Sample Category Title

Pivot (invalidation): 113.75

Our preference Long positions above 113.75 with targets at 114.10 & 114.40 in extension.

Alternative scenario Below 113.75 look for further downside with 113.50 & 113.20 as targets.

Comment A support base at 113.75 has formed and has allowed for a temporary stabilisation.

Pivot (invalidation): 1.3080

Our preference Short positions below 1.3080 with targets at 1.3040 & 1.3010 in extension.

Alternative scenario Above 1.3080 look for further upside with 1.3115 & 1.3150 as targets.

Comment A break below 1.3040 would trigger a drop towards 1.3010.

Pivot (invalidation): 1.1390

Our preference Short positions below 1.1390 with targets at 1.1330 & 1.1300 in extension.

Alternative scenario Above 1.1390 look for further upside with 1.1420 & 1.1445 as targets.

Comment The RSI has broken down its 30 level.

• Rates: Fed doesn't change direction
  The Fed hardly changed its policy statement yesterday, leaving the door wide open for a December rate hike. US Treasuries faced some minor selling pressure towards the end of trading. Oil prices and stock markets are at important technical levels. Some caution could prime in today's trading going into the US long weekend and favoring core bonds intraday.
• Currencies: Dollar extends rebound as Fed stays on track
  Yesterday, the dollar again outperformed other majors. Dollar momentum even improved further as the Fed didn't show any intention to slow its rate hike path. EUR/USD is again nearing the 1.13 key support area. A new test might be on the cards. Sterling continues to profit from hope on a EU-UK Brexit deal in the very near future

The Sunrise Headlines

• US stock markets lost ground yesterday. Only the Dow Jones (+0.04%) was able to keep its head above water. Asian equities follow the deteriorating risk sentiment and open in red. Hong Kong (-2.3%) underperforms.
• UK PM May will try to convince her ministers to back the Brexit deal taking shape in Brussels on Sunday, including an agreement for the Irish border. If talks succeed, the target date for a special Brexit summit is set on Nov 25th.
• Manfred Weber, a German conservative and EP member, has been chosen by Europe's coalition of centre-right parties (EPP) to be the lead candidate, or ‘spitzenkandidat', in the 2019 race for the European Commission's presidency.
• The US Federal Reserve has left its policy rate unchanged at 2.0%-2.25% and little altered its policy statement. It repeated the strength of the US economy, removing the last doubts of a December rate hike, which is discounted.
• China's producer inflation decreased to 3.3% in October, from 3.6% a month earlier, to slow for a fourth month in a row on a lower domestic demand and manufacturing activity. Consumer inflation printed at 2.5%.
• USD/CAD tests the 1.32 area on a combination of dollar strength and loonie weakness. The latter suffers from a weaker oil prices and as a Federal Court this morning blocked the Keystone XL Pipeline Project.
• Today's economic calendar is richly filled in the UK (GDP, industrial production) and the US (PPI, Michigan consumer confidence). First Fed governors speak after yesterday's policy meeting

Currencies: Dollar Extends Rebound As Fed Stays On Track

USD extends rebound post Fed

The impact of the US midterm elections faded further on Thursday. The forecasts of the EC accentuated the difference in view between the EU and Italy on next year's Italian growth and on the country's budgetary performance. It was a marginal negative for the euro. In US trading, the dollar captured a better bid going into the Fed decision. The FOMC left the policy rate unchanged. The statement was little changed. Further gradual rate increases are likely. The USD-rally accelerated after the Fed decision. EUR/USD closed the day at 1.1363. USD/JPY finished at 114.07. The rise in US yields and the dollar also weighed on US equities. This morning, Asian equities are also trading in the defensive in the wake of yesterday's Fed decision. Chinese equities continue to underperform. Most regional currencies are losing ground, but the decline remains orderly. USD/CNY trades near 6.9450. The dollar is well bid across the board. EUR/USD trades in the 1.1345 area. USD/JPY is trading just below 114. Today, there are few data in Europe. In the US, producer prices and U of Michigan Consumer confidence will be published. PPI is expected at a modest 0.2% M/M and 2.5% Y/Y. Michigan confidence is expected to hold slightly below the cycle peak. We don't see much reason for a negative surpise. The question is whether the ‘formal' confirmation of further Fed rate hikes will be enough to push US (10-y) yield and the dollar beyond next resistance. The jury is still out. However, with the US 2-y yield nearing 3.0%, the dollar looks quite well protected. Earlier, this week, uncertainty on the US election weighted on the dollar. EUR/USD rebounded 1.13 area to the 1.15 area, but the dollar correction had no strong legs. EUR/USD is again heading for the bottom of the 1.1621/1.13 trading range. A sustained break is not evident, but USD momentum remains constructive. Lingering tensions on Italy remain a euro negative short-term. USD/JPY is also nearing the 114.54 top. A break might be less easy if sentiment on risk remains soft.

