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Pound Trading A Tad Lower, Ahead Of UK’s GDP Data
For the 24 hours to 23:00 GMT, the GBP declined 0.53% against the USD and closed at 1.3133, after dovish comments from the Bank of England's (BoE) Deputy Governor, Jon Cunliffe fuelled uncertainty over a potential November interest rate hike.
In the Asian session, at GMT0300, the pair is trading at 1.3132, with the GBP trading marginally lower against the USD from yesterday's close.
The pair is expected to find support at 1.3087, and a fall through could take it to the next support level of 1.3043. The pair is expected to find its first resistance at 1.3202, and a rise through could take it to the next resistance level of 1.3273.
Trading trend in the Pound today is expected to be determined by the release of UK's flash 3Q GDP figures, due in a few hours. Investors will also eye the nation's BBA mortgage approvals data for September.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
Japanese Yen Trading Marginally Higher This Morning
For the 24 hours to 23:00 GMT, the USD rose 0.48% against the JPY and closed at 113.94.
In the Asian session, at GMT0300, the pair is trading at 113.90, with the USD trading a tad lower against the JPY from yesterday’s close.
The pair is expected to find support at 113.45, and a fall through could take it to the next support level of 112.99. The pair is expected to find its first resistance at 114.19, and a rise through could take it to the next resistance level of 114.47.
Amid no major macroeconomic releases in Japan today, Yen investors will focus on global macroeconomic factors for further direction.
The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average
EUR/CHF Elliott Wave Analysis
EUR/CHF : 1.1643
The single currency has continued moving higher after recent anticipated rise from 1.1388 and previous resistance at 1.1624 was finally breached, add credence to our view that recent upmove has resumed and bullishness remains for medium term uptrend to extend further gain to 1.1695-00 (61.8% projection of 1.0833-1.1538 measuring from 1.1259) and possibly towards 1.1790-00, however, this wave v is likely to be limited to1.1860-70 and price should falter well below 1.2000, bring correction later.
To recap our preferred count, the decline from 1.6828 (end wave (B)) is labeled as the beginning of wave (C) which should unfold as an impulsive move with 1: 1.5326, 2: 1.6377 and wave 3 is sub-divided into (i): 1.4300, (ii): 1.5880 and wave (iii) is still unfolding with (1): 1.4577, (2): 1.5448 and wave (3) is an extended 3rd with i: 1.5006, ii: 1.5383, wave iii: 1.3073, then wave iv ended at 1.3925 and wave v at 1.3073, wave (4) ended at 1.3925 and wave (5) has ended at 1.2765 which also marked the low of wave (iii) and wave (iv) has ended at 1.3835 and wave (v) as well as larger degree wave 3 has ended at 1.0075. The selloff from 1.2650 signals wave 4 has ended there and we are taking a view that the wave 5 could also have ended 0.8426, hence consolidation is seen with mild upside bias for rebound to 1.1400 (already met), then towards 1.1600.
On the downside, whilst initial pullback to 1.1600 cannot be ruled out, reckon 1.1570 would limit downside and bring another rise later. Only a drop below support at 1.1488 would defer and risk pullback to 1.1425-30, then towards support at 1.1388 which is likely to hold from here. In the unlikely event euro drops below said support at 1.1388, this would signal a temporary top has been formed and bring retracement of recent rise to 1.1345, then towards another previous support at 1.1259 which is likely to hold from here.
Recommendation: Buy again at 1.1580 for 1.1780 with stop below 1.1480.
The long-term downtrend started from 1.9626 (Apr 1985) to 1.4166 (Sep 1995) is treated as wave (A) with A:1.6285 (Dec 1987), B: 1.9342 (May 1992) and C: 1.4166, then wave (B) ended at 1.6828 with A: 1.7147 (Feb 1997), B: 1.4398 (Sep 2001), C: 1.6828 (Nov 2007), therefore, wave (C) is now in progress with the breakdown indicated as above. This wave (C) already met indicated downside target at 1.1455/60 and 1.1300, it could have ended at 0.8426, consolidation with mild upside bias is seen for gain to 1.1000 and later towards 1.2000.
Swiss Franc Trading A Tad Lower, Ahead Of Switzerland’s ZEW Expectations And The UBS Consumption Indicator Data
For the 24 hours to 23:00 GMT, the USD rose 0.59% against the CHF and closed at 0.9908.
In the Asian session, at GMT0300, the pair is trading at 0.991, with the USD trading slightly higher against the CHF from yesterday's close.
