. Intraday bias is turned back tot he upside for 113.38 resistance. Break there will confirm completion of the corrective pull back from 114.73 and turn outlook bullish. Below 1101.8 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.

SPX Short Term Elliott Wave view suggests that the rally from 12/2/2017 low is unfolding as 5 waves impulsive Elliott Wave structure where Minute wave ((i)) ended at 2665.19, Minute wave ((ii)) ended at 2624.75, Minute wave ((iii)) ended at 2807.54, and Minute wave ((iv)) ended at 2768.64. Index has broken above Minute wave ((iii)) at 2807.54 which suggests that the next leg higher has started.

Near term, while dips stay above 2768.64, Index has scope to extend higher within Minute wave ((v)) before ending the 5 waves rally from 12/12/2017 low. Potential target for Minute wave ((v)) is equal to Minute wave ((i)) in length, which comes at 2328 – 2843 area. We do not like selling the Index and favor more upside as far as pivot at 2768.64 low stays intact.

Daily Pivots: (S1) 1.2348; (P) 1.2441; (R1) 1.2527; More...

USD/CAD is staying in range above 1.2354 and intraday bias remains neutral. More consolidations could be seen. But again, 1.2623 support turned resistance holds, deeper decline is expected. Break of 1.2354 will extend the fall from 1.2910 to retest 1.2061 low. However, 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, current development argues that rebound from 1.2061 has 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) 0.7932; (P) 0.7977; (R1) 0.8014; More...

AUD/USD lost some upside momentum after hitting 0.8022 and intraday bias is turned neutral for consolidations first. Further rally is expected as long as 0.7874 support holds. Above 0.8022 will extend the rise from 0.7500 to 0.8124 high. 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 0.7764).

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.

Trading in the forex markets remain rather dull today. Dollar's recovery overnight again lack conviction. Nonetheless, USD/JPY does seem to have bottomed out, but that's mainly thanks to Yen's weakness. Canadian Dollar is bounded in range after the highly anticipated BoC rate hike. Traders are holding their bet on the Loonie after cautious tone of BoC. Sterling spiked higher through 1.3835 key resistance but there was no follow through buying. It'll take a little more time to see if that's bull trap. Australian Dollar doesn't get any lift by strong job data and is staying in consolidation.

Canadian Dollar range bound after BoC rate hike

BOC raised the policy rate by 25 bps to 1.25% yesterday, as "recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity". The move had been widely anticipated. As such, we observed the instant "sell the news" move in USDCAD after the announcement. Canadian dollar's retreat was pared later in the day, though, as the market has priced in another rate hike by May. Policymakers remained cautious over future rate hikes and cited the uncertainty in the NAFTA renegotiations as a risk. Yet, the market appeared to have shrugged off these comments.

The central bank also released its latest Monetary Policy Report (MPR), providing updated economic projections. The staff projected GDP growth to average at 3% in 2017, followed by 2.2% in 2018 (up from 2.1% in October's estimate). Growth should ease further to 1.6% in 2019 (up from October's 1.5% forecast). A major risk facing Canadian economy is the uncertainty around NAFTA negotiations which is "clouding the economic outlook". As such, the latest economic projections have incorporated "additional negative judgment on business investment and trade" of NAFTA uncertainty.

More in BOC Raises Policy Rate, Market Prices In Another Hike Before May

Fed Beige Book: Modest to moderate gains in activity

The latest Beige Book prepared by the Atlanta Fed continued to depict an upbeat economic environment. All Districts surveyed reported "modest to moderate gains" in economic activity while Dallas reported a "robust" increase. The outlook for this year remains optimistic. On the employment situation, most Districts noted a tight labour market. Some suggested that the situation is constraining growth. Despite this, wages in most Districts only grew at a "modest" pace.

Focus shifting to BoJ meeting next week

With BoC decisions now passed, focuses are gradually shifting to BoJ meeting next week. According to a Reuters poll, the majority of economists surveyed expected BoJ to stand pat on interest rate throughout 2018. But it should also be noted that there is no overwhelming consensus on what would happen in the second half. It's noted that the outlook in the latter part of 2018 will very much depend on the future of Governor Haruhiko Kuroda. That is, whether Prime Minister Shinzo Abe would offer him another term.

Yet, for the near term, there is little chance for a change in BoJ's policies. According to Bloomberg's report, the summary of opinions of December meeting noted discussion on the possibility of raising rates. But that's just a small shift in sentiments, and it's not even a majority of view. The document noted that "when it is expected that economic activity and prices will continue to improve going forward, the situation may occur where the Bank will need to consider whether adjustments in the level of interest rates will be necessary," as one member said.

Australia job growth extends record streak

Australian job growth remained strong with 34.7k expansion in December. That's more than double of market expectation of 15.2k. That's the 15th straight month of expansion, the longest streak since 1993. And the more encouraging part is that full time jobs rose by 322k since December 2016, making up the majority of the 393k growth. Unemployment rate rose to 5.5% but that's due to a jump in participation rate at 65.7%. For the moment, markets are only pricing in 50/50 chance of an RBA rate hike by August. Also from Australia, consumer inflation expectation rose 3.7% in January.

Elsewhere

A batch of key Chinese data will be the focus today, including GDP. US will release housing starts, Philly Fed survey and jobless claims.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7932; (P) 0.7977; (R1) 0.8014; More...

AUD/USD lost some upside momentum after hitting 0.8022 and intraday bias is turned neutral for consolidations first. Further rally is expected as long as 0.7874 support holds. Above 0.8022 will extend the rise from 0.7500 to 0.8124 high. 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 0.7764).

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.

Economic Indicators Update