Sample Category Title

USD/JPY keeps on pushing higher. The pair has strongly bounced back. Hourly resistance is given at 112.70 (30/11/2017 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 has been trading lower over the past few days but the technical structure indicates an extension of bullish momentum. Support is given at a distance at 1.3027 (06/10/2017 low). Expected to show continued increase towards resistance at 1.3657 (20/09/2017 high).

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 lies in a short-term bearish momentum. Hourly resistance is given at 1.1961 (27/11/2017 high). Hourly support is given at 1.1809 (30/11/2017 low). Expected to show continued increase.

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).

Spot Gold holds within tight range on Tuesday and awaiting series of US PMI data for fresh signals. Repeated rejections at $1270 zone keep the downside protected for now, but upside attempts remain limited and keep near-term bias with bears. Widening daily Ichimoku cloud continues to weigh, along with converging daily MA's in bearish setup. Near-term risk remains at the downside for test of 200SMA ($1266) and lows of 27 / 06 Oct at $1263/60. Broken Fibo 61.8% of $1263/$1299 upleg caps for now and marks initial barrier at $1277, with extended upticks to be limited by daily cloud base ($1282).

Res: 1277, 1282, 1285, 1289
Sup: 1274, 1270, 1266, 1263

No breakthough – Sell GBP

One of our core themes for 2018 will be the ascensions of the EU from fragile union to a unified political and economic force. We can see the start of this transformation in the current EU/UK Brexit negotiations. British Prime Minister Theresa May and European Commission President Jean-Claude Juncker failed to make progress after hours of discussion with differences over Irish border proving the recent barrier. Externally members expressed confidence that a deal would arrange in time to allow EU policymakers to focus on the future trade relationship. However, internally the mood is more apprehensive. According to internal sources, talks will resume later this week. Despite all the progress made in the Brexit negotiations there is feeling that the EU is taking difficult position and the UK bending (highlighted by the divorced bill concessions).

We see a deal unlikely at 14-15 December EU Council meeting. Bullish EUR exposure were paired backs and GBP long increased on speculations of a breakthrough in negotiations. Short-term traders were caught on the wrong side, as negative news flow hit the wires and EURGBP rallied back to 0.8848. Give our long-term theme of a strong EU we suspect the risk rewards favors long EURGBP fading Brexit positive news. The Irish borader issue will find an ordinary solution but there will be another blocker right around the corned. And negotiators have not even got to the difficult part (trade). We have increased our view for a “hard” Brexit. EURGBP is holding around the 200d MA with a clear close above 0.8850 triggering an bullish extension to 0.8879 (55d MA).

Australia: RBA held rates unchanged.

The RBA Cash Rate Target has been maintained again at 1.50%. It is now the 16th consecutive months in a row that the rates is held at this level. It has also been since 2010 that the rates have not been increased.

At this rate level, we cannot consider that the housing market, one source of issue, will be soon cool off. On top of that markets have strong expectations that rates will remain on hold until at least 2019.

Yet, economic conditions look mixed. The low inflation and the low wages growth are preventing any rate hike in a near future despite forecasts from the Australian central bank. The RBA Governor mentioned that debt levels are high. Is this possible that this is actually the main reason for holding rates so low? We could hardly believe it. The era of free money has created and is still underpinning bubbles in all asset-class. Raising rates may trigger a massive bubble burst. We note that the Australian debt levels went from 15% to 45% of the GDP since 2009 (much sustainable than most of the G10 countries).

The Aussie is getting lower against the greenback and will likely continue to do so. The RBA will likely follow major central banks and not lead the move of monetary policy normalization. This is why we believe that the Aussie has some more downside room within the medium-term.

Notes/Observations

Brexit conundrum as Ireland might not agree to a proposed border deal with UK (**Note: nine days until the EU Leader summit begins)

Major European Services PMI mixed (Beats: France, Italy; Misses: Germany, Spain; In-line: Euro Zone)

Asia:

RBA left its Cash Target Rate unchanged at 1.50% (as expected) for its 16th straight pause in the current easing cycle. RBA removed references to "higher exchange rate damping inflation" and "inflation likely to remain low over time"

China Nov Caixin PMI Services: 51.9 v 51.2 prior

Bank of Japan (BOJ) Gov Kuroda: Appropriate to patiently continue bold monetary easing under current framework, still far from 2% inflation target. No discussions about second term as Gov

RBNZ Gov Spencer (acting Gov): Persistently low inflation has prompted central bank to think about whether it needs to ‘tweak' its approach to monetary policy

Europe:

Portugal Fin Min Mario Centeno won the Eurogroup chairmanship race; term starts in Jan

EU's Juncker: it was not possible to make a complete Brexit deal on Monday but did make considerable progress; would need further talks to reach a complete deal

