Sample Category Title

EUR/JPY - 119.52




EUR/JPY: Wave v as well as larger degree wave (C) ended at 94.11 and first leg of larger degree wave C upmove has possibly ended at 149.79 and wave 2 correction has possibly ended at 109.49.




The single currency only recovered to 120.44 (we recommended in our previous update to sell at 120.50 and missed the short entry) before meeting renewed selling interest and price has dropped again, adding credence to our view that the fall from 122.89 top (last week’s high) is still in progress, this move also signal the rebound from 118.24 has ended at 122.89, hence downside risk remains for further weakness to 118.75-80, however, still reckon said support at 118.24 would remain intact and bring another rebound later. Looking ahead, only a break below said support at 118.24 would retain bearishness and signal the erratic decline from 124.10 top has resumed for further fall to 117.50-60 and later towards 117.00 (61.8% Fibonacci retracement of 112.61-124.10) but downside should be limited to 116.00.

The daily chart is labeled as attached, early selloff from 169.97 (July 2008) to 112.08 is wave (A) of B instead of end of entire wave B and then the rebound from there to 139.26 is wave (B), hence, wave (C) has possibly ended at 94.12 with a diagonal triangle as labeled in the daily chart, hence upside bias is seen for further gain. Recent rally above indicated retracement level at 116.69 (50% Fibonacci retracement of the intermediate fall from 139.26-94.12) adds credence to this view and signal major reversal has commenced but first leg of this wave C has possibly ended at 149.79, hence wave 2 has commenced with wave A ended at 126.09, followed by wave B at 141.06, wave C commenced and could have ended at 109.49, above 125.00 would add credence to this view. 



On the upside, although initial recovery to 119.90-00 cannot be ruled out, reckon upside would be limited to said resistance at 120.44 and bring another decline later. Only above indicated resistance at 121.84 would abort and signal the retreat from 122.89 has ended instead, bring further gain to 122.25-30, however, as broad outlook remains consolidative, reckon upside would be limited and said resistance at 122.89 would remain intact.



Recommendation: Sell euro at 120.40 for 118.50 with stop above 121.40.

To re-cap the corrective upmove from the record low of 88.93 (18 Oct 2000), the wave A from there is subdivided as: 1:88.93-113.72, 2:99.88 (1 Jun 2001), 3:140.91 (30 May 2003), 4:124.17 (10 Nov 2003) and 5 ended at record high of 169.97 (21 Jul 2008). The brief but sharp selloff to 112.08 is viewed as a-b-c x a-b-c wave (A) of B. The subsequent rebound to 139.26 is (B) of B and (C) of (B) has possibly ended at 94.12 and in any case price should stay well above previous chart support at 88.93, bring rally in larger degree wave C towards 150.00.

USD/CHF –  0.9999

 
USD/CHF – Wave IV ended at 1.1730 and wave V has possibly ended at 0.7068

 
Although the greenback did meet renewed selling interest at 1.0003 (we recommended in our previous update to sell at 1.0000) and dropped to as low as 0.9815 (just missed our downside target at 0.9800), as decent demand emerged there and dollar has staged a strong rebound, suggesting low has possibly been formed and consolidation with mild upside bias is seen for another test of 1.0003, however, a daily close above previous support at 1.0060 is needed to add credence to this view, bring further fain to 1.0105-10. Having said that, price should falter below resistance at 1.0171, bring retreat later. In the unlikely event dollar breaks above said resistance at 1.0171, this would revive our bullish view for the erratic rise from 0.9861 to extend further gain to 1.0200 and possibly test of resistance at 1.0248, however, a daily close above there is needed to signal the retreat from 1.0344 has ended at 0.9861, bring eventual retest of 1.0344.

Our preferred count on the daily chart is that early selloff to 0.9630 is an end of the larger degree wave III and major correction is unfolding from there with a leg ended at 1.2298 (Nov 2008 with (a): 1.0625, (b):1.0011 and (c):1.2298), wave b ended at 0.9910 with (a): 1.0370, (b): 1.1967, (c): 0.9910. The rise from there to 1.1730 is the wave c which also marked the end of wave IV and wave V has possibly ended at 0.7068.


On the downside, whilst pullback to 0.9945-50 cannot be ruled out, reckon downside would be limited to 0.9910-15 and bring another rise later. Below 0.9900 would suggest the rebound from 09815 has ended instead bring another fall towards said support at 0.9815. Looking ahead, only a break below this level would confirm another leg of major fall from 1.0344 top is underway for further fall to 0.9735-40, however, oversold condition should prevent sharp fall below 0.9675-80 and price should stay well above 0.9600, bring rebound later.
 
