Sample Category Title

USD/JPY - 112.68

Most recent candlesticks pattern   : N/A

Trend                      : Up

Tenkan-Sen level              : 112.67

Kijun-Sen level                  : 112.61

Ichimoku cloud top             : 113.01

Ichimoku cloud bottom      : 112.88

Original strategy  :

Sell at 113.10, Target: 112.10, Stop: 113.45

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 113.10, Target: 112.10, Stop: 113.45

Position :  -

Target :  -

Stop : -

Although the greenback jumped to 113.44 on Friday, the subsequent reversal from there to 112.32 suggests top has possibly been formed there and consolidation with downside bias is seen for test of support at 112.21, however, break there is needed to add credence to this view, bring retracement of early upmove to 112.00, then 111.75-80 but previous support at 111.47 should remain intact.

In view of this, we are looking to sell dollar on recovery as resistance area at 113.20-26 should cap upside and bring another decline to aforesaid downside targets. Only break of said resistance at 113.44 would abort and signal recent upmove is still in progress for further gain to 113.75-80 and possibly towards 114.00-10 which is likely to hold from here, bring correction later. 

EUR/GBP - 0.8931

Original strategy  :

Sold at 0.8930, Target: 0.8750, Stop: 0.8970

Position : - Short at 0.8930

Target :  - 0.8750

Stop : - 0.8970

New strategy  :

Hold short at 0.8930, Target: 0.8750, Stop: 0.8970

Position : - Short at 0.8930

Target :  - 0.8750

Stop : - 0.8970

 
As the single currency faltered below indicated resistance at 0.8970 and has retreated, retaining our bearish view and as long as this level holds, prospect of another retreat remains, below support at 0.8850 would signal top is formed, bring further fall to 0.8820-25 but break of 0.8800-05 is needed to signal the rebound from last month’s low at 0.8746 has ended, then subsequent decline to 0.8770 would follow. 

In view of this, we are holding on to our short position entered at 0.8930. Above said resistance at 0.8970 would signal the rise from 0.8746 low is still in progress for retracement of early decline to psychological resistance at 0.9000 but reckon previous resistance at 0.9048 would remain intact. 

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.

USD/JPY has shown little movement at the start of the week. In Monday's North American session, the pair is trading at 112.71, up 0.06% on the day. In the US, banks are closed for Columbus Day, and there are no US events on the schedule. Later in the day, Japan releases Current Account, with the surplus expected to narrow to JPY 1.98 trillion.

US employment data was a mix on Friday. Non Farm Employment change surprised with a decline of 33 thousand, compared to the estimate of a gain of 85 thousand. The weak reading didn't cause any alarm in the markets, but rather underscored the severe impact of Hurricanes Harvey and Irma, which hit the US in late August and early September. The two storms caused $150-200 billion in damage and also took a toll on the employment market, although the labor market is expected to rebound as the recovery effort intensifies. On a brighter note, wage growth accelerated to 0.5%, above the estimate of 0.3%. This reading is pointing to stronger inflationary pressure, although we'll have to wait for additional inflation indicators, such as CPI, to gauge inflation is moving higher. There was more good news from September job data, as the unemployment rate fell from to 4.2% in September, down from 4.4% a month earlier.

Early in the year, the Federal Reserve broadly hinted that it would raise rates three or four times in 2017, and a third hike in December now appears very likely. Fed futures are currently priced in at 91%, which is remarkable, considering that only a month ago, the odds of a December increase were just 31 percent. A strong US economy has helped raise the odds, but the primary reason for the huge shift in market sentiment can be attributed to the Fed policymakers that have come out in support of a rate hike, notably Fed Chair Janet Yellen. The lack of inflation remains the most significant impediment to raising rates, but Yellen and other FOMC members have insisted that strong economic conditions will lead to higher inflation levels.

