Stock markets charged into gains on Thursday after U.S President Donald Trump's promise of a "phenomenal" tax plan in the coming weeks rekindled investor risk sentiment. Asian shares were positive during early trading on Friday with the risk-on trading mood elevating European markets. The prospects of Trump's pending corporate tax announcement aimed to positively impact US growth may provide enough inspiration for bulls to propel Wall Street higher during today's trading session. While the gains displayed across stocks this week have been unquestionably impressive, it continues to highlight how markets remain dictated by Trump.

It must be kept in mind that the bearish fundamentals of political risks across the globe, Brexit developments and Trump uncertainties still have a firm grip on the financial markets in the longer term. Global stocks could come under renewed selling pressure in the coming weeks if investors fail to retrieve the much-needed clarity from Donald Trump's pending tax announcement. With political risks and uncertainty the key market themes for the first quarter of the year, investors should remain diligent when handling the extremely volatile stock markets.

Sterling remains pressured in the background

The Brexit uncertainty may ensure that Sterling remains depressed for prolonged periods. Sentiment towards the Pound is skewed to the downside with the increasing focus on the Brexit developments diverting attention from the economic fundamentals. Although December's solid UK Manufacturing Production figure of 2.1% has slightly uplifted Sterling, the selling momentum from the ongoing uncertainty should limit upside gains and send the GBPUSD lower towards 1.2350 in the shorter to medium term. While UK economic data continues to display resilience despite the Brexit woes, the anxiety and investor jitters ahead of the article 50 invoke in March may pressure Sterling further.

From a technical standpoint, the GBPUSD is pressured on the daily charts and a break below 1.2450 could encourage a selloff lower towards 1.2350.

Gold Trumped on Thursday

Gold found itself exposed to downside risks on Thursday after U.S President U.S President Donald Trump stated he would make a tax announcement in the coming weeks which has consequently bolstered the Greenback. The sharp depreciation was complimented with positive US economic data that rekindled expectations of further US interest rate hikes this year. While sellers may be commended on their ability to exploit the period of risk-on to attack Gold, the downside should be limited amid the market uncertainty.

It should be kept in mind that the ongoing Trump developments have heavily eroded investor risk appetite while political risks continue to weigh on global sentiment. Although the yellow metal remains slightly pressured on the daily charts, bulls could reclaim control if the $1220 regions defend. In the scenario where $1220 is conquered, the next level of interest on Gold can be found at $1200.

Commodity spotlight – WTI Oil

The growing optimism over OPEC respecting their pledge to cutting oil production has kept WTI Crude buoyed this trading week. Bullish investors received further inspiration to attack on Thursday following reports showing a draw in U.S gasoline inventories, which suggested that demand remained healthy in the world's largest oil market. Although OPEC has been compliant with the output cuts, the rising fear of U.S shale pumping incessantly, and even undermining the OPEC cut deal could limit upside gains on oil. Technical traders may observe how WTI crude reacts to the $54 resistance level with weakness potentially opening a path lower towards $52.

News and Events:

Don't be fooled by strong Chinese trade data

January’s trade data from China printed much higher than expected with exports in yuan term jumping 15.9%y/y versus 5.2% expected, while imports surged 25%y/y compared to 15.2% median forecast. At first glance, it is tempting to conclude that the Chinese are back on track with the economic machine running at full speed. First of all, the weaker yuan had a massive effect on the trade valuation as in dollar term imports rose “only” by 16.7% (10% median forecast) and exports increased 7.9% compared to 3.2% expected and -6.2% in December. Secondly, the Chinese New Year always clouds economic data in January and February, making it difficult for investors to draw meaningful conclusions on the development of the world’s second largest economy.

We therefore remain cautious not to over interpret these preliminary figures from China, with the exception of the evolution of the foreign exchange reserve - which fell below the USD 3 trillion threshold in January, for the first time since early 2011.

All in all, a weaker yuan should continue to support China’s manufacturing industry that finally started to stabilise throughout 2016. Exports will therefore continue to recover should China’s relationship with the US remain friendly. USD/CNH continued to move toward 6.90 as it reached 6.87 this morning amid the strong dollar rally that has rattled FX market over the last few days.

Trump rally is not over

Yesterday was one of those days when stocks broke their all-time highs. The S&P 500 ended above 2300 points for the first time in history after Donald Trump revealed that he will make a corporate tax announcement within the next two to three weeks.

