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USD/JPY is almost unchanged in the Thursday session, after declining 1.1% on Wednesday. Currently, the pair is trading at 113.30. On the release front, the BoJ stood pat and maintained interest rates at -0.10%. The US, will release three key indicators – Building Permits, Philly Fed Manufacturing Index and unemployment claims. The week wraps up with consumer confidence data, with the release of UoM Consumer Confidence on Friday.

As expected, the Bank of Japan rate announcement on Wednesday was a non-event. The central bank opted to leave rates at -0.10%, where they have been pegged for over a year. The Japanese economy has showed improvement, recording four consecutive quarters of growth. However, the BoJ is unlikely to feel pressure to raise rates anytime soon, as inflation levels are still well below the central bank's target of around 2 percent. The BoJ is comfortable maintaining its ultra-loose monetary policy for the time being. However, if the yen again falls below the 120 line, the US will likely complain of currency manipulation and unfair trade practices by Japan. It wasn't that long ago, when yen was trading close to the 100 level, that the shoe was on the other foot, and Japan was warning that it would take unilateral action to combat what it viewed as currency manipulation. Clearly then, a "fair" exchange rate depends on the eye of the beholder.

There were no surprised faces when the Federal Reserve raised rates by a quarter-point on Wednesday. The hike, the second in just three months, raised the benchmark rate to the 0.75%-1.00% range. What was not expected, however, was the sharp drop of the dollar against its major rivals, including the yen. The markets were hoping that a red-hot US economy would propel the Fed to accelerate its pace of monetary tightening. There was disappointment as Fed Chair Janet Yellen reiterated that further rate hikes would be done gradually, pushing the dollar on Wednesday. As well, the US dollar may have lost ground due to traders and investors acting on "buy on rumor, sell on fact". This larges-scale selling of US dollars after the Fed hike has sent the US dollar broadly lower.

Daily Pivots: (S1) 1.2183; (P) 1.2246; (R1) 1.2350; More...

GBP/USD's rebound from 1.2108 extends higher today. The break of 1.2346 resistance argues that fall from 1.2705 is completed. And, the consolidation pattern from 1.1946 is extending with another rising leg. Intraday bias is turned back to the upside for 1.2569 resistance first. Break will target 1.2705/2774 resistance zone next. On the downside, below 1.2240 minor support will turn bias back to the downside for 1.2108 instead.

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 bottoming 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.

Sterling jumps sharply after BoE left monetary policies unchanged as widely expected. That is, benchmark interest rate was kept at 0.25%, asset purchase target was kept at GBP 435b. Most importantly, the decision for interest rate was not unanimous. Kristin Forbes voted for a 25bps hike. That's seen by the markets as sign of a split in the MPC with some policymakers getting more intolerant to the surge in inflation. As noted in the minutes, "some members noted that it would take relatively little further upside news on the prospects of activity or inflation for them to consider that a more immediate reduction in policy support might be warranted." On the other hand, the majority stayed cautious on inflation outlook as wage growth has been "notably softer than expected, despite a further fall in the unemployment rate". Also, "estimates of retail sales had weakened notably" and that other indicators were "mixed".

SNB on hold, raised inflation forecast

SNB kept monetary policies unchanged as widely expected. Site deposit rate was held at -0.75%. Libor target range was kept at -1.25% to -0.25% too. The central bank noted in the statement that "a more extensive analysis of the available economic indicators points to an ongoing moderate recovery in the final months of the year; developments on the labour market support this view." Meanwhile, "compared to December, the new conditional inflation forecast is slightly higher for the next few quarters. Increased oil prices in particular contribute to the rise in inflation in the short term." SNB raised inflation forecast for 2017 to 0.3%, up from 0.1%.

On the other hand, it also pointed out that considerable risks remain for the global economy. And, "chief among these are political uncertainty with respect to the future course of economic policy in the US, upcoming elections in Europe, and the complex exit negotiations between the UK and the EU." SNB also reiterated that the Swiss Franc's exchange rate is "significantly overvalued" and kept itself open to intervention.

More in SNB Pledges to Carry On Intervention as Political Risks Raise Franc's Demand

Dollar stays as the weakest for the week

Dollar pares back some of post FOMC loss today but stays as the weakest major currency for the week. Released from US, housing start rose to 1.29m annualized rate in February. Building permits dropped to 1.21m. Initial jobless claims dropped 2k to 241k in the week ended March 11, better than expectation of 245k. Continuing claims dropped 30k to 2.03m in the week ended March 4. Philly Fed survey dropped to 32.8 in March, but beat expectation of 25.0. From Canada, international securities transactions dropped to CAD 6.2b in January.

