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Trump is the biggest market mover in an otherwise rather listless day. Chinese stocks surged 5.6% on news that trade truce deadline on March 1 is postponed. He's now planning a summit in Mar-a-Lago to seal the trade deal with Chinese President Xi Jinping. Later in the day, WTI drops over 2.3% after Trump complains that oil prices are too high with his tweet, and urges OPEC to relax. Canadian Dollar and Yen are racing for the worst performer spot for today.

On the other hand, Australian and New Zealand Dollar are taking turns to be the strongest one. But it should be noted that momentum in both currencies are not too convincing yet. AUD/USD is held well below 0.7206 resistance for now. NZD/USD is also kept below 0.6941 resistance. EUR/AUD is also holding well above 1.5743 support. Meanwhile, USD/JPY, EUR/JPY and GBP/JPY are staying in tight range. Traders will need some more time to make up their mind to commit to a direction.

In Europe, currently, FTSE is down -0.01%. DAX is up 0.57%. CAC is up 0.36%. German 10-year yield is up 0.0185 at 0.115. Earlier in Asia, Nikkei rose 0.48%. Hong Kong HSI rose 0.50%. China Shanghai SSE rose 5.60%. Singapore Strait Times rose 0.07%. Japan 10-year JGB yield rose 0.0056 to -0.034.

WTI oil dips after Trump urges OPEC to relax

WTI crude oil drops notably today after Trump's tweet. He said "Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!" With today's sharp fall, WTI should have formed a short term top at 57.83. Focus is now immediately on 4 hour 55 EMA (now at 56.06). Sustained break there should at least bring deeper fall to trend line support (now at 54.48).

In the bigger, rise from 42.05 is seen as a corrective move. Hence, strong resistance will likely be seen around 61.8% projection of 42.05 to 55.85 from 51.49 at 60.01 to limit upside. That is is actually close to 50% retracement of 77.06 to 42.05 at 59.55. 55 week EMA (now at 59.60) is also in proximity.

Trump delay new tariffs on China, planning Mar-a-Lago summit

Trump tweeted on Sunday that there was "substantial progress" made in US-China trade talks on "important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues". Hence he will be delaying the scheduled March 1 tariff increase. In other words, trade truce now extends beyond the date.

Trump added that assuming there is additional progresses, he is planning a summit with Chinese President Xi Jinping at Mar-a-Lago resort in Florida to conclude the agreement. Later, Trump also said there could be "very big news over the next week or two" if all goes in well. He added that "China has been terrific. We want to make a deal that's great for both countries and that's really what we're going to be doing."

China Shanghai SSE targets 3500 in medium after breakaway rally

Performance in Chinese stock is overwhelming today. The Shanghai SSE blew our expectations and closed up 5.60% at 2961.28. 38.2% retracement of 3587.03 to 2440.90 at 2883.84 was taken out with ease. Technically speaking, it's early to declare that China SSE is now in a long term bull market. The strong break of 55 week EMA is nevertheless a strong bullish development. Now, the corrective down trend from 5178.19 should have completed with three waves down to 2440.90, on bullish convergence condition in weekly MACD.

Current rise should extend through 3000 handle to 38.2% retracement of 5178.19 to 2440.90 at 3486.54. The reaction to resistance zone of 3486/3587 will reveal whether the SSE is really in a long term up trend.

Fed Bostic: Room to run with rate hikes if economy runs fine

Atlanta Fed President Raphael Bostic said there is "room to run" with Fed's rate hikes. as long as the economy is "running fine" and there is no sign of contraction. He expects the economy growth between 2.2-2.5% this year. But inflation is expected to rise above 2% target. Bostic is still aiming at lifting Federal funds rate to neutral. And a slow approach is a good path for Fed. He's currently seeing one rate hike this year and one in 2020.

EU still assume UK to leave on March 29

European Commission spokesman Mina Andreeva said that EU's assumption is that UK will still leave as planned on March 29. Brexit Minister Stephen Barclay and Attorney General Geoffrey Cox will meet EU chief negotiator Michel Barnier again on Tuesday. Andreeva also noted "good progress was being made" on the EU-UK political declaration on future ties and on "alternative arrangements" and "possible additional guarantees" on the Irish backstop. She added that both sides "agreed on the need to conclude this work in time before the European Council (of March 21)".

