Sample Category Title

GBP/USD - 1.2270

Original strategy :

Buy at 1.2140, Target: 1.2250, Stop: 1.2105

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2220, Target: 1.2320, Stop: 1.2185

Position : -

Target :  -

Stop : -

As cable rallied again after finding renewed buying interest at 1.2178 yesterday, suggesting the rise from 1.2109 low is still in progress for retracement of recent decline, above 1.2310 resistance would extend gain to 1.2335-40 (61.8% Fibonacci retracement of 1.2479-1.2109), however, previous support at 1.2347 should turn into resistance and limit cable’s upside, bring retreat later.

In view of this, we are looking to buy cable on pullback as 1.2220-30 should limit downside and bring another rise. Only below said support at 1.2178 would abort and signal the rebound from 1.2109 has possibly ended, risk weakness to 1.2145-50 first.

EUR/USD - 1.0723

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.0731

Kijun-Sen level                  : 1.0677

Ichimoku cloud top             : 1.0657

Ichimoku cloud bottom      : 1.0624

New strategy  :

Buy at 1.0675, Target: 1.0775, Stop: 1.0640

Position : -

Target :  -

Stop : -

As the single currency found renewed buying interest at 1.0600 yesterday and has rallied, reviving our bullishness for recent erratic upmove from 1.0493 low to extend further gain to 1.0755, break there would encourage for headway to 1.0775-90 but reckon resistance at 1.0799 would limit upside and price should falter well below resistance at 1.0829, bring retreat later.

In view of this, would not chase this rise here and we are looking to buy euro on pullback as the Kijun-Sen (now at 1.0677) should limit downside. Below the upper Kumo (now at 1.0657) would signal top is formed, bring weakness to 1.0620-25 but said support at 1.0600 should remain intact.

Market movers today

The Bank of England's (BoE) March meeting (one of the small meetings without updated projections or a press conference) ends today and we do not expect it to make any policy changes. We expect the BoE to maintain the Bank Rate at 0.25% and keep its neutral stance by repeating that it could move in ‘either direction'. This is widely expected, so we do not expect big movements in the GBP or UK yields.

We expect Norges Bank to stay on hold with no major changes in signals about the rate path. The growth outlook is better than was expected at the December meeting. The regional network survey indicated growth of around 2.0%, that unemployment has fallen further than expected and that employment appears to be rising more quickly than expected.

In Sweden, the labour force survey is due today, including the unemployment rate, employment and hours worked, which is widely expected to demonstrate continued strong employment growth and an unemployment rate posing as white noise (due to the unintelligible on/off influx of migrants into the labour force).

Selected market news

Not even a blizzard could keep the Fed and Janet Yellen from delivering the much anticipated 25bp rate hike yesterday. Despite the tightening of monetary policy, equities extended their gains from the early hours, bond yields pushed lower and USD lost some ground, as the Fed did not signal that the number of rate hikes expected for 2017 and 2018 has increased. This caused some relief in the market that the Fed was not going to increase the hiking cycle going forward. See more in our FOMC review (http://bit.ly/2mPRDdb).

As expected, the Bank of Japan (BoJ) kept its monetary policy unchanged at its two-day meeting ending this morning, saying that it will keep its target for the short-term policy interest rate unchanged at -0.1% and continue to purchase Japanese government bonds (JGBs) so yields on 10Y JGB remain around 0%. Despite general upward pressure on US and global yields, which clearly increases the pressure on the BoJ's willingness to maintain its current yield curve control policy, there were little changes in the statement, and no hints that the BoJ is considering raising its 0% target on the 10-year yields on JGB.

As the results of the Dutch election keep ticking in, it seems more apparent that Prime Minister Mark Rutte's VVD once again will be the largest party in the Netherlands with 32 of the parliament's 150 seats, according to Reuters. What might be even more important is the fact that Geert Wilders' PVV only seems to have claimed 19 of the seats in parliament. Albeit an increase from the previous election, it is less than most polls suggested and a lot of people ‘feared'. See more here.

