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For the 24 hours to 23:00 GMT, the USD rose 0.1% against the JPY and closed at 112.47.

In the Asian session, at GMT0300, the pair is trading at 111.70, with the USD trading 0.68% lower against the JPY from yesterday’s close.

The pair is expected to find support at 111.33, and a fall through could take it to the next support level of 110.95. The pair is expected to find its first resistance at 112.40, and a rise through could take it to the next resistance level of 113.09.

Next week, investors would look forward to Japan’s national consumer price index, jobless rate, flash Nikkei manufacturing PMI and the small business optimism index.

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

For the 24 hours to 23:00 GMT, the USD rose 0.07% against the CHF and closed at 0.9707.

In economic news, data revealed that Switzerland's trade surplus narrowed to a level of CHF2.17 billion in August, as imports grew faster than exports. The nation registered a revised surplus of CHF3.49 billion in the previous month.

Separately, the State Secretariat for Economic Affairs (SECO) lowered Switzerland's economic growth forecast to 0.9% for this year, down from 1.4% projected earlier.

In the Asian session, at GMT0300, the pair is trading at 0.9671, with the USD trading 0.37% lower against the CHF from yesterday's close.

The pair is expected to find support at 0.9643, and a fall through could take it to the next support level of 0.9616. The pair is expected to find its first resistance at 0.9723, and a rise through could take it to the next resistance level of 0.9776.

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

For the 24 hours to 23:00 GMT, the USD marginally declined against the CAD and closed at 1.2329.

In the Asian session, at GMT0300, the pair is trading at 1.2314, with the USD trading 0.12% lower against the CAD from yesterday's close.

The pair is expected to find support at 1.2294, and a fall through could take it to the next support level of 1.2274. The pair is expected to find its first resistance at 1.2351, and a rise through could take it to the next resistance level of 1.2388.

Moving ahead, market participants will keep a close watch on Canada's inflation figures for August as well as retail sales data for July, both due to release later today.

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

Global Markets:

• Asian stock markets: Nikkei down 0.34 %, Shanghai Composite fell 0.48 %, Hang Seng dropped 0.91 %, ASX 200 rose 0.34 %
• Commodities: Gold at $1301.52 (+0.14 %), Silver at $17.11 (+0.53 %), WTI Oil at $50.62(+0.56 %), Brent Oil at $56.41 (+0.14 %)
• Rates: US 10-year yield at 2.25, UK 10-year yield at 1.37, German 10-year yield at 0.45

News & Data:

• (GBP) Public Sector Net Borrowing 5.1 B vs 6.5 B expected
• (CAD) Wholesale Sales m/m 1.5 % vs -0.7 % expected
• (USD) Unemployment Claims 259 K vs 302 K expected
• (USD) Philly Fed Manufacturing Index 23.8 vs 17.3 expected
• (USD) CB Leading Index m/m 0.4 % vs 0.3 % expected
• (USD) Natural Gas Storage 97 B vs 93 B expected
• U.S. jobless claims fall; hurricanes still affecting data – RTRS
• S&P downgrades China, says rising debt is stoking economic, financial risks – WSJ
• "I will surely and definitely take the mentally deranged U.S. dotard with fire"- North Korean leader Kim Jong-un saying of Trump

Markets Update:

Equity markets across the Asia-Pacific region were down on Friday, with stocks in Japan reversing early gains after a report that North Korea could respond to fresh sanctions with a hydrogen bomb in the Pacific. While China-related stocks declined on a credit-rating downgrade. The yen and gold advanced.

USDJPY is currently seen trading around 111.79 as The Japanese yen gained over 0.7 percent against the US dollar, advancing the most in more than two weeks as the pair traded down to lows of 111.65 booking 50+ point loss on the session. Similar to the USDJPY, all Yen crosses were generally lower.

