Sample Category Title

The euro has moved sharply higher against the greenback, reaching 1.2068 against the U.S dollar, following the release of a more hawkish than expected ECB Meeting Minutes. The Meeting Minutes revealed that members of the European governing council may start to change ECB guidance in 2018, to represent the continued economic recovery underway in the eurozone. The EURUSD pair currently trades around the 1.2040 level, with buyers now looking to the 2017 price-high, at 1.2093, as bullish momentum continues to build in the euro ahead of the European trading session.

The EURUSD pair is strongly bullish while trading above the 1.2030 level, further upside towards 1.2093 and 1.2150 remains possible.

Should price-action on the EURUSD pair move below the 1.2030 level, sellers may start to target the 1.2010 and 1.1989 support zones.

The pair is holding in narrow consolidation in early Friday's trading, taking a break after strong fall in past three days.

Sustained break here would spark fresh bearish acceleration towards targets at 110.15/00 (Fibo 61.8% of 107.31/114.73/psychological support).

Firm bearish structure of daily techs supports further losses, but oversold slow stochastic warns of consolidation preceding fresh weakness.

US data due later today are in focus.

Res: 111.43, 111.68, 111.87, 112.00
Sup: 111.04, 110.83, 110.15, 110.00

Cable ticked higher on Friday, in attempts to extend recovery rally from the previous day, driven by weaker dollar, but limited upside seen so far.

Bulls are lacking strength for stronger advance, holding in the middle of two-week 1.3457/1.3612 range.

Daily studies show MA's in bullish setup but RSI and Momentum in sideways mode and offsetting bullish signals.

Recent upside attempts were so far limited by 4-hr cloud top (currently at 1.3552, also Fibo 61.8% of 1.3612/1.3457), firm break of which would generate fresh bullish signal and shift near-term focus higher.

Otherwise, increasing downside risk could be expected on repeated rejections here and return below 10 SMA (1.3540).

The pair is awaiting releases of US data today for fresh direction signals.

Res: 1.3564, 1.3585, 1.3612, 1.3655
Sup: 1.3540, 1.3517, 1.3481, 1.3457

The Euro remains well supported on Friday and extends gains from the previous day when it rallied on hawkish ECB. At the same time the dollar came under pressure on downbeat US jobless claims data. Bulls approach key barriers at 1.2100 zone (tops at 1.2092/88, posted on 08 Sep and 04 Jan respectively). Overall bullish structure keeps focus at the upside, favoring final break above 1.2100 resistance zone and triggering stops parked above. This could spark fresh acceleration towards initial target at 1.2166 (Fibo 50% of 1.3992/1.0340 descend) and 1.2219 (Fibo 123.6% projection) in extension. Rising 10SMA offers solid support at 1.2010, guarding key supports at 1.1927 (20SMA) and 1.1915 (correction low). With no significant releases from the EU scheduled today, focus turns towards US CPI and retail sales data, due later today, which could generate fresh signals (Dec CPI 0.2%f/c vs 0.4% previous, retail sales Dec 0.4% f/c vs 0.8% previous).

Res: 1.2075, 1.2088, 1.2092, 1.2166
Sup: 1.2028, 1.2010, 1.1961, 1.1927

USDCAD remains weak following a drop below the key 1.2700 level and out of a 2-month range. In the near-term, the pair has a firmer undertone after making a recovery off 3-month lows and is now testing 1.2500 which is seen as a strong support level.

The odds for a sustained rebound are low at the moment. RSI is still in bearish territory below 50 and USDCAD is capped by the 100-day moving average at 1.2590. The recovery back above the key 1.2500 level from 1.2355 indicates that the decline from the 1.2900 handle has stabilized.

USDCAD is expected to remain neutral and consolidate around 1.2500 in the short term. The market needs to make a sustained move above yesterday’s high and above the 100-day MA in order to confirm whether the recent rebound off 1.2355 is not just a corrective move of the downtrend from the December 19 high but rather the start of a bullish phase.

US FED's William Dudley spoke on Thursday at the Securities Industry and Financial Markets Association in New York. 'Over the longer term I am considerably more cautious about the economic outlook,” said Dudley, 'Keeping the economy on a sustainable path may become more challenging,” due to the risk of 'overheating'. He made the point that there is a strong case to keep gradually raising rates and that the forecast for 3 rate hikes this year is a reasonable starting point. He said it could go faster or slower depending on data and he wants to achieve 2% inflation before shifting goal higher. He also said that 'Tax cuts will come at a cost, pose challenges for Fed.' Tax cuts, he said, made him considerably more cautious about the longer-term economic outlook and the cuts give a short-term boost to the economy but pose serious long-term risks. He expects 2.5% to 2.75% GDP growth, inflation hitting 2% in the medium term and unemployment down below 4% in 2018.