Yesterday, FOMC raised the fed funds target range, by 25 bps, to 0.75%-1.00% with 9-1 vote. Minneapolis Fed President Neel Kashkari dissented as he favored leaving the monetary policy unchanged. The disappointments came from the fact that the Summary of Projections (SEP) shows virtually the same macroeconomic outlook. The median projection of federal fund rates was held at 1.4% by the end of 2017, same as December projection. Median projection for rate by the end of 2.18 was held at 2.1%, also same as December projection. Median projection for rate by the end of 2019 was revised by a mere 0.1% to 3.0%. Fed fund futures are pricing pricing in 49.6% chance of another hike in June, down from prior day's 53.2%. More in FOMC Delivered, Market Disappointed

Euro buoyed by Dutch elections

Euro is somewhat supported by the result of Dutch election. The election is seen by many as the first test on populism in Europe. Conservative prime minister Mark Rutte claimed victory and said that "this night is a night for the Netherlands -- after Brexit, after the American elections -- where we said stop it, stop it to the wrong kind of populism." The turnout rate for the election was 81%, highest in three decades. Rutte's Party for Freedom and Democracy is projected to win 33 seats out of 150 total. That's significantly higher than 20 seats of far rightist Geert Wilder's Freedom Party. Released from Eurozone, CPI was finalized at 0.4% mom, 2.8% yoy in February. Core CPI was finalized at 0.9% yoy.

BoJ on hold as widely expected

BoJ left monetary policies unchanged today as widely expected. Policy makers voted 7-2 to keep the Yield Curve Control unchanged. Short term policy rate is held at -0.1%. And BoJ will continue asset purchase at JPY 80T per annum. T. Sato and . T. Kiuchi voted against the decision. Regarding the economy, BoJ noted that it has "continued its moderate recovery trend", "exports have picked up". BoJ is optimistic that "Japan's economy is likely to turn to a moderate expansion." Risks to outlook include development in US and Fed's rate hikes, emerging economies, the consequences of Brexit.

BoJ governor said at the post meeting press conference that "the momentum for inflation to accelerate to 2 percent remains in place but lacks strength." And he pledged that BoJ will "continue to promote powerful monetary easing under the yield curve control framework to achieve its price target at the earliest date possible."

Aussie and Kiwi pare gains on weak data

Both Aussie and Kiwi pare some gains against Dollar after weak economic data. The Australian economy lost -6.4k jobs in February, much worse than expectation of 16.3k growth. Unemployment rate jumped 0.2% to 5.9%, above expectation of 5.7%. That's also the highest rate in more than a year. Contraction in job markets was led by -33.5k loss in part-time jobs. The 27.1k rise in full-time jobs couldn't make up the number. Some economists noted that there is basically no inflationary pressure from the labor market and wage growth. Meanwhile, further surge in unemployment rate could pressure the RBA for a rate cut despite facing bubbling in the housing markets. Also from Australia, consumer inflation expectation dropped to 4.0% in March.

New Zealand GDP rose only 0.4% qoq in Q4, slowed from prior quarter's downwardly revised 0.8 qoq. It also missed expectation of 0.7% qoq. The earthquake near Kaikoura back in November is seen as a factor skewing the data. But StatsNZ didn't directly mention any disruption to activity due to that earthquake. Meanwhile, weakness in manufacturing, which contracted by -1.6%, has trimmed -0.2% from GDP growth. For 2016 growth averaged 3.1%, which was an improvement over 2.5% in 2016. That's also the second straight year of above 3% growth.

PBoC raised short term repo and MLF rates

In China, the PBoC raised the key seven-day repo rate by 0.1% to 2.45%. The 14-day repo rate was also raised by 0.1% to 2.60%. Same amount was raised in 28-day repo rate to 2.75%. Meanwhile, For medium-term lending facility loans, the 6-month rate was raised by 0.1% to 3.05%. One-year MLF rate was raised by 0.1% to 3.2%. PBoC said that the hikes doesn't not constitute a benchmark rate increase. Instead, it's just a move to add flexibility for deleverage "deflating bubbles" and risk preventions.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2183; (P) 1.2246; (R1) 1.2350; More...

