Sample Category Title

EUR/USD Consolidating around 1.0800 within bullish trend.

EUR/USD keeps on pushing higher, even though the pair is now pausing around 1.0800. A break of the upside channel would signal persistent buying pressures. Key resistance is given at a distance 1.0874 (08/12/2017 high). Strong support can be found at 1.0493 (22/02/2017 low). The technical structure suggests deeper increase towards resistance at 1.0874.

In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD Continued increase.

GBP/USD has broken bearish downtrend channel. The pair has broken resistance at 1.2429 and there are rooms for further strength. Hourly resistance is located at 1.2570 (24/02/2017 high). Hourly support is given at 1.2324 (03/17/2017 low).

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY Ready for another leg lower.

USD/JPY has failed to break key resistance given at 115.62 (19/01/2016 high) confirming persistent selling pressures. The pair has broken strong support at 111.36 (28/11/2016 low). Hourly resistance can be located at 113.57 (16/03/2017 high).

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

The Aussie remains under pressure and accelerated lower on Wednesday, after previous day's dip was contained at 0.7637 and subsequent bounce resulted in close well above cracked pivot at 0.7649 (Fibo 38.2% of 0.7489/0.7747 upleg).

Fresh weakness is threatening key supports at 0.7618/0.7597 (daily Kijun-sen / top of widening daily Ichimoku cloud.

Pullback from fresh high at 0.7747 needs to find ground at these supports to keep overall bullish structure intact for fresh upside attempts.

Conversely, penetration into daily cloud and violation of nearby 0.7588 pivot 9Fibo 61.8%) would signal further weakness and open 0.7550 (Fibo 76.4%) and 0.7541 (200SMA).

Res: 0.7649, 0.7665, 0.7682, 0.7700
Sup: 0.7618, 0.7597, 0.7588, 0.7550

China's financial system continues to display fragility and liquidity squeeze. China's 7-day repo rate jumped to 5.5% (close), the highest level since late 2014, on Tuesday, followed by PBOC's injection of RMB 80-90B to the market on Wednesday as some small banks failed to repay debts in the interbank market. Less than a week ago, PBOC raised a range of short-term and medium-term interest rates to reduce financial risks, thought to be a response to Fed funds rate hike. Interbank rates should remain volatile over the coming week, ahead of PBOC's quarterly macro-prudential assessment in late March. Although recent data suggested that the problem of capital outflow eased in February, ongoing interest rate normalization in the US would prolong China's capital outflow problem, sustaining the challenges facing China in the implementation of its monetary policy.

As a gauge of liquidity in China, the sudden uptick in the 7-day repo is alarming. Hovering around mid-3% level these two days, the rate jumped to as high of 9.5% earlier in Tuesday before settling at 5.5% for the day. This has overshot the underlying trend of interbank tightening and has raised concerns over China's tight credit condition. Less than a week ago, PBOC raised a range of short-term and medium-term interest rates last Thursday, following the Fed's rate hike of +25 bps. The reverse repo rates for 7 days, 14 days and 28 days, increased +10 bps to 2.45% 2.6% and 2.75% for 7 day, 14 days and 28 days, respectively. The rates for medium lending facility (MLF) for 6 months and 1 year also added +10 bps to 3.05% and +3.2%, respectively. It was estimated that the move had eliminated RMB120B from the market. The central bank affirmed that the move aimed at deleveraging, "deflating bubbles", and risk prevention. While PBOC would prefer to continue guiding an upward trend in interbank rates in order to curb bubbles and prevent risks in certain 'risky' areas (e.g. housing market), the implementation would be a cautious one as the market is obviously vulnerable to small increase in funding costs.

