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GBPJPY has a neutral bias in the short term and has been pivoting around the 149.00 level. Momentum is very weak in the market and this is indicated by the flat RSI. The 50 and 200-period moving averages on the 4-hour chart are converging and a bearish crossover is imminent.

Near-term risk is tilted to the downside as the market has dropped below the 200-moving average on the 4-hour chart. Immediate support is at the key 149.00 level. An extension lower from here would bring into view the psychological level of 148.00 which has been tested as support this week. Below this, the 147.00 level is critical, which if broken would shift the bias to bearish and set the focus on 144.00.

To the upside, immediate resistance exists at the 200-MA currently at 149.17. Breaking above this barrier would help shift momentum to the upside and to focus on targeting the key 150.00 level. From here, the 152.85 peak comes into sight and rising above this would confirm the resumption of the longer-term uptrend from 141.34.

In the near term, the bias is neutral with risk tilted to the downside. The neutral RSI suggests momentum is weak and this points to more consolidation during the next few sessions.

• Indices Pare Strong Gains;
• Dow Looks Vulnerable Below 23,250;
• Gold Higher as Traders Shift to Safe Havens.

US investors appeared to find their mojo again on Thursday but that may not last long, with futures currently in the red and markets in Europe on course for a second consecutive weekly decline.

Strong gains yesterday left US equity markets back within touching distance of record highs and while that will have given some investors' confidence that the recent stumble has passed, an inability to hold onto these today still leaves markets vulnerable to a broader pull-back. A failure to make a new high is typically another warning that the trend is weakening, especially coming after a month in which it has fallen into a sideways trend, rather than continuing its gradual ascent.

From a technical perspective, 23,250 now looks like a very important level for the Dow and a break below here could trigger a bigger correction in the index. Given the steady gains we've seen over the last few months, even move back towards 23,000 would only represent a small correction in the most recent rally and would be healthy for markets.

European equity markets are also trading in the red this morning and while this is being attributed to downgrades and earnings, I think it's simply part of a broader move away from risk and a decision to lock in some profits. Slow progress on tax reform in the US and reports that Robert Mueller has issued a subpoena to the Trump campaign in relation to the Russia probe are two other things that are being blamed for the more risk averse tone but I think in reality, neither of these would have had such an impact a month ago and it's probably more a reflection of a less bullish investor.

With that in mind, we are seeing some preference for safe haven assets today, with the yen making gains against its major counterparts – USD, EUR and GBP – while Gold is making steady gains after a wobbly few days. The yellow metal though continues to trade in a fairly tight sideways range not far below $1,300, a sign that traders haven't entirely given up on the traditional safe haven despite the strong risk rally in recent months.

While it's been a very busy week in terms of economic data and events, Friday is looking much more calm. Canadian CPI and US building permits and housing starts make up the only notable country-specific releases, although we will get rig data from Baker Hughes later in the day.

Spot Gold accelerates higher after descend following strong upside rejection found footstep at $1275 and closed above rising daily Tenkan-sen, keeping hopes of fresh upside alive.

Broadly lower dollar keeps the yellow metal on front foot on Friday for renewed attempt at key $1290 barrier (Fibo 61.8% of $1306/$1263 downleg / Wednesday’s strong upside rejection).

Improving daily studies are increasing support for further advance which needs break above initial barrier at $1284 (daily Kijun-sen) to open $1290 and another key barrier at $1294, provided by daily cloud base.

Cloud is thickening after twisting last week and weighs on near-term action which may stall under cloud base.

Failure to break higher would signal prolonged directionless mode while downside stays limited at $1270 (Tue’s spike low).

Break here would shift near-term focus lower for test of strong support at $1263 (200SMA / 27 Oct low).

