Sample Category Title

During Tuesday's trading session, the rate passed through the support level of the monthly PP at 1.1346 to trade near the weekly S1 at the 1.1321 mark for the rest of the trading session. On Wednesday morning, the European Single Currency was located between the monthly PP and the weekly S1 to trade at the 1.1324 mark.

In regards to the near-term future, most likely, the European Single Currency will be resisted by the monthly PP at 1.1346 to trade downside towards the weekly S2 at the 1.1260 mark.

However, the rate could appreciate during today's US CPI data release at 13:30 GMT to push the rate to break the monthly PP at 1.1346 to trade at 1.1360 level.

Global markets are on the rise on Wednesday, adding more than 1.2% on the MSCI Asia ex Japan index. Japanese Nikkei jumped by 2%. Chinese stocks behave more carefully: Hang Seng grows by 1.1%, China A50 is up only by 0.2%. Futures on S&P 500 add 1% to the closing levels of the previous day.

However, it should be noted that in general, the American stock markets have complex dynamics. It is not the first day that we have seen the sale prevail in the midst of the American session, and often even overlap the positive dynamics within the day. For example, yesterday S&P 500 futures not only lost 1.4% of the growth within the day but also closed the session with the losses at 0.4%.

Global markets are on the rise on Wednesday, adding more than 1.2% on the MSCI Asia ex Japan index. Japanese Nikkei jumped by 2%. Chinese stocks behave more carefully: Hang Seng grows by 1.1%, China A50 is up only by 0.2%. Futures on S&P 500 add 1% to the closing levels of the previous day.

However, it should be noted that in general, the American stock markets have complex dynamics. It is not the first day that we have seen the sale prevail in the midst of the American session, and often even overlap the positive dynamics within the day. For example, yesterday S&P 500 futures not only lost 1.4% of the growth within the day but also closed the session with the losses at 0.4%.

In fact, this is a wrong signal, because it does not allow neither accurately determine the time of economic recession, no reason.

However, the markets are reacting nervously to the inversion, and as long as this event causes turbulent emotions.

From technical analysis perspective, on the chart of index S&P 500 it is visible, that the latest three impulses of reduction and subsequent bounces are formed in a tendency with all lower extremes reflecting increase of pressure.

As a result, American markets can’t fully grasp the positive dynamics of foreign peers. Often, they just follow the mood in the United States, so it is possible that caution will soon spread to the Asian markets.

We’ve heard that the threshold is about to be, or has been, breached for weeks but now that is very much the case, with 48 letters having been collected triggering a vote of no confidence in Theresa May this evening. The Prime Minister has spent months walking on eggshells and trying to keep Brexiteers just enough onside, while securing a deal that can get through the Commons, but it’s become abundantly clear that she has instead failed on both fronts and this week, the fragile house of cards has come crashing down around her.

This is not necessarily the end of the road for May, however, as MPs may well decide that as much as they despise the backstop – and they do – they hate the prospect of a leadership election, article 50 extension and possible no deal even more. This may all actually end up working in May’s favour and embolden her if it forces the EU to offer a minor concession to get the deal through parliament and removes the risk of another challenge for 12 months. Politics can be a funny old game.

From an investors standpoint this is hugely undesirable, if only due to the level of uncertainty it creates around the negotiations, not to mention the future relationship and the economy post-March 29th. The pound is holding up surprisingly well in the midst of all of this, despite flirting below 1.25 overnight. A defeat for May could see this temporary support break in spectacular fashion as the prospect of no-deal Brexit rises.

Notes/Observations

• PM May to face no-confidence vote later today on her leadership (13:00 ET/18:00 GMT); various Cabinet ministers voiced support ahead of the secret ballet vote. Reportedly at least 75 Conservative lawmakers have expressed publically support for PM May ahead of the leadership vote (Note: PM May would need 158 votes to survive challenge)
• South Africa Nov CPI data saw the annual pace remain above the mid-point of the target range, keeping another rate hike possible
• Sweden Nov CPI moved back to target level and pushed back analysts' expectations of the 1st potential rate hike to the Feb meeting

Asia:

• South Korea Nov Unemployment Rate: 3.8% v 3.9%e
• Japan to spend ¥3.0T in second extra budget to boost infrastructure support farmers & deal with natural disaster

Europe:

