Sample Category Title

GBP/USD - 1.2527

Original strategy :

Buy at 1.2485, Target: 1.2585, Stop: 1.2450

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2485, Target: 1.2585, Stop: 1.2450

Position : -

Target :  -

Stop : -

As cable has continued trading with a firm undertone after this week’s rally, adding credence to our view that low has been formed at 1.2365 on Monday and upside bias remains for the rebound from there to extend gain to 1.2585-90, however, break of previous resistance at 1.2616 is needed to retain bullishness and extend further subsequent rise to 1.2650-60. 

In view of this, would not chase this rise here and would be prudent to buy cable on pullback as 1.2481 support should limit downside and bring another upmove later. Below the lower Kumo (now at 1.2455) would defer and suggest top is formed, risk test of 1.2433 (previous resistance) first.

Daily Pivots: (S1) 108.67; (P) 109.26; (R1) 109.58; More....

At this point, intraday bias remains on the downside with 110.10 support turned resistance intact. Sustained break of 50% retracement of 98.97 to 118.65 at 108.81 will target 61.8% retracement at 106.48 and possibly below. Nonetheless, break of 110.10 will indicate short term bottoming and turn bias back to the upside for 112.19 resistance.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. Sustained trading below 55 week EMA (now at 111.15) will indicate that the second leg from 98.97 has completed at 118.65. And in that case, USD/JPY would start the third leg down through 98.97 low to 61.8% retracement of 75.56 to 125.85 at 94.77. On the upside, break of 115.49 resistance should resume the rise from 98.97 for a test on 125.85 high.

Daily Pivots: (S1) 1.2499; (P) 1.2524; (R1) 1.2567; More...

Intraday bias in GBP/USD remains on the upside for 1.2614 resistance. Break there will resume whole rise from 1.2108 and target 100% projection of 1.2108 to 1.2614 from 1.2365 at 1.2871. But overall, price actions from 1.1946 low are viewed as a consolidation pattern. We'd expect strong resistance around 55 week EMA (now at 1.3015) to limit upside and bring down trend resumption. But for now, further rise will be favored in near term as long as 1.2365 support holds.

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.

EUR/USD - 1.0630

Original strategy  :

Sold at 1.0665, Target: 1.0565, Stop: 1.0680

Position : - Short at 1.0665

Target :  - 1.0565

Stop : - 1.0680

New strategy  :

Hold short entered at 1.0665, Target: 1.0565, Stop: 1.0680

Position : - Short at 1.0665

Target :  - 1.0565

Stop : - 1.0680

Although the single currency staged a strong rebound after finding support at 1.0589, as this move from 1.0570 is viewed as retracement of recent decline, reckon upside would be limited and bring retreat later, below the upper Kumo (now at 1.0606) would bring test of said support at 1.0589 but break there is needed to signal the rebound from 1.0570 has ended, bring retest of this Monday’s low, below there would extend the decline from 1.0906 to 1.0550-55 (50% projection of 1.0906-1.0635 measuring from 1.0689), then 1.0525-30.

In view of this, we are holding on to our short position entered at 1.0665. A firm break above intra-day resistance at 1.0678 would abort and suggest low has been formed at 1,0570, bring a stronger rebound to 1.0698-02 (50% Fibonacci retracement of 1.0827-1.0570 and previous resistance).

USD/JPY - 109.17

Original strategy  :

Sell at 109.90, Target: 108.90, Stop: 110.25

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 109.90, Target: 108.90, Stop: 110.25

Position :  -

Target :  -

Stop : -

The greenback has dropped again after brief recovery to 109.87, adding credence to our bearish view that recent entire decline from 118.66 top is still in progress, hence downside bias remains for recent selloff to extend further weakness to 108.40-50 (100% projection of 118.66-111.55 measuring from 115.51), however, loss of near term downward momentum should prevent sharp fall below 108.20-25 (1.618 times projection of 112.20-110.13 measuring from 111.58) and 108.00 should hold, bring rebound later.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as said resistance at 109.87 should limit upside and bring another decline later. Above previous support at 110.13 would abort and suggest low is formed, bring a stronger rebound later to the upper Kumo (now at 110.45). 

Daily Pivots: (S1) 1.0611; (P) 1.0642 (R1) 1.0697; More....

EUR/USD recovered to 1.0677 but failed to take out 1.0688 resistance and retreated. Intraday bias remains neutral first. Near term bearish outlook is unchanged. Corrective rise from 1.0339 is likely finished after being rejected by 55 week EMA. And, the larger down trend is ready to resume. Below 1.0569 will turn bias to the downside for 1.0494 support first. Break will confirm this bearish case and send EUR/USD through 1.0339 to 100% projection of 1.1298 to 1.0339 from 1.0905 at 0.9946. On the upside, however, break of 1.0688 resistance will delay the bearish case and turn focus back to 1.0905 resistance 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.