Recall that China's FX reserve, rising for the first time in 8 months, added +US$ 6.9B to US$ 3.01 trillion in February. After adjusting for currency valuation effects, the reserves probably increased US$ 19-25B in the month. While this might be the first signal that China's capital outflow problem has tamed, we suggested in our previous report that PBOC's FX positions are insightful for a clearer outlook of China's capital flow situation. The second chart below shows that China's capital outflow problem indeed eased last month. The monthly change in total foreign assets position (including FX, gold and "other" foreign assets) is not subject to valuation effect and can be considered as PBOC's cost of acquiring foreign assets. The change in FX position is most directly related to the central bank's FX intervention. The changes in both positions rose to the levels not seen since mid-2016.

Part of the improvement can be attributed to one-off and seasonal factors. For instance, repatriation of unreported export proceeds might have affected the figure, while a shorter month in February had also reduced the time that the public could engage in capital flows. Nonetheless, government's capital control measures have also played an important role. Indeed, the crackdown on outward M&A has led to declines in China's outbound investment, by -39% y/y and -36% y/y in December and January respectively. The above-mentioned rate hikes have also helped retain capital. This is another rationale for PBOC to continue guiding interbank rates higher.

The DAX Index has inched higher in the Thursday session. Currently, the DAX is at trading at 11,926.50. On the release front, GfK German Consumer Climate dipped to 9.8 points, shy of the forecast of 10.1 points. Later in the day, the eurozone releases consumer confidence data. On Friday, Germany and the eurozone release Manufacturing PMIs, both of which should be treated as market-movers.

German consumer confidence lost ground for a second straight week, as the GfK indicator fell to 9.8, its lowest level since November 2016. The drop is largely a result of higher inflation, as consumers are more concerned that their purchasing power has been reduced. Still, the German economy, the largest in Europe, remains in solid shape, as the economy is expected to expand 1.5% in 2017. German data is regarded as a bellwether for the eurozone, so the markets will be keeping a close eye on the upcoming German Manufacturing PMI report.

With the Fed quarter-point hike behind us, what can we expect next from the central bank? Based on the Fed’s rate statement as well the dot plot, the Fed expects to raise rates two more times in 2017, for a total of three hikes this year. Earlier this week, Chicago Fed President Charles Evans echoed this sentiment, saying he expected the Fed to raise rates two more times this year. Although one could make a strong case that three rate hikes in 2017 would be impressive, the markets appear disappointed and would like four hikes, given the strong performance of the US economy. The Fed’s cautious approach over monetary policy, together with growing frustration over a lack of coherent economic policy from President Donald Trump, has soured investor sentiment, which is weighing on stock markets in both the US and Europe.

'There is a small supply of homes for sale and great demand for them, and that's driving prices higher in many markets. We believe the strong appetite for homes will continue, people just need more homes to choose from.' - Gino Blefari, Berkshire Hathaway HomeServices

Residential home sales plunged in February despite the promising start of the year. Contrary to experts' forecasts, total existing home sales slipped 3.7% over the month of February. Nevertheless, last month's results were still 5.4% higher than a year ago. According to the National Association of Realtors, the drop was mainly attributable to shortage of homes in the affordable price range. In February, the median house price soared 7.7%, which tags the 60th consecutive monthly increase. Realtors cannot satisfy the demand because more prosperous buyers quickly acquire newly listed houses and, thus, leave minimal choices to the remaining customers. Consequently, housing inventories went up 4.2% but still remained lower than a year ago. The other data revealed that on the week ended March 17, US crude oil inventories surged 5.0M barrels, which significantly exceeds experts' forecasts. Moreover, the week highlighted the tenth increase in the last eleven weeks and presented a new record of 533.1M barrels.

