Sample Category Title

EUR/USD - 1.1768

Most recent candlesticks pattern   : N/A

Trend                      : Sideways

Tenkan-Sen level              : 1.1770

Kijun-Sen level                  : 1.1787

Ichimoku cloud top             : 1.1760

Ichimoku cloud bottom      : 1.1726

Original strategy  :

Bought at 1.1765, Target: 1.1865, Stop: 1.1730

Position : - Long at 1.1765

Target :  - 1.1865

Stop : - 1.1730

New strategy  :

Hold long entered at 1.1765, Target: 1.1865, Stop: 1.1730

Position : - Long at 1.1765

Target :  - 1.1865

Stop : - 1.1730

As the single currency has retreated after meeting resistance at 1.1828 yesterday, suggesting consolidation below this level would be seen, however, reckon minor support at 1.1745 would limit downside and bring another rise later, above said resistance at 1.1828 would extend the rise from last week’s low of 1.1662 to resistance at 1.1847, break there would provide confirmation the pullback from 1.1910 has ended and encourage for headway to 1.1870-80 but reckon said resistance at 1.1910 would hold from here. 

In view of this, we are holding on to our long position entered at 1.1765. Only below 1.1725-30 would abort and suggest the rebound from 1.1662 has ended instead, risk weakness to 1.1695-00 first. 

USD/JPY - 109.37

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 109.35

Kijun-Sen level                  : 109.09

Ichimoku cloud top             : 109.49

Ichimoku cloud bottom      : 109.07

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Despite yesterday’s all to 108.63, the subsequent rebound after holding above indicated support at 108.60 has retained our view that further consolidation would take place and another test of resistance at 109.60-67 cannot be ruled out, however, a firm break above there is needed to signal low has been formed at 108.60, bring a stronger rebound to 110.00 and later towards resistance at 110.37 which is likely to hold from here.

On the downside, below 108.80 would bring retest of 108.60 but only break there would signal recent decline has resumed and may extend further weakness to 108.30 (1.618 times projection of 110.95-109.67 measuring from 110.37), then towards 108.10-15 (61.8% projection of 110.95-108.60 measuring from 109.60), however, loss of downward momentum should prevent sharp fall below latter level and reckon 108.00 would hold from here, bring rebound later. As near term outlook is mixed, would be prudent to stand aside for now, then look to sell dollar on subsequent rebound. 

EUR/GBP - 0.9166

Original strategy  :

Buy at 0.9000, Target: 0.9130, Stop: 0.8960

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9070, Target: 0.9190, Stop: 0.9030

Position : -

Target :  -

Stop : -

 
As the single currency has continued moving higher, adding credence to our bullish view that recent upmove is still in progress and may extend further gain to 0.9190-00, however, weakening of near term upward momentum should prevent sharp move beyond 0.9220 and price should falter below 0.9245-50, risk from there has increased for a retreat to take place later.

In view of this, would not chase this rise here and would be prudent to buy euro on subsequent pullback as 0.9065-70 would limit downside. Below 0.9045-50 would defer and suggest a temporary top is possibly formed, bring correction to 0.9005-10 but downside should be limited to 0.8970-75 and 0.8922 support should remain intact, bring another rally. 

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.

The CHI50 index gained positive momentum after touching a one-month low of 11367, on August 11, moving back towards the two-year high of 12027 posted on August 2. The bias is bullish but with a risk to the downside, as indicated by the RSI moving into the overbought area.

The technical indicators paint a bullish picture as both the RSI and the MACD are trending above their neutral zones, while the index itself has today crossed above the Ichimoku cloud. However, the fact that the RSI has entered overbought territory, hints to a potential reversal in the current trend. Moreover, the recent bearish cross between the 50- and the 200-period moving averages could signal that there is risk to the downside.

Should the price continue increasing, the area around 78.6% Fibonacci level at 11886 of the downleg from 12027 to 11367 (August 2- 11) is likely to provide resistance to upside movements, before the two-year high of 12027 comes back into view as an additional barrier.

Alternatively, if the price declines, immediate support is likely to be found at 11697, which is the 50% Fibonacci and the top of the Ichimoku cloud. From here, further downfalls would meet the 38.2% Fibonacci point of 11619, whilst steeper falls would shift focus towards the 23.6% Fibonacci of 11522. In case the index breaks below the swing low of 11367, a resumption of the previous downleg would take place.

USD/CAD - 1.2545

Trend:  Down

 
Original strategy       :

Sold at 1.2690, Target: 1.2490, Stop: 1.2700

Position: - Short at 1.2690

Target:  - 1.2490

Stop: - 1.2700

 
New strategy             :

Hold short entered at 1.2690, Target: 1.2490, Stop: 1.2610

Position: - Short at 1.2690

Target:  - 1.2490

Stop:- 1.2610

As the greenback has fallen again after meeting renewed selling interest at 1.2691 on Friday, retaining our bearish view that the decline from 1.2778 top is still in progress for weakness to 1.2490-00, however, a sustained breach below there is needed to signal the wave iv correction from 1.2414 (wave iii trough) has ended at 1.2778, bring further fall towards support at 1.2451 which is likely to hold on first testing. We are keeping our count that wave v as well as wave (C) ended at 1.3794 and impulsive wave (i ii, i ii) is now unfolding with minor wave iii possibly ended at 1.2414, hence wave iv correction is underway.