Recommendation: Exit short entered at 1.0000 and stand aside for this week

Dollar's long-term downtrend started from 2.9343 (Feb 1995) and it was unfolding as a (A)-(B)-(C) with (A): 1.1100, (B): 1.8310 (26 Oct 2000), then followed by another impulsive wave (C) with wave III ended at 0.9630 (Mar 2008). Under this count, correction in wave IV has possibly ended at 1.1730 and wave V already broke below support at 0.9630 and met indicated downside target at 0.7500 and 0.7400. The reversal from 0.7068 suggests the wave V has possibly ended and the breach of resistance at 0.9595 add credence to this view and indicated upside target at 1.0000 had been met, however, the sharp retreat from 1.0296 to 0.7401 suggests choppy trading would be seen but price should stay above said record low at 0.7068.

Daily Pivots: (S1) 111.26; (P) 111.60; (R1) 112.27; More....

The rebound from 110.10 continues today and break of 111.57 minor resistance indicates short term bottoming, on bullish convergence condition in 4 hour MACD. Intraday bias is back on the upside for 55 day EMA (now at 112.91). Sustained break there will raise the chance of near term reversal and target 115.49 resistance for confirmation. On the downside, though, below 110.99 minor support will turn bias back to the downside for 110.10 and break will extend the corrective fall from 118.65.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. sustained trading below 55 week EMA (now at 111.11) will indicates that such consolidation is not completed. And another fall would be seen back to 98.97 as the third leg. In that case, downside would be contained by 61.8% retracement of 75.56 to 125.95 at 94.77 to complete the correction. On the upside, above 115.49 will extend the rise from 98.97 to retest 125.85 first. Overall, up trend from 75.56 is expected to resume after the consolidation from 125.85 completes.

Risk appetite returned overnight with financial sector leading stocks higher. The surge in WTI crude oil through 50 handle also boosted overall sentiments. DJIA closed up 0.33% at 20728.94 and would be testing 20757.89 near term resistance today. NASDAQ has indeed closed at new record high at 5914.34, up 0.28%. But the sentiments didn't carry on in Asian session as Nikkei closed down -0.81% at 18909.26, below 19000 handle again. Dollar index is back above 100 handle and broke near term resistance at 100.48, indicating the possibility of reversal. In the currency markets, Aussie and Canadian Dollar are leading the way up for the week on risk appetite, followed by Dollar. Meanwhile, European majors are generally weak with Euro setting to close as the weakest one.

NY Fed Dudley: Appropriate to scale back monetary policy accommodation gradually

In US, New York Fed President William Dudley said that federal funds rate remains "unusually low". And, "it seems appropriate to scale back monetary policy accommodation gradually in order to reduce the risk of the economy overheating," and, "to avoid a significant inflation overshoot in the medium term." Also Dudley noted that the economic outlook abroad has "brightened" with risks "significantly lower than they were a year ago." On the other hand, Dallas Fed President Robert Kaplan continued to sound cautious. He noted that US is "finally in a situation where the consumer capacity to spend is in pretty good shape." But, he's "frankly more worried about and watching to make sure we don't enact policies or some uncertainty that might cause consumers to take a little pause." Three rate hike this year is still Kaplan's "base case".

US to unveil USD 1T infrastructure plan... later

US Transportation Secretary Elaine Chao indicated that the government would roll out USD 1T infrastructure plan later this year. Without offering further details, Chao suggested that plan would include "a strategic, targeted program of investment valued at USD 1T over 10 years. The proposal will cover more than transportation infrastructure, it will include energy, water and potentially broadband and veterans hospitals as well". But again, it should be noted that there is no detail about the plan yet. And US president Donald Trump's failure in health care act raised much doubts on his ability to push through his economic agendas. Such doubts are still remaining in investors' minds.

EC Tusk to issue Brexit negotiation guidelines

European Council President Donald Tusk will issue draft guidelines on negotiation with UK on Brexit. The guidelines are expected to set the tone for the negotiations which could last for two years. And such proposals will be sent to the governments of the 27 EU members today. It's reported that the initial phase of the negotiation will center mainly on the terms of separation. The second phase will be on future trade relationship. Meanwhile, the third phase be on the transition between the relationship.

In UK, a policy paper "the Great Repeal Bill" was published yesterday to set out the government's proposals for ensuring a functioning statute book once we have left the EU". Around 12000 EU regulations are in force in UK and around 7900 statutory instruments have implemented EU directives. There is a huge scale of tasks for legislators to work on. Brexit Secretary David Davis said that "it will mean that as we exit the EU and seek a new deep and special partnership with the European Union, we will be doing so from a position where we have the same standards and rules".

Japan data not too encouraging

In Japan, national CPI core rose 0.2% yoy in February, meeting expectations. This is also the first back to back increase in CPI since late 2015. However, it should be noted that Tokyo CPI dropped -0.4% yoy in March, worse than February's -0.3% yoy and missed expectation of -0.2% yoy. Unemployment rate dropped to 2.8% in February, lowest since 1994. Household spending dropped -3.8% yoy in February,below expectation of -1.6% yoy. Industrial production rose 2.0% mom in February, above expectation of 1.2% mom. Housing starts dropped -2.6% yoy. All in all, the set of data from Japan is not too encouraging.

