Sample Category Title

Weekly
    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 7 Mar 2017
    •    Trend bias: Sideways

Daily
    •    Last Candlesticks pattern: Morning star
    •    Time of formation: 9 May 2017
    •    Trend bias: Near term up

USD/CHF – 0.9690

Although the greenback found support at 0.9565 and surged again last week, lack of follow through buying and the subsequent retreat from 0.9748 (last week’s high) suggest consolidation below this level would be seen and pullback to the Tenkan-Sen (now at 0.9657), then 0.9600-10 is likely, however, break of said support at 0.9565 is needed to revive our bearishness and signal top is formed, bring weakness to 0.9520-25 and 0.9500. Looking ahead, dollar needs to penetrate 0.9455-60 to signal the rebound from 0.9421 has ended, bring retest of this level, break there would confirm recent decline from 1.0344 (2016 top) has resumed and extend weakness to 0.9390-00, then towards 0.9330-35.

On the upside, expect recovery to be limited to 0.9715-20 and said resistance at 0.9748 should hold. Only a break of this last week’s high would signal the rise from 0.9421 low is still in progress for at least a retracement of early decline to 0.9765-73 (50% Fibonacci retracement of 1.0108-0.9421 and previous resistance), having said that, dollar needs to penetrate this level to signal the decline from 1.0344 has ended, bring further subsequent gain to 0.9845-50 (61.8% Fibonacci retracement of 1.0108-0.9421), however, reckon upside would be limited to 0.9900-10 and price should falter well below psychological resistance at 1.0000.

Recommendation: Stand aside for this week.

On the weekly chart, although the greenback edged higher last week, dollar continued meeting resistance just below the Kijun-Sen (now at 0.9765), price needs to penetrate previous resistance at 0.9773 to retain near term bullishness and add credence to our view that low has been formed at 0.9421, bring retracement of recent decline to 0.9845-50 (61.8% Fibonacci retracement of 1.0108-0.9421), then test of the lower Kumo (now at 0.9894) but upside should be limited to the upper Kumo (now at 0.9970), price should falter well below resistance at 1.0100-08.

On the downside, whilst initial pullback to the Tenkan-Sen (now at 0.9597) cannot be ruled out, reckon last week’s low at 0.9580 would hold and bring another rebound. Only below 0.9565 support would signal the rebound from 0.9421 has ended, bring further fall to 0.9500 but break of 0.9455-60 is needed to retain bearishness and bring retest of this level, break there would extend recent decline from 1.0344 top to 0.9350, then towards previous support at 0.9259, however, oversold condition should prevent sharp fall below 0.9220 (38.2% Fibonacci retracement of 0.7401-1.0344) and reckon 0.9150 would hold from here, risk from there is seen for a rebound later.

USD/CHF - 0.9690

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9673

Kijun-Sen level                    : 0.97694

Ichimoku cloud top                 : 0.9708

Ichimoku cloud bottom              : 0.9701

New strategy  :

Buy at 0.9675, Target: 0.9775, Stop: 0.9640

Position : -

Target :  -

Stop : -

Although the greenback dropped to as low as 0.9642 yesterday, lack of follow through selling on break of previous resistance at 0.9649 and the subsequent rebound suggest consolidation with mild upside bias would be seen, hence gain to 0.9720 cannot be ruled out, however, break of last week’s high at 0.9748 is needed to retain bullishness and extend recent rise from 0.9421 low to 0.9761-66 (50% Fibonacci retracement of 1.0100-0.9421 and previous resistance), then test of another previous resistance at 0.9773.

In view of this, we are looking to buy dollar on dips. Below said support at 0.9642 would abort and signal the fall from 0.9748 is still in progress, then further weakness to 0.9620-25 would follow but oversold condition should limit downside to indicated support at 0.9589, bring rebound later.

