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SPX Short term Elliott Wave view suggests that the rally to 2664.58 ended Minor wave 1 as a Leading diagonal. Below from there Minor wave 2 ended as a zigzag correction at 2624.19 low, above from there Minor wave 3 remains in progress as a double structure. And showing the incomplete bullish sequence to the upside. The Minutte wave (a) of ((w)) ended in 5 waves at 2671.92 high. Where internals of that leg Subminutte wave i ended at 2633.72, Subminutte wave ii ended at 2626.32 low, Subminutte wave iii ended at 2669.68. Subminutte wave iv ended at 2663.68 and Subminutte wave v of (a) ended at 2671.92. Below from there, it ended the Minutte wave (b) 2651.78 low, above from there Minutte wave (c) of ((w)) ended in another 5 waves at 2695.38 peak and also ended the cycle from 12/06 low 2624.19 there.

Currently, the index could have finished correcting the cycle from 12/06 low in 3 waves at 2675.72 low in Minute wave ((x)) pullback, where Minutte wave (a) ended at 2680.28, Minutte wave (b) ended at 2691.38. After reaching the Green box (potential buying area) 2676.19-2667.16 100%-161.8% Fibonacci extension area. While above 2675.72 low and more importantly the pivot from 12/06 low 2624.19 stays intact index is expected to resume the upside in Minute ((y)) leg higher within wave 3. However, the index still needs to see a break above 2695.38 peak to avoid the double correction lower towards 2673.02-2660.92 in Minute wave ((x)) pullback. Don’t like selling it and like staying long from 2676.19 previous equal legs area with the risk-free position. But if it does the double correction lower, we would like to be buyer’s again at the 2673.02-2660.92 area provided the pivot at 2624.19 low remains intact.

SPX 1 Hour Elliott Wave Chart

Daily Pivots: (S1) 1.3347; (P) 1.3367; (R1) 1.3403; More.....

The correction from 1.3549 is still extending and intraday bias in GBP/USD remains neutral. As long as 1.3220 support holds, we'd favor another rise. Break of 1.3549 will target 1.3651 high next. Break there will resume medium term rally from 1.1946. However, firm break of 1.3220 will turn near term outlook bearish for 1.3038 key support level.

In the bigger picture, while the medium term rebound from 1.1946 low was strong, it's limited below 1.3835 key support turned resistance. As long as 1.3835 holds, we'd view such rebound as a correction. That is, we'd expect another leg in the long term down trend through 1.1946 low. However, 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) 0.9852; (P) 0.9880; (R1) 0.9910; More....

Intraday bias in USD/CHF remains neutral for the moment. On the upside, above 0.9977 will resume the rebound from 0.9734 for 1.0037 resistance. On the downside, below 0.9834 will probably extend the correction from 1.0037 through 0.9734. But we'd expect strong support from 61.8% retracement of 0.9420 to 0.1.0037 at 0.9656 to complete the correction from 1.0037 and bring rebound.

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.

Key Highlights

• The US Dollar is once again approaching towards a major resistance near 113.75-114.00.
• On the downside, there is a key bullish trend line forming with support at 113.20 on the 4-hours chart of USD/JPY.
• A break and 4-hour close above 114.00 could open the doors for more upsides.
• The third estimate of the US GDP came in at +3.2%, less than the forecast of +3.3%.

USDJPY Technical Analysis

The US Dollar survived losses below 112.00 a few days ago against the Japanese Yen. The USD/JPY pair is now moving higher towards a crucial barrier around 113.75-114.00.

There was a decent bullish bias formed from the 112.00 swing support and the pair moved above the 113.00 level. The upside move was strong since buyers succeeded in a 4-hour close above the 100 (red) and 200 (green) simple moving averages.

These are positive signs, but we cannot ignore the fact that the pair is now facing an uphill task near the 113.75-114.00 resistance area, which acted as a key hurdle on many occasions.

On the downside, there is a key bullish trend line forming with support at 113.20 on the same chart. The trend line support is also close to the 50% Fib retracement level of the last wave from the 112.83 low to 113.63 high.

Should the pair correct lower from the current levels, it could find bids near 113.20. A break below the stated 113.20 support would negate further gains in USD/JPY and may push the pair back lower.

On the flip side, if the US Dollar buyers succeed in gaining momentum above 114.00, then there can be a rally toward 115.00.

Fundamentally, the US saw the release of the third estimate of the Gross Domestic Product for Q3 2017 by the US Bureau of Economic Analysis. The market was looking for a 3.3% rise (annualized).

However, the actual was below the estimate as the US GDP grew by 3.2%. The US Dollar traded a bit lower after the release. EUR/USD is currently trading nicely above the 1.1800 handle. On the other hand, the GBP/USD pair is struggling to hold the 1.3340 support.

Today, there are a few events like the UK GDP (Q3, 2017 – Forecast 1.5% versus the previous 1.5%) and the US Core Personal Consumption Expenditure (Nov 2017, MoM – Forecast +0.1% versus the +0.2% previous). Both events could impact the next move in the US Dollar and British Pound.

