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Daily Pivots: (S1) 0.7600; (P) 0.7624; (R1) 0.7640; More...

AUD/USD's fall from 0.7748 continues today and intraday bias remains on the downside for 0.7490 support. Firm break there will confirm completion of rise from 0.7158. In such case, near term outlook will be turned bearish for 0.7158 support next. On the upside, though, above 0.7647 minor resistance will turn bias back to the upside for 0.7748 and above. At this point, we'd continue to expect strong resistance from long term retracement level at 0.7849 to limit upside.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8169) and above.

Daily Pivots: (S1) 110.16; (P) 110.60; (R1) 111.10; More...

With 111.57 minor resistance intact, deeper decline is still expected in USD/JPY. Current fall from 118.65 should target 100% projection of 118.65 to 111.58 from 115.49 at 108.42 and possibly below. On the upside, break of 111.57 resistance is needed to indicate short term bottoming. Otherwise, near term outlook stays mildly bearish in case of recovery.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. sustained trading below 55 week EMA (now at 111.11) will indicates that such consolidation is not completed. And another fall would be seen back to 98.97 as the third leg. In that case, downside would be contained by 61.8% retracement of 75.56 to 125.95 at 94.77 to complete the correction. On the upside, above 115.49 will extend the rise from 98.97 to retest 125.85 first. Overall, up trend from 75.56 is expected to resume after the consolidation from 125.85 completes.

Daily Pivots: (S1) 0.9812; (P) 0.9854; (R1) 0.9894; More.....

Intraday bias in USD/CHF remains on the downside for the moment. Current fall from 1.0342 should extend to 100% projection of 1.0342 to 0.9860 from 1.0169 at 0.9687 and possibly below. On the upside, break of 0.9959 resistance is needed to indicate short term bottoming. Otherwise, outlook will stay bearish in case of recovery.

In the bigger picture, USD/CHF is staying in medium term sideway pattern between 0.9443/1.0342. In any case, decisive break of 1.0342 resistance is needed to confirm underlying strength. Otherwise, we'll stay neutral in the pair first. In case of deeper fall, we'd expect strong support from 0.9443/9548 support zone.

USD/JPY - 110.54

Most recent candlesticks pattern   : N/A

Trend                      : Down

Tenkan-Sen level              : 110.68

Kijun-Sen level                  : 110.47

Ichimoku cloud top             : 110.86

Ichimoku cloud bottom      : 110.73

Original strategy  :

Sell at 111.00, Target: 110.00, Stop: 111.35

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 111.20, Target: 110.20, Stop: 111.55

Position :  -

Target :  -

Stop : -

The greenback recovered after falling to 110.11 and consolidation above this level would be seen and corrective bounce to 110.95-00 cannot be ruled out, however, reckon upside would be limited to 111.15-20 (38.2% Fibonacci retracement of 112.90-110.11) and price should falter well below resistance at 111.48, bring another decline later, below said support at 110.11 would signal recent decline is still in progress and may extend weakness to 109.95-00 but loss of downward momentum should prevent sharp fall below 109.70-75 and reckon 109.50 would hold.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 111.15-20 should limit upside. Above 111.48-51 (previous resistance and 50% Fibonacci retracement of 112.90-110.11) would abort and signal low is formed, bring a stronger rebound to 111.80-85 first (61.8% Fibonacci retracement).

Daily Pivots: (S1) 1.0822; (P) 1.0864 (R1) 1.0904; More.....

Intraday bias in EUR/USD remains on the upside. Current rise from 1.0494 should target 100% projection of 1.0339 to 1.0828 from 1.0494 at 1.0983. At this point, we're still treating rise from 1.0339 as a correction. Hence, we'd expect strong resistance from 1.0983 to limit upside and bring near term reversal. On the downside, break of 1.0760 support will turn bias back to the downside for 1.0494 support. However, firm break of 1.0983 will dampen our view and put focus on 1.1298 key resistance.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.

Daily Pivots: (S1) 1.2488; (P) 1.2551; (R1) 1.2621; More...

GBP/USD retreats mildly after hitting 1.2614. With 1.2468 minor support intact, further rise would be seen to 1.2705/74 resistance zone. Rise from 1.2108 is seen as part of the consolidation pattern from 1.1946. We'd expect upside to be limited by 1.2705/2774 to bring down trend resumption eventually. On the downside, below 1.2468 minor support will turn bias back to the downside for 1.2108 support first. Though, sustained break of 1.2774 will extend the rise towards 1.3444 key resistance level.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Dollar gains some ground against European majors and Yen as market sentiments stabilized mildly. But near term outlook remains bearish and more downside should be seen in the greenback in near term. DJIA closed down -0.22% at -20550.98 after diving to as low as 20412.80. S&P 500 also closed down -0.1% at 2341.59 after hitting as low as 2322.25. Both indices drew support from 55 day EMAs and pared much losses before close. Nikkei recovers today by gaining 1.14% and is back above 19200. US President Donald Trump will remain a focus of the markets as his ability to implement his policies is in serious doubt. Trump will sign another executive order today to curb enforcement of climate regulations.

