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Daily Pivots: (S1) 111.57; (P) 111.94; (R1) 112.19; More...

Intraday bias in USD/JPY remains on the downside with 112.57 minor resistance intact. Fall from 113.43 short term top would target EMA (now at 111.37) first. As whole rebound from 107.31 is likely completed, sustained trading below 55 day EMA will target 107.31 low and below. In that case, we'd expect strong support from 61.8% retracement of 98.97 to 118.65 at 106.48 to contain downside and bring rebound. On the upside, above 112.57 minor resistance will turn intraday bias neutral first. But risk will stays on the downside as long as 113.43 resistance holds.

In the bigger picture, rise from 98.97 (2016 low) is seen as the second leg of the corrective pattern from 125.85 (2015 high). It's unclear whether this second leg has completed at 118.65 or not. But medium term outlook will be mildly bearish as long as 114.49 resistance holds. And, there is prospect of breaking 98.97 ahead. Meanwhile, break of 114.49 will bring retest of 125.85 high. But even in that case, we don't expect a break there on first attempt.

Daily Pivots: (S1) 0.7834; (P) 0.7866; (R1) 0.7918; More...

Intraday bias in AUD/USD remains mildly on the upside for the moment. Rebound from 0.7732 short term bottom could extend to retest 0.9124 high. But we'd be cautious on strong resistance from there to limit upside and bring another fall to extend the corrective pattern. On the downside, break of 0.7732 will target medium term fibonacci level at 0.7628 first.

In the bigger picture, rise from 0.6826 medium term bottom is seen as corrective pattern. Current development suggests that it might be completed with three waves up to 0.8124 already. Break of 38.2% retracement of 0.6826 to 0.8124 at 0.7628 will firm this bearish case. And, decisive break of 0.7328 key cluster support (61.8% retracement at 0.7322) will confirm and bring retest of 0.6826 low. In case rise from 0.6826 resumes and extends, strong resistance should be seen at 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside.

Daily Pivots: (S1) 1.2439; (P) 1.2479; (R1) 1.2507; More....

No change in USD/CAD's outlook. With 1.2529 minor resistance intact, pull back from 1.2598 could extend lower to 38.2% retracement of 1.2061 to 1.2598 at 1.2393, or even further to 61.8% retracement at 1.2266. But we'll look for bottoming sign below 1.2266. Break of 1.2061 low is not anticipated for now. On the upside, break of 1.2529 minor resistance will resume the rise from 1.2061 for 1.2777 resistance.

In the bigger picture, USD/CAD should have defended 50% retracement of 0.9406 (2011 low) to 1.4869 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. Break of 1.2777 will further affirm this bullish case. That is, larger up trend from 0.9406 is not completed. And in that case, USD/CAD should target 1.3793 resistance next. However, on the other hand, firm break of 1.2048 will indicate that fall from 1.4689 is at least a medium term down trend and should target 61.8% retracement at 1.1424 and below.

Daily Pivots: (S1) 131.90; (P) 132.42; (R1) 132.70; More...

Intraday bias in EUR/JPY remains neutral at this point. But again, it's getting more likely that 134.39 is a medium term top and a downside breakout could be seen soon. Focus is on 131.69 support. Decisive break there will be an early sign of medium term reversal and will target 127.55 key support level. On the upside, firm break of 134.39 is needed to confirm up trend resumption. Otherwise, more corrective trading would be seen.

In the bigger picture, medium term rise from 109.03 (2016 low) is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). 61.8% retracement of 149.76 to 109.03 at 134.20 is already met. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. However, break of 127.55 support will argue that the medium term trend has reversal and will turn outlook bearish for deeper fall.

Daily Pivots: (S1) 148.22; (P) 148.74; (R1) 149.04; More

Intraday bias in GBP/JPY remains neutral first. With 149.73 minor resistance intact, deeper decline is still expected. . Below 146.92 will target 61.8% retracement of 139.29 to 152.82 at 144.45. Such decline is seen as a correction and we'd look for strong support from 144.45 to bring rebound. On the upside, break of 149.73 support turned resistance will argue that the pull back is completed and turn bias back to the upside for retesting 152.82 high. However, sustained break of 144.45 will put 139.29 key support in focus.

