Sample Category Title

EUR/USD - 1.1843

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1857

Kijun-Sen level                  : 1.1885

Ichimoku cloud top             : 1.1895

Ichimoku cloud bottom      : 1.1875

Original strategy  :

Sell at 1.1915, Target: 1.1815, Stop: 1.1950

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1915, Target: 1.1815, Stop: 1.1950

Position : -

Target :  -

Stop : -

As the single currency ran into resistance at 1.1940 on Friday and has retreated, suggesting further consolidation below resistance at 1.1961 (last week’s high) would be seen and weakness towards support at 1.1808-09 (61.8% Fibonacci retracement of 1.1713-1.1961 and previous support), however, break there is needed to retain bearishness and extend weakness to 1.1770 and possibly to support at 1.1736 but price should stay above previous key support at 1.1713.

In view of this, we are looking to sell euro on recovery as 1.1910-20 should limit upside and bring another decline. Above said Friday’s high at 1.1940 would revive bullishness, bring retest of 1.1961, break there would confirm early upmove has resumed for headway to 1.1990-00 which is likely to hold from here.

• European equities gain up to 2% today (German Dax), reversing Friday's losses with risk sentiment improving after the US Senate tax reform vote. US stock markets open around 0.75% higher, reaching yet another record high.
• Britain is heading for a breakthrough on Brexit talks after reaching a compromise with Ireland on the border between the Republic and Northern Ireland, the issue that threatened to derail the negotiations.
• A deal to complete post-financial crisis capital rules for banks around the globe may be reached on Thursday. French central bank governor Villeroy indicating he is ready to accept a compromise. France has been a key hold-out for completing the Basel III rules.
• The Bank of Japan does not plan to change its massive stimulus programme and will "immediately act" if risks to the economy undermines the momentum toward achieving its inflation target, central bank Governor Kuroda said.
• The leaders of Germany's Social Democrats (SPD) agreed to enter talks with Chancellor Merkel's conservatives on forming a government that could end a political deadlock. The SPD set the contours of its demands in coalition talks expected to start next year with proposals on issues like the economy and immigration likely to cause friction.
• Help-to-buy is helping the housebuilders at least: an increase in house building work meant activity increased much faster than expected in Britain's challenged construction industry during November. The construction PMI increased from 50.8 to 53.1 in November, compared with a 51 forecast.
• Czech wage growth slowed in the third quarter but still ran at its second fastest pace since 2009 to remain the main demand driver in the overheating economy. The average gross monthly wage grew by 4.2% from a year ago in real terms in Q3, as rising inflation bit, the Czech Statistical Bureau said. Nominal wages jumped by 6.8%.

Rates

Slight optimism after US Senate tax reform vote

Global core bonds lost part (Bund) to all (US Note future) of Friday's gains. The move was limited to a one-off repositioning in the Asian or European opening with the positive US Senate tax bill vote the main incentive. It's now up to House and Senate lawmakers to find common ground for a bill, preferable before year-end. More worrying headlines on the US political scene about Mueller's investigation into Russia-links in Trump's presidential campaign team perhaps hampered a more enthusiastic reaction. Core bond trading was rather lethargic after the opening move and confined to a tight sideways range. Investors probably have Friday's payrolls and next week's FOMC meeting in mind. The European eco calendar contained only second tier and slightly disappointing data (PPI, Sentix investor confidence).

At the time of writing, the German yield curve bull flattens with yields up to 4.7 bps (30-yr) lower. Changes on the US yield curve vary between +2.9 bps (30-yr) and +4.2 bps (5-yr). On intra-EMU bond markets, 10-yr yield spreads versus German range between +1 bp and -1 bp with Spain (-3 bps) and Greece (-7 bps) outperforming.

Currencies

Dollar succeeds modest gains, but no USD-euphoria yet

Markets reacted differently to the approval of the US tax bill in the US Senate. US and European equities jumped higher. ST US yields also rose a few basis points. The dollar extended cautious gains. USD/JPY trades in the 113 area. However, the gain of the dollar against the euro is far from impressive with EUR/USD trading at 1.1840.

Asian equity markets traded mixed this after the approval of the Tax bill in the US Senate. US yields were modestly higher and so was the dollar. USD/JPY profited most and rebounded to the high 112 area. Japanese equities underperformed despite the rise of USD/JPY. EUR/USD traded in the 1.1865 area, within the range that reigned for most of last week. Ongoing noise on the Russia investigation probably prevented a bigger USD gain on the Senate vote.