Dollar is recovering against European majors in early US session but stays weak against commodity currencies. The greenbacks is still trading as the weakest major of the week, troubled by comments from US President Donald Trump regarding it's strength. Released from US, initial jobless claims dropped 1k to 234k in the week ended April 8, below expectation of 245k. It's the 110 straight week of sub-300k reading, longest streak since 1970 and indicates a healthy job market. Continuing claims dropped 7k to 2.03m in the week ended April 1. PPI, however, dropped -0.1% mom March but accelerated to 2.3% yoy. PPI core rose 0.0% mom, and accelerated to 1.6% yoy. Both PPI and core PPI missed expectations. From Canada, new housing price index rose 0.4% mom in February. Manufacturing shipments dropped -0.2% mom. Release in European session, Swiss PPI rose 0.1% mom 1.3% yoy in March. German CPI was finalized at 0.2% mom, 1.6% yoy in March.

Markets question whether Trump would still deliver his promises

In an interview with the Wall Street Journal, US President Donald Trump complained that US dollar "is getting too strong, and partially that's my fault because people have confidence in me. But that's hurting - that will hurt ultimately". He added that "it's very, very hard to compete when you have a strong dollar and other countries are devaluing their currency". Meanwhile, Trump also reversed his position and said that China is "not currency manipulators". And he hailed that Chinese President Xi Jinping "wants to help us with North Korea." Trump also showed in the interview his "respect" for Yellen and suggested that he has not decided whether he would reappoint her for the second term.

The comments regarding Dollar was seen as a factor driving the greenback down. However, it remains to be seen if investors' worries are more than that. To be specific, traders could be getting increasingly doubtful on what Trump would and could do. His failure in health act and travel ban raised a lot of questions on his administrative ability. Now that his stance on China has had a U-turn. And that further raises questions on whether he will deliver his election promises.

China exports surged in March

Talking about China, trade surplus came in at USD 23.9b in March, much higher than expectation of USD 12.b. Exports surged 16.4% yoy, much stronger than expectation of 3.2% yoy and much more reversed the lunar new year decline of -1.3% yoy back in February. Imports, on the other hand, rose 20.3% yoy, slowed from February's 38.1% yoy rise. Imports were, nonetheless, also above expectation of 18.0% yoy. Trade surplus with US jumped to USD 17.74b, up from February's 10.42b. Trade surplus with US for first quarter was at USD 49.6b, just slightly down from 2016 Q1's USD 50.57b. In CNY terms trade surplus was at CNY 164b, more than double of expectation of CNY 76b. It remains to be seen what action would US and Chin take after Trump and Xi agreed to a 100-day plan for trades after last week's summit.

Aussie boosted by strong job data

Australia Dollar is boosted by strong employment data today. Employment grew 60.9k in March, triple of expectation of 20.0k. Prior month's figure was revised up from -6.4k to 2.8k. Full time jobs rose by 74.5k, highest jump in nearly 30 years since December 1987. Part-time jobs dropped -13.6k. Participation rate also rose from 64.6% to 64.8%. Unemployment rate was unchanged at 5.9% as more people are back in the market. Also from Australia, consumer inflation expectation rose 4.1% in April.

Adding to the support to Aussie, RBA said in its semiannual Financial Stability Review that " vulnerabilities related to household debt and the housing market more generally have increased." And, "some riskier types of borrowing, such as interest-only lending, remain prevalent." RBA also expressed the concern that "investors are likely to contribute to the amplification of the cycles in borrowing and housing prices, generating additional risks to the future health of the economy." Today's job number certainly removed much burden on RBA for lowering interest rate again, with the background of worries on housing market bubble. Q1 CPI and GDP will be the next key pieces of data to watch.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0611; (P) 1.0642 (R1) 1.0697; More....

EUR/USD recovered to 1.0677 but failed to take out 1.0688 resistance and retreated. Intraday bias remains neutral first. Near term bearish outlook is unchanged. Corrective rise from 1.0339 is likely finished after being rejected by 55 week EMA. And, the larger down trend is ready to resume. Below 1.0569 will turn bias to the downside for 1.0494 support first. Break will confirm this bearish case and send EUR/USD through 1.0339 to 100% projection of 1.1298 to 1.0339 from 1.0905 at 0.9946. On the upside, however, break of 1.0688 resistance will delay the bearish case and turn focus back to 1.0905 resistance 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.

Economic Indicators Update

The US EIA crude oil inventories figure (the week ending April 7) released on Wednesday, saw the biggest drop in 2.166 million barrels this year.

