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Daily Pivots: (S1) 1.1307; (P) 1.1345; (R1) 1.1367; More.....

Intraday bias in EUR/USD remains mildly on the downside at this point. Fall from 1.1472 is in progress for retesting 1.1215 support first. Decisive break there will resume larger down trend for 1.1186 fibonacci level next. On the upside, above 1.1421 minor resistance will turn intraday bias back to the upside for 1.1499 resistance. Firm break there will indicate near term reversal and turn outlook bullish for 1.1814 key resistance.

In the bigger picture, down trend from 1.2555 medium term top has just resumed 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. On the upside, break of 1.1814 resistance is now needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of strong rebound.

Daily Pivots: (S1) 1.2782; (P) 1.2823; (R1) 1.2849; More...

Intraday bias in GBP/USD remains neutral as it's bounded in range of 1.2764/2927. On the upside, above 1.2927 will turn bias to the upside for 1.3071 resistance first. On the downside, break of 1.2764 will extend the fall from 1.3174 to 1.2661 key support level. Overall, price actions from 1.2661 are viewed as a consolidation pattern. Even in case of strong rebound, upside should be limited by 1.3316 fibonacci level to bring down trend resumption eventually.

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. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

Daily Pivots: (S1) 0.9963; (P) 0.9978; (R1) 1.0003; More...

USD/CHF's recovery from 0.9908 is still in progress but upside is limited below 1.0006 minor resistance. Intraday bias stays neutral first. On the upside, break of 1.0006 minor support will argue that the pull back from 1.0128 has completed. Intraday bias will be turned back to the upside for retesting 1.1028. However, on the downside, break of 38.2% retracement of 0.9541 to 1.0128 at 0.9904 will target 0.9848 key support level.

In the bigger picture, the pullback from 1.0067 has completed at 0.9541 already. And rise from 0.9186 is likely resuming. Firm break of 1.0067 will pave the way to retest 1.0342 key resistance. We'd be cautious on strong resistance from there to limit upside to bring another medium term fall to extend long term range trading. However, break of 0.9848 near term support will dampen this view and bring deeper decline back to 0.9541 support and possibly below.

Daily Pivots: (S1) 113.10; (P) 113.38; (R1) 113.87; More..

USD/JPY's rise from 112.30 continues to as high as 113.65 so far. Intraday bias remains on the upside for 114.20/73 key resistance zone. Decisive break there will resume larger rally from 104.62. On the downside, below 113.16 minor support will turn intraday bias neutral first. Overall, price actions from 114.54 are seen as a consolidation pattern. Hence, even in case of another decline, downside should be contained by 38.2% retracement of 104.62 to 114.54 at 110.75 to bring rebound.

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.

The forex markets are in a rather mixed mode this week so far, except that clear strength is seen in USD/JPY. Euro's rebound yesterday was rather brief as Italy eventually decided to stick with its 2019 budget plan despite rumors of some adjustments. Sterling did get any sustainable boost from the Brexit deal. Instead, Dollar was apparently lifted by rebound in US stocks and mild recovery in treasury yields. Yen is thus being pressured for the same reasons. Nonetheless, no follow through movements are seen yet.

Technically, USD/JPY is on track to have a test on 114.20/73 resistance zone. But there is no confirmation of Dollar strength, nor Yen weakness elsewhere. USD/CHF is held well below 1.0006 minor resistance. GBP/USD is held above 1.2764 minor support. AUD/USD is held above 0.7164 near term support. And, USD/CAD is stuck in range. EUR/JPY is held below 129.10 minor resistance. GBP/JPY also held below 145.99 minor resistance. These levels have to be broken before confirming the underlying trends for the near term.

In other markets, DOW closed up 354.29 pts, or 1.46% at 24640.25. But it's still kept below the lower side of last Tuesday's gap at 24707.26. S&P 500 rose 1.55% and NASDAQ rose 2.06%. Treasury yields closed slightly higher with 10-year yield up 0.018 at 3.072. Asian markets are mixed. Nikkei is currently up 0.64%, Singapore Strait Times up 0.20%. China Shanghai SSE is also up 0.42% but Hong Kong HSI is down -0.009%. Overall, Asian markets reacted little to Trump's new threats of tariffs on China.

Italy to stick with 2019 budget for now, wait for technical analysis of the plan

Italy decided to stick with their 2019 budget after meeting between Prime Minister Giuseppe Conte and his two deputies, Matteo Salvini and Luigi Di Maio. In a joint statement, the three said that "the objectives that have already been fixed are confirmed." Also, "as far as the on-going discussions with European institutions are concerned, we agreed to wait for the technical analysis of the proposed reforms which have the most important social impact to quantify precisely the cost."

