Sample Category Title

USD/JPY - 112.43

Original strategy  :

Sell at 112.80, Target: 111.80, Stop: 113.15

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 112.80, Target: 111.80, Stop: 113.15

Position :  -

Target :  -

Stop : -

Although dollar has retreated after faltering below resistance at 112.59, as long as this week’s low at 111.99 holds, risk of another rebound to 112.70-75 (50% Fibonacci retracement of 113.44-111.99) cannot be ruled out, however, reckon 112.83-89 (yesterday’s high and 61.8% Fibonacci retracement) would limit upside and bring another decline later, below said support at 111.99 would add credence to our view that top has been formed at 113.44 and extend weakness to 111.75-80, then towards 111.47 support but oversold condition would limit downside and reckon 111.11 support would remain intact.

In view of this, we are looking to sell dollar on recovery as 112.83 resistance should limit upside and bring another decline. A break of indicated level at 112.83-89 would abort and signal low is formed, bring a stronger rebound to 113.10-20 but price should falter well below said last week’s high at 113.44. 

The cross rallied strongly after disappointing Brexit news, surging through psychological 0.9000 barrier and dented strong resistance at 0.9024, provided by base of thick daily cloud.

Today's fresh bullish acceleration signals resumption of larger uptrend from 0.8745 (27 Sep low) which was paused for 0.8992/0.8906 consolidation before bulls resumed.

Clear break above cloud base would generate fresh bullish signal and open way towards next target at 0.9092 (Fibo 61.8% of 0.9306/0.8745 (29 Aug/27Sep descend).

Daily studies are turning into full bullish setup and are supportive for further advance.

However, hesitation at key barrier at 0.9024 cannot be ruled out as slow stochastic is re-entering overbought territory and forming bearish divergence which may delay bulls.

Broken daily Kijun-sen at 0.8974 should keep the downside protected.

Res: 0.9032; 0.9047; 0.9092; 0.9165
Sup: 0.9000; 0.8974; 0.8916; 0.8906

GOLD - The commodity extended its recovery on Wednesday leaving risk higher in the days ahead. However, beware of pullback threats. On the downside, support comes in at the 1,290.00 level where a break will turn attention to the 1,280.00 level. Further down, a cut through here will open the door for a move lower towards the 1,270.00 level. Below here if seen could trigger further downside pressure targeting the 1,260.00 level. Conversely, resistance resides at the 1,300.00 level where a break will aim at the 1,310.00 level. A turn above there will expose the 1,320.00 level. Further out, resistance stands at the 1,330.00 level. Its daily RSI is bullish and pointing higher suggesting further strength. All in all, GOLD looks to recover further higher.

Cable fell sharply on comments from EU's chief Brexit negotiator Barnier who said on Thursday that Brexit talks are in impasse as negotiations got stuck over the amount Britain should pay on divorce.

Situation is seen very worrying for big number of projects in Europe and for those who contribute.

News sent pound sharply lower across the board.

Cable dipped to 1.3141 in mid-Thursday's trading and retested strong support provided by 55SMA on strong bearish acceleration after bulls stalled at 1.3266 3266 (Fibo 38.2% of 1.3655/1.3026 descend).

Fresh weakness weakened near-term structure as sharp fall surged through thick hourly cloud and pressures 55SMA pivot, loss of which is needed to confirm an end of corrective phase from 1.3026 and lower top at 1.3266 for renewed attempts towards 1.3026 (06 Oct low / 100SMA) and psychological 1.3000 support.

Immediate downside risk would reduced while 55SMA holds, but bounce and close above 10SMA (1.3204) is needed to neutralize and shift focus higher.

Res: 1.3164; 1.3200; 1.3266; 1.3318
Sup: 1.3136; 1.3074; 1.3026; 1.3000

The USDJPY continues to trade in an increasingly tight trading range on Wednesday, with the pair largely unchanged from Tuesday even after the FOMC Meeting Minutes and a sharp drop in the U.S dollar index.

Trading sentiment surrounding the USDJPY pair today remains neutral until a range-break is confirmed. Traders will look to U.S economic data later today, U.S equities and headlines from the upcoming Japanese elections.