Res: 1284, 1290, 1294, 1296
Sup: 1278, 1276, 1270, 1263

Notes/Observations

(EU) Euro Zone Sept Current Account (Seasonally Adj): €37.8B v €34.5B prior; Current Account NSA (unadj): 41.8B v €30.8B prior

(IT) Italy Sept Current Account: €4.3B v €3.7B prior

(EU) Euro Zone Sept Construction Output M/M: +0.1 v -0.2% prior; Y/Y: 3.1 v 1.9% prior

Fixed Income Issuance:

(IN) India sold total INR150B vs. INR150B indicated in 2024, 2027, 2034 and 2055 bonds

(ZA) South Africa sold total ZAR855M vs. ZAR900M indicated in I/L 2029, 2033 and 2050 bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 -0.2% at 3,554, FTSE -0.2% at 7,370, DAX -0.1% at 13,031, CAC-40 -0.2% at 5,325, IBEX-35 -0.4% at 10,043, FTSE MIB -0.6% at 22,073, SMI -0.2% at 9,130, S&P 500 Futures -0.2%]

Market Focal Points/Key Themes: European stocks open largely flat and moved lower as the session progressed; attention on Italian banking sector again as banks having difficulty raising capital; energy stocks buoyed by oil price, but not enough to overcome general market trend; upcoming earnings in US session include Foot Locker and Abercrombie & Fitch

Equities

Consumer discretionary: Elior ELIOR.FR -3.5% (earnings), Hennes & Mauritz HMB.SE -3.4% (analyst action), Ubisoft UBI.FR -0.9% (Viviendi rules out takeover bid), Vivendi VIV.FR +1.5% (results)

Industrials: Touax TOUP.FR -13.3% (analyst action)

Financials: Scor SCR.FR +0.6% (analyst action)

Healthcare: Shire SHP.UK -1.7% (analyst action), Celyad CYAD.BE -7.5% (results)

Speakers

ECB's Draghi comments from banking conference in Frankfurt were in-line with recent Oct policy statement. He noted that the Euro region was in the midst of economic recovery with increasing confidence that the robust momentum would continue going forward. Did not see inflation moving steadily away from the very low levels of recent years. Reiterated Council view that was not at a point where the recovery or inflation could be self-sustained without the current accomodative monetary policy. Extension of QE had anchored rate expectations

German Bundesbank's Dombret (ECB SSM member): Low interest rates is a problem for the banking sector from a supervisory viewpoint

Brexit Min Davis: Brexit negotiations were not a one-way street; EU needed to compromise as France and Germany were blocking progress

UK Foreign Sec Johnson: Will have good talks with Irish officials; need to move into phase 2 of Bexit negotiations at this time. Transition period could b e done in much less than 5 years

Ireland Foreign Min Coveney stated that was somewhat at an impasse on border issue and needed clarity on Brexit. Sought to move into key area of trade talks. Plan and space were needed for Brexit planning

Portugal paid €2.78B to IMF in another early repayment of bailout loans (as speculated)

Turkey President Erdogan: Country faced serious operation in economy; have to find a middle-way for the economy in 2018. Reiterated view that as interest rates moved higher so does inflation; central bank was on the wrong path

Turkey Econ Min Zeybekci: Inflation to fall in 2018; Economy should find its balance without intervention. Fx volatility was purely speculative

China PBoC announced draft rules on asset management to help lower shadow banking risks and reduce liquidity risks: To ban financial companies from the capital pool business. Highly indebted companies were not allowed to invest in asset management products. Capped debt ratio for public products at 140% and private products at 200%

Currencies

The USD was softer against the major pairs. Dealers cited reports that special counsel Robert Mueller issued subpoena to President Trump's election campaign back in mid-Oct in relation to documents on Russia (**Note: first time that Mueller officially requested information from the campaign) EUR/USD higher by 0.2% at 1.1795 while USD/JPY was off by 0.4% at 112.55

Weaker TRY currency in session after Turkey President Erdogan against criticized the central bank. Dealers noted concern over political pressure on the central bank; market is pricing in the risk that the CBRT may do something wrong only because pressured into easing. EUR/TRY at 4.59 area, higher by 0.9

The session saw weakness in AUD and NZD currencies. Dealers noted that a growing theme going forward was that China credit and growth were slowing down and would negatively impact Australia's economy. AUD/USD off 0.4% at 0.7555 area

Fixed Income

Bund futures trade at 162.62 down 8 ticks in relatively quiet trade, with volume around 70% of the recent average. Futures closed the opening gap, with a continued move lower targeting 162.38 then 162.25. A break above the high sees analysts eyeing 162.90 then 163.08.

Friday's liquidity report showed Thursday's excess liquidity fell €1.848T from €1.867T. Use of the marginal lending facility increased to €235M from €189M.

For the week ending Nov 15th Lipper Fund flows reported IG Funds net inflows of $2.41B bringing YTD inflows to $111.9B. For high Yield funds reported net outflows of $4.44B bringing YTD new outflows to $12.96B.

