Sample Category Title

Daily Pivots: (S1) 1.1318; (P) 1.1343; (R1) 1.1384; More...

Intraday bias in EUR/USD remains neutral for the moment. With 1.1265 minor support intact, further rally will remain mildly in favor. On the upside break of 1.1482 will target 38.2% retracement of 1.2348 to 1.1120 at 1.1589 next. Sustained break there will argue that whole fall from 1.2348 has completed too and target 61.8% retracement at 1.1879. On the downside, however, break of 1.1265 support will dampen this bullish view and bring retest of 1.1120 low instead.

In the bigger picture, the decline from 1.2348 (2021 high) is seen as a leg inside the range pattern from 1.2555 (2018 high). Sustained trading above 55 week EMA (now at 1.1613) will argue that it has completed and stronger rise would be seen back towards top of the range between 1.2348 and 1.2555. However, firm break of 1.0635 (2020 low) will raise the chance of long term down trend resumption and target a retest on 1.0339 (2017 low) next.

Daily Pivots: (S1) 1.3498; (P) 1.3532; (R1) 1.3578; More...

Intraday bias in GBP/USD remains neutral at this point. On the upside, break of 1.3642 will resume the rebound from 1.3356 to 1.3748 resistance. Firm break there will revive the bullish case that correction from 1.4248 has completed with three waves down to 1.3158. Further rally should then be seen to retest 1.4248 high. On the downside, however, break of 1.3356 will bring retest of 1.3158 low.

In the bigger picture, as long as 38.2% retracement of 1.1409 to 1.4248 at 1.3164 holds, up trend from 1.1409 (2020 low) is still in progress. On resumption, next target will be 38.2% retracement of 2.1161 to 1.1409 at 1.5134. Nevertheless sustained break of 1.3164 will argue that whole rise from 1.1409 has completed and bring deeper fall to 61.8% retracement at 1.2493.

Daily Pivots: (S1) 0.9228; (P) 0.9251; (R1) 0.9275; More....

Intraday bias in USD/CHF remains neutral first and outlook is unchanged. Overall, further rally is mildly in favor as long as 0.9090 support holds. On the upside, break of 0.9372 will resume the choppy rally from 0.8925 to 0.9471 high. However, break of 0.9090 will turn bias back to the downside for 0.8925 support instead.

In the bigger picture, medium term outlook will be neutral at best as long as 0.9471 resistance holds. Larger down trend could still extend through 0.8756 (2021 low). However, firm break of 0.9471 will argue that the trend has already reversed and rebound the rally from 0.8756 with another impulsive move.

Daily Pivots: (S1) 115.29; (P) 115.58; (R1) 115.89; More...

Range trading continues in USD/JPY and intraday bias remains neutral first. On the downside, below 115.00 will extend the fall from 116.33, as the third leg of the corrective pattern from 116.34. Deeper fall would be seen to 114.14 support, and then 113.46. On the upside, firm break of 116.34 will resume larger up trend from 102.58. Next target is 118.65 long term resistance.

In the bigger picture, no change in the view that rise from 102.58 is the third leg of the up trend from 101.18 (2020 low). Such rally should target a test on 118.65 (2016 high). Sustained break there will pave the way to 120.85 (2015 high) and raise the chance of long term up trend resumption. This will remain the favored case as long as 55 week EMA (now at 111.21) holds.

Daily Pivots: (S1) 1.2687; (P) 1.2730; (R1) 1.2760; More...

USD/CAD dips mildly today but stays in range of 1.2634/2795 and intraday bias remains neutral. Further rally is mildly in favor with 1.2634 support intact. On the upside, break of 1.2795 will resume the rally from 1.2448 to 1.2963 resistance next. However, break of 1.2634 support will turn bias back to the downside for 1.2448 support instead.

In the bigger picture, focus stays on 38.2% retracement of 1.4667 (2020 high) to 1.2005 (2021 low) at 1.3022. Sustained break there should confirm that the down trend from 1.4667 has completed after defending 1.2061 long term cluster support. Further rise would then be seen towards 61.8% retracement at 1.3650. However, rejection by 1.3022 will maintain medium term bearishness. Break of 1.2005 will resume the down trend from 1.4667 and that carries larger bearish implications too.

Overall market sentiment is slightly weaker entering into US session. While Russia showed videos of tanks leaving Crimea, NATO questioned de-escalation and said troop buildup was still going on. There is little reaction to much stronger than expected US retail sales. Nevertheless, Canadian Dollar is popped up by higher than expected, surging consumer inflation data. As for today, Canadian Dollar is the strongest one for now, followed by Aussie. Dollar is the weakest, followed by Euro and Sterling. Swiss Franc is quietly firming up slightly while Yen is mixed. Focus will turn to FOMC minutes, but eyes will still be on the Russia-Ukraine developments.

