Sample Category Title

Daily Pivots: (S1) 1.2481; (P) 1.2506; (R1) 1.2532; More....

No change in USD/CAD's outlook. While deeper fall could be seen, considering bullish convergence condition in 4 hour MACD, we'll be cautious on strong support from 1.2460 key support to contain downside and bring rebound. On the upside, break of 1.2608 minor resistance will indicate short term bottoming and turn bias back to the upside for 1.2968 support turned resistance. However, firm break of 1.2460 will target next key fibonacci level at 1.2048.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. Fall from 1.3793 is seen as the third leg and should target 50% retracement of 0.9406 to 1.4869 at 1.2048. At this point, we'd look for strong support from there to contain downside and bring rebound. However, firm break there will target 100% projection of 1.4689 to 1.2460 from 1.3793 at 1.1564.

Daily Pivots: (S1) 0.7902; (P) 0.7936; (R1) 0.7970; More...

AUD/USD continues to stay in consolidation below 0.7988 and intraday bias remains neutral. Near term outlook remains bullish as long as 0.7785 support holds and another rise is expected. Break of 0.7988 will target 100% projection of 0.6826 to 0.7833 from 0.7328 at 0.8335 next. However, break of 0.7785 will argue that deeper pull back in under way and could target 55 day EMA (now at 0.7658).

In the bigger picture, current development suggests that rebound from 0.6826 is developing into a medium term rise. There is no confirmation of trend reversal yet and we'll continue to treat such rebound as a corrective pattern. But in any case, further rise is now expected to 55 month EMA (now at 0.8100) or even further to 38.2% retracement of 1.1079 to 0.6826 at 0.8451. Break of 0.7328 support is needed to confirm completion of the rebound. Otherwise, further rise is now expected.

Daily Pivots: (S1) 1.1613; (P) 1.1662 (R1) 1.1696; More...

Despite edging higher to 1.1711, EUR/USD quickly retreated. Considering weak momentum with 4 hour MACD staying below signal line, intraday bias is turned neutral first. Some consolidations would be seen but downside should be contained above 1.1444 resistance turned support and bring another rally. Above 1.1711 will target 1.2 handle next.

In the bigger picture, an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Sustained break of 55 month EMA (now at 1.1760) will pave the way to key fibonacci level at 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. While rise fro 1.0339 is strong, there is no confirmation that it's developing into a long term up trend yet. Hence, we'll be cautious on strong resistance from 1.2516 to limit upside. But for now, medium term outlook will remain bullish as long as 1.1295 support holds, in case of pull back.

Daily Pivots: (S1) 1.2994; (P) 1.3038; (R1) 1.3070; More...

GBP/USD is still bounded in range below 1.3125 and intraday bias remains neutral first. With 1.2811 support intact, another rise is mildly in favor. Break of 1.3125 will target 61.8% projection of 1.2108 to 1.3047 from 1.2588 at 1.3168. Overall, choppy rebound from 1.1946 is seen as a corrective pattern, hence, we'd be cautious on strong resistance from 1.3168 to limit upside. But firm break of 1.3168 will bring further rise towards 1.3444 key resistance. Meanwhile, break of 1.2811 support will be the first sign of reversal and will turn bias to the downside to target 1.2588 key support next.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern that is still in progress. While further upside is expected, overall outlook remains bearish as long as 1.3444 key resistance holds. Larger down trend from 1.7190 is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

Daily Pivots: (S1) 111.15; (P) 111.55; (R1) 112.28; More...

The recovery from 110.61 temporary low extends higher but USD/JPY is staying below 112.41 resistance so far. Intraday bias remains neutral first. Another decline is expected with 112.41 intact. Below 110.61 will target 108.81. Break there will resume whole correction from 118.65 and target 61.8% retracement of 98.97 to 118.65 at 106.48. Nonetheless, break of 112.41 will dampen this bearish view and turn focus back to 114.49 resistance instead.

In the bigger picture, the corrective structure of the fall from 118.65 suggests that rise from 98.97 is not completed yet. Break of 118.65 will target a test on 125.85 high. At this point, it's uncertain whether rise from 98.97 is resuming the long term up trend from 75.56, or it's a leg in the consolidation from 125.85. Hence, we'll be cautious on topping as it approaches 125.85. If fall from 118.65 extends lower, down side should be contained by 61.8% retracement of 98.97 to 118.65 at 106.48 and bring rebound.

Daily Pivots: (S1) 0.9475; (P) 0.9500; (R1) 0.9549; More...

USD/CHF's rebound indicates temporary bottoming at 0.9437 and intraday bias is turned neutral first. We remain cautious on strong support from 0.9443 key support to bring reversal. But break of 0.9699 is needed to confirm Otherwise, another fall will be in favor. Sustained trading below 0.9443 will extend the down trend from 1.0342 to 161.8% projection of 1.0342 to 0.9860 from 1.0099 at 0.9319.

