Sample Category Title

USD/JPY - 113.39

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 113.52

Kijun-Sen level                  : 113.41

Ichimoku cloud top             : 113.20

Ichimoku cloud bottom      : 112.79

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 112.79) 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.

Here are the latest developments in global markets:

FOREX: The dollar was trading down relative to a basket of currencies but still not far below a three-week high of 94.09 reached on Friday. The antipodean currencies – predominantly the kiwi – were advancing relative to the greenback. The New Zealand dollar’s gains came on the back of expectations of a more hawkish approach to monetary policy following the appointment of a new governor who’s seen as less of a dove by market participants.

STOCKS: The Nikkei 225 added 0.6% to finish the day at its highest since early 1992; major Asian indices were broadly on the rise with the Hang Seng being last up by 1.1%. Euro Stoxx 50 futures traded 0.1% up at 0755 GMT. Dow, S&P 500 and Nasdaq 100 futures were up by 0.2%, 0.15% and 0.3% respectively.

COMMODITIES: WTI and Brent crude were down but not much changed relative to Friday’s close. WTI was last at $57.30 per barrel and Brent at $63.38. Gold was 0.2% up, trading around $1,250.00 per ounce

Major movers: Dollar’s index not much changed; kiwi jumps on appointment of new governor

The dollar’s index against a basket of six currencies traded at 93.8, being 0.1% down on the day, while dollar/yen was little changed, trading close to the four-week high of 113.68 reached earlier in the day. The Fed is widely expected to raise interest rates as it completes it two-day meeting on monetary policy on December 13. Further monetary policy divergence between the Federal Reserve and the Bank of Japan is supportive of a stronger dollar.

Euro/dollar was 0.2% up and not far below the 1.18 handle after losing ground the preceding week. Pound/dollar was up by a similar proportion, trading slightly above the 1.34 level. Optimism on Brexit saw the pair exceed 1.35 during the previous week.

Adrian Orr being appointed as the Reserve Bank of New Zealand’s new governor spurred a rally in the local dollar. Kiwi/dollar was up by 1.2%, trading little below 0.6930, a two-week high touched earlier in the day. Markets apparently view Orr as being more on the hawkish rather than the dovish side. Aussie/dollar was also up, specifically by 0.4% and above the 0.75 handle.

In other news, the first bitcoin futures contracts started trading at 2300 GMT on the CBOE Futures Exchange.

Day ahead: JOLTs job openings attract attention; eyes on Fed & tax deliberations

Economic releases during the day would be light, with the US JOLTs job openings being the figures attracting most interest. Particularly, the report published by the Burau of Labor Statistics, is likely to show that 6,030 million positions opened in November compared to 6,093 million seen in the previous month.

However, news on monetary policy and tax legislation would also be of significance as the Fed is heading for its last policy meeting of the year on Tuesday-Wednesday – markets are widely anticipating policymakers to raise interest rates by 25 basis points to 1.50%. On the fiscal front, investors remain optimistic on the passage of tax cuts which Republicans hope to turn into law before the year-end, rendering this President Trump’s first major legislative achievement.

Technical Analysis: NZDUSD back to 0.6900 but neutral bias still intact

NZDUSD is trading at two-week high levels above 0.6900, as the outlook for monetary policy was altered after the appointment of a new hawkish RBNZ governor. However, in the short-term, the bias remains neutral given that the pair continues to trade between 0.6779 and 0.6978 since the end of October.

On the upside, immediate resistance could be found at the 50-day exponential moving average of 0.6948 before the upper bound of the range comes into view (0.6978). Breaking this point would turn the bias from neutral to bullish, opening the scope for a re-test of the 38.2% Fibonacci at 0.7029 of the downleg from 0.7433 to 0.6779. Additional resistance could emerge around the 0.7100 area (50% Fibonacci).

On the downside, the lower bound of the range (0.6779) could act as potential support. But any close below this could stretch the longer-term downleg started from 0.7557 to 0.6779 towards the 0.6600 area which has been repeatedly tested in the past. In case of sharp decreases, the focus would shift towards the two-year low of 0.6347.

Cable stands at the back foot in trading of Monday and fell near Friday's low (1.3356) at the beginning of European session, after recovery attempts stalled at 1.3431 (capped by broken 10SMA). Fresh weakness pressures strong support at 1.3354 (Fibo 38.2% of 1.3038/1.3549 rally) where last week's downside attempts were repeatedly rejected. Overall bullish structure is expected to stay intact while 1.3354 Fibo support and rising 20SMA (1.3338) hold corrective action of larger 1.3038/1.3549 rally. Break here would signal deeper correction and expose supports between 1.3300 and 1.3256 (provided by daily Kijun-sen/MA's). Weak near-term techs support this scenario.

