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Daily Pivots: (S1) 0.9930; (P) 0.9947; (R1) 0.9972; More....

Intraday bias in USD/CHF remains neutral as consolidation from 0.9994 is still in progress. In case of another fall, downside should be contained by 38.2% retracement of 0.9716 to 0.9994 at 0.9888 to bring another rally. As noted before, the corrective decline from 1.0128 should have completed at 0.9716 already. On the upside, break of 0.9994 will extend the rise from 0.9716 to retest 1.0128 next. On the downside, though, firm break of 0.9888 will target 61.8% retracement at 0.9822 before completing the retreat.

In the bigger picture, USD/CHF drew strong support from medium term trend line and rebounded. That suggests rise from 0.9186 is still in progress. Further break of 1.0128 will confirm up trend resumption and target 1.0342 key resistance. Nevertheless, break of 0.9716 will dampen this bullish view and at least bring deeper fall to 0.9541 key support.

Daily Pivots: (S1) 108.95; (P) 109.27; (R1) 109.81; More...

USD/JPY rebounds further today but stays below 110.00 resistance. Intraday bias remains neutral first. On the upside, break of 110.00 will extend the rebound from 104.69. But we'd expect strong resistance from 61.8% retracement of 114.54 to 104.69 at 110.77 to limit upside. On the downside, break of 108.49 will target 107.77 support first. Break will confirm completion of the rebound and bring retest of 104.69 low.

In the bigger picture, while the rebound from 104.69 is strong, there is no change in the view that it's a corrective move. That is, fall from 114.54, as part of the decline from 118.65 (2016 high), is not completed yet. Break of 104.62 will target 100% projection of 118.65 to 104.62 from 114.54 at 100.51, which is close to 100 psychological level. Nevertheless, sustained trading above 55 day EMA (now at 110.55) will dampen this bearish view and turn focus back to 114.54 resistance instead.

Daily Pivots: (S1) 0.7227; (P) 0.7256; (R1) 0.7276; More...

Intraday bias in AUD/USD remains neutral at this point. Another rise could be seen with 0.7180 minor support intact. On the upside, above 0.7295 will target 0.7393 cluster resistance (61.8% projection of 0.6722 to 0.7235 from 0.7076 at 0.7393). We'd expect strong resistance from there to limit upside to complete the rebound from 0.6722. On the downside, break of 0.7180 minor support will turn bias back to the downside for 0.7076 support. However, sustained break of 0.7393 will indicate bullish reversal and target 100% projection at 0.7589 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.

Market movers today

We start off a relatively quiet week with euro area Sentix investor confidence. The index has been on a steady downward trend since August and at -1.5% remains at its lowest level since 2015. But in light of more dovish central bank signals recently and clouds clearing over the US-China trade negotiations, we could see a small rebound in sentiment in February (for more information, see our new Euro Area Macro Monitor - Recession angst is building , 4 February).

In Denmark, currency reserve data for January will be scrutinized by markets for further FX interventions by Danmarks Nationalbank..

Selected market news

Asian stocks started the week with modest gains following strong U.S. economic data and positive comments out of Washington on the trade talks. Trading in Asia is more subdued as much of the region heads into Lunar New Year holidays. The general positive risk sentiment buoyed Japanese stocks, as the less need for safe-haven flows weakened the weaker. Australian stocks also advanced, while Hong Kong shares were little changed.

On Friday, the US economy showed its resilience despite recent concerns about the economy slipping towards a recession : the non-farm payrolls (NFP) release showed more than 300,000 jobs were added in January (although part of the increase was tempered by a downward revision of the strong December number) the report marks the hundredth month of positive employment growth. However, wage growth was more muted. Furthermore, the manufacturing survey ISM was also strong, rising to 56.6 from 54.3 in December, particularly driven by big jump up in new orders to 58.2 from 51.3. Construction spending was strong as well, growing +0.8% m/m in Nov after -0.1% m/m in October. We generally believe the US economy will do well this year, expecting it to grow 2.7% this year (for more details see here ). However, in terms of the Federal Reserve, the central bank has clearly hinted that inflation developments will be important in driving further rate hikes and as wage growth was the only soft spot in the NFP release on Friday, the market pricing of the next Fed hikes will probably not change much, indicating the Fed is on hold for now.

