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EURGBP - The cross saw a follow through lower on Monday. This is coming on the of its Friday weakness. Support lies at the 0.8800 Level where a violation will turn focus to the 0.8750 level. A break will expose the 0.8700 level. Its daily RSI is bearish and pointing lower suggesting further weakness. Resistance resides at the 0.8900 level where a violation if seen will turn risk towards the 0.8950 level. Further up, resistance resides at 0.9000 level followed by the 0.9050 level. All in all, EURGBP remains biased to the downside.

• European equities trade with small losses in this week's opening session. US stock markets opened narrowly mixed.
• Bill Dudley, the influential head of the NY Fed, announced plans to retire next year before his term expires. Mr Dudley is planning the mid-2018 retirement to "ensure that a successor is in place well before the end of his term" in January 2019, the regional branch of the central bank said.
• Donald Trump accused Japan of engaging in unfair trade practices on the first leg of his five-nation Asia tour, during which the American president will focus on improving the US trade balance and efforts to press North Korea to give up its nuclear weapons.
• Just one in seven people from Catalonia believe the current standoff between Barcelona and Madrid will end in independence for the region while more than two thirds think the process has been bad for the economy, a survey showed.
• German industrial orders rose unexpectedly in September (1% M/M), driven by strong demand from other euro zone countries for capital goods including machines and vehicles, suggesting the economy will extend its solid upswing into the coming months.
• Second tier EMU eco data were better than forecast with an upward revision to the final October Services PMI (55 from 54.9; despite downgrades to national figures), the highest Sentix investor confidence since 2007 (34 in November from 29.7) and more rapidly accelerating producer prices in September (0.6% M/M and 2.9% Y/Y from 0.3% M/M and 2.5% Y/Y).
• The ECB's decision to extend asset purchases was warranted by weak inflation and reinforces its guidance to keep rates at their current level for an extended period of time, ECB chief economist Peter Praet said.

Rates

Core bonds trade quiet, but constructive

Core bonds started the European session with a move higher that lasted till 10am CET. Afterwards, sideways trading in a very tight range kicked in. We don't have a good explanation for this spurt higher. Eco data were certainly not the reason. German factory orders and the EMU Sentix investor confidence were materially stronger-than-expected, but ignored. The final national October PMI figures were slightly revised lower, but nothing to get excited about. Dovish, but no new, comments of ECB Praet and some technical buying (Bund opened above 162.78 first resistance) may go some way to explain today's move. However, the key resistance/contract high at 163.43 remained as of yet out of reach, lowering the significance of today's price action, which wasn't exceptional in scope either. US Treasuries followed Bunds higher, but the latter outperformed. There were no US eco data and a speech of NY Fed Dudley will only take place after the European close.

At the time of writing, the German yield curve bull flattens with yields down between 0.6 bps (2-yr) and 2.7/2.8 bps (10-30-yr). The US yield curve also bull flattens with yields 0.1 bp (2-yr) to 1.6 bps (30-yr) lower. On intra-EMU bond markets, 10-yr yield spreads versus Germany are little changed (-1 to +2 bps).

Currencies

Euro drifts south in technical trade

Trading in the major FX cross rates was mostly technical in nature. EMU eco data were strong, but had no impact on trading. In a cautious risk-off context USD/JPY, EUR/JPY and EUR/USD all lost gradually ground in lockstep. EUR/USD finally dropped below the 1.16 barrier. The 1.1575 post-ECB low is on the radar. USD/JPY's topside attempt was rejected. The pair trades in well-known territory in the 114 area.

Asian equities traded mixed overnight. Chinese equities outperformed even as the PBOC warned on the risks of too high leverage. BOJ's Kuroda said that the BOJ wants inflation to overshoot the 2% target, suggesting the ultra-loose BOJ policy won't be scaled back anytime soon. USD/JPY spiked temporary north of the 114.50 barrier, but the break couldn't be sustained. EUR/USD held stable in the low 1.16 area.

