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The EUR/USD is testing the support trend line (blue) of the bullish trend channel. A bearish breakout could indicate the end of wave A (purple) and the start of a wave B (purple), whereas a bullish bounce could extend the wave A to a higher high. The zone of resistance confluence at around 1.1750-1.1780 is still active and could stop the price from moving higher.

The EUR/USD could be in a potential ABC (green) correction if the price breaks below the uptrend channel. A break above the resistance trend line (orange) however, could indicate a bullish breakout towards the Fibonacci targets of wave 5.

The GBP/USD bullish momentum is showing very strong price action when it broke above the resistance trend line (dotted orange). Price is now approaching a key invalidation level (orange line) for the current wave 4 pattern. A bullish breakout invalidates this wave outlook and could indicate a larger bullish correction.

The alternative wave scenario is a potential bullish 5 wave pattern (light blue). A bullish breakout above the invalidation level could make this pattern more likely. After completing the 5 waves, price could build a bearish ABC correction before moving up again.

The GBP/USD bullish impulse is strong and seems to be a wave 3 (orange). A sideways corrective pattern such as a bull flag or triangle could confirm a wave 4, which would indicate that a bullish continuation within wave 5 is likely.

Daily Pivots: (S1) 1.2887; (P) 1.2924; (R1) 1.2947; More...

USD/CAD loses some downside momentum ahead of 1.2879 fibonacci level. But with 1.2981 minor resistance intact, intraday bias stays on the downside for further decline. Sustained break of 1.2879 fibonacci level will add to the case of medium term reversal and target next fibonacci level at 1.2567. On the upside, above 1.2981 will bring stronger recovery. But overall near term outlook will stay cautiously bearish as long as 1.3173 resistance holds.

In the bigger picture, the break of channel support (now at 1.2988), argues that rise from 1.2246, as well as that from 1.2061, has completed at 1.3385. Focus is back on 38.2% retracement of 1.2061 to 1.3385 at 1.2879. Decisive break there will affirm the case of medium term reversal and target 61.8% retracement at 1.2567 and below. That will also put key long term support at 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048 into focus. On the upside, break of 1.3173 resistance will revive the bullish case and target 61.8% retracement of 1.4689 to 1.2061 at 1.3685 and above.

NZDUSD short-term elliott wave analysis suggests that the decline to 0.6543 low ended Minor wave 1. The internals of that decline unfolded as impulse structure with lesser degree Minute wave ((i)), ((iii)) & ((v)) unfolded in 5 waves structure. Above from there, Minor wave 2 bounce is taking place as double correction higher with lesser degree cycles showing sub-division of 3 wave structure its each leg higher.

Up from 0.6543 low, the rally to 0.6719 high ended Minute wave ((w)) of 2. The internals of that rally also unfolded as double three structure where Minutte degree wave (w) ended at 0.6639. Minutte wave (x) pullback ended at 0.6609 &Minutte (y) of ((w)) ended at 0.6719 high. From there, the pullback to 0.6616 low ended Minute wave ((x)) of 2 as a Flat structure. Near-term, as far as dips remain above there, expect pair to resume the next leg higher in Minute wave ((y)) of 2 looking for 0.6795-0.6835, which is the 100%-123.6% Fibonacci extension area of Minute wave ((w))-((x)) to end Minor wave 2 bounce. We don't like buying the pair.

NZDUSD 1 Hour Elliott Wave Chart

General Trend:

• Asian equity markets trade mixed, despite record gains in the US
• Australian telecoms TPG and Vodafone Hutchison Australia rise on merger plan
• Chinese earnings remain in focus: ICBC and Air China are among the companies expected to report today
• New Zealand business confidence hits new multi-year low
• In Australia, Q2 CAPEX and July building approvals miss expectations

