Daily Pivots: (S1) 1.2390; (P) 1.2434; (R1) 1.2486; More...

Intraday bias in GBP/USD remains neutral as it's bounded in range of 1.2346/2705. Price actions from 1.1946 are viewed as a consolidation pattern, with rise from 1.1986 as the third leg. In case of another rise, we'd expect upside to be limited by 1.2774 to bring larger down trend resumption. On the downside, below 1.2346 will revive the case that such consolidation is completed at 1.2705 already. In that case, intraday bias will turn back to the downside for retesting 1.1946 low.

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 bottoming 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.

Daily Pivots: (S1) 112.13; (P) 112.48; (R1) 113.06; More...

USD/JPY weakens mildly today but stays inside range of 111.58/114.94. Intraday bias remains neutral at this point. The corrective fall from 1118.65 could extend lower. But we'd still expect strong support from 38.2% retracement of 98.97 to 118.65 at 111.13 to contain downside and bring rebound. On the upside, above 114.94 resistance should confirm completion of pull back from 118.65. In such case, intraday bias will be turned back to the upside for retesting 118.65.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

Daily Pivots: (S1) 1.0058; (P) 1.0077; (R1) 1.0110; More.....

USD/CHF continues to stays in consolidative trading below 1.0140. Intraday bias remains neutral at this point. With 0.9966 support intact, further rise is in favor. Above 1.0140 will turn bias to the upside and target a test on 1.0342 resistance. Based on neutral medium term outlook, we'd be cautious on topping at around 1.0342. Meanwhile, break of 0.9966 will indicate completion of the rebound from 0.9860. And intraday bias will be turned back to the downside for 0.9860.

In the bigger picture, prior rejection from 1.0327 resistance argues that USD/CHF is staying in a medium term sideway pattern. 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 another fall, we'd expect strong support from 0.9443/9548 support zone. Meanwhile firm break of 1.0342 will target 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

Dollar continues to trade mixed in early US session. The greenback is seen weaker against European majors and Yen. Nonetheless, Dollar trades mildly up against Canadian Dollar thanks to pull back in oil price. Released from US, Q4 GDP growth was unrevised at 1.9% annualized in Q4, below expectation of 2.1%. GDP price index was revised lower to 2.1%. Trade deficit widened to USD -69.2b in January. Wholesale inventories dropped -0.1% in January. From Canada, IPPI rose 0.4% mom in January while RMPI rose 1.9% mom. Focus will turn to US president Donald Trump's address to Congress.

In his speech at the National Governors Association meeting on Monday, Trump told the state governors that he would delegate them "the powers that have been taken away from states and great people and great governors" so that the states "can control it better than the federal government". Trump also previewed the economic policies that would help the states. These include infrastructure spending, tax cuts, and fairer trade policies. He also indicated to talk about healthcare issue in the joint session address.

BoE Hogg warned of sudden drop in consumption

BoE deputy governor designate Charlotte Hogg warned that "households are beginning to face a squeeze on their incomes.:" She pointed to MPC forecast that "assumes steadily slowing growth in consumption, facilitated by a continued fall in the savings rate". And she envisaged "scenarios in which the reaction of consumption could be more sudden." Regarding inflation, she noted that her "tolerance for temporarily above-target inflation will depend on events." And she emphasized that "I would have no tolerance for a less than credible path back to target -- from either above or below the target."

The British Chambers of Commerce published a report based on feedback from more than 400 businesses. It urged the government to give "solutions and certainty" to business before Brexit. BCC director general Adam Marshall said that "business communities across the UK want practical considerations, not ideology or politics, at the heart of the Government's approach to Brexit negotiations". Meanwhile, the report also urged the government to "aim to minimise tariffs, seek to avoid costly non-tariff barriers, grandfather existing EU free trade agreements with third countries, and expand the trade mission programme".

Swiss KOF rose markedly

The Swiss KOF leading indicator jumped sharply to 107.2 in February, up from 102.0 and beat expectation of 102.1. That's also the highest level since 2013. KOF noted that "the Swiss franc appreciation shock from early 2015 hence by now appears to have been largely overcome." And Swiss economy should growth at "rates above average. It also said in the release that "the strongest positive contributions to this result come from the manufacturing industry, followed with a clear gap by the hospitality industry." And, "the markedly improved sentiment in manufacturing as a whole is primarily a reflection of the more positive assessment of incoming orders, followed by the production and employment outlook as well as by the profit situation."