Res: 1.3419,1.3431,1.3453,1.3520
Sup: 1.3354,1.3338,1.3300,1.3256

The Euro rose in early Monday's trading after Friday's action ended in long-tailed Doji, generating initial signal of near-term downtrend stall. Recovery attempts were so far limited under 1.1800 handle (top of falling hourly cloud) however, improved hourly studies suggest further correction of 1.1940/1.1730 bear-leg. Strong resistance zone between 1.1810/35 (Fibo 38.2% of 1.1940/1.1730/daily cloud top, reinforced by Tenkan-sen) is expected to cap as downtrend is still intact on daily chart and correction is expected to precede final push towards targets at 1.1716/09 (daily cloud base/Fibo 61.8% of 1.1553/1.1961 ascend). Near-term action is supported at 1.1760 (converged 30/55 SMA's) which guards Friday's spike low (1.1730). Falling hourly cloud top (currently at 1.1790) marks initial barrier, guarding strong resistance zone above 1.1800. Bullish scenario requires firm break above daily cloud to signal higher low at 1.1730 and open way for stronger correction.

Res: 1.1790, 1.1810, 1.1835, 1.1860
Sup: 1.1760, 1.1730, 1.1716, 1.1709

EURUSD's recent decline has paused around the 50-day moving average. Downside pressure has eased for now but the medium-term neutral phase that started a few months ago remains intact.

Looking at the daily chart, EURUSD was falling for five consecutive days and breached the 50-day MA before pulling back. Immediate resistance is expected at 1.1791 – the 23.6% Fibonacci of the rise from 1.0820 to 1.2091. A successful break to the upside would target 1.1900 and open the way for a re-test of the 1.2091 peak. From here there would be a resumption of the long term uptrend.

Momentum signals have dropped into bearish territory, suggesting there is not enough strength to push much higher for now. Dips are expected to find support in the 1.1600 zone, which is a round figure and also near the 38.2% Fibonacci level. Further downside risk is expected to be limited.

The short-term bearish phase has stalled but the overall outlook remains neutral and EURUSD is expected to trade sideways between 1.16 – 1.19. Only a drop below the 20-day MA would start to shift the positive bigger picture.

XAUUSD (1248.79): Gold prices continue to extend their declines following last Thursday's close below the 1262 handle. Price action fell to a 5-month low. The Stochastics oscillator on the daily chart is however, in the oversold level including the 4-hour time frame. This suggests a near term retracement. The gains in gold prices could be limited to the price level of 1262 where resistance could be established. Any upside gains can be expected only on a strong close above this level. To the upside, 1285 resistance will be back in focus. A reversal near the 1262 area could however spell more declines for gold prices in the near term.

USDJPY (113.61): USDJPY continued to extend it’s gains, which come after the strong bullish engulfing pattern that was formed. The upside momentum is expected to see USDJPY pushing towards the previous resistance level near 114.00. In the short term, any pullback is likely to be limited to the 113.00 region. The upside bias will shift on a bearish close below the 113.00 region. In this case, we can expect USDJPY to push lower to test the previous support level formed at 112.00.

EURUSD (1.1776): The EURUSD extended declines on Friday as price fell to a fresh one month low on an intraday basis. However, price action managed to pullback before the close. Price action on EURUSD suggests near term upside as we expect a retest of the resistance level near 1.1822 level. Establishing resistance here could potentially pave way for the euro to resume its declines down to the 1.1710 level of support. However, a short term higher low needs to be formed for this bias to be validated. In the event that the declines continue, EURUSD could be seen pushing lower to the support level without any retracement.

The U.S. dollar index firmed on Friday following a broadly positive jobs report for November. Data from the U.S. Labor department showed that the economy added 228,000 jobs during the month which was higher than forecasts. The U.S. unemployment rate was steady at 4.1% while job wages grew slightly but below forecasts.

The payrolls report comes ahead of this Wednesday's FOMC meeting where interest rates are set to rise by 25 basis points. Last week, the U.S. government shutdown was also averted as President Trump signed the legislation to fund the government for two more weeks. The Congress is expected to negotiate a long term budget deal during the period.

The economic calendar is quiet today, ahead of a busy week that will see the FOMC, ECB, BoE and the SNB holding their respective monetary policy meetings.

Sunrise Market Commentary

• Rates: Consolidation ahead of Fed meeting
  Today's eco calendar is empty apart from the start of the US refinancing operation. That could spark some underperformance of the US Note future vs the Bund, but we expect trading to occur within existing (sideways) ranges ahead of Wednesday's Fed meeting. Volumes are expected to decline. Risk sentiment is a wildcard.
• Currencies: USD awaiting guidance from the Fed after soft wage data
  The USD rebound slowed on Friday as US wage data outweighed strong job growth. More USD consolidation might be on the cards as investors await Wednesday's Fed policy statement. USD/JPY resilience might be an indication that dollar sentiment isn't too bad.

