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Daily Pivots: (S1) 1.1699; (P) 1.1753 (R1) 1.1786; More....

EUR/USD's choppy decline from 1.1860 extends lower today. But it's staying well above 1.1677 minor support. Intraday bias remains neutral and another rally is still in favor. As noted before, corrective fall from 1.2091 has completed at 1.1553 already, ahead of 38.2% retracement of 1.0569 to 1.2091 at 1.1510. Above 1.1860 will turn bias to the upside for retesting 1.2091 high. However, break of 1.1677 will dampen this bullish view and turn focus back to 1.1553 low instead.

In the bigger picture, rise from 1.0339 medium term bottom is seen as a corrective move for the moment. Therefore, in case of another rally, we'd be cautious on 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 to limit upside and bring reversal. Meanwhile, sustained trading below 55 week EMA (now at 1.1373) will suggest that such medium term rebound is completed and could then bring retest of 1.0339 low.

Daily Pivots: (S1) 0.9896; (P) 0.9916; (R1) 0.9955; More....

Intraday bias in USD/CHF remains neutral for the moment as corrective trading from 1.0037 continues. On the upside, firm break of 1.0037 resistance will extend the rise from 0.9420 and target 1.0342 high. However, sustained break of 0.9835 resistance turned support will argue that whole rebound form 0.9420 is completed and turn outlook bearish. In that case, USD/CHF should target 61.8% retracement of 0.9420 to 1.0037 at 0.9565 and possibly below.

In the bigger picture, current development suggests that USD/CHF has defended 0.9443 (2016 low) key support level again. Rise from 0.9420 could be a medium term up move and should target a test on 1.0342 high. This represents the upper end of a long term range that started back in 2015. On the downside, break of 0.9736 support is now needed to indicate completion of the rise from 0.9420. Otherwise, further rally will remain in favor in medium term.

Daily Pivots: (S1) 1.3186; (P) 1.3232; (R1) 1.3279; More....

Intraday bias in GBP/USD remains neutral as consolidation from 1.3026 continues. Upside of recovery should be limited below 1.3337 resistance to bring fall resumption. Break of 1.3038 will now resume decline from 1.3651 to 1.2773 key support level. However, decisive break of 1.3337 will indicate that pull back from 1.3651 is completed and medium term rise from 1.1946 is resuming.

In the bigger picture, as noted before, GBP/USD hit strong resistance from the long term falling trend line. Current development is starting to favor that corrective rebound from 1.1946 low has completed at 1.3651. Decisive break of 1.2773 will confirm this bearish case and target a test on 1.1946 low next, with prospect of resuming the low term down trend. Nonetheless, break of 1.3320 resistance will restore the rise from 1.1946 for 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.

The Canadian dollar has ticked higher in the Tuesday session. Currently, USD/CAD is trading at 1.2810, down 0.08% on the day. On the release front, Canada releases Wholesale Sales, which is expected to edge higher to 0.6%. The US will release Existing Home Sales, with an estimate of 5.42 million. As well, Fed Chair Janet Yellen will speak at an event in New York City. Wednesday is busy, as the US releases employment, durable goods and consumer confidence reports. Also, the Federal Reserve releases the minutes of its November policy meeting.

Like its southern neighbor, Canada continues to grapple with low inflation levels. There were no surprises on Friday, as CPI posted a negligible gain of 0.1% for October, matching the estimate. The Bank of Canada remains cautiously optimistic about inflation – on Wednesday, Senior Deputy Governor Carolyn Wilkins said she expected wages to rise as the economy improved. Inflation levels remain well below the Bank's inflation target of 2.0%, and the markets don't expect another rate hike until 2018.

Will we see a triple sweep from housing indicators? The markets are forecasting that Existing Home Sales will improve in October, following sharp housing data on Friday. 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 Start 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, which is good news for the US economy.

Euro remains pressured today and suffers some renewed selling. But overall sentiments in Eurozone are not too bad as German DAX rebounds today and is trading up 0.87% at the time of writing. CAC 40 is also trading up 0.69%. US futures also point to higher open. Political deadlock Germany will remain a focus but it will likely take some more time to resolve. Meanwhile, Dollar trading is subdued with Thanksgiving holiday this week and Senate could only vote on the tax plan next week. The greenback is trading as the second weakest one today, next to Euro. On the other hand, commodity currencies are trading broadly higher, paring recent losses.

