Sample Category Title

Daily Pivots: (S1) 120.38; (P) 120.69; (R1) 121.16; More...

EUR/JPY is staying in tight range below 121.32 and intraday bias stays neutral. We're holding on to the view that corrective fall from 124.08 has completed at 119.32 already. Above 121.32 will turn bias to the upside for 123.30 resistance. Break of 123.30 will likely extend the whole medium term rise from 109.20 through 124.08 high. Below 119.32 will bring another fall. In that case, downside should be contained by 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39) and bring rebound.

In the bigger picture, price actions from 109.20 medium term bottom are seen as part of a medium term corrective pattern from 149.76. There is prospect of another rise towards 126.09 key resistance level before completion. But even in that case, we'd expect strong resistance between 126.09 and 141.04 to limit upside, at least on first attempt. Nonetheless, decisive break of 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39) will argue that rise from 109.20 is completed and turn outlook bearish for 61.8% retracement at 114.88 and below.

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Daily Pivots: (S1) 141.38; (P) 142.05; (R1) 143.10; More...

With 140.67 minor support intact, intraday bias in GBP/JPY remains mildly on the upside for 144.77 resistance. Rise from 136.44 is seen as the second leg of the consolidation pattern from 148.42. Break of 144.77 will target a test on this 148.42 high. On the downside, below 140.67 minor support will turn bias back to the downside and extend the fall fro 144.77 through 138.53.

In the bigger picture, price actions from 122.36 medium term bottom are still seen as a corrective pattern. Main focus is on 38.2% retracement of 195.86 to 122.36 at 150.42. Rejection from there will turn the cross into medium term sideway pattern with a test on 122.36 low next. Though, sustained break of 150.42 will extend the rebound towards 61.8% retracement at 167.78.

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Daily Pivots: (S1) 1.3778; (P) 1.3825; (R1) 1.3849; More...

Intraday bias in EUR/AUD remains on the downside as fall from 1.4721 continues. It's seen as part of the larger down trend from 1.6587 and should target 1.3671 key support level next. At this point, we'd still expect strong support around 1.3671 to bring rebound. On the upside, above 1.3888 minor resistance will turn bias neutral first. Firm break of 1.4025 support turned resistance will indicate short term bottoming and turn focus back to 1.4289 resistance.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Deeper fall could be seen but, we'd expect strong support above 1.3671 to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.4721 resistance will indicate completion of such correction and outlook bullish for retesting 1.6587 high. However, sustained break of 1.3671 will invalidate our bullish view and would turn focus back to 1.1602 long term bottom.

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Daily Pivots: (S1) 0.8448; (P) 0.8489; (R1) 0.8523; More...

With 0.8550 minor resistance intact, intraday bias in EUR/GBP remains mildly on the downside. Fall from 0.8851 is seen as the third leg of the corrective pattern from 0.9304. Deeper decline should be seen to 0.8303 low next. Break will extend the fall from 0.9304 to 0.8116 key cluster support level. On the upside, above 0.8550 minor resistance will turn bias neutral first. But outlook will stay bearish as long as 0.8643 resistance holds.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).

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Daily Pivots: (S1) 1.0633; (P) 1.0654; (R1) 1.0664; More...

EUR/CHF is staying in tight range of 1.0631/0706 and intraday bias remains neutral first. With 1.0706 resistance intact, outlook stays mildly bearish. Break of 1.0620 key support level will extend the larger decline from 1.1198 to 1.0485 fibonacci level. However, considering bullish convergence condition in 4 hour MACD, break of 1.0706 minor resistance will raise the chance of medium term reversal. In that case, focus will be turned back to 1.0749 and then 1.0897 key resistance.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Such correction is still in progress. Sustained trading below 38.2% retracement of 0.9771 to 1.1198 at 1.0653 will target 50% retracement at 1.0485. On the upside, break of 1.0897 resistance is needed to confirm completion of such fall. Otherwise, outlook will stay bearish.

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Market movers today

We are facing an interesting data calendar with several important releases amid markets digesting Federal Reserve Chair Janet Yellen's comments yesterday on the US monetary policy outlook.

