EURUSD

The EURUSD was indecisive yesterday. Price attempted to push lower bottomed at 1.0729 but closed a little bit higher at 1.0767 and hit 1.0788 earlier today. The bias is neutral in nearest term but overall price is still in a bullish phase since bounce from 1.0350 as you can see on my H1 chart below. Immediate support is seen around 1.0730 but key support remains at 1.0650. Immediate resistance is seen around 1.0800 followed by 1.0850/70. Overall I remain neutral.

GBPUSD

The GBPUSD continued its bullish momentum yesterday topped at 1.2679. The bias remains bullish in nearest term testing 1.2750 before testing 1.2790 key resistance which is a good place to sell with a tight stop loss. Immediate support is seen around 1.2615. A clear break below that area could lead price to neutral zone in nearest term testing 1.2565 area. Overall I remain neutral.

USDJPY

The USDJPY was indecisive yesterday. Price attempted to push higher topped at 113.95 but closed lower at 113.22. The bias is neutral in nearest term probably with a little bearish bias testing 112.00 region. Immediate resistance is seen around 113.50 followed by 113.95. As long as stay below 115.60 I still prefer a bearish scenario at this phase and any upside pullback should be seen as a good opportunity to sell.

USDCHF

The USDCHF failed to continue its bearish momentum yesterday topped at 0.9956. The bias is neutral in nearest term but overall price is still in a valid bearish phase targeting 0.9800. Immediate resistance is seen around 0.9956. A clear break above that area could trigger further bullish pullback testing 1.0000 area. Overall I remain neutral.

Sunrise Market Commentary

• Rates: Fed keeps it simple; US Treasuries rebound
  US Treasuries rebounded as the Fed kept its monetary policy unchanged without giving a hint about when the tightening cycle will continue. Its policy statement was nearly a copy for the December one. Today's eco calendar is thin with only US weekly jobless claims. Speeches by ECB governors and the BoE policy meeting are wildcards.
• Currencies: Fed doesn't help the dollar
  Yesterday, the USD returned gains eked out after strong eco data as the Fed stayed muted on the timing of further rate increases. Today, a cautious risk-off sentiment may continue to weigh on the dollar. Sterling traders keep a close eye on the BoE policy decision. A positive BoE assessment might be (moderately) supportive for sterling

The Sunrise Headlines

• US stock markets ended close to unchanged with Nasdaq outperforming (+0.5%). Overnight, most Asian stock markets lose ground with Japan underperforming on the back of a stronger yen.
• The Federal Reserve kept its monetary policy unchanged and said it remains on track to gradually raise short-term interest rates this year without giving a hint about when the next increase might come.
• Facebook's revenue and earnings soared in the fourth quarter despite investors' concerns sales will slow as it hits the limit on how many advertisements it puts in its news feed.
• Australia boasted its biggest trade surplus on record in December as surging commodity prices showered the resource-rich nation in cash, a windfall that could lessen the risk of a downgrade to its triple A credit ratings.
• Theresa May won lawmakers' OK to trigger EU separation talks by the end of March, though lawmakers warned not to mistake that for unconditional support to negotiate freely. The government outlines its strategy today.
• Italy has pledged to meet the EU's demands for extra cuts to its budget deficits by ramping up its tax evasion efforts and introducing new spending cuts, though the timing and precise scale of the move remain uncertain.
• President Trump urged Republicans in the Senate to make a major change to the chamber's voting rules if Judge Gorsuch can't attract the necessary Democratic support to win confirmation for the Supreme Court.
• Today it's Carney's first "Super Thursday" of 2017, with the BOE chief presiding over a policy decision, new inflation forecasts and a press conference. ECB Draghi, Praet and Coeure speak and US weekly jobless claims will be published

Currencies: Fed Doesn't Help The Dollar

Dollar in the defensive as Fed stays muted

On Wednesday, risk sentiment improved. Initially, dollar gains remained very limited. A very strong ADP report and a solid US manufacturing ISM propelled the dollar, even as investors remained cautious ahead of the FOMC meeting. The Fed policy statement didn't give any hint on the timing of a next rate hike. Investors expected something more sending USD bond yields a few basis points lower. The dollar lost most of its intraday gains. USD/JPY closed the session at 113.25. EUR/USD finished the day at 1.0769.