Meanwhile, it's reported that they're still flexible in adjusting the details of the plan so as to avoid disciplinary actions by the European Commission. For example, the so called citizen's income plan could be delayed for a month or two which could save billions.

ECB Draghi: Prevailing uncertainties call for patience, prudence and persistence calibrating policy

ECB President Mario Draghi told the ECON committee of the European Parliament today that data since September have been "weaker than expected". And, the "loss in growth momentum mainly reflects weaker trade growth, but also some country and sector-specific factors."

But he tried to talk down the slowdown as he said "A gradual slowdown is normal as expansions mature and growth converges towards its long-run potential." Also, "some of the slowdown may also be temporary." He maintained that "underlying drivers of domestic demand remain in place." On prices, Draghi reiterated that "recent developments confirm the Governing Council's earlier assessments of the medium-term inflation outlook."

And ECB therefore "continues to anticipate that, subject to incoming data confirming our medium-term inflation outlook, net asset purchases will come to an end in December 2018." But he also emphasized that "prevailing uncertainties still call for patience, prudence and persistence in calibrating our monetary policy stance." And, "significant degree of monetary policy stimulus will be maintained, even after the end of net asset purchases."

UK PM May to visit Northern Ireland to sell her Brexit deal

The UK Parliament is set to vote on the Brexit withdrawal agreement on December 11. Prime Minister Theresa May will start her nationwide tour today to secure the vote. Northern Ireland and Wales are her destinations today.

For Norther Ireland, May said in a statement on her visit that "having been told by the EU that we would need to split the UK in two, we are leaving as one United Kingdom." And, "my deal delivers for every corner of the UK and I will work hard to strengthen the bonds that unite us as we look ahead to our future outside of the EU."

May is also expected to highlight the benefits of her deal for businesses and said it has support from manufacturers who "need to be able to trade freely across the border with Ireland and have unfettered access to the rest of the United Kingdom's market".

UK corrected Trump's false claim on Brexit deal

Without knowing the details, Trump questioned if the Brexit deal with EU with hamper trade with the US. But UK PM May's office quickly clarified and corrected Trump's claim.

Trump said to reporters outside the White House that "I think we have to take a look seriously whether or not the UK is allowed to trade." And, he added, "because right now if you look at the deal, they may not be able to trade with us."

May's office then said "the political declaration we have agreed with the EU is very clear we will have an independent trade policy so that the UK can sign trade deals with countries around the world — including with the US." And, "we have already been laying the groundwork for an ambitious agreement with the US through our joint working groups, which have met five times so far."

Trump highly unlikely to hold off 25% tariffs on $200B Chinese goods, threaten another $267B

In an interview with the WSJ, Trump said it was "highly unlikely" for him to hold off on raising tariffs on USD 200B in Chinese goods from 10% to 25% on January. We went further to threaten China for more tariffs if they cannot make a deal.

Trump said, "the only deal would be China has to open up their country to competition from the United States". And, "as far as other countries are concerned, that's up to them."

Then Trump warned "If we don't make a deal, then I'm going to put the $267 billion additional on".

WTO indicator dropped to lowest since Oct 2016, exports orders weakest since 2012

WTO's World Trade Outlook indicator dropped notably from 100.3 to 98.6 according to data released today. That's the lowest level since October 2016, with declines in all component indices. WTO said in the release that it signals trade growth in the coming months is "expected to be below-trend".

WTO said that "the continued moderation in the overall WTOI index was driven by the steady decline in the export orders index (96.6), which remains below trend and is approaching the weakest point recorded in 2012 during the eurozone crisis". And, "The latest results are consistent with the WTO's downgraded outlook for global trade issued in September amid escalating trade tensions and tighter credit conditions in important markets. The revised forecast anticipated trade expansion to slow to 3.9% in 2018 and 3.7% in 2019 from 4.7% in 2017."

On the data front

New Zealand trade deficit widened to NZD -1.295M in October, above expectation of NZD -850M. Japan corporate services price index rose 1.3% yoy in October versus expectation of 1.2% yoy.

Later in the day, UK will release CBI reported sales. US will release house price indices and consumer confidence.

USD/JPY Daily Outlook

Daily Pivots: (S1) 113.10; (P) 113.38; (R1) 113.87; More..

USD/JPY's rise from 112.30 continues to as high as 113.65 so far. Intraday bias remains on the upside for 114.20/73 key resistance zone. Decisive break there will resume larger rally from 104.62. On the downside, below 113.16 minor support will turn intraday bias neutral first. Overall, price actions from 114.54 are seen as a consolidation pattern. Hence, even in case of another decline, downside should be contained by 38.2% retracement of 104.62 to 114.54 at 110.75 to bring rebound.

