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Daily Pivots: (S1) 1.2845; (P) 1.2879; (R1) 1.2927; More....

Intraday bias in GBP/USD remains neutral and outlook is unchanged. Further rally is expected as long as 1.2668 minor support holds. On the upside, above 1.3001 will target 1.3174 resistance, which is close to 38.2% retracement of 1.4376 to 1.2391 at 1.3149. We'd expect strong resistance from there to limit upside, at least on first attempt. On the downside, break of 1.2668 support will argue that such rebound is completed and turn bias back to the downside for retesting 1.2391 low.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA. The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend from 2.1161 (2007 high). And this will remain the preferred case as long as 1.3174 structural resistance holds. GBP/USD should target a test on 1.1946 first. Decisive break there will confirm our bearish view. However, sustained break of 1.3174 will invalidate this case and turn outlook bullish.

Daily Pivots: (S1) 0.9941; (P) 0.9965; (R1) 0.9996; More....

USD/CHF is losing some upside momentum. But with 0.9332 minor support intact, intraday bias stays on the upside. Current rise from 0.9716 should target a test on 1.0128 high next. On the downside, below 0.9932 minor support will turn intraday bias neutral again. But near term outlook will remain cautiously bullish as long as 0.9856 minor support holds.

In the bigger picture, current development suggests that rise from 0.9186 has possibly completed with three waves up to 1.0128 already. Decline from 1.0128 could either be correcting this move, or reversing the trend. As long as 0.9541 support holds, we'd slightly favor the former scenario, and expect another rise through 1.0128 at a later stage. However, sustained break of 0.9541 will confirm trend reversal and bring deeper fall back to 0.9186 low.

Daily Pivots: (S1) 109.50; (P) 109.63; (R1) 109.80; More...

With 4 hour MACD dropped below signal line, a temporary top is in place at 109.89. Intraday bias in USD/JPY is turn neutral first. Another rise could be seen with 107.77 minor support intact. On the upside, above 109.89 will target 61.8% retracement of 114.54 to 104.69 at 110.77. We'd look for topping signal above there. On the downside, break of 107.77 will indicate completion of the rebound from 104.69. Intraday bias will be turned back to the downside for retesting this low.

In the bigger picture, price actions from 125.85 (2015 high) are seen as a long term corrective pattern, no change in this view. Apparently, such corrective pattern is not completed yet. Fall from 114.54 is seen as part of the falling leg from 118.65 (2016 high). 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. But in that case, we'd expect strong support from 98.97 to contain downside to bring reversal. Also, this bearish case will remain the preferred one as long as 114.54 resistance holds.

Daily Pivots: (S1) 1.3261; (P) 1.3290; (R1) 1.3326; More...

USD/CAD's rebound from 1.3180 extends today. Break of 1.3323 minor resistance suggests short term bottoming. Intraday bias is turned back to the upside for retesting 1.3664 high. We'd be cautious on strong resistance from there to limit upside. On the downside, break of 1.3180 will resume the fall from 1.3664 to 61.8% retracement of 1.2781 to 1.3664 at 1.3118.

In the bigger picture, the medium term rise from 1.2061 (2017 low) might continue further. But the structure of such rise is not clearly impulsive so far. 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 1.3036) holds. Sustained break of 1.3793 will pave the way to retest 1.4689 (2015 high).

For the 24 hours to 23:00 GMT, the EUR slightly rose against the USD and closed at 1.1370.

Data indicated that the Germany's producer price inflation slowed to a 7-month low level of 2.7% on an annual basis in December, falling short of market anticipation for a gain of 2.9%. In the prior month, the PPI had recorded a rise of 3.3%.

In the Asian session, at GMT0400, the pair is trading at 1.1362, with the EUR trading 0.07% lower against the USD from yesterday's close.

The pair is expected to find support at 1.1349, and a fall through could take it to the next support level of 1.1336. The pair is expected to find its first resistance at 1.1383, and a rise through could take it to the next resistance level of 1.1404.

