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During Wednesday's trading session, the US Dollar was supported by the 55-hour SMA to help the rate to break the resistance level of the monthly pivot point at the 113.34 mark. On Thursday morning, the rate was trading at the 113.43 mark.

In regards to the near-term future, most likely, the rate will break the resistance level of the weekly R1 at 113.62 mark to trade towards the monthly R1 at the 114.37 mark.

However, the US Dollar could be resisted by the weekly R1 at 113.62 mark to push the currency exchange rate to trade near the 200-hour simple moving average at the 113.00 level.

During Wednesday's trading session, the yellow metal was trading near the 38.20% Fibonacci retracement level to end the trading session at the 1,245.17 mark. During Thursday's morning hours, the yellow metal was supported by the 55-hour and the 100-hour SMAs to trade at the 1,246.16 mark.

In regards to the near-term future, most likely, the gold will surge upwards due to the support of the 55-hour and the 100-hour simple moving averages which could support the rate to trade at the 1,250.00 level during the trading session.

On the other side, the gold could continue to trade sideways to stay near the 38.20% Fibonacci retracement level to trade at the 1,246.00 level.

The single European currency appreciated about 55 base points against the Japanese Yen on Wednesday. The currency pair breached the upper boundary of a dominant descending channel at 128.80 during the end of yesterday's trading session.

Everything being equal, it is likely that the EUR/JPY currency pair continues its upside movement and potentially targeting the upper boundary of an ascending channel pattern at 129.500.

Technical indicators suggest that the movement is could happen before the close of trading session today.

The Australian Dollar continued its sideways movement against the US Dollar on Wednesday. However, a breakout through the upper boundary of a descending channel pattern occurred during the end of the previous session.

Given that a breakout had occurred, it is likely that the Aussie continue to make gains against the Greenback within this session.

Nevertheless, a resistance cluster formed by the weekly pivot point and the 200-hour simple moving average at 0.7259 could hinder bullish traders from pushing the currency exchange rate higher today.

The US Dollar depreciated about 65 base points against the Canadian Dollar on Wednesday. The surged was stopped by a support level formed by the 200-hour simple moving average at 1.3325.

The USD/CAD currency pair was trading near the lower boundary of an ascending trendline at 1.3353 during the first half of today's session and could be set for a breakout.

If this breakout occurs, the currency exchange rate will aim at a swing low level of 1.3260 during the following trading session.

On the other hand, if the price passes the 50– and 100-hour SMAs, the next target will be near a resistance level at 1.3419.

The New Zealand Dollar depreciated about 75 base points against the US Dollar on Wednesday. However, the exchange rate regained its lost positions during the first part of Thursday's trading session.

Currently, the currency pair is testing a resistance level formed by the 50– and 100-hour SMAs at 0.6873.

If this resistance line holds, the currency exchange rate will aim at a low level of 0.6820 today.

However, if the pair passes the SMAs, the next target for bullish traders will be at a resistance cluster near the 0.6893 region.

WTI oil price stands at the back foot on Thursday and pressures near-term base at $50.60 zone, following Wednesday's close in red after repeated failure to close above 10SMA ($51.80). Bearish daily studies continue to weigh, with stronger momentum showing little positive impact so far. Also, bears remained unaffected by signals of easing trade tensions between the US and China, while lower than expected draw in oil inventories (EIA report on Wednesday showed 1.2 mln bls draw in crude stocks vs 2.9 mln bls forecast and previous week's draw of 7.3 mln bls) added to negative signals. The sentiment soured after recovery stalled, with decision of main oil producers to reduce the output by 1.2 mln bps, showed so far little help in attempts to stabilize oil market. Negative signal could be expected on violation of $50.60 base which would open way for renewed attempt below psychological $50 support. Conversely, initial bullish signal could be expected on break above 10SMA ($51.79), with extension above falling 20SMA ($52.48) needed to provide relief and signal fresh attack at pivotal barriers at $54.54 (recovery top) and $54.86 (falling 30SMA).