In the US, retail sales figures for January are released. Private consumption continues to be the main growth driver and given the very high level of consumer confidence we expect retail sales rose 0.3% m/m in January, which would indicate that private consumption got off to a great start in 2017. Also today, we get CPI figures for January which we expect rose 0.3% m/m pushed up not only by core CPI but also by higher energy and food prices, implying an increase in the inflation rate to 2.4% y/y in January from 2.1% y/y in December. CPI core inflation is expected to fall to 2.1% y/y from 2.2% y/y, which means the Fed can afford to stay patient before hiking again. Also, Federal Reserve Chair Janet Yellen will testify before the House of Financial Services Committee (after she testified before the Senate Banking Committee yesterday, see ‘Selected Market news' below).

In the UK the labour market report for December is due. We expect the unemployment rate (3M avg.) rose to 4.9% from 4.8%, as the very low print in September drops out of the threemonth average. We estimate the annual growth in average weekly earnings ex bonuses (3M average) fell to 2.6% y/y in December from 2.7% y/y in November.

In the Scandies, the big event of the day is the Riksbank monetary policy meeting in Sweden. For more info see ‘Scandi Markets' on page 2.

Selected market news

In yesterday's semi-annual monetary policy testimony to US Congress, Fed chair Janet Yellen repeated the message from the January FOMC meeting that the Fed expects to raise rates over the coming year if economic developments remain on track. Yellen said it would be ‘unwise' to tighten policy too late as it could require an undesirable tightening pace at a later stage at a larger cost; a message delivered at several previous occasions.

Importantly, Yellen repeated that the Fed wants more clarity about the fiscal policy outlook and that the Fed still has not yet taken into account possible policy changes as this would be ‘speculation'. Yellen did, however, say that fiscal easing is ill timed given unsustainable public finances and an output gap which is almost closed. As a result, Yellen's comments seem to confirm markets in the view that fiscal easing will lead to tighter monetary policy than in the baseline case outlined by Yellen. While this has been the message since the December hike, this, alongside comments on the discussion on balance sheet reduction, weighed on US FI while the USD rallied on higher short-end US rates.

hike in June.When should we expect the next Fed hike? Yellen specifically stated: "At our upcoming meetings, the Committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate". As her comments did not refer to a rate hike ‘soon' (but upcoming meetings) and referred to an adjustment (singular) we still think a March hike is unlikely. In our view, a May hike is still in play but our base case remains a hike in June.

In Norway, the quarterly consumer confidence release from Finance Norway revealed another solid rise. Together with improved purchasing power from lower inflation, we expect higher optimism among consumers to feed into higher private consumption this year.

Trump campaign staff alleged to be in contract w/ Russian security officials

Asia Mid-Session Market Update: Indices rise again as Yellen threads the needle on gradual rate increase expectations; Australia Consumer Confidence further builds the case for higher rates; Trump campaign staff alleged to be in contract w/ Russian security officials

US Session Highlights

(US) JAN PPI FINAL DEMAND M/M: 0.6% V 0.3%E; Y/Y: 1.6% V 1.5%E

(US) Fed's Lacker (hawk, non-voter): significantly higher rates are warranted; next hike should come sooner rather than later - comments in Delaware

(US) Fed Chair Yellen: waiting too long to tighten would be unwise; more policy adjustments will likely be needed if the economy remains on track - semi-annual testimony

(US) Fed Chair Yellen: ultimately want to shrink our balance sheet, will eventually be substantially smaller, but can't put a number on it - Senate testimony Q&A

GM rises on talk of offloading European unit

US markets on close: Dow +0.5%, S&P500 +0.4%, Nasdaq +0.3%

Best Sector in S&P500: Financials

Worst Sector in S&P500: Utilities

Biggest gainers: COTY +4.9%, GM +4.8%, ENDP +4.6%, UA +4.1%, NFX +4.0%

Biggest losers: FLIR -6.2%, SCG -4.5%, ALB -3.8%, MU -3.3%, APA -2.9%

At the close: VIX 10.7 (-0.3pts); Treasuries: 2-yr 1.24% (+3bps), 10-yr 2.47% (+4bps), 30-yr 3.06% (+3bps)

US movers afterhours

SEDG: Reports Q2 $0.32 v $0.31e, R$111.5M v $115Me; Guides Q3 Rev $110-120M v $110Me, gross margin 31-33%; +6.2% afterhours

CCS: Reports Q4 $0.71 v $0.67e, R$292.4M v $273Me; Guides initial FY17 Home deliveries 3.0-3.3K, Rev $1.0-1.2B v $1.09Be; +3.9% afterhours

PG: Reportedly Trian (Peltz) has built a $3.5B position(1.5% stake); have not contacted PG management yet - CNBC; +3.0% afterhours

