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Daily Pivots: (S1) 110.48; (P) 110.56; (R1) 110.70; More...

Intraday bias in USD/JPY remains neutral at this point. On the downside, break of 110.00 resistance turned support will suggest rejection by 110.77 and the rebound from 104.69 has likely completed. Intraday bias will be turned back to the downside for 108.49 support for confirmation. Nevertheless, break of 111.13 should confirm resumption of rise from 104.69 for 114.54 resistance.

In the bigger picture, while the rebound from 104.69 was stronger than expected, it couldn't sustain above 55 day EMA yet. Outlook is turned mixed first. On the downside, break of 108.49 support will revive that case that such rebound was a correction. And, larger down trend is still in progress for another low below 104.62. But sustained trading above 55 day EMA will turn focus to 114.54. Decisive break there will confirmation completion of the decline from 118.65 (2016 high).

Daily Pivots: (S1) 1.3225; (P) 1.3241; (R1) 1.3259; More...

USD/CAD is staying in consolidation below 1.3340 temporary top and intraday bias remains neutral. With 1.3196 minor support intact, further rise is expected. We're favoring the case that decline from 1.3664 has completed with three waves down to 1.3068 already, on bullish convergence condition in 4 hour MACD, just ahead of medium term channel support. On the upside, decisive break of 1.3375 resistance will confirm this bullish case and target a test on 1.3664 high. However, break of 1.3196 will now dampen our view and turn bias back to the downside for 1.3068 support instead.

In the bigger picture, structure of the medium term rise from 1.2061 (2017 low) to 1.3664 is not clearly impulsive. Hence, we'd stay cautious on strong resistance from 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 and 1.3793 resistance to limit upside, and bring medium term topping. But in any case, medium term outlook will stay bullish as long as channel support (now at 1.3095) holds. Sustained break of 1.3793 will pave the way to retest 1.4689 (2015 high). Firm break of the channel support should confirm reversal target 1.2061 low again.

Daily Pivots: (S1) 0.7116; (P) 0.7138; (R1) 0.7153; More...

AUD/USD's corrective recovery extended to 0.7160 but dropped sharply since then. For now, it's still staying above 0.7054 temporary low and intraday bias remains neutral first. More consolidation could be seen. In case of another rise, upside should be limited below 0.7295 resistance. We're favoring the case that rebound from 0.6722 has completed at 0.7295 already. On the downside break of 0.7054 support will affirm this case and target 61.8% retracement of 0.6722 to 0.7295 at 0.6941 next.

In the bigger picture, as long as 0.7393 resistance holds, we'd treat fall from 0.8135 as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

Dollar and Yen trade generally higher today as Asian markets turned mixed. The strong rally in Asian stocks yesterday was based on optimism on US-China trade negotiation. But such optimism has quickly turn into cautiousness. Another round of negotiation will start in Washington today, followed by high-level meeting later in the week. It remains to be seen what kinds of progress were made and investors would be eager to see then in writing in a to-be-delivered MOU.

Staying in the currency markets, Australian and New Zealand Dollars are the weakest one so far. Aussie is pressured as RBA minutes revealed much concerns over housing market slump. Economists are predicting that RBA could stand pat through 2021. And some even expected a cut as next move. Sterling follows as next weakest ahead of employment data. Euro is mixed, awaiting German economic sentiment.

Technically, there is no breakthrough in the markets so far. EUR/USD and GBP/USD remains held below 1.1341 and 1.2958 resistance. USD/CHF is holding above 0.9988 support, USD/JPY above 110.00, USD/CAD above 1.3196. The greenback is in favor to rally in general. AUD/USD's dip today could also be an early of weakness ahead. Similarly, EUR/JPY is held well below 125.95 resistance, GBP/JPY well below 144.84 resistance. CAD/JPY is staying below 83.98 resistance. Outlook in Yen is neutral for now but upside risks are building. 0.8728 minor support in EUR/GBP could be a level to watch given the data release schedule in UK and EU.

In other markets, Nikkei closed up 0.17%. Hong Kong HSI is down -0.24%. China Shanghai SSE is down -0.35%. Singapore Strait Times is up 0.05%. Japan 10-year JGB yield is down -0.004 at -0.024.

US-China trade talks to resume today, high level meeting starts Thursday

The White House confirmed in a statement that US-China trade negotiations will resume on Tuesday, today, in Washington. High-level talks will start on Thursday as led by US Trade Representative Robert Lighthizer. Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross, economic adviser Larry Kudlow and trade adviser Peter Navarro would also take part in the talks. Chinese Vice Premier Liu He is expected to join the meeting on Thursday and Friday too.

