Sample Category Title

Daily Pivots: (S1) 1.0837; (P) 1.0882; (R1) 1.0917; More...

Further rally is expected in EUR/USD with 1.0765 support intact. Current rise from 0.9534 should target 61.8% projection of 0.9630 to 1.0733 from 1.0482 at 1.1164 next. On the downside, though, break of 1.0765 support should now indicate short term topping, and turn bias back to the downside for 55 day EMA (now at 1.0557).

In the bigger picture, current development suggests that the rally from 0.9534 low (2022 low) is a medium term up trend rather than a correction. Further rise is in favor to 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273 next. This will remain the favored case as long as 1.0482 support holds.

Daily Pivots: (S1) 1.2319; (P) 1.2384; (R1) 1.2443; More...

GBP/USD is staying in consolidation in tight range and intraday bias remains neutral. On the upside, decisive break of 1.2445 will confirm resumption of whole rise from 1.0351. Next target will be 1.2759 fibonacci level. On the downside, break of 1.2252 minor support will turn bias to the downside, and extend the corrective pattern from 1.2445 with another falling leg.

In the bigger picture, rise from 1.0351 medium term bottom is at least correcting whole down trend from 1.4248 (2021 high). Further rise is expected as long as 1.1644 resistance turned support holds. Next target is 61.8% retracement of 1.4248 to 1.0351 at 1.2759. Sustained break there will pave the way back to 1.4248.

Daily Pivots: (S1) 0.9152; (P) 0.9193; (R1) 0.9245; More...

Intraday bias in USD/CHF remains neutral for the moment. Outlook also stays bearish with 0.9407 resistance intact. On the downside, sustained break of 61.8% projection of 1.0146 to 0.9355 from 0.9545 at 0.9056 will pave the way to 100% projection at 0.8754, which is close to 0.8756 long term support. Nevertheless, on the upside, break of 0.9407 should confirm short term bottoming and turn bias back to the upside.

In the bigger picture, rise from 0.8756 (2021 low) has completed at 1.0146, well ahead of 1.0342 long term resistance (2016 high). Based on current downside momentum, fall from 1.0146 should be a medium term down trend itself. Next target is a test on 0.8756 low. Strong support should be seen there to bring rebound. Still, further decline will now be expected as long as 0.9407 resistance holds, in any case.

Daily Pivots: (S1) 129.53; (P) 130.21; (R1) 131.37; More...

Range trading continues in USD/JPY and intraday bias stays neutral at this point. On the downside, break of 127.20 will resume the whole decline from 151.93 and target 121.43 fibonacci level. Nevertheless, on the upside, break of 131.56 should confirm short term bottoming, and turn bias back to the upside for stronger rebound to 55 day EMA (now at 134.49).

In the bigger picture, the break of 55 week EMA (now at 131.47) raises the chance of medium term bearish reversal, but that's not confirmed yet. Strong support could be seen around 61.8% retracement of 102.58 to 151.93 at 121.43 and 38.2% retracement of 75.56 to 151.93 at 122.75 to bring rebound. But break of 131.56 resistance is needed to indicate bottoming first. Otherwise further fall will remain in favor.

Daily Pivots: (S1) 1.3333; (P) 1.3376; (R1) 1.3409; More....

Range trading continues in USD/CAD and intraday bias stays neutral at this point. On the downside, break of 1.3320 will resume the fall from 1.3704 to 1.3224 key support level. On the upside, though, above 1.3519 will turn bias back to the upside for 1.3704 resistance.

In the bigger picture, as long as 1.3222 cluster support (38.2% retracement of 1.2005 to 1.3976 at 1.3223) holds, larger up trend from 1.2005 (2021 low) is still expected to resume through 1.3976 high at a later stage. However, firm break of 1.3222/3 will indicate that the trend might have reversed. Deeper fall would be seen to next cluster support at 1.2726 (61.8% retracement at 1.2758).

Daily Pivots: (S1) 0.6981; (P) 0.7010; (R1) 0.7059; More...

AUD/USD's recovery from 0.6871 extends higher today, but stays below 0.7062 resistance. Intraday bias remains neutral first and further rally is expected. On the upside, break of 0.7062 will resume rise from 0.6169 to 61.8% projection of 0.6169 to 0.6892 from 0.6721 at 0.7168 next. However, on the downside, break of 0.6871 support should confirm short term topping, and turn bias back to the downside for 0.6721 support and possibly below.

In the bigger picture, corrective decline from 0.8006 (2021 high) should have completed with three waves down to 0.6169 (2022 low). Further rally should be seen to 61.8% retracement of 0.8006 to 0.6169 at 0.7304. Sustained break there will pave the way to retest 0.8006. This will now remain the favored case as long as 0.6721 support holds.

