Sample Category Title

Due to holidays, next update will be posted on Oct 9.

GBP/USD - 1.3399

Most recent candlesticks pattern   : N/A

Trend                                 : Near term down

Tenkan-Sen level                 : 1.3388

Kijun-Sen level                    : 1.3403

Ichimoku cloud top              : 1.3416

Ichimoku cloud bottom        : 1.3393

Original strategy :

Bought at 1.3375, Target: 1.3475, Stop: 1.3340

Position : - Long at 1.3375

Target :  - 1.3475

Stop : - 1.3340

New strategy  :

Hold long entered at 1.3375, Target: 1.3475, Stop: 1.3340

Position : - Long at 1.3375

Target :  - 1.3475

Stop : - 1.3340

Although cable retreated after meeting resistance at 1.3455 and initial downside risk is seen, as long as support at 1.3343 holds, mild upside bias remains for another rebound, above said resistance would extend the rebound from 1.3343 to 1.3470 (50% Fibonacci retracement of 1.3596-1.3345), however, reckon resistance at 1.3514 would limit upside and price should falter well below resistance at 1.3571, bring another decline later.

In view of this, we are holding on to our long position entered at 1.3375. Only below said support at 1.3343 would abort and signal the selloff from 1.3658 top has resumed and extend weakness to previous resistance at 1.3329, then towards 1.3300. 

Due to holidays, next update will be posted on Oct 9.

EUR/USD - 1.1818

Most recent candlesticks pattern   : N/A

Trend                      : Down

Tenkan-Sen level              : 1.1803

Kijun-Sen level                  : 1.1800

Ichimoku cloud top             : 1.1773

Ichimoku cloud bottom      : 1.1752

Original strategy  :

Sell at 1.1855, Target: 1.1735, Stop: 1.1890

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1855, Target: 1.1735, Stop: 1.1890

Position : -

Target :  -

Stop : -

Euro’s rebound after holding above support at 1.1717 has retained our view that consolidation above this level would be seen and marginal gain from here cannot be ruled out, however, reckon upside would be limited to 1.1850 and renewed selling interest would emerge below 1.1861-62 (50% Fibonacci retracement of 1.2005-1.1717 and previous resistance), bring another decline later, below 1.1770-75 would bring weakness to 1.1740-45, break there would bring retest of said support at 1.1717, below there would signal the decline from 1.2093 top has resumed and extend weakness to 1.1700 but loss of downward momentum should prevent sharp fall below previous support at 1.1662 and reckon 1.1625-30 would hold.

In view of this, we are looking to sell euro on recovery as 1.1850-55 should limit upside and bring another decline. A firm break above previous support at 1.1832-38 (now resistance) should hold and bring another decline later. Above resistance at 1.1862 would abort and signal low is formed instead, bring a stronger rebound to 1.1896 (another previous support). 

Due to holidays, next update will be posted on Oct 9.

USD/JPY - 112.48

Most recent candlesticks pattern   : N/A

Trend                      : Up

Tenkan-Sen level              : 112.48

Kijun-Sen level                  : 112.49

Ichimoku cloud top             : 112.84

Ichimoku cloud bottom      : 112.46

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Despite falling to 112.21, lack of follow through selling suggests further consolidation would take place and recovery to 112.75-80 cannot be ruled out, however, price should falter below indicated resistance at 113.26, bring another retreat later, below 112.20 would signal top has been formed at 113.26, bring retracement of recent rise to 112.00, then 111.75-80 but previous support at 111.47 should remain intact.

On the upside, whilst recovery to 112.75-80 cannot be ruled out, reckon said resistance at 113.26 would hold and bring further consolidation. Only a break of said this week’s high at 113.26 would revive bullishness and signal recent upmove has resumed, then further gain to previous resistance at 113.58 would follow but loss of upward momentum should prevent sharp move beyond 113.75-80 and reckon 114.00-10 would remain intact. As near term outlook is mixed, would be prudent to stand aside for now. 

Due to holidays, next update will be posted on Oct 9.

EUR/GBP - 0.8832

Original strategy  :

Sell at 0.8890, Target: 0.8740, Stop: 0.8930

O.C.O.

Buy at 0.8670, Target: 0.8820, Stop: 0.8610

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.8930, Target: 0.8750, Stop: 0.8970

O.C.O.

