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The Chinese Ministry of Commerce released Fall 2018 "China Foreign Trade Situation Report" today. In a statement, MOFCOM noted that China's foreign trade maintained a "stable and good trend" and in 2018 up to Q3. And, the current US-China trade friction has "limited impact" on China's foreign trade.

MOFCOM also noted that current international demand is "relatively stable". Domestic demand is "growing steadily". And conditions exist for steady growth in foreign trade. Nonetheless, with higher base effect, Q4's import and export growth could be dragged down.

Additionally, MOFCOM also said 2019 trade development will be "more adverse and complex". It noted increasing downside risks in the world economy and protectionism. The report urged measures like reducing burden on bother import and export businesses, and real implementation of trade policies.

Full release in Simplified Chinese.

Pivot (invalidation): 60.10

Our preference Long positions above 60.10 with targets at 61.20 & 61.60 in extension.

Alternative scenario Below 60.10 look for further downside with 59.70 & 59.25 as targets.

Comment The RSI broke above a declining trend line.

Pivot (invalidation): 14.2900

Our preference Short positions below 14.2900 with targets at 14.0800 & 14.0000 in extension.

Alternative scenario Above 14.2900 look for further upside with 14.3600 & 14.4600 as targets.

Comment Even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.

Pivot (invalidation): 1214.00

Our preference Short positions below 1214.00 with targets at 1206.50 & 1203.00 in extension.

Alternative scenario Above 1214.00 look for further upside with 1217.50 & 1221.50 as targets.

Comment The RSI is mixed to bearish.

Rates: Slow start to trading week?
Market settings suggest a calm start to the trading week on bond markets with an empty eco calendar and subdued trading volumes because of a US public holiday. Attention later this week turns to Fed speeches, including Fed chair Powell, US eco data (CPI & retail sales), the Italian budget reply and the possible climax of brexit talks.

Currencies: EUR/USD touching new 2018 correction low
Last week, dollar softness after the US mid-term elections didn't last long. The prospect for further Fed policy normalization soon put the dollar again in the driver's seat. This morning, this ‘by default' US-buying pushed EUR/USD to a new 2018 low. Recent sterling rally ran into resistance as markets realize that it won't be easy for PM May to get a Brexit deal approved.

The Sunrise Headlines

• US stock markets closed last week's trading session in red with losses mounting between -0.75% and -1.65%. Asian equities opened mixed this morning with Chinese indices outperforming on tax cut news.
• Brexit momentum is once again fading. PM May's effort to address her ministers over the weekend fell short as the Irish backstop remains unresolved. Tomorrow there is a new cabinet meeting that may feature a Brexit discussion.
• Saudi Arabia announced it will cut crude oil production in December with 500k barrels a day because of lower demand, despite Russia saying that the current excess supplies are short term. The Brent oil price settles back above $70/barrel.
• China's Finance Minister, Liu Kun, said in a statement on the ministry's website that its country will study and implement tax cuts of a larger scale for Chinese companies and consider more significant fee reductions for companies.
• Japanese producer inflation slowed to 2.9% (YoY) in October, from 3.0% a month earlier (2.8% expected). On a month-to-month basis, the PPI printed 0.3% in October which is steady from September (0.1% expected).
• Russian president Putin stated that he wants to restore a full-scale dialogue with the US about the Intermediate-Range Nuclear Forces treaty. Last month, President Trump warned he would withdraw from it as Russia was violating it.
• Today's economic calendar is empty apart from second tier Italian industrial production. SF Fed governor Daly speaks on the eco outlook. US markets (except equities) are closed.

Currencies: EUR/USD Touching New 2018 Correction Low

EUR/USD sets new 2018 low

The USD stayed well bid on Friday, extending gains after Thursday's Fed policy statement. The Fed confirming its intention to continue policy normalization despite recent volatility, left investors with mixed feelings. US yields and the dollar held near recent highs. Global equities struggled to avoid further losses. US PPI printed higher than expected (2.9% Y/Y). The report had little impact on trading, but suggests that inflation will remain on the Fed's radar. The tradeweighted dollar again tested the 97 barrier, nearing the 2018 top. EUR/USD drifted lower in the 1.13 big figure closing the week at 1.1336. USD/JPY slightly underperformed other major US cross rates as a risk-off sentiment (slightly) supported the yen. The pair finished marginally lower at 113.83. Asian equities show a rather constructive price action this morning, given Friday's US losses. Oil rebounds as OPEC indicated that it might act to ‘balance' the market. For now, the rise of the oil price and the equity rebound don't prevent further USD strength. The trade-weighted dollar regained the 97 market. EUR/USD looks like breaking the 1.1301 2018 low. USD/JPY regained the 114 level. USD/CNY is also drifting higher (6.96). Later today, there are few eco data in Europe and US markets are partially closed in observance of Veterans' Day. Investors will look forward to the next steps in the Italian-EU budget rift as Italy has to respond to the EC objections by Tuesday. Regarding the data, US CPI (Wednesday) and retail sales (Thursday) probably have most market moving potential. Solid data might support the case for further Fed normalisation. Early last week, uncertainty on the US mid-term election weighed temporarily on the dollar, but the USD soon regained momentum. EUR/USD is falling below the bottom of 1.1621/1.13 range. Given current ‘by-default' USD bid, a continuation of this trend is very well possible. Next support is seen in the 1.1187/1.1119 area (62 % retracement/Jun 2017 low).

Sterling profited from hope on a EU-UK Brexit deal recently. However, this trade faltered going into the weekend. Solid UK Q3 growth data also didn't help sterling anymore. During the weekend, headlines/rumours suggested that it won't be easy of PM May to ‘convince' hard-line Brexiteers to approve a deal in Parliament. For now, the test of the EUR/GBP 0.87 looks to be rejected. The market assessment on Brexit already made quite some remarkable swings. At least for now, it looks that sterling trading see the glass again half empty rather than half full.