Daily Pivots: (S1) 112.99; (P) 113.22; (R1) 113.62; More...

With 112.83 minor support intact, intraday bias in USD/JPY stays mildly on the upside. Break of 113.74 will resume rise from 110.83 and target key resistance at 114.73 next. On the downside, below 112.83 minor support will turn intraday bias neutral first. But we'll continue to expect further rally ahead as long as 112.02 support holds.

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.

Daily Pivots: (S1) 1.2678; (P) 1.2758; (R1) 1.2819; More....

While USD/CAD's fall from 1.2919 was steep, the pair is still holding in range between 1.2598/2919. Intraday bias stays neutral at this point. As noted before, as s 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 1.2885). 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.

Australia/New Zealand

ASX 200 opened +0.2%; closed +0.2%

ASX 200 Energy Index +0.8%, Resources +0.6%, Financials +0.1%; REIT -0.3%

China/Hong Kong

Hang Seng opened +0.5%, Shanghai Composite -0.1%

Hang Seng Consumer Discretionary Index +0.8%, Property/Construction +0.7%; Services Index -0.5%

Postal Savings Bank of China +1%: Says press report on HNA cutting stake ‘do not accord with the facts’

(CN) China CSRC (securities regulator): no change in pace of IPO reviews - press

(CN) China PBoC is not expected to raise rates in 2018 - China Daily

(CN) PBoC OMO: Skips OMO, cites high level of liquidity v CNY70B injected in 7,14 and 28-day reverse repos prior; Net drain CNY80B v CNY10B drain prior; For the week, PBoC injected net of CNY200B vs CNY80B injection w/w.

(CN) China sets yuan reference rate at 6.5821 v 6.5795 prior

(CN) China Development Bank (CDB) said to sell 20-year bonds at 5.14% - US financial press

(CN) China Banking Regulatory Commission (CBRC) to effectively prevent risks in property sector

(CN) China issues guideline related to development of drone industry: Targets CNY60B civil-use drone industry by 2020; Targets CNY180B civil-use drone industry by 2025.

(CN) China NDRC: To cut on-grid solar power prices for 2018

(HK) HK Chief Exec Lam: Cooling measures have not suppressed housing prices – HK Media

(HK)Hong Kong Monetary Authority (HKMA) to monitor capital outflows after year-end effect – HK Press

Japan

Nikkei 225 opened -0.1%; closed +0.2%

Mega-banks broadly higher: Mitsubishi UFJ +1.9%, Sumitomo Mitsui Financial +1.2%

Fast Retailing +0.7%

TOPIX Pharma Index -1.6%: Eisai -15% (phase 2 Alzheimer’s study did not meet endpoint)

Chip-related names track US declines: Tokyo Electron -2.4%, SUMCO -2%, Toshiba -1.5%

Kobe Steel -2%: Confirmed third party committee needs additional time for data falsification report, expects completion around the end of Feb; To change duties of 3 executives who were aware of fraud

Japan Cabinet approves annual general-account budget spending of ¥97.71T for FY18/19 (record); Approves FY17/18 supplementary budget with added spending of ¥2.71T (as expected); Confirms plans to sell new bonds worth ¥33.69T (9-year low)

Japan Fin Min Aso: Budget focuses on improving productivity and human capital; budget sticks to fiscal consolidation

Japan Econ Min Motegi: Government will continue to work toward achieving primary budget surplus

South Korea

Kospi opened +0.3% (declined over 1.7% prior session)

Samsung Electronics +1.3% (declined over 3.4% prior session);China NDRC said to have discussed memory chip prices with the company – Chinese Press

Cosmetics names under pressure, Amorepacific -2.5%; China Shandong said to have halted group tours to South Korea – South Korean Press

Korean Won +0.3%

South Korea Minister: Open to talks with North Korea without preconditions

South Korea denies press report related to military drill – South Korean Press (**Note: An earlier press report said that North Korea and South Korea were said to have discussed military drills and the upcoming 2018 Winter Olympics in South Korea)

South Korea denies press report related to military drill – South Korean Press

Looking Ahead: UN vote on new sanctions on North Korea due on Friday

Other Asia

(ID) Indonesia FSA plans to remove cap on bank deposit rates – Indonesia Press

(PH) Philippines expected to raise 2018 export growth forecast – Philippines Press

(PH) Philippines Central Bank (BSP) said to allow companies to borrow overseas without its approval

North America

US equities closed higher: Dow +0.2%, S&P500 +0.2%, Nasdaq +0.1%, Russell 2000 +0.5%

S&P500 Energy Sector +2.2%, Financials +0.9%

Nike -1.9% in the afterhours (reported Q2 results above ests, Q2 gross margin -120bps, Q2 North America Rev -5% y/y ex currency; affirmed FY18 Rev growth forecast)

(US) US Senate has enough votes to pass temporary stopgap funding measure; final vote 66-32 (**Note: The measure, which was passed earlier on

Thursday by the US House, will now go to President Trump for his signature; The bill funds the government through Jan 19th and avoids a government shutdown on Saturday, Dec 23rd)

