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The U.S dollar remains intraday bearish against the Japanese yen, after another failed attempt at the pair 200-day moving average, at 111.69. The USDJPY pair currently trades around the 111.50 level, as price-action is caught between daily support and resistance. Yesterday the USDJPY pair received a boost, after U.S Consumer Confidence figures helped lift the US dollar, after posting the best set of numbers since December 2000.

The USDJPY pair is likely to remain under pressure while trading below the 111.70 technical level. Any upside attempts above 111.70 may trigger further buying towards the 112.20 level.

Should price action decline back below the 111.34 level, sellers will look to test back towards the 110.83 level, with extended daily USDJPY support at the 110.60 level.

The British pound has moved sharply higher against the U.S dollar, hitting 1.3380, after reports surfaced that the UK is prepared to offer the EU over forty billion euros, as part of the 'divorce' deal. The GBPUSD pair currently trades above the key 1.3360 level, as bullish momentum continues to build over short and medium-term horizons. Yesterday sterling dipped to 1.3220 level support, but quickly recovered as dip buyers came in. The major risk events for the GBPUSD pair today are third quarter GDP figures from the U.S, and Janet Yellen's testimony before U.S congress.

The GBPUSD pair remains strongly technically bullish while trading above the 1.3360 level. Further upside towards the 1.3410 and 1.3500 levels seems possible today.

Should price-action on the GBPUSD pair decline below the 1.3360 support level, sellers will likely target the 1.3307 level, with extended support at 1.3280.

As expected, real GDP was revised up in the third quarter, to 3.3% annualized, versus the 3.0% in the BEA's advance estimate of 3.0%.

Part of the upward revision was related to stronger business investment (+4.7%, up from 3.9%). Spending on equipment grew 10.4% (previously 8.6%) and investment in intellectual property was up 5.8% (prev. 4.3%). These upward revisions more than offset a downgrade to spending on structures (-6.8% versus -5.2%).

Other areas of upward revisions were government spending, which now grew 0.4% (prev. -0.1%), and inventories. Investment in inventories contributed 0.8%-points to growth in Q3, a hair above the 0.7%-point contribution in the advance estimate.

Consumer spending was revised down slightly, to 2.3% from 2.4%. This is not overly concerning as household spending was held back in many regions by hurricane activity. Residential investment subtracted less than previously thought, contracting by 5.1% (prev. -6.0%).

Corporate profit growth accelerated (after IVA and CCA) in the third quarter, up $91.6bn (18.4% annualized), after a 2.8% gain in the second. This gain was entirely driven by financial corporations.

Key Implications

Given the data seen since the advance GDP report, today's upgrade was largely expected. Still, economic growth at a three-year high is likely to garner some positive headlines. Today's data confirms that the U.S. economy has had back-to-back quarters of 3%+ growth for the first time in three years. To a certain extent, the strength in Q3 borrows a bit from Q4, where we expect growth to ease very slightly to closer to 2 ½% -- still well-above the economy's potential rate (around 2.0%).

FOMC members were already pretty upbeat about economic growth, and a hike at December's meeting was essentially fully priced in before this release. Still, fixed income yields have pushed higher on the positive headlines.

The dollar rose across the board on optimistic remarks from Fed chair Yellen, ahead of her testimony to Congress later today.

Yellen said that strengthening of the US economy will warrant continues interest rate increases and weak inflation is seen transitory with expectations for gradual increase of interest rate to be appropriate.

Despite Yellen did not talk about the timing of next rate increase, markets took her comments as bullish shift from the recent release of minutes of last FOMC meeting when a number of Fed's policymakers expressed their concerns about stubbornly low inflation.

USDJPY pair surged through strong barrier at 111.68 (200SMA) which capped the action in past few days.

Extended bullish acceleration dented next resistance at 112.00 (falling Tenkan-sen), turning focus towards next pivot at 112.32 (Fibo 38.2% of 114.73/110.83 downleg).

