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Daily Pivots: (S1) 0.7272; (P) 0.7299; (R1) 0.7321; More...

AUD/USD retreats notably after failing to sustain above 0.7314 resistance. Intraday bias is turned neutral first. For now, further rally is expected as long as 0.7164 support holds. On the upside, sustained break of 0.7314 will indicate medium term reversal. Further rally should be seen to 38.2% retracement of 0.8135 to 0.7020 at 0.7446 next. Nevertheless, failure to sustain above 0.7314, and break of 0.7164 support will retain bearishness and turn bias back to the downside for retesting 0.7020 low.

In the bigger picture, AUD/USD's decline from 0.8135 could have completed at 0.7020 already, ahead of 0.6826 key support (2016 low). Break of 0.7314 will confirm and bring strong rebound. But for now, we'd expect strong resistance from 0.7500 support turned resistance to limit upside. Medium term fall from 0.8135 should extend to take on 0.6826 low at a later stage.

For the 24 hours to 23:00 GMT, the AUD declined 0.36% against the USD and closed at 0.7293.

LME Copper prices rose 1.3% or $79.0/MT to $6260.0/MT. Aluminium prices rose 0.2% or $4.0/MT to $1918.0/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7289, with the AUD trading 0.05% lower against the USD from yesterday’s close.

The minutes of the Reserve Bank of Australia’s (RBA) November monetary policy meeting minutes showed that policymakers sounded optimistic about the country’s economic growth and signalled for a possible decline in the unemployment rate. Further, the minutes revealed that policymakers expect above-trend growth this year and next year, driven by record low interest rates at 1.50%.

The pair is expected to find support at 0.7270, and a fall through could take it to the next support level of 0.7250. The pair is expected to find its first resistance at 0.7317, and a rise through could take it to the next resistance level of 0.7344.

Looking ahead, traders would await the Reserve Bank of Australia’s Governor, Philip Lowe’s speech followed by Australia’s Westpac leading index for October, slated to release overnight.

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

Daily Pivots: (S1) 1.3141; (P) 1.3171; (R1) 1.3203; More...

USD/CAD remains bounded in range of 1.3056/3264 and intraday bias remains neutral at this point. With 1.3056 support intact, further rise is expected in the pair. On the upside, break of 1.3264 will resume the rise from 1.2781 and target 1.3385 key resistance next. On the downside, however, break of break of 1.3056 will indicate near term reversal and turn outlook bearish.

In the bigger picture, current development revives the case that corrective fall from 1.3385 has completed at 1.2781 already. And whole up trend from 1.2061 (2016 low) is ready to resume. Break of 1.3385 will target 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685. This will now be the favored case as long as 1.2781 support holds.

Daily Pivots: (S1) 1.1359; (P) 1.1392; (R1) 1.1414; More...

No change in EUR/CHF's outlook. The structure of price actions from 1.1501 suggests it's a consolidation pattern. In case of another fall, downside should be contained by 61.8% retracement of 1.1173 to 1.1501 at 1.1298 to bring rebound. On the upside, break of 1.1470 resistance will argue that rise from 1.1173 is resuming. Break of 1.1501 will revive the case of bullish trend reversal.

In the bigger picture, price actions from 1.2004 medium term top is seen as a correction only. Downside should be contained by support zone of 1.1198 (2016 high) and 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to complete it and bring rebound. This cluster level is in proximity to long term channel support (now at 1.1261) too. A break of 1.2 key resistance is still expected in the medium term long term. However, sustained break of the mentioned support zone will mark reversal of the long term trend. In that case, 1.0629 key support will be back into focus.

For the 24 hours to 23:00 GMT, Gold rose 0.24% against the USD and closed at USD1224.80 per ounce, amid weakness in the greenback.

In the Asian session, at GMT0400, the pair is trading at 1222.60, with gold trading 0.18% lower against the USD from yesterday’s close.

The pair is expected to find support at 1218.57, and a fall through could take it to the next support level of 1214.53. The pair is expected to find its first resistance at 1226.57, and a rise through could take it to the next resistance level of 1230.53.

The yellow metal is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

Daily Pivots: (S1) 0.8877; (P) 0.8903; (R1) 0.8938; More...

EUR/GBP is losing some upside momentum as seen in 4 hour MACD. But further rise is expected as long as 0.8824 support holds. Decisive break of 0.8939 resistance will pave the way to 0.9098 high. However, break of 0.8824 will now suggest completion of the rebound from 0.8655. Intraday bias will be turned back to the downside instead.