Res: 51.55, 51.79, 52.48, 52.84
Sup: 50.60, 50.00, 49.40, 49.00

Notes/Observations

• No surprises in various European rate decisions (SNB, Norges keep policy steady)
• ECB set to confirm that it will end its asset purchasing program at the end of this month; but tone likely to be caution going into 2019 die to headwinds on growth and inflation
• Italy blinked on 2019 budget to cool tensions with EU; but EU sees need for more improvement

Asia:

• China FX Regulator SAFE official Li Lei reiterated stance that CNY currency (Yuan) to keep basically stable, would push forward with capital market opening
• New Zealand Treasury issues Half-Year Economic and Fiscal Update cuts 2018/19 GDP growth forecast from 3.8% to 2.9%; maintained 2019/20 GDP at 3.0%

Europe:

• UK PM May wins confidence of party 200-117. PM May stated afterwards that was pleased to receive backing of colleagues in confidence vote; now needed unity and to delivery on Brexit. PM May told Party lawmakers she won’t stand at the next election but would be no snap election; she made it clear people were uncomfortable about her leading the conservatives into next election
• Six UK Cabinet ministers said to have urged PM May to force Parliament to vote informally on a range of Brexit outcomes as soon as next week. Plan would be to show that there’s no majority for any kind of divorce in a bid to get lawmakers to accept a compromise.
• EU Draft document confirms leaders will look at ways for further Brexit assurances that do not contradict original deal
• Italy PM Conte: New budget deficit to GDP proposal of 2.04% in 2019 dids not betray Italians. Government to respect promises made, but was also reasonable. Offer on deficit goal change was serious and reasonable and majority is unified on proposal
• France Fin Min Le Maire: public deficit will top EU's limit of 3% of GDP in 2019 (Reminder: On Dec 10th France President Macron addressed the nation and asked the govt to increase wages by €100/month starting in Jan. Would cancel social security tax increase on pensioners who were earning under €1,000/month)

Americas:

• US Soybean Export Council: Chinese importers have bought 1.5-2m tons of US soy over the last 24 hours , shipments were expected during Q1 2019

Macro

• (UK) United Kingdom: PM May is in Brussels to seek more assurance from the EU on the Irish boarder backstop. EU leaders have made clear that they won't remove the legal text but there may be some leeway on the political declaration on the future relationship. In that case and in order to avoid a hard border, the backstop foresees that the U.K. will remain in the customs union. It seems unlikely that this will be sufficient to convince her critics in the UK.
• (CH) Switzerland: The Swiss central bank remained unchanged and continues to rely on negative rates and the option of ad hoc currency interventions to keep the "highly valued" currency under control in still "fragile" currency markets. The inflation forecast for next year was cut back to 0.5% from 0.8%. The expansionary policy is putting a strain on the domestic real estate market, which the SNB tries to keep under control with a counter-cyclical capital buffer that remains under constant review.
• (EU) Eurozone: The ECB looks set to confirm the future of QE and the re-investment schedule amid ongoing market volatility and escalating political risk. The re-investment of stock of assets will become more important from next year and is in now a key tool of forward guidance. Recent commentary from ECB officials confirm that they remains on track to phase out net asset purchases this year, despite the likely downward revision to growth forecasts and the uncertain environment. For now it seems a new round of TLTROs are also not on the agenda, but the message as always will probably be dovish leaning, and the re-investment schedule to remain open-ended for now.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.15% at 349.48, FTSE -0.02% at 6,878.97, DAX -0.05% at 10,924.24, CAC-40 -0.05% at 4,907.04, IBEX-35 +0.53% at 8,900.00, FTSE MIB +0.38% at 19,017.50, SMI +0.07% at 8,848.50, S&P 500 Futures +0.18%]

Market Focal Points/Key Themes:

Equities

• European Indices trade mixed this morning following two straight days of strong gains, US index futures trade higher after fading from the highs yesterday. Brexit returns to focus after PM May survived the confidence vote yesterday. Elsewhere the SNB kept rates on hold and later today will see a rate decision by the ECB where rates are expected to remain on hold.
• On the corporate front, TUI trades higher after full year results, with Gam Holding trades notably lower after cutting its outlook. OVS also trades sharply lower alongside Metro, Purple Bricks, PZ Cussons and Ultra Electronics following earnings and trading updates.
  Elsewhere G4S trades higher after company options for separation of its Cash Solutions business; Deutsche Bank also is higher after reports yesterday that Germany were looking to intensify plan to facilitate a deal with Commerzbank.
  Looking ahead notable earnings include Fred's, Ciena Corp and Vince Holdings.
• Consumer discretionary: G4S [GFS.UK] +11% (reviewing options for separation of unit), TUI [TUI1.DE] +5% (earnings), Bunzl plc [BNZL.UK] +2% (trading update), Sports Direct International [SPD.UK] -3% (earnings), Serco Group [SRP.UK] +8% (trading update), Metro AG [B4B.DE] n/c (earnings; Amazon interest in stores), GAM Holding [GAM.CH] -25% (profit warning; suspends dividend; jobs cut), Plastic Omnium [POM.FR] +7% (investor day), OVS [OVS.IT] -21% (earnings)
• Energy: EVN AG [EVN.AT] -2% (earnings)
• Financials: Deutsche Bank [DBK.DE] +0.5%, Commerzbank [CBK.DE] +0.5% (said to be probed; Germany to intensify plan to fix Deutsche Bank by merger, potentially with Commerzbank), Unicredit [UCG.IT] +2.5% (said to consider divestment of unit)
• Technology: Purplebricks Group [PURP.UK] -8% (earnings)
• Telecom: Telefonica [TEF.ES] +2% (reportedly informed of possible approach from activist investor)