The pair is expected to find support at 0.9860, and a fall through could take it to the next support level of 0.9811. The pair is expected to find its first resistance at 0.9937, and a rise through could take it to the next resistance level of 0.9965.
Ahead in the day, traders would eye Switzerland's ZEW expectations index for October and the UBS consumption indicator for September.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
AUD/USD Elliott Wave Analysis
AUD/USD – 0.7777
As aussie has retreated after faltering below resistance at 0.7897, adding credence to our view that the rebound from 0.7733 has possibly ended at 0.7897, hence bearishness remains for a retest of this level but break there is needed to confirm the decline from 0.8125 top has resumed for retracement of early upmove to previous resistance at 0.7712, break there would bring further fall towards 0.7640-50 but near term oversold condition should limit downside and reckon support at 0.7570 would hold.
We are keeping our count that top has been formed at 1.1081 (wave 5 of V) and major correction (A-B-C-X-A-B-C) has commenced, indicated downside targets at 0.7945 (61.8% Fibonacci retracement of entire rise from 0.6007-1.1081) and 0.7750 had been met and downside bias is seen for further weakness to 0.6800, then 0.6700 but reckon 0.6500 would hold from here.
Our preferred count is that the rally from 0.6007 to 0.7270 (7 Jan 2009) is marked as wave A, the retreat to 0.6248 (2 Feb 2009) is wave B and the subsequent upmove is labeled as wave C with wave (iii) and wave (iv) ended at 0.8265 and 0.7700 respectively and wave (v) as well as 3 ended at 0.9407, then wave 4 ended at 0.8066 (instead of 0.8578). The wave 5 has met our indicated projection target of 1.1060 and could ended at 1.1081, this level is now treated as the peak of wave (C) as well as larger degree wave B, hence major fall in wave C has commenced, our initial downside target at psychological support at 0.7000 has just been met and further weakness to 0.6500 would be seen later.
On the upside, expect recovery to be limited to 0.7720-30 and bring another decline to aforesaid downside targets. Above said resistance at 0.7897 would abort and signal low has been formed instead, risk test of previous support at 0.7908, break there would signal first leg of decline from 0.8125 has ended instead, bring a stronger rebound to 0.7940-50 but upside should be limited to 0.8020 and bring another decline later. A daily close above 0.8020 would risk test of 0.8080 but only break of resistance at 0.8103 would signal correction from 0.8125 has ended, bring retest of this level first.
Recommendation: Hold short entered at 0.7870 for 0.7670 with stop above 0.7850.
Our alternate count on the daily chart treated the top formed in 2008 at 0.9851 could be a larger degree wave I and was followed by a deep and sharp correction in wave II to 0.6007 and wave III is unfolding from there.
The long-term uptrend started from 0.4775 (2 Apr 2001) with an impulsive structure. Wave I is labeled as 0.4775 to 0.9851 (15 Jul 2008), wave II has ended at 0.6007 (Oct 2008) and wave III is still in progress which may extend further gain to 1.1265.
Loonie Extends Its Losses, Ahead Of BoC’s Interest Rate Decision
For the 24 hours to 23:00 GMT, the USD rose 0.22% against the CAD and closed at 1.2672.
In the Asian session, at GMT0300, the pair is trading at 1.268, with the USD trading 0.06% higher against the CAD from yesterday's close.
The pair is expected to find support at 1.2637, and a fall through could take it to the next support level of 1.2594. The pair is expected to find its first resistance at 1.2708, and a rise through could take it to the next resistance level of 1.2736.
This afternoon will bring the Bank of Canada's (BoC) interest rate decision. Market participants widely anticipate the central bank to stand pat on its monetary policy.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
Trade Idea : USD/CHF – Buy at 0.9840
USD/CHF - 0.9896
Most recent candlesticks pattern : N/A
Trend : Up
Tenkan-Sen level : 0.9906
Kijun-Sen level : 0.9883
Ichimoku cloud top : 0.9852
Ichimoku cloud bottom : 0.9839
Original strategy :
Buy at 0.9795, Target: 0.9895, Stop: 0.9760
Position : -
Target : -
Stop : -
New strategy :
Buy at 0.9795, Target: 0.9895, Stop: 0.9760
Position : -
Target : -
Stop : -
Yesterday’s rally above resistance at 0.9882 confirms our view that recent rise from 0.9421 low is still in progress and bullishness remains for this move to extend further gain to 0.9920, then towards 0.9940-50, having said that, near term overbought condition should limit upside and price should falter well below psychological resistance at 1.0000, bring retreat later.
