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The campaign to block a no-deal Brexit in the parliament is gaining momentum today. Labour lawmaker Yvette Cooper put an cross-party supported amendment proposal earlier, to try to impose a deadline of February 26 for Prime Minister Theresa May to get the Brexit deal approved by the parliament. Otherwise, there would be a parliamentary vote on delaying Brexit. The second most influential Labour member John McDonnell said today the party is "highly likely" to back Cooper's amendment. He added "Yvette Cooper has put an amendment down which I think is sensible".

Regarding no-deal Brexit, Moody's senior vice president Sarah Carlson warned that "from a sovereign credit perspective, if you end up with a 'no deal' Brexit that is a sign that something institutionally has really quite profoundly failed." And, that would weigh negatively on UK's creditworthiness.

European Commissioner for Economic and Financial Affairs Pierre Moscovici reiterated the EU's stance that regarding Brexit, the ball is in UK's court now. He said "Certainly the EU is there, the EU is waiting, the EU is ready but first we need to know clearly what are the British intentions and we need some clarifications from London".

He added that "Of course the door is always open for discussion but it's not up to us to tell now the British side where it wants to go. The ball clearly is in the British side again. It's not a problem that can be solved by Brussels, maybe in Brussels later, but it has to be first dealt with in London."

Also on the possibility of hard Brexit, Moscovici said "Nobody wants a no-deal (Brexit), that is clear. The British parliament doesn't want a no-deal, the British government doesn't want a no-deal, and the EU is not willing a no-deal, so we need to explore all options which are not a no-deal."

The pair trades within narrow range for the fifth straight day, with the upside being capped by a cluster of converged daily MA's while the downside was protected by daily cloud top in past few sessions. The action could be seen as consolidation before bears resume towards significant 200SMA support (5.2550) as daily studies are bearish. Oversold conditions so far prevent deeper dips, however, near-term focus remains skewed lower and eventual close below daily cloud base would generate stronger signal for stretch towards 200SMA. The latter marks breakpoint and should ideally contain the action to keep overall negative lira's picture intact and keep alive hopes of pair's fresh rally. Weak economic data from Turkey weigh, along with geopolitical issues, but high CBRT's interest rates balance the situation for now. Conversely, sustained break below 200SMA would indicate change in overall outlook and risk test of next key support at 5.1323 (29 Nov low of pullback from new all-time USDTRY high), break of which would generate strong bearish signal.

Res: 5.3663, 5.3879, 5.4282, 5.4512
Sup: 5.2550, 5.2427, 5.2290, 5.2012

President Donald Trump's statement last week that an agreement could be reachable, a second salvo of US import duties on Chinese products looms large. Preparations are underway for a 2-day meeting starting on 30 January between US Trade Representatives and Chinese Vice Premier Liu He's delegation. However, China will not send two vice-ministers, due to a lack of progress in topics such as technology transfer and structural reforms that include state subsidies to Chinese companies. To top it off, the prosecution of Huawei's CFO continues: the US Justice department is pursuing extradition from Canada, where she was arrested. Chinese authorities are not willing to leave the case overlooked.

Despite a weakening Chinese economy in Q4 2018 and a bearish global growth comment from the International Monetary Fund, the key question remains unresolved: how will the Chinese yuan react in a positive or negative deal? If negative, fundamentals would favour a drop in CNY, as China's trade surplus would considerably reduce, whereas improvement in risk sentiment would tend to say the opposite. It is too early to know the balance. Looking ahead after 1 March, the rise of existing trade duties from 10% to 25% on USD 250 billion imports, close to 50% of China's exports to the US, should further weaken CNY. This is unappealing to US authorities, because Chinese exports would gain further traction.

The currency pair is currently trading at 6.7856 CNY per USD.

The British pound has continued to advance against the US dollar during the European trading session, with price now testing the crucial 1.3000 resistance level. A sustained break above this key region may spark an eventual test of the 1.3095 level, while the 1.3040 level offers near-term resistance. Overall, technical indicators suggest that the GBPUSD pair is yet to reach oversold trading conditions.

The GBPUSD pair is strongly bullish while trading above the 1.2930 level, key technical resistance is found at the 1.3000 and 1.3030 levels.

If the GBPUSD pair trades under the 1.2930 level, key support is found at the 1.2890 and 1.2850 levels.