Equity markets revelled in the news and major indices recorded colossal gains. The Trump rally is not over and the new US president has once again managed to fuel market optimism.

Currency-wise, the greenback is still strong and the promised deregulation by the Trump administration is sending the dollar higher. On top of that, the Fed is expected to raise rates, which would boost dollar demand as other major countries are not expected to raise rates.

As a result of yesterday’s comment, gold took a hit and has lost almost 1% in the last 24 hours. We nonetheless believe that political and economic uncertainties are high in the medium-tern and we would take the opportunity to reload bullish positions.

Today's Key Issues (time in GMT):

• Jan CPI MoM, exp -0,10%, last 0,00% DKK / 08:00
• Jan CPI YoY, exp 0,80%, last 0,50% DKK / 08:00
• Jan CPI EU Harmonized MoM, exp 0,00%, last 0,10% DKK / 08:00
• Jan CPI EU Harmonized YoY, exp 0,80%, last 0,30% DKK / 08:00
• Feb 3 Money Supply Narrow Def, last 8.71t RUB / 08:00
• Dec House transactions YoY, last 17,30% EUR / 08:00
• Dec Industrial Production NSA YoY, last 3,20%, rev 3,30% EUR / 09:00
• Dec Industrial Production WDA YoY, exp 3,20%, last 3,20%, rev 3,30% EUR / 09:00
• Dec Industrial Production MoM, exp -0,10%, last 0,70%, rev 0,80% EUR / 09:00
• Dec Visible Trade Balance GBP/Mn, exp -£11450, last -£12163 GBP / 09:30
• Dec Trade Balance Non EU GBP/Mn, exp -£3300, last -£3577 GBP / 09:30
• Dec Trade Balance, exp -£3500, last -£4167 GBP / 09:30
• Dec Industrial Production MoM, exp 0,20%, last 2,10% GBP / 09:30
• Dec Industrial Production YoY, exp 3,20%, last 2,00% GBP / 09:30
• Dec Manufacturing Production MoM, exp 0,50%, last 1,30% GBP / 09:30
• Dec Manufacturing Production YoY, exp 1,70%, last 1,20% GBP / 09:30
• Dec Construction Output SA MoM, exp 1,00%, last -0,20% GBP / 09:30
• Dec Construction Output SA YoY, exp -0,50%, last 1,50% GBP / 09:30
• ECB's Mersch Speaks in Hamburg EUR / 09:50
• ECB's Weidmann Speaks in Hamburg EUR / 10:00
• Dec Industrial Production YoY, exp 1,20%, last 5,70% INR / 12:00
• Dec Trade Balance, exp 9.5b, last 9.1b RUB / 13:00
• Dec Exports, exp 28.4b, last 26.6b RUB / 13:00
• Dec Imports, exp 19.3b, last 17.5b RUB / 13:00
• Jan Unemployment Rate, exp 6,90%, last 6,90% CAD / 13:30
• Jan Import Price Index MoM, exp 0,30%, last 0,40% USD / 13:30
• Jan Net Change in Employment, exp -10.0k, last 53.7k, rev 46.1k CAD / 13:30
• Jan Import Price Index ex Petroleum MoM, last -0,20% USD / 13:30
• Jan Full Time Employment Change, last 81,3, rev 70,9 CAD / 13:30
• Jan Import Price Index YoY, exp 3,40%, last 1,80% USD / 13:30
• Jan Part Time Employment Change, last -27,6, rev -24,7 CAD / 13:30
• Jan Participation Rate, exp 65,8, last 65,8 CAD / 13:30
• Jan NIESR GDP Estimate, last 0,50% GBP / 15:00
• Feb P U. of Mich. Sentiment, exp 98, last 98,5 USD / 15:00
• Feb P U. of Mich. Current Conditions, last 111,3 USD / 15:00
• Feb P U. of Mich. Expectations, last 90,3 USD / 15:00
• Feb P U. of Mich. 1 Yr Inflation, last 2,60% USD / 15:00
• Feb P U. of Mich. 5-10 Yr Inflation, last 2,60% USD / 15:00
• Jan Monthly Budget Statement, exp $45.0b, last -$27.5b USD / 19:00
• Jan Money Supply M2 YoY, exp 11,30%, last 11,30% CNY / 23:00
• Jan Money Supply M1 YoY, exp 20,20%, last 21,40% CNY / 23:00
• Jan Money Supply M0 YoY, exp 8,90%, last 8,10% CNY / 23:00
• Jan New Yuan Loans CNY, exp 2440.0b, last 1040.0b CNY / 23:00
• Jan Aggregate Financing CNY, exp 3000.0b, last 1630.0b, rev 1626.0b CNY / 23:00
• Jan Foreign Direct Investment YoY CNY, exp 1,40%, last 5,70% CNY / 23:00