Risk sentiment was on positive news on the trade talks between China and the US as U.S. President Donald Trump over the weekend told CBS that trade talks with Beijing are "doing very well". He also sounded confident an agreement with North Korea was on the horizon. On the trade discussions with China, Xi Jinping and Donald Trump 'may meet in Da Nang, Vietnam' on February 27 and 28 just shy of the end-February deadline according to sources familiar with discussions ( see here ). In our view, we are getting more confident that we are closer to a deal and that the probability of a deal in March has increased. The intense efforts put into the talks at the highest level - including from Trump and Xi - suggest that both sides are very keen to get the work done ( for more details, see our China Weekly Letter--On track for a trade deal, first signs of a bottom in growth , 1 February).

Traders not sure what to make of jobs data

It's shaping up to be a pretty slow start to the week, with Europe getting little direction from Asia trade overnight where various countries join China in celebrating new year in the coming days.

There isn't much in store in Europe and the US on Monday either that will dramatically change this. Last week was packed with major political and economic events but this week looks very different, which may take its toll on volumes but also direction.

The US jobs report gave investors a bit of a lift on Friday, with job creation well exceeding expectations – 304,000 - and the shutdown having no clear negative impact on the numbers. The huge downward revision to the December number may have taken some of the edge off the report as investors seemed to battle with what the report actually means. Is the economy far better off than we think? Is the expected slowdown exaggerated? Are people's views of the Fed too dovish? We seem to be in a state of mild confusion at this moment in time.

Gold eyeing test of $1,300 from above on stronger dollar

We have seen some gradual improvements in the dollar since the immediate whipsaw price action which suggests that traders are taking the report at face value rather than looking for the hidden negatives or missed signals. That said, the upside has been mild under the circumstances so there is still a big element of suspicion around the reports we've seen over the course of the shutdown.

The gains we've seen in the dollar have taken the shine off gold, which has come under a little pressure in recent session. Still, the yellow metal trades above $1,300 and is yet to test this level from above. We may see that in the coming days and should it hold and rotate higher, it would be viewed as confirmation of the initial break and be a very bullish signal.

Oil traders less uncertain as jobs data brings strong gains

There was clearly no ambiguity in the jobs data among oil traders, with WTI and Brent both getting a significant boost from the report, with further gains coming later in the session as Baker Hughes confirmed the number of US oil rigs had fallen by 15 last week. This continues a trend that started following the peak in November but the pace is picking up.

Lower oil prices are clearly not just bad for OPEC nations and is taking its toll on US producers also. Any sign that US supply growth – which is currently at record levels around 11.9 million barrels a day – is slowing or reversing is bullish for crude at these levels. The key resistance levels in WTI and Brent though - $55 and $65 – remain intact for now although the former is flirting just above here. A clear break has not yet happened though.

Daily Pivots: (S1) 1.3059; (P) 1.3110; (R1) 1.3150; More...

USD/CAD recovers mildly today but stays below 1.3165 resistance. Further decline could be seen. But we'd start to be cautious on bottoming as it approaches channel support (now at 1.3056). On the upside break of 1.3165 will turn bias to the upside for rebounding towards 1.3375 resistance. However, sustained break of the channel support will pave the way to 100% projection of 1.3664 to 1.3180 from 1.3375 at 1.2891.

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 1.3049) 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.

Dollar is trading broadly higher today, trying to recovery some of last week's losses. New Zealand Dollar follows closely, which Canadian Dollar is also a close third. Yen and Australian Dollar are taking turns to be the weakest ones. Mildly risk appetite is pressuring both Yen and Swiss Franc. But Asian markets have been generally quite as Lunar New Year approaches. Australian Dollar is weighed down by poor housing data. There is more downside potential for Aussie as RBA rate decision and statement looms.

