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UK Headline CPI was unchanged at 2.4% yoy in October, below expectation of 2.5% yoy. Core CPI was also unchanged at 1.9% yoy, below expectation of 2.0% yoy. RPI, too, was unchanged at 3.3% yoy, below expectation of 3.4% yoy.

ONS noted that the "large downward contributions to the change in the 12-month rate from food and non-alcoholic beverages, clothing and footwear, and some transport elements". They were offset by "contributions from rising petrol, diesel and domestic gas prices."

PPI input slowed to 10.0% yoy, down from 10.5% yoy, below expectation of 9.6% yoy. PPI output rose to 3.3% yoy, up from 3.1% yoy and beat expectation of 3.1% yoy. PPI output core was unchanged at 2.4% yoy, matched expectation.

Also from UK, house price index rose 3.5% yoy in September, accelerated from 3.1% yoy and beat expectation of 3.3% yoy.

Overall, Sterling shows little reaction to the release and eyes are on PM May's Cabinet meeting on Brexit agreement.

UK100 stock index (FTSE 100) has rebounded somewhat after falling to an 8-month low of 6,850 on October 26 but momentum indicators now suggest that the market sentiment might get worse before getting better as the RSI is reversing back to the downside after failing to break decisively above its 50-neutral threshold. The MACD also looks to be changing direction, moving down to meet its red signal line in negative zone.

Should bearish dynamics dominate, the market might revisit the 6,850 bottom before meeting the 6,760 low on March 25. Below that, the area around 6,643 which halted downside corrections several times between August-December 2016 could be another potential barrier in focus, while steeper declines may overcome that point to test 6,410, a frequently approached level in 2016 and 2015.

Alternatively, if the price manages to rebound above 7,095, the 23.6% Fibonacci of the downleg from 7,902 to 6,850, nearby resistance could come from the previous peak at 7,195. Further up, the index could rest around the 38.2% Fibonacci of 7,250 as it did in early September, while a violation of this point may shift attention towards the 7,498-7,558 region, formed by the 61.8% Fibonacci and the top on September 27. A decisive close above the latter and hence above the Ichimoku cloud would increase speculation that an uptrend is in progress.

In the medium-term picture, the downfall from 7,902 is still active and hence the outlook remains negative. The 50-day moving average has further increased distance below the 200-day MA, hinting that the downward pattern might hold for longer.

To summarize, UK100 stock index bias looks negative both in the short and the medium term.

Over the last 24 hours, the crypto market has seen a drop of $3 billion from $212 billion to $209 billion, as major cryptocurrencies including Stellar (XLM) and Cardano (ADA) have fallen by 3 to 6 percent. Peculiarly, Stellar and Cardano are amongst three cryptocurrencies alongside Zcash that are expected to be integrated into Coinbase, the world’s fourth-largest fiat-to-crypto exchange behind Bitfinex, Bithumb, and Upbit.

Prior to their listing, Basic Attention Token (BAT) and 0x (ZRX) recorded gains in the range of 100 to 120 percent, increasing by at least two-fold. Subsequent to their listing, both BAT and ZRX recorded large losses. BAT in specific saw a drop of more than 36 percent from $0.36 to 0.24. While Coinbase listing provides a confirmation that a token is not considered a security under existing regulations, in terms of short-term price trend, it seems to have a negative effect after the fact.

Stellar, Cardano and Zcash already experienced major rallies following the Coinbase listing interest announcement in May, and investors likely see a drop in value to come next in the weeks to come, especially if Coinbase pursues its plans to list the three assets. On November 12, CCN reported that Stellar increased by more than 27 percent since the integration of BAT on November 2.

Where is Bitcoin Heading?

As a technical analyst and cryptocurrency trader The Crypto Dog explained, various technical indicators demonstrate a lack of momentum for both Bitcoin and the rest of the cryptocurrency market. Due to the stability of Bitcoin over the last three months since August 9, it can be argued that the bottom is in, but the unpredictability of the cryptocurrency exchange market could send the market to a downward trend.