GBP/USD's rebound from 1.2108 extends higher today. The break of 1.2346 resistance argues that fall from 1.2705 is completed. And, the consolidation pattern from 1.1946 is extending with another rising leg. Intraday bias is turned back to the upside for 1.2569 resistance first. Break will target 1.2705/2774 resistance zone next. On the downside, below 1.2240 minor support will turn bias back to the downside for 1.2108 instead.

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 bottoming 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.

Economic Indicators Update

China raised a range of money market borrowing rates by 10bp this morning (7, 14 and 28-day repos, medium lending facility) - not long after the Fed hiked 25bp. The move by the People's Bank of China (PBoC) follows a 10bp hike in February. The official deposit and lending rates were kept unchanged, though.

China uses the money market facilities to try to reign in too much leverage in the financial system. Official lending and deposit rates are changed when deemed necessary to steer the real economy and inflation. Currently inflation is well below the 3% target but we expect it to move above target during spring and the PBoC to raise official rates by 2x 25bp over next six months.

The 3m money market rate is now very close to the upper level in the rate corridor of official rates as the 1-year lending rate is 4.35% and the 3m money market rate now at 4.33%. However, a larger part of the money market funding has moved to short maturities using 7-day and 14-day funding as the rates are much lower here. Hence in order to increase the real cost of money market funding, the PBoC needs to push up the cost of shorter-dated repo rates. The moves of 10bp at a time are very moderate, but it has been enough to push up the cost of borrowing through the bond market. The rise in bond yields is starting to weigh on highly indebted companies, which is why the PBoC is probably careful in not taking too big steps.

The Chinese money market system has evolved gradually over the past couple of years with many different facilities and rates, making it harder to interpret moves by the PBoC. However, the recent moves are most likely targeted at dampening leverage in the financial system, which has gone up over the past year in order to get a higher return in an environment where it has become harder to deliver the promised returns in for example Wealth Management Products. This is because yields have in general declined to low levels. Lower yields drive more leverage creating more financial fragility. It is this leverage that the PBoC is trying to dampen by making it more expensive.

CNY strengthened against USD yesterday from 6.89 to 6.85 following the Fed hike as the USD weakened. This morning CNH is a bit weaker again, moving up to around 6.87 against the USD. The CNH rate is again a bit stronger than CNY (6.874 vs 6.897). Hence companies with export income in CNY can take advantage of this and convert CNY to CNH at a 1-1 rate gaining the spread between the CNH and CNY.

The Bank of England's Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 15 March 2017, the Committee voted by a majority of 8-1 to maintain Bank Rate at 0.25%. The Committee voted unanimously to continue with the programme of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, totalling up to £10 billion. The Committee also voted unanimously to maintain the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion.

As the MPC had observed at the time of the UK's referendum on EU membership, the appropriate path for monetary policy depends on the evolution of demand, potential supply, the exchange rate, and therefore inflation. The Committee expects a slowdown in aggregate demand over the course of this year, as household demand growth declines in reaction to lower real income growth. Official estimates of retail sales have weakened notably, consistent with this expectation, although other indicators of consumer demand such as consumer confidence have been steadier. Measures of overall activity growth have been resilient, with official estimates indicating a fairly steady pace of expansion around historical average rates and business surveys suggesting little change in the near term. It is possible that slowing consumption may be offset to some degree by other components of demand, such as a more supportive net trade position following last year's fall in sterling and the recent pickup in global momentum.

Consistent with prospects for stronger global growth, equity prices have generally risen internationally, and short and long-term interest rates have increased in some economies. The evolution of asset prices has been different in the United Kingdom, however, where market interest rates have fallen and the equity prices of companies with significant domestic exposure – most notably to consumers – have underperformed. Those developments seem somewhat difficult to reconcile with the ongoing resilience of most macroeconomic indicators. In addition, for some time, financial markets and households appear to have had different perspectives on UK economic prospects. This difference cannot persist indefinitely, and the nature and timing of its resolution are likely to be key factors in the MPC's policy assessment.

CPI inflation increased to 1.8% in January, and the MPC expects it to rise above the 2% target over the next few months, before peaking at around 2¾% in early 2018 and drifting gradually back down towards the target thereafter. The projected overshoot entirely reflects the expected effects of the drop in sterling. Pay growth has remained subdued, while measures of inflation expectations remain at levels broadly consistent with the achievement of the inflation target.

