Sample Category Title

Daily Pivots: (S1) 0.7717; (P) 0.7723; (R1) 0.7734; More...

AUD/USD's rebound from 0.7500 is still in progress. But for the moment, we'd still expect upside to be limited by 0.7732/8 cluster resistance (38.2% retracement of 0.8124 to 0.7500 at 0.7738). On the downside, break of 0.7653 minor support will turn bias to the downside for retesting 0.7500. However, sustained break of 0.7732 should invalidate our bearish view and bring stronger rise through 61.8% retracement at 0.7886.

In the bigger picture, corrective rise from 0.6826 medium term bottom is likely completed at 0.8124, after hitting 55 month EMA (now at 0.8034). Decisive break of 0.7328 key cluster support (61.8% retracement 0.6826 to 0.8124 at 0.7322) will confirm. And in that case, long term down trend from 1.1079 (2011 high) will likely be resuming. Break of 0.6826 will target 61.8% projection of 1.1079 to 0.6826 from 0.8124 at 0.5496. This will now be the favored case as long as 0.7732 near term resistance holds.

Daily Pivots: (S1) 1.2668; (P) 1.2701; (R1) 1.2717; More....

Intraday bias in USD/CAD remains neutral as sideway trading from 1.2916 is still extending. Deeper fall could be seen. But after all, as long as 1.2598 resistance turned support holds, near term outlook remains bullish. On the upside, firm break of 1.2916 will resume the rise from 1.2061 and target 1.3065 medium term fibonacci level next. However, sustained break of 1.2598 will argue that rebound from 1.2061 has completed after hitting 55 week EMA (now at 1.2879). Near term outlook will be turned bearish in this case.

In the bigger picture, USD/CAD should have defended 50% retracement of 0.9406 (2011 low) to 1.4689 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. Rise from 1.2061 medium term bottom should now target 38.2% retracement of 1.4689 to 1.2061 at 1.3065. Firm break there will target 1.3793 key resistance next (61.8% retracement at 1.3685). We'll now hold on to this bullish view as long as 1.2450 support holds.

The financial markets are treading water in quiet holiday trading. DOW closed -0.03% down at 24746.21 overnight. S&P 500 closed down -0.11% at 2680.50. Nikkei is also trading up around 0.1% at the time of writing. In the currency markets, Aussie is the clear winner for the week while Yen is broadly lower. The markets may need to wait for consumer confidence from US to give it back its life.

Commodity currencies are generally strong this month. While Aussie has been impressive in the past two weeks, the strength against Loonie and Kiwi is not convincing yet.

AUD/CAD rebounded after breaching 0.9591 and a short term bottom was formed at 0.9578. Nonetheless, upside is limited by 55 week EMA (now at 0.9867), and below 0.9916 resistance. While the rebound was strong, there is no confirmation of reversal yet. That is, fall from 1.0344 could extend lower. Break of 0.9578 will target 0.9322 support next. On the upside, sustained trading above 0.9916 will bring stronger rise. But recent price actions have been corrective for a while, with lack of a clear trend. Hence, we'd expect strong resistance below 1.0344/96 to bring more sideway trading.

AUD/NZD recovered ahead of 1.0823 cluster support (50% retracement of 1.0368 to 1.1289 at 1.0829, 55 week EMA at 1.0826). But there is no clear sign of reversal yet. Deeper fall is expected as long as 1.1112 resistance holds. Sustained break of 1.0823 will bring deeper fall to 1.0368 and possibly below. But so far, price actions from 1.1638 are clearly corrective. Even in case of a deep decline, we don't expect a break of 1.0016 low. On the upside, above 1.1112 will extend the rise from 1.0368 to test 1.1638 resistance.

NZD/JPY is one of the biggest gainer this month, thanks to rebound in Kiwi and selloff in Yen. The break above flat 55 week EMA affirmed the case that fall from 83.90 has completed at 76.08. The development also argue that the consolidation pattern from 83.76 has completed with three waves to 76.08. In other words, medium term rebound from 68.88 might be ready to resume. Near term outlook will stay bullish as long as 78.36 support holds. Retest of 83.90 should be seen first. Break there will confirm this bullish view and target a test on 94.01 (2015 high).

On the data front

Japan housing starts will be featured in Asian session. Swiss will release UBS consumption indicator, UK will release BBA mortgage approvals in European session. The main feature of the day is Conference Board consumer confidence from US.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.2668; (P) 1.2701; (R1) 1.2717; More....

