Sample Category Title

GBP/USD - 1.2788

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.2821

Kijun-Sen level                    : 1.2829

Ichimoku cloud top              : 1.2641

Ichimoku cloud bottom        : 1.2637

Original strategy :

Buy at 1.2720, Target: 1.2850, Stop: 1.2685

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2710, Target: 1.2850, Stop: 1.2675

Position : -

Target :  -

Stop : -

Yesterday’s rally from 1.2515 to 1.2906 signals recent upmove from 1.1986 low is still in progress and although price has retreated from 1.2906, reckon downside would be limited to 1.2700-10 (50% Fibonacci retracement of 1.2515-1.2906) and bring another rise later, above 1.2855-60 would signal the retreat from 1.2906 has ended, bring retest of this resistance, break there would extend recent rise to 1.2920-30 (2 times extension of 1.2365-1.2575 measuring from 1.2500), then 1.2950 but loss of near term 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 price should stay above 1.2700-10, bring another rise later. Below 1.2690-00 would defer and risk correction to 1.2660-65 (61.8% Fibonacci retracement of 1.2515-1.2906) but price should stay well above 1.2608-16 (previous resistance now support), bring another upmove.

EUR/USD - 1.0704

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 1.0719

Kijun-Sen level                  : 1.0711

Ichimoku cloud top             : 1.0669

Ichimoku cloud bottom      : 1.0651

Original strategy  :

Buy at 1.0685, Target: 1.0785, Stop: 1.0650

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0675, Target: 1.0775, Stop: 1.0640

Position : -

Target :  -

Stop : -

As the single currency has retreated after marginal rise to 1.0737, suggesting consolidation below this level would be seen and pullback to 1.0690 cannot be ruled out, however, reckon previous resistance at 1.0670 (now support) would contain downside and bring another upmove later to 1.0738-40 (50% Fibonacci retracement of 1.0906-1.0570) and possibly towards 1.0775-80 (61.8% Fibonacci retracement) but reckon 1.0800-10 would hold from here, bring retreat later.

In view of this, would not chase this rise here and would be prudent to buy euro on pullback as 1.0670-75 should limit downside. Only below support at 1.0635 would abort and signal top is formed instead, risk weakness towards 1.0602 support.

USD/JPY - 109.09

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 108.93

Kijun-Sen level                  : 108.75

Ichimoku cloud top             : 108.84

Ichimoku cloud bottom      : 108.68

Original strategy  :

Bought at 108.45, Target: 109.45, Stop: 108.30

Position :  - Long at 108.45

Target :  - 109.45

Stop : - 108.30

New strategy  :

Hold long entered at 108.45, Target: 109.45, Stop: 108.30

Position :  - Long at 108.45

Target :  - 109.45

Stop : - 108.30

Although the greenback slipped to 108.32 overnight, as dollar found renewed buying interest there and has staged a rebound, retaining our view that further consolidation above this week’s low at 108.13 would be seen and test of resistance at 109.22 is likely, break there would add credence to our view that a temporary low has been formed there, bring retracement of recent decline to 109.40-45 (previous resistance and 38.2% Fibonacci retracement of 111.58-108.13), however, reckon upside would be limited to 109.86-87 (50% Fibonacci retracement and previous resistance) and price should falter below 110.25-30 (61.8% Fibonacci retracement), bring retreat later.

In view of this, we are holding on to our long position entered at 108.45. Below 108.30-32 would risk retest of 108.13 support (this week’s low) but break there is needed to signal recent decline has resumed and extend weakness to 107.75-80 later.

Headlines

European equities are trading firmer but gains remain small (0.33% EuroStoxx), except for Milan and to a lesser extent Madrid. US equities opened with gains of up to 0.5% (Nasdaq) as more quarterly earnings are coming in.

ECB Hansson (Estonia) said it is not too early to have a discussion on ECB policy. He doesn't want to discuss changes to the issue and issuer limits of QE. The discussion on the QE exit is "mostly an issue of getting the timing right and looking at incoming data. At the same time, it's too early to rush with concrete actions".

ECB Coeuré said the ECB is very, very serious about its forward guidance. It doesn't want extraordinary measures to become permanent, but the ECB has to be convinced inflation is sustainable. He added though that the balance of risks is "by and large" balanced.

Inflation in the euro area has been confirmed at 1.5% Y/Y in March, dipping from the 4 year high of 2%, which had begun to raise concerns over an inflationary surge in the continent. Digging deeper shows though that energy, food and holiday packages, volatile items, were behind the surprisingly large drop and partly due to the timing of Easter.