There were few important eco data in Europe. European equities reacted more positive than Japanese equities. Of course European markets had still some catching up to do after Friday's fall. ST interest rate differentials between the US and Germany widened further (2-y at 2.5% +). Changes at the long end of the curve were modest. However, during the European morning session, the dollar hardly profited from the rising interest rate support or the positive risk sentiment. USD/JPY finally tried a new upside test early in US dealings and is testing the 113 big figure. EUR/USD trades currently in the 1.1840 area. So, the dollar is gaining slightly further ground, but there is no euphoria after the approval of the Senate tax bill. Especially the gains of the dollar against the euro remain mediocre and EUR/USD holds it the established sideways consolidation pattern.

Sterling profits on Bxexit breakthrough

The focus for sterling trading was on the next steps in the Brexit process as UK PM May met with EU Commission president Juncker. This morning, it was still unclear whether the meetings in Brussels would yield enough progress that the EU deems needed to move to the next stage of the negotiations. EUR/GBP initially hovered in the 0.8825 area. However, around noon there were press headlines from several sources that EU's Barnier had indicated that negotiations on the separation issues were headed for a breakthrough. Sterling jumped higher across the board as the Brexit negotiations are likely to move to the content of the new relationship between the UK and the EU post Brexit. EUR/GBP trades currently in the 0.8765 area and nears the 0.8746/33 support area. The rally of cable ran into resistance in the 1.3540 area as the dollar was also better bid across the board.

USD/JPY - 112.96

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 112.94

Kijun-Sen level                  : 112.25

Ichimoku cloud top             : 112.38

Ichimoku cloud bottom      : 112.11

Original strategy  :

Buy at 112.30, Target: 113.30, Stop: 111.95

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 112.30, Target: 113.30, Stop: 111.95

Position :  -

Target :  -

Stop : -

Although the greenback retreated sharply on Friday to as low as 111.41, renewed buying interest emerged and the pair has rallied from there on dollar’s broad-based strength, reviving our bullishness for the rise from 110.84 low to extend gain to previous support at 113.09, however, near term overbought condition should limit upside to resistance at 113.33 and reckon 113.60-70 would hold on first testing.

In view of this, we are still looking to buy dollar on pullback as the Kijun-Sen (now at 112.24) should limit downside. Below 111.80 would defer and risk weakness to 111.60 but only break of said support at 111.37-41 would abort and signal top is formed instead. 

The OPEC's November decision on the extension of the agreement, which establishes strict borders and limits for the oil extracting countries, was quite logical. The agreement has been extended at least until the end of 2018. So, the main question for the nearest future is how the OPEC is going to terminate the agreement if the organization has no plan B.

On the first Monday of December, oil prices are trying to start a correction. Brent costs $63.41 (-0.5%); WTI lost 0.7% and right now is $57.98. Less than 4 weeks left until the end of the year, that's why there are doubts that oil prices will update the highs reached this autumn.

Right now, political scandals that seem to have become a back-burner question are a key concern once again. Nobody forgot about them. We're talking about the "Russian trail" during the 2016 electoral campaign, when Donald Trump defeated the other candidate and won the elections.

It became known that the former US National Security Advisor, Michael Flynn, is ready to provide evidence of Trump's knowing about the contacts with Russian representatives. As a matter of fact, this is a testimony against the US President and it will put the pressure on all assets, which are risky one way or another. The Oil is one of them.

Due to this, the latest statistics on the Oil Rigs changes from Baker Hughes published last Friday didn't attract much attention. However, it might be considered as "bearish", because the Rig Count increased by 6 and now equals 929 units. The statistics over the last couple of months is looking rather mixed. To a certain degree, this is the reason why investors barely react to these numbers.

From the technical point of view, Brent is moving inside the uptrend; however, the tendency is being corrected to the downside for about a month. For form of the mid-term correctional trend looks like the Triangle pattern, which may be a short pause before further growth.

In the short-term, Brent may break the downside border of the triangle channel and the support level of the main trend. After that, the instrument is expected to rebound and start forming a new rising impulse with the main target at the current high at 64.75. If the price breaks this level, it may continue growing towards the upside border of the main trend channel close to 69.75.

