Risk appetite continued in the market as US equities extended record run. DJIA finally took out 20000 handle to close at 20068.52, up 155.80 pts or 0.78%. S&P 500 closed up 18.3 pts, or 0.80%, at 2298.37. NASDAQ ended at 5656.34, up 55.38 pts or 0.99%. All three indices closed at new historical highs. Positive sentiments carried on in Asian session with Nikkei up 1.8% to above 19400 Notable strength was also seen in treasury yields. 10 year yield gained 0.052 to close at 2.523 while 30 year yield rose 0.052 to 3.108. However, the greenback continued to lag behind with Dollar index dipping through 100 handle to as low as 99.79. The index is trying to regain 100 handle at the time of writing but lacks momentum so far. In the currency markets, dollar remains the weakest major currency this week while Sterling is the strongest.

Stock markets up trend resumed on expectation that US president Donald Trump would gradually implement the pro-growth policies he promised. Sentiment was also lifted by encouraging earnings reports. As soon as he has been sworn in, Trump signed a series of executive orders with the latest one on Keystone and Dakota pipelines. The action aims at facilitating TransCanada to build the Keystone XL pipeline and for Energy Transfer Partners to build the final uncompleted portion of the Dakota Access pipeline. A report by McClatchy revealed that the President and his team has compiled a list of about 50 infrastructure projects nationwide, totaling at least USD 137.5b. According to the preliminary list provided to the National Governor's Association, the projects include to renewal of the country's highways, airports, dams and bridges. A similar list was revealed by the Star. The market was thrilled by the news with DJIA's material sector index gaining over 2%.

Some economists attributed the breakdown in correlation between treasury yield and Dollar to concerns over Trump's protectionism. Some pointed to the US-Japan trade conflicts back in 1990s when Dollar was weak despite higher US interest rates. But at this point, it's still too early to confirm the divergence in yield and Dollar. Technically, the benchmark 10 year yield is held below key near term resistance at 2.621. Dollar index is holding above key structural support at 99.43. Technically, both can be seen as staying in consolidative mode. As stocks are gathering bullish momentum, the picture will likely be cleared soon.

On the data front, New Zealand CPI rose 0.4% qoq, 1.3% yoy in Q4. Japan corporate service price rose 0.4% yoy in December. Swiss trade surplus narrowed to CHF 2.72b in December. German Gfk consumer sentiment rose to 10.2 in February. UK Q4 GDP will be the main focus in European session. UK BBA mortgage approval and CBI reported sales will also be featured. From US, jobless claims, wholesale inventories, new home sales and leading indicators will be released.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.2535; (P) 1.2586; (R1) 1.2683; More...

GBP/USD reaches as high as 1.2662 so far as rebound from 1.1986 extends. Intraday bias stays on the upside for 1.2774 resistance. Again, rise from 1.1986 is seen as the third leg of the consolidation pattern from 1.1946. We'd expect strong resistance at 1.2774 to limit upside and bring down trend resumption eventually. On the downside, below 1.2414 minor support will turn bias 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.

Economic Indicators Update

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Daily Pivots: (S1) 0.9971; (P) 0.9994; (R1) 1.0032; More.....

Intraday bias in USD/CHF remains on the downside for the moment. As noted before, rise from 0.9443 has completed at 1.0342 already, after failing to sustain above 1.0327 key resistance. Fall from there would now target 61.8% retracement of 0.9443 to 1.0342 at 0.9786 and below. On the upside, break of 1.0121 resistance is needed to indicate short term bottoming. Otherwise, near term outlook will stay bearish in case of recovery.

In the bigger picture, rejection from 1.0327 resistance suggests that consolidation pattern from there is still in progress. Fall from 1.0342 is seen as the third leg and retest of 0.9443/9548 support zone could be seen. But we'd expect strong support from there to contain downside. At this point, we're still expect the larger rally to resume later to 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

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Daily Pivots: (S1) 112.90; (P) 113.40; (R1) 114.28; More...

Intraday bias in USD/JPY remains neutral for the moment. Choppy fall from 118.65 is seen as a corrective move. In case of another decline, downside should be contained by 38.2% retracement of 98.97 to 118.65 at 111.13 to complete the correction and bring rebound. On the upside, above 115.61 will target a test on 118.65 first. Break will resume whole rise from 98.97 and target 125.85 key resistance.

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.

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Daily Pivots: (S1) 1.0710; (P) 1.0742 (R1) 1.0765; More.....

With 1.0588 minor support intact, EUR/USD's rebound from 1.0339 could extend higher. Still, such rise is seen as a corrective move and should be limited by 1.0872 resistance. On the downside, below 1.0588 minor support will argue that it's completed and turn bias back to the downside for 1.0339 support.

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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Global financial markets are trading in general risk seeking mode today. At the time of writing, European indices are trading in black with FTSE up 0.4%, DAX up 1.7% and CAC up 1.1%. US futures also point to higher open as S&P 500 and NASDAQ could extend their record runs. Meanwhile, DJIA is head for a take on 20000 handle again. In the currency markets, while the greenback remains generally weak, Aussie is even weaker after disappointing consumer inflation data. On the other hand, recent news regarding Brexit seems to be welcomed by the markets as Sterling surges broadly.

In UK, prime minister Theresa May said she will publish the Brexit plan in a formal "white paper" for the parliament. She said today that "I set out that bold plan for a global Britain last week and I recognize there is an appetite in this house to see that plan set out in a white paper." And, "I can confirm to the house that our plan will be set out in a white paper." The decision came after Supreme court ruled that the Brexit plan must be approved by the Parliament. And opposition Labour Party has expressed they will try to shape to deal with EU even though they will not reject it. May is still set to triggered the so-called Article 50 for Brexit by end of March. Also from UK, UK CBI trends total orders rose to 5 in January.

