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For the 24 hours to 23:00 GMT, the USD declined 0.17% against the CAD and closed at 1.3165.

In the Asian session, at GMT0400, the pair is trading at 1.3173, with the USD trading 0.06% higher against the CAD from yesterday’s close.

The pair is expected to find support at 1.3140, and a fall through could take it to the next support level of 1.3107. The pair is expected to find its first resistance at 1.3221, and a rise through could take it to the next resistance level of 1.3269.

Trading trend in the Loonie today, is expected to be determined by Canada’s consumer price index for January, scheduled to release later in the day.

The currency pair is trading below its 20 Hr moving average and showing convergence with its 50 Hr moving average.

Indeed, there is not much update after the parliament voted down the original Brexit deal (Withdrawal Agreement) proposed by PM Theresa May back in January. Yet, things evolving since then appear to have diminished, or delayed, the risk of a no-deal Brexit. There are a number of votes scheduled to take place in the parliament in March. With little breakthrough on the negotiation with EU, it is getting more likely that the MPs would prefer to extend Article 50, buying time to avoid leaving the EU with no deal. The market is obviously thrilled by developments, with sterling and gilt yields strengthening on any news that reduce the chance of no-deal Brexit. Yet, the UK economy has already been suffering due to the uncertainty. Extending Art. 50 could actually be prolong the damage done on the economy by Brexit uncertainty.

Upcoming Brexit Votes

February 27 – Vote on amendments to the Government’s motion ahead of another “meaningful vote” in March. The most-talked one is the Cooper-Letwin amendment, tabled by Labour's Yvette Cooper and Conservative Sir Oliver Letwin to avert no deal on March 29. Cooper confirmed that the amendment would still be tabled so as to “to secure confirmation of PM’s commitment

March 12 – Meaningful vote on a new Brexit deal. This is essentially a repeat of what was done on January 15. Recall that the parliament rejected the original deal by a 432-202 vote. PM May promised to renegotiate with the EU, especially on the Irish backstop issue. As the EU has so far refused to reopen negotiations, the best PM May could do is to secure some “legal guarantees”.

March 13 – No-deal vote. If the “new” deal is again rejected on March 12, PM May would table a motion, asking if the MPs support to leave the EU without a deal on March 29. This is to get explicit consensus from the parliament as PM May affirmed that the UK “will only leave without a deal … if there is explicit consent in the House for that outcome”.

March 14 – Vote on Extension of Art. 50(delaying the time to officially leave the EU from Mar 29, 2019). If the above motion is rejected, meaning the parliament rejects a no-deal Brexit with a majority, it would then have to vote on whether to “seek a short, limited extension to Article 50”. If the extension is approved, PM May would have to seek unanimous approval from the EU parliament on the extension. The uncertainty here is that PM May has not specific the duration of the delay. It is believed that she prefers a 2-month extension, ending before the upcoming EU parliament election on May 23-26. However, short a short timeframe would unlikely be meaningful for any breakthrough. Some in the EU parliament instead propose a 21-month extension. A longer extension would increase the chance of a second referendum. While it is more likely that the majority would vote for an extension, PM May has yet to reveal a contingency plan should the extension vote be rejected.

Economy has been Suffering for Some Time

The market is in favor of anything that could reduce the chance of no deal Brexit. No doubt, a no-deal Brexit is the worst of all scenarios (amongst smooth Brexit, extension of Art.50 and no Brexit), UK’s economic development has already been damaged by the Brexit drama over the past few years.

GDP growth decelerated to +0.2% in 4Q18, from +0.6% in the prior quarter. For the full year of 2018, growth was only +1.4% in 2018, the lowest recorded in six years. The slowdown in the fourth quarter was broadly based. Household spending weakened as confidence was eroded. Gfk’s consumer confidence index has fallen to the most negative level since July 2013 Business investment plunged -1.4%q/q. It appears that businesses are more cautious in making big spending. Instead, they hire more labors as it is easier to reverse hiring decisions than capital investment decisions.

BOE has downgraded sharply its GDP growth forecast for this year. PMI, usually used as a leading indicator to economic growth, has suggested that economic activities continued to fall in January. The January composite index fell to a 2.5 year low of 50.3, suggesting that “the UK economy is at risk of stalling or worse as escalating Brexit uncertainty coincides with a wider slower slowdown in the global economy”.

With PM May softening her stance in accepting votes of two important motions (no-deal Brexit and extension of Art. 50) [and EU's openness in the extension], it appears that the chance of rejection the first motion and approval of the second is high. In this scenario, what matter most is the time frame of the extension. The longer the duration of extension, the higher the case of second referendum. For now, the market is optimistic as the probability of a no-deal Brexit is greatly diminished, but not averted. However, we would like to point out that UK's economy has suffered a lot as a result of Brexit uncertainty. MPs voting for the extension is prolonging the detriment done to the economy. The negative impact could be amplified in the midst of global economic slowdown.