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.

Economic Indicators Update

Key Highlights

• The British Pound found support near 1.2720 and recovered against the US Dollar.
• There is a crucial bearish trend line formed with resistance at 1.2900 on the 4-hours chart of GBP/USD.
• The German business sentiment index in Nov 2018 declined from the last revised reading of 102.9 to 102.0.
• Today, the US House Price Index for Sep 2018 will be released, which is forecasted to increase 0.4% (MoM).

GBPUSD Technical Analysis

The British Pound formed a decent base near the 1.2730 level and started an upside correction against the US Dollar. The GBP/USD pair recovered above 1.2820 and it is now facing a solid resistance near 1.2900.

Looking at the 4-hours chart, the pair started a decent recovery from the 1.2720 swing low. It traded above the 1.2800 resistance and the 23.6% Fib retracement level of the last decline from the 1.3071 high to 1.2722 low.

However, the price struggled to break the 1.2900-1.2915 resistance area plus the 100 simple moving average (red, 4-hours). Besides, there was no close above the 50% Fib retracement level of the last decline from the 1.3071 high to 1.2722 low.

Moreover, there is a crucial bearish trend line formed with resistance at 1.2900. Therefore, the pair must break the 1.2900 and 1.12915 resistance levels to move into a positive zone.

On the downside, an immediate support awaits at 1.2800, below which the pair may perhaps drop back towards the 1.2720 swing low in the near term. Overall, it seems like GBP/USD is preparing for the next break either above 1.2900 or below 1.2800.

Fundamentally, the German IFO business sentiment index for Nov 2018 was released by the CESifo Group. The market was looking for a decline from the last reading of 102.8 to 102.3.

However, the result was negative as there was a decline in the index to 102.0. On the positive side, the last reading was revised up from 102.8 to 102.9.

The EUR/USD pair stayed above the 1.1320 support, but it is facing many resistances near the 1.1400, 1.1420 and 1.1440 levels.

Economic Releases to Watch Today

• UK's CBI Industrial Trends Survey Realized Nov 2018 (MoM) – Forecast 10%, versus 5% previous.
• US House Price Index for Sep 2018 (MoM) – Forecast +0.4%, versus +0.3% previous.
• S&P/Case-Shiller Home Price Indices for Sep 2018 (YoY) – Forecast +5.3%, versus +5.5% previous.

USDJPY threatens 113.62 resistance zone on bull pressure. This is coming on the back of its Monday strength. On the upside, resistance comes in at 114.00 level. Above here will turn focus to the 114.50 level. Further out, we expect a possible move towards the 115.00 level if the earlier level is taken out. Above here will open the door for more strength towards the 115.50. Its daily RSI is bullish and pointing higher suggesting further strength. On the downside, support comes in at the 113.00 level where a break will target the 112.50 level. A break through that level will turn focus to the 112.00 level and then lower towards the 112.00 level. On the whole, USDJPY faces further upside pressure.

In an interview with the WSJ, Trump said it was "highly unlikely" for him to hold off on raising tariffs on USD 200B in Chinese goods from 10% to 25% on January. We went further to threaten China for more tariffs if they cannot make a deal.

Trump said, "the only deal would be China has to open up their country to competition from the United States". And, "as far as other countries are concerned, that's up to them."

Then Trump warned "If we don't make a deal, then I'm going to put the $267 billion additional on".

STOCKS

Equities in the G3 (USA, Europe and Japan) have rallied as expected, but China and India could be vulnerable to some downside.

As expected, Support at 24250 is holding well enough on the Dow (24640.24, +1.46%). A further rise to 24750-25000 might be thought of.

Even the DAX (11354.72, +1.45%) saw a good bounce yesterday, imparting greater strength to the Support at 11000. We may now look for 11600 while above 11200 and 11000.

The Nikkei (21856.69, +0.19%) has also just risen above 21800 and could move up to 22100-200 if the rally sustains, which might happen.

As it turns out, the Nifty (10628.60, +0.97%) managed to rally a bit yesterday and avoid further near-term bearishness. However, important Resistance at 10725 could still push the Nifty down all over again, unless it is broken. The corresponding Resistance on the Sensex (35354.08, +1.07%) comes in at 35600 and also has the potential to push the market down unless broken.

As cautioned, the Shanghai (2586.71, +0.42%) could be a loss leader and we may have to be prepared for a fall towards 2550 or even 2400.

COMMODITIES

Precious metals are trading lower today while crude prices have risen a bit.