Overnight, Asian equities open mixed, but are drifting well into negative territory. The dollar remains in the defensive in the wake of yesterday's dull Fed statement. This is often a positive for Asian equities (ex-Japan), but not today. USD/JPY declines and is changing hands in the 112.65 area. So, the correction low (112.08) is on the radar. EUR/USD is returning to the 1.08 barrier.

Today, there are no key eco releases. US. So the focus for USD trading will be on global issues. Investors will also look forward to tomorrow's US payrolls. There is no direct link between the BoE policy decision and the timing of any further steps of the Fed. However, the BoE completing its asset purchases and raising its growth forecasts might be another sign that global monetary conditions are gradually turning to tighter. If so, there might be some positive spill-over effects on the dollar. On the other hand, the Fed clearly doesn't want to anticipate on the expected pro-growth policy of the Trump administration. This is a short-term dollar negative. At the same time, the risk momentum is apparently again turning risk-off today, as investors are growing nervous on the unconventional policy style and the protectionist approach of the Trump administration. So, Trump-driven uncertainty might weigh on the USD. However, the losses of the dollar might remain limited ahead of tomorrow's US payrolls. Yesterday's price reaction showed that, despite rising global uncertainty, the dollar is still sensitive to strong US eco data. So, a break of the EUR/USD 1.0874 is unlikely today.

Global context. Of late, the USD rally due to the Trump reflation trade petered out. Even more, the Trump politics/communication is becoming a sources of global uncertainty that weighs on the dollar. EUR/USD cleared a next minor resistance at 1.0775. Next resistance is coming in at 1.0874. The day-to-day USD momentum has become more fragile. A return above EUR/USD 1.0874 would question the short-term USD positive outlook. At some point, the absolute interest rate support should provide a USD floor, but we are not in a hurry to play this card. We wait for technical signals that the USD correction has run its course. Tomorrow's payrolls, if strong, might provide such a signal. USD/JPY is trading well off the post-Trump highs (118.60/66). The rebound off the lows (112.08) isn't convincing. USD/JPY 111.16 (38% retracement of the 99.02/118.66 rally) is the next key support.

EUR/USD dollar remains in the defensive as Fed remains cautious on further rate hike

EUR/GBP

BoE to support sterling?

Yesterday, the UK currency found its composure after a setback on Tuesday. The UK January manufacturing PMI printed in line with expectations at 55.9, but prices rose sharply, questioning the appropriateness of an ongoing ultra-easy BoE policy. EUR/GBP started a gradual but protracted intraday downtrend. The positive risk sentiment also supported sterling, in particular against the euro. Investors were also looking forward to today's BoE policy meeting. EUR/GBP closed the session at 0.8509. Cable also profited from a softer dollar post-Fed and finished the session at 1.2659, testing the recent highs.

Today, the focus for sterling trading will be on the BoE's policy decision. The BoE will probably acknowledge the resilience of the UK economy post Brexit and raise its growth forecasts. The inflation forecast will probably be little changed. The BoE already expected an overshoot of the target due to the decline of sterling. Until now, the BoE maintained a relatively soft policy bias related to the uncertainty/potential negative impact of the Brexit-process. We expect that this will remain the case. The BoE is also expected to finish its bond buying plan this month, as planned. Carney probably will try to avoid further market rate hike speculation. However, individual members might stress upside risks. We expect a balanced approach, but the market/sterling is probably more sensitive to positive signals/deviations rather than to warnings of downside risks. In this context, a retest of the 0.8450 support is possible

EUR/GBP: 0.8450 support still within reach going into the BoE policy decision”

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Currency pair GBP/USD

The GBP/USD is retesting the resistance trend line (red). A bearish bounce could confirm a wave X (blue) and see price test the Fibonacci levels of wave B (green). A break above the 138.2% Fibonacci level of wave X vs W invalidates wave X (blue) and makes an uptrend likely.

The GBP/USD seems to be building a rising wedge chart pattern (red/green). A breakout (arrows) could occur to both sides of the support and resistance trend lines.

Currency pair EUR/USD

The EUR/USD showed a bearish bounce as expected at the 88.6% level resistance level. The bearish bounce however has been choppy and mild. A break above the 88.6% makes a wave 2 (brown) unlikely and a break above 100% invalidates this wave structure. A break below support (blue) could spark wave 3 (green).

The EUR/USD is showing hesitation when developing bearish price action and is finding support along the way. Price bounced at the 38.2% Fibonacci support level of wave X vs W and is now retesting the resistance trend line (red).