Elsewhere, New Zealand building permits rose 14.0% mom in February. NBNZ business confidence dropped to 11.3 in March. China PMI manufacturing rose 0.2 to 51.8 in March while non-manufacturing PMI rose to 55.1. UK Gfk consumer sentiment was unchanged at -6 in March, nationwide house prices dropped -0.3% mom in March. Germany retail sales rose 1.8% mom in February.

A major focus today is Eurozone CPI which might miss market expectation and give Euro some pressure. UK will release GDP, current account and index of services. Canada will release GDP later in the day. US will release PCE and Chicago PMI

USD/JPY Daily Outlook

Daily Pivots: (S1) 111.26; (P) 111.60; (R1) 112.27; More....

The rebound from 110.10 continues today and break of 111.57 minor resistance indicates short term bottoming, on bullish convergence condition in 4 hour MACD. Intraday bias is back on the upside for 55 day EMA (now at 112.91). Sustained break there will raise the chance of near term reversal and target 115.49 resistance for confirmation. On the downside, though, below 110.99 minor support will turn bias back to the downside for 110.10 and break will extend the corrective fall from 118.65.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. sustained trading below 55 week EMA (now at 111.11) will indicates that such consolidation is not completed. And another fall would be seen back to 98.97 as the third leg. In that case, downside would be contained by 61.8% retracement of 75.56 to 125.95 at 94.77 to complete the correction. On the upside, above 115.49 will extend the rise from 98.97 to retest 125.85 first. Overall, up trend from 75.56 is expected to resume after the consolidation from 125.85 completes.

Economic Indicators Update

EUR/JPY - 119.55

Recent wave: wave v of (C) ended at 94.12 and major correction in wave A has ended at 149.79

Trend: Near term up

Original strategy:

Sell at 120.40, Target: 118.40, Stop: 121.00

Position: -
Target: -
Stop: -

New strategy :

Sell at 120.40, Target: 118.40, Stop: 121.00

Position: -
Target:  -
Stop:-

As the single currency has recovered after holding above support at 119.01 (this week’s low), suggesting consolidation above this level would be seen and corrective bounce to 120.00 cannot be ruled out, however, reckon resistance at 120.44 would limit upside and bring another decline later, below said support would add credence to our view that the decline from 122.89 top is still in progress and may extend weakness towards support at 118.67, however, break there is needed to retain bearishness and extend further fall to previous chart support at 118.25, risk from there is seen for a rebound later.

In view of this, would not chase this fall here and would be prudent to sell euro on subsequent rebound as resistance at 120.44 should cap upside and bring another decline. Above 1121.00 would abort and suggest low is possibly formed, risk rebound to 121.50 but resistance at 121.84 should hold from here, bring another decline later.

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).

AUD/USD – 0.7657

Recent wave: Wave 5 ended at 1.1081 and major correction has commenced for fall to 0.7000 and then towards 0.6500-10

Trend: Near term up

Original strategy :

Bought at 0.7645, Target: 0.7800, Stop: 0.7605

Position: - Long at 0.7645
Target:  - 0.7800
Stop: - 0.7605

New strategy :

Hold long entered at 0.7645, Target: 0.7800, Stop: 0.7605

Position: - Long at 0.7645
Target:  - 0.7800
Stop:- 0.7605

Although aussie has eased after meeting resistance at 0.7680 and consolidation below this level would be seen, reckon downside would be limited to 0.7630 and bring another rise later, above indicated resistance at 0.7680-85 would signal low is formed there and suggest the retreat from 0.7750 (last week’s high) has ended, then retest of this level would follow, above this resistance would extend gain to 0.7778 (last year’s high), however, break there is needed to retain bullishness and extend headway to 0.7840-50 but price should falter below 0.7900.

In view of this, we are holding on to our long position entered at 0.7645. Only below 0.7585 would abort and signal top is formed instead, then further choppy trading would take place and risk is seen for pullback to 0.7530-40 but indicated support at 0.7491 should remain intact.

On the 4-hour chart, the move from 0.8066 is the wave 5 with i: 0.8860, ii: 0.8315, wave iii is an extended move ended at 1.0183, iv: 0.9706 and wave v has ended at 1.1081 (also the top of entire wave 5). The subsequent selloff is the major correction which is unfolding as ABC-X-ABC and 2nd A leg has ended at 0.8848, followed by a-b-c wave B which ended at 0.9758, hence, 2nd C wave is now in progress and indicated downside target at 0.7000 and 0.6950 had been met, so further fall to 0.6710-20 cannot be ruled out.