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.1%
• ASX 200 Telecom index +2.9%, Utilities +0.7%, Energy +0.3%; Resources -0.2%, Financials -0.2%
• (AU) AUSTRALIA Q2 PRIVATE CAPITAL EXPENDITURE (CAPEX): -2.5% V +0.6%E
• (AU) AUSTRALIA JUL BUILDING APPROVALS M/M: -5.2% V -2.0%E; Y/Y: -5.6% V -3.0%E
• (AU) Australia Weather Bureau: Sept and Oct are likely to be drier than avg across most of the country; drier and warmer than avg Spring likely to intensify drought
• (NZ) NEW ZEALAND AUG ANZ ACTIVITY OUTLOOK: 3.8 V 3.8 PRIOR; BUSINESS CONFIDENCE: -50.3 V -44.9 PRIOR (new multi-year low)
• (NZ) New Zealand Jul Building Permits M/M: -10.3% v -7.6% prior (largest decline in more than 3 years)
• (NZ) New Zealand sells NZ$250M in 3.00% April 2029 bonds, avg yield 2.5676%, bid to cover 2.92x

China/Hong Kong

• Shanghai Composite opened flat, Hang Seng +0.4%
• Hang Seng Telecom index -1.7%, Industrial Goods -1.1%, Info Tech -1%, Services -1%, Consumer Goods -0.9%, Property/Construction -0.6%, Financials -0.5%, Utilities -0.5%
• (CN) China PBoC set yuan reference rate: 6.8113 v 6.8072 prior
• (CN) China PBoC Open Market Operation (OMO): Skips OMO (7th straight skip)
• (CN) China govt pledges to improve credit policy for property market - financial press
• (HK) Property developers in Hong Kong said to offer 6,000 homes in Sept, which is the most in 5 years - Local Press
• (CN) China NDRC: Has already approved 152 major infrastructure projects in the Western regions of China worth a combined CNY3.75T
• (CN) Fitch Report: China policy easing to stop short of credit stimulus: does not see the US tariffs that already have been imposed on Chinese goods as being large enough to revise growth forecasts

Japan

• Nikkei 225 opened +0.8%
• TOPIX Marine Transportation index +0.6%, Retail Trade +0.3%, Electric Appliances +0.2%; Real Estate -0.4%, Securities -0.3%, Iron & Steel -0.2%, Info & Communications -0.2%
• Megabanks underperform
• Automakers trade generally weaker
• Panasonic: To move European headquarters from London to Amsterdam in Oct to avoid possible tax issues and barriers for flow of workers and goods related to Brexit (Nikkei)
• (JP) Japan Jul Retail Sales M/M: 0.1% v 0.2%e; Retail Trade Y/Y: 1.5% v 1.2%e
• (JP) Japan Cabinet Office (Govt) Monthly Economic Report for Aug: Lowers assessment on exports (lowered for the first time since Aug 2015)
• (JP) Japan Jul Dept Store and Supermarket Sales: -1.6 v -0.7%e
• (JP) Japan MOF sells ¥2.1T v ¥2.1T indicated in 0.10% 2-year bonds, avg yield -0.1120% v -0.117% prior, bid to cover 5.26x v 4.38x prior

Korea

• Kospi opened +0.2%
• (KR) South Korea may announce cabinet reshuffle later today - South Korean Press
• (KR) Trump tweets about North Korea: have a warm relationship with Kim Jong Un; see no need to spend money on South Korea war games at this time
• (KR) US and South Korea said to plan to hold Air Force drills in Dec - South Korean Press
• (KR) South Korea Sept Business Survey: Manufacturing: 77 v 73 prior
• (KR) South Korea Jul Department Store Sales Y/Y: 2.9% v 5.4% prior; Discount Store Sales Y/Y: -2.5% v +0.2% prior

Other

• (MY) Malaysia Official: Set the new sales tax rate at 5-10%, new services tax rate at 6%

North America

• US equity markets ended higher: Dow +0.2%, S&P500 +0.6%, Nasdaq +1%, Russell 2000 +0.4%
• S&P 500 Consumer Discretionary +1.1%, Technology +0.9%
• (US) DOE CRUDE: -2.6M V -1ME
• (US) US President Trump: Necessary to maintain aluminum tariff levels; US still in talks with nations on aluminum tariffs