Currency pair USD/JPY

The USD/JPY is retracing back to the Fibonacci levels of wave 4 (purple). Either the 38.2% or 50% are likely bounce spots for such a wave 4 (purple).

The USD/JPY is building a bearish ABC (orange) zigzag within wave Y (blue).

A note on lower timeframe confirming price action…

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails – essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

EUR/USD

For those who read Wednesday's report on the EUR you may recall that our desk executed a market sell order at 1.0798, with a stop placed at 1.0824. Fueled by the upbeat numbers seen from both the US ADP non-farm employment change and US manufacturing PMIs, the trade struck the H4 support area at 1.0765-1.0753 during yesterday's sessions. 50% of the position was taken off the table, and risk was also reduced to breakeven. The final take-profit zone, according to our team, is set around the 1.07 neighborhood which is sited only a few pips south of daily support coming in at 1.0710.

Why we entered short where we did was due to the following converging structures: a H4 Quasimodo resistance level at 1.0796, a 1.08 handle, a H4 88.6% Fib resistance at 1.0810, Weekly resistance at 1.0819 and a H4 symmetrical AB=CD approach terminating at 1.0805. Well done to any of our readers who jumped on board here!

Our suggestions: Although there is a chance that price may retest the above noted H4 sell zone today, thereby taking us out of the current position, an additional retest could offer traders (and us) a second opportunity to trade this area. Why would we look to enter here when the zone may have been weakened by yesterday's decline? Good question! Well, apart from the fact that weekly resistance at 1.0819 is now IN PLAY, stops below the H4 support area mentioned above at 1.0765-1.0753 have also very likely been taken out, thus clearing the path south down to 1.07ish.

Data points to consider: ECB President Draghi speaks at 12.15 pm. US Jobless claims at 1.30pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.0798 ([live position] stop loss: breakeven).

GBP/USD

Following the FOMC's decision to leave interest rates unchanged, as expected, sterling gravitated north from the top edge of a H4 support area coming in at 1.2611-1.2589. In consequence to this, the H4 mid-way resistance at 1.2650 was engulfed, potentially clearing the trail north to a H4 Quasimodo resistance drawn from 1.2699. What is quite notable here, at least from a technical standpoint, is its surrounding confluence! Fusing not only with the 1.27 psychological handle, it is also housed within a daily supply at 1.2728-1.2657, as well as positioned only 25 or so pips above the weekly Quasimodo resistance at 1.2673.

Our suggestions: On the data front today the GBP has a rather busy schedule ahead, with the main event being the BoE's monetary policy decision. However, dependent on the time of day, one could possibly look to sell from the 1.27 mark without the need for additional confirmation, as stops can be positioned above the aforementioned daily supply around the 1.2730 range.

Data points to consider: UK Construction PMI at 9.30am, UK BoE inflation report and Interest-rate decision at 12.00pm followed by BoE Gov. Carney due to speak at 12.30pm. US Jobless claims at 1.30pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.27 region ([possible area to look at selling from without the need for additional confirmation] stop loss: 1.2730 – 2 pips above daily supply).

AUD/USD

The Aussie dollar, as you can see, spent yesterday's session clinging to the H4 channel support extended from the low 0.7449. While upside remains capped by the 0.76 handle and the nearby November's opening level at 0.7606, we feel it's only a matter of time before the bulls take charge and rise above these barriers. Our reasoning lies within the higher-timeframe structures. Over on the weekly chart, the weekly candles indicate bullish intent given the successful retest of a weekly support area at 0.7524-0.7450. In conjunction with the weekly timeframe, daily price is seen teasing the top edge of a daily supply zone coming in at 0.7581-0.7551. In the event that this barrier gives way, which we believe it will, the next upside hurdle on the hit list can be seen at 0.7720: a daily resistance level that is located 30 or so pips ahead of a weekly supply at 0.7849-0.7752 (the next upside target on the weekly scale).

Our suggestions: Before our team looks to become buyers in this market, nevertheless, we'd need to see a decisive H4 bullish close above the 0.7606 region. That way, we can be relatively sure that offers within the current daily supply are exhausted. A H4 close above this number, followed by a retest and either a lower-timeframe confirming buy signal (see the top of this report) or a H4 bullish candle close would, in our opinion, be sufficient enough to enter into a buy trade.

Data points to consider: Aussie building approvals and trade balance at 12.30am. US Jobless claims at 1.30pm GMT.

