Sample Category Title

GBP/USD - 1.2229

Most recent candlesticks pattern   : N/A

Trend                                 : Near term down

Tenkan-Sen level                 : 1.2206

Kijun-Sen level                    : 1.2183

Ichimoku cloud top              : 1.2195

Ichimoku cloud bottom        : 1.2183

New strategy  :

Buy at 1.2155, Target: 1.2255, Stop: 12120

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. 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.

EUR/USD - 1.0637

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.0623

Kijun-Sen level                  : 1.0632

Ichimoku cloud top             : 1.0666

Ichimoku cloud bottom      : 1.0651

Original strategy  :

Bought at 1.0640, stopped at 1.0610

Position : - Long at 1.0640

Target :  -

Stop : - 1.0610

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.

Sunrise Market Commentary

• Rates: Higher dots, higher US yields?
  The US 5-yr, 10-yr and 30-yr yield arrived at key technical resistance levels ahead of the FOMC meeting. A rate hike is discounted and markets will be sensitive to the Fed's intentions in the remainder of the year. Higher dots in 2018 & 2019 are likely, but will the central bank surprise by indicating to step up its tightening pace already this year?
• Currencies: Will Fed give a strong enough message to kick-start new USD rally?
  Yesterday, the dollar showed a mixed picture. EUR/USD reversed the post-payrolls rebound going into today's Fed meeting. The Fed dots indicating four rate hikes this year would be USD supportive, but this scenario is not that evident. So, the bar for the dollar to already start a new sustained up-leg might be rather high

The Sunrise Headlines

• US equities corrected around 0.33% lower yesterday as the countdown to tonight's FOMC meeting continues. Overnight, Asian stock markets trade near opening levels.
• The French prosecutor starts an inquiry which focuses on whether Business France, a government agency, was guilty of favouritism in organizing a Las Vegas trip for Emmanuel Macron, who was then economy minister.
• Most major Japanese companies offered the lowest hike in base pay in four years. Japan's annual "shunto" spring wage increases are a barometer of corporate confidence and of whether consumer spending can get a boost.
• Today's Dutch election should serve as a bellwether for upcoming votes in France and Germany. Wilders' Freedom Party trails PM Rutte's Liberals in surveys. The exit polls are expected after voting closes at 9 pm local time.
• China's Premier Li Keqiang said that Beijing does not want to see a trade war with the US and urged talks between both sides to achieve common ground.
• Saudi Arabia, the world's biggest oil exporter, moved to allay fears that the kingdom was backing away from its pledge to curb production, underlining its concern about a 10% plunge in the crude price over the past week.
• Today's eco calendar contains UK labour market data, US Empire Manufacturing, CPI and retail sales. However, focus turns to the FOMC meeting. The German Finanzagentur holds a 30-yr Bund auction.

Currencies: Will Fed Give A Strong Enough Message To Kick-Start New USD Rally?

FOMC to decide on next directional USD move?

There was no clear driver for USD trading yesterday, as investors counted down to today's FOMC decision. EUR/USD drifted south in the 1.06 big figure. Brexit and EMU political uncertainty probably weighed on the euro. USD/JPY was well bid early in the session, but failed to sustain north of 115 as risk sentiment eased. EUR/USD finished the session at 1.0604 (from 1.0653). USD/JPY closed at 114.75 (from 114.88).

Overnight, Asian equities show minimal losses, in line with the US yesterday. Chinese officials stressed that the are trying hard to avoid a trade war and repeated they intend to keep the yuan stable. EUR/USD stabilizes in the 1.0615/20 area. The rise in the oil price yesterday eve and minimal Asian equity losses help USD/JPY to stay off yesterday's intraday low. The pair is trading the 114.80 area.

