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For the 24 hours to 23:00 GMT, the USD declined 0.22% against the CAD and closed at 1.2522.

In economic news, Canada's new house price index climbed 0.1% on a monthly basis in November, undershooting market expectations for an advance of 0.2%. In the previous month, the index had registered a similar rise.

In the Asian session, at GMT0400, the pair is trading at 1.2525, with the USD trading slightly higher against the CAD from yesterday's close.

The pair is expected to find support at 1.2493, and a fall through could take it to the next support level of 1.2460. The pair is expected to find its first resistance at 1.2574, and a rise through could take it to the next resistance level of 1.2622.

With no key macroeconomic releases in Canada today, investors would draw their attention to the Bank of Canada's (BoC) interest rate decision, due next week.

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

DAX Short Term Elliott Wave view suggests that the decline to 12731.46 ended Intermediate wave (X). Up from there, rally is unfolding as a 5 waves impulsive Elliott Wave structure where Minutte wave (i) ended at 12943, Minutte wave (ii) ended at 12881.5, Minutte wave (iii) ended at 13408.5, Minutte wave (iv) ended at 13328.5, and Minutte wave (v) of ((a)) ended at 13421.5. Minute wave ((b)) pullback is currently in progress to correct cycle from 1/2/2018 low before the rally resumes.

Internal of Minute wave ((b)) is unfolding as a double three Elliott Wave Structure where Minute wave (w) ended at 13237 and Minute wave (x) ended at 13297.5. Index has scope to extend lower towards 13043.19 – 13091.37 area to end Minute wave (y) of ((b)) before the rally resumes, provided pivot at 12731.46 low stays intact. We don’t like selling the Index and expect buyers to appear from the above area for more upside in 3, 7, or 11 swing, provided pivot at 1/2 low (12731.46) stays intact.

DAX 1 Hour Elliott Wave Chart

Headlines/Economic Data

General Trend: Energy shares outperform

China Dec Trade Surplus above estimates amid lower than expected imports; China Customs Dept expresses caution regarding 2018 trade outlook

Japan 40 year JGB auction has highest bid to cover since 2014

Earnings expected in NY morning from BlackRock, JPMorgan, PNC and Wells Fargo

India’s Infosys due to report Q3 results

China/Hong Kong

Hang Seng opened +0.6%, Shanghai Composite flat

Hang Seng Energy Index +1.9%, Materials +1.3%, Consumer Goods +0.6%, Financials +0.5%

(CN) CHINA DEC TRADE BALANCE ($): 54.7B V 37.0BE (highest monthly surplus since Jan 2016); Exports Y/Y: 10.9% v 10.8%e; Imports Y/Y: 4.5% v 15.1%e

(CN) China Customs Dept Comments on drivers of 2017 Trade: For 2017, trade growth was driven by better than expected global recovery, domestic economic improvement, policies to boost imports, 'Belt and Road Initiative' and low comparison base.

(CN) China Customs Dept Comments on Trade Outlook: China Trade outlook ‘upbeat’ in 2018; will be difficult to maintain double digit trade growth in 2018; Dec Export Leading Index 41.1, down 0.7 m/m; Says data shows pressure facing Q1 exports.

(CN) China PBoC OMO: Injects CNY270B v CNY60B injected in 7, 14-day reverse repos prior: Net injects CNY180B v CNY30B drained prior; For the week, PBoC injects net of CNY40B v CNY510B drain w/w

(CN) PBoC sets yuan reference rate at 6.4932 v 6.5147 prior

(CN) China should keep its property controls continuous and stable

China press

(CN) Trust companies in China have placed limits on leveraged funds used for equities – China Securities Journal

Japan

Nikkei 225 opened flat; closed -0.2%

TOPIX Real Estate Index -0.7%, Information/Communications -1%

Fast Retailing +6% (Q1 results above ests; affirmed FY outlook)

Softbank -1%

Nikkei 225 Jan options said to settle at ~23,723

JAPAN NOV TRADE BALANCE BOP BASIS: ¥181.0B V ¥310.6BE

Japan Dec Bank Lending Ex-Trusts Y/Y: 2.4% v 2.7% prior; Incl Trusts Y/Y: 2.5% v 2.7% prior

