Sample Category Title

Pivot (invalidation): 11620.00

Our preference Long positions above 11620.00 with targets at 11880.00 & 12000.00 in extension.

Alternative scenario Below 11620.00 look for further downside with 11530.00 & 11465.00 as targets.

Comment The break above 11620.00 is a positive signal that has opened a path to 11880.00.

Pivot (invalidation): 71.60

Our preference Long positions above 71.60 with targets at 72.70 & 73.10 in extension.

Alternative scenario Below 71.60 look for further downside with 71.20 & 70.85 as targets.

Comment The RSI is bullish and calls for further advance.

Pivot (invalidation): 14.6800

Our preference Short positions below 14.6800 with targets at 14.5500 & 14.4900 in extension.

Alternative scenario Above 14.6800 look for further upside with 14.7700 & 14.8500 as targets.

Comment The break below 14.6800 is a negative signal that has opened a path to 14.5500.

Pivot (invalidation): 1227.00

Our preference Short positions below 1227.00 with targets at 1215.50 & 1210.00 in extension.

Alternative scenario Above 1227.00 look for further upside with 1230.00 & 1233.00 as targets.

Comment The RSI has broken down its 30 level.

The US Dollar remained relatively stable against a number of its counterparts, however scored gains against the Yen and CHF. In general, upbeat Wall Street earnings announced, seem to have improved overall market risk sentiment, weakening safe havens. In other news, president Trump renewed his criticism on the Fed as he called the bank his “biggest threat”. The bank is to release today, the minutes of its last meeting and the market will be scrutinizing the document for clues of the bank’s intentions. Should there be a confirmation of the current rate hike path and prevailing hawkish comments, we could see the USD getting some further support.

USD/JPY rose yesterday breaking the 112.15 (S1) resistance level, now turned to support. The pair could continue to trade in a bullish market, should the positive sentiment for the USD continue and the release of the Fed’s minutes support the greenback. If the market continues to favour the pair’s long positions, we could see the pair breaking the 112.72 (R1) resistance line and aim for the 113.25(R2) resistance barrier. Should the bears take over, we could see the pair breaking the 112.15 (S1) support line and aim for the 111.63 (S2) support area.

GBP gains on favorable employment data.

The pound scored some gains yesterday, as some employment data released, for August, were better than expected. The most characteristic reading would be the average earnings growth rate which reached +3.1% yoy, breaking a 4 years + record, despite the unemployment change figure dropping. Analysts point out though, that the increased likelihood of not reaching a Brexit deal could be keeping the pound in check. Volatility for the pound could be rising again today, as the CPI rates for September will be released.

Cable rose yesterday, breaking the 1.3150 (S1) resistance line (now turned to support) as well as the 1.3215 (R1) resistance level for a short period of time, as it corrected and stabilised lower, later on. The pair could drop somewhat today as the UK CPI data forecasts, if realised, could weaken the pound and the release of the FOMC minutes, could provide some support for the USD. Should the pair come under the markets’ selling interest we could see it breaking the 1.3150 (S1) support line and aim for the 1.3080 (S2) support zone. Should the bulls take over once again, we could see the pair breaking the 1.3215 (R1) resistance line and aim for the 1.3285 (R2) resistance hurdle.

In today’s other economic highlights:

During the European session, we get the UK headline and Core CPI rates for September and Eurozone’s final release of the HICP rate for September. In the American session, we get the number of US Housing Starts for September and the EIA weekly crude oil inventories figure. Bear in mind that, the Fed is to release the minutes of FOMC’s last meeting, late in the American session. As for speakers, ECB’s Peter Praet, BoE’s Jonathan Cunliffe and Fed’s Lael Brainard will be speaking.

USD/JPY 4H

Support: 112.15 (S1), 111.63 (S2), 111.15 (S3)

Resistance: 112.72 (R1), 113.25 (R2), 113.95 (R3)

GBP/USD 4H

Support: 1.3150 (S1), 1.3080 (S2), 1.3025 (S3)

Resistance: 1.3215 (R1), 1.3285 (R2), 1.3360 (R3)

Here are the latest developments in global markets:

FOREX: The dollar is higher by 0.1% against a basket of six major currencies on Wednesday, after ending the previous session practically unchanged. The British pound regained some poise yesterday, aided by encouraging UK wage figures and reports suggesting the EU is open to extending Britain's Brexit transition period by another year. Meanwhile, the Japanese yen was the worst performer, as global risk sentiment rebounded, triggering a rotation away from haven assets and into riskier ones.

