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The yellow metal drops further on the short term and closed the former gap up. Is under selling pressure on the short term as the USD has managed to increase versus all its rivals. A further USDX increase will send the Gold towards the $1307 per ounce, where we have an important static support. Support can be found at the warning line (WL1) as well.

The price has rallied in the last two sessions and have managed to breakout above the warning line (wl1) of the major descending pitchfork. Brent jumped above the 54.96 previous high as well and confirms a further increase. It should climb towards the $57 per barrel in the upcoming period, even if we’ll have a minor decrease because the price could make a minor consolidation here.

We have a major upside target at the median line (ML) of the major ascending pitchfork. Technically, it was expected to approach the median line (ML) after the failure to reach and retest the 50% Fibonacci line.

The AUD/USD increased significantly in the morning and recovered a little after the yesterday’s impressive drop. Is trading in the green right now after the rejection from a dynamic support level. The rebound could be only temporary if the USDX will resume the yesterday’s bullish momentum.

AUD/USD maintains a bullish perspective on the short term because is still trapped in the green zone. However, the rate showed some exhaustion signs on the Daily chart, but we still need a confirmation that will start another leg lower.

The AUD/USD increased somehow surprisingly today as the Australian data have come in mixed, while the Chinese figures have disappointed. The Australian Employment Change surged from 29.3K to 54.2K, beating the 17.5K estimate, while the Unemployment Rate remains steady at 5.6%. The MI Inflation Expectations rose by 3.2%, less versus the 4.2% growth in the former reading period.

The Aussie ignored the Chinese Industrial Production release, the indicator increased only by 6.0%, less versus the 6.6% estimate.

Price was rejected by the lower median line (lml) of the minor ascending pitchfork and now tries to climb higher again. Personally, I’m expecting to see a further drop on this pair, a valid breakdown below the lower median line (lml) of the ascending pitchfork will open the door for more declines in the upcoming period.

A major drop will be validated after a breakdown and a retest of the lower median line (LML) of the major ascending pitchfork.

EUR/USD has finally started another leg lower on the Daily chart. Is trading in the red and should hit fresh new lows in the upcoming period. The net downside target will be at the median line (ml) of the minor descending pitchfork, could be attracted by the confluence area formed at the intersection between the median lines (ml).

EUR/GBP changed little in the Asian session, but most likely we’ll have a significant move in the upcoming hours as the fundamental factors will take the lead again. Price is pressuring the 0.9000 psychological level, could still be attracted by the confluence area formed at the intersection between the lower median line (lml) and with the median line (ML) of the ascending pitchfork.

The GBP/USD has dropped sharply in the yesterday's trading session and seems poised to start a corrective phase. Price is going down as the USD has managed to increase after the USDX's rebound. The pair is trading in the red on the short term and could hit fresh new lows in the upcoming hours if the United States data will come in line with expectations or better in the afternoon. Technically, a retreat is natural after the failure to close above a dynamic resistance.

We may have some volatility later after the UK and the US data will be sent to the public, the BOE is to release the Official Bank Rate, which is expected to remain steady at 0.25%, while the Asset Purchase Facility shouldn't suffer any change.

Price continues to be trapped within the ascending channel's body, has retested the upside line and now could drop again. Technically, it could drop again after another failure to close above the red up sloping line. Now is pressuring the warning line (wl1) of the ascending pitchfork, a valid breakdown will confirm a further drop. The next downside targets will be at the 1.3046 level, actually could be attracted by the confluence area formed between the 250% Fibonacci line with the 1.3046 horizontal obstacle.

Is premature to talk about a broader drop because is located above some important support levels, only a breakdown below the 250% Fibonacci line will confirm a larger decrease.

Another Positive Day for The Greenback. US dollar was able to stay in the green for another day as most market watchers focus on U.S. CPI data due later on Thursday by the U.S. Federal Reserve as it considers when to next raise interest rates. The market focus has also shifted to President Trump’s tax-reform plan, which helped to rejuvenate appetite for the US dollar and riskier assets.

Dollar Holds Near 4-week High vs Yen. The dollar held steady near a four-week high against the yen on Thursday, with traders looking to U.S. consumer inflation data later in the day for clues on the possible timing of the Federal Reserve’s next rate rise. The dollar last stood at 110.59 yen, trading within sight of its highest level since Aug. 16 of 110.69 yen.

Sterling Steady Before BoE Monetary Policy Decision. Sterling held steady at $1.3211 after setting a one-year high of $1.3329 On Wednesday, as investors took profits before the Bank of England policy decision and the Swiss National Bank due later on Thursday.

