Sample Category Title

Daily Pivots: (S1) 1.1468; (P) 1.1512; (R1) 1.1587; More.....

With 1.1422 minor support intact, further rise is expected in EUR/USD. Rebound from 1.1215 is correcting whole decline from 1.2555, if not reversing the down trend. Further rise should be seen to 1.1621 resistance first. Break will target 38.2% retracement of 1.2555 to 1.1215 at 1.1727 next.

In the bigger picture, as long as 1.1814 resistance holds, down trend down trend from 1.2555 medium term top is still in progress and should target 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. However, break of 1.1814 will confirm completion of such down trend and turn medium term outlook bullish.

Daily Pivots: (S1) 1.2724; (P) 1.2764; (R1) 1.2831; More....

Intraday bias in GBP/USD remains neutral at this point. With 1.2814 resistance intact, outlook stays bearish and larger decline is expected to resume later. On the downside, below 1.2615 minor support will turn bias to the downside for retesting 1.2391 first. Break will extend the down trend from 1.4376 and target 61.8% projection of 1.4376 to 1.2661 from 1.3174 at 1.2114 next. However, firm break of 1.2814 resistance will be an early sign of trend reversal and bring stronger rebound back to 1.3174 resistance next.

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 now 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.

Daily Pivots: (S1) 107.73; (P) 108.37; (R1) 108.76; More..

Intraday bias in USD/JPY remains mildly on the downside. The corrective rebound from 104.69 could have completed at 109.08 already. Deeper fall would be seen back to retesting 104.69 low first. In case of another recovery, upside should be limited 109.46 minor resistance. Overall, larger downtrend from 118.65 (2016 high) is expected to resume finally through 104.62 after current consolidation from 104.69 completes.

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) 0.9710; (P) 0.9766; (R1) 0.9799; More....

USD/CHF recovers after dropping support from near term channel. Intraday bias is turned neutral for some consolidations. But upside of recovery should be limited well below 0.9963 resistance to bring another decline. Current fall from 1.0128 should be correcting whole rise from 0.9186. Below 0.9716 will target 0.9541 (61.8% retracement of 0.9186 to 1.0128 at 0.9546).

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.

The forex markets is rather mixed today, partly thanks to fading momentum in global stock rebound. Australian Dollar is so far the strongest one for today. Dollar follows as second strongest, paring some of yesterday's losses. Yen is the third strongest. But no apparent momentum is seen in all three. On the hand, Swiss Franc is the weakest for today so far, followed by Sterling and then Canadian Dollar.

Over the week, Dollar remains the worst performing one as Fed officials generally want patience before raising interest rate again. Richmond Fed Thomas Barkin also expressed some concern over the economy. Comments from Fed chair Jerome Powell, James Bullard and Charles Evans later today will likely echo similar cautiousness.

Technically, Dollar is generally weak except versus GBP/USD. However, downside momentum is not too convincing. AUD/USD and USD/CAD have both displayed loss of momentum. EUR/USD and USD/CHF also quickly pared back much of yesterday's move. A focus today will be on whether Dollar would suffer renewed selling, or stage a stronger recovery.

In other markets, FTSE is dropping -0.19%, DAX is down -0.15% and CAC is down -0.52%. German 10 year yield is down -0.0179 at 0.204. Earlier in Asia, Nikkei closed down -1.29%. Singapore rose 0.81%. Hong Kong HSI rose 0.22% but China Shanghai SSE dropped -0.36%. Japan 10-year JGB yield dropped -0.0061 to 0.025 but stays positive.

US initial jobless claims dropped -17k to 216k

US initial jobless claims dropped -17k to 216k in the week ending January 5, below expectation of 226k. Four-week moving average of initial claims rose 2.5k to 221.75k. Continuing claims dropped -28k to 1.722M in the week ending December 29. Four-week moving average of continuing claims rose 15.25k to 1.721M.