There were several EMU eco data, but most of them were no market movers. German factory orders printed very strong at 1.0% M%/M and 9.5% Y/Y. The EMU Sentix investor confidence rose much more than expected, reaching the highest level since mid-2007. The Final EMU composite PMI was close to expectations at 56.0. The data confirmed that the EMU economy is in very good shape. However, it didn't help the euro. Risk sentiment turned a bit more cautious and core yields declined slightly. This weighed on USD/JPY, EUR/JPY and EUR/USD. The upside test of USD/JPY was rejected and the pair returned to the low 114 area. EUR/JPY tumbled almost one big figure from 133+ levels in Asia this morning. The rather sharp setback in EUR/JPY weighed on the overall performance of the euro. EUR/USD came within reach of the post-ECB low of 1.1575, but a real test didn't occur. If anything, euro softness (rather than USD strength) was the underlying FX trading theme today. A break below 1.1575 could inspire further euro losses.

Sterling extends rebound, partially on euro softness

On Friday, sterling regained modest ground after Thursday's post-BoE sell-off. This rebound continued today. We didn't see any eco or political news to support the move. In an appearance before a CBI audience, the UK PM acknowledged the need for clarity and for an implementation period, but didn't bring much new. Still the UK currency remained in relatively good shape today. Maybe some investors hope on signs of progress in the next round of Brexit-negotiations which start later this week. The political scandals (inside and outside the Conservative party) are apparently no really important factor for sterling trading yet. EUR/GBP trades in the 0.8845/50 area. The decline is at least partially due to euro softness. Cable also trades cautiously stronger in a daily perspective. The pair trades in the low 1.31 area.

The euro price keeps consolidating in anticipation of new drivers. Less than expected non-farm payroll data out of US on Friday hasn't decreased the chances of another interest rate hike by the Fed in December. That along with the ECB's decision to prolong the asset purchasing programme into 2018 is exerting pressure on the common currency. The EUR/USD was mildly impacted by a weaker than expected report on German services PMI which dropped to 54.7 against the forecasted 55.2. The euro did receive support following the release of the services PMI for the Eurozone which increased by 0.1 to 55.0 and from the Sentix investor confidence index which grew to 34.0 in November, much better than the forecasted 31.2.

Investors are also reluctant to open new positions ahead of the speeches of the ECB's Mario Draghi and the Fed's Janet Yellen tomorrow. Analysts are however not expecting to get any new hints about future steps by the central banks.

The USD/JPY has fallen despite the negative effects from the speech by the head of the Bank of Japan. Haruhiko Kuroda confirmed the intention to keep the ultra-soft policy settings in Japan until inflation reaches the target level of 2.0%. Investors in the yen will be keeping an eye on the average cash earnings data due in Japan at 00:00 GMT.

Tomorrow the market turns its focus to the RBA's interest rate decision due at 03:30 GMT. The central bank is not expected to change monetary policy in Australia, but we may see a rise in volatility.

The bulls keep pushing WTI quotes upwards thanks to the fall in the number of active oil drilling rigs in the US by 8 to 729 units, according to oil services company Baker Hughes. Oil prices hit their highest level since July 2015 following Saudi Arabia's anti-corruption crackdown on the weekend and from statements on the Kingdom's intention to maintain OPEC's tightening of global supplies and target to reduce oil inventories.

EUR/USD

The EUR/USD price keeps consolidating under strong resistance at 1.1620. Fixing under this level may be the basis for further price drops to the 1.1500-1.1550 range. At the same time, we do not eliminate the chance of a current trend reversal to positive and in case of gaining a foothold above 1.1620, we may see further growth to 1.1730.

USD/JPY

The USD/JPY retreated downwards after testing the resistance at 114.70. In case of breaking through the support at 114.00 and fixing below it, the next targets are likely to be 113.00 and 111.70. The RSI on the 15-minute chart just left the oversold zone, which points to the increased probability of a rising movement soon.