Today, there are plenty of US eco data. Fed will announce its policy decision and markets will keep an eye at the Dutch election . The outcome of the latter will only be available early tomorrow. So, no impact on FX trading today. Regarding the FOMC, a rate hike is fully discounted. Markets' attention will go to the press conference and the economic and rate projections. We raised our rate expectations to four rate hikes this year, but we doubt this will already be seen in the median 2017 rate projection . It is more likely that the 2018/2019 median rate projection will be raised. Regarding the US data, headline CPI might hit a new high at 2.7% Y/Y, mostly due to base effects. Core CPI is expected to be up 0.2% M/M, but this might result in a 0.1%-point decline to 2.2% Y/Y. Risks might be on the upside. February retail sales are expected to have increased only 0.1% M/M and 0.2% M/M respectively for headline and core measures following strength in January. Gasoline sales (price effect) was a negative factor. Also here small upside risks. Yesterday, the dollar found a better bid after a disappointing post-Payrolls performance. The data are interesting, but big deviations from consensus are needed to trigger a directional move in the dollar ahead of the Fed. The dollar might be most sensitive for an unexpected rise of inflation. A rise in core yields due to higher oil prices might also be slightly USD supportive. The Dots raising the expected 2017 rate median rate hike expectation from 3 to 4 would support further USD gains. However, this scenario is not that evident. In case of higher rate expectations only for 2018/2019, the reaction of the dollar might be modest. We maintain a cautiously USD positive view going into the Fed policy decision. Even so, it won't be easy for the dollar to break the next key resistance levels

(EUR/USD 1.0494; USD/JPY 115.62) without additional positive fiscal or economic news (especially higher price data). A sell EUR/USD on upticks remains favoured, even as we have to admit that the USD/EUR momentum isn't convincing. At the same time, the dollar still enjoys the supported of a massive interest rate differential, discouraging USD short positions.

EUR/USD: Post-Payrolls USD setback reversed ahead of the FOMC decision

EUR/GBP

Sterling hovering up and down as Brexit start looms

On Tuesday, sterling was quite aggressively sold early in the session. Asian investors reacted to the Scottish PM Sturgeon initiative to start the procedure for a new ‘indiref' and to the parliamentary final go to trigger the ‘real' start of the Brexit procedure. Sterling set intraday lows against the dollar (1.2110 area) and the euro (0.8787 area) very early in European trading. Some consolidation and even a gradual intraday rebound kicked in. At the end of the day, sterling was little changed. EUR/GBP finished at 0.8726 (from 0.8719). Cable closed at 1.2153 from 1.2219, but this move largely mirrored the intraday rebound of the dollar.

This morning, sterling shows again some wild swings going in the close of the Asian markets. This time, sterling is captured by some short-squeeze in thin trading conditions, pushing the UK currency higher. We see no hard news to explain the move. There are headlines that the EU might delay the real start of the Brexit negotiations till June. Such a scenario is UK/sterling negative. Later today, the UK labour data will be published. Of late, momentum in the labour market eased a bit, but the overall picture remained constructive. We don't have strong reasons to distance ourselves from the consensus, but softer data might reinforce the BOE wait-and-see approach: a mildly negative for sterling. However, the focus will be on the Brexit debate and on any fall-out from the FOMC decision. 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

USD/JPY - 114.71

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 114.75

Kijun-Sen level                  : 114.86

Ichimoku cloud top             : 115.00

Ichimoku cloud bottom      : 114.86

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. 

Market movers today

The main event in the markets today will be the FOMC meeting. A rate hike of 25bp is a done deal, and the market will be looking towards the statement regarding future rate hikes and a possible redaction in its balance sheet.

In Europe, focus is on the Dutch election. Recent polls suggest that Geert Wilders is losing ground to Mark Rutte and that Geert Wilders' party will not be the largest party. This should be supportive for European semi-core yield spreads to Germany

Finally, we have string of data from the US and Swedish inflation survey as the main economic releases today.

Selected market news

The Oil price has risen modestly this morning, while US equity markets posted small losses yesterday. 10Y US Treasury yields fell a few basis points in yesterday's trading session. It has again been a mixed session in the Asian equity markets but with most markets following the negative sentiment from the US equity markets while the markets await the outcome of the FOMC meeting.

Currency pair EUR/USD

The Federal Reserve (Fed) will release its interest rate decision on Wednesday evening 6pm GMT. The major question is whether the FOMC (Federal Open Market Committee) will keep the rate at 0.75% or raise it to 1.0% which would typically lead to USD strength. The FOMC also offer its economic projections and statement. Price action could see increased volatility during and after the announcement.