UK Prime Minister Theresa May announced yesterday that a Brexit "meaningful vote" would not take place this week. Instead, the vote on the withdrawal agreement is rescheduled to March 12, just 17 days before the March 29 Brexit date. Though, the Parliament will still hold a series of Brexit votes on Wednesday. Also, May insisted that "we still have it within our grasp to leave the European Union with a deal on the 29th of March and that's what I'm going to be working at".

BoE, FCA and CFTC announced measures to ensure continuity of derivatives trading and clearing post-Brexit

Bank of England, UK's Financial Conduct Authority and US Commodity Futures Trading Commission announced measures today to ensure Brexit, in whatever form "will not create regulatory uncertainty regarding derivatives market activity between the UK and US". Measures include continued supervisory co-operation, extension of existing CFTC relief to EU firms to UK after Brexit. Also, US trading venues, firms and CCPs will be able to continue providing services in the UK.

In a joint statement, BoE Governor Mark Carney said "As host of the world's largest and most sophisticated derivative markets, the US and UK have special responsibilities to keep their markets resilient, efficient and open. The measures we are announcing today will do that. Market participants can be confident that the clearing and trading of derivatives between the UK and US will maintain the high standards of today when the UK leaves the EU". Carney also warned that "The biggest issue from a financial stability perspective, from a market integrity perspective, from a continuity perspective, is a no-deal scenario by the end of March."

Japan Hamada: BoJ can drops the 2% inflation target

Koichi Hamada, an advisor to Japanese Prime Minister Shinzo Abe said the BoJ could abandon the 2% inflation target. He told Reuters that "prices don't need to rise much. From the perspective of people's livelihood, what's more desirable is for prices to fall, not rise."

And, the inflation target is only "a tool for achieving full employment". Hamada added "it can be abandoned. It isn't absolutely crucial", and the "appropriate target level of inflation can be decided by the central bank".

On current monetary policy, Hamada said "the world economy faces substantial turbulence, the BOJ can wait". There is no need for loosen up policy too as "Demand is exceeding supply now. As long as this trend continues, we don't need to worry too much."

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1316; (P) 1.1336; (R1) 1.1355; More.....

EUR/USD is still staying in tight range below 1.1371 temporary top and intraday bias remains neutral. On the upside, break of 1.1371 would extend the rebound from 1.1234. In that case, rise from 1.1234 is seen as another leg in the consolidation pattern from 1.1215 and should target 1.1514 resistance. On the downside, break of 1.1275 minor support will turn bias back to the downside for 1.1215 low instead. Decisive break there will confirm completion of consolidation from 1.1215, and resumption of down trend from 1.2555.

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

Entering into US session, Australia and New Zealand Dollar are taking turns to be the strongest one today. Sentiments are generally supported after Trump postponed the March 1 trade truce deadline with China. Chinese customs data also showed that US soybeans imports nearly doubled in January from a month ago. But it should be noted that other than the strong rally in Chinese stocks, market reactions elsewhere are relatively muted. Aussie is limited well above last week's higher against Dollar and Euro. Yen is also held in familiar range against Dollar, Euro and Sterling.

Canadian Dollar taking over Yen as the weakest one for today. WTI crude oil is down sharply, now below 56, comparing to Friday's high at 57.83. It's reacting negatively as Trump complains that oil prices are too high with his tweets again.

In Europe, currently:

• FTSE is down -0.09%.
• DAX is up 0.56%.
• CAC is up 0.33%.
• German 10-year yield is up 0.016 at 0.112.

Earlier in Asia:

• Nikkei rose 0.48%.
• Hong Kong HSI rose 0.50%.
• China Shanghai SSE rose 5.60%.
• Singapore Strait Times rose 0.07%.
• Japan 10-year JGB yield rose 0.0056 to -0.034

The US 30 index has been in a flying mode, recording a new three-month high of 26,179 after the rebound on the 16-month low of 21,596 on December 26, successfully surpassing the 50- and 200-simple moving averages (SMAs) in the daily timeframe. This implies that the short-term picture remains positive, albeit cautiously so, with a break above the all-time high of 26,951 needed to confirm that the bulls are in full control.

