Sample Category Title

USD/JPY - 110.99

Most recent candlesticks pattern   : N/A

Trend                      : Up

Tenkan-Sen level              : 110.89

Kijun-Sen level                  : 110.45

Ichimoku cloud top             : 110.59

Ichimoku cloud bottom      : 110.35

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

The greenback found renewed buying interest at 109.55 yesterday and has resumed recent upmove as price broke above resistance at 111.04 on active cross-selling in yen, however, loss of upward momentum should prevent sharp move beyond 111.40-45 (50% projection of 107.32-111.04 measuring from 109.55) and price should falter well below 111.85-90 (61.8% projection), bring correction later.

In view of this, would not chase this move here and would be prudent to stand aside for now. Below the Kijun-Sen (now at 110.45) would bring correction to 110.10-15 but only break there would signal an intra-day top is formed, weakness to 109.80 would follow but said support at 109.55 should remain intact. 

EUR/GBP - 0.8809

Original strategy  :

Sell at 0.8980, Target: 0.8850, Stop: 0.9020

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.8900, Target: 0.8780, Stop: 0.8940

Position : -

Target :  -

Stop : -

 
The single currency extended yesterday selloff and dropped to as low as 0.8774, suggesting the reversal from 0.9307 top is still in progress and bearishness remains for this fall to extend weakness towards 0.8737-43 (61.8% Fibonacci retracement of 0.8384-0.9307 and previous support), however, near term oversold condition should limit downside to 0.8719 support and reckon another previous chart support at 0.8652 would hold, bring rebound later. 

In view of this, would not chase this fall here and we are looking to sell euro on recovery as resistance at 0.8907 would limit upside and bring another decline later. Above 0.8940-50 would defer and risk a stronger rebound to 0.8975-80 but price should falter below 0.9000 and bring another selloff next week.

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.

AUD/USD is trading in the green and resumes the yesterday's bullish candle. It seems poised to climb much higher as the USDX drops again. Unfortunately, the USDX has found strong resistance at the 92.49 static resistance and now is going down again. USDX dropped also below the 91.92 static and could hit another dynamic support very soon. The dollar index could move in range on the short term and a failure to close below the 91.02 previous low will signal a rebound.

We'll see what will happen because the dollar index is very heavy on the short term, but this could be only a retest of the dynamic support levels.

An accumulation will signal a reversal on the short term, but we have to wait for a fresh signal because right now we don't have any reversal signs.

The Aussie was helped by the Chinese New Loans, which have increased unexpectedly higher, from 826B to 1090B, beating the 933B estimate.

You can see that the price is trading in the green after the retest of the lower median line (lml) of the minor ascending pitchfork. Is still trapped within the median line and the lower median line (lml) of the minor ascending pitchfork.

The failure to reach and retest the median line (ML) of the major ascending pitchfork signaled that it could come higher to retest the 0.8065 static resistance and the upper median line (uml) of the descending pitchfork.

The Brent has managed to reach fresh new highs in the yesterday's trading session, where has found temporary resistance. I've already shown you that the next major upside target will be at the median line (ML) of the major ascending pitchfork. We'll see how will react when will hit it, a valid breakout will signal that the upward movement will continue, while a rejection or a failure to reach this level will confirm a sharp drop.

The GBP/JPY has rallied aggressively and has managed to resume the bullish movement. The pair has finally managed to breakout from the extended sideways movement and goes for the next upside target from the lower median line (LML) of the ascending pitchfork.

Headline retail sales dropped 0.2 percent in August, as hurricane Harvey hit multiple categories. The July print was revised lower to 0.3 percent. The prognosis for PCE in Q3 GDP growth has certainly weakened.

Gas Prices and Shuddered Stores Impact August Sales

Advanced retail sales for August marked the beginning of several months in which retail sales data will show impacts from hurricane Harvey on Southeast Texas. Some early prepping by Floridians for Irma also may have been included in the surge of spending at grocery stores. Most sales showed steep declines from lost selling days at the end of the month, with auto sales showing the sharpest drop.

Downward revisions to the previous month added salt to the wound this morning. July's 0.6 percent rise first reported was revised to 0.3 percent, which wipes out some of the comforting buffer that Q3 PCE had built up to lessen the blow from the two major hurricanes that will inevitably cut into personal consumption growth in the GDP calculations. Control group sales also declined by 0.2 percent in August and the 3-month annualized rate of 1.1 percent is the slowest pace so far this year.

Auto sales were clearly the hardest hit in August. Sales of motor vehicles and parts declined 1.6 percent in August after a flat reading in July. The decline in auto sales trimmed 0.3 percentage points from headline growth, which was easily the largest drag from a single category in several months. Sales excluding motor vehicles were up slightly in August. The decline in auto sales eclipsed the boost from the 2.5 percent rise at gas stations. We were expecting gasoline sales to surge, due both to stocking up in storm affected areas and the surge in gasoline prices. Harvey slammed straight into the heart of the oil industry and several pipelines delivering fuel to the east coast were offline for several days, causing pump prices to rise in areas not directly hit by the storms.