Technically, attention will be on Swiss Franc pairs to gauge if nervousness on war is back. In particular, Break of 1.2465 support in GBP/CHF will at least indicate that rise from 1.2276 has completed at 1.2598. Deeper fall would be seen back to this support level. That would also retain near term bearishness for resuming larger down trend from 1.3070 through 1.2134 low at a later stage.

In Europe, at the time of writing, FTSE is down -0.41%. DAX is down -0.16%. CAC is down -0.25%. Germany 10-year yield is down -0.051 at 0.262. Earlier in Asia, Nikkei rose 2.22%. Hong Kong HSI rose 1.49%. China Shanghai SSE rose 0.57%. Singapore Strait Times rose 0.52%. Japan 10-year JGB yield rose 0.0049 to 0.221.

US retail sales rose 3.8% mom in Jan, ex-auto sales up 3.3% mom

US retail sales rose 3.8% mom to USD 649.8B in January above expectation of 1.8% mom. Ex-auto sales rose 3.3% mom, above expectation of 1.0% mom. Ex-gasoline sales rose 4.2% mom. Ex-auto, ex-gasoline sales rose 3.8% mom. Retail trade rose 4.4% mom.

Total sales for November 21 through January 2022 period were up 16.1% from the same period a year ago.

Import price index rose 2.0% mom in January, above expectation of 1.3% mom.

Canada CPI jumped to 5.1% yoy in Jan, highest since 1991

Canada CPI jumped from 4.8% yoy to 5.1% yoy in January, above expectation of 4.8% yoy. Also, inflation surpassed 5% for the first time since September 1991. On monthly basis, CPI rose 0.9% mom, above expectation of 0.6% mom, highest since January 2017.

Excluding gasoline, CPI rose 4.3% yoy, highest since the introduction of the index in 1999. Prices for services was unchanged at 3.4% yoy. Prices for goods accelerated from 6.8% yoy to 7.2% yoy.

CPI common rose from 2.1% yoy to 2.3% yoy, above expectation of 2.1% yoy. CPI median rose from 3.1% yoy to 3.3% yoy, above expectation of 3.1% yoy. CPI trimmed rose from 3.8% yoy to 4.0% yoy, above expectation of 3.7% yoy.

Also released, manufacturing sales rose 0.7% mom in December. Wholesale sales rose 0.6% mom.

Eurozone industrial production rose 1.2% mom in Dec, EU up 0.7% mom

Eurozone industrial production rose 1.2% mom in December, well above expectation of 0.3% mom. Production of capital goods rose by 2.6%, intermediate goods by 0.5% and non-durable consumer goods by 0.4%, while production of durable consumer goods fell by -0.3% and energy by -0.8%.

EU industrial production rose 0.7% mom. Among Member States for which data are available, the largest monthly increases were registered in Ireland (+10.3%), Lithuania (+6.2%) and Luxembourg (+5.1%). The highest decreases were observed in Czechia (-2.9%), Austria (-1.1%) and Italy (-1.0%).

UK CPI rose to 5.5% yoy in Jan, highest since 1992

UK CPI rose further from 5.4% yoy to 5.5% yoy in January, matched expectations. That's the highest level in the National Statistics series since January 1997. It was last higher in the historical modelled series in March 1992, which as at 7.1%. CPI core rose from 4.2% yoy to 4.3% yoy, above expectation of 4.3% yoy.

Also released, PPI input came in at 0.9% mom, 13.6% yoy, versus expectation of 0.7% mom, 14.2% yoy. PPI output was at 1.2% mom, 9.9% yoy, versus expectation of 0.6% mom, 9.4% yoy. PPI output core was at 1.1% mom, 0.7% yoy, versus expectation of 0.7% mom, 9.0% yoy.

BoJ Kuroda: Basic approach to allow 10-yr JGB yield to move 25 bps up-down 0%

Speaking in the parliament, BoJ Governor Haruhiko Kuroda said there is no plan to change the band for 10-year JGB yield to fluctuate in. He added, "our basic approach is to buy a sufficient amount of bonds to allow 10-year JGB to move 25 basis points up and down each around our 0% target."

"How much JGBs BoJ will buy to defend its yield target depends on market conditions at the time," he said. "BoJ's fixed-rate bond-buying offer was made in light of such unusual market situation. If market conditions become unusual again, BoJ will of course use tools such as fixed-rate market operation."

Australia Westpac leading index turned positive, signalling above trend growth

Australia Westpac-Melbourne Institute leading index rose from -0.1% to 0.4% in December. That's the first positive, above trend, read on the since Since Delta outbreak last August. The index signalled that growth outlook has improved with above trend growth over the next three to nine months.

Westpac expects contraction in spending in January due to Omicron, and zero growth in GDP in Q1. But the economy is expected to bounce back strongly over the rest of 2022, with a solid 5.5% growth for the year overall.

Westpac also continues to expect interest rate hike by RBA before August meeting.

USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.2687; (P) 1.2730; (R1) 1.2760; More...

USD/CAD dips mildly today but stays in range of 1.2634/2795 and intraday bias remains neutral. Further rally is mildly in favor with 1.2634 support intact. On the upside, break of 1.2795 will resume the rally from 1.2448 to 1.2963 resistance next. However, break of 1.2634 support will turn bias back to the downside for 1.2448 support instead.

In the bigger picture, focus stays on 38.2% retracement of 1.4667 (2020 high) to 1.2005 (2021 low) at 1.3022. Sustained break there should confirm that the down trend from 1.4667 has completed after defending 1.2061 long term cluster support. Further rise would then be seen towards 61.8% retracement at 1.3650. However, rejection by 1.3022 will maintain medium term bearishness. Break of 1.2005 will resume the down trend from 1.4667 and that carries larger bearish implications too.

Economic Indicators Update

US retail sales rose 3.8% mom to USD 649.8B in January above expectation of 1.8% mom. Ex-auto sales rose 3.3% mom, above expectation of 1.0% mom. Ex-gasoline sales rose 4.2% mom. Ex-auto, ex-gasoline sales rose 3.8% mom. Retail trade rose 4.4% mom.

Total sales for November 21 through January 2022 period were up 16.1% from the same period a year ago.

Full release here.

Canada CPI jumped from 4.8% yoy to 5.1% yoy in January, above expectation of 4.8% yoy. Also, inflation surpassed 5% for the first time since September 1991. On monthly basis, CPI rose 0.9% mom, above expectation of 0.6% mom, highest since January 2017.

Excluding gasoline, CPI rose 4.3% yoy, highest since the introduction of the index in 1999. Prices for services was unchanged at 3.4% yoy. Prices for goods accelerated from 6.8% yoy to 7.2% yoy.

CPI common rose from 2.1% yoy to 2.3% yoy, above expectation of 2.1% yoy. CPI median rose from 3.1% yoy to 3.3% yoy, above expectation of 3.1% yoy. CPI trimmed rose from 3.8% yoy to 4.0% yoy, above expectation of 3.7% yoy.

Full release here.

BTCUSD (Bitcoin) pivoted nicely near the 41,474 support region on Tuesday, signaling that the rebound off the 32,950 low and, more recently, the bullish trendline breakout has further to go.

The base overlaps with the 23.6% Fibonacci retracement of the 68,999 – 32,950 downtrend and the 50-day simple moving average (SMA). Hence, any further extensions above this floor may keep bullish momentum alive, especially as the MACD is stepping higher in the positive region and its red signal line. The RSI is reflecting an improving bias as well after rejecting any declines below its 50 neutral mark.

The 45,000 mark is currently on target, while within a breathing distance, the 38.2% Fibonacci of 46,725 could also cap the rally, preventing any acceleration towards the key resistance formed between the 200-day SMA and the 50% Fibonacci of 50,968. If the bulls manage to knock down that wall, the spotlight will immediately turn to the 54,000 – 55,212 region.

Alternatively, a pullback below 41,474, where the 20- and 50-day SMAs are set to post a bullish cross, could immediately halt around the 39,275 restrictive region. Lower, traders will pay special attention to the 36,000 – 32,950 zone and the broken descending trendline, which could ideally switch from resistance to support within the same region. Should selling forces intensify, the door will open for the 30,000 level.

Summarizing, buyers are expected to add more upside pressure to BTCUSD in the short term, likely bringing the 45,000 – 46,725 band under examination.

UK short-term bond yields may struggle to keep up with inflation after January headline CPI surprised to the upside. If the Bank of England fails to deliver a 50 bps hike in March, GBP/USD could be in real trouble.

Earlier in February I pointed out how high expectations for Bank of England (BoE) policy tightening this year may contribute negatively to GBP/USD from then onwards. Flash forward to Wednesday’s higher-than-expected 5.5% y/y UK January CPI print and my concerns have only grown. UK-2-year government bond yields, already well above pre-pandemic levels, risk failing to keep pace with inflation.

UK CPI vs UK yields

Furthermore, economic theory doesn’t necessarily favour currencies from countries that are running high levels of inflation over the long term. Granted, on a relative basis US headline CPI ran at 7.5% in January versus 5.5% for the UK, but the US economy, based on quarterly GDP figures, has as also has surpassed pre-pandemic levels by more much than the UK. In other words, the Fed has more justification on both growth and inflation grounds to be hiking aggressively.

Growing expectations of a 50 bps hike from the BoE, versus 25 bps when the central bank next meets in March, puts the value of GBP/USD at risk should the BoE ultimately disappoint. Households in the UK are already coming under pressure from negative real wage growth and big upward swing in April utility bills. This could force the BoE to go lower rather than higher. If the BoE does disappoint, interest rate markets could easily take that as a sign that the BoE has lost the grip on inflation. That could prove bad for GBP/USD.