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NZDUSD had a deep fall earlier today, dropping to a fresh two-month low of 0.6560. Currently, the price is trading well above this bottom, paring some of the losses and creating a base below the 20- and 40-simple moving averages (SMAs) in the 4-hour chart. The technical picture supports that the strong sell-off is likely to continue in the short-term.

Looking at momentum indicators, the RSI is lacking direction in the oversold zone, while the MACD oscillator is strengthening its negative movement below the trigger and zero lines.

Should the pair face more negative pressures, the market could meet support at the 0.6610 barrier, before it heads lower to the two-month low. A successful close below this level could see a retest of the October 31 low of 0.6505.

On the flipside, a move to the upside could see immediate resistance at the 23.6% Fibonacci retracement level of the downleg from 0.6968 to 0.6560 around 0.6656. Should the market increase positive momentum above this area, the 20-SMA near 0.6690 could be next the level for investors to focus on. A stronger barrier, though, could be found at the 38.2% Fibonacci of 0.6716.

Overall, NZDUSD has been developing in a downward tendency over the last month, following the bounce off the 0.6968 resistance level.

Daily Pivots: (S1) 1.1280; (P) 1.1388; (R1) 1.1452; More.....

Despite breaking 1.1342 minor support, EUR/USD recovered ahead of 1.1270 support. Intraday bias remains neutral first. On the downside, break of 1.1270 revive the bearish case that down trend from 1.2555 is still in progress. EUR/USD should then target 1.1186 key fibonacci level next. On the upside, however, sustained break of 1.1496 will revive the case of near term reversal, on bullish convergence condition in daily MACD. Bias will be turned back to the upside for 1.1621 resistance first. Break will target 1.1814 key resistance 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.

The US dollar remains under intense downside pressure against the Japanese yen currency in early Thursday trade, due to a heavy technical sell-off in the pair and increasing fears about a global economic slowdown. The USDJPY pair is now trading below the key May 2018 trading low, at 108.10, and is vulnerable to further losses while below this important area. Only a strong move back above the 110.00 resistance level can negate short-term bearish pressures.

The USDJPY pair is heavily bearish while trading below the 108.10 level, key technical support is now found at the 107.00 and 106.35 levels.

If USDJPY pair trades above the 108.10 level, a technical correction towards the 108.80 and 110.00 levels remains possible.

The British pound is now under heavy selling pressure against the US dollar, following a flash crash in the foreign exchange market which saw the pair hitting 1.2424. The GBPUSD pair has made a recovery above the 1.2500 level, although short-term sellers still retain control of price action. A continuation to the downside is expected if sellers can hold price below the pivotal 1.2528 level.

If the GBPUSD pair trades below the 1.2528 level, sellers are likely to test the 1.2470 and 1.2424 support levels.

If buyers can hold price above the 1.2528 level, a correction towards the 1.2600 and 1.2620 levels may occur.

Daily Pivots: (S1) 0.9824; (P) 0.9872; (R1) 0.9949; More...

USD/CHF is still staying in range of 0.9789/9963 and intraday bias remains neutral first. At this point, with 0.9963 resistance intact, another decline is mildly in favor. Below 0.9789 will target 0.9765/8 (61.8% retracement of 0.9541 to 1.0128 at 0.9765, 38.2% retracement of 0.9186 to 1.0128 at 0.9768). We'll look for bottoming signal again there. On the upside, break of 0.9963 will suggests that the pull back from 1.0128 has completed and will turn bias back to the upside for this resistance.

In the bigger picture, the deeper than expected fall form 1.0128 argues that medium term rally from 0.9186 might have completed at 1.0128 already, on bearish divergence condition in daily and weekly MACD. Break of 0.9541 key support will confirm this bearish case. More importantly, the corrective three wave structure will in turn argue that long term corrective pattern from 1.0342 (2016 high) is extending. In that case, 0.9186 will be the next target.

In 2018, crypto was the worst-performing asset class losing more than $600 billion of value. The market capitalization of Bitcoin declined from above $300 billion and ended the year at about $60 billion.

In 2019, crypto investors have started the year on a bullish note. The price of Bitcoin has moved from $3558 to a high of $3900. There has been no major news that has contributed to this rally. Instead, the price increase is based on the market sentiment that cryptocurrencies have been oversold.

