Sample Category Title

Cable is slightly lower on Friday after Thursday's close in red, but holding above daily cloud top which offers strong support at 1.3273.

Bullish sentiment is expected to stay in play while consolidation holds above cloud top, as bullish techs on daily chart remain supportive.

However, recent rallies still lack close above key barrier at 1.3337 (13 Oct high) to confirm bullish continuation.

Cloud top lies at 1.3273 and marks solid support, together with 55SMA (1.3257) which should ideally contain and keep immediate bulls in play.

Plethora of supports, provided by MA's and daily cloud base (between 1.3190 and 1.3230) is expected keep the downside protected in case of deeper pullback. Conversely, break and close below daily cloud would put bulls on hold for stronger correction.

Res: 1.3313, 1.3337, 1.3401, 1.3415
Sup: 1.3273, 1.3226, 1.3214, 1.3190

The Euro traded within narrow range in Asia on Friday, holding in the middle of daily cloud. Easing concerns about political situation in Germany could be supportive for the single currency, along with bullish tech. Strong rally in past two days eyes key barriers at 1.1877/86 (daily cloud top/Fibo 61.8% of 1.2092/1.1553 descend) with sustained break here needed to generate fresh bullish signal. The pair is on track for the third consecutive bullish weekly close, which supports scenario of bullish continuation. Base of daily cloud offers solid support at 1.1825, with extended dips to be contained by rising 10SMA (1.1770) which is forming bull cross with 55SMA. Only close below the latter would sideline bullish scenario and signal further easing.

Res: 1.1859, 1.1877, 1.1886, 1.1936
Sup: 1.1836, 1.1825, 1.1813, 1.1770

XAUUSD (1291.57): Gold prices have managed to maintain their gains above the 1285 resistance level that was breached earlier. However, price can be seen struggling to push higher. Current price action in gold shows the price testing last week's highs near the 1290 area. Unless there is a strong breakout above this previous high, gold prices might remain flat or even biased downwards. Support at 1285 is seen as the immediate level to the downside, while a breach of 1290 area will signal a move towards the next main resistance at 1300 region

USDJPY (111.48): The strong declines in the Japanese yen stalled after price action closed with a doji candlestick pattern on the daily chart. This indicates a near term correction in price. However, there is equally the risk of price extending the declines on a close below the doji's low. In the short term, we expect to see a higher low being formed, which will confirm the upside correction towards 112.00 level. This previously served as support but, following the breakdown below this level, we now expect to see 112.00 turn to resistance. To the downside, the lower support at 111.00 remains in sight. The bias changes only on a strong close above 112.00 level, in which case USDJPY can be seen targeting 113.00.

EURUSD (1.1855): The euro currency was seen extending the gains amid holiday thin trading yesterday. Price action remains biased upwards as the EURUSD is approaching a 2-month high. However, the recovery above the resistance level of 1.1843 - 1.1822 signals some weakness. Therefore, there is a strong risk of EURUSD pushing lower with the resistance level coming back into play. Alternately, if EURUSD manages to continue trading above this resistance level, then further upwards movement can be expected. There is some divergence being built on the intraday charts which could suggest a near term decline in prices.

The euro extended it's gains yesterday as economic data was upbeat, including the regional data from Germany. The U.S. and Japan markets were closed but the currency managed to push higher amid lower trading volumes. The broad flash PMI numbers showed a positive increase adding to the gains.

In the UK, the second revision to the GDP showed no changes as the UK's economy was seen rising 0.4% in the third quarter. Data from Canada saw retail sales rising below forecasts of just 0.3% but it's better in comparison to the previous month's decline of 0.4%. Headline retail sales increased 0.1%, offsetting the 0.1% decline from the month before.

Looking ahead, the economic calendar today is quiet. Flash manufacturing PMI numbers from Markit will show how the sector performed for the month of November.