(US) White House Economic Adviser Jeremy Katz said to resign – Washington Post

(US) Reportedly Larry Lindsey being considered for role of Fed Vice Chair; Lindsey is interested – CNBC (Lindsey, 63, is an economist who was director of the National Economic Council, and the assistant to the president on economic policy for the U.S. President George W. Bush)

M&A: Embraer: Boeing said to have held takeover talks but are currently at a standstill as they seek permission from Brazil govt to pursue a deal – press
Ignyta [RXDX]: Said to be in advanced talks regarding a sale – financial press

Looking ahead: US Nov Durable Goods, Core PCE Index, Personal Income, Personal Spending and New Home Sales due for release on Friday

Europe

(ES) Catalan separatists have won majority of seats in the regional parliament; The Separatists said to have won 70 out of 135 seats in the regional assembly, according to a financial press report.

(GE) Germany's Sigmar Gabriel said to warn of minority government - US financial press (**Note: Gabriel has served as Germany's Minister for Foreign Affairs since 2017 and Vice Chancellor since 2013)

EUR/USD: In early Asia, traded lower by 0.5% amid Germany’s Sigmar Gabriel reportedly warning of minority government, Catalan Separatists win of majority of seats in regional parliament

(UK) Lloyds Dec Business Barometer: 28 v 24 prior

Looking Ahead: UK third reading of Q3 GDP due for release

Levels as of 01:00ET

Hang Seng +0.4%; Shanghai Composite +0.1%; Kospi +0.5%

Equity Futures: S&P500 +0.1%; Nasdaq100 +0.1%, Dax +0.2%; FTSE100 +0.1%

EUR 1.1817-1.1876; JPY 113.27-113.8 ; AUD 0.7701-0.7718; NZD 0.7007-0.7027

Daily Pivots: (S1) 0.7667; (P) 0.7687; (R1) 0.7720; More...

AUD/USD's rebound from 0.7500 resumed and reaches as high as 0.7718 so far. Further rally could still be seen. But it's seen as a correction and upside should be limited by 0.7732 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.

Canadian Dollar remains generally firm today but it's overwhelmed by Aussie on commodity prices. Meanwhile, Euro trades mildly lower as results of the Catalonia regional election provide no resolution to the political crisis. Dollar again attempts to recover today but it's trading in red against all others expect Yen for the week. The greenback will need some solid PCE inflation data if it's going to have a sustainable rally.

Separationist parties triumph in Catalonia elections

With most votes counted for Catalan parliament snap election, the three pro-independence parties, Together for Catalonia (JxCat), Republican Left of Catalonia (ERC) and Popular Unity (CUP) together won 70 seats out of 135, two above majority and should be able to form a coalition government. However, they altogether got 2 fewer seats than in the 2015 election. The election result suggests a still-divided Catalonia and has done little to resolve the existing political crisis. Euro is mildly pressured on the news.

Odds of January BoC hike surged after data

Canadian Dollar was boosted by strong inflation and retail sales data overnight. After the two surprised rate hikes this year, BoC has turned cautious and thus market expectation for another hike in near term receded. But the set of solid data revived such speculations. OSI data are now pricing in close to 60% chance of a January hike and over 75% within Q1. But for the moment, USD/CAD is holding above 1.2598 key near term support. There is no confirmation of a reversal yet and Dollar would likely out-perform the Loonie.

Aussie strong on commodity prices

While Canadian Dollar was strong, it is being over-whelmed by Aussie, who's trading as the strongest for the week. Traders seem to be banking on surge in commodity prices and its support to the Aussie. China steel futures extended gains for the second day today. The most active rebar futures rises over 2%. Iron ore price on the Dalian Commodity Exchange also rose 0.4%. Nonetheless, we're still skeptical on the sustainability of Aussie's rebound as RBA will likely hold interest rate unchanged next year, until they see upward pressure in wages.

On the data front

Germany will release Gfk consumer sentiment in European session. Swiss will release KOF economic barometer. UK will release current account balance and Q3 GDP final. Later in the data, Canadian Dollar will look into GDP for further strength. On the other hand, Dollar will look into personal income and spending, PCE, durable goods and new home sales.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7667; (P) 0.7687; (R1) 0.7720; More...

AUD/USD's rebound from 0.7500 resumed and reaches as high as 0.7718 so far. Further rally could still be seen. But it's seen as a correction and upside should be limited by 0.7732 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.

Economic Indicators Update

For the 24 hours to 23:00 GMT, the AUD rose 0.48% against the USD and closed at 0.7703.

LME Copper prices rose 0.8% or $52.0/MT to $6977.0/MT. Aluminium prices rose 0.8% or $16.5/MT to $2108.5/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7714, with the AUD trading 0.14% higher against the USD from yesterday’s close.

The pair is expected to find support at 0.7673, and a fall through could take it to the next support level of 0.7631. The pair is expected to find its first resistance at 0.7737, and a rise through could take it to the next resistance level of 0.7759.

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