The Risk Today:

EUR/USD's selling pressures continue towards strong hourly support given around 1.0620. Theb a break of this level would pave the way towards stronger hourly support at 1.0581 (16/01/2016 low) and 1.0454 (11/01/2017 low). Expected to see continued consolidation. In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD is still trading below resistance given at 1.2771 (05/10/2016 high). The technical structure suggests that the pair should back bouncing lower towards support given at 1.2254 (19/01/2016 low). The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY is slowly pushing lower towards support at 111.36 (28/11/2016 low). Hourly resistance is given at 115.62 (19/01/2016 high). The break of hourly support given at 112.57 (17/01/2017 low) has confirmed bearish pressures. We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

USD/CHF's momentum is still bearish despite ongoing increase. Key resistance is given at a distance at 1.0344 (15/12/2016 high). We believe that the road is clearly wide-open for further decline if the pair does not break parity. In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

Focus on Abe-Trump meeting in Washington

Notes/Observations

Market focus on results from discussions between Japan PM Abe and President Trump on the future of trade policy, the car industry, defense policy and the JPY currency (monetary policy)

IMF continues to see Greek debt as unsustainable and is asking EMU Partners to arrange debt relief

IEA Monthly Oil Report highlights 90% compliance on Nov production cut agreement (record OPEC compliance)

Overnight:

Asia:

China Jan Trade surplus hit a 5-month high with both exports and imports exceeding expectations ($51.4B v $48.5Be); Exports hit 10-month high while imports hit 45-month high)

US President Trump said to have indicated to China President Xi that he will respect "one China" policy

BOJ announced amounts to buy in upcoming QE operation; Increased its 10-25 year purchases to ¥200B from ¥190B (**Note: part of its yield control policy)

RBA Quarterly Statement on Monetary Policy (SOMP) reiterated that appreciating AUD currency could complicated economic transition; inflation showed signs of having stabilized and to gradually rise over time. Cut its H1 2017 GDP growth forecast from 2.5-3.5% range to 1.5-2.5%

Europe:

Greece creditors said to be drafting framework for measures needed for auditors to return to Athens with plan for fiscal measures equal to ~2% of GDP

Greek Alt Fin Min: Greece must wrap up debt negotiations quickly to avoid having to renegotiate with potential new European leaders after upcoming elections

German Chancellor Merkel reiterated view that was not a matter of two speeds within Euro Zone; Region must remain as one bloc; members must deliver on common commitments

German govt officials continue to note that Euro currency was too weak and interest rates too low from a German perspective (Fin Min Schaeuble, Dep Min Spahn)

Americas:

US appeals court upholds suspension of Trump travel ban

Trump border 'wall' to cost $21.6B and take 3.5 years to build: internal report (higher than a $12-billion figure cited by Trump in his campaign)

Fed's Evans (dove, voter): three rate hikes this year isn't unreasonable; reiterated supports gradual rate hikes

Energy:

Goldman Sachs analyst saw global crude markets turning into deficit in H1 as US stockpiles decline and OPEC-led curbs take effect

Economic data

(NO) Norway Jan CPI M/M (miss): -0.1% v +0.2%e; Y/Y: 2.9% v 2.9%e

(NO) Norway Jan CPI Underlying M/M: -0.5% v 0.0%e; Y/Y: 2.1% v 2.6%e

(FR) France Dec Industrial Production (miss) M/M: -0.9% v -0.7%e; Y/Y: 1.3% v 1.4%e

(FR) France Dec Manufacturing Production (miss) M/M: -0.8% v -0.7%e; Y/Y: 0.6% v 0.6%e

(FR) France Q4 Preliminary Wages Q/Q: 0.1%e v 0.2% prior; Non-Farm Payrolls Q/Q: 0.4% v 0.3%e

