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Currency pair EUR/USD

EUR/USD is in between key support (green) and resistance (red) trend lines. A break below support indicatesthat an ABC (orange) pattern is more likely than a 123 (pink) pattern whereas a bullish breakout could be part of the wave 3 (pink).

The EUR/USD potential breakout aboveresistance (red) could indicate a continuation of the uptrend within a wave 5 (purple) of wave 3 (pink). A push below makes a wave 4 less likely and could indicate a bearish continuation towards the targets of wave Y (blue).

Currency pair USD/JPY

The USD/JPY remains in the bearish channel. A bullish break above that resistance could see price challenge the 38.2, 50% Fibs and shallower trend line (orange) whereas a bearish continuation could target the 50% Fib of wave 2 or B (light purple).

The USD/JPY could expand the wave X (pink) via an ABC zigzag (blue), although this scenario becomes less likely as price is breaking below the support trend lines (blue). Price still needs to break below the Fibs of wave B (blue).

Currency pair GBP/USD

The GBP/USDremains in the bullish channel (red/green) within the larger sideways range (red/blue). A breakout above the higher resistance (red) or below the support (blue) is needed before a new trend can be expected.

The GBP/USD is building a bearish wave 1-2 (brown) if price manages to break below support (green). A break above resistance (orange) could see price test the bigger resistance (red).

For the 24 hours to 23:00 GMT, the AUD rose 0.38% against the USD and closed at 0.7578.

Yesterday, the Reserve Bank of Australia's (RBA) Governor, Philip Lowe ruled out the possibility of a near-term interest rate hike as inflation is expected to remain below the central bank's target for another two years.

LME Copper prices rose 1.1% or $76.0/MT to $6828.0/MT. Aluminium prices declined 0.3% or $5.5/MT to $2062.0/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7567, with the AUD trading 0.15% lower against the USD from yesterday's close.

Data released overnight showed that Australia's Westpac leading index climbed 0.13% on a monthly basis in October, after recording a revised gain of 0.14% in the prior month. Moreover, the nation's seasonally adjusted construction work done unexpectedly advanced 15.7% QoQ in 3Q 2017, defying market consensus for a fall of 2.3% and compared to a rise of 9.3% in the prior quarter.

The pair is expected to find support at 0.7535, and a fall through could take it to the next support level of 0.7502. The pair is expected to find its first resistance at 0.7598, and a rise through could take it to the next resistance level of 0.7628.

The currency pair is trading between its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR marginally rose against the USD and closed at 1.1736.

In the US, data indicated that existing home sales climbed more-than-expected by 2.0% on a monthly basis to a level of 5.48 million in October, rising by the most in seven months, as disruptions caused by hurricanes dissipated. In the prior month, existing home sales had recorded a revised level of 5.37 million, while investors had expected for a rise of 5.40 million. Additionally, the nation's Chicago Fed national activity index unexpectedly advanced to a level of 0.65 in October, notching a more than ten-year high level. The index had registered a revised reading of 0.36 in the previous month, while markets were expecting for a drop to a level of 0.20.

In the Asian session, at GMT0400, the pair is trading at 1.1739, with the EUR trading a tad higher against the USD from yesterday's close.

Meanwhile, the Federal Reserve (Fed) Chairwoman, Janet Yellen, acknowledged that the US central bank is reasonably close to its goals and expects inflation to pick up over the next couple of years. However, she cautioned that the Fed is “not certain” whether weakness in inflation will prove transitory. Further,

Yellen noted that raising interest rates too quickly risked inflation to drift down to dangerously low levels.

The pair is expected to find support at 1.1715, and a fall through could take it to the next support level of 1.1692. The pair is expected to find its first resistance at 1.1760, and a rise through could take it to the next resistance level of 1.1782.

Moving ahead, investors would focus on the Euro-zone's flash consumer confidence index for November, slated to release later today. Moreover, minutes from the Federal Reserve's recent meeting, due to release later in the day, would be closely monitored to get clues on the central bank's monetary policy trajectory.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP slightly rose against the USD and closed at 1.3239.

On the macro front, UK's public sector net borrowing posted a deficit of £7.5 billion in October, higher than market expectations for a deficit of £6.5 billion. Public sector net borrowing had recorded a revised deficit of £4.4 billion in the previous month. Moreover, the nation's CBI industrial trends total orders sharply jumped to a level of 17.0 in November, hitting its highest level since August 1988. Industrial trends total orders had recorded a level of -2.0 in the prior month, while investors had envisaged for a rise to a level of 3.0.

