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Headlines/Economic Data

General Trend: Asian equity markets trade mixed, energy companies outperform

Chinese cities start to issue 2018 GDP targets: Shanghai and Beijing are both targeting around 6.5% growth

Dollar trades below 110 for first time since Sept: PBoC fixed yuan at multi-year high for 4th straight session

US Dollar (USD) Index moves below 90 for first time since late 2014

Japan Jan Prelim Manufacturing PMI nears 4-year high

Japan Dec exports growth at slowest pace since April 2017, yet monthly export amount hits highest since 2008 (exports to Asia and China hit record)

Japan 2017 Trade Surplus with the US +3.1% y/y (2-year high)

Japan

Nikkei 225 opened -0.4%; closed -0.8%

Topix Electric Appliances Index -1.7% (Fanuc -3% due to report earnings on Friday after the close)

Mega banks trade broadly weaker: Sumitomo Mitsui -2.5%, Mitsubishi UFJ -2.5%, Mizuho Financial -1.5%

TOPIX Real Estate Index +1.1% (tracked Tuesday’s outperformance in S&P500 Real Estate Index)

Nidec [6594.JP] -3% (expected to report earnings after the close)

(JP) JAPAN DEC TRADE BALANCE: ¥359.0B V ¥535.0BE; ADJ ¥86.8B V ¥276.7BE; Exports y/y: 9.3% (13th consecutive rise, slowest growth since April 2017) v 10.0%e; Imports y/y: 14.9% v 12.4%e

(JP) JAPAN JAN PRELIM PMI MANUFACTURING: 54.4 V 54.0 PRIOR

(JP) Japan Trade Union Confederation Chief Kozu: Rising monthly wages will boost consumer spending

(JP) Japan Nov Final Leading Index CI: 108.3 v 108.6 prelim; Coincident Index: 117.9 v 118.1 prelim

(JP) BOJ announcement related to daily bond buying operation: leaves amounts unchanged

(JP) Japan Econ Min Motegi: Believes that start date for Trans-Pacific-Partnership will not change; March 8th is the target date for signing the agreement (after the close)

(JP) Japan Cabinet Office report indicates Japan will not be able to achieve a primary budget surplus until FY27 (2-yrs longer than prior indications) unless it manages to dramatically curb spending - Nikkei

Korea

Kospi opened -0.1%

Banks trade generally lower following gains on Tuesday: Hana Financial -3%, KB Financial -1.3%, Woori -1.6%

LG Household & Health Care [051900.KR] -5.5% (reported FY17 results on Tuesday’s session)

LG Electronics [066570.KR]: -5.5% (Reported final FY17 results after Tuesday’s close; Trade concerns)

LG Display +2% (positive broker commentary following Q4 earnings report and guidance)

(KR) South Korea removed from EU blacklist of tax havens - Korean press

(KR) Main opposition party has called on North Korea to delay military parade - Korean press

(KR) S&P: Corporates in South Korea show improvement in creditworthiness; Hyundai Motors rating faces downgrade pressure due to US market; LG Electronics may be 'greatly' impacted by US safeguard issue related to washing machines

Looking Ahead: Q4 Prelim GDP due for release on Thursday

China/Hong Kong

Hang Seng opened -0.1%, Shanghai Composite +0.2%

Hang Seng Info Tech Index -0.9%, Materials -0.7%, Consumer Goods -0.8%, Property/Construction -0.7%, Financials -0.3%; Energy +2.2%

Leshi Internet [300104.CN]: Opens limit down (-10%) after being halted for 9-months

(CN) China said to be prepared to support stocks after trading resumption for shares of Leshi Internet

USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.3916 V 6.4009 PRIOR (strongest setting since Dec 4th, 2015)

(CN) China PBOC OMO: Injects CNY220B v CNY170B injected in 7,14 and 63-day reverse repos prior

(CN) China Official: CNY100B in solar subsidies are unpaid as of 2017; To roll out solar subsidy-free pilot projects in 2018

(CN) former PBOC vice gov Zhu: Interest rates are likely to remain unchanged given govt's current focus on reducing debt levels, and a stable inflation rate - Chinese press

