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Daily Pivots: (S1) 111.86; (P) 112.10; (R1) 112.48; More..

Intraday bias in USD/JPY remains neutral for the moment. As long as 112.52 minor resistance holds, deeper fall is expected. Decline from 114.54 is viewed as correcting whole rise from 104.62. Break of 111.62 will target 38.2% retracement of 104.62 to 114.54 at 110.75. We'll look for bottoming signal above 109.76 key support. On the upside, considering mild bullish convergence condition in 4 hour MACD, above 112.52 minor resistance will indicate completion of the pull back and bring retest of 114.54 high.

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.

Daily Pivots: (S1) 0.9874; (P) 0.9892; (R1) 0.9924; More...

USD/CHF's consolidation from 0.9954 is still in progress and intraday bias remains neutral first. Another fall cannot be ruled out. But downside should be contained by 38.2% retracement of 0.9541 to 0.9954 at 0.9796 to bring rise resumption. On the upside, break of 0.9954 will resume the rise from 0.9541 and target 1.0067 resistance next.

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.

Risk appetite appears to be gradually returning to markets following strong earnings-driven gains in the US overnight as attention now shifts to Brussels were Brexit talks will continue.

May heads to Brussels as no deal preparations continue

All eyes in Europe will be on the EU summit over the next couple of days as Theresa May heads to Brussels to try and break the impasse on the Northern Ireland border and the backstop arrangement. As the pressure has increased and the deadline neared, relations appear to have deteriorated rather than improved which has been worry but I still believe a deal will come, just not this month.

The EU has become renowned for its 11th hour deal making and I expect these negotiations to proceed in much the same way. For me, it’s the prospect of a deal not getting through parliament that represents the greatest risk rather than the leaders of the 28 deciding to suddenly abandon talks and shoot themselves in the foot in the process. We will hopefully be a lot clearer on the prospects of a deal by the end of the week.

Oil stable for now as Trump seeks to diffuse Saudi tensions

Oil prices appear to have stabilised a little in recent sessions after coming off their highs earlier in the month. Iranian sanctions have contributed strongly to the rise in oil prices in recent months but global growth concerns over the last week or two has clearly taken some of the heat out of the rally and at the very least, been the catalyst for some profit taking.

The disappearance of journalist Jamal Khashoggi threatened to heighten tensions between the US and Saudi Arabia, which immediately drew attention back to oil as many saw it as being a potential weapon against US sanctions. But this was short-lived, with Trump clearly going out of his way to diffuse the situation rather than take his usual more combative approach, in a clear sign of his lack of appetite for a confrontation with Riyadh.

Trump increasingly frustrated with the Fed

Trump once again weighed in on the central bank on Tuesday, claiming it is his biggest threat and that he’s not happy with what it’s doing as the inflation numbers are very low. Trump has repeatedly tried to pile pressure on the central bank to slow its rate hikes while claiming to respect its independence so the latest attack comes as no surprise.

And while the dollar has often softened in response to his comments, I don’t yet see them as a real risk to the central bank’s independence and we’re yet to see any evidence that it’s having any impact whatsoever on policy making. In fact, it’s simply another attempt by Trump to lay the groundwork for future finger pointing in the event that the economy falters, just as he did at the first sign of weakness last week.

The Fed minutes will likely highlight the Fed’s determination to plough on later on today, with the central bank having previously alluded to one more hike this year and a few more next. Given everything that’s happened since the meeting though, I wonder whether the minutes are already outdated and in fact, the comments we’ll get over the course of this week – including from Lael Brainard today – will be more relevant.

Daily Pivots: (S1) 1.3139; (P) 1.3188; (R1) 1.3234; More...

Intraday bias in GBP/USD remains neutral for now first. Further rise could be seen through 1.3257. But upside should be limited by 1.3316 key fibonacci level to bring down trend resumption eventually. On the downside, below 1.3081 minor support will turn bias to the downside for 1.2921 support first. However, sustained break of 1.3316 would pave the way to next fibonacci level at 1.3721.

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 declined 0.06% against the USD and closed at 1.1576.

On the data front, the Euro-zone's seasonally adjusted trade surplus widened to €16.6 billion in August, amid a surge in exports. Markets had expected to record a surplus of €14.7 billion, while in the previous month, the nation posted a revised surplus of €12.6 billion. On the other hand, the region's ZEW economic sentiment index sharply declined to a level of -19.4 in October, compared to a level of -7.2 in the preceding month.

