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Daily Pivots: (S1) 0.9680; (P) 0.9724; (R1) 0.9767; More....

No change in USD/CHF's outlook and focus remains on 0.9772 key resistance. Decisive break there will suggest that whole down trend form 1.0342 has completed. In that case, near term outlook will be turned bullish for 0.9860/1.0099 resistance zone. Nonetheless, with 0.9772 resistance intact, outlook remains bearish. Below 0.9587 minor support will turn bias back to the downside for retesting 0.9420 low.

In the bigger picture, focus remains on whether 0.9443 key support (2016 low) could be taken out firmly as down trend from 1.0342 extends. There are various interpretation of the price actions. But in any case, medium term outlook will stay bearish as long as 0.9772 resistance holds. Current down trend could extend to 38.2% retracement of 0.7065 (2011 low) to 1.0342 (2016 high) at 0.9090. However, break of 0.9772 will indicate that USD/CHF has successfully defended 0.9443 again and turn outlook bullish for 1.0099 resistance.

Daily Pivots: (S1) 112.25; (P) 112.75; (R1) 113.30; More...

No change in USD/JPY's outlook. With 111.46 minor support intact, further rise is expected. Sustained break of medium term channel resistance will argue that correction from 118.65 is already completed with three waves down to 107.31. Break of 114.49 will confirm this bullish case and target a test on 118.65 next. On the downside, however, break of 111.46 will suggest rejection from the channel resistance and turn bias back to the downside.

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 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) 1.3347; (P) 1.3403; (R1) 1.3444; More....

GBP/USD recovers mildly today but it's staying in corrective pattern from 1.3651. Intraday bias remains neutral first. We'd continue to expect strong support from 38.2% retracement of 1.2773 to 1.3651 at 1.3316 to contain downside and bring rally resumption. Break of 1.3651 will turn bias back to the upside for 1.3835 support turned resistance next. Break there will target 55 month EMA (now at 1.4405).

In the bigger picture, current development argues that the long term trend in GBP/USD has reversed. That is, a key bottom was formed back in 1.1946 on bullish convergence condition in monthly MACD. Current rise from 1.1946 will target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466 next. In any case, medium term outlook will now stay bull

Dollar is paring some gains today but it remains the strongest major currency for the week so far. While bond yields remains firm today, the greenback is losing some momentum. Euro and Sterling are trading firmer while commodity currencies remain weak. Released from US, initial jobless claims rose 12k to 272k in the week ended September 23, above expectation of 269k. Continuing claims dropped -45k to 1.93m in the week ended September 16. Trade deficit narrowed to USD -62.9b in August. Wholesale inventories rose 1.0% in August. Q2 GDP was revised up to 3.1% with price index unchanged at 1.0%.

US President Donald Trump's plan of cut in corporate tax rate from 35% to 20% and top individual tax rate from 39.5% to 35% are generally welcomed. But the plan itself is already drawing criticisms from top Democrats, as Bernie Sanders called it "morally repugnant" for benefiting the "wealthiest people and most profitable corporations in this country." Politics aside, there are questions on how the government could recoup the loss revenue. Without a plan, the tax cut could indeed be translated into small infrastructure spending. But overall, for now, more upside is still in favor for the Dollar.

ECB Praet: It's readjusting, not ending of stimulus

ECB Chief Economist Peter Praet emphasized today that the central bank will discuss adjusting monetary stimulus, not ending. He also repeated President Mario Draghi's wording of "re-calibration". Praet noted that "things are going on the real (economy) side much, much better", but the "job is not yet done". There are talks that ECB could announce to lower the current EUR 60b a month asset purchase target to EUR 40b a month starting next year.

Separately, ECB Governing Council member Francois Villeroy de Galhau is confident that the current recovery in economy and job market would push up inflation. But the question is how long that would take. And while policy makers "must reduce the intensity of our net asset purchases", they should also "keep overall our monetary policy significantly accommodative".

Another Governing Council member Erkki Liikanen said that for now "a very substantial degree of monetary accommodation is still needed in the euro area for underlying inflation pressures to gradually build up". He pointed to the fact that "global weight of the advanced economists has decreased". However, he also singled out that "a stronger than forecast deceleration in China's debt driven growth would weaken confidence globally and significantly dampen growth".