The US dollar is struggling to find a directional bias against Japanese yen currency, as buyers and sellers continue to battle for control of the risk-sensitive pair. The USDJPY pair has a slight intraday bearish bias, after an earlier failed attempt at the 109.88 level created a bearish lower daily high. Overall, a break from the 109.14 to 109.88 price range is needed to provoke technical selling.

The USDJPY pair is intraday bearish while trading below the 109.60 level, key technical support is found at the 109.14 and 108.90 levels.

If the USDJPY pair trades above the 109.60 level, buyers may test towards the 109.88 and 110.40 levels.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.13644
Open: 1.13597
% chg. over the last day: -0.02
Day's range: 1.13616 – 1.13647
52 wk range: 1.1214 – 1.2557

EUR/USD is showing an ambiguous technical picture. The quotes are moving sideways. Yesterday the US published a weak report on the secondary real estate market, where the sales lowered to 4.99M instead of 5.25M. You should open positions from the key range of 1.13500-1.13750.

The Economic News Feed for 23.01.2019 is calm.

The indicators do not provide precise signals, the price is testing 50 MA.

The MACD histogram is close to 0.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %d line which points to the bearish mood.

Trading recommendations

Support levels: 1.13500, 1.13150
Resistance levels: 1.13750, 1.14100, 1.14500

If the price fixes below 1.13500 consider selling EUR/USD. The movement will tend toward 1.13150-1.29990.

Alternatively the quotes can grow toward 1.14100-1.14300.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.28911
Open: 1.29565
% chg. over the last day: +0.49
Day's range: 1.29764 – 1.29847
52 wk range: 1.2438 – 1.4378

Yesterday GBP/USD showed an aggressive sell-off. The quotes grew by 100 points. The GBP is strengthening despite the weak reports from the UK labour market. The average wage including bonuses in November grew by 3.4% while the experts expected 3.3%. However, the number of applications for the unemployment benefits in December grew by 20.8K instead of 20K. You should open positions from the key levels of 1.29500 and 1.30000. A technical correction is possible soon.

The Economic News Feed for 23.01.2019 is calm.

The indicators point to the power of the buyers, the price fixed above 50 MA and 200 MA.

The MACD histogram is in the positive zone and above the signal line, which gives a strong signal to buy GBP/USD.

The Stochastic Oscillator is close to the overbought zone, the %K line is above the %D line which points to a bullish mood.

Trading recommendations

Support levels: 1.29500, 1.29000, 1.28500
Resistance levels: 1.30000, 1.30400

If the price fxes above the round 1.30000, expect further growth toward 1.30400-1.30600.

Alternatively, the quotes can correct toward 1.29000-1.28800.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.32903
Open: 1.32903
% chg. over the last day: +0.49
Day's range: 1.33267 – 1.33356
52 wk range: 1.2248 – 1.3664

Yesterday USD/CAD had an aggressive buy-out. The quotes grew by 70 points. CAD is weakened after the oil price fell by 2% due to the slow-down in the economic growth. You should open positions from the key levels of 1.33150 and 1.33400. The quotes have prospects for future growth.

At 15:30 (GMT +2:00) Canada will publish the basis index of retail sales.

The price fixed above 50 MA and 200 MA which points to the power of the buyers.

The MACD histogram is close to 0.

The Stochastic Oscillator is leaving the oversold zone, the %K line is above the %D line, which gives a weak signal to buy USD/CAD.

Trading recommendations

Support levels: 1.33150, 1.32900, 1.32650
Resistance levels: 1.33400, 1.33650

If the price fixes above 1.33400, expect further growth toward 1.33650-1.34000.

Alternatively, the quotes can fall toward 1.32900-1.32650.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 109.651
Open: 109.651
% chg. over the last day: -0.28
Day's range: 109.417 – 109.478
52 wk range: 104.56 – 114.56

USD/JPY is going through a variety of trends, the investors are waiting for additional drivers. The key resistance and support are 109.650 and 109.400. Open positions from these levels and keep an eye on the US Treasury bonds 10-year yield.

During the Asian trading session Japan published mixed economic reports.

The price fixed above 50 MA and 200 MA which points to the power of the buyers.

The MACD histogram moved to the positive zone which gives a strong signal to buy USD/JPY.

