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The rally in DAX from 8/29 low is unfolding as a double three Elliott Wave structure where Intermediate wave (W) ended at 13089 and pullback to 12903 ended Intermediate wave (X). Up from there, the rally from 12903 low looks to be unfolding as an impulse. Minute wave ((i)) ended at 13066 and pullback to 12906.5 ended Minute wave ((ii)). Minute wave ((iii)) remains in progress and expected to end with one more leg higher. Afterwards, Index should pullback in Minute wave ((iv)) before another leg higher in Minute wave ((v)) of A. We don’t like selling the Index in any proposed pullback. For the impulse view to remain valid, ideally Minute wave ((iv)) pullback later should not retrace more than 50% of Minute wave ((iii)). Near term, while pullbacks stay above 12903 low, expect the Index to extend higher.

DAX 1 Hour Elliott Wave Analysis

Asia Summary

During yesterday's NY session, equities ended mixed amid the release of the US Fed statement. In Asia, Nasdaq Futures have declined by over 0.2%. Shares of tech firms Facebook, Symantec and Tesla declined in the US afterhours, following their most recent earnings reports.

-As of the time of writing, equity markets are trading mixed. Financials in China and Australia are trading generally weaker, following earnings. Standard Chartered has declined by more than 5% amid weaker than expected Q3 results. National Australia Bank (NAB) has declined by over 2% after reporting FY17 cash earnings below market expectations.

At the same time, Boral, which produces building and construction materials in Australia, has gained over 3% after it said Q1 earnings were better than expected.

-In the auto sector, Honda has gained over 4% after the company reported financial results and raised its FY sales forecast. Steel maker Kobe Steel has continued to rise after the company issued its earnings report on Monday, while JFE has gained over 1% following its earnings release.

The Aussie has gained over 0.3%, following better than expected Sept Trade Balance and Building Approvals data with Sept retail sales due for release on Friday. Overall, the US dollar is trading with a generally weaker tone following the most recent FOMC statement.

At the same time, US government bond yields are lower, with Long Bond Futures up over 0.1%. Later on Thursday (at 3:00 PM EST), US President is expected to confirm that Jay Powell will be named as the next Fed Chair.

On the tax front, the US House GOP members are also expected to release their tax plan at 9:00 AM EST. The plan may include a 12% repatriation tax on cash held overseas and 5% tax for non-cash foreign holdings, according to a press report. Under the 2016 GOP tax blueprint, a tax rate of 8.75% was proposed for cash and cash equivalent profits repatriated from overseas and 3.5% on other overseas profits.

US corporate earnings expected for Thursday include, Apple. Earlier in the Asian session, retailer Costco reported better than expected Oct US SSS.

Japanese companies expected to report earnings later today include Asahi Group, Asics Corp, Furukawa Electric, Marubeni, Mazda Motor, Mitsubishi Chemical, Mitsui & Co, Nippon Sheet Glass, Renesas Electronics, Sapporo Holdings, Suntory Beverage, Suzuki Motor, Tokai Carbon and Yamaha Motor.

Key economic data

(AU) AUSTRALIA SEPT TRADE BALANCE: $1.75B V $1.2BE

(AU) AUSTRALIA SEPT BUILDING APPROVALS M/M: +1.5% V -1.0%E; Y/Y: +0.2% V -2.4%E

(JP) Japan investors net sold ¥1.08T in foreign bonds v bought ¥10.9B in prior week; Foreign investors net bought ¥697B in Japan stocks v bought ¥686B in prior week; Japan sold most foreign bonds on weekly basis since April.

Speakers and Press

Japan

(JP) Japan govt reportedly plans to widen tax on foreign online retailers - Nikkei

(JP) Follow Up: Japan PM Abe seeking ¥2T supplementary budget - Japan press

Korea

(KR) North Korea said to be working on an ‘advanced' version of its KN-20 intercontinental ballistic missile (ICBM) which could possibly reach the US – CNN

(JP) Japan Chief Cabinet Sec Suga: Watching for possible of collapse at North Korea nuclear site

China/Hong Kong

(CN) PBoC official Zeng Hui calls for stronger regulations related to public-private partnership (PPP) projects

(HK) Hong Kong HKMA: Announces USD bonds eligible yuan liquidity facility collateral, effective immediately

(HK) Macau Oct Gaming Rev MOP22.6B, +22.1% y/y v 14.5%e (yesterday)

