As widely anticipated, RBA left its cash rate unchanged at1.5% in February, its first meeting in 2017. Policymakers acknowledged improvement in the global economic outlook. They also retained the view that the domestic economy would growth above-trend. The overall monetary stance is neutral, signaling the central bank is in no hurry to adjust the policy. The market is closely awaiting Governor Philip Lowe's speech on Thursday and RBA's Statement on Monetary Policy (SoMP) on Friday. The SoMP would reveal policymakers' updated economic forecasts. We expect downgrades of both growth and inflation outlooks.

As noted in the monetary statement, RBA attributed that weaker-than-expected GDP growth in 3Q16 to temporary factors and forecast growth to return to normal in 4Q17. Policymakers judged that Australia's economy is 'continuing its transition following the end of the mining investment boom'. They maintained the central forecast of GDP growth at 'around +3% over the next couple of years', as driven by 'further increases in resource exports' and the end of declining mining investment'. They expected consumption growth to 'pick up from recent outcomes, but to remain moderate', as well as further improvement in non-mining business investment'. The central bank acknowledged that inflation has remained quite low. Yet, this has not changed its inflation forecasts with headline inflation expected to 'pick up over the course of 2017 to be above +2%'. The rise in underlying inflation is expected to be 'a bit more gradual'.

RBA indicated that the employment market was rather mixed. While the unemployment rate has picked up, growth in full-time employment 'turned positive late in 2016'. The central bank anticipated expansion in employment over the period ahead. Wage growth has remained subdued and is expected to stay low for some time.

On the housing market, RBA noted the developments 'vary considerably around the country'. As mentioned in the statement, 'conditions have strengthened further and prices are rising briskly' in some markets while 'prices are declining' in others. Policymakers acknowledged a 'considerable additional supply of apartments' coming, over the next couple of years, in the eastern capital cities. On rents, the central bank noted that its growth is 'the slowest for a couple of decades'.

RBA believed that the monetary policy has remained accommodative and should be 'consistent with sustainable growth in the economy and achieving the inflation target over time'. Policymakers added that the appreciation of Australian would complicate the monetary policy stance. We see the monetary statement is neutral, suggesting that RBA is not hurry to adjust its policy.

STOCKS

Nifty and Dow looks potentially bullish for the near term. Nikkei and Dax may remain stable for sometime before deciding on further direction.

Dow (20052.42, -0.09%) was almost stable above 20000 yesterday and could possibly try and move up in the near term. Immediate target for the coming sessions would be 20200-20400 levels.

The daily horizontal resistance at 11700 has held well on the Dax (11509.84, -1.22%), pushing down the index towards 11500. The index may remain trapped within the 11700-11400 resistance and support levels for a few more sessions before deciding on further directions. Overall the medium term trend is up.

Nikkei (18876.93, -0.53%) continues to remain in the 18651-19258 region and could possibly test support near 18650 before bouncing back from there. However, the 3-day and weekly charts show support at current levels which if hold may take the index higher in the near term.

Shanghai (3158.22, +0.04%) is trading just at resistance levels and could possibly see a rejection towards 3125 and lower in the coming sessions. The index is currently at inflection point as seen on the weekly line charts and a sharp movement from here could be the trend decider for the medium term. We need to keep a close watch on the price action at current levels.

Nifty (8801.05, +0.69%) looks like a strong performer amongst other indices mentioned above. Continuous rally breaking all immediate resistances is seen for quite sometime now. While the index is inching up along the daily channel resistance, in case we do not see any immediate correction, we may target 8900-8930 (crucial resistance) levels in the near term.

COMMODITIES

With the political risk outweighing the benefits expected from the US president, the demand for safe havens has increased and strengthened Gold (1232.11), which has reached our target zone of 1230-40. While the trend remains firmly up, a bout of profit booking can be expected if Gold fails to rise and sustain above 1240 soon.

