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Here are the latest developments in global markets:

FOREX: The dollar traded slightly higher versus a basket of currencies and further above a two-week low hit earlier in the week. Despite this, it was still on track to record a weekly loss. The euro was down, though it recovered to a significant extent earlier losses after the results from Catalonia's regional elections showed a victory for pro-independence forces.

STOCKS: The Japanese Nikkei 225 and Topix indices finished the day higher by 0.2% and 0.35% respectively, with the latter renewing a multi-decade high close. Hong Kong's Hang Seng was higher by 0.3%. At 0726 GMT, Euro Stoxx 50 futures traded lower by 0.45%, while Dow, S&P 500 and Nasdaq 100 contracts were all slightly higher.

COMMODITIES: WTI and Brent crude were down by 0.4% and 0.3%, trading at $58.14 and $64.72 per barrel respectively. Gold was little changed at $1,267.45 an ounce. Yesterday it came close to the $1,269 handle to record its highest in two weeks.

Major movers: Euro records losses on Catalan vote, though shows resilience; aussie supported by rising iron ore prices

The dollar index, which gauges the greenback against the currencies of six major US trading partners, was 0.1% up at 93.37, as we're getting closer to Christmas and thin trading is anticipated. This compares to Wednesday's two-week low of 93.16.

The US Senate yesterday averted a government shutdown yet again by voting in favor of a bill that provides funding to the government up to January 19.

Dollar/yen was not much changed, trading at 113.37, not far below its highest in 10 days reached yesterday. The pair was supported by rising long-term US yields throughout the week – the 10-year Treasury yield yesterday touched a nine-month high of 2.50% – and a BoJ that seemed in no hurry to tighten monetary policy as it completed its meeting on monetary policy yesterday. Pound/dollar was also not much changed at 1.3377.

Separatist forces winning the majority of seats in the Catalan parliament exerted pressure on the euro, pushing euro/dollar as low as 1.1815. Eurozone's common currency later recovered though to trade 0.2% down versus the dollar at 1.1854. The pair is well on track for a weekly gain, having advanced earlier in the week on the back of rising German yields.

Dollar/loonie was roughly flat at 1.2738 after retreating by 0.7% in the day that preceded and recording a more than 2-week low of 1.2696. The Canadian dollar was boosted by the positive surprise in inflation and retail sales data, with higher oil prices over the last number weeks also to some extent lending support to the currency.

The aussie was 0.1% higher versus the US currency at 0.7711, just a shade below the one-and-a-half-month high tracked earlier in the day. The Australian currency was supported by a rise in iron prices. Kiwi/dollar was flat at 0.7015, also trading close to multi-week high levels.

Day ahead: Catalan political developments in focus; US core PCE inflation pending

Friday will see the release of some economic reports though it is expected to be a quiet day for traders, with UK markets being only partially open ahead of the Christmas holiday.

The UK is delivering final figures on GDP growth for the third quarter at 0930 GMT, with analysts projecting the economy to expand in line with second estimates by 1.5% y/y and 0.4% q/q. The pound, though, is likely to have a muted reaction to the data as traders are more eager to hear what the projections for the fourth quarter would be.

Canada will also get monthly stats on GDP growth for the month of October at 1330 GMT. As final numbers are only provided by Statistics Canada, the loonie might experience some volatility in the wake of the numbers.

Elsewhere, the Bureau of Economic analysis will report on the core PCE index, the Fed's preferred inflation measure, at 1330 GMT. Expectations are for the index to inch up by 0.1 percentage points to 1.5% y/y in November, but the dollar might not react much given that the Fed has already signaled that further rate hikes are on the way despite subdued inflation. Moreover, the US tax puzzle is almost complete, and markets seem confident in the performance of the US economy.

Readings on US personal spending and personal income as well as on durable goods orders, new home sales and the University of Michigan's consumer sentiment survey are also due today.