Brent Crude Oil fell by 5.7% on Tuesday, sinking below $65 per barrel. American WTI is close to $55.50, the lowest value seen in the last year.

Investors have shifted their focus away from the fears of decreasing oil shipments due to sanctions against Iran, as there are many countries on the horizon who want to replace the drop-off shipments inside OPEC+. This is Iraq, Russia and Saudi Arabia. Meanwhile, Iran wants to retain its markets share, hoping to keep a significant part of its exports.

Against this background, the fears of supply disruptions in the near future have vanished from the market. Again, we are in a situation in which storing oil is more profitable than selling it on the spot market. However, it is worth noting that supply is likely to grow in the future.

An important driving pressure of oil prices in the last month was the resumption of speculation around overproduction. The forecasted growth of production in the next year exceeds, almost twice, the forecasted increase in demand.

American drilling is breaking records, and OPEC predicts that the United States will increase its production by another 2 million barrels a day by the end of next year. The cartel, in turn, predicts a decline in demand for its own oil and indicates a slowdown in demand growth.

It is also worth paying attention to the technical factors behind the previous day’s collapse. We have recently noted that entering the bear market is often preceded by a further decrease of 20% in prices. In our case, these levels are about $55.5 per barrel for Brent and about $50 for WTI. The fall of oil yesterday was very impactful, causing avalanche of stop orders.

Despite the extreme levels of oversold readings observed in market oscillators, the decline in oil may keep its momentum in the coming days as long as market players see the recent decline as the end of the oil growth trend. From the technical analysis perspective, the nearest important levels may be remote marks near the next round level and previous local minimums, at $50 for WTI and $62-63 for Brent.

The pound strengthened yesterday, as it was announced that a draft Brexit deal with the EU was reached. The deal is to be presented to the UK Cabinet on Wednesday in order to be signed off in order for an EU summit to be convened and the draft deal approved by EU leaders. Market attention may be zooming in the UK political stage, as Theresa May will need to convince the majority of parliament to back the deal and difficulties may arise, starting with her own party’s hard Brexiteers and the DUP. EU officials, seem to fear that any delay could increase the possibility of UK ministers and/or the UK parliament rejecting the deal. Volatility is expected to continue for the pound, as further Brexit headlines could continue to reel in and UK financial data are due out today.

GBP/USD rallied yesterday, as it broke the 1.2920 (S1) resistance line (now turned to support) and tested the 1.3015 (R1) resistance level. As the pair broke its downward trendline which was incepted since the 8th of November, we lift our bearish bias. The pair could continue to trade in a bullish market if the pound gets some support from the release of the UK CPI rates for October later on, as well as any further positive headlines for Brexit. On the other hand, negative Brexit headlines and the US CPI rate (due out in the American session today), could weaken the pair. Should the pair find fresh buying orders along its path we could see it breaking the 1.3015 (R1) resistance line and aim for the 1.3075 (R2) resistance level. If the pair comes under the selling interest of the market we could see it breaking the 1.2920 (S1) support line and aim for lower grounds.

USD retreats as risk sentiment improves

The USD retreated or consolidated against a number of its major counterparts yesterday as the risk sentiment improved after the draft Brexit deal. The dollar index moved away from Monday’s 16 month high as the EUR and the GBP, which account for 70% of the weight, gained on Brexit, however other currencies also got some support. Analysts point out that the greenback’s retreat was caused by exterior factors and not a shift in appetite for USD or worsening US financial data. We could see the USD rebounding on the release of favorable financial data, expectations for further interest rate hikes and its role as a safe haven.

USD/JPY maintained a sideways motion yesterday near the 113.95 (R1) resistance line. We could see the pair continuing to move in a sideways manner, however some bullish tendencies may occur as the US CPI rates for October could provide some support for the USD side of the pair. Should the bulls dictate the pair’s direction we could see it breaking the 113.95 (R1) resistance line and aim for the 114.55 (R2) resistance hurdle. Should on the other hand the bears take over, we could see the pair breaking the 113.25(S1) support level.

