Sample Category Title

USD/JPY - 110.80

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 111.00

Kijun-Sen level                  : 111.21

Ichimoku cloud top             : 111.49

Ichimoku cloud bottom      : 111.37

Original strategy  :

Sold at 111.45, Target: 110.45, Stop: 111.75

Position :  - Short at 111.45

Target :  - 110.45

Stop : - 111.75

New strategy  :

Hold short entered at 111.45, Target: 110.45, Stop: 111.40

Position :  - Short at 111.45

Target :  - 110.45

Stop : - 111.40

As the greenback has fallen again after meeting renewed selling interest at 111.71, retaining our bearishness for a retest of this week’s low t 110.62, however, break there is needed to confirm recent decline has resumed and extend further weakness to 110.30-35 but reckon 110.00-05 would hold from here due to near term oversold condition, risk from there is seen for a rebound next week.

In view of this, we are holding on to our short position entered at 111.45. Only above said resistance at 111.71 would defer and prolong choppy trading, however, price should still falter below said resistance at 112.20, bring retreat later.

EUR/GBP - 0.8957

 
Recent wave: Major double three (A)-(B)-(C)-(X)-(A)-(B)-(C) is unfolding and 2nd (A) has possibly ended at 0.6936.

Trend: Near term up

Original strategy  :

Buy at 0.8865, Target: 0.8995, Stop: 0.8825

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.8925, Target: 0.9025, Stop: 0.8885

Position : -

Target :  -

Stop : -

 
The single currency found renewed buying interest at 0.8891 and has staged a rebound, suggesting the pullback from 0.8995 has possibly ended there, hence retest of this level would be seen, however, break there i needed to confirm upmove has resumed for test of psychological resistance at 0.9000, then 0.9020 but reckon upside would be limited to 0.9050 due to overbought condition, risk from there has increased for a retreat later.

In view of this, would not chase this rise here and would be prudent to buy euro on dips as 0.8920-25 should limit downside. A break of said support at 0.8891 would defer and suggest a temporary top is formed instead, bring correction to 0.8860-65 but only break of support at 0.8829 would provide confirmation, bring correction to 0.8800 first. 

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.

USD/CAD - 1.2423

 
Recent wave: Only wave v of c has ended at 0.9407 and wave C of major A-B-C correction is underway with wave iii ended at 1.4690, wave v of C may bring one more marginal rise probably in 2018

Trend:  Down

 
Original strategy       :

Sell at 1.2690, Target: 1.2490, Stop: 1.2750

Position: -

Target:  -

Stop: -

 
New strategy             :

Sell at 1.2690, Target: 1.2490, Stop: 1.2750

Position: -

Target:  -

Stop:-

As the greenback has fallen again after brief rebound, suggesting recent decline is still in progress and bearishness remains for further weakness to 1.2400, then  towards 1.2350-60, however, oversold condition should prevent sharp fall below 1.2330 and reckon 1.2300 would hold, risk from there is seen for a 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 still in progress, hence bearishness remains for this fall to extend weakness to aforesaid downside targets.

In view of this, would not chase this fall here and would be prudent to sell the pair again on recovery as 1.2690-95 should limit upside. Above 1.2745-50 would defer and risk a stronger rebound to 1.2800-10 but only break of latter level would signal a temporary low is formed instead, bring retracement of recent decline to 1.2850, then 1.2900, however, price should falter below 1.3000 and the greenback shall head south again from there.

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.

GDP Q2 bounced back to a trend-like 2.6 percent with the help of solid consumer spending and business investment. Flagging inflationary pressures continue to challenge current FOMC dot-plot expectations.

Second Quarter Bounce Back: Real Final Sales Solid

After the perennial residual seasonality issues and despite a negative inventory contribution, second quarter GDP returned to trend at 2.6 percent, annualized.

Underlying momentum for the economy is better gauged by real final sales to domestic purchasers, which came in at 2.4 percent, a reflection of solid consumer spending and continued business equipment spending (top graph). The gains in consumer spending reflect the gains in disposable personal income of 3.2 percent. Spending for durables and nondurables were areas where consumer spending rebounded most notably. Business equipment also contributed to growth at a moderate pace of 8.2 percent, consistent with core capital goods shipments. Core capital goods shipments and orders have been on an improving track, and with business leaders still optimistic that some progress can be made on the fiscal policy front, the outlook for business investment remains constructive.

Structures, government and net exports all added to GDP growth. Moreover, residential investment corrected from the favorable weather induced fast pace of the first quarter when activity was clearly pulled forward. Looking forward, the outlook for residential construction remains constructive as long as the labor market, including wage & salary growth continues to show improvement.

Inflation Remains Tame

Inflation, as measured by the PCE deflator, has registered soft performances over the prior four months and has grown just 1.6 percent, year over year (middle graph). The figure reinforces the view that the price environment exhibits little upward momentum as we enter the second half of the year. The FOMC will have to grapple with flagging price pressures as they assess the appropriate path for monetary policy. There is a lot of runway left before the December FOMC meeting where we believe the Fed may be in position to hike interest rates again, but a return to a quickening pace of inflation is critical to that call.