Sterling profited this week from headlines that a Brexit deal might be close, even a the issue of the Irish boarder remains a high hurdle. There are also plenty of UK data today including the Q3 GDP. Day-to-day sterling momentum remains positive. EUR/GBP nears/tests the (0.8723/0.8681/0.8621)-support. We have the impression that sterling already discounts quite some good news. Further sterling gains might be become more difficult, unless PM May can prove that her cabinet will approve a deal

EUR/USD: dollar reaccelerates post Fed. A new test of the 1.13 EUR/USD support might be on the cards

The euro currency is coming under renewed selling pressure against the US dollar after the FOMC policy statement revealed that the US Federal Reserve is likely to continue hiking US interest rates. The EURUSD pair is strongly bearish while trading below the 1.1352 level and may soon challenge key support, at 1.1300. Buyers need to move price above the 1.1400 resistance level to reduce short-term technical selling pressures.

The EURUSD pair is strongly bearish while trading below the 1.1352 level, key support is found at the 1.1300 and 1.1200 levels.

If the EURUSD pair moves above the 1.1400 level, buyers are once again likely to test towards the 1.1431 and 1.1452 resistance levels.

The British pound is under selling pressure against the US dollar in early Friday trade, following the release of the FOMC monetary policy statement. The GBPUSD pair is intraday bearish while trading below the 1.3100 level, with the MACD indicator turning lower across the four-hour time frame. Traders now await the release of key GDP and Trade data from the United Kingdom economy this morning.

The GBPUSD pair is bearish while trading below the 1.3100 level, key support is found at the 1.3000 and 1.2955 levels.

If the GBPUSD pair moves above the 1.3100 level, key resistance is found at the 1.3122 and 1.3170 levels.

The USD strengthened against its peers after the Fed released its interest rate decision. The bank left rates unchanged but signaled that the gradual pace of interest rate hikes will continue arguing that the economy was strong enough to handle another hike. This will be the fourth hike this year. It comes as the Fed faces criticism from the US President who has accused the bank of working against his policies. The bank also indicated that the Fed Chair will start holding a press conference after every rate decision. This is different from what happens today when the Chair holds a press conference once per quarter.

The price of crude oil fell into bear territory yesterday and continued the lower momentum overnight. A security is said to be in bear territory when its price falls by more than 20% from its previous high. The reason for the decline was mostly because of the increased supplies from OPEC and the United States. In a recent statement, OPEC secretary general said that OPEC members were pumping as much crude as they can. In the United States, recent data from the EIA has shown that inventories were on the rise.

Sterling fell against the USD after the Fed’s interest rate decision. Today, the UK will release the first reading of the third quarter GDP numbers and other important data. Over the quarter, traders expect that the economy rose by an annualized rate of 1.5%, which was higher than the second quarter’s growth of 1.2%. On a MoM basis, the economy expanded by 0.6%, which was better than the expected 0.3%. The manufacturing production in September is expected to grow by 0.1%, which was higher than the slump of minus 0.2% in August.

EUR/USD

The EUR/USD pair declined sharply after the decision by the Federal Reserve. This is because there were investors who were expecting the Fed to change its language about interest rates. It reached an intraday low of 1.1340. This was the lowest level since November 1. It was also a decline of almost 1.5% from the monthly high of 1.1500. The pair’s moving averages indicators show that the pair will continue moving lower. The RSI on the 30-minute chart is at 23, which is an oversold zone but also an indicator that the downward trend could continue. The Bears Power has also lost momentum as shown below. Therefore, in the short while, the pair could see a minor upward movement but in the next few days, it will resume the downward trend.

GBP/USD

The GBP/USD pair ended the sharp upward trend it has been following the past few days. The pair declined from yesterday’s high of 1.3175 to an intraday low of 1.3040. On the hourly chart, the pair’s ADX is currently at 31 and rising. The double EMA indicators have crossed one another which is an indication that the downward momentum could be maintained. While this could happen, the biggest driver for the pair will be economic data from the UK. If data is positive, the pair will resume the upward momentum. If it’s negative, it will likely test the important support level of 1.3000.

XTI/USD

The price of crude oil continued making the lower lows, reaching an intraday low of $60.30. This was the lowest level since March this year. The 30-day and 15-day EMA indicators on the four-hour chart show that the pair will continue to decline. At the same time, the RSI is close to the oversold level of 30, which is an indication that it has more room to go down. It is therefore likely that the pair will continue to move down, potentially to the $55 level.

USDCAD is challenging the 1.3170 resistance level after it failed several times to close below the 23.6% Fibonacci retracement level of the upleg from 1.2060 to 1.3385, around 1.3072. According to the RSI, the market could maintain positive momentum in the short-term as the indicator is positively sloped above its neutral threshold of 50, while the MACD oscillator is ready to post a bullish crossover with its trigger line in the daily chart.

In case of a significant leg above the 1.3170 barrier, the market could meet the 1.3230 resistance, taken from the highs on September 6. The next level in focus could be the 1.3290 mark since any strong violation of this point could increase chances for further gains probably towards the one-year high of 1.3385.

