Sample Category Title

EUR/JPY - 133.72

Original strategy:

Buy at 132.00, Target: 134.00, Stop: 131.40

Position: -
Target: -
Stop: -

New strategy :

Buy at 132.40, Target: 134.40, Stop: 131.80

Position: -
Target:  -
Stop:-

As the single currency has maintained a firm undertone after recent rally, adding credence to our view that recent upmove is still in progress and bullishness remains for further gain to 134.50-60, then towards 135.00-10, however, near term overbought condition should limit upside and reckon 135.55-60 would hold from here, risk from there is seen for a retreat to take place later. 

In view of this, we are looking to reinstate long on pullback as 132.30-40 should limit downside and bring another rise. Below support at 132.27 would defer and risk test of previous resistance at 132.01 (should turn into support) but only break there would signal a temporary top is formed, bring correction to 131.40-50 first. 

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).

EURUSD (1.2008): The euro currency posted steady gains for the past five consecutive days with price action breaking above 1.1954. On the 4-hour chart, the inverse head and shoulders pattern that was formed has been validated and price action is likely to rally towards 1.2060 which marks the measured move. However, the rally to 1.2060 will be critical as it coincides with the resistance level that was previously tested. Failure to break out above this level could keep EURUSD trading in the range. To the downside, price action will need to push lower towards the 1.1882 support level. A break down below this support will push EURUSD to new lows and possibly the correction. To the upside, 1.2200 will be the next target on a successful breakout above 1.2060.

Daily Pivots: (S1) 1.1498; (P) 1.1531; (R1) 1.1576; More... .

Intraday bias in EUR/CHF remains on the upside for the moment. Prior break of 1.1537 resistance indicates resumption of medium term rise. Further rally should be seen to the upside for 61.8% projection of 1.0830 to 1.1537 from 1.1355 at 1.1792 next. However, considering weak upside momentum so far, break of 1.1438 will turn focus back to 1.1355 support instead.

In the bigger picture, long term rise from SNB spike low back in 2015 is still in progress. EUR/CHF should now be heading back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.1087 resistance turned support holds.

The markets were trading fairly subdued although the US dollar was seen easing back. Economic data over the day included the German ZEW economic sentiment rising to 17.0, beating estimates of 12.3. The Eurozone ZEW economic sentiment was however soft, rising just 31.7 falling below estimates of 32.4. Data from the US saw the building permits which increased 1.30 million, but housing starts remained sluggish at 1.18 million.

Looking ahead, the main event for the day will be the FOMC meeting. The Fed is expected to announce it balance sheet normalization at today's meeting while keeping interest rates steady. The Fed will also be releasing its dot plot giving fresh forecasts on GDP, inflation and interest rates. Later in the day, New Zealand GDP is expected to show a quarterly GDP growth rate of 0.8%.

AUD/USD – 0.8040

Original strategy:

Sell at 0.8080, Target: 0.7900, Stop: 0.8140

Position: -
Target:  -
Stop:-

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Despite falling to 0.7940, as aussie found good support there and has staged a strong rebound, suggesting near term upside risk remains for gain to 0.8080-90, however, reckon upside would be limited and resistance at 0.8125 (this month’s high) would hold, bring further consolidation. Only break of this level would revive bullishness and extend recent upmove to 0.8150-60, then towards 0.8190-00 later this week.

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below 0.7985-90 would bring another test of said support at 0.7940 but only break there would signal top has been formed at 0.8125, bring retracement of recent rise to 0.7920-25 and later 0.7890-00 but support at 0.7867-71 should remain intact.

On the 4-hour chart, recent upmove from 0.7329 is unfolding as an impulsive rise with wave 3 as well as smaller degree wave (iii) extending, only minor wave v of (iii) has ended at 0.8125, hence bullishness remains for this move to extend headway to 0.8200, then towards 0.8300, however, reckon upside would be limited to 0.8400 and the final wave 5 should falter below 0.8500, bring correction probably next week.

Dollar Edged Up Ahead of Federal Reserve's Meeting. The dollar index added 0.1 percent to 91.855, holding well above its more than 2-1/2 year low of 91.011 plumbed on Sept. 8. Analysts expect U.S. central bank policymakers to announce at the end of their two-day meeting later on Wednesday that they will trim its $4.2 trillion in bond holdings starting in October, and also leave the door open for an interest rate hike at their Dec. 12-13 meeting.