Additionally, in Germany, the ZEW economic sentiment index slid to a level of -24.7 in October, compared to market consensus for a fall to a level of -12.0. In the previous month, the index had registered a reading of -10.6. Moreover, the nation's current situation index eased to a level of 70.1, compared to market anticipation for a drop to a level of 74.4. The index had recorded a level of 76.0 in the prior month.

In the US, data showed that manufacturing production advanced in line with market forecasts by 0.2% on a monthly basis in September, following a similar rise in the previous month. Also, the nation's industrial production climbed 0.3% on a monthly basis in September, higher than market expectations for a rise of 0.2%. In the prior month, industrial production had advanced 0.4%. Furthermore, the US NAHB housing market index unexpectedly jumped to a level of 68.0 in October, defying market expectations to drop to a level of 66.0. In the preceding month, the index had recorded a reading of 67.0.

In the Asian session, at GMT0300, the pair is trading at 1.1562, with the EUR trading 0.12% lower against the USD from yesterday's close.

The pair is expected to find support at 1.1540, and a fall through could take it to the next support level of 1.1517. The pair is expected to find its first resistance at 1.1603, and a rise through could take it to the next resistance level of 1.1643.

Looking forward, investors would keep an eye on the Euro-zone's construction output for August and consumer price index for September, scheduled to release in a few hours. Later in the day, Federal Reserve's meeting minutes along with the US housing starts and building permits data, all for September, will keep traders 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 1.3188, after data showed that Britain's wage growth hit a 10-year high in August. The average earnings including bonus advanced 2.7% in the June-August 2018 period, more than market expectations for a gain of 2.6%. The average earnings including bonus had recorded a rise of 2.6% in the May-July 2018 period. Meanwhile, the UK's ILO unemployment rate remained steady at 4.0% for the three-months ended August 2018, marking its lowest level since 1975 and meeting market expectations. On the contrary, the nation's number of unemployment benefits claimants climbed to its 43-year low level by 18.5K in September. Number of unemployment benefits claimants had registered a revised gain of 14.2K in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.3175, with the GBP trading 0.10% lower against the USD from yesterday's close.

The pair is expected to find support at 1.3132, and a fall through could take it to the next support level of 1.3089. The pair is expected to find its first resistance at 1.3227, and a rise through could take it to the next resistance level of 1.3279.

Going ahead, traders would closely monitor UK's consumer price index and retail price index, both for September and house price index for August, set to release in a few hours.

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

Daily Pivots: (S1) 1.1552; (P) 1.1587; (R1) 1.1609; More.....

EUR/USD spiked to 1.1621 but quickly retreated. Intraday bias is turned neutral again. On the upside, above 1.1621 will resume the rebound from 1.1431. But upside should be limited by 1.1779/1814 resistance zone to bring down trend resumption eventually. On the downside, break of 1.1534 will indicate completion of rebound from 1.1431. Intraday bias will be turned back to the downside for 1.1431 and then 1.1300 low.

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.

US equities closed sharply higher overnight with DOW ended up 2.17%. Optimism carried on in early part of Asian session but couldn't persist. At the time of writing, China's Shanghai SSE reversed earlier gains and is trading down -0.8%, breaking yesterday's low to extend larger down trend. Riding on this, Dollar and Yen are trading as the two strongest ones for now. Canadian Dollar, Euro and Sterling has under some selling pressure.

But overall, the forex markets are in consolidative mode. EUR/USD's spike to 1.1621 yesterday but quickly dipped back into established tight range. GBP/USD had much volatility this week but it's also bounded in range below 1.3257. USD/CHF, USD/JPY, EUR/GBP, EUR/JPY, GBP/JPY and EUR/AUD are all clearly in consolidation. Trump's another attack on Fed couldn't trigger a breakout, nor stock rally. Let's see if today's UK CPI, EU summit and FOMC minutes could trigger some sustainable moves.

Technically, EUR/USD's focus is back on 1.1534 minor support. 0.9954 in USD/CHF and 112.52 minor resistance in USD/JPY will also be watched today for clues on Dollar's strength, if it exists.

Trump called Fed his biggest threat but added he's not blaming anybody

Trump escalated his attack on Fed yesterday by falling it his "biggest threat", "because the Fed is raising rates too fast". Though, he repeated that Fed is "independent" and he "don't speak to " Fed chair Jerome Powell. But he also expressed that "I'm not happy with what he's doing because it's going too fast. Because – you look at the last inflation numbers, they're very low."

