Sample Category Title

GBP/USD - 1.2948

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Despite yesterday’s euro-led retreat to 1.2903, as cable found good support there and has staged a strong rebound, suggesting the pullback from 1.2991 has possibly ended there and gain towards 1.2999-00 (1.236 times projection of 1.2109-1.2616 measuring from 1.2365 and psychological resistance) cannot be ruled out, however, break there is needed to signal recent upmove has resumed and extend further rise to 1.3040-50, then towards 1.3075-80 which is likely to hold from here due to near term overbought condition. 

In view of this, would be prudent to stand aside in the meantime. Below 1.2920 would brig another test of said support at 1.2903, however, break there is needed to revive near term bearishness and suggest a temporary top has been formed at 1.2991, bring correction to 1.2875-80 but price should stay well above last week’s low at 1.2831.

EUR/USD - 1.0878

Original strategy  :

Sell at 1.0955, Target: 1.0855, Stop: 1.0990

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0955, Target: 1.0855, Stop: 1.0990

Position : -

Target :  -

Stop : -

As the single currency has recovered after marginal fall to 1.0858, suggesting minor consolidation above this level would be seen and recovery to 1.0920-25 cannot be ruled out, however, if our view that top has been formed at 1.1025 is correct, upside should be limited to 1.0960-70 and bring another decline later, below said support at 1.0863 would add credence to this view and extend the fall from there for retracement of recent rise to 1.0851 support and possibly towards 1.0825-30 but reckon 1.0800 would hold from here due to near term overbought condition.

In view of this, we are looking to sell euro on recovery as 1.0960-70 should limit upside. Above resistance at 1.0997 would bring retest of said resistance at 1.1025, however, break there is needed to signal recent upmove from 1.0340 low has resumed for headway to 1.1050 but reckon upside would be limited to 1.1065-70 (61.8% projection of 1.0602-1.0951 measuring from 1.0851).

The DAX is showing little movement on Wednesday, continuing what has been an uneventful week. Currently, the DAX is trading at 12,739.00. On the release front, it's a very light schedule, with no eurozone or German events. Market focus will be directed towards The Hague, where ECB President Mario Draghi will speak about monetary policy in the Dutch House of Representatives. On Thursday, the spotlight will be on inflation indicators, with Germany releasing WPI and the US publishing PPI.

The eurozone has posted stronger numbers in the first quarter, and this has included industrial better production and manufacturing numbers in Germany. Industrial production in March declined 0.4%, but this was just a blip, as industrial production in the first quarter posted a respectable gain of 1.6%. German Factory Orders came in at 1.0%, above the forecast of 0.7%. An improvement in global economic conditions has boosted the demand for German exports, notably cars and machinery. A weak euro has made European exports more attractive and helped boost the manufacturing sector. Germany releases Preliminary GDP for the first quarter on Friday, with the markets predicting a gain of 0.6%. A better than expected GDP report could shake the DAX out of its slumber and push the index to higher levels.

Donald Trump is not one to shy away from controversy, but has he gone one step too far? Trump abruptly fired FBI director James Comey on Tuesday, stunning the political establishment in Washington. Comey, who has been conducting an investigation into possible collusion between Trump and Russia during the presidential campaign, clearly has been a thorn in Trump's side. The White House has claimed that it fired Comey over his handling of an email scandal involving Hillary Clinton, but the move has been roundly condemned by the Democrats, and some key Republicans have also voiced opposition as well. The political firestorm could heat up further, with calls in Congress to appoint a special prosecutor into Trump's connections with Russia. The dollar has already recorded some losses since the firing, and Trump's latest escapade could cause some jitters among investors and send the stock markets downwards.

The CAC is unchanged in the Wednesday session, as the index is trading at 5,395.50.On the release front, French data was better than expected. Industrial production posted a gain of 2.0%, above the estimate of 1.2%. France's trade deficit improved to EUR -5.4 billion, better than the forecast of EUR -5.9 billion. The markets are keeping a close eye on ECB President Mario Draghi, who will speak about monetary policy in the Dutch House of Representatives. On Thursday, the US releases PPI, an important inflation indicator.