AUDUSD continued its down trend dropping down as low as 0.7910 and is currently seen trading at 0.7925 after recovering partially. The Australian dollar added to losses triggered by a tumble in iron ore prices and dovish language from the nation’s central bank governor. The Aussie lost 0.1 percent against the US Dollar earlier in the session, this is in continuation to the 1.3 percent drop seen on Thursday.

EUR/USD is currently seen trading steadily around 1.1958 as the Euro added 0.1 percent against the US Dollar. However, the Euro is still 0.8 percent lower for the week overall. The dollar index, which tracks the dollar against a basket of currencies is down 0.2 percent and is currently valued at 92.01.

Upcoming Events:

• All Day – (NZD) Parliamentary Elections
• 07:00 GMT – (EUR) French Flash Manufacturing PMI
• 07:00 GMT – (EUR) French Flash Services PMI
• 07:30 GMT – (EUR) German Flash Manufacturing PMI
• 07:30 GMT – (EUR) German Flash Services PMI
• 08:00 GMT – (EUR) Flash Manufacturing PMI
• 08:00 GMT – (EUR) Flash Services PMI
• 12:30 GMT – (CAD) CPI m/m
• 12:30 GMT – (CAD) Core Retail Sales m/m
• 12:30 GMT – (CAD) Common CPI y/y
• 12:30 GMT – (CAD) Median CPI y/y
• 12:30 GMT – (CAD) Retail Sales m/m
• 12:30 GMT – (CAD) Trimmed CPI y/y

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.

EUR/USD

The value of the EUR strengthened on Thursday, consequently erasing 50% of Wednesday’s Fed-induced losses. As the US dollar found refuge beneath USDX weekly resistance at 11854, the single currency conquered both the 1.19 handle and September’s opening level at 1.1913, allowing H4 price to shake hands with the mid-level resistance marked at 1.1950.

Aside from dollar shorts, we also believe this recent upsurge may be a product of buyers defending weekly support at 1.1871, alongside the pair trading in-line with the overall trend. With this in mind, and assuming 1.1950 is consumed today, the unit will likely gravitate north to reconnect with the large psychological band 1.20.

For those considering shorts from 1.20, be prepared for the possibility of a fakeout. Directly above sits a H4 Quasimodo resistance at 1.2021, shadowed closely by weekly resistance at 1.2044. Both levels, in our opinion, are ideal candidates to help facilitate a fakeout above 1.20.

Suggestions: Instead of placing sell orders at 1.20, we will be looking for evidence that a fakeout has taken place before pulling the sell trigger. An ideal scenario would be for H4 price to print a bearish selling wick (as drawn on the chart) that pierces through 1.20, taps the noted H4 Quasimodo and closes lower. Should this trade come to fruition, stops are to be placed above the fakeout candle’s wick and the initial take-profit level would be 1.1950.

Data points to consider: EUR Manufacturing figures released between 8-9am; ECB President Draghi speaks at 9am GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.20 region ([waiting for a fakeout of this number is advised before selling] stop loss: ideally beyond the fakeout candle’s wick).

GBP/USD

From the weekly timeframe this morning, we can clearly see that the buyers and sellers remain undecided as price trades mid-range amid resistance at 1.3683 and a broken Quasimodo line coming in at 1.3371.

Across on the H4 timeframe price briefly found refuge beneath the 1.35 handle during London’s morning segment yesterday, even printing a reasonably nice-looking bearish selling wick. That was, of course, until the US buyers entered the fray, taking price up to highs of 1.3581 in one fell swoop.

Sellers, in our humble view, are very likely weak around the nearby 1.36 handle – just take a look at the size of Wednesday’s Fed-induced whipsaw through this psychological boundary! It is doubtful any sellers here survived that move.

Suggestions: Put simply, with USDX weekly sellers trading from resistance at 11854, and GBP weekly chart showing room to advance as far as resistance at 1.3683, a long above the 1.36 handle could be an option today. To take advantage of this potential move north, one could either buy the breakout or conservatively wait to see if price retests 1.36 as support, and buy on the condition that H4 price chalks up a reasonably sized H4 bull candle in the shape of a full, or near-full-bodied candle.