In the Asian session, at GMT0400, the pair is trading at 1.3252, with the GBP trading 0.1% higher against the USD from yesterday's close.

The pair is expected to find support at 1.3219, and a fall through could take it to the next support level of 1.3186. The pair is expected to find its first resistance at 1.3276, and a rise through could take it to the next resistance level of 1.3300.

Going ahead, traders would look forward to UK's Autumn Budget, due in a few hours.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.11% against the JPY and closed at 112.44.

In the Asian session, at GMT0400, the pair is trading at 112.29, with the USD trading 0.13% lower against the JPY from yesterday’s close.

The pair is expected to find support at 112.11, and a fall through could take it to the next support level of 111.94. The pair is expected to find its first resistance at 112.53, and a rise through could take it to the next resistance level of 112.78.

Amid lack of key macroeconomic releases in the Japan today, investors will look forward to global macroeconomic indicators for further direction.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.2% against the CHF and closed at 0.9914.

In economic news, Switzerland's trade surplus narrowed to CHF2.33 billion in October, after recording a surplus of CHF2.92 billion in the prior month.

In the Asian session, at GMT0400, the pair is trading at 0.9908, with the USD trading 0.06% lower against the CHF from yesterday's close.

The pair is expected to find support at 0.9889, and a fall through could take it to the next support level of 0.9870. The pair is expected to find its first resistance at 0.9937, and a rise through could take it to the next resistance level of 0.9966.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.25% against the CAD and closed at 1.2779.

On the macro front, Canada's wholesale sales surprisingly eased 1.2% on a monthly basis in September, confounding market consensus for a gain of 0.6%. In the prior month, wholesale sales had risen by a revised 0.4%.

In the Asian session, at GMT0400, the pair is trading at 1.2771, with the USD trading 0.06% lower against the CAD from yesterday's close.

The pair is expected to find support at 1.2734, and a fall through could take it to the next support level of 1.2698. The pair is expected to find its first resistance at 1.2822, and a rise through could take it to the next resistance level of 1.2874.

With no macroeconomic releases ibn Canada today, investor sentiment would be determined by global macroeconomic factors.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

Headlines/Economic Data

General Themes: Asian equity markets trade broadly higher, after US gains. MSCI Asia Pacific Index on track for record close-Best performing sectors include Energy and Materials

Japan

Nikkei 225 opened +0.8%, closed +0.5%

Continued strength in Auto (Toyota +1%, Honda +0.5%) and Steel sectors (Nippon Steel +0.8%, JFE Steel +2%, tracks 1.1% gain in shares of US Steel).

Financials add on to Tuesday’s gains: Mega Banks (MUFJ +1.9%, Mizuho +0.6%, SMFG +1%)

Nippon Paint halted following merger speculation related to Axalta Coating Systems.

(JP) Japan plans to reduce its annual float of 30-yr and 40-yr bonds for the first time ever FY18 due to low rates sapping demand – Nikkei; The possible reduction may be discussed at the Finance Ministry's meeting of bond market participants which is expected to be held later today.

Bank of Japan (BOJ) said to be hinting that it could move away from crisis mode stimulus earlier than expect through a future hike in its yield target - financial press

(JP) Japan govt said to plan FY17/18 extra budget of ¥2.0-2.5T - Japanese press

(JP) Japan govt said to be again leaning towards cutting CPI and GDP estimates in next mid-term report - financial press

Looking Ahead: Tokyo Stock Exchange to close on Thursday in observance of Labour Thanksgiving Day

Korea

Kospi opened +0.6%; Samsung Electronics +1%, Hynix +2% (tracks US chip sector gains)

Brokerage firms track gains in equity market

Lotte Shopping -4% (share placement)

USD/KRW (KR) South Korea FX Official: KRW gain pace faster than other currencies; KRW hit 2.5 year high in the session, analyst expect this downward trend to continue for the time being but the pace will probably be controlled

(KR) UN Command: North Korea violated Korean War armistice last week when it fired on defecting soldier at demilitarized zone

South Korea FX Official: KRW gain pace faster than other currencies

South Korea Q3 Household Credit (KRW): 1.42T v 1.39T prior; Household Debt y/y: 9.5% v 10.4% prior

China/Hong Kong

Shanghai Composite opened +0.2%, Hang Seng +0.9% (hit 10-year high above 30,0000)

Hang Seng Materials Index +2.4%, Energy Index +1.5%, Financials Index +1.2%

Hang Seng Property/Construction Index +1%; China to give priority to reducing property bubble – Xinhua

