Sample Category Title

Pivot (invalidation): 1.3270

Our preference Short positions below 1.3270 with targets at 1.3195 & 1.3170 in extension.

Alternative scenario Above 1.3270 look for further upside with 1.3310 & 1.3340 as targets.

Comment The RSI advocates for further downside.

Pivot (invalidation): 0.9800

Our preference Long positions above 0.9800 with targets at 0.9830 & 0.9845 in extension.

Alternative scenario Below 0.9800 look for further downside with 0.9785 & 0.9760 as targets.

Comment The RSI calls for a bounce.

Pivot (invalidation): 2530.00

Our preference Long positions above 2530.00 with targets at 2583.00 & 2637.00 in extension.

Alternative scenario Below 2530.00 look for further downside with 2473.00 & 2440.00 as targets.

Comment The RSI is mixed to bullish.

Pivot (invalidation): 10720.00

Our preference Long positions above 10720.00 with targets at 10910.00 & 10980.00 in extension.

Alternative scenario Below 10720.00 look for further downside with 10680.00 & 10610.00 as targets.

Comment Investors have to remain cautious since these levels may trigger profit taking.

Pivot (invalidation): 49.20

Our preference Long positions above 49.20 with targets at 51.25 & 52.15 in extension.

Alternative scenario Below 49.20 look for further downside with 48.70 & 48.30 as targets.

Comment The RSI advocates for further advance.

Pivot (invalidation): 15.5600

Our preference Long positions above 15.5600 with targets at 15.7500 & 15.8100 in extension.

Alternative scenario Below 15.5600 look for further downside with 15.4800 & 15.4200 as targets.

Comment The RSI advocates for further advance.

US and China delegations ended the prolonged three-day trade negotiation meeting in Beijing with some positive signs. Ted McKinney, U.S. Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs, said there were a "good few days" in China, and the meeting "went just fine". He added that "It's been a good one for us."

Chinese Foreign Ministry spokesman Lu Kang said "extending the consultations shows that the two sides were indeed very serious in conducting the consultations."

Pivot (invalidation): 1281.25

Our preference Long positions above 1281.25 with targets at 1287.00 & 1290.00 in extension.

Alternative scenario Below 1281.25 look for further downside with 1279.00 & 1276.00 as targets.

Comment The RSI is mixed to bullish.

• Rates: 2019 Fed rate cut no longer discounted
  Core bonds lost more ground with US Treasuries underperforming German Bunds. Markets no longer discount a Fed rate cut this year. Positive risk sentiment, fresh supply and higher oil prices add to the recent change in settings, originally inspired by Fed chair Powell comments and strong US eco data. Today’s eco calendar is thin. US central bank speeches are wildcards.
• Currencies: EUR/USD holding within reach of 1.15 resistance
  EUR/USD lost only marginal ground yesterday despite poor EMU eco data. The dollar continues trading with a soft bias. A positive risk sentiment and expectations for a softer, more flexible Fed going forward are blocking more sustained USD gains. Recent technical rebound of sterling proved short-lived as the brexit process enters a next key phase.

The Sunrise Headlines

• US equity markets climbed higher again yesterday with all major indices gaining around 1% as US-Sino trade talks move in the right direction. Asian equities opened in green as well with Chinese equities outperforming.
• Mid-level trade talks between the US and China were extended for a third day, adding optimism to ongoing progress. US President Trump is said to seek an agreement in the near future in hopes of boosting financial markets.
• US President Trump addressed the US people on the US-Mexico border issue. He urged Congress to provide billions more to combat illegal migration but did not declare a national emergency to bypass Congress, as some initially feared.
• UK PM May lost her first Parliamentary vote of 2019 as the House of Commons defeated her on an amendment to the finance bill. That amendment would allow the UK government to raise taxes in the event of a no-deal Brexit.
• The World Bank has cut its growth outlook for the global economy. It sees the downside risks to the world economy as more acute. The bank expects a global growth of 2.9% in 2019, down from the 3.0% projection in June.
• The Chinese government is preparing measures to boost the consumption of cars and household appliances. The move is aimed to revive automobile demand, as it slowed down for the first time this year in over twenty years.
• Today’s economic calendar contains Minutes of the previous Fed meeting. The Polish and Canadian central banks meets. Fed Bostic, Evans and Rosengren and BoE Carney speak. The US, Germany, Ireland and Portugal tap the bond market.