In view of this, we are looking to buy dollar again on pullback as said support at 0.9838 should limit downside and bring another rise. A firm break below 0.9830 would defer and risk test of support at 0.9796 but only break of latter level would signal top is formed instead, risk retracement of recent rise to 0.9775-80, however, support at 0.973037 should remain intact.
Trade Idea : GBP/USD – Sell at 1.3185
GBP/USD - 1.3137
Most recent candlesticks pattern : N/A
Trend : Near term down
Tenkan-Sen level : 1.3130
Kijun-Sen level : 1.3169
Ichimoku cloud top : 1.3202
Ichimoku cloud bottom : 1.3158
Original strategy :
Sell at 1.3170, Target: 1.3060, Stop: 1.3205
Position : -
Target : -
Stop : -
New strategy :
Sell at 1.3185, Target: 1.3085, Stop: 1.3220
Position : -
Target : -
Stop : -
Yesterday’s selloff after meeting renewed selling interest at 1.3228 adds credence to our view that the rebound from 1.3088 has ended there and bearishness remains for another test o said support, break there would extend the fall from 1.3338 to 1.3050, then towards recent low at 1.3027 which is likely to hold from here due to near term oversold condition, bring rebound later.
In view of this, wee are looking to sell cable on minor recovery as the Kijun-Sen (now at 1.3169) should limit upside and 1.3190 should hold, bring another decline. Above 1.3200-05 would risk another test of 1.3228, break there would bring a stronger rebound to 1.3240-45 (61.8% Fibonacci retracement of 1.3338-1.3088) but still reckon resistance at 1.3287 would cap upside.
Trade Idea : EUR/USD – Stand aside
EUR/USD - 1.1763
Most recent candlesticks pattern : N/A
Trend : Sideways
Tenkan-Sen level : 1.1762
Kijun-Sen level : 1.1768
Ichimoku cloud top : 1.1792
Ichimoku cloud bottom : 1.1752
New strategy :
Stand aside
Position : -
Target : -
Stop : -
Despite yesterday’s brief fall to 1.1725, lack of follow through selling on break of previous support at 1.1730 and the subsequent rebound 1.1793 suggest further consolidation would take place and recovery to 1.1800 cannot be ruled out, however, still reckon upside would be limited to 1.1820-25 and price should falter well below resistance at 1.1858, bring further choppy trading later.
On the downside, below said support at 1.1725 would extend the fall from 1.1880 top to 1.1700 and possibly towards indicated previous support at 1.1669 but break of latter level is needed to retain bearishness and extend further subsequent decline to 1.1640-45 first. As near term outlook is still mixed, would be prudent to stand aside in the meantime.
Market Update – Asian Session: Australia CPI Weaker Than Expected
Asia Summary
Asian equity markets opened the session mostly higher. On Tuesday, the Dow rose by 0.7% amid earnings reports from Caterpillar, McDonald’s and 3M. The Nikkei 225 is attempting to have its 17th straight higher close.
Auto components manufacturer, Nidec Corp has gained over 0.5% after raising its FY profit forecasts.
Shares of technology name, Canon Inc, have gained over 1% on better than expected profits, higher guidance and plan to pay a special dividend. Nintendo has gained over 2% ahead of its earnings due on Oct 30th. In South Korea, LG Display has gained over 0.7%, as quarterly net profit and revenues beat consensus expectations.
In the financial sector, Japanese ‘mega banks’ have continued to gain following Sunday’s election results. Mitsubishi UFJ has risen by over 1.5%, while Mizuho Financial has gained over 1%.
Financials in Hong Kong are trading higher, as China’s 10-year government bond yield rose to the highest level since 2014. Shares of rail equipment company Zhuzhou CRRC are gaining, after declining earlier in the week on 9-month financial results. The Hang Seng Property index is also rising, adding on to the gains seen in the prior session.
In the Philippines, miners are trading generally higher amid speculation that the government could end the ban on open-pit mines. Global miners, Rio Tinto and BHP have traded higher on the session. On Tuesday’s session, US copper producers rose after copper traded higher by over 0.6%.
Australian retailers are trading generally lower. Wesfarmers has declined following its Q1 trading update, as the company reported a y/y decline in sales at its Coles unit. Woolworths and Harvey Norman have declined by over 1%, amid the trading update from Wesfarmers and release of Australia’s Q3 CPI data.
