Sample Category Title

GBP/USD - 1.2215

Most recent candlesticks pattern   : N/A

Trend                                 : Near term down

Tenkan-Sen level                 : 1.2208

Kijun-Sen level                    : 1.2198

Ichimoku cloud top              : 1.2180

Ichimoku cloud bottom        : 1.2170

Original strategy :

Buy at 1.2140, Target: 1.2250, Stop: 1.2105

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2140, Target: 1.2250, Stop: 1.2105

Position : -

Target :  -

Stop : -

Although cable resumed recent decline and extend weakness to 1.2109 yesterday, the subsequent rebound suggests low is possibly formed there and consolidation with upside bias is seen for gain to 1.2260-65, above there would add credence to this view, bring retracement of recent decline to 1.2290-95 (50% Fibonacci retracement of 1.2479-1.2109), however, resistance at 1.2301 should limit upside and price should falter below 1.2335-40 (61.8% Fibonacci retracement), bring another decline later.

In  view of this, we are looking to buy cable on dips as 1.2135-40 should limit downside. Only below said support at 1.2109 would extend recent decline to 1.2090, however, loss of downward momentum should prevent sharp fall below 1.2070 and reckon 1.2040-50 would hold from here, sterling may stage another rebound from there later.

The growing anticipation of an interest rate increase by the Federal Reserve in a few hours has boosted the Greenback with bullish investors propelling the Dollar Index back above 101.50 as of writing. With the March rate hike a done deal, investors may direct their attention towards the FOMC statement and economic projections which could provide markets some clarity on rate hike timings this year. A hawkish tone in this evening's FOMC press conference coupled with a potential upwards shift in the "dot plot" could reignite the bull rally as speculations heighten over the Federal Reserve raising US rates on repeated occasions in 2017. With the improving sentiment towards the U.S economy supporting the Greenback, Dollar Index bulls could be back in action once 101.50 has been properly conquered.

Commodity spotlight - Gold

The looming US interest rates hike this evening has punished Gold with price stumbling back below $1200 as of writing. This zero-yielding metal has found itself at the mercy of rate hike expectations with a strengthening Dollar fueling the downside losses. Although risk aversion from the Brexit developments and elections in Europe have somewhat supported the metal this week, bears have maintained dominance with prices under noticeable pressure. From a technical standpoint, Gold is bearish on the daily charts as there have been consistently lower lows and lowers highs. Sellers may use the probable US rate increase this evening to attack Gold prices lower towards $1190.

Currency spotlight - EURUSD

The uncertainty gravitating around the elections in Europe have left the Euro vulnerable to heavy losses this week. Euro weakness has become a key theme with further downside expected as fears heighten over Eurosceptic parties destabilizing the unity of the European Union. The EURUSD has struggled to maintain gains on the daily charts this week with prices hovering around 1.0620. A rising Dollar from the prospects of higher US rates could provide permission for sellers to send the currency pair back towards 1.0500. From a technical standpoint, a break below the daily 20 simple moving averages could signal a further decline back towards 1.0500 in the short term.

EUR/USD - 1.0633

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.0624

Kijun-Sen level                  : 1.0624

Ichimoku cloud top             : 1.0656

Ichimoku cloud bottom      : 1.0649

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although the single currency slipped to as low as 1.0600, as euro found good support there and has rebounded again, suggesting consolidation above this level would be seen and gain to 1.0660-65 cannot be ruled out, however, break there is needed to signal low is formed, bring further gain to 1.0680-85 but price should falter below this week’s high at 1.0714.

On the downside, below said support at 1.0600 would signal top has been formed at 1.0714 and downside risk remains for the fall from there to bring retracement of recent rise to 1.0570-75, then 1.0550 but reckon downside would be limited and support at 1.0525 should remain intact. As near term outlook is mixed, would be prudent to stand aside in the meantime.

USD/JPY - 114.76

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 114.69

Kijun-Sen level                  : 114.71

Ichimoku cloud top             : 115.00

Ichimoku cloud bottom      : 114.91

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

As the greenback met renewed selling interest at 115.20 yesterday and slipped again, retaining our view that further consolidation below last week’s high at 115.51 is in store and risk of another fall to 114.48 support cannot be ruled out, however, reckon downside would be limited to 114.26 support and as this move is viewed as retracement of recent upmove, reckon downside would be limited to 114.00-05 (38.2% Fibonacci retracement of 111.69-115.51) and price should stay well above strong support at 113.56-61), bring rebound later.