Looking Ahead

(SE) Sweden Hosts EU Summit in Gothenburg

(UK) Possible bilateral meeting between UK PM May and EU's Tusk at Sweden EU Summit

(DE) Bavaria's Ruling CSU Party begins 2-day Convention

(IT) Italy Debt Agency (Tesoro) exchange auction (sell Feb 2033 BTP for 5 bonds)

06:00 (BR) Brazil Sept IBGE Services Sector Volume Y/Y: -2.5%e v -2.4% prior

06:00 (PT) Portugal Oct PPI M/M: No est v 0.3% prior; Y/Y: No est v 2.7% prior

06:00 (UK) DMO to sell combined £4.0B in 1-month, 3-month and 6-month Bills (£1.0B, £1.0B and £2.0B respectively)

06:30 (IN) India Weekly Forex Reserves

06:45 (US) Daily Libor Fixing

08:00 (PL) Poland Oct Employment M/M: 0.1%e v 0.1% prior; Y/Y: 4.5%e v 4.5% prior

08:00 (PL) Poland Oct Average Gross wages M/M: +1.3%e v -0.4% prior; Y/Y: 6.6%e v 6.0% prior

08:00 (DE) ECB's Weidmann (Germany) at banking conference in Frankfurt

08:00 (IN) India announces upcoming Bill auction (held on Wed); to sell combined INR110B in Bills on Nov

08:05 (UK) Baltic Dry Bulk Index

08:30 (US) Oct Housing Starts: 1.19Me v 1.127M prior; Building Permits: 1.25Me v 1.225M prior (revised from 1.215M)

08:30 (CA) Canada Oct CPI M/M: 0.1%e v 0.2% prior; Y/Y: 1.4%e v 1.6% prior

11:00 (US) Nov Kansas City Fed Manufacturing Activity: 21e v 23 prior

11:00 (EU) Potential sovereign ratings

(CY) Cyprus Sovereign Debt to Be Rated by Moody's

(DK) Denmark Sovereign Debt to be rated by Moody's

(NL) Netherlands Sovereign Debt to be rated by S&P

(CH) Switzerland Sovereign Debt to be rated by S&P

12:00 (CO) Colombia Central Bank Quarterly Inflation Report (QIR)

13:00 (US) Weekly Baker Hughes Rig Count data

20:30 (CN) China Oct Property Prices

(CO) Colombia Oct Consumer Confidence: No est v -10.3 prior

Overnight News

Asia:

Moody's raised India Sovereign rating to Baa2 from Baa3 (1st hike in 14 years); Outlook revised to Stable from Positive

BoJ tweaks its daily bond purchases (raises bills, cuts 1-3-year bonds) but adjustment appear to offset each other thus having the central bank sending a message it was not aiming to drive down yields

Europe:

ECB's Smets (Belgium) reiterated Council view that low inflation was not worrisome, just need a little patience

BOE Gov Carney reiterated MPC view that if economy evolved to be in line with BoE forecast, would probably raise rates a couple of times over the next few years

Brexit Sec Davis speech to German business community said to have warned EU negotiators not to put short term politics before the prosperity of its people. EU would have to wait a few more weeks for clarity on amount UK is prepared to pay for its Brexit divorce

Germany government coalition talks said to be suspended until midday on Friday, Nov 17th due to continuing differences over climate, migration and finances. Talks could continue into Saturday if needed

German FDP's Lindner says differences remained on immigration and finances; differences among parties can be overcome

Americas:

House of Representatives passes GOP tax reform bill (as expected) in a 227-205 vote (13 Republicans and all Democrats voted against the bill). Bill cut corporate tax rate, cut individual rates for many earners

Senate Finance Committee advances Republican tax legislation by vote of 14 to 12; full Senate expected to consider the measure during the week of Nov 27th

In mid-Oct, Special counsel Robert Mueller said to have issued subpoena to President Trump's election campaign in relation to documents on Russia (**Note: first time that Mueller officially requested information from the campaign)

Fed Williams (moderate, non-voter): Reiterates 4 rate hikes by end-2018 'reasonable' guess for policy; one more 2017 Fed rate hike and 3 in 2018 is 'reasonable guess'. Open to raising rates in Dec 2017 or holding steady

Fed's Mester (hawk, non-voter): Gradual upward tilt of policy path is appropriate. Inflation likely to hit 2% by sometime next year, but not in Q1

Fed's Kaplan (moderate, voter) Actively considering interest rate hikes ahead; open-minded on hikes at coming meetings

The Canadian dollar is unchanged in the Friday session. Currently, USD/CAD is trading at 1.2754, down 0.02% on the day. On the release front, Canada will publish CPI, which is expected to edge lower to 0.1%. In the US, the focus is on housing data, with the release of Building Permits and Housing Starts. Both indicators are expected to post stronger numbers for October, with forecasts of 1.25 million and 1.19 million, respectively.