SIRI: Berkshire Hathaway discloses stake; +2.5% afterhours

PBPB: Reports Q4 $0.15 v $0.07e, R$102.4M v $102Me; Guides initial FY17 $0.45-0.47 v $0.45e, Company-operated SSS flat y/y; +2.4% afterhours

DVN: Reports Q4 $0.25 ex-items v $0.19e, R$3.35B v $2.76Be; +1.0% afterhours

AIG: Reports Q4 $0.84 (adj for $3.56 in prior year adverse reseve) v $1.24e, Commercial insurance net premiums written $3.70B v $4.64B y/y; -4.5% afterhours

LC: Reports Q4 -$0.02 v -$0.03e, R$129.2M v $122Me; Guides Q1 Net -$43M to -$38M, R$117-122M v $135Me, adj EBITDA -$10M to -$5M; -6.8% afterhours

FOSL: Reports Q4 $1.03 v $1.21e, R$959M v $972Me; Guides Q1 GAAP -$0.25 to -$0.10 v +$0.07e, Rev -11.5 to -8% y/y v $654Me; -14.8% afterhours

Politics

(US) Members of Donald Trump's presidential campaign and his other associates said to have had repeated contact with members of Russian intelligence in the year before the election - NY Times

(US) President Trump hopes to pick new National Security Adviser by the end of the week - press citing WH spokesperson

Asia Key economic data:

(CN) CHINA JAN NEW YUAN LOANS (CNY): 2.03T V 2.44TE (2nd highest on record)

(CN) CHINA JAN AGGREGATE FINANCING (CNY): 3.74T V 3.00TE

(CN) CHINA JAN M2 MONEY SUPPLY Y/Y: 11.3% V 11.3%E; M1 MONEY SUPPLY Y/Y: 14.5% V 20.2%E

(AU) AUSTRALIA FEB WESTPAC CONSUMER CONFIDENCE INDEX: 99.6 V 97.4 PRIOR, M/M: 2.3% V +0.1%PRIOR

(KR) South Korea Jan Unemployment Rate: 3.6% v 3.5%e

Asia Session Notable Observations, Speakers and Press

Asia equity indices remaining bid, tracking the rebound in the 2nd half of trade on Wall St. Fed Chair Yellen's congressional testimony, though somewhat hawkish, did not sway markets sufficiently that the Fed is gearing up for a March rate hike. Fed funds futures still see that probability below 20% and the outlook for higher rates in May at 40%. US rates did tick higher while USD advanced in US hours.

Nikkei225 among the best performing indices again as USD/JPY pair solidifies its gains above 114. Other USD majors in narrow ranges in the absence of key data in the Asia session.

Political controversy for US President Trump continues its steady trickle with NY Times reporting that campaign staff and other associates were in contract with members of Russian intelligence in the year before the election. FBI investigation is ongoing, and neither the alleged campaign sources nor the content of communications have been revealed.

In China, economic data out overnight saw very strong lending figures, though analysts are again reminded the results may be skewed by the timing of the Lunar New Year coming a month earlier than last time. Separately, a commerce ministry official warned that trade sector still faces risks of soft external demand and potential rise in protectionism.

Australia Westpac Consumer data followed yesterday's strong NAB business confidence with an uptick, revealing that well over 50% of households are now anticipating rates to go higher in the near term.

Japan's Abe and Aso expressed confidence that Washington understands Japan monetary policy as it pertains to its currency, and that it is not deliberately manipulating exchange rates.

China:

(CN) China Commerce Ministry (MOFCOM) official Wang Dongtang: Uncertainties and unstable factors in China trade are still increasing - China Daily

(CN) China Machinery Industry Federation: 2017 growth of value-added industrial output may slow to 7% from 9.6% in 2016 - Chinese press

(CN) China Index Academy: Jan property sales in China fell 36.7% m/m in terms of floor space - Chinese press

(CN) Shanghai regulators said to hold a meeting on SOE reforms this Thursday - Chinese press

Japan:

(JP) Bank of Japan (BOJ) Gov Kuroda: Still a long way to hit price target; Not thinking about raising target rates now

(JP) Japan Chief Cabinet Sec Suga: Expect Spring wage talks to be at least at last year's levels

(JP) Japan Fin Min Aso: Want to tell US Treasury Sec Mnuchin that cannot call JPY weak now ; JPY is not at ¥120 level when Lehman collapsed - press

