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Optimism amongst investors following the U.S. election on November 8 is being questioned as recent developments show the U.S. President is more focused on protectionist measures than policies to boost economic growth. This also applies to Europe after France's Marine Le Pen launched her presidential campaign, promising to dump the Euro, fight globalisation and close the borders on immigrants.

What's more interesting, Francois Fillon who just few weeks ago, seemed to be winning the Presidential race is falling well behind in most recent polls after being accused ofpaying his wife and children hundreds of thousands of euros for jobs they did not do.

Investors who failed to predict the outcome of the biggest two political events, the U.S. elections and Brexit vote, started considering the high likelihood of Le Pen winning the French elections. This is reflecting in fixed income markets, as French bond yield rose to itshighest levels since July 2015, and the spread between the French 10-year bonds and the German Bunds widened to 0.78% which waslast seen in November 2012.

These developments are dragging EUR/USD lower for a second consecutive day, and Mr. Draghi who defended on Monday the ECB's QE program and fired back on the accusations by Peter Navarro that Germany is using a "grossly undervalued" euro, didn't help the single currency either.

Political risks in the euro area will likely continue to overshadow economic data in the weeks ahead. The French elections is not the only risk factor. Dutch, German, and possibly Italian elections will continue to weigh on the Euro.

The Yen is becoming the major beneficiary of the most recent developments. USD/JPY has declined by more than 5.7% from January highs and since BoJ will not likely take any new actions after the central bank extended buying 10-year bonds we may see further appreciation in the Yen, possibly hitting 110 if equity markets continued to decline.

Investors fell in love with gold again for same reasons after being dumped in November through mid-December last year. Rising political risks on both sides of the Atlantic will continue to support the yellow metal, but how further it may shine depends on real interest rates and the USD direction.

A widely ignored economic figure during Obama's era will be one of the most interesting releases going forward. The U.S. trade balance which is due to release later today will attract lot of attention, and I don't rule out a tweet from Trump after the U.S. shows a deficit close to $45 billion. Whether he's going to attack China, Germany, Japan or Mexico for being the winners in this trade relation will remain to be seen.

Key Points:

• Bearish channel remains intact at present.
• EMA crossover could herald further losses.
• Market fears continue to drag the pair lower.

The Swiss Franc has been taking back some ground from the Greenback over the past number of weeks and it shows little sign of slowing as we move forward. Specifically, the rather protracted downtrend could extend all the way back to the 0.97 handle if the current technical bias holds firm. However, on the fundamental front, there is also some evidence to suggest further downside potential for the only recently resurgent pair.

First and foremost, even at a glance, a relatively tight bearish channel has been in play since late-December and this structure looks set to remain in place moving ahead. This is largely a result of the EMA bias which has finally moved into its most bullish daily configuration. Specifically, the 100 day measure has now crossed both the 12 and 20 day averages whilst it is itself tracking lower.

Aside from the damning EMA readings, the presence of a strong and historical zone of resistance around the 50.0% Fibonacci level will be limiting chances of a near-term reversal for the Swissy. Indeed, the pair has largely been resisting the uptick in USD sentiment that characterised the prior sessions, resulting in some long wicks on the daily chart's candles.

One factor that could militate somewhat against further slides is the Parabolic SAR reading. Currently signalling a bullish bias, the indicator could be interpreted as a bellwether for the embattled USDCHF. Fortunately, in this context, it may not be indicative of an end to the recent slew of losses. Rather, it is suggestive of a near-term moderation that will likely come to an end as the pair approaches the intersection of the 50.0% Fibonacci level and the upside constraint of the channel.

After this moderation, losses should, at worst, extend to around the 0.97 handle which approximately coincides with the 78.6% Fibonacci retracement. The journey to this point will be assisted by the general malaise surrounding the market, currently strengthening haven investments such as gold, the JPY, and the CHF. What's more, this general uncertainty is unlikely to evaporate anytime soon given the rather torrid start to Trump's presidency.

Ultimately, keep an eye on the Swissy as it could provide some rather large swings even as it continues its long-term downtrend. Specifically, look to developments from the Trump administration which is likely to inspire some day to day peaks and troughs within the confines of the channel structure. However, to avoid being caught out by any breakouts, also stay abridged of any economic data pertinent to the pair, especially as it nears the upper and lower constraints.