The Canadian currency continues to have a quiet week, but that could change on Friday, with the release of key inflation indicators, led by CPI. The markets are expecting a negligible gain of 0.1%, as inflation levels remain well below the Bank of Canada target of 2 percent. As for future monetary policy, the BoC plans to proceed with caution, according to Senior Deputy Governor Carolyn Wilkins. On Wednesday, Wilkins said that less stimulus will be needed over time, and she expected wages to rise as the economy improved. Wilkins acknowledged that there was uncertainty over the future of NAFTA, and this was affecting business investment. US President Trump has reiterated that he prefers bilateral trade agreements to multilateral arrangements, and there is a real concern that the US could scuttle NAFTA.

Investors are keeping an eye on Washington, where Republican lawmakers are rushing through major tax reform, with an eye on presenting President Trump with a new bill by Christmas. On Thursday, the House passed its version of the tax bill, by a vote of 227-205. This is a significant victory for President Trump, who is yet to sign into law a major piece of legislation in his term in office. However, with the vote largely based on party lines, Republicans will have a tougher battle passing the Senate version of the bill, as the Republicans have a slim majority of 52-48. The tax legislation provides major tax relief and cut corporate taxes from 35% to 20%, and if Congress does enact a new tax code, it will likely spur strong gains in the US and global stock markets.

WTI oil price bounced on Friday following two-day consolidation above correction low at $54.80, posted after sharp fall on Tuesday.

Recovery was so far capped at $56.00 zone (Fibo 38.2% of $57.90/$54.80 pullback) with break here needed to signal bullish extension towards pivotal barrier at $56.30, provided by 10SMA.

Close above the latter would signal formation of higher low at $54.80 and spark further recovery.

Rising 20SMA which contained pullback continues to underpin (currently at $54.99), with daily slow stochastic reversing from oversold territory and supporting scenario.

However, oil remains vulnerable as rising US supplies and concerns over Russian support for extension of oil output cut continue to weigh on oil prices.

Downside is expected to remain at risk while 10SMA caps with violation of $54.80 pivot expected to spark fresh weakness, as oil is on track for bearish weekly close, the first close in red after five consecutive bullish weeks.

Res: 56.00, 56.30, 56.72, 57.17
Sup: 55.53, 54.99, 54.80, 54.53

We again see US stocks market turning up, followed by higher shares in Asian session as well, which means that something similar can be seen for European markets. In fact, I see a nice bullish intraday pattern on DAX, which accomplished wave A with a five wave rise, so current sideways price move is likely then wave B flat correction which may find a base around 12960 area, at an open gap. That's very significant since gaps will tend to react as a reversal after they are filled. That said, be aware of a higher prices into wave C, towards 13150 while market is above 12846 intraday invalidation level.

German DAX, 15Min

If DAX will turn up from 12960 open gap, then EURUSD may stay trapped in a correction; ideally it will make a deeper a-b-c decline to around 1.1720/40 area where we would expect to see a bounce next week.

Everybody take care and have a Great weekend. Relax and achieve.

EURUSD, 1H

Crude oil has weaken after hitting a 1-year high. Expected to show further short-term bearish consolidation. Indeed the technical structure has a history of decent consolidation phase

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. For the time being the pair lies in an upside momentum. Strong support lies at 35.24 (05/04/2016) while resistance can now be found at 55.24 (03/01/2017 high).

Silver is heading higher. Hourly support can be found at 16.60 (27/10/2017 low). Hourly resistance is given at 17.46 (13/10/2017 high). Additional support can be found at 16.13 (06/10/2017 low).

In the long-term, the trend is rater negative. Further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

Gold is pushing higher. The technical structure confirms the end of the consolidation phase. Support lies at a distance at 1251 (08/08/2017 high). Resistance is now located at 1288 (20/10/2017).

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).