(CN) China MoF sells 3-yr bonds, avg yield 3.56%, bid to cover 2.33x; 7-yr upsized bonds at 3.8592% v 3.91%e, bid to cover 2.51x

Australia/New Zealand

ASX 200 opened flat; closed +0.3%

ASX 200 Energy Index +0.8%, Utilities +0.6%, Financials +0.4%

Santos, STO.AU Reports Q4 Rev $861M v $753M y/y; FY17 sales volumes 83.4Mt (record high)

(AU) Australia Dec Westpac Leading Index M/M: 0.3% v 0.1% prior

(NZ) New Zealand Dec Credit Card Spending M/M: 0.6% v 0.8% prior; Y/Y: 6.3% v 9.1% prior

(NZ) New Zealand government delays law banning foreigners from purchasing property - NZ press

(AU) Australia Treasury is expected to boost its global forecasts in the May budget, due to a surge in confidence across advanced and emerging market economies - AFR

Looking Ahead: New Zealand Q4 CPI to be released on Thursday

Other Asia

(MY) MALAYSIA DEC CPI Y/Y: 3.5% V 3.5%E [**Note: The data is above Malaysia’s 2-3% inflation target for the 12th straight month]

(MY) There is press speculation that Malaysia Central Bank (BNM) may raise interest rates by 25bps at Thursday’s meeting – US financial press

(TW) Taiwan Jan 1-22nd foreign capital flow $3.28B - Taiwan press

UMC Corp [2303.TW]: -1.5%: expected to report Q4 earnings after close

AU Optronics [2409.TW] +3.5% (positive broker commentary)

TSMC [2330.TW] Chairman: Sees negative impact from NT$ gains

Moody's: Asia high-yield corporate bond covenant quality score declines to weakest level on record

(VN) Vietnam shut main Ho Chi Minh City stock exchange for second day amid technical malfunction

North America

US equities closed mostly higher: Dow -0.1%, S&P500 +0.2%, Nasdaq +0.6%, Russell 2000 +0.1%

S&P500 Real Estate Sector +1.5%, Utilities +1%

Texas Instruments [TXN] Down over 6% afterhours: Reports Q4 $1.09*(ex $0.75 tax expense) v $1.09e, Rev $3.75B v $3.73Be; Guides Q1 $1.01-1.17 (adj) v $1.07e, Rev $3.49-3.79B v $3.64Be

United Continental [UAL]: Down over 4% afterhours Guides initial FY18 $6.50-8.50 v $6.63e; Guides initial FY18 non fuel CASM -1% to 0%; FY18 capacity +4-6% - earnings call comments

(US) Senate confirms Jerome Powell as incoming Fed Chair (as expected)

(US) Fed nominee Goodfreind: transparency could be improved regarding reference rules for monetary policy

(US) White House Econ Adviser Cohn: Trump's message at Davos will be to invest in America, not that hes withdrawing the US from the global trade scene – press

(US) TREASURY SELLS $26B IN 2-YEAR NOTE AUCTION; DRAWS 2.066%; BID-TO-COVER RATIO: 3.22 V 2.52 PRIOR AND 2.82 AVG OVER THE LAST 12 (first 2-year auction above 2.00% since 2008)

(US) Weekly API Oil Inventories: Crude: +4.8M v -5.1M prior

(US) US AIA Dec Architecture Billings Index: 52.9 v 55.0 prior; New projects inquiry index 61.9 v 61.1 prior

Looking Ahead: US Dec Existing Home Sales due for release, along with Weekly DoE Crude Oil Inventories

Corporate earnings are expected out of companies including Comcast, Discover, Ford, General Dynamics, GE, Las Vegas Sands, SL Green, United

Technologies, Whirlpool

Europe

(UK) Conservative MPs have told PM May that the UK must not be bound by EU rules during the Brexit transition period

(UK) EU Chief Brexit Negotiator Barnier: hope UK will indicate what it wants in Brexit talks by March

(EU) EURO ZONE JAN ADVANCE CONSUMER CONFIDENCE: 1.3 V 0.6E; *(EU) EURO ZONE JAN ADVANCE CONSUMER CONFIDENCE: 1.3 V 0.6E ( Reading is highest since Aug 2000)