Data points to consider: UK Prime Minister May speaks sometime today.

Levels to watch/live orders:

• Buys: Watch for H4 price to engulf 1.36 and then look to trade any retest seen thereafter ([waiting for a reasonably sized H4 bullish candle to form following the retest – preferably a full, or near-full-bodied candle – is advised] stop loss: ideally beyond the candle’s tail).
• Sells: Flat (stop loss: N/A).

AUD/USD:

During the course of yesterday’s sessions, the commodity currency continued to sag against the US dollar following RBA’s Lowe’s speech at the American Chamber of Commerce in Australia. The move, as you can see, ended with H4 price running through bids at September’s opening level drawn from 0.7939, which is now acting resistance.

From a technical standpoint, it is highly likely that the Aussie will resume downside today at least until the pair reaches the 0.79 handle. This is largely due to weekly price showing room to extend down to a support area at 0.7849-0.7752, and daily price recently closing below support at 0.7955 (now acting resistance).

Suggestions: To trade from 0.7939, a stop not exceeding 15 pips is required should you target 0.79 to take profits. This will then provide at least two times one’s risk should the trade achieve its target. To find such a small stop from a H4 level, we would advise drilling down to the lower timeframes and looking to pin down a setup from that region (see the top of this report for ideas on how to utilize lower-timeframe action).

Data points to consider: No high-impacting news on the docket today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.7939 region ([waiting for lower-timeframe confirmation to form is advised] stop loss: dependent on where one confirms the area).

USD/JPY

Although the USD/JPY pair posted a gain on Thursday, H4 price action was relatively subdued around the underside of supply penciled in at 112.86-112.55.The highly anticipated BoJ meeting turned out to be a non-event, after the bank decided to leave its monetary policy unchanged.

Looking over to the weekly timeframe, we can clearly see the bulls look poised to challenge the supply area at 115.50-113.85. In conjunction with the weekly timeframe, daily price recently crossed above resistance coming in at 111.91 and shows little resistance stopping price from reaching trendline resistance extended from the high 115.50 (intersects with the aforementioned weekly supply area).

Suggestions: To our way of seeing things, the only barrier bolstering the current H4 supply is the weekly USDX resistance at 11854. Both the weekly and daily charts on the USD/JPY, however, suggest further buying is likely to take place. In addition to this, we have July’s opening level at 112.09, followed closely by the 112 handle lurking just below the current supply! Therefore, we will not be taking shorts in this market right now.

A break above the current H4 supply area would, as far as we can see, immediately open up the door to 113, and another H4 supply seen at 113.57-113.38 (not seen on the screen). So, even though there’s a good chance further upside is likely in this market, buying beyond the current H4 supply is also somewhat restricted for the time being.

Data points to consider: No high-impacting news on the docket today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

USD/CAD

In a similar fashion to the USD/JPY, the USD/CAD saw little change on Thursday, with the unit spending the majority of the day hugging the underside of a H4 mid-level resistance at 1.2350. As we highlighted in yesterday’s report, both the H4 supply seen above at 1.2415-1.2379 and the 1.2350 barrier are located within the walls of a daily resistance area coming in at 1.2303-1.2423. However, before we all get too excited and punch the sell button, it might be worth noting that weekly price shows room to extend above the daily area to tap a long-term weekly trendline resistance extended from the low 0.9633.

Suggestions: Given the threat of further upside on the weekly scale, the team is reluctant to sell from current prices. An area we would be interested in selling, however, is the H4 supply seen at 1.2491-1.2461. Not only is it surrounded by both September/August’s opening levels at 1.2497/1.2481 and the 1.25 handle, it also intersects nicely with the noted weekly trendline resistance.