• European equities tread water today with Spain outperforming (+0.75%) following this weekend's developments in the Spain-Catalunya stand-off. US markets are closed for Columbus Day.
• German industry rebounded from a summer lull with its best month in six years, keeping Europe's largest economy on a solid footing in the second half of the year. Output, adjusted for seasonal swings and inflation, increased 2.6% from July when it fell a revised 0.1%.
• After 208 days of tough negotiations, the leaders of four Dutch parties (VVD, D66, CU and CDA) agreed on a draft program for a new centre-right coalition government under Prime Minister Mark Rutte that will likely push policies further to the right.
• Theresa May's attempt to put pressure on the EU to move on to the next stage of Brexit talks received an early setback after the European Commission said that the "ball is entirely in the UK's court".
• Germany's Greens rejected a deal reached within Chancellor Angela Merkel's conservative bloc to limit migrants to 200,000 a year, but said coalition talks should get under way anyway.
• The ECB is still concerned with the stock of bad loans clogging up bank balance sheets in the euro zone, ECB Mersch said. The ECB last week issued new proposals that will force banks from 2018 to set aside more cash to cover newly classified bad debts and may also present additional measures to tackle the sector's huge stock of soured debt.

Rates

Bund treads water in thin market conditions

The German Bund gained slightly ground after today's opening, but hovered sideways in a narrow range for the remainder of the European session. Traded volumes were extremely low. Japanese and US markets are closed today and the EMU eco calendar only contained (very strong) German production data. Last week's failure to break above 0.50% resistance (German 10-yr yield) suggests some consolidation ahead despite this week's heavy EMU supply calendar.

The German yield curve bull flattens at the time of writing with yield changes ranging between flat (2-yr) and -1.1 bp (30-yr). On intra-EMU bond markets, 10-yield spread changes versus Germany range between +1 bps and -1 bps with Italy (-3 bps) and Spain (-5 bps) outperforming. Spanish bonds profit after this weekend's mass demonstrations against the Catalan secession case which play in the advantage of PM Rajoy's in the current stand-off. Dutch bonds don't react to the announcement of a new centre-right coalition government under PM Rutte after more than 200 days of negotiation.

The Slovak debt agency announced the near-term syndication (likely tomorrow) of a new 30-yr benchmark. The new issue is a significant lengthening of the Slovak curve. Currently, the longest-dated outstanding Slovak bond is a 20-yr one (SLOVGB 1.875% Sep2037; issued in Q1 2017).

Currencies

Sideways trading in main dollar crosses

The greenback traded listless in a tight range during today's session following a failed attempt of the dollar to gain more ground after the payrolls on Friday. A thin calendar and the absence of US traders (Columbus Day) contributed to the dull trading. Tensions between the US and Turkey and ongoing uncertainty about Catalonia didn't affect global currency markets. At the time of writing, EUR/USD trades around 1.1740, barely 10 ticks above Friday's close. USD/JPY trades at 112.70, nearly unchanged on the day.

Overnight, Japanese markets were closed, making the start of trading even thinner than is usual the case on Monday. Weak Chinese PMI's were ignored, leaving a modest risk-on sentiment in equity markets. However, it didn't impact USD/JPY or EUR/USD, which both traded near opening levels.

A shy attempt to push EUR/USD lower at the start of European trading after very strong August German production data ran rapidly into resistance and an intraday low around 1.1720 was reached when European equities started trading. Tensions about Catalonia's independence eased after the mass demonstrations in favour of Spanish unity. We shouldn't give too much credence to explain the sluggish move higher of the euro to this intrinsically euro positive factor. The pair topped out even before reaching the 1.1750 level and trades currently at 1.1740, insignificantly above Friday's closing levels. Moves in USD/JPY were even smaller during the European session.

Sterling strengthens as PM May re-asserts her authority

Following a 6 days losing streak, when investors scaled back sterling long positions, sterling managed to gain ground today versus euro and dollar. There were no economic data of importance, but the political future of PM May became again a bit more secure. On the weekend, she reasserted her authority as she mulled over a cabinet reshuffle in which Foreign Secretary Boris Johnson may be axed. This bit of news might have been enough to bolster sterling, as the trimming of sterling long positions might have finished (for now). We would currently consider the sterling rebound as corrective in nature. The alleged attempt of PM May to put the Brexit-ball in the EU camp during a speech that she will give later today, was already countered by the EU-27. A EU Commission spokesman said the ball is entirely in the UK Court. EUR/GBP was already downwardly oriented in late Asian trading and continued to slide lower in the European session. The pair is currently still near the intraday low near the 0.8910 level from Friday's 0.8915 close. Cable trades at 1.3160, up from 1.3066 Friday's eve.

