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Daily Pivots: (S1) 1.3092; (P) 1.3121; (R1) 1.3163; More...

With 1.2969 support intact, near term outlook in USD/CAD stays cautiously bullish. The choppy decline from 1.2285 should have completed 1.2781 already. Rise from 1.2781 should target 1.3225 resistance to confirm this bullish case, and pave the way to 1.3385 next. However, break of 1.2969 will mix up the outlook again and turn bias back to the downside.

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) 0.7036; (P) 0.7072; (R1) 0.7094; More...

AUD/USD is staying in range of 0.7020/7159 and intraday bias remains neutral first. As long as 0.7159 resistance holds, near term outlook will remain bearish and further decline is expected. Break of 0.7020 extend the down trend from 0.8135 towards 0.6826 low. However, firm break of 0.7159 will be a first sign of trend reversal, on bullish convergence condition in 4 hour MACD, and turn bias back to the upside for 0.7314 resistance.

In the bigger picture, 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). On the upside, break of 0.7314 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook stays bearish even in case of strong rebound.

Daily Pivots: (S1) 1.1350; (P) 1.1384; (R1) 1.1406; More....

Intraday bias in EUR/USD remains neutral for consolidation above 1.1335 temporary low. With 1.1493 resistance intact, further decline is expected. Below 1.1335 will target 1.1300 low first. Decisive break will resume whole down trend from 1.2555 and target 1.1186 fibonacci level next. On the upside, however, break of 1.14983 resistance will likely extend the consolidation pattern from 1.1300 with another rise towards 1.1814 before larger down trend resumption.

In the bigger picture, corrective pattern from 1.1300 could have completed at 1.1814 after hitting 38.2% retracement of 1.2555 to 1.1300 at 1.1779. Decisive break of 1.1300 will resume the down trend from 1.2555 to 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. On the upside, break of 1.1814 will delay the bearish case and extend the correction from 1.1300 with another rise before completion.

Daily Pivots: (S1) 1.2773; (P) 1.2813; (R1) 1.2834; More...

GBP/USD stays in consolidation above 1.2777 temporary low and intraday bias remains neutral. As long as 1.2919 minor resistance holds, further decline is expected. On the downside, break of 1.2777 will resume the fall from 1.3297 and target 1.2661 low first. Decisive break there will resume larger down trend from 1.4376. Next target is 61.8% projection of 1.4376 to 1.2661 from 1.3297 at 1.2237. On the upside, break of 1.2919 minor resistance will suggest short term bottoming and turn bias to the upside for stronger rebound.

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.

Daily Pivots: (S1) 0.9984; (P) 1.0004; (R1) 1.0041; More...

USD/CHF recovers today but stays below 1.0026 temporary top. Intraday bias remains neutral at this point. With 0.9848 support intact, further rise is in favor in the pair. On the upside, break of 1.0026 will resume the rally from 0.9541 and target 1.0067 resistance first. Decisive break there will confirm resumption of larger rise from 0.9186 and should target 1.0342 key resistance next. However, break of 0.9848 support will indicate near term reversal, on bearish divergence condition in 4 hour MACD, 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.

Daily Pivots: (S1) 111.92; (P) 112.24; (R1) 112.70; More..

USD/JPY's rebound from 111.37 extends today but stays below 112.88 resistance. Intraday bias remains neutral first. Another fall cannot be ruled out yet. On the downside, break of 111.37 will extend the fall from 114.54 to 38.2% retracement of 104.62 to 114.54 at 110.75. As such fall is seen as part of medium term correction, we'll look for bottoming signal above 109.76 key support. On the upside, break of 112.88 resistance will suggest that the fall has completed and turn bias back to the upside for retesting 114.54.

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.

Early rebound in US stocks overnight initially supported Dollar. But the greenback couldn't hold on to the gains as stocks suffered steep reversal. Fed's rate hike was not the reason for the selloff. Instead, the trigger of the late selloff in US equities was threat of Trump's escalation of US-China trade war. In particular, NASDAQ suffered worst single day reversal in three years. Though, Asian markets stabilized after Trump tried to tone down a bit in a TV interview. But sentiments would remain vulnerable due to erratic nature of Trump.