China offshore yuan (CNH) +0.2%

(CN) China PBOC Gov Zhou: Will reduce currency intervention to advance yuan internationalization; to strengthen policy coordination between central and local financial regulators. Reiterates calls for preventing systemic financial risks

(CN) China Ministry of Housing and Urban-Rural Development, the Ministry of Land Resources and PBOC in a joint meeting stressed regulations to curb property sector risks must not be relaxed

(CN) China National Development and Reform Commission (NDRC) target to cut coal capacity by 500Mt in 2016 within 3-5 years will most likely be met ahead of schedule

-China Q3 overseas real estate investments $2.5B, -51% y/y (lowest level since Q4 2013)

-Chinese airlines trade generally higher: Air China +11.5%, China Southern Airlines +10.5%, China Eastern Airlines +9.5%

China Southern Airlines President the company is planning to use American Airlines ties to ‘beef up’ US routes

China Securities Regulatory Commission (CSRC) Chairman Liu Shiyu: creating a new committee to oversee a powerful panel that reviews stock-issuance applications

Weichai Power +4% (fuel cell agreement with Robert Bosch; Chow Tai Fook Jewellery Group +5.5% (H1 profits +44% y/y)

Geopolitics: US Treasury sanctions 4 China companies and 1 citizen for North Korea ties

Air China says to suspend flights to Beijing from Pyongyang, North Korea as the operation is ‘unsatisfying.’

Fixed Income: Chinese corporates continue to tap USD bond market (Shenzhen International, Times Property Holdings, China State Construction)

(CN) PBoC OMO: Injects CNY190B v CNY180B injected in 7,14 and 63-day reverse repos prior; Net injects CNY0B v CNY10B prior

USD/CNY (CN) PBoC sets yuan reference rate at 6.6290 v 6.6356 prior

(CN) China to sell CNY7B in 'Dim Sum' Bond in Hong Kong during week of Nov 27th

China MoF sells 3-year bonds: avg yield 3.7365% v 3.74%e

(HK) Offshore yuan 1-day HIBOR +3.4ppts to 5.97968%; 1-week +1.76ppts to 4.99478%; 1-month +64bps to 4.50467%

Australia/New Zealand

ASX 200 opened +0.3%; ASX 200 Energy index +1.1% (oil prices +1.8% on Tuesday), Resources Index +1.1% (copper prices +1.2% on Tuesday)

ASX 200 Financials Index +0.1%: (AU) Australia PM Turnbull said to be planning to discuss reversing opposition to an inquiry into misconduct in banking sector - UK press

ASX 200 Utilities -0.5%, tracks underperformance in S&P 500 Utilities Sector

AUD trades higher then pares gains, amid recent comments from RBA Gov Lowe and better than expected Q3 construction work done data.

AUSTRALIA Q3 CONSTRUCTION WORK DONE Q/Q: 15.7% V -2.3%E; -Building construction work done -0.4% q/q, Engineering construction work done +33.0% q/q

Australia 10-year bond yield -2bps (US Treasury yield ended down on Tuesday)

WebJet -10% (FY18 outlook, restructuring measures)

(NZ) Reserve Bank of New Zealand (RBNZ): Developing strategic plans for future currency issues, to consider feasibility of alternative digital currency

(AU) Australia sells A$900M vs A$900M indicated in 2.25% May 2028 bonds, avg yield 2.5746%

(NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: -3.4% v -3.5% prior; Avg winning auction price: $2,970 vs. $3,105 prior

Looking Ahead: New Zealand Q3 retail sales due on Thursday

Other Asia

Malaysia:

Ringgit (MYR) gains over 0.3% amid equity flows and higher oil prices

Malaysia’s Government postpones today’s release of Oct CPI data to Nov 24th (no reason initially cited)

Malaysia sells MYR2.0B in 2033 Bonds: avg yield 4.55%, bid to cover 3.81x

Taiwan

Taiex opened +0.3%

UMC +3.5%: 2018 silicon wafer prices may increase by 25-35% amid higher demand, says Taiwanese press report

Taiwan Dollar (TWD) trades at strongest level since early Sept

North America

Fed Speak: Fed Chair Yellen: Must keep an open mind and not be trapped by forecast; Some hint inflation expectations may be drifting down; Don't think expectations have drifted down very much - speaking in New York

US equities ended broadly higher: Nasdaq +1.1%, Russell 2000 +1%, S&P 500 +0.7%, Dow Jones +0.7%