• Conservative Party members believed they were close to the required 48 letters (15% of Tory MPs) requesting a vote of 'no confidence' in PM May's leadership. Senior govt source: expect confidence vote on PM May imminently; threshold of 48 letters has been reached to trigger a vote
• Brexiteer MP Rees Moog: Theresa May should 'resign now'; doesn't know if there are enough letters submitted yet to launch no-confidence vote against PM May
• PM May's office: May and Merkel had a positive meeting, agreed to stay in closer touch
• Northern Ireland DUP Party leader Foster said to want Northern Ireland Brexit backstop taken out of the EU Withdrawal Agreement and put into the Political Declaration (which doesn't have the same binding status)
• German Chancellor Merkel said to have told the PM May at their Berlin meeting there was "no way" the Withdrawal Agreement would be reopened. Brexit negotiations had to be handled through the European Commission and not through bilateral talks with national governments
• France left wing party filed for no confidence vote in parliament. Parliament to debate no-confidence motion on Thursday, Dec 13th

Americas:

• President Trump spoke with news outlet on a wide-range of topics. He noted that If necessary he would meet with China President Xi again on trade issues. He added that the release of Huawei CFO Meng could be part of broader trade deal with China, could intervene in the Huawei case if it aided China trade deal; On rates, Trump noted that it would be 'foolish' for US Fed to raise rates at next week's meeting (Dec 18-19th)

Energy:

• Weekly API Oil Inventories: Crude: -10.2M v +5.4M prior

Macro

• (UK) United Kingdom: Prime Minister will face a no confidence vote in her leadership between 18:00-20:00PM GMT with result to be announced 2100PM (13:00-15:00 ET). Many MPs have expressed concerns about the timing of staging a new leadership election at such a crucial juncture. If she loses, it would take until at least until mid January or perhaps early February for the Conservative Party to select a new leader and by default Prime Minister, and leave insufficient time to renegotiate with the EU and then ratify a new deal ahead of the UK's official EU departure date on March 29. This would need an extension in Article 50 period before leaving.
• (IT) Italy: According to local press reports Italy may face new elections amid budget row. Reports suggest Deputy PM Salvini's League, which has been making good progress in the polls will be pushing for new elections, possibly on March 10. An even stronger result for the right wing populists, could potentially add to the stand-off between Rome and Brussels.
• (FR) France: President Macron faces no-confidence debate in parliament tomorrow, according to press reports, after a group of left-wing parties filed a motion for a no confidence vote yesterday. The motion will be debated on Thursday.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +1.0% at 347.7, FTSE +1.1% at 6880, DAX +1.2% at 10,904.91, CAC-40 %+1.7 at 4887, IBEX-35 +0.7% at 8793, FTSE MIB +0.9% at 18753, SMI +0.7% at 8777, S&P 500 Futures +0.8%]
• Market Focal Points/Key Themes: European Indices trade higher across the board once again buoyed by Trade optimism following positive trade related comments by US President Trump and the release on bail of Huawei CFO. On the Brexit front a vote of no confidence in UK PM May will be held tonight after Tory 'rebel's gathered the 48 names needed to trigger the vote. On the corporate front Fashion retailer Superdry falls over 30% after a drop in profits and cut outlook; Spanish retail giant Inditex falls on lackluster earnings, with UK electronics retailer Dixons Carphone also dropping sharply after H1 results. Rolls Royce, Marshalls, Hunstworth and BATs are among the notable names rising after positive trading updates. In the M&A space Swiss traded ABB rises after reports Hitachi nears deal to acquires its Power Grid Business, while Liberbank in Spain rises after Unicaja confirms prelim discussion regarding possible merger. Looking ahead notable earners include Photronics, Peak Resorts and Vera Bradley.

Equities

• Consumer discretionary: Superdry [SDRY.UK] -31% (trading update), Inditex [ITX.ES] -5% (earnings), Dixons Carphone PLC [DC.UK] -10% (earnings; to book exceptional charges), Pernod-Ricard SA [RI.FR] +4% (Elliott Advisors announces 2.5% stake in company), Marshalls Plc [MSLH.UK] +5% (trading update; acquisition), Colruyt [COLR.BE] +10% (earnings), Huntsworth [HNT.UK] +11.5% (trading update)
• Consumer staples: British American Tobacco PLC [BATS.UK] +2% (trading update)
• Utilities: Albioma [ABIO.FR] +10% (stake in company sold)
• Financials: Credit Suisse [CSGN.CH] n/c (investor day)
• Industrials: ABB Ltd [ABBN.CH] -1% (reportedly Hitachi nears deal for ABB's Power Grid business), Rolls Royce Holdings [RR.UK] +3% (trading update), John Wood Group [WG.UK] -7% (trading update), Siemens [SIE.DE] +1%, Alstom [ALO.FR] n/c (companies submit remedy package to EC)

