Sample Category Title

USD/CAD decreased significantly after the false breakout above the confluence area formed by the median line (ml) with the lower median line (LML). Price failed to stay above the median line (ml) of the minor ascending pitchfork and now approaches the lower median line (lml). A breakdown from the minor pitchfork will signal a further drop.

EURUSD: With the pair may be biased to upside in the medium term but faces a pullback risk on price hesitation. However, it will have to break and hold above its key resistance located at the 1.2091 level to prevent a return to the downside. Resistance comes in at 1.2050 level with a cut through here opening the door for more upside towards the 1.2100 level. Further up, resistance lies at the 1.2150 level where a break will expose the 1.2200 level. Conversely, support lies at the 1.1950 level where a violation will aim at the 1.1900 level. A break of here will aim at the 1.1850 level. Below here will open the door for more weakness towards the 1.1800. All in all, EURUSD faces further upside pressure medium term but with caution of a pullback.

Daily Pivots: (S1) 1.1959; (P) 1.1983 (R1) 1.2017; More...

Intraday bias in EUR/USD stays mildly on the upside for retesting 1.2091. Break will extend larger rise from 1.0339 and target next key fibonacci level at 1.2516. In any case, outlook will remain bullish as long as 1.1822 support holds. But considering bearish divergence condition in 4 hour MACD, break of 1.1822 will confirm short term topping and bring deeper fall back to 1.1661 support and below.

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.

Daily Pivots: (S1) 0.9597; (P) 0.9622; (R1) 0.9651; More....

No change in USD/CHF's outlook at this point. Deeper fall is still in favor to 0.9420 support. Also, with 0.9772 resistance intact, outlook remains bearish. Break of 0.9420 will resume medium term fall from 1.0342 and target next long term fibonacci level at 0.9090. However, firm break of 0.9772 will indicate trend reversal and turn outlook bullish.

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) 111.23; (P) 111.55; (R1) 111.92; More...

Intraday bias in USD/JPY remains neutral for consolidation below 111.87 temporary top. Downside of retreat should be contained above 109.54 support to bring another rally. Above 111.87 will target medium term channel resistance (now at 112.87). Sustained break there will argue that whole correction from 118.65 has completed too. In that case, further rise should be seen to 114.49 resistance for confirmation.

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.

As inflation recently in the US has had a recent slight increase near 1.9% p.a., it is still below their target range. Despite this, Actual QoQ GDP Growth has increased to 3%, well ahead of forecast and consensus, and this has seen Forward Company Earnings improve in the US also.The Fed will be conscious of all of this, however, as they saw a small increase in Unemployment and Inflation still below their target levels, they are inclined to keep the rates flat for this month.

The USD/JPY is in a congestion phase (violet channel) waiting for the always important FED decision and FOMC conference. 112.60 looks attractive too sellers and a heavy momentum spike above 111.80 could get the price to 112.30-60 where it could start selling towards camarilla pivot points shown on the chart. A drop below 111.20 could target 110.90 and 110.60. The event is expected to be volatile so be prepared for price whipsaws in both direction.

Daily Pivots: (S1) 1.3470; (P) 1.3510; (R1) 1.3553; More....

GBP/USD recovers mildly today but upside is limited below 1.3618 temporary top so far. Intraday bias remains neutral as consolidation could extend with another fall. But downside of retreat should be contained by 38.2% retracement of 1.2773 to 1.3618 at 1.3295 and bring rise resumption. Above 1.3618 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.

Dollar is trading broadly lower today as markets await FOMC policy decision and press conference. It's widely expected that Fed would formally announce the schedule of the long-awaited normalization of its USD 4.5T balance sheet. At the June meeting, the Fed revealed the plan to "gradually reduce" its securities holdings by "decreasing its reinvestment of the principal payments" received. More details are awaited as the plan is formalized. Inflation has remained persistently soft despite the upside surprise in the August data. We believe some members would raise concerns that weak price levels might last longer than previously anticipated. There might be downward revisions in the inflation forecast in 2018. Meanwhile, there are some speculations that the Fed might reduce its average Fed funds rates projections. Thus, the so called dot-plot will also be closely watched.

Credit Suisse: BoE hike is a policy mistake

Sterling trades in tight range today as it's continue to digest recent gains. Retail sales grew strongly by 1.0% mom in August, versus expectation of 0.2% mom. The data adds more case for BoE to finally raise interest rate from 0.25% in November. Indeed, after the hawkish BoE minutes released last week, economists are jumping on the bandwagon of forecasting a BoE hike. Latest comes Credit Suisse. But the investment bank warned that a hike at this point will be a "policy mistake". It pointed out that "the growth threshold required for the BoE to hike looks to have fallen." And, a rate hike in November in the backdrop of weak growth, high-currency-generated inflation but weak wage pressures and uncertainty is likely to be a policy mistake." It further warned that "there is a risk of a non-linear response to the first rate hike in 10 years. A tighter response to an (entirely) externally driven inflation overshoot today runs the risk of a sustained inflation undershoot in the future."