As H4 price could potentially fake above 1.2491-1.2461 to attack offers at 1.25, nevertheless, we would advise waiting for a reasonably sized H4 bear candle to take shape from here (preferably a full, or near-full-bodied candle), before pulling the trigger.

Data points to consider: Canadian inflation and retail sales figures scheduled to be released at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.2491-1.2461 area ([waiting for a reasonably sized H4 bearish candle to form – preferably a full, or near-full-bodied candle – is advised] stop loss: ideally beyond the candle’s wick).

USD/CHF

In recent dealings, H4 price put in a top at 0.9747 and shortly after collapsed back below the 0.97 boundary. Near-term, this opens up the path south down to August’s opening base line at 0.9672, followed closely by the support area coming in at 0.9647-0.9633.

Also of particular interest is daily price has aggressively punctured the top edge of supply drawn from 0.9699-0.9641 and opened up the possibility for further upside to resistance at 0.9770. What’s also interesting is that we can also see weekly price closing in on the weekly trendline resistance taken from the low 0.9257.

Suggestions: Technically speaking, although H4 action is now sub 0.97 both the weekly and daily charts show room for the market to extend north.

However, as we mentioned in Thursday’s analysis, instead of trying to long a market which is so close to testing weekly/daily structures, you could simply wait for price to challenge the H4 Quasimodo resistance at 0.9759 and look to sell. Positioned just 10 pips beneath daily resistance at 0.9770 and intersecting with a weekly trendline resistance this H4 level is, in our opinion, enough to warrant a sell without the need for additional confirmation.

Data points to consider: No high-impacting news on the docket today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.9759 area (stop loss: 0.9776).

DOW 30

Going into the early hours of Thursday’s session, US equities began paring gains. Shaped by three relatively strong H4 bearish candles, the index managed to end the day closing a few points ahead of H4 demand pegged at 22286-22323. This demand has, in our opinion, already proved its worth as it held ground in the immediate aftermath of Wednesday FOMC meet. A violation of this area, however, likely opens the door for a test of the H4 demand base coming in at 22187-22221.

Suggestions: With absolutely no resistances seen on the horizon, this remains a buyers’ market right now as far as we’re concerned. As such, we’ll be watching the current H4 demand for potential buying opportunities today. Should price chalk up a H4 bull candle in the shape of a full, or even a near-full-bodied candle, we would deem this a worthy buy signal to long this market in the hope of joining the long-term trend.

Data points to consider: No high-impacting news on the docket today.

Levels to watch/live orders:

• Buys: 22286-22323 ([waiting for a reasonably sized H4 bullish candle to form – preferably a full, or near-full-bodied candle – is advised] stop loss: ideally beyond the candle’s tail).
• Sells: Flat (stop loss: N/A).

GOLD

Kicking this morning’s report off with a quick look at the weekly timeframe shows price is currently seen crossing paths with support coming in at 1295.4. As you can see, the buyers have yet to register much interest here. Sliding down to the daily timeframe, however, the candles recently connected with the top edge of a demand base logged at 1275.3-1291.2. Should the bulls hold ground here, the next upside target can be seen at resistance drawn from 1308.4. Before price can reach this level, nonetheless, daily buyers will need to contend with the H4 broken Quasimodo line at 1304.9.

Suggestions: Although a long from weekly support looks tempting, buying into nearby H4 and daily resistances is not really our cup of tea. Along the same lines, selling at the noted H4/daily levels would, in our view, be considered

courageous given that weekly price is trading from support!

On account of the above, our desk will remain on the sidelines for the time being and reassess structure going into Monday’s open.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

Currency pair EUR/USD

The EUR/USD is probably in an extended correction within wave 4 (blue) when considering the sideways price movement between support (green) and resistance (red). Currently I'm expecting a longer wave Y (red) because from a time perspective the current wave seems short when compared to wave X and Y (red).