In the bigger picture, EUR/GBP is seen as staying in long term range pattern started at 0.9304 (2016 high). Medium term fall from 0.9305 is possibly in progress and could extend through 0.8620. On the upside, break of 0.8939 resistance is needed to indicate medium term reversal. Otherwise, outlook will remain cautiously bearish even in case of rebound.

For the 24 hours to 23:00 GMT, Silver rose 0.24% against the USD and closed at USD14.41 per ounce, tracking gains in gold prices.

In the Asian session, at GMT0400, the pair is trading at 14.36, with silver trading 0.31% lower against the USD from yesterday’s close.

The pair is expected to find support at 14.32, and a fall through could take it to the next support level of 14.27. The pair is expected to find its first resistance at 14.41, and a rise through could take it to the next resistance level of 14.46.

The white metal is trading below its 20 Hr moving average and showing convergence with its 50 Hr moving average.

For the 24 hours to 23:00 GMT, Crude Oil rose 0.38% against the USD and closed at USD57.37 per barrel, amid reports that the European Union backed a decision by the French government to sanction Iranian nationals linked to a bomb plot in France.

In the Asian session, at GMT0400, the pair is trading at 57.08, with oil trading 0.51% lower against the USD from yesterday's close, amid surge in US crude oil production.

The pair is expected to find support at 55.71, and a fall through could take it to the next support level of 54.35. The pair is expected to find its first resistance at 58.01, and a rise through could take it to the next resistance level of 58.95.

Crude oil is showing convergence with its 20 Hr and 50 Hr moving averages.

Daily Pivots: (S1) 1.5613; (P) 1.5668; (R1) 1.5759; More....

The break of 1.5693 minor resistance suggests that a short term bottom is formed at 1.5519 in AUD/USD, in bullish convergence condition in 4 hour MACD. Intraday bias is turned back to the upside for rebound to 38.2% retracement of 1.6357 to 1.5519 at 1.5839 and possibly above. But upside should be limited well below 1.5984 support turned resistance to bring fall resumption. On the downside, below 1.5643 minor support will bring retest of 1.5519 low.

In the bigger picture, current development argues that up trend from 1.3624 (2017 low) is possibly completed at 1.6357, ahead of 1.6587 (2015 high). This is supported by bearish divergence condition in weekly MACD. Deeper decline is now in favor to 1.5271 cluster support (38.2% retracement of 1.3624 to 1.6357 at 1.5313). Break will target 61.8% retracement at 1.4668. On the upside, break of 1.5984 support turned resistance is now needed to revive the prior medium term up trend. Otherwise, further decline will be in favor even in case of strong interim rebound.

Australian Dollar is under broad based selling pressure today. RBA minutes reiterated the non-urgency for any rate move. IMF report pointed out risks are tilted to the downside in Australia. But risk aversion is more likely the factor driving Aussie down. Major Asian indices are in deep red following the weakness in the US overnight, as tech selloff intensified. Euro and Dollar are following as the next weakest so far. Swiss Franc is the strongest one for today, extending yesterday's surprised rally. Meanwhile, New Zealand Dollar also bucks the trend as it's digesting yesterday's loss.

Technically, strong resistance at 0.7314 as experienced by AUD/USD is also a factor weighing down the Aussie. For now, there is no confirmation of rejection by 0.7314 yet. But break of 0.7164 support (which is still far) will indicate near term reversal. EUR/AUD's break of 1.5693 minor resistance yesterday suggests short term topping and we'll likely see some stronger rebound ahead. USD/CHF's break of 0.9952 support is seen as an indication of bearish reversal. But for now, EUR/USD is holding below 1.1499 resistance. So there is no confirmation of broad based weakness in Dollar yet.

In other markets, NASDAQ led the way down yesterday by dropping -3.03%. DOW closed down -1.56% and S&P 500 lost -1.66%. Treasury yields closed generally lower with 10 year yield down -0.017 at 3.057. 30 year yield showed some resilience and was down -0.011 only to 3.316. In Asia, all major indices are in red. Nikkei is down -1.12%, Hong Kong HSI down -1.89%, China Shanghai SSE down -1.51% and Singapore Strait Times down -1.18%.

RBA cautiously upbeat, but nowhere near a rate hike

RBA sounded cautiously upbeat in the minutes of November 6 meeting. There it noted that "Australian economy had continued to improve and had been a little stronger than expected". However, "outlook for consumption continued to be a source of uncertainty in an environment of slow growth in household incomes". Conditions in the labor market had also be "stronger than expected", and "forward-looking indicators of labour demand continued to point to ongoing strength in the near term".

Nevertheless, underlying inflation remained "low and stable", consistent with previous forecasts. Housing market conditions in Sydney and Melbourne "had continued to ease". "Housing credit growth had declined, particularly for investors, but had continued to be higher than growth in household income".