August sales at building supply stores were somewhat of a wildcard, as Harvey made landfall on August 26, closing stores for the entire last week of August. While some rebuilding purchases may have been made in August, the 0.5 percent decline in building material sales on the month suggest most of that spending took place in September. Prepping for Hurricane Irma will also likely boost this category in September.

Sales were up for miscellaneous retail stores, grocery stores and eating and drinking places on the month, though non-store retailers' sales dropped on the month. Non-store retailers' sales, which include online shopping, surged 1.8 percent in July, so the August drop is likely payback. Amazon's 'Prime Day' was on July 10, which may have made for tougher month-tomonth comparisons in August. The category is up 8 percent over the year.

In the first of many indicators this fall to be impacted by hurricanes, the August retail sales report showed the surge in gasoline sales was erased by the lost business from other categories in August. In September, building supply stores will likely see much stronger sales as Houston and the entire state of Florida rebuild and recover from major back-to-back storms.

• European stock markets correct lower today with losses of up to 0.5%. US stock markets opened mixed with the Dow gaining some ground and the S&P and Nasdaq suffering small losses.
• Gertjan Vlieghe, one of the BoE's nine-strong rate-setting committee, said in a speech today that the base rate may need to rise "as early as the coming months". Previously, he has defended the central bank's programme of monetary stimulus.
• An improvised device was detonated on a London Underground train on Friday morning, injuring 22 people in what police say was a terrorist incident. Counter-terrorism officers took charge of the investigation and were seeking to establish who had planted the device on a packed commuter train during rush hour.
• An unexpected decline in August US retail sales and downward revisions to the prior two months mainly reflected weaker results at auto dealerships. Retail-control group sales, which are used to calculate GDP and exclude the categories of food services, auto dealers, building materials stores and gasoline stations, decreased 0.2% following a 0.6% advance
• US industrial production dropped unexpectedly by 0.9% M/M in August following an upwardly revised 0.4% M/M in July. Manufacturing production was down 0.3% M/M. The US empire manufacturing index declined less than forecast, from 25.2 to 24.4 (18 expected).
• There is a realistic chance of another Czech interest rate hike this year, partly due to an unexpectedly fast rise in wages, the central bank's monetary department director Tomas Holub was quoted as saying.
• EMU wages grew at their fastest rate in two years in Q2, increasing the chances that the ECB will set out plans next month to rein in its economic stimulus. Hourly labour costs rose by 1.8% in the April-June period, from a revised 1.4% in Q1, its highest growth since the first quarter of 2016, Eurostat said.
• "It is time to take a decision now on scaling back our bond purchases at the beginning of next year," ECB Lautenschlaeger said. "We need to think about how to bring our unconventional measures to an end. We need to look ahead and discuss what the exit might look like."

Rates

Core bonds lose more ground despite weak US eco data

Global core lost more ground today despite disappointing US eco data (retail sales, industrial production). US Treasuries nevertheless outperformed German Bunds because of these data. Today's session confirms that sentiment on core bond markets turned a corner compared to the Summer months. The main culprit for the decline in core bonds was BoE Vlieghe. He is by far the most dovish BoE-member, but in a speech he argued as well in favour of rate hike (in line with BoE communication yesterday). Both the Bund and the US Note future suffered a blow via the UK Gilt market (5-yr yield at one stage +12 bps). It makes the topic of policy normalisation in EMU and US back alive ahead of next week's FOMC meeting. US eco data mainly disappointed (only empire manufacturing better than forecast) but offered only temporary relief for the US Note future. Hawkish comments by ECB Lautenschläger (see headlines) marginally weighted on the Bund as well.

At the time of writing, changes on the US yield curve range between +0.2 bps (30-yr) and +1.5 bps (5-yr). The German yield curve trades 0.7 bps (30-yr) to 3.1 bps (5-yr) higher. On intra-EMU bond markets, 10-yr yield spread changes versus Germany narrow up to 3 bps (Portugal).

Currencies

US data can't help dollar find a solid bottom

The dollar couldn't confirm tentative signs of a bottoming out process earlier this week. EUR/USD returned to the upper half of the 1.19 big figure. The move was reinforced by poor US retail sales and production data. USD/JPY (and EUR/JPY ) are in good shape, but this is mainly yen weakness as the Japanese currency suffers from higher US/EMU yields.

Overnight, North Korea launched a new missile over Japan. However, the multiple North Korean actions have diminishing impact on markets. Asian equity markets traded mixed, mostly even slightly stronger. USD/JPY spiked briefly below 110, but soon returned to the mid 110 area. The EUR/USD chart hardly showed any ripples.

There was no high profile eco news in Europe. European equities didn't suffer from the North Korea missile launch, but there were also no sustained gains. At the same time, US and European bond yields still trended cautiously higher. Contrary to what was the case of late , the euro this time profited more than the dollar. ECB's Lautenschlaeger said that it is now time to take a decision on scaling back QE. Her point of view is no surprise but it brought the ECB tapering story again in the spotlight. The hawkish comments from the UK were maybe also slightly more supportive for the euro than for the dollar. Whatever, EUR/USD returned to the mid 1.19 area going into the US session. The yen suffered quite heavily from higher US & EMU yields. USD/JPY jumped above 111. EUR/JPY even reached the highest level since end 2015.

