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A solid kick off for the U.S. earnings season, Theresa May surviving a vote of no-confidence, China's central bank pumping record liquidity, and policymaker assurances to take the right actions were all key factors in supporting risk in financial markets and keeping equity bulls in charge.

Upbeat U.S. bank earnings boosted investors' confidence this week. Goldman Sachs was up 9.5% on Wednesday after beating estimates by a wide margin on both top line and bottom line. Yesterday's surge in itsstock was the best reaction to earnings results in a decade. Bank of America also crushed expectations and ended the day 7.2% higher. The numbers released so far from U.S. banks managed to ease some concerns onthe economy. However, confirmation is still needed from other sectors - mainly the cyclical ones - to provide better guidance on how consumers are behaving, which is critical to future earnings.

Prime Minister Theresa May's government survived a no-confidence vote yesterday, just one day after her humiliating Brexit defeat. This result seemed to have been properly priced into the Pound given the slight reaction to the news. A snap general election appears to be out of the equation now, but there is still a high probability of a second referendum taking place. Although a soft Brexit remains to be the most likely scenario, it's a tough call to make. Expect an extension of Article 50 to provide further boost to the Pound, but if May starts to open up to the idea of a second referendum, Sterling may easily jump above 1.30.

Additional stimulus from China also managed to boost sentiment. After cutting taxes in response to disappointing industrial production figures and falling exports, monetary authorities injected a record $84 billion into the country's banking system. Such actions indicate that China will continue to use all available tools to reduce the impact from ongoing trade tensions with the U.S. However, this will only have a short-term impact on markets and onlysome sort of agreement with the U.S. to end the current trade tensions will provide a sustainable positive influence.

Japan Finance Minister Taro Aso urged G20 members to renew their commitment against protectionism. He noted in openings of G20 deputy financial leaders meeting that "dissatisfaction with economic inequality is growing. There is a serious risk that we will revert to a closed and fragmented world."

And he warned that "Protectionism and unfair trade practices lead to instability and perverse economic outcomes. We must renew our commitment to international cooperation and openness."

Market movers today

As expected, the UK government survived the confidence motion yesterday and the market's attention now turns to PM Theresa May's discussion with party leaders and other leading politicians on how to proceed with the Brexit negotiations. There is an increasing risk that the whole process will drag out and that the UK will need to ask for an extension of Article 50. Dominic Grieve, a pro-EU Conservative backbencher, has tabled two bills that would start preparations for a second EU referendum. The bills will be discussed on 21 January. For an overview of our take, see Brexit Monitor: The waiting game - Brexit edition , 16 January.

Today, the final euro area inflation figures for December are due out. Core inflation surprised again on the downside in the preliminary print and remained unchanged at 1.0%. We will look in particular for any signs that recent strong wage growth is starting to exert upwards pressure on some of the components of service price inflation.

The US Philly Fed index for January is also due out today and it will be interesting to see whether it mirrors the decline in the Empire index earlier this week, pointing to another slight decline for ISM manufacturing in January.

Following the dovish comments from Fed speakers, the Fed's Quarles is scheduled to speak later today. Keep an eye on comments on the future level of the balance sheet.

The US earnings season continues today with results from Morgan Stanley and Netflix.

Selected market news

Risk sentiment was initial lifted somewhat by a stronger-than-expected start to the earnings season with results from the Bank of America and Goldman Sachs being solid. This, together with the dovish signals from the ECB and the Fed, supports the relief rally we have seen so far in 2019, as the significant sell-off in December due to recession fears seems overdone. This was offset by trade war concerns as Huawei is being investigated by US prosecutors for stealing secrets from companies. This is another sign that while the trade talks are moving forward, the 'tech war' probably continues. There is a risk, however, that the tech war will make the trade talks more complicated to conclude. S&P500 futures are trading slightly lower and Asian stocks are mixed.

The US House of Representatives controlled by the Democrats has passed another bill to end the ongoing shutdown, but as it does not include any funds for President Trump's wall, the Senate will not vote on it, as Trump would veto it anyway. Despite the shutdown being the longest in US history and that missing pay checks are beginning to hurt families, nothing suggests the two sides are getting closer to each other. There is an increasing risk that the shutdown will hit the overall economy the longer it drags out. Trump's State of the Union address has been cancelled.

Daily Pivots: (S1) 139.43; (P) 140.07; (R1) 141.14; More...

GBP/JPY attempts to resume the rebound from 131.51 but cannot sustain above 139.88 resistance so far. Intraday bias remains neutral first. Sustained trading above 139.88 will dampen our bearish view and bring stronger rise to 143.93 resistance next. Nevertheless, reversal from current level, followed by 137.35 support will confirm completion of rebound from 131.51. Intraday bias will be turned back to the downside for retesting 131.51 low.