In the bigger picture, focus is now back 0.9443 key support level. Sustained break there indicate underlying bearish momentum and would target 0.9 handle and possibly below. Meanwhile, strong rebound from current level and break 0.9699 resistance will extend long term range trading between 0.9443/1.0342.

US stocks ignored policy uncertainty surrounding President Donal Trump and surged to record highs overnight. S&P 500 jumped to record high at 2477.13, up 0.29%, on strong earnings. NASDAQ also rose 0.02% to record at 6412.17. DOW jumped 0.47% to close at 21613.43, just shy of record. Surging oil price, which saw WTI reaching as high as 48.66, is another factor boosting sentiments. Meanwhile, US yields also staged a strong comeback just ahead of FOMC rate decision. 10 year yield closed up 0.072 to 2.326, scoring the largest jump in nearly 4 months. In the currency markets, Canadian Dollar is trading as the strongest major currency for the week while Yen and Swiss Franc are the weakest. Dollar and Sterling are mixed as markets await FOMC meeting and UK Q2 GDP.

The jump in treasury yield on inflation expectations is worth a note. It started with record German Ifo business sentiment that pushed 10 year bund yields up to 0.566. On the background, there was the strong rally in oil and industrial metal like copper. TNX is having its focus back on 2.396. Break there will extend the rebound from 2.103 to 2.621 high. Such development will be Yen negative.

Markets await FOMC and UK GDP

FOMC policy decision and statement will be the main focus today. The Fed would leave the policy rate unchanged but the key is whether the Fed would turn more dovish on the inflation outlook which might affect the future normalization path. The market consensus remains that there would be one more rate hike in December, which was signalled in the June dot plot. However, more and more voices of doubt about the implementation due to recent disappointment on the data front. Another focus is whether the Fed would announce the kickoff period of the balance sheet reduction plan.

Meanwhile, earlier in the day, Swiss will release UBS consumption. UK will release Q2 GDP and BBA mortgage approvals. US will also release new home sales.

Oil surged on production cut

Oil prices rallied on hopes that output surplus would come under control. Saudi Arabia has planned to cut exports to 6.6M bpd, down 1M bpd from a year ago, in August. The pledge was followed by UAE with its energy minister Mohamed al-Mazrouei announcing that state-owned Abu Dhabi National Oil Company will cut its crude exports by about 10% in September. While Nigeria and Libya are still exempted from the output cut deal, the two countries promised to limit outputs after which have reached a certain level.

IMF urged ECB to maintain stimulus

IMF said in a report published yesterday that "monetary policy should remain firmly accommodative until there is a sustained rise in the inflation path toward the ECB's price stability objective." And, it also emphasized that some countries in the region need to tolerate inflation above target for a "prolonged period" to life the average inflation among member states. The IMF acknowledged that recovery in Eurozone is "firming and becoming broad based". But it also warned that "the improving near-term outlook is clouded by significant downside risks, especially in the medium and long term, amidst thin policy buffers." Also, "some high-debt countries could experience rising borrowing costs in the face of tighter global financial conditions or reduced monetary accommodation."

BoJ Nakaso: Improving output gap will lift prices

BoJ Deputy Governor Hiroshi Nakaso said that he's still confident that inflation will reach the 2% target around fiscal 2019. And, BoJ should stick with the current stimulus program. He noted that for now, companies have been trying to "absorb higher labour costs by revising their business processes". In such a way, higher labour costs are not being passed on to consumers. However, he emphasized that "the output gap is clearly improving, so companies will become more aggressive in setting wages and prices."

Aussie lower after CPI

Australian Dollar weakens mildly today after lower than expected inflation data. CPI rose 0.2% qoq in Q2, below consensus of 0.4% qoq. Annually, CPI slowed to 1.9% yoy, down from 2.1% yoy and missed expectation of 2.2% yoy. RBA trimmed mean CPI slowed to 1.8% yoy, down from 1.9% yoy. RBA weighted median CPI, however, rose to 1.8% yoy, up from 1.7% yoy. RBA Governor Philip Lowe said today that tightening in global central banks "has no automatic implications for monetary policy in Australia". And RBA "didn't" and "don't need to" move in "lockstep" with others.

RBNZ McDermott stays dovish

RBNZ Assistant Governor John McDermott has spoken about the monetary policy outlook, with a dovish stance. He suggested that current estimates the neutral interest rate is around 3.5 % with potential output growth at 2.9% and core inflation at 1.4%. He added that the neutral rate has been slowly falling for some time, due to lower potential output growth. The impact on kiwi was rather muted. NZDUSD continued its sideways trading around a 10-month high. released from New Zealand, trade surplus widened to NZD 242m in June.

