Sample Category Title

EURUSD (1.1787): The EURUSD managed to rise to a two day high however the currency pair pulled back despite closing with some gains. Price action remains trading within the range established. Resistance at 1.1843 - 1.1822 is expected to keep the gains in check, while the support at 1.1710 - 1.1688 remains supportive of prices to the downside. The sideways consolidation is expected to continue until the range is breached. To the upside, the breakout above the resistance level could see the EURUSD extend the gains towards 1.1920. To the downside, a breach of support could push EURUSD down to 1.1552.

The U.S. dollar was seen trading weaker amid a lack of macro-economic themes. The U.S. Congress is expected to pass President Trump's tax reforms bill before the end of the week. The weaker U.S. dollar saw precious metals attempting to post some gains, as gold and silver prices rose by 0.5% within the day.

In the Eurozone, the final inflation figures confirmed that headline inflation in the Eurozone rose by 1.5% on a year over year basis in November. Core inflation rate was seen rising 0.9% in November. There was no change to the data following the flash inflation estimates.

Looking ahead, the U.S. building permits data will be coming out today. Building permits are expected to rise 1.28 million which will be followed by the housing stats data. FOMC Member, Kashkari who voted against the rate hike will be speaking later today.

GBPUSD maintains a neutral stance both in the short and medium term. The recent one-month uptrend that took the pair to 1.3550 in early December has reversed lower but prices managed to stay above the 50-day moving average.

Downward pressure has eased and a strong support zone has formed around the key 1.3300 level and the 50% Fibonacci retracement of the latest November-December upleg from 1.3038 to 1.3550.

Strong resistance at 1.3500 needs to be breached in order to shift back to a more bullish bias, otherwise, more range trading is expected to continue in the near term between 1.3300 and 1.3500.

Looking at the big picture, the overall trend is up and this is highlighted by the positively aligned 50 and 200-moving averages. The outlook is positive since the market is located above the 50-day MA, giving scope for a rise towards the 1.3500 area. However, the RSI indicator is mostly neutral, which makes it unlikely for a strong upside move in the near term.

On Monday, Ether's price soared by about 12% closing the day at $795. This followed the initial listing of Bitcoin at the CME with traders expecting ETH to be next.

Today, as of this writing, ETH is trading at $814, up 3.14%.

From a technical standpoint, ETH/USD seems overbought under these prices. As shown below, the pair's stochastic RSI is currently at 97.89 while the 14-period RSI is at 83.99. Using RSI, an asset is considered overbought when it is trading above the 70 level. Potentially, in case of a pullback, the pair might test the $664 level or the 23% Fibonacci retracement level.

Does this suggest a new position to short the pair? No. In the current bull run, the pair has continued to go high even when the oscillator indicators are in the overbought zone. A confirmation of the current bull run can be seen in the chart below which introduces the Average Directionally Index (ADX). The pair has an ADX of 38 which is an indicator of a strong upward trend.

The pair is currently pushing towards the psychological $1,000 level which it may reach before the end of the year.

The U.S dollar is starting to recover upside momentum against the Japanese yen in early trading, after slipping back towards the 112.30 support level on Monday. The USDJPY pair fell, as the U.S dollar index came under selling pressure across the board, however the pair quickly found dip buying demand. Risk-on sentiment is now boosting the USDJPY pair higher, as traders look for a clear break-out of established trading range between 112.02 and 113.10. Asian stocks are also moving higher on Tuesday, as optimism builds that the House Senate will later pass the U.S tax bill.

The USDJPY pair turns intraday bullish while trading above the 112.70 level, price-action may then head towards the 113.10 and 113.70 resistance levels.

When price-action start trades below the 112.70 level, sellers will likely retain control of the pay, price may then head back towards the former swing price-lows at 112.30 and 112.

The British pound has moved back below the 1.3400 level against the U.S dollar, as the greenback pairs back losses ahead of the U.S tax reform vote. The GBPUSD pair rose sharply on Monday, hitting 1.3418, after buyers pushed price above the key 1.3360 level, erasing some of Friday’s steep trading losses. The U.S dollar index will likely take center stage on Tuesday, as the House Senate votes on the U.S tax bill during the U.S trading session, with most expecting the bill to passed. Traders should expect a reasonable degree of volatility in the foreign exchange market heading into the vote.

