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A mixed trading day for U.S. stocks on Wednesday failed to provide direction to Asian equities today. While China, Hong Kong, and Korea led MSCI Asia ex-Japan to its highest levels since mid-2015, Japanese equities are unable to gain traction despite machinery orders rising 6.7% MoM in December and the Yen dropping slightly. A price action as such indicates that stocks are moving on specific corporate news rather than a global macro driven story, and with no tier one economic data on the calendar this indecisive performance is likely to resume into Europe trade.

The greenback traded slightly higher against a basket of currencies today, but remained within a very tight range. For the past three months, sentiments driven by expected fiscal and monetary policies drove the U.S. currency to its highest level in 14-years but the rally stalled as of late as these policies seem now to require more time than previously anticipated to come into force, and several comments from the White House weighed on the dollar. This is becoming more complicated now, as rising political uncertainty in Europe supports the U.S. currency, meanwhile on the other side, falling treasury yields plays an opposite role.

Concerns over the future of France, Germany and the Netherlands dragged the euro in the past couple of days, but the more exciting story developing now is in a much smaller country. Greece which has been ignored recently is back in the headlines as the IMF clashes with the Eurozone over the future of the heavy indebted country. Greece's debt to GDP which already stands at 176% and unemployment above 23% is required to achieve a primary surplus of 3.5% by next year. For some economists, this looks as mission impossible, and for Greece to survive, a haircut on its debt should be taken. However, with elections looming in Germany there's very little chance of this happening, and without a third bailout aid, Greece will be out of cash in July.

The pound continued to show resilience after British MPs voted to begin the Brexit process. After all this was widely anticipated and we don't expect to see any significant moves until article 50 is triggered and the formal negotiations begin.

With all these stories developing, investors are finding the yellow metal as the safest investment. Investors continued to increase their holdings in GLD as SPDR holdings rose for a sixth consecutive day. The more political tensions intensify, the more GLD is likely to attract investors, and the higher prices will go.

NZD falls as RBNZ signals neutral stance

Asia Mid-Session Market Update: NZD falls as RBNZ signals neutral stance, calls out market expectations of hikes premature

US Session Highlights

(US) DOE Crude: +13.8M v +2.5Me; Gasoline: -0.9M v +1Me; Distillate: +0.03M v +0.5Me

(US) MBA MORTGAGE APPLICATIONS W/E FEB 3RD: +2.3% V -3.2% PRIOR

(US) President Trump order to get rid of 2 regulatory initiatives for each new initiative is challenged in court by environmental group NRDC and others - press

(EU) ECB's Draghi: ECB will remain accommodative until at least the end of his term, Oct 2019 - France press report of earlier Draghi remarks

US markets on close: Dow -0.2%, S&P500 +0.1%, Nasdaq +0.2%

Best Sector in S&P500: Utilities

Worst Sector in S&P500: Financials

Biggest gainers: MCHP +6.0%, CTSH +5.0%, KSS +4.3%, XRX +4.1%, JWN +4.1%

Biggest losers: AKAM -10.6%, GILD -8.6%, AIZ -6.8%, ICE -4.8%, JEC -3.7%

At the close: VIX 11.5 (0.2pts); Treasuries: 2-yr 1.15% (-2bps), 10-yr 2.35% (-4bps), 30-yr 2.96% (-6bps)

US movers afterhours

PAYC: Reports Q4 $0.18 ex-items v $0.12e, R$87.8M v $86.2Me; extends existing stock repurchase plan; Guides Q1 Rev $114.5-116.5M v $114Me; +10.5% afterhours

IMPV: Reports Q4 $0.32 v $0.03e, R$78.4M v $70.2Me; Guides Q1 -$0.06 to -$0.02 v -$0.10e, R$67-69M v $68Me; +9.7% afterhours

PCMI: Reports Q4 $0.51 v $0.36e, R$586.6M v $578Me; +9.1% afterhours

SCSS: Reports Q4 $0.25 v $0.32e, R$313.4M v $314Me; +6.2% afterhours

WFM: Reports Q1 $0.39 adj v $0.39e, R$4.92B v $4.99Be; Q2 SSS to date tracking -3.2%; -1.5% afterhours

FISV: Reports Q4 $1.16 v $1.16e, R$1.43B v $1.48Be; -2.6% afterhours

QLYS: Reports Q4 $0.23 v $0.18e, R$52.2M v $52.8Me; Guides Q1 $0.17-0.19 v $0.20e, R$52-53M v $54.8Me; -7.1% afterhours