EUR/USD

The common currency was the worst performer against the greenback, undermined by soft local data and diminished hopes of an end of ECB's monetary stimulus. The EUR/USD continued retreating and closed the day at 1.0685, its lowest settlement since mid March. The EU Economic Sentiment indicator showed that confidence suffered a setback this month, as it came in at 107.9, below previous 108.00, and also missing expectations. Among business, sentiment also eased although consumer confidence remained flat at -5. Preliminary German's inflation EU harmonized, was of 0.1% for the same month, well below previous 0.7% or the 0.6% expected, leaving the year-on-year figure at 1.5%, sharply below previous 2.2% and somehow, supporting ECB's policymakers conviction that massive stimulus should remain in place as higher inflation seen during the past few months was driven by energy and food prices, and hence unsustainable.

In the US, the final revision of US Q4 GDP came in at 2.1% from previous estimate of 2.0%, which helped Wall Street to rebound. Weekly unemployment claims disappointed, reaching 258K in the week ending March 24th, against the 240K expected, although the figure is at multi-decade lows, hardly suggesting the US employment sector is losing momentum.

From a technical point of view, the EUR/USD pair has broken below a critical support, the 1.0700 region, where it has the 38.2% retracement of the late 2016 monthly decline, and looks poised to extend its slide towards given that in the 4 hours chart, the price is also developing far below a bearish 20 SMA and the 100 SMA, whilst technical indicators now head south near oversold readings. Approaches to the 1.0730 region should now attract selling interest, although a recovery above the level should deny the possibility of further declines.

Support levels: 1.0660 1.0620 1.0590

Resistance levels: 1.0730 1.0780 1.0820

USD/JPY

The USD/JPY pair ends Thursday modestly higher, although the pair has remained confined to a roughly 50 for the day, holding on the upper end of Wednesday's range. A tepid upward revision to US Q4 GDP was not enough to boost the pair, also subdued by the poor performance of worldwide equities. The pair advanced in the US afternoon alongside with Wall Street and a modest gain in US Treasury yields. Japan has quite a busy calendar as early Asia, it will release unemployment, industrial, and inflation data, which will likely set the mood for all of the upcoming session. The pair presents a bullish intraday stance, as in the 4 hours chart, technical indicators have resumed their advances within positive territory and stand at their highest in two weeks, although in the same chart, the 100 SMA maintains its bearish slope well above the current level, whilst selling interest contains advances around former yearly lows in the 111.60 region. Unless the pair is able to recover clearly above this last, the risk will remain towards the downside, with a break below 111.00 required to confirm additional declines.

Support levels: 110.95 110.50 110.10

Resistance levels: 111.60 112.00 112.50

GBP/USD

The GBP/USD pair surged to a daily high of 1.2523 early in the American afternoon, to end the day marginally higher around 1.2470. There was no certain catalyst behind Pound's recovery, although Footsie's weakness may have helped the UK currency. There were no major economic releases in the UK, with market players focused on the Brexit or better said, in EU's response to the Brexit. Ever since the formal trigger, the EU has gained the power over the matter, with members determinate to remain together and show unity, making things tough for the UK. German Angela Merkel, insisted that upcoming exit negotiations cannot run in parallel with talks on the future UK-EU relationship. “The negotiations must first clarify how we will disentangle our interlinked relationship,” said the German chancellor, remarking also that once that is out of the table, they could begin discussing future relationship. In the 4 hours chart, the pair remained below a bearish 20 SMA, with a spike beyond it being quickly reverted, while technical indicators have turned lower around their mid-lines, indicating that buying interest receded ahead of Wall Street's close. The downward potential, however, remains limited, with only a break below the 1.2330/40 region signaling a steeper decline ahead.

Support levels: 1.2445 1.2400 1.2365

Resistance levels: 1.2490 1.2520 1.2560

GOLD

Gold come under strong selling interest in the American afternoon, ending the day not far from its daily low at $1,245.00 a troy ounce, as safe-related assets were affected by a recovery in US equities. The commodity was under pressure ever since the day started, weighed by weak demand in India, later hit by growing demand for the US currency. The bright metal is at its lowest in a week, but the retracement remains corrective according to the daily chart, giving that the price is resting above its 200 DMA, still not able to break below it, whilst technical indicators are barely pulling back from overbought territory. March 24th intraday low at 1,243.59 is the level to break now to confirm further declines this Friday towards 1,230.00 a major Fibonacci support. In the shorter term, the 4 hours chart shows that the price is developing below a bearish 20 SMA, whilst technical indicators have extended their declines within negative territory, heading into the Asian session with a strong bearish momentum that supports a downward extension towards the mentioned Fibonacci level.

