Sample Category Title

EUR/USD

Current level - 1.1933

The intraday bias is neutral as the pair is trading in the middle of 1.1830-1.2070 range. I favor a break on the upside to target 1.2070, en route to 1.2240.

USD/JPY

Current level - 112.15

My outlook here is bearish below 112.80, for a slide towards 111.10 hurdle. 

GBP/USD

Current level - 1.3543

The support at 1.3440 is still intact and the bias is positive above that area, for a break through 1.3635, towards 1.3830 zone.

USD/JPY - 112.20

Most recent candlesticks pattern   : N/A

Trend                      : Up

Tenkan-Sen level              : 112.31

Kijun-Sen level                  : 112.18

Ichimoku cloud top             : 112.15

Ichimoku cloud bottom      : 111.92

Original strategy  :

Bought at 111.70, Target: 112.70, Stop: 111.60

Position :  - Long at 111.70

Target :  - 112.70

Stop : - 111.60

New strategy  :

Hold long entered at 111.70, Target: 112.70, Stop: 111.70

Position :  - Long at 111.70

Target :  - 112.70

Stop : - 111.70

Although the greenback has retreated after meeting resistance at 112.52 and further consolidation below last week’s high at 112.72 would be seen, reckon downside would be limited to 111.80-85 and bring another rise, above 112.52 would bring retest of said resistance at 112.72, break there would confirm recent upmove has resumed and extend further gain to 112.90-00, then towards 113.25-30 (1.236 times projection of 107.32-111.04 measuring from 109.55), having said that, previous chart resistance at 113.58 would hold from here, bring correction later.

In view of this, we are holding on to our long position entered at 111.70. Only below indicated support at 111.65 would abort and risk weakness to 111.40-45 but break there is needed to signal a temporary top has been formed at 112.72, bring retracement of recent rise towards support at 111.11 first.

Asia Summary

Asian equity markets opened mixed, solar names in China and South Korea weighed on indexes after ITC ruled imported solar panels are crippling American manufacturers. Election results in New Zealand saw ruling National Party with 46.6% and Labour with 35.5%. With neither party winning enough seats to have a majority in parliament, will have to use nationalist New Zealand First Party to form a coalition. This uncertainty sent NZD/USD into a tail spin, falling over 1% to 0.7252. The kiwi is expected to remain volatile until all votes are tallied by Oct 7th and a govt is formed.

In Germany similar results happened with the election, Chancellor Merkel's party finishes 1st (32.8%) with opposition SPD with (20.4%). So she will again need to form a coalition. Notably, like elections around the world, the nationalist party took a notable part of the vote (13%) which will see the AFD Party enter parliament for first time. EUR/USD was slightly weaker, 1.1898.

Japan PM Abe to hold press conference at 09:00GMT, no topic given but widely expected to announce a snap election, though a recent poll shows public is not in favor of one.

Indonesia 10-yr yield fell 15bps to 6.27%, the lowest level since June 2013 after central bank cut rates Friday. Onshore yuan fell to lowest intraday level in September after PBOC cut the fixing to the weakest since Aug. 31. The Hong Kong dollar overnight interbank rate fell 21bps (the most in three week) to 0.19464%.

Key economic data

(JP) Japan Sept Prelim PMI Manufacturing: 52.6 v 52.2 prior (4-month high)

Speakers and Press

China/Hong Kong

(CN) Eight China cities, including Shijiazhuang, Chongqing, Nanchang, Nanning and Guiyang imposed curbs on home resales as part of campaign to cool home prices

(CN) China Tangshang City to cut steel capacity by 50% in order to lower pollution levels; effective Monday – US financial press

(CN) China Academy of Fiscal Sciences chief Liu Shangxi: China will push fiscal reforms that could boost revenues for local governments after next month’s key party congress

Korea

(KR) North Korea Foreign Minister Ri Yong Ho: Pres Trump has made our rockets' visit to the entire U.S. mainland inevitable by nicknaming Kim Jong Un "rocketman" - UN speech

Japan

(JP) Japan PM Abe said to seek ¥2.0T economic package plan; Package is meant to be in effect from FY18/19 - Japan press

(JP) Support for ruling LDP Party at 44%, ahead of opposition; Abe cabinet support up 4 pct points to 50% – Nikkei Poll

(JP) According to Kyodo poll nearly Two-thirds of Japan voters oppose PM Abe calling snap election - financial press

New Zealand

(NZ) New Zealand Election Results: Ruling National Party 46.6%; Labour 35.5%; neither party wins enough seats to have a majority in parliament, will have to use nationalist New Zealand First Party to form a coalition