Buying the dip on Trump-Russia news proved to be the right trade again Friday as a reporting error led to an oversized market reaction. The US dollar bounces strongly to kick off the new week, with the exception of against the GBP and CAD, which are holding firm. CFTC positioning data showed yen shorts easing up and GBP positions re-entering net long territory. The EURUSD short Premium trade was closed for 60-90 pip gain (depending on point of entry), leaving one EURUSD trade open.

A half-dozen times this year, markets have been swept away by bombshells about the Trump government and Russian connections. On Friday, former national security advisor Mike Flynn pled guilty to lying to the FBI and promised to cooperate. That Flynn headline put a chill in markets but when ABC reported he would testify he was instructed to contact Russian officials before the election, then a full-scale flight to quality hit. USD/JPY dropped 130 pips to 111.40 and the S&P 500 fell more than 40 points. There were holes in the report from the start and markets slowly recovered. But it wasn't until the weekend that the news was retracted. The new report was that he was instructed to lobby Russian officials after the election and before the inauguration. That was still inappropriate and likely illegal but it's nowhere near stealing an election.

As a result, the US dollar opened stronger with USD/JPY rebounding 50 pips to 112.70, which is where it was before the Flynn news.

At the same time, the Senate voted on the tax bill on Saturday and that's likely to boost US stocks on Monday. At the same time, Flynn's cooperation will mean some fresh blame is laid and that the Russia story continues to roil markets – or at least provides a dip to buy.

CFTC Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

• EUR +90K vs +95K prior
• GBP +5K vs -1K prior
• JPY -110K vs -123K prior
• CHF -30K vs -30K prior
• CAD +46K vs +45K prior
• AUD +39K vs +40K prior

The shifts this week were relatively small but the crowded yen short remains a highly-vulnerable trade. Canadian dollar longs will be feeling better after the ultra-strong jobs report on Friday.

The British pound has moved sharply higher against the U.S dollar, hitting 1.3523, following a better than expected UK Construction PMI reading and encouraging reports coming from UK and EU negotiators. The GBPUSD pair currently trades close to the price-highs of the day, after finding interim support just below the 1.3450 technical level. British PM Theresa May has released a statement saying 'good progress' is being made on Brexit negotiations, encouraging pound buying. GBPUSD traders will now be focused on her meeting with EU President Donald Tusk, at 15.00GMT this afternoon.

The GBPUSD pair is strongly bullish while trading above the 1.3520 level. Further upside towards 1.3549 and 1.3610 appears likely.

An intraday decline back below the 1.3450 level, would like signal a deeper price correction towards the 1.3400 and 1.3360 support regions.

The euro has opened the trading week gap down against the U.S dollar after the Democrat party passed the tax reform plan through Congress late on Friday. The U.S dollar has reacted by moving sharply higher, as investors price-in lower U.S tax rates and U.S higher interest rates in 2018. The EURUSD pair currently trades around the 1.1855 level, after spending the European trading session on the backfoot, finding support at the 1.1836 level. Traders now await the release of U.S Factory Orders data, and shorter maturity bond auctions coming out of the United States.

The EURUSD pair remains intraday bearish while trading below the 1.1875 level. Further downside towards 1.1845 and 1.1790 appears possible.

Should EURUSD price-action move above the 1.1875 technical level, further buying towards 1.1900 and 1.1930 seems likely.

The CAC has started the week with strong gains. In the Monday session, the CAC is at 5384.00, up 1.30% since the Friday close. On the release front, Eurozone Sentix Investor Confidence dropped to 31.1, short of the estimate of 32.3 points. Eurozone PPI gained 0.4%, matching the forecast. On Tuesday, the eurozone releases Service PMI and retail sales.

President Trump has been pressing for a major legislative win before the end of the year, and it looks like he'll get tax reform all wrapped up in time for Christmas. The Republicans have pushed through tax legislation through the House and the Senate at breakneck speed. After a false start on Friday, the US Senate passed a tax reform bill on the weekend. The 51-49 was razor thin, vote was a squeaker, with 51 Republicans voting yes, against 48 Democrats and 1 Republican. Republican lawmakers hope to have Trump sign a bill before the end of the year. The Senate and House must now reconcile their two bills, and the new uniform bill will then have be passed in both houses. Investors are pleased with the bill, and the US dollar has responded to the vote with broad gains.

