The U.S. dollar was seen trading mixed as the dollar weakened against the yen and the price action against the euro was subdued. On the economic front, data was also limited. The Fed Chair, Janet Yellen spoke yesterday where she said that the central bank was reasonably close towards achieving its dual mandate. Yellen said that interest rates in the U.S. will start to rise gradually. However, her comments did not move the markets much.

Looking ahead, the U.S. durable goods orders data will be coming out today. Economists polled expect to see core durable goods orders rise 0.4% on the month, slower than 0.7% increase seen the month before. Headline durable goods orders are also expected to rise just 0.4% on the month after rising 2.0% previously.

The FOMC meeting minutes will be the main highlight of the day. However, the Fed's minutes are unlikely to show any surprises. Later in the day, New Zealand's retail sales data will be released.

The healthy combination of rising corporate profits, strong global growth and cautious optimism over U.S. corporate tax cuts, simply reinvigorated global equity bulls on Tuesday – boosting stocks across the globe.

Asian shares headed for a record close during early trading on Wednesday, following Wall Street's robust gains overnight. European markets concluded mostly higher on Tuesday and may open on a positive note today as market players continue to shrug off the political uncertainty in Europe. With U.S. stock indexes marching to record highs yesterday as technology and health stocks rallied, it will be interesting to see if the upside momentum is maintained this afternoon.

Chancellor Philp Hammond in the spotlight

Chancellor Philip Hammond will be in the limelight today as he presents the U.K. budget statement to the House of Commons. While Hammond's speech may revolve around managing the housing crisis, investors will be paying attention to the Office for Budget Responsibility (OBR) which is expected to trim Britain's GDP growth forecasts. If the overall tone of the budget statement is gloomy and Brexit concerns making an appearance, Sterling is likely to find itself under renewed selling pressure.

Taking a look at the technical outlook, the GBPUSD has found light support at 1.3230. An intraday breakout above 1.3250 could encourage a further incline towards 1.3300. Alternatively, a failure for prices to keep above 1.3230 may encourage a decline to 1.3150.

Dollar lower ahead of FOMC minutes

The Greenback weakened against a basket of currencies on Tuesday, after Yellen's cautious remarks reinforced market expectations of the Federal Reserve raising interest rates at a gradual pace.

Yellen cautioned that raising interest rates too quickly could obstruct the Feds efforts to reach the golden 2% target and reiterated the fact that this year's low U.S. inflation remained a mystery. With the outgoing Fed chair uncertain over the stubbornly low inflation being transitory, investors were left pondering over how this could influencethe central bank's monetary policy strategy in 2018.

Much attention will be directed towards the minutes from the latest FOMC meeting this evening which should offer further clues on the central bank's outlook future interest rate increases. With markets widely expecting U.S. interest rates to be increased in December, investors are likely to closely scrutinize the minutes for fresh insight into monetary policy beyond 2017.

The Dollar could receive a boost if the minutes are presented with a hawkish touch, alternatively, if the minutes express concerns over low inflation and fail to bring anything new to the table, sellers may make a move. From a technical standpoint, the Dollar Index is coming under pressure on the daily charts with resistance found at 94.00. Sustained weakness below this level may encourage a further decline towards 93.50. Alternatively, a breach back above 94.15 puts this current bearish setup at risk, with the next level of interest at 94.50.

Sunrise Market Commentary

• Rates: Trading expected to slow down ahead of US Thanksgiving & Black Friday
  Today's eco calendar turns more interesting, but it's uncertain whether US claims, durable goods, FOMC Minutes and EMU consumer confidence can break the calm on core bond markets ahead of EMU PMI's and US Thanksgiving (tomorrow).
• Currencies: US curve flattening caps USD rebound
  Yesterday, the dollar traded mixed to slightly lower. Ongoing low LT US interest rates prevent a protracted USD rebound. Today, the US eco news flow (data , Fed minutes) might be supportive for the dollar. However, liquidity might become thin ahead of Thanksgiving

The Sunrise Headlines

• US stock markets (+0.65% to +1%) closed at fresh record highs, driven by a rally in the tech and the healthcare sector. Asian stock markets gain around 0.4% overnight with China outperforming.
• Britain and the EU are targeting a Brexit divorce deal within three weeks, with negotiators drawing up a political road map that seeks to overcome the toughest unresolved issues on a financial settlement and Northern Ireland.
• ECB Coeuré said he expects policy makers to change their guidance on monetary policy next year, focusing on interest rates more than bond purchases as officials become more optimistic that inflation is back on track.
• Hungary's central bank said it will start buying mortgage bonds in order to push yields lower on long dated government bonds and to encourage borrowers to choose fixed-rate housing loans. It will also launch a new unconditional 5-yr and 10-yr interest rate swap, at up to HUF300 bn in Q1 2018.
• The US, Mexico and Canada failed to resolve any major differences in a fifth round of talks to rework the NAFTA trade deal, drawing a swift complaint from the Trump administration that the lack of progress could doom the process.
• Fed Chair Yellen stuck by her prediction that US inflation will soon rebound but offered an unusually strong caveat: she is "very uncertain" about this and is open to the possibility that prices could remain low for years to come.
• Today's eco calendar contains EMU consumer confidence, US weekly jobless claims, durable goods orders and FOMC Minutes. The UK Chancellor presents budget to Parliament and Germany holds a 30-yr Bund auction

