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Daily Pivots: (S1) 1.2968; (P) 1.3038; (R1) 1.3087; More....

GBP/USD recovers as it draws support from near term trend line (now at 1.2985). Intraday bias is turned neutral first. On the downside, sustained break of trend line support will argue that rebound from 1.2391 has completed earlier than expected at 1.3350. Deeper fall would then be seen to 1.2773 support for confirmation. On the upside, above 1.3184 minor resistance will suggest that the pull back has completed. Intraday bias will be turned back to the upside for 1.3350.

In the bigger picture, medium term decline from 1.4376 (2018 high) should have completed at 1.2391. Rise from 1.2391 is now seen as the third leg of the corrective pattern from 1.1946 (2016 low). Further rise could be seen through 1.4376 in medium term. On the downside, though, break of 1.2773 support will dampen this view. Focus will be turned back to 1.2391 low and break will resume the fall from 1.4376 to 1.1946.

Risk markets attempt to recover today but lacks clear momentum. Nonetheless, that's enough to send Swiss Franc generally lower. At the time of writing, Canadian Dollar is the second weakest. Dollar follows as third weakest despite better than expected retail sales. Sterling on the other hand recovers broadly after being pressured earlier today. The Pound is paring some losses ahead of the Brexit votes this week. Just like the EU, Sterling is awaiting some clarify on what the UK would like to do regarding Brexit.

Technically, GBP/USD recovers after hitting near term trend line support and focus is back on 1.3097 minor resistance. Break will indicate completion of pull back from 1.3350. EUR/CHF rebounds strongly after testing 1.1310 near term support and retains near term bullishness. Meanwhile, Dollar is still in consolidation against Euro, Swiss Franc, Aussie and Loonie. The greenback's retreat mildly extend lower.

In Europe, FTSE is currently up 0.24%. DAX is up 0.21%. CAC is up 0.16%. German 10-year yield is down -0.006 at 0.065. Earlier in Asia, Nikkei rose 0.47%. Hong Kong HSI rose 0.97%. China Shanghai SSE rose 1.92% to 3026.99, back above 3000. Singapore Strait Times dropped -0.14%. Japan 10-year JGB yield dropped -0.0033 to -0.035.

US retail sales rose 0.2%, ex-auto sales surged 0.9%

US January retail sales came in stronger than expected by Dollar shrugs. Headline retail sales rose 0.2% mom in January versus expectation of -0.1% mom. Ex-auto sales jumped sharply by 0.9% mom versus expectation of 0.3% mom. However, prior month's headline sales was revised down from -1.2% mom to -1.6% mom. Ex-auto sales was also revised down from -1.8% mom to -2.1% mom.

Released in European session, German industrial production dropped -0.8% mom in January versus expectation of 0.50% mom. Trade surplus narrowed to EUR 18.5B in January. From Asia, Japan machine tools orders dropped -29.3% yoy in February, M2 rose 2.4%.

UK confirms Brexit meaningful vote on Tuesday

UK Prime Minister Theresa May's spokesman confirmed that there will be a meaningful vote on the Brexit deal tomorrow. But at this point, it's unsure whether the vote would be on the "agreed" deal with EU, or a "hypothetical" deal that could push EU to concede to.

The spokesman also noted that "It's important to note the PM spoke to (European Commission President) Jean-Claude Juncker by phone yesterday evening and talks are continuing. The PM and negotiating teams are focused on making progress so we can secure parliament's support for the deal."

EU chief negotiator Michel Barnier refused to comment on Brexit negotiations today. Ahead of a meeting of EU ambassadors, Barnier just said "We talked all weekend and now the discussions, the negotiations, are between the government in London and the parliament in London."

In short, there will be another parliamentary vote on the Brexit deal on March 12, next Tuesday. As it's defeated, a vote on no-deal Brexit will then be held on March 13 to see if there is explicit consent on this path. If not, there will be another vote on Article 50 extension on March 14.

ECB Cœuré: No recession, no turnaround in policy, no need to resume asset purchases

In an interview on March 7, published today, ECB Executive Board Member Benoît Cœuré said the economy slowdown "didn't come as a surprise" even though it has been "stronger than expected and started sooner". ECB's decision last week "don't represent a turnaround in our policy" but just "carefully calibrated to this diagnosis". And ECB was just :adjusting to the new reality rather than reversing our course".

Coeure added "we don't see signs of a recession at present" and "we don't see the need" to resume asset purchases. Economic growth is "robust" although it's "less strong than before". And it will "take longer for inflation to reach our objective, but it will get there".

