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For the 24 hours to 23:00 GMT, Crude Oil rose 0.85% against the USD and closed at USD55.96 per barrel, amid hopes that OPEC and other producers would discuss supply cuts at a meeting next month. Meanwhile, the American Petroleum Institute (API) reported that US crude oil inventories advanced by 8.8 million barrels to 440.7 million barrels in the week ended 09 November.

In the Asian session, at GMT0400, the pair is trading at 55.96, with oil trading flat against the USD from yesterday’s close.

The pair is expected to find support at 54.94, and a fall through could take it to the next support level of 53.91. The pair is expected to find its first resistance at 57.18, and a rise through could take it to the next resistance level of 58.39.

Crude oil is trading below its 20 Hr and 50 Hr moving averages.

Short term Elliott Wave view on Oil suggests that the decline starting from Oct 3 high ($76.9) remains in progress as a 5 waves impulse Elliott Wave structure. Down from Oct 3 high, Primary wave ((1)) ended at $68.47 and Primary wave ((2)) ended at $69.66. Primary wave ((3)) ended at $54.75 and Primary wave ((4)) is proposed complete at $57.37.

Consistent with the guidelines in Impulse Elliott Wave structure, Primary wave ((3)) also unfolded as 5 waves of lesser Intermediate degree. Down from $69.66, Intermediate wave (1) of ((3)) ended at $65.74 and Intermediate wave (2) of ((3)) ended at $67.95. Intermediate wave (3) of ((3)) ended at $59.26, Intermediate wave (4) of ((3)) ended at $61.28. The final leg Intermediate wave (5) of ((3)) ended at $54.75.

Primary wave ((4)) ended at $57.37 as a double three Elliott Wave structure. Wave (W) of ((4)) ended at $56.49, wave (X) of ((4)) ended at $55.53, and wave (Y) of ((4)) ended at $57.37. Near term, while rally fails below $57.37, and more importantly below $61.35, expect Oil to extend lower. If Oil breaks above $57.37, then Oil is doing a double correction and can open more upside in 7 swing before the decline resumes. For the downside target, one way to measure wave 5 target in Elliott Wave Theory is wave 1 equal to wave 5. If we project wave ((1)) length to the beginning of wave ((4)), we can estimate potential target for wave ((5)) at $47 – $49. We don’t like buying Oil.

Oil 1 Hour Elliott Wave Chart

Daily Pivots: (S1) 1.5611; (P) 1.5653; (R1) 1.5676; More....

EUR/AUD's decline resumed after consolidation from 1.5575 entered rather quickly, dropping to as low as 1.5546 so far. Intraday bias is back on the downside. Current fall from 1.6357 should target 1.5271/5313 cluster support zone next. On the upside, though, break of 1.5693 resistance will now indicate short term bottoming. In that case, lengthier consolidation would be seen first before staging another decline.

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.

Both Sterling and Euro trade firmer after UK Prime Minister Theresa May got Cabinet support for her Brexit deal. But no significant technical development is seen with these two currencies yet. Instead, Australian Dollar steals the show with strong employment data. Additional support to Aussie was given by news that China has already sent response to US demand regarding trade, even though there's no detail yet. On the other hand, Dollar is leading the way down as consolidation continues, followed by Swiss France and Yen.

Technically, EUR/AUD takes the lead by breaking through 1.5575 temporary low today, resuming recent decline from 1.6357. AUD/USD might follow and challenge 0.7314 key structure support. Decisive break there will solidify the case of medium term bullish reversal. For Dollar-Europeans, despite this week's pull back, near term levels are holding well. That is, 1.1499 resistance in EUR/USD and 0.9952 support in USD/CHF are intact. Hence, Dollar remains bullish against the two. However, USD/JPY is risking near term bearish reversal ahead of 114.54/73 resistance zone. And focus is back on 112.94 minor support today.

In other markets, DOW dropped notably by -0.81% to 25080.50 overnight. S&P 500 lost -0.76% and NASDAQ fell -0.90%. Treasury yields also turned weaker with 10 year yield closed down -0.025 at 3.120. That's a major factor for Dollar's softness this week. In Asian, Nikkei trades in opposite direction with others again today, down -0.45%. Hong Kong HSI, China Shanghai SSE and Singapore Strait Times are up 0.38%, 0.72% and 0.06% respectively. WTI crude oil's recovery is losing some steam and is back below 56 handle.