The Sunrise Headlines

• US stock markets closed around 0.5% higher on Friday with a new closing high for the S&P 500 after a solid US paryolls report. Asian stock markets record gains as well this morning with China outperforming (+1%).
• The White House is preparing to roll out a long-delayed infrastructure rebuilding plan in January, as President Trump's advisers bet that voters want a $1 tn road-and-bridge-building plan—even though it is opposed by some lawmakers
• China's producer price inflation slowed to a four-month low in November (5.8% Y/Y) as factory activity softened due to the government's efforts to curb pollution, cooling demand from factories for raw materials.
• New Zealand's government named pension fund chief Adrian Orr as the new governor of the nation's central bank, triggering a rally in the local dollar as markets prepared for changes to the monetary policy mandate.
• OPEC and its global allies including Russia may end their production cuts before 2019 if the crude market re-balances by June, Kuwait's oil minister said.
• President Trump plans to deliver his closing argument for the proposed Republican tax overhaul in a speech on Wednesday as House and Senate negotiators hammer out differences between their versions of the bill.
• Today's eco calendar is empty. The US starts its mid-month refinancing operation with a $24 bn 3-yr Note and a $20 bn 10-yr Note auction

Currencies: USD Awaiting Guidance From The Fed After Soft Wage Data

USD in wait-and-see modus ahead of the Fed?

Positive risk sentiment kept the dollar near recent highs against the euro and the yen on Friday ahead of the US payrolls. US job growth remained strong, but wages again disappointed. With markets giving more weight to prices rather than activity data, the dollar declined off the intraday peak. EUR/USD closed the session at 1.1773, unchanged from Thursday. USD/JPY was more resilient and reversed most of the post-Payrolls decline. The pair finished the session 113.48.

Asian equities mostly trade with gains of 0.5% to 1.0%+, extending last week's rebound. Volumes are below average. The (trade-weighted) dollar is cautiously ceding ground as investors are building in some caution ahead of Wednesday's Fed policy announcement. USD/JPY set a minor ST top this morning, but currently hovers again in the mid 113 area. EUR/USD extends its post-Payrolls' rebound and trades in the 1.1780 area. The New-Zealand government appointed Adrian Orr as new RBNZ governor. His appointment eased recent fears that the RBNZ would give less weight to the inflation target. NZD/USD rebounded to trade in the 0.69 area.

There are no data in the US today. EMU data are second tier and probably will have less impact on (global) FX trading. The eco calendar is better filled later this week with the US price data (CPI Wednesday) and retail sales (Thursday). In EMU sentiment data including the December PMI's (Thursday) will be published. However, the focus will be on the Fed's policy decision (Wednesday evening) and, to a lesser extent, on the ECB meeting and press conference (Thursday). Analyst expectations on the Fed rate hike intentions in 2018/2019 are quite divided/diffuse. Recent relatively soft price/wage data make some market participants wonder whether the Fed should consider a slightly slower pace of rate hikes. We don't think that this will be the case, but uncertainty on low wages/prices might prevent further USD gains going into Wednesday's Fed policy decision. Last week, we had a cautious positive bias on the dollar, but the payrolls were not strong enough to sustain the ST USD rebound. In this context we assume EUR/USD to consolidate in the 1.1730/1.1960 area. USD/JPY resilience might be an indication that underlying dollar sentiment is not too bad. US politics remains a wildcard for USD trading (more progress on a tax bill?).

From a technical point of view: EUR/USD set a post-ECB low mid-November, but the dollar's momentum wasn't strong enough. EUR/USD settled in a directionless sideways consolidation pattern in the 1.18/19 area. A return below 1.1713 would signal an improvement in the ST USD momentum. However, the payrolls were not able to force this break. So, EUR/USD still gives no clear directional signal. Next support comes in at 1.1554 (November low). USD/JPY's momentum deteriorated early November, dropping below the 111.65 neckline. No aggressive follow-through selling occurred though. Over the previous two weeks, the pair succeeded a nice rebound, calling off the downside alert and returning to the 110.84/114.73 consolidation range. We amended our ST bias from negative to neutral. We maintain the view that a sustained break north of 115 won't be easy.

EUR/USD:USD rebound blocked after soft US wage data

EUR/GBP

EUR/GBP test of 0.8693 support rejected

Sterling developed some kind of buy-the-rumour, sell-the-fact reaction Friday. The UK currency rallied on Thursday evening and early on Friday on headlines that the EU and the UK agreed to move to the second stage of the Brexit negotiations. Sterling touched a ST top during (cable) or soon after (GBP/EUR) the press conference of EU Juncker and UK PM May, but markets soon realized that the hard work still has to be done. The sterling rally ran into resistance and the UK currency returned some of the earlier gains. The trade deficit was smaller than expected, but data were not the focus of markets. EUR/GBP finished the session at 0.8792 (from 0.8737). Cable closed the day at 1.3390.

During the weekend, political analyses from different parties involved in last week's agreement suggested that further progress in the negotiations will remain difficult. Regarding the eco data, Rightmove House prices this morning showed a further cooling in the UK prices (-2.6% M/M and 1.2% Y/Y). Sterling is gaining a few ticks this morning. Friday's agreement/statement is buying the UK some time as the start of negotiations on new trade relationship is/was urgent. In this respect it can be considered as slightly sterling supportive. However, Friday's GBP price action indicates that markets are well aware that the big works still has to be done. In this context we expect more ST consolidation of EUR/GBP in the 0.87/0.89 area. EUR/GBP 0.8693 (62% retracement) support was tested on Friday, but the test was rejected. We assume that this level won't be easy to break short-term.

EUR/GBP downside test rejected despite 'Brexit deal

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