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Daily Pivots: (S1) 1.2519; (P) 1.2597; (R1) 1.2665; More...

Intraday bias in GBP/USD remains neutral first as consolidation from 1.2474 might extend. Stronger recovery cannot be ruled out, but upside should be limited by 1.2811 resistance to bring fall resumption. On the downside, break of 1.2476 will extend larger down trend from 1.4376 to 61.8% projection of 1.4376 to 1.2661 from 1.3174 at 1.2114. However, firm break of 1.2811 will be an early signal of trend reversal and turn focus back to 1.3174 resistance.

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 now target a test on 1.1946 first. Decisive break there will confirm our bearish view.

Daily Pivots: (S1) 0.9942; (P) 0.9967; (R1) 1.0005; More...

Intraday bias remains mildly on the upside for 1.0008 resistance fist. Break there will confirm that corrective pull back fro 1.0128 has completed at 0.9862 already. Further rally should then be seen to retest 1.0128 high next. On the downside, though, below 0.9911 minor support will turn focus back to 0.9848 support instead.

In the bigger picture, current development suggests that the medium term rally from 0.9186 hasn't completed yet. Break of 1.0128 will target 1.0342 key resistance next (2016 high). On the downside, break of 0.9848 support will dampen this bullish view and turn focus back to 0.9541 key support instead.

Daily Pivots: (S1) 113.17; (P) 113.42; (R1) 113.64; More..

Intraday bias in USD/JPY remains neutral at this point. On the upside, above 113.70 will target 114.20 resistance first. Break there will resume the rise from 111.37 and target 114.73 key resistance next. However, break of 112.23 support will extend the corrective pattern from 114.54 with another decline. Overall, price actions 114.54 are seen as a consolidative pattern. In case of deeper fall, downside should be contained by 38.2% retracement of 104.62 to 114.54 at 110.75 to bring rebound. Larger rise from 104.62 is expected to resume later.

In the bigger picture, corrective fall from 118.65 (2016 high) should have completed with three waves down to 104.62. Decisive break of 114.73 resistance will likely resume whole rally from 98.97 (2016 low) to 100% projection of 98.97 to 118.65 from 104.62 at 124.30, which is reasonably close to 125.85 (2015 high). This will stay as the preferred case as long as 109.76 support holds. However, decisive break of 109.76 will dampen this bullish view and turns outlook mixed again.

Daily Pivots: (S1) 0.7141; (P) 0.7185; (R1) 0.7220; More...

Intraday bias in AUD?USD remains on the downside at this point. The corrective rebound from 0.7020 should have completed at 0.7393 already. Deeper fall should be seen back to retest 0.7020 low first. On the upside, break of 0.7246 resistance will delay the bearish case and turn bias back to the upside. Rebound from 0.7020 could probably head to 38.2% retracement of 0.8135 to 0.7020 at 0.7446 before completion.

In the bigger picture, a medium term bottom is in place at 0.7020 ahead of 0.6826 key support (2016 low). Stronger rebound could still be seen to correct the whole fall from 0.8135 high. But we'd expect strong resistance from 0.7500 support turned resistance to limit upside. Medium term fall from 0.8135 should resume later and extend to take on 0.6826 low at a later stage, after the correction from 0.7020 completes.

Daily Pivots: (S1) 1.3355; (P) 1.3378; (R1) 1.3411; More...

Intraday bias in USD/CAD remains neutral as consolidation from 1.3444 is still in progress. Near term outlook remains bullish as long as 1.3160 support holds, and further rally is expected. On the upside, break of 1.3444 will extend the larger up trend from 1.2061 for 1.3685 fibonacci level next. However, break of 1.3160 will indicate near term reversal and bring deeper decline.

In the bigger picture, up trend from 1.2061 (2017 low) is still in progress and should target to 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685. However, such rise is not clearly impulsive yet. And it could be the second leg of the long term corrective pattern that started at 1.4689. Hence, even in case of further rally, we'd be cautious on loss of momentum and topping above 1.3685. Nevertheless, in any case, outlook will stay bullish as long as channel support (now at 1.2969) holds.

The financial markets are rather steady in Asia today. Nikkei and and Singapore Strait Times are having notably rebounds. But China and Hong Kong stock markets are mixed. In the currency markets, Yen is the generally weaker one, followed by Sterling. Canadian Dollar and Swiss Franc are the stronger ones. But major pairs and crosses are bounded in Friday's range, indicating low volatility. Traders are apparently turning more cautious ahead of FOMC rate decision and economic projections to be released later this week.

Technically, Friday's selloff in Euro and Swiss Franc were a bit disappointing. EUR/USD recovered just ahead of 1.1267 support, keeping in consolidation in established range. EUR/JPY was also held above "equivalent" support at 127.61. USD/CHF was also held well below 1.0008 resistance. These levels will continue to be watched today. Also, EUR/GBP is held in tight range between 0.8931/9098. We're favoring an upside break through 0.9098 for now. But a break of 0.8931 will indicate near term reversal in EUR/GBP.

