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Market movers today

With no major euro area data releases on the calendar, today's highlight will be speeches by Bundesbank President Jens Weidmann and ECB's Benoit Coeuré at a conference on economic policy debates in Germany. With recent ECB at tempts to talk down the EUR over the last days markets will look out for any hints regarding future ECB monetary policy.

In the US, the Philly Fed index for January is released. Consensus is for a decline to 24.0, in line with the observed drop in the earlier released Empire manufacturing index, but despite a possible moderation the index remains at a high level.

This morning we will also get a bunch of data out of China including GDP data, retail sales, industrial product ion and fixed asset investments. Markets will digest these data for any indications of to what extent strong global export demand has cushioned the lower support from construction and infrastructure spending amid the housing market losing steam.

In Norway, Norges Bank's lending survey is released. If banks signal further tightening of their credit practices this could fuel uncertainty as to the out look for private consumption and investments. Meanwhile, we have not had a sniff of any plans in this direction and it seems unlikely with the housing market now beginning to show signs of stabilisation.

Selected market news

Overnight most Asian equity indices have followed US counterparts higher amid earnings and growth optimism. The USD has erased yesterday's losses amid US treasuries continuing to selloff. We at tribute the latest move higher in US yields to US treasury data showing declining foreign holdings and on further US companies committing to plans of repatriating foreign earnings suggesting a lower future treasuries demand (see below).

Also, developments in the US suggest the US as expected will avoid an imminent government shutdown as the Republican leaders seemingly have found sufficient votes for a plan to temporarily fund the government for an additional four weeks up until 16 February. Given the slim 51-49 republican majority in the Senate, the deal needs democrat votes to reach the 60-vote threshold needed to advance the spending legislation pushed forward by the House Republicans. Current government funding will expire by the end of tomorrow.

Yesterday Apple Inc. – the US company with the largest offshore cash reserve – announced that it plans to pay USD 38bn in repatriation taxes from foreign earnings. The announcement follows similar statements from a range of US peers that over the last days have stated they plan to raise US investments, increase US labour force pay and increase dividends/share buy backs via foreign earnings thereby utilising the tax discount brought forward in the US tax reform. Given the tax rate (15.5% on cash, 8% on less liquid asset ) and the latest fiscal reporting, the announcement suggest Apple is repatriating the majority of its foreign earnings. Market analysts estimate USD3.1 tn is held offshore by US companies. For more info see Financial Times.

In line with market pricing and analyst expectations Bank of Canada yesterday delivered the third 25bp interest rate hike since July. Meanwhile, the monetary policy report was to the soft side, not least emphasising the future of NAFTA as a key uncertainty for the rate out look.

Daily Pivots: (S1) 135.17; (P) 135.58; (R1) 136.00; More....

Intraday bias in EUR/JPY remains neutral as it's staying in range of 133.03/136.63. Near term outlook stays mildly bullish with 133.03 support intact and further rally is in favor. Break of 136.63 will resume medium term up trend. However, below 133.03 will turn focus to 132.04. Firm break there will indicate medium term reversal.

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) 1.1741; (P) 1.1771; (R1) 1.1790; More...

Intraday bias in EUR/CHF remains neutral for the moment. Medium term rise is still in progress and could extend higher. However, considering relatively weak upside momentum as seen in daily MACD we'd still expect strong resistance below 1.2 handle to limit upside and bring medium term reversal. But break of 1.1683 support is needed to indicate short term topping first. Otherwise, outlook will remain mildly bullish in case of retreat.

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 another to prior SNB imposed floor at 1.2000. Though, we'll reassess the outlook if 1.1198 is firmly taken out.

Daily Pivots: (S1) 1.2132; (P) 1.2228 (R1) 1.2279; More....

Intraday bias in EUR/USD remains neutral for consolidation below 1.2322 temporary top. But, as long as 1.2088 resistance turned support stays intact, near term outlook remains bullish. Current medium term rally would target 1.2494/2516 key resistance zone next. At this point, we'd expect strong resistance from there to limit upside and bring reversal. On the downside, break of 1.2088 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 another 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 38.2% retracement of 1.6039 to 1.0339 at 1.3862.