Monetary policy cannot prevent either the real adjustment that is necessary as the UK moves towards its new international trading arrangements or the weaker real income growth that is likely to accompany it over the next few years. Attempting to offset fully the effect of weaker sterling on inflation would be achievable only at the cost of higher unemployment and, in all likelihood, even weaker income growth. For this reason, the MPC's remit specifies that, in such exceptional circumstances, the Committee must balance the trade-off between the speed with which it intends to return inflation to the target and the support that monetary policy provides to jobs and activity. At its March meeting, the MPC continued to judge that it remained appropriate to seek to return inflation to the target over a somewhat longer period than usual. Eight members thought that the current stance of monetary policy remained appropriate to balance the demands of the Committee's remit. Kristin Forbes considered it appropriate to increase Bank Rate by 25 basis points.

As the Committee has previously noted, there are limits to the extent that above-target inflation can be tolerated. The continuing suitability of the current policy stance depends on the trade-off between above-target inflation and slack in the economy. The projections described in the February Inflation Report depend in good part on three main judgements: that the lower level of sterling continues to boost consumer prices broadly as expected, and without adverse consequences for expectations of inflation further ahead; that regular pay growth does indeed remain modest, consistent with the Committee's updated assessment of the remaining degree of slack in the labour market; and that the hitherto resilient rates of household spending growth slow as real income gains weaken, without a sufficient offset by other components of demand.

In judging the appropriate policy stance, the Committee will be monitoring closely the incoming evidence regarding these and other factors. At present, the Committee's best collective view is that the central judgements underpinning the February projections remain broadly on track, and so the conditioning assumption underpinning the February projections – that there will be some modest withdrawal of monetary stimulus over the course of the forecast period – remains appropriate. There are risks in both directions. For example, if aggregate demand growth remains resilient, monetary policy may need to be tightened sooner and to a greater degree than that implied path. A more marked slowdown in activity than currently anticipated by the Committee, by contrast, could warrant additional policy support relative to that implied path. Monetary policy can respond, in either direction, to changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target.

Thursday March 16: Five things the markets are talking about

As expected, the Fed raised rates by +25bps, but the outlook of the accompanying statement and Fed Chair Yellen's press conference was very much less 'hawkish' than anticipated.

Absent from the statement was any language indicating an acceleration of interest rate hikes. Market forecast for this year remains at +1.375%, which implies only two more rate hikes in 2017, reversing hints of markets anticipating a potential fourth hike.

Note: The 2018 median forecast was also left unchanged with three more hikes, as the Fed judged near-term outlook as "roughly balanced" and market-based inflation compensation remaining low.

The committee stated inflation was close to their +2% target, but that it was "symmetrical," meaning there may be a willingness to let prices run higher slightly faster.

In reality, the Fed's outlook has not changed much since December; it's the market that needs to adjust to the Fed's rate hike expectations, by again selling the dollar, buying treasuries and stocks.

Investors will now turn their attention to President Trump's fiscal 2018 budget request to congress today - he is proposing deep cuts to most federal agencies to boost defense and security spending.

1. Global equities given the green light

The Fed's move to raise interest rates without accelerating the timeline for future tightening has sent global stocks higher.

In Japan, stocks eked out small gains in choppy trade. The Nikkei rose +0.1%, after trading mostly in negative territory on the back of a stronger yen (¥113.43). Investors ignored the BoJ's no rate policy change (see below).

In Hong Kong, the Hang Seng Index closed at a 19-month high on the Fed 'slow but steady' rate view. Trading up +2.1%, its highest close since Aug. 2015.

In China, the Shanghai Composite Index closed up +0.8%, a three-month high, thanks to sharp gains led by brokerage, manufacturing and banking stocks. Investors seized on the Fed's perceived good news, and chose to ignore the People's Bank of China (PBoC) increase in money-market rates (see below).

In Europe, equity indices are trading sharply higher. Investors are waiting for the BoE monetary policy decision and post-decision comments scheduled in a couple of hours. Banking stocks leading the gains on the Eurostoxx, while energy, commodity and mining stocks are trading notably higher in the FTSE 100.

U.S stocks are set to open in the black (+0.2%).

Indices: Stoxx50 +1.1% at 3,447, FTSE +1.0% at 7,439, DAX +1.0% at 12,134, CAC-40 +0.8% at 5,025, IBEX-35 +1.6% at 10,142, FTSE MIB +1.6% at 20,085, SMI -0.3% at 8,666, S&P 500 Futures +0.2%

2. Oil prices extend gains after drop in U.S. stockpiles

Crude oil prices have extended its gains overnight after data yesterday showed U.S. stockpiles had eased from their record highs.