US

(US) President Trump to announce Fed Chairman nominee Thursday 15:00ET

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.2%, Hang Seng -0.2%; Shanghai Composite -0.6%; ASX200 -0.1%, Kospi -0.5%

Equity Futures: S&P500 -0.2%; Nasdaq100 -0.3%, Dax -0.1%; FTSE100 -0.1%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.1672-1.1614; JPY 114.21-113.73; AUD 0.7726-0.7672;NZD 0.6942-0.6883

Dec Gold +0.3% at $1,280/oz; Dec Crude Oil +0.0% at $54.30/brl; Dec Copper +0.3% at $3.15/lb

(CN) PBoC OMO: skips v injects CNY240B combined in 7-day, 14-day and 63-day reverse repos prior; Net injection CNY140B v CNY0B prior

USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6196 V 6.6300 PRIOR

Equities notable movers

Australia/New Zealand

ASH.AU Reports Q1 (A$) net 1.1M v v 1.2M y/y; EBITDA 1.9M v 2.7M y/y; Rev 81.7M v 78.4M y/y – AGM; +29%

MBE.AU Guides FY18 well placed to deliver improved EBITDA y/y +14%

Japan

4091.JP Reports H1 Net ¥17.7B v ¥16.5B y/y; Op ¥29.6B v ¥26.0B y/y; Rev ¥305.7B v ¥268.8B y/y; +7.5%

7951.JP Reports H1 Net profit ¥19.6B v ¥27.2B y/y, Op profit ¥23.9B v ¥24.7B y/y, Rev ¥210B v ¥199B y/y; -10.5%

Hong Kong/China

1378.HK Chairman raises stake to 81.65%; +12%

STOCKS

Overall Global indices are looking strong and bullish for the near term. But as mentioned earlier, the exhaustion levels for the indices are not very far. We could soon see a sharp correction in the medium term.

Dow (23435.01, +0.25%) is trying to move up again after a few sessions of sideways consolidation. A rise towards 23600 and higher is on the cards for the medium term.

Dax (13465.51, +1.78%) is almost there at our target of 13500. Further upside could be limited just now as resistance above current levels could bring in some rejection as seen on the 3-day candles. Only on a break above 13500-13550 levels if seen, we would have to shift our focus towards 13800 levels. But for now, we prefer a rejection from 13500-13550 levels in the coming sessions.

Nikkei (22458.30, +0.17%) closed at higher levels today also. While the upward momentum remains intact, or target of 22666 could be tested soon. Thereafter the index is likely to see a corrective dip from there for the medium term. A failure to come off from 22666 levels would be a surprise and the index could be indicating a much larger rally than currently expected. Wait and watch crucial levels of 22666.

Shanghai (3383.40, -0.37%) has come off from levels of 3400 but is trading within the broad 3425-3360 region. A rise back towards 3425 is on the cards for the coming sessions.

Nifty (10440.50, +1.02%) has surprised in the near term by breaking above 10400. Now it could be headed towards 10500-10600 levels where it could be forming a medium term top. A corrective fall from there looks more likely.

COMMODITIES

Gold (1279.52) has started to rise from lower levels of 1263 and could possibly test 1285-1290 on the upside in the next 2-sessions. A rise towards 1300 looks likely and could be boosted by a weaker or a stable Dollar Index in the near term.

Silver (17.14) has risen sharply but could face some rejection near 17.25 or higher at 17.50 in the near term. Immediate view is bullish.

Brent (60.60) has come off slightly from 61.60 and if that holds, a sharp rejection towards 59.50 or lower is possible in the coming sessions.

WTI (54.33) is also trading lower and could come off in the near term. View looks bearish for the coming sessions.

Copper (3.1475) may rise towards 3.25 again in the next few sessions. Price looks strong just now.

Daily Pivots: (S1) 1.2841; (P) 1.2876; (R1) 1.2898; More....

Intraday bias in USD/CAD remains neutral for the moment as consolidation from 1.2916 temporary top is expecting. In case of deeper fall downside should be contained well above 1.2598 resistance turned support and bring rally resumption. Medium term trend in USD/CAD should have reversed. Break of 1.2916 will extend the rise from 1.2061 to 38.2% retracement of 1.4689 to 1.2061 at 1.3065.

In the bigger picture, USD/CAD should have defended 50% retracement of 0.9406 (2011 low) to 1.4689 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. Rise from 1.2061 medium term bottom should now target 38.2% retracement of 1.4689 to 1.2061 at 1.3065. Firm break there will target 1.3793 key resistance next (61.8% retracement at 1.3685). We'll now hold on to this bullish view as long as 1.2450 support holds.