The eurozone has posted stronger numbers in the first quarter, and this has included industrial better production and manufacturing numbers in France and Germany. In France, industrial production jumped 2.0% in March, ending a streak of three consecutive declines. The Markit France Manufacturing PMI rose to 55.1 in April, its highest level since 2011. German industrial production in March declined 0.4%, but this was just a blip, as industrial production in the first quarter posted a respectable gain of 1.6%. German Factory Orders came in at 1.0%, above the forecast of 0.7%. An improvement in global economic conditions has boosted the demand for Eurozone exports, notably cars and machinery. A weak euro has made European exports more attractive and helped boost the manufacturing sector. The German economy will get a report card on Friday, with the release of Preliminary GDP for the first quarter. The markets are predicting a gain of 0.6%. A better than expected GDP report could shake the DAX out of its slumber and push the index to higher levels.

Donald Trump unconventional style has caused consternation and uneasiness in the markets, but his latest move could turn into a political earthquake. Trump abruptly fired FBI director James Comey on Tuesday, stunning the political establishment in Washington. Comey, who has been conducting an investigation into possible collusion between Trump and Russia during the presidential campaign, clearly has been a thorn in Trump's side. The White House has claimed that it fired Comey over his handling of an email scandal involving Hillary Clinton, but the move has been roundly condemned by the Democrats, and some key Republicans have also voiced opposition as well. The political firestorm could heat up further, with calls in Congress to appoint a special prosecutor into Trump's connections with Russia. Has Trump gone one step to far? The dollar has already recorded some losses since the firing, and this latest controversy could cause some jitters among investors and send the stock markets downwards.

USD/JPY - 113.82

Original strategy  :

Buy at 113.35, Target: 114.45, Stop: 113.00

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 113.25, Target: 114.45, Stop: 112.90

Position :  -

Target :  -

Stop : -

Dollar’s retreat after rising to 114.33 suggests consolidation below this level would be seen and pullback to 113.50 cannot be ruled out, however, reckon 113.30-35 would limit downside and bring another rise later, above said resistance at 114.33 would extend recent upmove to 114.50-55 (100% projection of 108.13-111.78 measuring from 110.87), however, near term overbought condition should limit upside to 114.75-80 and price should falter below 115.00, bring retreat later.

In view of this, would not chase this rise here and would be prudent to buy dollar on pullback as 113.25-35 should contain downside. Only below previous resistance at 113.05 would defer and suggest top is formed, bring correction of recent upmove to 112.70-80 but reckon support at 112.39 would remain intact. 

Daily Pivots: (S1) 1.0846; (P) 1.0890 (R1) 1.0916; More....

Intraday bias in EUR/USD remains mildly on the downside for the moment. A short term top is in place at 1.1020 on bearish divergence condition in 4 hour MACD. Deeper decline would be seen back to 55 day EMA (now at 1.0757) first. As noted before, rise from 1.0339 is seen as a corrective move. Break of 55 day EMA will affirm the case that such correction is completed and bring deeper decline to 1.0569 for confirmation. Above 1.1020 will extend such corrective rise 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 long term reversal.

Daily Pivots: (S1) 1.2904; (P) 1.2932; (R1) 1.2962; More...

No change in GBP/USD's outlook for the moment. With 1.2830 minor support intact, further rise is still in favor. Current rise could target 161.8% projection of 1.2108 to 1.2614 from 1.2365 at 1.3184. At this point, price actions from 1.1946 are still interpreted as a correction pattern. Therefore, we'd expect strong resistance below 1.3444 to bring larger down trend resumption. On the downside, break of 1.2830 support will indicate short term topping. In such case, intraday bias will be turned back to the downside for 1.2614 support.

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.

Daily Pivots: (S1) 1.0000; (P) 1.0045; (R1) 1.0118; More.....

Intraday bias in USD/CHF remains on the upside for 1.0107 resistance. Current development revived the case that correction from 1.0342 is already completed at 0.9812. Break of 1.0107 will bring a retest on 1.0342 high. On the downside, below 1.0037 minor support will turn bias neutral and bring consolidation first before staging another rise.

In the bigger picture, we're still maintaining that firm break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. However, the corrective nature of the fall from 1.0342 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) 113.30; (P) 113.82; (R1) 114.50; More...

USD/JPY is losing some upside momentum as seen in 4 hour MACD. But with 113.04 minor support, intraday bias remains on the upside for the moment, for 115.49 resistance next. Outlook remains unchanged that correction from 118.65 has completed with three waves down to 108.12. Break of 115.49 will resume larger rally from 98.97 to 125.85 high. On the downside, below 113.04 minor support will turn bias neutral and bring consolidations before staging another rally.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Meanwhile, break of 115.49 resistance will extend the rise from 98.97 to retest 125.85. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

Dollar rally lost some momentum as markets are concerned that US President Donald Trump's firing of FBI Director James Comey could delay his tax reform. In a controversial move, Trump abruptly fired Comey who oversaw an FBI investigation into Trump's tie with Russia during last year's election campaign. Trump's tax reform was originally targeted at approval by the Congress by August. It was already delayed after the healthcare act failure. Markets are concerned that there will be more distraction to Trump ahead and further slow down the progress on tax reforms.