The bearish price action of the EUR/USD after price reached the 61.8% Fibonacci retracement level of wave 2 (purple) could indicate that the wave 2 has been completed. A break below support (blue) could see price move lower to retest the bottom (green).

The EUR/USD price action is showing lower lows and lower highs which could be part of a new downtrend. The current wave 4 (green) is invalid if price breaks above the 61.8% Fibonacci retracement level. A break below support could spark a bearish breakout within wave 3 (blue/purple).

Currency pair GBP/USD

The GBP/USD broke the support trend line (dotted blue) which restarted the downtrend and continuation within wave 5 (blue). Price has been hesitant to break below the bottom (green) but a 2nd attempt could see price fall towards the Fibonacci targets of wave 5 vs 1+3.

The GBP/USD could be building a wave 4 (orange) correction. The Fibonacci levels of wave 4 (orange) could act as resistance but a break above the 61.8% Fib makes a wave 4 (orange) less likely. A break below the support trend lines (green) could see a downtrend continuation.

Currency pair USD/JPY

The USD/JPY seems to have completed a wave 4 (purple) at a shallow Fibonacci level from the daily-weekly charts, which makes a larger uptrend more likely. The uptrend stays intact if price manages to stay above the bottom of wave 2 (blue).

The USD/JPY could be building a wave 1-2 (orange) but a break below the 100% Fibonacci level invalidates wave 2 (orange).

Volatility compressed ahead of tomorrow's Dutch elections

Asia Mid-Session Market Update: Volatility compressed ahead of tomorrow's Dutch elections, Fed decision/projections/conference, Aussie jobs, and BOJ statement

US Session Highlights

OPEC Monthly Report: Saudi Arabia Feb production rises back above 10M; boosts non OPEC supply growth forecast

(US) FEB PPI FINAL DEMAND M/M: 0.3% V 0.1%E; Y/Y: 2.2% V 1.9%E; Ex Food and Energy M/M: 0.3% v 0.2%e; Y/Y: 1.5% v 1.5%e

(SA) Reportedly Saudi oil production increase in Feb went to domestic storage, not to international oil market - press

US markets on close: Dow -0.2%, S&P500 -0.3%, Nasdaq -0.3%

Best Sector in S&P500: Consumer Discretionary

Worst Sector in S&P500: Energy

Biggest gainers: WU +3.5%, MSI +2.1%, REG +1.8%, GT +1.7%, KIM +1.6%

Biggest losers: FTR -4.7%, UAL -4.7%, CTXS -3.4%, OKE -3.3%, MRO -3.3%

At the close: VIX 12.3 (+1.0 pts); Treasuries: 2-yr 1.38% (flat), 10-yr 2.60% (-1bps), 30-yr 3.17% (-2bps)

US movers afterhours

CLDX Reports Q4 -$0.30 v -$0.34e, R$1.9M v $1.0Me; +3.0% afterhours

AKAO Reports Q4 -$1.04 v -$0.47e, R$10.7M v $11.3Me; -5.9% afterhours

NPTN Reports Q4 $0.13 v $0.08e, R$109.8M v $108Me; Guides Q1 -$0.30 to -$0.20 v $0.05e; -12.0% afterhours

RUBI Reports Q4 $0.37 v $0.26e, R$72.7M v $63.6Me (2 est); Guides Q1 -$0.26 to -$0.22 v $0.05 (adj) y/y; -15.5% afterhours

Politics

(US) MSNBC's Rachel Maddow unveils Pres Trump's 2005 tax returns; Trump paid about $36M on income of about $150M (implies 24%)

(US) FBI Director Comey to disclose whether its probe of Russia interference in Trump's campaign is ongoing tomorrow - press

(NL) Ahead of tomorrow's elections, DPA news citing 3 polls see Netherlands Liberal Party leader and PM Rutte in the lead with expected 24-28 seats in 150-seat Parliament - press

Asia Key economic data:

(AU) AUSTRALIA MAR WESTPAC CONSUMER CONFIDENCE INDEX: 99.7 (4-month high) V 99.6 PRIOR, M/M: 0.1% (3rd straight increase) V 2.3% PRIOR