However, the technical indicators are holding in overbought zones, suggesting that a pullback may be on the cards. The RSI jumped above the 70 level and the MACD stands above its trigger line with weaker momentum than before.

In case of a correction lower, preliminary support may be found near the crossroads of the 200-day SMA at the 23.6% Fibonacci retracement level of 26,179 around 25,091. A clear break below this area would turn the bias back to neutral in the short-term and could set the stage for a rest around the 38.2% Fibonacci of 24,426, which hovers near the 50-day SMA.

On the other hand, if the bulls continue to have the control, immediate resistance could come around 26,280, which capped the rally on November 8. If buyers pierce above that, the next obstacle may be the all-time high of 26,960.

In the short-term bias, the indicators point for a possible bearish retracement, however, the index is still creating higher highs and higher lows over the last couple of months.

European Commission spokesman Mina Andreeva said that EU's assumption is that UK will still leave as planned on March 29. Brexit Minister Stephen Barclay and Attorney General Geoffrey Cox will meet EU chief negotiator Michel Barnier again on Tuesday.

Andreeva also noted "good progress was being made" on the EU-UK political declaration on future ties and on "alternative arrangements" and "possible additional guarantees" on the Irish backstop. She added that both sides "agreed on the need to conclude this work in time before the European Council (of March 21)".

WTI crude oil drops notably today after Trump's tweet. He said "Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike - fragile!"

https://twitter.com/realDonaldTrump/status/1100002139282309121

With today's sharp fall, WTI should have formed a short term top at 57.83. Focus is now immediately on 4 hour 55 EMA (now at 56.06). Sustained break there should at least bring deeper fall to trend line support (now at 54.48).

In the bigger, rise from 42.05 is seen as a corrective move. Hence, strong resistance will likely be seen around 61.8% projection of 42.05 to 55.85 from 51.49 at 60.01 to limit upside. That is is actually close to 50% retracement of 77.06 to 42.05 at 59.55. 55 week EMA (now at 59.60) is also in proximity.

The news that Trump delays the US-China trade truce deadline gives risk markets a general lift today. But performance in Chinese stock is overwhelming. The Shanghai SSE blew our expectations and closed up 5.60% at 2961.28. 38.2% retracement of 3587.03 to 2440.90 at 2883.84 was taken out with ease.

Technically speaking, it's early to declare that China SSE is now in a long term bull market. The strong break of 55 week EMA is nevertheless a strong bullish development. Now, the corrective down trend from 5178.19 should have completed with three waves down to 2440.90, on bullish convergence condition in weekly MACD.

Current rise should extend through 3000 handle to 38.2% retracement of 5178.19 to 2440.90 at 3486.54. The reaction to resistance zone of 3486/3587 will reveal whether the SSE is really in a long term up trend.

EURJPY rose above the 50-day moving average (MA) last week but its positive action remained constrained within the symmetrical triangle. The pair is currently completing the triangle pattern and the technical indicators suggest a bullish breakout as the MACD has successfully entered the positive territory after six months , while the RSI seems to be resuming positive momentum above its 50 neutral mark. Yet as long as the former holds close to zero and the latter below the 56 resistance, upside corrections may appear in the short term.

Should the price close decisively above the triangle and the 50% Fibonacci of 125.80 of the downleg from 133.21 to 118.57, the rally could pick up steam towards the 61.8% Fibonacci of 127.53, a previous key support area. Crawling higher, the next target could be somewhere between 129.30 and 130, but prior that the bulls should bring down the wall around the 200-day MA (128.15).

In the alternative scenario, the price could shift lower to retest the lower line of the triangle at 125. If efforts prove successful, the way could open towards the 124.13-123.75 region, encapsulated by the 38.2% Fibonacci and the lows registered at the end of January. Beneath that zone, the bears will likely take a break between the January 4 trough of 122.38 and the 23.6% Fibonacci of 122.

Turning to the medium-term picture, EURJPY maintains a bearish profile. A strong rally above 130 would switch outlook back to positive, though with the 50-day MA showing no signs of correcting its bearish cross with the 200-day MA, chances for such a move are very weak.

After posting strong gains last week, the DAX index continues to rally on Monday. Currently, the DAX is at 11,492, up 0.31% on the day. It’s a very quiet start to the week, with no eurozone or German events. On Tuesday, Germany releases GfK Consumer Climate.