'The RBNZ continues to see an outlook shaped by considerable uncertainty and is in no hurry to alter policy in either direction as a result. There is no change to our view. We continue to see the next move in the OCR being up, but not until mid-2018.' - Cameron Bagrie and Philip Borkin, ANZ Bank New Zealand

As markets expected, the Reserve Bank of New Zealand left its monetary policy unchanged at its March meeting on Wednesday amid high global uncertainties. The RBNZ Governor Graeme Wheeler said that policymakers would keep monetary policy loose for an extended period of time, as it might need to be adjusted in light of existing uncertainties coming mainly from the US and Europe. On Wednesday, the Monetary Policy Committee voted to hold the official cash rate at a record low of 1.75%, claiming that the current global situation was preventing inflation from reaching the Bank's target. Moreover, Wheeler said that the inflation rate would probably remain below 2% until 2019. However, some analysts suggest that inflation will reach 2% already this quarter and borrowing costs will start growing within a year. Wheeler noted that a 4% drop in the value of the Kiwi since February was 'encouraging' but added that further depreciation of it was necessary to 'achieve more balanced growth'. Back in the Q4 of 2016, New Zealand's economy expanded at a slower-than-expected pace, forcing the RNBZ to review its 2017 growth forecast. Thus, according to the Bank, annual economic growth is unlikely to rise above 3.5% this year.

As we could see on previous Session Recap webinar, the GBP/USD perfectly rejected from POC and provided more than 120 possible pips. Another bullish sign that wee see today is Bullish SHS pattern ( Inverted Head and Shoulders) that might provide a continuation to the upside targeting 1.2550. However Retail Sales data might move the price today. On a worse than expected result the pair might drop to POC (Ema 89, ATR pivot, D L4) 1.2430-50 and then it might spike. On a better than expected data look for continuation above 1.2516 towards 1.2550 D H5/ W H4 confluence.

Cable remains steady on Thursday and posted new high at 1.2514, signaling bullish continuation after Wednesday’s action ended in long-legged Doji and closed at important Fibo 61.8% barrier at 1.2476.

Technical studies are in firm bullish setup and supportive for further advance, as daily cloud contained yesterday’s dips and is going to widen in coming days, is continuing to underpin.

Focus remains at immediate targets at 1.2563/68 (Fibo 76.4% of 1.2704/1.2107 / 24 Feb high), however, close above 1.2476 is seen as initial requirement to maintain bullish bias.

Solid supports at 1.2412/04 (broken 100SMA / daily cloud top) need to contain extended dips to keep bulls intact and prevent deeper downticks.

Res: 1.2514, 1.2521, 1.2568, 1.2580
Sup: 1.2465, 1.2412, 1.2404, 1.2383

USD/CHF - 0.9935

Original strategy :

Sell at 1.0000, Target: 0.9900, Stop: 1.0035

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0000, Target: 0.9900, Stop: 1.0035

Position : -

Target :  -

Stop : -

Dollar’s rebound after falling to 0.9882 yesterday suggests consolidation above this level would be seen and corrective bounce to 0.9945-50 cannot be ruled out, however, reckon upside would be limited to 0.9980 and renewed selling interest should emerge around 1.0003 resistance, bring another decline later. A break of said support at 0.9882 would add credence to our view that recent decline from 1.0171 is still in progress and may extend weakness to 0.9865-70 but loss of downward momentum should prevent sharp fall below 0.9850 and reckon 0.9825-30 would hold.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 1.0000-05 should limit upside and bring another decline. Only above previous support at 1.0060 (now resistance) would abort and signal low is formed instead, risk rebound to 1.0090-95 first.

GBP/USD - 1.2472

Original strategy :

Buy at 1.2400, Target: 1.2520, Stop: 1.2365

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2400, Target: 1.2520, Stop: 1.2365

Position : -

Target :  -

Stop : -

As cable has continued trading with a firm undertone, adding credence to our bullish view that recent upmove from 1.2109 is still in progress and may extend further gain to 1.2540-50 but loss of upward momentum would limit upside to previous chart resistance at 1.2570 and price should falter below 1.2600-10, risk from there has increased for a retreat to take place later.

In view of this, would not chase this move here and we are looking to buy cable on subsequent pullback as 1.2400 should limit downside. Below 1.2380-85 would defer and risk correction to 1.2350-55 but still reckon support at 1.2335 would remain intact, bring another rise later.