In the bigger picture, medium term rebound from 122.36 is still expected to resume after corrective pull back from 152.82 completes. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. However, break of 139.29 will indicate rejection from 150.43 key fibonacci level. And the three wave corrective structure of rebound from 122.36 will argue that larger down trend is resuming for a new low below 122.26.

Daily Pivots: (S1) 1.1500; (P) 1.1526; (R1) 1.1541; More....

Intraday bias in EUR/CHF remains neutral for the moment. Overall, price actions from 1.1622 are developing into corrective pattern. In case of another rise, upside will be limited by 1.1622 to bring another fall to extend the pattern. On the downside below 1.1497 minor support will likely start the third leg through 1.1387 support. But in that case, strong support in expect at 1.1257 cluster support (38.2% retracement of 1.0652 to 1.1622 at 1.1251) to contain downside and bring rebound.

In the bigger picture, long term rise from SNB spike low back in 2015 is still in progress. EUR/CHF should now be heading back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.1198 resistance turned support holds.

Daily Pivots: (S1) 1.4922; (P) 1.5025; (R1) 1.5078; More....

Intraday bias in EUR/AUD remains on the downside for 1.4945 support. As noted before, consolidation pattern from 1.5226 is still unfolding with fall from 1.5241 as the third leg. Break of 1.4945 will affirm this case and send EUR/AUD through 1.4791 to 1.4421 support cluster support (50% retracement of 1.3624 to 1.5226 at 1.4425). We'd expect strong support from there to bring rebound.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term top has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. The corrective structure of the price actions from 1.5226 is affirming this view. Sustained trading above 1.5226 will target a test on 1.6587 key resistance. However, break of 1.4421 support will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.

Daily Pivots: (S1) 0.8869; (P) 0.8899; (R1) 0.8924; More...

Intraday bias in EUR/GBP remains on the downside for the moment. As noted before, recovery from 0.8745 is completed at 0.9032. Deeper fall would be seen to retest 0.8745 first. Break will resume whole decline from 0.9305 and target 61.8% projection of 0.9305 to 0.8745 from 0.9032 at 0.8686. On the upside, break of 0.9032 is needed to confirm resumption of the rebound. Otherwise, risk will stay on the downside in near term.

In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of another fall. And in that case, EUR/GBP could have a retest on 0.8303. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

The forex markets open the week rather steadily. Sterling is trying to extend last week's late rally but is held below Friday's high for the moment. It will be a big week for the Pound with inflation, employment and sales data featured. Meanwhile, UK Prime Minister Theresa May is trying her last effort to break that deadlock in Brexit negotiation ahead of the crucial EU summit on October 19. Dollar, on the other hand, is mildly firmer, recovering some of the post CPI loss.

Fed Yellen, ECB Constancio, BoJ Kuroda and PBoC Zhou spoke

Fed Chair Janet Yellen sounded quite upbeat on the economy when she delivered a speech at G30 international banking panel that include BoJ Governor Haruhiko Kuroda, PBoC Governor and ECB Vice President Vitor Constancio. Yellen noted that "economic activity in the United States has been growing moderately so far this year, and the labor market has continued to strengthen."  Impact of the hurricanes were "quite noticeable in the short term". But she emphasized that "history suggests that the longer-term effects will be modest and that aggregate economic activity will recover quickly."

Meanwhile, "risks to global growth have receded somewhat". And she expects " growth to continue to improve over the near term." And, wage gains "appear moderate" which is "broadly consistent with a tightening labor market". She noted that the "biggest surprise" has been this year's low inflation "which could reflect something more persistent than is reflected in our baseline projections." Nonetheless, she expects "ongoing strength of the economy will warrant gradual increases in that rate to sustain a healthy labor market and stabilize inflation around our 2 percent longer-run objective."

ECB Vice President Vitor Constancio said policymakers "remain confidence that the continued closing of the output gap will lead inflation to return to our medium-term objective". However, "this return remains conditional on a very substantial degree of monetary accommodation. He also pointed out that "the apparent disconnect between strong economic activity, on the one hand, and low inflation and wages on the other is one of the stand-out characteristics of the ongoing recovery".

