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Daily Pivots: (S1) 1.3061; (P) 1.3110; (R1) 1.3164; More...

USD/CAD is staying in range of 1.3048/3170. At this point, intraday bias remains neutral first. On the upside, break of 1.3170 target 1.3225 key near term resistance. Break will confirm completion of choppy fall from 1.3385 and target a retest on this high. Though, break of 1.3048 will turn focus to 1.2969 support. Firm break there will indicate completion of whole rebound from 1.2781. In that case, whole fall from 1.3385 might extend through 1.2781 support before completion.

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) 0.7226; (P) 0.7263; (R1) 0.7314; More...

AUD/USD's rally is still in progress and intraday bias stays on the upside, with focus on 0.7314 key resistance. As noted before, a medium term bottom might be in place at 0.7020 already. Decisive break of 0.7314 should confirm this bullish case. Next target will be 38.2% retracement of 0.8135 to 0.7020 at 0.7446 next. However, on the downside, break of 0.7182 minor support will suggest that the rebound is completed. In that case, intraday bias will turn bias back to the downside for 0.7020 low.

In the bigger picture, as long as 0.7314 resistance holds, fall from 0.8135 is tentatively treated as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 will target 0.6008 key support next (2008 low). However, firm break of 0.7314 will suggest that whole decline from 0.8135 has completed. And, the corrective pattern from 0.6826 (2016 low) is extending with another rising leg towards 0.8135 before completion.

General Trend:

• Equity markets in Asia track Wednesday's gains in the US
• Toshiba rises over 9%, confirmed stock buyback and resumption of dividend
• Bridgestone cut operating profit forecast
• Japan regional bank Suruga up over 15%, commented on press report related to ¥90B in losses
• Lenovo's Q3 profits and sales beat ests
• Wynn Macau declines over 10% after Q3 results
• Australian gas company APA declines over 8%, government official raised concerns about merger agreement
• Building materials firm James Hardie drops over 14%, Q2 results missed ests
• Australia prudential regulator issues paper about higher capital requirements for big banks
• Reserve Bank of New Zealand (RBNZ) Gov leaves rate cut on the table
• China Oct forex reserves have largest monthly drop since late 2016
• China Oct trade balance misses ests, trade surplus with the US narrows from prior record
• China 1-week offshore yuan (CNH) HIBOR declines over 60bps following Wednesday's PBoC bill sale in Hong Kong
• Japan Sept Core Machine Orders have largest drop on record amid earthquake
• Reserve Bank of Australia (RBA) is due to release its Quarterly Statement on Monetary Policy (SOMP) on Friday

Headlines/Economic Data

Japan

• Nikkei 225 opened +1.6%
• (JP) JAPAN SEPT CORE MACHINE ORDERS M/M: -18.3% V -9.0%E; Y/Y: -7.0% V +7.7%E
• (JP) JAPAN SEPT CURRENT ACCOUNT (BOP BASIS): ¥1.82T V ¥1.79TE; CURRENT ACCOUNT ADJ: ¥1.33T V ¥1.35TE; TRADE BALANCE (BOP BASIS): -¥323.3B V ¥334.2BE
• (JP) Japan Oct Bank Lending Ex-Trusts y/y: 2.2%v 2.3% prior; Incl Trusts y/y: 2.2% v 2.3% prior
• (JP) Bank of Japan (BoJ) Summary of Opinions for Oct 30-31 Monetary Policy Meeting: Uncertainty over global economy is heightening
• (JP) In Oct Japan life insurance companies have sold the most foreign bonds since 2015
• Suruga Bank, 8358.JP Says not the source of report related to ¥90B loss, is considering increasing reserves [+20%, daily limit]
• Toshiba, 6502.JP Reports H1 Net ¥1.08T v -¥49.8B y/y; Op ¥6.9B v ¥36.2B y/y; Rev ¥1.78T v ¥1.87T y/y; to pay ¥20 special dividend; to buyback ¥700B in shares; confirms to sell LNG operations

Korea

• Kospi opened +1.5%
• (KR) South Korea Pres Moon could nominate a new Fin Min as soon as this weekend - Korean press
• (CN) China Commerce Ministry (MOFCOM) to impose anti-dumping tax for some rubber products imported from Japan and South Korea: anti-dumping tax rates to range from 12% to 56.4%, effective from Nov 9th
• (KR) US State Dept: Sec State Pompeo's meeting with North Korean leaders was postponed due to scheduling issues

