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The Japanese yen has posted slight gains in the Monday session. In North American trade, USD/JPY is trading at 113.30, down 0.16% on the day. On the release front, Japanese BSI Manufacturing Index improved to 9.7 points, but this fell short of the estimate of 10.1 points. In the US, JOLTS Openings softened to 6.00 million, shy of the estimate of 6.03 million. On Tuesday, the US releases PPI, an important inflation indicator.

The markets continue to digest Friday's US employment numbers, which were a mix. Nonfarm Employment Change softened in November, but the reading of 228 thousand easily beat the estimate of 198 thousand. However, Average Hourly Earnings, which measures wage growth, came in at 0.2%, shy of the estimate of 0.3%. Analysts remain stumped as to why wages remain stubbornly low, given a red-hot labor market which is running at full capacity. On an annual basis, wages rose 2.5%, short of the forecast of 2.7%. The Fed is also concerned with the lack of wage growth, and this could have a significant effect on monetary policy – if wage growth and inflation shows improvement in 2018, the Fed could raise rates up to three times in 2018.

Will the real Kuroda please stand up? Bank of Japan Governor Haruhiko Kuroda has been sending mixed signals over the BoJ's monetary policy. Kuroda has insisted that there will be no reduction of stimulus until the Bank's inflation target of 2% is met. Still, there has been pressure on him to reconsider, given the marked improvement in Japanese economy this year. However, the governor has recently dropped subtle hints about easing monetary policy. Last week, Kuroda said that a change in economic conditions could lead the BoJ to raise its yield target, which would be a significant change to current policy. Kuroda noted that an exit from quantitative and qualitative easing would be "quite an important topic" to communicate to the markets. Although the BoJ is unlikely to tighten policy before next year at the earliest, these deliberate hints indicated that the Bank is preparing for a time when conditions will warrant tightening monetary policy, after years of an ultra-accommodative stance.

The UK will see the release of November inflation figures at 0930 GMT on Tuesday. Annual inflation is expected to grow by 3.0%, the same more-than-five-year-high pace that was recorded in October and September. The pace of inflation has implications for the rate hike path that is to be implemented by the Bank of England.

Month-on-month, CPI is anticipated to have grown by 0.2% in November, exceeding the 0.1% pace that was recorded in October, while the 3.0% y/y rate projected by analysts compares to the BoE's target rate for inflation of 2.0%. Core inflation, the measure that excludes volatile food and energy items, is expected to grow by 2.7% on an annual basis in November, the same as in the preceding three months which is also the highest since late 2011.

An upside deviation from inflation forecasts is expected to push sterling higher as market participants will likely push their expectations for an additional rate hike by the BoE - after the one delivered in early November - closer rather than later in time. In such an event, resistance to up movements in price could come at around the 11-week high of 1.3549 that was recorded on December 1. Notice that late September's 17-½-month high of 1.3656 lies not far above this level - the area around this peak could act as a barrier to stronger bullish movements further ahead by the pair. For the record, markets currently expect the BoE to hike rates by 25 bps - for the bank's target rate to reach 0.75% - by late 2018.

Should inflation forecasts fall short of expectations, then sterling will likely weaken as more questions about how fast the central bank will deliver additional interest rate increases would emerge. A declining pound/dollar could meet support around the current level of the 50-day moving average at 1.3243.

One should not forget though that in the case of the UK, things are not as "binary" as might be in the US or the eurozone for example where inflation is running below the respective central banks targets and where a higher reading would definitely be welcome. In the UK, higher-than-anticipated inflation might raise hopes for interest rate hikes to be delivered sooner, but is also eating out of consumers' purchasing power (as inflation is outpacing wage growth), affecting their spending habits and thus the outlook for growth which either way is not looking that bright at the moment; a weakening growth outlook is also acting to the detriment of the outlook for monetary policy normalization. Besides this, it should be taken into account that other releases out on Tuesday also have the capacity to move sterling. Producer prices and retail price inflation (a measure used to calculate payments on instruments such as index-linked government bonds and other contracts such as indexed-pensions) for November will me made public at the same time as the aforementioned CPI figures.

Other forces driving sterling throughout the week are of course developments on the Brexit front. Following last week's breakthrough, it is expected that by the end of the EU summit taking place on Dec. 14-15, the EU heads of state will formally decide that negotiations should move to the second stage, that of determining the future relationship - including trade talks - between Britain and the EU. In terms of data, Wednesday will see the release of November's claimant count, as well as October's unemployment rate and average earnings. Linking the latter to what was previously mentioned, it would be interesting to see to what extent the divergence between price pressures and wage growth, which acts to the detriment of households' purchasing power, continues. Thursday will see the release of November's retail sales while the completion of the BoE's two-day meeting on monetary policy will complement the day. The bank is widely expected to hold its benchmark rate steady at 0.5%.

