Sample Category Title

Daily Pivots: (S1) 1.0054; (P) 1.0074; (R1) 1.0092; More.....

USD/CHF is staying in consolidation below 1.0107 temporary top. Intraday bias remains neutral for the moment. Outlook is unchanged that corrective fall from 1.0342 should have finished with three waves down to 0.9812. Hence, downside of retreat should be contained by 0.9980 support and bring rally resumption. Above 1.0107 will target 1.0169 resistance. Decisive break there will confirm this bullish case and target 1.0342 key resistance next. However, below 0.9980 will dampen this bullish case and turn bias back to the downside for 0.9812 low.

In the bigger picture, we're still maintain that firm break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the cross. However, the corrective nature of the fall from 1.0342 to 0.9812 is starting to give the medium term outlook a bullish favor. Hence, in stead of looking for topping signal around 1.0342, we'd now pay closer attention to upside acceleration as USD/CHF approaches this level again.

Daily Pivots: (S1) 109.15; (P) 110.04; (R1) 110.49; More....

Intraday bias in USD/JPY remains on the downside as the fall from 118.65 is still in progress. Next target will be 50% retracement of 98.97 to 118.65 at 108.81. At this point, there is no clear indication of reversal yet and it's staying comfortably inside a falling channel. Break of 108.81 will target 61.8% retracement at 106.48 and possibly below. Meanwhile, on the upside, break of 111.57 resistance is needed to be the first sign of reversal. Otherwise, outlook will remain bearish in case of recovery.

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.

USD/CHF - 1.0067

Original strategy :

Buy at 1.0000, Target: 1.0100, Stop: 0.9965

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0000, Target: 1.0100, Stop: 0.9965

Position : -

Target :  -

Stop : -

Dollar’s retreat after rising to 1.0108 on Monday has retained our view that consolidation below this level would be seen and initial downside risk is for pullback to 1.0050, then towards support at 1.0026, however, reckon 0.9995 support would contain weakness and bring another rise later, above indicated resistance at 1.0108-09 would extend recent upmove from 0.9813 towards 1.0140-45 but loss of upward momentum should prevent sharp move beyond another previous resistance at 1.0171, risk from there has increased for a retreat to take place later. 

In view of this, would not chase this rise here and would be prudent to buy dollar on subsequent pullback as support at 0.9995 should limit downside. Below 0.9970 (50% Fibonacci retracement of 0.9831-1.0108) would abort and signal top is formed instead, bring correction to support at 0.9948. 

GBP/USD - 1.2493

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As cable has maintained a firm undertone after yesterday’s rally, suggesting low has been formed at 1.2365 on Monday and near term upside risk remains for the rebound from there to extend gain to 1.2520-30, however, break there is needed to add credence to this view and bring further rise towards resistance at 1.2559 but near term overbought condition should prevent sharp move beyond there, bring retreat later.

In view of this, would not chase this rise here and would be prudent to stand aside for now. Below 1.2445-50 would suggest an intra-day top is possibly formed, bring weakness to 1.2420, break there would confirm and bring further fall to 1.12400-05 which is likely to hold on first testing.

EUR/USD - 1.0600

Original strategy  :

Sell at 1.0665, Target: 1.0565, Stop: 1.0700

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0665, Target: 1.0565, Stop: 1.0700

Position : -

Target :  -

Stop : -

As the single currency recovered again after finding support at 1.0595 earlier today, retaining our view that further consolidation would be seen and initial upside risk remains for the rebound from 1.0570 low to extend gain to 1.0630, then 1.0650, however, reckon upside would be limited to 1.0667 resistance (Friday’s high) and bring another decline later, below said support at 1.0595 would bring retest of Monday’s low at 1.0570, break 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, would not chase this fall here and would be prudent to sell dollar on further recovery as 1.0667 resistance should limit upside. Only a firm break above said resistance at 1.0667 would abort and suggest low is formed instead, risk a stronger rebound to 1.0689, then 1.0702.

USD/JPY - 109.55

Original strategy  :

Sell at 110.30, Target: 109.30, Stop: 110.65

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 110.30, Target: 109.30, Stop: 110.65

Position :  -

Target :  -

Stop : -

Yesterday’s selloff below support at 110.11 on active cross-buying in yen in part due to risk aversion suggests recent entire decline 118.66 top is still in progress, hence downside bias remains for recent decline to extend weakness to 109.30-35, then towards 109.00-05 (123.6 times projection of 112.20-110.13 measuring from 111.58), however, near term oversold condition should prevent sharp fall below 108.85 (61.8% projection of 115.51-110.11 measuring from 112.20) and reckon 108.40-50 (100% projection of 118.66-111.55 measuring from 115.51) would hold, bring rebound later.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 110.30-40 should cap upside and bring another decline. Above 110.70-75 would defer and risk a stronger rebound to 111.00-05 but price should falter well below resistance at 111.58.