Strong Euro Driving a Rift Between ECB Policymakers. European Central Bank policymakers disagree on whether to set a definitive end-date for their money-printing program when they meet in October, raising the chance that they will keep open at least the option of prolonging it again. The euro was steady on the day, at $1.1990.

Yen Unmoved by Trump's Fiery North Korea Rhetoric at the U.N. The yen tends to benefit during times of economic and political uncertainty, but it had a muted reaction to U.S. President Donald Trump's speech to the U.N. General Assembly on Tuesday. This week the main factor for the yen is Japanese Prime Minister Shinzo Abe, who is considering calling an election for as early as next month. The U.S. currency was steady on the day against its Japanese counterpart at 111.56 yen, moving back toward an eight-week peak of 111.88 yen scaled overnight.

Precious Metals Retained Their Lead. Gold and silver remained supported as several market watchers are still wary of geopolitical risks stemming from Trump's latest batch of threats on North Korea. In his speech to the UN General Assembly, the U.S. President declared: “The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea.”

Crude Oil Rises on Possible OPEC Cut Extension. Oil prices rose on Wednesday after Iraq's oil minister said OPEC and other crude producers were considering extending or even deepening a supply cut to curb a global glut, while a report showed a smaller-than-expected increase in U.S. inventories. US West Texas Intermediate (WTI) crude futures were up 34 cents at USD 49.82, Brent crude futures were 24 cents higher at USD 55.38. OPEC and producers including Russia have agreed to reduce output by about 1.8 million barrels per day until March 2018, when the agreement expires, in a bid to reduce global oil inventories and support prices.

Watch Out Today For:

08:00 am GMT: EUR Non-monetary policy's ECB meeting

19:00 pm GMT: USD Fed Interest Rate Decision

19:30 pm GMT: USD FOMC Press conference

Gold has come back to retest the broken uptrend line and the first warning line (WL1) of the major red descending pitchfork. Is traded above the $1312 per ounce and could climb much higher if the USD will drop further after the FOMC. A minor consolidation above the WL2 and above the $1303 per ounce will signal another rally towards the 250% Fibonacci line, despite the breakdown below the uptrend line.

USD/JPY decreased a little in the Asian session after another failure to close above the 38.2% retracement level. It could come down to retest the WL3 before will climb much higher. Technically, it is expected to approach and reach the median line (ml) of the minor blue ascending pitchfork. However, a failure to reach the mentioned dynamic resistance will send the rate down very fast. Is trading near the 111.50 level, we have a major upside target somewhere at 114.28 level, will reach it only if the USDX will start an impressive rally.

The currency pair has increased in the morning, but failed to reach the 0.7343 previous high and an important dynamic resistance. The sellers have stepped in again and have forced the rate to erase the morning gains.

NZD/USD dropped even if the USDX slides further, the index slipped below the 91.92 static support and below a dynamic support, so it could hit new lows. You should be careful today because the FOMC will shake the markets, a dovish speech will punish the USD again.

There are some rumors that said that the FED will still hike the rate in December despite the poor US data, we could have a neutral speech which could help the dollar.

The Kiwi rallied in the morning as the New Zealand Current Account has come in better than expected, was reported at -0.62B, higher versus the -0.82B estimate. The US Existing Home Sales will come out in the afternoon and are expected to increase from 5.44M to 5.46M.

Price increased and resumed the yesterday’s bullish momentum, but failed to reach and retest the third warning line (WL3) of the former descending pitchfork. A failure to reach it will signal a minor decrease, but will be better to stay away from trading today because anything could happen. The FOMC Press Conference should bring a high volatility, while the direction is uncertain. Technically, a valid breakout above the WL3 will confirm a further increase in the upcoming weeks.