Release from Eurozone, German CPI CPI rose 0.1% mom 1.8% yoy in September, in line with expectation. Looking at the details, inflation in some German region has risen above ECB's target. In the state of Hesse, headline CPI surged to 2.1% yoy. CPI in Saxony rose to 2.0% yoy. Meanwhile, CPI in the most populous state of North Rhine-Westphalia was unchanged at 1.9% yoy. Also from Germany, Gfk consumer confidence dropped to 10.8 in October, down from 0.9, below expectation of 11.0.

Eurozone confidence indicators generally improved in September. Business climate rose to 1.34, up from 1.08 and beat expectation of 1.12. Economic confidence rose to 113.0, up from 111.9, beat expectation of 112.0. Industrial confidence rose to 6.6 up from 5.0 and beat expectation of 5.1. Services confidence rose to 15.3, up from 15.1 and beat expectation of 15.0. Consumer confidence was finalized at -1.2.

Carney said BoE can't nullify Brexit impacts

BoE Governor Mark Carney said today that the central is unable to nullify the economic impact of Brexit. Carney pointed out that "the biggest determinants of the UK's medium-term prosperity will be the country's new relationship with the EU and the reforms it catalyses." And, "monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU." And Carney added that "carefully circumscribed independence is highly effective in delivering price and financial stability." However, BoE "cannot deliver lasting prosperity and it cannot solve broader societal challenges." 

BoE Chief Economist Andy Haldane said today that majority of the MPC members are "nearing the point" to hike interest rate. And he emphasized the positive side of it. He noted that "this would be a sign of the economy healing, and therefore adjusting to that healing process." Therefore, "rather than being a source of fear or trepidation, this ought to be a good news story about the economy proving resilient." Haldane's comments affirm the expectation of a rate hike by BoE in near term, possibly in November.

Brexit talks need months to move to next stage

Staying in UK, Brexit Secretary David Davis said that "decisive steps forward" were made in the latest round of negotiations with EU. He hailed that "this round was a vital one". And Davis urged EU officials to be pragmatic with the talks. EU negotiator Michel Barnier said "we have had a constructive week". However, Barnier emphasized that "further work is needed in coming weeks and coming months" on the resolving the standout issues.

Barnier acknowledged the "new dynamic" created by UK Prime Minister Theresa May's speech in Florence last week. And there were progress made on citizen rights. However, Barnier said UK is not in a position to identify its financial commitments to EU yet. And Barnier emphasized that "for the EU, the only way to reach sufficient progress is that all commitments taken at 28 are honoured at 28."

Kiwi stays weak after RBNZ stands pat

New Zealand Dollar remains the weakest one for the week after RBNZ rate decision. As widely anticipated, RBNZ left the OCR unchanged at 1.75% in September Policymakers downgraded the domestic growth outlook and suggested that the accommodative monetary policy would stay for a 'considerable period'. Thanks to the recent decline in New Zealand, driven by heightened political uncertainty, RBNZ tweaked its warning over currency strength. It noted that a lower exchange rate would "would help" raise tradables inflation. We expect RBNZ to keep the policy rate unchanged for the rest of the year, and likely through 2018. More in RBNZ Downgrades Growth Outlook While Keeping OCR At 1.75%

BoJ Kuroda cautiously upbeat on economy

BoJ Governor Haruhiko Kuroda reiterated his cautiously upbeat view on the economy. He expects expansions to be well balanced and are broadening He expressed confidence that recovery is likely to be highly sustainable. However, the question remains on the fact that "despite an expanding economy, prices continue to hover on a weak note." And therefore, BoJ is still committed to the massive stimulus program in form of yield curve control framework. It will still take much time for Japan to hit 2% inflation target.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3347; (P) 1.3403; (R1) 1.3444; More....

GBP/USD recovers mildly today but it's staying in corrective pattern from 1.3651. Intraday bias remains neutral first. We'd continue to expect strong support from 38.2% retracement of 1.2773 to 1.3651 at 1.3316 to contain downside and bring rally resumption. Break of 1.3651 will turn bias back to the upside for 1.3835 support turned resistance next. Break there will target 55 month EMA (now at 1.4405).