Still, the industry continues to face major challenges. For example, there has been no major acceptance of crypto in the retail industry. This is because retailers are afraid of accepting a currency whose value can depreciate sharply within minutes. Another challenge is that most cryptocurrencies are still in developer mode and individuals have not been able to apply them in their daily lives. Furthermore, there are fears about the security of digital currencies because a lot of hackings happened in 2018. Additionally, the forking of Bitcoin Cash led many investors to fear crypto because of dilution.

As of this writing, the BTC/USD pair has moved up to 3867. This price is above the 50-day and 25-day moving averages while the RSI has remained above the overbought level of 70. In the coming days, the pair could continue moving up as the sentiment in the market improves. If it does, the next important resistance level it will reach will be the $4000.

Global markets were mixed during the Asian session after a disappointing report from Apple. In a letter to investors, Apple CEO Tim Cook lowered the guidance for the first quarter. In particular, he blamed China for the weakness. In recent months, Apple has continued to experience major challenges. In December, courts in China and Germany banned the sales of iPhones in the two countries respectively. In addition, the company continues to face intense competition from Chinese counterparts like Huawei and OPPO. In Asia, the China A50 index gained by 10 basis points while the Shanghai composite index rose by 5 basis points. On the other hand, US futures declined sharply with the Dow shedding more than 300 points.

The Swiss Franc rose slightly against the USD. This happened ahead of key economic data from Switzerland. The country will release the retail sales and the PMI numbers. The retail sales are expected to show an increase of 0.9%, which will be higher than the previous 0.8%. The PMI for December is expected to show a slight decline to 57 from the previous 57.1. That said; there is a possibility that the Swiss National Bank (SNB) will continue maintaining a dovish stance in the upcoming meetings.

Today, traders will focus on employment numbers from the United States. The non-farm payrolls from ADP are expected to show that the economy created 179K. This will be flat from the previous month. The initial jobless claims are expected to increase by 220K while the continuing job losses are expected to increase by 1,701K. Another important number will be the ISM manufacturing PMI that is expected to show a reduction to 57.7 from the November number of 59. The new home sales are expected to remain unchanged.

EUR/USD

The EUR/USD pair rose during the Asian session after falling sharply yesterday. It managed to move from a low of 1.1300 to a high of 1.1370. On the hourly chart, the pair is below the 25-day and 50-day EMA. The RSI has moved from the oversold level of 20 to the current 45. The Force Index too has moved up and crossed the neutral line. Today, the pair will likely be slightly volatile as traders wait for important data from the US.

USD/CHF

After rising sharply yesterday, the USD/CHF pair declined in overnight trading as the franc strengthened. The pair moved from a high of 0.9920 to a low of 0.9860. The current price is along the short and medium-term moving averages on the hourly chart. The RSI has also fallen from the overbought territory of 70 to the current 48 while the Parabolic SAR points to more declines. The pair today will react to key data from Switzerland and the United States.

USD/CAD

The USD/CAD pair moved up in the Asian session as the pair continued the upward momentum started in January last year. Since then, the pair has gained from 1.2245 to the current 1.3636. On the daily chart, the pair’s price is above the 50-day and 100-day exponential moving averages. The Relative Strength Index has remained above the overbought level of 70. The same is true with the money flow index. There is a likelihood that the upward trend will continue for a while before the pair starts retreating.

Market movers today

Focus to remain on risk sentiment after sharp moves in equities and currencies overnight. Today's main calendar events are US ISM manufacturing and the Norwegian unemployment rate.

In the US, ISM manufacturing is expected to fall back slightly to 57.5, still indicating strong growth in the US economy. Trade tensions have yet to show a significant impact on the US economy, however early signs may have emerged already after the lower Apple sales estimates were attributed mainly to lower Chinese purchases.

In Norway, we expect the jobless rate to land at 4.0%; more on page 2.

We also get Danish FX reserves today, which may very well indicate an end to the 20-month streak with no intervention; more on page 2.

Tomorrow morning we will publish our updated view on the Nordic economies in our Nordic Outlook publication.

