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For the 24 hours to 23:00 GMT, the USD rose 0.73% against the JPY and closed at 106.20.

In the Asian session, at GMT0400, the pair is trading at 106.35, with the USD trading 0.14% higher against the JPY from yesterday’s close.

The pair is expected to find support at 105.65, and a fall through could take it to the next support level of 104.94. The pair is expected to find its first resistance at 106.76, and a rise through could take it to the next resistance level of 107.16.

Looking ahead, market participants would keep a close watch on Japan’s flash leading economic and coincident indices for January, set to release tomorrow.

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 0.38% against the CHF and closed at 0.9400.

On the data front, Switzerland’s total sight deposits remained steady at a level of CHF576.0 billion in the week ended 02 March.

In the Asian session, at GMT0400, the pair is trading at 0.9392, with the USD trading 0.09% lower against the CHF from yesterday’s close.

The pair is expected to find support at 0.9361, and a fall through could take it to the next support level of 0.9329. The pair is expected to find its first resistance at 0.9416, and a rise through could take it to the next resistance level of 0.9439.

Ahead in the day, traders would eye Switzerland’s inflation figures for February, slated to release in a few hours.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.58% against the CAD and closed at 1.2974.

In the Asian session, at GMT0400, the pair is trading at 1.2976, with the USD trading slightly higher against the CAD from yesterday's close.

The pair is expected to find support at 1.2908, and a fall through could take it to the next support level of 1.2841. The pair is expected to find its first resistance at 1.3022, and a rise through could take it to the next resistance level of 1.3069.

Later today, the release of Canada's Ivey PMI for February, will be on closely monitored by market participants.

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

Daily Pivots: (S1) 105.61; (P) 105.92; (R1) 106.50; More...

Breaching of 106.37 minor resistance suggest temporary bottoming at 105.24. Intraday bias in USD/JPY is turned neutral again for consolidation. But after all, near term outlook will remain bearish as long as 107.67 resistance holds. Larger decline from 118.65 is expected to continue. Below 105.24 will target 100% projection of 118.65 to 108.12 from 114.73 at 104.20 next. Firm break there will pave the way to 98.97 key support level and below. However, break of 107.67 will indicate short term bottoming, on bullish convergence condition in 4 hour MACD. In such case, stronger rebound would be seen back to 55 day EMA (now at 109.05) first.

In the bigger picture, current development argues that the corrective pattern from 118.65 is extending. The solid break of 61.8% retracement of 98.97 to 118.65 at 106.48 now suggests that the pattern from 125.85 high is possibly extending. Deeper fall could be seen through 98.97 key support (2016 low). This bearish case will now be favored as long as 110.47 resistance holds.

Market sentiments improved as some considered US President Donald Trump's threat of trade war is merely a "political show". And pressures from the Republicans and business executives will eventually force him to back down. DOW closed up 336.7 pts or 1.37% at 24874.76. S&P 500 also rebounded 29.69 pts or 1.10% to close at 2720.94. Mild strength was seen in treasury yield with 10 year yield at 2.881, up 0.024. In Asia, Nikkei is trading up 2.1% at the time of writing. In the currency markets, Yen trades broadly lower today but Canadian Dollar remains the weakest one for the week. Aussie trades higher today after RBA stands pat and sounds less concerned with wage growth.

While Trump said he won't back down on imposing steel and aluminum tariff, he is facing increase opposition from his own party. House Speaker Republican Paul Ryan is leading the way. His spokesperson said Ryan is "urging the White House to not advance with this plan. The new tax reform law has boosted the economy and we certainly don't want to jeopardize those gains."

House Ways and Means Chairman Kevin Brady also warned that "blanket tariffs that also sweep up fairly traded steel and aluminium, especially with trading partners like Canada and Mexico". He suggested that Canada and Mexico should be excluded from the tariff. This is the opposite of Trump's rhetoric of "tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed."

Separately, it's reported that White House economic adviser Gary Cohn is arranging a meeting on Thursday with business executives to halt the imposition of the steel and aluminum tariffs. Representatives of breweries, beverage-can manufacturers, automakers, and oil industry will attend. Trump is also expected to attend too.