Speakers

• UK 1922 Committee of Conservative MPs (back benchers) Chair Brady confirms conservative party leadership to hold no-confidence vote on PM May on Wed, Dec 12th (today) between 13:00-1500 ET (18:00-20:00 GMT)
• UK PM May issued a statement ahead of the leadership vote that she would contest the leadership challenge with everything I have; stood ready to finish the job as the Govt must deliver on referendum vote. Reiterated view that believed a deal with the EU was attainable. Stressed that a leadership challenge risked handing control of Brexit negotiations to Labour party (opposition) and that a new leader would not have time to meet deadline, would risk Brexit delay
• Northern Ireland DUP Brexit Spokesman Wilson: Our agreement was to back the government with the Tory party. Up to Parliament to decide on leadership change. Reiterated stance that Brexit policy must change
• Italy PM Conte reportedly to seek 2019 budget deficit to GDP ratio between 2.05-2.08%
• Italy Dep PM Salvini (League party) said to possibly seek elections in March 2019 (**Note: Previously Salvini (League party) stated that the coalition govt with 5-Star to last the full 5-year term). Salvini (League party) refutes speculation on early elections
• Spain PM Sanchez: To approve increase of minimum wage to €900 on Dec 21st. To hold Cabinet meeting on Barcelona on Dec 21st and noted that Constitutional path was the way to resolve problems
• Sweden set to adopt Moderate/Christian Democrats 2019 budget. Democrats to support Moderates Christian Democrats budget. Sweden Liberal party and Centrer Party said to abstain in final budget vote on Wed, Dec 12th. Budget seen passing with 154 votes
• Turkey Fin Min Albyra reiterated stance to maintain tight fiscal and monetary policies . Would see positive developments on PPI data in coming period
• Iceland Central Bank (Sedlabanki) Policy Statement noted that the rise in inflation since Nov MPC meeting was still limited to short-term expectations. Depreciation of the ISK currency (Krona) has slowed. Monetary stance as measured by the real rate had eased again

Currencies/Fixed Income

• GBP was initially weaker as the UK 1922 Committee formally announced that a leadership challenge to PM May would occur later today. GBP/USD tested below 1.2480 while the 5-year UK Credit Default Swap tested 40bps for its highest level since the post Brexit vote back in Jun 2016. Various Cabinet Ministers spoke out and voiced support for the Prime Minister to help the pound sterling recover. PM May also issued a statement that she would contest the leadership challenge with everything she had and stood ready to finish the job. A change of leadership would only suit the opposition party and likely delay the Brexit process
• Sweden Nov CPI data dented the prospects that the Riksbank could move to hike rates in Dec. Next Riksbank rate decision take place next Thursday (Dec 21st) and it seemed to be a close call for 1st potential hike to occur in either Dec or Feb policy meetings. Analysts currently leaning towards a February hike as inflation returned to target level and in light of the ongoing market turmoil. The central bank might benefit from a little more time before moving on rates. EUR/SEK cross higher by over 0.5% as it approached the 10.34 level.
• South Africa Nov CPI annual pace came in above expectations and remained above the mid-point of the SARB target range for the 6th straight month. The ZAR currency (Rand) was slightly firmer as the data kept the door open for more central bank rate hikes. USD/ZAR at 14.3020 area

Economic Data

• (FI) Finland Oct Final Retail Sales Volume Y/Y: 1.0% v 0.8% prelim
• (ZA) South Africa Nov CPI M/M: 0.2% v 0.2%e; Y/Y: 5.2% v 5.1%e
• (ZA) South Africa Nov CPI Core M/M: 0.2% v 0.1%e v 0.1% prior; Y/Y: 4.2% v 4.1%e
• (ES) Spain Oct House transactions Y/Y: 15.8% v 9.7% prior
• (SE) Sweden Nov CPI M/M: -0.1% v 0.0%e; Y/Y: 2.0% v 2.0%e
• (SE) Sweden Nov CPIF M/M: -0.1% v 0.0%e; Y/Y: 2.1% v 2.2%e; CPI Level: 330.40 v 330.64e
• (IS) Iceland Central Bank (Sedlabanki) left the 7-Day Term Deposit Rate unchanged at 4.50%
• (IT) Italy Q3 Unemployment Rate: 10.2% v 10.3%e
• (EU) Euro Zone Oct Industrial Production M/M: 0.2% v 0.1%e; Y/Y: 1.2% v 0.7%e

