Sample Category Title

EUR/CHF continues to push towards resistance area above 1.17 and support given at 1.1610 (27/10/2017 low). Expected to show continued increase.

In the longer term, the technical structure has reversed. Strong resistance is given at 1.20 (level before the unpeg). Yet, the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

EUR/GBP is trading mixed. The pair has failed to hold below broken support at 0.8791 (07/11/2017 low). Resistance is located at 0.8943 (27/11/2017 high). Expected to show further sideways trading.

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 (psychological level).

AUD/USD's downside pressures continue to increase despite short-term bounce. Hourly resistance is given at a distance at 0.7897 (13/10/2017 high). Key support at 0.7535 (22/06/2017 low) has been broken. Expected to go even lower.

In the long-term, the trend is turning positive. Key supports stands at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8164 (14/05/2015 high) is needed to invalidate our long-term bearish view.

USD/CAD has bounced back after testing hourly support lies at 1.2667 (10/11/2017 low). Hourly resistance stands at 1.2917 ( 27/10/2017 high). Expected to show further consolidation around 1.2900.

In the longer term, the pair has broken longterm support that can be found at 1.2461 (16/03/2015 low). Strong resistance is given at 1.4690 (22/01/2016 high). The pair is likely to head further lower.

USD/CHF is trading mixed. The pair lies in a short-term bearish momentum. Yet, the technical structure indicates further downside risks. The pair has failed to hold consistently above the parity.

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/JPY keeps on pushing higher. The pair has strongly bounced back. The pair is heading towards strong resistance at 114.73 (06/11/2017 high).

We favor a long-term bearish bias. Support is now given at 99.02 (10/08/2013 low). A gradual rise towards the major resistance at 125.86 (05/06/2015 high) seems unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

GBP/USD continues to move lower. The technical structure indicates further weakness. Support is given at a distance at 1.3304 (12/12/2017 low). Expected to show continued further monitoring of resistance at 1.3549.

The long-term technical pattern is reversing. The Brexit vote had paved the way for further decline. Long-term support can be found at 1.1841 (07/10/2017 low). Long-term resistance given around 1.35 is at stake and indicates a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

EUR/USD's bearish momentum is very strong. Hourly resistance is given at 1.1961 (27/11/2017 high). Hourly support given at 1.1713 (21/11/2017 low). Expected to show continued decline.

In the longer term, the momentum is now turning largely positive. We favour a continued bullish bias. Key resistance is holding at 1.2252 (25/12/2014 high) while strong support lies at 1.0341 (03/01/2017 low).

Notes/Observations

Democrats gain seat in US Senate follow Jones victory in Alabama special election; not expected to impact the GOP's plan to pass tax reform, as Republican leaders are racing to approve the tax legislation by early next week

Plethora of central bank rate decisions over the next 24 hours including the FOMC today and BOE and ECB on Thursday.

Focus on FOMC rate decision later today with 3rd rate hike for 2017 expected; markets eye dots for 2018 rate outlook

Asia:

US/EU/Japan Joint Statement at WTO: vowed to work together to fight market-distorting trade practices and policies that have fueled excess production capacity (in-line with speculation)

Japan Govt said to keep the assumed interest rate at record low of 1.1% in FY18/19 budget draft

Asian Development Bank (ADB) raised 2017 Developing Asia GDP growth forecast to from 5.9% to 6.0%; maintains 2018 forecast at 5.8

Europe:

PM May is facing another painful Brexit dilemma as Tory lawmakers are lining up vote for an amendment to her flagship law that paves the way for the UK's exit from the EU. Faces the issue whether to cave in to rebels in her Conservative Party who want the power to veto the final Brexit deal or face a potentially damaging defeat.

Italy President Mattarella to dissolve Parliament on Dec 28th or 29th to clear the way for elections(in-line with recent speculation)

Americas:

Alabama special election has Democrat Jones defeating Republican candidate Moore

Energy:

Weekly API Oil Inventories: Crude: -7.4M v -5.5M prior

OPEC Sec Gen Barkindo: Affirms re-balancing of oil market ‘on its way'; strong economic growth, especially in China, is positive. Reiterated saw 2018 global oil demand up 1.5M B/D, in line with 2017

Economic Data:

(DE) Germany Nov Final CPI M/M: 0.3% v 0.3%e; Y/Y: 1.8% v 1.8%e

(DE) Germany Nov Final CPI EU Harmonized M/M: 0.3% v 0.3%e; Y/Y: 1.8% v 1.8%e

(DE) Germany Nov Wholesale Price Index M/M: 0.5% v 0.0% prior; Y/Y: 3.0% v 3.0% prior

(ZA) South Africa Nov CPI M/M: 0.1% v 0.1%e; Y/Y: 4.6% v 4.7%e

(ZA) South Africa Nov CPI Core M/M: 0.0% v 0.2%e; Y/Y: 4.4% v 4.5%e

Iceland Central Bank (Sedabanki) left its 7-day Deposit Rate unchanged at 4.25%

(IT) Italy Oct Industrial Production M/M: 0.5% v 0.7%e; Y/Y: 0.7% v 0.8%e, Industrial Production WDA Y/Y: 3.1% v 3.4%e