Sunrise Market Commentary

• Rates: Range bound trading going into the weekend?
  Traded volumes are expected to remain low today with US trading desks thinly staffed on “Black Friday”. A strong German IFO and progress in German formation talks (SPD) could be slightly negative for the Bund, but we expect today's moves to occur within very tight ranges. Correlations between bond markets and equity or oil markets were very loose of late.
• Currencies: EUR/USD holds within reach of 1.1880 resistance
  The US currency remained in the defensive yesterday after soft Fed Minutes on Wednesday. The USD decline slows in Asia this morning, but EUR/USD stays resilient and holds within reach of 1.1861/80 resistance. Today's eco calendar is thin and US trading desks might be thinly staffed. More technically inspired trading might be on the cards

The Sunrise Headlines

• US stock markets were closed yesterday for Thanksgiving Holiday. Traded volumes are expected to remain low today at “Black Friday”. Asian stock markets trade mixed overnight. Yesterday's Chinese sell-off doesn't persist.
• Ireland is facing a political crisis with opposition parties calling for the head of the deputy PM over an escalating policing scandal with fears growing for an early election. Taoiseach Varadkar declared his support for his number two.
• British households are their least confident since immediately after last year's Brexit vote, partly because of this month's interest rate hike and further signs of a slowdown in the housing market, a survey showed.
• UK officials tried to accelerate Brexit negotiations by suggesting that rather than wielding its veto next month, Ireland could hold fire and block a final accord if it wished, three people familiar with the talks said.
• China said it will further cut import taxes for a wide range of consumer goods including several categories of baby formula, in a bid to boost consumption.
• Japanese manufacturing activity expanded at the fastest pace in more than three years in November as output, new orders, and new export orders all accelerated in a sign the economy will continue its growth streak.
• Today's eco calendar is very thin with only German Ifo business sentiment and US PMI's. ECB Nouy is scheduled to speak

Currencies: EUR/USD Holds Within Reach Of 1.1880 Resistance

Will EUR/USD 1.1880 resistance hold?

Global/FX trading shifted into a lower gear yesterday as US markets were closed in observance of Thanksgiving. The dollar remained in the defensive after Wednesday's soft Fed minutes. The euro was slightly supported by strong EMU PMI's. EUR/USD came close to 1.1861/80 resistance, but a real test didn't occur. The pair closed the session at 1.1851. USD/JPY hovered in the lower half of the 111 big figure.

Overnight, Asian markets show again a diffuse picture. Most regional indices trade near opening levels. Mainland China slightly underperforms, but losses are smaller than yesterday and indices rebound toward the end of the session. Investors ponder the potential impact of selective deleveraging actions by Chinese officials. The dollar tries to regain slightly ground after a two-day setback. USD/JPY trades in the 111.50 area, but the US currency fails to make any progress against the euro. EUR/USD trades in the 1.1850 area.

The US eco calendar contains the Markit PMI business confidence report, but it is no market mover. US trading desks will still be thinly staffed today (Black Friday). In the euro area, the German IFO business confidence index is expected to have stabilized at a multi-decade high. After the very stronger EMU PMI's, released yesterday, we are inclined to expect an upward surprise, even as the IFO performed relatively better than the PMI of late. A strong German IFO release is in theory positive for the euro, but the good news should already be discounted after yesterday's PMI's. Markets might also keep an eye at German politics. Global sentiment is a wildcard. Of late, global uncertainty, via lower core yields, often weighted more on the dollar than on the euro. For now, US equity futures show no signs of stress

Dollar sentiment remains fragile after Wednesday's soft Fed-minutes. We see no trigger from further USD losses today. However, the jury is still out. We look out whether US yields and the dollar find a bottom after the recent setback. Over the previous days, we kept the working hypothesis that the EUR/USD 1.1861/80 area would be difficult to break and that the high interest rate differential between the US and Europe would at least help to prevent further USD losses. This hypothesis is not yet rejected, but remains under pressure

From a technical point of view, EUR/USD set a post-ECB low two weeks ago but regained since intermediate resistance at 1.1690/1.1837. The 1.1880 MT correction top was left intact. A break above the latter would suggest a full retracement to the 1.2092 top. We don't preposition for such a scenario, but pressure is rising. On the downside, the 1.1554 reaction low remains the first important reference, but it is far away. We look for confirmation that 1.1861/80 resistance will be able to do its job, before adding EUR/USD short exposure. Partial stop-loss to defend a break higher might be considered. The USD/JPY momentum was positive in October, but deteriorated this month. Last week's drop below the 112.96 support reinforces the downside pressure. On Wednesday, USD/JPY dropped below the 111.65 neckline. If confirmed, it would make the picture outright USD negative.