Silver (17.68) remains strong on the back of a stable Gold-Silver ratio (69.63). Repeat – it may rise to 18.00 or even 18.40 in the near term but any weakness in Gold may affect this precious metal too.

Both Brent (55.91) and WTI (53.14) remain stuck in the 6-week ranges of 53-58 and 50-55 respectively. Immediate support comes at 54.25 for Brent and 51.50 for WTI above which the possibility of an upside breakout from their ranges remain strong.

Copper (2.64) is holding above the interim support at 2.61 so far but as discussed yesterday, a break below 2.60 may drag it down to 2.55-50. Repeat - the technical structure is damaged from a larger perspective and the resistance of 2.75 may not be tested soon.

FOREX

Safe haven demand has boosted Yen but Dollar hasn’t weakened anymore. The chances of an upside reversal for Dollar must be considered now though it still requires confirmation.

Dollar Index (100.03) is wandering just below our resistance of 100.25 after testing it yesterday but the chances of a breakout on the higher side for 101.00 and beyond has increased. Repeat - while the chance of a retest of the long term support at 99.00 can’t be ruled out yet, the bulls may try for a rally in the next few sessions.

Euro (1.0724) has corrected in line with expectations and a break below 1.0700-1.0680, if materializes in the next couple of sessions, may confirm a near term reversal to the downside.

Dollar-Yen (111.83) has broken the 4-day range of 112-114 to the downside as the demand for safe haven is driving money into Yen but the chances of a quick recovery above 112.00-35 can’t be ruled out yet as long as it stays above 111.30 levels. The downtrend remains in play but a sudden rally towards 114-115 may surprise the market in the next few sessions. Wait and watch.

Pound (1.2473) has managed to stay above the support of 1.2400 till now but the trend remains firmly down. The best case for the bulls would be sideways consolidation in 1.2400-1.2700 for the next few days.

Aussie (0.7654) is waiting for the RBA policy announcement due in the next hour where the rates are expected to remain unchanged. The target remains unchanged at 0.7750 where profit booking may be seen.

In the eve of the RBI meet, Dollar Rupee (67.22) remains weak but the chances of a Dollar demand re-emerging near 67.00-66.90 in the next 2-3 sessions must be kept in consideration now.

INTEREST RATES

RBI policy meet is due tomorrow and the market sentiments indicate that the RBI may cut 25bps tomorrow. The Indian 10Yr GOI (6.5499%) has increased slightly from levels near 6.5273% seen on last Thursday.

The US yields are coming off from resistance levels and could head lower this week. The 5YR (1.83%), 10YR (2.40%) and the 30Yr (3.04%) may fall towards 1.80%, 2.35% and 3.0% before bouncing back in the near term.

The US 30-10 (0.65%) and 30-5 (1.21%) have bounced slightly from horizontal support levels and could move higher in the near term.

The German yields are sharply falling and could move lower in the near term. The 10YR (0.37%) could head towards 0.30-0.25% before pausing.

EUR/USD

The American dollar closed the day firmer against most of its major rivals after a tepid start to the week, with the EUR/USD pair settling around 1.0735 after falling to a daily low of 1.0705. Such low came after the release of a poll carried by INSA for Germany’s Bild newspaper showing that Ms. Merkel’s Christian democrats have fallen into second place behind Germany’s centre-left opposition for the first time in a decade. Additionally, ECB's head Draghi has said before the Committee on Economic and Monetary Affairs of the European Parliament that the Bank is prepared to increase both the size and duration of its bond-buying program if the inflation outlook remains low.

In general, data released in Europe continued to signal a faster pace of growth in the region in the Q4 or 2016 and early 2017, as the EU Sentix Investor Confidence Index for February, came in at 17.4, matching market's expectations, but below previous 18.2. In Germany, Factory Orders rose by 5.2% in December, from a previously revised -3.6%, while the year-on-year reading resulted at 8.1% from previous 2.0%. In the US the Labor Market Conditions Index increased by 1.3% in January, indicating that the jobs' market remains healthy in the US.