Overall, RBA maintained that "the next move in the cash rate was more likely to be an increase than a decrease, but that there was no strong case for a near-term adjustment in monetary policy."

There are also two interesting points to note. Firstly, RBA noted the depreciation in Australian Dollar exchange rate in 2018. And to the board member "this had reflected offsetting effects on the exchange rate from higher commodity prices, on the one hand, and the decline in Australian bond yields relative to those in other major markets, on the other hand."

Regarding future monetary policy moves, board members discussed how different scenarios could affect the decision. And, "the appropriate policy response would depend on the specifics of the situation, including the underlying factors driving economic developments." RBA also quoted an example in the minutes. "For example, in the event of a marked change in the strength of the global economy, the effect on the Australian economy – and thus the appropriate monetary policy response – would depend on any associated move in the exchange rate of the Australian dollar."

IMF: Australia's growth to continue but risks tiled to the downside

IMF noted in a report that Australia's recent strong growth is expected to "continue in the near term". Also, "further reducing slack in the economy and leading the way to gradual upward pressure on wages and prices." In particular, "private consumption growth is anticipated to remain buoyant, supported by strong employment gains." Also, "rebound in non-mining private business investment and further growth in public investment is envisaged to offset a softening in dwelling investment."

However, balance of risks is "tilted to the downside" with a "less favorable global risk picture". IMF noted "weaker-than-expected near-term outlook in China coupled with further rising global protectionism and trade tensions could delay full closure of the output gap". Also, "sharp tightening of global financial conditions could spill over into domestic financial markets, raising funding costs and lowering disposable income of debtors, with the impact also depending on the response of the Australian dollar".

Also, "domestic demand may equally turn out weaker if wage growth remained subdued or investment spillovers were smaller." Housing market downturn is "another source of risk". But under the baseline outlook, the housing correction "remains orderly". But negative risk developments could "amplify the correction and lower domestic demand."

BoJ Kuroda: Negative rate still necessary but no need to take extra easing

BoJ Governor Haruhiko Kuroda ruled out the need to ramp up stimulus today. He said that "there's no need to take additional steps. What's important is to ensure our policy is sustainable, with an eye on balancing its pros and cons."

But at the same time, he also ruled out an early end to the negative interest rate policy. He noted "I know there is various debate on the BoJ's negative rate policy", "but for the time being, it's a necessary step that is part of our large-scale monetary easing program."

Kuroda remained optimistic that "wage and price growth will likely accelerate" and lift inflation to 2% target eventually. But that change of doing that any time during fiscal 2020 is "slim".

Fed Williams: Interest rates are still very low, and we'll likely raise them somewhat

New York Fed President John Williams said overnight that the US is "in a great position", where "unemployment is very low, the economy has got a lot of, I think good, positive signs and for us it's just keeping a good balance. Keeping this economy strong and stable."

For now, Williams noted "interest rates are still very low". And, "We'll be likely raising interest rates somewhat but it's really in the context of a very strong economy". Though, he also noted that Fed is "not on a preset course", but "we'll adjust how we do monetary policy to do our best to keep this economy going strong with low inflation."

For December meeting, Williams said, "what we're going to do over the next FOMC monetary policy meeting, we're going to do what we've been doing as best we can - we're going to find a ... gradual path of the monetary policy back to a more normal level of interest rates."

Looking ahead

BoE Governor Mark Carney's inflation report hearing will be a main focus for today. On the data front, Swiss will release trade balance. Germany will release PPI. UK will release CBI trends total orders. US will release housing starts and building permits later in the day.

EUR/AUD Daily Outlook

Daily Pivots: (S1) 1.5613; (P) 1.5668; (R1) 1.5759; More....

The break of 1.5693 minor resistance suggests that a short term bottom is formed at 1.5519 in AUD/USD, in bullish convergence condition in 4 hour MACD. Intraday bias is turned back to the upside for rebound to 38.2% retracement of 1.6357 to 1.5519 at 1.5839 and possibly above. But upside should be limited well below 1.5984 support turned resistance to bring fall resumption. On the downside, below 1.5643 minor support will bring retest of 1.5519 low.

In the bigger picture, current development argues that up trend from 1.3624 (2017 low) is possibly completed at 1.6357, ahead of 1.6587 (2015 high). This is supported by bearish divergence condition in weekly MACD. Deeper decline is now in favor to 1.5271 cluster support (38.2% retracement of 1.3624 to 1.6357 at 1.5313). Break will target 61.8% retracement at 1.4668. On the upside, break of 1.5984 support turned resistance is now needed to revive the prior medium term up trend. Otherwise, further decline will be in favor even in case of strong interim rebound.

Economic Indicators Update