Turning to Eurozone, the focus will be in Catalonia, where the pro-independence parties succeeded to gain the majority in a regional vote on Thursday, bringing a headache to the Spanish government. Recall that the Spanish Prime Minister, Mariano Rajoy, called the polls in October after he took control of the region and prevented a declaration of independence. Now, secessionists parties have enough seats to reassemble the parliament and potentially agree on a new coalition.

Technical Analysis: EURGBP remains neutral in short-term

EURGBP climbed back to the 0.88 key area after it found support at the six-month low of 0.8688. In the near-term, the picture is looking neutral as the RSI is moving sideways close to the 50 neutral-perceived level and the shorter-term moving average lines have flattened out.

An immediate support to downside movements might appear at the 23.6% Fibonacci at 0.8833 of the downleg from 0.9305 to 0.8688, while further declines from here would meet first the 50-day moving average at 0.8800 and then the bottom of the aforementioned Fibonacci retracement at 0.8688.

Should the pair head up, resistance could be found at the 38.2% Fibonacci level at 0.8922 before prices target strong resistance at the 50% Fibonacci at 0.8947, which has been repeatedly tested in the past.

GBP/USD – 1.3379





New strategy :

Stand aside

Position: -

Target:  -

Stop:- 



Despite slipping to 1.3332 yesterday, the subsequent rebound suggests further choppy trading would be seen and another bounce to 1.3400 cannot be ruled out, however, a firm break above resistance at 1.3420 is needed to revive bullishness and extend the rebound from 1.3302 low towards resistance at 1.3466. Only a break of this level would signal the entire correction from 1.3550 top has ended at 1.3302, bring further gain to 1.3500, then towards said recent high at 1.3550. Looking ahead, a break of 1.3550 would extend the rise from 1.3027 low to 1.3595-00, however, reckon recent high at 1.3658 (Sept high) would hold from here due to near term overbought condition, bring retreat later. Our preferred count is that (pls see the attached chart) the wave IV is unfolding as a complex double three (ABC-X-ABC) correction with 2nd wave B ended at 1.2774, hence 2nd wave C could have ended at 1.3658.

On the downside, whilst pullback to 1.3330-35 cannot be ruled out, said support at 1.3302 should remain intact, bring another rebound later. Only a drop below said support at 1.3302 would revive bearishness and extend the fall from 1.3550 for retracement of recent rise to 1.3250-60 but previous support at 1.3221 should remain intact, bring rebound later.

Our preferred count on the daily chart is that cable's rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has ended at 1.7192, the subsequent selloff is the larger degree wave (C) which is still unfolding with minor wave (III) of larger degree wave 3 ended at 1.1986, hence wave (IV) correction is in progress which could either be a triangle wave (IV) of a complex formation but upside should be limited to 1.3500 and price should falter well below 1.4000, bring another decline in wave (V) of 3 for weakness to 1.1500, then 1.1200. 


A deluge of economic data will make headlines on Friday, giving investors a final taste of the global economy ahead of the Christmas long weekend.

Action begins at 07:00 GMT with a report on German consumer confidence courtesy of GfK. The monthly indicator is expected to show a reading of 10.8 for January.

The French government will report on producer inflation, consumer spending and third quarter GDP at 07:45 GMT. France's economy likely expanded 0.5% on the quarter, according to a median estimate of analysts.

The United Kingdom's Office for National Statistics will report on third quarter GDP, business investment and the current account balance at 09:30 GMT.

Shifting gears to North America, the US Department of Labor will report on personal income and outlays at 13:30 GMT. Personal income from all sources is projected to grow 0.4% month-on-month. Personal spending is projected to grow 0.5%.

The core personal consumption expenditure (PCE) index – the Federal Reserve's preferred measure of inflation – is projected to rise 1.5% annually. That's well below the central bank's 2% target.

A report on durable goods orders will also make headlines at 13:30 GMT. Orders for manufactured goods meant to last three years or more is forecast to rise 2% in November after falling 0.8% the month before. Excluding transportation, durable goods orders likely rose 0.5%, according to analysts.

The Commerce Department will report on new home sales at 15:00 GMT. New home sales are projected to fall 4.7% in November.

Other US data releases on Friday including the Michigan consumer sentiment index and the Kansas City Fed's manufacturing index.

