Sample Category Title

Daily Pivots: (S1) 1.3435; (P) 1.3526; (R1) 1.3674; More....

With 1.3522 minor support intact, intraday bias in GBP/USD remains on the upside for 1.3835 support turned resistance next. Break there will target 55 month EMA (now at 1.4405). On the downside, below 1.3522 minor support will turn intraday bias neutral and bring consolidations, before staging another rally.

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.

USD/CHF - 0.9597

Original strategy :

Sell at 0.9645, Target: 0.9545, Stop: 0.9680

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.9645, Target: 0.9545, Stop: 0.9680

Position : -

Target :  -

Stop : -

Although the greenback has recovered after finding support at 0.9565 on Friday and consolidation above this level would be seen, if our view that top has been made at 0.9705 last week is correct, reckon upside would be limited to minor resistance at 0.9648 and bring another decline later, below 0.9563-65 (50% Fibonacci retracement of 0.9421-0.9705 and said support) would extend weakness to 0.9525-30 (61.8% Fibonacci retracement), however, downside should be limited to 0.9500 and 0.9480-85 should hold.

In view of this, would not chase this fall here and would be prudent to sell dollar again on further recovery as 0.9648 should limit upside. Above 0.9680 would risk retest of said last week’s high at 0.9705, break there would extend recent rise from 0.9421 to 0.9740-50 later.

Daily Pivots: (S1) 0.9556; (P) 0.9602; (R1) 0.9638; More....

Intraday bias in USD/CHF remains mildly on the downside for 0.9420 support. 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.

GBP/USD - 1.3555

Original strategy :

Buy at 1.3420, Target: 1.3600, Stop: 1.3385

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.3420, Target: 1.3600, Stop: 1.3385

Position : -

Target :  -

Stop : -

Although cable edged higher in London morning to 1.3619, lack of follow through buying on break of Friday’s high at 1.3617 and current retreat suggest consolidation with initial mild downside bias would be seen and pullback to the Kijun-Sen (now at 1.3518) cannot be ruled out, however, reckon downside would be limited to 1.3420-30 and bring another rise later, above said resistance at 1.3619 would extend recent upmove to 1.3650 and possibly towards 1.3675 but upside should be limited to 1.3700-10, bring retreat later.

In view of this, would not chase this rise here and would be prudent to buy cable on subsequent pullback as 1.3420-30. Only below 1.3380-85 would defer and signal a temporary top is formed, bring retracement of recent rise to 1.3350, then 1.3320-25 but lower Kumo (now at 1.3302) should remain intact. 

The CAC index has started the trading week with gains. Currently, the index is at 5,226.00, up 0.26% on the day. On the release front, Eurozone Final CPI improved to 1.5%, matching the forecast. On Tuesday, the eurozone releases its current surplus and ZEW Economic Sentiment, both of which are expected to improve.

France received a thumbs-up from the OECD last week, which released a report on the French economy. The OECD is forecasting French growth of 1.7% in 2017, compared to a 1.1% gain in 2016. The report commended President Emmanuel Macron's agenda to reform the economy, but emphasized that the government needed to cut public sector spending, which is the highest in the 35-member OECD. The report also called on the French government to overhaul the country's labor laws, including cutting pension costs and raising the current retirement age of 62 years. With President Emmanuel Macron declaring he will reform France's labor laws, powerful trade unions are mobilizing to fight back. On Tuesday, some 200,000 trade unionists came out for a mass protest. The government plans to adopt new labor rules on September 22, and two large unions have threatened to respond with a massive truckers strike on September 25, which could cause chaos across the country.