Released from Canada, new housing price index rose 0.0% mom in November, matched expectations. Building permits rose 2.6% mom, beat expectation of -0.5% mom.

Released earlier today, UK BRC retail sales monitor dropped -0.7% yoy in December versus expectation of -0.3% yoy. China CPI slowed to 1.9% yoy in December, down from 2.2% yoy and missed expectation of 2.1% yoy. PPI slowed to 0.9% yoy, down from 2.7% yoy and missed expectation of 1.6% yoy. Japan leading index dropped 0.3 to 99.3 in November.

Fed Barkin: Economic numbers strong, but business sentiment weakened considerably

In a prepared speech, Richmond Fed President Thomas Barkin said " as we enter 2019, I hear a lot of concern" regarding growth. Such concerns were driven by "trade, international economies or politics." And some were "market driven, as volatility has increased and the yield curve has narrowed."

Also, he noted that "some companies are still feeling hungover from the Great Recession" and that's a real issue. That is, "as the economy's numbers look strong but business sentiment has weakened considerably."

Barking concluded that "the United States faces a slower growth trend that isn't in any of our interests. Changing the slope is doable via initiatives to expand the workforce and boost productivity growth."

UK Leadsom: Brexit plan B will be ready within days if the deal is voted down

In UK, Andrea Leadsom, the Leader of the House of Commons, said the government will set out its plan B should Prime Minister Theresa May's Brexit deal is voted down next week. She told the Parliament that "the prime minister has shown her willingness to always return to this House at the first possible opportunity if there is anything to report in terms of our Brexit deal and we will continue to do so."

Meanwhile, May's spokesman said she is still working on more assurances from the EU on the Brexit deal, in particular the Irish backstop. May still hope to convince MPs to vote for the agreement on January 15.

Opposition Labour leader Jeremy Corbyn said the party would vote against the deal. And after that it's voted down, "an election must be the priority. It is not only the most practical option, it is also the most democratic option." Though, he's open that "if a general election cannot be secured, then we will keep all options on the table, including the option of campaigning for a public vote."

MOFCOM: China-US trade talks enhanced mutual understanding and laid foundation for resolving mutual concerns

In a relatively brief statement, the Chinese Ministry of Commerce said the trade talks with the US this week were extensive and laid down the foundation for resolving trade friction between the countries.

The MOFCOM statement said "The two sides actively implemented the important consensus of the two heads of state and conducted extensive, in-depth and meticulous exchanges on trade issues and structural issues of common concern, which enhanced mutual understanding and laid the foundation for resolving mutual concerns. Both parties agreed to continue to maintain close contact."

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9710; (P) 0.9766; (R1) 0.9799; More....

USD/CHF recovers after dropping support from near term channel. Intraday bias is turned neutral for some consolidations. But upside of recovery should be limited well below 0.9963 resistance to bring another decline. Current fall from 1.0128 should be correcting whole rise from 0.9186. Below 0.9716 will target 0.9541 (61.8% retracement of 0.9186 to 1.0128 at 0.9546).

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.

Economic Indicators Update

USDCHF has moved considerably lower from the 20-month high of 1.0130, recording a new almost four-month low of 0.9715 earlier today and touching the long-term ascending trend line. The price retraced more than the 38.2% Fibonacci retracement level of 0.9770, taken from the downward movement from 0.9185 to 1.0130. Zooming to today’s intraday bullish move, the RSI is sloping marginally up in the negative zone, however, the MACD oscillator confirms the bearish structure as it holds below the trigger and zero lines.

Should the pair continue to head lower the next level to have in mind is the 50.0% Fibonacci mark of 0.9655, which holds below the uptrend line. A break of this level would deepen the bearish risks and open the way towards the 61.8% Fibonacci, which stands near the 0.9540 support level, shifting the outlook to a more negative one.