Levels to watch/live orders:

• Buys: Watch for a H4 close to be seen above 0.7606 and then look to trade any retest seen thereafter ([waiting for a lower-timeframe confirming setup to form following the retest is advised prior to pulling the trigger] stop loss: dependent on where one confirms this area).
• Sells: Flat (stop loss: N/A).

USD/JPY

The buyers managed to find their feet early on in the day yesterday, successfully breaking above the 113 psychological handle. US ADP non-farm employment change, along with US manufacturing PMIs both came in above expectations, thus boosting the appeal to own US assets. Despite this, however, price failed to muster enough strength to overcome the 114 band and, fueled by the recent FOMC meeting, consequently dropped to lows of 112.83 by the close.

As of this time, we can see that the weekly candles have space to push south this week down to the weekly support area penciled in at 111.44-110.10. However, daily demand at 111.35-112.37, which is positioned on top of the above noted weekly support area, is still very much in play right now.

Our suggestions: Buying from 113 today would, in our book of technical charms, be considered a risky move. There's very little confluence supporting this line both on the H4 chart and on the higher timeframes. While a breakdown through this level may encourage further selling to H4 demand at 112.05-112.37 (housed within the aforementioned daily demand), a short beyond this number places one in direct conflict with daily buyers! Therefore, opting to stand on the sidelines today may very well be the better path to take.

Data points to consider: US Jobless claims at 1.30pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

USD/CAD

Exacerbated by yesterday's FOMC meeting where interest rates were left unchanged, the H4 supply at 1.3123-1.3093 (bolstered by a H4 61.8% Fib resistance at 1.3091 and the 1.31 handle) held beautifully. This was a noted zone to watch for shorts assuming that the lower-timeframe action chalked in a sell setup. As price rebounded so fast, lower-timeframe confirmation was unfortunately not seen. Nevertheless, well done to any of our readers who managed to net some green pips here!

At the time of writing, the H4 candles recently squeezed through the H4 mid-way support at 1.3050 and looks to be on course to shake hands with the 1.30 handle. Seeing as how both weekly and daily price remain within demand at the moment (1.3006-1.3115/ 1.3006-1.3041), 1.30, coupled with a H4 trendline support extended from the low 1.3080, could potentially provide a floor in this market today.

Our suggestions: Although the higher-timeframe candles are positioned within demand, both areas recently suffered a breach, thus possibly weakening the zones. As a result, we feel the best method of approach here would be to wait for price to strike the 1.30 neighborhood and see if the H4 candles are able to print a reasonably sized H4 bull candle. Of course, this will not guarantee a winning trade, but what it will do is indicate whether or not there is buyer interest here.

Data points to consider: US Jobless claims at 1.30pm GMT.

Levels to watch/live orders:

• Buys: 1.30 region ([wait for a H4 bull candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle).
• Sells: Flat (stop loss: N/A).

USD/CHF

Going into the early hours of yesterday morning, the pair marginally closed above the 0.99 handle and retested the line as support. This – coupled with upbeat numbers seen from both the US ADP non-farm employment change and US manufacturing PMIs, helped lift the H4 candles up to H4 supply at 0.9966-0.9949. As you can see, reinforced by the FOMC leaving rates on hold, bids dried up after connecting with this zone and sent the unit to lows of 0.9909 on the day.

With the above in mind, here is how we see this market at the moment:

• Weekly action recently broke through weekly support at 0.9943, but is currently being supported by a weekly trendline taken from the low 0.9443.
• Daily flow is, as you can see, retesting the underside of the above noted weekly support as resistance.

Our suggestions: While H4 supply could continue to hold firm today given that it's wrapped around the recently broken weekly support, let's not forget that parity (1.0000) is lurking just above. This number alone attracts a huge amount of attention, but when combined with two H4 trendline resistances (0.9959/1.0335), which also sits just below a daily trendline resistance drawn from the high 0.9956, a reaction is highly probable!

Essentially, we're recommending keeping an eyeball on both the H4 supply zone, and parity today. Whether or not the trader deems these areas to be stable enough to trade without additional confirmation is, of course, dependent on one's trade plan. For us, we would require lower-timeframe confirming action (see the top of this report) to be seen before a sell trade can be executed. We require it at parity since there is no structural supply to the left of current price on the H4, and we also require it at the H4 supply since this will be its second retest!