French President Emmanuel Macron, a staunch supporter of a unified Europe, is hoping to continue working with German Prime Minister Angela Merkel after the German election, and focus on reforming the eurozone. Macron's proposal includes a eurozone finance minister who would be in charge of a eurozone budget. Macron's call for greater cooperation is linked to Britain's exit from the EU, which could lead to divisions among the remaining 27 members in the bloc. However, the French ambitious plan will need Germany's support before it can become a reality. Will Germany embrace the idea? Angela Merkel has indicated that she is open to the idea, but Jean-Claude Juckner, head of the European Commission, came out against the plan last week. Juckner said he favored a finance minister for the EU but was against a separate eurozone budget and finance minister. Even if the plan is not adopted, we can expect a Macron-Merkel alliance to take steps which will strengthen Franco-German ties and further unify the eurozone.

EUR/USD - 1.1961

Original strategy  :

Buy at 1.1905, Target: 1.2005, Stop: 1.1870

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.1905, Target: 1.2005, Stop: 1.1870

Position : -

Target :  -

Stop : -

Although the single currency retreated after meeting resistance at 1.1988 on Friday, last week’s anticipated rebound from 1.1838 suggests low has possibly been formed there and downside should be limited to 1.1900-05, bring another rebound later to 1.1995-00 (previous resistance and 61.8% Fibonacci retracement of 1.2093-1.1838), however, break there is needed to signal the fall from 1.2093 has ended, bring subsequent rise to 1.2030-35 and then 1.2050-55.

In view of this, we are looking to buy euro again on dips as 1.1900-05 should limit downside and bring another rebound. Below 1.1865-70 would abort and suggest the rebound from 1.1838 (last week’s low) has ended, bring retest of this level first. 

USD/JPY - 111.41

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Although the greenback has edged higher again after last week’s rally and bullishness remains or recent reversal from 107.32 low to extend gain to 111.55-60, however, reckon upside would be limited to 111.85-90 (61.8% projection of 107.32-111.04 measuring from 109.55) and price should falter below 112.00-10, risk from there has increased for a correction later.

In view of this, would not chase this move here and would be prudent to stand aside for now. Below 111.00 would bring correction to 110.60-65 but downside should be limited to 110.30-35 and price should stay above 110.00, bring rebound later.

Daily Pivots: (S1) 109.79; (P) 110.56; (R1) 111.59; More...

USD/JPY's rebound from 107.31 continues today and reaches 111.44 so far. Intraday bias remains on the upside for medium term channel resistance (now at 112.91). 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. On the downside, break of 109.54 support is needed to indicate completion of the rebound. Otherwise, outlook will stay cautiously bullish in case of retreat.

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.

Yen trades generally lower today in otherwise quiet markets. Euro is trading firmer while Sterling is paring some of last week's sharp gains. Global markets are generally in risk seeking mode. The MSCI Asia Pacific ex Japan index surged to decade high earlier today. European indices follow with some gains, including FTSE. US futures also suggest that stocks are going to extend the record run. If other markets, gold continues with it's pull back from recent high at 1362.4 and hits as low as 1314.5 so far. It's possibly heading back to 1300 handle, which is close to 55 day EMA at 1293.4. WTI crude oil weakens mildly as it struggles to find sustainable buying to stay firm above 50 handle.

The economic calendar is rather light today. Canada international securities transactions rose CAD 23.95b in July. Eurozone CPI was finalized at 1.5% yoy in August, core CPI at 1.2% yoy. UK Rightmove house price dropped -1.2% mom in September. There are a lot of high profile events ahead in the week. BoE Governor Market Carney will speak at IMF in Washing today. RBA will release meeting minutes tomorrow. US President Trump will also address the United Nations. Fed is expected to announce the plan to unwind the balance sheet on Wednesday. UK Prime Minister Theresa will deliver a Brexit speech in Italy on Friday. And there will be general elections in New Zealand and Germany in the coming weekend.

ECB Hansson advocates broader recalibration of monetary policy

ECB Governing Council member Ardo Hansson urged not to have "inordinate focus on the asset purchase program". Instead, he advocates a "somewhat broader recalibration" of monetary policy. He noted that the central has "a range of instruments already under implementation" And, ECB could "in addition bring to the table for consideration". He pointed out that "various refinancing operations and the details of forward guidance could be more precise about interest rates". Hansson also played down the concern over Euro's strength. He noted that the exchange rate is "well within the historical range". Also, the euro area has a "current accounts surplus of some volume".