Buy at 0.8670, Target: 0.8820, Stop: 0.8610

Position : -

Target :  -

Stop : -

 
As the single currency recovered after holding above support at 0.8746, suggesting consolidation above this level would be seen and corrective bounce to 0.8870 cannot be ruled out, however, reckon upside would be limited to 0.8899 and 0.8930-35 should hold, bring another decline later, below said support at 0.8746 would extend recent decline from 0.9307 top to extend weakness to 0.8690-95 (61.8% Fibonacci retracement of 0.8312-0.9307), having said that, loss of downward momentum should prevent sharp fall below 0.8670-75 (50% projection of 0.9226-0.8774 measuring form 0.8899) and bring rebound later. 

In view of this, whilst we are looking to sell euro on recovery, we are inclined to turn long on subsequent decline as 0.8670-75 should limit downside. Below 0.8640-50 would risk weakness to 0.8600-10 but sharp fall below there should not be repeated and risk remains for another rebound to take place soon. 

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.

• European equities eked out modest to moderate gains, with the exception of Madrid that trades flat ahead of the referendum. US equities open little changed.
• Eurozone inflation rose by 1.5% Y/Y in September, unchanged from August and slightly below expectations. Core inflation surprised on the downside slowing to 1.1% Y/Y from 1.2% Y/Y. The outcome makes it slightly harder for the ECB to wind down its bond buying programme, but we don't expect a further delay.
• German unemployment slid to a record low in September in a sign that Europe's largest economy will continue to expand on the back of domestic spending. The jobless rate dropped to 5.6%, down from 5.7% in August. Number of jobless fell by a SA 23,000 to 2.506 million, beating the median estimate for a drop of 5,000.
• The UK economy expanded at a weaker 1.5% Y/Y pace in Q2 than the 1.7% Y/Y estimated before. The figures highlight the "notable slowdown" in growth in H1. It was the slowest growth pace since 2013.
• EC president Juncker has ruled out any chance that EU leaders will decide next month to unlock the next stage in Brexit talks. "By the end of October we will not have sufficient progress," he said, adding that "miracles" would need to happen to change this. However, he admitted that negotiations are making progress.
• BOE president Mark Carney confirmed that the BOE is close to raising interest rates at its November meeting, saying that they would rise so long as there was not a sudden and unexpected deterioration in economic data.

Rates

Bund corrects further up, but US Treasuries stall

Core bonds' upward correction resumed in early European dealings and bonds managed to hold on to marginal, (US), respectively modest (German) gains. We think that after the sharp sell-off for the best part of September, core bonds were ripe for an upward correction and that started in fact yesterday. Early EMU data releases were mixed with strong German labour market data on the one hand and weak German retail sales and weak French consumer spending on the other hand. The rise of Bunds coincided with falling equities and a rising EUR/USD, but when equities turned north, it didn't affect Bunds. The Bund made a last minor move higher on the weaker-than-expected EMU headline and core inflation. We don't expect it to have much impact on the ECB decision on asset purchases when they meet at the end of October. Bunds moved sideways shortly after the initial reaction and continued to go so till the closing of our report. The US Treasuries lagged Bunds on their way higher (effectively moving sideways throughout the session), but rose sluggishly to new minor intra-day highs after the release of slightly lower-than-expected US PCE deflators. However, US Treasuries traded soon lower again, little changed on the day. The US personal spending and income data were weak, but as expected.

At the time of writing, the German curve bull flattens with yields down 0.2 bp (2-yr) to 3 bps (30-yr). US yields are flat (2-yr) to 0.9 bp (10-yr) lower. The outperformance of German bonds is partly explained by catching up after strength of US Treasuries yesterday eve. In the intra-EMU bond market, 10-year yield spreads were little changed (between -1 and +2 bps). Spanish bonds only marginally underperformed despite Sunday's disputed Catalonian referendum and the increased tensions surrounding it. The risks of a Catalonian secession are small, but we would have expected some spread widening as it should be considered as a non-negligible tail risk. Markets are maybe a bit too sanguine.

Currencies

USD returns part of this week's gains.

Yesterday, the recent rise in core yields and in the dollar ran into resistance. Additional profit taking occurred today. Soft price data (in the US and the EMU) weighted more on the dollar than on the euro. EUR/USD tries to regain the previous range bottom at 1.1823. The loss of USD/JPY remains modest (112.30 area).