Daily Pivots: (S1) 0.7649; (P) 0.7673; (R1) 0.7698; More...

AUD/USD's recovery from 0.7624 extends higher today. But still it's seen as a correction. Hence, upside should be limited well below 0.7896 resistance to bring fall resumption. Firm break of 0.7624 will resume whole decline from 0.8124 and target next key cluster level at 0.7322/8.

In the bigger picture, corrective rise from 0.6826 medium term bottom is likely completed at 0.8124, after hitting 55 month EMA (now at 0.8067). Decisive break of 0.7328 key cluster support (61.8% retracement 0.6826 to 0.8124 at 0.7322) will confirm. And in that case, long term down trend from 1.1079 (2011 high) will likely be resuming. Break of 0.6826 will target 61.8% projection of 1.1079 to 0.6826 from 0.8124 at 0.5496. This will now be the favored case as long as 0.7896 near term resistance holds.

Daily Pivots: (S1) 1.1596; (P) 1.1626 (R1) 1.1648; More...

EUR/USD recovery mildly as the consolidation pattern from 1.1574 temporary low continues. Intraday bias stays neutral at this point. As noted before, break of 1.1879 resistance is needed to confirm completion of the decline from 1.2091. Otherwise, near term outlook will stay bearish. Below 1.1574 will target 38.2% retracement of 1.0569 to 1.2091 at 1.1510.

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 will suggest that such medium term rebound is completed and could then bring retest of 1.0339 low.

Daily Pivots: (S1) 0.9986; (P) 1.0011; (R1) 1.0059; More....

Intraday bias in USD/CHF remains neutral as the consolidation from 1.0037 is still in progress. Another fall could be seen. But still, downside should be contained above 0.9835 resistance turned support and bring rally resumption. Since 61.8% retracement of 1.0342 to 0.9420 at 0.9990 is already met, break of 1.0037 will turn bias to the upside for 1.0342 key resistance next.

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 is 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) 113.75; (P) 114.01; (R1) 114.43; More...

Intraday bias in USD/JPY remains neutral as consolidation from 114.44 is still in progress. Another fall cannot be ruled out. But after all, near term outlook will remain cautiously bullish as long as 111.64 support holds. Decisive break of 114.49 key resistance will confirm that correction pattern from 118.65 has completed at 107.31 already. And USD/JPY should then target a test on 118.65. However, sustained break of 111.64 will argue that rebound from 107.31 has completed and bring retest of this low.

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.

Daily Pivots: (S1) 1.3216; (P) 1.3268; (R1) 1.3297; More....

GBP/USD rebounded strongly from 1.3068 but overall outlook is unchanged. Price actions from 1.3026 are seen as forming a consolidation pattern. Further rise and break of 1.3337 cannot be ruled out. But upside should be limited by 61.8% retracement of 1.3651 to 1.3026 at 1.3412 to bring fall resumption finally. On the downside, firm break of 1.3026 support will resume the decline from 1.3651 and target 1.2773 key support level. This will also revive the case of medium term reversal. However, sustained break of 1.3412 will turn focus back to 1.3651 high.

In the bigger picture, while the medium term rebound from 1.1946 was strong, GBP/USD hit strong resistance from the long term falling trend line. Outlook is turned a bit mixed and we'll stay neutral first. On the downside, decisive break of 1.2773 key support will argue that rebound from 1.1946 has completed. The corrective structure of rise from 1.1946 to 1.3651 will in turn suggest that long term down trend is now completed. Break of 1.1946 low should then be seen. On the upside, break of 1.3835 support turned resistance will revive the case of trend reversal and target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466 .

Dollar weakens broadly after FOMC rate decision that provides little news to the markets. Instead, traders are keen awaiting US President Donald Trump's announcement on nominating Fed Governor Jerome Powell to take over Fed chair job next year. The announcement is expected at 3pm New York Time today. Also, after a day of delay, House is set to reveal the details of the tax bill. But the greenback could continue to stay in range and wait for tomorrow's non-farm payroll report. Meanwhile, Sterling remains the strongest one for the week as markets await the highly anticipated BoE rate hike.