Market movers today

Today, German industrial production for December is set to be released. Industrial production was solid throughout October and November, with 0.5% and 0.4% monthly increases, respectively. However, factory orders saw a monthly decline in November, following October's strong increase, which indicates declining industrial production in December. Thus, we estimate the December figure will show a monthly decline of 0.4%.

Chinese FX reserve data due to be released this morning is likely to attract some attention, as we saw significant movements in the Chinese currency in January.

The ECB's Jens Weidmann speaks in Mainz.

Selected market news.

Risk-off sentiment hit the European fixed income market yesterday and particularly France and Italy came under strong pressure. The 10-year yield-spread against Germany surged to the widest level since 2012 for France and 2014 for Italy, respectively.

The reason is the rising political risks in Europe, where focus is on France and the growing concerns that Marine Le pen could win the French Presidential election after the Francois Fillon ‘fake job' scandal. The ‘excuse' or explanation from Fillon yesterday afternoon did little to calm the markets.

The sour sentiment in the European government Bond might continue today after the IMF overnight said that Greece is falling short of budget-surplus targets set out under the bail-out agreement. The IMF also said that Greece's debt is unsustainable. However, the ESM/EFSF recently agreed a new debt package with Greece that should ease the debt burden.

Holland is another political hotspot this year. Yesterday, we published a piece on the election in the Netherlands, which is scheduled to be held on 15 March. Here, we argue that although the probability of a PVV government is low, in our view, investor sentiment is unlikely to remain complacent and some risk premium should be included when the election date draws nearer.

Daily Pivots: (S1) 1.0707; (P) 1.0747 (R1) 1.0790; More.....

EUR/USD's decline from 1.0828 extends today but stays above 1.0619 minor support. Intraday bias remains neutral for the moment. As noted before, choppy rise from 1.0339 is seen as a correction. Hence, in case of another rise, upside should be limited by 1.0872 resistance and bring fall resumption eventually. Break of 1.0619 will turn bias to the downside for retesting 1.0339 low.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

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A note on lower timeframe confirming price action…

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails – essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

EUR/USD

The sellers managed to find their feet early on in the day yesterday, consequently surrendering all of Friday's gains. It was only once price struck the top edge of a H4 demand base coming in at 1.0684-1.0709 (houses the 1.07 handle) going into the US segment did we see the tables begin to turn. It may be worth noting here that this H4 demand area is reinforced by a daily support level drawn from 1.0710 that stretches as far back as March 2015.

While the buyers may be growing confidence, one thing to keep in mind here is that weekly action recently shook hands with a weekly resistance level seen at 1.0819. With that being the case, here is our two cents' worth on the direction this market may head today/tomorrow:

Ideally, what we'd like to see happen is the bulls continue bidding prices higher, and form a H4 AB=CD approach in the direction of 1.08. 1.08, coupled with February's opening level at 1.0801, a H4 Quasimodo resistance at 1.0812, a H4 trendline resistance extended from the high 1.0873 and also the weekly resistance mentioned above at 1.0819 is a stable enough zone to consider shorts from (yellow area). Still, there is a possibility that price may possibly fake through this H4 sell area to tap the daily resistance at 1.0850 and maybe even the 2016 yearly opening level at 1.0873 (sits above the current weekly resistance). To that end, opting to wait for a reasonably sized H4 bearish candle to take shape here before placing an order is, in our view, the better/safer route to take.

A second scenario, given the position of price on the weekly timeframe, is a breakdown through the current H4 demand zone. This would likely open up the trail south to a H4 trendline support taken from the low 1.0589, which is planted within daily demand seen at 1.0589-1.0662.
Our suggestions: Unless price comes into contact with the 1.08 band today, or breaks below the current H4 demand and retests the area as a resistance, we'll likely remain flat during today's sessions.

Data points to consider: There are no scheduled high-impacting news events on the docket today relating to these two markets.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.0819/1.08 ([wait for a reasonably sized H4 bear candle to form before looking to execute a trade] stop loss: ideally beyond the trigger candle). Watch for H4 price to engulf the H4 demand at 1.0684-1.0709 and retest the area as resistance.