In other markets, Nikkei closed up 0.62% at 21506.88. Singapore Strait Times is rising 1.12%. But Hong Kong HSI is just up 0.04% and China Shanghai SSE is down -0.03%. Japanese 10 year JGB yield is down -0.0008 at 0.034. Gold's rebound last steady last week and is now back at 1237. WTI crude oil continues to consolidate in tight range above 50 handle.

UK PM May to urged not to "break faith" with British people with another Brexit referendum

According to pre-released text, UK Prime Minister Theresa May will urged parliament today not to "break faith" with the British people with another referendum. She will also warned that "Another vote which would do irreparable damage to the integrity of our politics, because it would say to millions who trusted in democracy, that our democracy does not deliver. Another vote which would likely leave us no further forward than the last"

Separately, Trade Minister said in a BBC show that "it is very clear that the EU understand what the problem is. And it's a question now, without unpicking the whole of the withdrawal agreement, can we find a mechanism of operating the backstop in a way that actually removes those anxieties". He added that "It will happen over Christmas, it's not going to happen this week, it's not going to be quick, it will happen some time in the New Year."

Irish Foreign Minister Simon Coveney told RTE television that "If there is an entirely new proposal coming from the UK, I think undoubtedly it would need a lot more time to be considered on the EU side and that would probably involve an extension of Article 50 or pulling Article 50 for the moment."

Italy coalition government agreed on numbers and contents of 2019 revised budget

In Italy, leaders of the coalition government sounded optimistic that they would eventually avoid disciplinary actions by the EU over its 2019 budget. Leader of the League Matteo Salvini said, after meeting with 5-Star Movement head Luigi Di Maio and Prime Minister Giuseppe Conte, "We have found an agreement on further fiscal reductions that probably will be appreciated by the EU."

Salvini's spokeswoman also said that there is "total agreement between Conte, Salvini and Di Maio on the numbers and contents of the proposal to send to Brussels," regarding 2019 budget plan. And she denied there were tensions within the coalition government and rumors that Prime Minister Giuseppe Conte had threatened to quit.

Separately, Di Maio also said the talks with the commission "will allow us to avoid an infraction procedure".

Fed rate hike and new economic projections as main focus

Looking ahead, three central banks will meet this week, including Fed, BoJ and BoE. BoJ and BoE are both expected to stand pat and are unlikely to reveal anything special. FOMC is widely expected to raise federal funds rate by 25bps to 2.25-2.50% this week. The main focus are both the new economic projections and chair Jerome Powell's press conference. Powell's comment that interest rates are now "just below" neutral prompted some selling pressure on the Dollar. But thanks to risk aversion, the greenback regained much ground and is trading as one of the strongest for the month along with Yen and Swiss Franc. Powell now has a chance to clarify what he exactly means.

In the September economic projections, the median longer run federal funds rate was estimated to be 3.0%, with central tendency at 2.8-3.0%. The range of estimate was naturally larger at 2.5-3.5%. Revision to this will be crucial on how far fed would hike to. Also, median projection for federal funds rates for 2019 was at 3.1%, with central tendency at 2.9-3.4%. Based on the projections, Fed would have two more rate hikes next year, with prospect of a third. The chance was dimmed by recent developments in the economy while investors were getting less convinced of such rate path. This will be another piece of market moving figure.

Addition to Fed, there are also some other events to watch, including German Ifo, UK CPI and retail sales,Canada CPI and retail sales, Australia employment and RBA minutes etc. Here are some highlights for the week:

• Monday: Eurozone CPI final, trade balance; UK CBI industrial orders; Canada foreign securities transactions; US Empire State manufacturing, NAHB housing index
• Tuesday: New Zealand ANZ business confidence; RBA minutes; German Ifo business climate; Canada manufacturing sales; US housing starts and building permits
• Wednesday Japan trade balance; Germany PPI; UK CPI, PPI, CBI realized sales; Canada CPI; US current account, existing home sales, FOMC rate decision
• Thursday: New Zealand GDP; Australian employment; BoJ rate decision, japan all industries index; Swiss trade balance; Eurozone current account; UK retail sales, BoE rate decision; Canada wholesale sales; US Philly Fed manufacturing , jobless claims
• Friday: Japan national CPI core; Germany Gfk consumer sentiment; UK Gfk consumer sentiment, Q3 GDP final, current account, public sector net borrowing; Canada retail sales, GDP; US durable goods, Q3 GDP final, personal income and spending

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3355; (P) 1.3378; (R1) 1.3411; More...