The gains in the US have spilled into the morning session in Asia with major indices up and especially Hang Seng having increased by more than 1% at the time of writing. This bodes well for a strong European opening for both Fixed Income and equities.

USD/JPY - 113.33

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 113.21

Kijun-Sen level                  : 114.86

Ichimoku cloud top             : 114.84

Ichimoku cloud bottom      : 114.81

New strategy  :

Sell at 114.00, Target: 113.00, Stop: 114.35

Position :  -

Target :  -

Stop : -

Although the greenback tumbled today and dropped below 113.00 level, lack of follow through selling and current rebound suggest consolidation above support at 112.90 would be seen and recovery to 113.55-60 cannot be ruled out, however, reckon 114.00-05 would limit upside and bring another decline later. A break of said support at 112.90 would extend the fall from 115.51 to 112.76-77, then towards 112.50 but reckon downside would be limited to 112.00-10, bring rebound later.

In view of this, we are looking to sell dollar on recovery as 114.00 should limit upside. Only above previous support at 114.48-52 would abort and signal low is formed instead, risk a stronger rebound to 114.89 resistance first, break there would signal the retreat from 115.51 has ended, then gain to 115.20 resistance would follow.

'Thank you, Janet Yellen,' this is today's market message to the U.S. Fed Chair.

The greenback is falling while everything else is in green today after the Federal Reserve delivered on its promise to hike rates by 25 basis points. While this move was widely expected, many market participants were positioned for a more hawkish language and an upgrade in economic projections which didn't happen.

Yesterday's hike can be described as a 'dovish hike' or 'neutral' at best. The little tweaks in the statement and economic projections suggest that the economy is still moving on the right path, but there's no evidence of overheating economy. Inflation forecasts remained unchanged at 1.9% for 2017, the GDP forecast for 2018 was revised slightly higher by 0.1%, and most importantly the dots didn't move much, indicating that only two rate hikes remain for the rest of the year.

Minneapolis Fed President Neel Kashkari who joined the Fed voting members last year surprised us with his dissent to raising rates, as opposed to 2015 and 2016 where decisions were unanimous.

Thus, markets concluded that tightening in June isn't a done deal and four rate hikes for 2017 are far from reach.

The U.S. dollar took a hit after the decision, tumbling sharply against its major peers as U.S. Treasury yields fell across the yield curve. Apparently, this disappointed dollar bulls but no doubt cheered equity investors who started to become worried most recently by the attractiveness of fixed income markets. One component for a pullback in equities is behind us for now, at least on the short run.

The Bank of Japan monetary policy meeting was a non-event today, as the Central Bank kept interest rates unchanged at -0.1%, asset purchases at ¥80 trillion, and ten-year bond yields capped near zero. However, the Bank of England meeting is likely to be more interesting as we get closer to a 2-year journey which Marc Carney described as ‘unclear', so there will be twists and turns along the way. When looking at economic data, nothing is exciting other than the drop in unemployment rate. Manufacturing, services, and construction sectors all showed signs of cooling. While no changes are expected in policy, the pound will still move on any shift between the hawks and doves.

Netherlands says no to populism

The EUR is benefiting from the Dutch election exit polls which are pointing towards a clear victory for the People's Party for Freedom and Democracy led by current Prime Minister Mark Rutte. The bigger question now is how the Dutch vote will impact the French elections. If today's election results are an indication that the populist spread will stop in the Netherlands, this might provide a further boost to the Euro which was impacted heavily by the change in political environment.

Sunrise Market Commentary

• Rates: Fed hikes rates, but markets wanted more
  The Fed raised its policy rate by 25 bps to 0.75%-1%, but the median rate projections for 2017-2019 and the long run remained broadly unchanged. While Yellen indicated that the Fed would step up its tightening pace, markets were positioned for a more hawkish message. The US yield curve shifted up to 12.5 bps lower, the belly outperforming.
• Currencies: Dollar declines as Fed hikes rates. Euro gains on Dutch election result
  The dollar ceded ground across the board after the FOMC decision. The market was apparently positioned for a more aggressive Fed signal. The euro also gained as there is no role for Wilders in the formation of a new Dutch government. How far will the post-FOMC repositioning go? We assume key USD support levels to hold.