(JP) Japan PM Abe: Gained Pres Trump's understanding that monetary policy is not currency manipulation; Hopes to see good progress on Japan and US talks by mid-term election

Australia/New Zealand:

(AU) Latest Westpac consumer confidence data shows that 60% of households in Australia are preparing for interest rates to rise - AFR

Asian Equity Indices/Futures (00:00ET)

Nikkei +1.1%, Hang Seng +1.3%, Shanghai Composite +0.4%, ASX200 +0.9%, Kospi +0.4%

Equity Futures: S&P500 flat; Nasdaq flat; Dax +0.1%; FTSE100 +0.1%

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

EUR 1.0565-1.0585; JPY 114.20-114.50; AUD 0.7655-0.7680; NZD 0.7150-0.7180

Apr Gold +0.1% at $1,227/oz; Mar Crude Oil -0.6% at $52.86/brl; Mar Copper +0.1% at $2.75/lb

(US) Weekly API Oil Inventories: Crude: +9.9M (4th straight build) v +14.2M prior

GLD: SPDR Gold Trust ETF receives Sharia-compliant certification - press

(CN) China sells CNY in 5-yr Govt bonds; avg yield 3.0293% v 3.04%e; bid-to-cover 2.04x

(CN) PBOC SETS YUAN MID POINT AT 6.8632 V 6.8806 PRIOR; Biggest CNY increase in 3 weeks; Strongest Yuan setting since Feb 7th

(CN) PBoC said to have injected funds through mdium term lending facility loans (MLF)

(KR) BOK sells KRW2.5T 2-yr monetary stabilization bonds at 1.61% v 1.64% prior

Asia equities / Notables / movers by sector

Consumer discretionary: 1055.HK China Southern Airlines Co +2.3% (Jan result); DMP.AU Domino & Pizza Enterprises -14.3% (H1 result)

Consumer staples: SWM.AU Seven West Media -5.8% (H1 result); 4324.JP Dentsu +9.5% (FY16 result)

Financials: CPU.AU Computershare +4.8% (guidance); 8136.JP Sanrio Co. -3.1% (9-month result); CBA.AU Commonwealth Bank of Australia +2.3% (H1 result)

Industrials: 1803.JP Shimizu +4.1% (9-month result); BLD.AU Boral Ltd +6.4% (H1 result); 5110.JP Sumitomo Rubber Industries -7.4% (FY16 result); 6326.JP Kubota Corp -1.9% (FY16 result); 4631.JP DIC Corp +10.1% (FY16 result)

Technology: 6502.JP Toshiba Corporation -8.6% (earnings release delay and govt probe)

Materials: SGM.AU Sims Metal -1.5% (guidance); PDN.AU Paladin Energy -5.0% (H1 result); ORA.AU Orora -1.7% (H1 result); MGX.AU Mount Gibson Iron +3.7% (H1 result); 5105.JP Toyo Tire & Rubber Co +9.9% (FY16 result)

Energy: ORG.AU Energy -0.9% (guidance); 1088.HK China Shenhua Energy Co +1.5% (Jan result); 5002.JP Showa Shell -2.8% (FY16 result)

Healthcare: CSL.AU CSL Limited +3.0% (H1 result); SHL.AU Sonic Healthcare +0.4% (H1 result); PRY.AU Primary Health Care -12.1% (guidance)

Key Points:

• 100 day EMA and 38.2% Fibonacci level should encourage a reversal.
• Potential Gartley pattern looks like it is taking form.
• Both medium and long-term trend lines likely to be respected.

The Kiwi Dollar should be hitting a reversal point in the near future but this could simply be a set up for an even larger tumble in the weeks beyond. Specifically, a combination of technical signals are hinting that the recent downtrend may need to take a breather around the 0.7144 handle but a developing Gartley pattern could subsequently smack the pair significantly lower in the long-run.

As is shown below, the Kiwi Dollar ultimately failed in its recent bid to push beyond the confines of the medium-term declining trend line. Consequently, it has been hammered by the recent resurgence of the greenback and has sunken back to support. However, this spate of losses could be about to reverse as a near-term bottom seems to have been found if the stochastics are anything to go by.

Additionally, the bears seem to be having some difficulty breaking through the 38.2% Fibonacci level around the 0.7144 price. In part, this is due to the positioning of the 100 day EMA which is supplying some dynamic support around this level. However, the configuration of the 12, 20, and 100 day moving averages also reveals something else. Even with the recent slew of losses, the NZD retains an overall bullish bias.

