Sample Category Title

USD/CHF - 0.9932

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9938

Kijun-Sen level                    : 0.9945

Ichimoku cloud top                 : 0.9948

Ichimoku cloud bottom              : 0.9947

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although dollar has slipped again after faltering below resistance at 0.9981 and near term downside risk remains for weakness towards yesterday’s low at 0.9893, break there is needed to confirm recent decline from 1.0108 has resumed and extend weakness to 0.9865-70 (2 times extension of 1.0108-1.0008 measuring from 1.0067) but reckon support at 0.9831 would hold from here, bring rebound later.

In view of this, would be prudent to stand aside in the meantime. Above 0.9960 would prolong consolidation, bring another bounce to 0.9981 but break of 1.0000-08 resistance is needed to signal low is formed instead, bring rebound to 1.0025-30 (61.8% Fibonacci retracement of 1.0108-0.9893), however, price should falter below resistance at 1.0067.

GBP/USD - 1.2833

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.2824

Kijun-Sen level                    : 1.2809

Ichimoku cloud top              : 1.2808

Ichimoku cloud bottom        : 1.2807

Original strategy :

Buy at 1.2710, Target: 1.2850, Stop: 1.2675

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2710, Target: 1.2850, Stop: 1.2675

Position : -

Target :  -

Stop : -

Cable has remained confined within near term established range and further sideways trading is in store, whilst another test of Friday’s low at 1.2757 cannot be ruled out, reckon downside should be limited to 1.2700-10 (50% Fibonacci retracement of 1.2515-1.2906) and bring another rally, break of 1.2859 would signal the pullback from 1.2906 has ended, bring retest of this level, above there would extend recent upmove to 1.2920-30 (2 times extension of 1.2365-1.2575 measuring from 1.2500), then 1.2950 but loss of upward momentum should prevent sharp move beyond 1.2990-00 (1.236 times projection of 1.2109-1.2616 measuring from 1.2365 and psychological resistance). 

In view of this, would not chase this rise here and would be prudent to buy cable on subsequent pullback as downside should be limited to 1.2710 (50% Fibonacci retracement of 1.2515-1.2906), bring another rise. Below 1.2700 would defer and signal top has been formed, risk correction to 1.2660-65 (61.8% Fibonacci retracement of 1.2515-1.2906) and price should stay well above 1.2608-16 (previous resistance now support).

EUR/USD - 1.0940

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.0906

Kijun-Sen level                  : 1.0888

Ichimoku cloud top             : 1.0832

Ichimoku cloud bottom      : 1.0809

New strategy  :

Buy at 1.0900, Target: 1.1000, Stop: 1.0865

Position : -

Target :  -

Stop : -

Current break of yesterday’s high at 1.09367 signals recent upmove has resumed and bullishness remains for the erratic upmove from 1.0340 low to extend further gain to 1.0975-80 and possibly towards 1.1000 which is likely to hold on first testing due to loss of momentum, risk from there is seen for a retreat later.

In view of this, would not chase this rise here and would be prudent to buy euro on pullback as 1.0900 should limit downside. Below 1.0870 would defer and suggest an intra-day top is formed, risk weakness towards support at 1.0851 but another previous support at 1.0821 should hold from here.

USD/JPY - 110.93

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 110.60

Kijun-Sen level                  : 110.30

Ichimoku cloud top             : 109.97

Ichimoku cloud bottom      : 109.74

New strategy  :

Buy at 110.40, Target: 111.40, Stop: 110.05

Position :  -

Target :  -

Stop : -

The greenback has surged and broke above previous resistance at 110.60, suggesting recent rise low 108.13 low is still in progress and bullishness remains for this move to bring at least a strong retracement of early downtrend, hence further gain to 111.20-25 and possibly towards resistance at 111.58 would be seen, however, near term overbought condition should prevent sharp move beyond 111.90-00 and price should falter well below resistance at 112.20.