BoJ Governor Haruhiko Kuroda maintained that BoJ will "consistently pursue aggressive monetary easing with a view to achieving the price stability target at the earliest possible time." But he also noted that "achieving the 2% target is still a long way off." Nevertheless, he noted that business have started to adopt labor saving productivity improvements recently, and that would eventually lead to rising labor costs. Then, "once price increases become widespread, medium- to long-term inflation expectations for firms and households are expected to rise gradually and actual inflation will increase toward 2%."

PBoC Governor Zhou Xiaochuan said that while China's growth has "slowed over the past few years", it has "rebounded this year". GDP growth hit 6.9% in the first half and "may achieve 7% in the second half". But he also pointed out that "the main problem is that the corporate debt is too high". And he urged to "pay further effort to deleveraging and strengthen policy for financial stability".

Updates on Geopolitical risks, US-North Korea, Brexit, Catalonia

Regarding geopolitical risks, US Secretary of State Rex Tillerson said in an interview that President Donald Trump wants him to continue diplomacy with North Korea "until the first bomb drops". But that was in contrast to what Trump has been tweeting as he noted that "only one thing will work" after decades of failure of diplomacy. Also, it's reported that there is a rift as Tillerson called Trump a "moron". Trump responded by asking to compare IQ tests. Tillerson refused to comment on it during the interview. Separately, National Security adviser H.R. McMaster said that Trump is "willing to do anything necessary" to preview North Korea from threatening the US with nuclear weapons. And McMaster added that "what Kim Jong Un should recognize is that if he thinks the development of this nuclear capability is keeping him safer, it's actually the opposite. It's having the opposite effect,"

UK Prime Minster Theresa May will have a dinner with EU leaders in Brussels today, trying to rescue the Brexit negotiations. It came days after EU officials said the talks were deadlocked, as conclusion to the fifth round. It's believed that May would try to persuade the EU counter parts to start the talks on post-Brexit trade agreements. But so far, nothing is know about what May could offer in return. And it's clear that the EU side sees there isn't "sufficient progress" to move on, with key issues like the divorce bill unresolved.

Catalan President Carles Puigdemont was requested by Spanish Prime Minister Mariano Rajoy to say clearly whether he is declaring independence. That came after Puigdemont suspended the declaration last week and opened the door for talks. But Rajoy was clear that he won't negotiate until the unilateral declaration of independence is withdrawn. Puigdemont is given a deadline of 10am today to clarify his stance. If Puigdemont confirms the declaration, it's very likely that Rajoy will trigger an Article 155 to take control of the Catalan administration and call for regional elections. If Puigdemont withdraws the declaration, separatists will likely start unravel. And Puigdemont would have no choice but call early regional elections to settle the issue in order manner. That is, one way or the other, a regional election could be the eventual outcome.

Looking ahead

It will be an important week on UK economic data with CPI, retail sales and job data featured. In particular CPI is expected to finally hit 3% level, meeting BoE's forecast. And that should clear the way for BoE to hike interest rate at November meeting. Meanwhile, Aussie and Kiwi were strong last week thanks to China data. They will be facing another batch of Chinese growth data this week. Plus, New Zealand will release CPI, Australia will release employment and RBA minutes. Here are some highlights for the week ahead:

• Monday: Eurozone trade balance; Canada foreign securities purchase; US Empire state manufacturing index
• Tuesday: New Zealand CPI; RBA minutes; UK CPI, PPI; German ZEW, Eurozone CPI final; US industrial production, NAHB housing index
• Wednesday: UK employment; Canada manufacturing sales; US housing starts and building permits, Fed's Beige Book
• Thursday: Japan trade balance; Australia employment; China GDP, industrial production, retail sales; Swiss trade balance; UK retail sales; US jobless claims, Philly Fed survey
• Friday: German PPI, Eurozone currency account; UK public sector net borrowing; Canada CPI, retail sales; US existing home sales

EUR/GBP Daily Outlook

Daily Pivots: (S1) 0.8869; (P) 0.8899; (R1) 0.8924; More...

