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Daily Pivots: (S1) 1.1702; (P) 1.1738 (R1) 1.1780; More...

No change in EUR/USD's outlook. With 1.1832 minor resistance intact, deeper decline is expected. Fall from 1.2091 would extend through 1.1661 support. Decline from 1.2091 is correcting whole rise from 1.0569. Deeper fall should be seen to 38.2% retracement of 1.0569 to 1.2091 at 1.1510, where we're expecting support to bring rebound. On the upside, break of 1.1832 minor resistance will suggest that the corrective fall is completed and turn bias back to the upside.

In the bigger picture, rise from medium term bottom at 1.0339 is not finished yet. It's expected to continue after pull back from 1.2091 completes. And, next target will be 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. However, it should be noted that there is no confirmation of trend reversal yet. That is, such rebound from 1.0399 could be a correction. And the long term fall from 1.6039 (2008 high) could resume. Hence, we'd be cautious on strong resistance from 1.2516 to limit upside.

GBPUSD (1.3233): The British pound has retreated from its highs. Data this week showed that the PMI's signaled sluggish growth as manufacturing was weak and construction PMI showed a contraction in the sector. Only the services PMI managed to rise slightly higher in comparison. GBPUSD is seen testing the support level near 1.3223. We expect to see a reversal at this support level which will keep GBPUSD range bound within 1.3360 resistance and the support level. A breakout from this level will signal further direction in the currency pair. We expect a breakout to the downside, especially is resistance is formed near 1.3360.

EURUSD (1.1755): The euro currency was slightly bullish but the currency gave up some of the gains as it retreated from the intraday highs. With the ECB minutes coming up today, the intraday charts shows EURUSD consolidating into a descending wedge pattern. In the short term, we expect the downside in the EURUSD which could see another retest to the support zone of 1.1720 - 1.1688. A retest of this support could result in a breakout to the upside. Resistance at 1.1822 - 1.1843 remains the most likely target. Failure to hold the declines near 1.1720 could signal further declines in the currency pair and could shift the bias to the downside.

Daily Pivots: (S1) 1.3218; (P) 1.3254; (R1) 1.3285; More....

Intraday bias in GBP/USD remains on the downside for the moment. Fall from 1.3651 should extend to 61.8% retracement of 1.2773 to 1.3651 at 1.3108. Firm break there will target a test on 1.2773 key support level. On the upside, above 1.3291 minor resistance will turn bias back to the upside for 4 hour 55 EMA (now at 1.3343) first.

In the bigger picture, current development argues that the long term trend in GBP/USD has reversed. That is, a key bottom was formed back in 1.1946 on bullish convergence condition in monthly MACD. Current rise from 1.1946 will target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466 next. In any case, medium term outlook will now stay bullish as long as 1.2773 support holds.

The non-manufacturing PMI released by the Institute of Supply Management (ISM) yesterday showed an increase as the index rose to 59.8 in September. It was the highest level since September and beat estimates. The ADP private payrolls data was also released yesterday which showed that private hiring added 135k jobs in September which was slightly above the estimates of 131k. Previous month's payrolls were revised down to 228k.

The US dollar was seen trading flat as investors were focused on the upcoming nomination of the Federal Reserve Chair. The US President Trump is expected to announce his nominee in a few weeks time.

Looking ahead, the economic calendar today will see the release of the ECB's meeting minutes which could be a major catalyst for the euro currency. Fed member speeches today include Jerome Powell and Harker. Powell is widely tipped to be one of the contenders for the next chair of the Federal Reserve.

Investors have marched into the final trading quarter of 2017 with a risk-on attitude, as global stocks hit fresh record highs on Wednesday.

Most Asian Indexes were supported by the renewed appetite for risk, while Wall Street stole the spotlight - both the S&P 500 Index and Dow Jones Industrial Average, sprinted to record levels. However in Europe, sentiment was bruised by the political uncertainty surrounding Catalonia, which exposed European shares to downside risks during Wednesday's trading session.