Although Brent (60.16) and WTI (51.26) might have lower supports near 56 and 47.50 respectively, the crude prices have seen a decent rise from lower levels seen yesterday. Brent could test the earlier support turned resistance near 62 on the upside while a possibility of testing 56 remains intact. WTI could also test 53 on the upside this week before coming off from there. A break above 62 and 53 respectively is needed to initiate some more upside for the Crude prices going forward.

Gold (1222) is trading just below immediate resistance near 1230 but is yet to see a sharp rejection just now. If a sharp fall is not seen from here just now, the price could attempt to eventually break on the upside after seeing some stable movement in the 1218-1230 region for a few sessions. A fall below 1218 could take it lower towards 1210-1208 before bouncing back towards 1230 again.

Silver (14.20) is headed downwards and could target 13.80 before again bouncing back towards 14.

Copper (2.7490) has also come off and could head lower to 2.65 in the coming sessions before it bounces back from there. Near term looks bearish.

FOREX

Euro (1.1333) tested a high of 1.1384 yesterday but again came off from there. It has decent resistance zones at 1.136-1.138 and higher up at 1.140-1.142, which should keep the upside capped in this week. A further fall below 1.13 in the week looks possible.

Dollar Index (97.05) has immediate support between 96.75 to 97.00. While above 96.75, it should rise towards resistance on daily and 3 day line chart near 97.50-97.75 in coming few sessions.

Dollar-Yen (113.45) has risen to test levels near 113.5 as expected. It can now rise further in the near term towards 114.0-114.2 – seen as resistance on daily candles and daily line chart.

Pound (1.2812) – Some support might be emerging for the Pound near 1.28 on daily candles. It could range between 1.2800-1.2875 for the next 1-2 sessions and then break on the downside towards 1.27 after that.

Aussie (0.7223) – While below immediate resistance on daily candles near 0.725, Aussie could move lower towards 0.719 in this week.

Euro-Yen (128.61) – While below resistance on daily candles near 128.75, it could move lower towards 128 in the next 1-2 sessions. With Dollar Yen looking bullish towards 114, Euro would need to become bearish towards 1.12 for Euro Yen to break below 128.

Dollar Rupee (70.875): Dollar Rupee may test 71.30 on the upside before seeing another decline towards 70.20/40 again in the near term.

INTEREST RATES

Decent bounce in the US 2Yr (2.82%) and 10Yr (3.06%) suggesting that Supports at 2.80% and 3.00-05% respectively are holding in the near term at least. Now, the Supports would break either if the US GDP data comes in a little weaker than expected on Wednesday or if any of the Fed members start becoming dovish ahead of the Dec FOMC. Else, the Supports may continue to hold ahead of the FOMC.

German yields are more or less near Friday's levels. The Germany-Italy 10Yr Spread (-2.90%) has Resistance near current levels of -2.90% and could move lower towards -3.5% while that holds, keeping the Euro weak in the near term.

The 10Yr GOI (7.7257%) has not broken below interim Support at 7.70% as yet, but should be overall bearish for 7.65-7.60% and lower while below 7.80%. That said, maybe the near term could see a bit of an uptick in the 10Yr GOI yield, especially if the US Bond yields move higher.

A whole number of things just went sideways for global risk sentiment.

Timing is everything when it comes to President Trump, and while his tariff comments are probably a case of holding cards close to his chest while keeping the pressure on China, when taken in context with all the other noise, markets have quickly gone from good to bad.

His latest comments on the immigration front with Mexico are bringing into question the USMCA again ” “We won't be trading with Mexico if the relationship isn't good […] we want to see Mexico move migrants back to Central America.”

In general, risk sentiment is getting hit with a ton of bricks driven by Trump's hard-line immigration stance threating the USMCA and then backed up this morning bellicose tariff comments directed at China.

It doesn't sound like we will see Donald, the Deal Maker but instead Trump the Trade Warrior at G20

And then on the never-ending Brexit saga and perhaps a foreshadowing of what to expect when May faces parliament. BREXITEERS ‘WILL BACK MAY'S DEAL IF SHE SAYS WHEN SHE'S QUITTING'- THE TIMES

And to add a bit of spice to the local narrative, The Australian Government has just lost its control of parliament after a surprise departure. Julia Banks, an MP from the Liberal Party, has made a shock announcement that she is leaving the party and joining the ranks of independent MPs. This politically damaging body blow has sent the Aussie hurtling towards them.720O

It's a flat-out toxic cocktail that has seen equities and commodities come under pressure

Oil is suffering from the ” risk off ” financial flow amidst uncertainty over just how aggressively Saudi Arabia will be inclined to offer up d a production cut with enough sting to buttress prices without provoking the ire of President Trump. President Trump is not in a good mood today. !!

So how was your morning ??