Eurozone Industrial Production w.d.a. (YoY) (Nov) was released with a number of 3.2% from a consensus of 3.0% and a prior of 3.7%, revised up to 3.9%. Industrial Production s.a. (MoM) (Nov) was 1.0% v an expected 0.8%, from 0.2% previously, which was revised up to 0.4%. EURUSD moved marginally lower on the data to 1.19387.

Eurozone ECB Monetary Policy Meeting Accounts were published at 12:30 GMT on Thursday. The ECB said they could consider a 'gradual shift' in guidance from early 2018. Inflation was an ongoing concern to the ECB and 'the relative importance of guidance on rates will increase as inflation rises.' They said that a transition to a broader forward guidance, comprising various dimensions of policy stance was warranted and they would revisit the whole issue in early 2018. On the policy side, they had ' increased confidence that inflation pressures would take hold ' and further easing of financial conditions are not regarded as warranted. They saw comfort in wage dynamics but inflation is still a concern. EURUSD soared higher from 1.19364 to reach a high of 1.20587.

US Continuing Jobless Claims (Dec 29) were 1.867M v an expected 1.915M, from a previous number of 1.914M that was revised down to 1.902M. Initial Jobless Claims (Jan 5) was 261K v an expected 245K, with a prior reading of 250K. USDJPY moved lower after this data release from 111.616 to 111.387.

US Monthly Budget Statement (Dec) came in at $-23B v an estimated $-40B, from a previous $-139B.

New Zealand Building Permits s.a. (MoM) (Nov) was released as 10.8%. The previous reading was -9.6%, but this was revised down to -10.4%.

Japanese Foreign Investment in Japan stocks (Jan 5) came out as ¥597.9B. ¥76.2B was the previous number but this was revised to ¥76.1B. Foreign Bond Investment (Jan 5) came out at ¥173.0B, with the prior number of ¥434.2B revised to ¥427.4B.

Chinese Imports (YoY) (Dec) were 4.5% v a consensus of 13.0%, from 17.7% previously. Exports (YoY) (Dec) came in at 10.9% v an expected 9.1%, from 12.3% prior. Imports (YoY) CNY (Dec) were 18.7% v an expected 11.8% and 15.6% previously. Exports (YoY) CNY (Dec) were 10.8% v 7.4% expected and 10.3% prior. Trade Balance USD (Dec) was $54.69B v $37.00B expected, from $40.21B prior. Trade Balance CNY (Dec) came in at 361.98B v 254.00B, with a previous read of 263.60B.

Japanese Eco Watchers Survey: Outlook (Dec) was 52.7 v 53.5 expected, from 53.8 previously. Japanese Eco Watchers Survey: Current (Dec) was 53.9 v 55.2 expected, from 55.1 previously.

EURUSD is up 0.11% overnight, trading around 1.20445.

USDJPY is up 0.09% in early session trading at around 111.344.

GBPUSD is up 0.07% to trade around 1.35438.

USDCAD is up 0.15%, trading around 1.25380.

Gold is up 0.47% in early morning trading at around $1,328.38.

WTI is down -0.24%, trading around $63.37.

Major data releases for today:

At 07:45 GMT, French Consumer Price Index (EU Norm) (YoY) (Dec) will be released. An unchanged reading of 1.3% is expected. EUR pairs will be influenced by this data point along with the French Stock market.

At 13:30 GMT, US Retail Sales (MoM) (Dec) will be released with an expected 0.4% from 0.8% previously. Retail Sales ex Autos (MoM) (Dec) is expected at 0.4% from 1.0% prior. Retail Sales (Dec) Control Group expected at 0.4% from 0.8% prior. Consumer Price Index (YoY) (Dec) is expected at 2.1% from 2.2% previously. Consumer Price Index Ex Food & Energy (YoY) (Dec) is expected to be unchanged at 1.7%. Consumer Price Index Ex Food & Energy (MoM) (Dec) is expected to be 0.2% from 0.1% previously. USD crosses could see increased volatility around this data release.

At 16:30 GMT, German Buba President Weidmann will be speaking at the Ludwig-Erhard summit, in Bavaria. His comments could move EUR crosses.

At 18:00 GMT, Baker Hughes US Rig Count numbers will be released. The prior number last Friday showed that there were 742 Oil rigs in operation. WTI traders will be paying close attention to this number as they look to the week ahead.

At 20:30 GMT, US Federal Reserve Bank of Boston President Rosengren will be speaking and his comments may affect USD crosses, stocks, commodities and bonds.