In the currency market, Yen is currently the weakest one for today, followed by Dollar and then Swiss Franc. Australian Dollar leads commodity currencies higher. Eurozone and Sterling are mixed. Technically, for now, EUR/USD and GBP/USD are held well below 1.1493 and 1.2919 minor resistance levels, hence, near term outlook stays bearish. Though, in case of further declines, we'd be cautious on bottoming at around 1.1300 1.2661 lows respectively.

In other markets, Asian stocks are mostly in black for now. Nikkei is up 1.57%, Hong Kong HSI is up 0.30%, China Shanghai SSE is up 1.70%. But Singapore Strait Times is down -0.38%. Overnight, DOW lost -0.99%, S&P 500 down -0.66% and NASDAQ down -1.63%. 10 year yield rose 0.010 to 3.087 but was way off day high at 3.117.

DOW suffered bearish U-turn on new threat of Trump's China tariffs, but Asia recovered

US stocks suffered heavy selloff towards the end of the session overnight, single handedly knocked down by Trump's trade policy. DOW rebounded in early trading to as high as 25040.58 but closed down -0.99% or -245.39 pts at 24442.92. That's the biggest U-turn in eight months. S&P 500 hit 2706.85 before closing down -0.66% at 2641.25. NASDAQ jumped to 7296.51 and close down -1.63% or -116.92 pts at 7050.29. The U-turn in NASDAQ was the worst in three years.

Selloff emerged as Bloomberg reported that Trump is going to impose additional tariffs on all Chinese imports, should the summit with Chinese President Xi Jinping fail. The two leaders plan to meet at sideline of G20 summit in Buenos Aires in November, but even this arrangement is not finalized yet. The announcement of the new tariffs could come in as early as December. The total amount of imports to be tariffs could add up to USD 257B, in addition to the USD 250B already covered by current tariffs.

White House Press Secretary Sarah Huckabee Sanders declined talked about the specifics of the Xi-Trump meeting. She just said "You have two of the most powerful leaders in the world. I think that's consequential no matter how you look at it and we'll see what happens when they sit down."

In Asia, though, Chinese and Hong Kong stocks reversed early losses after Trump's comment in an interview with Fox news. He said, "I think we will make a great deal with China, and it has to be great because they've drained our country."

Separately, according to Gallup polling during the week ended October 28, Trump's job approval rating dropped steeply by 4% to 40%, sharpest decline since June 24, on the controversy over his policy of separating families apprehended illegally crossing the US-Mexico border. On the other hand, his disapproval rating rose to 54%.

UK Hammond: It's double dividend if Brexit negotiation turns out right

Yesterday in his budget speech, UK Chancellor of Exchequer Philip Hammond raised the total funding for Brexit preparation to GBP 4B. He also noted that budget deficit has fallen to less that 1.5% this year. And it's projected to fall further to 0.8% by 2023-24.

Hammond emphasized that it's a "pivotal moment" in Brexit negotiations. If things turn out right, it will be "double Brexit dividend". Firstly, investments current on hold will come on stream. Secondly, Treasury will no longer have to hold back money for preparations.

On the economy, he raised growth forecasts for 2019 and 2020. For 2021 and 2022, growth projections are kept unchanged. But growth is expected to pickup again in 2023.

Here is a quick summary on GDP growth projections:

• 2019: 1.6%, up from 1.3% in the spring statement
• 2020: 1.4%, up from 1.3% in the spring statement
• 2021: 1.4%, unchanged from 1.4% in the spring statement
• 2022: 1.5%, unchanged from 1.5% in the spring statement
• 2023: 1.6% (new forecast)

Japan unemployment rate dropped to 2.3%, BoJ meeting starts

Japan's unemployment rate dropped for the second month by -0.1% to 2.3% in September, better than expectation of 2.4%. That's also just 0.1% above May's low at 2.2%. Unemployment rate has been in steady decline in recent years.

BoJ monetary policy meeting starts today. It's widely expected that the central bank will stand pat in the announcement tomorrow. Interest rate will be held unchanged at -0.1%. A major focus is the new economic forecasts but a majority of economists expect them to be largely unchanged.