(CZ) Czech Jan CPI (beat) M/M: 0.8% v 0.7%e; Y/Y: 2.2% v 2.0%e (2nd straight annual reading at central bank's inflation target)

(IT) Italy Dec Industrial Production M/M: +1.4% v -0.1%e; Y/Y: 3.4 v 3.3% prior, Industrial Production WDA Y/Y: 6.6% v 3.2%e

(UK) Dec Visible Trade Balance (beat): -£10.9B v -£11.5Be; Total Trade Balance: -£3.3B v -£3.5Be; Trade Balance Non EU: -£2.1B v -£3.3Be

(UK) Dec Industrial Production (beat) M/M: 1.1% v 0.2%e; Y/Y: 4.3% v 3.2%e

(UK) Dec Manufacturing Production (beat) M/M: 2.1% v 0.5%e; Y/Y: 4.0% v 1.7%e

Fixed Income Issuance:

(IN) India sold total INR110B vs. INR110B indicated in 2022, 2026, 2034 and 2046 bonds

(IT) Italy Debt Agency (Tesoro) sold €6.5B vs. €6.5B indicated in 12-month bills; Avg Yield: -0.247% v -0.250% prior; Bid-to-cover: 1.68x v 1.66x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 +0.1% at 3,283, FTSE +0.4% at 7,260, DAX +0.5% at 11,698, CAC-40 +0.3% at 4,840, IBEX-35 +0.1% at 9,450, FTSE MIB -0.2% at 18,903, SMI -0.2% at 8,423, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European equity indices are trading mixed as geopolitical uncertainties across Europe continue to weigh in the markets; FTSE 100 outperforming as energy, commodity and mining stocks trade sharply higher after the IEA raised 2017 global oil demand in its monthly report; Brent, WTI and other commodity contracts spiked higher off the report; Financial stocks weighing in the Eurostoxx with the French banking names SocGen and BNP Paribas the notable laggards, shares of Intesa Sanpaolo and Banco Santander also trading lower.

Upcoming scheduled US earnings (pre-market) include Aon, American Axle, Buckeye Partners, CBRE Group, Calpine, FirstService, Genpact, Interpublic Group, and Ventas.

Equities (as of 09:50 GMT)

Consumer Discretionary: [Euro Disney EDL.FR +65.0% (Disney issues offer for remaining shares at €2.00/shr; Q1 sales), Greene King GNK.UK -1.5% (9M sales), Haldex HLDX.SE -0.4% (Q4 results), Just Eat JE.UK -7.0% (CEO to step down), Kering KER.FR +2.6% (FY16 results)]

Consumer Staples: [Carl Zeiss Mediec AFX.DE +1.5% (Q1 results)]

Financials: [Unipol Gruppo Finanziario UNI.IT -1.7% (FY16 results)]

Healthcare: [Reckitt Benckiser RB.UK +0.2% (confirms to acquire MJN; FY16 results)]

Industrials: [DSV DSV.DK -0.7% (Q4 results), Elementis ELM.UK +6.9% (to acquire SRLH Holdings for $360M), Renault RNO.FR +1.6% (FY16 results)]

Materials: [ArcelorMittal MT.NL +4.0% (Q4 results)]

Technology: [Mycronic MTCR.SE +1.4% (Q4 results), RIB Software RSTA.DE +4.3% (prelim FY16 results), Suess MicroTec SMHN.DE -0.6% (FY16 results)]

Speakers

ECB's Villeroy (France) reiterated view that temporary inflation peak was very much under control

ECB's Mersch (Luxembourg) reiterated view that ECB measures were effective but needed to be complemented by structural reforms to sustain economic recovery. Inflation target of near 2% is the only goal that unconventional measures are bound by; not intended to be permanent

Eurogroup chief Dijsselbloem reiterated view that Greek reforms were taking a long time but headed in right direction. Today's discussion not about debt relief but budget surplus was on the table

Senior Euro Zone Official: Euro Zone lenders and IMF reached an agreement on a common stance on approach with Greece

Iran President Rouhani stated that was not seeking tensions, but would not give into bullying (**Note: today marks the 38th anniversary of the victory of the Islamic revolution in 1979)

IEA Monthly Report raised 2017 global oil demand growth from 1.3M bpd to 1.4bpd and noted that OPEC/Non-Opec oil supplies fell combined 1.5 million barrels per day. Opec production declined by 1M bpd in Jan; compliance of 90% (record compliance)

Currencies

FX market focus was on results from today's discussions on trade and FX issues between Japan PM Abe and President Trump.

