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The British pound has posted small gains in the Thursday session. In North American trade, GBP/USD is trading at 1.3413, up 0.15% on the day. On the release front, British Halifax HPI gained 0.5%, beating the estimate of 0.2%. In the US, unemployment claims dipped to 236 thousand, below the estimate of 239 thousand. Friday will be busy, with a host of key events. The UK will publish Manufacturing PMI. The US releases three key employment indicators – Average Hourly Earnings, Nonfarm Employment Change and the unemployment rate. We'll also get a look at consumer confidence, with the release of UoM Consumer Sentiment.

US employment numbers have been steady this week, as unemployment claims and ADP nonfarm payrolls both beat their estimates. However, the stiffer test is on Friday, with the release of nonfarm payrolls and wage growth. The ADP reading slowed considerably compared to the previous release, and the markets are predicting the same trend for nonfarm payrolls, which is expected to come in at 190 thousand. As one of the most important indicators, nonfarm payrolls could shake up the markets, so traders should be prepared for some movement from GBP/USD in Friday's North American session.

Ireland is in the spotlight on both sides of the Channel, as the UK and European Union scramble to find a solution to the vexing question of the status of the Irish border after Brexit. An embattled Prime Minister May is desperate to move on to trade talks with the EU, but the Europeans want to wrap up the non-trade issues first. There had been hopes of a major announcement following a meeting between Prime Minister May and European Commission President Jean-Claude Juckner. However, these expectations were left on hold, as it became apparent that wide gaps remain on two key issues – Northern Ireland and the European Court of Justice. The European Union is willing to let EU rules apply to Northern Ireland, but the small DUP party, which is keeping the May government afloat, is against any steps which could be seen as separating the UK mainland from Northern Ireland. A solution that will satisfy the UK, the EU and the DUP over the Irish border remains elusive. Another thorny issue is whether the European Court of Justice will apply to European citizens in the UK after Brexit. While the EU is in favor of the court having authority over these citizens, many British lawmakers feel that such a move would undermines British sovereignty. The EU holds a key summit on December 12, and all sides are hoping to wrap up the non-trade sticking points before the meeting.

The EUR/USD kept falling on the background of hopes linked to successful negotiations on tax cuts in the US. If the bill on fiscal stimulation passes, we are likely to see further strengthening of the USD against other major world currencies. The news on the strong GDP growth in the Eurozone by 0.6% in the fourth quarter was not able to change the mood of traders. Trader activity is also restrained by the expectation of the release of important data on the labor market in the US that will impact the FOMC decision on the rate hike at its next meeting. Positive statistics are likely to raise the bullish sentiment on the market, which will support the EUR/USD bears.

The Canadian dollar has weakened despite the recent hawkish rhetoric of the Bank of Canada during yesterday's statement on monetary policy, according to which the growth in investments and wages are among positive factors that may lead to a rate hike during 2018. In 2017, the key interest rate in Canada was increased twice and is currently at 1.0%.

The AUD/USD remains under pressure from unexpectedly weak trade balance data in the country, according to which the trade surplus was only 0.11 billion in October against the 1.37 billion forecasted. Volatility is likely to remain high due to tomorrow's release of trade balance data in China which traditionally has a significant influence on the AUD/USD quotes. Today we should also pay attention to the reports on the Japanese current account balance and GDP growth at 23:50 GMT.

EUR/USD

The EUR/USD price keeps moving along the upper limit of the local descending channel. The closest targets in case of maintaining the current impulse will be at 1.1730 and 1.1620. In order to change the bearish trend, the price needs to fix above the 1.1800 mark. In this scenario, the closest goals will be located at 1.1825 and 1.1925.

USD/CAD

The USD/CAD quotes are growing fast after an unsuccessful attempt to fix under 1.2665. Gaining a foothold above 1.2000 may be the basis for price growth up to 1.2915 and 1.3000. At the same time, we do not exclude the rollback on the background of profit taking with the fall potential to SMA100 on the 15-minute chart.

AUD/USD

The AUD/USD quotes fell to the strong support at 0.7520 and after a sharp decline, we may see the price rebound to the 0.7550-0.7565 range. The MACD signal line on the 15-minute chart has changed direction to positive, which together with the RSI on the 15-minute chart being near the oversold zone, may result in an upward correction. In case of the price declining lower than 0.7500, the next objective will be at 0.7440.

The euro has moved to a new weekly price-low against the U.S dollar, hitting 1.1775, as technical selling in the pair gathers pace. Broad-based U.S dollar strength is also weighing on the EURUSD on Thursday, with the dollar index breaking above strong resistance. Investors earlier looked past better than expected annual third quarter GDP growth from the eurozone, during a quiet European trading session. Euro traders now look to a market-moving speech from European Central President Mario Draghi later today, held in Frankfurt, Germany.

The EURUSD pair is turning technically bearish below the 1.1808 level, further downside selling towards the 1.1750 and 1.1713 levels remains possible.

