Sample Category Title

Daily Pivots: (S1) 0.9617; (P) 0.9667; (R1) 0.9747; More....

Intraday bias in USD/CHF remains neutral for the moment. On the upside decisive break of 0.9772 resistance 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 0.9420 low.

In the bigger picture, current development suggests that 0.9443 key support (2016 low) could be taken out firmly as down trend form 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) 1.3505; (P) 1.3546; (R1) 1.3621; More....

Intraday bias in GBP/USD remains neutral as consolidation from 1.3651 continues. In case of deeper fall, downside should be contained by 38.2% retracement of 1.2773 to 1.3651 at 1.3316 and bring rise resumption. Above 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, the strong break of 1.3444 key resistance now 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 bullish as long as 1.2773 support holds.

Retail sales in Canada rose in July, up 0.4% month-on-month, although slight downward revisions to the June figures broke what would have been a five month streak of increased spending. July's gains were entirely due to price increases however, as volumes declined 0.2%.

The two largest spending categories, motor vehicle and parts dealers (+0.8%) and food and beverage stores (+0.9%) saw solid increases in July. Offsetting these somewhat were declines in the furniture and home furnishings (-0.6%), electronics and appliances (-0.2%), and building material and garden equipment (-0.2%) categories. Sales elsewhere were generally up. Excluding car/parts dealers and gasoline sales, retail sales growth was a tick lower, at 0.3%.

Across the provinces, it was Quebec that drove the result, as sales rose 1.0% in July. Saskatchewan (+1.3%) and British Columbia (+0.7%) also saw decent sales growth, with the latter recording a 5th straight month of gains. Sales growth across the remaining provinces was mixed.

Key Implications

Canadians seem to have celebrated Canada Day by heading to a car dealership as new vehicle sales helped drive a respectable climb in retail sales in July. While the volume of goods sold was down a tick, the broader data evolution remains consistent with a healthy pace of GDP growth over the back half of the year.

Indeed, as discussed in our latest Quarterly Economic Forecast, consumer spending is likely to moderate from the hot pace seen at the start of the year. But, it is expected to remain an important driver of growth, supported by rising aggregate incomes generated by a healthy labour market.

With the July data likely to only partially reflect the impact of tighter monetary policy, today's data will likely be discounted somewhat as the Bank of Canada assesses the impacts of its actions. That said, with robust July wholesale trade figures released yesterday, and a modest uptick in inflation also reported this morning, the data continues to support further monetary tightening in the final quarter of the year.

Daily Pivots: (S1) 1.1886; (P) 1.1919 (R1) 1.1974; More...

EUR/USD is bounded in range of 1.1822/2091 so far and intraday bias stays neutral. Considering bearish divergence condition in 4 hour and daily MACD, break of 1.1822 should confirm near term reversal. In the case, intraday bias will be turned back to the downside through 1.1661 support. EUR/USD should then correct whole rise from 1.0569 and target 38.2% retracement of 1.0569 to 1.2091 at 1.1510. However, rebound from 1.1822/1837 and break of 1.2029 will resume the larger up trend to next key fibonacci level at 1.2516.

In the bigger picture, rise from medium term bottom at 1.0339 is still in progress for 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. However, it should be noted that there is no confirmation of trend reversal yet. That is, such rebound from 1.0399 could be a correction. And the long term fall fro 1.6039 (2008 high) could resume. Hence, we'd be cautious on strong resistance from 1.2516 to limit upside. But after all, break of 1.1661 is needed to indicate medium term topping. Otherwise, outlook will remain bullish in case of pull back.

Yen trades broadly higher today on resurgence of geopolitical risks. North Korea threatens to launch hydrogen bomb in Pacific Ocean, in response to US President Donald Trump's "total destruction" provocation, and new sanctions. But overall, Yen is the weakest one for the week so far with risk appetite and global monetary stimulus exit in the background. This is also reflected in Swiss Franc, which is the second weakest for the week. On the other hand, Euro reversed the post FOMC selloff and is occupying the top spot among major currencies. The common currency is also getting support from solid data. Dollar is firm too but the uncertainty over the tension with North Korea is limiting its strength.