Brent futures have climbed +47c, or +0.9% to +$52.28 - They had their first increase in seven days yesterday, gaining +1.7%. West Texas Intermediate (WTI) crude is up +39c, or +0.8%, at +$49.25 a barrel. On Wednesday, it rallied +2.4%, its first increase in eight-days.

Data from the EIA yesterday showed U.S stocks falling last week, the first weekly decline after nine straight increases. Crude inventories fell -237k barrels in the week to March 10 - the market was expecting another increase of +3.7m barrels.

Crude bulls are taking solace in the IEA's statement that 'demand should overtake supply in H1 this year' and in OPEC's level of compliance with the cuts.

Note: There are early signs that OPEC's March compliance data will be stronger than the previous two-months.

Ahead of the U.S open, gold (+0.6% to +$1,226.21 per ounce) has hit a one-week high after the Fed signaled a cautious stance on interest rate policy this year, pushing the dollar to its lowest level in a month.

3. Central Banks being kept busy

Overnight, the People's Bank of China (PBoC) also eased off the monetary accommodation in the wake of the Fed's decision, raising rates it charges in open-market operations and on its medium-term lending facility. It's not a shift in policy, but rather reflect changes in markets, firmer domestic economy, and strong credit expansion. The PBoC also strengthened the Yuan in its daily fix by the biggest margin in two-months.

In Japan, the Bank of Japan (BoJ) maintained its policy stance with more upbeat view of longer-run inflation. Officials, as expected, left interest rates (IOER) unchanged at -0.10% and has maintained its 10-yr JGB yield target around +0%. The BoJ has also kept its JGB buying target at about +¥80T per year, while maintaining its overall assessment of their economy to continue its moderate recovery trend.

Earlier this morning, there were no surprises from the Swiss National Bank (SNB) who left their deposit rate at -0.75% and repeated its long-held view that the CHF ($0.9994) is "significantly overvalued."

The Bank of England (BoE) is up next (08:00aam EST) and no changes are expected to monetary policy.

The yield on U.S 10's has backed up +3bps to +2.52% after tumbling -11bps yesterday. Similarly, Aussie yields have fallen -10bps to +2.82% and Kiwi -10bps to +3.26%.

4. Dollar sees red, but the bleeding is slowing

The mighty USD is weaker across the board, particularly against JPY as it fell as much as -140 pips to below the psychological ¥113 handle (¥112.90). Investors remain somewhat cautious ahead of this weekends G20 meeting. What will U.S say about China's yuan policy? Ahead of the U.S session its trading atop of ¥113.40.

The EUR has rallied to above €1.0720, helped by a weaker showing for the Eurosceptic party in the Dutch elections (see below).

Sterling (£1.2269) will take its cues from the Bank of England (BoE) later this morning.

5. Dutch populist vote easily beaten

The Dutch political establishment held on to power, despite losing votes to anti-immigrant nationalists. Prime Minister Rutte's center-right People's Party for Freedom and Democracy gained the most votes, putting him in a strong position to form a new ruling coalition.

The VVD has won 33 seats, eight fewer than in 2012, while the far-right populist Party for Freedom of Wilders is second with 20 seats, five more than the last time but still a stinging setback for Euro populist vote. They will now start a long process of coalition talks.

GOLD (in USD) Surging.

Gold's weakness has paused as the precious metal surged yesterday out of the Fed rate hike. Strong support is given at 1177 (11/01/2017 low). The short-term momentum seems strong and it would not be abnormal to see an increase again towards resistance at 1263 (27/02/2017 high).

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

SILVER (in USD) Strong increase.

Silver's selling pressures have stopped below 17.00. Strong support is given at 16.63 (27/01/2016 low). Hourly resistance is now given at 17.52 (intraday high). Expected to further consolidate,

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

Crude Oil (in USD) Short-squeeze.

Crude oil's bearish pressures continues despite ongoing consolidation due to some shortsqueeze. The commodity had been unable to mount a serious challenge to 55.24 (03/01/2017 high) resistance. Strong support given at 49.61 (08/12/2016) has been broken. Expected to see deeper selling pressures.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 24.82 (13/11/2002) while resistance can now be found at 55.24 (03/01/2017 high).