Support levels: 1.243.60 0 1,230.00 1,222.70

Resistance levels: 1,251.45 1,263.80 1,272.80

WTI CRUDE

Oil prices extended their recovery this Thursday, with West Texas Intermediate crude futures settling at $50.33 a barrel, its highest in over three weeks, as different news from the sector backed the commodity. In Libya, oil production disruption has led the country to produce around 560,000 barrels a day, well below the 700,000 pledged. Also, Kuwait oil minister Essam al-Marzouq said his country was among several OPEC and non-OPEC nations supporting the extension of a deal to limit output. Finally, the EIA reported that natural gas storage fell by more-than-expected last week, as gas storage fell by 43 billion cubic feet in the week ending March 24th. The daily chart for WTI shows that the price surpassed the 200 SMA while technical indicators head north within positive territory, maintaining the downside risk limited. In the 4 hours chart, technical indicators have turned flat within overbought territory, whist the 20 SMA accelerated its advance below the current level, now breaking above a bearish 100 SMA, also favoring additional gains for the upcoming sessions, although limited.

Support levels: 49.70 49.00 48.30

Resistance levels: 50.70 51.25 51.90

DJIA

Wall Street closed with gains, although US major indexes retreated from their daily highs in the last hours of trading. The Dow Jones Industrial Average advanced 69 points to settle at 20,728.52, while the Nasdaq Composite gained 0.28% or 16 points, to 5,914.34 a new record high. The S&P added roughly 7 points to 2,368.06, backed by a strong recovery in oil prices and a firmer sentiment towards the greenback after an upward revision to local GDP. Within the Dow, Exxon Mobil was the best performer, up 1.84%, followed by American Express up 1.27% and Goldman Sachs that added 1.23%. Nike was the worst performer by losing 1.13%, followed by Procter & Gamble that shed 0.41%. As for the technical picture, the DJIA daily chart shows that the Dow still develops below a bearish 20 DMA, currently providing a dynamic resistance at 20,783, whilst technical indicators have extended their recovery within negative territory, indicating that a limited upward potential at the time being. In the 4 hours chart, the index bounced sharply from a now bullish 20 SMA, but technical indicators lost upward momentum within positive territory, whilst the index remains below its 100 and 200 SMAs, both converging around 20,790, in line with the longer term perspective.

Support levels: 20,677 20,623 20,562

Resistance levels: 20,783 20,830 20,881

FTSE 100

The FTSE was unable to extend its advance and closed 4 points lower at 7,369.52, undermined by the poor performance of Asian equities, and with speculative interest cautious after the formal beginning of the Brexit process. Mining-related equities were among the top performers, with Antofagasta leading the way higher by adding 2.94%, followed by Ashtead Group that advanced 2.44% on a revision of its rating to buy. Mediclinic International was the worst performer, down 3.00% followed by Associated British Food that lost 2.04%. The index stands around the mentioned close ahead of the Asian opening, and the daily chart shows that its standing around its 20 SMA that lost its upward strength, whilst technical indicators turned modestly lower within neutral territory, not enough to confirm additional slides. In the 4 hours chart, the index remains above horizontals 20 and 100 SMAs whilst technical indicators have turned horizontal within positive territory, offering a neutral stance.

Support levels: 7,355 7,332 7,301

Resistance levels: 7,387 7,415 7,448

DAX

European equities closed again with gains, with the German DAX adding 53 points on the day to settle at 12,256.43, a fresh almost two-year high. Mining and industrial stocks led the way higher in the region, although within the DAX, Deutsche Boerse, an exchange operator, was the best performer, up 2.29%, followed by Continental, which added 1.72%. Only 8 members closed down, with Commerzbank topping losers' list with a 1.34% decline. The daily chart for the German benchmark shows that it keeps posting higher high and higher lows, above bullish moving averages, whilst the limited intraday range barely helped technical indicators to advance within positive territory, overall bullish. In the shorter term and according to the 4 hours chart, technical indicators have lost upward momentum within overbought territory, still far from suggesting upward exhaustion, whilst the 20 SMA heads sharply higher well below the current level, supporting additional advances, particularly on an upward acceleration above the intraday high of 12,261, the immediate resistance.

Support levels: 12,221 12,180 12,139

Resistance levels: 12,261 12,318 12,365

Weekly
    •    Last Candlesticks pattern: Hammer
    •    Time of formation: 19 Sep 2016
    •    Trend bias: Down

Daily
    •    Last Candlesticks pattern: Doji
    •    Time of formation: 28 Mar 2017
    •    Trend bias: Near term up



EUR/JPY – 119.54




As the single currency faltered just below the Kijun-Sen (now at 120.57) and slipped from 10.44 this week, suggesting the fall from 122.89 is still in progress and downside risk remains for the fall from there to extend weakness to 118.90-00, then 118.65-70, however, a daily close below latter level is needed to retain bearishness and bring retest of 118.24 support. Once this level is penetrated, this would signal the  break of  the erratic decline from 124.10 top has resumed and bring subsequent fall to 117.90-00, then towards 117.40-50 which is likely to hold from here due to oversold condition, bring rebound later.