Looking Ahead: Euro Zone Prelim Jan Manufacturing and Services PMIs due for release (Euro Zone, France, German); UK Nov Avg Earnings and Unemployment Rate, Dec Claimant Count Change; France Jobseekers data (US session)

Levels as of 01:00ET

Nikkei225 -0.8%, Hang Seng -0.1%; Shanghai Composite +0.3%; ASX200 +0.3%, Kospi -0.0%

Equity Futures: S&P500 +0.0%; Nasdaq100 +0.0%, Dax +0.1%; FTSE100 -0.2%

EUR 1.2335-1.2291; JPY 110.34-109.81; AUD 0.8017-0.7993;NZD 0.7377-0.7349; GBP 1.4049-1.3997

Feb Gold +0.3% at $1,340/oz; Mar Crude Oil +0.0% at $64.45/brl; Mar Copper +0.6% at $3.14/lb

GBPUSD Short Term Elliott Wave view suggests that the pair rallies as 5 waves impulse Elliott Wave structure from 16 December 2017 low. Up from 16 December 2017 low (1.33), Minor wave 1 ended at 1.3613, pullback to 1.3456 ended Minor wave 2, rally to 1.3943 ended Minor wave 3, and Minor wave 4 ended at 1.3803. Pair has broken above Minor wave 3 at 1.3943, suggesting that Minor wave 5 is currently in progress.

Internal of Minor wave 5 is proposed to be unfolding as an Ending Diagonal where Minute wave ((i)) ended at 1.3945 and Minute wave ((ii)) ended at 1.3838. As far as pivot at 18 January 2018 low (1.3803) stays intact, expect the pair to extend higher to end Minor wave 5 of (3) towards 1.40s area. Afterwards, pair should pullback in Intermediate wave (4) to correct cycle from 16 December 2017 low (1.33) in 3, 7, or 11 swing before the rally resumes. We do not like selling the pair.

GBPUSD 1 Hour Elliott Wave Chart

Daily Pivots: (S1) 0.8764; (P) 0.8780; (R1) 0.8798; More...

Intraday bias in EUR/GBP remains on the downside as fall from 0.8928 is in progress. Retest of 0.8688 should be seen first. Firm break there would resume whole fall from 0.9305 to retest 0.8303/12 key support zone. On the upside, above 0.8845 minor resistance will turn intraday bias neutral first. But outlook will remain bearish as long as 0.8928 resistance holds, even in case of recovery.

In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of deeper fall. And in that case, EUR/GBP could have a retest on 0.8303. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Daily Pivots: (S1) 1.5304; (P) 1.5351; (R1) 1.5416; More....

Intraday bias in EUR/AUD remains neutral at this point. On the upside, break of 1.5446 resistance will revive the case that correction from 1.5770 has completed at 1.5153. In that case, intraday bias will be turned back to the upside for retesting 1.5770 first. However, break of 1.5153 will resume the fall from 1.5770 to 1.4949 cluster support (38.2% retracement of 1.3624 to 1.5770 at 1.4950).

In the bigger picture, price actions from 1.5770 so far suggests that it's corrective in nature. That is, medium term rise from 1.3624 is not completed yet. Break of 1.5770 will extend the rise to retest 1.6587 (2015 high). However, considering bearish divergence condition in daily MACD, sustained break of 1.4949 cluster support (38.2% retracement of 1.3624 to 1.5770 at 1.4950) will indicate medium term reversal. And there is prospect of retesting 1.3624 low in that bearish case.

Daily Pivots: (S1) 153.60; (P) 154.50; (R1) 155.27; More...

GBP/JPY formed a temporary top at 155.38 after hitting 61.8% projection of 139.29 to 152.82 from 146.96 at 155.32. Intraday bias is turned neutral. Outlook will remain bullish as long as 153.10 minor support holds. Break of 155.32 will target 100% projection at 160.49. Though, break of 153.10 will indicate short term topping and bring pull back to 150.18 support.

In the bigger picture, as long as 146.96 key support holds, medium term outlook remains bullish. Rise from 122.36 is in favor to extend to 61.8% retracement of 195.86 to 122.36 at 167.78. However, break of 146.96 support will indicate trend reversal. And there would be prospect of retesting 122.36 in that case.

Daily Pivots: (S1) 135.14; (P) 135.68; (R1) 136.16; More....