RBA: Rate of wage growth troughed

Aussie trades mildly higher after RBA kept the cash rate unchanged at 1.50% as widely expected. The statement is almost likely a carbon copy of the prior one. Nonetheless, RBA sounded more optimistic on wage growth as it said that "the rate of wage growth appears to have troughed". Regarding the economy, Australian economy is expected to grow fast in 2018 than in 2018. Regarding inflation RBA maintained that "the central forecast is for CPI inflation to be a bit above 2 per cent in 2018." The statement concluded by maintaining "holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time."

More on RBA: RBA Left Cash Rate Unchanged At 1.5% As Property Markets Cooled

Released earlier in Australia retail sales rose 0.1% mom in January, below expectation of 0.4% mom. Current account deficit widened to AUD -14.0b in Q4.

Looking ahead

Swiss CPI will be a main focus in European session. Eurozone will release retail PMI too. US will release factory orders while Canada will release Ivey PMI later in the day.

USD/JPY Daily Outlook

Daily Pivots: (S1) 105.61; (P) 105.92; (R1) 106.50; More...

Breaching of 106.37 minor resistance suggest temporary bottoming at 105.24. Intraday bias in USD/JPY is turned neutral again for consolidation. But after all, near term outlook will remain bearish as long as 107.67 resistance holds. Larger decline from 118.65 is expected to continue. Below 105.24 will target 100% projection of 118.65 to 108.12 from 114.73 at 104.20 next. Firm break there will pave the way to 98.97 key support level and below. However, break of 107.67 will indicate short term bottoming, on bullish convergence condition in 4 hour MACD. In such case, stronger rebound would be seen back to 55 day EMA (now at 109.05) first.

In the bigger picture, current development argues that the corrective pattern from 118.65 is extending. The solid break of 61.8% retracement of 98.97 to 118.65 at 106.48 now suggests that the pattern from 125.85 high is possibly extending. Deeper fall could be seen through 98.97 key support (2016 low). This bearish case will now be favored as long as 110.47 resistance holds.

Economic Indicators Update

As widely anticipated, RBA left the policy rate unchanged at 1.5% in March. A cooling property market signals that further rate hike is less urgent. On top of the central bank’s agenda has returned to boosting inflation and employment. In 2017, Australia’s CPI averaged at 1.9% while the unemployment rate picked up to 5.5% in January from 5.4% in October 2017. Meanwhile, wage growth remained low while US looming imposition of trade tariffs on metals might affect Aussie economy which relies heavily on exports of raw materials.

As suggested in the accompanying statement, RBA indicated that inflation is “likely to remain low for some time reflecting low growth in labour costs and strong competition in retailing. A gradual pick-up in inflation is, however, expected as the economy strengthens. The central forecast is for inflation to be a bit above 2% in 2018”.

The central bank remained confident over the employment situation. It acknowledged that “employment has been rising in all states and has been accompanied by a significant rise in labour force participation”. Going forward, growth on the job market should remain “solid” with “a further gradual reduction in the unemployment rate expected”. Same as many other advanced economies, wage growth has remained a concern. RBA was aware of the soft wage growth and expected it would “continue for a while yet, although the stronger economy should see some lift in wage growth over time”. It added that “the rate of wage growth appears to have troughed and there are reports that some employers are finding it more difficult to hire workers with the necessary skills”.

The housing market is less a concern as “the housing markets in Sydney and Melbourne have slowed”. Policymakers added that the macro-prudential policies “have been helpful in containing the build-up of risk in household balance sheets, although the level of household debt remains high”.

The language on the exchange rate was unchanged from the previous month. with AUDUSD modestly lower during the inter-meeting period, policymakers should be less worried about the tightening effect of a strong Aussie on the economy.

On the monetary policy outlook, the central bank reiterated the stance that the current accommodative policy should be appropriate to support economic growth. The market has priced in no chance of a rate hike for the rest of the year.

Yen broadly lower in Asian as markets stablized. Nikkei is up 2.1%. Dow closed up 1.37%.

Trump is facing strong opposition from Republicans on steel and aluminum tariffs, and threat of trade wars.

House Speaker Republican Paul Ryan's spokesperson: Ryan is "urging the White House to not advance with this plan. The new tax reform law has boosted the economy and we certainly don't want to jeopardize those gains."