Sunrise Market Commentary

• Rates: Hawkish ECB Minutes are bearish for Bunds
  Hawkish ECB Minutes surprised markets yesterday. They suggest changes to the ECB's forward guidance early this year. The German 10-yr yield is heading for a test of the 2017 cycle top at 0.62%. Today's eco calendar heats up in the US with CPI and retail sales. Especially higher CPI readings won't go unnoticed in current volatile, negative, core bond sentiment.
• Currencies: EUR/USD nears again 1.2092 range top
  USD weakness was replaced by euro strength yesterday as the ECB Minutes signaled a potential change in the central bank's policy assessment. US CPI and retail sales take center stage today. A miss might cause further USD softness short-term. The key EUR/USD 1.2092 resistance might again be challenged.

The Sunrise Headlines

• US stock markets overcame Wednesday's off-day and closed around 0.7-0.8% higher, supported by a weaker dollar. Risk sentiment is positive overnight with China and mainly Japan underperforming.
• China's exports rose more than expected in December (10.9% Y/Y), but import growth (4.5% Y/Y) slowed dramatically, helping to drive up the country's trade surplus to $54 bn for the month, the highest since January 2016.
• NY Fed president Dudley said that US tax cuts pushed through last month added to the risk that the economy could overheat, hardening the case for higher short-term interest rates.
• The EU has begun debating the price for prolonging Britain's Brexit transition beyond December 2020, with Brussels, Paris and Berlin attempting to maximise their bargaining power should trade talks drag on for several years.
• Bulgaria stepped up its campaign to adopt the euro, challenging member states to let it into the single currency's "waiting room" in the coming months or spell out why it cannot join.
• Brazil paid the price for failing to approve President Temer's flagship pension overhaul as S&P downgraded Latin America's largest economy further into junk territory (BB-; outlook stable).
• Today's eco calendar heats up with US retail sales and CPI data. ECB Weidmann and Boston Fed Rosengren are scheduled to speak. The Q4 earnings season kicks off with JP Morgan and Well Fargo

Currencies: EUR/USD Nears Again 1.2092 Range Top

EUR/USD 1.2092 resistance again on the radar

The dollar entered calmer waters yesterday as China indicated that news on the country reducing US Treasury holdings was false. However, calm was disturbed by the December ECB Minutes. The ECB discussed a change in communication. Forward guidance will focus more on interest rates rather than on the APP. The Minutes propelled EMU yields and the euro. EUR/USD jumped north of 1.20. The US PPI printed softer than expected and gave no reason for the dollar to counterbalance the rise of the euro. EUR/USD finished the day at 1.2032. USD/JPY lost modestly further ground and closed at 111.26, despite strong US equities.

Overnight, Asian equities mostly trade in positive territory. Japan underperforms as the strong yen weighs. EUR/USD holds in the mid 1.20 area. There are only second tier EMU data today, but markets will still contemplate the consequences from yesterday's ECB Minutes. US data contain the December CPI and retails sales. Retail sales are expected solid (0.5% M/M headline; 0.4% control group). Headline CPI is expected subdued (0.1% M/M and 2.1% Y/Y, core 1.7% Y/Y).

The dollar was resilient yesterday as the Chinese news was dismissed. Euro strength finally prevailed after the ECB minutes. US price data were not really strong of late. Retail sales are expected solid. So, an outright beat for US data is not that evident. Another miss in the US data contains the risk for further USD losses short term. EUR/USD might revisit the 1.2092 top. This level proved solid off late. We don't preposition for a break yet, but the pressure grows. Partial stop-loss protection against a break beyond 1.21 might be considered. We look out whether the USD/JPY decline might slow after this week's setback. If so, it could be a first sign that pressure on the USD might ease.

There were no important UK data yesterday. Underlying sterling sentiment was sluggish as the bickering on Brexit, including on the role of the UK financial sector, continued. In the afternoon, EUR/GBP jump above 0.89 on the ECB minutes. The pair closed the day at 0.8888. There are again no UK data today. Political noise and the broader EUR & USD price moves will guide sterling trading. Euro strength and Brexit uncertainty will probably keep the downside in EUR/GBP well protected. We keep a EUR/GBP buy-on-dips in case of return action to 0.87 big figure. A break beyond 0.8925 would indicated a further improvement in the ST EUR/GBP momentum.

EUR/USD 1.2092 again within reach after ECB Minutes. US data to decide on a break?

Download entire Sunrise Market Commentary

Key Highlights

• The US Dollar failed to stay above the 112.00 support area and declined against the Japanese Yen.
• USD/JPY is now well below the 112.00 support, which is a strong bearish sign.
• A major support sits at 111.00 where buyers may attempt to prevent further losses.
• Other major pairs such as EUR/USD and GBP/USD recently gained bullish traction.