Data points to consider: US Jobless claims at 1.30pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.9966-0.9949 ([wait for a lower-timeframe confirming setup to form before looking to execute a trade] stop loss: dependent on where one confirms this area). 1.0000 neighborhood ([wait for a lower-timeframe confirming setup to form before looking to execute a trade] stop loss: dependent on where one confirms this area).

DOW 30

US equity prices are little changed this morning, despite yesterday's upbeat US economic data. The H4 candles are seen loitering mid-range between a daily resistance level at 19964 and a H4 demand coming in at 19785-19803. Meanwhile, up on the weekly chart, the index is currently hovering just ahead of the 2017 yearly opening level at 19769. A decisive weekly close beyond this range could spark another wave of selling down to the weekly demand area at 19071-19222. Before this can be achieved, however, a daily close below the daily support at 19747 would, of course, need to be seen!

With the above noted H4 demand likely weakened by the recent attack, the next level of interest on our radar is still 19759: a sneaky H4 Quasimodo support that is bolstered by the 2017 yearly opening base and the nearby daily support.

Our suggestions: Given the confluence in place around the current H4 Quasimodo support, our team still has a pending buy order placed at 19760, with a stop set just below the apex of the Quasimodo formation (see black arrow) at 19730.

Data points to consider: US Jobless claims at 1.30pm GMT.

Levels to watch/live orders:

• Buys: 19760 ([pending order] stop loss: 19730).
• Sells: Flat (stop loss: N/A).

GOLD

Kicking off this morning's report with a look at the weekly chart, we can see that the weekly bulls are currently attempting to overcome the weekly trendline resistance taken from the low 1130.1. In the event that they succeed here, the next angle on the horizon is seen around the weekly resistance level at 1241.2. The story on the daily chart, however, shows that the candles remain capped by a daily supply area fixed at 1220.9-1212.0. Therefore, unless a daily close is seen above this area, our desk will not commit to any medium/long-term longs in the gold market.

Sliding over to the H4 timeframe, the H4 support area at 1198.4-1203.8 held beautifully going into yesterday's US segment. Despite this, the yellow metal was effectively unchanged by the closing bell. A notable area of interest for our team on this scale today is the H4 Quasimodo resistance level at 1217.5, which, as you can see, converges beautifully with a H4 trendline resistance taken from the low 1187.7 and also sits within the above said daily supply.

Our suggestions: Put simply, we'll be keeping a close tab on the H4 Quasimodo resistance today. Should price connect with this line and pencil in a lower-timeframe sell signal (see the top of this report), our team would look to sell, targeting the aforementioned H4 support area as an initial take-profit target.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1217.5 region ([wait for a lower-timeframe confirming setup to form before looking to execute a trade] stop loss: dependent on where one confirms this area).

Investors hoping for more clarity on the path of U.S. interest rates were disappointed on Wednesday after the Federal Reserve left the fed funds target unchanged at 0.5%-0.75%, and refrained from providing any further indications on the timing of the next hike.

The 500-word statement released didn't include any surprises. The Fed continues to see expansion in economic activity, solid jobs gain, moderate household spending, and added to that consumer and business sentiment have improved. This suggests that monetary policy makers were not worried about the most recent GDP figures which showed that the U.S. economy grew at its slowest pace since 2011.

Projected fiscal policies, currently the wildest card, were not mentioned in the statement, but of course werea hot topic at the meeting. However, the Fed can't act based on assumptions and requires more clarity on tax reforms and stimulus measures, so probably we should wait a little more until Trump shifts his focus from protectionist measures to boosting economic growth.

The lack of clarity didn't help to close the gap between the Fed's projected interest rates hikes in 2017 and markets' expectations. According to CME's Fedwatch, markets are still pricing in only two rate increases in 2017, while the Fed penciled three in December's projections.

The dollar and U.S. bonds yields fell as a result, while the robust ADP jobs report and ISM manufacturing figures couldn't do much to help the U.S. currency. However, if Friday's non-farm payrolls report surprises by equivalent scale to yesterday's ADP, I think this will cap the dollar's losses on the short run.

Investors will shift their focus to the UK today as the Bank of England announces monetary policy, release its meeting minutes and quarterly inflation report in what's called “Super Thursday”.

The BoE is not expected to make any changes on interest rates or asset purchases, but what's going to be more interesting is how the central bank sees the economy 7-months after the Brexit vote.

