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EURUSD (1.1343): The EURUSD maintains a sideways range with price action turning flat for the past few daily sessions. The common currency touched down to the support level at 1.1315 - 1.1300 briefly before pulling back higher. However, with the strong consolidation, we expect that the support could eventually pave the way for further declines in the near term. A strong close below 1.1315 - 1.1300 could signal a drop down to 1.1220 level to re-establish support. To the upside, the trend line which is currently being followed needs to be breached to confirm the upside.

Trading in the U.S. markets were subdued as equities, and some other exchanges were closed due to the National day of mourning for the former President George H. W. Bush.

In the Eurozone, the services PMI showed a modest increase in activity as the index rose to 53.4 beating estimates of 53.1 and advancing from the month before. Retail sales data also came out better, rising 0.3% on the month although previous month's report was revised lower to show a 0.5% decline.

The Bank of Canada held its interest rates unchanged at 1.75%. The Central Bank flagged concerns about the trade which sent the Canadian Dollar to post losses on the day.

Earlier in the day, Australia's retail sales showed a 0.3% increase for November. The data matched estimates but previous month's retail sales numbers were revised lower to show a 0.1% increase.

The European trading session will start with the German factory orders which are forecast to shrink 0.4% in November. This follows a 0.3% increase the month before.

The NY trading session will see the release of the private payrolls report from ADP. Forecasts point to private payrolls rising 196k in November. This follows a 227k increase the month before. The Bank of Canada governor, Stephen Poloz is due to speak later in the afternoon.

ISM's non-manufacturing PMI is due later and is forecast to show an increase to 59.2 for November. This marks a modest slowdown from 60.3 in the previous month. Factory orders in the U.S. are set to fall 1.9% on the month.

A few months ago, some investorsspeculated that Oil prices couldreach $100 per barrel in 2018. Sanctions on Iran, shortages in supplies, strong demand, and an all-time low in spare capacity were all factors contributing todriving prices to new highs. This proved to be a bad speculation. After OPEC's meeting in June, the cartel decided to ramp up production to meet any supply shortages. What happened next was the U.S. issuing eight countries for waivers before sanction on Iran kicks off, global demand seemed to have abated, and production in the U.S., Saudi Arabia, and the United Arab Emirates reached a new high. These factors combined led to a free fall in prices where Brent lost third of its value from October's peak.

Today's OPEC meeting is heldat a very critical time where there's clear evidence of a global economic slowdown and strong Oil supply particularly from the U.S. which will eventually lead to oversupply and swelling inventories.

The current environment requires a strong response and is definitely a case for cutting supply to save prices from falling further in 2019. While we think that a cut in production will be announced in Vienna today, the more critical question is by how much, and how the cartel would divide the cuts among members and non-members?

This is where it becomes tricky. Although Russia agreed in principle to cutting production, they do not feel the same urgency as the Saudis. That's simply because Russia's economy is more diversifiedand the Ruble is free floating. Higher revenues from a strong rally in Oil prices will be offset by a rising currency. A range of $50-$60 is just fine for Russia. Meanwhile, Saudi Arabia needs Oil price at $85 to balance itsbudget, according to the IMF.

Iraq is also under severe economic pressure and doesn't want to cut production. If it was forced to, there's an increasing chance of leaving the cartel eventually.

The base case scenario seems that Saudi Arabia will shoulder most of the burden with a symbolic cut from Russia.

OPEC+ are also aware that a high spike in Oil prices will attract more anger from the U.S. President. So, expect the cut to be anywhere between 1 – 1.5 million barrels per day from November's level, and the situation will be reevaluated in 2019. Under this scenario prices may remain range bound until year end.

EUR/USD

Current level - 1.1341

We expect the pair to make another attempt to test 1.1260. Breaking this level will open its way toward the next important support at 1.1214. Initial support in case of an opposite movement is 1.1320.

USD/JPY

Current level - 112.70

The pair moves toward a test of the the 112.27 support. Breaking below this level will lead to more weakness to the pair and test of the 111.33 level.

GBP/USD

Current level - 1.2724

The political tensions around the Brexit deal weigh on the pound. The break down of the 1.2730 level clears the way to continue the down move to 1.2200  To witness an alternative scenario the pair must break the key resistance at 1.2860 and afterwards 1.3300.