• European equity markets started the week with small losses (-0.2%) in a low volume trading session. US stock markets opened with small gains.
• UK Environment Secretary Gove and Foreign Secretary Johnson will demand that PM May presses for a hard Brexit when the UK starts trade negotiations with Brussels, as payback for their support for her deal last week, according to unidentified sources.
• EUR/SEK rose above 10 after SEB's Swedish housing-price indicator dropped to the weakest level in almost six years in December, with most respondents expecting price declines. EUR/NOK approached 9.9 after slightly disappointing November inflation data. Both headline (1.1% Y/Y) and core inflation (1% Y/Y) decelerated.
• Turkey's economy grew at a blistering 11.1% in the Q3 for its fastest expansion in six years, data showed, handily beating forecasts due to government incentives and the base effect after last year's failed coup.
• Merger activity in the euro zone bank sector is likely to accelerate given rapid economic growth and a reduction in soured debt, ECB supervisory chief Nouy told a Portuguese newspaper.

Rates

Low volume trading session ahead of key events

Global core bonds traded with a small upward bias but volumes are extremely low. We don't draw conclusions from today's action. An intraday peak was reached shortly after media started reporting on a NY explosion. Fragile risk sentiment on European stock markets and higher oil prices gave mixed impetus for other markets. The eco calendar was empty and most investors remain side-lined with this week's back-loaded agenda. On Wednesday, the focus turns to the US with the key Fed meeting, CPI inflation and a rumored Trump speech providing final details of tax reforms. The ECB and BoE gather on Thursday with also the publication of EMU December PMI's and US retail sales The start of the US supply operation (tonight) normally weighs somewhat on US Treasuries, but that's not the case today. The Treasury holds a $24 bn 3-yr Note auction and a $20 bn 10-yr Note auction. The WI's currently trade around 1.93% and 2.36% respectively.

At the time of writing, the US yield curve flattens slightly with yield changes ranging between +0.4 bps (2-yr) and -1.4 bps (30-yr). The German yield curve bull flattens with yields declining up to 1.8 bps . The German 10-yr yield tests 0.3% support for a fourth straight session. On intra-EMU bond markets, 10-yr yield spread changes versus Germany widen up to 2 bps with Portugal slightly outperforming (-1 bp).

Currencies

USD topside blocked for now

There was hardly any hard news to guide USD trading today. Investors turned again more cautious on the dollar after last Friday's soft US wage data and this bias continued today. USD/JPY trades in the 113.40 area. EUR/USD is returning to the 1.18 area. The topside in the dollar is blocked for now.

Overnight, Asian equities mostly traded with gains of 0.5% to 1.0%+, extending last week's rebound. The (trade-weighted) dollar drifted gradually further south as risk sentiment turned a bit more cautious ahead of Wednesday's Fed policy announcement. USD/JPY held up fairly well and even set a minor ST top this morning before returning to the mid 113 area later. EUR/USD extends its post-payrolls rebound and traded in the 1.1780 area at the European opening.

There were no important eco data in Europe or in the US to guide USD trading. The dollar continued to trade with a slightly negative bias throughout most of the day. Friday's soft US wage data clearly prevented investors to add USD long positions going into Wednesday's Fed policy announcement. Interest rates/interest rate differentials were no guide for USD trading today.

Early in US dealings, headlines on an explosion in New York sent some shivers across markets, but in the end it had little directional impact on global markets. USD/JPY trades in the 113.40 area. EUR/USD remains well bid. The pair holds close to, mostly slightly below the 1.18 big figure. Dollar caution prevails after last Friday's US payrolls report.

Brexit-optimism erodes, weighing on sterling

Sterling continued trading with a negative bias today, prolonging the slide that started on Friday after the press conference of EU commission president Juncker and UK PM May. The interpretation/nuances from different players involved in the process are different. However, Friday's agreement clearly was far away from a detailed, legally binding text. A commission spokesman called it a gentlemen's agreement. The hot topics that where avoided last week in order to be able to move to the next stage of the negotiations will return in the second phase. It also remains unclear how much backing UK PM May has in her own government. The feeling that little progress has been made erased last week's tentative sterling optimism. EUR/GBP returned north of 0.88. Cable settled in the high 1.33 area.