Also there are concerns that Trump's move would further reduce the support from fellow Republicans. Some prominent ones like Senator Jeff Flake said he cannot find any rationale for doing so. Armed Services Chairman John McCain said the removal of Comey confirmed the "need and urgency" for a special congressional investigation on Russia's interference in the election. A former chief White House ethics lawyer to George W Bush also criticized the case as an "abuse of power".

ECB Study: High labor market slack caps wage growth

According to a ECB study, wage growth has been unexpectedly weak and unemployment in higher than what the official data suggest. The adjusted labor market slack is around 15%, well above the official 9.5% unemployment rate. The study noted that "in France and Italy, broader measures of labour market slack have continued to increase throughout the recovery, while in Spain and in the other euro area economies, they have recorded some recent declines, but remain well above pre-crisis estimates." And, "the level of the broader indicator of labour underutilisation is still high, and this is likely to continue to contain wage dynamics."

BoJ might release calculations on impact of stimulus exit

BoJ Governor Haruhiko Kuroda said today that BoJ might release the details of the study of stimulus withdrawal and the impact on its balance sheet. And he emphasized that "it is very important to explain in easy-to-understand terms how monetary policy could affect the BOJ's financial health". Regarding monetary policies, Kuroda said that he's "not thinking about changing the policy mix right now". And "the amount of our bond purchases may vary depending on financial market conditions at the time. But this has no implications for monetary policy going forward." Regarding the economy, Kuroda said that "while global economic growth is gaining momentum, various uncertainties remain".

In the summary of opinions of BoJ meeting, board members believed that current massive policy accommodations are warranted because of downside risks from overseas. Nonetheless, as export and production outlook improved, it was appropriate to raise economic assessment.

China CPI accelerated

China's headline CPI accelerated to 1.2% yoy in April, up from 0.9% a month ago, as mainly driven by the recovery of food disinflation. Food price contracted -3.5% yoy, following a -4.4% drop in March. Non-food inflation rose to 2.4% yoy in April from 2.3% a month ago. Core inflation (excluding food and energy) improved to 2.1% yoy from 2% in March. Such level should be in line with the government's target. PPI moderated to 6.4% in April from 7.6% in March. The deceleration came in more than expectations. A key contributor to the slowdown was commodity prices which slowed further in April as low base effects dissipated. Global prices also pulled back after the strong rally earlier in the year. More in China's PPI Inflation Fell Further From High Level.

Kiwi extends rally ahead of RBNZ

RBNZ rate decision will be a focus in the upcoming Asian session. The central bank is widely expected to keep interest rate unchanged at 1.75%. New Zealand Dollar strengthens broadly this week as markets are expecting an upbeat statement by RBNZ after recent economic data. In particular, headline inflation already jumped to 2.2% yoy. And, some economists expected inflation to stay above 2% level through 2017 and 2018. Opinions are divided on when RBNZ would hike, ranging from Q1 in 2018 to Q4 in 2018.

NZD/JPY's rally extended to as high as 79.06 this week. Upside acceleration and break of 78.82 cluster resistance (38.2% retracement 83.76 to 75.65 at 78.74 suggests that fall fro 83.76 is completed at 75.65. It's early to say whether rise from 75.65 is resuming medium term rebound from 68.88, or a part of the consolidation pattern from 83.76. In both case, NZD/JPY should now target 61.8% retracement at 80.66 next.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 113.30; (P) 113.82; (R1) 114.50; More...

USD/JPY is losing some upside momentum as seen in 4 hour MACD. But with 113.04 minor support, intraday bias remains on the upside for the moment, for 115.49 resistance next. Outlook remains unchanged that correction from 118.65 has completed with three waves down to 108.12. Break of 115.49 will resume larger rally from 98.97 to 125.85 high. On the downside, below 113.04 minor support will turn bias neutral and bring consolidations before staging another rally.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Meanwhile, break of 115.49 resistance will extend the rise from 98.97 to retest 125.85. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

Economic Indicators Update