Chicago Fed Evans: Two is the "right number" for rate hike

Chicago Fed President Charles Evans said that US President Donald Trump's failure on health care act added to the many uncertainties remained. For him, two rate hikes this year "might be the right number if there's a little bit more uncertainty". And, "to the extent that I gain more confidence in the forecast I have, that would be a good indicator that I could perhaps support three." Some media quoted four hikes as a possibility but according to Evans, that's only "if things really take off, if we get continued strong growth and if underlying inflation really picks up".

Separately, Dallas Fed President Robert Kaplan reiterated his preference for a gradual pace of tightening. He noted that "you don't want to just slam on the brakes. You want to ease off of the accelerator first". And, at the same time, "monetary policy does operate with a lag."

ECB Praet: Premature to talk about stimulus exit

ECB Chief Economist Peter Praet indicated that deflation risk in the region is gone. Yet, it remains "premature to talk about exit". By contrast, Bundesbank President Jens Weidmann once again called for "less expansive" monetary policy. Indeed, Weidmann has been urging ECB to review the bond buying program. For instance, he questioned last week why "the ECB governing council shouldn't slowly consider an exit from very loose monetary policy". ECB executive board member Sabine Lautenschläger said the central bank should "prepare for a change in the policy and as soon as the data is stable and we have a sustainable path towards our objective of price stability then we are well prepared to do."

Scotland FM Sturgeon: Frustrated by not being listened

In UK, Prime Minister Theresa May met Scotland's First Minister Nicola Sturgeon in Glasgow yesterday for a meeting that last around an hour. Sturgeon expressed afterwards that she was "frustrated by a process that appears not to be listening. She has called for another independence referendum and the Scottish Parliament is expected to back her today. On the other hand, May repeated that "now is not the time" for another independence referendum for Scotland but kept herself open for one after Brexit process is complete.

UK PM May is scheduled to trigger Article 50 for Brexit tomorrow. Ahead of that, Brexit secretary David Davis said that the government had a "huge contingency plan" for UK leaving EU without a deal. Davis said there will be measures to restore control to the borders and the new system would be "properly managed". But he didn't specify anything on the changes to the immigration system.

On the data front...

US data are the main features today with trade balance, wholesale inventories, S&P Case-Shiller house price and consumer confidence featured.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.2488; (P) 1.2551; (R1) 1.2621; More...

GBP/USD retreats mildly after hitting 1.2614. With 1.2468 minor support intact, further rise would be seen to 1.2705/74 resistance zone. Rise from 1.2108 is seen as part of the consolidation pattern from 1.1946. We'd expect upside to be limited by 1.2705/2774 to bring down trend resumption eventually. On the downside, below 1.2468 minor support will turn bias back to the downside for 1.2108 support first. Though, sustained break of 1.2774 will extend the rise towards 1.3444 key resistance level.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Economic Indicators Update

Markets recover as selling on failed US healthcare bill subsides

US Session Highlights

(RU) Senate Intel Committee reportedly requests White House aide Jared Kushner to be interviewed regarding prior Russia meeting - press

(MX) Mexico Central Bank Gov Carstens: if bilateral relations go well, peso could strengthen to levels seen before the US election or even more - press interview

(QA) Qatar Energy Min: OPEC supply cut deal must be judged over the agreement's full cycle

(US) MAR DALLAS FED MANUFACTURING ACTIVITY: 16.9 V 22.0E

US markets on close: Dow -0.2, S&P500 -0.1%, Nasdaq +0.2%

Best Sector in S&P500: Healthcare

Worst Sector in S&P500: Telecom

Biggest gainers: HCA +5.2%, UHS +3.4%, BBY +3.0%, VIAB +2.9%, FLS +2.9%

Biggest losers: FCX -4.7%, FTR -3.4%, HAL -3.3%, KIM -2.6%, SEE -2.5%

At the close: VIX 12.5 (-0.5 pts); Treasuries: 2-yr 1.27% (+2bps), 10-yr 2.37% (-3bps), 30-yr 2.98% (-2bps)

US movers afterhours

PSIX: Announces strategic investment and collaboration agreement with Weichai America Corp; +47.7% afterhours