Trump also added "Can I be honest? I'm not blaming anybody, I put him there", referring to Powell. "And maybe it's right, maybe it's wrong. But I put him there."

Markets had little reaction to Trump's words so far.

Fed Daly favors gradual pace of monetary policy normalization

New San Francisco Fed President Mary Daly expressed her support to continued gradual rate hikes in her first remarks as monetary policy maker. She said the labor market is "booming" and inflation at the at 2% target. And, she explained that Fed might not want to go too slowly on rates and risking falling behind the curve. Her approach is consistent with Fed's and she favors "a gradual pace of normalization."

Daly also used the analogy that "you put a toe in the water and see how much of a ripple it makes". And, "the FOMC just raised rates in September, and we're now in the watching phase -- what's going on in the economy, how does it react."

She also tried to talk down last week's stock market crash. She said "a correction in the stock market where it comes down a little bit is not necessarily a worrisome thing."

May to address EU leaders in Brussels, Tusk said problem is still Irish border

UK Prime Minister Theresa May will address EU leaders in the summit dinner today, trying to sell her Chequers plan again. Ahead of that, European Council President Donald Tusk said "the problem is clear it is still the Irish question and the problem of the border between Ireland and Northern Ireland. And the so-called backstop. It looks like a new version of the Gordian knot."

Tusk added that "We should ... remain hopeful and determined, as there is good will to continue these talks on both sides. But at the same time, responsible as we are, we must prepare the EU for a no-deal scenario, which is more likely than ever before,"

Tusk said he will ask May whether she has concrete proposals on how to break the impasse. Only such proposals can determine if a breakthrough is possible." Tusk also added that the unscheduled Brexit summit in November only makes sense if there negotiation is really close to a breakthrough.

RBA Debelle: Unemployment rate might drop further before material rise in wages growth

RBA Deputy Governor Guy Debelle welcomed the developments in the Australian labor market in a speech. He noted that "employment has grown strongly, the participation rate is close to its highest level on record and the unemployment rate has declined to be at a six-year low." And, that is "consistent with the above-trend GDP growth in the economy."

However, he also noted again there was "little" change in long term unemployment rate and "wages growth remains low". Above averaged demand for labor and growth in economy should "gradually reduce the spare capacity in the labour market." And that will lead to "gradual increase in wages growth and, in turn, inflation." But the extend and timing are uncertain. Unemployment rate could drop further than historical experience before material increases in wages growth.

Debelle also noted that the drag on the economy from lower house prices is still unclear and RBA is paying close attention.

On the data front

Australia Westpac leading index dropped -0.1% mom in September. UK inflation is the major focus in European session, with CPI, RPI and PPI featured. Eurozone will release CPI final too. Later in the day, US will release housing starts and building permits. FOMC minutes will also be featured.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1552; (P) 1.1587; (R1) 1.1609; More.....

EUR/USD spiked to 1.1621 but quickly retreated. Intraday bias is turned neutral again. On the upside, above 1.1621 will resume the rebound from 1.1431. But upside should be limited by 1.1779/1814 resistance zone to bring down trend resumption eventually. On the downside, break of 1.1534 will indicate completion of rebound from 1.1431. Intraday bias will be turned back to the downside for 1.1431 and then 1.1300 low.

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.

Economic Indicators Update

For the 24 hours to 23:00 GMT, the USD rose 0.45% against the JPY and closed at 112.28.

In the Asian session, at GMT0300, the pair is trading at 112.39, with the USD trading 0.10% higher against the JPY from yesterday’s close.

The pair is expected to find support at 112.07, and a fall through could take it to the next support level of 111.76. The pair is expected to find its first resistance at 112.56, and a rise through could take it to the next resistance level of 112.74.

Looking ahead, investors await the release of Japan’s trade balance data for September, slated to release overnight.

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

For the 24 hours to 23:00 GMT, the USD rose 0.31% against the CHF and closed at 0.9901.

In the Asian session, at GMT0300, the pair is trading at 0.9913, with the USD trading 0.12% higher against the CHF from yesterday’s close.

The pair is expected to find support at 0.9877, and a fall through could take it to the next support level of 0.9840. The pair is expected to find its first resistance at 0.9932, and a rise through could take it to the next resistance level of 0.9950.

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