In view of this, would not chase this rise here and would be prudent to buy dollar on subsequent pullback as the Kijun-Sen (now at 110.30) should limit downside, bring another rally. Below 110.00-05 would defer and suggest top is possibly formed, risk weakness to 109.80 but break of support at 109.59 is needed to provide confirmation.

Consumer confidence fell a bit more than expected in April but, at 120.3, remains near a 12-year high. Consumers' views of both present and expected conditions were dialed back, but remain at solid levels.

Paring Back Only Some of Last Month's Surge

Consumer confidence fell 4.6 points in April to 120.3. The pullback was a bit more than expected and followed a downward revision to the March reading. Nevertheless, the index still stands at its second highest reading of the expansion and above the highs of the past expansion.

We expected some giveback in consumer confidence following the trouble late last month surrounding the proposed revision in the Affordable Care Act and the signal it sent that it may be much tougher for Washington to pass new policies than what consumers and the market expected. The stock market slid following the preliminary cut off to the March survey, while yesterday's rally that erased those losses fell outside the April response date.

Assessments of the Labor Market Still Favorable

The pullback in confidence reflected a decline in assessments of both present conditions and expectations. The present situation index fell 3.3 points to a still-solid reading of 140.6. Consumers' views of current employment conditions deteriorated slightly relative to March, but continue to point to a labor market that has improved markedly over the past year. The share of workers reporting jobs are plentiful slipped by one point, while the share reporting that jobs are hard to get was nearly unchanged. The labor differential, the difference between these two series, fell 1.1 point to 11.7 in April, holding most of the leap in March. Compared to a year ago, the labor differential is up more than 10 points and suggests that consumers' view of the labor market has improved more than other measures, such as the unemployment rate.

Looking further out, consumers' expectations for the next six months were somewhat less upbeat. The expectations index fell nearly six points. Following the softer-than-expected March payrolls report, the share of respondents expecting more jobs ahead fell 3.8 points, while the share expecting fewer jobs rose a touch. Income expectations followed suit, with the share of consumers expecting to see their incomes increase falling back near February levels. The share expecting income to decrease, however, remained at a post-recession low.

Confidence Level Still Supportive of Consumer Spending in Q2

Although readings of consumer confidence have been particularly disjointed from households spending in recent months, the index remains at a level supportive of a pickup in spending in the second quarter. Real personal consumption spending in the first quarter looks to have been held down by a number of one-off factors, including depressed utilities spending from relatively warm winter weather, but, with the labor market continuing to improve, we expect a rebound in the second quarter.

Headlines

European equities didn't face the traditional setback after yesterday's stellar gains. Instead they added another 0.5%. US stock markets opened positive as well (+0.5%) with the Dow Jones outperforming (+0.1%). A lot of huge corporates posted good Q1 earnings (Eli Lilly, Caterpillar, McDonalds, Dupont…)

The Richmond Fed Manufacturing index declined less than expected in April, from 22 to 20 (vs 16 expected). Consumer confidence disappointed though, falling from a downwardly revised 124.9 to 120.3 in April (vs 122.5 expected). Especially the "expectations" component faced a setback. Housing data were better than forecast.

Kikuo Iwata, deputy governor of the central bank, says it's too early for the Bank of Japan to reveal its simulations for exiting its monetary easing program as its 2% price target remains distant.

Banks across the euro zone are set to tighten access to credit for companies in the second quarter but lending volumes are still seen rising, helped by ultralow rates, the ECB indicated in its bank lending survey. Corporate credit standards eased somewhat in the first quarter, broadly in line with earlier expectations.

The German government has slightly raised its growth forecasts for Europe's biggest economy for this year and next due to increased optimism about rising global demand, two senior government officials told Reuters. The government now expects gross domestic product (GDP) to expand by 1.5% in 2017 and by 1.7% in 2018.

Caterpillar cut its forecast for full year earnings per share because of higher restructuring costs, even as it forecasts stronger than expected sales and revenues for 2017, which could suggest a recovery in global markets for construction, energy and mining.

Rates

French elections cleared. focus back on ECB exit?