Outlook Going Forward

In the first half of the year, GDP growth has averaged just 1.9 percent. Looking ahead to the second half of the year, we expect GDP to accelerate slightly, averaging 2.5 percent. Continued job gains (bottom graph) along with signs that real disposable income is accelerating is supportive of our view of stronger consumer spending in the second half of the year. Global economic data has been surprising to the upside, suggesting that domestic business investment is also likely to slowly accelerate in the second half of the year. Should our forecast for H2 hold, year-over-year GDP growth should expand at a 2.2 percent pace in 2017, faster than the 1.5 percent rate observed in 2016.

EURCHF surged to as high as 1.1396 so far, reaching the highest level since January 2015 after four days of big gains. The near-term bias remains on the upside as the pair is heading sharply higher.

Despite the market being overextended as indicated by the RSI which reached overbought territory above 70, the rally is not showing signs of exhaustion. The technical picture still looks bullish, with the three moving averages being positively aligned and giving bullish signals. The 20-day MA crossed above the 50-day MA, which is also located above the 200-day MA.

Prices are fast approaching a key level at 1.1400, which is likely to be a strong resistance area. The rally could pause here amidst an overextended market (if RSI remains overbought). A break above 1.1400 would open the way towards 1.1500 and then 1.1551 (161.8% Fibonacci extension level of move from 1.1200 to 1.0619).

Should prices fall below 1.1000, this would likely lead to consolidation and bring the pair back to a neutral bias. But only a drop below the 200-day MA in the 1.0700 handle would shift the overall market structure to bearish.

• The economy grew by 2.6% (annualized) in the second quarter according to the BEA's advance estimate - a hair below expectations for 2.7%.
• Real personal consumption expenditures grew by 2.8%, led by a 6.3% gain in durable goods spending. Spending on non-durable goods rose 3.8%, while spending on services was up a more moderate 1.9%.
• Non-residential fixed investment rose 5.2%, led by a 8.2% gain in equipment spending. Non-residential structures investment rose 4.9%, down from 14.8% in the first quarter as non-mining structures investment declined by 9.4% annualized - the largest decline in six quarters. Mining investment continued to support growth on increasing drilling activity, advancing by 117% (annualized), but still down from the 272% (annualized) pace in Q1.
• Net exports contributed marginally economic growth. Exports were up 4.1%, while imports rose 2.1%.
• Inventory investment was basically flat in the quarter (-0.3 billion from 1.2 billion in Q1).
• Benchmark revisions reduced first quarter growth to 1.2% from 1.4% previously. Annual average growth in 2016 was revised down to 1.5% (from 1.6%), while 2014 and 2015 were both revised up (to 2.6% and 2.9% from 2.4% and 2.6% respectively). All told, the positive revisions were larger than the downward ones and the American economy is 0.2% bigger than previously estimated.

Key Implications

• Not too shabby. As expected, economic growth accelerated from its soft opening and is once again is running at a capacity-absorbing pace.
• Still, with the downward revision to first quarter growth and 2.6% in the second quarter, economic growth will have to accelerate further in the second half of the year in order to hit the Federal Reserve's median forecast for 2.2% (on a Q4/Q4 basis). Fortunately, economic data has maintained momentum heading into the third quarter and there is good reason to expect this to happen.
• All told, there is little here to raise eyebrows at the Fed. As long as economic growth continues to run above 2.0%, the focus will likely remain firmly on inflation, wage growth, and unemployment for guidance on future monetary policy.

• The Canadian economy notched up its seventh straight monthly expansion in May, growing an impressive 0.6% month-on-month.  
• Growth was again broad based, with 14 of 20 major industries expanding on the month.
• The goods-producing side of the economy tore ahead, growing 1.6% month-on-month. Leading the way was mining and quarrying (+4.6%), as a major oil facility came back online following a shutdown earlier, and conventional extraction saw robust growth. Canadian manufacturing expanded 1.1% on broad-based sub-sector strength, more than offsetting last month's declines. The fly in the ointment was construction, which fell for a second month (-0.6%), attributed in part to a strike among Quebec workers.   
• While less exciting, the services-producing industries remained reliable, notching up a 0.2% gain in its 21st straight monthly expansion. Leading the way were retail trade (+0.9%), finance and insurance (+0.9%), and wholesale trade (+0.7%). The impact of changes to real estate market regulations in Ontario could be seen in the real estate/rental and leasing sector , which declined 0.2% in May, the largest decline seen since mid-2010. 

Key Implications

• There appears to be no holding back the Canadian economy, at least for now. Making a robust GDP print even more impressive was that those sectors that did decline did so either due to government policy (real estate), normalization after a robust April (arts and entertainment), or one-off factors (construction), suggesting an even healthier underlying signal. 
• May's solid report continues a string of encouraging economic data, and suggests that the Canadian economy likely saw its strongest first half performance since at least 2004 (Current Q2 tracking: 3.8%). 
• The near-term robustness of the Canadian economy will likely allow the Bank of Canada to carry through with another interest rate increase this fall, completing the removal of the 2015 emergency stimulus, and consistent with the rapid change in their communication tone. 
• Beyond the near-term, a return to a more cautious communication strategy and pace of interest rate increases is expected in light of the headwinds facing Canada, and evidence suggesting that recent economic strength may not translate as meaningfully into inflationary pressures relative to historic experience.