China/Hong Kong

• Hang Seng opened +1.3%, Shanghai Composite +0.7%
• (CN) China should raise fiscal deficit ratio - China Securities Times
• (CN) China Foreign Min Wang Yi: China and Australia reached $10B worth of deals at China import fair
• (CN) CHINA OCT FOREIGN RESERVES: $3.053T V $3.059TE (largest monthly decline since Dec 2016)
• (CN) China PBoC Open Market Operations (OMO): Skips OMO v skipped prior
• (CN) China PBoC sets Yuan reference rate at: 6.9163 v 6.9065 prior
• Tencent, 700.HK Said to plan to cut game marketing budget - US financial press
• (CN) CHINA OCT TRADE BALANCE: $34.0B V $35.2BE; Exports Y/Y: 15.6% v 11.7%e, Imports Y/Y: 21.4% v 14.5%e
• (CN) CHINA OCT TRADE BALANCE (CNY): 233.6B V 237.0BE; Exports Y/Y: 20.1% v 14.2%e; Imports Y/Y: 26.3% v 17.7%e
• Lenovo, 992.HK Reports Q2 Net $168M v $139M y/y, Rev $13.4B v $11.76B y/y

Australia/New Zealand

• ASX 200 opened +0.1%
• (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.75%; AS EXPECTED; Brings forward rate hike forecast to Q2 2020 (from Q2 2020); Below target CPI requires continued supportive monetary policy
• (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: would consider a rate cut if GDP fall short of forecast, not taking rate cut off the table; no view on NZ$ level
• (NZ) RBNZ Deputy Gov Bascand: Consideration of easing LVR restrictions will be included in November financial stability report, will explicitly consider it
• (NZ) RBNZ Gov Orr: Comfortable with foot still on the accelerator - parliament
• FCG.NZ Affirms FY19 farmgate milk price NZ$6.25-6.50/kgMS; EPS NZ$0.25-0.35 – AGM
• APA.AU Comments on Treasurer Frydenberg's preliminary view on CK Group deal; notes expectations are that the market will read the preliminary view as a 'no' but finds it interesting that FIRB was unable to reach a unanimous recommendation
• JHX.AU Reports Q2 adj Op $80.9M v $81Me; Rev $644.6M v $659Me; issues positive outlook
• ECX.AU To merge with McMillan Shakespeare in cash and share deal with implied value A$2.85/share
• (AU) Australia Foreign Min Payne: Committed to deepening China relations

Other Asia

• (PH) Philippines Q3 GDP q/q: 1.4% v 1.9%e; y/y: 6.1% v 6.2%e

North America

• US stocks gain amid post election risk-on sentiment: Dow +2.1%, S&P500 +2.1%, Nasdaq +2.6%, Russell 2000 +1.7%
• (US) Pres Trump: hopes to work with Democrats on drug prices and infrastructure; dealmaking may be easier with a Democratic House; Won't rule out another govt shutdown
• (US) JEFF SESSIONS RESIGNS AS ATTORNEY GENERAL AT THE REQUEST OF DONALD TRUMP; ACTING AG WHITAKER TO TAKE OVER MUELLER INVESTIGATION - PRESS
• CVNA Reports Q3 -$0.40 v -$0.37e, Rev $535M v $507Me [+19.6% after hours]
• ALRM Reports Q3 $0.36 v $0.25e, Rev $111.8M v $96.8M [+17.6% after hours]
• KRO Reports Q3 $0.28 v $0.64 y/y, Rev $410.3M v $464.5M y/y [-15.2% after hours]
• (US) DOE CRUDE: +5.8M V +2ME

Europe

• (UK) OCT RICS HOUSE PRICE BALANCE: -10% V -2%E
• (DE) Germany CSU Party Head Seehofer (interior Min) said to be considering resigning in coming days - financial press
• (UK) According to Sun's Schofield: sources say draft agreement does not include Irish backstop, as that has not yet been agreed; emerging meeting now looking like next week
• Prosiebensat [PSM.DE]: Reports Q3 Net €75M v €78Me; adj EBITDA €175M v €176Me, Rev €892M v €895Me; Cuts FY18 Rev to be lower than prior low to mid single-digit growth

Levels as of 01:30ET

• Hang Seng +0.8%; Shanghai Composite +0.1%; Kospi +1.4%; Nikkei225 +1.9%; ASX 200 +0.5%
• Equity Futures: S&P500 -0.1%; Nasdaq100 -0.3%, Dax -0.1%; FTSE100 -0.2%
• EUR 1.1396-1.1500; JPY 113.47-113.73 ; AUD 0.7265-0.7286;NZD 0.6771-0.6795
• Dec Gold -0.3% at $1,225/oz; Dec Crude Oil +0.1% at $61.73/brl; Dec Copper -0.3% at $2.73/lb