A major change in BoJ's communications this year was the explicit allowance of 10 year JGB yield to move in a range of -0.1% to 0.1%. And, JGB is has already moved more than that. Hence, there is possibly unnecessary for BoJ to widen that band further.

Also release in Asian session, Australia building approvals rose 3.3% mom in September, below expectation of 3.9% mom.

Elsewhere

Eurozone data will catch a lot of attention today. Eurozone, Fran and Italy will release Q3 GDP. Germany will Eurozone unemployment and CPI flash. Eurozone will also release confidence indicators.

Later in the day, US S&P Case-Shillar house price and Conference Board consumer confidence will be featured.

USD/JPY Daily Outlook

Daily Pivots: (S1) 111.92; (P) 112.24; (R1) 112.70; More..

USD/JPY's rebound from 111.37 extends today but stays below 112.88 resistance. Intraday bias remains neutral first. Another fall cannot be ruled out yet. On the downside, break of 111.37 will extend the fall from 114.54 to 38.2% retracement of 104.62 to 114.54 at 110.75. As such fall is seen as part of medium term correction, we'll look for bottoming signal above 109.76 key support. On the upside, break of 112.88 resistance will suggest that the fall has completed and turn bias back to the upside for retesting 114.54.

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.

Economic Indicators Update

Japan's unemployment rate dropped for the second month by -0.1% to 2.3% in September, better than expectation of 2.4%. That's also just 0.1% above May's low at 2.2%. Unemployment rate has been in steady decline in recent years.

BoJ monetary policy meeting starts today. It's widely expected that the central bank will stand pat in the announcement tomorrow. Interest rate will be held unchanged at -0.1%. A major focus is the new economic forecasts but a majority of economists expect them to be largely unchanged.

A major change in BoJ's communications this year was the explicit allowance of 10 year JGB yield to move in a range of -0.1% to 0.1%. And, JGB is has already moved more than that. Hence, there is possibly unnecessary for BoJ to widen that band further.

US stocks suffered heavy selloff towards the end of the session overnight, single handedly knocked down by Trump's trade policy. DOW rebounded in early trading to as high as 25040.58 but closed down -0.99% or -245.39 pts at 24442.92. That's the biggest U-turn in eight months. S&P 500 hit 2706.85 before closing down -0.66% at 2641.25. NASDAQ jumped to 7296.51 and close down -1.63% or -116.92 pts at 7050.29. The U-turn in NASDAQ was the worst in three years.

Selloff emerged as Bloomberg reported that Trump is going to impose additional tariffs on all Chinese imports, should the summit with Chinese President Xi Jinping fail. The two leaders plan to meet at sideline of G20 summit in Buenos Aires in November, but even this arrangement is not finalized yet. The announcement of the new tariffs could come in as early as December. The total amount of imports to be tariffs could add up to USD 257B, in addition to the USD 250B already covered by current tariffs.

White House Press Secretary Sarah Huckabee Sanders declined talked about the specifics of the Xi-Trump meeting. She just said "You have two of the most powerful leaders in the world. I think that's consequential no matter how you look at it and we'll see what happens when they sit down."

In Asia, though, Chinese and Hong Kong stocks reversed early losses after Trump's comment in an interview with Fox news. He said, "I think we will make a great deal with China, and it has to be great because they've drained our country." At the time of writing, Hong Kong HSI is down -0.17% only, China Shanghai SSE is even up 0.72%.

Separately, according to Gallup polling during the week ended October 28, Trump's job approval rating dropped steeply by 4% to 40%, sharpest decline since June 24, on the controversy over his policy of separating families apprehended illegally crossing the US-Mexico border. On the other hand, his disapproval rating rose to 54%.

STOCKS

While the talks of US planning to add another $257 bln worth of tariffs on Chinese goods goes on, the stocks remain weak globally. There could be some corrective recovery seen from long term support levels just now but overall weakness may continue to loom in the medium term.