On the upside, whilst initial recovery to 119.80-85 cannot be ruled out, reckon upside would be limited to the Kijun-Sen (now at 120.57) and bring another decline later. A daily close above 120.85 would defer and risk rebound to the upper Kumo (now at 121.35) but only break of resistance at 121.84 would revive bullishness and signal the fall from 122.89 has ended instead, bring further gain to 122.50, then retest of said resistance at 122.89. Looking ahead, a break there is needed to signal the rise from 118.24 low has resumed and extend further gain to resistance at 123.31, a daily close above this level would suggest the entire fall from 124.10 top has ended at 118.24 back in Feb and bring further subsequent headway towards this level.

Recommendation: Sell at 120.40 for 118.40 with stop above 121.40.

On the weekly chart, euro’s retreat from 122.89 has kept price under near term pressure, adding credence to our view that the rebound from 118.24 has ended there and downside risk remains for weakness to 119.00, then 118.65-70 but said support at 118.24 should remain intact, bring further choppy trading. In the event euro drops below 118.24 level, this would signal the retreat from 124.10 top is still in progress and near term downside bias remains for this move to bring retracement of recent upmove, hence weakness to the Kijun-Sen (now at 118.09) is likely but a weekly close below there is needed to signal the rise from 109.49 has ended, bring further decline to 117.30-35, however, previous resistance at 116.29 should contain downside due to near term oversold condition, bring rebound later.

On the upside, expect recovery to be limited to 120.00-10 and the Tenkan-Sen (now at 120.70) should hold from here, bring another decline later. Only above said resistance at 121.84 would suggest the pullback from 122.89 has ended instead, bring another test of this level, break there would signal the rebound from 118.24 is still in progress and may extend gain to indicated key resistance at 123.31. Looking ahead, a break above this level is needed to retain bullishness and signal recent rise from 109.49 low has resumed for retracement of early decline to 125.25-30 (50% Fibonacci retracement of 141.06-109.49), having said that, reckon resistance at 126.47 would cap upside and price should falter below resistance at 128.23, bring retreat later.

Weekly
    •    Last Candlesticks pattern: Bullish engulfing
    •    Time of formation: 02 May 2016
    •    Trend bias: Up

Daily
    •    Last Candlesticks pattern: Hammer
    •    Time of formation: 19 Oct 2016
    •    Trend bias: Up



USD/CAD – 1.3281




Although the greenback rose briefly to 1.3415 earlier this week, as renewed selling interest emerged there and the pair has retreated sharply, suggesting the rebound from 1.3264 has ended there and downside bias is seen for the fall from 1.3535 to extend further weakness to 1.3230, however, reckon downside would be limited to 1.3200-10. Looking ahead, a daily close below there would retain bearishness for the aforesaid decline to extend weakness to 1.3160-65 and possibly towards 1.3100 but price should stay well above support at 1.3056, bring rebound later. Only a daily close below this level would retain bearishness and signal the rebound from 1.2969 has indeed ended, bring further fall to 1.3000 first, however, said support at 1.2969 should remain intact.

On the upside, whilst recovery to the Tenkan-Sen (now at 1.3340) cannot be ruled out, reckon upside would be limited to 1.3380-85 and bring another decline later. Above 1.3380-85 would risk test of said resistance at 1.3415 but only break there would revive bullishness and signal low has been formed, bring another rise later. A daily close above 1.3415 resistance would suggest the pullback from 1.3535 top has ended and bring further gain to 1.3490-00 but said resistance at 1.3535 would hold on first testing. Looking ahead, only a break of this level would retain bullishness and extend early erratic upmove from 1.2461 low to 1.3599, then 1.3660-70 but still reckon upside would be limited to 1.3700 and risk from there is seen for a retreat later. 



Recommendation: Sell at 1.3375 for 1.3175 with stop below 1.3435.


On the weekly chart, as the greenback met resistance at 1.3415 and has retreated, retaining our view that further consolidation below resistance at 1.3535 would be seen and test of the Tenkan-Sen (now at 1.3252) is likely, however, break of previous resistance at 1.3210 is needed to suggest a temporary top is formed, bring further fall to 1.3150-60, break there would add credence to this view and signal the rebound from 1.2969 has ended, bring subsequent decline towards 1.3083, however, indicated support at 1.3056 should hold from here, risk from there has increased for a rebound later.

On the upside, expect recovery to be limited to 1.3340-50 and bring another decline. Above said resistance at 1.3415 would bring test of 1.3495 resistance but break of latter level is needed to signal the pullback from 1.3535 has ended, bring retest of this level first, break there would extend recent rise from 1.2969 to indicated resistance at 1.3599, however, a break of this resistance is needed to retain bullishness and signal upmove from 1.2461 (2016 low) has resumed for headway to 1.3700 and later towards 1.3835-40 (61.8% Fibonacci retracement of 1.4690-1.2461) which is likely to cap upside.