GBPUSD sellers retain control of the pair while price action stays below the 1.3400 level. Further losses towards the 1.3360 and 1.3330 support levels remain likely.

Should price action move back above the 1.3400 level, GBPUSD sentiment will turn bullish. Upside targets remain 1.3418 and 1.3440.

The economic calendar is off to a slow start this week, as investors parse through a light release schedule ahead of the holidays. On Tuesday, data releases from the United States and Eurozone will make headlines.

Action begins at 08:00 GMT with a report on German business conditions. The Ifo Group will release separate barometers for business climate, current assessment and expectations. The readings for December are expected to deviate very little from the previous month.

Later in the morning, the European Commission's statistical agency will report on construction output and labour cost. The labour cost index is forecast to rise 2% in the third quarter. Construction output is forecast to grow 1.1% annually in October.

Shifting gears to North America, the Department of Labor will report on building starts and housing permits at 13:30 GMT. Starts for single-family homes are expected to decline 3.7% in November to a seasonally adjusted 1.25 million. Starts surged 13.7% the previous month. Permits, which are a bellwether of future construction plans, are expected to fall 4.9% to 1.278 million units.

On the policy docket, Federal Open Market Committee (FOMC) member Neel Kashkari will deliver a speech on Tuesday that will be closely watched by the financial markets.

Earlier in the day, the Reserve Bank of Australia (RBA) released the minutes of its most recent policy meeting, where officials voted to keep interest rates on hold.

The minutes said: “taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.”

Regarding the labour market, the minutes observed, "Growth in employment, particularly full-time employment, had increased and the unemployment rate had fallen to a four-year low. Although wage growth had been a little lower than expected in the September quarter, it appeared to have stabilised at a low rate.”

The RBA kept interest rates at a record low of 1.5% in its December meeting.

AUD/USD

The Australian dollar was fairly stable following the release of the RBA minutes, with the AUD/USD continuing to trade around 0.7660. The pair faces immediate support at 0.7600. On the flipside, resistance is likely met at 0.7730.

EUR/USD

Europe's common currency held within a narrow range Tuesday, as investors awaited fresh trading catalysts. The EUR/USD was last seen trading around 1.1780. Analysts are expecting a bigger drop for the pair now that the US Fed has raised interest rates for a third time this year. That means 1.1600 is likely in play.

GBP/USD

Cable traded slightly lower on Tuesday after posting a sharp recovery at the start of the week. The GBP/USD was last seen trading at 1.3370, having declined 0.1%. The pair likely has key support around 1.3300. On the flipside, key resistance is likely met at 1.3435

Key Highlights

• The New Zealand Dollar moved nicely recently and traded above 0.6950-80 resistance against the US Dollar.
• There is a short-term breakout pattern forming with support at 0.6980 on the 4-hours chart of NZD/USD.
• A break above 0.7030 is required for buyers to step up the bullish momentum.
• The ANZ Business Confidence in January 2018 increased to -37.8 from -39.3.

NZDUSD Technical Analysis

The past couple of weeks were positive for the New Zealand Dollar as it moved above 0.7000 against the US Dollar. However, the main question is whether NZD/USD can retain traction above 0.6980 and 0.7000 or not.

Looking at the 4-hour chart, the pair started a solid upside move from the 0.6820 swing low. It broke many resistances on the way up such as 0.6880, 0.6950 and 0.6980. More importantly, the pair moved above 0.7000, and is currently placed well above the 200 simple moving average (green, 4-hour) and the 100 SMA (red, 4-hour).

The pair was able to move above the 1.236 Fib extension of the last decline from the 0.6945 high to 0.6816 low.

The upside was strong enough for a push above 0.7000. The pair recently formed a high at 0.7033. It seems like the pair is struggling to break the 1.618 Fib extension of the last decline from the 0.6945 high to 0.6816 low.

At the outset, there is a short-term breakout pattern forming with support at 0.6980 on the same chart. On the upside, the breakout resistance is at 0.7030. Should there be a close above 0.7030, the pair could surge toward 0.7100.

