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UK International Trade Minister Liam Fox emphasis today that 'the government will want to leave with a deal but the government will want to prepare for no deal if it's impossible to get any agreement through the House of Commons. That would be the default policy." He added that "I don't regard no deal as national suicide. I think that no deal would damage our economy but I think it's survivable. I think no Brexit, politically, is a disaster from which we might not recover."

Separately, RTE News reported the EU is going to issue a letter to the UK today, with a series of reassurances on the Irish backstop. EU might reiterate that the backstop itself is not the preferred solution. But it does help avoiding a hard border. Also, EU will emphasize there is no attempt to "annex" Northern Ireland. But EU will also insist that there will be no renegotiation of the Brexit deal, including the Irish backstop. It's over all, hardly anything new. UK Prime Minister Theresa May is set to make a statement at 1530GMT regarding the so called new assurances from the EU.

European and US futures are trading lower as investors are reacting to the adverse Chinese economic number. But before we go into that, the equity investors can still proudly say that it hasn’t been extremely rough so far this year by looking at the broader indices such as S&P up 3.57%, the Dow Jones up 2.87% and the Nasdaq index which is maintaining its strong gains of 5.07%. Of course, investors have to thank the Fed. Jerome Powell, the chairman of the Federal Reserve took some important steps in maintaining the market confidence.

It wasn’t simply possible for the Fed to let the fruit of their hard labour go to waste. The jawboning had to stop at some stage, and I do think that the Fed understood clearly what the market needs are. For instance, the current water down version about the tightening of the balance sheet was a decent move. Reducing the size of the balance sheet while increasing the interest rate created too much shock for the economy. The system needs some time for recovery now.

Having said this, the jury is still out and by no means, we are out of woods. The soggy growth over in China and the ongoing trade war between the US and China have everything on a tight leash. Under these circumstances, the market participants are confident that the Fed isn’t going to increase the interest rate anytime soon, at least not in the coming six months. This has brought some stability for the investors to a large degree.

However, the more cautious outlook is coming from China today. Investors are once again on the back foot in relation to this and they do not feel comfortable about the risk on trade. The Chinese trade numbers released today got all the alarm bells ringing once again, the country's export fell sharply to 4.4%. This is as devastating as this can be because the previous number was 5.4%. If you ever need any evidence that how the trade spat can impact the country's economic health then this number is clearly a major factor here. The lower export number also means that lower jobs which means another direct impact on the economy. Donald Trump may be pleased to see these numbers because it shows that his policies have clearly brought China to its knees. Clearly, Beijing must do something to put a stop to this chaos. President Trump may actually beat his chest even more by looking at the fact that China's trade surplus with the US is at a 10-year high.

Back home, it is all about Brexit and all eyes are one thing: how bad Theresa May is going to lose in the parliament. The prime minister clearly doesn’t understand that no one really likes the deal she has made with the EU. The EU policy members who are involved with the Brexit divorce process are actually enjoying this moment because they literally have a win-win situation; they have put the UK in an extremely difficult position and they have all the leverage in relation to what they can say. We are expecting the markets to remain on the edge on the back of this and we don’t expect the Brexit divorce vote to have any success in the parliament tomorrow. The British pound and the FTSE 100 are the two major choices for investors who like volatility and of course there is abundance o this.

Gold has been consolidating since January 2 and has been stuck in a channel with resistance boundary the upper Bollinger band around 1297 and support boundary the 1279 barrier. The neutral picture in the short-term looks to last for a while longer after prices failed to surpass the seven-month high of 1298.47 several times in the preceding sessions.

Technically, in the 4-hour chart, the RSI indicator is sloping marginally up while in positive territory and the MACD oscillator holds near the trigger line in the bullish area.

Should the price edge higher, it would likely retest the seven-month high of 1298.47 and then the 1300 strong psychological barrier. Also, if the price jumps above this peak it could challenge the 1309 hurdle, taken from the high on June 14.

Alternatively, if the price slips lower and starts a bearish retracement, immediate support is coming from the mid-level of the Bollinger band and the 40-simple moving average (SMA) around 1289. Should this fail to hold, subsequent declines could open the way for the lower Bollinger band around 1282 and then the next target is coming at 1279.