However, the figure failed to push oil prices higher. WTI and Brent crude oil spot retraced around 1%, and 1.13% respectively on Wednesday.

The reasons for the fall comprise both technical and fundamental factors.

Technically oil prices were trading at the mid-term major resistance zone, where the selling pressure is heavy.

Fundamentally, markets concern whether OPEC will extend the output cut agreement in the May meeting. In addition, the oil supply has been continuously increasing from the thriving US shale industry and some other non-OPEC oil producers.

The price range between 53.00 - 55.00 is the mid-term major resistance zone for WTI spot, where the pressure is heavy.

On the 4-hourly chart, WTI spot broke the downside uptrend line support on Wednesday, indicating the bullish momentum is likely to be restrained at this zone.

The daily Stochastic Oscillator reading is above 80, suggesting a retracement.

The resistance level is at 53.50, followed by 54.00 and 54.50.
The support line is at 53.20, followed by 53.00 and 52.50.

GOLD: The commodity strengthened further on Wednesday leaving risk of more gains on the cards. On the downside, support comes in at the 1,280.00 level where a break will turn attention to the 1,270.00 level. Further down, a cut through here will open the door for a move lower towards the 1,260.00 level. Below here if seen could trigger further downside pressure targeting the 1,250.00 level. Conversely, resistance resides at the 1,290.00 level where a break will aim at the 1,300.00 level. A turn above there will expose the 1,310.00 level. Further out, resistance stands at the 1,320.00 level. All in all, GOLD looks to strengthen further.

The recent escalation of geopolitical risks dominating the financial market headlines has been briefly removed from investors' radars after US President Donald Trump once again took the markets by surprise. This time, President Trump made U-turns on several of his previous public views, making investors wonder whether he could be gradually abandoning some of his core election pledges. While it is not a surprise at all to hear the US President make downbeat comments over the Dollar, backing away from labelling China as a currency manipulator and seemingly supporting the need for lower US interest rates is a real surprise.

Trump reversing away from a previously well-documented aggressive stance on China will go a long way to improving his image in mainland China; it will also be seen by many other observers as an attempt towards improving diplomatic ties, following Chinese President Xi Jinping's recent visit to the United States. Away from diplomacy, this shift in tone should be viewed as a positive development for the financial markets, as it reduces the risk of China abandoning its US Treasury Holdings as a result of the previous risk of President Trump beginning a trade war with China.

Most emerging market currencies across Asia have welcomed the latest comments from the US President, with the majority of currencies across the Asian Pacific moving somewhat higher against the Dollar. Emerging market currencies that are particularly sensitive to speculation around US interest rate rises, such as in Malaysia, Indonesia and perhaps the Indian Rupee, will also applaud comments around the need for lower US interest rates. It has been noted that the Bond markets have benefitted from Trump's unexpected comment that he "likes" the Federal Reserve's low-interest rate policy.

However, the potential for further gains in the Asian emerging market currency space will be attributed to expectations of the Fed pulling the trigger on an interest rate rise once again in June drifting lower and also whether Trump next chooses to take a softer stance on protectionist policies.

While emerging market currencies across Asia have benefitted from Trump's comments, it has not helped to find a bid for either the South African Rand or Turkish Lira. Both currencies are plagued by political risk, with the upcoming referendum in Turkey this weekend giving possible cause for a major event risk over the Easter weekend. The Turkish Lira and South African Rand are obviously not correlated in any way, but with both currencies being plagued by political issues, this is impacting investor confidence and weakening economics that includes impending inflation risks. Inflation risks are going to be a major headline attraction for the Rand over the next couple of months, following the currency being squashed to pieces in recent weeks.

Gold eyes $1300

The 2017 revival in the value of Gold is showing no signs of slipping, after the precious metal climbed to fresh levels not seen since the US Election, getting marginally close to $1290 earlier in trading on Thursday. These are still uncertain times in the financial markets and some would even add global politics, meaning investors are keeping Gold as a close ally when it comes to hedging. The combination of uncertainty when it comes to political risks, the upcoming elections in France, rising geopolitical tensions and doubts over Trump's ability to follow through with his campaign promises presents an ongoing threat to investors entering a period of "risk-off" that is too difficult to ignore when it comes to being encouraged towards Gold.

Sterling backs away from attempt for 1.26

After benefiting from the unwinding of USD positions, it appears that the GBPUSD is at threat of shying away from an attempt to reach 1.26 before the markets close for the Easter holidays. If you ask me, the ongoing uncertainty over Brexit's direction is still enough motivation to maintain a negative mindset towards the Pound. Investors are likely to continue utilising sell-on rally opportunities in the Cable, when the pair climbs near 1.25 with this being the mindset traders have exploited for months.