Currencies: EUR/USD Rebound Still Blocked At 1.15 Resistance

EUR/USD 1.15 level stays within reach

Global sentiment improved yesterday as US policy makers said that progress is being made in the US-China trade talks. Stocks rebounded further and core (US & EMU) yields rose. The impact on the dollar was again modest given the price moves in interest rates and equities. A risk-on sentiment often favours the euro (and other ‘risk currencies’) more than the dollar. However, the impact of the global risk rally on EUR/USD was mitigated by poor EMU/German data. The widening of US/German interest rate differentials also prevented further EUR/USD gains. At the same time, USD/JPY gained only modestly despite higher US yields and a risk-on sentiment. For now, FX markets (especially the USD) stay in some kind of wait-and-see modus. EUR/USD finished at 1.1441 (from 1.1474). USD/JPY closed the day at 108.75 (from 108.72).

The risk rally continues overnight as the US and China are extending trade talks. President Trump taking no new steps on the financing of the wall with Mexico in its television address yesterday also eased investors’ concerns. Chinese equities outperform a broader regional rally, supporting the yuan (USD/CNY near 6.8390). Commodity currencies are profiting from a rebound in the oil price with the Canadian dollar extending its rally. The dollar is losing a few ticks. EUR/USD is trading near 1.1450. USD/JPY hovers in the high 108 area. There are few eco data in EMU and in the US today. Markets will keep an eye at Fed speakers and at the minutes of the December Fed meeting. Markets will look for more indications on Fed policy flexibility. Also keep an eye at the auction of 10-y US Treasuries. Yesterday’s sale of 3-y bonds received only mediocre investor interest. A difficult sale of LT US bonds might raise LT US interest rates, but probably won’t help the dollar. Yesterday, we advocated a cautious stance on the dollar and saw the downside in EUR/USD rather well protected as markets anticipate a softer, flexible Fed. We hold that view. For now, the established ranges remain in place, but if the risk rebound continues, a retest of the 1.15 area remains possible. The 1.1621 mid-Oct top is next reference. Recent ‘sterling strength’ proved short-lived yesterday as the political debate on Brexit returned to the forefront. UK PM May lost a vote in Parliament limiting her (financial) room of manoeuvre in case of a no-deal Brexit. Uncertainty on the next steps in the brexit process probably will cause investors to stay cautious on sterling long exposure going into next week’s brexit vote (scheduled for Jan 15).

EUR/USD: holding up well despite poor EMU eco data

AUDUSD is continuing last week’s rebound but with slower momentum, reaching one-month highs at 0.7170 today and at the same time confirming another lower low at 0.6746(decade low) within its long downward pattern. The short-term bias looks positive as the MACD keeps gaining ground above its red signal line, while the RSI seems to be making its way up above its 50-neutral mark, though more progress is needed from the latter.

The 50-day simple moving average (MA) currently at 0.7185 could be a trigger point for steeper bullish action if the pair manages to break the line. This is also slightly below the 50% Fibonacci of 0.72 of the donwleg from 0.7675 to 0.6746 and hence should attract some attention. Higher, resistance could run towards the 61.8% Fibonacci of 0.7316, a strong barrier last year, though more buyers could be waiting to enter once the price breaks above the 200-day MA at 0.7335 and more importantly the previous peak of 0.7392.

However, if the pair reverses back to the downside, investors could put a stop-loss order first at the 38.2% Fibonacci of 0.7095 and then at 0.7050. If the price continues to drop, support could next come somewhere between 0.6950 and 0.6826 before the focus shifts back to the 0.6746 bottom.

In the medium-term picture, the bounce off 0.6746 turned the outlook from negative to neutral again. Chances for another bullish move are still rising as the 200-day MA keeps falling towards the 50-day MA.