In view of this, we are holding on to our short position entered at 1.2690. Above 1.2691 resistance would risk a stronger rebound to 1.2740-50, however, said resistance at 1.2778 should hold. Only break of said resistance at 1.2778 would abort and signal the rebound from 1.2414 is still in progress for retracement of recent decline to 1.2825-30 but still reckon upside would be limited to 1.2880-85 (50% Fibonacci retracement of wave iii) and price should falter well below 1.2990-95 (61.8% Fibonacci retracement), bring retreat later.

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

The dollar continued strengthening against most majors during the European session as geopolitical tensions have been out of the spotlight and the euro and sterling weakened, with the latter ignoring upbeat industrial data. Oil prices continued gaining ahead of an oil inventories report by the API.

The euro lost ground and fell below the $1.1175 level following a disappointing set of data out of Germany that got investors worried over the eurozone's largest economy. The ZEW economic sentiment index, which gauges the six-month economic outlook, deteriorated sharply in August, falling for the third consecutive month. At 10, the index came in well below the expected 15 and the reading of 17.5 in July. Weaker exports and the ongoing scandals in the auto industry dragged the index lower. However, the report also showed that surveyed companies find current economic conditions to be better than expected. The reading pertaining to current conditions for August stood at 86.7 against expectations of 85.5 and the 86.4 seen in July. This has eased pressure on the euro. Euro/dollar was last trading at 1.1759.

The pound had a difficult trading day as the British currency fell despite the upbeat set of data from the Confederation of British Industry that showed better than anticipated expectations of manufacturing executives. At 13, the industrial orders index came in above the expected reading of 9 and above the prior month's figure of 10. The pound weakened against the dollar to trade at $1.2833 ahead of the US open, its lowest since mid-July.

In the wake of no new bad news that could worsen political tensions in Washington DC, the greenback got a breather and rallied against most majors. The dollar index was up 0.40% ahead of US trading.

The loonie rose following the release of Canadian retail sales in June. While total retail sales came in below expectations, the Canadian dollar found support in upbeat core retail sales. Economists had predicted a 0.3% advance in total retail trade, but the Statistics Canada figures showed a monthly gain of only 0.1%. This is a slowdown from the downwardly revised reading for the prior month of 0.5% (instead of the originally reported 0.6%). Sales of gas and autos dragged down the overall figure. However, core retail sales gained 0.7%, above the expected 0.3% and the 0.1% decline in the prior month. Dollar/loonie tumbled to last trade at 1.2528, down from 1.2573 prior to the data release.

Oil prices continued gaining during European trading hours ahead of the American Petroleum Institute report on the latest crude oil and gas inventories. WTI was last trading at $47.95 a barrel and Brent was at $52.08.

Gold prices remained under pressure during the European session. The precious metal was last trading at $1,287.98 an ounce.

• Most European equity indices gain around 0.7% despite disappointing German ZEW sentiment. US stock markets opened 0.3% to 0.5% higher. Overall, global trading remained confined to tight ranges in the run-up to the Jackson Hole Economic Symposium at the end of the week.
• German ZEW investor confidence declined for a third month amid concern that the widening diesel scandal and the strengthening euro will weigh on Europe's largest economy. An expectations index, which aims to predict economic developments six months ahead, fell to 10 from 17.5 in July, the lowest level since October
• Indonesia's central bank surprised markets by cutting its benchmark policy rate from 4.75% to 4.50%, the first change since October, in a bid to boost sluggish lending and economic growth.
• Hungary's central bank kept its benchmark rate unchanged at a record-low 0.90% as the strengthening forint, subdued price-growth and a slowing economic expansion create more room for unconventional monetary easing.
• The UK government deficit in the last financial year was smaller than previously thought, but borrowing is on track to climb this year despite a healthier than expected balance in July. The ONS' latest estimates of public sector net borrowing for the year to March put the deficit at £45.1B, a £27bn reduction on the previous year.

Rates

Core bonds reverse yesterday's small gains

Quiet bond trading continued. Whereas bonds traded with an upward bias yesterday, the bias was downward today. US Treasuries slightly underperformed German Bunds. There was no big story behind the moves, which were technical and sentiment driven in nature. For the US Treasuries, there might have been some profit taking as the T-Note future arrived near the contract high. Fin Minister Mnuchin downplayed the idea that the Treasury's debt-ceiling deadline could pass without action and said payments can't be prioritized without disruption. This might have brought the issue of the debt ceiling back in focus, more than easing concerns that it will be fixed in time. German Bunds kept a more sideways profile with yesterday's closing of 165.45 (Bund future) as the upper boundary and 164.10 as the lower boundary. The German ZEW economic sentiment was mixed (see headlines) with a stronger current situation and lower expectation sub-index. The Bund rose after the release, but the move started 45 minutes before the release. So, we suspect its impact was limited, just like the up-move of European equities.