In view of this, would be prudent to stand aside for now. A firm break above 115.20 would suggest low is formed, bring a stronger rebound but still reckon said resistance at 115.51 would cap upside. Only break there would revive bullishness and extend recent upmove to previous resistance at 115.62, then towards 115.90-00. 

Inflation rose to 2.7% (year-on-year) in February, continuing its upward trend as the influence of lower energy prices ebbs. Prices were up a slight 0.1% month-on-month, as lower energy prices partially offset increases for food and other core items.

Gasoline prices were 3% lower (y/y) in February, a key influence behind the 1% drop in the energy category as a whole, as prices for energy services prices (electricity and gas) rose.

Food prices rose 0.2% month-over-month in February, their largest increase since September 2015. Food has exerted downward pressure on headline inflation since the middle of last year, but prices are now showing a bit more upward momentum, and food inflation is now flat on a year-on-year basis.

Core prices rose an as-expected 0.2% (m/m) in February. A slight step down from January's heady 0.3% pace, but on an annualized basis, core price growth has averaged over 3% over the past three months. On a year-on-year basis core inflation was 2.2% in February.

Core services prices (+0.3% m/m) continues to outpace core goods (-0.0% m/m), as the strong U.S. dollar keeps prices for many imported good contained.

With a heavy weight in the index, housing has been a key factor elevating services prices. The price index for owners' equivalent rent picked up in February to 0.3% m/m. On an annual basis, inflation in owners' equivalent rent is 3.5%, a pace it has roughly maintained since November.

Key Implications

Energy prices kept inflation low through 2015 and much of 2016, but have become a key factor in taking headline inflation higher. We expect headline inflation to top out at 2.8% in the third quarter, so we don't expect headline inflation to rise too much further from February's pace.

Today's report is consistent with an interest rate hike by the Fed later today. On the one hand, the Fed will generally look past higher headline inflation as transitory, as the base-year effects from the rise in energy prices from the lows of early 2016 dissipate. On the other hand, the continued improvement in underlying inflation, driven in part by firming wage growth, will be interpreted by the Fed as a sign of a diminishing economic slack, and therefore confirm the need for a tightening of monetary policy.

Retail sales ticked up by 0.1% in February according to the advance Census Bureau report - on par with expectations. Better yet, January spending was revised up strongly, now up 0.6% during the month to start of the year.

Sales at motor vehicle & parts dealers (-0.2%) slipped a bit, with the ex-auto sales up 0.2% on the month. Gasoline station spending was also lower (-0.6%) - largely due to lower prices. Excluding autos and gas, retail sales were up 0.2% on the month, following up on a 1.1% surge during January (previously reported as 0.7%).

Excluding gas, autos, building materials (+1.8%), and food services (-0.1%), the so-called 'control group' used in calculating GDP was up just 0.1% on the month. While this was half of what was expected, it too came atop of a sizeable revision to January's data which were reported as 0.8% - or double the previous estimate. Sales in the control group were dragged down by sales at electronics stores (-2.8%), department stores (-1.1%), and miscellaneous (-0.8%). Clothing and sporting goods were also lower after sizeable gains in the previous month. Overall sales were boosted by non-store and e-commerce retailers (+1.2%), furniture (+0.7%), and health & personal care stores (+0.7%).

Key Implications

This was a decent report as far as the U.S. consumer is concerned. While the headline print was far from awe-inspiring, the upward revisions to January data point to a much healthier consumption profile than previously anticipated, and suggest that the enthusiasm to shop carried into 2017. Overall we expect consumption to exceed 2% during the first quarter of 2017 despite the warmer weather that pulled down spending on winter clothing and utilities so far.

While some weakness was definitely present in several spending categories, much of this appears related to changing patterns in consumer behavior, with Americans increasingly opting for online purchases and shying away from department stores. Having said that, we expect the consumer to continue driving growth this year, as strong job gains and income gains enable American consumers to go shopping for things they may have held back from buying last year.

Given its relatively constructive tone, this report, alongside the CPI report released simultaneously, will only reaffirm the Fed's resolve to raise rates at today's meeting, with our expectation for two more hikes likely to come later this year as the Fed increasingly approaches its dual targets.

EUR/GBP - 0.8704

 
Recent wave: Major double three (A)-(B)-(C)-(X)-(A)-(B)-(C) is unfolding and 2nd (A) has possibly ended at 0.6936.

