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Daily Pivots: (S1) 1.3423; (P) 1.3486; (R1) 1.3529; More....

Intraday bias is GBP/USD remains neutral for consolidation below 1.3549 temporary top. Downside of retreat should be contained by 1.3337 resistance turned support to bring another rise. Above 1.3549 will target 1.3651 and above. However, decisive break of 1.3337 will argue that rise from 1.3038 has completed and turn bias back to the downside for this support.

In the bigger picture, while the medium term rebound from 1.1946 low is strong, it's still 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) 0.9701; (P) 0.9786; (R1) 0.9836; More....

Intraday bias in USD/CHF stays neutral for the moment. On the upside, break of 0.9881 resistance will indicate completion of the pull back from 1.0037. Intraday bias will then be turned back to the upside for retesting 1.0037. Below 0.9734 will extend the pull back. But we'll look for bottoming again below 61.8% retracement of 0.9420 to 1.0037 at 0.9656.

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) 111.40; (P) 112.14; (R1) 112.89; More...

Intraday bias in USD/JPY remains on the upside. Rebound from from 110.83 should target a test on 114.73 key resistance next. Decisive break there will extend the rally from 107.31 to retest 118.65 high. In case of another fall, we'll look for bottoming again below 61.8% retracement of 107.31 to 114.73 at 110.14.

In the bigger picture, we're holding on to the view that correction from 118.65 is completed a 107.31. And medium term rise from 98.97 (2016 low) is resuming. Sustained break of 114.73 should affirm our view and send USD/JPY through 118.65. However, break of 107.31 will dampen this will and extend the medium term fall back to 98.97 low.

The Canadian dollar has steadied on Monday, after surging in the Friday session. In North American trade, USD/CAD is trading at 1.2684, down 0.02% on the day. On the release front, there are no Canadian events on the schedule. The US will release Factory Orders, with an estimate of -0.3%. On Tuesday, Canada releases Trade Balance and the ISM Non-Manufacturing PMI.

After some stumbling on Friday, the US Senate passed a tax reform bill on the weekend. The vote was a squeaker, with 51 Republicans voting yes, against 48 Democrats and 1 Republican. The Senate vote is a big win for President Trump, who wants to sign a tax bill before Christmas. 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.

There was unexpected positive news on Friday, as Canadian employment change soared to 79.5 thousand, crushing the estimate of 10.2 thousand. This marked 12 straight months of job gains and helped drive the unemployment rate down to 5.9%. There was more good news, as the September GDP rebounded with a gain of 0.2%, edging above the estimate of 0.1%. The impressive numbers boosted the Canadian dollar by some 1.6% on Friday, its strongest 1-day gain in 2017. Will the Bank of Canada reconsider its monetary policy? A rate hike remains unlikely before April 2018, although red-hot numbers in the fourth quarter could mean that the BoC will adjust and raise rates more quickly.

Daily Pivots: (S1) 150.23; (P) 151.35; (R1) 152.16; More...

GBP/JPY surges to as high as 152.93 so far today. Breach of 152.82 resistance argues that medium term rally is resuming. Intraday bias is back on the upside. Sustained trading above 152.93 will pave the way to 61.8% projection of 139.29 to 152.82 from 146.96 at 155.32. On the downside, though, break of 150.57 minor support will dampen the bullish view and turn bias neutral first.

In the bigger picture, medium term rebound from 122.36 is still expected to resume after consolidation from 152.82 completes. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. However, break of 46.96 support will indicate rejection from 150.43 key fibonacci level. And the three wave corrective structure of rebound from 122.36 will argue that larger down trend is resuming for a new low below 122.26.

Sterling and Dollar remain the two strongest currencies today. The Pound surges further as boosted by comments from European Parliament's chief Brexit negotiator Guy Verhofstadt that there is a 50/50 chance of making "sufficient progress" today. Dollar, on the other hand, is firmly supported by optimism on getting the tax bill done before end of the year. Swiss Franc and Yen are trading broadly lower as risk appetites return. At the time of writing, DAX is trading up 1.4%, CAC up 1.0%. US futures point to sharply higher over as DOW will likely extend the record run.

Republicans dismissed Trump's idea of 22% corporate tax

With Senate and House passed their respective tax bill, work will now move on to reconciling the plans. Some Republicans like Senator David Perdue of Georgia was optimistic that the differences could be hammered out quickly and the bill could be on President Donald Trump's desk within 10 days. Talking about Trump, he said on Saturday that the final corporate tax rate "could be 22 (percent)", which is estimated to raise USD 200b over 10 years, comparing to 20% rate. But the idea is generally dismissed by other Republicans as they're committed to 20% figure.

Eurozone Sentix dipped on 2018

Eurozone Sentix investor confidence dropped to 31.1 in December, down from 34.0 and missed expectation of 32.7. Sentix noted that "investors are asking whether 2018 can be even better, and are hedging their bets on the future by placing their expectations below those of September 2017." Nonetheless, it played down the fall as there's nothing for concern when it just hit a 10 year high in November. Also from Eurozone, PPI rose 0.4% mom, 2.5% yoy in October.