Global core bonds lost ground today. German Bunds underperformed US Treasuries at the long end of the curve suggesting that European investors' focus turns to the ECB's normalisation process with French elections out of the way. We think that the ECB will calibrate its APP again later this year by lowering the amount of monthly purchases again. We don't expect any communication at Thursday's policy meeting though. Heavy supply was additionally negative today for bonds (see below). The European eco calendar (empty), stock markets (0%-0.5%), and oil prices (flat) didn't provide impetus for trading. US eco data printed mixed. Housing data and the Richmond Fed manufacturing index surprised on the upside of expectations, but the more important consumer confidence disappointed. The US Note future made a small uptick after the release, but we don't expect sustained gains.

At the time of writing, the German yield curve bear steepens with yields 1.4 bps (2-yr) to 6.7 bps (30-yr) higher. Changes on the US yield curve vary between +2.9 bps (2-yr) and +4 bps (5-yr). On intra-EMU bond markets, 10-yr yield spread changes versus Germany range between -3 bps (Portugal) and +1 bp (Italy). Greece slightly outperforms (-6 bps).

The German Finanzagentur held a €4B 2-yr Schatz auction (0% Mar2019). Total bids amounted only €3.78B, below the €5.08B average at the previous 4 Schatz auctions and below the amount on offer (real bid cover 0.9). The Bundesbank set aside €0.78B for secondary market operations, resulting in an official bid cover of 1.2. The auction yield (-0.69%) was the highest since November last year. The Dutch debt agency tapped the 10-yr DSL (€2.1B 0.75% Jul2027) for up to €3B. The amount sold was in the lower half of the €2-3B target range. The US Treasury starts its end-of-month refinancing operation with a $26B 2-yr Note auction. Currently, the WI trades around 1.27%.

Currencies

USD/JPY extends gains; EUR/USD holds near 1.09

The post-Macron risk-on trade continued today, but, understandably, at a slower pace than yesterday. Equities and especially core bond yields trended further north. The risk-on sentiment had again a mixed impact on the dollar as both EUR/USD and USD/JPY trended cautiously higher. EUR/USD is retesting the 1.09 big figure. The USD/JPY upleg accelerated during the day. The pair is changing hands in the 110.70 area.

Overnight, Asian equities eked out more gains even as global markets pondered the impact of President Trump's tax proposals and a spending bill that the needs to be approved soon to avoid a government shutdown. For now, it didn't hamper the global risk rally. The yen weakened slightly after yesterday evening's setback. USD/JPY returned to the 110 area. EUR/USD held near 1.0865, where it was most of yesterday's session.

European markets continued the Asian trend. European equities maintained a positive intraday bias. Of course, the gains were modest as investors digested yesterday's steep gains. Core bond yields rose another few basis points. Interest rate differentials widened slightly in favour of the dollar at the short end of the curve but narrowed at the long end. EUR/USD held a narrow range just below 1.09. So, the post-Macron top remained within reach. USD/JPY also maintained a cautious upward bias, drifting to the 110.50 area.

Risk sentiment remained positive early in US dealings. US equity futures were supported by strong results for several US bellwethers including Dupont, Caterpillar and others. Initially, the risk on trade supported USD/JPY, EUR/JPY and EUR/USD at the same time. However, strong US housing data gave the dollar a better bid capping the topside of EUR/USD as the pair retested the 1.09 area. USD/JPY trended higher to the 110.75 area going into the US midmorning data. These data were mixed. US new home sales were very strong and the Richmond Fed manufacturing index decline less than expected (from 22 to 20). However, consumer confidence dropped more than expected. The immediate impact on the dollar is limited. EUR/USD again tries to regain the 1.09 big figure. USD/JPY remains well bid in the 110.70 area.