Speakers

• Swiss National Bank (SNB) Policy Statement Reiterated the Swiss franc was highly valued, and the situation on the FX market was still fragile. Reiterated prepared to intervene in markets if needed and remain active in the foreign exchange market as necessary while the overall currency situation into consideration
• SNB Quarterly Staff Forecasts narrowed 2018. GDP growth forecast from 2.5-3.0% to 2.5% and set 2019 GDP at 1.5%. Maintained 2018 CPI at 0.9% but cut 2019 inflation outlook from 0.8% to 0.5% and 2020 CPI from 1.2% to 1.0%
• SNB's Jordan post rate decision press conference reiterated that its expansionary monetary policy remained appropriate given slightly muted inflation outlook and continued fragility in exchange rate situation . Reiterated stance that CHF currency (Franc) remained highly valued, FX market situation fragile. Saw risk of major and sudden exchange rate movements which would significantly alter monetary conditions
• Norway Central Bank (Norges) Policy Statement noted that the decision to keep policy steady was unanimous. Reiterated that outlook and balance of risks implied a gradual interest rate increase in the years ahead and saw the next rate increase as most likely in Mar 2019
• Norway Central Bank (Norges) Gov Olsen post rate decision press conference stated that saw gradual increase in years to come. The rate path was seen as two rate hikes in 2019, one in 2020 and two in 2021
• EU's Moscovici commented on Italian and French 2019 budgets. Stated that was not there yet on the Italian deficit reduction but a step in the right direction. Some step still to take perhaps from both sides. Italy should make additional efforts for its 2019 budget. Wanted limited budget overrun in France’s 2019
• French govt reportedly considering delaying 2019 corporate tax cut for large firms as part of its effort to keep the 2019 budget deficit to under 3.0%
• UK Brexit Sec Barclay reiterated govt stance that all Brexit options would require a backstop and would not hold another referendum
• German IFO Institute cut Germany 2018 and 2019 GDP growth forecasts citing that the period of economic weakness triggered by auto industry to last until 2019. It also noted that uncertainty also due to Brexit and US trade policy. Cut 2018 GDP growth forecast from 1.9% to 1.5% and 2019 GDP growth forecast from 1.9% to 1.1%
• Swiss KOF Institute Winter Economic Forecast cut both 2018 and 2019 GDP growth forecasts. Cut 2018 GDP growth from 2.9% to 2.6% and 2019 GDP growth from 1.7% to 1.6%
• Philippines Central Bank (BSP) Policy Statement noted that it was prudent to keep monetary policy steady but was prepared to take further actions if needed. It would remain vigilant against development affecting CPI. It saw inflation settling within the 2-4% target range for both 2019 and 2020 period
• China President Xi reiterated stance to implement proactive fiscal and prudent monetary policies in 2019
• China Commerce Ministry (MOFCOM) Spokesman Gao: China open to US visit to China for trade talks. also open to visit the US to discuss trade
• China said to plan more U.S. soybean purchases as soon as today (Dec 13th)
• IEA Monthly Report maintained 2018 global oil demand growth forecast at 1.3M bpd and 2019 global oil demand growth forecast at 1.4M bpd. Cuts 2018 Non-Opec supply from 2.4M bpd to 1.5M and cut 2019 Non-Opec supply from 1.9M bpd to 1.5M