North of the border, the Canadian government will release the latest GDP numbers for the month of October. Monthly GDP is projected to climb 0.2% following an identical increase the previous month.

EUR/USD

The EUR/USD traded within a narrow range on Thursday, as investors awaited fresh trading catalysts in the form of economic data. The EUR/USD exchange rate was last down 0.1% on Friday to 1.1849. Cable faces immediate support at 1.1815, the low from Thursday. Resistance is likely found at 1.1900.

GBP/USD

Thursday was a relatively uneventful session for cable, as the pair hovered within a narrow range. The GBP/USD exchange rate was little changed at 1.3378 Friday. Support levels include 1.3375 and 1.3340. Resistance comes in at 1.3420 and 1.3465.

USD/CAD

The USD/CAD fell to fresh weekly lows on Thursday, as the pair continued its long descent from 1.2900. The pair touched a session low near the 1.2700 support before recovering around 1.2743. The pair faces immediate resistance at 1.2785, which corresponds with the 50-DMA. On the downside, support is located near the Thursday low of 1.2720.

A barrage of negative stories has pushed the price of bitcoin to below $14,000 from a high of near $20,000.

This week, a South Korean exchange filed for bankruptcy following a hack reportedly from North Korea. In the U.S, Coinbase started an internal insider trading investigation.

In addition, during the week, some bitcoin holders tried to make purchases only to find ballooning transaction fees. These fees have increased recently because of crowding on the network.

Also, the much-awaited listing of bitcoin futures in the CME and CBOE showed an early struggle as demand was below expectations.

Other than the negative headlines, the sell-off could be because of traders taking year-end profits. This is not unique to the cryptocurrencies markets. At this time of the year, the volumes of financial assets reduce as traders take profits.

As seen above, the correction landed slightly above the 38.2% Fibonacci retracement level. If the pink line is crossed, expect the sell-off to continue to about $11,800 level, which forms the 50% retracement level. Also, the RSI is currently at 48, headed south and the ADX is at above 50 which could be an indication of more downside risks.

However, if you are bullish bitcoin, these short-term shocks should not scare you. In the past, similar corrections have happened. In the chart above, from 8th to 12th November, a similar correction happened when bitcoin fell from about $7,815 to $5,492. Also, similar corrections have happened before especially when bitcoin reached a major milestone or when major negative news were reported.

Weekly
    •    Last Candlesticks pattern: Window
    •    Time of formation: 24 April 2017
    •    Trend bias: Up

Daily
    •    Last Candlesticks pattern: Hammer
    •    Time of formation: 18 May 2017
    •    Trend bias: Up



EUR/JPY – 134.43




The single currency found renewed buying interest at 132.05 late last week and has staged a strong rebound, the breach of previous resistance at 134.50 confirms recent upmove has resumed and upside bias is seen for this move to extend further gain to 135.00, then 135.50-60, however, near term overbought condition should prevent sharp move beyond 136.00-10 and price should falter below 136.60, risk from there has increased for a retreat to take place later.

On the downside, whilst pullback to 134.00 is likely, reckon the Tenkan-Sen (now at 133.47) would limit downside and bring another upmove later to aforesaid upside targets. A daily close below the Kijun-Sen (now at 133.03 would defer and suggest top is possibly formed, bring weakness to 132.50-60 but said support at 132.05 should remain intact, bring another rebound later. A drop below said last week’s low at 132.05 would confirm top formation, bring weakness to 131.70-75, then towards support at 131.17-23 which is likely to hold from here. 

Recommendation: FINAL UPDATE, HOPE TO SEE U ALL SOON.

On the weekly chart, the single currency found good support at 132.05 last week and has rallied this week, a white candlestick looks set to be formed and the breach of previous resistance at 134.50 confirms medium term upmove has resumed and may extend further gain to 135.00, then 136.00-10 but reckon upside would be limited and 136.95-00 should hold, price should fatter below 138.45-50 (1.618 times extension of 109.49-124.10 measuring from 114.85), bring retreat later.