Currencies: US Curve Flattening Caps USD Rebound

USD struggles as long term US yields stay low

The dollar traded mixed yesterday. It held a cautious positive bias against the euro during the European session supported by a high/slightly rising interest rate differential, but EUR/USD reversed the early losses later on to finish the session little changed at 1.1738. The yen remained strong despite the outright risk-on sentiment. Ongoing low (LT) core yields keep the yen relatively attractive. USD/JPY dropped temporary to the 112.20 area, but finished the session at 112.45 (from 112.62).

The WS equity-rally continues in Asia overnight, with several regional indices reaching a cycle top. Even so, the USD dollar remains in the defensive. Ongoing low LT US yields (and a flatting yield curve) are weighting on the dollar. Cautious comments from Fed's Yellen also don't help, even as the direct impact is limited. The won touched the highest level against the USD since the spring of 2015. USD/JPY (112.10) is again drifting south despite good gains of Japanese equities. EUR/USD trades little changed from yesterday's close (1.1750 area).

Today, EMU consumer confidence is expected to reach the highest level since early 2001. In the US, initial claims (240K from 249K), Michigan consumer confidence (up to 98 from 97.8) and the durable orders will be published. Orders are expected to grow at a sold pace and that should would also be visible to in the capital goods orders and shipments. The Minutes of the November 1 FOMC meeting will be scrutinized for clues about December rate hike. The November statement was relative hawkish as it qualified growth as ‘solid'. Solid growth often points to a Fed in tightening mode. We suspect that the minutes won't question the likelihood of a December rate hike.

The eco news flow (data and Fed minutes) might be slightly supportive for the dollar. However, (FX) markets currently also keep a close eye at the long end of the US yield curve. Usually, a rise in short-term yields/interest rate differentials is considered supportive for the currency (in casu the dollar). However, FX markets are clearly puzzled by ongoing low LT yields and a flatting yields curve. We have a cautiously negative bias on EUR/USD and assum that the 1.1861/80 area will be difficult to break. The dollar profited only modestly from the rising interest rate differential of late. At the same time, the high yield spread should at least make investors cautious to be USD short, giving the USD currency downside protection. For now, we don't change tactics. That said, trading might become more erratic as market liquidity dries up going into the Thanksgiving weekend.

From a technical point of view, EUR/USD set a post-ECB low two weeks ago and 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 correction top. We don't preposition for such a scenario unless real negative news from the US pops up. On the downside, the 1.1554 reaction low remains the first important reference, but it is still far away. A downside correction within the 1.1554/1.1880 range is favoured. The USD/JPY momentum was positive in October, but deteriorated this month. The pair tested the 114.49 MT range top, but the attempt failed. Recent price action was unconvincing despite solid US interest rate support. Last week's drop below the 112.96 support reinforces the downside pressure. 111.65 is the next key support. A break would turn the picture outright USD negative.

EUR/USD declines very gradually in the 1.1880/1.1554 trading rang

EUR/GBP

Sterling rebound to slow

Yesterday, Sterling trading entered calmer waters and moved mostly sideways yesterday. The UK eco data were mixed. Several BoE members testifying before a parliamentary Committee maintained a balanced approach and indicated that gradual policy tightening was likely needed to control inflation during the policy horizon. EUR/GBP basically held a sideways range in the mid 0.88 area. The pair closed the session at 0.8863. Cable shows no clear trend and finished the day at 1.3239.

There are no UK eco data today. The focus for trading will be on the UK budget and the Brexit process. Slowing growth gives UK Finance Minister little room to support the UK economy as the Brexit process continues. So, there will probably only selective measures to support parts of the economy. This probably won't change to framework for BoE policy further down the road. There are again press headlines this morning that the EU and the UK are stepping up efforts the bring a positive message to the 14/15 EU summit, but plenty issues still have to be solved. Over the previous days, sterling profited slightly from more constructive headlines on Brexit. For now, we have to impression that this repositioning has run its course unless there is more concrete news. So, some further consolidation in EUR/GBP around current levels might be on the cards

MT technical: Recently, the BoE driven sterling rebound ran into resistance and sterling declined again as markets anticipated that any rate cycle would be very gradual and limited. EUR/GBP trades in a 0.8733/0.9033 consolidation range. Last week, the 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