RHT: Reports Q4 $0.61 v $0.61e, R$629M v $619Me; +5.3% afterhours

DRI: Reports Q3 $1.32 v $1.27e, R$1.88B v $1.86Be (earnings released a day early); Raises FY17 $3.95-4.00 v $3.93e, guides SSS ~1.5%; +3.9% afterhours

SNX: Reports Q1 $1.82 v $1.66e, R$3.52B v $3.50Be; +2.2% afterhours

DECK: Red Mountain (3.3% stake) calls on Deckers to explore sale of the company; +1.8% afterhours

HUN: Guides Q1 adj EBITDA to exceed $274M; provides restart time-line for Pori, Finland Pigment Facility; +0.7% afterhours

Politics

(US) US White House press secretary Spicer: August is potential target date for tax reform, depends on consensus on 'big issues'

(US) Seven Democratic Senators ask Carl Icahn to explain role in the Trump administration - press

(US) House Ways & Means Chair Brady (R-TX): not looking to repeal Obamacare taxes via upcoming tax reform legislation

(US) White House said to consider infrastructure and tax reform as a package deal; Prepared to work with Democrats after feeling burned by Freedom Caucus - Axios

Asia Key economic data:

(KR) SOUTH KOREA Q4 FINAL GDP Q/Q: 0.5% V 0.4%E; Y/Y: 2.4% V 2.3%E

(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.8 v 112.0 prior

Asia Session Notable Observations, Speakers and Press

Key Asian equity indices are higher with the exception of the mainland, as market takes note of the rebound on Wall St to much more benign losses relative to the tumble in the morning session. Investors are willing to test a bottom in hopes that the White House has learned its lesson from the healthcare debacle to seek a broader consensus as it moves forward to more economy sensitive tax reform, deregulation, and infrastructure investment. Indeed, an Axios report notes that Trump is prepared to work more with the Democrats after feeling burned by Freedom Caucus while combining tax reform with an infrastructure investment initiative that may be an easier sell to the left. However, POTUS was also active on Twitter late on Monday, claiming that Democrats will come to him to fix healthcare once Obamacare fails

In FX, JPY was under some early pressure on risk-on flows, with USD/JPY rising about 25pips above 110.80. Other USD majors are consolidating recent greenback selling in narrow ranges with an eye on Tuesday's Consumer Confidence data.

Asia economic calendar is very light until Friday of this week. Today's only notable data were Q4 GDP figures from South Korea, where final prints rose slightly from prelim levels on smaller decline in construction investment and CAPEX.

In China, CNY weakened after PBoC set its yuan fix lower for the first time in 5 days. PBoC also skipped its open market operations for the first time in 3 days pledging it will maintain relatively tight liquidity. On that note, Hong Kong earnings season is entering its final stretch with China's top banks on tap for FY16 results.

China

(CN) China Govt: China continues to face serious challenges in cutting steel overcapacity

(CN) PBoC said to maintain relatively tight liquidity - Chinese press

(CN) China Finance Ministry: Jan-Feb profit for China SOEs rose 40.3% y/y to CNY301.9B; Rate of growth rose from 1.7% in 2016 and 14.2% y/y - Chinese press

Japan

(JP) Former BOJ Chief Economist Momma: BOJ should adopt rate guidance to improve its communication with the market and give clearer signals on the direction of borrowing costs

(JP) Japan Fin Min Aso: Japan Cabinet asks for smooth enactment of FY17 budget

Korea

(KR) North Korea said to have conducted another missile engine test last Friday - financial press

Asian Equity Indices/Futures (00:30ET)

Nikkei +1.0%, Hang Seng +0.5%, Shanghai Composite -0.3%, ASX200 +1.2%, Kospi +0.2%

Equity Futures: S&P500 +0.2%; Nasdaq +0.2%; Dax +0.1%; FTSE100 +0.1%

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.0855-1.0870; JPY 110.50-110.80; AUD 0.7610-0.7635; NZD 0.7035-0.7050

Apr Gold -0.1% at $1,255/oz; May Crude Oil +0.5% at $47.98/brl; May Copper -0.3% at $2.63/lb

SPDR Gold Trust ETF daily holdings rise 2.7 tonnes to 835.3 tonnes

(CN) PBOC SETS YUAN MID POINT AT 6.8782 V 6.8701 PRIOR; First weaker setting in 5 days

(CN) PBoC skips open market operations for 3rd straight session; Said to drain ¥70B

(AU) Australia MoF (AOFM) sells A$150M in 2.0% 2035 inflation-indexed Bonds; avg yield: 1.0930%; bid-to-cover: 5.63x