The EUR/USD could perhaps be building an ABC (purple) zigzag correction within wave Y (red). The confirmation could be a bearish candlestick pattern at the Fibonacci levels of wave B (purple) or a break of the support trend line (blue). A break above the resistance trend line (orange) and 78.6% Fib of wave B vs A with strong candles could indicate uptrend continuation.

Currency pair GBP/USD

The GBP/USD bounced at the support trend line (green). The bounce could be part of the wave 4 (blue) correction as typically waves 4 are lengthy consolidation patterns.

The GBP/USD is probably building an ABC (grey) correction within wave B (purple) but a break above the resistance trend lines and 78.6% Fib of wave B vs A with strong candles could indicate uptrend continuation.

Currency pair USD/JPY

The USD/JPY did not manage to break above the resistance trend line (red) and bounced back down. Price is now testing a support trend line (green).

The USD/JPY could be a wave 123 (orange) which could be part of a larger ABC correction.

STOCKS

Dow (22359.23, -0.24%) saw its first dip in the last 9-sessions and this could possibly be limited to 22200 from where the index may again resume its uptrend.

Dax (12600.03, +0.25%) is almost posed to move higher and could crawl up towards 12800 in the near term. Thereafter a sharp corrective dip could be possible.

Nikkei (20298.87, -0.24%) came off from levels near 20500(our mentioned target) and could come down to test 20100 in the coming sessions. The US-Japan 10Yr yield (2.25%) is trading near resistance levels and if that holds could come off sharply towards 2.2% or lower. Also the Dollar Yen has decent resistance above current levels. This could indicate an upcoming fall in Nikkei, the yield spread and Dollar Yen in the near term.

Shanghai (3345.88, -0.36%) could be headed towards 3320 in the coming sessions. 3320 is a medium term support which could hold and push back the price to higher levels. Near term looks bearish for shanghai given the weakness in Copper (2.91) which could head towards 2.85 soon.

Nifty (10121.90, -0.19%) made an intra-day low of 10058 yesterday before rising to close at higher levels. The resistance on the 3-day line chart seems to be working well for now and while that holds, the index could come down towards 10000 or lower in the near term.

COMMODITIES

Gold (1296.48) is almost stable below 1300. Immediate support seen near 1280 which if holds could take the price to higher levels of 1315-1320; else a sharp dip towards 1280 initially is possible followed by some more extension on the downside.

Silver (17.02) is trading slightly higher. May trade within 17.25-16.75 in the next couple of sessions.

Brent (56.36) has moved up from levels near 56.20. As mentioned yesterday, 56.55-57.20 is an important resistance zone to keep an eye on. On the other hand, unlike Brent, WTI (50.59) has dipped slightly and doesn’t look very strong just now. There is some scope of coming off to 50.00-49.50 in the near term.

Copper (2.9120) has broken the immediate support levels. It could now be headed towards 2.85 in the coming week. Near term looks bearish.

FOREX

A slight uptick in the German-US 10Yr Spread (-1.81%, see Interest Rates below) has helped the Euro (1.1952) move up since yesterday. As such, the overall uptrend still remains intact and unless there is a sharp decline today, we have to be open to chances of further rise.

In line with yesterday's warning, the Aussie (0.7922), however, has broken rank with the Euro and has broken below 0.7950 as well, on dovishness from the RBA Governor. A clear top is in place now and the uptrend since 0.7329 (May '17) is broken. A slow dip to 0.7850 is possible now.

The Pound (1.3584) has moved back up a bit yesterday, consolidating between 1.3450-3600+. Maybe the upmove will exhaust itself near 1.38.

Dollar-Yen (111.72) remains in an overall uptrend that can still move up to 113.50-60 before it exhausts itself. In case of a break above 113.50, look for 115.00. The Euro-Yen (133.52) too remains in an uptrend and might move up to 136 before any profit-taking sets in.

The Dollar Index (91.99), has come down again, heavily influenced by the rise in the Euro. Thus, the overall downtrend still remains in force, but we are not sure whether the earlier Low of 91.01 (8th Sep) will be broken or not.

