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Daily Pivots: (S1) 1.5339; (P) 1.5383; (R1) 1.5445; More....

Intraday bias in EUR/AUD stays neutral for the moment and outlook is unchanged. The correction from 1.5570 could still extend lower. But again, near term outlook stays bullish with 1.5226 resistance turned support intact. Break of 1.5526 minor resistance will turn bias back to the upside for retesting 1.5770 resistance. However, sustained break of 1.5226 will indicate larger reversal and target 1.4949 support next.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term top (2015 high) has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. We'll hold on to this bullish view as long as 1.5226 resistance turned support holds. Firm break of 1.6587 will resume long term rise from 1.1602 (2012 low). However, sustained break of 1.5226 will indicate trend reversal and target 1.3624 again.

Daily Pivots: (S1) 1.1694; (P) 1.1710; (R1) 1.1733; More...

Intraday bias in EUR/CHF remains neutral at this point and outlook is unchanged. While there is no confirmation yet, we'd maintain that the cross is close to topping. And in case of another rise, strong resistance should be seen well below 1.2 handle to bring medium term reversal. On the downside, break of 1.1602 support will indicate reversal and turn outlook bearish for 1.1387 and below.

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.

Elliott Wave view for Nasdaq suggests that the Index has ended the correction to the cycle from 12/5 low at 6383.25 and from there it it has started the next leg higher. Up from Intermediate wave (4) low on 12/5, the rally unfolded as a double three Elliott Wave structure where Minor wave W ended at 6545.75 and Minor wave X is proposed complete at 6383.25. However, for this view to gain validity, the Index needs to break above Minor wave W at 6545.75.

Internal of Minor wave W unfolded as a double three Elliott Wave structure where Minute wave ((w)) ended at 6427.75, Minute wave ((x)) ended at 6383, and Minute wave ((y)) of W ended at 6545.75. The Index then pullback in Minor wave X which unfolded as a a triple three Elliott Wave structure where Minute wave ((w)) ended at 6463.25, Minute wave ((x)) ended at 6520.75, Minute wave ((y)) ended at 6432.25, and second Minute wave ((x)) of X ended at 6383.25.

Short term, rally from 12/30 low (6383.25)( looks impulsive and could see more upside to end 5 waves up in Minutte wave (a). Afterwards, the Index should pullback in Minutte wave (b) in 3, 7, or 11 swing to correct cycle from 12/30 low (6383.25) before turning higher again. We don’t like selling the Index and while dips stay above 6383.25, and more importantly above 6232.30, expect Index to extend higher.

Nasdaq 1 Hour Elliott Wave Chart

Daily Pivots: (S1) 1.2010; (P) 1.2045 (R1) 1.2094; More....

With 1.1998 minor support intact, intraday bias in EUR/USD remains on the upside for 100% projection of 1.1553 to 1.1960 from 1.1717 at 1.2124, which is above 1.2091 high. Decisive break there will confirm medium term rally resumption and target next key fibonacci level at 1.2494/2516. On the below 1.1998 minor support will turn intraday bias neutral and bring consolidation before staging another upmove.

In the bigger picture, rise from 1.0339 medium term bottom is 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) 1.3527; (P) 1.3564; (R1) 1.3629; More.....

Intraday bias in GBP/USD remains on the upside for 1.3651 resistance. Break will resume medium term rise from 1.1946 and target key resistance level at 1.3835. On the downside, below 1.3518 minor support will turn intraday bias neutral first. But outlook will stay bullish as long as 1.3300 support holds.

In the bigger picture, while the medium term rebound from 1.1946 low was strong, it's limited below 1.3835 key support turned resistance. As long as 1.3835 holds, we'd view such rebound as a correction. That is, we'd expect another leg in the long term down trend through 1.1946 low. However, 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) 0.9694; (P) 0.9721; (R1) 0.9744; More....

Intraday bias in USD/CHF remains on the downside as correction from 1.0037 could extend lower. At this point, we'd expect strong support from 61.8% retracement of 0.9420 to 0.1.0037 at 0.9656 to contain downside and bring rebound. On the upside, above 0.9774 minor resistance will turn intraday bias neutral first. But break of 0.9977 is needed to confirm completion of the correction. Otherwise, risk will stay on the downside in near term.

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) 111.96; (P) 112.37; (R1) 112.70; More...

At this point, USD/JPY is staying in range of 112.02/113.74 and intraday bias remains neutral first. Near term outlook stays bullish as long as 112.02 support holds. Break of 113.74 will resume the rebound from 110.83 and target 114.73 key resistance. Decisive break there will carry larger bullish implications. However, break of 112.02 will likely extend the corrective pattern from 114.73 with another leg through 110.83 support.

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) 0.7799; (P) 0.7821; (R1) 0.7852; More...

AUD/USD retreats mildly after hitting 0.7844 and intraday bias is turned neutral first. Another rise could still be seen. But considering bearish divergence condition in 4 hour MACD, upside should be limited by 0.7896 cluster resistance (61.8% retracement of 0.8124 to 0.7500 at 0.7886) to form a short term top. Meanwhile, break of 0.7964 support will suggest that rebound from 0.7500 has completed. In such case, intraday bias will be turned back to the downside for retesting 0.7500.