Fixed Income Issuance

• (IN) India sold total INR150B vs. INR150B indicated in 3-month, 6-month and 12-month bills
• (DK) Denmark sold total DKK1.18B in to sell 3-month and 6-month
• (SE) Sweden sold total SEK1.5B vs. SEK1.5B indicated in 2025 and 2032 bonds
• (CH) Switzerland sold CHF135.5M in 0% 2029 bond; Yield: -0.070% v +0.077% prior; Bid-to-cover: 5.04x v 2.17x prior
• (GR) Greece Debt Agency (PDMA) sold €812.5M vs. €625M indicated in 26-week bills; Avg yield: 0.90% v 0.90% prior; Bid-to-cover: 1.53x v 1.33x prior

Looking Ahead

• (SE) Sweden Parliament begins 2-day debate then vote on 2019 Budget
• 05:30 (UK) DMO to sell £500M in 0.125% Inflation -Linked 2048 Gilts (UKTei)
• 06:00 (PT) Portugal Nov Final CPI M/M: No est v -0.4% prelim; Y/Y: No est v 0.9% prelim
• 06:00 (PT) Portugal Nov Final CPI EU Harmonized M/M: No est v -0.9% prelim; Y/Y: No est v 1.0% prelim
• 06:00 (ZA) South Africa Oct Retail Sales M/M: +0.5%e v -0.6% prior; Y/Y: 1.5%e v 0.7% prior
• 06:45 (US) Daily Libor Fixing - 07:00 (RU) Russia to sell combined RUB21.2B in OFZ bonds (2 tranches)
• To sell RUB in OFZ bonds
• To sell RUB in OFZ bonds
• 07:00 (US) MBA Mortgage Applications w/e Dec 7th: No est v +2.0% prior
• 07:00 (IN) India Nov CPI Y/Y: 2.6%e v 3.3% prior
• 07:00 (IN) India Industrial Production Y/Y: 6.0%e v 4.5% prior
• 07:00 (DE) German Chancellor Merkel begin 2-day Q&A in Bundestag Plenary
• 07:00 (UK) Weekly PM question time in House of Commons
• 08:00 (RU) Russia Oct Trade Balance: $18.0Be v $18.5B prior; Exports: $39.0Be v $38.4B prior; Imports: $21.4Be v $20.0B prior
• 08:00 (RU) Russia Q3 Preliminary GDP (2nd reading) Y/Y: 1.3%e v 1.3% advance
• 08:10 (UK) Baltic Dry Bulk Index
• 08:30 (US) Nov CPI M/M: 0.0%e v 0.3% prior; Y/Y: 2.2%e v 2.5% prior
• 08:30 (US) Nov CPI Ex Food and Energy M/M: 0.2%e v 0.2% prior; Y/Y: 2.2%e v 2.5% prior
• 08:30 (US) Nov CPI Index NSA: 252.006e v 252.885 prior; CPI Core Index SA: 259.412e v 258.939 prior
• 08:30 (US) Nov Real Avg Weekly Earnings Y/Y: No est v 0.9% prior; Real Avg Hourly Earning Y/Y: No est v 0.7% prior
• 08:30 (CA) Canada Nov Teranet/National Bank House Price Index (HPI): M/M: No est v -0.4% prior; Y/Y: No est v 2.8% prior; HPI: No est v 225.38 prior
• 08:30 (CA) Canada Q3 Capacity Utilization Rate: 86.0%e v 85.5% prior
• 08:30 (FI) ECB's Hakkarainen (Finland) in Frankfurt
• 09:00 (MX) Mexico Oct Industrial Production M/M: -0.3%e v +1.0% prior; Y/Y: 1.8%e v 1.8% prior; Manufacturing Production Y/Y: 2.5%e v 2.4% prior
• 09:30 (BR) Brazil weekly Currency Flow data
• 10:00 (IT) Italy PM Conte meets EU's Juncker
• 10:30 Weekly DOE Oil Inventories
• 12:00 (UK) PM addresses Parliament ahead of confidence vote
• 12:00 (CA) Canada to sell 2-year notes
• 10:00 (IT) Italy PM Conte meets EU's Juncker
• 13:00 (UK) Confidence vote begins on PM May's leadership
• 13:00 (US) Treasury to sell 10-Year Notes Reopening
• 14:00 (US) Nov Monthly Budget Statement: -$196.0Be v -$100.5B prior
• 15:20 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to leave Selic Rate unchanged at 6.50%
• 16:00 (UK) Leadership vote results announced

The Australian dollar stands at the front foot on Wednesday, as comments of US President Trump over Huawei case boosted risk assets, but upside action was so far limited.

Initial resistance at 0.7228 (100SMA/Fibo 23.6% of 0.7393/0.7177) capped recovery, with long shadows on daily candles of past three days suggesting that recovery attempts face strong headwinds and may stall.