Coeure also said Italy is "in a difficult juncture" and it's the "only euro area country that is experience a technical recession". There was no improvement in the labor market and in the long term, Italy's problem is well known and it's "productivity growth". But "I don't believe that any of this has to do with the euro, otherwise it would be a general problem across the euro area."

Fed Powell: Roughly neutral interest rate appropriate with muted inflation

In CBS's 60 Minutes show, Fed Chair Jerome Powell reiterated that current interest rates are "appropriate" while inflation is "muted". He also described the current rate setting as "roughly neutral". Fed is patient regarding policy adjustment and that means "we don't feel any hurry to change our interest rate policy".

On the economy, he said "the outlook for the U.S. economy is favorable." And, "the principal risks to our economy now seem to be coming from slower growth in China and Europe and also risk events such as Brexit."

Powell added that "what's happened in the last 90 or so days is that we've seen increasing evidence of the global economy slowing down" and "we're going to wait and see how those conditions evolve before we make any changes to our interest-rate policy."

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2968; (P) 1.3038; (R1) 1.3087; More....

GBP/USD recovers as it draws support from near term trend line (now at 1.2985). Intraday bias is turned neutral first. On the downside, sustained break of trend line support will argue that rebound from 1.2391 has completed earlier than expected at 1.3350. Deeper fall would then be seen to 1.2773 support for confirmation. On the upside, above 1.3184 minor resistance will suggest that the pull back has completed. Intraday bias will be turned back to the upside for 1.3350.

In the bigger picture, medium term decline from 1.4376 (2018 high) should have completed at 1.2391. Rise from 1.2391 is now seen as the third leg of the corrective pattern from 1.1946 (2016 low). Further rise could be seen through 1.4376 in medium term. On the downside, though, break of 1.2773 support will dampen this view. Focus will be turned back to 1.2391 low and break will resume the fall from 1.4376 to 1.1946.

Economic Indicators Update

UK Prime Minister Theresa May's spokesman confirmed that there will be a meaningful vote on the Brexit deal tomorrow. But at this point, it's unsure whether the vote would be on the "agreed" deal with EU, or a "hypothetical" deal that could push EU to concede to.

The spokesman also noted that "It's important to note the PM spoke to (European Commission President) Jean-Claude Juncker by phone yesterday evening and talks are continuing. The PM and negotiating teams are focused on making progress so we can secure parliament's support for the deal."

EU chief negotiator Michel Barnier refused to comment on Brexit negotiations today. Ahead of a meeting of EU ambassadors, Barnier just said "We talked all weekend and now the discussions, the negotiations, are between the government in London and the parliament in London."

US January retail sales came in stronger than expected by Dollar shrugs. Headline retail sales rose 0.2% mom in January versus expectation of -0.1% mom. Ex-auto sales jumped sharply by 0.9% mom versus expectation of 0.3% mom. However, prior month's headline sales was revised down from -1.2% mom to -1.6% mom. Ex-auto sales was also revised down from -1.8% mom to -2.1% mom.

Full release here.

After posting sharp losses last week, the DAX has started the week with gains. On Monday, the DAX is at 11,485, up 0.24% on the day. On the release front, there are no major eurozone events. German industrial production posted a fourth straight decline. The reading of -0.8% missed the forecast of 0.5%. On the DAX, Deutsche Bank has jumped 3.3% on the day, as merger talks between Deutsche Bank and Commerzbank have intensified.

The German manufacturing sector continues to post dismal numbers. Industrial production managed only two gains in the second half of 2018 and has started 2019 with a decline. Last week, factory orders plunged 2.6%, marking a third successive decline. The U.S-China trade war has dampened global growth, which has reduced the demand for German exports and weighed on manufacturing. Eurozone manufacturing has also struggled, and the negative trend is likely to continue if there is no breakthrough in the U.S-China trade talks.

The ECB was more dovish than expected last week, and investors reacted with a thumbs-down. The ECB announced that it was extending its forward guidance on interest rate levels, saying that it would not raise rates before 2020. Although this should not have come as a surprise, the ECB had been on record until now as saying that rates could move higher in late 2019. In an acknowledgment to the slowdown in the eurozone, the ECB announced a new round of long-term loans to eurozone banks and slashed the 2019 GDP forecast for the bloc to 1.1%, down from 1.7% in the previous forecast. Mario Draghi reinforced the bank’s dovish stance in his press conference, saying that risk was pointed to the downside, although a recession was unlikely.