OECD: Nobody is contracting for the first time since 2008

The Organisation for Economic Cooperation and Development released its Interim Economic Outlook today. Global economy is forecast to grow 3.5% in 2017 and 3.7% in 2018. OECD noted that "the upturn has become more synchronised across countries. Investment, employment and trade are expanding." Chief economist Catherine Mann said that "we've got some short-term momentum, it's become broad-based and one way to measure that is to look around the world and see nobody is contracting for the first time since 2008." And she emphasized that "a synchronised upturn is an important signal for businesses to invest."

US growth is forecast to be 2.1% in 2017. OECD warned that shrinking Fed's huge balance sheet without economic disruption "represent a significant challenge". It emphasized that "To minimize financial market volatility and global spillovers, central banks should opt to reduce their assets gradually and in a predictable way." Eurozone growth is projected to be 2.1% in 2017. UK growth is expected to lag other major economies and be at 1.6% only in 2017, and drop further to 1.0% in 2018, unrevised. OECD warned that "the depreciation of the sterling has modestly improved export prospects but also pushed up inflation, dampening purchasing power and private consumption." China, on the other hand, is expected to grow 6.8% in 2017 and slow to 6.6% in 2018.

New Zealand Election: Change in Government is NZD-Negative in Near-Term

The upcoming New Zealand election would be a tight race between the incumbent National Party and Labor Party. Polls of polls compiled by both RNZ and Stuff indicate that supports for both parties are at around 40%. Moreover, opinion polls have been suggesting that neither of the parties would be able to a government without forming coalition with smaller parties. This is such uncertainty that has increased the volatility of New Zealand dollar of late. This report compares the impacts of various scenarios on the economic growth outlook and the monetary policy, hence the exchange rate. We believe that maintain 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.

Elsewhere

Germany PPI rose 0.2% mom, 2.6% yoy in August, above expectation of 0.1% mom, 2.5% yoy. New Zealand current account turned into NZD -0.62b deficit in Q2. Australia Westpac leading indicator dropped -0.1% mom in August. Japan trade surplus widened slightly to JPY 0.37T in August.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3470; (P) 1.3510; (R1) 1.3553; More....

GBP/USD recovers mildly today but upside is limited below 1.3618 temporary top so far. Intraday bias remains neutral as consolidation could extend with another fall. But downside of retreat should be contained by 38.2% retracement of 1.2773 to 1.3618 at 1.3295 and bring rise resumption. Above 1.3618 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.

Economic Indicators Update

USD/CHF - 0.9609

Original strategy :

Sold at 0.9625, Target: 0.9525, Stop: 0.9650

Position : - Short at 0.9625

Target :  - 0.9525

Stop : - 0.9650

New strategy  :

Hold short entered at 0.9625, Target: 0.9525, Stop: 0.9650

Position : - Short at 0.9625

Target :  - 0.9525

Stop : - 0.9650

The greenback has continued meeting resistance at 0.9649 and has remained locked within familiar range, retaining our view that further consolidation would take place and as long as said resistance at 0.9649 holds, mild downside bias remains for another fall towards 0.9563-65 (50% Fibonacci retracement of 0.9421-0.9705 and Friday’s low), break there would add credence to our view that top has been formed at 0.9705, bring further weakness to 0.9525-30 (61.8% Fibonacci retracement), however, downside should be limited to 0.9500 and 0.9480-85 should hold from here.

In view of this, we are holding on to our short position entered at 0.9625. Above 0.9649 would defer and risk rebound to 0.9675-80, break there would signal the pullback from 0.9705 has ended, bring retest of this level, a breach of this last week’s high would extend recent rise from 0.9421 to 0.9740-50 later.

GBP/USD - 1.3537

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

The British pound has remained confined within near term established range and further consolidation would take place, although risk of another corrective fall towards support at 1.3465 remains, break there is needed to signal a temporary top has been formed at 1.3619, bring retracement of recent upmove to 1.3430 and later towards 1.3400 but reckon 1.3375-80 would hold from here.

On the upside, whilst recovery to 1.3570-75 cannot be ruled out, break of 1.3605-10 is needed to signal the pullback from 1.3619 has ended, bring retest of this level first, break there would extend recent upmove towards 1.3650 later. As near term outlook has turned mixed, would be prudent to stand aside in the meantime.