Bearishly aligned daily techs support the notion. Repeated failure at 0.7228 would increase risk of return to 0.7177 (10 Dec low) and possible attack at key near-term support at 0.7163 (Fibo 61.8% of 0.7020/0.7393/daily cloud base), loss of which would generate strong bearish signal. Only lift and close above upper pivots at 0.7260 zone (Fibo 38.2% of 0.7393/0.7177/converged 10/20SMA's) would neutralize bearish threats and open way for stronger recovery.

Res: 0.7228, 0.7260, 0.7285, 0.7311
Sup: 0.7195, 0.7177, 0.7163, 0.7139

The USD strengthened against the basket of other currencies due to the recovery of the US Treasury bonds 10-year yield. The USD index updated the monthly maximum and closed in the green (+0.18%). Also yesterday the US published the Manufacturer's Price Index which grew by 0.1% in November, just as the experts predicted. Today we expect essential reports from the US.

The GBP remains under pressure due to the Brexit conundrum. Yesterday's reports from the UK labor market are also somewhat ambiguous. For example, the average wage grew by 3.3% while the experts expected 3.0%. The September`s growth was also re-reviewed and closed at 3.1%. However, the number of requests for the unemployment benefits grew to 21.9K instead of 13.2K. The data from October was also re-reviewed from 20.2K to 23.2K.

Prices on oil moderately grew. The WTI futures are at 51.95 USD/barrel. At 17:30 (GMT+2) the report on the US crude oil reserves will be published.

Market Indicators

• The US stock market had a variety of trends yesterday: #SPY (+0,02%), #DIA (-0,20%), #QQQ (+0,33%).
• The US Treasury bond 10-year yield started to grow. Right now it is at 2.88-2.89%

The Economic News Feed for 12.12.2018:

• Inflation report (US) – 15:30 (GMT+2:00).

The pair holds in green for the third straight day and extends rally from 112.23 double-bottom through pivotal Fibo barrier at 113.35 (61.8% of 114.03/112.23 bear-leg), close above which would generate bullish signal.

The dollar was boosted by higher US treasuries and weakness of pound on rising uncertainty over Brexit.

Near-term action is underpinned by thickening daily cloud which contained recent attacks and strengthening bullish momentum.

Bulls eye target at 113.61 (Fibo 76.4%) break of which would open way towards peaks at 114.03 (28 Nov) and 114.20 (12 Nov). Broken converged 10/20SMA's (113.20) are expected to contain dips and keep bulls in play

Res: 113.61, 113.82, 114.03, 114.20
Sup: 113.35, 113.20, 113.08, 112.92

EURJPY has been trading within a consolidation area over the last month, with upper boundary the 129.28 resistance barrier, and lower boundary the 127.60 support level, having mid-level the 23.6% Fibonacci retracement level of the downleg from 133.10 to 126.60, around 128.15.

From the technical structure, in the 4-hour chart, the RSI indicator is moving slightly lower below the threshold of 50, while the MACD oscillator is flattening above the zero line but below the trigger line.

However, if prices rebound again on the 23.6% Fibonacci, they could jump towards the 128.90 resistance level, identified by the recent highs and then could touch the 38.2% Fibonacci mark of 129.10. More upside movement could drive the market until the upper boundary of 129.28. A penetration above this level could switch the neutral bias to a more positive one, hitting the 50.0% Fibonacci of 129.86.

Alternatively, if the market manages to turn to the downside and slip below the 23.6% Fibonacci, attention could turn to the 127.60 support. A clear run below the consolidation area may challenge the 127.25 barrier.

Overall, looking at the short-term picture, the market is predicted to remain neutral.

Last week strength stalled at the major level 0.9070/80. Our bias though stays bullish, but we do expect a pullback. Trading below the mentioned resistance area should turn our focus back on the major support at 0.8950 which may be a good entry point for a long position.

Finally, closing above 0.9080 would be a confirmation for the medium-term uptrend with next resistance is seen at 0.9180.

Cable bounces above 1.25 handle in early European trading on Wednesday, as bears are taking a breather after steep three-day fall which hit new 20-month low at 1.2476. Sterling remains under strong pressure on political turmoil after PM May postponed parliamentary vote on Brexit deal and rising concerns over no deal Brexit. Bearish studies on daily and weekly chart support negative scenario for further weakness and test of 1.2365 (Apr 2017 trough) and possible extension towards 1.20 zone after bears took out Fibo support at 1.2508 (76.4% of 1.1930/1.4376). Upticks are expected to provide fresh selling opportunities and should be ideally capped under 1.2638/58 (Tuesday's spike high / daily Tenkan-sen/4 Dec low).

Res: 1.2549, 1.2619, 1.2638, 1.2661
Sup: 1.2476, 1.2418, 1.2365, 1.2268