Following the release of the FOMC Meeting Minutes the USDJPY dropped towards the 112.08, but later recovered towards the 112.57 level.

At present, the pair is creating an increasingly narrow trading range within a 50-pip band, with price-action making higher price-lows and lower price highs.

Key intraday USDJPY technical support is located at 112.25 and the recent swing price-low, at 112.08. Further support is seen at 111.98 and the key 200-week moving average, located at the 111.69 level.

To the upside, key intraday technical resistance is found at the USDJPY daily pivot point, at 112.39, and the recent swing price-high, at 112.57. Further intraday resistance is seen at the 112.83, 113.25 and the Non-farm payrolls spike high, at 113.43.

The British pound has reversed intraday gains against the U.S dollar, hitting 1.3143 after the Bank of England Credit Condition Survey warned that the United Kingdom will soon face a sharp decline in consumer credit availability.

Trading sentiment surrounding the GBPUSD pair is bearish while trading below the key 1.3220 level. On an intraday basis, the pair is now testing supply and demand interest around its key weekly pivot point, at 1.3166.

Going forward, Brexit negotiations and today's PPI inflation figures from the United States should prove pivotal in the GBPUSD pairs next intraday move.

As previously noted, the daily price-close surrounding the GPBUSD pair will be crucial around the 1.3220 level, especially after Yesterday's failure to close the daily price-candle above this key region.

Key intraday support below the 1.3166 level is located at 1.3150 and the Monday price low, at 1.3139. Further support is found at the key 1.3110 level and the weekly low, at 1.3075.

To the upside, key intraday resistance for the GBPUSD pair is located at 1.3190, 1.3220 and the former swing high, currently located at 1.3267.

Notes/Observations

Plethora of central bank speak at Institute of International Finance (IIF) conference in Washington today (includes ECB's Draghi (along with members Praet, Coeure and Lautenschlaeger, Fed's Brainard, Fed's Powell, BOE's Haldane and Bank of Canada (BOC) Wilkins, Riksbank Gov Ingves (along with member Skingsley)

Overnight

Asia:

China Foreign Ministry: Have lodged representations with US over destroyer's trespass on territorial waters

Europe:

Spain central govt said to have given Catalan leader Puigdemont 5 days (until Monday, Oct 16) to clarify independence stance. If Catalan President Puigdemont confirmed by Monday that he has declared independence, he will be given a further 3 days to withdraw the declaration

Americas:

FOMC Minutes (from Sept 19-20th): Many Fed officials saw another rate hike warranted this year. Many officials concerned low inflation might not only reflect transitory factors. Several members wanted to be more data dependent into December

Treasury Sec Mnuchin reportedly strongly advocating for Jerome Powell as Fed chair

US President Trump: Looking at ~10% repatriation tax rate (vs current 35% corporate tax rate)

Energy:

Weekly API Oil Inventories: Crude: +3.1M v -4.1M prior

Economic data

(NL) Netherlands Aug Trade Balance: €4.1B v €4.7B prior

(FR) France Sept Final CPI M/M: -0.2% v -0.1%e, Y/Y: 1.0% v 1.0%e, CPI Ex-Tobacco Index: 101.30 v 101.31e

(FR) France Sept Final CPI EU Harmonized M/M: -0.2% v -0.1%e, Y/Y: 1.1% v 1.1%e

(SE) Sweden Sept CPI M/M: 0.1% v 0.4%e, Y/Y: 2.1% v 2.4%e, CPI Level: 323.62 v 324.31e

(SE) Sweden Sept CPI CPIF M/M: 0.2% v 0.4%e, Y/Y: 2.3% v 2.5%e

(EU) Euro Zone Aug Industrial Production M/M: 1.4% v 0.6%e, Y/Y: 3.8% v 2.6%e

Fixed Income Issuance:

(SE) Sweden sold SEK750M vs. SEK750M indicated in I/L 2022 and 2026 Bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 flat at 390, FTSE +0.1% at 7540, DAX -0.2% at 12950, CAC-40 -0.3% at 5348, IBEX-35 flat at 10280, FTSE MIB -0.4% at 22466, SMI flat at 9264, S&P 500 Futures -0.2%]