German Ifo business climate dropped to 109.8 in January,d own from 111.0 and below expectation of 111.3. Expectations gauge dropped notably to 103.2, down from 105.6, below consensus of 105.8. Current assessment gauge, however, rose to 116.9, up from 116.6, met expectations. Ifo chief Clemens Fuest noted that "the German economy made a less confident start to the year." However, Ifo economist Klaus Wohlrabe noted "there is no Trump effect seen in this numbers as export expectations have risen, even in the car industry." Also from Europe, Swiss ZEW expectations rose sharply to 18.5 in January, UBS consumption indicator rose to 1.5 in December.

Released in Australia, CPI rose 0.5% qoq and 1.5% yoy in Q4, below expectation of 0.7% qoq and 1.6% qoq. Down from prior month's 0.7% qoq and 1.3% yoy. RBA trimmed mean CPI rose 0.4% qoq, 1.6% yoy, compares to expectation of 0.5% qoq, 1.6% yoy. RBA weighted mean CPI rose 0.4% qoq, 1.5% yoy, compares to expectation of 0.5% qoq, 1.4% yoy. AUD/USD bottomed at 0.6826 in Feb 2016 and engaged in range trading for nearly a year. While US Dollar was strong, Aussie stayed relatively resilient on fading expectation of more RBA rate cut. But some economists pointed out that today's data are highlighting the downside risks to the country and could prompt RBA to rethink the need to more policy accommodation later in the year. Also from Australia, Westpac leading index rose 0.4% mom in December. In Japan, trade surplus narrowed to JPY 0.36T in December, above expectation of JPY 0.22T.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2422; (P) 1.2480; (R1) 1.2591; More...

GBP/USD's rebound from 1.1986 resumed and reaches as high as 1.2605 so far. Intraday bias is back on the upside for 1.2774 resistance next. Again, rise from 1.1986 is seen as the third leg of the consolidation pattern from 1.1946. We'd expect strong resistance at 1.2774 to limit upside and bring down trend resumption eventually. On the downside, below 1.2414 minor support will turn bias 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.

Economic Indicators Update

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Daily Pivots: (S1) 1.2422; (P) 1.2480; (R1) 1.2591; More...

GBP/USD's rebound from 1.1986 resumed and reaches as high as 1.2605 so far. Intraday bias is back on the upside for 1.2774 resistance next. Again, rise from 1.1986 is seen as the third leg of the consolidation pattern from 1.1946. We'd expect strong resistance at 1.2774 to limit upside and bring down trend resumption eventually. On the downside, below 1.2414 minor support will turn bias 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.

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Daily Pivots: (S1) 141.31; (P) 141.90; (R1) 143.05; More...

The break of 142.16 support turned resistance suggests that corrective full from 148.42 has completed at 136.44. And, larger rise from 122.36 isn't finished yet. Intraday bias is back on the upside for 145.38 first. Break will target retest of 148.42 high. On the downside, below 140.74 minor support will turn bias to the downside for 136.44. Break will extend the fall from 148.42 to 61.8% retracement of 122.36 to 148.42 at 132.31 and below.

In the bigger picture, price actions from 122.36 medium term bottom are seen as developing into a corrective pattern. Upside is so far limited below 38.2% retracement of 195.86 to 122.36 at 150.42 for setting the medium term range. At this point, we don't expect a break of 122.36 in near term and the corrective pattern would extend for a while. Though, sustained break of 150.42 will target 61.8% retracement at 167.78.

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Daily Pivots: (S1) 121.45; (P) 121.83; (R1) 122.50; More...

EUR/JPY is staying in the correction from 124.08 and intraday bias remains neutral for the moment. Rebound from 109.20 is not finished yet. Break of 124.08 will extend such rise and target 126.09 key resistance next. Meanwhile, below 120.54 will target 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39). We'd expect strong support from there to contain downside.

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. Sustained trading below 55 day EMA will pave the way to retest 109.20.

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Daily Pivots: (S1) 1.4125; (P) 1.4172; (R1) 1.4201; More...

Intraday bias in EUR/AUD remains neutral for the moment. Near term outlook stays bearish as the corrective decline from 1.6587 is still in progress. Below 1.4025 will target 1.3671 key support level. We'd expect downside to be contained there to bring reversal. Meanwhile, above 1.4251 minor resistance will turn focus back to 1.4271 resistance.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a consolidative pattern. 50% retracement of 1.1602 to 1.6587 at 1.4095 was already met. While further fall cannot be ruled out, we'd expect strong support above 1.3671 to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.4721 resistance will be the first sign of resumption of up trend from 1.1602 and target retesting of 1.6587 high first.

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Daily Pivots: (S1) 0.8540; (P) 0.8595; (R1) 0.8626; More...

EUR/GBP's break of near term channel is seen as a sign of completion of corrective rise from 0.8303. But it's staying above 0.8449 support and intraday bias stays neutral first. As noted before, rise from 0.8303 is seen as the second leg of the corrective pattern from 0.9304. Break of 0.8449 support will indicate that such rise is completed and the third leg has started for 0.8303 and below. Above 0.8851 will extend the rise from 0.8303. But in that case, strong resistance should be seen above 61.8% retracement of 0.9304 to 0.8303 at 0.8922 to limit upside and bring near term reversal.

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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