The dollar index plunged around 0.31% on Tuesday, falling from the psychological resistance level at 101.00 and hitting a 2-day low of 100.49. The downtrend was held above the support line at 100.50. This morning during the European session, the dollar index saw a rebound.

USD/CAD has fallen 0.8% in past one week. The bulls failed to gain the significant psychological level at 1.3400.

The USD/CAD downtrend was held above the near term major support line at 1.3300 since Tuesday April 12, as the range between 1.3280 - 1.3300 is the near term major support zone, where there is stronger support.

On the 4-hourly chart, the price has been moving from the lower band to the middle band by the Bollinger Band indicator, suggesting the bearish momentum has been waning.

The Bank of Canada (BoC) will announce its rate decision and monetary policies this afternoon at 15:00 BST. It will be followed by the BoC's press conference at 16:15 BST. Be aware that the data and the press conference will likely affect the strength of CAD and CAD crosses.

Although Canadian economy is improving, however, the US economic outlook is still uncertain under Trump's administration. The BoC is likely to keep rates on hold for the near future.

Keep a close eye on the US retail sales and CPI figures (Mar), to be released at 13:30 BST this Friday April 14. It will likely cause volatility for USD and USD crosses.

The resistance level is at 1.3330, followed by 1.3340 and 1.3355.
The support line is at 1.3315, followed by 1.3300 and 1.3280.

EURUSD: With the pair remaining weak and vulnerable despite its price hesitation on Tuesday, more weakness is envisaged. Resistance comes in at 1.0650 level with a cut through here opening the door for more upside towards the 1.0700 level. Further up, resistance lies at the 1.0750 level where a break will expose the 1.0800 level. Conversely, support lies at the 1.0550 level where a violation will aim at the 1.0500 level. A break of here will aim at the 1.0450 level. All in all, EURUSD faces further bear threats in the days ahead.

EUR/USD continues to have a quiet week. Currently, the pair is trading at the 1.06 level. On the release front, German WPI came in at 0.0%, short of the forecast of 0.4%. In the US, there are no major events on the schedule. President Donald Trump will conduct an interview with the Fox Business Network, and will discuss health care, tax reform, and the crisis in Syria. On Thursday, the US releases three key indicators – PPI, unemployment claims and UoM Consumer Sentiment.

The eurozone economy has improved in the first quarter in 2017, and this has been reflected in investor confidence levels, which have moved higher. Eurozone Sentix Investor Confidence climbed to 23.9 points in April, pointing to strong optimism among investors and analysts. German ZEW Economic Sentiment, which surveys the mood of German investors, sparkled in April, jumping to 19.5 points, well above the forecast of 13.2 points. This marked the strongest reading since August 2015.

On Monday, Federal Reserve Chair Janet Yellen said that with the economy close to full employment and 2 percent inflation, Fed policymakers were looking to reduce the support that the central bank was providing the economy. The minutes of the March meeting indicated that the Fed plans to trim the $4.5 trillion balance sheet, which has ballooned as a result of the huge asset-purchase program which started in 2008. The Fed plans to raise rates twice more in 2o17, with the next rate expected in June. Yellen emphasized that the Fed’s policy stance is neutral, as interest rate increases will be gradual, given that the economy is growing at a moderate pace.

US Nonfarm Payrolls was unexpectedly soft in March, as the economy produced just 98 thousand jobs, compared to an estimate of 174 thousand. However, the good news is that the weak reading was not accompanied by higher unemployment numbers. The unemployment rate dropped to 4.5% and jobless claims fell sharply to 234 thousand. This means that the Fed is unlikely to lose any sleep over the weak payrolls report, and will remain on course to raise rates twice more in 2017 (a majority of FOMC voting members favor two more hikes, while some members have called for three more hikes this year). According to the CME Group, the markets have circled June as the next likely date for a hike, which is priced in at 67 percent.

Despite safe haven flows remaining the prevalent market theme on geopolitical risks related to conflicts in Syria and saber rattling by North Korea, investors are shifting away from the worst of theses levels as yen, U.S Treasuries and gold erase their gains ahead of the U.S open.

Note: Yesterday, the Vix had spiked to a two-week high, while U.S 10's tested a key long-term support of +2.30%, and the Nikkei was the worst performing major index on Yen strength (both Nikkei and USD/JPY are at lowest levels since mid-Nov).

With limited fundamental data being released in the North American session, the market focus will be on the Bank of Canada's (BoC) monetary policy announcement (10:00 am EST).

Dealer consensus expects the central bank to leave its benchmark interest rate unchanged (+0.5%), with Gov. Poloz expected to keep his focus on downside risks even though signs point to a Canadian economy that “maybe” coming to life.

Note: Many still argue that Canada's economy is not as strong as the data would suggest, citing a recent setback in trade data and a household sector burdened with debt. Others argue that economic indicators, most notably job creation, point to an acceleration in growth.