EUR/GBP off the recent lows on euro strength

The March budget data were the only UK specific data on the agenda today. The March deficit was slightly wider than expected at £5.1 bln. Disappointing VAT revenues might be another indication that UK consumers are pressured by the rising prices. As usual, the impact of the report on sterling trading was limited. EUR/GBP still held a very tight sideways range around the 0.85 big figure. Cable traded with a slight upward bias intraday and returned north of 1.28 (currently 1.2820). This cross rate also stabilized within the tight range that was in place since UK PM announced early elections last week.

National home prices rose 0.4 percent in February and are up 5.8 percent year over year, according to the S&P CoreLogic Case-Shiller Index. Prices continue to be fueled by a steady uptrend in sales and low inventory.

National Home Prices Edge Up

Supported by tight supply and steady gains in home sales, U.S. home prices continue to edge higher. The S&P CoreLogic Case- Shiller National Home Price Index is up 5.8 percent over the past 12 months and the 20-City and 10-City indices are up 5.9 percent and 5.2 percent, respectively.

Among the 20 cities, Seattle continues to lead price gains, reporting a 12.2 percent increase over the year.

Solid Seller's Market

Sentiment reports indicate that consumers feel increasingly confident that it is a "good time to sell." Survey measures have been corroborated by recent hard data as the NAR reports properties are selling at a faster rate. Existing homes were on the market for an average of just 34 days in March, down from 45 days in February and 50 days in January. Low inventories and rising demand are likely to continue to fuel price pressures.

EUR/GBP - 0.8523

 
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 down

Original strategy  :

Sold at 0.8475, stopped at 0.8515

Position : - Short at 0.8475

Target :  -

Stop : - 0.8515

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

 
The single currency has continued edging higher and broke above indicated previous resistance at 0.8512, dampening our bearishness and signal temporary low has been formed at 0.8312, hence near term upside risk remains for the rebound from 0.8312 to bring retracement of recent decline to 0.8545-50, however, reckon resistance at 0.8580 would hold from here.
 
In view of this, would not chase this rise here and would be prudent to buy euro on subsequent pullback as 0.8450-55 should limit downside. Only below previous resistance at 0.8415 would abort and signal top is formed instead, bring weakness to 0.8380-85 but break of support at 0.8351 is needed to signal the rebound from 0.8312 has ended, bring retest of this level 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 - 1.3588

 
Recent wave: Only wave v of c has ended at 0.9407 and wave C of major A-B-C correction is underway for headway to 1.4700

Trend:  Near term up

 
Original strategy       :

Bought at 1.3430, met target at 1.3590

Position: - Long at 1.3430

Target:  - 1.3590

Stop: -

 
New strategy             :

Stand aside

Position: - Long at 1.3430

Target:  - 1.3590

Stop:- 1.3410

Current anticipated rally adds credence to our bullish view and the breach of previous resistance at 1.3599 confirms early upmove has resumed, hence upside bias remains for recent rise to extend further gain to 1.3650-60, however, near term overbought condition should prevent sharp move beyond 1.3690-00 and reckon 1.3750-60 would hold from here, bring retreat later. 

As we have taken profit on our long position entered at 1.3430, would not chase this rise here and would be prudent to stand aside for now, then look to buy again on subsequent pullback as 1.3500 should limit downside. Below 1.3465-70 would risk weakness to 1.3430 but indicated support at 1.3411 should contain downside and bring rebound later.

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 - 0.9948

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Despite dropping to 0.9893 yesterday, lack of follow through selling and the subsequent rebound suggest consolidation above this level would be seen and another bounce to 0.9975-80 cannot be ruled out, however, reckon 1.0000 (said resistance and 50% Fibonacci retracement of 1.0108-0.9893) would limit upside and bring another decline later. Below said support at 0.9893 would extend the fall from 1.0108 top to 0.9865-70 (2 times extension of 1.0108-1.0008 measuring from 1.0067) but support at 0.9831 would hold, bring rebound later.

In view of this, would be prudent to stand aside in the meantime. Above previous support at 1.0008 would suggest low is formed instead, bring rebound to 1.0025-30 (61.8% Fibonacci retracement of 1.0108-0.9893) but price should falter below resistance at 1.0067.