May secured cabinet support for Brexit deal, Sterling reactions volatile yet muted

After some last minute dramas, UK Prime Minister Theresa May finally secured the backing from her Cabinet, on the Brexit draft agreement. As a more positive sign, there is no resignation of ministers so far. May said after a five-hour marathon meeting that "the collective decision of cabinet was that the government should agree the draft withdrawal agreement and the outline political declaration." She added, "when you strip away the detail, the choice before us was clear: this deal, which delivers on the vote of the referendum, which brings back control of our money laws and borders, ends free movement, protects jobs security and our Union; or leave with no deal; or no Brexit at all."

EU chief Brexit negotiator Michel Barnier hailed the UK for making a "decisive, crucial step" towards orderly Brexit. Referring to the draft, he said "this is a precise, detailed document... which provides legal certainty for everyone and on all the issues where we have to deal with the consequences of Brexit." While it " may be hard to guarantee an orderly withdrawal", he pledged that UK will remain "our friend, our partner, and our ally." Barnier had also passed his recommendation to EU27 leaders that "decisive progress" had been made for an extra EU summit, probably on November 25, to sign off.

EU's statement here, with link to the withdrawal agreement.

More on the deal: Brexit Update – EU and UK Agree on Draft Deal, Still More Challenge Ahead

EU Malmstromg: Scope of trade negotiation with US cannot be defined until early 2019

EU Trade Commissioner Cecilia Malmstrom met US Trade Representative Robert Lighthizer yesterday. Malmstrom said the meeting focused on regulatory cooperations issues, plus ways for EU to import more soybeans and LNG from the US. She also told Lighthizer the EU's willingness to negotiation a trade deal, but that would be limited to industrial goods, excluding agriculture. However, Malmstrom noted that the scope of the talks cannot be defined until early 2019. USTR will have to complete its consultation with Congress. EU will also need to receive negotiating mandate from member states.

On US auto tariff threats, Malmstrom said EU already has a list of retaliation targets ready. She said "it could be cars, it could be agriculture, it could be industrial products - it could be everything. And we will do that, but hope we don't have to get to that situation."

Fed Powell: From now on, Fed can and will move at any meeting

Fed Chair Jerome Powell had an hour long exchange with Dallas Fed President Robert Kaplan, titled "Global Perspectives with Jerome H. Powell". Powell reiterated his upbeat comments on the US economy. He said "I'm very happy about the state of the economy now". He also hailed the Fed collectively and said "our policy is part of the reason why our economy is in such a good place right now."

A key take away is his comments regarding the arrangement of having press conference after all eight FOMC meetings during the year, starting next. He said "certainly all meetings are live now, there's no question about it now." And he added, "over time, folks will get used to the idea that we can and will move at any meeting."

On interest rates, Powell acknowledged the need to thing about "how much further to raise rates and the pace at which we will raise rates." And, "the way we will be approaching that is to be looking really carefully at how the markets and the economy and business contacts will be reacting to our policy." He emphasized that "our goals will be to extend the recovery ... and to keep unemployment low and inflation low. So that's how we're going to think about it."

On headwinds, Powell noted slowing growth abroad, waning effect of the administration's tax cuts and spending increases are some that the economy might face. Also, he noted that there are a lot of factors weighing on home building too.

Australia employment jumped 32.8k, with strong growth in full-time jobs

Australia employment rose 32.8k in October, much better than expectation of 20.3k. Full-time employment jumped 42.3k to 8.70M. Part-time jobs dropped -9.5k to 3.97M. Unemployment rate was unchanged at 5.0%, below expectation of 5.1%. Participation rate rose 0.1% to 65.6%. Monthly worked hours in all jobs also rose 0.3%. Released yesterday, wages grew 2.3% in Q3, fastest annual pace in three years. The overall set of employment data released this week is pretty encouraging.