Selected market news

Risk was in another 'off' move overnight as equities went on the defensive and currencies experienced a 'flash crash' in JPY crosses. Throughout Wednesday, sentiment was weighed down by the dire Chinese PMI in the morning and mediocre European PMIs, but took a further significant hit as Apple issued a revenue warning last night, leading its stock to plummet in after-market trading. US equity futures weighed, with S&P futures down more than 1%; Asian indices were also markedly lower as notably Apple suppliers were sold off.

The bleak mood in stock markets - coupled with thin liquidity as the Japanese remain out for holidays - further helped to set off a 3.5% drop in notably AUD/JPY and a plunge in USD/JPY to below 105 (from around 109). The moves may have been exacerbated by FX algo trading amid meagre liquidity, and were later partly reversed with USD/JPY now trading around 107. US yields are still on the defensive and the 'risk-off' move led the 10Y towards 2.62%, close to 1Y lows. The price of crude oil bounced a tad yesterday after Saudi Arabia was said to rein in exports but it was dragged down with risk assets again overnight.

The moves overnight are clearly a testament to the fact that risk markets remain vulnerable due to a faltering global macro backdrop, and notably the global economic surprise index continues the deroute which started early in the autumn. Indeed, it is easy to eye the challenges for markets going into 2019: the trade dispute remains unresolved and China continues to lose momentum, Trump remains adamant on wall-building and the US government remains shut down, and in Europe populism is again on the rise ahead of the EU parliamentary elections and Brexit remains unsettled. Near term, the US ISM today and the jobs report tomorrow will be crucial in setting the scene for risk appetite among investors.

Short term Elliott Wave view in GBPUSD shows that rally to 1.2816 ended Intermediate wave (4). Internal of that rally unfolded as a triple three Elliott Wave structure. Minor wave W ended at 1..2687, Minor wave X ended at 1.2528, Minor wave Y ended at 1.2739, second Minor wave X ended at 1.2614, and Minor wave Z ended a 1.2816. Decline from there ended at 1.2437 in Minute wave ((a)) as a 5 waves impulsive Elliott Wave structure.

Down from 1.2816, Minutte wave (i) ended at 1.2717, Minutte wave (ii) ended at 1.2773, Minutte wave (iii) ended at 1.258, Minutte wave (iv) ended at 1.2616, and Minutte wave (v) ended at 1.2437. Near term, expect pair to correct decline from 12/31 high (1.2816) within Minute wave ((b)) in 3, 7, or 11 swing before the decline resumes. We don’t like buying the pair with the right side tag showing lower and expect sellers to appear and pair to extend lower as far as pivot at 1.2816 stays intact.

GBPUSD 1 Hour Asia Elliott Wave Chart

General Trend:

• Apple declines over 7% in afterhours trading: cut revenue guidance for the 1st time since 2002, sending component makers across the region into the red
• Speculation that Samsung may cut inventories has also weighed on Asian chip makers
• China and Hong Kong markets outperformed in early trade, supported by IT and financial names; PBoC rule change in focus
• China markets later pare gains
• Australian equities supported by the resources and energy sectors
• PBoC uses OMO to drain liquidity for second consecutive day
• Japanese Yen gains on risk aversion and Apple guidance cut
• In early Asian trade, Yen spiked higher by over 7% against both Aussie and Lira; USD/JPY tested below ¥105; some speculation that USD/JPY volatility is part of Apple hedge or Japan retail investors
• AUD/USD trades at lowest level since early 2009
• Thin currency market liquidity conditions noted amid extended holiday in Japan
• China PBoC to allow more SMEs to be eligible for bank loans with adjustment to RRR policy, markets expect additional easing ahead of Chinese New Year
• China Commerce Ministry expected to hold weekly press conference later today
• Japan markets are due to reopen on Friday (Jan 4th)
• China Caixin Services PMI due for release on Friday’s session
• US government’s partial shutdown entered 12th day as of Wednesday

Headlines/Economic Data

Japan

• Nikkei 225 closed
• "Flash crash" in the currency markets, triggered early Asia session, saw yen increase against all pairings, said to be spurred on by Japan retail investors and exacerbated by algorithmic programming and thinner trade with Japan markets closed for holiday - SCMP