Intraday bias in EUR/GBP remains on the downside for the moment. As noted before, recovery from 0.8745 is completed at 0.9032. Deeper fall would be seen to retest 0.8745 first. Break will resume whole decline from 0.9305 and target 61.8% projection of 0.9305 to 0.8745 from 0.9032 at 0.8686. On the upside, break of 0.9032 is needed to confirm resumption of the rebound. Otherwise, risk will stay on the downside in near term.

In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of another fall. And in that case, EUR/GBP could have a retest on 0.8303. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Economic Indicators Update

STOCKS

Dow (22871.72, +0.13%) is headed towards our expected 23000-23250 levels in the near term. View remains bullish for the coming sessions.

Dax (12991.87, +0.07%) has made an intra-week high at exact resistance levels at 13036 last week and in case the index manages to rise above 13036, could indicate further rise towards 13500 in the coming sessions.

Nikkei (21288.12, +0.63%) is trading at multi-year highs, levels last seen in 1996. The current upmove can take the index towards 21500-21600 at least in the coming sessions. Nikkei looks overbought at the current levels and could be a signal of some turn-around for the near to medium term. Need to be cautious and keep an eye on the Dollar Yen (112.005) which needs to rise above 112.0-112.5 to boost further up-move in the Nikkei. Else we would have to be ready to see pause in Nikkei any time soon.

Shanghai (3398.62, +0.24%) is steadily moving up towards 3400-3420 levels and looks positive for the near term.

Nifty (10167.45, +0.70%) has started celebrating Diwali since Friday, making all time highs near 10190. Note crucial resistance is visible at 10200 and that could push the index down towards 10100 again in the coming sessions. In case the index manages to break above 10200, there could be a straight 100points rally towards 10300-10320 levels in the near term.

COMMODITIES

Gold (1302.04) could face some rejection just above current levels and could possibly come off towards 1290/80 again in the near term. Else a break above 1308 could take it higher to test 1320 before coming off to 1300 or lower.

Silver (17.34) is headed towards 17.50 soon from where slight rejection is possible.

Brent (57.84) has scope of testing 59.50-60.00 in the near term while above 57.40. WTI (51.89) is trading higher and could move up towards 52.00-52.30 in the coming sessions.

Copper (3.1305) is bullish towards 3.15-3.18 as mentioned last week, before some pause is seen.

FOREX

Surprisingly for us, the Euro (1.1808) lost ground in US trade on Friday after an initial rise to 1.1875 after the release of US CPI (+2.23%) and US Retail Sales (+4.69% y/y). It is testing the lower Support of 1.1800 mentioned on Friday. It has to do some hard work now to earn its still preferred rise towards 1.20.

At the same time, Dollar-Yen (112.00) has recovered a bit after dipping to 111.50, the lower Support mentioned on Friday. It may now try to rise towards 113.00 over the coming days.

The Euro-Yen (132.23) has tested and held above Support at 131.70 (not mentioned on Friday) and may be able to rise towards 133.25 at least, as it is still in an overall uptrend.

The Pound (1.3288) was stable/ mixed. It rose to 1.3325 on Friday and might want to test 1.3400-50 in a few days. We are seeing long-term Resistance in the 1.34-35 region.

Good rise in the Aussie (0.7878) from a low of 0.7733 over the last week aided by a strong Copper. Suggests chances of some more upside to 0.7930 or higher.

The Chinese Yuan (6.5769) trades relatively strong. Dollar-Rupee is tesing Support at 64.70/75 on the NDF compared to 64.93 on Friday.

INTEREST RATES

Contrary to expectation, the German-US 10Yr Spread (-1.89%) and the German-US 2Yr Spread (-2.25%) trade a wee bit lower than Friday, contributing to the Euro weakness. That said, the Support at -1.93% on the German-US 10Yr Spread mentioned on Friday could hold.

US Yields (2Yr 1.51%, 5Yr 1.91%, 10Yr 2.28% and 30Yr 2.82%) have been coming down all of last week, but stabilised a bit on Friday. Need to see if they will dip some more towards 1.81% (5yr), 2.21% (10Yr) and 2.72% (30Yr).

In contrast, the German Yields (10Yr 0.41%) could be trading near Supports and could move up a bit ahead of the ECB meeting next week, even though Draghi has said rates will remain low for a long time.

The Indo-US 10Yr Spread (4.45%) may have Resistance near current levels.