The set of data should be very welcomed by the RBA. However, they kind of just confirmed RBA's outlook, without too much out-performance. Wage growth remains the key for lifting inflation. And there's still much more work to do. Nevertheless, it's a step in the right direction and affirmed that the next move is a hike rather than a cut. But, that leaves RBA with no urgency to move any time soon.

Looking ahead

UK retial sales and Eurozone trade balance are the main feature in European session. US data will take center stage later in the data. Retail sales, Empire State manufacturing, Philly Fed survey, import price index, business inventories and jobless claims will be released.

EUR/AUD Daily Outlook

Daily Pivots: (S1) 1.5611; (P) 1.5653; (R1) 1.5676; More....

EUR/AUD's decline resumed after consolidation from 1.5575 entered rather quickly, dropping to as low as 1.5546 so far. Intraday bias is back on the downside. Current fall from 1.6357 should target 1.5271/5313 cluster support zone next. On the upside, though, break of 1.5693 resistance will now indicate short term bottoming. In that case, lengthier consolidation would be seen first before staging another decline.

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

Australia employment rose 32.8k in October, much better than expectation of 20.3k. Full-time employment jumped 42.3k to 8.70M. Part-time jobs dropped -9.5k to 3.97M. Unemployment rate was unchanged at 5.0%, below expectation of 5.1%. Participation rate rose 0.1% to 65.6%. Monthly worked hours in all jobs also rose 0.3%. Released yesterday, wages grew 2.3% in Q3, fastest annual pace in three years. The overall set of employment data released this week is pretty encouraging.

The set of data should be very welcomed by the RBA. However, they kind of just confirmed RBA's outlook, without too much out-performance. Wage growth remains the key for lifting inflation. And there's still much more work to do. Nevertheless, it's a step in the right direction and affirmed that the next move is a hike rather than a cut. But, that leaves RBA with no urgency to move any time soon.

Australian Dollar is lifted by the release. In particular, EUR/AUD ended the brief consolidation from 1.5575 and resumed the decline from 1.6357 for 1.5271 key support.

Brexit news again dominates the headline as UK Prime Minister Theresa May announced that she has gained support from the Cabinet the Withdrawal Deal hammered out between the UK and EU. End of the story? Not yet. If both the UK Cabinet and the EU approve the deal, the EU would call for a special meeting for votes by member- states of the Union. Meanwhile, the UK needs to get ratification of the Parliament. As we have mentioned previously, the biggest hurdle is UK’s parliamentary vote.

The Deal

Recall that the “remaining 5%” of the withdrawal deal is concerned with Irish border. Back in March, the EU proposed a backstop plan in an attempt to avoid that a hard border between Ireland and Northern Ireland. It suggested that, if no better solutions were found, Northern Ireland would stay in the EU customs union and most parts of the single market, unless and until a long-term trade deal is agreed upon that kept the border as open as it is now. The UK rejected the proposal, suggesting that it is an invasion to sovereignty (Northern Ireland adopts EU law and creates a border in the Irish Sea). Instead, it counter-proposed that the WHOLE UK, together with North Ireland, would align with the EU customs arrangement for “a limited period” after 2020. This has been rejected by the EU, which insisted that the backstop plan has to continue until a better option is found.

The draft agreement released yesterday proposed that, to deal with Irish border, a “single customs territory” between EU and UK would be established. Accordingly, Northern Ireland is in the same customs territory as Great Britain. Such single customs territory will begin operation from the end of the transition period (21 months from March 29, 2019). If EU and UK fail to agree a deal on their future relationship by December 31, 2020, the end of the transition period, the backstop will continue until a subsequent agreement is in place. The UK can request to extend to the transition period, before July 1st, 2020. It might also be able to leave this single customs territory of either side notifies the other that it wants the backstop to come to an end. The plan would cease if both sides “jointly" judge that it is no longer necessary. This signals that the UK would not be able to withdraw from the backstop plan unilaterally.

On other issues, it is proposed that rights of EU citizens living in the UK and rights of UK nationals living in the EU are protected. The divorce fee is estimated to be between 35-39B pound.