On the flip side, a downside break below the 0.6980 support may open the doors for a correction. In the mentioned scenario, NZD/USD could retest the 0.6950 support zone.

Fundamentally, there is no major event lined up today in the US except November's Building Permits and Housing Starts figures. The market is looking for a decline and if that's the case, NZD/USD might continue to move higher.

December has been historically a good month for equity markets. Many traders bet on the Christmas rally as a seasonal trend to benefit from. Data from 1928 shows that December has been mostly a good month for the S&P 500. It was never the worst performing month and was the best performing month four times. This time, the rally has been fueled by optimism that U.S. lawmakers are on the brink of passing a historic bill to overhaul the U.S. tax code.

Getting the Republican Senate fully on board wasn’t an easy task. There’re now also question marks over the ethics of a last-minute addition to the tax bill that gives real estate owners a major tax break. Senator Rob Corker, a deficit hawk who opposed the original Senate tax bill, because it was expected to add $1 trillion to the deficit, appeared to have had a change of heart and provided his full support to the revised legislation.

However, the complicated provision doesn’t seem to threaten Republicans’ chances of a success with the vote on the bill later today; with Trump signing it into law this week.

Given that U.S. indices are trading at record highs, the main question is how much of the tax reforms have already been priced in. In my opinion, much of it has been priced in, but further upside potential may continue to push stocks higher for the remainder of 2017 and into the first quarter of next year. However, I don’t think the rally will occur for the right reasons. Most of the increase in earnings due to tax cuts are likely to go to shareholders in the form of dividends and shares repurchases. That’s why U.S. bond yields are showing no enthusiasm, and the U.S. dollar is unmoved.

Neel Kashkari, the Minneapolis Federal Reserve president who voted against the rate rise last week, explained that low inflation and a flattening yield curve contributed to his decision. Mr. Kashkari seems to be listening to fixed income investors rather than equity investors. Although the yield curve hasn’t inverted, he pointed out that bond markets are telling us that the odds of a recession are increasing. If U.S. long-term bond yields don’t appreciate this week on signing the tax reform bill, I don’t know what else could move it.

Headlines/Economic Data

General Trend: Asian equities open mostly higher ahead of expected tax vote by the US House

Japan

Nikkei 225 opened +0.3%; closed -0.2%

TOPIX Securities Index +1.2%, Information/Communications -0.4%

Fitch Affirms Ratings on Japanese Major Banks

(JP) According to Nikkei Bank of Japan (BOJ) is likely to keep monetary policy unchanged again in its final policy board meeting (Thursday); this would mark the first year with no policy change since Kuroda became gov in 2013

(JP) Japan Fin Min Aso: Want to watch before deciding on bitcoin regulation, has not been proven as a credible currency

(JP) Japan PM Abe: China has a big role to play in North Korea, want to take China ties to a new level; Want to have Japan/China/south Korea summit as soon as possible

(JP) Japan Cabinet Office (Govt) raises FY17/18 and FY18/19 GDP growth forecast citing improvement in domestic demand

Japan expected to start regular Diet session Jan 22nd – Sankei

Korea

Kospi opened +0.2%

Chipmakers trade higher, tracking gains in the US: Samsung Electronics +1%, Hynix+3.5%

Consumer Discretionary: Amorepacific -2.4%, LG Household -1.9%, Lotte Shopping -2.4%

(KR) SOUTH KOREA NOV PPI Y/Y: 3.1% V 3.5% PRIOR

(KR) South Korea calls on China to carry out its ongoing anti-dumping investigations into South Korean chemical products in a fair manner

(KR) South Korea President Moon advisor cancels meeting with largest firms - Korean press

Strong won is largest concern for South Korea exporters in 2018 - Korean press

097950.KR To raise KRW735.8B via private placement; -8%

China/Hong Kong

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

Hang Seng Information Technology Index +1.9%, Financials +0.9%

(CN) PBoC OMO: Injects CNY100B in 7,14 and 28-day reverse repos v CNY300B prior; Net injected CNY20B v CNY260B prior