The EUR/USD pair bounced was mostly technical, given that the pair has the 38.2% retracement of the November/January slide around it, while in the daily chart a bullish 20 DMA converges with a bearish 100 DMA around the level. The tepid posterior recovery, however, maintains the risk towards the downside for the upcoming sessions. In the 4 hours chart, the 100 SMA stands a few pips above the mentioned critical support, whilst the 20 SMA has turned flat around 1.0770. Indicators in this last time frame have lost their bearish strength, but remain within negative territory, supporting a downward extension on a breakout of the 1.0700/10 support area. A recovery beyond 1.0770 on the other hand, will favor another attempt of breaking beyond the 1.0800/40 price zone.

Support levels: 1.0710 1.0660 1.0620

Resistance levels: 1.0770 1.0800 1.0840

USD/JPY

The USD/JPY pair broke below the 112.00 level late in the US session, with the Japanese currency benefiting from market's turmoil. Uncertainty surrounding the US future, alongside with increasing political woes across Europe, has sent investors into safe haven assets, with the JPY and gold benefiting by the most daily basis. Adding to the bearish case of the pair were US Treasury yields that edged sharply lower at the beginning of the week, with the 10-year benchmark down to 2.42% from 2.49% last Friday, and the 30-year yield falling from 3.11% to 3.06%. Japan will release December preliminary coincident and economic indexes during the upcoming Asian session, expected to have improved from November's readings. Trading below the key 112.00 level, the 38.2% retracement of the latest bullish run, the 4 hours chart shows that the 100 SMA has accelerated its slide above the current level, whilst the Momentum indicator has been rejected from its mid-line on multiple attempts to regain the level, as the RSI extends its slide around 36, supporting further slides ahead, moreover on a break below 111.60, the 100 DMA.

Support levels: 111.60 111.25 110.80

Resistance levels: 112.00 112.45 112.80

GBP/USD

The GBP/USD pair fell for a third consecutive day, settling around 1.2460 after posting a daily low of 1.2427 at the beginning of the European session. There were no macroeconomic releases in the UK this Monday, with attention centered in the ongoing Parliament discussion over the Brexit bill. Policymakers are willing to make amendments to May's proposal, but the government said that they won't allow any Brexit legislation that attempts to keep Britain inside the EU. The House will vote next Wednesday, and in the meantime, tensions surrounding the matter will likely keep the Pound subdued. Short term technical readings are biased towards the downside, supporting additional declines ahead, particularly on a break below the mentioned low, as the level stands for the 38.2% retracement of this year's bullish run. In the 4 hours chart, the 20 SMA has turned south above the current level, now converging with the 23.6% retracement of the same rally at 1.2530, while the Momentum indicator has bounced from oversold readings, heading north below its 100 level, and the RSI indicator consolidates around 37.

Support levels: 1.2425 1.2390 1.2350

Resistance levels: 1.2495 1.2540 1.2585

GOLD

Spot gold rose to its highest since mid November, ending the day a few cents below a daily high of $,1232.95 a troy ounce. The commodity has benefited from an easing dollar ever since the year started, now accelerating its advance after the latest FOMC meeting's minutes suggest that a rate hike in the US won't come anytime soon. Weaker-than-expected wage growth in the US according to the NFP report released on Friday, support the safe-haven metal, further underpinned by increasing risk aversion. The metal has now trimmed half of its post-US elections losses, as the price stands around the 50% retracement of the November/December decline. In the daily chart, the 20 DMA accelerated higher and is currently aiming to cross above the 100 DMA, whilst technical indicators head north within positive territory, supporting some further gains for this Tuesday. In the 4 hours chart, technical indicators also present a strong upward momentum, with the RSI entering overbought territory, and the price well above bullish moving averages, in line with the longer term view.