The British pound is back under selling pressure against the greenback, as traders continue to sell the recent corrective move higher towards the 1.2800 level. A clear breach of the 1.2700 level exposes further downside in the GBPUSD pair towards the 1.2657 support level. Overall, the general trend remains bearish with traders continuing to watch the large head and shoulders pattern across the lower time frames.

The GBPUSD pair is strongly bearish while trading below the 1.2700 level, key technical support is found at the 1.2657 and 1.2550 levels.

If the GBPUSD pair trades above the 1.2739 level, key resistance is found at the 1.2770 and 1.2800 levels.

Ethereum continues to erode early week gains, with the third largest cryptocurrency by market capitalization pressing the $100.00 support level. Price is also trading close to the neckline of a bearish head and shoulders pattern, which holds a $25.00 downside projection. Only a sustained move above the $123.00 level can negate short-term selling pressures on the ETHUSD pair.

If the ETHUSD pair moves below the $97.60 support level, further losses towards the $90.00 and $75.00 levels remains possible.

If ETHUSD pair moves above the $110.00 level, further upside towards the $116.00 and $125.00 resistance levels appears likely.

The US dollar is once again under bearish pressure against the Japanese yen, as risk-off trading sentiment returns to financial markets. The USDJPY pair is trading under trendline support, following a minor technical correctional towards the pivotal 113.15 level. Traders now await a slew of high-impact economic data from the United States economy and a scheduled speech from FED Chair Jerome Powell.

The USDJPY pair is strongly bearish while trading below the 112.50 level, key support is found at the 112.30 and 111.50 levels.

If the USDJPY pair moves above the 112.95 level, key resistance is found at the 113.15 and 113.90 levels.

World markets declined overnight after a daughter of Huawei's founder and current CFO, Wanzhou Meng, was arrested in Canada for potential extradition to the US. While details of the arrest are yet unknown, Huawei is believed to have been used for espionage purposes in the past. US carriers have been banned from using its products and just last month, Australia banned its networking products too. After the arrest, the S&P VIX index, which measures the fear in the market, rose by 4% to 20.75.

The Australia dollar continued the declines started on Tuesday after the country released weak trade balance data. In October, the country's trade balance was at A$2.316 billion, which was lower than the consensus estimate of A$3.1 billion. In September, the balance was at A$2.90 billion. The trade balance happened as exports increased by 1% while imports increased by 3%. This data came a day after the country released weaker-than-expected GDP numbers and two days after the RBA sounded hawkish about the economy. Later today, traders will listen to a statement by the RBA vice chair, Guy Debelle.

The price of crude oil was little moved in overnight trading ahead of the OPEC meeting in Vienna. This will be an important meeting because it comes at a time of numerous geopolitical tensions and when the price of oil is close to the yearly low. The US has also become the biggest oil producer. OPEC members account for more than 50% of all crude oil produced globally. Over the past few days, Saudi Arabia has convinced Russia that supply cuts are needed. However, the problem is on how to word the statement on reducing production without going against the US President, Donald Trump.

The USD was unchanged in overnight trading ahead of key employment data. Today, ADP will release its reading of the number of private sector payrolls in November. Traders expect the data to show an increase by 196K, which will be lower than October's 227K. In the past, however, this number has differed greatly off the back of official government data that will be released tomorrow. In addition to this, traders will pay close attention to the jobless claims data, trade numbers, and the ISM non-manufacturing PMI.

EUR/USD

The EUR/USD pair was little moved overnight ahead of US jobs numbers. The pair is trading at 1.1345, which is unchanged from where it was yesterday. The consolidation in the pair was evident with the triangular pattern that has been forming. The current price is along the middle band of the Bollinger Band while the RSI and MACD are all in neutral positions on the four-hour chart below. This pattern will likely end today after the US jobs numbers.

AUD/USD

The AUD/USD pair dropped sharply in overnight trading and reached an intraday low of 0.7220 after weak trade data. The pair's price is now below the 25-day and 50-day EMA while the RSI has dropped from 70 to the current 36. The ATR, which measures volatility has increased to the highest level since September while the price is along the lower line of the Bollinger Band. Therefore, it is likely that the pair will continue the downward trend.