Focusing on today, Asian stocks were mostly mixed during early trade, with markets in China, South Korea and Hong Kong closed for public holidays. With market players adopting a cautious stance and strolling to the sidelines ahead of the US Jobs Report on Friday, US equity bulls may take a short break and cool off.

Dollar supported by upbeat U.S data

The Dollar clawed back some of its losses against a basket of major currencies on Wednesday, after stronger than expected US data supported expectations of a Fed rate hike before year end.

According to ADP, corporate payrolls increased by 135k in September, compared to the 228k in the previous month. While this relatively low reading would spark concerns in normal circumstances, it must be kept in mind that the impact of Hurricanes Irma and Harvey has heavily distorted the figures. With ADP exceeding the 131k market estimates, the Dollar was offered some support.

Sentiment towards the US economy received another boost on Wednesday, after the Non-Manufacturing Purchasing Manager Index came in at 59.8 in September, the highest reading since August 2005. With growth in the US service sector hitting a 12-year high last month, the outlook for the US economy continues to look encouraging for the second half of 2017.

Taking a look at the Dollar Index, the index seems to be in limbo ahead of the US Jobs Report on Friday. Prices still remain bullish on the daily charts, with 93.30 and 93.70 both acting as levels of interest. A strong NFP report that exceeds market estimates, is likely to instill bullish investors with enough inspiration to target 93.70 and 94.00, respectively. A breakout above 94.00 should open a clean path towards 94.30.

Euro wobbly ahead of ECB minutes

It has been a rocky and volatile week for the Euro, as anxiety over political uncertainty in Spain weighed heavily on the currency.

The array of sluggish Eurozone services PMI and soft retail sales data released on Wednesday have also sparked doubts over the European Central Bank's tapering plans, and consequently compounded to the Euro's woes. With the EURUSD currently trading around 1.1750 as of writing, bears still remain in control on the daily charts and are eyeing 1.1680.

Much attention will be directed towards the minutes of September's European Central Bank meeting, which could offer some fresh insight into the central banks tapering plans. The Euro still remains at risk of depreciating further, if the minutes express concerns over the strength of the Euro.

From a technical standpoint, the EURUSD remains under noticeable pressure on the daily charts. Bears remain in control under the 1.1830 lower high, with an intraday breakdown below 1.1730 opening a path towards 1.1680.

Daily Pivots: (S1) 0.9714; (P) 0.9749; (R1) 0.9771; More....

USD/CHF is staying in consolidation in tight range and intraday bias remains neutral. And outlook remains unchanged. On the upside, decisive break of 0.9772 key resistance will suggest that whole down trend form 1.0342 has completed. In that case, near term outlook will be turned bullish for 0.9860/1.0099 resistance zone. However, break of 09669 minor support will suggest rejection from 09772 and turn bias back to the downside for 0.9587 support. Break will target retesting 0.9420 low.

In the bigger picture, focus remains on whether 0.9443 key support (2016 low) could be taken out firmly as down trend from 1.0342 extends. There are various interpretation of the price actions. But in any case, medium term outlook will stay bearish as long as 0.9772 resistance holds. Current down trend could extend to 38.2% retracement of 0.7065 (2011 low) to 1.0342 (2016 high) at 0.9090. However, break of 0.9772 will indicate that USD/CHF has successfully defended 0.9443 again and turn outlook bullish for 1.0099 resistance.

Daily Pivots: (S1) 112.40; (P) 112.67; (R1) 113.01; More....

Intraday bias in USD/JPY remains neutral as consolidation from 113.25 continues. On the upside, sustained break of medium term channel resistance will argue that correction from 118.65 is already completed with three waves down to 107.31. Break of 114.49 will confirm this bullish case and target a test on 118.65 next. On the downside, considering bearish divergence condition in 4 hour MACD, break of 111.46 will suggest rejection from the channel resistance and turn bias back to the downside.