Japan PM Abe has previously suggested that currency discussions should be left to G20 or G7 meetings. Analyst note that today's press conference might only hear about Japan's message that the BoJ's monetary policy so far has been to raise inflation. The USD/JPY pair was higher by 0.4% in the session as it benefited most from the USD yield curve shifting higher. Additionally BoJ increased its buying more of the back end of the curve in its QE operation h

EUR/USD was little changed around 1.0645 area but dealers continued to believe the pair had more downside potential. Dealers believe a break of 1.0610 would suggest a fresh round of a EUR bear market would begin. The weak growth potential coupled by political uncertainty in Europe provides the ECB with little other choice than to ignore German pressures to accelerate tapering.

GBP/USD was fractionally higher after better trade and industrial production data. GBP/USD hocvering around the 1.25 level just ahead of the NY morning.

Fixed Income:

Bund futures trade at 163.95 down 28 ticks trading towards lows on the back of Trump comments yesterday regarding Tax reform and reports on Eurozone lenders and IMF agreeing on a common stance on approach with Greece. A move above 164.13 high targets 164.46, 164.94 followed by 165.29. Support moves to 163.44 followed by 162.92.

Gilt futures trade at 125.57 down 41 ticks aided by stronger UK Industrial Production data. Analysts see support moving to 125.32 followed by 124.90. Resistance remains at 126.28 followed by 126.70. Short Sterling futures trade flat to down 1 bp Jun17Jun18 steepening to 18/19bp

Friday's liquidity report showed Thursday's excess liquidity rose to €1.334T up €4B from €1.330T prior. Use of the marginal lending facility rose to €337M from €288M prior.

Corporate issuance was quiet with just the sole issuer raising $300M, which brings week issuance to $13.1B which fell short of Analyst expectations. For the week ending Feb 8th Lipper US fund flows reported IG Funds net inflows of $4.93B bringing YTD inflows to $17.29B, High Yield Funds reported net inflows of $441.72M bringing YTD inflows to $732.4M.

Looking Ahead

(DE) German Economy Ministry Monthly Report

(DE) ECB's Weidmann (Germany)

(MX) Mexico Jan Nominal Wages: No est v 3.9% prior

(BE) Belgium Jan YTD Budget Balance: No est v -€12.6B prior

(MX) Mexico Jan ANTAD Same-Store Sales Y/Y: No est v 5.3% prior

(PE) Peru Dec Trade Balance: No est v $0.2B prior

06:00 (PT) Portugal Jan CPI M/M: No est v 0.0% prior; Y/Y: No est v 0.9% prior

06:00 (PT) Portugal Jan CPI EU Harmonized M/M: No est v 0.0% prior; Y/Y: No est v 0.9% prior

06:00 (IE) Ireland Dec Property Prices M/M: No est v 1.5% prior; Y/Y: No est v 8.6% prior

06:00 (UK) DMO to sell combined £2.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £1.0B respectively)

06:30 (IN) India Weekly Forex Reserves

06:30 (CL) Chile Central Bank Economist Survey

06:45 (US) Daily Libor Fixing - 07:00 (IN) India Dec Industrial Production Y/Y: 1.2 %e v 5.7% prior

07:00 (CZ) Czech Central Bank comments on CPI data

08:00 (RU) Russia Dec Trade Balance: $9.5Be v $9.1B prior; Exports: $28.4Be v $26.6B prior; Imports: $19.3Be v $17.5B prior

08:00 (ES) Spain Debt Agency (Tesoro) to announce upcoming issuance

08:15 (UK) Baltic Dry Bulk Index

08:30 (US) Jan Import Price Index M/M: 0.3%e v 0.4% prior; Y/Y: 3.3%e v 1.8% prior

08:30 (CA) Canada Jan Net Change in Employment: -10.0Ke v +53.7K prior; Unemployment Rate: 6.9%e v 6.9% prior

09:00 (MX) Mexico Dec Industrial Production M/M: -0.2%e v 0.0% prior; Y/Y: -0.3%e v +1.3% prior; Manufacturing Production Y/Y: 1.5%e v 4.3% prior