FTSE hit a series of fresh record highs after 7382/7254 correction was fully retraced and strong bullish acceleration commenced above previous high at 7382.

The rally was inspired by surge in commodity stocks on Fed’s rate hike.

Strong bullish setup of technical studies is complementing positive environment after Fed that would result in further upside action.

The price is eyeing its Fibo 161.8% projection at 7461 as next target, after previous one at 7431 (Fibo 138.2%) was taken out.

Rally could extend towards psychological 7500 barrier and 7511 (Fibo 200% projection of the upleg from 7254 trough).

Former top at 7382 now acts as good support, followed by rising 10SMA at 7352.

Res: 7440, 7461, 7500, 7511
Sup: 7400, 7389, 7382, 7352

News and Events:

The Fed’s three-hike pipe dream

As widely expected, the Federal Reserve increased borrowing rates by 25bps to 0.75%-1%. This is the second interest rate lift in four months and nobody got it wrong. So, no surprise here, however the greenback plunged sharply during Yellen's press conference with rates collapsing along the yield curve. Monetary sensitive 2-year treasury yields as well as the 10-year slid 9bps to 1.30% and 2.48% respectively. In the FX market, the single currency hit 1.0746 against the dollar as investors unwound their long USD positions. Interestingly, the disappointing defeat of Geert Wilders’ Freedom Party provided an additional boost.

So what exactly happened? Just as we wrote yesterday, the market mis-priced the tightening path beyond the March rate hike and when Janet Yellen adopted a dovish tone and wording during the press conference, investors quickly caught on that the three rate hikes promised for 2017 were in fact a pipe dream. Yes, the US economy is still in recovery in that growth is positive, however dark clouds have begun to gather on the horizon. One of the most disconcerting of all - as also mentioned in our report yesterday - is the negative trend in real wage growth. In February, data showed that real wages contracted 0.5% compared to a year ago. This is a major issue as consumer spending accounts for roughly 70% of the US GDP. Moreover, less disposable money for consumers means less price pressure, which translates into falling consumer prices, which ultimately means that the Fed will have to increase rates slowly if not taking a break during the process altogether.

The greenback is staring down the barrel of some complicated times ahead as investors slowly switch to risk-on mode and move towards higher yielding assets. In the short-term, EUR/USD will continue to suffer from the political uncertainty stemming from the French election. CHF and JPY have room for further appreciation against the USD.

SNB maintains course

Unsurprisingly, the Swiss central bank has decided to steer straight ahead, holding interest rates unchanged at -0.75%. Even though defending the franc is a clear SNB priority, rates will not be pushed much lower out of fear of boosting capital outflows. Recent strong intervention from the Swiss central bank pushed the EURCHF towards 1.0800 before bouncing lower.

These periods of uncertainty of having more margins to defend the Swiss franc seem to define the SNB’s strategy as the currency is still largely seen as overvalued.

In terms of data, retail sales saw a drop in January at -1.4% y/y, while Switzerland’s Q4 2016 printed below expectations at 0.6%.

The SNB’s wait-and-see approach is clearly set to continue as Europe remains on tenterhooks despite Geert Wilder’s Populist Party defeat. In the short-term, it is likely that we will see further euro weakness against the CHF.

Today's Key Issues (time in GMT):

