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If the economic calendar is any indication, Friday is shaping up to be one of the most active trading sessions in recent memory. A deluge of market-moving reports from Europe and North America will make headlines, including several policy-laden speeches.

The data dump begins bright and early with German retail sales at 06:00 GMT. Over the next several hours, traders will navigate French inflation data, German unemployment figures and revised UK GDP numbers. The British economy is projected to grow 1.7% annually in the second quarter.

The European Commission’s statistical agency will report on preliminary consumer inflation at 09:00 GMT. At the same time, the Italians will produce their own CPI figures, while the Greeks unveil retail sales and producer prices.

Shifting gears to North America, US personal incomes and outlays will make headlines at 12:30 GMT. The monthly report includes the core personal consumption expenditure (PCE) index, which is the Federal Reserve’s preferred inflation measure. Core PCE inflation is projected to rise 0.2% in August and 1.5% annually.

The Chicago purchasing managers’ index (PMI) and Michigan consumer sentiment index will also be released in the New York session.

Around the same time, investors can expect a steady stream of high profile central bank speeches. European Central Bank (ECB) President Mario Draghi will deliver a speech at 14:15 GMT. Thirty minutes later, Bank of England (BOE) Governor Mark Carney is also scheduled to speak. Federal Open Market Committee (FOMC) member Patrick Harker completes the trifecta at 15:00 GMT.

Lots of interesting developments are under way at each central bank, making Friday’s speeches all the more important. Currency traders and stock investors will be listening intently to the commentary.

EUR/USD

The euro recovered lost ground on Thursday, but continued to trade below 1.18 US. The EUR/USD exchange rate crashed some 270 pips in the first three days of the week, as the US dollar clawed back heavy losses against a basket of world peers. The pair continues to trade above a major support cluster in the 1.1690 – 1.1740 region.

GBP/USD

The British pound stabilized on Thursday after suffering a series of losses during the week. However, cable was once again under pressure in the Asian session, where it fell 0.2% to the low-1.34 range. The bears are eyeing the 1.33 level for a major corrective breakthrough.

USD/CAD

The Canadian dollar rose against the greenback on Thursday, but posted limited gains as investors eyed the latest economic developments. The USD/CAD is currently trading around 1.2440, having gained more than 300 pips since 8 September. Surprisingly, the loonie has been unable to catch a break despite the recent surge in global oil prices.

USD/CHF - 0.9714

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9708

Kijun-Sen level                    : 0.9725

Ichimoku cloud top                 : 0.9735

Ichimoku cloud bottom              : 0.9714

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.

Data released on Thursday indicated that the US economy grew at a faster pace in Q2 than expected. The US Commerce Department released data showing that Gross Domestic Product increased at a 3.1% annual rate in the April-June period. This is a slight revision from the 3% growth rate reported in August. Harvey and Irma are likely to restrain early Q4 growth but, as the rebuilding process quickens, growth is likely to increase as Q4 ends. The US Labour Market remains strong even with the release of data showing initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 272,000 for the week ended Sept. 23.

Whilst President Trump's Tax Reform was met with general USD buying, the lack of detail is concerning the markets. On the surface, the reform could see more money in the 'pockets' of both US citizens and Corporations, which should drive economic growth. However, as with all this Administration's 'plans/initiatives' they have failed to get Congress approval. With many of Trump's own Republican party members 'at odds' with the plan it is likely there will be several uphill battles to overcome before we truly see the real details of Trump's tax reform plan.

EURUSD improved +0.31% on Thursday and is little changed overnight, currently trading around 1.1780.

USDJPY moved slightly higher overnight and currently trades around 112.70.

GBPUSD lost 0.20% in early Friday trading. GBPUSD is currently trading around 1.3415.

Gold fell further against USD overnight, reaching a low on Friday of $1,283.57. Currently, Gold is trading around $1,285.

WTI fell over 1.25% on Thursday as many market participants believe it reached 'overbought' territory. In early Friday trading, WTI is down 0.3% to currently trade around $51.58.