China official PMIs strike multi-month highs

Asia Mid-Session Market Update: China official PMIs strike multi-month highs; Japan jobless rate at 23-year lows

US Session Highlights

(US) INITIAL JOBLESS CLAIMS: 258K V 247KE; CONTINUING CLAIMS: 2.05M V 2.03ME

(US) Q4 FINAL GDP PRICE INDEX: 2.1% V 2.0%E; CORE PCE Q/Q: 1.3% V 1.2%E

(US) Q4 FINAL GDP ANNUALIZED Q/Q: 2.1% V 2.0%E; PERSONAL CONSUMPTION: 3.5% V 3.0%E

(US) Fed’s Mester (hawkish, non-voter): reiterates support for starting to trim bond portfolio this year; supports further rate hikes but not at each meeting

(US) Trump administration draft letter seeks changes to NAFTA, but not scrapping deal altogether - Washington Post

(US) WEEKLY EIA NATURAL GAS INVENTORIES: -43 BCF VS. -41 TO -43 BCF EXPECTED RANGE

US markets on close: Dow +0.3%, S&P500 +0.3%, Nasdaq +0.3%

Best Sector in S&P500: Financials

Worst Sector in S&P500: Utilities

Biggest gainers: COP +8.8%, FTR +5.5%, FCX +4.6%, STX +3.2%, COF +2.9%

Biggest losers: AKAM -4.6%, CF -3.9%, CBT -3.7%, VF -3.7%, PRGO -3.1%

At the close: VIX 11.5 (+0.1 pts); Treasuries: 2-yr 1.29% (+1bps), 10-yr 2.42% (+3bps), 30-yr 3.03% (+3bps)

US movers afterhours

VJET: Reports Q4 net -€3.0M v -€2.4M y/y, Rev €6.3M v €8.3M y/y; Guides Q1 Rev €4.25-4.75M v €4.9M y/y; +3.9% afterhours

EGLE: Reports Q4 -$2.96 v -$42.37 y/y, R$41.9M v $25.7M y/y; +2.9% afterhours

NH: Reports Q4 -$0.18 v -$0.18e, R$24.1M v $29.5Me; +1.2% afterhours

Politics

(ZA) South Africa Pres Zuma fires Gordhan appoints Malusi Gigaba as new Fin Min

(US) White House advisor Navarro: Pres Trump to sign Executive Order on Friday to strengthen collections of anti-dumping and anti-subsidy duties on imports - press

(US) Former National Security Advisor Mike Flynn makes an offer to FBI and Congressional investigators to testify in exchange for immunity from prosecution - press

(US) US Pres Trump: Meeting with China to be a difficult one amid concerns over trade deficits and jobs; appealing Hawaii judge ruling who blocked his Executive Order travel ban - press

(US) Commerce Sec Ross: hopes to trigger 90-day NAFTA consultation period before spring congressional recess; NAFTA negotiations could start in August - CNBC

Asia Key economic data:

(CN) CHINA MAR MANUFACTURING PMI (GOVT OFFICIAL): 51.8 (highest since Apr 2012) V 51.7E; NON-MANUFACTURING PMI: 55.1 (highest since May 2014) V 54.2 PRIOR

(JP) JAPAN MAR TOKYO CPI Y/Y: -0.4% (biggest decline in 6 months) V -0.2%E; CPI EX-FRESH FOOD Y/Y: -0.4% (biggest decline in 3 months) V -0.2%E

(JP) JAPAN FEB NATIONAL CPI Y/Y: 0.3% (5th consecutive increase) V 0.2%E; CPI EX FRESH FOOD (CORE) Y/Y: 0.2% (22-month high) V 0.2%E

(JP) JAPAN FEB OVERALL HOUSEHOLD SPENDING Y/Y: -3.8% V -1.7%E; 12th consecutive decline, biggest decline in 6 months

(JP) JAPAN FEB PRELIMINARY INDUSTRIAL PRODUCTION M/M: 2.0% V 1.2%E; Y/Y: 4.8% V 3.9%E

(JP) JAPAN FEB JOBLESS RATE: 2.8% V 3.0%E; lowest since June 1994

(NZ) NEW ZEALAND MAR ANZ ACTIVITY OUTLOOK: 38.8 V 37.2 PRIOR; BUSINESS CONFIDENCE: 11.3 V 16.6 PRIOR

(NZ) NEW ZEALAND FEB BUILDING PERMITS M/M: +14.0% V +2.1% PRIOR (8-month high)

(NZ) NEW ZEALAND Q1 WESTPAC EMPLOYMENT CONFIDENCE INDEX: 109.9 v 112.7 PRIOR

(KR) SOUTH KOREA FEB INDUSTRIAL PRODUCTION M/M: -3.4% V -0.3%E; Y/Y: 6.6% V 7.2%E

Asia Session Notable Observations, Speakers and Press

Asian indices are mixed following modest gains on Wall St, where rising interest rates and more gains in the oil patch sent Financials and Energy sectors higher. Nikkei225 is among the leaders, helped by weaker Yen, while Shanghai Composite has backed away from 2-week lows in the wake of multi-month highs in China manufacturing and non-manufacturing PMIs.