Market movers today

We do not expect the Fed to hike the Fed funds rate tonight at 20:00 CET (in line with consensus and market pricing). As it is one of the interim meetings without updated projections and a press conference, we do not expect Powell & co to make big changes to the policy signals in the statement. We do not think the Fed will cut the interest rate on excess reserves by 5-10bp at this meeting despite the effective Fed funds rate trading exactly at the IOER. We think the Fed will wait until December and then hike the target range by 25bp but only raise the IOER by 15-20bp. In our view, the Fed is on track to raise the Fed funds rate to 3%, which is the neutral rate, where monetary policy is neither expansionary nor contractionary. This will happen in June (hikes in December, March and June).

Today at 11:00, the European Commission will release its autumn forecast. While usually not a market mover, attention will be brought to the outlook assessment for the Italian economy.

In Sweden, average house prices in October are due out at 09:30 CET.

Selected market news

Positive risk sentiment has returned to financial markets in recent days. US stocks rose more than 2% yesterday and the positive sentiment has carried over to the Asian market. The 10Y US yield has climbed back to its 2018 peak of 3.23%. USD/JPY is creeping higher and the gold price is inching lower.

The oil market has had to digest a lot of news this week. At the beginning of the week the market had to cope the effect of oil-related sanctions on Iran. Yesterday, news broke that OPEC+ (the corporation between OPEC and oil producers outside OPEC, including Russia) will meet on Sunday to discuss a common strategy for the oil market in 2019, as the current agreement to cut production ends this year. Apparently, an extension of production cuts is on the table. The news provided some temporary support to oil prices yesterday. However, that support vanished when the weekly US inventory report confirmed the large stock build last week, as reported by API on Tuesday. So far this week, the price on Brent crude has traded in the range of USD71.2-73.5/bbl.

Yesterday, the Riksbank announced it plans to add NOK and DKK to its currency reserve portfolio, meanwhile indicating it will raise USD exposure and reduce EUR exposure. The change in composition is set to take place in Q1 19. The new investment policy is motivated by a need for contingency and aims to capture better the short-term funding needs of the Swedish banks. However, we do not expect this to have any material impact on the market, as the amounts are still negligible relative to total market turnover.

Daily Pivots: (S1) 113.06; (P) 113.44; (R1) 113.94; More..

Intraday bias in USD/JPY stays neutral first. And, with 112.56 minor support intact, another rise is mildly in favor. On the upside, above 113.81 will extend the rebound from 113.37 to 114.54 resistance. We'd be cautious on strong resistance from there to limit upside to bring another fall. On the downside, break of 112.56 minor support will argue that the rebound has completed. And, in that case, the corrective pattern from 114.54 could have started the third leg for 111.37 support and possibly below.

In the bigger picture, corrective fall from 118.65 (2016 high) should have completed with three waves down to 104.62. Decisive break of 114.73 resistance will likely resume whole rally from 98.97 (2016 low) to 100% projection of 98.97 to 118.65 from 104.62 at 124.30, which is reasonably close to 125.85 (2015 high). This will stay as the preferred case as long as 109.76 support holds. However, decisive break of 109.76 will dampen this bullish view and turns outlook mixed again.

Short term S&P 500 (SPX) Elliott wave view suggests that the selloff starting from Sept 21 high (2940.9) has ended at Oct 29 low (2603.54). We take the most aggressive view and call the low at 2603.54 as wave IV in Cycle degree. This suggests that SPX is ready to rally in a new bullish cycle towards a new all time high. However, for this view to gain validity, the Index must first break above the previous all-time high, labelled as Cycle degree wave III at 2940.9. Without this confirmation, the Index technically can just correct the selloff from last month in 3 waves ABC zigzag, then continue the selloff again.

Looking at the internal subdivision, it appears the selloff from Sept 21 to Oct 29 low took the form of a double three Elliott Wave structure. Down from 2940.9 high, Primary degree wave ((W)) ended at 2710.5, wave ((X)) ended at 2816.94, and wave ((Y)) ended at 2603.54. This move lower also ended a higher Cycle degree wave IV. Since then, the Index has rallied strongly, further getting acceleration to the upside after U.S. midterm election.

