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Positive jobs data from Australia (upbeat employment change showed 54.2K new jobs added in August vs 15K forecasted and unemployment rate staying unchanged at 5.6%) inflated Australian dollar in Asia.

The Aussie jumped above 0.8000 barrier after three-day fall, including today’s action, found support at 0.7970 (daily Kijun-sen / 20SMA, as well as main bull-trendline off 0.7370).

However, gains were limited on disappointing data from China (Industrial production rose by 6.0% in August, undershooting forecast at 6.6% and also falling well below 6.4% in July and Retail sales also missed, coming at 10.1% in August vs 1.5% forecast and 6.4% in July).

This may offset positive impact from positive jobs data and keep near-term bias with bears while the price is unable to clearly break above initial 0.8000 barrier.

Stronger recovery needs break above 0.8000 and next pivot at 0.8030 (daily Tenkan-sen / Fibo 38.2% of 0.8124/0.7970 pullback) which would generate stronger bullish signal.

Otherwise, the downside is expected to remain vulnerable for renewed attack at 0.7970 pivot, loss of which would trigger fresh extension of pullback from 0.8124 towards 0.7929 (Fibo 61.8%) and expose daily cloud top at 0.7883.

Res: 0.8016, 0.8030, 0.8043, 0.8058
Sup: 0.7970, 0.7939, 0.7929, 0.7883

EUR/GBP         –  0.9018

Although the single currency slipped again this week and near term downside risk remains for the retreat from 0.9307 temporary top to bring retracement of recent rise, reckon downside would be limited to 0.8980 and bring rebound to 0.9100, then test of 0.9200-05 but a daily close above latter level is needed to signal the retreat from 0.9307 has ended, bring further gain to 0.9235-40. Looking ahead, above this level would bring retest of 0.9307 but break there is needed to confirm recent upmove from 0.8304 (wave iv trough) has resumed and extend gain to 0.9380-85. We are keeping our view that early retreat from 0.9576 (wave iii top) has ended earlier at 0.8304 and bullishness remains for the rise from there to extend further gain to 0.9350, however, near term overbought condition should prevent sharp move beyond 0.9380-85 (100% projection of 0.8312-0.8950 measuring from 0.8743) and reckon 0.9440-50 would hold from here, risk from there is seen for a retreat.

Our latest preferred count is that the wave V of a 5-wave series from 0.5682 ended at 0.9805 earlier and major from there has possibly ended at 0.8067 as A-B-C-X-A-B-C. We are keeping our view that the entire correction from 0.9805 has possibly ended at 0.7756 and as labeled as the attached daily chart and impulsive move from 0.9084 has ended at 0.6938 as a 5-waver which marked as the (C) wave, recent impulsive rise is labeled as (I) (II), (i) (ii) series, indicated upside target at 0.9084 had been met, the retreat from 0.9576 suggest wave iii ended there and next upside target for wave v of (III) should head towards 0.9700 but price should falter well below parity .

On the downside, whilst initial marginal weakness from here cannot be ruled out, reckon downside would be limited to 0.8970-80 and bring another rise later. A daily close below support at 0.8923 would defer and suggest a temporary top has possibly been formed at 0.9307, risk correction to support at 0.8891, then 0.8850-60 but reckon downside would be limited to 0.8825-30 and bring another upmove later.
 
Recommendation: Hold long entered at 0.9065 for 0.9265 with stop below 0.8965

Euro's long term uptrend started in Feb 1981 at 0.5039 and is unfolding as a (A)-(B)-(C) move with (A): 0.8433 (Feb 1993), (B): 0.5682 (May 2000) and impulsive wave (C) should have ended at 0.9805 with wave III ended at 0.7254 (May 2003), triangle wave IV at 0.6536 (23 Jan 2007) and wave V as well as wave (C) has ended at 0.9805.

We are keeping an alternate count that only wave III ended at 0.9805 and the correction from there is the wave IV and has possibly ended at 0.6936, however, it is necessary to see a daily close above resistance at 0.9576 in order to change this to be the preferred count.

