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Bitcoin is taking a dive after strong interest over the summer. Support lies at 3599 (22/08/2017 low) has been broken. Key resistance can be located at 4921 (01/09/2017 high). The road is wide open for further decline below $3000.

In the long-term, the digital currency has had an exponential growth. There are decent likelihood that the asset will reach $10'000.

EUR/CHF's buying pressures are going up and the pair has broken resistance area between 1.1356 and 1.1472. Further medium-term sideways moves are favoured.

In the longer term, the technical structure has reversed. Strong resistance is given at 1.20 (level before the unpeg). Yet, the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low)

EUR/GBP is trading lower. However, as long as prices remain below the resistance at 0.9176 (declining trendline), the short-term technical structure is biased to the downside. Hourly support is given at 0.8982 (12/09/2017). Resistance lies at 0.9306 (29/07/2017 high).

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 (psychological level).

Friday September 15: Five things the markets are talking about

North Korea's latest missile test overnight has not managed to generate a lasting market reaction. The launch is the second to fly over Japan in less than a month and the first since the U.N adopted fresh sanctions earlier this week.

Note: Japan's Defense Minister indicated that the missile launched could be an intermediate range ballistic missile (IRBM). The UN Security Council is expected to meet later this afternoon (3 pm EDT).

Global equities have traded mixed as Pyongyang latest missile launch raised geopolitical tensions, though declines in traditional risk assets – gold, yen and CHF – indicate that many investors are becoming somewhat accustomed to the sequence of baiting and diplomatic reaction.

Yesterday's stronger than expected U.S consumer inflation data is lending pockets of support for the 'mighty' dollar and U.S bond yields as fixed income dealers increase their bets for the potential of another Fed rate hike in 2017.

Markets focus now shifts to this morning's volatile U.S retail sales (08:30 am EDT), industrial production (09:15 am EDT) and consumer sentiment print (10 am EDT).

1. Global stocks mixed reaction

In Japan, the Nikkei share average ended higher overnight (+0.5%), and posted its biggest weekly gain in ten-months (+3.3%) as a stronger dollar supported exporters. Investors basically shrugged off N. Korea's missile launch that happened to knock risk appetite in wider Asia. The broader Topix advanced +0.4%.

In South Korea, the Kospi index ended +0.4% higher after dropping as much as -0.5% intraday, while down-under, Australia's S&P/ASX 200 Index fell -0.8%.

In Hong Kong, the Hang Seng Index swung between gains and losses (+0.1%), while the China Enterprises Index lost -0.3%.

In China, equities end the week lower on signs that Chinas economy may be losing steam. The blue-chip CSI300 index ended little changed, while the Shanghai Composite Index fell -0.5%. For the week, the CSI300 rose +0.1%, while SSEC slid -0.3%.

In Europe, regional indices trade mostly lower, led again by the FTSE 100 which has continued yesterday's steep drop after 'hawkish' commentary this morning from the BoE's strongest 'dove' has pushed GBP +1.2% higher outright (see below).

Indices: Stoxx600 -0.1% at 381.6, FTSE -0.7% at 7247, DAX flat at 12536, CAC-40 flat at 5225, IBEX-35 -0.2% at 10341, FTSE MIB flat at 22274, SMI -0.4% at 9040, S&P 500 Futures -0.1%

2. Oil falls as markets dip on N. Korea tensions, gold lower

Ahead of the U.S open, oil prices are a tad softer as global markets weaken following N. Korea's latest missile launch.

Nevertheless, crude prices remain atop of their five-month highs reached this week on bullish demand forecasts and U.S refineries restarting.

Brent crude futures are down -18c at +$55.29 a barrel, however the benchmark remains on track for its third consecutive weekly gain and the highest weekly rise since the end of July.

U.S West Texas Intermediate crude (WTI) is down -16c at +$49.73 a barrel. The contract is set for a +5% weekly gain, also its strongest in nearly two-months.

Note: OPEC this week forecasted higher demand for its oil in 2018 and pointed to signs of a tighter global market, while the IEA said the global oil glut was shrinking due to strong European and U.S demand, as well as production declines in OPEC.

Spot gold has slipped overnight (down -0.2% at +$1,326.70 an ounce), shrugging off N. Korea's latest missile launch. Strong U.S inflation data yesterday is raising the spectre of another Fed hike by year-end interest, which is supporting the U.S dollar. The 'yellow' metal is down over -1% for the week, on track for its first weekly decline in a month.

3. BoE's most 'dovish' member now sees need for rate hike

The BoE's most 'dovish' member has changed his view and now thinks a hike may be needed soon.

In a speech this morning, Gertjan Vlieghe said the U.K economy was “running through its spare capacity quicker than he had expected, while household spending was stronger.'

Fixed income dealers now peg a 50-50 chance that the BoE will raise its policy rate in November after his comments, which have boosted Sterling Overnight Index Swap Average (OIS) this morning. The probability of a +25 bps rate rise has jumped from +0.25% to +49.92% – it stood at +33.32% after yesterday's BoE decision and minutes. Ten-year gilt yields have backed up to +1.282% from +1.244%.

Elsewhere, the yield on U.S 10-year Treasuries advanced +1 bps to +2.19%, while Germany's 10-year Bund yield dipped -1 bps to +0.41%, the first retreat in more than a week.