STOCKS: Wall Street surged on Tuesday, reclaiming some lost ground as solid earnings results from major firms amplified speculation for another quarter of spectacular corporate profits. Robust US data showing that job openings hit another record high in August likely aided the moves. The tech-heavy Nasdaq Composite led the way higher (+2.89%), while the Dow Jones (+2.17%) and the S&P 500 (+2.15%) followed closely in its tracks. The S&P, Dow, and Nasdaq 100 are set to open a little higher today as well, according to futures. The positive sentiment spilled over into Asia on Wednesday. In Japan, both the Nikkei 225 (+1.29%) and the Topix (+1.54%) advanced, alongside South Korea's Kospi 200 (+1.14%). Europe was a similar story, with futures tracking all the major indices pointing to a notably higher open today.

COMMODITIES: Oil prices ticked higher, buoyed by a drawdown in the API crude inventory data released overnight, with concerns that the US-Saudi Arabia diplomatic rift may escalate still hanging in the background. Although the US administration appears highly unlikely to take any action against the Kingdom, prominent Republican lawmakers have been quite vocal in calling for sanctions against the regime over the disappearance of a journalist. In precious metals, gold is marginally lower on Wednesday (-0.07%) at $1,223 per ounce, extending the modest losses it recorded in the previous session as sentiment shifted back to “risk-on”.

Major movers: Yen underperforms as risk appetite rebounds; sterling advances

Risk appetite firmed again on Tuesday, with the major US stock indices all recovering substantial ground, while haven currencies like the Japanese yen fell across the board as investors unwound some of their defensive bets. The shift in sentiment was likely owed to the earnings season kicking off with strong results from market heavyweights such as UnitedHealth (+4.73%) and Johnson & Johnson (+2.12%), which probably amplified expectations for yet another quarter of blockbuster corporate profits. On a secondary but perhaps more important note, although 10-year US bond yields remain relatively elevated at 3.16%, they have clearly stabilized over the past few sessions, potentially calming the nerves of investors that expected a more aggressive surge in longer-term interest rates.

In Brexit land, the pound advanced on Tuesday, initially drawing strength from upbeat UK wages data, and later from reports suggesting the UK may be allowed to stay in the EU for one extra year beyond the end of the transition period in December 2020. Such an extension would provide more time to reach a comprehensive trade deal, allow businesses a smoother adjustment, and perhaps avoid the need for a special arrangement for Northern Ireland altogether. The EU summit will kick off with a working dinner between leaders tonight. Any formal remarks pointing in the direction of a prolonged transition period, or even better an actual deal being possible within the coming weeks, could spell more good news for sterling.

Meanwhile, it was a relatively quiet session for both the euro and the dollar, with euro/dollar giving back some early gains to close the day almost flat, near 1.1570. The greenback's rebound was aided by a set of data reaffirming that the world's largest economy continues to fire on all cylinders, with the JOLTS job openings hitting a new record high in August. Interestingly, the US currency remained indifferent to another round of Fed-criticism from President Trump, who said “my biggest threat is the Fed”, as such remarks from the White House are hardly surprising by now.

Turning to the commodity currencies, the loonie and the kiwi posted meaningful gains yesterday as investors turned their sights back to “riskier” plays. The kiwi seems to have capitalized on New Zealand's upbeat CPI data as well, though market pricing still points to a small probability for a rate cut by the RBNZ over the coming quarters.

Day ahead: UK CPI and Fed minutes on the agenda

UK inflation data and the Fed minutes relating to the central bank's latest meeting are the highlights on Wednesday's calendar.