Are the bumpy Brexit talks back on track? Prime Minister May and European Commission President Jean-Claude Juckner are meeting in Brussels, hoping to move closer to wrapping up the first phase of the talks. Britain wants to move to talk trade with the Europeans, and has given in on EU demands of a divorce bill around EUR 50 billion. Still, two thorny non-trade issues have yet to be resolved. One is the border between the UK (Northern Ireland) and Ireland, which is a member of the EU. The UK will clearly not remain in a customs union with the EU, but Ireland is insistent that there not be a hard border. 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.

USD/CAD - 1.2673

Trend:  Near term up

 
Original strategy       :

Bought at 1.2820, stopped at 1.2760

Position: - Short at 1.2820

Target:  -

Stop: - 1.2760

 
New strategy             :

Sell at 1.2800, Target: 1.2600, Stop: 1.2860

Position: -

Target:  -

Stop:-

The greenback faltered below resistance at 1.2917 and has tumbled, suggesting further consolidation below said resistance would be seen and the breach of previous support at 1.2665 suggests bearishness remains for weakness to 1.2600-10, however, loss of near term downward momentum should prevent sharp fall below 1.2550 and price should stay well above 1.2500-10.

In view of this, we are looking to turn short on recovery as 1.2790-00 should limit upside and bring another decline later. Above 1.2850-60 would risk test of 1.2890-00 but only break of said resistance at 1.2917 would revive bullishness and extend recent upmove to 1.2975-80 (61.8% Fibonacci retracement of 1.3547-1.2061), then towards psychological resistance at 1.3000.

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

Here are the latest developments in global markets:

Forex: Sterling rallied above 1.35 against the dollar and touched a fresh one-month high versus the euro after EU parliamentary members of the Brexit group said there was a "very good chance" of a deal and that May's meeting with the President of the European Commission could resolve main issues. The euro was on track to post a second red daily candle on the back of a stronger dollar despite the Eurozone's Sentix investors confidence index in December and PPI readings in October remaining robust. Dollar/yen broke above the113.00 key-level (+0.70%).

Stocks: European stocks extended their gains, with the pan-European STOXX 600 surging by 1.0%. The German DAX 30 gained 1.35%, while the Spanish IBEX 35 jumped by 1.24% with all component sectors being in the green. The British FTSE 100 was up by 0.50%. Futures markets pointed to a higher open on Wall Street.

Commodities: Oil prices extended losses despite the Saudi Arabian energy minister saying on Monday that the OPEC will not alter supply curbs in the second half of 2018, refuting concerns of an early exit from the deal. However, he added that oil producers might discuss when to raise output in June. WTI crude declined by 1.11% on the day to $57.71 per barrel and Brent fell by 0.90% to $63.16. Gold was 0.56% down at $1,272.70 per ounce as demand for riskier assets increased.

Day ahead: US factory orders coming up; Brexit updates attract attention

The calendar will be light of data for the remainder of the day, with US factory orders being the only major pending figures (1500GMT). The numbers published by the US Census Bureau are expected to show a contraction of 0.4% m/m in new manufacturing orders in October after a growth of 1.4% in September. The US currency would be eyed ahead of the release.

Besides that, any political news out of the country could have a dominant effect on the dollar. On the one hand, investors will be keen to hear any updates on the tax front, which promises massive tax cuts to businesses and provides some relief to individuals, after Senators approved their tax version of the relevant bill on Saturday. Note that the House of Representatives and the Senate will reconcile their tax plans this week. If they manage to reach an agreement, then the promised tax cuts can then be signed into law by US President Donald Trump.

On the other hand, any developments in the investigation of the Russian meddling into the 2016 US presidential campaign could shake the dollar. The latest developments revealed that the former security council, Michael Flynn, made fake statements regarding the conversations he had with the Russian ambassador.

In other areas of interest, markets will keep a close eye on May's meeting with the President of the European Council, Jean Claude Junker, in Brussels. May who will probably be accompanied by the UK Brexit secretary David Davis and his EU counterpart, Michel Barnier, is expected to provide progress on three key elements (Irish border, the withdrawal bill, rights of the EU citizens) demanded by the EU for negotiations to move to the next stage of future relations. This is May's last attempt to break the deadlock ahead of the EU summit on December 14.