USD/WTI

The USD/WTI is moving along the upper limit of the rising channel. The immediate goal in case of maintaining the current positive impulse will be at 57.00. In case of profit taking the quotes may return to the SMA100 on the 15-minute chart or even to the support at 55.00.

Good day traders!

Bitcoin moved slightly higher up to 7400/7440 where we see a potential completion of a three wave recovery, either for wave B or wave 2, but in both cases there is room for a drop down to 7k while price is below 7600.

BTCUSD, 1H

GBPJPY is making a slow recovery up from 148.60 towards the trendline resistance that we see it as a corrective bounce; it can be wave 4 maybe even wave 2, but in either case there is probability for a drop to 148.00 soon.

GBPJPY, 1H

The Euro accelerated lower after recovery attempts on Monday were capped by falling 7SMA at 1.1624.

Fresh weakness returned below 1.1600 handle and pressuring key support at 1.1574 (27 Oct low), break of which would signal bearish continuation towards next target at 1.1510 (Fibo 38.2% of 1.0570/1.2092 rally/rising weekly Kijun-sen).

Completion of bearish flag pattern on daily chart was strong bearish signal for further weakness, as flag base now acts as initial resistance at 1.1623 (reinforced by falling 7 SMA).

Res: 1.1624; 1.1671; 1.1690; 1.1705
Sup: 1.1574; 1.1510; 1.1445; 1.1400

Major political upheaval is underway in Saudi Arabia after dozens of top officials were arrested on Saturday along with a series of other events that are unlikely to be a coincidence. The Canadian dollar was the top performer last week, while the pound lagged. CFTC positioning showed a shift against commodity currencies. A new Premium trade has been issued on a commodity currency, backed by 3 supporting charts.

Thirty-two year Prince Mohammed bin Salman continues to tighten his grip following his rise to Crown Prince in June. A series of arrests on Saturday, ostensibly for corruption, threaten major turmoil in the Kingdom. The arrests included 11 senior princes, a former finance minister and Prince al-Waleed bin Talal, who is the richest man in the Arab world and the largest shareholder of Citigroup. The head of the National Guard was also removed.

Also on Saturday, a missile was shot down near Riyadh while on Sunday a helicopter carrying Mansour bin Muqrin crashed. His father had been in-line to succeed King Salman until 2015.

This all comes just a week after Trump's son-in-law Jared Kushner made an unannounced trip to Saudi Arabia and on Saturday Trump tweeted asking Aramco to launch its IPO in New York. Lebanese PM Hariri's announced resignation on Friday on the grounds that it is no longer safe to remain on the post may be related to the Saudi equation as the Kingdom has long served as a safehaven to the PM and his family.

We struggle to believe this is all a coincidence but what comes next is equally opaque. The turmoil could be followed by assassinations and internal strife or Bin Salman could successfully tighten his grip on all the levers of power. For now, the present is developing quickly and the future highly uncertain.

Domestic market signals may also be tough to interpret. Saudi stocks fell 2.2% early but finished up 0.3% in what was likely government buying.

Late on Friday, WTI crude broke out to the highest since January 2015 and - once again - we can't dismiss that as a coincidence.We will be watching very closely in the days ahead.

CFTC Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

• EUR +72K vs +84K prior
• GBP +1vs -1K prior
• JPY -119K vs -116K prior
• CHF -21K vs -12K prior
• CAD +58K vs +72K prior
• AUD +52K vs +57K prior
• NZD -6K vs +1K prior

The head-and-shoulders pattern in EUR/USD along with the resurgent US dollar placed substantial euro positions in jeopardy. Commodity currencies also remain in a precarious position despite last week's bounce. With the BoE decision out of the way and no more hikes coming in the near term, expect to see a slow build in GBP shorts unless the Brexit rhetoric improves in the coming 6 weeks.