Gold has posted considerable gains in the Friday session. In North American trade, spot gold is trading at $1264.43, up 0.42% on the day. On the release front, US Advance GDP posted a strong gain of 2.6%, above the forecast of 2.5%. UoM Consumer Sentiment will be released later in the day, with the key indicator expected to dip to 93.2 points.

There have been ominous warnings that the US economy is in trouble and that second quarter growth might follow a soft first quarter. However, the naysayers were nowhere to be found on Friday, as the economy expanded at an impressive clip of 2.6%. Consumer spending and business investment led the way with strong gains, as the economy recovered from a slow start to the quarter. Still, more data will be available for the next two GDP reports, which could show more restrained growth. Gold prices shrugged of the GDP numbers, as the metal has climbed to its highest level since mid-June.

It's become an all-too-familiar pattern out of Washington – trouble for the White House has translated into losses on global stock markets, as higher political risk has made investors jittery. It was déjà vu on Thursday, as President's struggling healthcare bill gasped its final breath as the bill was defeated in the Senate after three Republican lawmakers joined the Democrats and voted against the bill. This is another setback for President Trump, who has been unable to get Congress to pass any significant legislation, despite the Republicans controlling both the House and the Senate. Trump will now be able to focus on other issues such as tax reform, but investors are skeptical as to whether the President will have the support he needs in Congress to pass major legislation.

With the Federal Reserve holding rates at 1.25% at this week's policy meeting, the markets focused on the rate statement, as investors looked for clues about future rate moves. The statement was cautiously optimistic in tone, with policymakers saying that the economy was growing at a moderate pace and that the labor market remained strong. The statement made note of low inflation, but said that the Fed expected the economy to continue to expand. Another key issue on the Fed's plate is the $4.2 trillion balance sheet. The rate statement said that the Fed plans to taper asset purchases "relatively soon", which is a likely nod at September as the start date. This would involve the Fed tapering its purchases of Treasury bonds and mortgage securities, with an initial taper likely of $10 billion/month. Although the Fed continues to talk about another rate hike in 2017, investors remain skeptical. The rate statement did not change many minds, as the odds of rate increase in December stand at 47%, according to the CME Group.

The EUR/USD has been in a steady uptrend as I also showed on Live trading webinar but now it is struggling to break W H3/D H4 camarilla pivot. The POC zone is 1.1700-1.1710( D H3, ATR pivot, 23.6, trend line) and if the pair get there it might spike again towards the 1.1730 and 1.1750. A strong momentum above 1.1750 should provide a continuation wave towards 1.1770 and 1.1800. However a break below 1.10695 could initiate a pullback towards 1.1660. Today is Friday, so pay attention to possible profit taking that could instill additional volatility during the EOD (End Of Day).

Highlights:

• US Q2 GDP growth matched consensus, picking up to an annualized 2.6% pace from Q1's 1.2% gain.
• Final domestic demand growth held steady at 2.4% in Q2.
• Consumer spending growth rebounded to 2.8% from 1.9%. The Q1 increase was revised up from 1.1%, which looked surprisingly weak given aggregate income gains and strong consumer sentiment.
• Nonresidential investment maintained momentum with a 5.2% gain in Q2 building on the previous quarter's 7.1% gain.
• Stronger business investment was broadly-based though the increase in structures was due to a further surge in mining exploration.
• Residential investment slipped back following a double-digit gain in Q1. Some housing activity may have been brought forward by unseasonably warm winter weather.
• Net exports added to growth for a second consecutive quarter, reflecting solid export gains year-to-date.

Our Take:

It would be easy to say the US economy got its groove back in Q2 with GDP growth jumping to 2.6% following Q1's sub-trend 1.2% gain. However, revisions show much of that slowing can be attributed to weaker inventory investment. Underlying demand never really lost its mojo with final sales to domestic purchasers rising 2.4% in each of the last two quarters. The previously-reported slowdown in Q1 consumer spending has been lessened to 1.9% through revisions with Q2's growth rate rebounding to 2.8% and thus more consistent with solid employment gains to date this year. Another solid increase in business investment was also encouraging, coming from both rebounding oil and gas capex and spending by non-energy firms. We don't think the Fed will be surprised by today's data; they've been anticipating a Q2 rebound for some time now and have consistently pointed to strength in consumer spending and business investment. But confirmation of a solid increase is heartening, particularly in the face of slowing inflation in recent months. The return to above-trend growth points to remaining economic slack being absorbed, which should begin to put upward pressure on prices and help return inflation to their 2% objective. As such, we continue to expect another rate increase before year end, to which markets are only attaching 50/50 odds at present.