In today’s other economic highlights:

In today’s European session we get Germany’s preliminary release of its GDP growth rate for Q3, the Czech GDP growth rate for Q3, Sweden’s CPI rate for October, UK’s inflation rates for October and the second preliminary release of Eurozone’s GDP growth rate for Q3. In the American session we get the US CPI rates for October and later on the API weekly crude oil inventories figure. The figure gains on attention as oil prices slipped further yesterday and could provide for further volatility on oil prices. Should you be interested in further fundamentals and technical analysis regarding black gold, please refer to our oil weekly outlook due out later today. As for speakers, Riksbank deputy governor Janssen, BuBa president Weidman, BoE’s Ramsden and Fed’s Quarles speak.

USD/JPY H4

Support: 113.25 (S1), 112.72 (S2), 112.15 (S3)

Resistance: 113.95 (R1), 114.55 (R2), 115.10 (R3)

GBP/USD 4H

Support: 1.2920 (S1), 1.2850 (S2), 1.2780 (S3)

Resistance: 1.3015 (R1), 1.3075 (R2), 1.3160 (R3)

Yesterday USD weakened against the major currencies. The USD index (#DX) retreated from the annual maximums and closed the trading session in the red. Further correction is highly possible. An additional pressure on the USD is caused by the political processes in the White House. Several important economic stats were published during the Asian trading session. According to the preliminary data, the GPD of Japan in the third quarter slowed down by 0.3%, as expected. In October, the industrial production volume in China increased by 5.9% (year-to-year), which is higher than the expected 5.8%.

The demand for the pound is significantly higher. Great Britain and the European Union reached the preliminary agreement regarding Brexit after long negotiations. Germany published weak GDP reports. During the third quarter, the growth of their economy was 1.1% (year-to-year) instead of the expected 1.3%. The financial market participants are expecting inflation reports from the US and Great Britain.

The prices for oil are showing a negative trend. Yesterday the WTI futures lowered by 7%. At the moment the price is 55.50 USD/barrel.

Market Indicators

The major stock indices in the US are showing mixed results: #SPY (-0,19%), #DIA (-0,46%), #QQQ (+0,08%).

The 10-year US government bonds yield is 3.14-3.15%.

The Economic News Feed for 14.11.2018:

Customer Price Index (GB) – 11:30 (GMT+2:00);

preliminary data on the GDP (EU) – 12:00 (GMT+2:00);

CPI Index (US) – 15:30 (GMT+2:00).

Recovery Mon/Tue double-bottom at 1.1215 shows signs of stall as early Wednesday's extension of previous day's rally lost the steam on approach to pivotal Fibo barrier at 1.1324 (38.2% of 1.1499/1.1215 bear-leg.

Data released earlier today showed that German economy contracted in Q3, adding to negative signals on Italy's budget and fears of negative impact from trade conflict to the global growth, which keeps the Euro under pressure.

Focus turns on release of bloc's Q3 GDP data today, which could provide fresh boost on better that expected results.

Near-term outlook remains negative as daily techs are bearish and lacking momentum for stronger recovery.

Fears of recovery stall and fresh acceleration towards key supports at 1.1215 (the lowest since June 2017) would remain strong while Fibo barrier at 1.1324 stays intact.

Conversely, break above 1.1324, would provide relief, but stronger bullish signal could be expected on break and close above falling 10SMA (1.1353).

Res: 1.1300, 1.1324, 1.1353, 1.1382
Sup: 1.1276, 1.1252, 1.1215, 1.1186

German GDP contracted -0.2% qoq in Q3, slightly better than expectation of -0.3% qoq. That's also the first quarter-on-quarter decline since Q1 2015. But that's a notable reversal from 0.5% qoq growth in Q2. The Federal Statistical Office noted that the slight decline in GDP was "mainly due to the development of foreign trade" as exports were down while imports were up in the quarter. "As regards domestic demand, there were mixed signals".

Economy Ministry said in its monthly report that "the upturn was merely disrupted during the third quarter". And, "once these special effects have dissipated, the German economy's upturn will continue."