At 0830 GMT, UK inflation figures as gauged by the consumer price index (CPI) will be hitting the markets. Year-on-year, September's headline CPI is projected to stand at 2.6%, below August's 2.7% and reversing the trend of rises from recent months. Core CPI, which excludes volatile food and energy items, is forecast to grow by 2.0% on a yearly basis, from 2.1% in August. For the record, the Bank of England's target for annual inflation is at 2.0%.

While a data beat may exert pressure on the BoE to hike rates sooner rather than later, more instrumental in freeing the Bank's hands to do so would be a breakthrough for a Brexit deal during the EU summit commencing today. The Irish border issue remains the main sticking point. Should the parties come to an agreement on this front then sterling is likely to post considerable gains. The opposite holds true of course in the event a no-deal Brexit receives traction.

Elsewhere, the UK will see factory price and retail price inflation numbers at the same time as the CPI figures are made public.

The eurozone Harmonised Index of Consumer Prices (HICP) for September due at 0900 GMT will also attract some attention, though the euro might not react much as the release will pertain to the final readings rather than the initial estimates. Headline HICP is expected to be confirmed at 2.1% y/y, above August's 2.0%, while core HICP that excludes food, energy, alcohol and tobacco from its calculations is forecast to come in at 0.9% y/y, below the preceding month's 1.0%.

Out of the US, September's housing starts will be released at 1230 GMT. They're anticipated to decline by 4.5% m/m after rising by 9.2% in August. The release is not typically market moving, at least not for FX markets, though it is gathering additional attention lately in light of the rising rate environment; higher interest rates are negative for the real estate market. Building permits for the same month are due at the same time.

But of more importance for the greenback will be the Fed minutes (1800 GMT) pertaining to the September meeting during which the central bank delivered its third 25bps rate increase of the year. The outlook for policy normalization in 2019 might attract most attention out of the record. More optimism for steeper tightening is theoretically dollar-positive.

Canadian manufacturing sales are due at 1230 GMT.

The ECB's Praet will be giving a speech at 0730 GMT, while Bank of England policymaker Cunliffe's re-appointment hearing is scheduled to begin at 1315 GMT. Permanent FOMC voting member Brainard will also be making a public appearance at 1410 GMT, though the topic of discussion is unlikely to yield any market-sensitive remarks.

In equities, Alcoa is among corporations releasing quarterly results; the firm's report will be made public after the closing bell on Wall Street. The Fed minutes may also affect stock market positioning, especially in light of yield angst that has weighed on equities recently.

In energy markets, EIA data on US crude stocks due at 1430 GMT are predicted to show an inventory buildup of around 2.2 million barrels during the week ending October 12, following a rise by roughly 6.0m in the previously tracked week. Tensions between the US and Saudi Arabia over the disappearance of journalist Khashoggi will also be monitored for a potential impact on prices.

Technical Analysis: EURGBP bearish in short-term though negative bias may be easing

EURGBP is trading roughly 50 pips above last week's four-month low of 0.8722. The Tenkan-sen is below the Kijun-sen, this being indicative of the bearish bias in the short term. At the moment though, the Kijun-sen has halted its decline which may be an early sign of easing negative momentum.

A breakthrough on the Irish border issue is expected to push the pair lower. Support to losses may come around last Wednesday's four-month low of 0.8722; the area around this captures a couple of lows from previous months, as well as the 0.87 handle. Lower still, the 0.8620 nadir would come into scope, potentially offering support to steeper losses.

On the upside and in case of an impasse in negotiations, immediate resistance could occur around the Tenkan-sen at 0.8784; notice that the zone around this point was congested from late April to late June. Further above, the Kijun-sen would be eyed, with the region around it capturing a few tops and a bottom from the recent past, as well as the current level of the 100-day moving average line at 0.8875.

UK inflation data can also provide some near-term direction to the pair.

NZDUSD has been comfortably rising since its drop to a 2 ½ -year low of 0.6423 on October 8. However, the recent upside has not violated the long-term downtrend yet and the pair remains bearish in the bigger picture, maintaining the lower lows and the lower highs off 0.7393 and below the Ichimoku cloud.