UK Parliament

The biggest challenge is UK’s parliamentary vote. Back in June 2017, Theresa May, as soon as she has become the PM, called for a snap election. Contrary to her hope of expanding Tory’s majority in the parliament, the election resulted in a loss of Tory majority. The party had to enter into a “confidence-and-supply arrangement” with the Democratic Unionist Party (DUP) in order to keep the government afloat.

Some Brexiteers within the Conservative Party and DUP hardliners have indicated that they would dissent on the deal. It would be impossible for May to gain majority support for the deal, if she fails to persuade many of those in her alliance, let alone those from the Labor Party and SNP.

Fed Chair Jerome Powell had an hour long exchange with Dallas Fed President Robert Kaplan. Powell reiterated his upbeat comments on the US economy. He said "I'm very happy about the state of the economy now". He also hailed the Fed collectively and said "our policy is part of the reason why our economy is in such a good place right now."

A key take away is his comments regarding the arrangement of having press conference after all eight FOMC meetings during the year, starting next. He said "certainly all meetings are live now, there's no question about it now." And he added, "over time, folks will get used to the idea that we can and will move at any meeting."

On interest rates, Powell acknowledged the need to thing about "how much further to raise rates and the pace at which we will raise rates." And, "the way we will be approaching that is to be looking really carefully at how the markets and the economy and business contacts will be reacting to our policy." He emphasized that "our goals will be to extend the recovery ... and to keep unemployment low and inflation low. So that's how we're going to think about it."

On headwinds, Powell noted slowing growth abroad, waning effect of the administration's tax cuts and spending increases are some that the economy might face. Also, he noted that there are a lot of factors weighing on home building too.

https://www.youtube.com/watch?v=HHZe0d4neHo

EU Trade Commissioner Cecilia Malmstrom met US Trade Representative Robert Lighthizer yesterday. Malmstrom said the meeting focused on regulatory cooperations issues, plus ways for EU to import more soybeans and LNG from the US. She also told Lighthizer the EU's willingness to negotiation a trade deal, but that would be limited to industrial goods, excluding agriculture. However, Malmstrom noted that the scope of the talks cannot be defined until early 2019. USTR will have to complete its consultation with Congress. EU will also need to receive negotiating mandate from member states.

On US auto tariff threats, Malmstrom said EU already has a list of retaliation targets ready. She said "it could be cars, it could be agriculture, it could be industrial products - it could be everything. And we will do that, but hope we don't have to get to that situation."

After some last minute dramas, UK Prime Minister Theresa May finally secured the backing from her Cabinet, on the Brexit draft agreement. As a more positive sign, there is no resignation of ministers so far. May said after a five-hour marathon meeting that "the collective decision of cabinet was that the government should agree the draft withdrawal agreement and the outline political declaration." She added, "when you strip away the detail, the choice before us was clear: this deal, which delivers on the vote of the referendum, which brings back control of our money laws and borders, ends free movement, protects jobs security and our Union; or leave with no deal; or no Brexit at all."

EU chief Brexit negotiator Michel Barnier hailed the UK for making a "decisive, crucial step" towards orderly Brexit. Referring to the draft, he said "this is a precise, detailed document... which provides legal certainty for everyone and on all the issues where we have to deal with the consequences of Brexit." While it " may be hard to guarantee an orderly withdrawal", he pledged that UK will remain "our friend, our partner, and our ally." Barnier had also passed his recommendation to EU27 leaders that "decisive progress" had been made for an extra EU summit, probably on November 25, to sign off.

EU's statement here, with link to the withdrawal agreement.

Sterling's reactions to the development were volatile, yet muted. There were ups and downs in GBP/USD, GBP/JPY and EUR/GBP. But they're after all, kept in familiar range.

Stocks

Dow (25080.50, -205.99, -0.81%) has continued to dip and has closed just above 25000 (the lower end of our 25250-000 Support region) after seeing an intra-day low of 24935.82. If there is no bounce today, then we have to be prepared to see a further decline towards 24500 as seen in the 3-day candle chart.

Dax (11412.53, -0.52%) failed to move back yesterday. While resistance near 11500 holds, the index could possibly come off towards 11100-11051 in the near term. A break above 11500 would be needed to negated the bearish view.