Eurozone PMIs indicates broad-based upswing

PMI data from Eurozone are generally better than market expectation. Eurozone PMI manufacturing rose to 58.2 in September, up from 57.4 and beat expectation of 57.2. Eurozone PMI services rose to 55.6, up from 54.7 and above expectation of 54.8. Germany PMI manufacturing rose to 60.6 in September, up from 59.3, and beat expectation of 59.0. Germany PMI services rose to 55.6, up from 53.5, beat expectation of 53.8. France PMI manufacturing rose to 56.0, up from 55.8, beat expectation of 55.5. France PMI services rose to 57.1, up from 54.9, beat expectation of 54.8. IHS Markit chief business economist Chris Williamson noted that "it was a super manufacturing performance. We are well-placed for a strong fourth quarter as well ... in this broad-based upswing."

Japan PM Abe to announce snap election next Monday

In Japan, rumors continue to heat up, on Prime Minister Shinzo Abe to dissolve the parliament this month and call for a snap election on October 22. Abe would be holding a news conference on Monday afternoon Japan time to announce it. It's reported that Abe would also make use the opportunity to delay the timing to achieve primary budget surplus, for a few years from fiscal 2020. IMF mission chief for Japan said that BOJ will likely lag behind Fed and ECB in normalization of monetary policy. But he noted that "his is appropriate, as monetary policy is focused on domestic conditions and domestic conditions are different among countries and regions." And, a gradual increase in sales tax, together with control social security spending would help the government to achieve medium term fiscal reform.

Loonie softer after mixed data

Canadian Dollar trades softer after mixed data. Headline CPI rose 0.1% mom, 1.4% yoy in August, below expectation of 0.2% mom, 1.5% yoy. But that was an uptick from July's 0.0% mom, 1.2% yoy. CPI core common rose to 1.5% yoy, CPI core trim rose to 1.4% yoy, CPI core mean was unchanged at 1.7% yoy. Retail sales rose 0.4% mom in July, above expectation of 0.3% mom. But ex-auto sales rose 0.2%, well below expectation of 0.4% mom.

In the weekend - New Zealand and Germany elections

The upcoming New Zealand election would be a tight race between the incumbent National Party and Labor Party. Opinion polls suggest that supports for both parties are at around 40%. As such none of them would be able to a form government without entering coalition with smaller parties. This is such uncertainty that has increased the volatility of New Zealand dollar of late. Maintaining the status quo – a minority government led by Nationals- would be the most NZD-favorable while a Labor + Green+ NZ First trio would lead to an immediate, but short-term selloff in the currency. More in New Zealand Election: Change in Government is NZD-Negative in Near-Term

Although Chancellor Angela Merkel's Christian Democratic Union (CDU) and its sister party, the Christian Socialist Union (CSU), have been comfortably leading in polls. There still are a number of uncertainties in the upcoming German election. While Merkel is on the way to be the Chancellor for a fourth, and the last, term, her party is unlikely to form a government without forming coalition with other party(ies). While the Grand Coalition (CDU/CSU+SPD as the junior partner), just like the one we have had since 2013 and between 2005-2009, is the most favorable to the economy and the financial markets, it cannot be seen as a done deal. Meanwhile, rising supports for the populist Alternative for Germany (AfD) signal that a far-right party would enter the parliament for the first time since WWII. AfD has pledged to promote its anti-EU and anti-immigrants rhetoric in the parliament as it might probably become the biggest opposition party in case of a Grand Coalition. Moreover, the parliament is prone to be more fragmented with six parties in 2017-term, compared with four previously. More in German Election: Not as Boring as You Think

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1886; (P) 1.1919 (R1) 1.1974; More...

EUR/USD is bounded in range of 1.1822/2091 so far and intraday bias stays neutral. Considering bearish divergence condition in 4 hour and daily MACD, break of 1.1822 should confirm near term reversal. In the case, intraday bias will be turned back to the downside through 1.1661 support. EUR/USD should then correct whole rise from 1.0569 and target 38.2% retracement of 1.0569 to 1.2091 at 1.1510. However, rebound from 1.1822/1837 and break of 1.2029 will resume the larger up trend to next key fibonacci level at 1.2516.

In the bigger picture, rise from medium term bottom at 1.0339 is still in progress for 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. However, it should be noted that there is no confirmation of trend reversal yet. That is, such rebound from 1.0399 could be a correction. And the long term fall fro 1.6039 (2008 high) could resume. Hence, we'd be cautious on strong resistance from 1.2516 to limit upside. But after all, break of 1.1661 is needed to indicate medium term topping. Otherwise, outlook will remain bullish in case of pull back.