The Sunrise Headlines

• US equities rallied after the Fed hiked rates, but without turning hawkish towards the near future. Overnight, Asian stock markets receive a boost with Japan underperforming on the back of a lower USD/JPY
• The Fed said it would raise short-term interest rates and keep lifting them this year, moving the central bank into a new, more aggressive phase of draining easy money from the financial system as the economy improves.
• The BoJ kept monetary policy on hold as it battles to reach 2% inflation. Short-term interest rates will stay at -0.1%, 10y bond yields will be capped near 0%, and asset purchases remain at about ¥80T/year
• Rutte looks certain to form the Netherlands next government, with his party projected to secure a clear victory over rivals including populist challenger Wilders. A scattered political landscape will make it hard to form a coalition.
• China's central bank has raised interbank interest rates in a move designed to limit investors' interest in moving money from China to the US following the Federal Reserve's interest rate rise overnight.
• Australia's jobless rate climbed to a 13-month high in February and employment unexpectedly fell, a risk to the outlook for wage growth and inflation that will likely keep open the possibility of another interest rate cut.
• Today's eco calendar contains final EMU CPI, US initial jobless claims, Philly Fed Business Outlook and auctions in Spain & France. The Swiss National Bank, Norges Bank and Bank of England hold policy meetings.

Currencies: Dollar Declines As Fed Hikes Rates. Euro Gains On Dutch Election Result

Dollar declines as Fed hikes policy rate

Yesterday, the dollar drifted sideways ahead of the FOMC decision. The Fed as expected raised its policy rate by 25 bps. Yellen indicated a further gradual policy normalisation as the Fed meets its objectives. The market was apparently positioned for more aggressive communication. The dollar ceded ground across the board. Later, the euro found support as the first Dutch exit-polls made clear that the populist PVV party has no role in the formation of a new government. EUR/USD closed the session at 1.0734, the highest level in more than a month. USD/JPY finished the session at 113.38 (from 114.75 on Tuesday).

Overnight, Asian markets joined the post-Fed trends from the US. The dollar holds near the recent lows. The decline of core bond yields and of the dollar supports equities. Regional indices gain about 1%. Commodities/commodity related assets perform well. Japan underperforms on USD/JPY weakness (currently in the 113.25 area). The BOJ left its policy rate (-0.1%) and the target level for the 10y government bond yield (0.0%) unchanged. The market reaction was very limited. Eco data in Australia (labour market report) and in New-Zealand (Q4 GDP) disappointed. The Aussie (AUD/USD 0.7690) and the kiwi dollar (NZD/USD 0.70 area) returned a small part of the post-Fed gains. EUR/USD hovers in the 1.0720/45 area this morning, maintaining the post-Fed gain.

Today, the eco calendar is moderately interesting. In EMU, the final February CPI will be published. In the US, the calendar is better filled with the housing starts, building permits, jobless claims and the Philly Fed business outlook. Especially the claims and the Philly Fed survey might have some intraday impact on USD trading. Claims are expected to decline slightly to 240 000. The Philly Fed is expected to decline to 30 from an extremely high 43.3. Recently, confidence indicators remained at fairly strong levels and we expect this to remain the case. The key question is whether markets will continue their soft reaction to the Fed's communication. We are a bit surprised by the substantial decline of US bond yields, even as Yellen suggested that, considering the eco developments, the Fed policy might be relatively close to the 'dot-path'. The Fed also didn't assume much fiscal easing in its assessment. The day-to-day momentum is USD negative, but if US eco data remain OK, the correction doesn't have to go far. EUR/USD might still feel some support from the outcome of the Dutch elections this morning, but we assume that this effect will peter out very soon

EUR/USD 1.0874 resistance remains the line in the sand with intermediate resistance at 1.0829. We maintain the view that a sustained break of EUR/USD above this area will be difficult, even after yesterday's Fed message. The US/German (EMU) interest rate differential remains at an absolute high level. Especially at the short end of the curve, the differential might even re-widen after yesterday's easing. The fundamentals/interest rate differentials are in theory also supportive for USD/JPY, but of late the momentum/technical picture was not really convincing. We maintain the working hypothesis that the 111.60 range bottom should hold.