IRBT: Reports Q4 $0.49 v $0.39e, R$212.5M v $206Me; Guides initial FY17 $1.35-1.65 v $1.69e, R$770-785M v $763Me; -9.1% afterhours

Politics

(US) Ninth Circuit Court of Appeals will not be issuing ruling on Trump travel ban today - press

(US) Senate confirms Jeff Sessions as the next US Attorney General by 52-47 margin

Asia Key economic data:

(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE UNCHANGED AT 1.75%; AS EXPECTED

(NZ) NEW ZEALAND DEC BUILDING PERMITS M/M: -7.2% V -9.6%PRIOR (2nd straight decline)

(AU) AUSTRALIA Q4 NAB BUSINESS CONFIDENCE: 5 V 6 PRIOR

(AU) AUSTRALIA DEC HIA NEW HOME SALES M/M: +0.2% V +6.1% PRIOR; 2nd straight increase

(JP) JAPAN Q4 HOUSING LOANS Y/Y: 3.1% V 2.7% PRIOR

(JP) JAPAN JAN M2 MONEY STOCK Y/Y: 4.1% V 4.0%E; M3 MONEY STOCK Y/Y: 3.5% V 3.5%E

(JP) JAPAN DEC CORE MACHINE ORDERS M/M: 6.7% V 3.0%E; Y/Y: 6.7% V 4.5%E

Asia Session Notable Observations, Speakers and Press

Markets stateside as well as in Asia appear to have reached an equilibrium, with sessions of modest losses alternating with those of modest gains; Few macro catalysts are observed, even as bond markets rally continues to put in question the confidence of 3 FOMC rate hikes this year. Investors are now looking forward to Fed Chair Yellen's Congressional testimony next week as key determinant of near term policy bias.

Fixed income markets had begun to price in the possibility of RBNZ preparing for a rates liftoff after the latest quarterly inflation data returned to target range for the first time in over 2 year. However today's RBNZ statement, economic projections, and subsequent commentary delivered a squarely neutral assessment. While acknowledging progress on inflation, RBNZ is not convinced the upward pressure can be sustained and also noted elevated uncertainty from external factors. NZD/USD was most volatile among the majors, selling off by 100pips below $0.72.

PBoC has once again skipped its reverse repo operations, calling liquidity conditions ample; Separately, a local press report speculated the central bank will continue to tighten policy, even though economists have suggested that last week's 10bp hike in reverse repo yields were an adjustment to fundamentals rather then a start of a trend.

Ahead of the high profile Abe-Trump summit tomorrow, Japan PM signaled he is prepared to discuss the currency issues at G20, with local press also calling for more formal framework for cooperation between US and Japan. BOJ Dep Gov Nakaso also noted that while the central bank is prepared to consider raising long-term rates target in the future, momentum behind inflation does not yet justify the shift.

China:

(CN) China Ministry of Commerce (MOFCOM) Spokesperson Sun Jiwen: Urges other countries to drop protectionism

(CN) White House press secretary: Pres Trump sent letter to China Pres Xi; Looking forward to constructive relationship - press

(CN) PBOC may continue tightening of monetary conditions in 2017 - Chinese press

Japan:

(JP) Japan PM Abe: To suggest to Trump to talk about currency issues at G20 and G7

(JP) Japan PM Abe to propose new cabinet level framework for US-Japan talks on trade, security, and macroeconomic issues - press

(JP) Japan Chief Cabinet Sec Suga: nothing has been decided on US/Japan economic framework

(JP) BOJ Dep Gov Nakaso: Momentum towards price target not yet sufficiently firm; BOJ should consider raising long term rate increase in near future, though momentum toward hitting price goal not yet sufficient

Australia/New Zealand:

(NZ) RBNZ Gov Wheeler: comfortable with a neutral bias, neutral bias was the right one to have at this point; Market a bit ahead of itself in pricing in 2017 rate hike.

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.4%, Hang Seng +0.4%, Shanghai Composite +0.4%, ASX200 +0.2%, Kospi +0.2%

Equity Futures: S&P500 flat; Nasdaq flat; Dax flat; FTSE100 flat

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

EUR 1.0675-1.0700; JPY 111.70-112.30; AUD 0.7610-0.7645; NZD 0.7190-0.7280

Apr Gold +0.3% at $1,243/oz; Mar Crude Oil +0.6% at $52.60/brl; Mar Copper +0.3% at $2.67/lb

(CN) PBOC SETS YUAN MID POINT AT 6.8710 V 6.8849 PRIOR

(CN) PBOC skips reverse repo operations (5th consecutive halt)