Economic Indicators Update

USD/CHF - 0.9693

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

The greenback retreated after rising to 0.9748 earlier this week and consolidation below this level would be seen and pullback towards the lower Kumo (now at 0.9654) cannot be ruled out, however, reckon previous minor resistance at 0.9630 would limit downside and price should stay well above indicated support at 0.9589, bring rebound later.

On the upside, whilst recovery to the Kijun-Sen (now at 0.9708) cannot be ruled out, reckon upside would be limited to 0.9720-25 and said resistance at 0.9748 should hold, bring retreat later. In the event dollar is able to penetrate said resistance at 0.9748, this would revive 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 another previous resistance at 0.9773. As near term outlook is still mixed, would be prudent to stand aside for now.

GBP/USD - 1.3572

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although cable retreated after edging higher to 1.3596 and consolidation with mild downside bias is seen for weakness towards the Kijun-Sen (now at 1.3534), below 1.3500 is needed to revive near term bearishness and signal the rebound from 1.3452 has ended, bring further fall to 1.3470, then test of said support. Looking ahead, only a drop below 1.3452 would add credence to our view that top has been formed at 1.3658 earlier this week, bring retracement of recent rise to 1.3400-05 (50% Fibonacci retracement of 1.3153-1.3658).

On the upside, above 1.3600 would extend gain to 1.3620-25, however, still reckon said this week’s high at 1.3658 would hold from here, bring retreat later. Only a break above said resistance at 1.3658 would signal recent upmove has resumed and extend gain to 1.3690-00 later. As near term outlook is still mixed, would be prudent to stand aside for now.

EUR/USD - 1.1969

Original strategy  :

Sold at 1.1970, Target: 1.1870, Stop: 1.2005

Position : - Short at 1.1970

Target :  - 1.1870

Stop : - 1.2005

New strategy  :

Hold short entered at 1.1970, Target: 1.1870, Stop: 1.2005

Position : - Short at 1.1970

Target :  - 1.1870

Stop : - 1.2005

As the single currency found good support at 1.1861 and has staged a strong rebound, suggesting consolidation above this level would be seen, however, as long as 1.2005 holds, mild downside bias remains for another decline, below 1.1915-20 would bring test of 1.1885-90 but break of latter level is needed to signal the rebound from 1.1861 has ended, bring another fall to this level, then retest of previous support at 1.1838 which is likely to hold on first testing.

In view of this, we are holding on to our short position entered at 1.1970. Above 1.2000 would dampen our bearishness and risk test of this week’s high at 1.2035 but only break there would shift risk back to upside and extend the rebound from 1.1838 to 1.2060-70 first.

USD/JPY - 112.13

Original strategy  :

Bought at 111.70, Target: 112.70, Stop: 111.60

Position :  - Long at 111.70

Target :  - 112.70

Stop : - 111.60

New strategy  :

Hold long entered at 111.70, Target: 112.70, Stop: 111.60

Position :  - Long at 111.70

Target :  - 112.70

Stop : - 111.60

Although the greenback retreated after rising to 112.72 yesterday and consolidation below said resistance would be seen initially, reckon 111.65 would contained downside and bring another rise later towards said resistance but only break there would confirm recent upmove has resumed and extend further gain 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 hold from here, bring retreat later.

In view of this, we are holding on to our long position entered at 111.70. Below said support at 111.65 would risk weakness to 111.40-45 but break there is needed to signal a temporary top has been formed at 112.72, bring retracement of recent rise towards support at 111.11 first.

The British pound continues to push higher against the U.S dollar, ahead of a key speech by British Prime Minister Theresa May on the terms of Brexit deal with European Union in Florence, Italy.

Yesterday, the GBPUSD pair reversed Wednesday's losses, after breaking back above the key 1.3515 technical level, creating a surge in buying interest back towards the 1.3600 region.

The GBPUSD pair remains strongly bullish in intraday trading while price-action is above the 1.3553 level, which represents the pairs weekly pivot point.

Key upside resistance is currently located at 1.3618, 1.3633 and the currently yearly high, at 1.3657. Above the yearly price-high, further resistance is found at 1.3680 and 1.3710.

To the downside, key intraday technical support is found at the 61.8 Fibonacci retracement of Wednesday daily range, at 1.3569 and the weekly pivot at 1.3553.

Below 1.3553, further support is seen at 1.3538 and 1.3515, with critical weekly support, at 1.3480.