Sample Category Title

USD/CAD is failing to break hourly resistance at 1.2917 (27/10/2017 high). Expected to show continued buying pressures.

In the longer term, the pair has broken longterm support that can be found at 1.2461 (16/03/2015 low). Strong resistance is given at 1.4690 (22/01/2016 high). The pair is likely to head further lower.

USD/CHF is trading lower. Yet, the technical structure indicates further downside risks. The pair has failed to hold consistently above the parity. Expected to go even lower.

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/JPY's buying demand is increasing and the pair is approaching hourly resistance is given at 113.75 (12/12/2017 high) while hourly support is given at 112.03 (15/12/2017 low). The technical structure suggests continued increase.

We favor a long-term bearish bias. Support is now given at 99.02 (10/08/2013 low). A gradual rise towards the major resistance at 125.86 (05/06/2015 high) seems unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

USD/CHF –  0.9872

 
Although the greenback met resistance at 0.9935 last week and price has slipped again this week, reckon downside would be limited to 0.9800-10 and bring another rise later, above said resistance at 0.9935 would signal the pullback from 0.9978 has ended and bring retest of this level, break there would add credence to our view that correction from 1.0039 is over, bring further gain to 1.0000, break there would confirm upmove has resumed for retest of 1.0039. Looking ahead, a break of 1.0039 would confirm early upmove from 0.9421 low has resumed and extend headway to previous resistance at 1.0100.

Our preferred count on the daily chart is that early selloff to 0.9630 is an end of the larger degree wave III and major correction is unfolding from there with a leg ended at 1.2298 (Nov 2008 with (a): 1.0625, (b):1.0011 and (c):1.2298), wave b ended at 0.9910 with (a): 1.0370, (b): 1.1967, (c): 0.9910. The rise from there to 1.1730 is the wave c which also marked the end of wave IV and wave V has possibly ended at 0.7068.


On the downside, expect pullback to be limited to 0.9820-25 and 0.9800 should hold, bring another rise later. Only below said support at 0.9735 would abort and signal the corrective fall from 1.0039 top is still in progress and may extend weakness to 0.9705 support, then towards 0.9640-45 but reckon previous support at 0.9589 would hold from here, bring rebound later. 

Recommendation: Hold long entered at 0.9850 for 1.0050 with stop below 0.9750.

Dollar's long-term downtrend started from 2.9343 (Feb 1995) and it was unfolding as a (A)-(B)-(C) with (A): 1.1100, (B): 1.8310 (26 Oct 2000), then followed by another impulsive wave (C) with wave III ended at 0.9630 (Mar 2008). Under this count, correction in wave IV has possibly ended at 1.1730 and wave V already broke below support at 0.9630 and met indicated downside target at 0.7500 and 0.7400. The reversal from 0.7068 suggests the wave V has possibly ended and the breach of resistance at 0.9595 add credence to this view and indicated upside target at 1.0000 had been met, however, the sharp retreat from 1.0296 to 0.7401 suggests choppy trading would be seen but price should stay above said record low at 0.7068.

GBP/USD continues to move lower within downtrend short-term channel. The technical structure indicates further weakness. Support is given at a distance at 1.3304 (15/12/2017 low).

The long-term technical pattern is reversing. The Brexit vote had paved the way for further decline. Long-term support can be found at 1.1841 (07/10/2017 low). Long-term resistance given around 1.35 is at stake and indicates a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

EUR/USD's short-term bearish momentum has abruptly ended and the pair is now moving higher. Hourly resistance given at 1.1863 (14/12/2017 high) has been broken. Hourly support given at 1.1718 (12/12/2017 low). Expected to show sideways price action.

In the longer term, the momentum is now turning largely positive. We favour a continued bullish bias. Key resistance is holding at 1.2252 (25/12/2014 high) while strong support lies at 1.0341 (03/01/2017 low).

US tax reform not dollar positive

The greenback continued to weaken for three straight sessions, as traders rotated into EUR and emerging market currencies.

The Trump tax cut's positive effect on equites is beginning to fade. Improvements in corporate earnings have already been priced in; bond markets are worried by the government debt needed to fund the cuts. Tax credits for renewable energy and electric cars are preserved, while the new tax code will decrease demand for gas and oil.

Bank of Japan holds tight

As expected, the Bank of Japan kept rates unchanged at -0.1%, and the 10-year bond target stayed at 0%. BoJ officials expressed their confidence that the inflation will rise toward its target of 2%. The BoJ were also happy about the Q3 economic growth of an annualised 2.5%.

We believe this growth has cost too much, and it is unsustainable in the long haul.