Crude Oil Chalks Up More Gains. Crude oil prices surged over 2% as the International Energy Agency (IEA) noted that the combination of the output drop from the OPEC and the expected pickup in global demand could keep crude oil prices supported and rebalance inventories. The rebound in the oil price over the last few days also reflects expectations of resumed demand from Major Gulf Coast restarted operating refineries after they were shut down due to Hurricane Harvey.

Watch Out Today for:

07:30 am GMT: CHF SNB Interest Rate Decision
11:00 am GMT: GBP BoE Interest Rate Decision
12:30 pm GMT: USD Consumer Price Index

DXY Dollar Index Short Term Elliott Wave view suggests that the Index ended Primary wave ((3)) at 91.01 and currently in a Primary wave ((4)) bounce. Internal of Primary wave ((4)) is unfolding as a zigzag Elliott wave structure. Preferred view suggests rally to 92.01 completed Intermediate wave (A) and dip to 91.71 ended Intermediate wave (B) as an expanded Elliott wave FLAT. Expect the Index to continue higher towards 92.71 – 92.95 area to complete Primary wave ((4)). Afterwards, the Index should resume the decline lower or at least pullback in 3 waves. We don’t like buying the Dollar Index. Expect sellers to appear at 92.71 – 93.33 area for a 3 waves reaction lower at least. If the rally in the Dollar Index extends beyond 93.33 (1.168 extension), the move from 9/8 low could unfold as impulse instead.

DXY 1 Hour Elliott Wave Chart

Ending Diagonal is an Elliott wave structure that typically happens inside wave 5 of an impulse or inside wave C of a zigzag. Ending Diagonal has 5 waves subdivision and each wave is further subdivided into 3 waves. Thus Ending Diagonal has the structure of 3-3-3-3-3. When Ending Diagonal happens within wave 5, the internal wave 1 of 5 and wave 4 of 5 can overlap. The Ending diagonal also often forms a wedge shape.

Sunrise Market Commentary

• Rates: End of uptrend US Treasuries since start Summer?
  The US Note future dropped below first technical support levels, suggesting an end to the uptrend which started at the start of July. US CPI will be published today and have the possibility to seal the deal. The market implied probability of a December Fed rate hike increased this week from 35% to 45%.
• Currencies: EUR/USD and USD/JPY are near first technically relevant levels
  The dollar succeeded a new up-leg yesterday even as (US) data were mixed, at best. EUR/USD (1.1823) and USD/JPY 110.67/95 are near first important technical support/resistance. The US CPI report might help to decide on break. The BoE meets today. A hawkish BoE statement might support the recent rebound of sterling

The Sunrise Headlines

• Three main US equity indices gained up to 0.2% yesterday, succeeding a simultaneous second straight all-time closing high. Asian stock markets are mixed overnight with Japan and China slightly underperforming.
• Paul Ryan, the top Republican in Congress, has sought to quell discontent in his own party over a lack of a concrete proposals on tax reform —legislative priority — by promising to unveil the outlines of a plan before the end of this month.
• US President Trump said he would stop a $1.3 bn China-backed bid for US-based chip maker Lattice Semiconductor, citing national-security risks. The order directed the companies to take all steps to drop the deal within 30 days.
• China posted its slowest growth in fixed-asset investment in nearly 18 years along with weaker-than-expected industrial output and retail sales, suggesting the economy may be starting to lose steam as lending costs rise.
• Australia's labor market has demonstrated renewed strength, recording substantial gains in full-time employment (+40.1k) in particular; but under-employment remains stubbornly high. AUD/USD rose back above 0.80
• ECB Praet renewed his call for a "steady hand" in conducting the ECB's ultra-easy monetary policy despite a positive growth outlook, striking a cautious note as the ECB prepares to decide whether and how to wind down its stimulus.
• Today's calendar contains US CPI inflation and weekly jobless claims. ECB Weidmann and Mersch are scheduled to speak. The Bank of England holds a policy meeting and Ireland taps the bond market

Currencies: EUR/USD And USD/JPY Are Near First Technically Relevant Levels

USD maintains a good bid going into US CPI

The risk rebound slowed yesterday. Initially this was also the case for the rise in core yields and in the dollar. Eco data were few (US PPI) and close to expectations. Later in the US, yields started a new up-leg and so did the dollar. USD short-covering apparently had still some way to go. A new campaign of the Trump administration to reduce taxes maybe added to the USD positive sentiment. Contrary to what was the case earlier this week, USD/EUR this time outperformed USD/JPY. EUR/USD finished the session at 1.1885. USD/JPY ended the day at 110.49

Overnight, Asian equities are trading mixed. China and Japan mostly show modest losses. Other regional indices trade with a slightly positive bias. USD/JPY sits in the 110.50 area, nearing 110.67/95 resistance. EUR/USD (1.1875) holds near the correction low. Chinese data, including retail sales, investment and production printed weaker than expected. The yuan trades again slightly softer against the dollar. Strong Australian labour data pushed AUD/USD back above the psychological 0.80 barrier, but the move loses momentum.