Elsewhere, New Zealand trade deficit widened sharply to NZD -285m in January. NBNZ business confidence tumbled to 16.6 in February. Australia current account deficit narrowed to AUD -3.9b in Q4. Japan industrial production dropped -0.8% mom in January, retail sales rose 1.0% yoy in January. UK Gfk consumer confidence dropped to -6 in February. French GDP rose 0.4% qoq in Q4.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 1.0058; (P) 1.0077; (R1) 1.0110; More.....

USD/CHF continues to stays in consolidative trading below 1.0140. Intraday bias remains neutral at this point. With 0.9966 support intact, further rise is in favor. Above 1.0140 will turn bias to the upside and target a test on 1.0342 resistance. Based on neutral medium term outlook, we'd be cautious on topping at around 1.0342. Meanwhile, break of 0.9966 will indicate completion of the rebound from 0.9860. And intraday bias will be turned back to the downside for 0.9860.

In the bigger picture, prior rejection from 1.0327 resistance argues that USD/CHF is staying in a medium term sideway pattern. 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 another fall, we'd expect strong support from 0.9443/9548 support zone. Meanwhile firm break of 1.0342 will target 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

Economic Indicators Update

Financial markets were on standby during early trading on Tuesday with most investors treading cautiously ahead of U.S President Donald Trump's speech to Congress this evening. Although global stocks have displayed phenomenal gains this month, the growing scepticism over the sustainability of the bull rally may encourage participants to heavily scrutinize Trump's first speech to a joint session of Congress. With the visible lack of clarity over the proposed pro-growth policies attributing to the market anxiety, investors will be paying extra attention to topics on tax cuts, infrastructure investments, trade, and deregulations. Although some participants remain cautiously optimistic over Trump providing further insights into his economic policies, the threat of today's speech mirroring the inaugural address could trigger a tidal wave of risk aversion. Global markets have been somewhat patient and even resilient against the persistent Trump uncertainties, but the crack could start to show if nothing new is brought to the table.

Dollar Index hovers above 101.00

The Greenback drifted lower during Tuesday's trading session as investors awaited Trump's market shaking stimulus plans. Although sentiment towards the United States is firmly bullish and domestic data continues to display signs of economic stability, the Dollar remains pressured. Sellers have exploited the ongoing anxiety to limit gains on the Greenback while the uncertainty over a March rate hike despite the rising odds have installed bears with further inspiration to attack prices. Although Trump remains the main focus for today, investors may direct some attention to the revised US GDP report for the fourth quarter. While a positive release may slightly uplift the Dollar, gains could be swiftly surrendered if Trump fails to deliver in his speech to Congress this evening.

Commodity spotlight - Gold

The growing uncertainty across the board and rising political risks have bolstered the appetite for safe-haven assets with Gold back in fashion. This yellow metal remains bullish on the daily charts with further upside expected in the short term if the Greenback continues to depreciate. With investors maintaining a cautious approach ahead of Trump's speech to Congress this evening, bulls may take advantage of the anxiety to elevate Gold prices higher back above $1260. From a technical standpoint, the $1250 intraday level could act as a minor support which encourages a further incline higher towards $1265.

A day after the Dow extended its winning streak to 12 straight session - the longest in 30 years - US futures look a little flat ahead of the open with all eyes firmly on Donald Trump's first appearance before Congress this evening.

The sustainability of this rally in the near term may well rest on how Trump performs this evening and whether promises of big spending and phenomenal tax reforms are accompanied by any insight into what they will entail. Trump's words, while lacking few if any actual details, have so far been effective in getting investors pumped up at the prospect of a stronger economy but the longer this goes on, the less effective these promises are going to become and higher the risk is that the rally will run out of steam.

The last few sessions may have seen the Dow extend its winning streak but the gains we're talking about have been tiny. The market may well already be experiencing Trump fatigue and he's now put himself in a position where he must deliver, and in a big way, or markets could quite quickly turn against him. I think Trump fully intends to deliver on the substantial promises and therefore in the longer term, these levels may be justified. The risk is that he's unable to do so as quickly as he hoped at which point doubt will set in and I think markets may be preparing for the prospect of that a little in recent days.

While Trump's appearance today is the clear stand out event, there are a number of others that could have an impact on the markets prior to this. Three Fed policy makers are due to appear throughout the day, only one of which though - Patrick Harker - is a voting member on the FOMC this year. The other two - John Williams and James Bullard - will both be voters over the next couple of years and will of course have insight and a voice in the discussions. Most policy makers have broadly stuck to the same line over the last couple of months, that a hike sooner rather than later will be appropriate, while offering little insight on when exactly that would be referring to. Market pricing would suggest that means May or June although the latter would make three hikes this year - as per the Fed's own forecasts - very difficult.