USD/CHF - 0.9902

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9911

Kijun-Sen level                    : 0.9924

Ichimoku cloud top                 : 0.9951

Ichimoku cloud bottom              : 0.9927

Original strategy :

Buy at 0.9860, Target: 0.9970, Stop: 0.9825

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9860, Target: 0.9970, Stop: 0.9825

Position : -

Target :  -

Stop : -

As the greenback has retreated again after rising to 0.9780, suggesting consolidation below this level would be seen and pullback to 0.9885 (38.2% Fibonacci retracement of 0.9735-0.9978), however, reckon 0.9855-60 (50% Fibonacci retracement) would hold and bring another rise later, above 0.9950 would suggest the retreat from 0.9978 has ended, bring retest of this level, break there would signal recent upmove has resumed and extend gain to 1.0000 but price should falter below recent high at 1.0038.

In view of this, would not chase this rise here and we are looking to buy dollar on subsequent pullback as 0.9855 support should contain downside. Only below 0.9825-30 (61.8% Fibonacci retracement of 0.9735-0.9978) would abort and signal top has been formed, bring further fall to 0.9800.

GBP/USD - 1.3363

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.3388

Kijun-Sen level                    : 1.3388

Ichimoku cloud top              : 1.3453

Ichimoku cloud bottom        : 1.3430

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As cable’s retreat from 1.3521 has kept sterling under pressure, suggesting near term downside risk remains for weakness to 1.3340-45, however, as outlook remains consolidative, reckon support at 1.3320 would limit downside and bring further choppy trading. Only a drop below this level would revive bearishness and signal top has been formed at 1.3550 earlier, bring retracement of recent rise to 1.3290-00 first.

On the upside, expect recovery to be limited to 1.3430-35 and the upper Kumo (now at 1.3453) should hold, bring another decline later. Above the upper Kumo would bring a stronger rebound to 1.3490-95 but still reckon resistance at 1.3521 would hold from here, bring retreat later. As near term outlook is mixed, would be prudent to stand aside for now. 

EUR/USD - 1.1794

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 1.1789

Kijun-Sen level                  : 1.1775

Ichimoku cloud top             : 1.1779

Ichimoku cloud bottom      : 1.1761

Original strategy  :

Sell at 1.1835, Target: 1.1735, Stop: 1.1870

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1835, Target: 1.1735, Stop: 1.1870

Position : -

Target :  -

Stop : -

As the single currency found support at 1.1730 late last week and euro has rebounded, suggesting consolidation above this level would be seen and corrective bounce to 1.1810 (38.2% Fibonacci retracement of 1.1940-1.1730) cannot be ruled out, however, reckon upside would be limited to 1.1835 and bring retreat later, below 1.1760 would bring retest of 1.1730 but break of this support is needed to confirm recent decline has resumed and extend weakness to previous key support at 1.1713. Looking ahead, only break there would retain bearishness for subsequent decline towards 1.1660-70.

In view of this, we are looking to sell euro on further subsequent recovery as said resistance at 1.1815 should limit upside and bring another decline. Above 1.1845-50 would defer and suggest low is formed, bring a stronger rebound to 1.1875-80 first.

USD/JPY - 113.39

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 113.41

Kijun-Sen level                  : 113.41

Ichimoku cloud top             : 113.25

Ichimoku cloud bottom      : 112.81

Original strategy  :

Buy at 112.90, Target: 114.00, Stop: 112.55

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 112.90, Target: 114.00, Stop: 112.55

Position :  -

Target :  -

Stop : -

As the greenback has retreated after rising to 113.69 earlier today, suggesting consolidation below this level would be seen and pullback to 113.00-05 (38.2% Fibonacci retracement of 111.99-113.69), however, reckon 112.80-85 (50% Fibonacci retracement) would hold and bring another rise later, above said resistance at 113.69 would extend recent rise from 110.84 low to resistance area at 113.91-114.07 but a sustained breach above this region is needed to signal early uptrend has resumed for headway to 114.34.

In view of this, would not chase this rise here and would be prudent to buy dollar again on pullback as 112.90-00 should limit downside and bring another rise later. Below the lower Kumo (now at 112.81) would defer and risk test of 112.55-60 but only break of latter level would signal top is formed instead, bring subsequent fall to 112.20-25.

Hello fellow traders. In this technical blog we're going to take a quick look at the past Elliott Wave charts of GBPAUD published in members area of www.elliottwave-forecast.com. We're going to explain the Elliott Wave forecast and our trading strategy.

As our members know , we were keep saying that GBPAUD is trading within larger bullish trend. The pair is showing incomplete bullish sequences in the cycle from October 2016 low, targeting 1.8144 area. Consequently , we advised our members to avoid selling it,and keep buying the dips in 3,7,11 swings when get chance.

Let's take a look at the previous short term Elliott Wave forecasts.