On the downside, expect pullback to be limited to 133.90-00 and the Tenkan-Sen (now at 133.03) should hold, bring another rise later. A weekly close below the Tenkan-Sen would bring weakness to said support at 132.05, however, a sustained breach below there is needed to suggest top is possibly formed, bring test of support area at 131.17-23. Looking ahead, only break of indicated strong support at 131.17 would shift risk to downside and suggest a temporary top has been formed, bring retracement of recent rise to support at 130.90-00, then 130.20-25 but reckon downside would be limited to 129.37 support and previous support at 127.56 should remain intact.

The euro is under slight pressure against the U.S dollar, after Catalan separatists won a major victory in regional elections yesterday evening. The EURUSD pair crashed lower towards 1.1815 in late trading but quickly recovered back towards the 1.1850 region during the Asian session. The recent bullish trading sentiment towards the euro remain under threat while price trades below the key 1.1860 level. Traders now await more high impacting data from the United States, with the release of Core Durable Goods Orders and Person Income figures.

The EURUSD remains intraday bearish while trading below the 1.1860 level, sellers may now target towards the 1.1813 and 1.1770 support levels.

Should the EURUSD pair start to move above the 1.1860 level, buyers may target towards the 1.1900 level and the 1.1940 level.

The British pound has again recovered losses against the U.S dollar, with buyers moving price-action back towards the 1.3400 level. The pound started to recover upside momentum yesterday, as the sell-off due to another British political scandal proved short-lived. The GBPUSD pair remains range-bound between 1.3330 and 1.3418, with both sellers and buyers battling to take control of the pairs medium-term direction. Traders now await key economic data from the United Kingdom today, with third fiscal quarter GDP figures due in the upcoming European trading session.

The GBPUSD pair will remain intraday bullish while trading above the 1.3361 level. Intraday upside targets for buyers remain 1.3418 and 1.3450.

Should price-action on the GBPUSD pair move below the 1.3361 level, sellers are likely to target towards the 1.3330 and 1.3300 levels.

EUR/USD

Current level - 1.1854

The outlook is positive for a breakthrough of the resistance level at 1.1863 and test of the next resistance at 1.1939. In negative direction the support level is at 1.1712.

USD/JPY

Current level - 113.34

After the unsuccessful breakthrough at 113.63, the forecast is negative again for a test of the support level at 113.13 and after that at 111.95.

GBP/USD

Current level - 1.3378

The outlook is positive for a test of the resistance level at 1.3550. In negative direction a successful breakthrough of the support level at 1.3302, we may expect a test at 1.3071.

USD/CHF - 0.9895

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9893

Kijun-Sen level                    : 0.9883

Ichimoku cloud top                 : 0.9861

Ichimoku cloud bottom              : 0.9857

Original strategy :

Buy at 0.9860, Target: 0.9960, Stop: 0.9825

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9860, Target: 0.9960, Stop: 0.9825

Position : -

Target :  -

Stop : -

As the greenback found support at 0.9828 and staged a strong rebound, retaining our view that further consolidation would be seen with mild upside bias for gain to 0.9915-20, however, break of resistance at 0.9935-36 is needed to signal low has been formed, bring a stronger rebound to 0.9960-65 but indicated resistance at 0.9978 should hold from here.

In view of this, we are looking to buy dollar on dips. Below said support at 0.9828 would revive bearishness and extend the decline from 0.9978 to 0.9795-00, however, reckon downside would be limited to 0.9750 and risk from there has increased for a rebound later due to anticipated oversold condition.

USDJPY - The pair may have hesitated on Thursday but still faces upside threats. On the downside, support lies at the 113.00 level where a break if seen will aim at the 112.50 level. A cut through here will turn focus to the 112.00 level and possibly lower towards the 111.50 level. On the upside, resistance resides at the 114.00 level. Further out, we envisage a possible move towards the 114.50 level. Further out, resistance resides at the 115.00 level with a turn above here aiming at the 115.50 level. Its daily RSI is bearish and pointing higher suggesting more strength. On the whole, USDJPY faces further upside threats.