Daily Pivots: (S1) 1.3741; (P) 1.3841; (R1) 1.3927; More.....

GBP/USD spikes higher to 1.3942 but fails to sustain above 1.3835 key resistance yet. Intraday bias remains neutral first. We'd still expect strong resistance from 1.3835 to limit upside to complete the medium term rally from 1.1946. Break of 1.3612 resistance turned support will be the first sign of reversal and turn bias back to the downside for 1.3457 support. However, sustained break of 1.3835 will carry larger bullish implication and target long term fibonacci level at 1.5466.

In the bigger picture, the break of long term trend line resistance from 1.7190 (2014 high) is seen as a sign of long term reversal. However, rise from 1.1946 (2016 low) is not impulsive looking. And the pair is limited below 1.3835 key resistance. Hence, we won't turn bullish yet and would continue to monitor the development. On the downside, break of 1.3038 support will now indicate that rebound from 1.1946 has completed and turn outlook bearish. Meanwhile, sustained break of 1.3835 should at least send GBP/USD to 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.

Daily Pivots: (S1) 0.9596; (P) 0.9627; (R1) 0.9683; More....

Intraday bias in USD/CHF remains neutral for consolidation above 0.9571 temporary low. As long as 0.9698 support turned resistance holds, deeper fall could be seen to 0.9420 low. Nonetheless, break of 0.9698 will indicate short term bottoming. Intraday bias would then be turned back to the upside for 0.9844 key near term resistance next.

In the bigger picture, range trading continues between 0.9420/1.0342. At this point, 0.9420 appears to be a strong support level. Therefore, in case of decline attempt, we don't expect a firm break of this level. Nonetheless, strong break of 1.0342 is also needed to confirm upside momentum. Otherwise, medium term outlook will stay neutral.

Daily Pivots: (S1) 110.55; (P) 110.94; (R1) 110.70; More...

Break of 111.26 minor resistance now argues that USD/JPY has bottomed at 110.18, ahead of 61.8% retracement of 107.31 to 114.73 at 110.14. Intraday bias is turned back tot he upside for 113.38 resistance. Break there will confirm completion of the corrective pull back from 114.73 and turn outlook bullish. Below 1101.8 will extend the correction lower. But we'd again look for bottoming signal in next fall.

In the bigger picture, we're holding on to the view that correction from 118.65 is completed at 107.31. And medium term rise from 98.97 (2016 low) is going to resume soon. Sustained break of 114.73 should affirm our view and send USD/JPY through 118.65. However, break of 107.31 will dampen this view and extend the medium term fall back to 98.97 low.

SPX Short Term Elliott Wave view suggests that the rally from 12/2/2017 low is unfolding as 5 waves impulsive Elliott Wave structure where Minute wave ((i)) ended at 2665.19, Minute wave ((ii)) ended at 2624.75, Minute wave ((iii)) ended at 2807.54, and Minute wave ((iv)) ended at 2768.64. Index has broken above Minute wave ((iii)) at 2807.54 which suggests that the next leg higher has started.

Near term, while dips stay above 2768.64, Index has scope to extend higher within Minute wave ((v)) before ending the 5 waves rally from 12/12/2017 low. Potential target for Minute wave ((v)) is equal to Minute wave ((i)) in length, which comes at 2328 – 2843 area. We do not like selling the Index and favor more upside as far as pivot at 2768.64 low stays intact.

Daily Pivots: (S1) 1.2348; (P) 1.2441; (R1) 1.2527; More...

USD/CAD is staying in range above 1.2354 and intraday bias remains neutral. More consolidations could be seen. But again, 1.2623 support turned resistance holds, deeper decline is expected. Break of 1.2354 will extend the fall from 1.2910 to retest 1.2061 low. However, 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, current development argues that rebound from 1.2061 has 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) 0.7932; (P) 0.7977; (R1) 0.8014; More...

AUD/USD lost some upside momentum after hitting 0.8022 and intraday bias is turned neutral for consolidations first. Further rally is expected as long as 0.7874 support holds. Above 0.8022 will extend the rise from 0.7500 to 0.8124 high. 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 0.7764).

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.