Dollar softens mildly again in rather subdued trading in Asia. Many markets are still on Lunar New Year holiday. For now, Australia Dollar is the relatively stronger one for the week, followed by New Zealander. Euro is maintaining some of this week's gains, but there is no follow through buying. Yen is the weakest one despite today's mild recovery, follow by Sterling and Swiss Franc. Dollar and Canadian are mixed. Overall, nearly all major pairs and crosses are trading inside last week's range. Focuses will turn to PMIs from Eurozone, the UK and US.

Technically, some attention will be on the development in NASDAQ this week. After yesterday's rally, 11571.64 resistance is within reach. Decisive break there will complete a double bottom pattern (10088.82, 10207.47) which should at least signal medium term bottoming, on bullish convergence condition in daily MACD too. In this case, further rise should then be seen towards 13181.08 resistance. Risk-on sentiment would continue to cap Dollar's rally.

In Asia, at the time of writing, Nikkei is up 1.49%. 10-year JGB yield is up 0.0274 at 0.405. Overnight, DOW rose 0.76%. S&P 500 rose 1.19%. NASDAQ rose 2.01%. 10-year yield rose 0.041 to 3.525.

ECB Lagarde: Rates still have to rise significantly at a steady pace

ECB President Christine Lagarde said in a speech that the "high inflation environment" is a big challenge facing Europe. And, that's "the challenge that concerns me the most".

"We must bring inflation down. And we will deliver on this goal," she emphasized. "We have made it clear that ECB interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive, and stay at those levels for as long as necessary."

"In other words, we will stay the course to ensure the timely return of inflation to our target."

Another challenge Lagarde named is to "best protect Europe's critical interests... as the next chapter in the globalisation story is being written". Europe must be "prepared for a future in which the global economy could fragment", and "develop more our own sources of growth."

NZ BusinessNZ services dropped to 52.1, marked a significant slowdown

New Zealand BusinessNZ Performance of Services Index dropped from 53.8 to 52.1 in December. Looking at some details, activity/sales dropped notably from 58.2 to 52.1. Employment fell from 51.8 to 47.1. New orders/business rose from 57.4 to 58.4. Stocks/inventories declined from 54.6 to 51.7. Supplier deliveries increased from 46.8 to 53.4.

BNZ Senior Economist Craig Ebert said that "December marked a significant slowdown in a short space of time for the PSI, although the maintained loftiness in New Orders/Business suggested there was still a lot of demand-side pressure at play".

Australia PMI composite rose to 48.2, economy is not slowing sufficiently for RBA

Australia PMI Manufacturing fell from 50.2 to 49.8 in January, a 32-month low. PMI Services rose from 47.3 to 48.3. PMI Composite rose from 47.5 to 48.2.

Warren Hogan, Chief Economic Advisor at Judo Bank said:

"Following eight consecutive rate hikes in 2022, the RBA Board will be meeting for the first time on 7 February. The latest PMI readings may raise the concern that the economy is not slowing sufficiently to bring inflation back to target in a timely manner...

"Inflation pressures may abate somewhat but the risk for the RBA is that inflation remains stubbornly high well into 2023. This could maintain upward pressure on inflation expectations and wages growth. On this basis it seems premature for the RBA to pause the current tightening cycle....

"We expect the RBA to hike the cash rate by 25bp in each of February and March before an extended pause. Further rate hikes may be required later in 2023 if the economy and inflation prove more resilient than current consensus forecasts suggest."

Australia NAB business conditions fell to 12, confidence improved to -1

Australia NAB Business Conditions fell from 20 to 12 in December. Trading conditions fell from 27 to 18. Profitability conditions fell from 19 to 12. Employment conditions also declined from 13 to 8. Business Confidence improved from -4 to -1.

NAB Chief Economist Alan Oster said: "The main message from the December monthly survey is that the growth momentum has slowed significantly in late 2022 while price and purchase cost pressures have probably peaked".

"The gap between current business conditions and business confidence remains wider than usual though has narrowed. Ultimately while on average business reports still healthy activity at present, they don't necessarily expect that to last."

Japan PMI manufacturing unchanged at 48.9, services rose to 52.4

Japan PMI Manufacturing was unchanged at 48.9 in January, below expectation of 49.4. PMI Services rose from 51.5 to 52.4. PMI Composite rose form 49.7 to 50.8.

Laura Denman, Economist at S&P Global Market Intelligence, said: "Japan's private sector kicked off 2023 on a more positive note, as signalled by activity returning to growth territory in January. However, similar to trends recorded over much of the past six months, a divergence between the manufacturing and services sectors has remained.