Market Focal Points/Key Themes:

European Indices trade mixed in range bound trade, ahead of key earnings reports out of the US. Banking giants JP Morgan and Citigroup set to report as we enter into earnings season.
On the corporate front Suedzucker trades lower after Q2 results and Sanofi weighs on the CAC after noting unfavorable currency will impact Q3 results. JustEat trades sharply higher after receiving provisional clearance from the CMA on its merger with hungryhouse. Elsewhere in the UK, Sky, GVC, Hays and Booker were some of the names that reported whilst in Germany Lufthansa trades higher after

Equities

Consumer discretionary [Lufthansa [LHA.DE] +2.9%, Air Berlin [AB1.DE] +40% (Lufthansa to acquire Air Berlin Assets), Kappahl [HAHL.SE] +16% (Earnings), Brown (N) Group [BWNG.UK] -3.1% (Earnings), Just Eat [JE.UK] +5.1% (CMA provisionally clears merger with Hungryhouse), GVC [GVC.UK] +2.7% (Earnings)]

Consumer Staples [Suedzucker [SZU.DE] -3.6% (Earnings)]

Materials: [Acacia Mining [ACA.UK] -3.1% (Q3 update)]

Industrials: [Renold [RNO.UK] -12% (Trading update)]

Healthcare: [ Sanofi [SAN.FR] -1% (Q3 currency impact),Fagron [FAGR.BE] - 8% (Q3 Rev)]

Speakers

Bank of England (BOE) Credit Conditions & Bank Liabilities Surveys: Lenders tightened criteria on unsecured borrowing (Motivations for this included concerns about customer indebtedness and the squeeze on real incomes), Defaults on Non-credit card unsecured lending up sharply

ECB spokesperson: Has legal basis for NPL provision guidance (**Note: refers to recent proposal on new guidance for banks' bad-loan provisioning starting in 2018)

Turkey Presidential advisor Ertem: Central bank tight monetary policy stance is important, seen as adequate and positive

Turkey Presidential spokesperson: Received an American request to resolve visa crisis, will evaluate proposal

Russia Central Bank (CBR) Gov Nabiullina: 2017 CPI forecast seen around 3.2%

Romania President Iohannis: Support bid for Cabinet reshuffle as economy is impacted by political turmoil

Norway 2018 fiscal budget set structural non-oil deficit at NOK231.1B vs. NOK219.6B y/y

IEA Monthly Oil Report: Maintains 2017 Global oil demand growth forecast at 1.6M bpd, Sets 2018 Global oil demand forecast at 1.4M bpd

Currencies

USD consolidated its post FOMC minutes loses in which some central bankers were still concerned about persistently low inflation. Many policymakers still felt that another rate increase this year "was likely to be warranted" but several noted that additional tightening was dependent on upcoming inflation data

EUR/USD holding steady at 1.1860 area while USD/JPY was at 112.25 just ahead of the NY morning.

SEK currency was softer after Sweden Sept CPI missed expectations Analyst noted that Swedish inflation has probably passed its peak as the strong SEK currency was taking a bite out of the upward momentum. EUR/SEK higher by over 0.5% approaching 9.60 area

Fixed Income

Bund futures trade at 161.42 up 24 ticks little change as the Fed Minutes showed central bankers are still concerned about persistently low inflation. Continued downside targets 161.03 while upside resistance stands initially at 162.07, followed by 163.27.

Gilt futures trade at 123.87 up 18 ticks with no major UK releases due for today. Continued downside eyeing 123.26. Upside targets 124.90 then 125.24.

Thursday's liquidity report showed Wednesday's excess liquidity rose to €1.809T from €1.790T and use of the marginal lending facility fell to €161M from €221M.