Merkel prefers new election to minority government

German Chancellor Angela Merkel make her stance very clear regarding the political deadlock in an interview with ARD. Merkel said that "a minority government isn't part of my plans." And, "I'm certain that new elections are the better way." That came after German President Frank-Walter Steinmeier, a member of SPD, urged the parties to "pause and reconsider their positions". Overall, there are four possibilities present in the aftermath of coalition talk collapse. 1 New election, 2. Grand coalition (a CDU/CSU+SPD Government), 3. Restart of the Jamaica talks (CDU/CSU + FDP+ Greens) or 4. Formation of a minority government by CDU/CSU with either the Greens or FDP. Assessing the likelihood of the scenarios at this stage appears premature as the developments remain fluid. But we've analyzed each of the four scenarios in German Political Stalemate: Four Options on Table, None An Easy Way.

BoE Saunders, Cunliffe, McCafferty and Vlieghe defend British way of guidance

BoE policymakers Michael Saunders, Jon Cunliffe, Ian McCafferty and Gertjan Vlieghe defend their communications in a parliamentary hearing today. Saunders noted that "it's tempting to think the bank could promise where rates will be in future, but this would create more uncertainty." And Saunders emphasized that, "Monetary policy responds to what the economy does. It's not possible to forecast the economy with perfect certainty."

McCafferty said Fed's style forward guidance would be an "undesirable" one for BoE. And McCafferty argued "against the false precision that seeks to give you a path of interest rates that you know for certainty will be followed, as I don't think that's possible." He added that "it is useful for the bank to communicate widely to households and businesses a general sense that interest rates are likely to go up over the next two, three years if the economy evolves as we expect -- and we can't give you a precise path, but I think that general guidance is a very useful thing."

Cunliffe also criticized that forward guidances "gets misunderstood a bit" and he prefers the British way. Vlieghe said "we will support the economy to meet the inflation target," and "that's all we can do."

BoE Ramsen had a "somewhat different" view to some other MPC members

BoE Deputy Governor Dave Ramsen, who voted against the rate hike this month, said yesterday that he had a "somewhat different" view of the economy to most of his colleagues. He noted that "I attach some weight to the idea that workers have responded to the changing outlook by showing greater flexibility in their wage demands." Then, "if true it would mean there is a little more room than headline measures of slack suggest for the economy to grow without generating above-target inflation in the medium term."

RBA Low: We're patient and we'll continue to be patient

RBA Governor Philip Lowe said today that the country is "not too far away from 2%" inflation and is "just not getting there as quickly as we would like to". He emphasized that "we're prepared to be patient. We're getting there, we're making progress, we're patient and we'll continue to be patient." Also, regarding sluggish wage growth, as also noted the RBA minutes, Lowe said "I think eventually the forces of supply and demand will win out and wage growth will pick up, it's just taking time.:" He added that "my sense is that wage growth has stabilized at a low level and it's not going to fall further." Lowe's comment is in line with the view that RBA would stand pat for longer.

The RBA minutes for the November minutes delivered a dovish tone as policymakers expressed concerns over the wage growth outlook. This is consistent with the central bank's worry over household spending as indicated in the meeting statement (released earlier this month). We believe this has added further pressure to Aussie's recent weakness, sending AUDUSD to the lowest level in 5 months. The central bank kept its powder, leaving the cash rate unchanged at 1.5%, in November. We expect the monetary policy would stay unchanged at least until 1H18 and could extend to 2H18. More in RBA Worried About Wage Growth Despite Strong Job Market.

On the data front

Canada wholesale sales dropped -1.2% mom in September. UK CBI trends trade total orders rose to 17 in November. Public sector net borrowing rose to GBP 7.5b in October. Swiss trade surplus widened to CHF 2.33b in October. Japan all industry index dropped -0.5% mom in September.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1699; (P) 1.1753 (R1) 1.1786; More....

EUR/USD's choppy decline from 1.1860 extends lower today. But it's staying well above 1.1677 minor support. Intraday bias remains neutral and another rally is still in favor. As noted before, corrective fall from 1.2091 has completed at 1.1553 already, ahead of 38.2% retracement of 1.0569 to 1.2091 at 1.1510. Above 1.1860 will turn bias to the upside for retesting 1.2091 high. However, break of 1.1677 will dampen this bullish view and turn focus back to 1.1553 low instead.