USD/CHF - 0.9892

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9900

Kijun-Sen level                    : 0.9918

Ichimoku cloud top                 : 0.9919

Ichimoku cloud bottom              : 0.9907

Original strategy :

Sold at 0.9935, Target: 0.9835, Stop: 0.9950

Position : - Short at 0.9935

Target :  - 0.9835

Stop : - 0.9950

New strategy  :

Hold short entered at 0.9935, Target: 0.9835, Stop: 0.9950

Position : - Short at 0.9935

Target :  - 0.9835

Stop : - 0.9950

As the greenback has retreated after meeting renewed selling interest at 0.9947 yesterday, retaining our bearishness and consolidation with downside bias remains for another retreat, below support at 0.9876 would add credence to our view that the rebound from 0.9846 has ended at 0.9947, bring further fall to 0.9860, then retest of 0.9846. Once this level is penetrated, this would signal the erratic decline from 1.0038 top has resumed for at least a retracement of early upmove to previous resistance at 0.9837, break below there would encourage for subsequent decline towards 0.9795-00.

In view of this, we are holding on to our short position entered at 0.9935. Above said resistance at 0.9947 would defer and risk test of 0.9970-75 but price should alter below resistance at 0.9987, bring another decline later. 

GBP/USD - 1.3255

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.3250

Kijun-Sen level                    : 1.3238

Ichimoku cloud top              : 1.3239

Ichimoku cloud bottom        : 1.3225

Original strategy :

Buy at 1.3200, Target: 1.3300, Stop: 1.3165

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.3200, Target: 1.3300, Stop: 1.3165

Position : -

Target :  -

Stop : -

As cable has traded narrowly, further sideways trading is in store, however, bullishness remains for recent erratic rise from 1.3039 to resume after consolidation, bring further gain to 1.3300, having said that, as broad outlook remains consolidative, reckon upside would be limited and price should falter below indicated previous resistance area at 1.3321-38, bring another retreat later.

In view of this, would not chase this rise here and would be prudent to buy cable on pullback. Below 1.3200 would bring weakness to 1.3180-85 but only break of support at 1.3170 would abort and risk correction to 1.3150, then test of said support at 1.3134, once this level is penetrated, this would signal top has been formed.

EUR/USD - 1.1757

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1748

Kijun-Sen level                  : 1.1738

Ichimoku cloud top             : 1.1771

Ichimoku cloud bottom      : 1.1752

Original strategy  :

Buy at 1.1680, Target: 1.1780, Stop: 1.1645

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.1680, Target: 1.1780, Stop: 1.1645

Position : -

Target :  -

Stop : -

Although the single currency has recovered after finding support at 1.1713 yesterday, reckon upside would be limited to 1.1780 and near term downside risk remains for the erratic fall from 1.1861 top to bring retracement of recent rise, below 1.1730 would extend weakness to 1.1700, however, reckon downside would be limited to 1.1671-78 (61.8% Fibonacci retracement of 1.1554-1.1861 or previous resistance) and bring rebound later to 1.1809 but break of resistance at 1.1822 is needed to signal the pullback from 1.1861 (last week’s high) has ended, bring retest of said resistance later.

In view of this, we are looking to buy euro on next decline as 1.1671-78 should limit downside and bring rebound later. Only below 1.1650 would defer and signal top has been formed instead, bring a stronger retracement of recent rise to previous support at 1.1637 first. 

USD/JPY - 112.05

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 112.25

Kijun-Sen level                  : 112.31

Ichimoku cloud top             : 112.47

Ichimoku cloud bottom      : 112.30

Original strategy  :

Sold at 112.60, Target: 111.60, Stop: 112.75

Position :  - Short at 112.60

Target :  - 111.60

Stop : - 112.95

New strategy  :

Hold short entered at 112.60, Target: 111.60, Stop: 112.60

Position :  - Short at 112.60

Target :  - 111.60

Stop : - 112.60

As the greenback met renewed selling interest at 112.72 earlier and has retreated, retaining our bearishness and consolidation with downside bias remains for another test of indicated support at 111.88 (this week’s low), break there would extend recent decline from 114.74 top to previous support at 111.65, below there would bring further fall to 111.45-50, however, near term oversold condition should limit downside and reckon 111.00-05 would hold from here.

In view of this, we are holding on to our short position entered at 112.60. Above said resistance at 112.72 would risk test of previous support at 113.09 but only break there would abort and signal low is formed instead, bring a stronger rebound to 113.33 resistance first.

AUDUSD has fallen to its lowest level in five months and has turned increasingly bearish after breaking below its 200-day moving average. The slide from the 0.8124 peak is still in progress and shows no sign of reversing yet.

