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For the 24 hours to 23:00 GMT, the GBP slightly rose against the USD and closed at 1.3242.

Macroeconomic data revealed that Britain's Markit services PMI surprisingly advanced to a level of 53.6 in September, soothing worries about a Brexit-induced economic slowdown. Markets were anticipating the PMI to remain steady at a level of 53.2 recorded in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.3239, with the GBP trading marginally lower against the USD from yesterday's close.

The pair is expected to find support at 1.3215, and a fall through could take it to the next support level of 1.319. The pair is expected to find its first resistance at 1.3278, and a rise through could take it to the next resistance level of 1.3316.

In absence of any macroeconomic releases in the UK today, investor sentiment would be governed by global macroeconomic events.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

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For the 24 hours to 23:00 GMT, the USD marginally declined against the JPY and closed at 112.77.

In the Asian session, at GMT0300, the pair is trading at 112.75, with the USD trading a tad lower against the JPY from yesterday’s close.

The pair is expected to find support at 112.40, and a fall through could take it to the next support level of 112.05. The pair is expected to find its first resistance at 113.02, and a rise through could take it to the next resistance level of 113.29.

Moving ahead, Japan’s flash leading economic and coincident indices, both for August, due to release tomorrow, will be on investors’ radar.

The currency pair is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.18% against the CHF and closed at 0.9752.

In the Asian session, at GMT0300, the pair is trading at 0.9748, with the USD trading slightly lower against the CHF from yesterday's close.

The pair is expected to find support at 0.9719, and a fall through could take it to the next support level of 0.9691. The pair is expected to find its first resistance at 0.9769, and a rise through could take it to the next resistance level of 0.9791.

Looking ahead, market participants will focus on Switzerland's inflation numbers for September, scheduled to release in a few hours.

The currency pair is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.11% against the CAD and closed at 1.2477.

In the Asian session, at GMT0300, the pair is trading at 1.2479, with the USD trading a tad higher against the CAD from yesterday’s close.

The pair is expected to find support at 1.2453, and a fall through could take it to the next support level of 1.2426. The pair is expected to find its first resistance at 1.2502, and a rise through could take it to the next resistance level of 1.2524.

Ahead in the day, market participants will focus on Canada’s international merchandise trade balance for August.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

EURUSD Short Term Elliott Wave structure suggests the decline from 9/8 peak is in progress as an expanded Flat Elliott Wave structure. From 9/8 high (1.2094), pair declined to 1.837 and ended Intermediate wave (A). Pair then bounced to 1.2034 and ended Intermediate wave (B). At present, Intermediate wave (C) remains in progress as 5 waves impulse. Minor wave 1 of (C) ended at 1.186 and Minor wave 2 of (C) ended at 1.2. Decline to 1.1716 ended Minor wave 3 of (C), and Minor wave 4 of (C) bounce ended at 1.1832.

While near term bounce stays below 1.18329, pair can extend lower in Minor wave 5 of (C) and reach as low as 1.16207. This move lower will also end cycle from 9/8 peak and complete Primary wave ((W)). Pair should then bounce in Primary wave ((X)) to correct cycle from 9/8 peak in 3, 7, or 11 swing at least. If pair breaks above 1.1832 from here, it could be in Minor wave 4 as a flat before turning lower again in Minor wave 5. As the minimum target and swing have been met, pair may have also ended Primary wave ((W)) already if it breaks above 1.1832 from here without making a new low.

EURUSD 1 Hour Elliott Wave Chart

Expanded Flat is a 3 waves corrective pattern, and the inner subdivision is labeled as A,B,C with 3,3,5 structure. That means waves A and B are always corrective structures i.e. could be WXY, WXYXZ, Zigzag or any 3 waves corrective pattern. Wave C is either 5 waves impulse or ending diagonal pattern. In the graphic below, we can see what Expanded Flat structure looks like. Inner structure has ABC labeling, where wave B can complete below or above the starting point of wave A. Wave C should complete below the end point of wave A (usually at 1.236-1.618 fibonacci extension A related to B).