Intraday bias in USD/CAD remains neutral as sideway trading from 1.2916 is still extending. Deeper fall could be seen. But after all, as long as 1.2598 resistance turned support holds, near term outlook remains bullish. On the upside, firm break of 1.2916 will resume the rise from 1.2061 and target 1.3065 medium term fibonacci level next. However, sustained break of 1.2598 will argue that rebound from 1.2061 has completed after hitting 55 week EMA (now at 1.2879). Near term outlook will be turned bearish in this case.

In the bigger picture, USD/CAD should have defended 50% retracement of 0.9406 (2011 low) to 1.4689 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. Rise from 1.2061 medium term bottom should now target 38.2% retracement of 1.4689 to 1.2061 at 1.3065. Firm break there will target 1.3793 key resistance next (61.8% retracement at 1.3685). We'll now hold on to this bullish view as long as 1.2450 support holds.

Economic Indicators Update

Notes/Observations

• Thin holiday trade as various markets closed in Asia/Europe (including Hong Kong, Australia, New Zealand, France, Germany, Spain, Switzerland, UK and Italy);

Asia:

• Japan Nov Jobless Rate hits its lowest level since Nov 1993 (2.7% v 2.8%e)
• Japan Nov National Core CPI hits its highest level since March 2015 (0.9% v 0.8%e) but 2% inflation target still distant
• BOJ Gov Kuroda reiterated stance to patiently maintain powerful monetary easing
• Japan PM Abe urges firms to raise wages by 3% or more

Europe:

• Russian Central Election Commission (CEC) denied opposition leader Alexei Navalny the right to participate in the 2018 presidential election due to his criminal conviction for fraud

Americas:

• AAPL said to have told suppliers Q1 iPhone X sales will be 30M v 50M units

Energy:

• Oil producers to discuss exit plans from cuts once market near balance

Economic Data:

• (BR) Brazil Dec FGV Construction Costs M/M: 0.1% v 0.3%e

**Fixed Income Issuance:

• None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

• Indices [Stoxx50 closed, FTSE closed, DAX closed, CAC-40 closed, IBEX-35 closed, FTSE MIB closed, SMI closed, S&P 500 Futures +0.02%]
• Market Focal Points/Key Themes: European markets largely closed due to holiday; very thin trading during session with no major equities news; attention on upcoming US session with Case-Shiller home price index and Richmond Fed Manufacturing Index

Equities

• None Seen

Speakers

• Russia govt official: Legitimacy of elections is not influenced by absece of one person seeking to take part; Navalny's call for election boycott needs to be carefully studied to see whether they comply with law
• India Fin Min official: Recap bonds to be issued to all State-run banks; will not let any bank default

Currencies

• FX markets were quiet with many outlets closed for holiday.
• EUR/USD was little changed at 1.1875 area after a brief Christmas day volatility said to be inspired by algorithmic trading.
• The USD/JPY was also little changed near 6-week highs despite some encouraging data out of Japan on the employment and inflation front

Fixed Income

• Markets closed for holiday.

Looking Ahead

• 05:25 (BR) Brazil Central Bank Weekly Economists Survey
• 06:30 (TR) Turkey Dec Capacity Utilization: No est v 79.9 prior
• 06:30 (TR) Turkey Dec Real Sector Confidence (Seasonally Adj): No est v 109.8 prior; Real Sector Confidence (unadj): No est v 106.3 prior
• 06:45 (US) Daily Libor Fixing (**Note: no 3-month fixing)
• 09:00 (US) Oct S&P/Case-Shiller 20-City M/M: 0.60%e v 0.52% prior; Y/Y: 6.25%e v 6.19% prior; House Price Index (HPI): No est v 203.50 prior
• 09:00 (US) Oct S&P Case-Shiller (overall) HPI Y/Y: No est v 6.15% prior; Overall HPI Index : No est v 195.51 prior
• 09:00 (EU) Weekly ECB Forex Reserves:
• 10:00 (US) Dec Richmond Fed Manufacturing Index: 21e v 30 prior
• 10:30 (US) Dec Dallas Fed Manufacturing Activity: 20.0e v 19.4 prior
• 11:30 (US) Treasury to sell 4-Week Bills
• 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
• 13:00 (US) Treasury to sell 2-Year Notes
• 14:00 (AR) Argentina Nov Trade Balance: -$0.8Be v -$1.0B prior
• 16:00 (KR) South Korea Dec Consumer Confidence: No est v 112.3 prior
• 20:10 (JP) BOJ Outright Bond Purchase 1~3 Years and 3~5 Years
• 20:30 (CN) China Nov Industrial Profits Y/Y: No est v 25.1% prior
• (AR)Argentina Central Bank (BCRA) Interest Rate Decision

The gold is quickly recovering after a drop to Monthly L5 level during this holiday trading mode. Christmas trading and pre-New Year price action is a bit slow. Banks are off, traders are off work, so be careful if you still want to test you luck against low liquidity.