As widely anticipated, the November FOMC meeting contained few changes from the previous one. The members left the target range of the Fed funds rate unchanged at 1-1.25%. One surprise came from the upgrade of the growth assessment to 'solid' for the first time since 2015, despite disruptions by hurricanes. Inflation stayed below the 2% target and the members acknowledged that core inflation 'remained soft'. However, the encouraging growth outlook and further decline in the unemployment rate suggest that a December rate hike remains on track. More in FOMC Upgraded Growth Assessment First Time In Two Years, December Hike On Track

Also on FOMC:

• FOMC Review: Overshadowed by Fed Chair Announcement Tomorrow
• Few Changes from the Fed as December Hike Appears on Track
• Fed Holds the Line on Rates in November
• Few Surprises from the FOMC

House Ways and Means Committee Chairman Kevin Brady said yesterday that Republicans will "definitely" reveal the details of the tax bills today. Brady also hinted on a phased approach on tax cuts for businesses. Responding on questions of whether the cuts are permanent Brady said that "that's our goal, and I think it's going to take several steps through the process to achieve that." But it's believed that the purpose of the phased approach is to get around with Senate budget rules and Democratic filibuster.

BoE to hike for the first time in a decade

BoE is widely expected to hike interest rate for the first time in a decade. The Bank Rate would be raised by 25bps to 0.50%. The core question is whether this is a one-off hike. In our view, it will be a one-off as the Bank Rate will be brought back to pre-Brexit referendum level. The impact of the voting decision is largely absorbed by the monetary stimulus as well as depreciation in Sterling. BoE policy makers would hesitate to make any more move before getting a clearer picture on Brexit. With that in mind, the vote split of the decision is the first key point to watch. The tighter the decision, the more unlikely for another hike in near term. In addition, BoE will release the quarterly inflation report. Revision in inflation projection there will tell us how policymakers general feel about the recent surge in inflation.

ECB Hansson: Tapering a minor issue

ECB Governing Council Member Ardo Hansson said yesterday that tapering the asset purchase is a "minor issue" for the central bank. He noted that "How we move in the future ... to zero, is a very minor issue in the context where the stock of accumulated purchases is already in the trillions of euros." And, "so the question about 10 billion euros there or the precise phasing, I think is not really a material issue". That is taken by a sign by some that ECB could be moving the policy focus away from asset purchases. That is, the central bank will put more emphasis on tools like interest rates, or forward guidance.

Japan PM Abe undecided yet on next BoJ head

In Japan, the question on whether BoJ Governor Haruhiko Kuroda would be given another five year term next year is still unanswered. Prime Minister Shinzo Abe expressed his recognition on Kuroda's achievements. He said that "we have created a situation in a short period of time that Japan is no longer in deflation as a result of strengthening policy coordination between the government and the BOJ." And, "the government and the BOJ have achieved a major result on employment, which is the most important responsibility of politics." But he also noted he had "no decided at all" on who will lead BoJ after Kuroda's term expires next April.

On the data front

Australian Dollar rebounds notably today after positive economic data. Trade surplus widened to AUD 1.75b in September, above expectation of 1.2b. Building approvals rose 1.5% in October versus expectation of -1.0% fall. Japan monetary base rose 14.5% yoy in October.

Swiss will release retail sales and SECO consumer confidence and retail sales in European session. Eurozone will release PMI manufacturing revision and German unemployment. UK will release construction PMI but focus will be on BoE rate decision and inflation report.

From US, jobless claims, Challenger job cuts and non-farm productivity will be featured.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.3216; (P) 1.3268; (R1) 1.3297; More....

GBP/USD rebounded strongly from 1.3068 but overall outlook is unchanged. Price actions from 1.3026 are seen as forming a consolidation pattern. Further rise and break of 1.3337 cannot be ruled out. But upside should be limited by 61.8% retracement of 1.3651 to 1.3026 at 1.3412 to bring fall resumption finally. On the downside, firm break of 1.3026 support will resume the decline from 1.3651 and target 1.2773 key support level. This will also revive the case of medium term reversal. However, sustained break of 1.3412 will turn focus back to 1.3651 high.

In the bigger picture, while the medium term rebound from 1.1946 was strong, GBP/USD hit strong resistance from the long term falling trend line. Outlook is turned a bit mixed and we'll stay neutral first. On the downside, decisive break of 1.2773 key support will argue that rebound from 1.1946 has completed. The corrective structure of rise from 1.1946 to 1.3651 will in turn suggest that long term down trend is now completed. Break of 1.1946 low should then be seen. On the upside, break of 1.3835 support turned resistance will revive the case of trend reversal and target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466 .

Economic Indicators Update