On the flipside, if the price successfully surpasses the 38.2% Fibonacci of 0.9770, it could increase chances for upside movements until the 20-day simple moving average (SMA) near 0.9880. Slightly above this level, the pair could stop around the 23.6% Fibonacci region of 0.9900.

In the medium-term, the outlook should remain bullish if the price fails to slip beneath the significant diagonal line, which has been standing since February 2018.

EURAUD and EURCAD are trading alike, both trading bearish and now unfolding a three-wave corrective recovery which can be labelled as wave 2 of a bigger upcoming impulse. Once wave 2 fully develops, that is when more weakness will follow in favor of Aussie, and in favor of commodity currencies, which are already stronger that the euro.

Resistance for EURAUD is at 1.623 level, while EURCAD can see limited upside near the 1.530/1.545 region.

EURAUD, 1h

EURCAD, 1h

The Canadian dollar continues to climb and has posted six straight winning sessions. On Wednesday, USD/CAD dipped below the 1.32 level for the first time since December 4. In Thursday’s North American session, the pair is trading at 1.3230, up 0.15% on the day. On the release front, Canadian Building Permits jumped 2.6%, crushing the estimate of -0.5%. The New Housing Price Index remained stuck at 0.0%, matching the forecast. In the U.S, unemployment claims dropped sharply to 216 thousand, below the forecast of 226 thousand. On Friday, the U.S. releases CPI and Core CPI, which should be treated as market-movers.

The Bank of Canada held the benchmark rate at 1.75% on Wednesday, where it’s been pegged since October. The bank policy statement was somewhat on the dovish side, as policymakers highlighted their concerns for the economy. These included low oil prices, an overpriced housing market and the global trade war. The Canadian economy is highly dependent on exports, and a weaker global economy has put a crimp in the export sector. The Canadian dollar had a dismal 2018, falling 8.4%. However, it’s been a stellar January for the currency, which has jumped 3.0%, recovering the losses seen in December. The loonie is sensitive to the movement in equity markets, and higher risk appetite has boosted the currency. The BoC remains cautious, and is likely to hold off on interest rate hikes until the current turmoil in the equity markets eases.

The U.S. dollar’s retreat continued on Wednesday, after the release of the FOMC minutes of the December meeting. At the meeting, the Fed raised rates for a fourth time in 2018, culminating a very aggressive stance. This was reflected in the rate statement, but then came the thumbs-down from investors, who wanted a more dovish approach, and sent the equity markets into a tailspin. Fed policymakers have since made a sharp U-turn and are sounding much more cautious about future rate hikes. The minutes noted low inflation meant that the Fed can “afford to be patient about further policy firming”. Even more striking, the minutes revealed that at the December meeting, some policymakers opposed a rate hike, arguing that inflation was too low to warrant higher rates. The new dovish stance from the Fed has relieved investors and helped stabilize the stock markets, but has hurt the U.S. dollar, with some analysts predicting a cut in rates late this year.

In a prepared speech, Richmond Fed President Thomas Barkin said " as we enter 2019, I hear a lot of concern" regarding growth. Such concerns were driven by "trade, international economies or politics." And some were "market driven, as volatility has increased and the yield curve has narrowed."

Also, he noted that "some companies are still feeling hungover from the Great Recession" and that's a real issue. That is, "as the economy's numbers look strong but business sentiment has weakened considerably."

Barking concluded that "the United States faces a slower growth trend that isn't in any of our interests. Changing the slope is doable via initiatives to expand the workforce and boost productivity growth."

Full speech here.

US initial jobless claims dropped -17k to 216k in the week ending January 5, below expectation of 226k. Four-week moving average of initial claims rose 2.5k to 221.75k. Continuing claims dropped -28k to 1.722M in the week ending December 29. Four-week moving average of continuing claims rose 15.25k to 1.721M.

Released from Canada, new housing price index rose 0.0% mom in November, matched expectations. Building permits rose 2.6% mom, beat expectation of -0.5% mom.