Europe

• (EU) France Pres Macron reportedly proposed a new structure for EU alliances – press
• (EU) EU said to consider full summit in Nov to discuss Brexit (in-line with recent speculation)
• (UK) Nigel Farage said to consider running to become mayor of London - FT

Levels as of 01:30ET

• Nikkei 225, +0.1%, ASX 200 +0.1%, Hang Seng -0.8%; Shanghai Composite -0.8%; Kospi flat
• Equity Futures: S&P500 -0.1%; Nasdaq100 -0.2%, Dax -0.3%; FTSE100 -0.3%
• EUR 1.1714-1.1695 ; JPY 111.77-111.51 ; AUD 0.7317-0.7274 ;NZD 0.6718-0.6652
• Aug Gold -0.1% at $1,209/oz; Sept Crude Oil +0.3% at $69.69/brl; Sept Copper -0.3% at $2.724 /lb

Daily Pivots: (S1) 0.7272; (P) 0.7311; (R1) 0.7347; More...

AUD/USD weakens notably but it's staying in range of 0.7237/7381. Intraday bias remains neutral and more consolidative trading could be seen. In case of stronger rise through 0.7381 we'd expect upside to be limited by 0.7452 resistance to bring larger down trend resumption eventually. On the downside, below 0.7237 will target a test on 0.7201 low first.

In the bigger picture, rebound from 0.6826 (2016 low) is seen as a corrective move that should be completed at 0.8135. Fall from there would extend to have a test on 0.6826. There is prospect of resuming long term down trend from 1.1079 (2011 high). But we'll look at downside momentum to assess at a later stage. On the upside, break of 0.7452 resistance, however, will indicate medium term bottoming, on bullish convergence condition in daily MACD. In that case, a correction should be seen first, with stronger rebound would be seen to 38.2% retracement of 0.8135 to 0.7201 at 0.7558. The down trend from 0.8135 will resume after the correction completes.

Market movers today

The main release today is the US PCE data, which we expect to rise to 2.0% from 1.9% (PCE core inflation). We still believe the Fed is on track to deliver two more hikes this year. The consumer spending data will give us more insight into growth at the beginning of Q3.

In Scandi, the Swedish NIER's monthly confidence survey is due out this morning. Norwegian retail sales are also due, see page 2.

The regional inflation prints during the day will give an indication before Friday's euro area flash estimate. We also get European confidence indicators (11:00 CET).

Selected market news

Overnight, Asian equities traded mixed despite the S&P500 closing at an all-time high.

EMs had a tough day yesterday. The TRY continued its recent decline despite the Turkish Central bank (TCMB) applying more tools. Although the TCMB doubled its o/n transaction limits, the implicit tightening did not convince the markets. In our view, the only credible step would be a sharp interest rate hike by the TCMB, as even a 300bp rate hike doesn't seem to be enough in the current environment.

In Argentina, President Mauricio Macri asked the IMF to speed up its payment from the USD50bn credit line, as the government wants to ensure markets that it has sufficient funds through 2019. The central bank has already raised interest rates to 45% amid a looming recession (the second in three years). The peso (ARS) dropped to an all-time low yesterday. For more detailed EM analysis, see Strategy: New ‘fragile five’ in emerging markets.

The revamp of NAFTA seems likely to be concluded this week after positive tones from Canadian PM Trudeau saying a deal is possible by Friday if it 's good for Canada, though he also said, "no NAFTA deal is better than a bad NAFTA deal." US President Trump echoed similar positive language on the possibility of a deal this week. Overnight, Canadian Foreign Minister Freeland said that a "huge amount of work remains".