Trend: Near term down

Original strategy  :

Buy at 0.8660, Target: 0.8760, Stop: 0.8620

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.8645, Target: 0.8760, Stop: 0.8605

Position : -

Target :  -

Stop : -

 
As the single currency has retreated after faltering below indicated resistance at 0.8788 (last week’s high), retaining our view that further consolidation below this level would be seen and pullback to 0.8660 cannot be ruled out, however, reckon downside would be limited to 0.8645-48 (38.2% Fibonacci retracement of 0.8422-0.8788) and bring another rise later, break of said resistance at 0.8788 would extend the rise from 0.8403 low to 0.8800, however, loss of near term upward momentum should prevent sharp move beyond 0.8825-30 and price should falter well below 0.8850.

In view of this, would not chase this rise here and we are looking to buy euro on subsequent pullback as 0.8645-50 should limit downside. Below 0.8605 (50% Fibonacci retracement of 0.8422-0.8788) would defer and suggest top is possibly formed, risk test of 0.8560-65 (61.8% Fibonacci retracement) but support at 0.8547 should remain intact. 

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.

Market did not move much in the last few hours as everyone wait on latest news from the FED when I think USD can see strength based on possible rate hike. Charts suggests the same, with price trading in favour of the buck. However, a three wave bounce up on EURUSD is not over yet, but 1.0650-1.0670 area can be an interesting region for a turn lower. Invalidation level is at 1.0715, but that's only for short-term charts, where bigger downtrend cycles will not get invalidated yet!

EURUSD, 1H

USD/CAD - 1.3475

 
Recent wave: Only wave v of c has ended at 0.9407 and wave C of major A-B-C correction is underway for headway to 1.4700

Trend:  Near term up

 
Original strategy       :

Buy at 1.3350, Target: 1.3550, Stop: 1.3290

Position: -

Target:  -

Stop: -

 
New strategy             :

Buy at 1.3350, Target: 1.3550, Stop: 1.3290

Position: -

Target:  -

Stop:-

The greenback has remained confined within near term established range and further sideways trading is in store, however, as long as last week’s high at 1.3535 holds, risk another another corrective fall to 1.3421 cannot be ruled out but reckon downside would be limited to 1.3390-00 and reckon 1.3350-55 (38.2% Fibonacci retracement of 1.3056-1.3535) would limit downside and bring another rise later, above said resistance at 1.3535 would extend recent upmove for further gain to 1.3570-75 and possibly towards 1.3600 but near term overbought condition should prevent sharp move beyond 1.3640-50, bring retreat later.

In view of this, would not chase this rise here and would be prudent to buy on further pullback as 1.3350 should limit downside. Only below 1.3295-00 (50% Fibonacci retracement of 1.3056-1.3535) would signal top is formed, risk correction to 1.3250-60 but price should stay well above indicated previous resistance at 1.3212 (now support), bring another rise later.

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

• The all items index edged up just 0.1% in February, the smallest monthly increase since July 2016, though that was enough to push the year-over-year rate up to 2.7% from 2.5% in January.
• The increase in year-over-year inflation was largely due to energy price base effects. While the energy index fell in February (with gasoline prices down 3%), the decline was more significant a year ago when oil prices hit their low point. As a result, the year-over-year rate of energy price inflation picked up to 15% from 11% in January.
• Core prices (ex food and energy) posted a 0.2% increase with the year-over-year rate edging down to 2.2% in February. Prices for non-energy services rose while core commodities were flat.
• Services prices were up 3.2% year-over-year, the fastest pace since November 2008. The shelter component remains a significant source of inflation, though prices for services ex shelter have also trended higher for more than a year.

Our Take:

The increase in headline CPI inflation to 2.7% is consistent with market expectations and was once again largely an energy story. The now-inflationary impact of energy prices is expected to prove transitory - indeed, we think today's reading will mark the near-term peak in CPI inflation - and thus won't alter the Fed's plans for removing accommodation gradually. Beneath the higher headline reading, core inflation edged down from its post-recession high but there was some evidence of firming domestic price pressure, and a tight labour market and rising wages should support underlying inflation going forward. Today's report is consistent with Chair Yellen's comments that it would be "unwise" to wait too long before further removing accommodation. We expect the Fed will announce a 25 basis point rate hike this afternoon and we'll be paying close attention to the Committee's 'dot plot' to see if three hikes per year in 2017 and 2018 is still seen as an appropriate pace given upside risks to inflation from potential fiscal policy stimulus.