In the bigger picture, rise from 98.97 (2016 low) is seen as the second leg of the corrective pattern from 125.85 (2015 high). It's unclear whether this this second leg has completed at 118.65 or not. But medium term outlook will be mildly bearish as long as 114.49 resistance holds. And, there is prospect of breaking 98.97 ahead. Meanwhile, break of 114.49 will bring retest of 125.85 high. But even in that case, we don't expect a break there on first attempt.

Sunrise Market Commentary

• Rates: Caught between Spain and US payrolls
  The underperformance of Spanish assets can continue as the stand-off between Madrid and Barcelona persists. Today’s Spanish auction could also have consequences for other markets, especially in case of difficulties (risk-off). We expect more outperformance of the Bund vs. the US Note future ahead of US payrolls. Minutes of the ECB meeting are a wildcard.
• Currencies: dollar awaits guidance amid diffuse news flow
  Yesterday, there were too many divergent news topics to give USD trading a clear directional guidance. This pattern might continue today as investors look forward to tomorrow’s US payrolls. Catalonia, the ECB minutes and speculation on the succession of Yellen are wildcards. Sterling remains in the defensive and EUR/GBP nears the 0.89 resistance

The Sunrise Headlines

• The three major US equities indices (+0.1%) all hit minor new record closing highs for the third day in a row. Overnight, most Asian stock markets are positively oriented with Japan underperforming and China still closed.
• Catalan President Puigdemont said he'll soon apply the results of its illegal independence vote, but stopped short of saying when he'd trigger secession. He urged Madrid to accept an offer of mediation, which they declined (AFP)
• US secretary of state Tillerson denied longstanding rumours about his possible resignation after a report that he referred to Mr. Trump as a “moron” and had to be talked out of quitting by Vice President Mike Pence and others.
• Theresa May promised to give a “voice to the voiceless” in a speech intended to quell questions about her leadership. Instead, she lost her own voice and was confronted by a prankster as the Tories’ conference backdrop literally fell apart.
• The Trump administration objected to a UK-EU deal to divide valuable agricultural import quotas, in a sign of how the US and others plan to use Brexit to force the UK to further open its sensitive market for farm products.
• Australian retailers suffered their worst sales since early 2013 in August as debt-laden consumers tightened their purse strings, cutting back sharply on food, furniture and clothing. AUD/USD drops towards key support (0.78).
• Today’s eco calendar contains few eco data (US weekly jobless claims), but it is filled with central bank speeches and the publication of the ECB September Minutes. Spain and France tap the bond market

Currencies: Dollar Awaits Guidance Amid Diffuse News Flow

Dollar awaiting clear guidance

Yesterday, USD traders faced several conflicting issues including strong EMU eco data, uncertainty on Catalonia and the US debate on who will succeed Yellen at the helm of the Fed. EUR/USD and USD/JPY hovered up and down. The US non-manufacturing ISM was very strong and helped the dollar to regain some ground. However, at the end of the day, EUR/USD (1.1759 from 1.1744) and USD/JPY (112.76 from 112.85) closed the session little changed.

Overnight, several Asian markets are still closed for regional holidays. Other markets show a mixed picture. Japanese indices are little changed and so is USD/JPY (112.75 area). Australia August retails sales were very weak. AUD/USD declined 0.7865 to the 0.7830 area. EUR/USD holds a very tight sideways range in the 1.1760 area. The speech of Catalan President Puigdemont yesterday evening brought little insight in the next steps in the independence process.

Today, the US eco calendar only contains second tier releases. Initial claims are expected to have fallen somewhat, but is still well above the pre-storm levels. The August trade deficit is expected slightly lower. If confirmed, trade would positively add to Q3 GDP. The factory orders are expected to have rebounded, as already suggested by the durable orders. The event calendar is long. Fed governors Powell, Williams, Georges and Harker speak, but on non-policy issues. Since Powell is on the shortlist to become Fed chairman, any policy comment of him may affect markets. ECB Praet and Coueré chair panels at an ECB conference. Chances are slim they will unveil market sensitive info. The ECB Minutes will be closely read, looking for hints in what direction the debate on the APP is going.