SPDR Gold Trust ETF daily holdings rise 5.7 tonnes to 832.7 tonnes; 6th consecutive increase; Highest since Dec 16th

(JP) Japan MoF sells ¥723B in 0.6% (0.6% prior) 30-yr bonds; Avg yield: 0.907% v 0.745% prior; Bid to cover: 3.23x v 3.33x prior

Asia equities/Notables/movers by sector

Consumer discretionary: 751.HK Skyworth Digital +1.8% (Jan result); 2432.JP DeNA Co +1.9% (9-month result); 034230.KR Paradise Co -0.8% (Q4 result)

Consumer staples: 2607.JP Fuji Oil Holdings +5.5% (9-month result); 168.HK Tsingtao Brewery Co +5.3% (Carlsberg to bid stake); RHL.AU Ruralco Holdings +4.1% (ACCC not oppose acquisition)

Financials: 6881.HK China Galaxy Securities Co +1.1% (Jan result); PMV.AU Premier Investments -2.2%; AMP.AU AMP Capital +3.8% (FY16 result)

Industrials: 2238.HK Guangzhou Automobile Group +3.1%, 1958.HK +2.7% BAIC Motor Corp (Jan result); 6448.JP Brother Industries -7.9% (9-month result); 4118.JP Kaneka Corp -11.5% (9-month result); 052690.KR Kepco Engineering & Construction +7.0% (offer to join UK project); 1919.HK COSCO Shipping Co +10.4% (Maersk to be profitable this year); 7202.JP Isuzu Motors -0.2% (9-month result)

Technology: 3436.JP Sumco Corp +6.6% (Q4 result)

Materials: RIO.AU Rio Tinto -0.9% (FY16 result); 3863.JP Nippon Paper Industries -1.5% (9-month result)

Energy: AGL.AU AGL Energy +4.5% (H1 result); 1662.JP Petroleum Exploration +3.6% (9-month result)

Telecom: 035720.KR Kakao Corp +5.6% (Q4 result)

Market movers today

The market is still scrutinizing any news from the FOMC and tonight we have both Bullard and Evans on the wires.

Initial jobless claims will also be watched to get a first idea of the strength of the US labour market in February.

In Norway, it is time for mainland GDP. We estimate 0.3% q/q growth in Q4. See more in Scandi markets on page 2.

Selected market news

Risk appetite returned to the European government bond market yesterday and especially the periphery bond markets, including France, performed well and spreads tightened against Germany. French 10Y yields dropped close to 10bp. However, bunds were also supported and German 10Y yields were pushed below 0.3% again. German 2Y yields were pushed to a record low of -0.80%, fuelled by the ECB now buying bonds with a yield below the depo rate at -0.40% and the tight repo situation.

There is no single explanation behind the sudden support to France and periphery markets. But many investors probably concluded that the spread levels, for example, for France, which we have not seen this wide since the debt crisis in 2012, were starting to look attractive. Short covering was probably also a part of the story. Reassuring words from ECB president Mario Draghi furthermore supported sentiment. According to Bloomberg, Draghi said that he sees the ECB maintaining an accommodative policy until the end of his term in October 2019. It seems that Draghi is well aware that any talks about ECB tapering or less accommodative policy are very negative for periphery bond markets. The European bond market has also been weighed down by a severe supply wave this week with new bonds from the Netherlands, Belgium, Finland and the EFSF. The supply is now slowing down.

But it does not mean that the market is out the woods yet. More Italian supply is coming to the market already on Monday, the French political situation is still very uncertain and despite Draghi's reassurance, the ECB tapering discussion could soon resurface. The concern about the Italian banking sector is a never ending story. Finally, the stand-off between Greece, the EU and not least the IMF continues. Yesterday, the Dutch Finance Minister and Eurogroup Chairman Jeroen Dijsselbloem said that if the IMF will not take part or withdraws from the Greek bailout programme, the Netherlands would withdraw too. Greek 2Y yields are again trading dangerously close to 10%.

In the US equity market, financials came under pressure as little news on deregulations were seen and as the recent rally in bonds spooked investors, as it threatens to erode income for US banks. It seems that the market is starting to lose some of its patience with the Trump administration as little news on the promised pro-growth policies including tax-cuts are seen. The major indices all ended more or less flat. The energy sector did well, as oil prices were pushed higher by bullish gasoline stock and demand data.

Key Points:

• Greece and Germany on a debt collision course.
• Greece unlikely to meet budget or debt repayment schedule.
• The question is now political as to whether Greece remains part of the EU.