EUR/USD breaking below 2018 correction low as dollar regains momentum post-Fed

Bank of France manufacturing business sentiment indicator dropped to 103 in October, down from 104. The slowdown was "essentially because of a sluggish automobile sector."

Services business sentiment indicator was unchanged at 102. Construction business sentiment indicator rose to 106, up from 105. "Construction sector activity grew significantly, for both structural and finishing works."

Bank of France said according to the monthly index of business activity, GDP should grow 0.4% in Q4.

Full release here.

GBP/USD started a fresh decline and broke the 1.3040 support area. AUD/USD is under pressure and it could accelerate losses below the 0.7220 support.

Important Takeaways for GBP/USD and AUD/USD

• The British Pound recovered towards 1.3175 where it faced sellers, resulting in a bearish move.
• GBP/USD broke a major bullish trend line with support at 1.3130 on the hourly chart.
• AUD/USD failed to surpass the 0.7300 resistance and declined recently.
• The pair may continue to move down towards the 0.7180 or 0.7150 support level in the near term.

GBP/USD Technical Analysis

The British recovered nicely this past week above the 1.3000 level against the US Dollar. The GBP/USD pair surpassed the 1.3100 and 1.3120 resistance levels, but it failed to break the 1.3175 resistance.

The pair formed a high at 1.3174 on FXOpen and later started a downside move. Sellers pushed the price below the 1.3150 support and the 50 hourly simple moving average. More importantly, there was a break below a major bullish trend line with support at 1.3130 on the hourly chart.

Later, there was a break below the 1.3080 support and another bullish trend line. Sellers gained control and pushed the pair below the 1.3000 handle and the 50% Fib retracement level of the last wave from the 1.2695 swing low to 1.3174 high.

At the moment, the pair is consolidating losses around the 1.2940 level with a bearish angle. It seems like the pair may continue to move down and it could trade towards the 1.2855 support.

If there are further losses below 1.2855, the pair may perhaps decline towards the 1.2780 support level. On the other hand, if there is an upside correction, the pair could find resistance near the 1.2990 and 1.3000 levels.

Moreover, there is a connecting bearish trend line in place with resistance at 1.3060 on the same chart. Finally, the 50 hourly SMA is also positioned near the 1.3060 level to prevent gains.

Therefore, recoveries towards the 1.3000 and 1.3060 levels are likely to face a solid selling interest in the near term. On the downside, sellers could target 1.2855 or 1.2780.

AUD/USD Technical Analysis

The Aussie Dollar climbed higher recently and traded above the 0.7200 resistance against the US Dollar. The AUD/USD pair even traded above the 0.7250 resistance and tested the 0.7300 handle where sellers emerged.

The pair formed a top near the 0.7300 level and later started a downside move. It declined below the 0.7280 support and the 50 hourly simple moving average.

Later, there was a break below a key bullish trend line with support at 0.7250 on the hourly chart. It opened the doors for more losses and the pair traded towards the 0.7200-0.7210 support area.

Besides, there was a break below the 61.8% Fib retracement level of the last wave from the 0.7182 low to 0.7302 high. If there are further losses, the pair may decline towards the 0.7180 swing low, below which the pair will most likely revisit the 0.7150 support area.

On the flip side, if there is an upside correction, the previous support at 0.7240, a connecting bearish trend around the same area, and the 50 hourly SMA are likely to act as strong hurdles for buyers. A successful close above 0.7250 may well push AUD/USD back towards the 0.7300 swing high, which is a significant resistance.

Daily Pivots: (S1) 147.09; (P) 148.10; (R1) 148.71; More...

GBP/JPY's fall from 149.48 accelerates lower today and focus is on 146.28 support. Decisive break there will confirm completion of rebound from 142.76. And in that case, deeper fall should be seen back to 142.76 and possibly below. On the upside, decisive break of 149.70 will resume whole rise from 139.88 and target 153.84/156.59 resistance zone.

In the bigger picture, as long as 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47) holds, up trend from 122.36 (2016 low) would still extend beyond 156.69 high. However, decisive break of 139.29/47 will suggest that such up trend is completed and turn outlook bearish. In that case, next target is 61.8% retracement at 135.43.

Daily Pivots: (S1) 128.61; (P) 129.13; (R1) 129.53; More....

EUR/JPY's fall accelerates to as low as 128.37 so far today. Break of 128.60 minor support suggests that rebound from 126.63 has completed at 130.14. And, with 130.20 resistance intact, fall from 133.12 is still in progress. Intraday bias is back on the downside for 124.61/89 support zone. On the upside, break of 130.14 resistance is now needed to confirm rise resumption. Otherwise, near term outlook will stay cautiously bearish in case of recovery.

In the bigger picture, as long as 124.08 key resistance turn supported holds, larger up trend from 109.03 (2016 low) is still in progress. Firm break of 137.49 structural resistance will target 141.04/149.76 resistance zone next. However, decisive break of 124.08 will argue that such rise from 109.03 has completed and turn outlook bearish. In that case, deeper fall would be seen to 61.8% retracement of 109.03 to 137.49 at 119.90.

Daily Pivots: (S1) 0.8704; (P) 0.8725; (R1) 0.8759; More...

Intraday bias in EUR/GBP remains neutral for consolidation above 0.8690 temporary low. As long as 0.8800 minor resistance holds, another fall is expected. On the downside, break of 0.8690 will extend whole fall from 0.9098 to 0.8620 support first. Break will target 100% projection of 0.9098 to 0.8722 from 0.8939 at 0.8563 next. However, break of 0.8800 will turn focus back to 0.8939 resistance 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.