Swiss National Bank left interest rate unchanged at 0.75% on their monetary policy meeting today. The SNB will continue to maintain its expansionary monetary policy, aiming to stabilize price developments and support economic activity. The central bank said Swiss Franc remains highly valued and the situation in the FX market remains fragile, with negative interest rates and SNB remaining ready to intervene in the FX market to reduce pressure on the national currency. The USDCHF remains in steep near-term recovery rally from 0.9420 (08 Sep low) which so far retraced over 61.8% of 0.9765/0.9420 downleg and probes above daily cloud, which twisted on Wednesday and was attracting near-term bulls. The pair hit session high at 0.9660, retesting Wednesday's high, after mild downside action post-SNB (the price fell to 0.9617 but recovered quickly). Daily studies are mixed, with MA's turning into bullish setup but slow stochastic strongly overbought and negative momentum studies, requiring further signals. Close above daily cloud will be bullish signal for extension towards next target at 0.9688 (descending 100SMA), however, overbought conditions warn of stall signals. Daily cloud base (0.9605) and daily Kijun-sen (0.9592) mark lower pivots, loss of which would generate stronger bearish signal for deeper correction.

Res: 0.9660, 0.9688, 0.9700, 0.9765
Sup: 0.9648, 0.9617, 0.9605, 0.9592

Cable is holding within narrow range in early Thursday and awaiting the outcome of Bank of England MPC's monetary policy meeting.

The pound ended trading on Wednesday in red, after being hit by overall weak UK jobs data, with additional pressure coming from stronger dollar which was boosted by signs that President Trump's tax plan was gaining momentum. Today's focus is at BoE, with central bank widely expected to keep interest rate and QE unchanged (0.25% and 435billion pounds respectively).

Markets will be closely watching for the rhetoric of the MPC, as BoE is expected to keep the story about interest rate hike alive and also focus on today's voting configuration.

The nine-member UK MPC is expected to vote 7-2 for rate hike, but surprise on hawkish shift on 6-3 voting configuration is also on the table.

This scenario would be supportive for pound and could spark stronger bullish acceleration towards target at 1.3473 (weekly cloud top).

On the other side, more dovish tone from BoE would weaken pound and risk bearish acceleration towards strong support at 1.3070 (daily cloud top).

Res: 1.3268, 1.3300, 1.3328, 1.3385
Sup: 1.3198, 1.3158, 1.3112, 1.3070

The positive report on the Australia's job market contributed to strengthening of the Aussie in Wednesday morning. The Australian Dollar strengthened by 0.46% against the Greenback to consolidate in the 0.8000 area.

The Australian Bureau of Statistics published the report showing that the country's unemployment rate remained at the 5.6% level, in line with expectations. Data revealed the job market added 54.2K new positions over the course of August, while analysts' anticipated a 17.4K gain. The Australian economy was still far to reach full employment, with main concern surrounding flat wage growth, which refrains consumer confidence.

USD/CAD – 1.2177

As the greenback has remained under pressure after resuming recent decline, suggesting near term downside risk remains for recent selloff to extend weakness to 1.2050-60, however, loss of downward momentum should prevent sharp fall below psychological support at 1.2000 and reckon 1.1925 (61.8% projection of 1.3794-1.2414 measuring from 1.2778) and reckon 1.1890-00 would hold from here, risk has increased for a rebound to take place later. We are keeping our bearish count that wave b ended at 1.3794 and wave c has commenced for further fall towards psychological support at 1.2000. 

We are keeping our view that the wave b from 1.0657 (a leg top) has possibly ended at 0.9633 with (a): 0.9800, wave (b): 1.0447 and wave c at 0.9633, the subsequent rise from there is now treated as wave c exceeded indicated upside target at 1.3770-80 and 1.4000 and wave (3) has possibly ended at 1.4690 and wave (4) correction has commenced for retracement back towards 1.2000.