Major economic data releases for today:

At 09:00 BST, the German Statistics Office will release German Unemployment Rate & Change for September. The Unemployment rate is forecast to remain unchanged at 5.7% and the Change is to be -5K as it was in August. Any major departure from the forecasts will see EUR volatility.

At 10:00 BST, Eurostat will release Eurozone Consumer Price Index & Core CPI (YoY) for September. CPI is forecast at 1.6% (prev. 1.5%) and Core is expected to come in at 1.2% (prev. 1.3%). As an inflation indicator, the markets will be interested to see if CPI can near 2% as a likely indicator of increasing interest rates by the ECB.

At 13:30 BST, the US Bureau of Economic Analysis will release Core Personal Consumption Expenditure – Price Index (YoY) for August. CPE is expected to remain at 1.4%, remaining well below the Fed's 2% 'target' that would clearly signal a rate hike – however, recent comments from Fed Chair Yellen suggest that the 2% target is a 'soft' target and rates will rise regardless in the near future.

At 15:15 ECB, President Draghi is scheduled to have an 'In conversation' dialog with Bank of England Governor Mark Carney at the BOE's 20 Years On conference.

At 15:45 BST, Bank of England Governor Mark Carney is scheduled to make a speech at the BOE's 20 Years On conference.

Sunrise Market Commentary

• Rates: Sell-off stopped for now
  Today's calendar contains EMU and US inflation data, but for various reasons we don't expect these to have a major impact. Yesterday's V-shaped session suggests that the sell-off phase in bonds is over for now and consolidation is needed before new guidance will decide on the continuation of the sell-off or a more sustained recovery of core bonds.
• Currencies: USD rally running into resistance
  Yesterday, the rise of US yields and of the dollar ran into resistance. Markets need more evidence that the dollar will get additional interest rate support. This evidence won't come today. It would be disappointing for USD bulls if EUR/USD would close above 1.1823. EUR/GBP holds near the recent lows, but shows no clear directional trend

The Sunrise Headlines

• US equities ended flat (NASDAQ) to minimal higher, enough to set a new all-time closing high (S&P). Asian equities perform better, maybe helped by a slightly weaker dollar. Japanese equities underperformed for the same reason.
• China's central bank set the renminbi's trading band weaker again on Friday after the currency hit a five-week low against the dollar during the previous session. The golden week holiday starts in China.
• Japan's core consumer price index climbed to its highest level for the year to date in August, supported by rising costs for fuel and medical care. Core inflation rose 0.7% Y/Y in August.
• Japanese retail sales slowed in August to 1.7% Y/Y, from 1.8% Y/Y in July and largely below the 2.6% Y/Y consensus. However, both department store sales and household spending rose.
• Fed Fischer said the dot plot reflects the views of the FOMC participants, but it is a forecast, not a fact. He retires in October, meaning his words don't carry far anymore.
• Today, the attention goes to EMU inflation and US personal spending &income, besides the Chicago PMI and the final Michigan consumer sentiment

Currencies: USD Rally Running Into Resistance

Dollar rebound waiting for new guidance

The dollar rally from earlier this week stalled yesterday. Core yields initially went higher, but it didn't support more USD gains. In the European session, US and yields and the dollar corrected gradually lower. Markets apparently need more details on the Trump tax plan to assess its impact on growth. US eco data were OK, but with little impact on the dollar. EUR/USD finished the session at 1.1786 (from 1.1745). The S&P 500 set a minor record top, but the gain was too small to support USD/JPY. The pair closed the day at 112.63.

Asian equity markets ex-Japan are trading in positive territory. Activity slows as several markets including China prepare for holidays next week. Japan hovers around yesterday's closing level. Japanese eco data were mixed (see headlines). The data give the BOJ every reason to maintain its very loose monetary policy. The yen lost a few ticks after the data. USD/JPY trades in the 112.60 area. EUR/USD stabilizes in the 1.1775 area.