Support levels: 1,230.00 1,221.65 1,215.00

Resistance levels: 1,237.30 1,245.20 1,255.05

WTI CRUDE

West Texas Intermediate crude oil futures fell sharply this Monday, down to 52.90 to settle at $53.06 a barrel by the end of the US session. Speculation about an increase in US oil output continues to curb optimism over OPEC output cut, after last week´s Baker Hughes and EIA reports, showing a large increase in stockpiles and in the number of oil drilling rigs. Technically, WTI remains in a consolidative phase, having retreated from the upper end of its range tested late last week. In the daily chart, technical readings maintain a neutral stance, as the price is currently struggling with a horizontal 20 SMA, whist technical indicators have turned lower around their mid-lines, with limited bearish strength. In the shorter term, and according to the 4 hours chart, the price is currently pressuring its 100 and 200 SMAs, both around 53.10, without confirming a break lower, whilst the RSI indicator maintains its bearish slope around 40, supporting additional declines towards the 52.00 region.

Support levels: 52.65 52.00 51.60

Resistance levels: 53.55 54.30 55.10

DJIA

US indexes closed with modest losses this Monday, with the Dow Jones Industrial Average down by 19 points or 0.09%, to settle at 20,052.42. The Nasdaq Composite closed the day at 5,663.55, down by 3 points, while the S&P lost 0.21%, to 2,292.56. Energy-related equities dragged Wall Street's lower, although strong earnings reports limited declines. Hasbro Inc. shares rose to their highest on record, after reporting an 11% increase in revenues during the last quarter of 2016. Within the Dow, Boeing was the best performer, up by 1.00%, whist Verizon Communications topped losers' list, down by 1.21%. The daily chart shows that the index remains well above a flat 20 SMA, whilst technical indicators have lost upward momentum and turned modestly lower within positive territory, not enough to confirm further slides. In the 4 hours chart, the index maintains a positive technical stance, given that technical indicators have resumed their advances after a modest downward correction from near overbought readings, whilst it remains well above a bullish 20 SMA.

Support levels: 20,010 19,945 19,896

Resistance levels: 20,090 20,141 20,200

FTSE 100

The FTSE 100 closed the day at 7,172.15, down 16 points or 0.22%, weighed by the negative mood among local traders, although a sharp advance in Randgold Resources, after the company reported a 76% advance in its Q4 net profit, kept losses subdued. The company was the best performer, closing the day 4.15% higher, followed by Mediclinic International, up by 1.97%. The worst performer was Tesco, down 2.15%. The daily chart shows that an early advance was contained by the 20 DMA, while technical indicators diverge from each other within neutral territory, lacking clear directional clues. In the 4 hours chart, the index remains between its 20 and 100 SMAs, with the largest acting as immediate resistance at 7,205. In this last time frame, technical indicators have bounced from near their mid-lines and maintain upward slopes, indicating a limited bearish potential in the short term, and favoring a modest recovery, to be confirmed with a break above the mentioned resistance.

Support levels: 7,163 7,128 7,091

Resistance levels: 7,205 7,258 7,312

DAX

The German DAX fell to its lowest since mid January, down 1.22% or 139 points to settle at 11,509.84, as the positive sentiment seen during the Asian session reverted, resulting in a strong slide in banking-related equities. Automakers also fell sharply, amid a decline in oil prices. Within the DAX, all components closed in the red, with Commerzbank being the worst performer, down 2.61%, followed by Adidas that closed 2.39% lower and Volkswagen that shed 2.38%. Ahead of the Asian opening the index stands around the mentioned close, having finally extended below a horizontal 20 SMA, whilst the Momentum indicator maintains a neutral stance, hovering around the 100 level, and the RSI indicator accelerates its decline, now heading south around 45, this last favoring a steeper decline, particularly on a break below 11,425, January 17th low. In the 4 hours chart, the upside was contained by a bearish 20 SMA that now converges with the 100 SMA at 11,628, whilst technical indicators maintain strong bearish slopes within negative territory, also indicating further slides ahead.