Copper price rose above $3.17 on Monday, fully reversing losses on Friday, but upside remains limited, following repeated upside rejections above $3.17 handle.

Future contract for December delivery is holding within triangular consolidation, as converging trend lines limit near-term price fluctuation.

Daily studies are bullishly aligned and favor eventual firm break above $3.1707 (triangle's upper boundary) to signal resumption of recovery from $3.0725 (27 Oct correction low) towards targets at $3.1871 (Fibo 61.8% of $3.2580/$3.0725 pullback) and psychological $3.20 barrier.

The price may stay in prolonged consolidation while holding within the triangle.

Strong bearish signal could be expected on break and close below lower trendline (currently at $3.1091).

Res: 3.2000; 3.2120; 3.2355; 3.2415
Sup: 3.1450; 3.1232; 3.1091; 1.3100

USD/CHF - 1.0003

Most recent candlesticks pattern : N/A

Trend                                    : Up

Tenkan-Sen level                  : 1.0015

Kijun-Sen level                    : 1.0008

Ichimoku cloud top                 : 0.9993

Ichimoku cloud bottom              : 0.9976

Original strategy :

Bought at 0.9950, Target: 1.0050, Stop: 0.9950

Position : - Long at 0.9950

Target :  - 1.0050

Stop : - 0.9950

New strategy  :

Hold long entered at 0.9950, Target: 1.0050, Stop: 0.9950

Position : - Long at 0.9950

Target :  - 1.0050

Stop : - 0.9950

As the greenback found renewed buying interest at 0.9948 and has staged another rebound, retaining our bullish view for recent rise to resume after consolidation, above said resistance at 1.0038 would confirm the rise from 0.9421 low has resumed and extend further gain to 1.0050-55, then towards 1.0075-80 but price should falter below 1.0100 chart resistance.

In view of this, we are holding on to our long position entered at 0.9950. Below said support at 0.9938-48 would abort and signal top is formed instead, risk correction to 0.9920-23 (38.2% Fibonacci retracement of 0.9737-1.0038) but 0.9885-90 (50% Fibonacci retracement) should limit downside and support at 0.9869 would remain intact. 

Silver dipped below 17.00 on Friday after a short phase of consolidation and is currently trying to pare its losses on the 4-hour chart. The bias is neutral as the RSI and the MACD are laying in their neutral zones, while the metal itself has rebounded inside the Ichimoku cloud.

Should the metal head up, resistance could be first met at the 17.00 key-level before the previous high at 17.22 come into view. Next, the top at 17.44 touched on October 16 could act as a potential resistance.

Alternatively, a negative foot would first target the previous low of 16.75 and then the area around 16.58 which has been approached recently. From here, any downside movements would see the two-month low of 16.30.

GBP/USD - 1.3101

Most recent candlesticks pattern   : N/A

Trend                                 : Near term down

Tenkan-Sen level                 : 1.3098

Kijun-Sen level                    : 1.3092

Ichimoku cloud top              : 1.3177

Ichimoku cloud bottom        : 1.3123

Original strategy :

Sell at 1.3150, Target: 1.3030, Stop: 1.3185

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.3175, Target: 1.3045, Stop: 1.3210

Position : -

Target :  -

Stop : -

As cable has rebounded again today, retaining our view that further consolidation above Friday’s low at 1.3039 would be seen and corrective bounce to 1.3150 cannot be ruled out, however, reckon upside would be limited to the upper Kumo (now at 1.3177) and bring another decline, below said support at 1.3039 would bring retest of recent low at 1.3027 but break there is needed to signal early downtrend has resumed for weakness to psychological support at 1.3000, then towards 1.2970-75.  

In view of this, would not chase this fall here and would be prudent to sell cable on recovery as 1.3170-75 should limit upside and bring another decline later. Above 1.3200 would defer and prolong choppy trading, risk rebound to 1.3235-40 first.