Intraday bias in EUR/JPY remains neutral and more consolidation would be seen in range of 133.03/136.63. But after all, outlook stays bullish with 133.03 support intact. Break of 136.63 will resume medium term up trend. However, on the downside, break of 133.03 will have 55 day EMA and medium term channel support firmly taken out. Also, considering bearish divergence condition in daily MACD too, that will suggest medium term reversal. Deeper fall should then be seen to 132.04 support for confirmation.

In the bigger picture, medium term rise from 109.03 (2016 low) is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). It should be targeting 141.04/149.76 resistance zone. On the downside, break of 132.04 support is needed to indicate medium term reversal. Otherwise, outlook will stay bullish in case of deep pull back.

Daily Pivots: (S1) 1.1764; (P) 1.1780; (R1) 1.1793; More...

Intraday bias in EUR/CHF stays neutral as range trading continues. As long as 1.1683 support holds, near term outlook stays bullish for further rally. Again, considering relatively weak upside momentum, in case of another rise, we'd expect strong resistance below 1.2 handle to bring medium term reversal. Break of 1.1683 support will be a early sign of reversal and turn focus to 1.1602 support.

In the bigger picture, while a medium term top could be around the corner, there is no change in the larger outlook. That is, long term rise from SNB spike low back in 2015 is still in progress and would extend. As long as 1.1198 resistance turned support holds, we'll hold on to this bullish view and expect further rise to prior SNB imposed floor at 1.2000 and above. Though, we'll reassess the outlook if 1.1198 is firmly taken out.

Daily Pivots: (S1) 0.7960; (P) 0.7995; (R1) 0.8033; More...

Intraday bias in AUD/USD remains neutral as consolidation from 0.8038 is extending. As long as 0.7874 support holds, further rally should be seen to 0.8124 high. Break there will resume whole medium term rebound from 0.6826 and target key fibonacci level at 0.8451. On the downside, break of 0.7874 will indicate short term topping and turn bias to the downside for 55 day EMA (now at 0.7797) and below.

In the bigger picture, current development suggests that medium term rebound from 0.6826 is still in progress and could be resuming. Such rise could target 38.2% retracement of 1.1079 (2011 high) to 0.6826 (2016 low) at 0.8451. As such rise is seen as a corrective move, we'd expect strong resistance from 0.8451 to limit upside and bring reversal.

Daily Pivots: (S1) 1.2395; (P) 1.2442; (R1) 1.2467; More...

USD/CAD is staying in consolidation from 1.2354 and intraday bias remains neutral. With 1.2623 support turned resistance intact, near term outlook remains mildly bearish. On the downside, break of 1.2354 will extend the decline from 1.2919 to retest 1.2061 low. Nonetheless, on the upside, sustained break of 1.2623 will argue that the fall has completed and turn bias back to the upside for 1.2919 resistance.

In the bigger picture, rebound from 1.2061 is likely completed completed at 1.2919, rejected by 55 week EMA (now at 1.2850) and kept below 38.2% retracement of 1.4689 to 1.2061 at 1.3065. The development also suggests that long term fall from 1.4689 is not completed yet. Decisive break of 1.2061 low will target 61.8% retracement of 0.9406 to 1.4689 at 1.1424. This will now be the favored case as long as 1.2919 resistance holds.

Daily Pivots: (S1) 1.2244; (P) 1.2275 (R1) 1.2328; More....

Breach of 1.2322 suggests EUR/USD's rally is resuming. Intraday bias is back on the upside. Current medium term rise should target next key fibonacci level at 1.2494/2516. We'd expect strong resistance from there to bring reversal. On the downside, break of 1.2164 support will argue that EUR/USD has topped earlier than expected. In that case, intraday bias will be turned to the downside for 1.1915 support first.

In the bigger picture, rise from 1.0339 medium term bottom is still seen as a corrective move for the moment. Therefore, in case of further rally, we'd be expect 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 to limit upside and bring reversal. That is also close to 61.8% projection of 1.0569 to 1.2091 from 1.1553 at 1.2494. Break of 1.1553 support will confirm completion of the rise. However, sustained break of 1.2516 will carry larger bullish implication and target 61.8% retracement of 1.6039 to 1.0339 at 1.3862.