As a result, rather than seeing an unbroken slide all the way back to the long-term ascending trend line, we could instead see the pair have another rally in the near-term. If this occurs, the price action would form the majority of a fairly convincing Gartley pattern which could subsequently generate a rather sizable decline in the medium-term.

This decline should end around the 0.7030 handle which represents the intersection of the final leg of the Gartley pattern and the long-term trend line. This level is likely to hold firm once again in the absence of some strong fundamentals and, if it does hold, a reversal should occur. Whether or not this push higher will have the support to break above the descending trend line is currently not clear but, given the narrowing of the pennant, it is not entirely impossible.

Ultimately, keep an eye on this pair as there is plenty of movement on offer which should mean it’s an interesting few week of trading. Moreover, whilst the technical bias is looking fairly clear, don’t neglect the fundamental side of things, especially when the Kiwi Dollar reaches a potential turning point.

Global Markets:

• Asian stock markets: Nikkei up 1.10 %, Shanghai Composite gained 0.30 %, Hang Seng rose 1.25 %, ASX 200 rallied 0.90 %
• Commodities: Gold at $1227 (+0.18 %), Silver at $17.92 (+0.18 %), WTI Oil at $52.85 (-0.65 %), Brent Oil at $55.65 (-0.55 %)
• Rates: US 10-year yield at 2.48, UK 10-year yield at 1.31, German 10-year yield at 0.37

News & Data:

• Australia Westpac Consumer Confidence Index (Feb): 99.6 (prev 97.4)
• Australia New Motor Vehicle Sales (Jan): 0.6 % (est 0.2 % prev 0.3 %)
• South Korea Unemployment SA (Jan): 3.6% (est 3.5% rev prev 3.5%)
• PBoC Fixes USDCNY Reference Rate At 6.8632 (prev fix 6.8806 prev close 6.8660)
• Asia stocks at 19-month peak, dollar up as Yellen puts March rate hike in play – RTRS
• Fed on course to raise interest rates at an upcoming meeting: Yellen – RTRS

Markets Update:

The US Dollar appreciated against most currencies following comments from Fed Chair Janet Yellen. Yellen said that a rate hike will be appropriate at one of the Fed's upcoming meetings if employment and inflation evolve in line with expectations. She sees three hikes as possible this year, and stated that waiting too long to tighten would be unwise. She noted that there remains an uncertainty regarding the announced economic policies by US President Trump, and said that she hopes it will be consistent with putting the US on a sustainable trajectory.

USD/JPY failed to extend gains overnight, but remained bid throughout the Asian session. Resistance is now seen at 115, while support lies at 114.00 and 113.20.

The Australian Dollar is still struggling with 0.77 resistance, but is holding relatively well given the broad USD strength. In Asia, it consolidated in a 0.7655-80 range.

The Euro remains under pressure after weak economic data yesterday and on-going political concerns. Major support now lies at 1.0450 in EUR/USD, and it is likely it will test that level in the near-term.

Upcoming Events:

• 08:00 GMT – Spanish CPI
• 09:30 GMT – UK Average Earnings
• 09:30 GMT – UK Unemployment Rate
• 09:30 GMT – UK Claimant Count Change
• 10:00 GMT – Euro Zone Trade Balance
• 13:30 GMT – US CPI
• 13:30 GMT – US Retail Sales
• 13:30 GMT – Canadian Manufacturing Sales
• 14:15 GMT – US Manufacturing Production
• 14:15 GMT – US Industrial Production
• 15:00 GMT – US Business Inventories
• 15:00 GMT – Fed Chair Yellen speaks
• 15:00 GMT – US NAHB Housing Market Index
• 15:30 GMT – US Crude Oil Inventories
• 17:00 GMT – FOMC Member Rosengren speaks
• 17:45 GMT – FOMC Member Harker speaks

Daily Pivots: (S1) 0.7621; (P) 0.7659; (R1) 0.7699; More...

Intraday bias in AUD/USD remains neutral for the moment. With 0.7510 support intact, further rise cannot be ruled out. However, lost of upside momentum is seen in bearish divergence condition in 4 hours MACD. We'd expect strong resistance from 0.7777/7833 resistance zone to limit upside and bring near term reversal. On the downside, break of 0.7510 minor support will indicate that rise from 0.7158 has completed already and turn bias back to the downside for this key near term support level.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seek to 55 month EMA (now at 0.8205) and above.

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