WTI oil price extended higher on Monday, bouncing from dangerous territory after spiking to $54.51 on Friday after weak Chinese data. Downbeat US NFP data which pushed dollar lower, helped oil's recovery, with the latest news that OPEC and other main oil producers will not change its production cut policy and signals that Saudi Arabia may further reduce output as early as April, added to positive signals. Oil price managed to close above rising 20SMA (currently at $56.06) on Friday and holding above it today, keeping positive tone. Fresh bullish momentum on daily chart also helps, along with other indicators in bullish alignment. Repeated close above 20SMA is needed to keep near-term focus shifted higher for renewed attempts towards key $57.79/85 highs, violation of which would signal bullish continuation. Conversely, close below 20SMA would keep the downside vulnerable for test of pivotal support provided by 30 and 100 SMA's ($55.27/$54.60 respectively) cracked on Friday's spike lower.

Res: 56.77; 56.97; 57.17; 57.85
Sup: 56.06; 55.55; 55.27; 54.60

The pair consolidates above rising 20SMA (currently at 111.04) which prevented deeper fall after dollar accelerated lower on downbeat US NFP data on Friday. Dip was contained by broken Fibo 61.8% support (110.74) and today’s recovery attempts are underpinned by rising daily Kijun-sen. Pivotal barrier at 111.38 (converged 10/200/100SMA’s) needs to be cleared to generate stronger recovery signal and neutralize downside threats. Otherwise, the downside is expected to remain vulnerable while converged MA’s cap, as daily momentum remains weak. Sustained break below 20SMA would open 30SMA (110.58) and Fibo 23.6% of 104.59/112.13 (110.35).

Res: 111.38; 111.65; 111.85; 112.13
Sup: 111.04; 110.78; 110.58; 110.35

The Euro extends recovery from new 2019 low (1.1176, posted last Thu) on Monday, as greenback remains at the back foot from downbeat US NFP data. However, current move is seen as corrective action of broader downtrend, as ECB's dovish stance weighs heavily. The single currency ended last week with loss of 1.3% (the biggest weekly fall since early Aug) after cracking key Fibo support at 1.1186 (61.8% of 1.0340/1.2555), clear break of which would generate bearish signal of larger downtrend from 1.2555. Strong bearish momentum on daily chart favoring further weakness, upticks could be seen as fresh selling opportunities. Solid double-Fibo resistance at 1.1270 (38.2 of 1.1419/1.1/23.6% of 1.1570/1.1176) should ideally cap upticks before bears regain traction. Only close above converged 10/20 SMA's (bear-cross at 1.1315) would sideline immediate downside risk.

Res: 1.1258; 1.1270; 1.1298; 1.1326
Sup: 1.1223; 1.1186; 1.1176; 1.1098

Entering into US session, Swiss Franc and Yen are among the weakest today as global stocks recover. Sterling is also soft  as traders turned cautious ahead of crucial Brexit votes this week. UK Prime Minister Theresa May's just confirmed that the Brexit deal meaningful vote will happen tomorrow. And, talks with EU on a solution to the Irish backstop were continuing. Meanwhile, Euro recovers broadly today but upside is relatively limited.

Released in European session, German industrial production dropped -0.8% mom in January versus expectation of 0.50% mom. Trade surplus narrowed to EUR 18.5B in January. From Asia, Japan machine tools orders dropped -29.3% yoy in February, M2 rose 2.4%. Focus will now turn to January retail sales fro the US. December's numbers were disastrous and we'll see if sales rebound this year.

In Europe, currently:

• FTSE is up 0.58%.
• DAX is up 0.40%.
• CAC is up 0.35%.
• German 10-year yield is down -0.0026 at 0.068.

Earlier in Asia:

• Nikkei rose 0.47%.
• Hong Kong HSI rose 0.97%.
• China Shanghai SSE rose 1.92% to 3026.99, back above 3000.
• Singapore Strait Times dropped -0.14%.
• Japan 10-year JGB yield dropped -0.0033 to -0.035.

UK Prime Minister Theresa May's office said UK Prime Minister Theresa May and European Commission Jean-Claude Juncker held phone conversation at Sunday night. But talks remained "deadlocked" and thus, there is no plan for May to travel to Brussels again today. Cabinet minister Andrea Leadsom, urged fellow Tories to support May's deal. And, that would mean "that we can move on" while leaving open the possibility to "potentially amend how we do this."

Some Conservative MPs are reported to ask May to pull the Brexit meaningful vote on Tuesday, because it's rather meaningless to hold a vote that will certainly be defeated. But there were also talks that May is planning to push for a vote on a "hypothetical" deal on Tuesday. It could be with a certain Irish backstop arrangement with Attorney General Geoffrey Cox' input. Then EU could be forced to concede should there be a Commons majority.