(UK) Nov Jobless Claims Change: +5.9K v +6.5K prior; Claimant Count Rate: 2.3% v 2.3% prior

(UK) Oct Average Weekly Earnings 3M/Y/Y: 2.5% v 2.5%e; Weekly Earnings ex Bonus 3M/Y: 2.2% v 2.2%e

(UK) Oct ILO Unemployment Rate: 4.3% v 4.2%e, Employment Change 3M/3M: -56K v -40Ke

(EU) Euro Zone Q3 Employment Q/Q: 0.4% v 0.4% prior; Y/Y: 1.7% v 1.6% prior

(EU) Euro Zone Oct Industrial Production M/M: 0.2% v 0.0%e; Y/Y: 3.7% v 3.2%e

Fixed Income Issuance:

(IS) Iceland to sell EUR-denominated 5-year notes; guidance seen +45bps to mid-swaps

(IN) India sold total INR110B vs. INR110B indicated in 3-month, 6-month and 12-month bills

(DK) Denmark sold total DK4.64B in 3-month and 6-month bills

(SE) Sweden sold SEK2.0B vs. SEK2.0B indicated in % 2028 bonds; Avg Yield: 0.7161% v 0.7373% prior; bid-to-cover: 1.86x v 2.31x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.1% at at 391.4, FTSE +0.1% at 7504, DAX -0.1% at 13165, CAC-40 -0.1% at 5421, IBEX-35 +0.3% at 10318, FTSE MIB -0.4% at 22635, SMI -0.1% at 9351 , S&P 500 Futures flat]

Market Focal Points/Key Themes: European Indices trade mixed this morning following mixed futures in the US after a flat close in Wall Street yesterday. US Futures did see initial weakness after Democrat Doug Jones wins the Alabama Senate race before paring the losses. Retailers were on the front foot this morning with Spanish Clothing giant Inditex lifting the Ibex after 9M results, while Electronics Firm Dixons Carphone trades over 4% higher after encouraging holiday season trading. Elsewhere following their Investor day Serco rises sharply, after lifting guidance, with shares of Nexans in Paris also higher after ther longer term outlook. Looking ahead looking out for guidance from the likes of Honeywell and United Health.

Equities

Consumer Discretionary [Dixons Carphone [CD.UK] +4% (Earnings), Inditex [ITX.ES] +3.0% (Earnings), TUI [TUI.UK] +0.8% (Earnings), Metro [B4B.DE] +1.1% (Earnings)]

Financials [Serco [SRP.UK] +8% (Investor day, lifts outlook)

Industrials [John Wood Group [WG.UK] -1.3% (Outlook), Aurubis [NDA.DE] -3.8% (Earnings)

Technology [Wirecard [WDI.UK] +0.8% (FY18 outlook), Nexans [NEX.FR] +1.4% (Investor day)]

Real Estate [Purple Bricks [URP.UK] -7% (Trading update)]

Speakers

Brexit Min Davis sent a letter to his conservative law makers that reiterated view that UK would not ratify the EU deal without Parliamentary approval (Seen as an attempt to ward off party in-fighting)

EU Chief Brexit Negotiator Barnier reiterated last week's Brexit agreement was complex; to recommend moving into phase 2 of negotiations

German SPD Dep leader Stegner reiterated party view that would not join Merkel coalition at any price

Iceland Central Bank (Sedabanki) policy statement noted that lower headline inflation would be offset by waning effects of past appreciation of exchange rate. Outlook was for continued strong demand pressures in domestic economy. Called for a tight monetary stance

Czech Central Bank Vice Gov Hampl: More rate hikes might be needed compared to current forecast. Saw risks of stronger domestic inflation pressure

Sweden Employment Service (PES) raised 2017 Unemployment forecast from 6.6% to 6.8% while cutting 2018 Unemployment forecast from 6.7% to 6.6%

German DIW institute raised 2017 and 2018 GDP growth forecasts in its Economic outlook Report. Raised GDP from 1.9% to 2.1% for both years

Brazil Fin Min Meirelles: 2018 GDP growth seen close to 3.0%. Believed that pension reform will be approved

China and UK said to hold bilateral trade talks between Dec 15-16th

UAE Oil Min Mazrouei: To early to speculate on any exit from OPEC/Non-Opec production cuts

Currencies

The softer USD exhibited during Asia saw that trend dissipate as the EU morning progressed. Alabama election results apparently get moved aside ahead of the Fed's pronouncements

There are a plethora of central bank rate decisions over the next 24 hours including the FOMC today and BOE and ECB on Thursday.

Some dealers were quite perplexed that the GBP failed to gain traction after the recent headline CPI reading of 3.1% and higher than expected wage data in today's session. While ILO unemployment rate matched a 4 decade low the employment change saw its 2nd straight decline. GBP/USD at 1.3340 area just ahead of the NY morning.