GBP/USD - 1.3490

Most recent candlesticks pattern   : N/A

Trend                                 : Up

Tenkan-Sen level                 : 1.3477

Kijun-Sen level                    : 1.3501

Ichimoku cloud top              : 1.3523

Ichimoku cloud bottom        : 1.3515

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As cable has recovered after falling to 1.3432 yesterday, suggesting consolidation above this level would be seen and corrective bounce to 1.3515-20 and 1.3530-35 cannot be ruled out, however, break of resistance at 1.3571 is needed to signal low has been formed there, bring test of 1.3596, once this level is penetrated, this would signal the correction from 1.3658 top has ended, bring subsequent gain to 1.3620-25 first. 

On the downside, below 1.3450 would signal the erratic fall from 1.3658 is still in progress for another test of said support at 1.3432, below there would bring retracement of recent rise towards 1.3400-05 (50% Fibonacci retracement of 1.3153-1.3658). As near term outlook is still mixed, would be prudent to stand aside for now.

Asia Summary

Asian equity markets opened mostly to the downside as tension on the Korean peninsula brought back risk aversion and a flow to safe haven assets after North Korea foreign minister declared that the N. Korea can shoot down US warplanes flying in international airspace and described Trump’s recent comments as a declaration of war. Commodities continue to rise being led by copper. Korean banks remain under pressure as South Korea FSC announced financial reforms for retail customers, including changes to interest rates on overdue loan payments. Chinese real estate names came off yesterday’s lows on fresh curbs announce over the weekend.

The yuan declined to the lowest level against its currency basket in nearly 4-weeks as the PBOC weakens the daily fix. In an SCMP piece it is noted that China could be heading towards a free-floating currency after a group of economists, including officials from PBoC suggested the time was ripe for such a move.

As expected late yesterday Japan PM Abe called for a snap election. Japan Fin Min Aso said that should call for election if planning big changes to taxes. He also warned that it will be difficult to meet the FY20 primary surplus goal. NZD/USD continued to be weaker after its rapid decent yesterday on election results.

Key economic data

(NZ) NEW ZEALAND AUG TRADE BALANCE (NZD): -1.24B V -0.83BE; YTD: -3.2B V -2.91BE

(KR) South Korea Sept Consumer Confidence: 107.7 v 109.9 prior (5-month low)

(JP) JAPAN AUG PPI SERVICES Y/Y: 0.8% V 0.6%E

(NZ) New Zealand Aug RBNZ New Residential Mortgage Lending y/y: -16% v -24% prior

Speakers and Press

China/Hong Kong

(CN) China could be heading towards a free-floating currency after a group of economistds, including officials from PBoC suggested the time was ripe for such a move - SCMP

Korea

(KR) South Korea Financial Services Commission (FSC) Chairman Jong-Ku announces financial reforms for retail customers, including changes to interest rates on overdue loan payments

Japan

(JP) Bank of Japan (BOJ) Jul Meeting Minutes: Most: Vital for Japan that BOJ achieves 2% target

(JP) Japan Economic Revitalization Min Motegi: Japan not at the point to consider sales tax above 10%, most important issue it to raise Japan potential growth

(JP) Moody's: Japan elections unlikely to have implications for sovereign rating; refreshed mandate for reform would be credit positive

New Zealand/Australia

(NZ) New Zealand Shadow Board: See little urgency for RBNZ to raise rates

(AU) ASX will likely suspend most of Australian listed gold sector if WA government budget with new gold royalty increase is passed –

Australian

(AU) Australia Treasurer Morrison: Final budget outcome A$4.4B better than forecasted, final budget A$33.2B

US

(US) Fed's Kashkari (dove, voter): Do not see signs of economy overheating; do not see inflation taking off no need to tap breaks; Fed should not be under any pressure to raise rates

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.4%, Hang Seng -0.1%; Shanghai Composite +0.1%, ASX200 -0.1%, Kospi -0.2%

Equity Futures: S&P500 -0.1%; Nasdaq100 -0.0%, Dax -0.2%, FTSE100 +0.0%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.1862-1.1846; JPY 111.80-111.50; AUD 0.7948-0.7922;NZD 0.7277-0.7236