White House said the talks are aimed at "achieving needed structural changes in China that affect trade between the United States and China". And, "the two sides will also discuss China's pledge to purchase a substantial amount of goods and services from the United States."

A memorandum of understanding of some sort is expected at the conclusion of the meeting, acting as the framework for the trade agreements to be detailed. If the teams are able to deliver the MOU, it should then be known what kind of structural reforms China has agreed to take. For now, no detail is leaked on the core issues regarding IP theft, forced technology transfer, subsidies on State-Owned Enterprises, and enforcement of the agreement.

EU Juncker believes Trump will keep his words and no US auto tariffs for now

European Commission President Jean-Claude Juncker believed that US will refrain from imposing auto tariffs on EU cars for now. He told Stuttgarter Zeitung newspaper that "Trump has given me his word that there will be no car tariffs for the time being. I believe him." But Juncker warned that "should he renege on that commitment, we will no longer feel bound by our commitments to buy more US soya and liquid gas. However, I would very much regret that".

The US Commerce Department submitted the Section 232 national security report on auto imports to the White House on Sunday. Trump Trump has 90 days to make a decision on whether to act up the recommendations, which could include tariffs. The Commerce Department refused to disclose any details of the report to the public nor the industry.

Germany's BDI industry association urged the US to release information on the report. BDI President Dieter Kempf said "the U.S. Department of Commerce should now publish its report on automobile imports quickly, so as not to further increase business uncertainty for companies." He also reiterated that "The import of automobiles is not a threat to U.S. national security, and U.S. President Donald Trump must abide by applicable trade law, and he should refrain from imposing any tariffs or quotas."

UK Cox to set out proposed legal changes in Irish backstop, and return to Brussels mid-week

UK Brexit Minister Stephen  Barclay said he had a "positive meeting" with EU chief Brexit negotiator Michel Barnier and UK Attorney General Geoffrey Cox. In the meeting, the proposed Malthouse Compromise regarding Irish backstop was discussed.

And, Cox shared his thinking in terms of the legal way forward and the ways to address the central issue. That is, according to Barclay, "the legal underpinning that is temporary and his advice to parliament in terms of the indefinite nature of the backstop".

Fox is now expected to set out the changes on Irish backstop on Tuesday. He and Barclay will return to Brussels at mid-week to present the proposals to Barnier.

BoJ Kuroda: We'll consider easing if currency moves derails path to inflation target

BoJ Governor Haruhiko Kuroda told the parliament today that "currency moves could have an impact on the economy and prices, so it's crucial we take into account these factors when guiding monetary policy."

And, if the currency moves are "having an impact on the economy and prices, and if consider it necessary to achieve our price target, we'll consider easing policy."

Yen dips mildly after the comments. But there is no follow through selling as what Kuroda said are pretty much known.

RBA minutes: Further decline in house prices could result in lower GDP, higher unemployment and lower inflation

RBA reiterated its rate views in the February meeting minutes but sounded more cautious regarding the downturn in housing markets. The central bank maintained that "given that further progress in reducing unemployment and lifting inflation was a reasonable expectation, members agreed that there was not a strong case for a near-term adjustment in monetary policy."

And, the minutes echoed Governor Philip Lowe's comments too. That is, "there were significant uncertainties around the forecasts, with scenarios where an increase in the cash rate would be appropriate at some point and other scenarios where a decrease in the cash rate would be appropriate." Most importantly, "the probabilities around these scenarios were now more evenly balanced than they had been over the preceding year, when an eventual increase in the cash rate had appeared more likely."

RBA tied the subdued consumption growth in Q4 to the possibility of being influenced by "lower housing prices and reduced housing market activity". On housing, RBA admitted that "dwelling investment was also expected to decline more sharply than previously expected, consistent with the decline in residential building approvals and the fall in housing prices". And, "members observed that if prices were to fall much further, consumption could be weaker than forecast, which would result in lower GDP growth, higher unemployment and lower inflation than forecast."

According to a Reuters poll, all of the 41 economists expected RBA to keep interest rate unchanged at 1.50% through 2019. 28 expected RBA to stand pat at least until Q1 of 2021. 10 expected at least one cut by the end of 2020. NAB economist David de Garis was quoted saying "For the rates outlook, the course of the economy will drive whether the RBA manages to hold rates steady for a while, or, as the risk has grown in recent months, the RBA cuts again. If there is a move this year, it's more likely to be an easing in policy."