The DAX climbed 1.40% last week, buoyed by stronger risk appetite. Investors are increasingly optimistic that the U.S-China trade talks will culminate with an agreement. On Sunday, President Trump waved off the threat of raising tariffs against China on March 1. Trump tweeted that the sides had made substantial progress, and if that trend continued, he would meet with Chinese President Xi. Chinese stocks jumped on the news and European stock markets are higher on Monday. A hold on new tariffs is great news for carmakers, which responded with sharp gains on the DAX. Volkswagen has jumped 2.81%, Daimler has climbed 2.23% and BMW is up 1.37%.

The news has been positive with regard to the U.S-China trade deadlock, but domestically, the numbers remain weak. German data disappointed last week, raising concerns that after a slowdown in the fourth quarter, Q1 will also be a soft quarter. On Friday, Germany’s fourth-quarter GDP showed no change, after a contraction of 0.2% in the third quarter. The Ifo Business Climate survey slowed for a sixth successive month, indicating concern in the business sector about the country’s economic outlook. Manufacturing and inflation data also disappointed. The manufacturing PMI contracted for a second straight month, while German CPI declined in January for the first time in a year. If the weak numbers continue, investor risk appetite could fall and weigh on the DAX.

Global manufacturing and trade continue to show signs of weakness. Last week's Japanese balance of trade in goods for January showed a deficit, versus expectations for a surplus. The fall was caused by a sharp decline in nominal exports. Those to China dropped 17.4% y/y and trade with Europe decelerated as well, but to a lesser extent. Understandably, markets jumped onto the favourable US-China news with both feet. There are some signs from the periphery, though, that real data is improving. The euro area February composite output was higher, but a worrying collapse in German activity actually contained a minor but real uptick. And French data indicated that the social tensions at the heart of the weakness might be ebbing. This would suggest that the Euro-Area PMI could stabilize.

That said, outside the EU core, signs of recovery offer scant grounds for optimism. The spectrum of Brexit-fuelled chaos weighs on overall sentiment. The uncertainty is highlighted by recent news of Prime Minister May's brinkmanship with the March 12th parliament vote and reports of EU chiefs drawing up a plan to delay Brexit until 2021. The ECB seems to understand that any planning needs to wait until EU-UK relations are settled, opting for now to limit planning on targeted longer-term refinancing operations (TLTRO). Interestingly, markets are catching on, with one-month EUR/GBP volatility climbing higher. We remain of the position that forecasting Brexit outcomes is futile and the play would be to go long on GBP volatility.

Yuan in demand as trade tariffs fears ease

After six days of intensive trade discussions that extended over the weekend, the US and China appear to have made significant progress. President Donald Trump has announced that the US will delay imposing further trade tariffs on Chinese goods. Following this headline, Asian markets have been rallying forcefully across the board, with China's mainland CSI 300 bouncing +5.95% to 3,729 — back to June 2018 highs, its biggest rise since July 2015. Hong Kong's Hang Seng closed +0.50% at 28,959. No details of the breakthrough have been communicated, suggesting that both sides are still working on an enforcement mechanism to guarantee structural reform commitments.

Both CNH and CNY have been bouncing at seven-month highs, while a global risk-on sentiment among G10 currencies is emerging. Despite this easing, which should support a Chinese economy that faces a slowdown, we remain highly doubtful as to the sustainability of the current trend since the Chinese authorities are expected to continue deleveraging which, looking forward, should support the opposite. Although both sides have agreed to keep the pair stable, a decline in the Chinese yuan is not ruled out.

Currently trading at 6.6894, USD/CNY is heading along 6.68 short-term.

The euro currency has continued to press higher against the US dollar during the European trading session, with the pair trading towards the upper end of its two-week range. The EURUSD pair is currently trapped within a bull flag pattern, which supports a break above the 1.1360 resistance area. Only a sustained technical break below the 1.1300 level can change the sentiment surrounding the pair.

The EURUSD pair is bullish while trading above the 1.1300 level, key resistance is found at the 1.1370 and 1.1410 levels.

If the EURUSD pair trades below the 1.1300 level, key support is found at the 1.1280 and 1.1250 levels.