There's also a lot of economic data due today, including the second release of US fourth quarter GDP, which is expected to be revised up slightly from 1.9% to 2.1%. We'll also get CB consumer confidence data as well as some other lower level releases. Later this evening, API will report its inventory figures for last week, the last few of which have been fairly consistent with the EIA number, released on Wednesday.

USD/JPY has recorded losses in the Tuesday session, erasing the gains from Monday. Currently, USD/JPY is trading at 112.20. On the economic front, Japanese numbers were mixed. Preliminary Industrial Production declined 0.8%, well off the estimate of +0.4%. This was the first decline in 8 months. Retail Sales improved to 1.0%, edging past the forecast of 0.9%. In the US, Preliminary GDP is expected at 2.1%. As well, CB Consumer Confidence is forecast to dip to 111.3 points. As well, President Donald Trump will address a joint session of Congress.

President Trump will deliver his first major speech on Tuesday, as he delivers remarks to a joint session of Congress. Although it is not officially a State of the Union address, the speech could have huge ramifications for the financial markets. Since Trump's election win, the stock markets are sharply higher and the US dollar has improved, but the greenback has lost ground since Trump has become president. It's crunch time, as the markets want to hear some details about Trump's economic agenda. Trump recently promised to unveil a "phenomenal" tax reform package and significant spending on infrastructure, but hasn't provided any details. Tuesday's speech marks a critical opportunity for the new administration, which is still trying to find its bearings after a rocky first month. If Trump fails to present specifics in terms of numbers or at least some timelines, market sentiment will likely sour, dragging down the US dollar.

The DAX Index has posted small losses in the Tuesday session. Currently, the DAX is trading at 11,816.00 points. On the release front, there are no major events in the eurozone. In the US, Preliminary GDP is expected at 2.1%. As well, President Donald Trump will address a joint session of Congress. On Wednesday, Germany releases three key events – Preliminary CPI, Unemployment Change and Final Manufacturing PMI.

Eurozone indicators started the week with mixed results. M3 Money Supply, which measures growth in the amount of money circulating in the eurozone, slowed to 4.8%, down from 5.0% a month earlier. This indicator is closely watched, as it often predicts economic activity. There was more positive news from bank lending to households, which improved for a third straight month, rising to 2.2% in January. Credit levels have been moving upwards since 2015, but have only recently shown strong gains. With inflation indicators also pointing upward, the ECB's stimulus program could finally be producing results. The central bank last took action in December, when it extended its asset-purchase program for six months until December 2017, but reduced purchases from EUR 80 billion to 60 billion/mth. If Eurozone indicators continue to indicate modest growth, the ECB is unlikely to tinker with the asset-purchase program.

Investors across the globe will be watching closely, as President Trump delivers remarks to a joint session of Congress on Tuesday. Although it is not officially a State of the Union address, the speech could have significant ramifications for the financial markets. Since Trump's election win, the stock markets are sharply higher and the US dollar has jumped 3.7% against the euro, but the greenback has lost ground since Trump has become president. It's crunch time, as the markets want to hear some details about Trump's economic agenda. Trump recently promised to unveil a “phenomenal” tax reform package and significant spending on infrastructure, but hasn't provided any details. Tuesday's speech marks a critical opportunity for the new administration, which is still trying to find its bearings after a rocky first month. If Trump fails to present specifics in terms of numbers or at least some timelines, market sentiment will likely sour and this could hurt the US dollar.

News and Events:

NZD stable despite trade balance miss

Since the RBNZ's last meeting on February 8th, the New Zealand dollar has been unable to get that positive momentum back. Indeed at its last meeting, the central bank took the market by surprise by delaying any tightening move, brutally interrupting the kiwi's run that was initiated in late December. Moreover, Donald Trump decision to finally start unveiling his plans for the US economy, is adding some downside risk to the pair as a USD rally would eventually squeeze investors out of long NZD positions. Indeed, in this low-yield environment, investors are desperately seeking higher returns; something that New Zealand is offering.

The kiwi rallied strongly during January and this groundswell has not been without consequences for the economy. Exports beat estimates rising to NZ$4.19bn in January, versus an expected 3.9bn amid a solid recovery in commodity prices. Imports also beat median forecasts and printed at NZ$4.19bn versus an expected 3.90bn as the rising NZD gave higher buying power to local customers. NZD/USD is trading sideways this morning ahead of Trump's address later today. The market's expectations are very high and we therefore believe that risk has slightly shifted to the upside. On the downside, a first support stands at 0.7130 (low from February 21st), while on the upside a resistance lies at 0.7247 (high from February 23rd).