Asia equities/Notables/movers by sector

Consumer discretionary: 493.HK Gome Electrical Appliances +1.0% (FY16 result); 1055.HK China Southern Airlines -2.2% (cooperation with American Airlines); 3197.JP Skylark Co -4.4% (Bain Capital may sell partial stake); MTR.AU Mantra Group +11.9% (buyout speculation); MYR.AU Myer Holdings -5.0% (block trade)

Consumer staples: 1610.HK COFCO Meat Holdings +1.7% (FY16 result)

Financials: 1112.HK Biostime International Holdings +5.2%, 1918.HK Sunac China Holdings +9.4% (annual result)

Industrials: 822.HK Kai Shui International Holdings +3.3%, 3969.HK China Railway Signal & Communication Corporation -3.0% (FY16 result)

Technology: 110.HK China Fortune -2.9% (profit warning); 6899.HK Ourgame International Holding -6.0%, 981.HK Semiconductor Manufacturing International Corp +3.6% (FY16 result); 2039.HK China International Marine Containers Group +3.2% (FY16 result)

Materials: 893.HK China Vanadium Titano-Magnetite Mining -4.6% (FY16 result); SYR.AU Syrah Resources +5.4% (signs MOU)

Market movers today

It is a fairly thin data calendar today.

In the US, we are due to get Conference Board Consumer Confidence for March. The preliminary numbers from the University of Michigan for March indicate that consumer confidence remained at a very high level in March and we expect the Conference Board figures to confirm this impression. Hence, we estimate the March Conference Board figure will be 114.0.

Selected market news

Global risk sentiment improved after the sell-off prompted by the failure by the US Congress to pass legislation to repeal Obamacare. This morning, most Asian indices are rebounding in line with the recovery in US stocks yesterday. US Fixed income markets are also losing some momentum after the rally since mid-March. Equity markets appear to have taken comfort in the fact that less aggressive fiscal policies in the US may prompt weaker inflation pressures, which will allow the Federal Reserve to refrain from hiking rates as much as it has indicated. Yesterday, Fed Bank of Chicago President Charles Evans said that two hikes may be the right amount of tightening for the US economy this year, given the uncertainty surrounding the outlook for inflation and government spending.

Ahead of the expected triggering of Article 50 by the UK government this week, tension is already growing between the EU and the UK government. UK Brexit Secretary David Davis said that Britain will pay ‘nothing like' the sums of money European Union officials have floated as needing to be paid when the UK leaves. Over the weekend, EU commission president Jean- Claude Juncker said the UK will be expected to pay around GBP50bn (covering liabilities such as pensions for EU officials, infrastructure projects and the bail-out of Ireland). The UK side is rebuking such figures as there has been ‘no explanation' for the amount.

In South Africa, political risk premia flared up again after Finance Minister Pravin Gordhan was called back from an investor road trip to London by President Jacob Zuma. This prompted speculation that Gordhan will be replaced as Finance Minister by Brian Molefe, a relatively new member of parliament. Molefe has sat on the boards of some of South Africa's biggest stateowned enterprises and has also worked at the Treasury. We think the markets will see him as a weaker minister than Gordhan if he is appointed to the role. As a result, the USD/ZAR shot up by 2% yesterday when the news broke. We think that the ZAR could weaken by more in the coming days if the stories take hold.

We are taking the more aggressive view in USDJPY and calling the rally to 115.48 on 3/10 as Intermediate wave (B). Decline from there is unfolding as a 5 waves impulse Elliott wave structure with an extension in wave 3. Down from 115.5, Minor wave 1 ended at 114.46 and Minor wave 2 ended at 115.2. Minor wave 3 is extended and further subdivided into 5 impulse waves where Minute wave ((i)) ended at 112.88, Minute wave ((ii)) ended at 113.56 and Minute wave ((iii)) ended at 110.59, Minute wave ((iv)) ended at 111.34, and Minute wave ((v)) of 3 is proposed complete at 110.077. Minor wave 4 bounce is currently in progress towards 111.27 – 112.02 area, which is 23.6 – 38.2 retracement of Minor wave 3, before further downside is seen to complete Minor wave 5 towards as low as 106.85 – 108.5 area. Bounce is expected to be limited and shallow.

If the current bounce gets too big, then as an alternate, the move lower in USDJPY from 115.5 high is unfolding as a zig zag Elliottwave structure where Minor wave A ended at 110.077 low with subdivision of 5 impulsive waves . In this alternative view, current bounce will then be bigger as it’s a Minor wave B bounce to correct decline from 3/10 high (115.52), but still as far as pivot at 115.2 stays intact, pair should resume lower again in Minor C. This alternate view is the less aggressive view but still calling for more downside in the pair as far as pair stays below 3/10 high. In both views (aggressive and less aggressive), we don’t like buying the pair.

1 Hour USDJPY Elliott Wave Chart