09:00 (HU) Hungary PM Orban's State of the Nation speech

10:00 (UK) Jan NIESR GDP Estimate: No est v 0.5% prior

10:00 (US) Feb Preliminary University of Michigan Confidence: 97.8e v 98.5 prior

11:00 (EU) Potential Sovereign rating after European close

(CA) Czech Sovereign Debt to be rated by Moody's

(FR) France Sovereign Debt to be rated by Moody's

(IT) Italy Sovereign Debt to be rated by Moody's

(SK) Slovakia Sovereign Debt to be rated by Fitch

(SE) Sweden Sovereign Debt to be rated by Fitch

12:00 (JP) Japan PM Abe meets President Trump in Washington DC

13:00 (US) Weekly Baker Hughes Rig Count data

14:00 (CO) Colombia Central Bank Minutes

14:00 (US) Jan Monthly Budget Statement: +$43.0Be v -$27.5B prior

EUR/USD is almost unchanged on Friday, as the pair trades at 1.0650. On the release front, French numbers were a mix. Industrial Production declined 0.9%, worse than the forecast of -0.6%. However, Preliminary Payrolls improved to 0.4% in the fourth quarter of 2016, edging above the forecast of 0.3%. This marked the highest gain since 2011. In the US, today’s highlight is Preliminary UoM Consumer Sentiment, with the markets expecting a strong reading of 97.9 points.

The eurozone economy is looking brighter early in 2017. Growth has been steady, and inflation, which has languished at low levels for years, is higher. However, there are black clouds on the horizon. There is increasing uneasiness in the markets as populist, far-right parties are gaining support in France, the Netherlands and Germany, threatening the old order. First up is France – the country goes to the polls in April, and Marie Le Pen, the far-right candidate in the ring, is leading in the polls ahead of the first round of voting. Le Pen wants to take France out of the Eurozone and has promised a referendum on France’s membership out of the European Union. Although Le Pen is not expected to win the presidency, neither was Donald Trump. Le Pen has enthusiastically endorsed Trump’s anti-establishment message and if she does well in the polls, the euro could be headed to lower levels.

Across the Channel, British Prime Minister Theresa May is preparing to invoke Article 50 and commence negotiations with the EU over Brtain’s departure by the end of March. May has said that a deal could be reached in two years, but on Thursday, the head of the European Commission in Britain, Jacqueline Minor, countered that the timeline was unrealistic, suggesting that an 'implementational' phase would be needed. The European Union doesn’t want to encourage other members to exit, so it has no reason to go out of its way to accommodate Britain, and Minor has warned that the Brexit negotiations could get 'nasty'.

Donald Trump didn’t field much of an economic platform during the election campaign, but he did promise a significant fiscal boost through infrastructure spending and tax cuts. This led to a post-election euphoria in the markets and boosted the US dollar. Fast forward to February, and optimism has been replaced by caution and unease, as Trump continues to entangle himself in controversy, both with US trading partners and at home, with the media and Supreme Court. On Thursday, Trump said that the administration was working on a 'phenomenal' tax plan, which would be released in a few weeks, although he gave no details. Trump’s plan is expected to lower taxes for both corporations and individuals, although tax reform promises to be a slow and daunting task, as changes to the US tax code can only be made by Congress. Still, the markets are hungry for any movement in this direction, and the dollar could get a strong boost once Trump outlines his tax agenda.

The NZD/USD dropped from highs, making a very clear head and shoulders pattern (Bearish SHS) with strong POC zone. Daily also turned bearish, showing a bearish Marubozu momentum candle. 0.7230-45 (EMA 89, Bearish order block, 38.2,H4, ATR high) could reject the price on a retest towards 0.7160 and 0.7130. Interesting to notice is that Bearish order block is the neckline of SHS pattern. 1h momentum break or 4h close below 0.7160 will aim for a test of 0.7100 level.

EUR/USD Between Levels Of Significance

'Multiple EUR/USD tests of support usually indicate the support is more likely to fail. Also, support areas are wide areas, not precise levels.' - Adam Grimes, Waverly Advisors (based on investing.com)

Pair's Outlook

During the early hours of Friday's trading session the common European currency began the day and traded against the US Dollar between the levels of significance, which together have provided the pair with support for the past three consecutive trading sessions. At the start of the session the currency exchange rate was above the monthly PP, which is at 1.0650. The forecast of a decline remains in force, as it can be clearly seen that slowly but surely the pair is moving lower. After passing the monthly PP the rate is most likely set to fall to the 55-day SMA at 1.0688.