Technically, despite today's recovery, the greenback is held below near term resistance against Euro, Australian, Canadian and even Sterling. There is no clear sign of bottoming yet. The clearer development is probably found in the Japanese yen. EUR/JPY is extending recent rebound from 118.62. USD/JPY is likely set to take on 110.00 resistance too. We'd probably see more broad based rally in Yen crosses is risk appetite persists for the day.

In other markets, Nikkei closed up 0.46%. Hong Kong HSI is up 0.21%. Singapore Strait Times is down -0.13%. Japan 10-year JGB yield is up 0.0096 at -0.0011, staying negative.

Fed Kashkari: Let's not tap the brakes prematurely

Minneapolis Fed President Neel Kashkari said the US economy is "fundamentally healthy". While "we at the Fed cannot control if Europe has a crisis, or if China has a hard landing", "we can control our own mistakes". He added that " if we can avoid tapping the brakes prematurely, I think the expansion can continue."

Kashkari also noted that"let's let the economy continue to strengthen and if we see signs then, wages pick up, inflation picks up, we can always tap the brakes then; let's just not tap the brakes prematurely."

UK PM May, armed with fresh mandate, to go back to EU with pragmatic Brexit solution

UK Prime Minister Theresa May said she is seeking a "pragmatic solution" for the Brexit withdrawal agreement. She wrote in The Sunday Telegraph that "with changes to the Northern Ireland backstop, they would support the deal that I agreed with Brussels to take us out of the EU". And, "when I return to Brussels I will be battling for Britain and Northern Ireland, I will be armed with a fresh mandate, new ideas and a renewed determination to agree a pragmatic solution that delivers the Brexit the British people voted for."

May's office also said that the government is establishing an "Alternative Arrangements Working Group" to work on alternative arrangement to the Irish border backstop arrangement. Brexit Minister Stephen Barclay will lead the group involving pro-Brexit lawmakers Steve Baker, Marcus Fysh and Owen Paterson, as well as pro-EU Conservatives Damian Green and Nicky Morgan. The first meeting will start today.

Trade Minister Liam Fox said EU would be irresponsible if they insist on refusing to reopen negotiation. He told Sky News that "are they really saying that they would rather not negotiate and end up in a 'no-deal' position?" And, "it is in all our interests to get to that agreement and for the EU to say we are not going to even discuss it seems to me to be quite irresponsible."

China Caixin PMI dropped to 50.9, hard to turn around without strong stimulus

China Caixin PMI services dropped to 53.6 in January, down from 53.9 but beat expectation of 53.3. PMI composite dropped to 50.9, down from 52.2. Caixin noted that "services activity continues to rise solidly, but manufacturing sector remains subdued", "new orders rise only slightly, despite rebound in export sales", "overall employment stabilises".

Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said in the release that "Overall, China's economic growth was weighed on by weakening domestic demand in January, although exports improved marginally as the Sino-U.S. trade negotiations flagged signs of progress. The effects of China's policies to support domestic demand and the development of the trade war between the country and the U.S. will remain key to the prospects of the Chinese economy. Given that the government has refrained from taking policies of strong stimulus, the downward trend of the economy may be hard to turn around for the time being."

Released earlier today, Australia building approvals dropped -8.4% mom in December versus expectation of 2.1% mom. TD securities inflation dropped -0.1% mom in January. New Zealand building permits rose 5.1% mom in December. Japan monetary base rose 4.7% yoy in January.

The week ahead: RBA and BoE to stand pat, publish new forecasts

Two central banks will meet this week. Both RBA and BoE are expected to stand pat. And focuses will be on new economic projections from both. Despite recent soft batch of data, RBA will likely maintain that growth will be above trend in the coming two years. And thus, that would justify the central bank's tightening bias. That is, the next move in interest rate is up even though RBA is in no rush to deliver it. However, there is some dovish possibility that RBA could take a even more cautious stance on downward revisions to both growth and inflation forecasts.