Asian equity markets ex-Japan traded in positive territory. Activity slowed as several markets including China prepared for holidays next week. Japan hovered around yesterday's closing level. Japanese eco data were mixed (see headlines). They gave the BOJ every reason to maintain its very loose monetary policy. The yen lost a few ticks after the data. USD/JPY traded in the 112.60 going into the start of European dealings. EUR/USD stabilized in the 1.1775 area.

Yesterday, the rise in US yields and in the dollar stalled and a modest countermove started as the was 'no strong enough' US news to extend the uptrend. This pattern continued today. From the start in Europe, the dollar lost gradually further ground. One might call it end of week profit taking even as the profit recent dollar profits still aren't that spectacular. Whatever, EUR/USD returned north of 1.18. USD/JPY drifted lower in the 112 big figure. EMU inflation (headline and core) both printed slightly softer than expected. The CPI release caused a temporary pause in the EUR/USD rebound, but the intraday trend resumed soon. Interest rates declined slightly more in Europe than in the US but differentials were too small to be significant for EUR/USD trading.

US spending and income data were weak as signalled by the retail sales data earlier this month. The PCE deflators were even a touch softer than expected at 1.4% Y/Y for the headline figure and 1.3% for the core. This is well off the Fed's 2% target. US yields and the dollar lost a few more ticks after the publication. EUR/USD is again testing the 1.1823 previous range bottom. A close above this level would be a disappointing for USD bulls. The losses in USD/JPY are modest. The pair is trading in the 112.40 area.

Is EUR/GBP bottoming out?

There were plenty of eco data in the UK today. Indicators showed a mixed picture but markets focused on two negative topics. UK Q2 growth was confirmed at 0.3% Q/Q but the Y/Y figure was reduced from 1.7% Y/Y to 1.5% Y/Y due to downward revision in Q3 and Q4 of 2016. The good post-Brexit performance of the UK economy was a bit good than assumed until now. At same time, output growth in the key UK services sector even declined 0.2% M/M in July. Sterling already felt some headwinds in the run-up to the data and the move accelerated afterwards. EUR/GBP extended its rebound north of 0.88. Admittedly, part of this move mirrored an overall rise of the euro. BoE's Carney in an interview indicated the BoE still intends a rate hike in the coming months. However, the rate hike talk was of little help for sterling anymore. EUR/GBP trades currently in the 0.8835 area. The pair is moving further away from the recent lows and from the 0.8742 support. A bottoming out process is developing. Cable dropped (temporary?) below the 1.34 mark, but the decline was retarded by a generally softer dollar. The pair trades again near the big figure.

Due to holidays, next update will be posted on Oct 9.

USD/CAD - 1.2478

 
Original strategy       :

Buy at 1.2360, Target: 1.2560, Stop: 1.2300

Position: -

Target:  -

Stop: -

 
New strategy             :

Buy at 1.2360, Target: 1.2560, Stop: 1.2300

Position: -

Target:  -

Stop:-

As the greenback ran into resistance at 1.2519 and retreated, suggesting consolidation below this level would be seen and pullback to 1.2400 cannot be ruled out, however, reckon 1.2350-60 would contain downside and bring another rise later, above said resistance at 1.2519 would extend the erratic rise from 1.2061 low to 1.2550, then towards 1.2590-00, however, near term overbought condition should limit upside and reckon resistance at 1.2663 would remain intact. 

In view of this, would not chase this rise here and would be prudent to buy again on pullback as 1.2360-70 should limit downside. Below indicated support at 1.2313 would defer and risk weakness to 1.2254 support (Friday’s low) but only break of latter level would signal top is possibly formed, bring test of previous support at 1.2197, below this level would confirm and bring weakness to 1.2160-65, then towards support at 1.2121, break there would confirm the rebound from 1.2061 has ended and bring retest of this level later, We are keeping our count that wave v as well as wave (C) ended at 1.3794 and impulsive wave (i ii, i ii) is now unfolding with minor wave iii ended at 1.2414, followed by wave iv correction ended at 1.2778, wave v has reached our indicated downside target at 1.2100 and may extend to 1.2000.