(CN) PBoC sets yuan reference rate at 6.6098 v 6.6162 prior

(CN) China 2018 retail sales may be ~10% - China Securities Journal

Conglomerate HNA Group Seeking to sell $6.0B in foreign properties, including commercial properties in the US – US financial press

China City Construction: Confirmed that it failed to pay principal on medium-term note due on Dec 17th, 2017

China Putian Food Holdings [01699.HK]: Cancels CNY3B bond offering due to market fluctuations

Shandong Longlive [002604.CN] confirms that it had default in relation to asset management product – US financial press

Australia/New Zealand

ASX 200 opened +0.2%; closed +0.7%

ASX 200 Resources Index +1.4%, Energy +1%

(NZ) New Zealand Dec ANZ Activity Outlook: 15.6 v 6.5 prior; Business Confidence: -37.8 v -39.3 prior

(NZ) New Zealand Govt will not proceed with reforms to Dairy Act; planning strategic review of dairy industry

(AU) RESERVE BANK OF AUSTRALIA (RBA) DEC MINUTES: The low level of interest rates is continuing to support the Australian economy

-(NZ) NEW ZEALAND Q4 WESTPAC CONSUMER CONFIDENCE: 107.4 V 112.4 PRIOR

(NZ) Moody's: New Zealand broad fiscal direction is unchanged

NZM.NZ New Zealand high court upholds regulator's ruling that blocked NZME/Fairfax merger

ADO.AU Initiates Lithium-ion battery development project; +57%

SGH.AU Completes 100 to 1 share consolidation; -24%

RFG.AU Guides H1 Net ~A$22M v A$33.5M y/y; domestic franchise Rev lower than expected; -21%

Looking Ahead: New Zealand Q3 Current Account and Nov Trade Balance Data due on Wednesday

North America

US equities closed at record highs: Dow +0.6%, S&P500 +0.5%, Nasdaq +0.8%, Russell 2000 +1.2%

S&P 500 Materials +1.5%, Financials +1%; Utilities -1.1%

(US) Sen Collins (R-ME): I will vote for tax bill (** NOTE: Collins' support gives GOP enough votes to pass tax bill in Senate this week even if Sen McCain remains in Arizona for cancer treatment)

(US) Fed's Williams (2018 voter): two or three rate hikes likely in 2018, and three more in 2019 - press interview

(US) Fed's Kashkari (dovish dissenter; non-voter in 2018): do not appear to be moving toward our inflation target; should not raise rates until we are more confident inflation will rise; Fed risks shortening the expansion by raising rates; Fed policy is very hawkish right now, depressing long-term yields; Too many Fed officials are using faith to hope inflation rises

M&A: McDermott [MDR] and CB&I [CBI] to combine in all-stock transaction valued at $6B; expected to be cash accretive, excluding one-time costs, within first year

(MX) S&P affirms Mexico Foreign Currency Sovereign Ratings, Lowers Local Currency Ratings On Revised Criteria; lowers short-term sovereign credit ratings to 'A-/A-2' from 'A/A-1'; outlook stable

Looking Ahead: US House expected to vote on tax bill in the early afternoon on Tuesday (speculated around 1830 GMT); US Nov Building Permits and Housing Starts, along with Weekly API Crude Inventories due for release.

Europe

(UK) Prime Min May: European Court of Justice (ECJ) will have jurisdiction at the beginning of Brexit transition period

(PT) Portugal Fin Ministry announces €1B early IMF repayment - press

(CZ) Czech Central Bank's Vice Gov Tomsik: Not considering tightening loan to value limits or other mortgage market recommendations currently

Looking Ahead: Germany Dec Ifo Survey due for release

Levels as of 01:00ET

Nikkei225 -0.2%, Hang Seng +0.9%; Shanghai Composite +0.6%; ASX200 +0.5%, Kospi -0.2%

Equity Futures: S&P500 +0.1%; Nasdaq100 +0.1%, Dax +0.2%; FTSE100 -0.0%

EUR 1.1795-1.1776; JPY 112.67-112.54; AUD 0.7671-0.7656;NZD 0.7011-0.6985

Feb Gold +0.1% at $1,266/oz; Feb Crude Oil +0.3% at $57.37/brl; Mar Copper -0.7% at $3.12/lb