Fixed Income

Bund futures trade 163.36 down 16 ticks, easing back marginally. Continued upside sees 163.63 then 164.25. A reversal targets 162.50 then 162.38.

Gilt futures trade at 125.73 up 7 ticks after UK wages come roughly in line while jobless claims and ILO unemployment rate miss expectations. Continued upside eyeing 126.15 then 126.65. Downside targets include 125.24 then 124.75.

Wednesday's liquidity report showed Tuesday's use of the marginal lending facility rose to €M from €283M prior.

Corporate issuance saw 5 issuers raise $1.9B in the primary market

Looking Ahead

OPEC Dec Monthly Oil Report

05:30 (CL) Chile Central Bank's Traders Survey

05:30 (UK) DMO to sell 0.125% 2036 I/L Gilts

06:00 (BR) Brazil Oct Retail Sales M/M: 0.1%e v 0.5% prior; Y/Y: 5.0%e v 6.4% prior

06:00 (BR) Brazil Oct Board Retail Sales M/M: -0.2%e v +1.0% prior; Y/Y: 9.3%e v 9.3% prior

06:00 (IL) Israel Nov Trade Balance: No est v -$1.7B prior

06:00 (ZA) South Africa Oct Retail Sales M/M: +0.2%e v -0.7% prior; Y/Y: 5.3%e v 5.4% prior

06:30 (IS) Iceland to sell 6-month Bills - 06:45 (US) Daily Libor Fixing

07:00 (RU) Russia to sell combined RUB40B in 2021 and 2028 OFZ bonds

07:00 (US) MBA Mortgage Applications w/e Dec 8th: No est v 4.7% prior

07:00 (UK) PM May Question Time in House of Commons

07:30 (FI) Finland PM Sipila on upcoming EU Leader Summit

08:05 (UK) Baltic Dry Bulk Index

08:30 (US) Nov CPI M/M: 0.4%e v 0.1% prior; Y/Y: 2.2%e v 2.0% prior

08:30 (US) Nov CPI Ex Food and Energy M/M: 0.2%e v 0.2% prior; Y/Y: 1.8%e v 1.8% prior

08:30 (US) Nov CPI Index NSA: 246.816e v 246.663 prior; CPI Core Index SA: 253.932e v 253.428 prior

08:30 (US) Nov Real Avg Weekly Earnings Y/Y: No est v 0.4% prior, Real Avg Hourly Earning Y/Y: No est v 0.4% prior

08:30 (CA) Canada Nov Teranet/National Bank HPI M/M: No est v -1.0% prior; Y/Y: No est v 10.0% prior, House Price Index: No est v 218.13 prior

10:30 (US) Weekly DOE Crude Oil Inventories

14:00 (AR) Argentina Q3 Unemployment Rate: No est v 8.7% prior

14:00 (US) FOMC Rate Decision: Expected to raise Funds Target Range 25bps to 1.25%-1.50%

14:30 (US) Fed Chair Yellen post rate decision press conference

Busy day for the greenback

After surging across the board yesterday, the US dollar partially reversed gains during the Asian session, with the dollar index returning towards 94 followinga positive surprise in the PPI Index. November’s headline producer prices gauge rose 3.1% year-over-year, beating median forecast of 2.9% and previous month reading of 2.8%. This is the largest increase since January 2012. Excluding the most volatile components, such as energy and food prices, the measure increased 2.4%y/y, matching market expectations. The surprise in the headline gauge is not exclusively due to the solid gains in crude oil prices throughout November but also due to the distortions created by the Hurricane season.

November’s consumer price index is due for release today. The headline gauge is expected to notch up to 2.2%y/y from 2% in October. The core measure should remain stable at 1.8%y/y. An upside surprise in the headline measure appears likely, especially against the backdrop of positive pressures from energy prices. However, the market remains cautious regarding the inflation outlook as the 1y breakeven inflation currently stands at around 1.43%y/y.

Finally, the December FOMC meeting will be the main event today. Fed members will provide their latest update on both the inflation and growth outlook. The main question today is not whether the Fed will raise borrowing costs today, as it already priced in at 100%, but rather how dovish/hawkish Janet Yellen will sound during the press conference. Any significant change in the dot-plot could affect significantly the USD outlook. So far, the market is expecting at least two rate hikes next year, if not three.

SNB Happy on the sidelines

The SNB is not moving, unwilling to disrupt the markets current narrative. From the SNB vantage point macro and domestic conditions are in a sweet spot for current policy. Inflation rates have improved but are nowhere near the SNB target rate while the short CHF is on most analyst top calls for 2018. All the while growth outlook has improved, led by export and manufacturing, supported by the weak CHF. The SNB will remain on the sideline, keeping rate unchanged and reiterating its pledge to intervene in the FX markets is needed.

SNB members will continue to sound cautions on exchange rate believe the CHF remain overvalued. Despite the improving backdrop its unlikely the SNB will get ahead of the ECB in tighten. This would put the first hike well into 2019 indicating that current pricing it too optimistic. We remain long on EURCHF.