In the bigger picture, we're still slightly favoring the case that corrective rise from 0.6826 medium term bottom is likely 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) 1.2482; (P) 1.2528; (R1) 1.2557; More....

USD/CAD drops to as low as 1.2499 so. It's losing some downside momentum on oversold condition in 4 hour RSI. But intraday bias stays on the downside as long as 1.2566 minor resistance holds. Current fall from 1.2919 would extend to 61.8% retracement of 1.2061 to 1.2919 at 1.2389 or possibly below. On the upside, above 1.2566 will turn intraday bias neutral first.

In the bigger picture, we're still favoring the case that USD/CAD has defended 50% retracement of 0.9406 (2011 low) to 1.4689 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. With that in mind, fall from 1.2919 is viewed as a correction. Hence, we're not anticipating a break of 1.2061 low. In the long run, USD/CAD should have another medium term rise to take on 38.2% retracement of 1.4689 to 1.2061 at 1.3065.

Dollar is trying to recover in Asian session today after the steep new year selloff. Nonetheless, the greenback remains the second weakest one for the week, just next to Kiwi. S&P 500 and NASDAQ closed at records high at 26951.81 and 7006.90 overnight. DOW also gained 104.79 pts or 0.42% to 24824.01. 10 year yield staged a strong rebound by gaining 0.06 to 2.465 but that was mainly driven by surge in European yields, including Germany and UK. In other markets, gold breached 1320 handle before retreating mildly today. WTI crude oil is also holding above 60 handle.

ECB Nowotny: QE may end in 2018

ECB Governing Council member Ewald Nowotny said in a newspaper interview that the central bank could end the asset purchase program this year and there is continuous improvements in growth in Eurozone. Inflation is still expected to miss the 2% target ahead. But Nowotny said that "we should not see that too dogmatically." Instead, "if the economy continues to do so well, we could let the program run out in 2018". Meanwhile, he also warned that funds are "flooding" into European stock markets and warned of risks of bubble.

CDU and SPD still at odds for grand coalition

In Germany, leaders of Chancellor Angela Merkel's CDU/CSU will meet today to prepare for the exploratory coalition talk with SPD scheduled for January 7 through 12. The chance for the rebirth of grand coalition seems get dimmer as the two largest parties are still at odds over a couple of issues. SPD deputy leader Thorsten Schaefer-Guembel cited in a newspaper interview the differences with CUD/CSU over tax, healthcare, immigration, Europe and work regulations. And he emphasized that "a minority government remains an option, even if Chancellor Angela Merkel doesn't want to acknowledge that."

And, Wolfgang Steiger, secretary general of CDU's economic council, said that Germany could face "enormous financial burdens for generations" if SPD manages to push through the spending plans in the grand coalition. And he warned that "a grand coalition will be more expensive in the long term than a minority government."

UK in talks to join TPP

In UK, it's reported that the government is in talks to join the so called Trans-Pacific Partnership for post-Brexit international trades. British Trade Minister Greg Hands said despite the geographical difference, "nothing is excluded in all of this," and "with these kind of plurilateral relationships, there doesn't have to be any geographical restriction." The department of international trade also said that "it is early days, but as our trade policy minister has pointed out, we are not excluding future talks on plurilateral relationships."

But the initiative drew criticism from other politicians. Shadow Trade Minister Barry Gardiner complained that "this plan smacks of desperation. These people want us to leave a market on our doorstep and join a different, smaller one on the other side of the world. It's all pie in the sky thinking."

The TPP is renamed as Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) after the US withdrew last year under the decision of President Donald Trump. There are eleven remaining members including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. A partial agreement was reached last November without US participation.

Looking ahead: FOMC Minutes and PMIs

FOMC minutes for December meeting will be a major focus of the day. Fed raised interest rate by the third time last year in December. The biggest difference that time was that Chicago Fed President Charles Evans joined Minneapolis Fed President Neel Kashkari in dissenting. What both have said during the meeting could be something of interest. Other than that, the minutes shouldn't reveal anything new given that there was a press conference, with new projections released after the meeting.

On the data front, Swiss will release PMI manufacturing while UK will release construction PMI. Germany will release unemployment. US ISM manufacturing will also be a focus and a strong set of number is needed to give Dollar a life.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.2482; (P) 1.2528; (R1) 1.2557; More....

USD/CAD drops to as low as 1.2499 so. It's losing some downside momentum on oversold condition in 4 hour RSI. But intraday bias stays on the downside as long as 1.2566 minor resistance holds. Current fall from 1.2919 would extend to 61.8% retracement of 1.2061 to 1.2919 at 1.2389 or possibly below. On the upside, above 1.2566 will turn intraday bias neutral first.

In the bigger picture, we're still favoring the case that USD/CAD has defended 50% retracement of 0.9406 (2011 low) to 1.4689 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. With that in mind, fall from 1.2919 is viewed as a correction. Hence, we're not anticipating a break of 1.2061 low. In the long run, USD/CAD should have another medium term rise to take on 38.2% retracement of 1.4689 to 1.2061 at 1.3065.

Economic Indicators Update