The Stochastic Oscillator is in the neutral zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 109.400, 109.100, 108.750
Resistance levels: 109.650, 109.900

If the price fixes above the key resistance of 109.650 consider selling USD/JPY. The movement will tend toward 109.000-110.100

Alternatively the quotes can fall toward 109.100-108.900.

Notes/Observations

• Markets await clarity on trade and Brexit fronts

Asia:

• BOJ left policy steady (as expected). Left Interest Rate on Excess Reserves (IOER) unchanged at -0.10% and maintained its policy framework of "QQE with Yield Control" around 0.00% and asset purchases at annual pace of ¥80T. Reiterated forward guidance to keep extremely low rates for an extended period
• Bank of Japan (BOJ) Quarterly Outlook for Economic Activity and Prices raised growth outlook but cuts inflation forecast . Cut FY18/19 GDP growth from 1.4% to 0.9%; raised FY19/20 GDP growth from 0.8% to 0.9%; raised FY20/21 GDP from 0.8% to 1.0%; Cut FY18/19 core CPI outlook from 0.9% to 0.8%; cut FY19/20 core CPI (ex-impact of consumption tax) from 1.4% to 0.9%; cut FY20/21 core CPI from 1.5% to 1.4%
• Japan Dec Trade Balance: -¥55.3B v -¥42.3Be; Adjusted Trade Balance: -¥183.6B v -¥290.7B; Exports Y/Y: -3.8% v -1.8%e; Imports Y/Y: 1.9% v 4.0%e
• US/China trade talks progress said to have stalled on disagreement over IP protection
• Trump Administration reportedly turned down Chinese offer to send ministers for preparatory trade talks
• China PBoC conducted its 1st use of targeted MLF; injected CNY257.5B in year TMLF at 3.15% (compares to 3.30% at the last MLF
• New Zealand Q4 CPI data beat expectations and remained within RBNZ target range of 1.0-3.0% for the 9th straight quarter (Q/Q: 0.1% v 0.0%e; Y/Y: 1.9% v 1.8%e)

Europe:

• UK Labour Party likely to back Cooper-Boles Brexit plan, with a sensible Brexit delay. Labour was increasingly likely to support a proposal to extend the Brexit deadline of March 29th if the PM failed to negotiate a divorcee agreement, moving parliament closer to blocking a no deal Brexit (Note: UK Govt official noted that it was likely to oppose Cooper-Boles Brexit plan)
• EU Commission spokesperson Schinas: No-deal Brexit would cause hard border in Ireland

Americas:

• White House Adviser Kudlow: earlier trade story about canceled China trade meeting is not true; there was never a planned meeting for junior ministers
• Senate leaders agree to hold vote on Trump's proposal and a Democratic proposal for reopening the govt. Neither bill was likely to pass this week, but might be seen as a small step toward compromise on the govt shutdown (Note: Previously Sen Majority Leader McConnell said he would not allow a vote on any bill unless Pres Trump indicated support beforehand)
• President Trump said to be interviewing new candidates for the open Fed board seat

Macro

• (JP) Japan: Governor Kuroda said the BOJ will focus on inflation target before normalizing policy. He said recent market moves were a little excessive and the BOJ will closely watch any effect on inflation and growth. At the same time downside risks from overseas economies are rising and prolonged trade friction would deeply effect the global economy. Nevertheless, he stressed that the banks scope for unconventional monetary policy hasn't narrowed and that the BOJ will take additional measures is needed, adding that it is vital for the BOJto hit the inflation target before normalizing policy.
• (UK) United Kingdom: The EU's chief Brexit negotiator saying that there will be no further negotiation of the Withdrawal Agreement. This would suggest that Prime Minister May's gamble hasn't paid off, and the second vote on her deal slated for Tuesday, is looking increasingly likely to be voted down again.
• (DE) Germany: The BGA exporter federation said 2019 export growth is seen at around 3.0% and assuming no further escalation of current trade issues growth of 2.5% could be possible in 2020. BGA president Boernier admitted that there was a discussion on the forecast for this year against the background of Brexit risks, which could cost German growth of anything between 0.3-0.5 percentage points.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.08% at 355.36, FTSE -0.19% at 6,888.50, DAX -0.14% at 11,074.41, CAC-40 +0.15% at 6,888.50, IBEX-35 +0.89% at 9,113.00, FTSE MIB -0.03% at 19,431.50, SMI +0.16% at 8,989.70, S&P 500 Futures +0.23%]
• Market Focal Points/Key Themes: European Indices trade mixed after declines yesterday mixed Asian Indices and slightly higher US Index futures. On the corporate front shares of Metro Bank trade over 30% lower after announcing one off adjustments of £900M following an internal review of commercial property exposures. On the earnings front French Supermarket giant Carrefour trades over 6% higher after inline earnings and affirmed outlook; Ahold Delhaize trades after a slight Revenue beat, while Deutsche Boerse rises after raising its outlook. Ingenico shares fall after missing forecasts; JD Weatherspoons and Burberry also decline after trading updates. In other news Heidelberger Druck trades higher after Masterwork Group intends to acquire a stake; RPC rises after agreeing terms to be acquired by Apollo while Sanne Group follows after CEO to retire. Looking ahead notable earnings include Comcast, UTX, P&G, Abbott Labs, Kimberly Clark and Progressive among others.