Yesterday, the dollar didn’t find a clear direction as the news flow contained too many conflicting signals. We don’t see a single dominant theme to guide FX trading today. In addition, investors aren’t keen to add directional positions ahead of tomorrow’s US payrolls. So, more sideways trading is likely, mirroring yesterday’s session. Concrete hints in the ECB Minutes on policy normalisation might be supportive for the euro, but no key technical levels should be taken out. Catalonia and speculation on the succession of Yellen remain wildcards

From a technical point of view EUR/USD hovered in a consolidation pattern between 1.1823 and 1.2070, but broke below last week. There is some hesitation in the USD rebound, but the pair holds below the 1.1823 previous range bottom. Higher US yields are probably needed to support additional USD gains. Next support in EUR/USD comes in at 1.1662, while 1.1423 marks the 38% retracement from the 2017 rally. The USD/JPY momentum was constructive of late, but for an important part due to yen weakness. USD sentiment recently also improved though. USD/JPY regained 110.67/95 (previous resistance), a short-term positive. The 114.49 correction top is the next important resistance. The rally lost momentum this week. So a break beyond 144.49 probably is not evident.

EUR/USD: dollar rebound stalled, as it needs additional good news

EUR/GBP

GBP holding near the recent lows .

Sterling traded on the defensive earlier this week as the Manufacturing and construction PMI were softer than expected. Yesterday, the news flow was more sterling supportive. The services PMI rebounded from 53.2 to 53.6. The report fits in a scenario of a limited BOE tightening in the near future. Sterling rebounded, but the move was limited given the recent correction. PM May said she is seeking a Brexit deal that works, but the government is also preparing for a no-deal scenario. The impact on markets was limited. However, sterling reversed most of the intraday rebound later in the session. EUR/GBP closed the day at 0.8876 (from 0.8871). Cable finished at 1.3248 (from 1.3237).

Today, BoE’s McCafferty and Chief economist Haldane speak in London. McCafferty voted already for a rate hike in September. Haldane likely supports the majority MPC view that rates might be raised in the near future. So, if they address monetary policy issues, they might sound rather hawkish, but that shouldn’t come as a surprise. Sterling was in the defensive of late. However EUR/GBP nears the 0.8900/07 resistance area. Maybe there is more important news needed for EUR/GBP to clear this hurdle. Even so, the test has started.

EUR/GBP made an impressive uptrend since April to set a top at 0.9307 late August. UK price data amended the dynamics and hawkish BoE comments reinforced a sterling rebound. Medium term, we maintain a EUR/GBP buy-on-dips approach as we expect the mix of euro strength and sterling softness to persist. The prospect of (limited) withdrawal of BOE stimulus triggered a good sterling countermove. However, this rebound has apparently run its course. EUR/GBP supports at 0.8743 and 0.8652 are probably difficult to break. We look to buy EUR/GBP on dips. A sustained rebound above the 0.89 area would improve the ST technical picture of EUR/GBP.

EUR/GBP: nears 0.89 resistance area

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Daily Pivots: (S1) 1.2449; (P) 1.2474; (R1) 1.2499; More....

Intraday bias in USD/CAD remains neutral at this point. With 1.2326 minor support intact, further rise is expected. Above 1.2537 will target 1.2777 resistance first. Decisive break of 1.2777 will target 38.2% retracement of 1.4689 to 1.2061 at 1.3065 next. However, break of 1.2326 will dampen our bullish view and turn bias back to the downside for 1.2061 instead.

In the bigger picture, current development argues that USD/CAD has defended 50% retracement of 0.9406 (2011 low) to 1.4869 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. Break of 1.2777 will further affirm this bullish case. That is, larger up trend from 0.9406 is not completed. However, on the other hand, firm break of 1.2048 will indicate that fall from 1.4689 is at least a medium term down trend and should target 61.8% retracement at 1.1424 and below.