In the wake of more negative pressures and a slip below the 20-day simple moving average (SMA) and the 23.6% Fibonacci, the market could meet support at the 40-day SMA near 1.3020 at the time of writing. A drop below this level could see a retest of the previous trough of 1.2910, while in case of steeper declines the price could breach this bottom and dive to the 38.2% Fibonacci of 1.2880.

Turning to the long-term view, the market seems to be in a strong bullish mode given that USDCAD trades above the ascending trend line, which has been holding since September 2014. But, in the medium-term, the pair looks to be negative over the last four months, creating lower lows and lower highs.

General Trend:

Asian equity markets trade generally lower in the aftermath of Fed meeting

Hang Seng IT index lags, Tencent declines over 4%

RBA again rules out near-term rate hike (Quarterly Monetary Policy Statement)

China inflation data inline with expectations

Friday’s US/China diplomatic and security talks in focus

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened flat

(AU) RESERVE BANK OF AUSTRALIA (RBA) QUARTERLY STATEMENT ON MONETARY POLICY (SOMP): REITERATES HIGHER INTEREST RATES LIKELY APPROPRIATE AT SOME POINT, does not see strong case to adjust cash-rate in near-term

(AU) Australia Sept Home Loans M/M: -1.0% v -1.0%e; Investment Lending: -2.8% v -1.1% prior

(NZ) New Zealand sells NZ$250M in April 2029 bonds, avg yield 2.8179%, bid to cover 2.20x

China/Hong Kong

Shanghai Composite opened -0.6%, Hang Seng -1.2%

(CN) CHINA OCT CPI Y/Y: 2.5% V 2.5%E

(CN) CHINA OCT PPI Y/Y: 3.3% V 3.3%E

(CN) Companies in China repurchased CNY33.7B (~$4.9B) in shares in 2018 - China Securities Times

(CN) China must maintain current property controls - Chinese Press

(CN) China PBoC Open Market Operations (OMO): Skips reverse repo operation v skipped prior

(CN) China PBoC sets Yuan reference rate at: 6.9329 v 6.9163 prior

Japan

Nikkei 225 opened -0.1%

(JP) Japan Chief Cabinet Sec Suga: PM Abe held phone call with US President Trump

(JP) Japan Fin Min Aso: Expects strong US/Japan relations to continue; can't comment on details of US Vice President Pence's visit next week

(JP) Japan Oct Money Stock M2 Y/Y: 2.7% v 2.8%e; M3 Y/Y: 2.3% v 2.4%e

Korea

Kospi opened +0.1%

(KR) South Korea President Moon names Government Coordination Office Chief as the new Finance Min (confirms press speculation)

(KR) South Korea President Moon approval rating 54% v 55% prior - Gallup Poll

Other

(MY) Malaysia Sep Industrial Production Y/Y: 2.3% v 2.3%e

North America

US equity markets ended mixed: Dow flat, S&P500 -0.3%, Nasdaq -0.5%, Russell 2000 -0.3%

(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 2.00-2.25%; AS EXPECTED: UNEMPLOYMENT RATE HAS DECLINED, JOB GAINS HAVE BEEN STRONG ON AVERAGE

TransCanada [TRP]: Federal Court said to block Keystone XL Pipeline project -US financial press

Europe

(UK) Prime Min May spokesperson: govt won't agree to anything that causes hard border on Ireland; will not accept UK division into two customs territories

(UK) Reportedly EU demanding fishing rights in British coastal waters as the price for an all-UK Brexit backstop agreement - UK Telegraph

(UK) Prime Min May reportedly will hold phone discussions with ministers on Sunday related to the Irish border - FT

ThyssenKrupp [TKA.DE]: Cuts FY18 Net €0.1B v €0.3B y/y, adj EBIT €1.6B (prior €1.8B): affected by provisions for cartel proceedings

Levels as of 01:30ET

Nikkei 225, -1%, ASX 200 -0.1%, Hang Seng -2.5%; Shanghai Composite -1%; Kospi -0.1%

Equity Futures: S&P500 flat; Nasdaq100 -0.2%, Dax flat; FTSE100 -0.1%

EUR 1.1369-1.1340 ; JPY 114.10-113.82 ; AUD 0.7272-0.7236 ;NZD 0.6767-0.6730

Dec Gold -0.4% at $1,220/oz; Oct Crude Oil -0.1% at $60.63/brl; Dec Copper -0.4% at $2.721/lb

The GBP/USD is moving lower as part of a waveB (blue) and price is expected to use the Fibonacci levels of wave B vs A as a potential support and bouncing spot. A break below the 100% Fib invalidates the bullish ABC zigzag.

The GBP/USD is expected to build an ABC zigzag wave pattern back to theFibonacci levels of wave B vs Awhich in turn could act as a support zone. Price could build an expanded WXY correction after completing the ABC within wave B (blue). A bullish breakout above the resistance trend line (red) indicates more upside.