(AU) Australia PM Turnbull: To impose extra controls unless LNG exporters set up domestic supply

(AU) Australia Energy Market Operator: Expect east coast gas supply shortfall to intensify next year, expects the shortfall to be as much as 107 petajoules - Australian

Europe

(DE) Germany exit polls suggest Merkel's party finishes 1st in German election; anti-migrant party to enter parliament; AFD Party to enter parliament for first time - tweet by financial press

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.4%, Hang Seng -1.2%; Shanghai Composite -0.3%, ASX200 +0.2%, Kospi -0.6%

Equity Futures: S&P500 -0.1%; Nasdaq100 -0.0%, Dax -0.2%, FTSE100 -0.1%

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

EUR 1.1960-1.1898; JPY 112.53-111.93; AUD 0.7973-0.7942;NZD 0.7362-0.7252

Dec Gold -0.0% at $1,297/oz; Nov Crude Oil -0.3% at $50.52/brl; Dec Copper -0.3% at $2.95/lb

(PH) Philippines to issue PHP500B in treasury bills in 2018 v PHP327B in 2017 - local press

(CN) PBOC OMO: To inject CNY200B in 14 and 28-day reverse repos v injected CNY120B in 7 and 28-day reverse repo prio

USD/CNY (CN) China PBOC sets yuan reference rate at 6.5945 v 6.5861 prior (weakest setting since Aug 31st)

(KR) Bank of Korea (BOK) sells KRW0.7T v KRW0.7T indicated in 1-yr monetary stabilization bonds; avg yield 1.54% v 1.50% prior

Equities notable movers

Australia/New Zealand

FCG.NZ Reports FY17 (NZ$) Net 745M v 834M y/y; EBIT 1.12B v 1.43B y/y; Rev 19.2B v 17.2B y/y; +0.2%

PEP.AU Gets improved and final proposal form KKR at A$3.70/shr for cash and special dividend; +4.6%

BLY.AU Third day of losses, -26%

Japan

7211.JP Planning to launch electric SUVs in Japan, US and Europe in early 2020s – Japanese Press; +4%

EURUSD - With the pair still facing price correction despite its past week price hesitation, more correction is envisaged. Resistance comes in at 1.2000 level with a cut through here opening the door for more upside towards the 1.2050 level. Further up, resistance lies at the 1.2100 level where a break will expose the 1.2150 level. Conversely, support lies at the 1.1900 level where a violation will aim at the 1.1850 level. A break of here will aim at the 1.1800 level. Below here will open the door for more weakness towards the 1.1750. All in all, EURUSD faces corrective pullback despite price hesitation.

Market movers today

This morning markets will digest the results of the German election yesterday.

The fourth round of Brexit negot iat ions begins today. Theresa May's speech in Florence on Friday did not reveal much news after the leaks on Thursday evening.

In Germany, the Ifo business confidence for September is expected to show a further increase and add to the upbeat picture of the euro area witnessed in the PMI data last week.

The Fed's Vice-Chairman Bill Dudley (voter, dove) is set to speak but the theme is workforce development , so it is not clear if he will touch on monetary policy. The Fed's Evans is due to speak tonight on the economy and monetary policy. The ECB speeches from Mario Draghi, Yves Mersch and Benoît Coeuré are also due today.

Later this week, focus will turn to euro inflation and Chinese PMI. In Scandi, the most interesting releases will be Swedish NIER business confidence and Norwegian unemployment.

Selected market news

Global markets are fairly quiet this morning. US yields are trading close to Friday levels and the S&P 500 equity future is around the S&P500 closing level on Friday. Chinese stocks have taken a small hit as developers are under pressure from new housing restrictions in eight cities in a move to cool the housing market further.

Angela Merkel secured her fourth term in office as her Conservat ives (CDU/CSU) remained the largest party with 33.0% in yest erday's elect ion, followed by the Social Democrats (SPD) at 20.5%. However, both parties registered significant losses in their vote shares to the benefit of the euro-scept ic AfD party, which will become the first right -wing nat ionalist party to enter the Bundestag since the 1950s with a vote share of 12.6%. The outcome now leaves only two viable coalition possibilities that can obtain a majority: Another grand coalition of CDU/CSU and SPD or a ‘Jamaica' coalit ion of CDU, FDP and the Greens. However, as the SPD leadership currently rules out another grand coalit ion under Merkel because of its disappoint ing elect ion result , a Jamaica coalition seems increasingly likely, in our view. Wit h t he ‘illegal' Cat alonian referendum this weekend and an Italian general elect ion looming, where the Five Star Movement stands to be a serious competitor for the premier minister posit ion, European political woes might well become a market driver once again.

