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The yen has posted slight gains in the Tuesday session. In North American trade, USD/JPY is trading at 112.38, down 0.21% on the day. On the release front, Japanese All Industries Activity declined 0.5%, edging below the forecast of 0.5%. This marked a second decline in just three months. In the US, Existing Home Sales jumped to 5.48 million, above the estimate of 5.42 million. Later in the day, Federal Reserve Chair Janet Yellen will speak at an event in New York City.

US construction numbers continue to beat expectations. On Monday, it was the turn of Existing Home Sales, which climbed to a 4-month high. On Friday, Building Permits and Housing Starts impressed the markets. Building Permits for single-family homes jumped to 1.30 million, above the estimate of 1.25 million. The annualized pace of 839,000 building permits in October was the fastest since September 2007. Housing Starts also sparkled, accelerating to 1.29 million, compared to an estimate of 1.19 million. The catalyst for the strong numbers were hurricanes Harvey and Irma, which caused massive damage in the southern part of the US. With rebuilding efforts well underway, construction numbers should remain strong in the fourth quarter.

Strong Japanese exports boosted the October trade surplus to JPY 0.32 trillion, well above the forecast of JPY 0.21 trillion. China is showing some momentum after a recent slowdown, and this has buoyed demand for Japanese automobiles, electronics and machinery. The robust manufacturing and export sectors have fueled a moderate recovery, as Japan has now posted seven consecutive quarters of growth, the longest economic expansion since 2001. Although the economy has improved in 2017, but this has not translated into higher inflation levels. Inflation remains persistently below the inflation target of around 2 percent, but the Bank of Japan has no plans to change policy. On Monday, Prime Minister Shinzo Abe said that the government and the BoJ would work together and take all needed steps to combat inflation.

BTCUSD is trading nicely higher, unfolding a picture perfect bullish impulse. We see price now trading at the beginning of blue wave 5, that can take price higher to around 9300/10000 region, where various Fibonacci projection target lay. There a new bearish reversal can come in play.

BTCUSD, 1H

GBPJPY is trading higher, now in a potential three-wave bullish reversal. We see black wave A as completed and now a temporary pullback can be on the move. Black wave B may search for support near the Fibonacci ratio of 50.0 or 61.8 and there bounce higher.

GBPJPY, 1H

• European equities opened soft, but soon found the way north again. Most indices show gains of 0.5% or slightly more. US equities join the risk-on trade, opening with gains just below 0.5%
• Turkey's central bank has decided to provide all funding from its late liquidity window effective Wednesday, which will raise the weighted average cost of funding by 25bps, according to a central bank official who asked not to be named, citing policy.
• The National Bank of Hungary kept its main policy rate and overnight deposit rate unchanged at respectively 0.90% and -0.15%. The Bank took some additional measures to keep monetary conditions easy at the long end of the curve.
• EU regulators have decided to give large euro zone banks up to four years to raise capital buffers, a source told Reuters, setting for the first time binding requirements that some lenders might find difficult to meet.
• Britain's Brexit minister Davis said that reaching a deal with the European Union was the most likely outcome of talks, but added that the British government was prepared for no agreement with the bloc.
• UK manufacturers reported the most robust demand since 1988 according to the latest survey by the Confederation of British Industry. The CBI data are the latest to indicate rising activity in British factories in recent months, as solid global growth figures and the continuing weakness of the pound have helped support UK industry.
• Czech police have requested parliament lift the immunity of prospective prime minister Andrej Babis to allow prosecution in a case involving alleged fraud in tapping European Union subsidies, the lower house's press office said.

Rates

Core bond curves continue to flatten.

The main theme in core bond markets was the ongoing flattening of the curve with the very long end the eye-catcher. Traders are likely front running the slowing of supply and riding the curve (carry). There were no obvious drivers to explain the moves that occurred in thin trading conditions. The Chicago Fed National Activity index for October was much stronger than expected, confirming the upbeat data flow of recent. However, the report is based upon a large number of other data and thus doesn't bring new info. After the closure of our report, the US Existing Home sales will still be published and ECB Coeuré participates at a panel discussion, but we don't expect these to give much direction. European equities had a strong unidirectional run higher, while core bonds showed intra-day volatility, confirming the weak/missing intra-day (inverse) correlation. The potential inverse correlation with oil was missing too.