Should EURUSD price-action move abo

The British pound continues to trade below the 1.3400 level against the U.S dollar, with the 1.3360 level still acting as strong support. Brexit headlines continue to dominate trading sentiment in the GBPUSD pair, ahead of the G-7 finance minister meeting. Price-action continues to trade in a narrow range between the 1.3360 to 1.3400 levels, as traders remain cautious on being overly long or short the pound. Investors now await the release of the Non-farm payrolls job report on Friday, with expectations shifting to the upside, after yesterday's solid ADP employment report.

The GBPUSD pair is still bearish while trading below the 1.3400 technical level, the 1.3360 level remains the foremost support, with 1.3303 extended weekly support.

Should buyers push price-action above the 1.3400 level, the GBPUSD pair should move back towards the 1.3450 and 1.3510 resistance levels.

The Japanese yen has posted losses in the Thursday session. In North American trade, USD/JPY is trading at 112.67, up 0.32% on the day. On the release front, unemployment claims dipped to 236 thousand, below the estimate of 239 thousand. In Japan, Final GDP in the third quarter is expected to slow to 0.4%. On Friday, the US publishes three key employment indicators – Average Hourly Earnings, Nonfarm Employment Change and the unemployment rate. As well, the US releases UoM Consumer Sentiment.

BoJ Governor Haruhiko Kuroda continues to drop subtle hints about easing monetary policy. On Thursday, 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 Kuroda has insisted that there will be no reduction of stimulus until the Bank's inflation target of 2% is met, there has been pressure on him to reconsider, given the marked improvement in Japanese economy this year. Although the BoJ is unlikely to tighten policy before next year at the earliest, these deliberate hints indicated that the Bank is thinking ahead to a time when conditions will warrant tightening monetary policy, after years of an ultra-accommodative stance.

In the US, this week's job numbers have met expectations, as unemployment claims and ADP nonfarm payrolls both beat their estimates. However, the stiffer test is on Friday, with the release of nonfarm payrolls and wage growth. The ADP reading slowed considerably compared to the previous release, and the markets are predicting the same trend for nonfarm payrolls, which is expected to come in at 190 thousand. As one of the most important indicators, nonfarm payrolls could shake up the markets, so traders should be prepared for some movement from USD/JPY in Friday's North American session.

• European equities trade near opening levels in another uneventful trading session. US stock markets open little changed as investors await more guidance from the payrolls and/or US political developments.
• The leader of Germany's Social Democrats has called for EU member states to commit to a "United States of Europe" by 2025, setting out an ambitious European reform agenda as a condition for holding talks with Chancellor Merkel on the formation of a new government.
• German industrial production unexpectedly declined for a second month in October as workers took extra days off, interrupting a run that put Europe's largest economy on track toward its best performance in six years. Output declined 1.4% from September, when it fell a revised 0.9%.
• The number of Americans filing for unemployment benefits unexpectedly fell last week to 236k (vs 240k expected), suggesting a rapid tightening of the labor market that bolsters expectations the Federal Reserve will raise interest rates next week.
• President Trump will face off with Democratic leaders of Congress later today in a high-stakes White House meeting intended to bridge differences over a spending bill and prevent a government shutdown.
• A spokesman for Jean-Claude Juncker, EC president, said there was still "no white smoke" in the talks which have stumbled as Theresa May tries to find a suitable border arrangement to satisfy the Democratic Unionist party in Northern Ireland.

Rates

More range bound trading

Global core bonds traded in a narrow sideways range today. Second tier eco data (disappointing German industrial production, confirmation EMU Q3 GDP and strong jobless claims) didn't affect trading. US Treasuries slightly outperformed as political risk remains elevated (debt ceiling, tax reforms, Mueller investigation, Jerusalem). Risk sentiment on equity and commodity markets remains fragile, but the selloff didn't continue.

At the time of writing, the German yield curve bear steepens with yield changes ranging between -0.3 bps (2-yr) and +1.5 bps. The test of 0.3% support in the German 10-yr yield is ongoing. The specific curve movement could be related to comments from the German deputy FM who said that the Finanzagentur will continue to rely on 30y funding next year while even suggesting the possibility of a 50-yr bond. The US yield curve bull flattens with yields up to 2.5 bps lower (30-yr). On intra-EMU bond markets, 10-yr yield spread changes versus Germany are nearly unchanged with Portugal (-5 bps) and Italy (-3 bps) outperforming.

Currencies

Dollar maintains benefit of the doubt

There was no high profile news to guide trading in the major FX cross rates today. The risk-off correction slowed, but there was no sustained rebound. Data were second tier and close to expectations. Investors await tomorrow's US payrolls and a solution on the US government spending bill. Trading in the major cross rates was technical in nature, with the dollar gaining on points. Investors apparently don't want to be positioned USD short ahead of tomorrow's payrolls.

Asian equities showed a diffuse picture. Japan outperformed with gains of 1% +. China and Korea underperformed. The profit taking move of the previous sessions slowed, but there is no big story to start a clear directional move/rebound. USD/JPY held in the mid 112 area. The pair lost only limited ground in yesterday's risk-off correction. EUR/USD stabilized near 1.18. At 93.60, the trade-weighted dollar (DXY) holds near the highest level in 2 weeks.