Close above 200SMA will be initial signal of basing and extended recovery while sustained break above Fibo barrier at 112.32 would generate firmer bullish signal for stronger recovery and test of daily cloud top (112.74) which marks next pivotal point, violation of which would confirm reversal.

Res: 112.32; 112.74; 113.00; 113.24
Sup: 111.68; 111.35; 111.02; 110.81

Investors Shrug Off North Korean Threat

US equity markets are on course to build on Tuesday's gains as we near the open on Wall Street, with the latest North Korea missile launch doing little to deter investors.

Not so long ago, the threat of escalation caused by such action would send investors fleeing for safe havens but as time has gone on and nothing has escalated beyond tough talk, investors have become less sensitive to the tests. Even Gold, the traditional safe haven, has seen only minor flows on the back of the launch and continues to trade below $1,300 which has been a notable resistance level for the yellow metal.

GBP Hits Two Month High on Divorce Bill Rumours

Sterling is trading at a two month high against the dollar this morning, after reports that the UK has agreed a divorce settlement with the EU following months of negotiations. While nothing has been explicitly confirmed and is unlikely to be given the tight political spot Theresa May finds herself in, if this is correct then this would be a major step towards moving negotiations on to transition deals and a future trade agreement.

Progress has come at a snail's pace so far and this agreement, if true, comes as May is put under substantial pressure by businesses demanding assurances on the future relationship with the EU and how it will impact them. While an agreement will come as a relief, as reflected in the rise in the pound, there's still a long way to go and there's likely to be many many more difficulties faced along the way. This is the first of many large hurdles on the way to Brexit, but it's a very important first step.

Oil Edges Lower as Oil Producers Meet to Discuss Extension

Brent and WTI crude are heading for a third consecutive daily loss on Wednesday as OPEC and non-OPEC officials preparing to meet in Vienna to discuss a possible extension to production cuts. The current cuts expire in March and there appears to be a broad agreement that more needs to be done in order to bring the market back into balance.

The next 12 months is going to continue to be challenging for oil producers and the higher oil prices get, the more we may see US shale companies turning on the taps and undoing the hard work. Still, oil prices have recovered strongly since the cuts were initially agreed and should producers agree to a nine month extension, it should keep prices at these more sustainable levels. That said, with an extension looking almost entirely priced in, I wonder if we'll see a similar response to last time when oil plummeted in the aftermath of the announcement.

Bitcoin Blasts Through $10,000

Bitcoin is tearing higher once again on Wednesday, having broken through the much talked about $10,000 level for the first time ever earlier in the day and is already closing in on $11,000, only hours later. The move takes Bitcoins gains to more than 30% since Saturday morning and more than 900% since the start of the year. It's no wonder why people are questioning whether this is a bubble.

Source - Thomson Reuters Eikon

That said, people have been calling this a bubble for months, if not years, and that hasn't stopped it making record after record. Clearly widespread acceptance and even adoption has aided the rally but the moves we've seen in recent days suggest there's been a substantial speculative component. Perhaps the additional coverage Bitcoin has received on its approach to $10,000 has fuelled the rally and speeded up the process. Whatever the cause, I fear a substantial correction is not far away and this could be the true test of the correct value of the cryptocurrency.

EUR/GBP - 0.8839

Original strategy  :

Sold at 0.8950, Target: 0.8820, Stop: 0.8990

Position : - Short at 0.8950

Target :  - 0.8820

Stop : - 0.8990

New strategy  :

Hold short entered at 0.8950, Target: 0.8820, Stop: 0.8920

Position : - Short at 0.8950

Target :  - 0.8820

Stop : - 0.8920

 
Although the single currency rose to 0.8982, lack of follow through buying and the subsequent selloff has retained our bearishness and downside bias remains for the fall from 0.9015 to extend weakness to support at 0.8792, however, break there is needed to signal the rebound from 0.8733 has ended at 0.9015 earlier this month, bring subsequent fall towards 0.8765-70.