For the 24 hours to 23:00 GMT, the AUD rose 0.35% against the USD and closed at 0.7194.

LME Copper prices declined 1.4% or $93.0/MT to $6471.0/MT. Aluminium prices declined 0.9% or $16.0/MT to $1870.0/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7182, with the AUD trading 0.17% lower against the USD from yesterday’s close.

The pair is expected to find support at 0.7150, and a fall through could take it to the next support level of 0.7117. The pair is expected to find its first resistance at 0.7207, and a rise through could take it to the next resistance level of 0.7231.

Amid lack of macroeconomic releases in Australia today, investors would focus on global macroeconomic events for further direction.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, Gold rose 0.12% against the USD and closed at USD1331.00 per ounce, amid broad weakness in the greenback.

In the Asian session, at GMT0400, the pair is trading at 1330.40, with gold trading 0.05% lower against the USD from yesterday’s close.

The pair is expected to find support at 1326.47, and a fall through could take it to the next support level of 1322.53. The pair is expected to find its first resistance at 1333.37, and a rise through could take it to the next resistance level of 1336.33.

The yellow metal is showing convergence with its 20 Hr and 50 Hr moving averages.

Daily Pivots: (S1) 1.1355; (P) 1.1379; (R1) 1.1412; More.....

EUR/USD rises to as high as 1.1402 so far as rebound from 1.1234 extends. Intraday bias remains on the upside for further rally. Current rise is seen as another leg in the consolidation pattern from 1.1215 and could target 1.1514 resistance and above. On the downside, though, break of 1.1316 minor support will argue that the rebound is completed. Intraday bias will be turned back to the downside for 1.1215 low.

In the bigger picture, as long as 1.1814 resistance holds, down trend down trend from 1.2555 medium term top is still in progress and should target 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. However, break of 1.1814 will confirm completion of such down trend and turn medium term outlook bullish.

For the 24 hours to 23:00 GMT, Silver rose 0.22% against the USD and closed at USD15.97 per ounce, tracking gains in gold prices.

In the Asian session, at GMT0400, the pair is trading at 15.95, with silver trading 0.16% lower against the USD from yesterday’s close.

The pair is expected to find support at 15.85, and a fall through could take it to the next support level of 15.76. The pair is expected to find its first resistance at 16.03, and a rise through could take it to the next resistance level of 16.12.

The white metal is showing convergence with its 20 Hr and 50 Hr moving averages.

Yen and Dollar trades mildly firmer today as markets turn cautious ahead of Trump-Kim summit. But the biggest risks could lie on US Trade Representative Robert Lighthizer's testimony at the House Ways and  Means Committee. After Trump postponed trade truce deadline with China "indefinitely", there is added optimism on a deal between the two countries. But so far there is little details on what would be agreed. Lighthizer's testimony might finally reveal something concrete, rather than just definitions of MOUs.

Staying in the currency markets, European majors are the weakest ones as led by Euro. But if should be noted that Sterling is only digesting this week's strong gains. For the week, Sterling remains overwhelmingly the strongest one. While there is no sign of having an approvable Brexit deal yet, no-deal scenario is a big step further away. It will now take explicit consent in the Commons, by a vote on March 13, to trigger no-deal Brexit. Otherwise, it's more likely that Article 50 will be extended for a short, limited time.

Technically, EUR/USD's break of 1.3171 resistance confirmed resumption of rebound from 1.1234, further rise is now in favor towards 1.1514 resistance. But such rebound is viewed as a leg inside the consolidation pattern from 1.1215 after all. USD/CHF will have at 0.9981 temporary low again and Swiss Franc might follow Euro higher. Yesterday GBP/USD has taken out 1.3217 resistance while EUR/GBP broke 0.8617 key support. Technical development in both pairs favor more upside in the pound.

In Asia, Nikkei closed up 0.50%. Hong Kong HSI is down -0.21%. Shanghai SSE is down -0.40%. Singapore Strait Times is down -0.16%. Japan 10-year JGB yield is up 0.0043 at -0.021. Overnight, DOW dropped -0.13%. S&P 500 dropped -0.08%. NASDAQ dropped -0.7%. 10-year yield dropped -0.037 to 2.636. 30-year yield dropped -0.028 to 3.006. 3% handle looks vulnerable again.