Corporate issuance saw $12.8B come to market via 6 Issuance was headlined by Wal-Mart's $6B 7-part senior unsecured offering and Sumitomo Mitsui Financial $2.5B 3-part issuance

Looking Ahead

(IT) Italy Debt Agency (Tesoro) to sell €6.0-7.5B indicated range in 2020, 20245 and 2048 BTP bonds

EU and UK official hold 5th round of Brexit monthly negotiation press conference

05:30 (ZA) South Africa Aug Total Mining Production M/M: +0.2%e v -0.4% prior, Y/Y: 0.5%e v 0.9% prior, Gold Production Y/Y: No est v 3.9% prior, Platinum Production Y/Y: No est v -5.0% prior

05:30 (SE) Sweden Central Bank (Riksbank) Dep Gov Ohlsson

05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds

06:00 (IE) Ireland Sept Property Prices M/M: No est v 3.0% prior, Y/Y: No est v 12.3% prior

06:00 (IE) Ireland Sept CPI M/M: No est v 0.4% prior, Y/Y: No est v 0.4% prior

06:00 (IE) Ireland Sept CPI EU Harmonized M/M: No est v 0.4% prior, Y/Y: No est v 0.4% prior

06:00 (PT) Portugal Sept CPI M/M: No est v 0.0% prior, Y/Y: No est v 1.4% prior

06:00 (PT) Portugal Sept CPI EU Harmonized M/M: No est v 0.2% prior, Y/Y: No est v 1.3% prior

06:30 (IS) Iceland to sell Bills

08:00 (PL) Poland Sept Final CPI M/M: No est v 0.4% prelim, Y/Y: No est v 2.2% prelim

08:00 (IN) India Sept CPI Y/Y: 3.5%e v 3.4% prior

08:00 (IN) India Aug Industrial Production Y/Y: 3.0%e v 1.2% prior

08:00 (UK) Baltic Dry Bulk Index

08:30 (US) Sept PPI Final Demand M/M: 0.4%e v 0.2% prior, Y/Y: 2.6%e v 2.4% prior

08:30 (US) Sept PPI Ex Food and Energy M/M: 0.2%e v 0.1% prior, Y/Y: 2.0%e v 2.0% prior

08:30 (US) Sept PPI Ex Food, Energy, Trade M/M: 0.2%e v 0.2% prior, Y/Y: No est v 1.9% prior

08:30 (US) Initial Jobless Claims: 250Ke v 260K prior, Continuing Claims: 1.93Me v 1.938M prior

08:30 (CA) Canada Aug New Housing Price Index M/M: No est v 0.4% prior, Y/Y: No est v 3.8% prior

08:30 (CA) Canada Sept Teranet/National Bank HPI M/M: No est v 0.6% prior, Y/Y: No est v 13.1% prior, House Price Index: No est v 222.03 prior

09:00 (MX) Mexico Aug Industrial Production M/M: +0.4%e v -1.0% prior, Y/Y: -0.7%e v -1.6% prior, Manufacturing Production Y/Y: 3.4%e v 2.2% prior

09:00 (RU) Russia Aug Trade Balance: $5.0Be v $ 4.0B prior, Exports: $27.3Be v $24.7B prior, Imports: $21.8Be v $20.8B prior

09:00 (RU) Russia Gold and Forex Reserve w/e Oct 6th: No est v $424.0B prior

09:00 (DE) German Chancellor Merkel at conference

10:00 (MX) Mexico Central Bank (Banxico) Sept Minutes

10:15 (EU) ECB's Draghi, Fed's Brainard speak on Monetary Policy Panel

10:30 (US) Weekly EIA Natural Gas Inventories

10:30 (US) Fed's Powell (voter, neutral) speaks at IIF Conference in Washington

10:30 (BE) ECB's Praet (Belgium, chief economist) in Washington

11:00 (US) Weekly DOE Crude Oil Inventories

12:00 (US) USDA World Agricultural Supply and Demand Estimate (WASDE) Crop Report

13:00 (US) Treasury to sell $12B in 30-Year Bonds Reopening

13:30 (SE) Sweden Central Bank (Riksbank) Dep Gov Skingsley in Washington

15:00 (AR) Argentina Sept National CPI M/M: No est v 1.4% prior

15:15 (CA) Bank of Canada (BOC) Wilkins in Washinton

15:30 (SE) Sweden Central Bank (Riksbank) Gov Ingves in Washington

15:45 (UK) BOE's Haldane in Washington

16:00 (FR) ECB's Coeure (France) in Washington

16:10 (DE) ECB's Lautenschlaeger on panel in Washington

• Attention turns to Fed speakers after minutes shed no further light on interest rates;
• Draghi joins a host of ECB speakers today ahead of key meeting in two weeks;
• Rajoy offers ultimatum to Catalan government.