On the data front

Swiss will release trade balance in European session while Eurozone will release current account. But main focuses will firstly be on UK job data, and then German ZEW economic sentiment. Later in the day, US will release NAHB housing market index.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7116; (P) 0.7138; (R1) 0.7153; More...

AUD/USD's corrective recovery extended to 0.7160 but dropped sharply since then. For now, it's still staying above 0.7054 temporary low and intraday bias remains neutral first. More consolidation could be seen. In case of another rise, upside should be limited below 0.7295 resistance. We're favoring the case that rebound from 0.6722 has completed at 0.7295 already. On the downside break of 0.7054 support will affirm this case and target 61.8% retracement of 0.6722 to 0.7295 at 0.6941 next.

In the bigger picture, as long as 0.7393 resistance holds, we'd treat fall from 0.8135 as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

Economic Indicators Update

For the 24 hours to 23:00 GMT, the EUR declined 0.05% against the USD and closed at 1.1312.

In the Asian session, at GMT0400, the pair is trading at 1.1296, with the EUR trading 0.14% lower against the USD from yesterday’s close.

The pair is expected to find support at 1.1282, and a fall through could take it to the next support level of 1.1268. The pair is expected to find its first resistance at 1.1322, and a rise through could take it to the next resistance level of 1.1348.

Moving ahead, investors would closely monitor Euro-zone’s construction output and current account balance, both for December along with Germany’s ZEW survey indices for February, scheduled to release in a few hours. Later in the day, the US NAHB housing market index for February, will pique significant amount of investors’ attention.

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

For the 24 hours to 23:00 GMT, the GBP rose 0.08% against the USD and closed at 1.2925, ahead of the outcome of Brexit talks.

In the Asian session, at GMT0400, the pair is trading at 1.2901, with the GBP trading 0.19% lower against the USD from yesterday’s close.

The pair is expected to find support at 1.2882, and a fall through could take it to the next support level of 1.2864. The pair is expected to find its first resistance at 1.2929, and a rise through could take it to the next resistance level of 1.2958.

Going ahead, traders wold keep an eye on UK’s average weekly earnings and ILO unemployment rate, both for December, set to release in a few hours.

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

For the 24 hours to 23:00 GMT, the USD rose 0.05% against the JPY and closed at 110.59.

In the Asian session, at GMT0400, the pair is trading at 110.48, with the USD trading 0.10% lower against the JPY from yesterday’s close.

The pair is expected to find support at 110.40, and a fall through could take it to the next support level of 110.33. The pair is expected to find its first resistance at 110.60, and a rise through could take it to the next resistance level of 110.73.

Looking forward, traders would await Japan’s trade balance data for January, slated to release overnight.

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

For the 24 hours to 23:00 GMT, the USD rose 0.15% against the CHF and closed at 1.0045.

In economic news, Switzerland’s total sight deposits rose to a level of CHF576.3 billion in the week ended 15 February 2019, from CHF576.2 billion in the previous week.

In the Asian session, at GMT0400, the pair is trading at 1.0052, with the USD trading 0.07% higher against the CHF from yesterday’s close.

The pair is expected to find support at 1.0033, and a fall through could take it to the next support level of 1.0014. The pair is expected to find its first resistance at 1.0062, and a rise through could take it to the next resistance level of 1.0072.

Trading trend in the Swiss Franc today, is expected to be determined by Switzerland’s trade balance data for January, set to release in a while.

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

Yen and Dollar regain some growth today as Asian markets turned mixed. The lift from trade optimism on investor sentiments was rather brief. US-China trade talk will resume today. Traders could turn cautious and wait for real concrete progresses by the end of the week. Meanwhile, Australian Dollar is leading New Zealand Dollar lower after RBA minutes showed more concerns on housing markets. Sterling follows too, ahead of job data today. Euro is mixed ahead of German ZEW economic sentiment.

In other markets,

• Nikkei is trading up 0.15% for now, and is set to end with slight gain.
• Hong Kong HSI is down -0.31%.
• China Shanghai SSE is down -0.43%.
• Singapore Strait Times is up 0.08%.
• Japan 10-year JGB yield is down -0.002 at -0.022. .

For the 24 hours to 23:00 GMT, the USD rose 0.05% against the CAD and closed at 1.3235.

In the Asian session, at GMT0400, the pair is trading at 1.3262, with the USD trading 0.20% higher against the CAD from yesterday’s close.

The pair is expected to find support at 1.3238, and a fall through could take it to the next support level of 1.3213. The pair is expected to find its first resistance at 1.3275, and a rise through could take it to the next resistance level of 1.3287.

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