It is widely anticipated that growth will be revised higher after a solid end to 2016, but inflation is likely to be the major risk. In November's quarterly inflation report, the BoE expected inflation to rise 2.8% in 2017, and if the figure was revised to the upside the question that comes in mind is, will the BoE turn more hawkish than neutral? If this was the case than GBPUSD could shoot higher to break above December's high at 1.2774. The same applies if one of the nine MPC members votes against holding rates at current record lows.

Market movers today

In the UK, the main event today is the Bank of England (BoE) meeting, with the rate announcement and an updated Inflation Report published at 13.00 CET. We expect that the BoE will keep its monetary policy unchanged so focus is on the minutes, the economic projections and Carney's press conference. We also expect the bank to maintain its neutral bias by stating that interest rates could move ‘in either direction', as we think the BoE is reluctant to indicate rate hikes at a time of elevated political uncertainty. As we think the BoE will continue to signal slower growth/higher unemployment in the updated projections, we think it will see through inflation moving above target if it is only temporary due to the weak GBP. We think the current market pricing of a 15bp hike this year is very hawkish and we expect the BoE to stay on hold for the next 12M.

In the UK, the government is expected to publish its White Paper on Brexit today, but it remains to be seen whether it will contain any new information or just mirror May's Brexit speech from 17 January.

In the Scandi countries, we get currency reserves data in Denmark, see next page.

Selected market news

As expected, the Fed maintained its target range unchanged at 0.50-0.75% at the meeting yesterday and made no major changes to the FOMC statement. We did not get any significant news on the Fed's economic outlook or when to expect the next Fed hike, so it will be important to look for hints in upcoming Fed speeches and the minutes. Based on the December meeting, the Fed still awaits more information about Trumponomics as ‘almost all' FOMC members think there are upside risks to their growth forecasts. We still expect two Fed hikes this year (in June and December), but the probability of a third hike has increased due to a combination of strong US data and a more hawkish Fed at the December meeting. Since the Fed did not give any signals as to when to expect the next hike, a hike already in March now seems unlikely, as the Fed usually tries to prepare markets for upcoming hikes. However, if the economy continues to surprise on the upside and markets stay calm, a hike could come already in May. Whereas markets currently have priced in two hikes a year in 2017 and 2018, we expect the Fed to hike more often, with three to four hikes in 2018 (see also FOMC review: No major changes to the FOMC statement, 1 February 2017).

The market reaction after the meeting was very muted. The US dollar lost some of the ground it had regained earlier on Wednesday and 10-year US Treasury yields slipped back to 2.48% from Wednesday's high of 2.52%. The picture for Asian equity markets this morning was mixed, with indices in Japan and China in the red. It seems that for now, market sentiment continues to be driven by Trump news.

Yesterday we also got further signs that economic growth gathered momentum, as manufacturing PMIs in the Euro zone, Japan and the US rose to multi-year highs. Even in the UK, where the weak GBP struck the sharpest rise in purchase prices on record, manufacturing activity remained robust.

Australia Trade Surplus hits record high

Asia Mid-Session Market Update: Australia Trade Surplus hits record high; Korea inflation finally within BOK target range

US Session Highlights

(US) JAN ADP EMPLOYMENT CHANGE: +246K V +168KE; goods producing +46K v -16K m/m

(US) JAN FINAL MARKIT MANUFACTURING PMI: 55.0 V 55.1E

(US) JAN ISM MANUFACTURING: 56.0 V 55.0E; PRICES PAID: 69.0 V 65.5E (Manufacturing Index highest since Nov 2014, Prices Paid highest since May 2011)

(US) DOE CRUDE: +6.5M V +3ME; GASOLINE: +3.9M V +1.5ME; DISTILLATE: +1.6M V -0.5ME

(US) Atlanta Fed raises Q1 GDP forecast to 3.4% from 2.3% on 1/30

(US) Senate Finance Committee votes to approve Mnuchin for Treasury Secretary and Price for HHS Secretary; Democrats boycotted the vote and were not present; GOP members suspended committee rules to force a vote; full Senate to take up vote

US markets on close: Dow +0.1%, S&P500 flat, Nasdaq +0.5%

Best Sector in S&P500: Healthcare

Worst Sector in S&P500: Utilities

Biggest gainers: ARNC +11.2%, AVY +9.1%, AAPL +6.1%, AGN +4.8%, NVDA +4.4%

Biggest losers: PBI -17.5%, D -5.8%, ADP -5.7%, PVH -4.2%, AFL -4.1%

At the close: VIX 11.8 (-0.2pts); Treasuries: 2-yr 1.21% (-1bps), 10-yr 2.47% (+2bps), 30-yr 3.08% (+3bps)