Rally from Cycle degree wave IV at 2603.54 is unfolding as a 5 waves impulsive structure where Minor wave 1 ended at 2756.55 and Minor wave 2 ended at 2700.25. Index has since extended higher again above Minor wave 1, suggesting that Minor wave 3 has started. Near term, while pullbacks stay above 2700.2, and more importantly above 2603.54, expect further upside in the Index. As an alternate, the rally from 2603.54 can take the form of a zigzag Elliott Wave structure, where the first leg higher to 2756.55 ended Minor wave A instead of Minor wave 1, and the pullback to 2700.25 ended Minor wave B instead of Minor wave 2. In this scenario, then SPX should finish Minor wave C as 5 waves then start to turn lower again.

SPX 1 Hour Elliott Wave Chart

Daily Pivots: (S1) 0.9968; (P) 1.0010; (R1) 1.0067; More...

USD/CHF recovers quickly after dipping to 0.9952 and intraday bias is turned neutral again. The consolidation pattern from 1.0094 might extend. And break of 0.9952 would target 38.2% retracement of 0.9541 to 1.0094 at 0.9883. We'd expect strong support from there to contain downside to bring rebound. Rise from 0.9541 is still in favor to resume. Break of 1.0094 will target 1.0342 key resistance next. However, decisive break of 0.9848 support will indicate reversal and turn outlook bearish.

In the bigger picture, the pullback from 1.0067 has completed at 0.9541 already. And rise from 0.9186 is likely resuming. Firm break of 1.0067 will pave the way to retest 1.0342 key resistance. We'd be cautious on strong resistance from there to limit upside to bring another medium term fall to extend long term range trading. However, firm break of 0.9848 near term support will dampen this view and bring deeper decline back to 0.9541 support and possibly below.

Daily Pivots: (S1) 1.3076; (P) 1.3125; (R1) 1.3177; More...

With 4 hour MACD crossed below signal line, intraday bias in GBP/USD is turned neutral first. On the upside, above 1.3174 will extend the rebound from 1.2692 to 1.3257/3297 resistance zone. As this rise is seen as the third leg of consolidation pattern from 1.2661, we'd expect strong resistance from 1.3316 fibonacci level to limit upside to bring down trend resumption eventually. On the downside, below 1.2951 minor support will turn bias back to the downside for 1.2692 and then 1.2661 key support.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA. The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

For the 24 hours to 23:00 GMT, the EUR rose 0.10% against the USD and closed at 1.1432.

On the macro front, the Euro-zone's seasonally adjusted retail sales rose 0.8% on an annual basis in September, compared to an advance of 1.8% in the previous month. Market participants had anticipated retail sales to record a gain of 0.9%.

Separately, in Germany, the seasonally adjusted Markit construction PMI declined to a level of 49.8 in October, compared to a level of 50.2 in the prior month. On the other hand, the nation's seasonally adjusted industrial production unexpectedly climbed 0.2% on a monthly basis in September, rising for the second consecutive month and defying market consensus for a drop of 0.1%. In the preceding month, industrial production had registered a drop of 0.3%.

In the US, data showed that US consumer credit rose to $10.92 billion in September, lower than market expectations for a rise of $15.00 billion, compared to a revised rise of $22.88 billion in the previous month. However, the nation's mortgage applications eased 4.0% on a weekly basis in the week ended 02 November 2018, following a drop of 2.5% in the previous month.

In the Asian session, at GMT0400, the pair is trading at 1.1428, with the EUR trading a tad lower against the USD from yesterday's close.

The pair is expected to find support at 1.1402, and a fall through could take it to the next support level of 1.1376. The pair is expected to find its first resistance at 1.1477, and a rise through could take it to the next resistance level of 1.1526.

Looking ahead, traders would await Germany's trade balance data for September, set to release in a while. Later in the day, the US initial jobless claims followed by Federal Reserve's interest rate decision, will keep investors on their toes.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 0.24% against the USD and closed at 1.3130.

Data indicated that, UK's Halifax house price index advanced 1.5% on an annual basis in the three months ended October 2018, rising at its slowest pace in five years and compared to an increase of 2.5% in the May-July 2018 period. Market participants had expected the index to rise 1.3%.

In the Asian session, at GMT0400, the pair is trading at 1.3126, with the GBP trading slightly lower against the USD from yesterday's close.

The pair is expected to find support at 1.3098, and a fall through could take it to the next support level of 1.3069. The pair is expected to find its first resistance at 1.3165, and a rise through could take it to the next resistance level of 1.3203.

In absence of key economic releases in the UK today, investor sentiment would be determined by global macroeconomic events.

The currency pair is trading in between its 20 Hr and 50 Hr moving averages.