EUR/USD rebound slows, but 1.1880 range top stays within reach

EUR/GBP

EUR/GBP trending higher within established range

Sterling traded with a slightly negative bias yesterday. UK Q3 GDP growth was confirmed at 0.4% Q/Q and 1.5% Y/Y. CBI November retail data printed much stronger than expected. The data hardly impacted sterling trading as the focus remained on the Brexit process. UK and EU negotiators are said to prepare a document on the progress in the run-up the December EU summit, but there was no concrete news. EUR/GBP finished the session at 0.8905 (from 0.8871). This moves was at least partially the result of the EUR/USD rally. Cable closed at 1.3309 (from 1.3325).

Sterling remains in the defensive overnight. A YouGov survey indicated that UK consumer confidence reached the lowest level since the Brexit referendum. An Irish government crisis might complicate the Brexit process. Progress on a solution for the Irish border is a condition to move to the next stage of the Brexit negotiations and Ireland has a de facto vote on this issue. There are only second tier UK eco data today. Markets will continue to look for headlines from Brussels. UK PM May joins a EU summit with six East European countries, but Brexit will be discussed in the sidelines of this event. Of late sterling was in some kind of wait-and-see modus. There are signs of progress, but it remains unsure whether the EU Summit mid-December will be able to give a green light for the next step in the negotiations. For markets/sterling, the outcome of this process is a binary risk. So one can expect more erratic trading as long as uncertainty persists. A further rise of the euro might also slightly support EUR/GBP.

MT view/technical picture. A BoE driven sterling rebound ran into resistance early this month. Sterling declined again as markets anticipated that the rate cycle would be very gradual and limited. Brexit headlines cause day-to-day gyrations. EUR/GBP trades in a 0.8733/0.9033 consolidation range. Last week's EUR/GBP rebound ran into resistance just ahead of the 0.9033 range top. We changed our ST bias on EUR/GBP from positive to neutral last week. The 0.9015/33 area might be tough to break short-term.

EUR/GBP: topside test rejected, but momentum of sterling rebound slows

Download entire Sunrise Market Commentary

Data released on Thursday from Markit Economics showed eurozone’s thriving economy powered ahead in November, with new manufacturing orders reaching 17-year highs and a resilient labour market that has shown steady growth. The data suggests that eurozone businesses experienced their best month in almost 7 years, with the main indicators of demand, output, employment and inflation at multi-year highs. The data signals that Q4 GDP growth is likely to surpass expectations, with an annualized growth that could reach 3%. Services and Manufacturing businesses reported better-than-expected activity in November, with a strong performance from Germany helping to push the manufacturing sub-index to its second-highest level on record. As a result, EUR has seen demand, helping push it to near-monthly highs.

More positive data came out of the UK as the Office for National Statistics (ONS) released GDP (for July to September) growing by 0.4%, a slight improvement on the 0.3% growth in Q1 & Q2. Additionally, consumer spending showed resiliency, bouncing back to 0.6% from 0.2% in Q2, regardless of the persistent squeeze on individual finances from higher inflation and poor wage growth. GBP has remained firm against USD throughout November and traded near to 2-month highs on Thursday.

EURUSD is little changed overnight, currently trading around 1.1842.

USDJPY is 0.25% higher in early Friday trading at around 111.48, after hitting a 2-month low on Thursday.

GBPUSD is 0.1% lower in early session trading at around 1.3293.

Gold is unchanged overnight, trading at around $1,290.50.

WTI is currently trading at around $58.45.

Major data releases for today:

At 09:00 GMT, the CESifo Group will release German IFO – Business Climate, Current Assessment & Expectations for November. As an indicator for current business conditions in Germany, the markets will be keen to see if the political instability is affecting sentiment. Business Climate is forecast at 116.5 (prev. 116.7), Current Assessment 125.0 (prev. 124.8) and Expectations 108.9 (prev. 109.1). If the actual data is worse than expected we are likely to see EUR volatility.