USD/CHF Daily Outlook

Daily Pivots: (S1) 0.9475; (P) 0.9500; (R1) 0.9549; More...

USD/CHF's rebound indicates temporary bottoming at 0.9437 and intraday bias is turned neutral first. We remain cautious on strong support from 0.9443 key support to bring reversal. But break of 0.9699 is needed to confirm Otherwise, another fall will be in favor. Sustained trading below 0.9443 will extend the down trend from 1.0342 to 161.8% projection of 1.0342 to 0.9860 from 1.0099 at 0.9319.

In the bigger picture, focus is now back 0.9443 key support level. Sustained break there indicate underlying bearish momentum and would target 0.9 handle and possibly below. Meanwhile, strong rebound from current level and break 0.9699 resistance will extend long term range trading between 0.9443/1.0342.

Economic Indicators Update

Weak inflation is not an ideal scenario for a central bank which is looking to improve it. Yet as trimmed and median hit consensus and RBA expect inflation to be variable then it may not be as bad as first feared.

Broad CPI read let the team down by missing expectations and softening on a quarterly and annual basis. Broad weakness for AUD ensued where AUDNZD felt the biggest squeeze just moments after the release. Trimmed mean, the RBA's preferred inflationary gauge softened form 1.9% YoY to 1.8%, yet this was the consensus figure, so this may not come as too much of a surprise.

Debelle may be feeling a touch of 'I told you so' and now Lowe may get to rub it in a little, but overall the downside for AUD is limited. Today's CPI data doesn't really change the underlying issues of a higher AUD; the US Dollar remain on the back ropes and AU sensitive commodities remain elevated. Until this scenario changes then verbal interventions will only provide limited pullbacks but, for now at least, 80c appears to be safe from bulls.

As quarterly CPI for weighted and trimmed have moved sideways for two quarters (three quarters for trimmed) then we expect a basing effect to take hold on these measures and support them. Although headline CPI has moved lower, this is partly to do with lower petrol prices and, whilst still followed by the RBA, is not their favoured measure as it is more volatile.

When you break down the CPI data into sectors, it has predominantly been led higher by health, with furnishings, alcohol & tobacco and housing. The biggest drags on the headline figure are recreation & culture, transport, communication, clothing 7 footwear and food & non-alcoholic beverages.

AUD has respected the weekly pivot (0.7894) to provide interim support ahead of the Fed meeting. We may find the 0.7873 level also tested upon any spikes lower but in all the time we remain above the 2016 high, we expect traders to buy the dip and take advantage of the weaker Greenback.

The downside on AUDJPY has also been limited as market sentiment overnight was a classic risk-on. Stocks broke to new highs and dragged yields higher whilst VIX moseyed on down to a record low. This environment favours carry trades such as AUDJPY, so we continue to think AUDJPY may eventually move its way to Y90 over the coming weeks unless risk-off rears its ugly head.

GBPAUD could be setting up for a swing trade short. 1.65 resistance is close to monthly S1 which allows for a little noise around this bearish zone. If we are to see Sterling move lower then this should help GBPAUD towards an inverted hammer or bearish signal of some sorts. If you were confident resistance may hold then a market order or sell-limit may be used to capture an anticipated move. Or for extra confirmation, await for NY close to assess the daily candle or simply use a sell-limit beneath today's low as part of a set and forget entry.

Short term YM_F (Dow E-Mini Future) Elliott Wave view suggests the rally from 6/29 low is unfolding as a double three Elliott wave structure and ended with Minor wave W at 21628. Down from there, Minor wave X pullback unfolded as a running Elliott Wave flat. Minute wave ((a)) ended at 21457, Minute wave ((b)) ended at 21624, and Minute wave ((c)) of X ended at 21444. Index has since made a new high suggesting the next leg higher has started. Up from 21444 low, Minutte wave (a) ended at 21640. While Minutte wave (b) pullback stays above 21444, expect Index to extend higher again.

Alternatively, the new high at 21640 could still be Minute ((b)) and part of a flat from 21628 high. In this case, we could still see Minute wave ((c)) lower in 5 waves before Index resumes the rally. We don't like selling the Index and expect more upside against 21444 low in the first degree.

Dow E-Mini Future 1 Hour Elliott Wave Chart

STOCKS

Dow (21613.43, +0.47%) could be ranged within 21700-21500 for the next couple of sessions. There is some chance of testing 21800 on the upside while immediate support near 21500 holds.