Technical perspective on Gold looks twofold. This could be a range play between POC (s) and POC (b). 1277.90-1284.50 is the zone where the price might reject - POC (s). POC (b) 1261.78-1265 is the zone where the price might bounce. As the low liquidity persists, you need to pay attention to all important levels in-between and cut on any targets you might want to take. If the price rejects from the POC (s) watch out for round numbers and important confluence points of fib and camarilla levels (green highlight).

• H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)
• W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)
• D H4 - Daily Camarilla Pivot (Very Strong Daily Resistance)
• D L3 - Daily Camarilla Pivot (Daily Support)
• D L4 - Daily H4 Camarilla (Very Strong Daily Support)
• PPR - Progressive Polynomial Channel
• POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

USD/JPY has shown little movement since Thursday, and this trend continues on Tuesday. Japanese markets were open over Christmas Day, and some strong Japanese numbers on Monday could push the yen higher during the week.

Japan released consumer spending and inflation numbers on Monday, and the readings were strong. Tokyo Core CPI, the primary gauge of consumer inflation, climbed 0.9%, in December its strongest gain since March 2015. This edged above the forecast of 0.8%. Household Spending rebounded with an excellent gain of 1.7%, crushing the estimate of 0.6%. This reading marked a 5-month high. Later in the week, we'll get a look at another inflation indicator, BoJ Core Inflation.

It was more of the same from the BoJ, which wrapped up a two-day policy meeting last week. Policymakers voted to hold record low interest rates and the target for the 10-year government bond yield at zero percent. The BoJ acknowledged stronger economic conditions, saying that the "economy is expanding moderately". A stronger global economy has boosted Japan's export and manufacturing sectors. However, inflation levels remains well below the BoJ's target of around 2 percent, and with this trend likely to continue well into 2018 or later, the BoJ is likely to hold the course on interest rate levels and its ultra-accommodative stimulus program. At a news conference, BoJ Governor stressed the importance of reaching the 2% inflation target, adding that the Bank would not "raise interest rates just because the economy is improving."

Heading into Christmas, key US indicators were a mix. Core Durable Goods Orders declined 0.1%, missing the estimate of +0.5%. This marked the first decline since May. Durable Goods Orders rebounded with a gain of 1.3%, but this was well short of the estimate of 2.1%. Consumer confidence slowed to 95.9, shy of the estimate of 97.1 points. On the positive side, Personal Spending improved to 0.6%, edging above the estimate of 0.5%. As well, New Home Sales jumped to 733 thousand, crushing above the estimate of 654 thousand. This was the highest reading since September 2007.

The euro has ticked lower in the Monday session. Currently, EUR/USD is trading at 1.1857, down 0.04% on the day. In economic news, it's a quiet start to the week. There are no eurozone events on the calendar. The US will release Richmond Manufacturing Index, which is expected to slow to 22 points. On Wednesday, there are two key US indicators – CB Consumer Confidence and Pending Home Sales.

US numbers ended the week with a host of events, but the results were mixed, leaving EUR/USD unchanged on Friday. Core Durable Goods Orders declined 0.1%, missing the estimate of +0.5%. This marked the first decline since May. Durable Goods Orders rebounded with a gain of 1.3%, but this was well short of the estimate of 2.1%. Consumer confidence slowed to 95.9, shy of the estimate of 97.1 points. On the positive side, Personal Spending improved to 0.6%, edging above the estimate of 0.5%. As well, New Home Sales jumped to 733 thousand, crushing above the estimate of 654 thousand. This was the highest reading since September 2007.

The week of Christmas will be light on fundamentals, with only a handful of economic indicators. On Friday, Germany releases Final CPI, with the markets forecasting a strong gain of 0.5%. If Final CPI meets or exceeds the estimate, the euro should gain some ground against the US dollar. In November, the indicator improved to 0.3%, marking a 4-month high. In the eurozone, annual average inflation also inched higher to 1.5% in November, up from 1.4% in October. This marked a multi-year high. Still, inflation remains well below the ECB target of just below 2.0%, and ECB policymakers are unlikely to announce an end to their stimulus package until inflation moves closer to the 2.0% target.