The Nikkei (21790.49, -0.26%) could trade in the 22500-21200 region in the medium term. The current rise could extend towards 22500 from where a decent rejection back towards 21200 could be possible. In the longer term charts, this could turn out to be a ranged trade.

Shanghai (2645.35, +0.50%) could remain above 2600 and attempt to test resistance at 2700. On the 3-day candle chart, the overall downtrend is intact and if 2700 holds, another dip towards 2500 could be possible in the coming week.

The Nifty (10570.80) has been unable to rise past Resistance at 10650 yesterday but remains potentially bullish for 10900-11000 while above 10500-400. Similarly, the Sensex (35116.24) remains potentially bullish while above 34750-600. Both could be in the process of developing a Bull Shoulder-Head-Shoulder.

COMMODITIES

Brent (65.88) and WTI (56.16) are stable after the recent sharp decline. We continue to see support at 64.50-65.0 on Brent from where a bounce is possible. Below 64.50, the fall could be limited to 62. On the other hand, WTI needs to bounce back immediately to avoid further fall towards 52. While above 65 and 56, there is some chances of bounce back. Else the bears could continue to play out in the next 1-2 weeks.

Gold (1210.50) has also moved up from support near 1200. While the upmove continues, it could target 1230 on the upside. View is bullish while above 1200.

Copper (2.7090) has bounced from support at 2.65 and is moving up slowly. A rise towards 2.75-2.80 looks likely.

FOREX

Watch resistances near 1.14, 1.3050 and 0.728 on Euro, Pound and Aussie. USDINR might hold above 72.

Dollar Index (96.93) could be mostly bearish towards 96.5-96.0 in the near term ie by next week. A break below 96 (if it happens) would be a bearish indicator for the medium term.

Euro (1.1326) : As per expectation, Euro is moving up towards 1.135. Infact, the upside in the current move could extend up till resistance near 1.138-1.140 (watch the 21 days MA @ 1.138); from where, Euro could again come off next week.

USD/JPY (113.54) could move lower towards support near 113 by next week - a break of 113 would be an important bearish indicator, possibly establishing 114.2-114.3 as a medium term top.

Aussie (0.7271) has immediate resistance close to 0.728-0.730 on weekly candles. Moreover, the crucial thing to see right now is whether it closes the week above the 21 weeks MA (0.7252) or not - a close above that would be bullish, leading to a rise to levels beyond 0.73 in the weeks ahead.

Pound (1.3004): As mentioned yesterday, Pound has been ranging between the broad 1.2700-1.3150 zone. It has resistance near 1.3050; which if broken could take it higher towards 1.3150; else a fall from 1.3050 could push back the pair towards 1.28-1.27 in the coming week. Important to see if closes above or below the 21 weeks MA @ 1.3009 in this week - a close above that would be bullish for the next couple of weeks.

EUR/JPY (128.62) looks likely to rise towards resistance near 129.50 in the near term. Given our preference on Euro and Dollar Yen, a dip from levels near 129.50 is likely, taking it back towards support near 127.

Dollar Rupee (72.31): Dollar Rupee is likely to hold above 72 and head back towards 72.60. Faint chances of immediately testing 71.80 is there but a confirmation below 72 is needed. For now, we may look for a rise back towards 72.60/70.

INTEREST RATES

US 10 Year yield (3.12%) has dipped lower in line with expectation and now has support in the 3.10%-3.05% zone. The US 30 year yield (3.36%) could also have Support near 3.30%. As mentioned yesterday, these supports are likely to hold on first testing and can produce a bounce that lasts up to the FOMC meeting in December, possibly along with a bounce in Brent towards 70 in the near term.

The German-US 10 Year yield spread (-2.72%) could rise towards medium term resistance near -2.65% to -2.60% in the next couple of weeks. A break above this resistance level might just establish the recent low near -2.80% as a possible bottom - hence levels near -2.65% to -2.60% need to be watched - a break above these levels might also indicate chances of bullishness in the German 10 year yield (0.40%) beyond medium term resistance near 0.50%-0.55%.

In India, the 10Yr GOI (7.73%) is seeing a break below 7.75%. As mentioned yesterday, the chances of moving lower towards 7.60% would now rise.