Morgan Stanley brought down the curtain on a generally bright earnings season for the biggest US banks, announcing a 70% rise in net income compared with a year ago, that handily beat analysts' expectations.

The UK government will have "no say" on the location of key EU agencies such as the bloc's banking regulator or medicines agency after Brexit, the European Commission said. It is no part of the Brexit negotiations, but it is rather a consequence of Brexit.

Citing the March SESFOD survey the ECB said that liquidity for underlying collateral worsened while terms for secured funding and OTC derivatives worsened too. This suggests that the negatives of the ECB's QE are increasing.

Rates

ECB survey highlights side-effects QE

Global core bonds lost some ground today, shrugging off overbought conditions. German Bunds underperformed European swap rates and US Treasuries at the front end of the curve. This Schatz/Bobl specific move occurred after the release of the ECB's survey on credit terms and conditions in euro-denominated securities financing and OTC derivatives markets. The survey cited scarcity of high-quality short term debt, which is used as collateral in funding markets. So far, the ECB continuously stated that these markets were properly functioning. This survey for the first time highlights side-effects from the asset purchase programme. The front end of the German curve suffered after the release. The only eco item on the agenda was the final EMU CPI, confirmed at 1.5% Y/Y and ignored by investors. Risk sentiment on stock markets improved marginally (+0.2%) while Brent crude moved back above $55/barrel.

At the time of writing, the German yield curve bear flattens with yields 5.5 bps (2-yr) to 3.5 bps (30-yr) higher. Changes on the US yield curve range between +2.4 bps (2-yr) and +3.9 bps (10-yr). On intra-EMU bond markets, 10-yr yield spreads versus Germany narrowed 5 to 9 bps for the non-core countries. Core spreads declined by 1 to 3 bps.

The German Finanzagentur tapped the off the run 30-yr Bund (€1B 2.5% Aug2044). Total bids amounted to €1.01B, below the €1.1B average at the previous 4 30-yr Bund auction and meaning that the auction was only just covered. The official bid cover was 1.2 as the Bundesbank retained €0.186B for secondary market operations (in line with average). The auction yield (0.87%) was the lowest since the end of 2016.

Currencies

USD decline slows, but no sustained rebound yet

Today, there were only second tier eco data releases. Core bond yields bottomed out after the recent decline and helped to put a floor for EUR/JPY and USD/JPY. The broader picture for the dollar remains indecisive. The tradeweighted dollar is holding within reach of the recent correction low. And EUR/USD hovers in the 1.0725 area, near this week's high. So, there is no consistent indication across markets that the correction on the US reflation trade is over and a sustained dollar rebound is around the corner.

In a daily perspective, EUR/USD held an extremely tight range roughly between 1.0705 and 1.0740. The soft EMU March inflation was confirmed (see headlines), giving no any additional support to the euro. Core bond yields in the US and Europe rose a few basis points after a protracted decline of late. However, the US/German spread hardly changed, once more failing to give guidance for EUR/USD trading. The pair is going nowhere (currently 1.0720).

USD/JPY showed some tentative signs of bottoming out yesterday and on Monday, but also today. The modest rise in US yields was slightly supportive. European and US equities traded with a cautiously positive bias, given some downside protection for the likes of USD/JPY and EUR/JPY. However, USD/JPY still struggles to hold north of 109. A break beyond this week's top (109.22) would be a first minor positive. Later today, USD traders will still keep an eye at the Fed beige Book, preparing the May 3 FOMC meeting. If the Fed maintains a constructive view on the US economy, it might put a floor on the USD setback.

Sterling holding near multi-month top

Sterling is holding near recent highs against the euro and the dollar. The UK currency jumped sharply higher yesterday, as UK PM May called for an early election on June 8. Markets see the prospect of May securing a bigger majority in Parliament as a factor of stability and potentially giving the UK PM some more room of manoeuvre in the Brexit negotiations. The jury is still out whether this will be the case. However, it was/is another reason for LT sterling shorts to be squeezed out of their positions. Today, the moves in cable and EUR/GBP were much more moderate, but there was no real correction on yesterday's GBP rally. Cable is holding in the 1.2850 area. EUR/GBP is trading around 0.8350. The 0.8304 key support remains within reach even as the euro is better bid across the board.

USDCAD is sharply turning up, now probably in the strongest and steepest wave 3 as part of a five wave impulse. As we can see, wave 3 may see limited upside and slow down around the 161.8 Fibonacci ratio, from where a new three wave drop into wave 4 may start to come in motion.