Dollar-Yuan (6.5855) is attempting to rise past 6.60 and might see success if and while it remains above 6.5750. Dollar-Rupee (64.81) rose sharply to a high of 64.8425 yesterday and may rise some more while above 64.50 now.

INTEREST RATES

US yields have dipped a bit, a day after the FOMC. The US 10Yr (2.26%) is down from 2.28%, the 5Yr (1.87%) is down marginally from 1.88%.

At the same time, the German-US 10Yr has moved up 3 bp, from -1.84% to -1.81%, as the German 10Yr (0.45%) has also moved up by 1 bp. Still, as mentioned yesterday, the uptrend in the German-US 10Yr Spread since -2.16% (April 2017) is clearly broken now. Upside may be limited to -1.77%, while the downside may be open to -1.85% and even -1.90%. We have to see how this impacts the Euro in the medium-term.

Coming back to US yields, the Curve has flattened further, as the 30Yr (2.79%) has dipped a bit from 2.81% seen after the FOMC. Yesterday, the flattening was due to an uptick in the 5Yr and 10Yr rates. Today, the flattening is due to a dip in the 30Yr.

The Indian 10Yr GOI (6.6749%) saw large jump yesterday as FIIs probably sold Indian after the FOMC. However, there is strong/ crucial Resistance coming up near 6.7000-7250% overhead, which could hold. That could limit the upside in Dollar-Rupee to 65.00-25.

EURUSD

The EURUSD failed to continue its bearish momentum yesterday topped at 1.1953. The bias is neutral in nearest term. Overall I remain bullish but price is still trapped between 1.2090 – 1.1823 range area as you can see on my H4 chart below. Immediate resistance is seen around 1.2000. A clear break above that area could trigger further bullish pressure testing 1.2050 region. Immediate support is seen around 1.1900 but key support remains at 1.1823 which remains a good place to buy with a tight stop loss as a clear break below that area would take price to a bearish correction zone.

GBPUSD

The GBPUSD had a bullish momentum yesterday topped at 1.3586. The bias is bullish in nearest term testing 1.3615/50 key resistance area which need to be clearly broken to the upside to nullify the bearish pin bar scenario and continue the major bullish scenario targeting 1.3700 – 1.3750 region. Immediate support is seen around 1.3520. A clear break below that area could lead price to neutral zone in nearest term testing 1.3470 region or lower. Overall I remain bullish.

USDJPY

The USDJPY continued its bullish momentum yesterday topped at 112.71. The bias remains bullish in nearest term testing 113.10/50 resistance area. Immediate support remains around 112.15 – 111.85 region. A clear break below that area could lead price to neutral zone in nearest term but as long as stay above 111.00 my H1 chart bias remains bullish. My H4 and daily chart bias remains neutral.

USDCHF

The USDCHF attempted to push higher yesterday topped at 0.9747 but closed lower at 0.9704. The bias is neutral in nearest term probably with a little bearish bias as price printed a bearish pin bar formation as you can see on my daily chart below testing 0.9650 support area. Immediate resistance is seen around 0.9747. A clear break above that area could trigger further bullish pressure testing 0.9765 – 0.9807 key resistance which remains a good place to sell with a tight stop loss.

The yellow metal is going down like a rock and is expected to reach the 38.2% retracement level. Actually, it could hit the confluence area formed at the intersection between the 38.2% retracement level with the WL1. A breakdown through the mentioned confluence will accelerate the sell-off, while a rejection will send the rate much higher again.

Brent Oil resumes the upside movement and should approach and hit the median line (ML) of the major ascending pitchfork in the upcoming days. Price ignored the higher Crude Oil Inventories and is almost to reach the $57.00 per ounce. The median line (ML) is acting as a magnet and attracts the price, actually, it could be attracted by the confluence area formed at the intersection between the ML with the 250% Fibonacci line.