The Dollar Was Little Changed Below the Recent 11-Week High. The U.S. Dollar Index was down 0.18% after U.S. economic data did little to change views on the timing or pace for monetary tightening and investors awaited fresh triggers for trading. There was a change in sentiment for the greenback during theAsian session as investors saw bets strengthen on Jerome Powell to become the next Fed Chair in February, a well renown dovish board member of the central bank. Yellen is still in the running and did not comment on monetary policy today in St. Louis. Investors focus their attention to upcoming unemployment claims and trade balance figures this evening out of the United States.

The Kiwi Remains Largely Flat Against the Greenback. The New Zealand Dollar opened this morning at 0.7160 after having some positive movements during the American session, reaching a high of 0.7204. The Kiwi initially lost ground against its counterpart when US non-manufacturing PMI numbers outperformed. This was then counter-balanced by increased speculation on Trumps next choice for Federal Chair with the significance being that the resulting decision will influence monetary policy going forward.

Australian Dollar Hits Weekly High. The Australian dollar edged upward on Wednesday pushing back through 0.7830 and testing intraday highs at 0.7875. With little domestic data on hand to drive direction the AUD found support in wider USD weakness as investors reacted to a proposed short list of candidates to replace Janet Yellen as Fed and FOMC Chair.

Canadian Dollar Awaits for Trade Balance Release. The USD/CAD lost 0.192 percent on Wednesday. The currency is trading at 1.2482 with the loonie regaining some ground after the USD got a temporary boost from purchasing managers in the service sector. In a day with few economic data releases the Canadian trade balance will impact the USD/CAD but could end up being eclipsed by FOMC member comments.

Gold Pares Gains as Dollar Comes Off Data Low. Gold was little changed at $1,275.39 an ounce as the US dollar came off its lows on strong data from the US service sector index. Having touched its lowest since mid-August on Tuesday, spot gold was up 0.2 per cent at $US1,274.41 per ounce on Thursday. Earlier on Wednesday, it reached a high of $US1,282 per ounce.

Oil Prices Fall for Third Session to Lowest Settlement in Over Two Weeks. Oil prices eased on Wednesday for a third-straight session, settling at their lowest level in more than two weeks. U.S. government report released Wednesday showed a much bigger-than-expected weekly drop in crude supplies along with a rise in gasoline stockpiles. WTI crude dropped 0.9% to $49.98 a barrel, Brent crude futures were down 0.4 percent, at $55.78 a barrel.

Watch Out Today for:

11:30 am GMT: EUR ECB Monetary Policy Meeting Accounts

Currency pair EUR/USD

The EUR/USD bounce at the 23.6% Fibonacci support level of wave 4 (blue) has not managed to break above the resistance at 1.18. A break above the resistance trend line (red) could start a bullish breakout whereas a third attempt to break below the 23.6% Fib could start a larger bearish correction towards the 38.2% Fib.

The EUR/USD is moving sideways in a channel (red/green lines). A break below the channel could still face support from the wave 2 (green) Fibonacci levels.

Currency pair GBP/USD

The GBP/USD is again retesting the support trend line (blue) and the 50% Fibonacci level of the wave 4 (blue), which is a bounce or break spot.

The GBP/USD break below the support trend line (dotted green) but could be bouncing at the previous bottom. A bullish bounce could see price retest the resistance levels (red).

Currency pair USD/JPY

The USD/JPY is in a triangle pattern, which is indicated by the support (blue) and resistance (red) trend lines. A bearish break could indicate the completion of wave A or 1 (green) at the recent high.

The USD/JPY could be in a wave 2 (purple) retracement.

STOCKS

Dow (22661.64, +0.09%) is trading higher. 22750 is the immediate target for the next few sessions.

Need to keep a close watch if Dax (12970.52, +0.53%) faces any rejection at 13000 or breaks higher to make fresh highs targeting 13250 in the near term. Looking at the upward momentum, the index looks bullish.

Shanghai (3348.94, +0.28%) could attempt a rise towards 3360-3375 in the near term. Overall the index may trade within 3375-3330 this week.

Nikkei (20629.02, +0.01%) could pause near 20700-20750 just now unless the Dollar Yen and the US-Japan 10Yr differential surges sharply to force Nikkei to rise towards crucial resistance of 21000. A rejection from 20750 is preferred in the coming sessions to levels near 20500-20400 levels. But in case the index breaks above 20750, the next target on the upside would be 21000.