Currencies/ Fixed Income

• GBP currency extended its rally into the European session after PM may survived a leadership challenge late Wednesday but analysts still cited the country faced continued political risks over the Brexit process. Dealers noted that current negotiated deal was still unlikely to be ratified. GBP/USD higher by 0.3% to test 1.2685 area in the session. GBP/USD at 1.2665 just ahead of the NY morning.
• EUR/USD was little changed at 1.1375 area ahead of the ECB rate decision. ECB expected to announce that QE to end this year and reaffirm its intent to hike rates after the summer. Particular focus on new staff forecasts. ECB likely to recognize the ongoing slowdown in Q4, so could see some very minor tweaks to the growth and inflation forecasts

Economic Data

• (SE) Sweden Nov PES Unemployment Rate: 3.6% v 3.7% prior
• (NL) Netherlands Oct Trade Balance: €4.9B v €5.1B prior
• (DE) Germany Nov Final CPI M/M: 0.1% v 0.1%e; Y/Y: 2.3% v 2.3%e
• (DE) Germany Nov Final CPI EU Harmonized M/M: 0.1% v 0.1%e; Y/Y: 2.2% v 2.2%e
• (FR) France Nov Final CPI M/M: -0.2% v -0.2%e; Y/Y: 1.9% v 1.9%e
• (FR) France Nov Final CPI EU Harmonized M/M: -0.2% v -0.2%e; Y/Y: 2.2% v 2.2%e; CPI Ex-Tobacco Index: 103.14 v 103.17e
• (PH) Philippines Central Bank (BSP) left its Overnight Borrowing Rate unchanged at 4.75% (as expected) for its 1st pause in six policy decisions in the current tightening cycle.
• (CH) Swiss Nov Producer & Import Prices M/M: -0.3% v +0.1%e; Y/Y: 1.4% v 1.7%e
• (CH) Swiss National Bank (SNB) Quarterly Interest Rate Decision left the Sight Deposit Rate unchanged at -0.75% and maintained 3-Month Libor Target Range between -1.25% to -0.25% (as expected)
• (SE) Sweden Nov Unemployment Rate: 5.5% v 5.7%e; Unemployment Rate (Seasonally Adj): 6.1% v 6.2%e; Trend Unemployment Rate: 6.2% v 6.3% prior
• (NO) Norway Central Bank (Norges) left the Deposit Rates unchanged at 0.75% (as expected)
• (CH) Swiss KOF Institute Winter Economic Forecast
• (ZA) South Africa Nov PPI M/M: 0.4% v 0.4%e; Y/Y: 6.8% v 6.8%e
• (GR) Greece Q3 Unemployment Rate: 18.3% v 19.0% prior

Fixed Income Issuance

• (IE) Ireland Debt Agency (NTMA) sold €500M vs. €500M indicated in 12-month bills; Avg yield -0.42% v -0.45% prior; Bid-to-cover: 2.37x v 2.51x prior

Looking Ahead

• (NG) Nigeria Nov CPI Y/Y: No est v 11.3% prior
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month bills
• 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: expected to leave 1-Week Repo Rate at 24.00%
• 06:00 (IE) Ireland Q3 GDP Q/Q: 1.3%e v 2.5% prior; Y/Y: 7.8%e v 9.0% prior
• 06:00 (IE) Ireland Q3 Current Account Balance: No est v €10.2B prior
• 06:00 (IE) Ireland Nov CPI M/M: No est v -0.1% prior; Y/Y: No est v 0.9% prior
• 06:00 (IE) Ireland Nov CPI EU Harmonized M/M: No est v -0.2% prior; Y/Y: No est v 1.1% prior
• 06:00 (IL) Israel Nov Trade Balance: No est v -$2.4B prior
• 06:00 (IL) Israel Q3 Current Account Balance: No est v $0.8B prior
• 06:00 (BR) Brazil Oct Retail Sales M/M: 0.0%e v -1.3% prior; Y/Y: 2.5%e v 0.1% prior
• 06:00 (BR) Brazil Oct Broad Retail Sales M/M: +0.6%e v -1.5% prior; Y/Y: 7.5%e v 2.2% prior
• 06:00 (RO) Romania to sell RON400M in 5% 2029 Bonds
• 06:45 (US) Daily Libor Fixing
• 07:00 (UR) Ukraine Central Bank Interest Rate Decisions: Expected to leave Key Rate unchanged at 18.00%
• 07:00 (RO) Romania to sell RON600M in 12-month Bills
• 07:45 (EU) ECB Interest Rate Decision: expected to leave Main 7-Day Main Refinancing Rate unchanged at 0.00%; To leave Marginal Lending Facility unchanged at 0.25%; expected to leave Deposit Facility Rate unchanged at -0.40%
• 08:00 (RU) Russia Gold and Forex Reserve w/e Dec 7th No est v $462.1B prior
• 08:00 (EU) EU-27 Leader Summit
• 08:10 (UK) Baltic Dry Bulk Index
• 08:30 (US) Nov Import Price Index M/M: -1.0%e v +0.5% prior; Y/Y: 1.3%e v 3.5% prior; Import Price Index (ex-Petroleum) M/M: -0.1%e v +0.2% prior
• 08:30 (US) Nov Export Price Index M/M: -0.3%e v +0.4% prior; Y/Y: No est v 3.1% prior
• 08:30 (US) Initial Jobless Claims: 226Ke v 231K prior; Continuing Claims: 1.65Me v 1.631M prior
• 08:30 (CA) Canada Oct New Housing Price Index M/M: 0.0%e v 0.0% prior; Y/Y: 0.1%e v 0.2% prior
• 08:30 (US) Weekly USDA Net Export Sales
• 08:30 (EU) ECB’s Draghi post rate decision press conference
• 08:30 ECB updates Staff Projections
• 10:30 Weekly EIA Natural Gas Inventories
• 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
• 13:00 (US) Treasury to sell 30-Year Bonds Reopening
• 14:00 (US) Nov Monthly Budget Statement: -$199.0Be v -$100.5B prior
• 14:00 (AR) Argentina Nov National CPI M/M: 2.8%e v 5.4% prior; Y/Y: No est v 45.9% prior
• 18:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to leave Reference Rate unchanged at 2.75%