It appears that history is again turning full circle as the formerly 'solved' Greek debt crisis returns to raise its ugly head and again threaten the wider Eurozone. The past week has seen the IMF again enter the fray and suggest that a looming debt Armageddon could potential pose a risk to the broader stability of the Eurozone. However, despite evidence that the previous bailout programs are not working, Germany is standing their ground and yelling a resolute no to any mention of debt relief for the embattled Greek nation.

Increasingly, the IMF is becoming unwilling to throw good money after bad, and continue to fund Greece's survival,without the prospect of debt cuts to provide for a relatively achievable recover for the nation. The renowned institution has, quietly behind the scenes, been pushing for a debt relief deal from Germany but is meeting staunch resistance. In fact, German Finance Minister Wolfgang Schaeuble has publicly suggested that the Lisbon Treaty blocks any form of debt forgiveness and that any moves in this direction would have to bring about a Greek exit from the common currency.

However, it remains to be seen just how far Germany is prepared to push Greece given that Britain will soon also exit the European Union. There is a definite split in the air between EU nations on how to deal with the errant Greek's but it appears relatively clear that the nation will indeed fail to meet either their current budget or the debt repayment target. It also begs the question as to the morality of asking the Greek people to continue accepting stark austerity measures when the money simply goes to Germany as part of the interest payments on borrowings and does little to reduce the current debt burden. Obviously, that is a highly untenable situation to have a European partner nation in effective debt servitude.

Given the fact that prior bailouts have not worked, and some of the other external pressures, we are rapidly reaching a critical juncture where both Europe and the Greek people will need to decide upon the way forward. Clearly there needs to either be debt forgiveness or an exit from the Eurozone. Subsequently, the choices have now exited the realm of economics and we are now faced with a range of political questions. Politics is likely to decide the course of action in the coming months but one thing is for sure, continued German intransigence could be presiding over the first few dominoes to fall in the greater question of the EU's survival.

Key Points:

• Turning point of the ABCD wave appears to have been reached.
• Most technical readings are indicative of a near-term decline.
• Brief ranging phase could come into effect this week.

The Euro's corrective wave seems to have finally given us a turning point which could signal we are destined to see some of the near-term downside risk realised. What's more, there are a number of other technical readings similarly suggestive of a spate of losses for the recently resurgent pair.

First and foremost, it's worth establishing if we have, in fact, reached the forecasted turning point in the ABCD corrective wave. Well, as shown below, the combination of both the 100 day EMA and the long-term trend line seem to suggest that we have reached a near-term peak for the EUR. Indeed, the rather voracious selling pressure seen over the past number of sessions could reflect a wider consensus that the pair actually briefly overshot the appropriate point of inflection.

Aside from the EMA and the trend line, the current Parabolic SAR and MACD oscillator readings provide further reasons to be bearish regarding the EURUSD. Specifically, there has been a clear signal line crossover on the MACD and a subsequent inversion of the Parabolic SAR bias. When combined with the aforementioned technical factors, upside potential seems notably limited as we move ahead.

However, downside risks are not nearly as significant as we would typically like to see when forecasting this particular wave. As is demonstrated below, we could also be dealing with a bullish channel formation which, when reinforced by the 38.2% Fibonacci level, could prevent the requisite downward momentum. As a result, we may have a brief ranging phase on our hands prior to any real declines taking hold of the pair.

Once the 38.2% level has been breached, we expect to see the pair retreat to around the 1.0543 price before having another go at moving beyond the long-term trend line. This point coincides with not only the 23.6% Fibonacci level, but it would also be the appropriate retracement for the overall ABCD pattern.

Ultimately, headline risks and the impacts of fundamentals will still be forces to contend with moving ahead but the corrective wave has proven largely resilient to market upsets. Consequently, follow the news feed fairly closely as it could help to explain any overshoots or ‘fake-outs' even if something short of an absolute calamity is unlikely to materially affect the medium-term forecast.

Daily Pivots: (S1) 1.0628; (P) 1.0643; (R1) 1.0655; More...