Intraday bias in USD/CAD remains neutral as consolidation from 1.3444 is still in progress. Near term outlook remains bullish as long as 1.3160 support holds, and further rally is expected. On the upside, break of 1.3444 will extend the larger up trend from 1.2061 for 1.3685 fibonacci level next. However, break of 1.3160 will indicate near term reversal and bring deeper decline.

In the bigger picture, up trend from 1.2061 (2017 low) is still in progress and should target to 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685. However, such rise is not clearly impulsive yet. And it could be the second leg of the long term corrective pattern that started at 1.4689. Hence, even in case of further rally, we'd be cautious on loss of momentum and topping above 1.3685. Nevertheless, in any case, outlook will stay bullish as long as channel support (now at 1.2969) holds.

Economic Indicators Update

For the 24 hours to 23:00 GMT, the EUR declined 0.47% against the USD and closed at 1.1307 on Friday, as weak private sector data from Germany and France for December signalled a slowdown in the Euro-zone.

Macroeconomic data showed that the Euro-zone's flash manufacturing PMI unexpectedly declined to a 34-month low level of 51.4 in December, defying market consensus for a flat reading. In the prior month, the PMI had recorded a reading of 51.8. Moreover, the region's preliminary services PMI surprisingly dropped to a level of 51.4 in December, marking its lowest level in 49-months and cofounding market expectations for a steady reading. In the previous month, the PMI had registered a level of 53.4.

Separately in Germany, the preliminary manufacturing PMI expanded at its weakest pace in 33-months to a level of 51.5 in December. The PMI had recorded a reading of 51.8 in the preceding month. Also, the nation's flash services PMI unexpectedly slid to a four-year low level of 52.5 in December. In the prior month, the PMI had recorded a reading of 53.3. Meanwhile, French private sector activity for December entered into contractionary territory for the first time in two-and-a-half years, amid widespread reports of disruption to business due to the Yellow Vests anti-government protests.

In the US, data showed that the US Markit manufacturing PMI fell to a 13-month low level of 53.9 in December, weighed down by losses in new orders and employment. The PMI had registered a reading of 55.3 in the prior month, while markets had anticipated for a drop to a level of 55.0. Additionally, the nation's Markit services PMI declined to a level of 53.4 in December, hitting its lowest level in 11-months. In the previous month, the PMI had registered a reading of 54.7. On the other hand, the US advance retail sales climbed 0.2% on a monthly basis in November, beating market expectations for a rise of 0.1%. In the preceding month, advance retail sales had recorded a revised rise of 1.1%. Furthermore, the industrial production advanced 0.6% on a monthly basis in November, compared to a revised decline of 0.2% in the prior month. Meanwhile, the nation's manufacturing production registered a flat reading in November.

In the Asian session, at GMT0400, the pair is trading at 1.1311, with the EUR trading a tad higher against the USD from Friday's close.

The pair is expected to find support at 1.1267, and a fall through could take it to the next support level of 1.1222. The pair is expected to find its first resistance at 1.1359, and a rise through could take it to the next resistance level of 1.1406.

Moving ahead, traders would keep an eye on the Euro-zone's consumer price index for November and trade balance data for October, set to release in a few hours. Later in the day, the US empire manufacturing and NAHB housing market index, both for December, will be on investors' radar.

The currency pair is trading in between its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP declined 0.62% against the USD and closed at 1.2583 on Friday, after British Prime Minister, Theresa May's chances of a failure to secure key Brexit related concessions from the European Union increased.

In the Asian session, at GMT0400, the pair is trading at 1.2582, with the GBP trading slightly lower against the USD from Friday's close.

On the data front, UK's Rightmove house price index rebounded 0.7% on an annual basis in December, following a decline of 0.2% in the previous month.

The pair is expected to find support at 1.2530, and a fall through could take it to the next support level of 1.2479. The pair is expected to find its first resistance at 1.2633, and a rise through could take it to the next resistance level of 1.2685.

In the absence of key economic releases in Britain later today, investor sentiment would be determined by global macroeconomic events.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.28% against the JPY and closed at 113.29 on Friday.

In the Asian session, at GMT0400, the pair is trading at 113.48, with the USD trading 0.17% higher against the JPY from Friday’s close.

The pair is expected to find support at 113.24, and a fall through could take it to the next support level of 113.01. The pair is expected to find its first resistance at 113.69, and a rise through could take it to the next resistance level of 113.91.

Amid lack of economic releases in Japan today, traders would focus on global macroeconomic events for further direction.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.38% against the CHF and closed at 0.9977 on Friday.

In the Asian session, at GMT0400, the pair is trading at 0.9977, with the USD trading flat against the CHF from Friday’s close.

The pair is expected to find support at 0.9949, and a fall through could take it to the next support level of 0.9920. The pair is expected to find its first resistance at 0.9996, and a rise through could take it to the next resistance level of 1.0014.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.