Fed Powell: We're going to be patient to allow things to clarify

In the semi-annual testimony overnight, Fed Chair Jerome Powell said there were "crosscurrents and conflicting signals" in the past few months. Financial markets became "more volatile" toward year-end. Financial conditions are now "less supportive". Also, growth slowed in some major foreign economies, "particularly China and Europe". And there is "elevated" uncertainty in issues including Brexit and trade negotiations.

Domestically, the US is facing "important longer-run challenges". Productivity "has been too low". Labor force participation among "prime-age men and women" is now lower in the US than in most other advanced economies. "relatively stagnant incomes", "lack of upward economic mobility" are also important challenges. Federal government debt is also on an "unsustainable path".

Overall, Powell noted, "we have the makings of a good outlook and our committee is really monitoring the crosscurrents, the risks, and for now we are going to be patient with our policy and allow things to take time to clarify."

On monetary policy, Powell reiterated that "going forward, our policy decisions will continue to be data dependent and will take into account new information as economic conditions and the outlook evolve." And, "the extent and timing of any further rate increases would depend on incoming data and the evolving outlook." He noted that inflation pressure were "muted" in January. and the cumulative development warranted "taking a patient approach" to future policy changes. Also, Fed will evaluate the appropriate timing and approach for the end of balance sheet runoff ahead.

Trump to friend Kim: Denuclearize and thrive like Vietnam

Trump arrived in Vietnam for the summit with Korean leader Kim Jong-un. Ahead of the meeting, he urged his "friend" Kim to denuclearize and said North Korea could be like Vietnam, "thriving like few places on earth". He added that "he potential is AWESOME, a great opportunity, like almost none other in history".

The two are expected to meet at French-colonial-era Metropole Hotel in Hanoi at 1130 GMT and have a 20-minute one-on-one conversation before a dinner.

UK Gov't: Lack of preparation by businesses on no-deal Brexit, particular SMEs

In a report titled "Implications for Business and Trade of a No Deal Exit on 29 March 2019", the UK government noted that businesses and individuals are under-prepared for no-deal Brexit because they see it as unlikely. But it's warned that the disruption risk could heighten if it does eventually take place.

The reported noted that "despite communications from the government, there is little evidence that businesses are preparing in earnest for a no-deal scenario, and evidence indicates that readiness of small and medium-sized enterprises in particular is low".

The government "judges that the reason for this lack of action is often because a no-deal scenario is not seen as a sufficiently credible outcome to take action or outlay expenditure". And "the lack of preparation by businesses and individuals is likely to add to the disruption experienced in a no-deal scenario".

Brexit debates will continue today and some amendments will be voted for. But the overall plan should now be set after Prime Minister Theresa May's statement yesterday. There will be another meaningful vote on the Brexit deal on March 12. May could get a last minute provisional agreement from EU on March 11, if any, with needed change on Irish backstop. If the deal is voted down, there will be a vote on March 13 for the Parliament to give explicit consent to no-deal Brexit. Then on March 14, if no-deal Brexit is ruled out, there will be another vote on Article 50 extension.

BoJ Kataoka: Uncertainty heightened if current monetary easing is prolonged

BoJ board member Goushi Kataoka continued his call for more monetary stimulus in a speech to business leaders today. He argued that the central bank should ramp up its monetary easing to achieve inflation target earlier.

And he warned, "if the current monetary easing is prolonged, it would mean the period in which Japan's economy faces various uncertainties will be longer. That means uncertainty on achieving our price target will heighten."

Kataoka is a known dove who persistently vote against BoJ's policy in push for more easing.

On the data front

New Zealand trade deficit came in much larger than expected at NZD -914m in January, versus consensus of NZD -300m. Australia construction work done dropped -3.1% in Q4, below expectation of -0.5%. UK BRC shop price rose 0.7% yoy in February versus expectation of 0.3% yoy.

Eurozone M3 and confidence indicators will be the main feature in European session. Canada CPI will take center stage in US session. From US, trade balance, pending home sales and factory orders will also be released. Fed Chair Jerome Powell will have part two of his Congressional testimony.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1355; (P) 1.1379; (R1) 1.1412; More.....

EUR/USD rises to as high as 1.1402 so far as rebound from 1.1234 extends. Intraday bias remains on the upside for further rally. Current rise is seen as another leg in the consolidation pattern from 1.1215 and could target 1.1514 resistance and above. On the downside, though, break of 1.1316 minor support will argue that the rebound is completed. Intraday bias will be turned back to the downside for 1.1215 low.

In the bigger picture, as long as 1.1814 resistance holds, down trend down trend from 1.2555 medium term top is still in progress and should target 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. However, break of 1.1814 will confirm completion of such down trend and turn medium term outlook bullish.

Economic Indicators Update

For the 24 hours to 23:00 GMT, Crude Oil rose 0.96% against the USD and closed at USD55.94 per barrel, after the American Petroleum Institute (API) reported that US crude oil inventories fell by 4.2 million barrels to 444.3 million barrels in the week ended 22 February 2019.