Traders' Sentiment

Traders have abandoned the bearish outlook, as 51% of trader open positions are long on Friday. In the meantime, 60% of trader set up orders are to sell the Euro.

'Broader signals suggest that 1.2675 may be reachable in the next few days if the Pound can hold support in the low 1.25s.' – Scotiabank (based on PoundSterlingLive)

Pair's Outlook

The GBP/USD pair erased its intraday gains on Thursday and slid back under the 1.25 threshold, due to US President Trump's comments boosting the US Dollar. No major changes in the Cable's performance are anticipated today, as the support cluster around 1.2440 is still sufficient to prevent the Pound from edging lower. At the same time, technical indicators are now giving bullish signals, implying fundamental data could restore the Sterling's bullish momentum today. Other technical signs also suggest the British currency is to begin appreciating soon, but political events keep causing aberrations.

Traders' Sentiment

There were barely no changes in the market sentiment over the day, as it remains bullish at 61% (previously 62%). As for the pending orders, the share of buy ones declined from 50 to 44%.

"The [US-Japan] summit may be a quick attempt by Japan to deal with pressure from the United States to allow the yen to appreciate." – SMBC Nikko Securities (based on Reuters)

Pair's Outlook

The US President Trump's promise to reveal a tax plan in the upcoming weeks caused the Greenback to soar, reaching a one-week high against the Japanese Yen. Yesterday's rally allowed the Buck to approach the six-week down-trend, which is expected to be put to the test today. The 20-day SMA is bolstering the trend-line, suggesting a breach is doubtful, unless another political event sparks USD-buying. In that case, the USD/JPY pair's main target will become the cluster around 114.40, formed by the monthly PP and the weekly R1. Meanwhile, technical indicators are unable to confirm the possibility of another positive outcome, as they keep giving bearish signals.

Traders' Sentiment

Today 61% of traders are long the Buck, compared to 63% on Thursday. The number of buy orders inched up from 47 to 59%.

'The reversal was almost entirely due to the surge in the dollar that took place after President Trump revealed he had a 'phenomenal' tax plan ready for unveiling in a few weeks' time.' – Edward Meir, INTL FCStone (based on Reuters)

Pair's Outlook

No matter how strong the technical perspective of a Gold surge can be, changes in the fundamental situation of the US Dollar are capable of destroying any kind of forecast, by changing the whole base of the markets. Due to a decision made by the President of US Donald Trump, the yellow metal fell on Thursday and continued to do so on Friday. If the situation persists, the bullion will fall at least to the 1,219.20 mark, where the 38.20% Fibonacci retracement level is located at. On the other hand, the yellow metal might rally and surge back up to the weekly R1 at 1,233.81.

Traders' Sentiment

SWFX traders have not changed their open positions during the last 24 hours, as 54% of open positions remain long. Meanwhile, 58% of trader set up orders are to buy the metal.

'There is no sign of a pickup in layoff activity. We continue to view the signal of extremely subdued layoffs from the jobless claims data as evidence of companies attempting to retain their workers in a tight labor market'. - John Ryding, RDQ Economic

The number of Americans filing for first-time unemployment benefits declined to an almost 43-year low, official figure revealed on Thursday. Last week's drop in claims was driven by tightening labor market, which is likely to prompt wage growth. According to the US Department of Labor, national jobless claims declined 12,000, to 234,000, during the week ending February 4 from the preceding week's upwardly revised 246,000. Meanwhile, economists anticipated a slighter deceleration to 250,000 during the reported period. Filings have been below 300,000 for 101 straight weeks — the longest streak since 1973. In the meantime, the less volatile four-week moving average of initial claims dropped 3,750 to 244,250, the lowest level since November. Furthermore, continuing claims increased 15,000 to 2.08 million during the week ended January 28, while their four-week moving average fell 3,750 to 2.08 million. These claims, reported with a one-week delay, reflect the number of people already collecting unemployment benefits. Other data released by the Commerce Department on Tuesday showed US wholesale inventories climbed 1% in December, following a similar gain in November. Excluding automobiles, wholesale stocks grew 0.9% in December. The change in private inventories contributed 1% to GDP growth in the final quarter of 2016.