The eco calendar is busy today. In EMU, the headline inflation is expected to have risen marginally to 1.6% Y/Y in September from 1.5% Y/Y. Based on lower than expected national figures in Spain and Germany, we see risk for a belowconsensus EMU CPI (stable 1.5% Y/Y). Core inflation is expected stable at 1.2% Y/Y. A substantial deviation from consensus is probably needed to move the euro. In the US, August Personal spending is expected weak (0.1% M/M) as indicated by the retail sales data. The PCE deflators are expected little changed to marginally higher. This indicator is important in the Fed's inflation assessment. A positive surprise might be slightly supportive for the dollar. Michigan consumer sentiment (final) is expected to be confirmed at 95.3.

The dollar rallied strongly earlier this week, as investors realised that the chances on a Dec. Fed rate hike have risen. The US government stepped up its efforts to put tax reform on the rails. Both factors propelled US yields and the dollar, but the repositioning stalled yesterday. The dollar (and US yields) need more hard news to sustain a further rise. Today's eco data may have intraday impact, but ‘big news' isn't expected. We expect calm trading at the last session of the quarter. EUR/USD dropped below a first support (1.1823). It would be disappointing for USD bulls if the pair would return (an close) north of the this level.

From a technical point of view EUR/USD hovered in a consolidation pattern between 1.1823 and 1.2070. It took time to break below the 1.1823 range bottom, but the break occurred earlier this week. The rise in US yields looks more solid and so does the rebound of the dollar. Next support in EUR/USD comes in at 1.1662.

The day-to-day momentum in USD/JPY was constructive recently, but it was primarily due to yen weakness. USD/JPY regained the 110.67/95 previous resistance, a short-term positive. The 114.49 correction top is the next important reference. The cross rate remains sensitive to changes in overall risk sentiment.

EUR/USD correction slows. Next support at 1.1662 stays out of reach for now.

EUR/GBP

GBP/EUR holding strong, but no further progress. Sterling had a roller-coaster ride yesterday. At the BoE independence conference, BoE's Carrey reiterated that the Bank will support the UK through the Brexit process. He didn't give much weight to the rise in inflation. Markets considered it a dovish assessment, triggering euro selling. The headlines from the UK-EU Brexit negotiations also weren't too positive. EU's Barnier said it can take weeks or even months to achieve sufficient Brexit progress. Sterling was sold against the euro and the dollar, but the UK currency showed good resilience later on and almost fully reversed the early losses in the afternoon. EUR/GBP closed the session at 0.8769. Cable rebounded to close at 1.3442

Overnight, UK Gfk consumer confidence was marginally better than expected at -9 (from -10). Later today, the Q2 current account, the monetary data (money supply) and the final reading of the UK Q2 GDP will be published. We don't expected the data to have a lasting impact on trading. The latest round of the UKEU Brexit negotiations again didn't yield much progress, but had little direct impact on sterling either. Over the previous days, the sterling rally (against the euro) lost momentum, but there is no clear sign of a significant countermove. This consolidation process might continue today.

EUR/GBP made an impressive uptrend from April to set a MT top at 0.9307 late August. UK price data amended the dynamics and hawkish BoE comments reinforced a sterling rebound. Medium term, we maintain a EUR/GBP buy-on-dips approach as we expect the mix of euro strength and sterling softness to persist. However, the prospect of (limited) withdrawal of BOE stimulus put a solid floor for sterling ST term. We look how far the current correction goes. EUR/GBP is nearing support at 0.8743 and 0.8652, which we consider difficult to break. We gradually look to by EUR/GBP on dips.

EUR/GBP: downtrend shows tentative signs of slowing.