The early morning US data were mixed. The US empire manufacturing remained strong, but August retail sales brought a big miss and a strong July report was downwardly revised. The August US production also declined sharply, but Harvey was to blame. The dollar lost some further ground, but the additional losses were modest given the substantial miss in the data . EUR/USD trades in the 1.1970 area. USD/JPY hovers around 110.85. Conclusion: There were tentative signs of a USD bottoming out prices earlier this week, but these are not yet confirmed. USD/JPY is testing the 111 resistance area but this is yen weakness rather than USD strength.

Sterling gets additional support as dove turns hawkish

Yesterday, sterling jumped sharply higher as the BoE minutes of the 13 September policy meeting revealed that a majority of MPC members expected that a gradual withdrawal of monetary stimulus is likely to be appropriate over the coming months in order for inflation to return sustainably to target. There were no eco data in the UK today. However, BoE's Vlieghe, a notorious dove within the MPC, gave a speech in London. Remarkably Vlieghe also supported the call for a rate hike. He even suggested that the equilibrium UK interest rate may be rising. This hawkish turn of a BoE dove evidently triggered further GBP gains. EUR/GBP dropped temporary below 0.88 and trades currently at 0.8825. Cable (currently 1.3575) jumped north of 1.36, supported by USD softness, too.

USD/CAD - 1.2186

Trend:  Down

 
Original strategy       :

Sold at 1.2240, Target: 1.2080, Stop: 1.2240

Position: - Short at 1.2240

Target:  - 1.2080

Stop: - 1.2240

 
New strategy             :

Hold short entered at 1.2240, Target: 1.2080, Stop: 1.2240

Position: - Short at 1.2240

Target:  - 1.2080

Stop:- 1.2240

As the greenback found support at 1.2121 today and has rebounded, suggesting further consolidation would take place, however, as long as indicated resistance at 1.2240 holds, bearishness remains for recent decline to resume after consolidation, below said support at 1.2121 would signal the rebound from 1.2061 has ended, bring retest of this level later, below there would confirm recent decline has resumed and extend weakness towards psychological support at 1.2000 but loss of downward momentum should prevent sharp fall below 1.1950-60, 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.

In view of this, we are holding on to our short position entered at 1.2240. Above 1.2240-50 would risk rebound to 1.2300 but only break there would defer and signal a temporary low has been formed, bring a stronger rebound to 1.2335-40, however, upside should be limited to resistance at 1.2429 and price should falter well below 1.2490-00.

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.

USD/CHF - 0.9578

Original strategy :

Sold at 0.9680, met target at 0.9580\

Position : - Short at 0.9680

Target :  - 0.9580

Stop : -

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As the greenback has slipped again after meeting renewed selling interest at 0.9648 earlier today, justifying out view that top has been formed at 0.9705 yesterday and our short position entered at 0.9680 just met our downside target at 0.9580 (with 100 points profit) in NY morning, this anticipated decline signals the rise from 0.9421 low has ended at 0.9705 yesterday and mild downside bias remains for weakness to 0.9560-63 (50% Fibonacci retracement of 0.9421-0.9705) but reckon 0.9525-30 (61.8% Fibonacci retracement) would hold.

As we have taken profit on our short position entered at 0.9680, would not chase this fall here and would be prudent to stand aside in the meantime. Above the Kijun-Sen (now at 0.9621) would bring another bounce to 0.9648 but break there is needed to signal an intra-day low is formed, bring test of 0.9670-75 later.

Gold has lost ground in the Friday session. In North American trade, the spot price for an ounce of gold is $1324.61, down 0.37%. On the release front, US retail sales reports were dismal. Core Retail Sales slowed to 0.2%, missing the forecast of 0.5%. Retail Sales was even worse, posting a decline of 0.2%, compared to the estimate of +0.1%. On the manufacturing front, the Empire State Manufacturing Index dipped to 24.4, but this easily beat the forecast of 18.2 points. Later in the day, the US releases UoM Consumer Sentiment.

North Korea was back in the headlines on Friday, as the country fired a missile over Japan, which landed in the Pacific Ocean. A similar launch several weeks ago ratcheted tensions in the region and sent investors flocking to safe-haven gold. However, investors have not panicked just yet, as the stock markets and gold remain steady despite the North Korean provocation. If the US decides to respond forcefully to the North Korean move, however, nervous investors could return to gold and send the metal to higher levels.

Earlier in 2017, the Federal Reserve was full of optimism that a strong US economy would warrant three rate hikes during in 2017. Fast forward to September – the economy has generally performed well, but the US continues to grapple with weak inflation levels. A strong labor market has not helped push inflation higher, as wage growth remains soft. Fed policymakers have retreated from their earlier optimistic forecasts, and have been counseling caution and patience regarding rate increases. A December hike remains iffy, but the odds of a rate increase have slowly been moving higher, and are currently at 50%. CPI, the primary gauge of consumer inflation, improved in August. Could this be a sign that at long last, inflation is moving in the right direction? If the markets feel this is the case, the odds of a December hike should continue to increase.