4. GBP hits 15-month highs on a 'hawkish' dove

Sterling (£1.3569) continues its relentless rally in European trading, adding to yesterday's gains in the wake of the BoE sounding in favor of raising interest rates sooner than the market has expected. While voting 7-2 yesterday to hold steady, the post-meeting statement pointed to a November tightening amid central-bank forecasts of +3% inflation in October.

The EUR (€1.1949) remains better bid outright, helped as the dollar underperforms against a strengthening pound. It's also being supported by comments from ECB policymaker Sabine Lautenschlaeger who reiterated that “it is time to decide on scaling back bond purchases next year and that conditions are in place for inflation to reach a stable trend.'

The JPY (¥111.24) is well off its overnight highs despite another missile launch from N. Korea. Investors seem happy to speculate that the ongoing tension on the Korean Peninsula would not lead to any actual military action.

5. Eurozone wage growth hits two-year high

Data released this morning by the E.U statistics agency suggest that things are about to change on the inflation front for the ECB.

Eurozone wages rose at the fastest pace in more than two years during the three months to June, a sign inflation may be set to rise to the ECB's target.

Eurostat said wages were +2.0% higher in Q2 than a year earlier, the fastest rise since Q1 of 2015 and up from +1.3% in the previous three-month period.

Note: The missing element in the link between growth and inflation has been wages, which have grown more slowly than President Draghi and company had expected.

AUD/USD is consolidating lower after the pair surged towards 0.8125 (08/09/2017 high). Hourly support below 0.7950 (former uptrend channel). Expected to further weaken.

In the long-term, the trend is largely negative since 2011. Key supports stands at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

USD/CAD is consolidating. Hourly support is located at 1.2062 (08/09/2017 low). Resistance is now given at a distance at 1.2239 (intraday high). Expected to show continued short-term bullish pressures.

In the longer term, the pair has broken longterm support that can be found at 1.2461 (16/03/2015 low). Strong resistance is given at 1.4690 (22/01/2016 high). The pair is likely to head further lower. Short-term increase.

EUR/JPY - 132.91





The single currency opened higher this week and has resumed recent upmove as euro broke above indicated resistance at 131.71, suggesting the major rise from 109.49 low (2016 low) is still in progress and may extend further gain to 133.50-60 and 134.00-10 but overbought condition should prevent sharp move beyond previous chart resistance at 134.59 and reckon 135.00 would hold on first testing, price should falter below 136.00-10, bring retreat later.

The daily chart is labeled as attached, early selloff from 169.97 (July 2008) to 112.08 is wave (A) of B instead of end of entire wave B and then the rebound from there to 139.26 is wave (B), hence, wave (C) has possibly ended at 94.12 with a diagonal triangle as labeled in the daily chart, hence upside bias is seen for further gain. Recent rally above indicated retracement level at 116.69 (50% Fibonacci retracement of the intermediate fall from 139.26-94.12) adds credence to this view and signal major reversal has commenced but first leg of this wave C has possibly ended at 149.79, hence wave 2 has commenced with wave A ended at 126.09, followed by wave B at 141.06, wave C commenced and could have ended at 109.49, indicated upside targets at 126.00 and 130.00 had been met and further gain to 135.00 would follow. 



On the downside, whilst initial pullback to 132.00-05 is likely, reckon downside would be limited to 131.65-70 and bring another upmove later. Below 131.00 would defer and risk test of support at 130.62 but only break of latter level would suggest top is formed instead, risk weakness to 130.00, however, strong support at 129.37 should remain intact, bring another upmove later this month.


Recommendation: Buy at 132.00 for 134.00 with stop below 131.00.

To re-cap the corrective upmove from the record low of 88.93 (18 Oct 2000), the wave A from there is subdivided as: 1:88.93-113.72, 2:99.88 (1 Jun 2001), 3:140.91 (30 May 2003), 4:124.17 (10 Nov 2003) and 5 ended at record high of 169.97 (21 Jul 2008). The brief but sharp selloff to 112.08 is viewed as a-b-c x a-b-c wave (A) of B. The subsequent rebound to 139.26 is (B) of B and (C) of (B) has possibly ended at 94.12 and in any case price should stay well above previous chart support at 88.93, bring rally in larger degree wave C towards 150.00.

USD/CHF keeps on bouncing. Strong resistance is given at 0.9771 (15/06/2017 high). The technical structure shows that the the pair is likely to head further lower below 0.9421 (03/05/2017). Expected to show renewed bearish pressures.

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/JPY is now monitoring resistance area around 111. Strong support is located at 107.32 (08/09/2017 high). Expected to show further downside pressures if the pair fails to break resistance at 111.05 (04/08/2017 high).

We favor a long-term bearish bias. Support is now given at 99.02 (10/08/2013 low). A gradual rise towards the major resistance at 125.86 (05/06/2015 high) seems unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

GBP/USD is consolidating lower. The pair has broken hourly resistance at 1.3329 (13/09/2017 high). Strong support is given at 1.2774 (24/08/2017 low). Expected to show continued bullish pressures.

The long-term technical pattern is reversing. The Brexit vote had paved the way for further decline. Long-term support can be found at 1.1841 (07/10/2017 low). Long-term resistance given around 1.35 is at stake and indicates a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.