NZD/USD

After months of increase, the NZD/USD pair continued the downward trend started on Tuesday. In the past two days, the pair has dropped from a YTD high of 0.6970 to today's intraday low of 0.6875. On the four-hour chart, the pair's current price is along the 50-day EMA and lower than the 25-day EMA. The pair's RSI has dropped from 72 on Tuesday to the current 38 and shows that there is a room for a further decline. There is a likelihood that the downward trend will continue today and the pair could test the important support of 0.6800.

Oil is a in wave 4 (pink), which often sees price retrace to the 23.6-50% Fibonacciretracement level of wave 4 vs 3. These Fib levels are always potential bounce and reversal spots for the end of wave 4 and the start of wave 5. It could also be possible that the wave 3 or wave 5 will become (even more) extended with an internal 5 waves. Any break above the 50% Fib makes a wave 4 less likely and a break below the support trend lines could confirm it.

Oil is either still in a wave 3 (pink) and is now building a wave 4 of a lower degree OR oil is in a wave 4 of the current degree (pink). The bearish price action has been very impulsive.

General Trend:

• Hong Kong equities underperform on news related to Huawei
• Nasdaq Futures underperform, in line with tech weakness in Asia
• US markets to resume on Thursday after holiday
• Arrest of Huawei CFO in Canada weighing heavily on the markets, suppliers significantly lower. Will add to friction for trade between Canada and China; China and US and could be a positive to relations between Canada and US if Canada extradites her the US for unspecified charges
• Apple supplier Largan declines over 9%, sees Dec sales lower m/m
• Chinese officials have still not offered new details on trade ‘truce’ (financial press)
• China Commerce Ministry (MOFCOM) is due to hold its weekly news briefing later on Thursday in Beijing (time not disclosed) - financial press
• China skips OMO operations for the 30th consecutive session, and again conducts 1-yr MLF for the 13th time this year
• Oil prices decline ahead of upcoming OPEC meeting
• Commodity currencies track declines in equities
• Taiwan Central Bank Gov rules out QE for now

Headlines/Economic Data

Japan

• Nikkei 225 opened -0.7%
• (JP) Japan Trade Min Motegi: Reiterates US want to reduce trade deficit with Japan
• (JP) Japan constitutional reform discussions to be delayed to 2019 – Nikkei
• (JP) Bank of Japan (BOJ) Gov Kuroda: Risks for Japan's economy is tilted to the downside; economy is expanding gradually, negative Q3 GDP growth due to temporary factors like natural disasters; BOJ can theoretically cut short and long term rate targets, ramp up asset buying or accelerate pace of base money expansion if it needs to ease further -6178.JP President Nagato: Expect 2019 GDP around 1%; interest rates wont rise for the next couple of years; impact of BOJ tweak in July on the company has been nothing
• 9984.JP Underwriters of $23B mobile unit IPO expected to cover entire book by Wednesday

Korea

• Kospi opened -0.3%
• (KR) North Korea has "significantly" expanded a key long-range missile base while denuclearization negotiations with the United States have stalled - Press citing satellite images
• 005380.KR Refused a revised plan that removed a restriction on collective wage bargaining at a proposed plant in Gwangju - Korean press
• (KR) South Korea Oct Current Account Balance: $9.2B v $10.8B prior; Goods Balance: $11.0B v 13.2B prior
• 005930.KR To promote president/CEO of device solution (chip) unit Kim Ki-nam to Vice Chairman position - annual executive shake up; retained its leaders in its smartphone and consumer electronics divisions
• (KR) South Korea rival political parties held talks to make a breakthrough over the government's 2019 budget bill; electoral reform emerging as a sticking point in moving their talks forward - Yonhap
• (KR) North Korea Foreign Min Ri Yong-ho to arrive in Beijing today at the invitation of his China counterpart - Korean press