Concluding, gold prices are still bullish in the and medium-term as they are holding above the five-month ascending trend line.

The Kiwi and the Aussie weakened during the Asian session today as the Chinese Trade data were released. Despite the data showing a widened trading surplus reaching 57 billion USD (vs. 51.5B expected), the import and export growth rates showed a substantial contraction. Both the Kiwi and the Aussies weakened as concerns about a possible sharp Chinese economic slowdown increased. The data was in contrast to the market sentiment which was boosted by the improving US-Sino relationships and the stimulus provided by Chinese authorities. Analysts point out though that the market may be overestimating China's economic slowdown. NZD/USD dropped during the Asian session today, breaking clearly the 0.6825 (R1) support line (now turned to resistance). We could see the Kiwi staying on a bearish mood currently, as the Chinese trade data show a significant contraction of the import rate. Should the pair remain under the market's selling interest, we could see it breaking the 0.6780 (S1) support line and aim for the 0.6725 (S2) support barrier. Should the market favor the pair's long positions, we could see the pair breaking the 0.6825 (R1) resistance line and aim for the 0.6860 (R2) resistance hurdle.

Possible Brexit delay lifts pound, however outlook seems bearish

The GBP was lifted against the USD on Friday on growing market expectations that Brexit could be delayed beyond 29th of March. Theresa May still has to face a UK parliament vote on Tuesday though about Brexit and most analysts point out that she may lose the vote. The UK Prime Minister has warned that Parliament will kill Brexit by voting down her plan, while blocking Brexit could be a disaster for British democracy. Should the UK government lose the vote in the UK parliament on Tuesday, the opposition Labour party has vowed to proceed with a confidence vote. Analysts also point out that the increased UK political uncertainty, has widened the range of possible prices for cable as either case is possible and no forecast about the final Brexit outcome can currently be reliable. We maintain a bearish outlook for the pound, as Brexit uncertainty continues to dominate its direction. Cable got a lift on Friday breaking the 1.2795 (S1) resistance line, now turned to support and stabilised later on. Never the less we maintain a bearish outlook for the pair as Brexit uncertainty continues to pressure the pound. Should the pair find fresh buying orders along its path, we could see the pair breaking the 1.2880 (R1) resistance line and aim for the 1.2960 (R2) resistance level. Should on the other hand the pair's direction be dictated by the bears, we could see it breaking the 1.2795 (S1) support line and aim for the 1.2700 (S2) support area.

In today's other economic highlights:

In today's European session, we get Sweden's CPI rates for December and later on Eurozone's industrial production growth rate for November.

As for the week ahead:

On Tuesday, we get France's final CPI (EU Norm.) rate for December, Germany's annual GDP for 2018 and from the US the New York Fed Mfg index for January. On Wednesday, we get Japan's Corporate Goods Prices for December and machinery orders growth rate for November, Germany's final HICP rate for December, Turkey's CBRT interest rate decision, and UK's headline and core inflation rate and the PPI Input rate, all for December. Form theUS we get the retail sales growth rate for December. On Thursday, we get Eurozone's final HICP rate for December and from the US the Philly Fed Index for January. On Friday, we get Japan's inflation rates for December, UK's retail sales growth rates for December, Canada's inflation rates for December and from the US the industrial production growth rate for December and the preliminary U. Michigan Sentiment Index for January.

GBP/USD H4

Support: 1.2795 (S1), 1.2700 (S2), 1.2630 (S3)
Resistance: 1.2880 (R1), 1.2960 (R2), 1.3070 (R3)

NZD/USD H4

Support: 0.6780 (S1), 0.6725 (S2), 0.6675 (S3)
Resistance: 0.6825 (R1), 0.6860 (R2), 0.6900 (R3)

Daily Pivots: (S1) 1.5841; (P) 1.5937; (R1) 1.5986; More....

With 1.6153 minor resistance intact, the decline from 1.6765 could extend lower. Sustained break of 61.8% retracement of 1.5346 to 1.6765 at 1.5888 will pave the way to 1.5346 key support level. On the upside, break of 1.6154 resistance is needed to indicate completion of the decline from 1.6765. Otherwise, further fall will remain in favor even in case of recovery.