At the time of writing, the US yield curve flattened today with US yield changes varying between +0.9 bp (2-yr) and -2.4 bps (30-yr). German yields dropped 0.7 bp (2-yr) to 3 bps (30-yr). On intra-EMU bond markets, 10-yr yield spread changes versus Germany ranged between -1 bp and 3 bps (Spain) with Greece underperforming (+5 bps). Intra-EMU bond trading was again lackluster and devoid of particular drivers. France is doing well and outperforming Belgium in a multi-day perspective.

Currencies

EUR/USD extends gradual decline

In technical trade, the dollar gained slightly more ground as interest rate differentials widened again slightly in favour of the US currency. There were no eco data of importance. EUR/USD drifted lower in the 1.17 big figure. Sentiment on risk remained positive, but again didn't weaken the yen. USD/JPY even lost marginal ground as core bond yields declined.

Overnight, most Asian equity indices showed decent gains, with China outperforming. Even so, the positive risk sentiment again didn't help USD/JPY. The pair stabilized in the mid 112.50 . The dollar also lost a few ticks against the euro. EUR/USD traded in the mid 1.1750.

There were no eco data in EMU. European equity markets opened hesitant, but gradually joined the Asian risk rally. Core European yields declined and rate differentials between the US and Europe (Germany) widened further. EUR/USD drifted further south in the 1.17 big figure . USD/JPY didn't go anywhere, holding stable in the mid 112 area. Trading developed in thin market conditions.

There was also no important US eco news. Core US/German yields moved more in lockstep during the US trading session. The dollar smade some further minimal gains against the euro. EUR/USD trades in 1.1725 area. USD/JPY is losing a few ticks, changing hands in the 112.35 area. Ongoing low core yields keep the yen relatively attractive against the euro and the dollar.

Sterling rebound slows

Sterling trading entered calmer waters and moved sideways today. British media reports reiterated that the UK government agreed to offer a higher amount in Brexit negotiations to settle the Brexit bill. This was a slightly positive for sterling yesterday. However, it is still unclear when and under what conditions the UK will make its proposition. The UK eco data were mixed today. The monthly UK budget deficit was higher than expected, but CBI orders were very strong. 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. Cable shows no clear trend an trades in the 1.3245 area.

USD/CHF - 0.9910

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9923

Kijun-Sen level                    : 0.9923

Ichimoku cloud top                 : 0.9911

Ichimoku cloud bottom              : 0.9902

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

Dollar’s rebound after finding support at 0.9876 suggests further consolidation would be seen, as long as indicated resistance at 0.9946 holds, bearishness remains for another retreat, below said support at 0.9876 would add credence to our view that the rebound from 0.9846 has ended at 0.9946, 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 0.9946 would defer and risk test of 0.9970-75 but price should alter below resistance at 0.9987, bring another decline later. 

GBP/USD - 1.3254

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.3238

Kijun-Sen level                    : 1.3238

Ichimoku cloud top              : 1.3232

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 maintained a firm undertone after yesterday’s anticipated rise to 1.3280, adding credence to our bullish view that recent erratic rise from 1.3039 is still in progress and further gain to 1.3300 is likely, however, 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 1.3210-15 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 - 1.1739

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1736

Kijun-Sen level                  : 1.1749

Ichimoku cloud top             : 1.1772

Ichimoku cloud bottom      : 1.1767

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 : -

As the single currency has retreated again after meeting resistance at 1.1809, suggesting near term downside risk remains for the erratic fall from 1.1861 top to bring retracement of recent rise, hence initial fall to 1.1700 cannot be ruled out, 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 - 112.25

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 112.40

Kijun-Sen level                  : 112.42

Ichimoku cloud top             : 112.61

Ichimoku cloud bottom      : 112.20

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: 112.75

Position :  - Short at 112.60

Target :  - 111.60

Stop : - 112.75

Although the greenback rebounded after falling to 111.88, reckon upside would be limited to 112.72-75 and bring retreat later, below 112.10-15 would bring retest of said support at 111.88 (yesterday’s low), break there would extend recent decline from 114.74 top to previous support at 111.65, break 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 112.85-90 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.

Bounce off session low at 1.2789 was boosted by downbeat Canadian data (wholesale sales -1.2% in Sep vs 0.3% f/c), with fresh recovery eyeing session high at 1.2836 (the highest since 03 Nov).