Swatch, anyone?

The Swiss watch industry's exports of traditional watches rose 5.8% to CHF 1.98 billion. Not only is this a boost to sector with six years of sales declines, but a hopeful sign for 2018. Exports to China increased a whopping 39.8% to CHF 162 million, and the rest of Asia including Hong Kong and Japan also showed strong demand. The Swiss franc's weakness can only help support sales

Notes/Observations

US President to sign new US Tax Bill on Jan 3rd

Japan, Taiwan keep rates on hold

UK Public Sector Net borrowing comes ahead of expectations

Catalonia goes to the polls in a closely watched regional election called by Spain following a controversial independence referendum

Asia:

BOJ voted 8-1 to keep rates unchanged as expected; Said will make policy adjustments as appropriate based on economy, prices and financial conditions

Taiwan Central Bank leaves interest rates unchanged for the 6th straight time

Europe:

Catalonia regional elections take place today with first exit polls expected around 20.00 CET.

UK Deputy PM Damian Green resigns from cabinet after admitting he lied about the presence of pornographic images on his House of Commons computer. This marks the third cabinet minister to step down since early November

UK PM May to allow a delay from Britain's departure from the EU in exceptional circumstances. This is a compromise with rebellious pro-EU lawmakers against the idea of setting a fixed exit day.

Americas:

US House voted 224-201 in favor to pass the Republican tax overhaul, with the bill now going to the President to be signed into law

President Trump is said to plan to sign the tax bill on Wed, Jan 3rd, according to a financial press report.

Economic Data:

(FR) FRANCE DEC BUSINESS CONFIDENCE: 112 V 111E; MANUFACTURING CONFIDENCE: 112 V 113E

(UK) NOV PUBLIC FINANCES (PSNCR): £12.9B V -£3.8B PRIOR; PUBLIC SECTOR NET BORROWING: £8.1B V £8.3BE

(SE) SWEDEN DEC CONSUMER CONFIDENCE: 108.2 V 106.6E; MANUFACTURING CONFIDENCE: 116.8 V 121.9E

(CH) SWISS NOV TRADE BALANCE (CHF): 2.6B V 2.3B PRIOR

(ES) Spain Oct House Mortgage Approvals Y/Y: 8.2% v 9.2% prior; Total Mortgage Lending Y/Y: 26.2% v 10.6% prior

(DK) Denmark Nov Retail Sales M/M: +1.3% v -0.8% prior; Y/Y: +2.5% v -1.9% prior

Fixed Income Issuance:

None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.2% at at 387.7, FTSE flat at 7529, DAX -0.3% at 13030, CAC-40 -0.2% at 5339, IBEX-35 -0.2% at 10188, FTSE MIB +0.2% at 22158, SMI +0.1% at 9328 , S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European Indices trade mixed this morning in quiet trade as volumes thin ahead of the holidays. News flow has been quiet with Earnings from Buwog and Hornbach; On the M&A front Gener8 Maritime confirmed over night press speculation in announcing a merger with Euronav, Balfour Beaty shares rise after divesting stake in Connect Plus. Elsewhere Nokia trades higher after signing a patent license agreement with Huawei. Looking ahead notable earners include Accenture, Carmax, Conagra and Finish Line.

Equities

Consumer Discretionary [McCarthy & Stone [MCS.UK] -10% ( Response to media commentary on ground rents)]

Healthcare [Summit Therapeutics [SUMM.UK] +9% (Enters into exclusive licence and commercialization agreement ), Basilea [BSLN] +2.2% (Reports that ceftobiprole received QIDP designation from US FDA for the treatment of SAB)]

Industrials [Euronav [EURN.BE] +4.0% (confirms merger agreement with Gener8), Balfour Beaty [BBY.UK] +2.5% (Divests stake in Connect Plus)]

Telecoms [Nokia [NOKIA.FI] +2.6% (Signs patent license agreement with Huawei)]

Speakers

(EU) ECB's Vasiliauskas (Lithuania): now is a good time to discuss the end of QE debate; discussion will continue in 2018

comments from Vilnius

(JP) BoJ Gov Kuroda: Reiterates to keep easy policy until inflation is stable over 2%; do not think its necessary to change yield curve control (YCC) policy now

Post Rate Decision Press Conference

Currencies

Most major pairs are unchanged and are trading in very tight ranges

Fixed Income

Bund futures trade 161.66 down 20 ticks, as markets return their focus to Catalonia's Parliamentary elections. Upside sees 162.75 then 163.25. A reversal targets 161.50 then 160.38.