Download entire Sunrise Market Commentary

GBP/USD - 1.3404

Most recent candlesticks pattern   : N/A

Trend                                 : Near term down

Tenkan-Sen level                 : 1.3418

Kijun-Sen level                    : 1.3399

Ichimoku cloud top              : 1.3438

Ichimoku cloud bottom        : 1.3393

Original strategy :

Buy at 1.3385, Target: 1.3485, Stop: 1.3350

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.3375, Target: 1.3475, Stop: 1.3340

Position : -

Target :  -

Stop : -

Although cable has retreated after meeting resistance at 1.3455 and initial downside risk is seen for weakness to 1.3375-85, 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 looking to turn long on dips as 1.3375-85 should limit downside. 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. 

Daily Pivots: (S1) 150.44; (P) 151.00; (R1) 151.55; More

Consolidation from 152.82 is still in progress and intraday bias remains neutral first. In case of deeper pull back, downside is expected to be contained by 38.2% retracement of 141.17 to 152.82 at 148.36 to bring rally resumption. Break of 152.82 will extend the larger rise from 122.36 to 61.8% projection of 122.36 to 148.42 from 139.29 at 155.39 next.

In the bigger picture, medium term rebound from 122.36 is in progress. 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. For now, the bullish scenario is preferred as long as 139.29 support holds.

EUR/USD - 1.1793

Most recent candlesticks pattern   : N/A

Trend                      : Down

Tenkan-Sen level              : 1.1787

Kijun-Sen level                  : 1.1763

Ichimoku cloud top             : 1.1790

Ichimoku cloud bottom      : 1.1747

Original strategy  :

Sell at 1.1830, Target: 1.1730, Stop: 1.1865

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 recovery towards resistance at 1.1811 cannot be ruled out, however, reckon upside would be limited to 1.1825-30 (38.2% Fibonacci retracement of 1.2005-1.1717) and renewed selling interest would emerge below 1.1861-62 (50% Fibonacci retracement and previous resistance), bring another decline later, below 1.1740-45 would bring retest of said support at 1.1717, break 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, bring rebound later.

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). 

Daily Pivots: (S1) 132.16; (P) 132.52; (R1) 132.76; More...

Intraday bias in EUR/JPY remains neutral as corrective trading from 134.39 is still in progress. Outlook stays bullish as long as 131.69 support holds. Above 133.02 minor resistance will turn bias back to the upside. Sustained break of 134.20 fibonacci level will extend larger up trend to 141.04 resistance next. However, break of 131.69 will be an early sigh of medium term reversal and will target 127.55 key support level instead.

In the bigger picture, current rise from 109.03 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. On the downside, break of 127.55 support is needed to be the first signal of medium term reversal. Otherwise, outlook will remain bullish.

EUR/USD - 1.1793

Most recent candlesticks pattern   : N/A

Trend                      : Down

Tenkan-Sen level              : 1.1787

Kijun-Sen level                  : 1.1763

Ichimoku cloud top             : 1.1790

Ichimoku cloud bottom      : 1.1747

Original strategy  :

Sell at 1.1830, Target: 1.1730, Stop: 1.1865

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 recovery towards resistance at 1.1811 cannot be ruled out, however, reckon upside would be limited to 1.1825-30 (38.2% Fibonacci retracement of 1.2005-1.1717) and renewed selling interest would emerge below 1.1861-62 (50% Fibonacci retracement and previous resistance), bring another decline later, below 1.1740-45 would bring retest of said support at 1.1717, break 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, bring rebound later.

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). 

Daily Pivots: (S1) 0.8748; (P) 0.8778; (R1) 0.8798; More...

With 0.8884 minor resistance intact, deeper decline is expected in EUR/GBP for 61.8% retracement of 0.8312 to 0.9305 at 0.8691 and below. Fall from 0.9305 is seen as the third leg of consolidation pattern from 0.9304. We'll look for bottoming signal again at it approaches 0.8303 support. Meanwhile, break of 0.8884 will indicate short term bottoming and turn intraday bias back to the upside for 55 day EMA (now at 0.8951).

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. It's still in progress with fall from 0.9305 as the third leg. Break of 0.8303 could be seen. 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. Whole up trend from 0.6935 is expected to resume after consolidation from 0.9304 completes.