Notes/Observations

• European Investor confidence hits a fresh decade high
• China Sept FX Reserves rise for 8th straight month

Overnight/weekend

Asia:

• China Sept Caixin Services PMI: 50.6 v 52.7 prior (21-month low)

Europe:

• Spain region of Catalonia Leader Puigdemont said a law passed by the Catalan parliament preparing the way for the referendum called for a declaration of independence in the event of a 'yes' vote
• Spain PM Rajoy: Could use constitution to suspend Catalonia's autonomy if it declares independence. Ruled out mediation to solve Catalonia crisis
• Chancellor Merkel said to have urged party to try to forge 3-way Jamaica coalition. Advised everyone to concentrate on what lies ahead; first between CDU and CSU, then with FDP and Greens and to understand the mandate that voters handed us
• PM May to tell Parliament on Monday, Oct 9th that she was offering Europe a "new, deep and special partnership" with Britain
• EU significantly steps up backroom Brexit talks with Labour Party over fears PM May's government will fall
• UK PM will warn the EU that Britain will not make any more concessions on Brexit until they compromise on trade and transition talks
• PM May said to have decided to commit "billions of pounds" on preparing Britain to leave the European Union without a deal in a bid to save her premiership; spending to be "unlocked" in new year if no progress is made with Brussels
• Turkey suspended non-immigrant visa services for US citizens (**Note: move follow US govt suspended non-immigrant visa services in Turkey. The move by the US followed the arrest of a US consulate employee in Istanbul in relation to alleged links to muslin leader Fethullah Gulen. Sovereign Updates:
• Moody's affirmed Italy's sovereign rating at Baa2; outlook remains Negative
• S&P affirmed France sovereign rating at AA; outlook Stable
• Canadian rating agency DBRS affirms Spain sovereign rating at A (low), stable trend
• Canadian rating agency DBRS affirms Austria sovereign rating at AAA with stable trend

Americas:

• Trump tweet: "Presidents and their administrations have been talking to North Korea for 25 years, agreements made and massive amounts of money paid...... hasn't worked, agreements violated before the ink was dry, makings fools of U.S. negotiators. Sorry, but only one thing will work!"
• US Senate Republican Corker says President Trump could set nation on the path to World War III by threatening other countries - Fed's Rosengren (moderate, non-voter): Fed has to respond to very tight labor markets or may damage the economy (reiterated support for continued gradual interest rate hikes)

Energy:

• OPEC' Sec Gen Barkindo: No talk of holding extraordinary meeting of OPEC at this time. Consultations are under way for the extension of OPEC output cut deal beyond March 30th

Economic data

• (DE) Germany Aug Industrial Production M/M: 2.6% v 0.9%e; Y/Y: 4.7% v 2.9%e
• (FR) Bank of France Sept Industrial Sentiment: 104 v 105e
• (CZ) Czech Sept CPI M/M: -0.1% v -0.1%e; Y/Y: 2.7% v 2.7%e
• (CZ) Czech Sept Unemployment Rate: 3.8% v 3.9%e
• (CH) China Sept Foreign Reserves: $3.109t v $3.100Te (8th straight increase)
• (EU) Euro Zone Oct Sentix Investor Confidence: 29.7 v 28.5e (highest level since 2007)

**Fixed Income Issuance:

• (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 12-month Bills; Avg Yield: 0.42% v 0.39% prior; Bid-to-cover: 2.31x v 2.08x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx600 +0.2% at 390.0, FTSE -0.1% at 7517, DAX +0.1% at 12964, CAC-40 flat at 5360, IBEX-35 +0.8% at 10270, FTSE MIB flat at 22395, SMI flat at 9255, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European Indices trade flat to slightly higher as worries over Catalonia independence ease with the Spanish Ibex rebounding up over 0.7% and the Dax touched a new all time higher. On the corporate front Millennium and Copthorne trades sharply higher after its to be acquired by City Developments, while SAF Holland reversed initial losses after prelim Q3 results, and raised Rev guidance and Ericsson trades higher after naming a new Chairman. Shares of BPost trades sharply lower after acquiring Radial, while Airbus trades lower after bearish comments from the CEO and possible corruption probe.