Breach of 1.0635 in EUR/CHF indicates decline resumption. Intraday bias is back on the downside for 1.0620 key support level next. Decisive break of 1.0620 will confirm resumption of whole fall from 1.1198. In that case, next downside target will be 1.0485 fibonacci level. On the upside, break of 1.0706 minor resistance will raise the chance of medium term reversal and turn focus 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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Global Markets:

• Asian stock markets: Nikkei up 0.35 %, Shanghai Composite and Hang Seng both gained 0.30 %, ASX 200 rose 0.10 %
• Commodities: Gold at $1242 (+0.25 %), Silver at $17.79 (+0.50 %), WTI Oil at $52.60 (+0.50 %), Brent Oil at $55.40 (+0.55 %)
• Rates: US 10 year yield at 2.34, UK 10 year yield at 1.21, German 10 year yield at 0.30

News & Data:

• RBNZ Keep Rates On Hold At 1.75%; NZD too high to be sustainable; Policy will continue to be accommodative
• RBNZ say longer term inflation outlook well anchored at 2%; numerous uncertainties exist, may need to adjust policy accordingly
• RBNZ push back the target date for reaching 2% inflation target by two quarters, now sees Q2 2019 (prev. Q4 2018)
• Australia HIA New Home Sales (MoM) Dec: 0.2% (prev 6.1%)
• Australia NAB Business Confidence (Q4): 5 (rev prev 6)
• Japan Machinery Orders (MoM) Dec: 6.7% (est 3.0% prev -5.1%)
• Japan Machinery Orders (YoY) Dec: 6.7% (est 4.5% prev 10.4%)
• Japan Housing Loans (YoY) Q4: 3.1% (prev 2.7%)
• UK RICS House Price Balance (Jan): 25% (est 22% rev prev 23%)
• New Zealand Building Permits (MoM) Dec: -7.2% (rev prev -9.6%)
• PBoC Fixes USDCNY Reference Rate At 6.8710 (prev fix 6.8849 prev close 6.8715)

Markets Update:

The New Zealand Dollar came under pressure overnight following the RBNZ rate decision. While the central bank left rates unchanged, the statement was more dovish than the market anticipated. The RBNZ said that the NZD is too high to be sustainable and that policy will continue to be accommodative. Further, the RBNZ pushed back the target date for reaching 2 % by two quarters, something that was not expected by the market.

NZD/USD fell from 0.73 to 0.7240 after the statement and extended losses to 0.7190 later in the session. Meanwhile, AUD/NZD rallied from 1.0445 to 1.0510 and later reached 1.06.

AUD/USD didn't really benefit from the AUD/NZD flows though. The pair fell from 0.7645 in the early Asian session to a low of 0.7610.

The US Dollar strengthened against most other major currencies as well. The Euro is back below 1.07, while GBP/USD is consolidating around 1.25. USD/JPY rose from 111.70 to 112.30 amid a rally in Asian equity markets.

Upcoming Events:

• 06:45 GMT – Swiss Unemployment Rate
• 07:00 GMT – German Trade Balance
• 13:30 GMT – US Initial Jobless Claims
• 14:10 GMT – FOMC Member Bullard speaks
• 18:30 GMT – Bank of England Governor Carney speaks

As expected, RBNZ left the OCR unchanged at 1.75%, following three rate cuts in 2016. The policy statement has changed to a more neutral tone from an accommodative one previously. Yet, the central bank's rate hike forecasts stay at a slower pace than what the market has priced in. Policymakers acknowledged that economic growth has 'increased as expected and is steadily drawing on spare resources'. The outlook remain s positive. It also acknowledged the return of headline CPI to the target band, and judged it would gradually move to the midpoint of the band. We expect the OCR would stay unchanged for the rest of the year.

As noted in the monetary statement, policymakers agreed that the pickup in domestic growth has come in line with expectation. The outlook remains positive as supported by 'ongoing accommodative monetary policy, strong population growth, increased household spending and rising construction activity'. Inflation has improved recently. Headline CPI has returned to 'the target band as past declines in oil prices dropped out of the annual calculation'. RBNZ expects inflation to 'return to the midpoint of the target band gradually, reflecting the strength of the domestic economy and despite persistent negative tradables inflation'.

On the housing market, RBNZ acknowledged that recent housing prices have slowed down, attributing it to the 'loan-to-value ratio restrictions and higher mortgage rates'. However, it stayed cautious and indicated that 'It is uncertain whether this moderation will be sustained given the continued imbalance between supply and demand'.

On the monetary policy outlook, RBNZ reiterated that it would 'remain accommodative for a considerable period. Numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly'. The central bank now forecasts one rate hike in 2019. While the forecast comes in more hawkish than previously, it remains more dovish than market expectations.

Earlier this week, Governor Wheeler announced that he will not be seeking another term at the RBNZ, once his current term comes to an end in September 2017. Deputy governor Grant Spencer would take over as acting governor for a period of 6 months upon the conclusion of Governor Wheeler's term, before a new full time governor is appointed in March 2018. Yet, we believe this would not do much change to the monetary stance of RBNZ

EUR/USD

Currencies and stocks struggled for direction this Wednesday, with major pairs confined to tight, familiar ranges, and the dollar firmer during the first half of the day, and pressured in US trading hours, as usual lately. The greenback fell alongside with US yields, with the 10-year note benchmark falling down to 2.34%, a fresh three-week low, as political risks coming from Europe and the absence of news about US new administration stimulus agenda fueled demand for safe-haven assets.