Yesterday, EU chief negotiator Barnier said the EU is prepared to "to offer a partnership with the UK such as has never been with any other third country". Barnier repeated his previous line, asking the UK to respect the EU's red lines, in the same way the EU respects the UK's red lines. As mentioned in yesterday 's daily , unidentified sources suggested that the UK and EU would extend the deadline for a Brexit deal and avoid a ‘hard' Brexit. Our base case remains a ‘decent Brexit', for a deal that maintains a close trading relationship between the UK and EU, although the UK leaves the single market. One major event is the UK Conservative Party conference in late September-early October, as PM Theresa May is under pressure by hardcore Brexiteers.

A Bloomberg survey indicated that Germany 's Jens Weidmann is no longer the front - runner to replace ECB's Draghi. The survey also indicated that there is no clear front -runner currently, with Finland's Liikanen, France's Villeroy and Ireland's Lane all back to back.

Daily Pivots: (S1) 0.9736; (P) 0.9773; (R1) 0.9801; More.....

USD/CHF drops to as low as 0.9700 so far and there is no sign of bottoming yet. The decline came deeper than we expected. Intraday bias is staying on the downside for 161.8% projection of 1.0067 to 0.9866 from 0.9981 at 0.9656 next. On the upside, above 0.9744 minor resistance will turn intraday bias neutral first. But outlook will now stay bearish as long as 0.9866 support turned resistance holds. And deeper fall will remain in favor even in case of recovery.

In the bigger picture, current development suggests that rise from 0.9186 low has completed at 1.0067, after failing to sustain above 1.0037 resistance. Fall from 1.0067 could extend to 61.8% retracement of 0.9816 to 1.0067 at 0.9523 and below. But for now, we don't expect a break of 0.9186 low. On the upside, firm break of 1.0067 will resume the rise to 1.0342 key resistance (2016 high).

Daily Pivots: (S1) 111.23; (P) 111.53; (R1) 111.98; More...

Intraday bias in USD/JPY remains on the upside as rebound from 109.76 is in progress for 112.14 resistance. Note again that correction from 113.17 should have completed at 109.76 already. Break of 112.14 should target a test on 113.17 high. On the downside, however, break of 110.93 minor support will dampen the bullish case and turn focus back to 109.76 instead.

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 109.36 support holds. However, decisive break of 109.36 will mix up the outlook again. And deeper fall should be seen back to 61.8% retracement of 104.62 to 113.17 at 107.88 and below.

For the 24 hours to 23:00 GMT, the EUR rose 0.10% against the USD and closed at 1.1707.

On the data front, Germany's Gfk consumer confidence index unexpectedly slid to a level of 10.5 in September, defying market expectations for an unchanged reading. In the previous month, the index had recorded a reading of 10.6. Separately, in France, preliminary gross domestic product (GDP) remained unchanged at 1.7% on an annual basis in 2Q 2018, at par with market consensus.

In the US, data showed that the annualised gross domestic product (GDP) advanced 4.2% on a quarterly basis in 2Q 2018, signalling its strongest gain in 4 years. Market participants had envisaged the GDP to rise 4.0%. The annualised GDP had registered a revised gain of 2.2% in the prior quarter while the preliminary figures had indicated an advance of 4.1%.

On the other hand, US pending home sales surprisingly eased 0.7% on monthly basis in July, defying market expectations for an advance of 0.3%. In the preceding month, pending home sales had registered a revised rise of 1.0%. Additionally, the nation's MBA mortgage applications retreated 1.7% on a weekly basis in the week ended 24 August 2018. In the previous week, mortgage applications had climbed 4.2%.

In the Asian session, at GMT0300, the pair is trading at 1.1702, with the EUR trading slightly lower against the USD from yesterday's close.

The pair is expected to find support at 1.1665, and a fall through could take it to the next support level of 1.1627. The pair is expected to find its first resistance at 1.1727, and a rise through could take it to the next resistance level of 1.1751.

Looking forward, investors will await the Euro-zone's consumer confidence, business climate indicator and economic confidence index, all for August, along with Germany's unemployment rate and the consumer price index, both for August, slated to release in a few hours. Later in the day, the US personal income and personal spending for July followed by initial jobless claims will keep traders on their toes

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