At 12:30 GMT, European Central Bank Vice President Vitor Constancio is scheduled to speak.

At 14:45 GMT, Markit Economics will release US Manufacturing PMI, Composite PMI and Services PMI for November. Manufacturing PMI is expected to improve to 54.8 (from 54.6) and Services to improve to 55.5 (from 55.3). The US economy has shown robustness of late and the markets will be expecting positive PMI data. If the data misses expectations USD is likely to experience selling pressure.

At 18:15 GMT, ECB Executive Board Member Benoit Coeure is scheduled to speak.

USDCAD is consolidating its gains made after a bounce to the October 27 high of 1.2916. Momentum indicators are relatively neutral.

The rally off the 6-month low of 1.2061 from September to October has lost steam after finding strong resistance at the 50% Fibonacci retracement level (1.2922) of the downleg from medium-term downtrend from 1.3793 to 1.2061.

The market is now at risk of reversing the recent corrective move. Prices are currently testing the 38.2% Fibonacci retracement level and there is a support zone between this level at 1.2715 and 1.2667. A breakdown of this support area would push USDCAD another leg lower to another key support zone between 1.2500 and 1.2432. An extension lower would open the way for a re-test of the 1.2061 low and from here there would be a resumption of the medium-term downtrend.

To the upside, there is a strong resistance zone between the 50% Fibonacci retracement level (1.2922) and the key psychological 1.3000 level. The 200-day moving average is also in this zone, making it a challenge for the market to break above.

As long as the market remains below its 200-day MA, the overall bearish outlook remains in play. A rise above the 50% Fibonacci is needed to weaken downside pressure.

Key Highlights

• The US Dollar declined heavily this month and moved below 112.00 against the Japanese Yen.
• There are a few bearish trend lines with resistances as 111.65, 112.10 and 112.35 on the 4-hours chart of USD/JPY.
• Japan's Nikkei Manufacturing PMI in Nov 2017 (Preliminary) posted a rise from 52.8 to 53.8.
• The US Manufacturing PMI for Nov 2017 (Preliminary) will be released today, which is forecasted to increase from 54.6 to 54.8.

USDJPY Technical Analysis

The US Dollar started a major downtrend from the 114.70 swing high against the Japanese Yen. The USD/JPY pair is now below 112.00 and struggling to recover or correct higher.

During the recent slide, the pair broke a few important support levels such as 112.80 and 112.00. It traded as low as 111.06 recently and is currently trading in a range.

An initial resistance is around the 23.6% Fib retracement level of the last decline from the 112.70 high to 111.06 low. To the topside, there are a few bearish trend lines with resistances as 111.65, 112.10 and 112.35 on the 4-hours chart.

Therefore, any major correction from the current levels is likely to face sellers near 112.00 and 112.35 in the near term.

Japan's Nikkei Manufacturing PMI

Today in Japan, the Preliminary reading of the Nikkei Manufacturing PMI for Nov 2017 was released. The market was looking for a decline in the PMI from 52.8 to 52.6.

However, the actual result was better than the forecast, as there was a rise in the PMI to 53.8 in Nov 2017. Moreover, the Manufacturing Output Index posted the strongest expansion reading for 45 months and came in at 54.2.

Commenting on the report, an Economist at IHS Markit, Joe Hayes, stated:

Following the softer Q3 GDP figure last week, November flash PMI data signalled the strongest improvement in the manufacturing sector for 44 month. New orders increased strongly, underpinned by business from abroad amid recent yen weakness.

The USD/JPY pair remains in a downtrend and a correction towards 112.00 will most likely face sellers in the near term.

Economic Releases to Watch Today

German IFO Business Climate Index for Nov 2017 – Forecast 116.5, versus 116.7 previous.

US Manufacturing PMI for Nov 2017 (Preliminary) – Forecast 54.8, versus 54.6 previous.

US Services PMI for Nov 2017 (Preliminary) – Forecast 55.5, versus 55.3 previous.