Surge in Swiss KoF

The economic barometer will further enforce CHF strengthening, while making the SNB's job considerably more difficult. In February, the leading indicators increased by 5.2 points to 107.2, indicating that the Swiss economy will grow at a quicker than normal pace. Despite the dire warning of the sharp CHF appreciation in early 2015, the Swiss economic backdrop seems to have weathered the lack of currency competitiveness well. Case in point, the highest contribution came from the manufacturing industry, which relies significantly on exports and therefore currency pricing should be critical to improvement. Data indicates a weakening sensitivity to FX valuations. Moving forwards, the economic improvement in both growth and inflation outlook will enable the SNB to allow greater flexibility in EURCHF pricing. The central bank will continue to move but action will be limited to smoothening rather than reversing the trend. We continue to view short EURCHF as the primary trade for navigating the impending European political uncertainty. EURCHF 1.0632 base support will provide the key test for traders and SNB (providing insight on how much CHF “overvaluation” they are willing handle).

Japanese retail sales positive in no wage growth environment

Since reaching its lowest level in a year against the dollar in December, the yen continues to strengthen. However, the BoJ has been unable to stimulate the economy over the past decade and fundamental data continues to concern. Industrial production came in last night at -0.8% m/m for January after financial markets were expecting a positive read. The yen is strengthening despite its economy being ironically out of control. Japan's economy is clearly a market risk indicator.

Japanese policymakers are still expecting the Fed to raise rates in order to hold off some pressures from the economy. However, as we believe that the Fed is not going to raise rates we remain cautious as there will clearly be further room for disappointment. Uncertainties over Trump's economic policies loom large.

It is also worth noting that retail sales have increased for the third consecutive month with a 0.5% m/m for January (1% increase annualized). Furthermore, wage growth slowed in December, which should reflect at some point in the retail sales. The truth is that wages are not at a sufficient level to support the economic recovery especially knowing that, once inflation is stripped away, wage growth for 2016 will in fact be negative.

Today's Key Issues (time in GMT):