Dec Gold +0.4% at $1,316/oz; Nov Crude Oil +0.2% at $52.34/brl; Dec Copper +0.9% at $2.96/lb

(AU) Australia sells A$150M in 2030 indexed bonds; avg yield 1.0024%; bid-to-cover 3.34x

(CN) PBOC OMO: To inject CNY50B in 14 and 28-day reverse repos v injected CNY200B in 14 and 28-day reverse repo prior; drains net CNY80B

USD/CNY (CN) China PBOC sets yuan reference rate at 6.6076 v 6.5945 prior

(JP) Japan MoF sells ¥499.4B v ¥500B in 0.90% 40-yr bonds; avg yield 1.015%; bid to cover: 3.24x (highest bid-to-cover since 2015)

Equities notable movers

Australia/New Zealand

KMD.NZ Reports FY17 (NZ$) Net 38.0M v 33.5M y/y; EBIT 57.0M v 56Me; Rev 445.3M v 425.6M y/y; +7.5%

Japan

8303.JP Anbang ends talks to acquire stake in Shinsei - FT

South Korea

023530.KR Trading to be halted effective Sept 28th before being relisted as Lotte Holdings; +8%

010140.KR Awarded KRW1.12T contract for containership for Europe; +7%

EUR/USD - 1.1854

Most recent candlesticks pattern   : N/A

Trend                      : Sideways

Tenkan-Sen level              : 1.1849

Kijun-Sen level                  : 1.1884

Ichimoku cloud top             : 1.1938

Ichimoku cloud bottom      : 1.1934

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

The single currency has remained under pressure after yesterday’s anticipated decline, suggesting another leg of corrective decline from 1.2093 top is underway and mild downside bias remains for one more fall towards 1.1800-10, however, loss of near term downward momentum should prevent sharp fall below 1.1770-75 and reckon 1.1750 would hold, bring rebound later. 

In view of this, would not chase this fall here and would be prudent to stand aside for now. Above the Kijun-Sen (now at 1.1884) would bring recovery to 1.1910-20 but reckon upside would be limited to the Ichimoku cloud (now at 1.1934-38) and 1.1980-85 should hold. 

USD/JPY - 111.55

Most recent candlesticks pattern   : N/A

Trend                      : Up

Tenkan-Sen level              : 111.65

Kijun-Sen level                  : 111.90

Ichimoku cloud top             : 112.19

Ichimoku cloud bottom      : 112.18

Original strategy  :

Bought at 111.70, stopped profit at 111.90

Position :  - Long at 111.70

Target :  -

Stop : - 111.90

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

The greenback met renewed selling interest at 112.53 yesterday and has slipped again, suggesting a temporary top has possibly been formed at 112.72 and downside risk remains for weakness towards 111.11-13 (previous support and 50% Fibonacci retracement of 109.55-112.72), however, break there is needed to add credence to this view, bring retracement of recent rise towards 110.75-80 (61.8% Fibonacci retracement) but reckon 110.60-65 would hold on first testing.

On the upside, whilst recovery to the Kijun-Sen (now at 111.90) cannot be ruled out, reckon the upper Kumo (now at 112.23) would limit upside and said resistance at 112.53 should hold, bring another decline later. Only a break of 112.53 resistance would revive bullishness and bring retest of 112.72 (last week’s high), break there would extend recent upmove to 112.90-00, then towards 113.25-30 (1.236 times projection of 107.32-111.04 measuring from 109.55), having said that, previous chart resistance at 113.58 would remain intact.

For the 24 hours to 23:00 GMT, the AUD declined 0.29% against the USD and closed at 0.7937.

On the data front, in China, Australia’s largest trading partner, the leading economic index advanced 1.1% on a monthly basis in August. The index had climbed 0.9% in the previous month.

LME Copper prices rose 0.2% or $11.0/MT to $6416.0/MT. Aluminium prices declined 0.4% or $9.0/MT to $2128.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7945, with the AUD trading 0.1% higher against the USD from yesterday’s close.