Dow (24442.92,-0.99%) is trading above 24000 and while that holds, a few sessions of ranged movement in the 24000-25000 region is possible. A break above 25000-25250 is needed to negate further fall and bring back the bulls into the picture. While Dow trades below 25000, it could well break below 24000 in the medium term. For now we expect 24000 to hold.

Dax (11335.48, +1.20%) moved up yesterday to test levels above 11400. While the support near 11000 holds, Dax has scope of rising towards 11700-11800 in the medium term. Only a fall below 11000, if seen would bring in fresh weakness in the index, but that looks unlikely for now.

Nikkei (21307.23, +0.74%) is trading in a clear near term down channel and looks bearish while below 21600. Downside target is seen near 20800-20500 in the longer run which could be tested on a rejection from 21600.

Shanghai (2546.93, +0.19%) looks weak and is likely to come off towards 2400 in the next 1-2 sessions. Immediate resistance is now visible near 2650-2600 and while that holds, some more sessions of ranged/downside movement is possible in Shanghai.

Nifty (10250.85, +2.20%) is also trading within the near term channel downtrend as seen on the daily candles and while below 10400, bearishness towards 9800-9700 persists. Our earlier mentioned support at 10000 has held well producing a decent bounce yesterday but it may not sustain in the medium term.

COMMODITIES

Crude prices have dipped.

Brent (77.06) has come off from resistance as mentioned yesterday. While 78 holds, the price could fall back towards 75-74 in the near term.

WTI (67.03) is likely to trade in the 66-68 region for the week, both being important levels in the near term. A break on either side thereafter would determine further course of direction for WTI.

Gold (1230.20) and Copper (2.7290) have fallen a bit from levels seen yesterday.

Gold is holding below 1240 for now and could see some ranged movement in the 1240-1220 region. This is likely to continue this week without any major movement.

Copper has crucial support near 2.65 which could produce a bounce in the coming sessions pushing the price higher towards 2.80-2.85 levels. This week could see a test of 2.65 on the downside.

FOREX

Yuan has weakened below its Dec ’16 low against the Dollar. Watch resistance near 1.1425 on Euro and near 73.50 on USDINR.

Euro (1.1382) hasn’t been able to move above resistance (earlier support) on weekly candles near 1.142 yet. While below 1.142, the bias remains bearish for the next 1-2 weeks. On daily candles also, there is immediate resistance now near 1.1425 which might keep the upside capped in this week.

Dollar Index (96.64) has immediate support near 96.5-96.6 on daily candles. While above 96.5, the uptrend looks intact with a possibility of targeting levels near 97.2 in the next 1-2 weeks.

Dollar Yen (112.67) might face some resistance from the 21 days MA at 112.69 and also near 112.9. While below 112.9, it could move down towards 111.5 in the next couple of weeks.

Euro-Yen (128.24) tested support on weekly candles near 127 last week and is currently rising from there. However, while below immediate resistances near 128.5-129.0 on daily candles, it could again re-attempt a test of 127 in this week.

Pound (1.2810) has important supports in the 1.28-1.27 zone, which could push it up towards 1.30-1.31 in the next couple of weeks. A break below 1.27 would however be very bearish.

Aussie (0.7087) : While above 0.705-0.706, Aussie could move up towards 0.715 by next week.

Dollar-Yuan (6.9642) has breached its Dec ’16 high of 6.9633 and while above 6.95, could now move higher towards 6.98 in the next 1-2 weeks.

Dollar Rupee (73.445) – Dollar Rupee could come off from 73.50 to test lower levels of 73.20. A break above 73.50 if seen could open up chances of 73.80 on the upside.

INTEREST RATES

The US 10 Year (3.10%) could move up slightly more towards 3.13%-3.14% in the next few sessions, before again coming off from there. It could move down towards 3% over the next couple of weeks.

As mentioned yesterday, The US 10-5 yr yield spread (0.16%) is trading at immediate resistance near current levels and if that holds the spread could come off towards 0.15% or lower in the coming sessions.

The German-US 2 year spread (-3.44%) could continue moving higher towards -3.40% in the next 1-2 weeks.

The German-US 10 year spread (-2.71%) could also see an upmove towards -2.65% in the next 1-2 weeks.