EUR/USD rebounds on after FOMC decision and on pro-European outcome of Dutch elections

EUR/GBP

BoE to keep wait-and-see approach

Yesterday, sterling showed again some sharp swings at the onset of the European session. This time, the UK currency jumped higher, without an obvious driver. Mid-morning, the UK labour market report was fairly strong but sterling traders focused on disappointing wage growth. Sterling reversed part of the earlier gains against the euro and the dollar. After the Fed decision, sterling mostly followed the USD moves. Cable rebounded to the 1.23 area. EUR/GBP didn't profit much from the rise in EUR/USD. The pair closed the session at 0.8733.

Today, the BOE will announce its policy decision and published the meeting minutes. No policy change is expected. Given the recent softening in some UK data, ongoing modest price rises and the Brexit negotiations coming closer, the BOE will feel comfortable with its wait-and-see approach. In theory, this is modestly sterling negative. However, the recent price action suggest that the recent decline of sterling needs a breather. So, we don't expect the BoE meeting to change the broader picture for sterling for the better. Sterling sentiment softened of late. EUR/GBP cleared the 0.8592 resistance, which improved the technical short-term EUR/GBP picture. We don't expect a sustained EUR/USD rebound , but a combination of temporary euro consolidation and ongoing sterling softness as the Brexit negotiations are nearing, might trigger some more ST EUR/GBP gains. The 0.8854 correction top is the next key resistance. The nervous swings over the previous days suggest that a clear break beyond 0.8854 will be difficult without important news.

EUR/GBP; sterling shows some nervous swings as formal start of Brexit procedure is nearing

Download entire Sunrise Market Commentary

Short term Elliott Wave view in EURJPY suggests that the decline to 118.18 on 2/24 ended Primary wave ((4)). Primary wave ((5)) is currently in progress higher and the rally from Primary wave ((4)) low at 118.18 is unfolding as an ending diagonal Elliott wave structure where Intermediate wave (1) ended at 122.88. The subwaves of Intermediate wave (1) takes the form of a zigzag Elliott wave structure where Minor wave A ended at 121.19, Minor wave B ended at 119.97, and Minor wave C of (1) ended at 122.88.

Intermediate wave (2) pullback is unfolding as as a double three structure where Minor wave W ended at 121.59, Minor wave X ended at 122.06 and Minor wave Y of of (2) is proposed complete at 121.16. While pullbacks stay above there, and more importantly above 118.18, expect pair to resume the rally higher, provided that pivot at 118.18 stays intact. If pair breaks below 121.16 here, then it’s still within Minor wave Y of (2) and can open extension lower towards 120.45 – 120.75 area before pair turns higher again. We don’t like selling the proposed pullback and favor the longside as long as pivot at 118.18 low stays intact.

EURJPY 1 Hour Chart

For the 24 hours to 23:00 GMT, the AUD rose 1.89% against the USD and closed at 0.7701.

LME Copper prices rose 1.8% or $103.0/MT to $5850.0/MT. Aluminium prices rose 0.7% or $12.0/MT to $1863.0/MT.

In the Asian session, at GMT0400, the pair is trading at 0.768, with the AUD trading 0.27% lower against the USD from yesterday's close, after the release of a downbeat Australian jobs report.

Early morning data indicated that Australia's seasonally adjusted unemployment rate rose to 5.9% in February, hitting its highest level in thirteen months, as the total number of people with jobs fell by 6.4K last month, while the market forecasted a rise of 16.0K. The unemployment rate was expected to remain steady at 5.7%. Further, the nation's consumer inflation expectations advanced 4.0% in March, compared to a gain of 4.1% in the prior month.