Equities

• Consumer discretionary [Air France [AF.FR] -1.2% (Sep metrics)]
• Materials: [K+S [SDF.DE] -3.5% (2030 strategic plan), Petra Diamonds [PDL.UK] -3.6% ( likely breach of the 31 December 2017 EBITDA covenant measurement ratios has been flagged) ]
• Industrials: [Bpost [BPOST.BE] -1.4% (Acquisition), Airbus [AIR.FR] -1.7% (CEO warns of turbulent times ahead), XP Power [XPP.UK] +6% (Earnings)]
• Financials: [Millennium & Copthorne [MLC.UK] +21% (to be acquired)]
• Telecom: [ Ericsson [ERICB.SE] +1.4% (Names new Chairman)]

Speakers

• ECB: Higher interest rates would lead to higher Net Interest Income in the next three year for a majority of banks, but lower economic value of equity
• ECB's Mersch (Luxembourg): Inflation forecasts harder to make in a globalized world. Recent information needed to be factored into ECB discussion; some disappointment in recent inflation data
• Spain Dep PM Saenz reiterates that applying Article 155 was among options on Catalonia
• Turkey Central Bank Dep Gov Uysal: Do not see any FX liquidity issues at this time
• Japan PM Abe: To give up government reins if he fails to get a majority - election debate

Currencies

• Quiet start to the trading week for the major FX pairs.
• GBP/USD was firmer by 0.4% as reports circulated that PM May might reshuffle her Cabinet to reinforce her grip on power. May might demote Foreign Secretary Johnson.
• The Turkish Lira slumped in trading after US and Turkey govts announces over the weekend they each would stop issuing non-immigrant visas to each others' citizens.

Fixed Income

• Bund futures trade at 161.36 up 24 ticks as markets show signs of selling exhaustion. Further downside targets 160.66 then 160.24, while a reversal targets 161.66 initially then 161.82.
• Monday's liquidity report showed Friday's excess liquidity rose to €1.798T from €1.796T prior. Use of the marginal lending facility fell to €195M from €567M prior.

Looking Ahead

• (UK) Commons Reconvenes After Conference Recess - (UK) PM May meets business leaders on Brexit
• (UR) Ukraine Sept CPI M/M: No est v -0.1% prior; Y/Y: No est v 16.2% prior
• (MX) Mexico Sept Vehicle Production: No est v 351.9K prior; Vehicle Exports: No est v 260.6K prior
• 05:30 (DE) Germany to sell EUR2.0 BuBills
• 06:45 (US) Daily Libor Fixing
• 07:00 (BR) Brazil Sept FGV Inflation IGP-DI M/M: 0.5%e v 0.2% prior; Y/Y: -1.1%e v -1.6% prior
• 07:00 (CZ) Czech Central Bank comments on inflation data
• 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey
• 08:00 (UK) Baltic Dry Bulk Index
• 09:00 (MX) Mexico Sept CPI M/M: 0.4%e v 0.5% prior; Y/Y: 6.5%e v 6.7% prior; CPI Core M/M: 0.4%e v 0.3% prior
• 09:30 (EU) ECB announces Covered-Bond Purchases
• 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

USD/CAD - 1.2551

 
Original strategy       :

Buy at 1.2360, Target: 1.2560, Stop: 1.2300

Position: -

Target:  -

Stop: -

 
New strategy             :

Buy at 1.2415, Target: 1.2600, Stop: 1.2355

Position: -

Target:  -

Stop:-

As the greenback resumed recent rise from 1.2061 low and bullishness remains for this move to bring retracement of early downtrend, above 1.2599 would extend further gain towards previous resistance at 1.2663, however, near term overbought condition should limit upside to 1.2700 and price should falter well below another previous resistance at 1.2778. 

In view of this, would not chase this rise here and would be prudent to buy again on pullback as 1.2410-15 should limit downside. Below 1.2395-00 would bring correction back to 1.2350-55 but reckon indicated support at 1.2313 would hold. Only a drop below 1.2313 would abort and signal the aforesaid rise from 1.2061 has ended, bring further fall to 1.2254 support, however, reckon downside would be limited to another previous support at 1.2197, bring rebound later. We are keeping our count that wave v as well as wave (C) ended at 1.3794 and impulsive wave (i ii, i ii) is now unfolding with minor wave iii ended at 1.2414, followed by wave iv correction ended at 1.2778, wave v has reached our indicated downside target at 1.2100 and may extend to 1.2000.