Dax (12264.31, +0.45%) is trying to recover from levels near 12140, and could rise towards 12400 once again in the coming sessions. There is some support visible near 12000 on the 3-day charts coming up from June’16 and while that holds, Dax is likely to recover in the near term with some chances of a dip towards 12000-11870.

Shanghai (3240.27, -0.11%) is almost stable and could either come off or remain sideways from levels near 3260/70. There is room on the downside towards 3200 which is possible before again moving up to current levels.

Nikkei (20048.62, +0.47%) has moved up a bit as Dollar Yen and the US-Japan yield spread has bounced up a bit. Decent support is visible near 19600 and while that holds, the index could move up towards 20500 in the coming weeks.

Nifty (9964.55, -0.02%) opened at 10011 yesterday before coming off sharply to close near 9964. As we have been mentioning, 10000-10050 levels could act as an immediate resistance and while that holds, we may expect some correction in Nifty in the near term.

COMMODITIES

Gold (1247) is trading within the range of 1245-58. It has a crucial Support at 1245. If that holds, we can see a rise towards 1258 and 1270. But, in case the Support at 1245 breaks, there will be a further dip to 1230 and 1210. Silver (16.40) is also within the range of 16.20-16.50.Only a close below 16.20 could open up 15.90 and 15.50 respectively.

Copper (2.83) looks on a firm footing as it sustain the higher levels. We were bullish on copper since 22nd of June 17 and the intraday highes of 2.85-89 were at par to our initial targets. Our next target of 2.95 and 3.00 may be achieved in the rest of the week. Midterm resistance comes at 3.08-12 regions from where we may see some correction due to short term profit taking.

Oil Price rose higher in line with our expectation. Both Brent (50.56) and WTI (46.34) September contacts are trading within the ranges of 49.60-51.30 and 47.60-49.50 respectively. We are bullish on oil since 10th of July 17 onward and there is no reason to change our bullish stance in near term while Brent and WTI are trading above 47.70 and 45.50 on a weekly closing basis. We have U.S weekly crude oil inventory data today at 8:00 p.m IST. If the anticipation of -3.3 M Barrel of shortage will match the actual outcome, we might see further rally toward 51.50 (Brent) and 49.70 (WTI). A weekly close above those levels might confirm the end of the midterm bearish trend too.

FOREX

The FOMC policy statement tonight may dictate the near term path for the majors, especially if there is any specific hints regarding normalization of the Fed balance sheet.

A rise in German business confidence at 116.00 against the expectations of a drop to 114.90 had pushed Euro (1.1650) above 1.17 but it was rejected exactly at the resistance of 1.1712 we have been following. Unless we see a weekly closing above 1.1712, this latest phase of the rise remains a bit suspect as it remains in the most overbought state since 2008.

Dollar Index (94.06) remains almost unchanged with the trend firmly down. Only a bounce above 94.65 can give initial hints about a recovery but till then, the downside target of 93.00 remains a strong possibility.

Dollar Yen (111.89) has bounced back sharply as expected and now if it manages a break above 112.10, the bounce may extend higher to 112.55 and 113.00. Immediate support comes at 111.50-15.

Aussie (0.7914) continues its consolidation with the larger trend up. With Copper (2.88) surging to a fresh 26-month high (Check Commodities section), the probability of further rise towards 0.80+ levels in the coming sessions strengthens considerably.

It was a day for mute price action for Dollar-Rupee (64.38) as expected but the range boundaries of 64.28-60 may be tested in the next couple of sessions . Bias neutral at this point.

INTEREST RATES

Market awaits the FOMC meeting tonight. Although the rates are likely to remain unchanged the market would look for firmer statements on the timings to start the effort on reducing the balance sheet. The probability of a rate hike in September has risen to 91.6%.

The US yields have risen sharply ahead of the FED meet tonight and could re-test the medium term resistance in the coming sessions. The 30Yr (2.91%) is trading close to the medium term resistance of 3% and while that holds, not much room is available on the upside just now. Unless the 30YR breaks above 3%, medium to long term looks bearish for the US yields.

The US 10YR (2.33%) has risen as expected breaking above our expected 2.28% mentioned yesterday. It could possibly move up faster as compared to the 5Yr (1.89%) as indicated by a rising 10-5Yr differential (0.44%) which could now move up towards 0.45-0.46%.

The US-Japan 10YR (2.25%) has bounced from support levels as expected and while it continues to move up, it could pull up both Dollar Yen and Nikkei in the coming sessions. The yield spread could test 2.3% in the near term.

The German-US 10Yr (-1.76%) and the German-Us 2Yr (-2.06%) have come off sharply and are testing decent supports near current levels. If the supports hold, we could see a bounce back else we could see a fall in the next few sessions before the yield spreads pause. Euro could come off a bit, if the yield spreads continue to fall.