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

Highlights:

• Canadian GDP held steady in July, failing to increase for the first time in 9 months.
• Goods-producing industries fell 0.5% - led by a pull-back in non-conventional oil extraction. Services output increased 0.2%.
• The strong run of earlier increases left GDP still up 3.8% from a year ago in July, reflecting broadly based increases across goods & services sectors of the economy.

Our Take:

Canada's 8-month long streak of monthly GDP growth finally came to an end in July with GDP holding steady at June's level. Most of the July weakness was in goods production with non-conventional oil production pulling back for a second straight month after a surge in output in May and manufacturing output inching lower. Services output rose another 0.2% in July despite a 0.6% drop in finance and insurance output that Statistics Canada noted may have been impacted by the timing of U.S. and Canadian holidays in July. The (unusually) long streak of increases over the prior year means that GDP was still up a solid 3.8% year-over-year in July, reflecting broadly-based gains across goods & services sectors.

More broadly, the slowing in GDP growth in July is consistent with our - and the Bank of Canada's - view that the recent outsized pace of growth over the last year won't be sustained going forward. That said, there is also a lot of room for growth to slow from the 3.7% average increase over the last four quarters and still be at an 'above-potential' pace. The July GDP increase was slightly below what we were expecting but at this point not enough to change our call that GDP will increase another solid 2.5% in Q3. Worries about the stronger dollar, the potential outcome of ongoing NAFTA renegotiations, and still below-target inflation readings will likely keep monetary policymakers cautious. We expect, though, the economy will continue to grow at a pace that will warrant further gradual rate hikes from the Bank of Canada.

USD/CHF - 0.9702

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

The greenback has remained confined within recent established range and further consolidation would take place, although the retreat from 0.9770 may bring test of 0.9681 support, break there is needed to suggest a temporary top has possibly been formed, bring subsequent weakness to 0.9660 but support at 0.9642 (this week’s low) should remain intact.

On the upside, whilst recovery to 0.9740-45 cannot be ruled out, said this week’s high at 0.9770 should remain intact and bring further consolidation later. Only break of  indicated resistance at 0.9770-73 would signal recent upmove has resumed and the move from 0.9421 low would extend gain to 0.9800-10 and later towards 0.9840-50. As near term outlook is mixed, would be prudent to stand aside for now.

GBP/USD - 1.3375

Original strategy :

Bought at 1.3375, Target: 1.3475, Stop: 1.3340

Position : - Long at 1.3375

Target :  - 1.3475

Stop : - 1.3340

New strategy  :

Hold long entered at 1.3375, Target: 1.3475, Stop: 1.3340

Position : - Long at 1.3375

Target :  - 1.3475

Stop : - 1.3340

Although cable retreated after meeting resistance at 1.3455 and initial downside risk is seen, as long as support at 1.3343 holds, mild upside bias remains for another rebound, above said resistance would extend the rebound from 1.3343 to 1.3470 (50% Fibonacci retracement of 1.3596-1.3345), however, reckon resistance at 1.3514 would limit upside and price should falter well below resistance at 1.3571, bring another decline later.

In view of this, we are holding on to our long position entered at 1.3375. Only below said support at 1.3343 would abort and signal the selloff from 1.3658 top has resumed and extend weakness to previous resistance at 1.3329, then towards 1.3300. 

EUR/USD - 1.1821

Original strategy  :

Sell at 1.1855, Target: 1.1735, Stop: 1.1890

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1855, Target: 1.1735, Stop: 1.1890

Position : -

Target :  -

Stop : -

Euro’s rebound after holding above support at 1.1717 has retained our view that consolidation above this level would be seen and marginal gain from here cannot be ruled out, however, reckon upside would be limited to 1.1850 and renewed selling interest would emerge below 1.1861-62 (50% Fibonacci retracement of 1.2005-1.1717 and previous resistance), bring another decline later, below 1.1770-75 would bring weakness to 1.1740-45, break there would bring retest of said support at 1.1717, below there would signal the decline from 1.2093 top has resumed and extend weakness to 1.1700 but loss of downward momentum should prevent sharp fall below previous support at 1.1662 and reckon 1.1625-30 would hold.

In view of this, we are looking to sell euro on recovery as 1.1850-55 should limit upside and bring another decline. A firm break above previous support at 1.1832-38 (now resistance) should hold and bring another decline later. Above resistance at 1.1862 would abort and signal low is formed instead, bring a stronger rebound to 1.1896 (another previous support).