(NZ) NEW ZEALAND Q4 CURRENT ACCOUNT BALANCE (NZ$): -2.34B V -2.43BE

(KR) South Korea Feb Unemployment Rate: 4.0% v 3.9%e (highest since Sept 2016)

Asia Session Notable Observations, Speakers and Press

Asia indices are down marginally, tracking modest declines in US markers where volumes were extremely light due to massive snowstorms impacting travel in the Northeast. Airlines were the most heavily hit for the 2nd straight day, while auto components and textiles outperformed. Treasuries were slightly higher going into the FOMC and USD majors traded sideways, with tomorrow's anticipated 25bp rate hike priced in and uncertainty building for a more aggressive FOMC statement/dot plots on the heels of better economic data and more hawkish Fed-speak.

Oil prices hovered around 3-month lows in the US session on reports of increased Saudi output, but WTI was up over 1.5% after API inventories showed the first draw in 3 weeks. Saudis also clarified that the increase in Feb went into domestic storage rather than global supply.

Economic data were limited to a slight uptick in Australia's Westpac Consumer Confidence and New Zealand's Q4 Current Account ahead of tomorrow's GDP. Westpac survey determined that consumers have turned more risk averse and also less optimistic about prospects of the property sector.

China Premier Li spoke at length to mark the conclusion of the NPC summit, calling for better relations and more dialogue with US to avoid a trade war that would hurt both sides. Li added the 6.5% 2017 GDP target is ambitious considering external risks, but noted the govt will prioritize employment and avoid large-scale job cuts similar to industry capacity reduction measures late last year. Li reiterated PBOC will keep Yuan stable and proceed with market based reform, adding CNY depreciated due to strong USD rather than China's efforts to devalue Yuan to gain competitive advantage in exports.

China

(CN) China Premier Li: Ties between China and US keep moving forward, optimistic about ties

(CN) China Customs Inspection Chief: China is increasing controls on imports of low quality coal

Japan

(JP) Japan wage increase by top firms for FY17/18 expected to be about 0.3%, the smallest in 4 years - press

Australia

(AU) NAB now sees RBA keeping rates on hold for all of 2017 v 1 rate cut in Nov seen in Feb

Korea

(KR) South Korea Ministry of Strategy and Finance and Korea Customs Service: March daily export turnover estimated above $2B, 17-month high - Korea press

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.2%, Hang Seng -0.1%, Shanghai Composite +0.1%, ASX200 -0.1%, Kospi -0.1%

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

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

EUR 1.0600-1.0620; JPY 114.60-114.90; AUD 0.7555-0.7575; NZD 0.6915-0.6940

Apr Gold -0.2% at $1,201/oz; Apr Crude Oil +1.7% at $48.54/brl; May Copper flat at $2.64/lb

(US) Weekly API Oil Inventories: Crude: -0.5M v +11.6M prior (first draw in 3 weeks)

SPDR Gold Trust ETF daily holdings rise 3.0 tonnes to 835.0 tonnes; 2nd straight increase

iShares Silver Trust ETF daily holdings rise to 10,303 tonnes from 10,268 tonnes prior; first rise since Feb 21st

USD/CNY (CN) PBOC SETS YUAN MID POINT AT 6.9115 V 6.9118 PRIOR

(CN) PBOC to inject combined CNY60B v CNY40B prior in 7,14, and 28-day reverse repos

(CN) China MoF sells 7-yr bonds at 3.20% v 3.16%e

(KR) Bank of Korea (BOK) sells KRW2.3T v KRW2.3T offered in 2-yr monetary stabilization bonds; avg yield 1.67% v 1.65% prior

Asia equities / Notables / movers by sector

Consumer discretionary: 753.HK Air China +3.7%, 1055.HK China Southern Airlines +5.0% (Feb result); 669.HK Techtronic Industries +5.8% (FY16 result); 1316.HK Nexteer Automotive Group +6.9% (FY16 result); CKF.AU Collins Foods -2.9% (Canaccord Genuity cuts rating)

Financials: 2378.HK Prudential PLC +3.2% (FY16 result); GPT.AU GPT +2.9% (Credit Suisse raises rating)

Industrials: 7267.JP Honda Motor +0.8% (base salary raise); 5202.JP Nippon Sheet Glass Co -4.5% (Tier 1 firm cuts rating)