Nifty (9914.90, +0.56%) could come off today to levels near 9800. Note immediate resistance near 9970-9950 levels may hold just now, pushing the index back towards 9800 or even lower.

COMMODITIES

Gold (1274.28) could be stuck in the 1260-1280 region this week and some consolidative phase is possible over the early sessions of next week too. Thereafter the price may start to rise above 1280 while decent support near 1260 holds.

Silver (16.59) attempted a rise towards 17 yesterday but came off sharply to close lower. 16.75 could possibly hold on the upside and push the index below 16.50 in the near term.

Brent (55.91) could try to rise towards 56.65 in the next few sessions before again resuming the fall towards 55 later on. WTI (49.99) on the other hand has some scope of falling towards 49.50 or even lower in the near term.

Copper (2.9650) is almost stable in the 2.90-3.00 region as mentioned yesterday. A break on either side is needed to get some clarity on further course of direction.

FOREX

Sideways consolidation in Dollar-Yen (112.75) below 113.00-50 over the last couple of days. Need to see if it tops out below 113 now over the next few days or breaks past it. The Euro-Yen (132.56) continues to look bullish overall with Support at 132.00.

Understandable consolidation happening in Euro (1.1758) as well, caught between short-term bearishness towards 1.16 and longer term bullishness while above 1.16. Note, though, that 1.16 is a super-crucial Support, dividing the bullish/ bearish regions. This corresponds with Resistance near 94.50 on the Dollar Index.

Slight dip in the Pound (1.3237) within current bearishness that targets 1.3200-3150 at least. The Aussie (0.7830) has also dipped a bit but has Support at 0.7800-7780, as mentioned yesterday.

Dollar-Rupee fell to 65.01 after the RBI policy yesterday and might dip to 64.90-80 today. That said, we also note that the market is a little Oversold in the near term.

INTEREST RATES

RBI kept the Repo Rate (6%) and CRR (4%) unchanged yesterday while lowering SLR from 20% to 19.5%. The 10Yr GOI yield rose from 6.65% to 6.70%, a sharp surge after the RBI policy rate yesterday. The yield could move up to test 6.75% in the near term before coming off in the longer run.

The RBI has also suggested that lending rates, especially to retail customers, should be tied to some external benchmark, in order to better transmit interest rate changes to the market.

The US yields are almost stable and are vulnerable to a slight fall in the coming sessions.

Also keep a close watch at the US-Japanand the German-US 10YR differentials which could provide some important cues for Euro and Dollar Yen movements in the near term.

Daily Pivots: (S1) 0.7836; (P) 0.7855; (R1) 0.7882; More...

AUD/USD continues to stay in tight range above 0.7784 and intraday bias remains neutral first. Focus stays on 0.7807 key near term support. Considering bearish divergence condition in daily MACD, firm break of 0.7807 support will indicate near term reversal. Outlook will then be turned bearish for 55 week EMA (now at 0.7674) first. Meanwhile, rebound from 0.7807 will retain bullishness. Above 0.7907 minor resistance will turn bias back to the upside for retesting 0.8124 high.

In the bigger picture, rise from 0.6826 medium term bottom is seen as corrective pattern. In case of further rally, strong resistance should be seen at 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside. Meanwhile, firm break of 0.7807 is the first signal that such correction is focused. Break of 0.7328 will bring retest of 0.6826 low.

Dollar trades mildly firmer in Asian session today but there is still no follow through buying in listless trading. The greenback is still limited below key near term resistance levels against Swiss Franc, Yen and Aussie. While the Aussie trades mildly softer after weak retail sales, it's staying as the strongest one for the week so far. Euro is attempting a rebound but the strength is limited by growing tensions in Catalonia. Meanwhile, Sterling was given some support after yesterday's service data. But there is no sign of a sustainable rebound yet.

Fed working on easing regulations on community banks

Fed Chair Janet Yellen said yesterday that the central bank is working on easing regulations on smaller banks. Yellen noted that "For community banks, which by and large avoided the risky business practices that contributed to the financial crisis, we have been focused on making sure that much-needed improvements to regulation and supervision since the crisis are appropriate and not unduly burdensome." Yellen has already talked a tough line defending post financial regulations. But there has been openness to softening the rules for community banks. And her comments were seen as a reminder to US President Donald Trump that there are rooms for discussions on easing business regulations. These comments come at a time when Trump is considering his short list of five candidates for the next Fed chair position.