Asia Summary

Asian equity markets opened moderately weaker, as markets and currencies shore up ahead of Fed meeting. Internationally US President Trump’s comments to UN vowing to destroy North Korea if necessary; large earthquake in Mexico and hurricane Maria made landfall in Puerto Rico (Jose decelerates to a tropical storm) dominated the headlines. Currencies overall were muted with the USD weaker. Markets strongly anticipate that the Fed will get more specific about balance sheet unwinding. PBOC OMO had a significantly smaller injection after two consecutive large injections. The onshore yuan climbed the most in nearly two weeks as the USD gave up an early advance and the euro extended a rally to the fifth day in a row. Onshore yuan rose 0.25%, the most since Sept. 7th , halting a 2- day decline.

Japan August trade balance had some notable components; exports to the US +21.8% y/y was the fastest rate since Dec 2014. Headline exports had their fastest rise since Nov 2013 and the 9th consecutive rise. Japan MoF said exports were supported by semiconductors and autos. Australia and New Zealand banks were under pressure after RBNZ announced new regulations in order to ensure that a bank can continue to operate in a situation where a key service provider fails.

Key economic data

(NZ) NEW ZEALAND Q2 CURRENT ACCOUNT BALANCE (NZ$): -0.62B V -0.9BE

(JP) JAPAN AUG TRADE BALANCE: ¥113.6B V ¥108.7BE; ADJ ¥367.3B V ¥404.5BE

(AU) AUSTRALIA AUG SKILLED VACANCIES M/M: 0.3% V 0.7% PRIOR

Speakers and Press

China/Hong Kong

USD/CNY (CN) China Securities Journal: Yuan's one way depreciation trend has ended

(CN) PBoC supports a move by some banks to increase lending rates on mortgage loans in the Beijing market – CCTV

(CN) China corn farmers expected to hoard their crops, waiting for prices to rise - Chinese press

(CN) China considering a plan to allow foreign electric-car business in free-trade zones – press

(CN) According to John McAfee: China has banned bitcoin exchange heads from travelling overseas - speaking in HK

Korea

(KR) US President Trump: If US is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea – UN speech

(KR) South Korea President Moon: Trump's comments to "totally destroy North Korea" were in line with previous remarks for pressure and sanctions

Japan

(JP) Japan PM Abe said to delay FY20 primary balance target – Nikkei

(JP) Japan Chief Cabinet Sec Suga: Trump speech was important due to its mention of abduction; nothing decided on primary balance surplus target year

Australia

(AU) RBA Assistant Gov Ellis: Household debt an exacerbating factor is shock occurred

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.0%, Hang Seng +0.2%; Shanghai Composite +0.2%, ASX200 -0.1%, Kospi -0.0%

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

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

EUR 1.2019-1.1987; JPY 111.65-111.45; AUD 0.8022-0.7999;NZD 0.7342-0.7311

Dec Gold +0.4% at $1,315/oz; Nov Crude Oil +0.7% at $50.25/brl; Dec Copper +0.1% at $2.98/lb

GLD SPDR Gold Trust ETF daily holdings +2.07 tonnes at 846.0 metric tonnes

(AU) Australia sells A$600M in 2% 2021 bonds; avg yield 2.3225%; bid-to-cover 7.48x (went to 1 bidder)

(CN) PBoC OMO: injects CNY30B in 7 and 28-day reverse repos v injected combined CNY150B in 7 and 28 day reverse repos prior

USD/CNY (CN) China PBOC sets yuan reference rate at 6.5670 v 6.5530 prior (weakest setting since Sept 12th)

(KR) Bank of Korea (BOK) Sells KRW2.1T v KRW2.1T indicated in 2-yr bonds; avg yield 1.73% v 1.69% prior

Equities notable movers

Australia/New Zealand

SVW.AU Acquires remaining 53.3% stake in Cotes Hire for A$517M; +7.5%

WLD.AU Reports 1st shipment of beef cattle to China; +10.3% (reported yesterday)

STO.AU Australia ACCC: moves to boost local gas supply not enough to help market; -1%

Japan

6502.JP Said to have chosen to sell chip unit to Innovation INCJ group (Japan/South Korea alliance); +2%

Korea

023530.KR , Lotte Shopping, (KR) South Korea govt considering law that would raise required closed days of hypermarkets to four per month from two; -3%

Hong Kong/China

175.HK Expects to reach sales target of 2.0M units by 2019 - HK press; +3.5%

1211.HK BYD, China considering a plan to allow foreign electric-car business in free-trade zones – press; +10%