Korea

• Kospi opened +0.1%
• (KR) South Korea state-run think tank Korea Institute for National Unification: North Korean leader Kim Jong-un's warning that he could seek "a new way" if the US insists on sanctions appears to be rhetoric, rather than a threat to go back to the policy of enlarging his country's nuclear arsenal – Yonhap
• 005930.KR Will cut chip inventory due to oversupply - Korean press
• 005930.KR Opening new 5G network equipment manufacturing line
• (KR) Bank of Korea (BOK) sells KRW2.3T in 2-yr Monetary Stabilization Bonds (MSBs) at 1.81% v 1.82% prior
• (KR) South Korea Fin Min Hong said will try to reach $700B in exports in 2019 v more than $600B in 2018 - Yonhap
• (KR) South Korea sells KRW1.8T v KRW1.8T indicated in 30-yr Bonds, avg yield 1.96%, bid to cover 2.57x

China/Hong Kong

• Hang Seng opened -0.2%, Shanghai Composite -0.1%
• (CN) China Ministry of Commerce and National Development and Reform Commission (NDRC) considering new package of measures to boost private consumption
• (CN) China PBoC adjusted rules on bank lending to small business, now defined as companies with bank credit lines of less than CNY10M (prior CNY5M); bank lending to these companies, if reaching certain amount, can make lenders eligible for lower reserve requirements (RRR)
• (CN) China CICC Research: PBoC's RRR criteria easing may release up to CNY400B
• (US) Pres Trump: repeats that trade talks with China are coming along very well; 'we'll see what happens'
• (CN) According to Rong360.com banks in Shanghai and Shenzhen have started to offer mild discounts for first-time home buyers, while Beijing's mortgage rate remains unchanged - Chinese press
• (CN) China PBoC Open Market Operation (OMO): Injects CNY60B in 7 and 14-day reverse repos v CNY40B injected in 7 and 14-day reverse repos prior; Net: CNY90B drain v CNY70B drain prior
• (CN) China PBoC sets yuan reference rate: 6.8631 v 6.8482 prior

Australia/New Zealand

• ASX 200 opened +0.2%
• KMD.AU Cuts H1 profit to +4-8% y/y (prior profit 'expected to be strongly above last year') due to below expected sales during Dec in NZ and Australia
• (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: +2.8% v +1.7% prior; Average winning auction price: $2,986 v $2,844 prior

Other

• (TW) Taiwan sells NT$24B v NT$30B indicated in 3-month treasury bills at 0.428% v 0.355% prior, bid to cover 1.75x

North America

• (US) House Maj Leader McCarthy (R-CA): Democrats did not make a counteroffer today in today's meeting; hopes to see border wall counteroffer on Friday
• AAPL Cuts Q1 Rev $84B v $91.3Be, gross margin 38%, opex $8.7B (prior Rev $89-93B, gross margin 38.0-38.5%; op-ex $8.7-8.8B) on emerging market challenges and lower anticipated iPhone Rev
• SPDR Gold Trust holdings +1.0% or ~7.6 tons to 795.31 ton

Europe

• (UK) Prime Min May to hold talks on Brexit this week with Germany Chancellor Merkel, Dutch PM Rutte, and EU Council Pres Tusk – FT
• (UK) Foreign Min Hunt: Believe that PM May can find a way to get her Brexit deal through parliament
• (UK) British Chambers of Commerce (BCC): In Q4 2018 UK services sales growth hit 2-year low
• (FR) France President Macron's Head of Communications Sylvain Fort said to resign - French Press

Levels as of 12:50ET

• Hang Seng -0.7%; Shanghai Composite -0.1%; Kospi -0.5%; Nikkei225 -0.3%; ASX 200 +1.3%
• Equity Futures: S&P500 -1.5%; Nasdaq100 -2.5%, Dax -0.7%; FTSE100 -0.3%
• EUR 1.1372-1.1309; JPY 108.90-104.78; AUD 0.6985-0.6743; NZD 0.6686-0.6591
• Feb Gold +0.6% at $1,291/oz; Feb Crude Oil -2.3% at $45.48/brl; Mar Copper +0.2% at $2.61/lb