Catalan leader Puigdemont's call mediation hits a wall

Catalonia leader Carles Puigdemont accused King Felipe of Spain of endorsing the "catastrophic" policies of Spanish Prime Minister Mariano Rajoy. He said King Felipe "have disappointed a lot of Catalans". But he also emphasized that "this moment requires mediation". But such calls have so far fallen on deaf ears. Puidgemont is also clear that he would declare independence in the coming days.

European Commission Vice President Frans Timmermans, a Dutch politician, criticized that Catalonia for holding an illegal referendum. Timmermans said in the European Parliament that "there is a general consensus that the regional government of Catalonia has chosen to ignore the law." And, he added that "respect for the rule of law is not optional, it is fundamental." But he also urged that "all lines of communication must stay open. It's time to talk, to find a way out of the impasse."

Guy Verhofstadt, a Belgian member of the European Parliament, who's also the Brexit negotiation representative, talked about Catalonia yesterday. He branded the independence referendum and condemned its 'deception and manipulation'. He also warned that any declaration of independence is "totally irresponsible" Manfred Weber, a German politician said "the EU has neither the will nor the right to intervene in a true liberal democracy such as Spain." But Weber warned that "who leaves Spain, leaves the European Union."

On the other hand, Greens group leader Ska Keller, another German politician, condemned that "this was massive police violence against people and that was beyond any proportionality. Violence so disproportionate cannot be justified. No buts and no excuses, whatever you think about the referendum,"

Aussie lower after worse retail sales contraction in four years

Australian Dollar trades mildly lower today after disappointing retail sales, that contracted -0.6% mom in August, much worse than expectation of 0.3% mom rise. That's also the steepest decline in more than four years. Also, the contraction is broad-based, as sales dropped in every state and territory across the country. The sluggish sales is seen partly a result of poor wage growth in the job market, and partly due to high household debt level. Also from Australia, trade surplus widened to AUD 0.99B in August, above expectation of AUD 0.87B. Exports grew 1% to AUD 32.2B while imports were flat at AUD 31.2B. The trade data was somewhat also consistent with retail sales, suggesting weak domestic demand growth. That's seen as one of the major reasons for RBA to stand pat while global central banks are exiting stimulus.

Staying in Australia, former RBA board member John Edwards warned that "very low interest rates at a time of firm economic expansion invite trouble." And, there is "too great a risk that the price of assets like houses and shares may get too far out of whack with what prove to be sustainable levels." Then he pointed to Australia 10 year bond year at around 2.6%, 1.1% above the cash rate. The long-term average premium sits at 0.8%. So, "there is perhaps some allowance for a rise in the cash rate over the ten years of the bond, but not much."

Japan Abe to meet US Trump on November 6

Japan Prime Minister Shinzo Abe held a telephone call with US President Donald Trump yesterday. Regarding North Korea, they both agreed that "dialogue for the purpose of dialogue was meaningless". Abe is expected to meet Trump in November, during the latter's visit to Asia including China, the Philippines, South Korea and Vietnam between November 3-14. That's also not long after Abe's snap elections. The summit will be held on November 6 with focuses on North Korea and trade relations.

Looking ahead

Swiss will release CPI in European session while Eurozone will release retail PMI. US will release Challenger job cuts, jobless claims, trade balance and factory orders later in the day. Canada will release trade balance too.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7836; (P) 0.7855; (R1) 0.7882; More...

AUD/USD continues to stay in tight range above 0.7784 and intraday bias remains neutral first. Focus stays on 0.7807 key near term support. Considering bearish divergence condition in daily MACD, firm break of 0.7807 support will indicate near term reversal. Outlook will then be turned bearish for 55 week EMA (now at 0.7674) first. Meanwhile, rebound from 0.7807 will retain bullishness. Above 0.7907 minor resistance will turn bias back to the upside for retesting 0.8124 high.

In the bigger picture, rise from 0.6826 medium term bottom is seen as corrective pattern. In case of further rally, strong resistance should be seen at 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside. Meanwhile, firm break of 0.7807 is the first signal that such correction is focused. Break of 0.7328 will bring retest of 0.6826 low.

Economic Indicators Update