Equities

• Consumer discretionary: Carrefour [CA.FR] +6% (earnings), WH Smith [SMWH.UK] +2% (trading update), Burberry [BRBY.UK] -1% (earnings), Ingenico [ING.FR] -12.5% (earnings), Heidelberger Druckmaschien [HDD.DE] +21.5% (Masterwork Group to acquire stake)
• Consumer staples: Ahold Delhaize [AD.NL] +3% (earnings)
• Financials: Metro Bank [MTRO.UK] -28% (earnings), Deutsche Bank [DBK.DE] -0.5% (reportedly being probed by Fed on Danske case; denies investigation), Deutsche Boerse [DB1.DE] +0.5% (positive profit alert), Sanne Group [SNN.UK] -11.5% (CEO steps down)
• Industrials: RPC Group [RPC.UK] +5% (confirms to be acquired)
• Technology: ASML Holding [ASML.NL] -2.5% (earnings; raises dividend; settles litigation; post earnings comments), Computacenter [CCC.UK] +4% (trading update)
• Materials: RWE [RWE.DE] +5% (reports on Germany's coal commission proposing additional compensation)

Speakers

• BOE's Broadbent: Debt growth better risk indicator of financial distress than debt level. Saw parallels between recent buildup of leveraged loans and subprime boom before the financial crisis. Chances of any material rise in average loan-to-value on new mortgages were low
• UK Trade Secretary Fox: PM May understands the strength of feelings on the Irish backstop; talking to EU to find an alternative. Technology could be a way to avoid a hard border. Govt telling businesses to prepare for no-deal Brexit; outcome remained a real possibility
• Turkey Fin Min Albayrak: currently did not see any recession on the horizon. Noted that growth in Q4 and Q1 were slightly softer, strong rebound expected after that. Forecastsed 2.3% for 2019 GDP growth
• IMF First Deputy Managing Dir Lipton reiterated expected economic slowdown to come sooner than expected; US government shutdown impact so far 'small' - comments from Davos
• BOJ Gov Kuroda post rate decision press conference noted that oil price decline was the key reason for downgrade of inflation outlook but stressed that price momentum was firmly maintained towards the 2% target. Direct impact of oil on prices was seen as temporary. Reiterated stance that appropriate to continue current easing; important to examine the cost/benefit of policy. Board member Kataoka opposed the outlook report on CPI. Did not see any big changes to the county's economic fundamentals
• Brazil President Bolsonardo: Pension reform to be substantial and of interest to all member States. Privatization plan was almost ready; large part of State-owned companies to be sold

Currencies/Fixed Income

• GBP/USD was edging back towards the 1.30 level aided by continued expactations of a softer Brexit process. UK parliament said to be preparing amendments to PM May's proposed Brexit deal, which could "reduce the risk of a no-deal Brexit
• EUR/USD listless and locked within current 1.13-15. Trading range. The upcoming German BOBL auction today likely to register its lowest yield for a Bobl auction since November 2017
• Overall session in Euro Zone government bond yields were slightly lower with the newest developments in the U.S.-China trade conflict spreading caution