The EMU eco calendar is again thin. US August CPI takes centre stage. Headline inflation is expected to rise 0.3% M/M and 1.8% Y/Y. The rise should be energyrelated. Core inflation is expected to ease from 1.7% Y/Y to 1.6%. The picture for US inflation remains soft if confirmed. That said, yesterday, mediocre US PPI didn't prevent a further rise in US yields and in the dollar. If the BoE turns more hawkish on inflation, it might be slightly supportive for global core yields, with possible positive spill-over effects for the dollar. USD momentum clearly improved this week. USD/JPY and EUR/USD are near first technical significant resistance/support at respectively 110.67/95 and 1.1823. Is a break possible, with or without strong US data? Clearing these levels in a sustainable way would call of the USD negative momentum short-term.

Global context. The euro remained strong last week even as the ECB delayed communication on APP tapering till October and as Draghi kept a soft tone. Markets apparently took the view that ECB normalisation will come anyway. At the same time, the dollar lost further interest rate support as global uncertainty kept US yields on a downward trajectory.

Finally, the decline in US yields and of the dollar had gone far enough given recent US eco data, which remained fairly good. A technical correction occurred this week. The dollar in the first place needs an improvement in global sentiment and higher yields. US data might become noisy due to the impact of the hurricanes and can cloud the Fed's outlook and complicate a USD rebound. In this context, we want more confirmation that the recent bottoming out process in US yields and in the dollar might be the start of more sustained USD gains. We keep a close eye on how the test of first important technical levels turns out (cf supra). A break of EUR/USD below 1.1823 would open the way to the 1.1662 correction low. We remain cautious on a sustained further upside break in USD/JPY

EUR/USD off recent top, nears first support at 1.1823.

EUR/GBP

BoE raising its inflation alert might support sterling

UK labour data failed to clarify the interest rate debate. The discrepancy between activity and wage data persisted. The unemployment rate dropped to 4.3%, the lowest level since 1975 and employment growth remained strong, but wage growth didn't accelerate at all. At 2.1% Y/Y, real wages move further into negative territory. This combination leaves left the market wary on today's BoE assessment and blocked the recent rebound of sterling. EUR/GBP closed the session at 0.8998 (from 0.9009). Cable finished the day at 1.3211 (from 1.3283) on overall USD strength.

The BoE decides on monetary policy today. Recent developments placed Carney and Co for a dilemma. The Bank will have to incorporate higher inflation in its assessment. At the same time, real wages remain negative and might weigh on spending and growth further down the road. A rate hike today is unlikely, but the bank will probably warn that it can't ignore inflation. A 6-3 vote instead of a 7-2 vote is possible. If so, it might support a further sterling rebound.

From a technical point of view, EUR/GBP cleared 0.8854/80 resistance (top end June), opening the way for a protracted August rebound. The move was the result of euro strength. Simultaneously, UK price data were soft enough to keep the BoE side-lined. Recent price data amended this story. Medium term, we maintain a EUR/GBP buy-on-dips approach as we expect the combination of relative euro strength and sterling softness to persist. The 0.9415 ‘flash-crash spike' is the next target on the charts. However, we let the current correction do its job, e.g. to the technical support in the 0.88/89 area, before selling sterling versus the euro.

EUR/GBP holds near 0.90 pivot ahead of BoE policy decision

Download entire Sunrise Market Commentary

USD/CHF - 0.9650

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9642

Kijun-Sen level                    : 0.9623

Ichimoku cloud top                 : 0.9589

Ichimoku cloud bottom              : 0.9552

Original strategy :

Sell at 0.9680, Target: 0.9580, Stop: 0.9715

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.9680, Target: 0.9580, Stop: 0.9715

Position : -

Target :  -

Stop : -

Although the greenback has maintained a firm undertone after yesterday’s rise in NY and near term upside risk remains for the rally from 0.9421 low to bring retracement of early decline, overbought condition should limit upside to 0.9680 (previous resistance as well as 38.2% Fibonacci retracement of 1.0100-0.9421) and bring retreat later , below the 0.9605-10 would bring test of support at 0.9584 (yesterday’s low) but reckon downside would be limited to 0.9540-45 and 0.9515-20 should hold, bring another upmove later.

In view of this, we are inclined to turn short on further subsequent rise. Above 0.9698-99 resistance would extend gain to 0.9725-30 but still reckon upside would be limited and 0.9761-66 (50% Fibonacci retracement of 1.0100-0.9421 and previous resistance) should hold, risk remains for another retreat to take place soon.