JAPAN NOV BOP CURRENT ACCOUNT ADJUSTED: ¥1.70T V ¥2.17TE; CURRENT ACCOUNT: ¥1.35T V ¥1.84TE

Japan Dec Eco Watchers Survey Current: 53.9 v 55.1e; Outlook: 52.7 v 53.5e

Japan MoF sells ¥500B v ¥500B indicated in 0.90% 40-yr bonds, bid to cover 3.67x v 3.00x prior (highest bid to cover since 2014)

South Korea

Kospi opened +0.5%, has since pared gains

Samsung Electronics -3%: Shares remain weaker following release of prelim Q4 results earlier in week

South Korea Presidential Office officials to discuss measures related to cryptocurrencies – South Korea Press

South Korea and China to hold Finance Chief meeting on Friday, Feb 2nd

Australia/New Zealand

ASX 200 opened +0.2%: closed flat

ASX 200 Resources Index +1.5%, Energy +0.8%; Financials -0.1%, REIT -0.5%

(NZ) New Zealand Nov Building Permits M/M: +10.8% v -9.6% prior

North America

US equities markets closed higher: Dow Jones +0.8%, S&P500 +0.7%, Nasdaq +0.8%, Russell 2000 +1.7%

S&P 500 Energy Sector +2%, Consumer Discretionary +1.6%

(US) Pres Trump: will terminate NAFTA unless we reach a fair deal - press interview

(US) US Commerce Sec Ross: Submitted results of probe into national security impact of steel imports to President Trump; - President Trump now has 90-days to decide on any potential action based on the findings of the Section 232 Steel probe.

(US) Fed's Dudley (dove, FOMC voter): worried growth overheating is a real risk in the next few years; Fed may have to press harder on the brakes at some point; Case for rate rises remains strong; A more aggressive Fed policy could increase risk of a hard landing; Fed forecast for 3 rate hikes this year is a reasonable starting point; We should try to achieve current 2% inflation target before talking about moving the goal higher;
Looking Ahead : US Dec CPI and Retail Sales due for release

Europe

(UK) PM May reportedly told bankers that their industry is a priority for her in Brexit talks - press

(UK) US President Trump said to cancel UK visit planned for Feb, expected to send US Sec of State Tillerson instead – UK Press; Trump was said to have been concerned about the welcome he would receive in the UK.

Levels as of 01:00ET

Hang Seng +0.4%; Shanghai Composite +0.1%; Kospi flat

Equity Futures: S&P500 flat; Nasdaq100 flat, Dax flat; FTSE100 -0.1%

EUR 1.2067-1.2029 ; JPY 111.06-111.35; AUD 0.7875-0.7905 ;NZD 0.7248-0.7277

Feb Gold +0.5% at $1,328/oz; Feb Crude Oil -0.3% at $63.62/brl; Mar Copper +0.3% at $3.237/lb

Daily Pivots: (S1) 0.7853; (P) 0.7874; (R1) 0.7911; More...

AUD/USD is pressing 0.7896 cluster resistance (61.8% retracement of 0.8124 to 0.7500 at 0.7886) resistance zone for the moment. At this point, considering bearish divergence condition in 4 hour MACD, we'd still expect this resistance zone to hold. Break of 0.7804 minor support will turn bias to the downside for 55 day EMA (now at 0.7731). However, sustained break of 0.7886/96 will pave the way for retesting 0.8124 high.

In the bigger picture, we're still slightly favoring the case that corrective rise from 0.6826 medium term bottom is completed at 0.8124, after hitting 55 month EMA (now at 0.8032). But stronger than expected rebound from 0.7500 is dampening this bearish view. On the downside, break of 0.7500 will target 0.7328 key cluster support (61.8% retracement 0.6826 to 0.8124 at 0.7322) to confirm this bearish case. But break of 0.8124 will extend the rise from 0.6826 to 38.2% retracement of 1.1079 (2011 high) to 0.6826 (2016 low) at 0.8451 before completion.

Daily Pivots: (S1) 1.2493; (P) 1.2541; (R1) 1.2568; More....

Intraday bias in USD/CAD stays neutral as correction from 1.2354 continues. As long as 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) 110.91; (P) 111.39; (R1) 111.74; More...

Intraday bias in USD/JPY remains on the downside for 110.83 support. As noted before, current development argues that fall from 114.73 is resuming. Break of 110.83 will target 61.8% retracement of 107.31 to 114.73 at 110.14. We'd look for bottoming signal again below 110.14. On the upside, above 112.05 minor resistance will turn intraday bias neutral first.

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.

Daily Pivots: (S1) 0.9721; (P) 0.9768; (R1) 0.9805; More....