GBPAUD 1 hour Asia update 12.05.2017

As we can see on the charts bellow, wave X red pull back is in progress. Proposed pull back is unfolding as Double Three structure ((w))((x))((y)), when we're in ((y)) leg . As of right now the pair is showing 5 swings from the 1.79098 peak, suggesting more short term wekness in order to complete 7 swings structure. Although the pair is expected to trade lower in short term, we don't recommend selling it against the main bullish trend. We're looking for 1.75455-1.74857 area where we would like to be buyers. Invalidation for the long positon is break below 1.618 Fibonacci extension : 1.7388 level.

GBPAUD 1 hour New York update 12.05.2017

Shortly after we got proposed leg lower toward our buying zone. Short term sellers pull the price toward 1.236 Fibo extension at 1.74872 where buyers appeared. The price has made nice reaction from there. We're calling pull back X red completed at 1.74872 low, expecting further rally toward new high ideally. We advised members to make long positions risk free as soon as the price reaches 50 Fibonacci retracement area against the ((b)) high.

EUR/GBP - 0.8821

Original strategy  :

Sell at 0.8885, Target: 0.8750, Stop: 0.8920

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.8755, Target: 0.8855, Stop: 0.8720

Position : -

Target :  -

Stop : -

 
Although the single currency extended recent fall to as low as 0.8690 last Friday, the subsequent reversal suggests low has possibly been formed there and consolidation with mild upside bias is seen for a test of resistance at 0.8868, however, break above there is needed to add credence to this view and suggest the decline from 0.9015 has ended, bring further gain to 0.8890-00 later.

In view of this, we are looking to turn long on dips as 0.8755-60 should limit downside and bring another rebound. Below 0.8720-25 would risk retest of 0.8690 but only break there would revive bearishness and signal the fall from 0.9015 is still in progress and may extend weakness to 0.8660-65 and then 0.8640-45. 

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.

Market players have dashed into the new trading week, adopting a risk-on attitude after November's strong NFP report and progress in the US tax reform initiatives, boosted risk sentiment.

Most Asian Indexes ventured higher during trading on Monday, thanks to a return of risk appetite following the better-than-expected Chinese trade figures on Friday. In Europe, shares were buoyed by news of a breakthrough in Brexit negotiations and this market positivity could find its way back into Wall Street in the afternoon. With positive economic data from the US and China boosting investor optimism over the global economy, equity bulls could remain in the vicinity this week.

Dollar lower ahead of Fed

The Greenback struggled to maintain gains against a basket of currencies on Monday, as investors continued to digest and evaluate November's US jobs data.

Although US Non-farm payrolls blasted through market expectations by rising 228,000 last month and unemployment remained at a 17-year low, wage growth figures printed below forecasts by rising 2.5% for the year. With sluggish inflation and slow wage growth fuelling uncertainty over the Federal Reserve's policy outlook beyond 2017, the Dollar has found itself under pressure. There is a possibility of the Greenback turning volatile this week as bulls and bears enter a fierce tug of war. While optimism over US tax reforms is likely to continue supporting bulls, uncertainty over the Fed outlook next year amid lacklustre wage growth, may attract bears.

From a technical standpoint, the Dollar Index edged lower during Monday's trading session with prices trading around 93.80 as of writing. An intraday breakdown below 93.80 may encourage a further decline towards 93.60, ahead of the Federal Open Market Committee (FOMC) statement on Wednesday.

Currency spotlight - GBPUSD

Sterling weakened against the Dollar on Monday, despite last week's breakthrough in Brexit negotiations opening the doors for future trade talks.

Although the United Kingdom and the European Union can now move on to the second phase of the talks, investors still remain somewhat anxious, and this is reflected in Sterling's price action. With the Pound still highly sensitive to the Brexit developments and headlines, this could be another interesting trading week for the currency. Taking a look at the technical picture, the GBPUSD is at risk of depreciating towards 1.3300 and even lower if 1.3350 is breached. Bears still have some degree of control on the daily charts, as long as prices can stay below the 1.3520 resistance level.

Bitcoin futures in the spotlight

Bitcoin was the hot topic across financial markets on Monday morning after making its debut onto the future markets in style.
The cryptocurrency exploded uncontrollably higher following the launch of futures by Chicago Board Options Exchange (CBOE), forcing the CBOE to halt trading twice in an effort to tame volatility. With the futures listing of Bitcoin, seen among some as another step towards legitimacy, this sentiment has the ability to bolster investor attraction - consequently supporting the upside. From a technical standpoint, Bitcoin staged a remarkable rebound from the $13000 regions last week with prices hovering around $16500 as of writing. A decisive breakout above $16700 may instil bulls with enough inspiration to challenge $17,000 and beyond.

It's remarkable how back in November $10000 seemed like a psychological end of year target. With the current gravity-defying bullish momentum, it may be no surprise if Bitcoin concludes 2017 on $20000.