At the time of writing, US yields are up 1.3 bp (30-yr) to 2.6 bps (5-yr). The German curve steepened a tad with 2- and 5-yr yields down less than 1 bp and the 10-to-30-yr yield up 0.8 to 1.5 bp. Peripheral bonds traded sluggish, increasing the 10-yr yield spread versus Germany by 3-to-4 bps (Spain/Portugal) to 8 bps (Italy). There was no specific reason to explain the underperformance, but some profit taking ahead of Draghi's speech or unwinding of carry spreads might have been at play.

Currencies

Dollar regains a few ticks within established ranges

Trading in the major dollar cross rates remained technical in nature today and confined to relatively tight ranges. The dollar reversed part of yesterday's decline as core rates rose a few basis points and as risk sentiment improved. However, USD investors basically remain in wait-and-see modus going into the Jackson Hole speeches.

Overnight, Asian equities showed moderate gains in thin volume trading. The yen eased slightly. USD/JPY tried to find a bottom after a protracted decline throughout August. EUR/USD hovered near 1.18.

The dollar finally gained some traction in Europe. EUR/USD reversed a substantial part of yesterday's gain. A positive risk sentiment supported core (EMU and US) yields. Interest rate differentials widened slightly in favour of the dollar. EUR/USD drifted off the 1.18 level. German ZEW confidence was slightly softer than expected, but still points to a healthy economic environment. There was no additional negative pressure on the euro after the report, but the EUR/USD downtrend continued. USD/JPY held north of 109.

The dollar rally ran into resistance during the US session and stabilized against the euro. USD/JPY initially held within reach of the intraday top supported by a constructive risk sentiment. However, the pair finally also lost some of its momentum and trades in the 109.25 area currently. EUR/USD is changing hands around 1.1760 . Today marks a USD positive intermezzo, but the global picture for the dollar hasn't changed as investors remain in wait-and-see modus ahead of the Jackson Hole event.

Sterling remains in the defensive

Sterling continued trading with a negative bias against the dollar and, to a lesser extent, also against the euro. Cable drifted from the high 1.28 area early in Europe and changed hands in the 1.2810/15 area early in US dealings. Most of the move was due to a rebound of the dollar. However, sterling also held near the recent lows against the single currency. EUR/GBP held a tight sideways range in the 0.9155/75 area and even touched a minor ST top. The UK data were not to blame. The UK August public budget showed an unexpected surplus (£ 0.8bln). The CBI order data were also better than expected. However, good eco/activity data don't help sterling these days as long as price rises remain modest and as there is little progress in the EU-UK Brexit talks. EUR/GBP trades in the 0.9170 area.

Copper contract for September broke through psychological $3.0000 and hit fresh high at 3.0135 on Tuesday, the highest since late Nov 2014. Fresh bullish acceleration that commenced from last week's correction low at $2.8750 extends into third consecutive day, with markets being driven more by technicals, as traders join broader longs in anticipation of further extension higher on sustained break above $3.0000 barrier. The price is currently riding on extended third wave of five-wave cycle from $2.5385 (21 June trough) which broke above its FE 200% and may travel to 3.0640, its 138.2% Fibonacci expansion. Hesitation to clearly break $3.0000 barrier could be expected, with downside attempts to be limited above former high at $2.9535 (09 Aug). Rising daily Tenkan-sen continues to underpin the advance and offers next strong support and at $2.9420.

Res: 2.9945; 3.0000; 3.0135; 3.0310
Sup: 2.9660; 2.9535; 2.9420; 2.9295

USD/CHF - 0.9682

New strategy  :

Buy at 0.9630, Target: 0.9730, Stop: 0.9595

Position : -

Target :  -

Stop : -

As dollar’s rebound has gathered momentum, suggesting the retreat from 0.9766 has ended at 0.9586 last week and consolidation with mild upside bias is seen for gain to 0.9720, then 0.9740, however, reckon resistance at 0.9766-73 would cap upside and bring further consolidation. Only a break of 0.9773 would retain bullishness and signal early rise from 0.9438 has resumed and extend gain to 0.9800.

In view of this, we are looking to buy dollar on pullback as 0.9620-30 should limit downside. Below 0.9600 would risk test of strong support at 0.9583-86 but only break there would signal a downside break of recent broad range has occurred, bring subsequent fall to 0.9550.

GBP/USD - 1.2838

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although cable has finally resumed recent decline as the pair broke below support at 1.2832, loss of downward momentum should prevent sharp fall below previous support at 1.2812 and reckon 1.2770 would limit downside, price should stay above 1.2750 and bring rebound later.

In view of this, would not chase this fall here and would be prudent to stand aside for now. Above the upper Kumo (now at 1.2875) would suggest an intra-day low is formed and bring a stronger rebound to 1.2890 but only break of resistance at 1.2917-18 would signal a temporary low is formed, bring retracement of recent decline to 1.2933-40 (previous support) first.