According to the new draft budget plan (DBP) submitted by Italy to the European commission, growth forecasts are held unchanged at 1.5% in 2019, 1.6% in 2020 and 1.4% in 2021. These are widely seen as overly optimistic as European Commission forecasts only 1.2% growth in 2019. The IMF projects only 1.0% growth in Italy in the same year. The budget deficit target was also held at 2.4% of GDP in 2019. Among that, Italy planned to raise its structural deficit by 0.8% of GDP. This is clearly a violation of EU's demand to cut by -0.6%.

However, the new draft showed fall debt as Italy planned to use funds equal to 1% of GDP from privatization. This is seen as an act to address EU's major concern on ballooning debt. Public debt is now estimated to fall to 129.2% of GDP in 2019, then further to 127.3% in 2020, and then 126.0% in 2021. Italy's debt stands at 130.9% this year.

The new DBP now risk triggering the Commission's penalty process. But Italian Deputy Prime Minister Matteo Salvini warned that "they've got it wrong if they are even just thinking of imposing fines on the Italian people." Economy Minister Giovanni Tria also insisted that fiscal expansion is necessary for the country.

Investors are taking the back seat again and shaving off their profits for this year. Sterling overnight volatility shoots to a critical level and WTI experienced its biggest daily drop

Global markets are now stuck in the topsy-turvey phase and the sell-off is mainly led by the tech and energy sectors. At least this was the theme over in the U.S yesterday, but traders over in Europe are picking up the momentum where they left off yesterday. The economic data released over in China has not helped the market sentiment either. This is because we have seen the retail sales number missing the estimates but the industrial sector is holding up it’s strength.

In terms of sectors, the Energy sector is feeling the burn because it appears there is no support for the oil price.

Yesterday, the crude price dropped by nearly 7 percent. This was the biggest one-day percentage drop since 2015 and of course, the question today is if the momentum would continue at this phase. There is no doubt that investors got carried away with the Iranian situation and the extra supply has become terrifying. Well, the portrait isn’t as horrible as it was a few years ago but unquestionably, the grousing phase is not that much different. We think the price of oil at it’s current level represents more stability.

Having said this, investors should keep a close tab on the ongoing situation between the US and Saudi Arabia. If the US decides to go ahead with sanctions on Saudi Arabia, this would really transform the game. The young crown prince, MBS would not hesitate to retaliate and this would topple the present balance between the supply and demand equation.

As for the silver lining, the US and China are still in process of carrying out the conversation at all levels but no solution is in sight for now. China’s Vice Premier Liu He is hopeful in setting up a meeting between the two leaders. We have also seen a softer stance from the Trump administration. This is because the administration is holding off to trigger the new tariffs on China's automobile parts. This surely shows that the change of hearts is taking place.

In the currency market, the dollar index has created anxiety among investors and the majority think that the Fed is getting ahead of themselves. The strength in the dollar index is unbearable for investors because it has started to eat up their profits. It is in this context that the upcoming speech by the Fed chairman, Jerome Powell is very important today. We expect him to cool off the market and provide some support. This is going to be arduous because one thing is for sure that the Fed isn’t going to change it’s current sailing path. So what can you really say to tranquil the market qualms? Well, Draghi did state "whatever it takes" and this phrase was only sufficient to bring the confidence back in the market and Mr Powell would have to drink from the same water well from where Draghi did - to restore confidence.

Closer to home, in the U.K, it is more of "make it or break it" moment. U.K and EU have agreed on Brexit text and Theresa May would have to convenience the Cabinet that it is the best deal that the UK can get not that this is the best deal she can get. The fact of the matter is that these two are very different things, if the idea is that this is the best deal she can get, then the slogans of "a dead woman

Sterling Overnight Volatility Spiked

What this means for the market, well the overnight pound-dollar volatility has touched a level which has not been seen since Jun 2017. This means that sterling is on the verge on a major move and depending on the outcome of today's event, we could easily see 2-3 percent for the currency in either direction. Of course, speculators have already reduced their short positions and they are leaning towards a bullish move