House Ways and Means Chairman Kevin Brady also warned that "blanket tariffs that also sweep up fairly traded steel and aluminium, especially with trading partners like Canada and Mexico".

Separately, White House economic adviser Gary Cohn is arranging a meeting on Thursday with business executives to halt the tariff.

Aussie trades mildly higher after RBA kept the cash rate unchanged at 1.50% as widely expected. The statement is almost likely a carbon copy of the prior one. Nonetheless, RBA sounded more optimistic on wage growth as it said that "the rate of wage growth appears to have troughed". Regarding the economy, Australian economy is expected to grow fast in 2018 than in 2018. Regarding inflation RBA maintained that "the central forecast is for CPI inflation to be a bit above 2 per cent in 2018." The statement concluded by maintaining "holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time."

Statement here

Released earlier in Australia retail sales rose 0.1% mom in January, below expectation of 0.4% mom. Current account deficit widened to AUD -14.0b in Q4.

AUD/USD mildly higher but first hurdle of near term reversal is trend line resistance at 0.78.

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

The global economy has strengthened over the past year. A number of advanced economies are growing at an above-trend rate and unemployment rates are low. Growth picked up in the Asian economies in 2017, partly supported by increased international trade. The Chinese economy continues to grow solidly, with the authorities paying increased attention to the risks in the financial sector and the sustainability of growth.

The pick-up in the global economy has contributed to a rise in oil and other commodity prices over the past year. Even so, Australia's terms of trade are expected to decline over the next few years, but remain at a relatively high level.

Globally, inflation remains low, although higher commodity prices and tight labour markets are likely to see inflation increase over the next couple of years. Long-term bond yields have risen but are still low. Market volatility has increased from the very low levels of last year. As conditions have improved in the global economy, a number of central banks have withdrawn some monetary stimulus. Financial conditions remain expansionary, with credit spreads narrow.

The Bank's central forecast is for the Australian economy to grow faster in 2018 than it did in 2017. Business conditions are positive and non-mining business investment is increasing. Higher levels of public infrastructure investment are also supporting the economy. Further growth in exports is expected after temporary weakness at the end of 2017. One continuing source of uncertainty is the outlook for household consumption. Household incomes are growing slowly and debt levels are high.

Employment grew strongly over the past year and the unemployment rate declined. Employment has been rising in all states and has been accompanied by a significant rise in labour force participation. The various forward-looking indicators continue to point to solid growth in employment over the period ahead, with a further gradual reduction in the unemployment rate expected. Notwithstanding the improving labour market, wage growth remains low. This is likely to continue for a while yet, although the stronger economy should see some lift in wage growth over time. Consistent with this, the rate of wage growth appears to have troughed and there are reports that some employers are finding it more difficult to hire workers with the necessary skills.

Inflation remains low, with both CPI and underlying inflation running a little below 2 per cent. Inflation is likely to remain low for some time, reflecting low growth in labour costs and strong competition in retailing. A gradual pick-up in inflation is, however, expected as the economy strengthens. The central forecast is for CPI inflation to be a bit above 2 per cent in 2018.

On a trade-weighted basis, the Australian dollar remains within the range that it has been in over the past two years. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.

The housing markets in Sydney and Melbourne have slowed. Nationwide measures of housing prices are little changed over the past six months, with prices having recorded falls in some areas. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. APRA's supervisory measures and tighter credit standards have been helpful in containing the build-up of risk in household balance sheets, although the level of household debt remains high.

The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

STOCKS

Dow (24874.76, +1.37%) moved up from the immediate support on the daily candles instead of moving down to test lower supports near 24000-23600. Upside could be limited to 25000-25200 levels in the medium term and an eventual test of 24000 is possible in the longer term. While the support on the daily candles hold, the index may rise towards 25000-25200.

Dax (12090.87, +1.49%) bounced slightly after the recent fall to levels below 12000. Currently trading just above 12000, the index could attempt a test of 12200-12300 on the upside from where another short dip is possible. The horizontal support on the weekly seems to be holding just now as mentioned yesterday but need to see if the current bounce is short lived or moves higher towards 12500 and above.