USD/CHF is staying in range above 0.9698 support and intraday bias remains neutral first. We're still slightly favoring that correction from 1.0037 has completed with three waves down to 0.9698. Above 0.9844 will turn bias back to the upside for 0.9977 resistance for confirming this bullish view. However, break of 0.9698 will extend such correction to 61.8% retracement of 0.9420 to 0.1.0037 at 0.9656 before completion.

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) 1.3479; (P) 1.3517; (R1) 1.3576; More.....

GBP/USD dipped to 1.3457 but recovered quickly again. The price actions from 1.3612 are now clearly corrective. Hence even in case of another fall, downside should be contained well above 1.3300 support to bring rise resumption. And, break of 1.3612/51 resistance zone will now target 1.3835 key resistance level next.

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.

Risk appetite continued to be generally strong. DOW closed up 205.6 pts, or 0.81% overnight to 25574.73. S&P 500 and NASDAQ were up 0.7% and 0.8% respectively. All hit new record highs. Positive sentiments continue in Asian session with gains in China and HK markets even though Nikkei weakens mildly on recent Yen strength. WTI crude oil also extended recent rally to as high as 64.77 and is set to test 65 handle. Gold is firm, consolidation around 1320, as Dollar is back under pressure. The greenback will look into today's CPI reading for direction.

Euro surged on ECB minutes

Euro jumped sharply yesterday the December ECB minutes signaled that policymakers might begin changing the forward guidance in coming months in response to a better macroeconomic backdrop. As the minutes noted, "the view was widely shared among members that the Governing Council's communication would need to evolve gradually... if the economy continued to expand and inflation converged further towards the Governing Council"s aim. The language pertaining to various dimensions of the monetary policy stance and forward guidance could be revisited early in the coming year". Moreover, the minutes suggested that the members noticed "a gap appeared to be emerging between favorable economic conditions and a policy stance that remained in a crisis configuration". More in Hawkish ECB Signals To Revisit Forward Guidance As Recovery Pace Accelerates.

The news sent EUR/USD above 1.2 handle while EUR/GBP is also back pressing 0.89. But EUR/JPY remains in near term decline despite a relatively weak recovery. EUR/CHF is also still limited below 1.1777 resistance. Underlying strength in Euro remains to be confirmed.

Fed Dudley warned tax cuts will come at a cost

A key Fed official, New York Fed President William Dudley warned that the Republican's tax cuts "will come at a cost. After all, there is no such thing as a free lunch". He said that "the economy has considerable forward momentum, monetary policy is still accommodative, financial conditions are easy, and fiscal policy is set to provide a boost. But, there are some significant storm clouds over the longer term". He added further that "keeping the economy on a sustainable path may become more challenging" for the Fed due to the risk of "overheating." 

Earlier in the week, Dallas Fed President Robert Kaplan also said that the short-term boost from the tax cuts to the economy will eventually "tail off". The government would be saddled with more debt in the future and "it would create a future headwind for economic growth".

On the data front

China trade surplus widened sharply to USD 54.7b, or in Yuan term CNY 362b. US CPI and retail seals will bee the main focus for today.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1953; (P) 1.2006 (R1) 1.2084; More....

EUR/USD's rebound from 1.1915 extends higher but it's still limited below 1.2091 key resistance. Intraday bias remains neutral at this point. Again, decisive break of 1.2091 key resistance is needed to confirm up trend resumption. Otherwise, more corrective trading should be seen with risk of another fall. Below 1.1915 will turn bias to the downside for 38.2% retracement of 1.1553 to 1.2088 at 1.1884. Break will target 61.8% retracement at 1.1757 and below. Nonetheless, firm break of 1.2091 will resume whole medium term rise from 1.0339 towards 1.2516 long term fibonacci level.

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.

Daily Pivots: (S1) 1.1953; (P) 1.2006 (R1) 1.2084; More....

EUR/USD's rebound from 1.1915 extends higher but it's still limited below 1.2091 key resistance. Intraday bias remains neutral at this point. Again, decisive break of 1.2091 key resistance is needed to confirm up trend resumption. Otherwise, more corrective trading should be seen with risk of another fall. Below 1.1915 will turn bias to the downside for 38.2% retracement of 1.1553 to 1.2088 at 1.1884. Break will target 61.8% retracement at 1.1757 and below. Nonetheless, firm break of 1.2091 will resume whole medium term rise from 1.0339 towards 1.2516 long term fibonacci level.

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.