Sample Category Title

NZDUSD (0.7211): The New Zealand dollar continues to extend the declines with the RBNZ's dovish statement earlier this week. The reversal off the 0.7333 support turned resistance indicates a decline to the initial support at 0.7160. NZDUSD could be seen rebounding off this level. If the support holds, we anticipate a potential inverse head and shoulders pattern being formed, visible on the daily time frame. With the neckline resistance seen at 0.7333 - 0.7350, NZDUSD could be potentially consolidating for a stronger breakout to the upside. The bias is invalidated on a break down below the 0.7160 support.

GBPUSD (1.3934): The British pound was seen to be volatile yesterday on the back of the Bank of England monetary policy meeting. As noted in yesterday's commentary, GBPUSD initially rallied to 1.4037 but with the resistance holding up, price action promptly reversed gains. We expect GBPUSD to maintain a sideways range within 1.4037 and 1.3855. A breakout from this range will establish further direction in the currency pair. The bias is to the downside and we expect GBPUSD to eventually breakout below 1.3855 to fall towards 1.3611 - 1.3589 level of support.

EURUSD (1.2254): The EURUSD extended declines as prices touched a fresh monthly low at 1.2211 before pulling back slightly. The daily session in the EURUSD ended with a spinning bottom candlestick pattern that could suggest a near term recovery in the declines. On the 4-hour time frame, EURUSD is seen consolidating near 1.2237 retesting the January 23 lows. We expect to see a pullback in prices that could see EURUSD retesting the broken support level at 1.2363 - 1.2333. If resistance is established here, then EURUSD could extend declines down to 1.2090 - 1.2070 level in the medium term. The bias shifts if price manages to breakout above 1.2363, resistance high

The Bank of England's monetary policy meeting yesterday surprised the markets with hawkish tone from the central. Officials voted to leave the interest rates unchanged at 0.50% at yesterday's meeting by a unanimous vote. However, the statement showed that the central bank expects faster pace of rate hikes given the uptick in the global growth.

Despite the hawkish tone from the BoE, the fact that the central bank acknowledged that the UK wasn't fully able to take advantage of the growth phase and the uncertainty from Brexit remained some key factors that offset the hawkish tone.

The equity markets resumed the selloff with the Dow Jones falling over 1000 points on the day on Thursday. Major U.S. stock indexes were down by at least 3%. The selloff extended to the Asian session with the Nikkei index down 2.7% while the Shanghai Index was seen losing 4.11% at the time of writing.

Earlier today, China's inflation data confirmed that consumer prices rose at a slower pace of 1.5% as expected. This is a weaker print compared to December’s inflation rate of 1.8%. Producer prices were also weaker, rising just 4.3% missing estimates and slower than December’s increase of 4.9%.

Looking ahead, the economic calendar will see Canada's unemployment details. Unemployment rate is expected to edge slightly higher to 5.8% while the economy is forecast to add 10.3k jobs during January.

EUR/USD

Current level - 1.2258

Intraday allow a brief rebound to 1.2330 resistance area before next drowning towards 1.2160 target area. Crucial on the upside is 1.2405.

USD/JPY

Current level - 108.96

The recent test of 109.70 failed again and the pair is struggling above the lower range boundary at 108.30. The outlook is positive above 108.30, for a rise through 109.70, towards 110.50.

GBP/USD

Current level - 1.3947

Yesterday's spike to 1.4065 should be considered an inner part of the consolidation above 1.3835 and although there is an intraday risk of another climb to 1.4090 hurdle, the overall outlook on the senior frames remains bearish, for 1.3620.