• 4Q Labour Costs YoY, last -0,50% EUR / 08:00
• mars.16 SNB Sight Deposit Interest Rate, exp -0,75%, last -0,75% CHF / 08:30
• mars.16 SNB 3-Month Libor Lower Target Range, exp -1,25%, last -1,25% CHF / 08:30
• mars.16 SNB 3-Month Libor Upper Target Range, exp -0,25%, last -0,25% CHF / 08:30
• Feb Unemployment Rate, exp 7,30%, last 7,30% SEK / 08:30
• Feb Unemployment Rate Trend, last 6,90% SEK / 08:30
• Feb Unemployment Rate SA, exp 6,80%, last 6,80% SEK / 08:30
• mars.16 Deposit Rates, exp 0,50%, last 0,50% NOK / 09:00
• Feb CPI MoM, exp 0,40% EUR / 10:00
• Feb F CPI YoY, exp 2,00%, last 2,00% EUR / 10:00
• Bank of Italy's Visco Speaks in Milan on EU Treaties EUR / 10:00
• Feb F CPI Core YoY, exp 0,90%, last 0,90% EUR / 10:00
• mars.15 FGV CPI IPC-S, exp 0,34%, last 0,34% BRL / 11:00
• mars.16 Benchmark Repurchase Rate, exp 8,00%, last 8,00% TRY / 11:00
• mars.16 Overnight Lending Rate, exp 9,25%, last 9,25% TRY / 11:00
• mars.16 Overnight Borrowing Rate, exp 7,25%, last 7,25% TRY / 11:00
• mars.16 Late Liquidity Lending Rate, exp 11,75%, last 11,00% TRY / 11:00
• mars.10 Foreigners Net Bond Invest, last -$99m TRY / 11:30
• mars.10 Foreigners Net Stock Invest, last $134m TRY / 11:30
• mars.16 Bank of England Bank Rate, exp 0,25%, last 0,25% GBP / 12:00
• Mar BOE Asset Purchase Target, exp 435b, last 435b GBP / 12:00
• Mar BOE Corporate Bond Target, exp 10b, last 10b GBP / 12:00
• Jan Int'l Securities Transactions, last 10.23b CAD / 12:30
• Feb Housing Starts, exp 1264k, last 1246k USD / 12:30
• Feb Housing Starts MoM, exp 1,40%, last -2,60% USD / 12:30
• Feb Building Permits, exp 1268k, last 1285k, rev 1293k USD / 12:30
• Feb Building Permits MoM, exp -1,90%, last 4,60%, rev 5,30% USD / 12:30
• mars.11 Initial Jobless Claims, exp 240k, last 243k USD / 12:30
• mars.04 Continuing Claims, exp 2050k, last 2058k USD / 12:30
• Mar Philadelphia Fed Business Outlook, exp 30, last 43,3 USD / 12:30
• mars.10 Gold and Forex Reserve, last 393.4b RUB / 13:00
• mars.12 Bloomberg Consumer Comfort, last 50,6 USD / 13:45
• Mar Bloomberg Economic Expectations, last 50 USD / 13:45
• Jan JOLTS Job Openings, exp 5562, last 5501 USD / 14:00
• Revisions: Job Openings and Labor Turnovers USD / 14:00
• ECB's Praet speaks in Brussels EUR / 18:00
• Feb BusinessNZ Manufacturing PMI, last 51,6 NZD / 21:30
• 4Q BoP Current Account Balance, exp -$12.00b, last -$3.40b INR / 22:00
• Feb Foreign Direct Investment YoY CNY, exp -4,20%, last -9,20% CNY / 23:00
• Feb Industrial Production YoY, exp 1,30%, last 2,30% RUB / 23:00
• Feb Tax Collections, exp 93244m, last 137392m BRL / 23:00

The Risk Today:

EUR/USD is strengthening. The pair is lying in an uptrend channel. Key resistance is still 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 is moving up but the pair remains around support given at 1.2254 (19/01/2017 low). The road is still wide-open for further decline. Hourly resistance is given at 1.2300 (05/03/2017 high). 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 has failed to break key resistance given at 115.62 (19/01/2016 high). Hourly support given at 113.56 (06/03/2017 low) has been broken. Expected to push lower. 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).

USD/CHF has exited uptrend channel. Hourly support given at 1.0075 (13/03/2017 low) has been broken. Key resistance can be found at a distance at 1.0344 (15/12/2016 high). Expected to consolidate. In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

EUR/CHF Moving sideways between 1.0700 and 1.0750.

EUR/CHF's renewed bearish pressures continues to increase. The medium-term pattern suggests us to see continued bearish pressures towards key support that can be found at 1.0623 (24/06/2016 low). Temporary surges seem the new normal for the CHF.

In the longer term, the technical structure is mixed. Resistance can be found at 1.1200 (04/02/2015 high). Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

EUR/JPY Bearish pressures increase.

EUR/JPY's demand has ended. Hourly support lies at 121.13 (intraday low). Strong resistance is given at a distance at 123.31 (27/01/2017 high). Expected to show further decrease.

In the longer term, the technical structure validates a medium-term succession of lower highs and lower lows. As a result, the resistance at 149.78 (08/12/2014 high) has likely marked the end of the rise that started in July 2012. Strong support at 94.12 (24/07/2012 low) looks nonetheless far away.

EUR/GBP Moving sideways.

EUR/GBP is trading mixed. Selling pressures increase around 0.8800. Key resistance is given at 0.8854 (15/01/2017 high). Yet, the road is wide-open for further weakness as there is no close support.

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level.