• 4Q P GDP SA QoQ, exp 0,40%, last 0,40% DKK / 08:00
• 4Q P GDP SA YoY, exp 1,90%, last 1,20% DKK / 08:00
• Jan Foreign Tourist Arrivals YoY, last -11,10% TRY / 08:00
• Dec Total Mortgage Lending YoY, last 16,90% EUR / 08:00
• Dec House Mortgage Approvals YoY, last 32,20% EUR / 08:00
• Feb KOF Leading Indicator, exp 102,1, last 101,7, rev 102 CHF / 08:00
• Jan PPI MoM, last 2,10% SEK / 08:30
• Jan PPI YoY, last 6,50% SEK / 08:30
• Jan Trade Balance, exp 1.7b, last 1.0b, rev -0.8b SEK / 08:30
• 4Q GDP QoQ, exp 0,80%, last 0,50%, rev 0,30% SEK / 08:30
• 4Q GDP WDA YoY, exp 2,30%, last 2,80%, rev 2,40% SEK / 08:30
• Dec Wages Non-Manual Workers YoY, last 2,20% SEK / 08:30
• Jan Retail Sales MoM, exp 1,50%, last -2,90%, rev -2,60% SEK / 08:30
• Jan Retail Sales NSA YoY, exp 2,00%, last 0,60%, rev 1,00% SEK / 08:30
• Dec Current Account Balance, last 3.3b EUR / 09:00
• Mar Norges Bank Daily FX Purchases, exp -1000m, last -1000m NOK / 09:00
• BOE's Charlotte Hogg Speaks at Appointment Hearing in London GBP / 09:15
• Feb P CPI EU Harmonized MoM, exp -0,10%, last -2,00%, rev -1,70% EUR / 10:00
• Feb P CPI NIC incl. tobacco MoM, exp 0,10%, last 0,20%, rev 0,30% EUR / 10:00
• Feb P CPI NIC incl. tobacco YoY, exp 1,30%, last 0,90%, rev 1,00% EUR / 10:00
• Feb P CPI EU Harmonized YoY, exp 1,30%, last 1,00% EUR / 10:00
• Jan Fiscal Deficit INR Crore, last 43254 INR / 11:00
• Dec House Price Index YoY, last 12,26% TRY / 11:30
• Dec House Price Index MoM, last 0,72% TRY / 11:30
• Jan Trade Balance Rand, exp -3.4b, last 12.0b ZAR / 12:00
• Jan South Africa Budget, last 22.7b ZAR / 12:00
• 4Q GVA YoY, exp 6,00%, last 7,10% INR / 12:00
• 4Q GDP YoY, exp 6,10%, last 7,30% INR / 12:00
• 2017 GDP Annual Estimate YoY, exp 6,80%, last 7,90% INR / 12:00
• 4Q S GDP Annualized QoQ, exp 2,10%, last 1,90% USD / 13:30
• 4Q S Personal Consumption, exp 2,60%, last 2,50% USD / 13:30
• 4Q S GDP Price Index, exp 2,10%, last 2,10% USD / 13:30
• Jan Industrial Product Price MoM, exp 0,50%, last 0,40% CAD / 13:30
• 4Q S Core PCE QoQ, exp 1,30%, last 1,30% USD / 13:30
• Jan Raw Materials Price Index MoM, exp 1,20%, last 6,50% CAD / 13:30
• Jan Advance Goods Trade Balance, exp -$66.0b, last -$65.0b, rev -$64.4b USD / 13:30
• Jan P Wholesale Inventories MoM, exp 0,40%, last 1,00% USD / 13:30
• Jan Retail Inventories MoM, last 0,00% USD / 13:30
• Dec S&P CoreLogic CS 20-City MoM SA, exp 0,70%, last 0,88% USD / 14:00
• Dec S&P CoreLogic CS 20-City YoY NSA, exp 5,40%, last 5,27% USD / 14:00
• Dec S&P CoreLogic CS 20-City NSA Index, last 192,14 USD / 14:00
• Dec S&P CoreLogic CS US HPI YoY NSA, last 5,64% USD / 14:00
• Dec S&P CoreLogic CS US HPI NSA Index, last 185,23 USD / 14:00
• Feb Chicago Purchasing Manager, exp 53,5, last 50,3 USD / 14:45
• Bank of England Bond Buying Operation GBP / 14:50
• Feb Conf. Board Consumer Confidence, exp 111, last 111,8 USD / 15:00
• Feb Conf. Board Present Situation, last 129,7 USD / 15:00
• Feb Conf. Board Expectations, last 99,8 USD / 15:00
• Feb Richmond Fed Manufact. Index, exp 10, last 12 USD / 15:00
• Feb QV House Prices YoY, last 13,50% NZD / 16:00
• Finance Minister Padoan, Bank of Italy's Rossi Speak at Event EUR / 17:00
• BIS's Caruana Speaks in Geneva CHF / 17:30
• Fed's Harker Speaks on Economy in Philadelphia USD / 20:00
• Fed's Williams Speaks in Santa Cruz USD / 20:30
• 4Q Terms of Trade Index QoQ, exp 4,00%, last -1,70% NZD / 21:45
• Feb AiG Perf of Mfg Index, last 51,2 AUD / 22:30

The Risk Today:

EUR/USD is trading sideways within a fifty-pip range below 1.0600. Hourly resistance is given at 1.0679 (16/02/2017 high) while hourly support can be found at 1.0521 (15/02/2017 low). The technical structure suggests deeper consolidation. In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD is trading with some volatility. Hourly resistance is given at 1.2582 (09/02/2017 high) while support area is given around 1.2400. Hourly support is given at 1.2347 (07/02/2017 low). The pair is still lying below strong resistance given at 1.2771 (05/10/2016 high). Expected to see continued monitoring of the support area around 1.2400. The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY's momentum is bearish. Hourly resistance is given at 115.62 (19/01/2016 high). The technical structure suggests further weakness around support given at 111.36 (28/11/2017 low). We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

USD/CHF's short-term momentum is definitely bullish. The pair lies within an uptrend channel. Hourly resistance is implied by upper bound of the uptrend channel. Key resistance is given at a distance at 1.0344 (15/12/2016 high). Expected to see further strengthening. In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

EUR/USD

Current level - 10596

Yesterday's rise after 1.0550 low has managed to reach a new peak below 1.0630 resistance and only a break through 1.0550 crucial level will signal, that a downtrend is on the run, towards 1.0450. 

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 112.35

A minor reversal has been confirmed at 111.90, but a break through 112.90 is needed in order to signal a rise towards 114.95.

GBP/USD

Current level - 1.2422

The overall outlook remains bearish, for a break through 1.2380, towards 1.2240. Key resistance lies at 1.2505.