The market has retraced over 61.8% of the rise from 0.7328 to 0.8124. The break below the key 0.7600 level has strengthened the bearish outlook. This is now acting as an immediate resistance level. Breaking above it will help ease downside pressure and target the 50% Fibonacci at 0.7724. Immediate support is now at 0.7530, a level that has provided support in the past. From here there is scope to target the 0.7328 low and erase the recent uptrend.

Only a move back above 0.7900 would invalidate the current bearish phase. The RSI is below 50, which supports a bearish outlook. Meanwhile, the 50-day MA is falling and a bearish crossover with the 200-day MA would confirm the bearish medium-term view.

Key Highlights

• The New Zealand Dollar recently fell below the 0.6900-0.6880 support area against the US Dollar.
• There is a crucial bearish trend line forming with resistance at 0.6850 on the 4-hours chart of NZD/USD.
• New Zealand’s Visitor Arrivals in Oct 2017 increased by 3.9% (YoY), more than the last +3.1%.
• The US Existing Home Sales in Oct 2017 increased 2% (MoM), more than the forecast of +0.7%.

NZDUSD Technical Analysis

The New Zealand Dollar remains in a major downtrend below 0.6900 against the US Dollar. The NZD/USD pair is holding the 0.6780 support, but remains at risk of more declines.

The pair is currently well below 0.6880, 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour). On the upside, there is a crucial bearish trend line forming with resistance at 0.6850 on the 4-hours chart.

Above the trend line resistance, the 50% Fib retracement level of the last decline from the 0.6979 high to 0.6780 low is at 0.6879 to act as a major resistance along with the 100 simple moving average (red, 4-hour).

On the downside, the recent low at 0.6780 low is a decent support. A break of the stated support at 0.6780 could ignite further declines toward 0.6750 and 0.6720.

US Existing Home Sales

Recently in the US, the Existing Home Sales figures were released by the National Association of Realtors. The forecast was slated for a rise of 0.7% in the Existing Home Sales compared with the previous month.

However, the actual result was better as there was an increase of 2% in sales in Oct 2017. On the other hand, the last reading was revised down from +0.7% to +0.4%.

Commenting on the report the NAR chief economist, Lawrence Yun stated:

Job growth in most of the country continues to carry on at a robust level and is starting to slowly push up wages, which is in turn giving households added assurance that now is a good time to buy a home.

Overall, the NZD/USD pair remains in the bearish zone as long as it is below 0.6850.

Economic Releases to Watch Today

US Initial Jobless Claims – Forecast 240K, versus 249K previous.

US Durable Goods Orders for Oct 2017 – Forecast +0.3% versus +2.2% previous.

USD/JPY Traded Lower And Remains Under Pressure

Market movers today

In the US, we will get the FOMC minutes from the October/November meeting and core capex orders for October. The last FOMC meeting revealed no new information and we do not expect much news from the minutes either – the Fed is on track to deliver another hike in December. Looking at core capex, it has been trending upwards since the spring in line with regional capex plan surveys. These suggest core capex orders growth of around 1.0% in October but the monthly changes are very volatile.

In the UK, we get Chancellor Philip Hammond’s autumn budgetst atement to parliament at 13:30 CET.

The Swedish Riksbank’s financial stability report is likely to draw attention, given the turnaround in the housing market .

In Norway, we expect LFS jobless rate to remain stable at 4.1% in September.

In Denmark, we expect a further drop in consumer confidence November to 6.8.

Selected market news

Fed Chairman Janet Yellen last night warned about rising rates too quickly and allow inflation to drift down and over time not to achieve the central bank’s 2% inflation target . According to Bloomberg, Yellen said t hat “ One reason it ’s dangerous is because inflation expect ations are likely to also drift down and indeed there is some evidence – I don’t really think they’ve drifted down very much – but t here’s some suggestion.”

Meanwhile the US yield curve continued to flatten yesterday with the 2Y-10Y US Treasury yield spread declining to 58bp. Interest ingly, the flattening of the yield curve yesterday continued despite a solid rebound in risk appet ite which underscores that the downward pressure on longer dated bonds (flat tening pressure) is not just a risk-off move, but also reflects that the market is increasingly buying into the views that inflation will stay low for a prolonged period and that the ‘neutral rate’ will continue to stay very low.

In the FX market , the flattening pressure on global yield curves could be a game changer for JPY, which has seen substant ial weakening pressure driven by higher global yields over the past year. Yesterday, USD/JPY also traded lower and remains under pressure this morning despite the positive development in Japanese equity markets.

In Germany, Chancellor Angela Merkel still struggles to form government. Yesterday Merkel stated that she favours a new poll over a minority government. However, according to the media, Merkel’s CDU part y is still betting on a revived “ grand coalition” with the SPD party hoping that increased public and political pressure on the SPD could change the SPD stance on not to rerun the “ grand coalition”