Economic Data

• (DK) Denmark Jan Consumer Confidence Indicator: 3.9 v 3.5e
• (TR) Turkey Jan Consumer Confidence Index: 58.2 v 58.7 prior
• (SE) Sweden Prospera Inflation Expectations Survey
• (FR) France Jan Business Confidence: 102 v 103e; Manufacturing Confidence: 103 v 103e; Production Outlook Indicator: -11 v -9e; Own-Company Production Outlook: 9 v 11 prior
• (FR) France Jan Overall Demand Business Survey: +1 v -2 prior
• (TW) Taiwan Dec Industrial Production Y/Y: -1.2% v +0.4%e
• (ZA) South Africa Dec CPI M/M: -0.2% v -0.2%e; Y/Y: 4.5% v 4.5%e
• (ZA) South Africa Dec CPI Core M/M: 0.3% v 0.3%e; Y/Y: 4.4% v 4.4%e
• (IS) Iceland Dec Wage Index M/M: 0.0% v 0.1% prior; Y/Y: 6.0% v 6.2% prior

Fixed Income Issuance

• (IN) India sold total INR90B vs. INR90B indicated in 3-month, 6-month and 12-month bills
• (DK) Denmark sold DKK2.52B in new 0.5% Nov 2029 DGB bond; Yield: 0.39% v 0.21% prior; Bid-to-cover: 2.01x v 1.77x prior

Looking Ahead

• (CO) Colombia Dec Industrial Confidence: No est v -4.3 prior; Retail Confidence: No est v 28.0 prior
• 05:30 (DE) Germany to sell €4.0B in new 0% Apr 2024 BOBL
• 06:00 (UK) Jan CBI Industrial Trends Total Orders: 5e v 8 prior; Selling Prices: 12e v 14 prior; Business Optimism: -25e v -16 prior
• 06:00 (BR) Brazil Mid-Jan IBGE Inflation IPCA-15 M/M: 0.3%e v -0.2% prior; Y/Y: 3.8%e v 3.9% prior
• 06:45 (US) Daily Libor Fixing
• 07:00 (US) MBA Mortgage Applications w/e Jan 18th: No est v 13.5% prior
• 07:45 (US) Weekly Chain Store sales data
• 08:00 (PL) Poland Dec M3 Money Supply M/M: 2.1%e v 1.1% prior; Y/Y: 8.6%e v 8.8% prior
• 08:00 (UK) Baltic Dry Bulk Index
• 08:00 (RU) Russia to sell combined RUB30B in 2022 and 2034 OFZ bonds
• 08:30 (CA) Canada Nov Retail Sales M/M: -0.6%e v +0.3% prior; Retail Sales (Ex-auto) M/M: -0.4%e v 0.0% prior
• 08:55 (US) Weekly Redbook Retail Sales data
• 09:00 (US) Nov FHFA House Price Index M/M: 0.3%e v 0.3% prior
• 10:00 (US) Jan Richmond Fed Manufacturing Index: -2e v -8 prior
• 10:00 (EU) Euro Zone Jan Advance Consumer Confidence: -6.5e v -6.2 prior
• 12:00 (CA) Canada to sell 2.25% Jun 2029 notes
• 16:30 (US) Weekly API Oil Inventory data

USDJPY eyes the 109.88 resistance zone beyond as it looks to resume its upside pressure. On the upside, resistance comes in at 110.00 level. A turn above here will turn attention to the 110.50 level. Further out, we expect a possible move towards the 111.00 level if the earlier resistance is invalidated out. The next resistance resides at the 111.50. Its daily RSI is bullish and pointing higher suggesting further strength. On the downside, support comes in at the 109.50 level where a break will target the 109.00 level. Below that level will turn focus to the 108.50 level and then lower the 108.00 level. On the whole, USDJPY faces further upside pressure on corrective recovery.

The cross holds in red for the third straight day and extends below pivotal supports at 0.8760 zone base (also Fibo 76.4% of 0.8656/0.9113 advance, to post new nine-week low (0.8749).

Sterling remains supported by fresh steer in Brexit saga which raised hopes of delay in Brexit and no-deal scenario.

Bearish daily studies were reinforced by formation of 10/200SMA death cross today, with eventual break through 0.8760 zone temporary base, opening way towards 0.8696 (low of 15 Nov when the pair made the biggest one-day advance in one year) and key med-term support at 0.8656 (13 Nov low).

Broken Fibo 61.8% support (0.8830) now marks solid resistance which should keep the upside protected and guard pivotal barrier at 0.8862 (200SMA).

Res: 0.8782, 0.8830, 0.8862, 0.8884
Sup: 0.8737, 0.8696, 0.8656, 0.8620