Sunrise Market Commentary

• Rates: Core bonds hardly profit as US stocks take another dive
  Core bonds made an intraday U-turn yesterday as US stock markets suffered another huge blow (-4%), but gains remained rather limited. It confirms underlying bearish sentiment. Spill-over effects to other markets are in general muted. Today's eco calendar is empty, so all eyes will be again on bourses.
• Currencies: Dollar struggles to extend gains as global market volatility remains high
  Yesterday, EUR/USD tried to extend its decline after Wednesday's break, but the move had no strong momentum. The dollar still has difficulties to play its save have role even as US yields remain elevated. Sterling jumped as the BoE signaled a steeper rate hike path, but the gains could not be sustained. EUR/GBP 0.8690 remains a very solid support

The Sunrise Headlines

• A late-afternoon rout sent S&P (-3.75%) to its lowest close since November. That leaves the S&P 500 benchmark 10% below its Jan. 26 record high. Volatility roared back with the VIX surging more than 20%. Asian stock markets lose up to 2.5% with China underperforming (up to -5%).
• US Congress missed a midnight deadline, failing to fund the government for a second time this year as a two-year bipartisan budget deal encountered delays in the Senate. A new vote is scheduled later today.
• A fast-growing mutual fund has told investors that it will not charge them to redeem what is left of their money, after losing more than 80% of its value in the wake of this week's turbulence. It's the biggest one-week drop for a mutual fund recorded in 20 years.
• China's producer and consumer inflation eased as expected in January. The PPI rose 4.3% Y/Y in January, the smallest rise in 14 months. CPI rose by 1.5% Y/Y.
• Australia's central bank said the economy is some way off full employment and inflation returning to the midpoint of its target, signalling policy will stay on hold.
• Moody's, the last of the major credit rating agencies to keep Portugal's debt in "junk" territory, considers it on the verge of regaining investment grade thanks to the country's economic and fiscal improvements.
• Today's eco calendar is thin with only UK industrial production data and UK trade balance.

Currencies: Dollar Struggles To Extend Gains As Global Market Volatility Remains High

EUR/USD decline slows even as volatility persists

The dollar maintained a positive momentum yesterday morning, but dynamics eased during the day. Some EUR/USD follow-trough selling occurred after the break below 1.2323. EUR/GBP selling after the BoE pushed EUR/USD to an intraday low in the 1.2215 area. From there, the euro decline/USD rally stalled, despite risk aversion. EUR/USD returned higher in the 1.22 big figure and closed the day at 1.2247. The return of volatility finally also triggered yen buying. USD/JPY dropped below 109. EUR/JPY tested 133 support, but a sustained break didn't occur. The moves in the FX majors stay modest given the swings on other markets.

Risk aversion still dominates Asian trading. Regional indices are losing up to 5%. Japan slightly outperforms. USD/JPY dropped temporary to the 108.50 area, but aggressive BOJ bund buying reinforces the Bank's will to maintain an easy policy, slowing the rise of the yen. USD/JPY trades again around 109. EUR/USD is going nowhere in the 1.2250 area. The yuan stabilizes after yesterday's correction against the dollar.

There are no important data in the US and Europe today. So, global factors will continue to dominate FX trading. Of late, the swings in the major USD cross rates were modest given the turmoil on other markets. The combination of higher core yields and an aggressive risk-off finally turned out USD positive. That said, the safe haven appeal of the dollar was far from impressive. It more looked like some cautious by default USD buying. We assume that this pattern can continue as long as the current global repositioning continues. Technical picture: the dollar decline slowed of late and EUR/USD finally dropped below 1.2323/35 support. A break below 1.2165 would call off the ST downside alert (for USD). We continue to monitor the EUR/JPY price action. A further risk-off correction in EUR/JPY might also put downward pressure on EUR/USD. However, in this respect, yesterday's price action was inclusive. The EUR/JPY decline was blocked at the key 133 support area.

Sterling jumped higher as the BoE indicated that rates will probably have to be raised faster than anticipated. Most of the rebound was reversed later as a new wave of risk-off repositioning weighed on sterling. Markets probably also realized that the Brexit-cliff isn't out of the way. EUR/GBP closed the session only marginally lower at 0.8803. UK production and trade balance data will be published today. Yesterday's price action confirmed our working hypothesis that the 0.8690 support probably won't be easy to break without big progress on Brexit.