The EUR/USD has formed a bullish SHS pattern (Shoulder-Head-Shoulder) or inverted Head and Shoulders as traders also call it.

I am bullish on this pair. The POC zone is 1.1365-75 and rejections from the zone target 1.1390. The price NEEDS to close above 1.1390 for a continuation towards 1.1415 and 1.1440. However a drop and close below 1.1350 will put the pair in neutral mode again and we might see yet another boring range play. MACD and MTF BB support the bullishness too.

ECB could push back rate hike expectations

Markets are trading relatively mixed ahead of the open on Wall Street on Thursday, with much of the focus falling on Europe where Theresa May lives on and the ECB meet.

The ECB should be an interesting affair despite slipping under the radar due to the political soap opera that is Brexit. Domestic political issues are another distraction for investors, with Italy offering some concessions on the deficit while at the same time keeping it above 2% and Macron coming under significant pressure in the aftermath of the riots. Coming against the backdrop of slower regional growth in 2018 and less optimistic views on the global outlook for next year, the job of the ECB has just got harder.

None of this is likely to change its plans to end the quantitative easing program this month but with the new economic projections likely to be lower than before, rate hike expectations for next year may be pushed back to the end of the year or beyond. The growing headwinds combined with financial market turbulence does not create the ideal environment for embarking on a new tightening cycle and I think policy makers may take a conservative approach to it.

May hoping for help from EU after week to forget

It’s been a week to forget for Theresa May, with the UK Prime Minister having to cancel the vote on her Brexit deal in the face of a humiliating defeat, before heading to Brussels to seek the help of her European partners before facing a vote of no confidence at home. Somehow, after all of that, May lived to tell the tale but the heat doesn’t end there. Today she heads back to Brussels again for the EU summit, during which she’ll try (again) to convince her colleagues to provide additional assurances on the backstop in order to get the deal through parliament.

Tusk has been open to discussing “how to facilitate UK ratification” but like his peers is insistent that no elements of the deal – including the backstop – are up for renegotiation. I’m not quite sure what May can secure that will provide comfort for the many MPs that aren’t satisfied with commitments to best endeavours when faced with the prospect of an indefinite backstop. It’s just another day for Mrs May, who’s become quite used to near-impossible puzzles over the last 18 months. The pound remains surprisingly resilient though, sitting just below 1.27 but nice off the lows just below 1.25 on Wednesday.

Gold still bullish but held back by flat dollar

Gold is a little flat today, with an equally flat dollar providing little direction for the yellow metal. We’ve seen plenty of intraday volatility in the currency space recently – particularly sterling pairs obviously – but the dollar hasn’t really moved one way or another. I remain a dollar bear going into next year which should be good for gold but at the moment it’s really dragging its feet. Gold is holding above $1,240 which is a bullish sign, with $1,260 and $1,280 both now looking feasible but until the dollar takes a dip, it may be a very gradual move.