The pair is expected to find support at 0.7588, and a fall through could take it to the next support level of 0.7495. The pair is expected to find its first resistance at 0.7746, and a rise through could take it to the next resistance level of 0.7811.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR rose 1.15% against the USD and closed at 1.0730, after Dutch election exit polls suggested that the country's Prime Minister, Mark Rutte's Liberals were on course for a resounding victory over anti-Islam and anti-EU Geert Wilders, thus easing concerns of a wave of populism in the currency bloc.

The greenback nursed losses against its key peers, following a less hawkish policy statement by the US Federal Reserve (Fed), since it did not suggest an acceleration in the pace of interest rate hikes as some experts had predicted.

The US Fed, at its latest monetary policy meeting, lifted the key interest rate by a quarter-point to a range of 0.75% to 1.0%, a move prompted by steady economic growth, improving labour market and a recent uptick in inflation. In a post-meeting statement, the Fed Chairwoman, Janet Yellen, did not signal an intent to increase rates more than three times this year and stressed that the central bank remains data-dependent. However, decision-makers see slightly faster pace of interest rate hikes in 2019, while projections for 2018 and the longer-run remain unchanged. Meanwhile, officials maintained the US economic growth forecast at 2.1% for 2017, but slightly raised the projection to 2.1% from 2.0% for 2018.

Ahead of the rate announcement, investors had been met by a raft of economic releases. The US consumer price index (CPI) recorded an unexpected rise of 0.1% on a monthly basis in February, confounding market expectations for a flat reading. In the prior month, the CPI had registered a rise of 0.6%.

Meanwhile, on an annual basis, the CPI advanced 2.7% in February, in line with market expectations and following a gain of 2.5% in the prior month. Moreover, the nation's advance retail sales rose 0.1% on a monthly basis in February, recording its smallest increase in six months. Advance retail sales had registered a revised rise of 0.6% in the prior month. Also, the nation's NAHB housing market index surprisingly jumped to a level of 71.0 in March, surging to its highest level in almost twelve years, amid actions on regulatory reforms by the US President. Markets anticipated the index to remain steady at a level of 65.0.

In other economic news, the US business inventories rose 0.3% in January, meeting market expectations and following a rise of 0.4% in the prior month. Further, the nation's mortgage applications increased 3.1% in the week ended 10 March 2017, after recording a gain of 3.3% in the prior week.

In the Asian session, at GMT0400, the pair is trading at 1.0721, with the EUR trading 0.08% lower against the USD from yesterday's close.

The pair is expected to find support at 1.0636, and a fall through could take it to the next support level of 1.0551. The pair is expected to find its first resistance at 1.0776, and a rise through could take it to the next resistance level of 1.0831.

Going ahead, investors will focus on the Euro-zone's CPI data for February, scheduled to release in a few hours. In the US, housing starts and building permits, both for February, coupled with initial jobless claims data, will keep investors on their toes. Market participants will also have their eyes on the Trump administration's fiscal 2018 federal budget plan, due later today.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 1.13% against the USD and closed at 1.2288, after UK's ILO unemployment rate surprisingly dropped to 4.7% in the November-January 2017 period, reaching its lowest level since 1975, while markets anticipated it to remain steady at 4.8%.

However, the nation's average earnings including bonus advanced less-than-expected by 2.2% on an annual basis in the three months ended January, underlining concerns that consumer spending will be eroded as inflation rises and making it more unlikely that the Bank of England will hike interest rates in the near term. Investors had envisaged average earnings to rise 2.4%, following a gain of 2.6% in the October-December 2016 period.

In the Asian session, at GMT0400, the pair is trading at 1.2262, with the GBP trading 0.21% lower against the USD from yesterday's close.

The pair is expected to find support at 1.2173, and a fall through could take it to the next support level of 1.2085. The pair is expected to find its first resistance at 1.2329, and a rise through could take it to the next resistance level of 1.2397.

Trading trends in the GBP today are expected to be determined by the Bank of England's interest rate decision, scheduled later today. Markets broadly expect the central bank to keep monetary policy unchanged.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.