Ireland PM Varadkar noted that talks had made substantial progress and hope to reach an agreement in coming days. Most difficult issue was agreement of no hard border. Should listen to the DUP but have to listen to other Northern Ireland constituencies as well; should not forget that a majority in Northern Ireland voted against Brexit. Happy to give May more time; there was plenty of time before the Dec 14 EU leaders summit

Economic Data:

(IN) India Nov Services PMI: 48.5 v 51.7 prior (1st contraction in 5 months); PMI Composite: 50.3 v 51.3 prior

(IE) Ireland Nov Services PMI: 56.0 v 57.5 prior (63rd month of expansion), Composite PMI: 57.7 v 56.0 prior

(RU) Russia Nov Services PMI: 57.4 v 53.5e (22nd month of expansion), Composite PMI: 56.3 v 53.2 prior

(RO) Romania Q3 Preliminary GDP (2nd reading) Q/Q: 2.6% v 2.6% advance; Y/Y: 8.8% v 8.8% advance

(ZA) South Africa Nov PMI (whole economy): 48.8 v 49.6 prior

(SE) Sweden Nov Services PMI: 61.8 v 61.4 prior

(TW) Taiwan Nov CPI Y/Y:+0.4% v -0.1%e v -0.3% prior, CPI Core Y/Y: 1.3% v 1.1%e v 1.1% prior, WPI Y/Y: 1.6% v 1.3%e

(HU) Hungary Q3 Final GDP Q/Q: 0.9% v 0.8% prelim; Y/Y: 3.9% v 3.6%e

(ES) Spain Nov Services PMI: 54.4 v 55.0e (49th month of expansion), Composite PMI: 55.2 v 55.1 prior

(IT) Italy Nov Services PMI: 54.7 v 53.2e (18th month of expansion), Composite PMI: 56.0 v 55.0e

(FR) France Nov Final Services PMI: 60.4 v 60.2e (confirms 17th month of expansion), Composite PMI: 60.3 v 60.1e

(DE) Germany Nov Final Services PMI: 54.3 v 54.9e (confirms 53rd month of expansion), Composite PMI: 57.3 v 57.6e

(EU) Euro Zone Nov Final Services PMI: 56.2 v 56.2e (confirms 53rd month of expansion, Composite PMI: 57.5 v 57.5e

(NO) Norway Nov Region Survey: Output Past 3 months: 1.22 v 1.23 prior; Output next 6 months: 1.19 v 1.11 prior

(UK) Nov Services PMI: 53.8 v 55.0e (16th month of expansion), Composite PMI: 54.9 v 55.8e

(ZA) South Africa Q3 GDP Annualized Q/Q: 2.0% v 1.7%e v 2.5% prior; Y/Y: 0.8% v 0.8%e

(EU) Euro Zone Oct Retail Sales M/M: -1.1% v -0.7%e; Y/Y: 0.4% v 1.6%e

Fixed Income Issuance:

(ZA) South Africa sold total ZAR3.3B vs. ZAR3.3B indicated in 2-35, 2040, 2044 and 2048 bonds

(ES) Spain Debt Agency (Tesoro) sold total €4.61B vs. €4.0-5.0B indicated in 6-month and 12-month Bills

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.2% at 386.8, FTSE +0.2% at 7355, DAX -0.1% at 13043, CAC-40 -0.3% at 5375, IBEX-35 -0.3% at 10177, FTSE MIB -0.1% at 22343, SMI -0.1% at 9323, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European Indices trade this morning, after strong gains yesterday. The FTSE outperforms as Cable drops on continued stumbling blocks on Brexit negotiations. On the M&A front Cineworld trades lower after confirming to acquire Regal and the subsequent launch of a £1.7B right offering. On the earnings front NeoPost falls sharply after a fall in Rev, while IG Index trades over 5% higher following a positive trading update, whilst Dialog Semicoductor rebounds after a sharp drop yesterday following a business update. Provident Financial trades over 10% lower after the FCA informs of an investigation into Moneybarn. Looking ahead, notable earners include Autozone, HD Supply and GIII apparel.