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.

• Sterling spikes higher, looks to parliamentary vote on Brexit deal tomorrow
• Risk aversion returns after Chinese trade data disappoint
• Euro inches lower as ECB officials strike a more concerned tone

Pound outperforms on reports of Article 50 delay

The British pound advanced against all its major peers on Friday, after UK media reported that the government is considering delaying the official deadline for exiting the EU on March 29, if it loses the crucial Brexit-deal vote in Parliament tomorrow. Although the Prime Minister’s office denied this, the market reaction suggests that investors nevertheless consider it a very real possibility, particularly given the lack of any other pragmatic options.

In truth, with Parliament increasingly taking control over the Brexit process lately, and most lawmakers being intent on avoiding a no-deal exit at all costs, the biggest tail risk for the pound seems to be abating. Meanwhile, the probability for other sterling-positive scenarios – such as a revised version of May’s deal eventually passing or even a second referendum– has likely risen. Yet, the pound has not really reacted to this shift in the big picture yet, most likely due to the short-term downside risks that are currently at play. Hence, while sterling may drop tomorrow in case PM May loses the vote, any downside may be relatively limited and perhaps viewed as a renewed buying opportunity by some investors – though a lot may depend on the margin of the defeat as well.

Aussie and kiwi weighed down by poor Chinese trade data

Fears that the Chinese economy is slowing resurfaced overnight, after the nation released a batch of particularly disappointing trade data for December. Both exports and imports fell from a year earlier, missing forecasts for a yearly rise, and providing the latest piece of evidence that the trade dispute with the US is “starting to bite”.

The news sent the China-sensitive aussie and kiwi lower, as markets likely priced in a dimmer outlook for exports from Australia and New Zealand to China. Beyond the antipodeans, futures tracking the major US equity indices – like the S&P 500 – are pointing to a lower open today, while the defensive Japanese yen is outperforming. Indeed, these trade figures could cause Trump to be even more hawkish in his demands, as he may view them as a sign China is suffering more than the US. Yet, it remains more likely than not that a deal will eventually be struck, given that Trump wants to support markets and score a “victory” before the 2020 election, while Xi seeks to stabilize Chinese growth.

ECB officials appear worried – prelude of next week’s meeting?

The euro was among the worst performers on Friday, and the dollar capitalized on that weakness. Although the catalysts for this drop in euro/dollar weren’t clear, the move coincided with a dovish shift in tone by ECB officials. Specifically, Governing Council members Nowotny and Makúch both seemed worried in their latest comments, highlighting the recent slowdown in growth, most notably in Germany.

To put things into context, the central bank will meet next week and the question is whether it will downgrade its assessment of growth risks to “tilted to the downside”, from “roughly balanced” now – something it hinted at the previous meeting. Given that the bloc’s data pulse has weakened further since then, and combining that with cautious-sounding comments from typically hawkish officials like Nowotny, it looks increasingly likely such a downgrade may indeed take place.

Today, the bloc’s industrial production figures for November are due out, though this is usually not a major marker mover.

Daily Pivots: (S1) 0.8883; (P) 0.8972; (R1) 0.9023; More...

Despite recovering mildly today, intraday bias stays on the downside in EUR/GBP, with focus on 0.8927 support. Sustained break will confirm near term reversal and target 61.8% retracement of 0.8655 to 0.9101 at 0.8825 and below. On the upside, break of 0.9101 resistance is needed to confirm rise resumption. Otherwise, risk will now stays on the downside 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 0.9620 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) 1.1259; (P) 1.1300; (R1) 1.1327; More...

Intraday bias in EUR/CHF remains neutral for the moment. We're 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.

Pivot (invalidation): 52.10

Our preference Short positions below 52.10 with targets at 50.20 & 49.50 in extension.

Alternative scenario Above 52.10 look for further upside with 52.90 & 53.35 as targets.

Comment The RSI advocates for further decline.

Pivot (invalidation): 15.6500

Our preference Short positions below 15.6500 with targets at 15.5200 & 15.4500 in extension.

Alternative scenario Above 15.6500 look for further upside with 15.7200 & 15.7800 as targets.

Comment The RSI is mixed to bearish.