Looking ahead, investors would await the Euro-zone's and Germany's ZEW survey indices, all for January, scheduled to release in a few hours. Later in the day, the US existing home sales for December, will keep traders on their toes.

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

For the 24 hours to 23:00 GMT, the GBP rose 0.18% against the USD and closed at 1.2895, after UK’s Prime Minister Theresa May disclosed Brexit’s plan B to the parliament.

In the Asian session, at GMT0400, the pair is trading at 1.2878, with the GBP trading 0.13% lower against the USD from yesterday’s close.

The pair is expected to find support at 1.2836, and a fall through could take it to the next support level of 1.2793. The pair is expected to find its first resistance at 1.2916, and a rise through could take it to the next resistance level of 1.2953.

Trading trend in the Sterling today is expected to be determined by UK’s public sector net borrowing for December followed by average weekly earnings and ILO unemployment rate, both for November, slated to release in a few hours.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.10% against the JPY and closed at 109.63.

In the Asian session, at GMT0400, the pair is trading at 109.43, with the USD trading 0.18% lower against the JPY from yesterday’s close.

The pair is expected to find support at 109.34, and a fall through could take it to the next support level of 109.25. The pair is expected to find its first resistance at 109.61, and a rise through could take it to the next resistance level of 109.79.

Going ahead, traders would keep an eye on Japan’s trade balance data for December, set to release overnight.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.22% against the CHF and closed at 0.9973.

On macro front, data indicated that Switzerland's M3 money supply advanced 3.1% on a yearly basis in December, higher than market consensus for a rise of 2.9%. In the previous month, M3 money supply rose 2.8%. Moreover, the nation's total sight deposits climbed to a level of CHF576.3 billion in the week ended 18 January, from CHF575.2 billion in the previous week.

In the Asian session, at GMT0400, the pair is trading at 0.9980, with the USD trading 0.07% higher against the CHF from yesterday's close.

The pair is expected to find support at 0.9956, and a fall through could take it to the next support level of 0.9932. The pair is expected to find its first resistance at 0.9996, and a rise through could take it to the next resistance level of 1.0012.

With no macroeconomic releases in Switzerland today, investors would look forward to global macroeconomic releases for further directions.

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

Daily Pivots: (S1) 0.7139; (P) 0.7158; (R1) 0.7178; More...

AUD/USD weakens mildly today but it's staying in range of 0.7116/7235. Intraday bias remains neutral first. As long as 0.7116 minor support holds, further rally is mildly in favor. On the upside, break of 0.7235 will target 0.7393 resistance. We'd expect strong resistance from there to limit upside. On the downside, break of 0.7116 minor support will suggest completion of rebound from 0.6722. Intraday bias will then be turned back to the downside for retesting this low.

In the bigger picture, the failure to sustain below 0.6826 (2016 low) suggests that the long term down trend is not ready to resume yet. But prior rejection by 55 week EMA indicates underlying medium term bearishness in the pair. Outlook will also stay bearish as long as 0.7393 resistance holds. On the downside, sustained break of 0.6826 will target 0.6008 (2008 low).

Sterling is trading lower in Asian session today as UK Prime Minister Theresa May's uninspiring statement did nothing to break the stalemate. But, commodity currencies are equally weak, if not weaker, following decline in the stock markets. There is no clear theme but investors appear to be turning cautious after yesterday's set of Chinese data. Slowdown is inevitably lying ahead but the depth would very much depends on the trade negotiation with the US. For now, Yen and Dollar are the strongest ones so far.

Technically, 1.3323 minor resistance in USD/CAD is a level to watch today. Break will add to the case of near term bottoming at 1.3180. And stronger rebound would be seen back towards 1.3664 high. 0.7116 in AUD/USD is another level to watch too. Break will suggest completion of rebound from 0.6722 and deeper fall would be seen back to this level.

In other markets, Nikkei is currently down -0.69% and is set to close with a loss. Hong Kong HSI is down -1.23%. China Shanghai SSE is down -1.17%. Singapore Strait Times is down -0.41%. Japan 10-year JGB yield is down -0.0037 at 0.001. WTI crude oil is currently at 53.5. It's apparently losing momentum after hitting 54.44 yesterday, ahead of 54.61 resistance.