In FX, USD/JPY pair was the most volatile among the dollar majors, rising to 1-week high above 112, as USD remained bid in US hours on higher US interest rates. In EM currencies, South African Rand fell over 2% through 13.60 late in Asia after Pres Zuma sacked the corruption-crusading Fin Min Gordhan, appointing Minister of Home Affairs Malusi Gigaba as his replacement. Focus will now fall on ratings agencies review of South Africa as it deals with its economic and political turmoil.

In notable political news stateside, WSJ reported that former National Security Advisor Mike Flynn has reached out to FBI and Congressional investigators to testify in exchange for immunity from prosecution, though follow-up statement from his counsel did not suggest that he has incriminating information but rather wants protection given "a highly politicized, witch-hunt environment."

PBoC has skipped open market operations for the full week now, claiming liquidity in the system is ample. There was also some tough talk from US President Trump ahead of his meeting with China leaders next week, expecting the summit to be "difficult in that we can no longer have massive trade deficit and job losses." China foreign ministry official response was that China will push for greater balance in trade. Separately, White House Advisor Navarro said Trump will sign an Executive Order on Friday to strengthen collections of anti-dumping and anti-subsidy duties on imports

Economic data out of China and Japan were mostly positive. China official manufacturing PMI hit a 5-year high while non-manufacturing was a near 2-year high. Employment component of manuf PMI marked a notable bounce into expansion, even as input prices declined. In Japan, unemployment rate fell to a 23-year low, though labor force participation rate declind to 59.6% from 60.0% while total number of employed persons fell for 81 straight month. Japan National CPI was slightly hotter than expected on the headline, though the forward looking Tokyo region inflation fell deeper in the red.

China

(CN) China vice foreign minister Zheng Zeguang : Trade and business relation with US good for both countries and win-win; Will push for greater balance in trade

(CN) US Pres Trump: Meeting with China to be a difficult one amid concerns over trade deficits and jobs - press

(CN) BoCom: China Mar CPI seen at 0.8% y/y, unchanged from 0.8% in Feb - Chinese press

Japan

(JP) Japan ruling LDP security research commission recommends to PM Abe that Japan obtains capability of striking enemy bases - Nikkei

(JP) Japan Fin Min Aso: Private banks have money but not willing to lend; North Korea situation more serious than portrayed in the press

Australia/New Zealand

(AU) According to one survey, analysts are unanimous in expectation for RBA to leave rates on hold next week - press

Asian Equity Indices/Futures (00:30ET)

Nikkei +0.5%, Hang Seng -0.5%, Shanghai Composite +0.3%, ASX200 -0.2%, Kospi flat

Equity Futures: S&P500 -0.1%; Nasdaq -0.1%; Dax -0.1%; FTSE100 -0.2%

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.0670-1.0690; JPY 111.70-112.20; AUD 0.7640-0.7660; NZD 0.6980-0.7005

June Gold -0.4% at $1,244/oz; May Crude Oil -0.3% at $50.20/brl; May Copper flat at $2.67/lb

SPDR Gold Trust ETF daily holdings fall 1.2 tonnes to 832.3 tonnes

(CN) PBOC SETS YUAN MID POINT AT 6.8993 V 6.8889 PRIOR

(CN) PBoC skips open market operations for 6th straight session; Said to drain CNY30B v CNY40B prior

(AU) Australia MoF (AOFM) sells A$600M in 5.75% 2021 Bonds; avg yield: 2.077%; bid-to-cover: 6.89x

Asia equities / Notables / movers by sector

Consumer discretionary: 670.HK China Eastern Airlines +0.7%, 1055.HK China Southern Airlines +2.5% (FY16 result); 1886.HK China Huiyuan Juice Group -1.6% (FY16 results); FXJ.AU Fairfax -3.6% (potential LBO difficult to justify)

Consumer staples: 168.HK Tsingtao Brewery Co -1.3% (FY16 results); 3349.JP Cosmos Pharmaceutical Corp +2.1% (Mizuho initiates with buy)

Financials: 6881.HK China Galaxy Securities +1.0%, 6818.HK China Everbright Bank -2.1%, 1398.HK ICBC -0.4%, 6886.HK Huatai Securities -0.7% (FY16 results); BOQ.AU Bank of Queensland +1.7% (JPMorgan raises rating)

Industrials:7 53.HK Air China -1.0% (FY16 results); 390.HK China Railway Group -5.7%, 1157.HK Zoomlion Heavy Industry Science and Technology -4.9% (FY16 results); 7951.JPYamaha Corp +2.8% (Daiwa initiates with outperform)

Technology: 1296.HK Guodian Technology & Environment Group +3.8% (FY16 results); NXT.AU Nextdc +3.7% (new buy at Canaccord); 6502.JP Toshiba Corporation +5.9% (Apple may be among bidders for chip unit)

Materials: 3993.HK China Molybdenum +8.7% (FY16 results)

Energy: 857.HK PetroChina Co -1.2% (FY16 results)