The EUR/USD pair's recovery, however, was limited by the key resistance in the 1.0700/10 region, mainly because of a light macroeconomic calendar that shifted the focus to upcoming French presidential election, which is becoming more a matter of leaving the EU than a question of domestic policies. Also, comments from ECB's Draghi, stating that the Central Bank's monetary policy will remain accommodative until at least October 2019, when his mandate ends, dented EUR's demand.

The EUR/USD pair trimmed half of its Tuesday's losses, still trading in the red for the week and with the upward potential looking limited, given that in the 4 hours chart, the 20 SMA is crossing below the 100 SMA, both around 1.0720, whilst technical indicators have bounced from oversold readings, but lost upward strength within negative territory, indicating limited buying interest around the common currency. The pair posted a daily low of 1.0640, yet failure to sustain gains around the current level, will probably lead to a downward extension towards the 1.0590 region during the upcoming sessions.

Support levels: 1.0650 1.0620 1.0590

Resistance levels: 1.0750 1.0800 1.0840

USD/JPY

The USD/JPY pair continues pressuring its recent multi-week lows on persistent risk aversion. The pair attempted to recover some ground during London trading hours, but resumed its decline after Wall Street's opening, helped by falling US Treasury yields. The 10-year note benchmark fell to a fresh 3-week low of 2.34% as international investors run away from US assets. Japan released its Trade Balance and Current Account figures for December earlier on the day, showing the biggest surplus since 2007. Also, the BOJ released the Summary of Opinions of its latest monetary policy, showing that most board members believe that Japan's economy is recovering, but also that inflation will continue lagging for a while more. Additionally, policymakers expressed their concerns about Trump´s policies, saying that “although overseas economies have turned to a moderate recovery, uncertainties are likely to persist, such as about the economic policies of the new U.S. administration and their impact on emerging economies.” Technically, the risk remains towards the downside as the pair is pressuring its 100 DMA for a third consecutive day, currently around 111.60. In the shorter term, and according to the 4 hours chart, the bias is also bearish, given that the pair has been developing well below a bearish 100 SMA, currently around 113.40, whilst technical indicators have posted modest recoveries within bearish territory, unable to confirm an upcoming recovery. The main bearish target on a bearish breakout is the 109.90 level, the 50% retracement of the latest bullish run.

Support levels: 111.60 111.25 110.80

Resistance levels: 112.10 112.60 113.00

GBP/USD

The GBP/USD pair held on to gains, ending the day not far from Tuesday's high of 1.2545, with buying interest defending the downside at 1.2470 ever since the day started. The UK Parliament is set to give the final vote on the Brexit bill by the end of the day. The House of Commons is discussing a set of amendments particularly aimed to define the key principles for the negotiation process. The bill still needs to pass through the House of Lords, later this month, before PM May is finally able to pull the trigger on the Art. 50 of the Lisbon treaty. From a technical point of view, the pair is unable to clearly confirm the break of the 23.6% retracement of the 1.1986/1.2705 rally at the current level, maintaining a neutral-to-bullish stance intraday, given that in the 4 hours chart, the mentioned daily bottom matches a flat 20 SMA, whilst technical indicators are standing directionless within positive territory.

Support levels: 1.2470 1.2425 1.2390

Resistance levels: 1.2545 1.2590 1.2640

GOLD

Spot gold surged to $1,244.67 a troy ounce, its highest in almost three months, as risk aversion dominated the scene, amid political woes in Europe and uncertainty surrounding the new US administration. Base metal also gathered support from news coming from Chile, as workers at the biggest cooper mine in the country that belongs to BHP Billiton, vowed to strike. Dollar's weakness added to gold's bullish case, moreover as chances of a US rate hike continue to diminish. From a technical point of view, the daily chart shows that technical indicators are gathering upward momentum, the RSI around 71, but the Momentum still within bearish territory. In the same chart, the 20 SMA maintains a bullish slope, advancing modestly above a bearish 100 SMA, both in the 1,210/12 region, all of which favors a new leg higher, now looking to test the 61.8% retracement of the post-US election' slide at 1,255.15. In the 4 hours chart, technical indicators eased from near overbought readings but remain well above their mid-lines, whilst the 20 SMA maintains a sharp bullish slope, now converging with the 50% retracement of the same decline around 1,230.00, in line with the longer term outlook.