In the Asian session, at GMT0400, the pair is trading at 55.91, with oil trading 0.05% lower against the USD from yesterday’s close.

The pair is expected to find support at 55.30, and a fall through could take it to the next support level of 54.69. The pair is expected to find its first resistance at 56.30, and a rise through could take it to the next resistance level of 56.69.

Crude oil is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

Yen buying emerges in early European session as markets turn cautious again. Rally in Asian stocks lost steam in the afternoon with China Shanghai SSE turning red. But for now, Canadian Dollar and New Zealand Dollar are both firm for now. WTI crude oil breached 56 handle on recovery and lifted the Loonie overnight. But the recovery is so far rather weak with corrective look. We might seen more downside in oil price ahead, which drags down Canadian again. On the other hand, European majors are generally the weakest ones today.

For the week, Sterling remains overwhelmingly the strongest one. While there is no sign of having an approvable Brexit deal yet, no-deal scenario is a big step further away. It will now take explicit consent in the Commons, by a vote on March 13, to trigger no-deal Brexit. Otherwise, it's more likely that Article 50 will be extended for a short, limited time. Australian Dollar follows as second strongest for the week but it's rather vulnerable. Canadian is the weakest on fall in oil prices after Trump tweeted it down.

In Asia:

• Nikkei closed up 0.50%.
• Hong Kong HSI is up 0.10%.
• Shanghai SSE is down -0.01%.
• Singapore Strait Times is flat.
• Japan 10-year JGB yield is up 0.0043 at -0.021.

Overnight:

• DOW dropped -0.13%.
• S&P 500 dropped -0.08%.
• NASDAQ dropped -0.7%.
• 10-year yield dropped -0.037 to 2.636.
• 30-year yield dropped -0.028 to 3.006. 3% handle looks vulnerable again.

EUR/USD gained bullish momentum recently and broke the 1.1360 resistance. USD/JPY is currently under pressure and upsides are likely to be capped near 110.70.

Important Takeaways for EUR/USD and USD/JPY

• The Euro started a decent recovery from the 1.1285 swing low and traded above 1.1320.
• There is a key bullish trend line in place with support at 1.1355 on the hourly chart of EUR/USD.
• USD/JPY broke a key bullish trend line with support at 110.70 n the hourly chart.
• The pair is currently correcting higher, but it could face sellers near 110.70 and 110.80.

EUR/USD Technical Analysis

After a strong decline, the Euro found support near the 1.1250 and 1.1260 levels against the US Dollar. The EUR/USD pair started a decent upward move and broke the 1.1285 and 1.1320 resistance levels.

The recent upward move was strong as the pair was able to clear the 1.1360 and 1.1380 resistance levels. There was even a close above the 1.1360 level and the 50 hourly simple moving average. The pair traded as high as 1.1402 on FXOpen and later corrected lower.

It broke the 1.1390 support and the 23.6% Fib retracement level of the recent wave from the 1.1345 low to 1.1402 high. However, there are many supports on the downside near the 1.1360 level.

There is also a key bullish trend line in place with support at 1.1355 on the hourly chart of EUR/USD. Above the trend line, the 50% Fib retracement level of the recent wave from the 1.1345 low to 1.1402 high is at 1.1373.

Therefore, if the pair continues to correct lower, it could find a strong support between the 1.1355 and 1.1370 levels. If there is a break below the 1.1355 support, the pair could trade towards the 1.1320 support.

On the upside, an initial resistance is near the 1.1400 level, above which EUR/USD is likely to extend gains towards the 1.1420 and 1.1440 resistance levels.

USD/JPY Technical Analysis

The US Dollar formed a crucial top near the 111.25 level and later declined against the Japanese Yen. The USD/JPY pair declined heavily and broke the 111.00 and 110.80 support levels to move into a bearish zone.

There was also a break below a key bullish trend line with support at 110.70 n the hourly chart. The pair even settled below the 110.70 level and the 50 hourly simple moving average.

It traded as low as 110.42 and later the pair started an upside correction towards the 23.6% Fib retracement level of the last decline from the 111.23 high to 110.42 low. On the upside, there are many resistances near the 110.70 level and the 50 hourly simple moving average.

The main resistance is near 110.80 and the 50% Fib retracement level of the last decline from the 111.23 high to 110.42 low. Having said that, the pair must gain traction above the 110.90 pivot level to move into a bullish zone.

On the other hand, if USD/JPY fails to correct higher, it could decline further in the near term below 110.50. The next key support is near the 110.40 level, below which the pair could revisit the 110.00 support area.