US movers afterhours

MJN Reckitt Benckiser confirms its in talks to acquire Mead Johnson at $90.00/shr cash (implied deal ~$16.6B), in period of due diligence; +23.7% afterhours

LCI: Reports Q2 $0.92 v $0.83e, R$170.9M v $169Me- Affirms FY17 Net sales in the range of $675-685M v $672Me (prior $675-685M); +4.3% afterhours

ALL: Reports Q4 $2.17 v $1.61e, R$9.3B v $8.45Be; +3.7% afterhours

TSCO: Reports Q4 $0.94 v $0.92e, R$1.92 v $1.87Be; +3.6% afterhours

FB: Reports Q4 $1.41 (adj) v $1.34e, R$8.81B v $8.47Be; Monthly active users (MAUs) 1.86B, +17% y/y; +0.1% afterhours

EW: Reports Q4 $0.73 v $0.71e, R$768Mv $756Me; -1.0% afterhours

MET: Reports Q4 $1.28 v $1.34e, R$17.2B v $17.3Be; -1.1% afterhours

HOLX: Reports Q1 $0.52 v $0.51e, R$734.4 v $724Me; -2.0% afterhours

CRUS: Reports Q3 $1.87 v $1.63e, R$523M v $495Me; -10.1% afterhours

SFLY: Reports Q4 $2.63 v $2.73e, R$561.2M v $586Me; To restructure in 2017; Guides Q1 GAAP -$1.00 to -$0.95 to $ v -$0.87e, R$185-190M v $199Me, gross margin 37-37.5%; -18.0% afterhours

M Said to be open to a sale to prevent shakeup of the Board - NY Post

Asia Key economic data:

(AU) AUSTRALIA DEC TRADE BALANCE (A$): 3.5B (record surplus) V +2.0BE

(AU) AUSTRALIA DEC BUILDING APPROVALS M/M: -1.2% V -1.5%E; Y/Y: -11.4% (4th stragith decline) V -10.8%E

(KR) SOUTH KOREA JAN CPI M/M: 0.9% V 0.3%E; Y/Y: 2.0% V 1.5%E (highest annual pace since Oct 2012)

(NZ) NEW ZEALAND JAN ANZ JOB ADVERTISEMENTS M/M: -0.2% V +1.4% PRIOR

Asia Session Notable Observations, Speakers and Press

Investors digest FOMC statement as the US yield curve steepens; While the Fed is more convinced about inflation reaching 2% target in the near term, there were no direct signals of March rate hike, prompting some modest USD selling.

Fears of a Trump-led trade and FX war continue to reverberate across the globe after reports of a tense call between Trump and Australia's Turnbull regarding refugee agreement made between the countries' leaders under Obama.

AUD rises to 2 1/2-month high as Australia terms of trade hits a record high amid recent rise in prices of iron ore and coal; Components showing value of shipments to China at record high, Iron ore at highest since Apr 2014, and Coal at highest since Nov 2008. Exports remained robust with 5% increase, though down from 8% prior. Conversely, Aussie building approvals contracted y/y for the 4th straight month, as analysts declare the peak in the housing market coming in 2016.

Korea CPI y/y rises to its best levels since late 2012 and finally within BOK's target range for the first time in 39 months; Stats Bureau attributes rise in prices to food and gasoline inflation.

China:

(CN) China Stats Bureau economist: Latest PMI data showed over 40% of business owners experienced some weak market demand along with cash and labor shortages - Shanghai Daily

(CN) According to Economic Policy Institute (EPI) report trade with China has cost 3.4M US jobs from 2001-2015 - SCMP

Japan:

(JP) Japan PM Abe: Generally not desirable for US and Japan leaders to talk forex at summits

(JP) Japan Center for Econ Research (JCER): Japan Dec GDP estimated at -0.5% m/m (first drop in four months) - Nikkei

Australia/New Zealand:

(AU) RBC economist: Last 4 months' of building approvals affirms the view that Australia housing market peaked in 2016 - AFR

(NZ) New Zealand PM English: Will continue to advocate for free trade - State of the Nation