China/Hong Kong

• Hang Seng opened -1.8%, Shanghai Composite -0.8%
• HUAWEI.CN Canada reportedly arrests global CFO, Deputy Chairwoman and daughter of founder, Wanzhou Meng in Vancouver on trade sanction violation suspicions in the US - Globe & Mail; Follow Up: Confirms Wanzhou Meng is detained by Canada authorities, not aware of any wrongdoing by Meng, not provided with much information so far; confirms US is seeking to extradite her
• Follow Up: China Embassy has asked Canada to free CFO Meng, resolutely opposes the arrest
• (CN) CHINA PBOC CONDUCTS CNY187.5B IN 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) V CNY403.5B PRIOR AT 3.30% V 3.30% PRIOR
• 1810.HK Accounts for 20% of wearable tech global market share in Q3, beating Apple and FitBit - SCMP citing IDC data
• (HK) Hong Kong micro flats expected to be hit the hardest on falling prices; seen -30% v the -20% to -10% expected in the overall residential market – SCMP
• (CN) China PBoC sets yuan reference rate: 6.8599 v 6.8476 prior
• (CN) China PBoC Open Market Operation (OMO): Skips open market operation v skipped prior (30th straight skip)
• (CN) China PBoC Advisor: PBoC to allow yuan to gain in trade truce - China press
• 54.HK Strength attributed to plan by Chairman to take the company private for $2.7B (+30%)

Australia/New Zealand

• ASX 200 opened -0.3%
• FCG.NZ Reports prelim Q1 EPS NZ$0.25-0.35, Rev NZ$3.8B, -4% y/y, gross margin 17% v 16.6% y/y; Cuts FY18-'19 milk price forecast to NZ$6.00-6.30/kg (prior NZ$6.25-6.50/kg)
• NUF.AU Guides FY19 earnings growth; EBITDA A$500-530M; Rev to grow y/y; Guides H1 EBITDA similar to 2018 - AGM
• (AU) AUSTRALIA OCT TRADE BALANCE (A$): 2.3B V 3.0BE (10TH CONSECUTIVE SURPLUS); Exports m/m: +1% v +1% prior; Imports m/m: +3% v -1.0% prior
• (AU) AUSTRALIA OCT RETAIL SALES M/M: 0.3% V 0.3%E (prior revised lower)
• AHY.AU Sells Australian consumer tissue division for A$180M; accretive to FY19 EBITDA (+45%)
• DNA.AU CEO Joey Lim requests leave of absence for ~3-months (-18%)
• (NZ) New Zealand sells NZ$100M v NZ$100M indicated in 2.50% Sept 2040 Inflation-Indexed Bonds, avg yield 1.7244% v 1.6952% prior, bid to cover 2.90x v 2.67x prior

Other Asia

• (TW) Taiwan Central Bank Gov Yang Chin-Long: US/China trade ware may last 1-2 years

North America

• (US) FEDERAL RESERVE BEIGE BOOK: ECONOMIC GROWTH 'MODEST OR MODERATE'; LABOR MARKETS TIGHTENED FURTHER
• (CA) BANK OF CANADA (BOC) LEAVES INTEREST RATE UNCHANGED AT 1.75%; AS EXPECTED
• (US) Fed Quarles (hawk; FOMC voter): No comments on monetary policy: US economy is strong, especially so in the West
• Citi [C]: CFO: may see Rev growth in branded cards in Q4; fixed income trading Rev may be lower in Q4 - GS conf comments

Europe

• OPEC delegate: some nations see a reduction of under 1M bpd as an adequate cut
• (RU) According to Russia calculations a return to 2016 oil quotas could result in cuts of 1.2M bpd - press
• (RU) Russia agrees to cut oil output in tandem with OPEC and allies in 2019; debates regarding figures and baseline for cuts still ongoing
• (FR) France Parliament votes in favor of tax announcements by 358-194 margin; Govt has now abandoned fuel tax rise
• (UK) PM May being pushed to call off Parliament vote on Brexit next week over worries that if it fails the Govt will break down - Times
• (UK) UK Government reportedly seeking compromise to avoid defeat at Dec 11th vote; to include Parliamentary Veto on Backstop - press
• (IT) Italy to send revised budget proposal to Brussels by next week - press

Levels as of 12:50ET

• Hang Seng -2.8%; Shanghai Composite -1.5%; Kospi -1.6%; Nikkei225 -2.3%; ASX 200 -0.4%
• Equity Futures: S&P500 -1.3%; Nasdaq100 -1.6%, Dax -1.5%; FTSE100 -0.8%
• EUR 1.1339-1.1352; JPY 112.58-113.24 ; AUD 0.7218-0.7274;NZD 0.6858-0.6901
• Feb Gold +0.2% at $1,244/oz; Jan Crude Oil -1.0% at $52.39/brl; Feb Copper -1.0% at $2.75/lb