USDJPY Technical Analysis

The US Dollar was not able to break the 113.80 and 114.00 resistance levels and moved down sharply versus the Japanese Yen. The USD/JPY pair is now in a bearish zone and poised to extend declines in the near term.

It seems like 2018 brought a lot of strength for the Japanese Yen since it gained a lot of bids against the US Dollar. USD/JPY failed to break a crucial bearish trend line with current resistance at 113.30 on the 4-hours chart.

A sharp downside wave was initiated and the pair tumbled below the 100 (red) and 200 (green) simple moving averages (4-hour). More importantly, there was a break below a key support at 112.00. The stated 112.00 support prevented declines on many occasions earlier. Therefore, a break and close below 112.00 suggests that the Japanese Yen buyers gained a lot of strength lately.

The pair traded as low as 111.04 recently and is attempting a recovery. However, the upside move may be capped by the 23.6% Fib retracement level of the last major decline from the 113.38 high to 111.04 low.

At the moment, the pair is showing signs of further weakness. A critical support on the downside sits at 111.00. Should USD/JPY drop below the 111.00 level, the pair could accelerate losses towards the 110.00 level in the near term.

To the topside, the previous support at 112.00 will most likely act as a resistance. Technically, indicators such as the RSI is showing negative signs.

Looking at the other major US dollar pairs, EUR/USD was able to move higher above the 1.2000 level. The main driving force for the Euro were the ECB minutes released yesterday, which pointed a solid recovery in the Euro Zone in the long run. GBP/USD also gained bullish traction and moved higher towards the 1.3580 level.

Today's US Consumer Price Index for Dec 2017 will be released. The market is aligned for an increase of 2.1% (YoY), down from the last 2.2%. If the outcome is positive, USD/JPY may recover in the short term toward 112.00. On the other hand, a negative outcome could further increase bearish pressure on the greenback.

For the 24 hours to 23:00 GMT, the AUD rose 0.59% against the USD and closed at 0.7890.

LME Copper prices declined 0.3% or $17.5/MT to $7123.0/MT. Aluminium prices rose 0.9% or $20.0/MT to $2179.0/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7881, with the AUD trading 0.11% lower against the USD from yesterday’s close.

The pair is expected to find support at 0.7853, and a fall through could take it to the next support level of 0.7825. The pair is expected to find its first resistance at 0.7907, and a rise through could take it to the next resistance level of 0.7933.

Moving ahead, traders would focus on Australia’s unemployment rate and consumer inflation expectations data, scheduled to release next week.

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 EUR rose 0.68% against the USD and closed at 1.2033, after the European Central Bank (ECB) unveiled upbeat minutes from its December policy meeting.

Minutes showed that the Governing Council could consider revising the outlook for the central bank’s massive monetary stimulus program early this year, as there was a “widely shared” view that the common currency region’s robust economic recovery had now moved into expansionary territory.

On the macro front, the Euro-zone’s seasonally adjusted industrial production advanced 1.0% on a monthly basis in November, surpassing market expectations for a gain of 0.8%. Industrial production had risen by a revised 0.4% in the prior month.

The greenback declined against its key peers, after producer prices in the US unexpectedly dropped 0.1% on a monthly basis in December, declining for the first time in over a year, thus intensifying concerns that factors restraining inflation could become more persistent. Producer prices had advanced 0.4% in the prior month, while investors had envisaged for a rise of 0.2%. Moreover, the number of Americans filing for fresh jobless claims registered an unexpected rise to a level of 261.0K in the week ended 06 January, hitting a nearly 4-month high level. Initial jobless claims had registered a reading of 250.0K in the previous week, while market participants had expected for a drop to a level of 245.0K.

Other data showed that budget deficit in the US narrowed more-than-expected to $23.2 billion in December, following a deficit of $138.5 billion in the prior month. Markets were anticipating the nation to record a budget deficit of $26.0 billion.

In the Asian session, at GMT0400, the pair is trading at 1.2049, with the EUR trading 0.13% higher against the USD from yesterday’s close.

The pair is expected to find support at 1.1963, and a fall through could take it to the next support level of 1.1877. The pair is expected to find its first resistance at 1.2101, and a rise through could take it to the next resistance level of 1.2153.

Amid no key macroeconomic releases in the Euro-zone today, investors would look forward to the release of final inflation numbers across the Euro-zone, scheduled to release next week. Later today, all eyes will be on the release of crucial US consumer price inflation and retail sales data, both for December.

The currency pair is trading above its 20 Hr and 50 Hr moving averages