Gilt futures trade at 125.09 down 27 ticks after UK PM May lost her deputy, one of her closest allies, in a divided cabinet, as she heads into the next phase of the Brexit negotiations. Continued upside eyeing 126.25 then 126.85. Downside targets include 124.75 then 124.25.

Thursday's liquidity report showed Wednesday's use of the marginal lending facility fell to €180M from €203M prior.

Corporate issuance - Primary expected to close for the year

Looking Ahead

06:00 (BR) Brazil Dec IBGE Inflation IPCA-15 M/M: 0.4%e v 0.3% prior; Y/Y: 2.9%e v 2.8% prior

06:00 (IE) Ireland Nov PPI M/M: No est v 1.3% prior; Y/Y: No est v -2.3% prior

06:00 (IL) Israel Oct Manufacturing Production M/M: No est v -0.4% prior

06:00 (IL) Israel Nov Unemployment Rate: No est v 4.2% prior

07:00 (CZ) Czech Central Bank (CNB) Interest Rate Decision: Expected to leave Repurchase Rate unchanged at 0.50%

08:00 (PL) Poland Central Bank (NBP) Dec Minutes

08:00 (RU) Russia Gold and Forex Reserve w/e Dec 15th: No est v $429.3B prior

08:05 (UK) Baltic Dry Bulk Index

08:30 (US) Dec Philadelphia Fed Business Outlook: 21.0e v 22.7 prior

08:30 (US) Q3 Final GDP Annualized Q/Q: 3.3%e v 3.3% prelim; Personal Consumption: 2.3%e v 2.3% prelim

08:30 (US) Q3 Final GDP Price Index: 2.1%e v 2.1% prelim; Core PCE Q/Q: 1.4%e v 1.4% prelim

08:30 (US) Nov Chicago Fed National Activity Index: 0.50e v 0.65 prior

08:30 (US) Initial Jobless Claims: 233Ke v 225K prior; Continuing Claims: 1.90Me v 1.886M prior

08:30 (US) Weekly USDA Net Export Sales

08:30 (CA) Canada Nov CPI M/M: 0.2%e v 0.1% prior; Y/Y: 2.0%e v 1.4% prior; CPI Core- Common Y/Y: No est v 1.6% prior, CPI Core- Trim Y/Y: No est v 1.5% prior, CPI Core- Median Y/Y: No est v 1.7% prior, Consumer Price Index: 131.1e v 130.9 prior

08:30 (CA) Canada Oct Retail Sales M/M: 0.3%e v 0.1% prior; Retail Sales Ex Auto M/M: 0.4%e v 0.3% prior

09:00 (US) Oct FHFA House Price Index M/M: 0.4%e v 0.3% prior

09:00 (MX) Mexico Oct IGAE Economic Activity Index (Monthly GDP) Y/Y: 1.3%e v 0.5% prior

10:00 (US) Nov Leading Index: 0.4%e v 1.2% prior

10:00 (EU) Euro Zone Dec Advance Consumer Confidence: 0.2e v 0.1 prior

10:30 (US) Weekly EIA Natural Gas Inventories

14:00 (AR) Argentina Q3 Current Account: -$7.0Be v -$6.0B prior

EUR/JPY - 134.77

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

The single currency has rallied and broke above previous resistance at 134.50, confirming recent upmove has resumed and we have relabeled our bullish count that, only wave v of iii ended at 134.50, followed by wave iv at 131.17, hence wave v is unfolding and may extend gain to 135.00-10, then 135.50, however, near term overbought condition should limit upside and reckon 136.00-10 would hold from here, bring retreat later. 

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below 134.15-20 would bring pullback to 133.70-75 but reckon downside would be limited to 133.30-35 and price should stay above previous resistance at 133.01 (now support), bring another rally later.

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Spot Gold remains firm on Thursday, supported by weaker dollar and consolidating under fresh three-week high at $1268. Today’s test of pivotal $1267/69 resistance zone (50% of $1299/$1236 descend / daily Kijun-sen / 200SMA) failed to break higher, with further hesitation expected as overbought slow stochastic on daily chart is turning south.

Extended consolidation should stay above initial support at $1260 (broken Fibo 38.2% of $1299/$1236) to keep near-term bulls intact for fresh attempts through $1267/69 barriers.

Sustained break here would open $1275 (Fibo 61.8%) and key barrier at $1281 (base of thick daily cloud).

North-turning 10SMA marks lower pivot at $1255, loss of which will be bearish signal.

Res: 1267, 1269, 1275, 1281
Sup: 1264, 1260, 1255, 1250