UK May pledged change in Brexit approaches, oppose to second referendum

UK Prime Minister Theresa May's statement on Brexit plan B was rather uninspiring. In short, she finally acknowledged the need to have in change in her approach and laid out three areas. Those include, being "more flexible, open and inclusive" in engaging the parliament, embedding the "the strongest possible protections on workers' rights and the environment". And finally, ensuring the "commitment to no hard border in Northern Ireland and Ireland". They're hardly anything new.

Meanwhile, she continued to oppose to a second referendum as that would "damage social cohesion by undermining faith in our democracy." And she doesn't believe there is a majority for a second referendum. On Article 50 extension, she claimed that EU would not approve it unless UK had a plan for approving a deal. And the only way to avoid a no-deal Brexit would be to revoke Article 50.

May will continue cross-party talks and provide further update next Tuesday.

Businesses respond: Fundamentals have not changed and the stasis continues

In response to May's statement on Brexit yesterday, CBI director general Carolyn Fairbairn said " the government's move to consult more widely is welcome, as is the commitment to scrap the settled status charge for EU citizens". But she criticized that "the fundamentals have not changed" as "Parliament remains in deadlock while the slope to a cliff edge steepens." She urged that "government should accept that no-deal in March 2019 must be off the table".

Allie Renison, head of Europe and trade policy at the Institute of Directors also complained "the stasis continues". She also noted that "two-thirds of our members say that leaving without a deal would be negative for their businesses and nearly 80% made clear they don't want to see it happen." And, "we desperately need politicians to get serious about finding a way forward."

SNB Zurbruegg: Expansive monetary policy still warranted

SNB Vice Chairman Fritz Zurbruegg spoke at an economic forum in Landquart, Switzerland, yesterday. He noted that expansive monetary policy is still warranted for the central bank, due to heightened uncertainties, highly valued franc exchange rate, low inflationary pressure and global low interest rates.

In particular, he noted that uncertainties have risen recently, due to protectionism, Brexit, Italy. The Swiss Fran remains highly valued and that remains a risk. But overall, outlook for the Swiss economy remains favorable.

The comments echoed those by Chairman Thomas Jordan, who noted the need to block a surge Franc on safe-haven flow.

China NDRC: Downward pressure on economy will be passed onto jobs

China National Development and Reform Commission spokeswoman Meng Wei warned that the job market faces "new changes" ahead and slowdown in the economy will pressure the job markets. She also noted that some factories in the export hub of Guangdong province have shut earlier than usual ahead of Lunar new year holiday.

Meng said "from the viewpoint of 'changes', the external environment is complex and austere." And, "Within the changes, there is something to worry about, and there is downward pressure on the economy. To a certain extent, the pressure will be passed onto jobs."

Her comments came after survey-based data showed unemployment rate rose 0.1% to 4.9% in December, release yesterday.

On the data front

UK job data and German ZEW economic sentiment will be the major focus in European session. Later in the day, Canada will release wholesale sales and manufacturing sales. US will release existing home sales.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7139; (P) 0.7158; (R1) 0.7178; More...

AUD/USD weakens mildly today but it's staying in range of 0.7116/7235. Intraday bias remains neutral first. As long as 0.7116 minor support holds, further rally is mildly in favor. On the upside, break of 0.7235 will target 0.7393 resistance. We'd expect strong resistance from there to limit upside. On the downside, break of 0.7116 minor support will suggest completion of rebound from 0.6722. Intraday bias will then be turned back to the downside for retesting this low.

In the bigger picture, the failure to sustain below 0.6826 (2016 low) suggests that the long term down trend is not ready to resume yet. But prior rejection by 55 week EMA indicates underlying medium term bearishness in the pair. Outlook will also stay bearish as long as 0.7393 resistance holds. On the downside, sustained break of 0.6826 will target 0.6008 (2008 low).

Economic Indicators Update