Nikkei (21487.16, +2.12%) is trading just along the support on the 3-day candle charts and while that holds, a bounce towards 22000-22500 looks possible.

Shanghai (3247.79, +0.28%) has immediate resistance as visible on the daily candle chartand while that holds, there could be a decent fall towards 3230-3200 in the next 1-2 sessions.

Nifty (10358.85, -0.95%) tested a low of 10323 yesterday, breaking our mentioned 10380 support. If the index does not bounce back immediately, it could indicate upcoming bearishness towards 10200-10000 levels in the near term. Else a bounce back from current levels could take it higher towards 10500-10800 levels.
Sensex (33746.78, -0.88%) show a clear break of the immediate support which is yet not visible on the Nifty. This could be indicateive of an upcoming bearishness. Current levels are crucial to keep an eye on.

COMMODITIES

Brent (65.66) and WTI (62.63) have moved up and could target 66.0-66.5 and 63.0-63.4 today. Thereafter a small dip is possible back towards 64.30 and 62-61 respectively.

Gold (1321.91) has paused near current levels and could trade sideways in the 1310-1330 region just now. Slight rejection from 1330 is possible in the next couple of sessions. Near term looks stable.

Copper (3.1315) is also in a pause mode just now and is likely to remain stable for sometime in the 3.15-3.07 region before trying to move towards 3.20 or higher in the longer run.

FOREX

The Dollar Index (89.966), seems to be getting some immediate support near 90 by the 13 days and 21 days moving average lines on daily line chart and also by the 5 weeks moving average line on the weekly line chart. However these supports might not hold for long as the Dollar Index might attempt to move further down towards support near 89.5 on daily candles. 89.0-89.5 is seen as crucial long term support level on the weekly line charts, which if broken, might lead to sustained bearishness for the Dollar.

The Euro (1.2350) has broken above the immediate resistance, which was being provided by the 21 days moving average line on the daily line chart near 1.232-1.233. There might be some resistance provided by earlier support line on 3 day candles near 1.235, but this resistance should be breached soon for an attempt of higher levels near 1.245-1.250 later this week.

Dollar-Yen (106.41) against our expectation has risen from levels near 105.4-105.5 seen yesterday and might now attempt a test of resistance near 106.5-106.75 on the daily candles before dipping again. Medium term looks bearish for Dollar Yen with the next target on the downside being levels close to 104.0-104.5, seen as support on daily and 3 day candles.

The Euro-Yen (131.43) tested support on daily candles near 129.5 (it saw a low of 129.36) earlier than expected and has now bounced. There is resistance near 131.5 on the daily candles and near 132 on the 3 day candles which should keep the Euro Yen’s upmove restricted.

Pound (1.3845) is bouncing from support near 1.3775 on the daily candles and might move back up towards 1.395 over the coming sessions, which is seen as immediate resistance on daily candles.

Dollar-Rupee (65.11): Bit of a two-way market possible today - watch if either Resistance at 65.3075 or Support at 65.00 breaks.

INTEREST RATES

The German 10 Yr – US 10 Yr yield differential (-2.24%) is hovering near crucial long term support level of -2.25%, which might hold. A hold of the support would imply either a drop in US 10 yr yield or a rise in the German 10 yr yield. The German 10 Yr yield (0.64%) recently dropped below support near 0.7 on the medium term chart and dipped from resistance near 0.75 on the long term chart. Moreover, the ECB is expected to not indicate much tightening in their next meeting on 8th March, which might thereby imply that a rise in German 10 Yr yield might be difficult. Hence, for support on the German-US spread to hold, US yields might need to drop, which also look unlikely immediately. For now, the 8th march ECB meeting and 21st March US Fed meeting become extremely vital to the course of yields and forex rates.

US 10 Year Yield (2.88), US 30 year Yield (3.1547), US 5 year yield (2.65), US 2 year yield (2.237) : US Yields continue their oscillation near respective long term resistances

The first half of March might just see muted movement in US yields. As the 21st March Fed meeting comes closer, there could be a rise in yields in anticipation of a rate hike.

(Long term resistance levels for the 4 yields have been as follows: 2.85-2.90, 3.20, 2.7 and 2.2 respectively – a decisive breach of these levels could happen in March 2nd half.)