The US trading day is shaping up to be far more interesting than the Asian and European sessions that preceded it on Thursday, with central bankers making appearances in large numbers, while earnings and economic reports will also attract some attention.

The FOMC meeting minutes, released on Wednesday, had the potential to be the week's most notable economic event but as many expected, there was very little in them that we were not aware of. We saw some softness in the dollar shortly after but this had been building prior to the release and I'm not convinced that many officials being concerned that inflation may not be transitory is the revelation it was made out to be.

The dollar may have weakened a little in the aftermath but yields on US Treasuries were broadly unfazed by the release. The dollar continues to look very oversold and a key test of this will likely come in the weeks ahead, with 92.50 being notable support in the dollar index and 94 resistance to the upside. A break above here could trigger a decent rally in the greenback, something that wouldn't entirely surprise me into the end of the year.

We'll hear from two permanent voters on the FOMC today, Lael Brainard and Jerome Powell, the latter being one of the final candidates rumoured to be being considered to replace Chair Janet Yellen in February. Both have been among the moderately hawkish members of the central bank but appear to fall very much in the unconvinced category, when it comes to the debate on inflation. It will therefore be very interesting to see what they have to say today, should they address it of course.

Other central bankers due to speak today include Mario Draghi and his colleagues at the ECB Peter Praet, Benoit Coeure and Sabine Lautenschlager, among many others. On the economic data side, we'll get PPI inflation data from the US for September, alongside weekly jobless claims and oil inventory data from EIA. This follows a report from API on Wednesday which indicated a build of just over three million barrels last week, which if replicated would comfortably exceed expectations of a small decline. Earnings season also got underway this week and while we're still in the quieter early stages, we will get reports on the third quarter from JP Morgan and Citigroup.

It's been a relatively quiet morning in Europe so far, with focus there still very much being on the constitutional crisis in Spain as Catalonia prepares to declare independence following its questionable and illegal referendum and Madrid prepares countermeasures. Spanish Prime Minister Mariano Rajoy has given the Catalan government eight days to drop its independence bid or risk losing its political autonomy, a move that would likely spur further unrest. So far the negative impact of this has been limited to Spanish assets, although the IBEX has recovered quite well over the last week.

NZDUSD is shifting out of a neutral phase and the bias is tilted to the upside. The 4-hour chart analysis shows that the market was consolidating near 0.7055 and then rallied towards the 50-period moving average where momentum stalled. But there is room for more upside since the RSI indicator is in bullish territory.

A valid breakout above 0.7120 could propel prices towards the key 0.7200 psychological level. Further strength in the market would change the September 20 to October 10 bearish trend and shift the focus back to the upside towards important highs at 0.7243 and 0.7343 ahead of the September 20 peak at 0.7434. Rising above this would open the way for an extension to the July peak at 0.7557.

Alternatively, prices could remain capped below the 50-period MA to target the low at 0.7055. A move below this would see a resumption of the recent downtrend with scope to target the major low at 0.6817.

Near-term risk remains to the upside and the recent downtrend is expected to take a pause above 0.7055. But only a move above 0.7200 would indicate the end to the September-October downtrend. The negative alignment of the 20 and 50-period moving averages are keeping the bearish picture in play.

Price extends the latest gains and looks determined to breakout from the minor descending pitchfork. I've said in the previous reports that price should reach the upper median line (uml) of the descending pitchfork after the failure to reach the median line (ml). A valid breakout above the WL5 and above the upper median line (uml) will validate an increase at least till will reach the 1.1621 previous high.