In the bigger picture, corrective medium term rise from 122.36 (2016 low) has completed at 156.69 already. That came after failing to break through 55 month EMA. Fall from 156.59 (2018 high) is seen as resuming the long term down trend from 195.86 (2015 high). Below 131.51 will target 122.36 low first. And this will now remain the preferred case as long as 139.88 support turned resistance holds. Sustained break of 139.88 will mix up the outlook and we'll reassess on the final structure of the rebound from 131.51.

Daily Pivots: (S1) 123.73; (P) 124.07; (R1) 124.63; More....

EUR/JPY is staying in tight range below 125.09 and intraday bias remains neutral first. For now, we'd still expect strong resistance around 124.61 to complete the rebound from 118.62 low. Larger decline is expected to resume afterwards. Break of 123.40 will affirm our view and turn bias back to the downside for retesting 118.62 low first. However, sustained break of 124.61 will dampen our view and extend the rebound to 127.09 resistance next.

In the bigger picture, medium term rebound from 109.03 (2016 low) has completed at 137.49 already, with corrective structure. Fall from 137.39 is seen as a medium term fall, resuming the decline from 149.76 (2014 high). Such decline should break through 109.03 low next. This will remain the preferred case as long as 124.61 support turned resistance holds. Sustained break of 124.61 will mix up the outlook and we'll reassess on the final structure of the rebound from 118.62.

Daily Pivots: (S1) 0.8824; (P) 0.8858; (R1) 0.8878; More...

Intraday bias in EUR/GBP remains on the downside. Fall from 0.9101 would target 61.8% retracement of 0.8655 to 0.9101 at 0.8825. Sustained break there will pave the way back to 0.8655 support. On the upside, break of 0.8986 is needed to indicate short term bottoming. Otherwise, risk will stay on the downside even in case of recovery.

In the bigger picture, EUR/GBP is seen as staying in long term range pattern started at 0.9304 (2016 high). The medium term range is set between 0.8620 and 0.9101. Downside break out of 0.8620 will pave the way back to 0.8302/12 support zone. Break of 0.9101 will bring retest of 0.9304/5 resistance.

Daily Pivots: (S1) 1.5826; (P) 1.5871; (R1) 1.5935; More....

EUR/AUD formed a temporary low at 1.5805 and recovered. Intraday bias is turned neutral for some consolidation first. Further decline is expected as long as 1.6154 resistance holds. Break of 1.5805 will extend the fall from 1.6765 to 1.5346 key support next.

In the bigger picture, the failure to sustain above 1.6587 key resistance (2015 high), argues that up trend from 1.1602 (2012 low), is not ready to resume yet. But still, as long as 1.5346 support holds, outlook will remain bullish. Break of 1.6765 will target 61.8% retracement of 2.1127 (2008 high) to 1.1602 at 1.7488 next. However, firm break of 1.5346 key support will indicate trend reversal, with bearish divergence condition in weekly MACD, and turn outlook bearish.

Daily Pivots: (S1) 1.1263; (P) 1.1280; (R1) 1.1301; More...

Intraday bias in EUR/CHF remains neutral at this point. We're still slightly favoring the case the choppy decline from 1.1501 has completed at 1.1181 already. On the upside, break of 1.1348 will confirm this bullish case and turn bias to the upside for retesting 1.1501 next. On the downside, in case of another fall, we'd expect strong support from 1.1154/98 support zone to contain downside to bring rebound.

In the bigger picture, price actions from 1.2004 medium term top is seen as a correction only. Downside should be contained by support zone of 1.1198 (2016 high) and 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to complete it and bring rebound. A break of 1.2 key resistance is still expected in the medium term long term. However, sustained break of the mentioned support zone will mark reversal of the long term trend. In that case, 1.0629 key support will be back into focus.

Daily Pivots: (S1) 1.3234; (P) 1.3259; (R1) 1.3284; More...

USD/CAD's consolidation from 1.3180 is in progress but stays below 1.3323 minor resistance. Intraday bias remains neutral first. On the downside, break of 1.3180 will resume the fall from 1.3664 and target 61.8% retracement of 1.2781 to 1.3664 at 1.3118. We'll start to look for bottoming sign below there. On the upside, above 1.3323 will suggest short term bottoming and turn bias back to the upside for stronger rebound.

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 1.2993) holds. Sustained break of 1.3793 will pave the way to retest 1.4689 (2015 high).

Daily Pivots: (S1) 0.7149; (P) 0.7180; (R1) 0.7200; More...

AUD/USD's retreat from 0.7235 is in progress but stays above 0.7116 minor support. Intraday bias remains neutral first. 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. On the upside, above 0.7235 will extend the rebound. But upside should be limited by 0.7393 resistance to bring reversal.

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).