While the focus of the BoE meeting remains on Brexit uncertainty, economic assessment and forward guidance, the dynamics of the political and economic situation signals that the members would turn more dovish. BOE can still retain its forward guidance, suggesting that, under the scenario of a smooth Brexit, an "ongoing tightening of monetary policy over the forecast period, at a gradual pace and to a limited extent, would be appropriate". It should also reaffirm that "the monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction". More in BOE Preview – Downgrade on Economic Outlook as Brexit Remains Uncertain.

On the data front, UK PMIs, US ISM services; Canada job data, New Zealand employment, etc, could trigger volatility in respective currencies.

Here are some highlights of the week:

• Monday: Eurozone Sentix investor confidence, PPI; UK construction PMI; US factory orders
• Tuesday: RBA rate decision, retail sales; Eurozone PMI services final, retail sales; UK PMI services, BRC sales monitor; US ISM non-manufacturing
• Wednesday: Germany factory orders; Canada building permits, Ivey PMI; US non-farm productivity, trade balance
• Thursday: New Zealand employment, labor cost; Australian NAB business confidence; Japan leading indicators; Germany industrial production; Swiss foreign currency reserves; ECB monthly bulletin; BoE rate decision and inflation report; US jobless claims
• Friday: Japan household spending, currency account, average cash earnings; RBA Statement on Monetary Policy; Swiss unemployment rate; Germany trade balance; Canada housing starts, employment

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3059; (P) 1.3110; (R1) 1.3150; More...

USD/CAD recovers mildly today but stays below 1.3165 resistance. Further decline could be seen. But we'd start to be cautious on bottoming as it approaches channel support (now at 1.3056). On the upside break of 1.3165 will turn bias to the upside for rebounding towards 1.3375 resistance. However, sustained break of the channel support will pave the way to 100% projection of 1.3664 to 1.3180 from 1.3375 at 1.2891.

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 1.3049) 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.

Economic Indicators Update

The British pound is under moderate selling pressure against the US dollar on Monday, as sterling traders scale back positions ahead of this week Bank of England interest rate decision. A sustained break from the 1.3040 to 1.3095 price range is needed before the next strong short-term directional move can occur. Traders now await the release of the UK Construction PMI this morning, with expectations for the release tilted to the downside.

The GBPUSD pair is bearish while trading below the 1.3095 level, key technical support is found at the 1.3044 and 1.3000 levels

If the GBPUSD pair trades above the 1.3095 level, key resistance is found at the 1.3130 and 1.3170 levels.

The euro currency is attempting to stabilize around the pivotal 1.1460 level against the US dollar on Monday, after the better than expected Nonfarm Payrolls job report boosted the greenback higher. Dip-buying interest in the EURUSD pair is likely to remain strong until the key 1.1410 support level is clearly broken. Overall, buyers will likely attempt a series of bullish daily price closes above the important 1.1500 resistance level.

The EURUSD pair is bullish while trading above the 1.1460 level, key technical resistance is found at the 1.1500 and 1.1550 levels.

If the EURUSD pair trades below the 1.1430 level, sellers may test towards towards the 1.1410 and 1.1360 support levels.

Bitcoin is still trading within a descending price channel on Monday, as the number one cryptocurrency continues to move in an increasingly narrow range. Sellers need to break the $3,300 level to accelerate downside pressures, while buyers need to hold price above the $3,500 level to break from the channel. If the BTCUSD pair performs an upside break, the $3,960 level provides a strong short-term bullish target.

The BTCUSD pair is only bearish while trading below the $3,300 level, key technical support remains at the $3,150 and $3,000 levels.

If the BTCUSD pair trades above the $3,300 level, key resistance is found at the $3,500 and $3,660 levels.