On Friday, the ECB's Vítor Constâncio played down the effect of the euro appreciation saying it might have a smaller effect on inflat ion than usual, based on recent ECB research. He also referred to a slight steepening of the Philips curve recently, saying t his gives ‘some hope that the future closing of the output gap will allow us to gradually reach our inflation target '.

Japan PMI manufacturing for September rose to 52.6 from 52.2 and continues to signal robust manufacturing growth in line with most other regions. It adds to the picture of st ill strong global growth in H2. Japan 's Prime Minister Shinzo Abe is expected to announce snap elections on Monday to take advantage of improved ratings.

Currency pair EUR/USD

The EUR/USD is moving sideways as price stays in between support (green) and resistance (red) trend lines. The overall trend however is up and a bearish break could stop at the Fibonacci support levels of wave 4 (blue). A bullish breakout could indicate that the WXY (red) correction is finished.

The EUR/USD is in a triangle chart pattern which is indicated by the trend lines. Price is in a wave C (purple) of wave Y (red) unless price manages to break above resistance (red). In that case, the wave C is most likely completed at the most recent bottom.

Currency pair GBP/USD

The GBP/USD is also in a sideways range (red/green lines) within a larger uptrend. A break below support could see price challenge the 38.2% Fibonacci level of wave 4 vs 3. A break above resistance could see price continue with the trend.

The GBP/USD needs to breakout below support (green) or above resistance (red/orange) otherwise the sideways range remains valid.

Currency pair USD/JPY

The USD/JPY is testing a support trend line (green) of the uptrend channel.

The USD/JPY needs to break above resistance (orange) before an uptrend continuation is likely. A break below support (blue) could confirm an ABC (blue) correction.

Daily Pivots: (S1) 150.18; (P) 151.48; (R1) 152.32; More

Intraday bias in GBP/JPY remains neutral for consolidation below 152.82. Downside of retreat should be contained above 146.57 support to bring another rally. Above 152.82 will target 61.8% projection of 122.36 to 148.42 from 139.29 at 155.39 next.

In the bigger picture, medium term rebound from 122.36 is in progress. Firm break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. In that case, GBP/JPY could target 61.8% retracement at 167.78. For now, the bullish scenario is preferred as long as 139.29 support holds.

Daily Pivots: (S1) 133.68; (P) 134.03; (R1) 134.66; More...

Intraday bias in EUR/JPY remains neutral for the moment. More consolidations could be seen. But outlook remain bullish as long as 131.69 resistance turned support holds. Sustained break of 134.20 fibonacci level will target 141.04 resistance next.

In the bigger picture, current rise from 109.03 is seen as at the same degree as the down trend from 149.76 (2014 high) to 109.03 (2016 low). 61.8% retracement of 149.76 to 109.03 at 134.20 is already met. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. On the downside, break of 127.55 support is needed to be the first signal of medium term reversal. Otherwise, outlook will remain bullish.

Daily Pivots: (S1) 0.8796; (P) 0.8839; (R1) 0.8892; More

EUR/GBP is staying above 0.8773 low and intraday bias remains neutral for the moment. More consolidations could be seen. But near term outlook stays bearish as long as 0.8981 cluster resistance holds (38.2% retracement of 0.9305 to 0.8773 at 0.8976). Fall from 0.9305 is seen as the third leg of consolidation pattern from 0.9304. Below 0.8773 will target 61.8% retracement of 0.8312 to 0.9305 at 0.8691 and below. We'll look for bottoming signal again at it approaches 0.8303 support.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. It's still in progress with fall from 0.9305 as the third leg. Break of 0.8303 could be seen. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Whole up trend from 0.6935 is expected to resume after consolidation from 0.9304 completes.

Daily Pivots: (S1) 1.4952; (P) 1.5030; (R1) 1.5071; More....

Intraday bias in EUR/AUD remains neutral for consolidation inside range of 1.4791/5173. On the upside, break of 1.5173/5226 resistance zone will finally resume larger rise from 1.3624. On the downside, break of 1.4791 support will turn bias to the downside and extend the fall from 1.5173 to retest 1.4421 support.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term top has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. The corrective structure of the price actions from 1.5226 is affirming this view. Above 1.5226 will target a test on 1.6587 key resistance. However, break of 1.4421 support will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.