Following these inflation figures, the Aussie has declined by over 0.5%, as the data missed market expectations and CPI remained below the lower end of the RBA’s 2-3% inflation target. Amid the CPI data, Australia’s 3-year bond yield has declined on the session, after gaining ahead of the inflation figures.
In the Philippines, the Peso currency has hit lows against the US dollar not seen since 2006. Philippines Sept budget balance data (released on Tuesday) showed a deficit.
Looking ahead, Japanese companies seen reporting earnings later today include Chugai Pharmaceuticals, Daiwa Securities, Fanuc, Hitachi Chemical and Matsui Securities. Taiwanese tech firm UMC may also report its quarterly figures. On Thursday’s session, Australia’s ANZ Bank and South Korean chipmaker Hynix are due to report their respective results.
US companies due to report on Wednesday include Amgen, Boeing, Coca-Cola, Freeport-McMoran, International Paper, Las Vegas Sands and Visa.
Key economic data
(AU) AUSTRALIA Q3 CONSUMER PRICES (CPI) Q/Q: 0.6% V 0.8%E; Y/Y: 1.8% V 2.0%E; TRIMMED MEAN Q/Q: 0.4% V 0.5%E ; Y/Y: 1.8% V 2.0%E
(AU) AUSTRALIA SEPT SKILLED VACANCIES M/M: 0.0% V 0.3% PRIOR
Speakers and Press
Japan
(JP) Japan to consider tax benefits for companies that raise wages - Japanese Media
(JP) Japan said to consider proposing increase in the tobacco tax for fiscal year 2018 - Japanese Press
(JP) PM Abe Cabinet approval ratings rise in Asahi and Yomiuri Polls following recent elections
(JP) Japan Chief Cabinet Sec Suga: To decide on extra budget for typhoon after monitoring
Korea
(KR) South Korea and China Defense Ministers said to have held their first bilateral talks in over two years on the sidelines of a regional security forum - financial press
China/Hong Kong
(CN) China NDRC to begin checking property prices for any 'violations'
Australia/New Zealand
(NZ) New Zealand PM Designate Ardern: Grant Robertson to become Finance Minister
Asian Equity Indices/Futures (00:00ET)
Nikkei +0.2%, Hang Seng +0.7%; Shanghai Composite +0.1%; ASX200 +0.1%, Kospi +0.2%
Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax +0.1%; FTSE100 -0.0%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.1770-1.1753; JPY 113.97-113.75; AUD 0.7784-0.7717;NZD 0.6912-0.6881
Dec Gold -0.3% at $1,274/oz; Nov Crude Oil -0.1% at $52.42/brl; Dec Copper -0.3% at $3.19/lb
(CN) PBoC OMO: Injects CNY160B in 7 and 14-day reverse repos v CNY250B injected prior; injects net CNY0B v CNY140B prior
USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6322 V 6.6268 PRIO
(KR) Bank of Korea (BOK) sells KRW 2.4T v KRW2.4T offered 2-yr monetary stabilization bonds; avg yield 2.04% v 1.85% prior
(CN) China MoF sells 7-yr upsized bonds at 3.7714%, bid-to-cover 2.72x; 3-yr bonds at 3.6%; bid-to-cover 2.0x
Equities notable movers
Australia/New Zealand
FBU.NZ Guides FY18 EBIT for B+I is expected at loss NZ$160M; EBIT ex- B+I NZ$680-720M; names Ross Taylor as CEO, effective Nov 22nd ; -2.1%
WES.AU Reports Q1 Curragh coal production 3Mt v 2.5Mt y/y; Coles Sales A$9.37B v A$9.40B y/y; -2.3%
MSB.AU Teva reportedly seeking buyers for its A$40M Mesoblast stake – press; -11%
Japan
7203.JP Scaling back Mexico plant capacity by 50% and will reduce investment by 30%; -0.4%
6370.JP Raises H1 guidance Net ¥7.4B from ¥5.3B y/y; FY17/18 Net ¥15B from ¥13B; +8.7%
5486.JP Reports H1 Net ¥19.6B v ¥18.3B y/y, Op ¥32.2B v ¥31.0B Rev ¥482.4B v ¥446.1B y/y; -7.6%
China/Hong Kong
973.HK Reports H1 Net Rev €548.2M, +1.1% y/y (cc); -6.5%