There was absolutely no unequivocal story to guide trading in Europe. European equities tried to join this morning's rebound in (some) Asian markets, but the move lacked any conviction. Core yields also didn't go anywhere. EMU Q3 growth was revised marginally higher to 2.6% Y/Y (from 2.5%). Evidently this was not enough to inspire any directional move. In line with the 'price action' earlier this week, the dollar maintained the benefit of the doubt recording marginal gains against the euro and yen.

The 'USD-bid' slowed this afternoon. US jobless claims were slightly better than expected (236K vs 240K expected), but that wasn't enough to cause any USD repositioning ahead of tomorrow's US payrolls. Headlines from the parties involved in the reconciliation of the House and Senate tax bill suggested further progress but we assume that (FX) markets didn't give much weight to it yet. USD/JPY trades in the 112.65 area. EUR/USD is changing hands just below 1.18. Dollar gains remain minimal, but investors apparently don't want to be positioned short USD going into tomorrow's US payrolls.

Sterling awaiting 'new' Brexit news

There was also little hard news on Brexit today. Rumours continued to swirl. Ireland indicated that it wants to be helpful in case UK PM may comes up with a new proposition, but its basic position on the issue of the Irish border hasn't changed. At the same time, the EU suggested that it might be more flexible on the deadline for PM May to finalize a proposal that would be presented at the EU summit at the end of next week. For now, there are no indications that there is any progress on the heart of the matter. Sterling was captured in erratic order-driven trading as most investors are avoiding directional positions as long as the binary Brexit-risk persists. EUR/GBP hovered up and down around the 0.88 pivot (currently 0.8810). Cable spiked briefly to the 1.3320 area, but trades again near 1.3375.

USD/CHF - 0.9919

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9921

Kijun-Sen level                    : 0.9809

Ichimoku cloud top                 : 0.9875

Ichimoku cloud bottom              : 0.9863

Original strategy :

Buy at 0.9825, Target: 0.9925, Stop: 0.9790

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9825, Target: 0.9925, Stop: 0.9790

Position : -

Target :  -

Stop : -

As the greenback has maintained a firm undertone after staging a strong rebound from 0.9735 (last Friday’s low), adding credence to our view that a temporary low has been formed there and consolidation with upside bias remains for this move to bring at least a strong retracement of recent decline to resistance at 0.9947 but reckon 0.9990-00 would hold from here due to near term overbought condition.

In view of this, we are looking to buy dollar on dips as 0.9820-25 should limit downside and bring another rebound. Below 0.9790 would defer and risk weakness to 0.9755-60 but still reckon said last week’s low at 0.9735 would remain intact.

GBP/USD - 1.3383

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.3372

Kijun-Sen level                    : 1.3372

Ichimoku cloud top              : 1.3449

Ichimoku cloud bottom        : 1.3404

Original strategy :

Sold at 1.3440, met target at 1.3340

Position : - Short at 1.3440

Target :  - 1.3340

Stop : -

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Cable did resume recent fall from 1.3550 and our short position entered at 1.3440 met indicated downside target at 1.3340 as the pair fell to as low as 1.3320 (with 100 points profit), having said that, as sterling found good support at 1.3320 and has rebounded in NY morning, initial upside risk is seen for recovery to 1.3430-35 but break of resistance at 1.3461 is needed to confirm low is formed, bring further gain towards 1.3500.

As we have taken profit on our short position entered at 1.3440, would not chase this fall here and would be prudent to stand aside in the meantime. Below said support at 1.3320 would signal the fall from 1.3550 is still in progress and may extend further weakness to 1.3300 but reckon 1.3260-65 would hold, bring rebound later. 

Daily Pivots: (S1) 0.7537; (P) 0.7584; (R1) 0.7609; More...

AUD/USD drops to as low as 0.7514 so far today. Break of 0.7531 confirms resumption of whole decline from 0.8124. Intraday bias remains on the downside for next key cluster level at 0.7322/8. For now, near term outlook will stays bearish as long as 0.7652 resistance holds, in case of recovery.

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 0.8033). 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.

EUR/USD - 1.1793

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 1.1791

Kijun-Sen level                  : 1.1800

Ichimoku cloud top             : 1.1839

Ichimoku cloud bottom      : 1.1831

Original strategy  :

Sell at 1.1865, Target: 1.1765, Stop: 1.1900

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1865, Target: 1.1765, Stop: 1.1900

Position : -

Target :  -

Stop : -

As the single currency has remained under pressure after recent selloff, adding credence to our bearish view that the erratic decline from 1.1961 top (last week’s high) is still in progress and downside bias remains for further weakness to to 1.1770 and possibly towards support at 1.1736 but near term oversold condition should limit downside and price should stay above previous key support at 1.1713.

In view of this, we are looking to sell euro on recovery as 1.1870-75 should limit upside and bring another decline. Above 1.1900 would risk test of last Friday’s high at 1.1940 but only break there would revive bullishness, bring retest of 1.1961 later.