EURUSD: The pair now looks to build up on its past week gains though seeing price hesitation on Friday. On the upside, resistance comes in at 1.1900 level with a cut through here opening the door for more upside towards the 1.1950 level. Further up, resistance lies at the 1.2000 level where a break will expose the 1.2050 level. Conversely, support lies at the 1.1800 level where a violation will aim at the 1.1750 level. A break of here will aim at the 1.1700 level. Below here will open the door for more weakness towards the 1.1650. All in all, EURUSD faces further downside weakness

• SWFX market sentiment is 57% bearish
• 54% of pending orders in 100-pip range are set to BUY
• 53% of traders are bullish on the Dollar
• Upcoming Events: US CB Consumer Confidence and Pending Home Sales

New trading week the currency exchange rate began in resistance zone located around the 1.1870 mark. As regards the further movement of the pair, there is a need to take into account that the rate four days in a row failed to cross the 61.8% Fibonacci retracement level at 1.1887.

The Greenback depreciated against the European single currency on the disappointing US GDP data. The EUR/USD exchange rate rose 11 base points to the 1.1866 mark to reveal temporary consolidation, but fell, as Congress managed to avoid the US Government shutdown on Friday.

The US economy expanded at its strongest pace in two years in the Q3, fuelled by solid business spending.The Commerce Department stated that the country's gross domestic product rose at a 3.2% yearly rate in the Q3, missing expectations for a 3.3% growth. Moreover, the US Congress approved tax cuts are set to encourage economic growth, though the risk of overheating is likely to occur with fiscal stimulus coming simultaneously with reaching the level of full employment.

Despite the holiday mood it might be worth to take a look at release of information on sentiment of American consumers, which is expected to decrease to 128.2 from 129.5.

EUR/USD fails to bypass 1.1880

The first trading day after Christmas the currency exchange rate started in a resistance zone located between the 1.1865 and 1.1876 levels. Because of an empty economic calendar and decreased liquidity the pair is likely to continue moving horizontally. In short the term, the rising 55- and 100-hour SMAs most probably will stimulate the rise of the Euro against the Dollar. However, in larger perspective the exchange rate is expected to keep moving downwards due to inability to bypass the 61.8% Fibonacci retracement level located at the 1.1887 mark. In support of this assumption, 54% of pending orders in 100-pip range are set to buy, while the aggregate market sentiment is 67% bearish.

Hourly Chart

At the moment, the currency rate is still fluctuating in a triangle formed by the upper line of a dominant descending channel and the bottom line of a junior ascending channel. From this perspective, the pair is expected to soar to the 1.1900 mark. However, the fact that the rate failed to bypass the 61.8% Fibonacci retracement level four times in a row suggests that it might resume the downward movement.

Daily Chart

• SWFX traders are 55% bullish
• 57% of pending orders in 500-pip range are set to BUY the gold
• Gold price remains near 1,268.00
• Upcoming Events: US CB Consumer Confidence and Pending Home Sales

In result of the previous trading session the bullion gained 0.7% against the buck. As pair approached the upper edge of a dominant four-month long channel, a rebound is expected to happen.

The US economy expanded at its strongest pace in two years in the Q3, fuelled by solid business spending.The Commerce Department stated that the country's gross domestic product rose at a 3.2% yearly rate in the Q3, missing expectations for a 3.3% growth. Moreover, the US Congress approved tax cuts are set to encourage economic growth, though the risk of overheating is likely to occur with fiscal stimulus coming simultaneously with reaching the level of full employment.

The only event that is worth following this week will happen at 15:00 GMT when the Conference Board will publish information on sentiment of American consumers.

XAU/USD tests dominant channel down

In result of the surge that was triggered by two disappointing macroeconomic data releases as well as the rising 55- and 100-hour SMAs the price of yellow metal ended up at the 1,273.00 mark. The further advance seems unlikely, as the exchange rate faces resistance formed by the monthly PP and the upper trend-line of a four-month long dominant descending channel that supposedly started to transform into rising wedge formation. However, the overall market sentiment as well as allocation of pending orders suggest that rise of the bullion might continue. In case the pair crosses the above barriers, it will be free to climb up to the 1,287.15 level, which represents location of the 100-day SMA.

Hourly Chart

In result of the Friday's surge, the exchange rate approached the upper boundary of a four-month long channel down that supposedly started to transform into the falling wedge formation. Accordingly, the rate is expected to make a rebound and start moving in the opposite direction towards the 200-hour SMA.

Daily Chart