In the short-term, Stochastics suggest that the rally is overdone and a reversal to the downside is around the corner as the green %K line is set to meet the red %D line in the overbought territory above 80. Looking at Ichimoku indicators, the red Tenkan-sen line has flattened below the blue Kijun-sen line, supporting that consolidation could also emerge before the price changes direction.

Should the pair extend gains above the 50-day (simple) moving average (MA), resistance is expected to come between 0.6686 and 0.6725, taken from the low on July 3 and the peak on August 28 respectively – the latter has been tested more frequently in the past couple of months. A decisive close above that region and thus above the cloud could trigger stronger bullish actions, sending the price up to 0.6849 which is another familiar zone for the market. Beyond that, traders may speculate that the upward move could continue, targeting the inside swing high of 0.6973 registered on May 22, which is slightly above the 200-day MA.

In the alternative scenario, a dip in the price could revisit the 0.6543 trough before stopping around the 0.65 round level. Beneath the latter, it would be interesting to see whether bears can unlock fresh lows below 0.6423 in which case support could run until 0.6346, the January 2016 bottom.

Early Wednesday’s action is holding within 30-pips range and below Tuesday’s spike high at 1.3235, awaiting fresh signals after previous day’s rally on better than expected UK earnings data stalled.

Brexit talks remain pound’s top driver with souring sentiment on concerns about progress in talks on EU summit, which starts today.

Fears of hard Brexit keep gains limited as current expectations show 25% chances that such scenario would be avoided.

Daily techs are bullishly aligned (strengthening momentum and bull-crosses of MA’s), but sustained break above 1.32 barrier (1.3191 is Fibo 61.8% of 1.3257/1.3083) is required to confirm bullish scenario for eventual attack at 1.3257 target (12 Oct high).

Rising 10SMA marks initial support (1.3144), loss of which would weaken near-term structure for test of next pivot at 1.3115 (20SMA).

Return below Monday’s low at 1.3083 would revive bears and shift focus lower.

UK inflation data are due in a while (Sep CPI y/y 2.6% f/c vs 2.7% prev / m/m 0.2% vs 0.7% prev) and expected to provide fresh direction signals.

Traders will be also focusing on FOMC minutes of September’s meeting to get more clues on the greenback’s near-term direction.

Res: 1.3192, 1.3216, 1.3235, 1.3257
Sup: 1.3161, 1.3144, 1.3115, 1.3096

The US Trade Representative Robert Lighthizer issued a statement notifying the Congress on the intentions of negotiation three separate trade agreements with Japan, the EU and the UK. Three separate letters were also sent to the Congress covering the relationships. He repeated in the letters that the aim aim in negotiations is to "address both tariff and non-tariff barriers to achieve fairer and more balanced trade". And the USTR are "committed to concluding these negotiations with timely and substantive results for US consumers, businesses, farmers, ranchers and workers".

On Japan, Lighthizer criticized that exporters in automobiles, agriculture and services have been "challenged by multiple tariff and non-tariff barriers for decades". And that lead to "chronic US trade imbalances with Japan", at USD 68.9B in 2017. Also, Japan "is an important but still too often underperforming market for U.S. exporters of goods,"

On EU, Lighthizer said the economic relationship is the "largest and most complex" in the world. He also said exporters faced "multiple tariff and non-tariff barriers for decade" without naming the sectors like with Japan.

With the UK, Lighthizer said there is "broad and deep trade and investment relationship". UK cannot negotiate the trade agreements yet until after Brexit, a Trade and Investment Working Group was already launched to provide the ground work for an FTA.

USTR statement here. Letters to Congress on Japan, EU and UK.

Japan Chief Cabinet Secretary Yoshihide Suga said "It will not be an easy negotiation ... But we would like to proceed with talks in line with our stance that we will push where necessary and defend our position where necessary, in a way that protects our national interests."

XAUUSD (1222.57): Price action in gold was muted as price stalled near Monday's highs before closing slightly bearish. On the 4-hour chart, we see the retracement taking place. This is indicative of a further decline down to the 1212.05 - 1207.00 level of support. A retest of this support would mark price action establishing support following the breakout from the ascending triangle pattern. The bias remains to the upside. However, if gold prices fail to hold near the support level, we expect further declines to invalidate the ascending triangle pattern.