Outperforming sectors on S&P 500: Technology +1.1%,Healthcare +0.9%

(US) Weekly API Oil Inventories: Crude: -6.4M v +6.5M prior

After Market Movers: Gamestop(GME) Reports Q3 $0.54 v $0.43e, Rev $1.99B v $1.96Be; +8.8% afterhours ; Guess (GES) Reports Q3 $0.12 v $0.11e, Rev $554M v $566Me; -11.1% afterhours, Hewlett Packard Enterprise (HPE) Reports Q4 $0.29 v $0.28e, Rev $7.70B v $7.71Be; Antonio Neri to succeed Meg Whitman as CEO; -7.2% afterhours; HP Inc (HPQ) Reports Q4 $0.44 v $0.44e, Rev $13.9B v $13.2Be; -5.8% afterhours , Salesforce.com (CRM) Reports Q3 $0.39 v $0.37e, Rev $2.68B v $2.65Be; -1.4% afterhours
M&A: Japan’s Nippon Paint declined comment on speculation that it could bid for Axalta Coating Systems.

Key Safety Systems to pay $1.59B to acquire substantially all of Japan Takata’s assets

Shares of Pepsi rose during NY session on speculation of possible interest from Kraft Heinz

Politics: US Special Prosecutor Mueller said to be investigating Kushner contact with foreign leaders before President Trump's inauguration - financial press

Tax Reform: (US) Sen Murkowski (R-AK): To support Obamacare mandate repeal in tax bill - press

Trade: (US) USTR Lighthizer: Remains concerned about the lack of headway made at the NAFTA talks; Seeks meaningful progress before end of the year; Says seen no evidence Canada and Mexico are willing to seriously engage on US demands.

Mexico Econ Min Guajardo: Mexico is seriously committed to NAFTA negotiation; Can consider trade rebalance only via expansion.

NAFTA round six discussions in Montreal scheduled for Jan 23-28 - press

Europe

(EU) ECB's Coeure (France): Expects change in monetary policy outlook soon, expected to occur by Sept of 2018 - Handelsblatt

(DE) Supporters of Chancellor Merkel reportedly anticipate grand coalition with SPD to end political impasse – press

(DE) Germany Free Democratic Party (FDP) spokesperson: we won't re-enter coalition govt talks - press

(UK) British and EU negotiators reportedly are targeting Brexit divorce deal within three weeks – FT

(EU) Smaller companies in the UK plan to cut use of euro for settling international payments by 7.8% in the next 6 months – East & Partners Pty Study

(EU) Some EU countries reportedly are balking at plans to boost taxes on tech multinationals – press

Dutch Telecom Altice SA said to have held talks with banks over tower sale plans (press)

AkzoNobel ends merger talks with Axalta Coating Systems.

Looking ahead: Upcoming UK Autumn Budget Statement in focus

Levels as of 01:00ET

Nikkei +0.5%, Hang Seng +0.6%; Shanghai Composite +0.1%; ASX200 +0.4%, Kospi +0.3%

Equity Futures: S&P500 +0.0%; Nasdaq100 +0.0%, Dax +0.1%; FTSE100 +0.1%

EUR 1.1748-1.1733; JPY 112.50-112.16; AUD 0.7595-0.7562;NZD 0.6854-0.6825

Dec Gold +0.0% at $1,281/oz; Jan Crude Oil +1.5% at $57.70/brl; Dec Copper -0.0% at $3.13/lb

Daily Pivots: (S1) 131.61; (P) 131.94; (R1) 132.31; More....

EUR/JPY is staying in the corrective pattern from 134.48 short term top. Deeper fall is mildly in favor and break of 131.16 will target 38.2% retracement of 114.84 to 134.48 at 126.97, which is close to 127.55 support. We'll look for support from there to bring rebound on first attempt. In any case, firm break of 134.48 is needed to confirm up trend resumption. Otherwise, near term risks remain on the downside.

In the bigger picture, medium term rise from 109.03 (2016 low) is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). 61.8% retracement of 149.76 to 109.03 at 134.20 is already met. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. However, break of 127.55 support will argue that the medium term trend has reversed and will turn outlook bearish for deeper fall back to 114.84/124.08 support zone at least.

Daily Pivots: (S1) 148.51; (P) 148.93; (R1) 149.26; More...

GBP/JPY's corrective pattern from 152.82 is still in progress. Deeper fall could be seen through 146.92 support. But we'd expect strong support from 61.8% retracement of 139.29 to 152.82 at 144.45 to contain downside and bring rebound. On the upside, break of 149.45 minor resistance will turn bias back to the upside for 151.92/152.82 resistance zone.

In the bigger picture, medium term rebound from 122.36 is still expected to resume after corrective pull back 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 139.29 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.