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.

Good day traders! Today's focus is on Gold and AUDUSD.

Metals saw a nice recovery on Friday, quite impulsive here on hourly chart, so ideally gold completed a downtrend in five waves for wave A, therefore market may travel higher this week, with a new three wave rally back above 1300 region. In the mean time 1290 can act as a temporary resistance for subwave a.

GOLD, 1H

Commodity currencies are also weak, and may see more weakness after any three wave recovery. Aussie can be at the end of wave 5 of 3), so be aware of a turn up this week, back above 0.7800 possibly even to 0.7880 resistance.

AUDUSD, 1H

WTI Oil is trading in choppy consolidation on Monday with upside attempts struggling to return above broken 200SMA ($49.44).

Oil price fell sharply on Friday after dollar rose on US jobs data and dipped to $49.09, the lowest in nearly one month (around 50% of $45.57/$52.84 rally).

Friday's close below psychological $50 point, as well as below 200SMA, was strong bearish signal but losses were contained by rising 55SMA and further recovery could be anticipated as slow stochastic is reversing from oversold territory on daily chart and signals recovery.

Corrective rally needs close above $50 to sideline immediate downside risk and allow for further recovery. Break and close above $51.00 (daily Tenkan-sen) is needed to signal higher low at $49.09 and shift near-term focus higher.

Res: 49.76; 50.00; 50.44; 50.73
Sup: 49.03; 48.35; 47.76; 47.29

Gold shone brightly on Monday as a renewed focus on geopolitical risks stoked demand for safe-haven assets.
Fresh concerns over North Korea's nuclear program has accelerated the flight to safety, consequently sending Gold to a weekly high above $1285 during early trading. While short-term bulls may exploit the current uncertainty and geopolitical jitters to drive prices higher, the upside is likely to be limited by a strengthening Dollar. With expectations mounting over the Federal Reserve raising US interest rates in December, the zero-yielding metal remains at risk of reversing its gains.

Technical traders will be paying very close attention to how prices react above the $1280 resistance level. A technical bounce seems to be in play, with bears still in firm control below the psychological $1300 level. Sustained weakness back below $1280, should forge a path back towards $1267. In an alternative scenario, a daily close above this level may encourage a further incline towards $1290.

Turkish Lira nosedives against Dollar

The Turkish Lira was under intense selling pressure during early trading on Monday following an escalation of diplomatic tensions between Turkey and the United States. A mutual suspension for visa services for non-immigrants remains the key culprit behind the Lira's startling 6.6% depreciation against the Dollar. Although the Lira has clawed back recent losses since the sharp depreciation, increased political tensions may continue to impact the Turkish currency this week.

Currency spotlight – GBPUSD

Sterling staged an aggressive rebound on Monday, as investors warmly received Theresa May's promises to fend off challenges to her leadership.

While the current optimism may fuel the Pound's appreciation in the short term, political risks at home and Brexit uncertainty, are likely to limit upside gains. With round five of the Brexit talks beginning today in Brussels and no clear plan on how the UK will break away from the EU, Sterling remains vulnerable to downside risks. It could get very messy for Sterling this quarter, especially if the ongoing Brexit drama and soft economic fundamentals, prevent the Bank of England from raising UK interest in November.

From a technical standpoint, the GBPUSD has broken back above 1.3150 on Monday. A daily close above this level may signal the start of a technical bounce, with 1.3230 being the next level of interest. Alternatively, sustained weakness below 1.3150 may open a path back towards 1.3050.

GBPUSD: With the pair halting its broader weakness to trigger a strong correction on Monday, more strength is expected. Support lies at the 1.3100 level where a break will turn attention to the 1.3050 level. Further down, support lies at the 1.3000 level. Below here will set the stage for more weakness towards the 1.2950 level. Conversely, resistance stands at the 1.3200 levels with a turn above here allowing more strength to build up towards the 1.3250 level. Further out, resistance resides at the 1.3300 level followed by the 1.3350 level. Its daily RSI is bullish and pointing higher suggesting further strength. On the whole, GBPUSD continues to face further upside pressure on correction.