1. Global equities produce mixed results

In Asia overnight, Japanese stocks fell to their lowest in more than four-months as rising geopolitical tensions in the region curbed risk appetite, with exporters badly hit as the safe-haven yen (¥109.35) spiked to a five-month high. The Nikkei 225 share average dropped -1.0%, while the broader Topix also fell -1%, led by declines in banks, autos and other exporters.

In Korea, the Kospi rose +0.2%, after dropping -2% over the previous six-sessions. Down-under, Australia's S&P/ASX 200 index gained less than +0.1%.

In Hong Kong, the Hang Seng China Enterprises Index climbed +0.3% and the Hang Seng Index jumped +0.6%, wiping out earlier intraday losses.

In China, the Shanghai Composite fell -0.5% as data showed China's producer price gains slowed in March from a peak in February, tempering the global inflation outlook (see below).

In Europe, equity indices are trading higher despite geopolitical tensions and the French Presidential election. Banking stocks are notably higher in the Eurostoxx, while mining stocks are trading lower in the FTSE 100.

U.S stocks are set to open in the black (+0.1%).

Indices: Stoxx50 +0.4% at 3,482, FTSE +0.4% at 7,396, DAX +0.4% at 12,183, CAC-40 +0.5% at 5,126, IBEX-35 +0.2% at 10,440, FTSE MIB +0.3% at 20,172, SMI +0.4% at 8,672, S&P 500 Futures +0.1%.

2. Oil higher on compliance, gold atop five month high

Oil prices have rallied overnight, putting crude futures on track for their longest winning streak in nine month, as Saudi Arabia is reported to be lobbying OPEC and non-OPEC members to extend last Nov. production cut beyond the H1, 2017.

Brent crude futures are up +20c, or +0.36% at +$56.43 per barrel, while U.S West Texas Intermediate (WTI) crude futures are up +18c, or +0.34%, at $53.58 a barrel.

While compliance from some participants has been patchy, the Saudi's have made significant cuts, with production down -4.5% since late 2016, despite a slight increase in March to +9.98m bpd.

The oil ‘bear' remains concerned that markets are bloated and oversupplied. Official U.S production and inventory data will be published later this morning (10:30 am EST).

Political tensions and expectations of a cautious Fed (gradual rate rise) continue to support gold prices. After printing a nine-month high yesterday, the yellow metal has fallen -0.1% to +$1,273.70 an ounce ahead of the U.S open.

3. Global yield curves flatter

Uncertainty surrounding the French presidential election on April 23 continues to drive investors to sell French government bonds (OAT's) and migrate cash into German government bonds and U.S Treasury debt. The yield on French 10's has backed up to +0.947%, while 10-year Bunds trade atop of their technically critical level of +0.2%.

Yesterday's U.S Treasury +$20B 10-year note reopening drew +2.332%. The bid-to-cover ratio was +2.48 vs. +2.66 prior. Indirect took +65.2% of competitive bids, with +26.4% were allotted at the high, while +5.3% go to direct bidders and +29.5% go to dealers.

The yield on U.S 10-year notes backed up +1 bps to +2.31%, erasing earlier declines. The rate dropped -7 bps on Tuesday.

Elsewhere, this morning Germany sold +€2.43B Feb. 2027 Bunds at an average yield of +0.21% vs. +0.41% on March 22. The bid-to-cover was +1.4 vs. +1.5.

4. Dollar pares losses, EUR contained, Yen jumps

With safe haven flows remaining the prevalent FX theme, overnight price action saw Yen (¥109.35) climb to its strongest level since mid-November before consolidating.

The pound (£1.2515) touched a one-week high ahead of this morning's U.K market data (see below). Thus far, GBP has been able to hold onto its gains as average wages (key focus of the BoE) beat expectations and saw higher back-month revisions.

Diminishing chances of a victory for far-right candidate Marine Le Pen in France's presidential election is helping the EUR (€1.0604). However, expect that growing support for leftist candidate Jean-Luc Melenchon keeps alive French political concerns and tempers the ‘single' unit's gains.

Note: Volumes across the various asset classes are down in a week that's shortened in many countries by Easter holidays.

5. China inflation soft, U.K wage growth slows

Data overnight showed China consumer inflation again remained “underwhelming” last month, as m/m CPI (-0.3% vs. -0.2%) fell for the second consecutive month in March and y/y was near its two-year lows below +1%.

Note: China's official CPI target for 2017 is +3%.

Digging deeper, the food CPI component fell again by over -4%, while non-food rose slightly by +2.3% vs. +2.2% prior. Also, rising input costs continue to prop up wholesale inflation, with PPI up for the seventh straight month at +7.6% – close to consensus.

In the U.K, average earnings after inflation in February for the first time in two and a half years, highlighting how rising prices fuelled by a weakened pound (£1.2500) are squeezing households' spending power.

Average weekly earnings growth after inflation and excluding bonuses declined -0.4% on the month. Over the three months through February, earnings growth averaged +0.1%.

Note: Annual U.K inflation is expected to exceed the BoE's +2% target as a fall in the pound since June's Brexit vote pushes up the cost of imports.