In the bigger picture, current development argues that the long term trend in GBP/USD has reversed. That is, a key bottom was formed back in 1.1946 on bullish convergence condition in monthly MACD. Current rise from 1.1946 will target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466 next. In any case, medium term outlook will now stay bull

Economic Indicators Update

USD/CHF - 0.9734

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although the greenback retreated to 0.9696 yesterday, as dollar found support there and has rebounded, suggesting another test of resistance at 0.9770-73 cannot be ruled out, however, break there is needed to signal recent upmove has resumed and revive bullishness for the move from 0.9421 low to to extend gain to 0.9800-10 but overbought condition should limit upside to 0.9840-50.

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below said support at 0.9696 would suggest top is possibly formed, bring test of 0.9681 support, break there would add credence to this view, bring correction of recent rise towards support at 0.9642 which is likely to hold on first testing.

GBP/USD - 1.3413

Original strategy :

Sell at 1.3500, Target: 1.3380, Stop: 1.3535

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.3500, Target: 1.3380, Stop: 1.3535

Position : -

Target :  -

Stop : -

As cable has recovered after intra-day brief fall to 1.3349 in London morning, suggesting consolidation above this level would be seen and recovery to 1.3435-40 is likely, however, reckon upside would be limited to 1.3470 and renewed selling interest should emerge around 1.3500-10, bring another decline later. A break of said support at 1.3349 would signal recent decline is still in progress and may extend weakness to previous resistance at 1.3329, then towards 1.3300. 

In view of this, would not chase this fall here and would be prudent to sell cable on further subsequent recovery as 1.3500 should hold. Above resistance at 1.3514 would defer and risk a stronger rebound to 1.3535-40 but resistance at 1.3571 should remain intact.

EUR/USD - 1.1772

Original strategy  :

Sell at 1.1810, Target: 1.1710, Stop: 1.1845

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1810, Target: 1.1710, Stop: 1.1845

Position : -

Target :  -

Stop : -

As the single currency has rebounded after holding above support at 1.1717, suggesting minor consolidation above this level would be seen and recovery towards resistance at 1.1811 cannot be ruled out, however, reckon renewed selling interest would emerge there and bring another decline later, below said support at 1.1717 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 resistance at 1.1811 should limit upside and bring another decline. 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). 

USD/JPY - 112.68

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Although the greenback staged a strong rebound after yesterday’s retreat to 112.38, break of this week’s high at 113.26 is needed to 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, bring correction later.

In view of this, would not chase this rise here and would be prudent to stand aside. Below 112.50 would prolong consolidation and bring another retreat to 112.38, however, only a drop below thios support would signal top has been formed, bring retracement of recent rise to the lower Kumo (now at 112.22) and then towards 111.75-80 but support at 111.47 should remain intact.

The USD/CAD is in a strong uptrend. However traders need to pay attention to Trade balance data release today which measures the difference in value between imported and exported goods during the reported month. From the current standpoint 1.2455-70 is the POC zone ( PPC, W H4, ATR pivot, 14.6) and during strong trend 14.6 is known to reject the price. However on a deeper retracement that might happen after the news depending on the actual result, the USD/CAD could drop to POC2 (D L4, previous week's high, EMA89, 38.2, W H3) 1.2370-95. Targets on a bounce are 1.2560 and 1.2630. 1.2325 needs to hold.

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Daily Camarilla Pivot (Very Strong Daily Resistance)

D L3 - Daily Camarilla Pivot (Daily Support)

D L4 - Daily H4 Camarilla (Very Strong Daily Support)

POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

CRUDE OIL - With the commodity bullish and resuming its broader medium term uptrend on Thursday, further strength is expected in the days ahead. On the downside, support resides at the 52.00 level where a break will expose the 51.50 level. A cut through here will set the stage for a run at the 51.00 level. Further down, support resides at the 50.50 level. On the upside, resistance resides at the 53.00 level. Further out, resistance comes in at the 53.50 level. A break above here will aim at the 54.00 level and then the 54.50 level followed by the 55.00 level. Its daily RSI is bullish and pointing higher suggesting further strength. All in all, CRUDE OIL remains biased to the upside medium term.