Sample Category Title

The 23.00% Fibonacci retracement level at the 1,295.57 mark retraced the yellow metal during the morning hours on Monday.

It is expected that the 23.60% Fibonacci retracement level will keep retracing the gold during the trading session on Monday. Most likely, the yellow metal will be trading sideways to stay at the 1,285.00 level for the rest of the day.

However, today's US ISM Non-Manufacturing PMI data release at 15:00 GMT could push the rate to break the resistance level of the 23.60% Fibo to continue the surge towards the upper boundary of the dominant pattern line at the 1,300.00 mark.

Daily Pivots: (S1) 1.5905; (P) 1.6106; (R1) 1.6209; More....

Intraday bias in EUR/AUD remains on the downside as pull back fro 1.6765 is in progress, for 55 day EMA (now at 1.5919) and possibly below. On the upside, above 1.6205 minor resistance will argue that the pull back is completed and turn bias back to the upside for retesting 1.6765.

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.

Daily Pivots: (S1) 1.1227; (P) 1.1248; (R1) 1.1266; More...

Intraday bias in EUR/CHF remains neutral for the moment. In case of another fall, we'd expect strong support from 1.1154/98 support zone to contain downside to bring reversal. On the upside, above 1.1348 resistance will turn bias to the upside for retesting 1.1501 resistance first. However, Sustained break of 1.1154/98 will carry larger bearish implications and extend the whole decline from 1.2004 high.

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.

• Rates: Change in tone by Fed chair Powell
  The stretched core bond rally fell prey to profit taking last Friday following a stellar US payrolls report and a dovish verbal turn by Fed chair Powell. He suggested readiness to alter policy to address downside eco risks. Will his genuflection be sufficient to end a volatile market period? Supply heats up this week which might weigh on bonds.
• Currencies: dollar ignores strong payrolls as Powell calls flexibility in Fed policy
  The dollar profited only temporarily from very strong payrolls on Friday as Fed's Powell comforted markets as he committed to a flexible Fed policy. A positive risk sentiment and a perceived softer Fed might remain a tentative USD negative. However, EUR/USD is holding in the 1.12/1.15 trading range, for now.

The Sunrise Headlines

• US equities spurred higher on Friday with gains up to 4% on a strong job report and soothing words of Fed chair Powell. Asian equities opened this week's trading in green as well, with Japanese indices outperforming.
• The US and China start face-to-face trade talks today as a US delegation, led by Deputy Trade Representative Jeffrey Gerrish, has arrived in Beijing. Topics on the agenda are intellectual property, agriculture and industrial purchases.
• US President Trump said his demand for a wall along the US-Mexico border could be satisfied by a steel barrier instead of a concrete wall. In the meantime, the US government shutdown heads into its third week.
• China's top planning agency has approved $125bn in rail projects across the country in the past month, as it continues fiscal spending to counteract its economic slowdown.
• The Brexit theatre wakes up from its hibernation as politicians return to Westminster today. PM May is still seeking to win over critics of her Brexit deal, as a crucial vote in Parliament is planned for next week (Jan 15?!).
• Japan's services sector slowed in Dec. with the Nikkei PMI Services dropping to 51.0 from 52.3 in Nov., caused by poor weather and weaker demand growth. The Composite PMI declined to 52.0, down from 52.4 a month before.
• Today's economic calendar covers only the ISM Non-Manufacturing Index (Dec) in the US, as other data is cancelled due to the government shutdown. The EMU calendar remains rather empty, with only retail sales catching our eye.

Currencies: Dollar Ignores Strong Payrolls As Powell Calls Flexibility In Fed Policy

Dollar eases on Powell's flexibility call

There were plenty of eco data on both sides of the Atlantic on Friday, but the market focus was on the US payrolls and on the interview of Fed's Powell (together with its predecessors Bernanke & Yellen). EMU data (PMI's and CPI) were again soft but left hardly any traces on FX markets. EUR/USD hovered near the 1.14 level. The December payrolls were very strong with both job growth and wage growth beating expectations. US yields and the dollar rose, but USD gains remained modest given the magnitude of the payrolls' beat. EUR/USD dropped to the mid 1.13 area. US gains were reversed as the headlines of Powell's interview flashed on the screens. Powell maintained a positive view on the economy, but stressed that the Fed could be flexible if necessary, both in its interest rate policy and in managing the balance sheet. His comments triggered an outright risk rebound and propelled EUR/USD back to pre-payrolls levels. The pair closed the session little changed at 1.1395. USD/JPY was marginally supported by the rise in US yields but gains were small given the sharp risk rebound on other markets. The pair closed the session at 108.51 (from 107.68). This morning, Asian equities are joining the post-Powell risk rebound from Friday, but gains as modest compared the US rally on Friday. Even so, the dollar remains slightly in the defensive. EUR/USD is changing hands in the 1.1420 area. USD/JPY is drifting back lower in the 108 big figure. The yuan also rebounds (USD/CNY < 6.85). Later today, most US data releases will be delayed (government shutdown) but the non-manufacturing ISM will be published. A modest decline from 60.7 to 59.0 is expected. Considering the steep decline in the manufacturing measure, risk are probably to the downside. The Sino-US trade talks are a wildcard. The jury is still out whether Powell's comments have eased market uncertainty. Even so, Powell signalling more Fed flexibility is a cautious USD negative. The modest rebound of USD/JPY on Friday also suggests some underlying USD caution. For now, the EUR/USD 1.12/1.15 trading range looks still solid, but a retest of the 1.15 barrier might be on the cards.