Equities

Consumer discretionary [Cineworld [CINE.UK] -4.2% (Confirm to acquire Regal, to launch rights issue), - Ferguson [FERG.UK] +0.4% (Q1 results), Neopost [NEO.FR] -11% (Earnings)]

Financials: [ IG Group [IGG.UK] +5.4% (Trading update), Provident Financial [PFG.UK] -13% (FCA to investigate MoneyBarn)]

Technology: [Dialog Semi [DLG.DE] +5% (Rebound following business update)]

Healthcare: [Gensight [SIGHT.FR] +1.2% (Postiive 1/II trial data)]

Speakers

BOE Financial Policy Committee (FPC) Nov 27th Minutes: Agreed to raise the UK countercyclical capital buffer (CCyB) rate from 0.5% to 1.0%, with binding effect from Nov 28th 2018. Did considered raising banks' capital requirements last week by more than it had previously signaled to tackle risks to the financial system including those from Brexit. Would reconsider adequacy of the 1.0% CCYB during H1 2018

Chancellor of Exchequer Hammond (Fin Min) stated that was very confident of moving the Brexit deal forward

Scotland First Min Sturgeon: Could be the moment for opposition to force a different approach and push to keep the whole UK in the single market and customs union

Italy Stats Agency (ISTAT) Monthly Economic Note: Growth is strengthening in the short term

Norway Central Bank (Norges): Employment growth seen remaining moderate

Czech Central Bank Gov Rusnok reiterated view that would gradually raise interest rates

Czech Central Bank Vice Gov Hampl: Cannot exclude raising the countercyclical buffer Various Finance Ministers comment ahead of EcoFin meeting

EU's Moscovici: There was no tax haven in the EU. Black list of tax havens to include approx 20 States. Must keep pressures on tax havens

EU's Dombrovskis: US tax reform will be discussed at today's meeting

Germany Fin Min Altmaier: Tax blacklist was an important 1st step

Currencies

GBP/USD maintained a heavy tone following Monday's disappointment that no breakthrough was made on the Brexit negotiations. The current conundrum as Ireland might not agree to a proposed border deal with UK. There are only nine days until the EU Leader summit begins (Dec 14th) and the UK needs to show by then that sufficient progress has been made to move on to trade negotiations. GBP/USD at 1.3425 just ahead of the NY morning and some 40 pips off its worst levels

Fixed Income

Bund futures trade 163.11 up 14 ticks, trading in a narrow range. Continued downward pressure sees 162.10 followed by 161.50. A reversal targets 163.40 then 163.75.

Gilt futures trade at 125.11 up 22 ticks, as the pound extends losses on Brexit fears. Continued upside eyeing 125.15 then 125.65. Downside targets include 124.01 then 123.75.

Tuesday's liquidity report showed Monday's excess liquidity rose to a record high of €1.915T from €1.912T. Use of the marginal lending facility rose to €394M from €243M prior.

Corporate issuance saw no deals price in high-grade primary

Looking Ahead

05.30 (UK) Weekly John Lewis LFL sales data

05:30 (EU) ECB allotment in 7-day Main Financing Tender (MRO) tender

05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills

05:30 (UK) DMO to sell £2.75B in 0.75% July 2023 Gilts

05:30 (BE) Belgium Debt Agency (BDA) to sell €1.2B in 3-month and 6-month bills

06:00 (IE) Ireland Nov Unemployment Rate: no est v 6.0% prior

06:00 (IE) Ireland Oct Industrial Production M/M: No est v 0.7% prior; Y/Y: No est v -3.2% prior

06:00 (BR) Brazil Oct Industrial Production M/M: 0.1%e v 0.2% prior; Y/Y: 5.2%e v 2.6% prior

06:00 (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 1.50%

06:30 (CL) Chile Oct Economic Activity Index (Monthly GDP) M/M: -0.1%e v -0.1% prior; Y/Y: 2.9%e v 1.3% prior, Economic Activity (ex-mining) Y/Y: No est v 0.7% prior

06:30 (TR) Turkey Nov Effective Exchange Rate (REER): No est v 87.96 prior

06:30 (EU) ESM to sell €1.5B in 3-month Bills; Avg Yield: % v 0.6730% prior; Bid-to-cover: x v 4.8x prior (Nov 7th 2017)

07:00 (BR) Brazil Nov Services PMI: No est v 48.8 prior, PMI Composite: No est v 49.5 prior

07:00 (RU) Russia announces weekly OFZ bond auction .

07:45 (US) Weekly Goldman Economist Chain Store Sales

08:00 (NZ) Fonterra Global Dairy Trade Auction

08:05 (UK) Baltic Dry Bulk Index

08:30 (US) Oct Trade Balance: -$47.5Be v -$43.5B prior

08:30 (CA) Canada Oct Int'l Merchandise Trade (CAD): -2.7Be v -3.2B prior

08:30 (SK) Slovenia Debt Agency (Ardal) to sell 12-month Bills - 08:55 (US) Weekly Redbook Sales

09:00 (EU) Weekly ECB Forex Reserves

09:00 (MX) Mexico Sept Gross Fixed Investment: No est v 0.3% prior

09:00 (SE) Sweden Central Bank (Riksbank) Gov Ingves

09:45 (US) Nov Final Markit Services PMI: 55.2e v 54.7 prelim, Composite PMI: No est v 54.6 prelim