Support levels: 11,479 11,425 11,366

Resistance levels: 11,570 11,628 11,680

A couple of weeks ago, we were watching this USD/JPY level that was approaching at the time.

Back then, price was flirting with a weaker swing low support level, but the bears were still large and in charge and it was all about the higher time frame zone just below.

USD/JPY Daily:

The higher time frame zone that price has today lurched down into the midst of.

You could probably draw this level a little differently, using some of the other spikes printed back in February last year, but as we aren't just blindly buying the level, this subjectivity shouldn't really matter here.

Now we're into the higher time frame support zone, we wait to see if it holds and then zoom into an intraday chart such as the hourly.

USD/JPY Hourly:

It's here on the lower time frame chart that we will look for a long entry on any retest of short term levels. Find your levels, trade your levels. It's always the same.

Risks Abound

The market's tone has been one of risk-off, as political fallout in both Europe and the United States is weighing on investor resolve, imposing an unpalatable risk on investor sentiment. Investors are now seeking shelter in safe havens to weather the mounting risk.

Australian Dollar

The focus today will be on the RBA later in the session. The RBA are expected to maintain a very neutral stance, with little reason to expect any deviation from this steadfast approach. However, given a lack of communication from the central bank lately, the AUD may be susceptible to a shift in language. A shift in tone could come from either global trade concerns or the domestic front, as risk is building about inflation, which continues to run below RBA forecasts, or weakness in the latest employment rates, which could lead to a dovish tone from the RBA. That said, while the market is in the thick of a run in USD weakness, it is unlikely the RBA will alter their course on interest rates.

Yesterday's mushy retail sales print hung over the Aussie like a dark cloud overnight, and the slide in oil prices on the back of increases in the US rig count did not help the commodity block's cause.

Japanese Yen

Pick your poison for the latest dollar swoon. Whether it is a miss on US wage growth, Trump induced risk aversion, or softening of US yields, the so-called dollar correction is beginning to look like a full blown rout, as the dollar bulls concede yardage by the hour. Indeed, stops below ¥112.00 triggered the deeper move to ¥111.50.

If the near term line in the sand was indeed 112, the risk should be skewed for a deeper correction. However, I think traders are having a difficult time committing to longer term views in these politically charged environments, and are exhibiting reluctance to chase either side of the dollar coin. However, if the market cannot regain the ¥112.00 soon, dollar bears will pounce on the opportunity to drive the Greenback lower.

Moreover, for good measure, Reuters reported that Japan's former currency king Eisuke Sakakibara has said the USD could fall below 100 JPY by year-end, as Trump's perceived support for a weak dollar helps slow the pace of rate hikes by the Fed.

Euro

Political uncertainty is mounting as election storm clouds gather over the continent. From growing waves of populism to Penelope–gate, the threat of global risk aversion is starting to build.

On the French election front, Parisian's response to Francois Fillion comments that he has nothing to hide concerning Penelope–gate will be carefully monitored. Before his recent address, 61% of French voters and 31% supporters of the Right and the Centre think Fillon should have pulled out of the elections.

Emerging Market APAC

Investors continue to buy EM Asia on the back of broader based USD weakness. Over short term, this could increase as the USD is precariously perched and poised to move lower with all eyes focused on USDJPY after the break of ¥112.0.

US crude has lost ground in the Monday session. In North American trade, US crude futures are trading at $53.41. Brent crude futures have dropped to $56.03, as the Brent premium stands at $2.62. There are no major US events to start off the week. On Tuesday, the US will release JOLTS Job Openings, with the indicator expected to rise to 5.56 million.

