Sample Category Title

• February retail sales rose an expected 0.1% in the month though the increase followed a much stronger and upwardly revised 0.6% gain in January.
• Though the level of auto sales remained high in the month it was little changed from January resulting in motor vehicle dealership sales in down a minimal 0.2%.
• Gas station receipts dropped 0.6% weighed down by indications of falling gasoline prices.
• Sales at building material stores continued to be strong rising 1.8% building further onto outsized gains in January and December of 1.2% and 2.2%, respectively.
• Control retail sales, which excludes autos, gas stations and building material stores rose a modest 0.1% though this followed a sizeable and upwardly revised gain of 0.8% in January.
• The data is consistent with our expectation that annualized consumer spending growth in the first quarter will moderate to 1 1/2% from the 3.0% recorded in Q4.

Our Take:

Lower gas prices and stalling auto sales, albeit at elevated levels, weighed on retail activity in February. However strength elsewhere resulted in retail sales still managing to eke out a gain following an upwardly revised 0.6% increase in January. The levelling out of auto sales following robust gains late in 2016 points to a slowing in consumer spending early in 2017 with today's report signaling that the quarterly increase is likely to come in at 1 1/2%, about half the pace of the previous three quarters. Recent robust employment gains suggest little reason to expect this slowing to continue. As well, indications of an offsetting strengthening in Q1 business investment will allow overall GDP growth to remain at a slightly above-potential pace in the current quarter. Sustained above-potential growth prompted the Fed to return to tightening mode late last year and is expected to keep them tightening through 2017 including a widely-expected 25-basis point hike at this afternoon's FOMC meeting.

Daily Pivots: (S1) 1.0581; (P) 1.0621 (R1) 1.0644; More.....

Intraday bias in EUR/USD stays mildly on the downside for the moment. Deeper fall could be seen back to 1.0494 support. Overall, price actions from 1.0339 are seen as a corrective pattern. Break of 1.0494 will revive that case that such correction is completed. And in such case, deeper decline should be seen to retest 1.0339. Meanwhile, above 1.0713 will turn bias back to the upside for 1.0828 and above to extend the correction from 1.0339.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115.

Daily Pivots: (S1) 1.0076; (P) 1.0092; (R1) 1.0116; More.....

No change in USD/CHF's outlook. Intraday bias stays neutral as the corrective pull back from 1.0169 continues. At this point, with 1.0008 support intact, further rise is mildly in favor. Above 1.0169 will turn bias to the upside and target a test on 1.0342 resistance. Based on neutral medium term outlook, we'd be cautious on topping below 1.0342. On the downside, break of 1.0008, however, will indicate completion of the rebound from 0.9860. And intraday bias will be turned back to the downside for 0.9860.

In the bigger picture, prior rejection from 1.0327 resistance argues that USD/CHF is staying in a medium term sideway pattern. In any case, decisive break of 1.0342 resistance is needed to confirm underlying strength. Otherwise, we'll stay neutral in the pair first. In case of another fall, we'd expect strong support from 0.9443/9548 support zone.

USD/CHF - 1.0093

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although the greenback retreated after meeting resistance at 1.0109 and mild downside bias is seen for test of 1.0060 support, however, break there is needed to signal the fall from 1.0171 top has resumed and extend weakness to 1.0035-40 but support at 1.0009 should remain intact, risk from there has increased for a rebound to take place later.

On the upside, above said resistance at 1.0109 would bring rebound to 1.0120 but break of resistance at 1.0142 is needed to signal low is formed and suggest the fall from 1.0171 has ended, bring another rise towards this level later. As near term outlook is still mixed, would be prudent to stand aside in the meantime.

Daily Pivots: (S1) 114.44; (P) 114.81; (R1) 115.12; More...

Intraday bias in USD/JPY remains neutral as the consolidation from 115.49 temporary top extends. Deeper retreat cannot be ruled out. But we'd expect strong support above 113.60 to contain downside and bring rise resumption. As noted before, corrective decline from 118.65 should have completed with a a double bottom pattern (111.58, 111.68). Above 115.49 should turn bias to the upside and pave the way for a test on 118.65. Decisive break there will extend whole rise from 98.97 and target 125.85 high next. On the downside, however, break of 113.60 will invalidate our view and turn bias back to the downside for 111.58/68 support zone instead.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

GBP/USD - 1.2202

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.

USD/JPY is almost unchanged in the Wednesday session. Currently, the pair is trading at 114.70. On the release front, Japanese Revised Industrial Production declined 0.4%, above expectations. In the US, there were no surprises from key consumer reports, as retail sales and CPI posted small gains in February. Today's highlight is the Federal Reserve policy meeting, with the central bank widely expected to raise the benchmark rate a quarter-point, from 0.50% to 0.75%. On Thursday, the US publishes a host of key indicators, led by unemployment claims.

The Bank of Japan will set its interest rate shortly after the Federal Reserve makes its announcement. Unlike the Fed meeting, the BoJ meeting will likely be a non-event, with the BoJ expected to hold pat and maintain rates at -0.10%. If, as expected, the Fed does raise rates, monetary divergence will widen and the yen could lose more ground against the US dollar. The Japanese economy has showed improvement, recording four consecutive quarters of growth. Still, analysts are not expecting the BoJ to make any changes to its ultra-loose monetary policy, as inflation levels remain well below the BoJ's target of around 2.0%.

With the markets expecting a quarter-point rate hike on Wednesday, will the currency markets react to a Fed move? Although a rate hike has been priced in by the markets at 93%, there have been disappointments in the past, so a rate move could boost the dollar at the expense of gold. Strong US employment numbers in February have reinforced market speculation that the Fed will raise rates for the first time this year. Nonfarm payrolls sparkled in February, as the indicator jumped to 235 thousand, easily beating the estimate of 196 thousand. Wage growth climbed 2.6% compared to February 2016, while the participation rate edged up to 63.0%, up from 62.9%. These solid job numbers have also provided President Trump with a much-needed boost. Trump is under pressure to present an economic agenda, but the markets won't mind giving him some additional breathing room, with the economy performing so well.

EUR/USD - 1.0613

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 - 114.66

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. 

Daily Pivots: (S1) 1.2100; (P) 1.2161; (R1) 1.2213; More...

GBP/USD formed a temporary low again at 1.2108 and recovered. Intraday bias is turned neutral for another round of consolidation. But still, outlook stays bearish as long as 1.2346 support turned resistance holds. As noted before, consolidation pattern from 1.1946 is completed at 1.2705 is resuming larger down trend. Below 1.2108 will target a test on 1.1946/86 support zone. Break of 1.1946 will confirm our bearish view.

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.