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.9%, Hang Seng -0.7%, Shanghai Composite closed, ASX200 -0.1%, Kospi flat

Equity Futures: S&P500 -0.3%; Nasdaq -0.4%; Dax -0.3%; FTSE100 -0.3%

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

EUR 1.0760-1.0795; JPY 112.50-113.40; AUD 0.7580-0.7650; NZD 0.7240-0.7310

Apr Gold +0.7% at $1,218/oz; Mar Crude Oil -0.6% at $53.58/brl; Mar Copper +0.3% at $2.72/lb

GLD: SPDR Gold Trust ETF daily holdings rise 10.6 tonnes to 809.7 tonnes; first rise since Jan 21st

SLV: iShares Silver Trust ETF daily holdings fall to 10,414 tonnes from 10,444 tonnes prior

JGB: (JP) Japan MoF sells ¥2.17T in 10-yr 0.1% JGBs; Avg yield: 0.087% v 0.056% prior; bid to cover: 3.62x v 3.59x prior

Asia equities/Notables/movers by sector

Consumer discretionary: TAH.AU Tabcorp -5.5% (H1 result); 6952.JP Casio Computer Co -5.1% (9-month result); 9697.JP Capcom Co -9.1% (9-month result)

Consumer staples: 4967.JP Kobayashi Pharmaceutical Co +2.0% (FY16 result)

Financials: VCX.AU Vicinity Centres -1.2% (Jefferies cuts rating)

Industrials: DOW.AU Downer EDI +13.0% (H1 result); CSR.AU CSR -2.0% (JPMorgan cuts rating); GUD.AU GUD Holdings -0.9% (JPMorgan cuts rating); 7013.JP IHI Corp +2.3% (9-month result); 6501.JP Hitachi Ltd +2.0% (9-month result); 5202.JP Nippon Sheet Glass -8.8% (private placement)

Materials: 4186.JP Tokyo Ohka Kogyo -6.9% (9-month result); 3861.JP OJI Holdings Corp -1.2% (9-month result speculation)

Energy: 010950.KR S-Oil Corp +1.4% (Q4 result)

Healthcare: VRT.AU Virtus Health -2.2%; 4519.JP Chugai Pharmaceutical +10.4% (guidance); 6849.JP Nihon Kohden Corp -8.5% (9-month result)

Telecom: VOC.AU Vocus +4.5% (Macquarie initiates Outperform); 032640.KR LG Uplus Corp +3.6% (Q4 result)

Daily Pivots: (S1) 141.94; (P) 143.03; (R1) 144.44; More...

Intraday bias in GBP/JPY remains neutral for the moment. On the upside, above 144.77 will extend the rise from 136.44 to 148.42 resistance next. Break there will resume whole rise from 122.46 and target 150.42 long term fibonacci level next. On the downside, however, below 140.43 minors support will turn bias to the downside to extend the pattern from 148.42 with another falling leg, possibly through 136.44.

In the bigger picture, price actions from 122.36 medium term bottom are still seen as a corrective pattern even. Main focus is on 38.2% retracement of 195.86 to 122.36 at 150.42. Rejection from there will turn the cross into medium term sideway pattern. Though, sustained break will extend the rebound towards 61.8% retracement at 167.78.

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Daily Pivots: (S1) 121.52; (P) 122.01; (R1) 122.45; More...

EUR/JPY's sideway consolidation from 124.08 is still in progress and intraday bias stays neutral at this point. Another fall cannot be ruled out as the consolidation extends. On the downside, below 120.54 will target 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39). In that case, we'd expect strong support from there to bring rebound. On the upside, break of 124.08 will extend the larger rally from 109.20 to 126.09 key resistance next.

In the bigger picture, price actions from 109.20 medium term bottom are seen as part of a medium term corrective pattern from 149.76. There is prospect of another rise towards 126.09 key resistance level before completion. But even in that case, we'd expect strong resistance between 126.09 and 141.04 to limit upside, at least on first attempt.

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Daily Pivots: (S1) 0.8467; (P) 0.8530; (R1) 0.8569; More...

Intraday bias in EUR/GBP remains neutral for the moment. Outlook is unchanged that the corrective rise from 0.8303 should have completed at 0.8851 already. On the downside, break of 0.8449 support should confirm our bearish view and bring resumption of whole corrective fall from 0.9304. In that case, next target is 0.8116 cluster support. However, break of 0.8650 will turn focus back to 0.8851 instead.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).

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