The US released key employment numbers on Friday, to mixed reviews. Nonfarm payrolls jumped to 227 thousand, well above the estimate of 170 thousand. However, wage growth disappointed, as Average Hourly Earnings slipped to 0.1%, short of the forecast of 0.3%. There's no arguing that the US economy is performing well, but there is a sense of uneasiness in the markets as Donald Trump continues to create controversy and dissent both at home and abroad. Trump has picked a fight with Mexico and his travel ban on Moslems from seven countries has created a strong backlash. Moreover, the lack of an economic policy is a major source of concern and the the post-election euphoria which sent the markets higher appears to have dissipated. The Federal Reserve also in the dark about Trump's plans, and is expected to adopt a wait-and-see attitude in the coming months. If the economy continues to grow, there is a strong likelihood of another rate hike in the first half of 2017, which is bullish for the dollar.

Another week, another surplus in US crude stockpiles. On Wednesday, Crude Oil Inventories soared, with a surplus of 6.5 million barrels. This was much higher than the estimate of 2.6 million. This marked a fourth straight surplus, each of which handily beat the market forecasts. US oil drilling has been on the increase, and more US production could offset the recent Russia/OPEC agreement which is aimed at reducing global oil supplies by some 2 percent. Analysts say that compliance by producers which signed the agreement has been high. This in itself is a noticeable achievement, given rampant cheating in previous OPEC agreements. Despite this, the agreement, which went into effect on January 1, has not led to higher oil prices one month later. A broadly stronger US dollar has weighed on oil prices, but oil continues to waver – one analyst described the recent movement of crude as "a tug of war" between bears and bulls.

GBP/USD has posted slight losses in the Monday session. In North American trade, the pair is trading at 1.2440. On the release front, it's a quiet start to the week, with no major US events. The UK will release BRC Retail Sales Monitor. On Tuesday, the US will release JOLTS Job Openings, with the indicator expected to rise to 5.56 million.

The US released key employment numbers on Friday, to mixed reviews. Nonfarm payrolls jumped to 227 thousand, well above the estimate of 170 thousand. However, wage growth disappointed, as Average Hourly Earnings slipped to 0.1%, short of the forecast of 0.3%. There's no arguing that the US economy is performing well, but there is a sense of uneasiness in the markets as Donald Trump continues to create controversy and dissent both at home and abroad. Trump has picked a fight with Mexico and his travel ban on Moslems from seven countries has created a strong backlash. Moreover, the lack of an economic policy is a major source of concern and the the post-election euphoria which sent the markets higher appears to have dissipated. The Federal Reserve also in the dark about Trump's plans, and is expected to adopt a wait-and-see attitude in the coming months. If the economy continues to grow, there is a strong likelihood of another rate hike in the first half of 2017, which is bullish for the dollar.

The Bank of England stood pat last week, making no changes to interest rates or asset-purchases. Interest rates have been pegged at 0.25% since August 2016 and asset purchases at 435 billion since July 2016. The BoE sharply raised its forecast for growth in 2017, from 1.4% to 2.0%. This is testament to the British economy which has performed much better than expected since the Brexit vote back in June. On the inflation front, BoE Governor Carney said that he expected inflation to reach the bank's 2 percent target later this month. Still, the pound dropped, as Carney stated that the bank remained neutral regarding which way rates would go next. The BoE appears comfortable with low rates, despite stronger inflation due to the a weak pound and higher oil prices. Carney reiterated his concerns about Brexit, saying that Britain's road out of Europe would be marked by "twists and turns".

It's been mixed start to trading at the beginning of the week as Friday's jobs data continues to sink in and investors wait to see what Donald Trump does next.

The new US President has been extremely active since his inauguration which has kept investors on their toes given the combination of market friendly and unfriendly policies that got him elected. Deregulation was the latest target for the President which provided a big boost to financial stocks on Friday as he aims to undo some of the regulatory burden created by Dodd-Frank following the financial crisis.

The unpredictable nature of Trump though makes it very difficult to anticipate what his next moves will be, as evidenced by his actions a week ago on immigration. This may ensure for now at least that while markets have remained volatile, a more cautious approach will be adopted during the bedding in period. It's a rather quiet week from the perspective of central bank decisions and economic data which will likely feed into this as well. Earnings season may provide a distraction for investors with almost one in five S&P 500 companies due to report on the fourth quarter.