Technology: 451.HK GCL New Energy Holdings +1.2% (profit warning); 6502.JP Toshiba Corporation -7.9% (Submits internal controls report to TSE); 6753.JP Sharp Corp -2.1% (press speculates may resume dividends and end domestic TV production); 6146.JP Disco Corp -1.4% (Tokai Tokyo cuts rating)

Materials: FMG.AU Fortescue +6.3% (RBC raises rating); SBM.AU St Barbara -3.9%, RSG.AU Resolute Mining -1.7% (Gold stocks pare gains); 5463.JP Maruichi Steel Tube -3.0% (SMBC cuts rating)

Energy: 916.HK China Longyuan Power Group -5.9% (FY16 result); ORG.AU Origin Energy +0.1% (JPMorgan raises rating)

For the 24 hours to 23:00 GMT, the AUD declined 0.09% against the USD and closed at 0.7558.

LME Copper prices declined 0.8% or $47.0/MT to $5747.0/MT. Aluminium prices declined 1.7% or $31.0/MT to $1851.0/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7569, with the AUD trading 0.15% higher against the USD from yesterday's close.

Early morning data showed that Australia's Westpac consumer confidence index inched 0.1% higher to a level of 99.7 in March, compared to a level of 99.6 in the previous month.

The pair is expected to find support at 0.7544, and a fall through could take it to the next support level of 0.7520. The pair is expected to find its first resistance at 0.7586, and a rise through could take it to the next resistance level of 0.7604.

Moving ahead, Australia's jobs report for February and consumer inflation expectations for March, slated to release in the early hours' tomorrow, will be on investor's radar.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR declined 0.41% against the USD and closed at 1.0608.

In economic news, German ZEW economic sentiment index rose less-than-expected to a level of 12.8 in March, suggesting that political uncertainty across the common currency region weighed on the outlook for the Euro-zone's largest economy. Market expected the index to rise to a level of 13.0, following a level of 10.4 in the prior month. Further, the nation's ZEW current situation index rose less-than-anticipated to a level of 77.3 in March, following a level of 76.4 registered in the previous month. Meanwhile, the nation's final consumer price index (CPI) advanced 2.2% on an annual basis in February, at par with market expectations and confirming the preliminary estimates. In the previous month, the CPI had climbed 1.9%.

Separately, the Euro-zone's ZEW economic sentiment index jumped to a level of 25.6 in March, after recording a level of 17.1 in the prior month. Additionally, the region's seasonally adjusted industrial production climbed 0.9% on a monthly basis in January, less than market expectations for an advance of 1.3%.

In the prior month, industrial production had fallen by a revised 1.2%.

In the US, the NFIB small business optimism index surprisingly dropped to a level of 105.3 in February, compared to a reading of 105.9 in the prior month, while market participants were anticipating the index to register a level of 106.0. On the other hand, the nation's producer price index rose 0.3% on a monthly basis in February, surpassing market consensus for an advance of 0.1% and following a gain of 0.6% in the prior month.

In the Asian session, at GMT0400, the pair is trading at 1.0615, with the EUR trading 0.07% higher against the USD from yesterday's close.

The pair is expected to find support at 1.0587, and a fall through could take it to the next support level of 1.0560. The pair is expected to find its first resistance at 1.0652, and a rise through could take it to the next resistance level of 1.0690.

Today in the Euro-zone, investors look forward to the Dutch elections. Also, all eyes will be on the US Federal Reserve, as it is expected to announce an interest rate hike at its monetary policy meeting later today. Moreover, the US consumer price inflation and advance retail sales, both for February along with the NAHB housing market index for March, will garner a significant amount of market attention.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the GBP declined 0.49% against the USD and closed at 1.2151.

In the Asian session, at GMT0400, the pair is trading at 1.2162, with the GBP trading 0.09% higher against the USD from yesterday's close.

The pair is expected to find support at 1.2109, and a fall through could take it to the next support level of 1.2055. The pair is expected to find its first resistance at 1.2213, and a rise through could take it to the next resistance level of 1.2263.

Moving ahead, traders will concentrate on Britain's ILO unemployment rate and average earnings data for three months ended January, scheduled to release in a few hours.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.