The risk rebound on global markets also supported sterling on Friday, with EUR/GBP closing well below 0.90. This week, the political debate on Brexit will resume ahead of a new Brexit vote that is scheduled for Jan 15. Despite recent cautiously positive GBP-momentum, we remain cautious on sterling as long as the uncertainty on the Brexit process remains as misty as it is now.

EUR/USD: USD ceding ground as Powell admits on Fed flexibility

Daily Pivots: (S1) 1.3331; (P) 1.3415; (R1) 1.3458; More...

Intraday bias in USD/CAD remains on the downside as the pull back from 1.3664 short term top is in progress. As such decline we'd expect strong support from 38.2% retracement of 1.2781 to 1.3664 at 1.3327, which is close to 55 day EMA (now at 1.3324), to contain downside and bring rebound. On the upside, above 1.3469 minor resistance will turn bias back to the upside for retesting 1.3664 high. However, sustained break of 1.3327 will bring deeper fall to 61.8% retracement at 1.3118 instead.

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).

The British pound is trading well above the 1.2700 level against the US dollar in early Monday trade, as speculation mounts that British PM Theresa May could delay the planned Brexit vote in parliament this week. The 1.2700 level remains the pivotal area to watch for gauging the intraday sentiment surrounding the GBPUSD pair. Continued bullish advancement above the 1.2740 level will likely lead to an eventual test of the former weekly trading high, at 1.2810.

The GBPUSD pair is intraday bullish while trading above the 1.2700 level, key technical resistance is now found at the 1.2740 and 1.2810 levels.

If the GBPUSD pair trades under the 1.2700 level, sellers are likely to test the 1.2660 and 1.2618 levels.

The euro currency remains well supported against the US dollar in early Monday trade, following a dovish speech from Federal Reserve Chair Powell on Friday. The EURUSD is expected to advance higher on an intraday basis while the pair trades above the 1.1410 level. A daily price close above the pairs 100-day moving average is essential for further technical buying in the EURUSD.

The EURUSD pair is intraday bullish while trading above the 1.1410 level, key technical resistance is found at 1.1470 and 1.1500 levels.

If the EURUSD pair moves under the 1.1410 level, further losses towards the 1.1360 and 1.1330 levels remain possible.

Daily Pivots: (S1) 0.7033; (P) 0.7079; (R1) 0.7165; More...

Intraday bias in AUD/USD remains on the upside as rebound from 0.6722 short term bottom is extending. But upside should be limited below 0.7393 resistance. On the downside, break of 0.7025 minor support will turn bias back to the downside for retesting 0.6722 low. Overall, larger down trend from 0.8135 is expected to resume later after consolidation completes.

In the bigger picture, the failure to sustain below 0.6826 (2016 low) suggests that the long term down trend is now 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).

Bitcoin has broken above the important $3,960 resistance level in early Monday trade, which has negated the formation of a bearish triple-top pattern. The move higher is being helped by positive sentiment in the cryptocurrency market, with most major cryptocurrencies advancing intraday. Buyers must now go on to break the $4,400 resistance level in order to trigger a large inverted head and shoulders pattern.

The BTCUSD pair is bullish while trading above the $3,960 level, key technical resistance is found at the $4,200 and $4,400 levels.

If the BTCUSD pair trades below the $3,960 level, heavy selling towards the $3,660 and $3,300 levels appears likely.

Asian markets firmed in early trading as investors cheered the talks between the United States and China. Over the weekend, officials from Washington travelled to Beijing where talks will happen this week. Investors believe that these talks will lead to a deal that could put an end to the trade war. They hope that discussions will yield results this time after failing to do so last year. Both Donald Trump and Xi Jinping are desperate to have a deal especially after the recent crash in the markets of the two countries.

Data from Japan showed that the country's service sector lagged in December because of poor weather and low demand. The data from Nikkei-Markit showed that the purchasing manufacturing index dropped to 51, the lowest level in three months. This drop brought it closer to the important 50 level range. A PMI reading below 50 is an indicator of contraction in the industry. The drop was also in contrast to the growth seen in the manufacturing sector in December. The PMI data released last week saw an improvement of 52.6.

The price of crude oil continued an upward streak started a week ago. The reason for the increase is that Saudi Arabia and OPEC have started to support the crude oil market by reducing supplies. This is in line with the outcome of the OPEC meeting held in December, during which members pledged to slash production by about 1.2 million barrels. A continued reduction will see the price continue to rise although an important resistance to both Brent and WTI is nearing.

EUR/USD

The EUR/USD pair continued the upward momentum started a week ago and reached a high of 1.1430. This was the highest level since Wednesday last week. The current level is higher than the 14-day and 28-day simple moving average while the RSI has moved closer to the overbought level of 70. The weakening of the USD comes after the impressive jobs data released on Friday.

GBP/USD

The GBP/USD pair continued the strong upward momentum started last week. After falling to the YTD low of 1.2424, the pair managed to recover and is currently trading at 1.2748. The RSI on the hourly chart has continued to rise and is currently near the overbought level of 30. At the same time, the MACD remains strongly above the signal line, an indication that the upward trend could continue. However, the sharp increase in the pair's price could expose it to a sharper drop as Brexit confusion intensifies.

Brent

In December, the price of Brent crude dipped to a low of $50 a barrel. This year, the price has continued moving up and on Friday, it reached a high of $58. The surge in price came as OPEC members started slashing production and as US inventories declined. The current price is slightly below the upper line of the Bollinger Bands while the RSI indicator is signaling more upward trends. There is a likelihood that the price will continue rising as it approaches the important resistance of $60.