Friday's jobs report didn't exactly leave us any-the-wiser on the health of the US economy, despite the number of jobs being created in January far exceeding expectations. Unemployment ticked higher as participation rose, which was one of the more positive aspects of the report, even if the headline number would perhaps suggest otherwise.

The earnings component of the report was the biggest disappointment, with annual growth falling back to 2.5% from 2.9% in December.

The inflation side of the Fed's dual mandate remains a barrier to the central bank raising interest rates three times this year, as it signaled in December it intends to. For inflation to run sustainably in line with the Fed's target, wage growth needs to improve and so Friday's report may be seen as more of a setback, despite impressive job creation. Investors clearly took it that way as near term rate hike expectations took another hit, with the market implied probability of a March rate hike now down to just 13%. June is still seen as the most likely meeting for the next increase, with markets pricing in a 68% chance currently.

Euro trades mildly softer today in rather quiet markets. Eurozone Sentix investor confidence dropped to 17.4 in February, down from 18.2, but beat expectation of 17.4. Sentix noted in the release that "investors are reacting to Donald Trump's first official acts and see in these a burden for the global economy." Eurozone PMI dropped 0.3 pt to 50.1 in January. German factory orders rose 5.2% mom in December, versus expectation of 0.7% mom. German finance minister Wolfgang Schäuble blamed ECB for making Euro's exchange rate "too low" and monetary polices that are "too loose" for Germany. He said that "when ECB chief Mario Draghi embarked on the expansive monetary policy, I told him he would drive up Germany's export surplus.... I promised then not to publicly criticise this [policy] course. But then I don't want to be criticized for the consequences of this policy."

The British Chambers of Commerce said today that depreciation in the exchange rate of Sterling has been a "double edged sword" for many UK businesses. And, "nearly as many exporters say the low pound is damaging them as benefiting them." And "or firms that import, it's now more expensive, and companies may find themselves locked into contracts with suppliers and unable to be responsive to currency fluctuations." Also, " inflation is going to be an important concern for businesses over the coming year." According to the survey in BCC poll, nearly half of 1500 companies said decline in Pound had a negative impact of domestic sales margins, 25% said it had positive impact on export margins, 22% said it had negative impact of export margin.

Elsewhere, Japan labor cash earnings rose 0.1% yoy in December, below expectation of 0.4% yoy. Australia retail sales dropped -0.1% mom in December versus expectation of 0.3% mom growth. China Caixin PMI services dropped 0.3 pt to 53.1 in January.

Aussie drops mildly today after much weaker than expected data. But it's staying as the strongest major currency for the month so far. RBA rate decision will be a focus in the upcoming Asian session. It's widely expected the central bank will keep interest rate unchanged at 1.50%. Nonetheless, more attention would indeed be on the monetary policy statement on Friday, which would give more information on how RBA views recent patch of soft data.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0729; (P) 1.0763 (R1) 1.0818; More.....

EUR/USD weakens mildly today but stays in range of 1.0619/0828. Intraday bias remains neutral first. As noted before, choppy rise from 1.0339 is seen as a correction. Hence, in case of another rise, upside should be limited by 1.0872 resistance and bring fall resumption eventually. Break of 1.0619 will turn bias to the downside for retesting 1.0339 low.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

Economic Indicators Update

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Daily Pivots: (S1) 1.0729; (P) 1.0763 (R1) 1.0818; More.....

EUR/USD weakens mildly today but stays in range of 1.0619/0828. Intraday bias remains neutral first. As noted before, choppy rise from 1.0339 is seen as a correction. Hence, in case of another rise, upside should be limited by 1.0872 resistance and bring fall resumption eventually. Break of 1.0619 will turn bias to the downside for retesting 1.0339 low.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

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