Firm bullish structure on daily chart is supportive but the price shows strong hesitation at pivotal 1.2820 barrier (Fibo 61.8% of 1.2914/1.2667 pullback). Close above here is needed to signal continuation, however, overbought slow stochastic on daily chart is generating negative signal and warning of pullback.

Bullish setup favors dip-buying above daily Tenkan-sen (1.2751).

Res: 1.2820; 1.2836; 1.2855; 1.2914
Sup: 1.2789; 1.2751; 1.2713; 1.2683

Gold collapsed like a house of cards during Monday's trading session, with prices dipping below $1275 thanks to a strengthening US Dollar.

The violent price action witnessed in recent days, continues to highlight the intensity of the battle between the bulls and bears. Although renewed political uncertainty in Europe is likely to support the flight to safety, it seems Gold investors may be more concerned with the value of the Dollar.

Focusing on today, prices have edged slightly higher towards $1280, ahead of the FOMC meeting minutes scheduled to be released on Wednesday. With markets widely expecting a US interest rate hike in December, investors most likely will closely comb through the minutes for fresh insights into monetary policy beyond 2017.

Since Gold has become heavily concerned with the value of the Dollar, the tone of the meeting minutes could play a leading role in where the metal concludes this week. Gold may find itself under renewed selling pressure if the FOMC minutes are presented with a hawkish touch, while a dovish surprise has the ability to offer the metal a boost.

Taking a look at the technical picture, prices are currently hovering around $1280 as of writing. Sustained weakness below $1280 could encourage a further decline towards $1267.

Sterling ranges ahead of Autumn Budget statement

Sterling struggled to gain ground against the Dollar on Tuesday morning, despite renewed hopes over the UK Government putting an end to an extended deadlock with the EU regarding the Brexit bill. Although reports are circulating that the Cabinet's Exit and Trade sub-committee could approve a further £20 billion, bringing the total offered to £38 billion, this is still below the £53 billion demanded by Brussels. With Theresa May saying that the UK would "honor our commitments", it will be interesting to see if this speeds up trade talks.

Investors who were expecting some fireworks from today's UK inflation report hearings, were left empty-handed after BoE officials chose their words carefully. Most BoE officials reiterated expectations that UK inflation would peak this quarter. With the remarks made in line with what the BoE has already shared with markets, Sterling offered a fairly muted response.

From a technical standpoint, the GBPUSD dipped below 1.3230 before recovering slightly higher towards 1.3250. Price action suggests that bulls may be exhausted, with a breakdown back below 1.3230 encouraging a further decline towards 1.3150. Alternatively, an intraday breakout above 1.3250 should trigger an incline towards 1.3300.

Oil prices sensitive ahead of OPEC meeting

WTI Crude slightly appreciated during Tuesday's trading session, amid investor expectations of major crude exporters extending production cuts beyond March 2018.

While an extension of the OPEC deal to limit production may inspire oil bulls short-term, the rising US output is likely to present headwinds, ultimately limiting upside gains. With markets widely expecting production cuts to be extended when OPEC meets on 30 November, the focus may be directed towards how the cartel deals with Nigeria and Libya - who are currently exempt from the deal.

From a technical standpoint, WTI Crude remains bullish on the daily charts above the $55 higher low. A breakout through $57 may encourage a further incline higher towards $57.80. Alternatively, an intraday breakdown below $55.80 could trigger a selloff back towards $55.00.

Daily Pivots: (S1) 112.09; (P) 112.40; (R1) 112.92; More...

Intraday bias in USD/JPY remains neutral for the moment. On the upside, break of 113.32 will revive near term bullishness and turn bias to the upside for 114.73. On the downside, however, decisive break of 111.64 support will argue that whole rebound from 107.31 has completed. In that case, deeper fall would be seen to 61.8% retracement of 107.31 to 114.73 at 101.14 and below.

In the bigger picture, medium term rise from 98.97 (2016 low) is not completed yet. It should resume after corrective fall from 118.65 completes. Break of 114.49 resistance will likely resume the rise to 61.8% projection of 98.97 to 118.65 from 107.31 at 119.47 first. Firm break there will pave the way to 100% projection at 126.99. This will be the key level to decide whether long term up trend is resuming. However, firm break of 111.64 support will dampen this view and turn focus back to 107.31 instead.