UK PM May to seek progress on Brexit negotiation

UK Prime Minister Theresa May will have lunch with European Commission President Jean-Claude Juncker in Brussels today. Juncker has set today as the deadline for May to revise her offer on Brexit. But UK government played down today's significance and pointed to the EU summit on December 14/15 as the crucial one. In a statement, UK said that "with plenty of discussions still to go, Monday will be an important staging post on the road to the crucial December council." European Parliament's Brexit negotiator Guy Verhofstadt said that agreements on the Irish border, the UK "divorce bill" and citizens rights were "possible". And there is 50/50 chance of giving the green-light for trade talks today.

UK PMI construction rose to 53.1 in November, up from 50.8 and beat expectation of 51.0. Markit said that "UK construction companies experienced a solid yet uneven improvement in business conditions during November." It pointed out that "the latest survey revealed sustained reductions in commercial building and civil engineering, with the latter now experiencing its longest period of decline since the first half of 2013".

Elsewhere

Japan consumer confidence rose to 44.9 in November, up from 44.5 and met expectation. Monetary base rose 13.2% yoy in November, slowed from 14.5% yoy. Australia TD securities inflation rose 0.2% mom in November.

BIS warned of global risk taking

The Bank for International Settlements warned in its quarterly financial review that "the vulnerabilities that have built around the globe during the long period of unusually low interest rates have not gone away." And, "high debt levels, in both domestic and foreign currency, are still there. And so are frothy valuations." Adding to that "the longer the risk-taking continues, the higher the underlying balance sheet exposures may become."

The reported noted that the situation was similar to pre-2008 global financial crisis era. While global central banks are generally on tightening path, BIS head Claudio Borio was uncertain if the tightening is effective. He pointed out that "even as the Fed has proceeded with its tightening, overall financial conditions have eased. If financial conditions are the main transmission channel for tighter policy, has policy, in effect, been tightened at all?"

RBA to stand pat

RBA rate decision is a key focus in the upcoming Asian session. The central bank is widely expected to keep its cash rate unchanged at record low of 1.50% on Tuesday. Considering weak wage growth and lack of inflationary pressure, there is little push for a hike at the moment. On the other hand, there were even talks that RBA is in "cut" territory due to sluggish house price growth. According to CoreLogic data back in November, annual price growth mere stood at 5.2%, half of the peak of 10.4% back in May 2017. More importantly, the six month price growth stood at 0.7%. And in the past 30 years, 7 out of 9 times RBA cut interest rates as 6-month house price growth weakened to zero or turned negative. But of course, considering RBA's high alertness on household debts, the central bank is also nowhere near a cut.

GBP/JPY Mid-Day Outlook

Daily Pivots: (S1) 150.23; (P) 151.35; (R1) 152.16; More...

GBP/JPY surges to as high as 152.93 so far today. Breach of 152.82 resistance argues that medium term rally is resuming. Intraday bias is back on the upside. Sustained trading above 152.93 will pave the way to 61.8% projection of 139.29 to 152.82 from 146.96 at 155.32. On the downside, though, break of 150.57 minor support will dampen the bullish view and turn bias neutral first.

In the bigger picture, medium term rebound from 122.36 is still expected to resume after consolidation from 152.82 completes. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. However, break of 46.96 support will indicate rejection from 150.43 key fibonacci level. And the three wave corrective structure of rebound from 122.36 will argue that larger down trend is resuming for a new low below 122.26.

Economic Indicators Update

GBPUSD: The pair now faces risk of a trend resumption after reversing its Friday losses on during Monday trading session. Support lies at the 1.3500 level where a break will turn attention to the 1.3450 level. Further down, support lies at the 1.3400 level. Below here will set the stage for more weakness towards the 1.3350 level. Conversely, resistance stands at the 1.3550 levels with a turn above here allowing more strength to build up towards the 1.3600 level. Further out, resistance resides at the 1.3650 level followed by the 1.3700 level. On the whole, GBPUSD continues to face upside pressure short term.

Copper holds positive tone at the beginning of the week as manufacturing demand from China, metal's top consumer, offset immediate negative impact on stronger dollar.

However, today's fresh attempts higher failed again to break above cloud top ($3.1162) which also capped Friday's rally, keeping the price within daily cloud ($3.0755/$3.1162). Signals from daily studies are mixed, but bullish momentum is building and suggesting fresh probes through cloud top, for extension of recovery leg from $3.0315 (29 Nov low). Break and close above daily cloud top as well as $3.1199 (Fibo 61.8% of $3.1745/$3.0315 downleg) would provide strong bearish signal for recovery continuation.

The downside is expected to remain vulnerable while the price stays capped by cloud top, with stronger downside pressure expected towards the end of the year, as trader will be taking profits from broader uptrend.

Res: 3.1106, 3.1162, 3.1245, 3.1408
Sup: 3.0925, 3.0784, 3.0755, 3.0505

Crude oil has finished its consolidation and is now ready to challenge the 60-dollar level. Expected to show continued increase. Support is given at a distance at 54.81 (14/11/2017 low)

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. For the time being the pair lies in an upside momentum. Strong support lies at 35.24 (05/04/2016) while resistance can now be found at 55.24 (03/01/2017 high)

Silver is heading lower. Hourly support can be found at 16.13 (07/08/2017 low). Hourly resistance is given at 17.46 (13/10/2017 high). Expected to keep pushing lower.

In the long-term, the trend is rater negative. Further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).