USDCAD, 1H

USD/JPY has posted modest gains in the Wednesday session. In North American trade, the dollar is trading at 109 yen. In economic news, there are no major US events on the schedule. In Japan, the trade surplus is expected to dip to JPY 0.61 trillion. On Thursday, the US releases the Philly Fed Manufacturing Index and unemployment claims. As well, US Treasury Secretary Steven Mnuchin will speak at event in Washington.

US vice-president Pence is in Tokyo for talks with Japanese officials. High on the agenda are bilateral trade relations as well as the simmering crisis in North Korea. On the trade front, the US administration is pushing for a free trade agreement with Japan, after President Trump pulled the US out of the Trans-Pacific Partnership, a regional free-trade agreement which was strongly supported by Japan. Trump has complained about the large trade deficit that the US has with Japan, and has criticized Japan for manipulating its currency for trade purposes. Trump wants the US to have greater access to Japanese markets and is looking for Japanese investment to help fund his infrastructure program. North Korea has been a flash-point in recent weeks causing volatility in the markets as the war of words between the US and North Korea has escalated, with North Korea warning it will respond with a nuclear strike if attacked by the US. The crisis has been bullish for the safe-haven Japanese currency, which has climbed 1.9% in April.

The Federal Reserve has broadly hinted that it plans two more rate hikes in 2017. There have been calls from some Fed policymakers to raise rates three more times, but this seems unlikely, given disappointing retail sales and CPI numbers in March. These weak numbers are likely to make the Fed more dovish, and prompted the Atlanta and New York Federal Reserve banks to lower their outlook for US economic growth for the first quarter of 2017. The Fed can point to a labor market that is close to capacity as well as strong consumer confidence, but this has not translated into stronger consumer spending, a key driver of economic growth. What can we expect next from the Fed? The odds of a rate hike in June are currently priced at 55%, according to the CME Group, down from 65% earlier in April.

EUR/GBP - 0.8355

 
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  :

Sell at 0.8485, Target: 0.8355, Stop: 0.8535

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.8425, Target: 0.8315, Stop: 0.8465

Position : -

Target :  -

Stop : -

 
The single currency has remained under pressure after yesterday’s selloff, adding credence to our bearish view that recent decline from 0.8788 is still in progress and downside bias remains for further weakness to 0.8300, then towards 0.8275-80, however, near term oversold condition should prevent sharp fall below 0.8250, risk from there has increased for a rebound to take place later.

In view of this, would not chase this fall here and would be prudent to sell euro on recovery as 0.8425-30 should limit upside. Above previous support at 0.8458 would defer and risk rebound to 0.8485-90 but break of indicated resistance at 0.8512 is needed to signal low is formed, bring a stronger rebound to 0.8545-50 but resistance at 0.8580 should remain intact.

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 - 1.3447

 
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       :

Exit short entered at 1.3320,

Position: - Short at 1.3320

Target:  -

Stop: -

 
New strategy             :

Buy at 1.3380, Target: 1.3530, Stop: 1.3320

Position: -

Target:  -

Stop:-

As the rally from 1.3223 has gathered momentum, suggesting the correction from 1.3535 has ended and above resistance at 1.3455 resistance would add credence to this view, bring further rise to 1.3500, then retest of 1.3535, once this level is penetrated, this would signal early upmove has resumed and extend headway towards previous chart resistance at 1.3599 later which is likely to hold from here.

In view of this, would not chase this rise here and would be prudent to buy on subsequent pullback as 1.3380 should limit downside. Below previous resistance at 1.3337 would abort and suggest top is possibly formed, risk weakness to 1.3300-10 but indicated support at 1.3262 should remain intact.

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.

Daily Pivots: (S1) 1.0664; (P) 1.0700 (R1) 1.0766; More....

Intraday bias in EUR/USD remains on the upside for the moment. As noted before, corrective rise from 1.0339 is still in progress with 1.0569 as another rising leg. Further rally would be seen to 1.0905 resistance and above. We'll pay attention to topping signal above 1.0905 again, as we'd expect larger down trend to resume later. On the downside, break of 1.0634 minor support will turn intraday bias back to the downside for 1.0569 instead.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.

Daily Pivots: (S1) 1.2603; (P) 1.2753; (R1) 1.2993; More...

Intraday bias in GBP/USD remains on the upside for the moment. There is no sign of topping yet. Firm break of 100% projection of 1.2108 to 1.2614 from 1.2365 at 1.2871 will target 161.8% retracement at 1.3184. Still, price actions from 1.1946 are seen as a correction. Hence we'd expect strong resistance below 1.3444 to bring larger down trend resumption. on the downside, break of 1.2614 resistance turned support will turn bias back to the downside for 1.2365 support first.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.