On the daily chart, our latest preferred count remains that the A of (B) rally from 0.9059 low (7 Nov 2007) unfolded into an impulsive wave with i: 0.9059-1.0380, ii ended at 0.9819, iii at 1.3019 followed by triangle wave iv at 1.2026 , then wave v formed a top at 1.3066 and also ended the wave A. The wave B is unfolding as an double three a-b-c-x-a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c at 1.0784, followed by wave x at 1.1725, another set of a-b-c unfolded with 2nd a at 0.9931, 2nd b at 1.0674. the 2nd c has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3900 had been met and gain to 1.4700 would follow.

On the upside, whilst initial recovery to 1.2290-00 cannot be ruled out, reckon upside would be limited to 1.2350-60 and price should falter below previous support at 1.2414 (now resistance), bring another decline later. A daily close above 1.2440-50 would defer and suggest a temporary low is possibly formed, bring a stronger rebound to 1.2500 and possibly 1.2550-60 but said resistance at 1.2663 should remain intact.

Recommendation: Would be prudent to stand aside for this week.

Longer term - The selloff from 1.6194 (21 Jan 2002) to 0.9059 (07 Nov 2007) is viewed as (A) wave which is a 5-waver as labeled on the monthly chart as below, the subsequently rally is labeled as (B) with impulsive A leg of (B) ended at 1.3066, wave B of (B) is unfolding which has either ended at 0.9407 or would extend one more fall but downside should be limited to 0.9200 and 0.9000 should hold.

The EUR/USD revealed muted response on a slighter-than-expected increase in the US producer prices. However, in the next couple of hours the Euro depreciated significantly against the Greenback, falling to the weakest level in a week below the 1.1900 mark.

The Labour Department revealed that the US producer prices accelerated growth at the strongest pace in four months amid an increase in gasoline prices. The report showed that the country’s PPI for final demand rose 0.2% in August, slightly below expectations for a 0.3% gain. Wednesday’s data were not quite as broad-based or strong as the Fed would like to consider to support an increase in core consumer prices to the Central Banks 2% target.

The Sterling continued an upmove in the Wednesday morning, though previous gains were partially offset after the disappointing report on the UK average earnings. After the drop of 0.13% against the Greenback the British Pound resumed depreciation to fall below the 1.3245 level.

The Office for National Statistics reported that both its Average Earnings Indexes including and excluding bonuses showed the same as previously annual increase of 2.1% in the three months period ended in July. On the positive side, data revealed that unemployment rate in the UK edged lower to 4.3% in the reported term, while analysts’ anticipated an unchanged reading of 4.4%. The release muted expectations for the Bank of England to change its interest rate policy due to a higher inflation.

Due to release of negative data in the US on the PPI the currency exchange rate made suddenly dropped down to the monthly PP, which is located at the 1.1881 level. In result of this action, the pair broke through the lower trend-line of a three month long senior ascending channel. At the moment, the only barrier that it faces from the south is the bottom edge of another more recently formed ascending channel. In this sense, the buck might drag the pair even lower. On the other hand, the pair is likely is stuck near the above monthly PP for some time, while traders are anticipating a release of data on the US CPI at 12:30 GMT. Accordingly, the positive result will strengthen the downside momentum even more, while the negative will give the Euro a necessary impulse to recover from yesterday’s loss.

As it was expected, a mismatch with experts’ forecasts on the UK Average Hourly Earnings forced the pair to make a premature rebound and retreat towards the closest combined support level formed by the 100-hour SMA and the monthly R1 at 1.3208. However, over the last ten hours the exchange rate did not make any significant moves. The reason behind such low volatility is anticipation of announcement of the Official Bank Rate by the Bank of England. Most probably, this event will lead to quite sharp depreciation of the Pound. In the first hour the downfall might be stopped by a combination of the 200-hour SMA and the weekly PP at 1.3110. However, then the pair is likely to slip even further, tending to reach the weekly S1 and the monthly PP near 1.2990.