In the bigger picture, rise from 1.0339 medium term bottom is seen as a corrective move for the moment. Therefore, in case of another rally, we'd be cautious on 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 to limit upside and bring reversal. Meanwhile, sustained trading below 55 week EMA (now at 1.1373) will suggest that such medium term rebound is completed and could then bring retest of 1.0339 low.

Economic Indicators Update

USD/CAD - 1.2807

Trend:  Near term up

 
 
New strategy             :

Stand aside

Position: -

Target:  -

Stop:-

Although the greenback continued edging higher after rebounding from 1.2665, suggesting near term upside risk remains for gain towards 1.2850-60, however, a firm break above this level is needed to signal the correction from 1.2917 has ended, bring further gain to 1.2880, then towards this level which is likely to hold from here.

In view of this, would not chase this move here and would be prudent to stand aside in the meantime. Below 1.2740 would prolong consolidation, risk weakness to 1.2710-15, only break of 1.2700 would revive bearishness and signal the rebound from 1.2665 has ended, bring another test o this level, break there would extend the fall from 1.2917 top for retracement of recent rise to support at 1.2636 but a drop below this level is needed to signal recent rise has ended at 1.2917, bring further fall to 1.2600 and later towards 1.2550-60.

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

Gold: The commodity remains weak and vulnerable to the downside after it reversed its Friday gains on Monday. On the downside, support comes in at the 1,270.00 level where a break will turn attention to the 1,260.00 level. Further down, a cut through here will open the door for a move lower towards the 1,250.00 level. Below here if seen could trigger further downside pressure towards the 1,240.00 level. Conversely, resistance resides at the 1,290.00 level where a break will aim at the 1,300.00 level. A turn above there will expose the 1,310.00 level. Further out, resistance stands at the 1,320.00 level. All in all, GOLD looks to weaken further as it looks to resume its short term weakness.

The cross remains in red on Tuesday, following strong fall on Monday, which broke through plethora of supports, provided by daily MA's and generated another bearish signal on close below Fibo 61.8% of 0.8791/0.9013 upleg at 0.8876. Today's action showed recovery attempts capped by broken 30SMA (0.8885), but the downside also remains limited by Fibo 76.4% support at 0.8843. Bearishly aligned MA's on daily chart and thick daily cloud weighing, favor further downside, but slow stochastic is entering oversold territory and warns of further hesitation of near-term bears. Extended upticks should be limited (ideally to remain below daily Kijun-sen) to keep bears in play for extension of bear-leg from 0.9013 (15 Nov peak and strong upside rejection) towards next target at 0.8791 (07 Nov trough).

Res: 0.8876; 0.8895; 0.8912; 0.8937
Sup: 0.8843; 0.8811; 0.8791; 0.8732

Copper extends steep recovery into third day and tests barrier at $3.1053 (falling 20SMA).

Higher base is forming at $3.0324 with recovery being tracked by rising daily cloud and metal's price supported by firmer China's housing sector numbers.

Recovery eyes pivotal barrier at $3.1174 (Fibo 38.2% of $3.2580/$3.0305 downleg), close above which would signal further correction and expose barrier at 3.1360 (daily Kijun-sen).

Daily techs are mixed and lacking momentum which may result in recovery stall on failure to clear $3.1053/$3.1174 (20SMA / Fibo 38.2%) pivots.

Initial support at $3.0795 (10SMA) holds today's action. Break here would soften near-term tone, while extension and close below 55SMA ($3.0659) would generate bearish signal and turn near-term focus lower.

Res: 3.1053; 3.1174; 3.1360; 3.1442
Sup: 3.0793; 3.0659; 3.0485; 3.0324

The U.S dollar has started to trade on the back-foot against the Japanese yen currency on Tuesday, slipping back below key support. A failure to hold price action above the 112.80 level, has created a bearish higher-low, and added to medium-term selling pressure on the USDJPY pair. Financial markets are currently lacking liquidity and holding in narrow-ranges, ahead of the Thanksgiving holiday on Thursday and the release of U.S Federal Open Market Committee Meeting Minutes on Wednesday.

The USDJPY pair remains bearish on an intraday basis while trading below the 112.47 technical level. Further losses towards the 112.20and 111.88 levels look increasingly likely.

Should the USDJPY pair trade back above the 112.47 technical level, buyers will likely push price-action back towards the 112.80 and 113.07 resistance levels.