EUR/USD: few follow-through gains despite Wednesday's break lower.

Download entire Sunrise Market Commentary

USDCAD rose as high as 1.2620, a level last experienced on December 28 and is posting a bullish rally following the rebound on the 1.2250 support level last Friday. Additionally, dollar/loonie is in progress to record the second consecutive green week as it also successfully surpassed the 23.6% Fibonacci retracement level at 1.2470 of the down-leg from 1.3800 to 1.2060.

Short-term momentum indicators are also pointing to a continuation of the bullish bias. However, the RSI is sloping to the downside in the positive territory, suggesting that the price could have a small retracement before its upward movement. On the other hand, the MACD oscillator is endorsing the bullish tendency as the indicator is rising near the zero line, deviating above its signal line.

If price jumps above the 1.2620 resistance level, which coincides with the upper Bollinger Band, there is scope to test the 38.2% Fibonacci mark near 1.2720. Rising above it could see prices re-test the 1.2910 peak taken from December 19.

In the event of a continuation of the major bearish trend, the 23.6% Fibonacci mark could be the next pause. A break below this level would shift the short-term outlook to bearish as it could take the pair towards the 1.2250 support barrier.

The EURUSD pair remains bearish and under downside pressure in early Friday trading, as risk-off trading sentiment continues to spread through broader financial markets. Price-action is currently range-bound between the 1.2240 to 1.2270 region, after the pair suffered more extreme volatility on Thursday, with the euro sinking to a new weekly low, hitting 1.2212. Moving into the European trading session, the U.S dollar index and fluctuating stock prices are likely to dictate the EURUSD pair next directional bias.

The EURUSD pair is strongly bearish while trading below the 1.2275 level, further losses towards the 1.2212 and 1.2192 levels may occur.

Should EURUSD price-action move above the 1.2275 level for a sustained period, we may see a move back towards the 1.2305 and 1.2332 resistance levels.

The USDJPY pair has moved back towards the pivotal 108.98 level, after suffering yet another pull-back towards the 108.50 zone, following the broad-based decline in global equity prices on Thursday. Investors continue to seek safe-haven asset classes on the last trading day of the week, as risk-off trading sentiment worsens, underpinning overall demand for the Japanese yen currency. Moving into the European trading session, traders will look to equity prices and the key 108.98 level for guidance on the USDJPY pairs next intraday move.

The USDJPY pair remains intraday bullish while price-action trades above the 108.98 level, further upside towards 109.44 and 109.71 may occur.

Should the USDJPY pair start to trade below the 108.98 level for an extended period, we may see a correction back towards the 108.70 and 108.45 support levels.

In December, bitcoin soared to almost $20,000 following a series of positive news. The biggest news of all was the institutionalization of the currency following its listing at the Chicago Board Options Exchange (CBOE) and CME.

After that, the price started falling following another series of negative news, mostly from China and South Korea. Last week, bitcoin continued its decline following reports that Bitfinex, one of the largest exchanges was under investigation. It reached a low of $5860 on Tuesday, before starting to gain. So far, it has gained more than 20% of value from the Tuesday’s low.

Some people now believe that bitcoin has bottomed. Yesterday, Dan Morehead, who had predicted the correction accurately, told CNBC that he believed that bitcoin had bottomed. In the interview, he argued that on average, bear runs take 72 days. The cryptocurrencies bear run is in the 52nd day, which means within a few more days, the prices could move higher.

When Morehead speaks, traders listen. According to Hedge Fund Research Indexes, his fund has recently gained more than 22,000% by investing in cryptocurrencies. He believes that investors’ appetite in cryptocurrencies would help push the price higher.

Today, traders should watch out for the $7800 level, which provides an important support. They should also watch out for the $8626 level, which is the highest level it reached yesterday. A breach in either direction could see an extended price action in that direction.