Looking ahead

Germany Gfk, Swiss trade balance; Eurozone PMIs and UK PMIs will be the focuses in European session. Later in the day, US will also release PMIs too.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6981; (P) 0.7010; (R1) 0.7059; More...

AUD/USD's recovery from 0.6871 extends higher today, but stays below 0.7062 resistance. Intraday bias remains neutral first and further rally is expected. On the upside, break of 0.7062 will resume rise from 0.6169 to 61.8% projection of 0.6169 to 0.6892 from 0.6721 at 0.7168 next. However, on the downside, break of 0.6871 support should confirm short term topping, and turn bias back to the downside for 0.6721 support and possibly below.

In the bigger picture, corrective decline from 0.8006 (2021 high) should have completed with three waves down to 0.6169 (2022 low). Further rally should be seen to 61.8% retracement of 0.8006 to 0.6169 at 0.7304. Sustained break there will pave the way to retest 0.8006. This will now remain the favored case as long as 0.6721 support holds.

Economic Indicators Update

Key Highlights

• GBP/USD started a fresh increase above the 1.2350 resistance.
• A connecting bullish trend line is forming with support near 1.2340 on the 4-hours chart.
• EUR/USD extended its increase above the 1.0880 resistance.
• The US Manufacturing PMI could decline from 46.2 to 46.1 in Jan 2022 (Preliminary).

GBP/USD Technical Analysis

The British started a major increase above the 1.2200 resistance against the US Dollar. GBP/USD even broke the 1.2320 level to move into a positive zone.

Looking at the 4-hours chart, the pair settled nicely above the 1.2350 level, the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).

The pair even cleared the 1.2400 resistance and tested the 1.2450 zone. On the upside, an initial resistance is near the 1.2400 level. The next major resistance may perhaps be near 1.2450. A clear move above the 1.2450 resistance might start a steady increase towards the 1.2550 resistance zone.

Any more gains could open the doors for a move towards the 1.2700 level. The next key hurdle is near 1.2800, above which the pair could climb towards the 1.3000 resistance zone.

On the downside, there is a major support at 1.2320. There is also a connecting bullish trend line forming with support near 1.2340 on the same chart. The next major support is near the 1.2240 level. A downside break below the 1.2240 zone might push the pair lower.

The next major support sits near the 1.2150 level. Any more losses might open the doors for a move towards the 1.2000 support zone.

Looking at EUR/USD, the pair extended its increase, but the bears seem to be active above the 1.0900 resistance zone.

Economic Releases

• Germany’s Manufacturing PMI for Jan 2022 (Preliminary) - Forecast 47.9, versus 47.1 previous.
• Germany’s Services PMI for Jan 2022 (Preliminary) - Forecast 49.7, versus 49.2 previous.
• Euro Zone Manufacturing PMI for Jan 2022 (Preliminary) – Forecast 48.5, versus 47.8 previous.
• Euro Zone Services PMI for Jan 2022 (Preliminary) – Forecast 50.2, versus 49.8 previous.
• UK Manufacturing PMI for Jan 2022 (Preliminary) – Forecast 45.0, versus 45.3 previous.
• UK Services PMI for Jan 2022 (Preliminary) – Forecast 49.9, versus 49.9 previous.
• US Manufacturing PMI for Jan 2022 (Preliminary) – Forecast 46.1, versus 46.2 previous.
• US Services PMI for Jan 2022 (Preliminary) – Forecast 44.5, versus 44.7 previous.

Japan PMI Manufacturing was unchanged at 48.9 in January, below expectation of 49.4. PMI Services rose from 51.5 to 52.4. PMI Composite rose form 49.7 to 50.8.

Laura Denman, Economist at S&P Global Market Intelligence, said: "Japan's private sector kicked off 2023 on a more positive note, as signalled by activity returning to growth territory in January. However, similar to trends recorded over much of the past six months, a divergence between the manufacturing and services sectors has remained.

Full release here.

Australia NAB Business Conditions fell from 20 to 12 in December. Trading conditions fell from 27 to 18. Profitability conditions fell from 19 to 12. Employment conditions also declined from 13 to 8. Business Confidence improved from -4 to -1.

NAB Chief Economist Alan Oster said: "The main message from the December monthly survey is that the growth momentum has slowed significantly in late 2022 while price and purchase cost pressures have probably peaked".

"The gap between current business conditions and business confidence remains wider than usual though has narrowed. Ultimately while on average business reports still healthy activity at present, they don't necessarily expect that to last."

Full release here.