Support levels: 1,230.00 1,219.40 1,210.10

Resistance levels: 1,244.70 1,255.15 1,263.90

WTI CRUDE

Crude oil prices fell to their lowest in four weeks, with West Texas Intermediate crude futures trading as low as $51.25 a barrel, undermined by the API stockpiles report released late Tuesday, reporting a build of 14.2M barrels. The EIA report released this Wednesday, also showed a large build, but a surprise decline in gasoline inventories offset the crude number. According to official data, US crude stocks rose 13.8 million barrels in the last week as refineries cut output, while gasoline stocks decreased by 900,000 after adding 3.9 million barrels in the previous week. Gasoline futures soared 2.7%, helping oil to recover some ground. WTI daily chart shows that the price remains below a horizontal 20 SMA that stands around 53.00, whilst technical indicators have turned higher within negative territory, unable to confirm further recoveries ahead. In the 4 hours chart, the 20 SMA has crossed below the 100 and 200 SMAs, whilst technical indicators have bounced from oversold readings, but the upward momentum faded will below their mid-lines, limiting chances of further recoveries, at least, as long as the price remains below the 53.00 level.

Support levels: 51.80 51.10 50.40

Resistance levels: 53.00 53.65 54.20

DJIA

Wall Street closed once again mixed and with the major indexes settling no far from their opening levels, as investors wait for a clear catalyst before taking stronger positions. The Dow Jones Industrial Average fell roughly 36 points or 0.18%, to end the day at 20,054.34. The Nasdaq Composite set another record close, up by 8 points or 0.15%, to 5,682.45, while the S&P also closed in the green, up 0.07% to 2,294.67. Nike was the best performer within the DJIA, up 2.03%, followed by Wal-Mart that added 1.32%. The banking sector was the worst performer, with JPMorgan chase leading losers' list, down by 0.97%. Technically, the Dow set a lower low and a daily basis, but holds within its weekly range, and the daily chart shows that it's still above a modestly bullish 20 SMA, this last around 19,940, whilst technical indicators have turned flat within positive territory, reflecting the lack of directional strength seen ever since the week started. In the shorter term, and according to the 4 hours chart, the index has settled right below a now flat 20 SMA, acting as immediate resistance at 20,067, while technical indicators stand pat around their mid-lines. Despite setting a fresh record high this week, the upward potential is moderated amid the ongoing risk-averse environment, although a break below 20,008, the weekly low, is required to confirm a bearish extension during the upcoming sessions.

Support levels: 20,008 19,940 19,869

Resistance levels: 20,067 20,104 20,160

FTSE 100

Wall Street closed once again mixed and with the major indexes settling no far from their opening levels, as investors wait for a clear catalyst before taking stronger positions. The Dow Jones Industrial Average fell roughly 36 points or 0.18%, to end the day at 20,054.34. The Nasdaq Composite set another record close, up by 8 points or 0.15%, to 5,682.45, while the S&P also closed in the green, up 0.07% to 2,294.67. Nike was the best performer within the DJIA, up 2.03%, followed by Wal-Mart that added 1.32%. The banking sector was the worst performer, with JPMorgan chase leading losers' list, down by 0.97%. Technically, the Dow set a lower low and a daily basis, but holds within its weekly range, and the daily chart shows that it's still above a modestly bullish 20 SMA, this last around 19,940, whilst technical indicators have turned flat within positive territory, reflecting the lack of directional strength seen ever since the week started. In the shorter term, and according to the 4 hours chart, the index has settled right below a now flat 20 SMA, acting as immediate resistance at 20,067, while technical indicators stand pat around their mid-lines. Despite setting a fresh record high this week, the upward potential is moderated amid the ongoing risk-averse environment, although a break below 20,008, the weekly low, is required to confirm a bearish extension during the upcoming sessions.

Support levels: 20,008 19,940 19,869

Resistance levels: 20,067 20,104 20,160

DAX

European indexes closed flat, with the German DAX down 6 points, to 11,543.38. Banking related equities remain under pressure across the region as investors continued unwinding the Trump-trade, but an advance in utilities stocks offset the sector's decline. Within the DAX, Commerzbank was the worst performer, closing the day down 1.73%, followed by Deutsche Bank that shed 1.59%. Vonovia led winners' list, up 3.03%, followed by RWE which added 2.85%. Additionally, persistent political concerns in the EU pushed investors to the sidelines ahead of some clarity. From a technical point of view, the German benchmark presents a neutral-to-bearish stance, given that in the daily chart, it remains below a horizontal 20 SMA, while the Momentum indicator holds around its 100 level and the RSI indicator turned south around 49. In the 4 hours chart, the 20 SMA heads south above the current level and below the 100 SMA, whilst technical indicators remain directionless, but within negative territory, leaning the scale towards the downside for the upcoming session.