Sterling awaits BoE Carney speech

Sterling pares back some gains today as markets await BoE Governor Mark Carney's speech at IMF in Washington. Traders are rather convinced that a November hike is on the table because a known dove Gertjan Vlieghe turned his stance last Friday and said a rate hike is "approaching". The echoed the surprised BoE minutes that showed most members believe there will be a hike in coming months. Markets will look into Carney's speech today to further verify such expectations. Nonetheless, it should already be priced in well after the strong surge in Sterling last week. Therefore, any Carney triggered gains could be temporary. The Pound may turn into consolidation to digest recent gains, before getting fresh inspirations from incoming data.

Japan PM Abe will decide on parliament dissolution after September 22

In Japan, it's report over the weekend that Prime Minister Shinzo Abe will dissolve the Lower House on September 28 and call for a snap election on October. Abe responded to the rumor at Haneda airport as he was departing for United Nations Meetings in New York. Abe said that he'll "refrain from answering each and every question about a dissolution of parliament". And he will "decide when I return to Japan" on September 22. It's believed that Abe wants to ride on recent resurgence in his approval rating, for handling of the North Korea tensions. In additional, politic analysts noted that the main opposition Democratic Party is in terrible shape, leaving practically no opposition to Abe.

RBA minutes watched in upcoming Asian session

RBA minutes will be a focus in the coming Asian session. The central bank left benchmark interest rate unchanged at 1.50% on September 4 and left the markets with a relatively neutral statement. The minutes would probably just reflect that neutral stance. Nonetheless, attention will still be on any change in tone regarding monetary policies that agrees with the market expectation of a hike as next step in 2018. AUD/CAD has been softer since BoC surprised the markets by two rate hikes this year. Deeper fall is expected in the cross to 09591 key support level in short to medium term. The bearish outlook will remain until RBA becomes more explicitly in its tightening bias.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 109.79; (P) 110.56; (R1) 111.59; More...

USD/JPY's rebound from 107.31 continues today and reaches 111.44 so far. Intraday bias remains on the upside for medium term channel resistance (now at 112.91). 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. On the downside, break of 109.54 support is needed to indicate completion of the rebound. Otherwise, outlook will stay cautiously bullish in case of retreat.

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.

Economic Indicators Update

The DAX index has posted slight gains in the Monday session. Currently, the DAX is trading at 12,552.00, up 0.30% on the day. On the release front, Eurozone Final CPI improved to 1.5%, matching the forecast. On Tuesday, Germany releases ZEW Economic Sentiment, which is expected to improve to 12.3 points.

With less than a week to go before the German federal election, Angela Merkel is widely expected to win her fourth term as prime minister. Merkel's CDU conservative party has a 14 percent lead over the center-left SPD, its current coalition partner. Another option for Merkel is the FDP, but the latter has insisted on receiving the finance ministry, and has also taken a hard line on immigration which Merkel may not be comfortable with. Germany's position in Europe will be even more dominant when Britain leaves the European Union, which may some members of the club uneasy.

French President Emmanuel Macron, a staunch supporter of a unified Europe, is hoping to continue working with Merkel and reform the eurozone. Macron's proposal includes a eurozone finance minister who would be in charge of a eurozone budget. Macron's call for greater cooperation is linked to Britain's exit from the EU, which could lead to divisions among the remaining 27 members in the bloc. However, the French ambitious plan will need Germany's support before it can become a reality. Will Germany embrace the idea? Angela Merkel has indicated that she is open to the idea, but Jean-Claude Juckner, head of the European Commission, came out against the plan last week. Juckner said he favored a finance minister for the EU but was against a separate eurozone budget and finance minister. Even if the plan is not adopted, we can expect a Macron-Merkel alliance to take steps which will strengthen Franco-German ties and further unify the eurozone.