The pair is expected to find support at 0.7922, and a fall through could take it to the next support level of 0.7899. The pair is expected to find its first resistance at 0.7969, and a rise through could take it to the next resistance level of 0.7993.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the EUR declined 0.6% against the USD and closed at 1.1856, following comments from the European Central Bank (ECB) Chief, Mario Draghi, as well as outcome of Germany's general election.

Yesterday, the ECB President, in a speech in Brussels, expressed confidence that inflation will gradually achieve the central bank's target, but argued that “ample” accommodation from the central bank was still needed to bring inflation to the target in a sustainable way. Draghi also highlighted risks emerging from volatile Euro to the medium-term inflation outlook.

On the data front, Germany's Ifo business climate index unexpectedly eased to a level of 115.2 in September, defying market expectations of a rise to a level of 116.0, amid concerns over recent strength in the Euro and uncertainty linked to the general elections. In the previous month, the index had registered a level of 115.9. Further, the nation's Ifo business expectations index recorded an unexpected drop to a level of 107.4 in September, confounding market expectations for an advance to a level of 108.0 and after recording a reading of 107.9 in the previous month. Additionally, the nation's Ifo current assessment index surprisingly dropped to a level of 123.6 in September, compared to a level of 124.6 in the prior month.

In economic news, the US Chicago Fed national activity index dropped more-than-anticipated to a level of -0.31 in August, compared to a revised reading of 0.03 in the previous month, while markets were expecting the index to fall to a level of -0.25. On the other hand, the nation's Dallas Fed manufacturing business index recorded an unexpected rise to a level of 21.3 in September, defying market consensus for a drop to a level of 11.5 and following a reading of 17.0 in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.1858, with the EUR trading slightly higher against the USD from yesterday's close.

The pair is expected to find support at 1.1814, and a fall through could take it to the next support level of 1.1771. The pair is expected to find its first resistance at 1.1919, and a rise through could take it to the next resistance level of 1.1981.

Amid a lack of major macroeconomic releases in the Euro-zone today, investors will focus on a speech by the Federal Reserve Chair, Janet Yellen, scheduled later in the day. Market participants would also eye the US consumer confidence index for September and new home sales data for August, scheduled to release later in the day.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the GBP declined 0.32% against the USD and closed at 1.3482.

In the Asian session, at GMT0300, the pair is trading at 1.3480, with the GBP trading marginally lower against the USD from yesterday's close.

The pair is expected to find support at 1.3417, and a fall through could take it to the next support level of 1.3354. The pair is expected to find its first resistance at 1.3557, and a rise through could take it to the next resistance level of 1.3634.

Going ahead, investors would look forward to UK's BBA mortgage approvals data for August, slated to release in a few hours.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.53% against the JPY and closed at 111.74.

On the data front, Japan’s final leading economic index dropped less than initially estimated to a level of 105.2 in July. The index had recorded a level of 105.9 in the previous month, while the preliminary figures had recorded a fall to a level of 105.0. Further, the nation’s final coincident index dropped to a level of 115.7 in July, compared to a flash print indicating a fall to a level of 115.6. In the previous month, the coincident index had registered a reading of 117.1.

In the Asian session, at GMT0300, the pair is trading at 111.63, with the USD trading 0.1% lower against the JPY from yesterday’s close.

The Japanese Yen gained ground against the USD, as fresh threats from North Korea overnight boosted demand for the safe-haven currency.

Separately, minutes of the Bank of Japan’s (BoJ) July meeting showed that policymakers expressed confidence over achieving the central bank’s inflation target and reiterated the need to stick with their current policy framework despite the recent weakness in consumer inflation.

The pair is expected to find support at 111.29, and a fall through could take it to the next support level of 110.96. The pair is expected to find its first resistance at 112.15, and a rise through could take it to the next resistance level of 112.68.

Going ahead, traders await the release of Japan’s small business confidence index for September, slated to release tomorrow.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.