Support levels: 11,520 11,463 11,408

Resistance levels: 11,605 11,660 11,711

STOCKS

Dow (20054.34, -0.18%) is unable to gather momentum for a sharp rise from current levels. However, we keep open, chances of rising towards 20200 and higher in the medium term. For now, there could be some consolidation in the 20200-20000 region.

The 11928 resistance is holding well on the Dax (11543.88, -0.05%) and while the index trades below the resistance, we may see a test of 11400 support levels in the next few sessions. A bounce from 11400 is expected in the near term.

Nikkei (18976.16,-0.17%) continues to remain stable. While immediate support near 111.36 holds on Dollar-Yen and the currency pair remains within 111.36-112.60 levels, Nikkei could find it difficult to make a sharp break on either side of the 19258-18651 region. Near term could possibly remain consolidative.

Shanghai (3180.57, +0.41%) has clearly broken above the daily candle resistance near 3160. Now the next resistance is coming up at 3200 which is crucial to decide on the medium term direction for the index. Looking at the weekly charts, it is like a conflict between the resistance at 3200 and the a possible rise towards 3400. A small dip from 3200 is possible before finally breaking on the upside in the longer run.

Nifty (8769.05, +0.01%) rose back to levels above 8750 in the 2nd half of the session yesterday after the RBI kept rates unchanged. We could possibly expect some strength in the index towards 8800-88500 in the near term. Overall trend is up.

COMMODITIES

Gold (1240.80) has been in a nonstop rally so far, indifferent to the highly overbought state. With the momentum not faltering yet, we have to consider higher levels of 1275-80 if it manages a break above 1250, as discussed yesterday.

Silver (17.75) remains in an uptrend but the gradual loss of momentum may encourage the bulls. It may ride on the back of Gold to higher levels but any weakness in Gold may push it below the support of 17.60 towards 17.20 fast. Cautious.

Both Brent (55.36) and WTI (52.56) have bounced back from their respective supports in line with expectations and keep the chances of our preferred upside breakout from their respective 6-week ranges of 53-58 and 50-55 open so far.

Copper (2.672) is trading sideways in the range of 2.61-2.70 as expected and that may continue for a few days more.

FOREX

Dollar is trying to make a base and its bullish reversal is yet to be fully confirmed. RBI has signaled an end to the accommodative stance which has strengthened Rupee.

Dollar Index (100.31) is stuck in the range of 100.00-101.00 for the last couple of sessions and requires a break above 100.75-101.00 to confirm a fresh uptrend. The immediate trend is neutral with bidirectional possibilities open.

Euro (1.0685) has bounced from 1.0650, brightening the chances of sideways consolidation in 1.0650-1.0800 for the next few sessions.

Dollar-Yen (112.12) is making a base in the narrow range of 111.50-112.70. Despite the dominant downtrend, the chances of rising to the major resistance of 113.50-60 remain open till the immediate support of 111.30 holds.

Pound (1.2506) is trading sideways in the range of 1.2350-1.2700 as expected which may continue for a few more sessions before any directional bias emerges.

Aussie (0.7614) is trading quiet but it needs to stay above the near term support 0.7570 to keep the chances of another rise to 0.7725-50 open where the bears may return again and push the price down.

Dollar Rupee (67.19) bulls have been disappointed by the RBI policy of maintaining the status quo and may test the major support zone of 67.00-66.90 by tomorrow.

INTEREST RATES

The RBI kept rates unchanged disappointing the market sentiments. Although not much movement was seen in the stock market, the yields shot up yesterday to rise from 6.5683% to 6.8920% levels, all in a single session. While it continues to move up, we may see a rise towards 6.9-7.0% soon.

The US yields are falling. The US 10-5Yr spread (0.52%) has come down as expected and could move lower towards 0.50-0.48% in the near term before bouncing back from there. The 10YR (2.34%) is down 4bps and is falling faster than the 5Yr (1.82%) which is down 2bps. The 10YR may continue to fall faster in line with our expectations.

The German-US 2YR (-1.94%) is trading at resistance levels and if it holds, we could see some fall in the Euro in the near term.

The UK yields are down too. The 5Yr (0.42%), 10YR (1.32%) and the 20Yr (1.79%) are trading lower than previous levels of 0.44%, 1.3750% and 1.8530% respectively.