In view of this, we are holding on to our short position entered at 0.8950. Above previous support at 0.8915 (now resistance) would defer and prolong choppy trading, risk rebound to 0.8935-40, however, still reckon said resistance at 0.8982 would cap upside and bring another retreat later. Only above indicated resistance at 0.9015 would risk test of previous resistance at 0.9033 but only a breach of this level would signal an upside break of recent established broad range has occurred, then subsequent rise to 0.9070-75 would follow.

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.

Daily Pivots: (S1) 1.1806; (P) 1.1863 (R1) 1.1899; More....

EUR/USD's pull back from 1.1960 extends lower but it's kept well above 1.1712 support so far. As long as 1.1712 support holds, rise from 1.1553 is expected to continue. Above 1.1960 will target 1.2091 high first. Break there will resume medium term up trend from 1.0339 and target 61.8% projection of 1.0569 to 1.2091 from 1.1553 at 1.2494, which is close to 1.2516 long term fibonacci level. We'd expect strong resistance from there to bring reversal. On the downside, break of 1.1712 will indicate completion of the rise from 1.1553 and turn near term outlook bearish.

In the bigger picture, rise from 1.0339 medium term bottom is seen as a corrective move for the moment. Therefore, in case of another rally, we'd be expect 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 to limit upside and bring reversal. Meanwhile, sustained trading below 55 week EMA (now at 1.1393) will suggest that such medium term rebound is completed and could then bring retest of 1.0339 low.

Daily Pivots: (S1) 1.3244; (P) 1.3315; (R1) 1.3410; More....

GBP/USD's rise is still in progress with focus on 61.8% retracement of 1.3651 to 1.3026 at 1.3412. Sustained break there will pave the way to retest 1.3651 high. Nonetheless, rejection from 1.3412, followed by break of 1.3220 support, will indicate that price actions from 1.3026 is merely a correction. And intraday bias would be turned back to the downside for 1.3026 low.

In the bigger picture, as noted before, GBP/USD hit strong resistance from the long term falling trend line. Nonetheless, subsequent fall was contained by 55 week EMA (now at 1.3069). Outlook is a bit mixed. For the moment, as long as 1.3835 support turned resistance holds, medium term rise from 1.1946 are viewed as a corrective pattern. That is, we'd expect another leg in the long term down trend through 1.1946 low. However, sustained break of 1.3835 should at least send GBP/USD to 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.

Daily Pivots: (S1) 1.2771; (P) 1.2797; (R1) 1.2842; More....

USD/CAD's strong rally and break of 1.2836 resistance suggests that corrective pattern from 1.2916 has completed at 1.2672 already. Intraday bias is turned back to the upside for 1.2916 first. Break will resume whole rise from 1.2061 and target 1.3065 medium term fibonacci level. On the downside, below 1.2753 will delay the bullish case and extend the correction from 1.2916 with another fall. But still, we'd expect downside to be contained by 1.2598 resistance turned support and bring rebound.

In the bigger picture, USD/CAD should have defended 50% retracement of 0.9406 (2011 low) to 1.4689 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. Rise from 1.2061 medium term bottom should now target 38.2% retracement of 1.4689 to 1.2061 at 1.3065. Firm break there will target 1.3793 key resistance next (61.8% retracement at 1.3685). We'll now hold on to this bullish view as long as 1.2450 support holds.

Daily Pivots: (S1) 0.9808; (P) 0.9830; (R1) 0.9860; More....

USD/CHF's recovery from 0.9776 extends higher but it's limited well below 0.9946 resistance so far. Intraday bias remains neutral first. As long as 0.9946 resistance holds, another fall is still expected. Below 0.9776 will extend the decline from 1.0037 to 61.8% retracement of 0.9420 to 1.0037 at 0.9656. We'll look for bottoming again below 0.9656 and above 0.9420. On the upside, break of 0.9946 resistance will indicate that the decline from 1.0037 has completed and bring retest of this resistance.

In the bigger picture, range trading continues between 0.9420/1.0342. At this point, 0.9420 appears to be a strong support level. Therefore, in case of decline attempt, we don't expect a firm break of this level. Nonetheless, strong break of 1.0342 is also needed to confirm upside momentum. Otherwise, medium term outlook will stay neutral.