10:00 (US) Nov ISM Non-Manufacturing Composite: 59.0e v 60.1 prior

10:00 Poland Central Bank Gov Glapinski to hold post rate decision press conference

11:30 (US) Treasury to sell 4-Week and 52-Week Bills

15:00 (MX) Mexico Citibanamex Survey of Economists

16:00 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index

16:30 (US) Weekly API Oil Inventories

19:00 (CO) Colombia Nov CPI M/M: 0.1%e v 0.0% prior; Y/Y: 4.1%e v 4.1% prior

The euro has posted small losses in the Tuesday session. Currently, EUR/USD is trading at 1.1854, down 0.09% on the day. On the release front, German Final Services PMI edged lower to 54.3, short of the forecast of 54.9 points. Eurozone Final Services improved to 56.2, matching the forecast.

The good news is that the Brexit talks have gained some momentum, but a breakthrough on the non-trade issues has not been reached. There were hopes that a breakthrough would be announced on Monday, following talks between Prime Minister May and European Commission President Jean-Claude Juckner, but the gaps on two issues remain, for now. One thorny issue is that of northern Ireland and its border. The UK will clearly not remain in a customs union with the EU, but Ireland is insistent that there not be a hard border with the North, while the DUP, which is propping up the May government, is strongly against any border between the UK mainland and Northern Ireland. The second issue is whether the European Court of Justice will have a role protecting European citizens in the UK. The EU is in favor of a role for the court, while many British lawmakers feel that such a move would impinge on British sovereignty. The EU holds a meeting on December 12, and May is anxious to wrap up the non-trade sticking points and move on to trade talks by that date.

The US Senate passed a tax reform bill on the weekend, but the vote was a squeaker, 51-49, as the vote went along party lines, with one Republican voting against the bill. Now that that the House and the Senate have passed tax bills, a conference committee will try and hammer out a uniform bill which can be sent to President Trump and signed into law. There are some differences in the two bills, notably individual tax rates, the alternative minimum tax, mortgage interest deductions and the estate tax. The Senate and House will have to work out their differences quickly, as the new “merged” bill will have to pass through in both houses. If the bill does become law, it will mark the first major tax reform in the US in 30 years, and could boost the US dollar against the euro and other major currencies.

WTI oil price remains in red for the second day and pressure support at $57.10 (20SMA) which guards pivot at $56.75 (29 Nov higher low).

Break here would signal increased risk of deeper pullback as loss of $56.75 handle would complete daily failure swing pattern and open way for extended correction from $59.02 (24 Nov peak).

Extended correction could travel to $56.41 and $55.80 (Fibo 61.8% and 76.4% of $54.80/$59.02 upleg respectively) with extended bearish acceleration to unmask key near-term support at $54.80 (14 Nov trough).

Early downside rejection (ideally above 20SMA) would signal an end of corrective phase and shift near-term focus higher as overall structure remains bullish.

Release of API US crude stocks data, due later today, is in focus.

Res: 57.62, 57.88, 58.31, 58.86
Sup: 57.10, 56.75, 56.41, 55.80

Recovery is gaining pace as the pair accelerated higher on Tuesday after RBA left interest rates unchanged at 1.5% as expected. The following statement showed no changes from the previous monetary policy meeting and indicating that the central bank would remain neutral and on hold for some time.

AUDUSD accelerated to fresh three-week high at 0.7653 after release. This marks pivotal resistance (Fibo 61.8% of 0.7729/0.7530 downleg) and sustained break here would trigger fresh extension higher and expose key barriers at 0.7691/0.7729 (200SMA / 02 Nov high).

Fresh bullish acceleration which eventually took out important barrier at 0.7607 (20SMA), turned techs on lower timeframes into full bullish setup while daily studies improved and regained bullish momentum.

Broken 30SMA (0.7634) now acts as initial support with extended downticks expected to hold above broken 20SMA.

Res: 0.7653, 0.7691, 0.7729, 0.7776
Sup: 0.7634, 0.7607, 0.7594, 0.7579

The pair ticked higher on Tuesday, leaving temporary footstep at 112.36 (Mon/Tue lows) intact but remaining below initial barrier at 112.78 (daily Kijun-sen).

Monday's close in red and repeated rejection at daily cloud top, as well as repeated failure to close above Kijun-sen, was bearish signal.

Risk of deeper pullback on loss of 112.36 handle and extension below 111.96 (daily Tenkan-sen) remains in play and scenario would include extension towards layers of strong supports, provided by converged 10SMA (111.80), 200SMA (111.68) and 100SMA (111.57).

Alternative scenario requires sustained break above cloud top (113.12) to signal continuation of recovery from 110.83 (27 Nov low).

Res: 112.78, 113.12, 113.24, 113.81
Sup: 112.36, 111.96, 111.80, 111.68