GBP/USD

For those who read Monday's report you may recall that our desk highlighted the possibility of a bullish reaction being seen from the 1.2390/1.2427 H4 zone marked in yellow. Comprised of a H4 support at 1.2427, a psychological level at 1.24 and a H4 trendline support drawn from the high 1.2432, the pair, as demonstrated on the H4 chart, did manage to catch a bid from the top edge of this barrier as the US opened their doors for business. While the bounce has rallied around 50 pips already, there's a chance that price will likely tap the 1.25 number today, followed closely by December's opening level at 1.2514. Our reasoning behind this simply comes down to the fact that although the GBP has declined for three consecutive days now, it is situated within the walls of a daily support area chalked in at 1.2510-1.2415. On the other side of the coin though, let's also take into consideration that weekly price is selling off from a weekly Quasimodo resistance level at 1.2673, which happens to show room for further selling to the 2017 yearly opening level at 1.2329.

Our suggestions: As of current prices, neither a long nor short seems attractive at this time. A short from the 1.25 region, while it would place you in-line with weekly flow, it simultaneously positions you against potential daily buyers! The same goes for a buy from the above noted H4 yellow buy zone. Buying from here places you alongside daily buying, but at the same time against weekly selling. What makes this area slightly more risky, in our opinion, is also the fact that it has already been tested once, thus it could potentially be much weaker now.

Data points to consider: There are no scheduled high-impacting news events on the docket today relating to these two markets.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

AUD/USD 

Weighed on heavily by disappointing Australian retail sales data yesterday, the commodity-driven currency tapered off from the H4 channel resistance band drawn from the high 0.7569. Evident from the H4 chart, Monday's downside move erased all of Friday's gains, and currently looks to be on course to attack the other side of the H4 channel taken from the low 0.7449.

Building a case for a potential buy trade here we have the following converging structures forming a buy zone (marked in yellow) around 0.7557/0.76: a round number at 0.76, a H4 61.8% Fib at 0.7582 and February's opening level at 0.7577. On top of this, we also have the top edge of a daily support area at 0.7581 bolstering the above noted H4 buy zone. This area will remain valid as long as price does NOT connect with the 0.77/0.7720 (daily resistance) beforehand.

Our suggestions: Dependent on how the Reserve Bank of Australia conducts itself today, although there is no change expected at this meeting, our desk favors the 0.7557/0.76 region for buys today. Given the confluence surrounding this H4 area, one may consider entering here without waiting for additional confirmation. To give the trade room to breathe, however, we'd look to place stops around the 0.7570 mark. As for take-profit targets, we typically look to take some off the table at the closest H4 supply (in this case) formed on approach.

Data points to consider: The RBA will announce its benchmark interest rate today at 3.30am.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

AUD/USD

Weighed on heavily by disappointing Australian retail sales data yesterday, the commodity-driven currency tapered off from the H4 channel resistance band drawn from the high 0.7569. Evident from the H4 chart, Monday's downside move erased all of Friday's gains, and currently looks to be on course to attack the other side of the H4 channel taken from the low 0.7449.

Building a case for a potential buy trade here we have the following converging structures forming a buy zone (marked in yellow) around 0.7557/0.76: a round number at 0.76, a H4 61.8% Fib at 0.7582 and February's opening level at 0.7577. On top of this, we also have the top edge of a daily support area at 0.7581 bolstering the above noted H4 buy zone. This area will remain valid as long as price does NOT connect with the 0.77/0.7720 (daily resistance) beforehand.

Our suggestions: Dependent on how the Reserve Bank of Australia conducts itself today, although there is no change expected at this meeting, our desk favors the 0.7557/0.76 region for buys today. Given the confluence surrounding this H4 area, one may consider entering here without waiting for additional confirmation. To give the trade room to breathe, however, we'd look to place stops around the 0.7570 mark. As for take-profit targets, we typically look to take some off the table at the closest H4 supply (in this case) formed on approach.

Data points to consider: The RBA will announce its benchmark interest rate today at 3.30am.

Levels to watch/live orders:

• Buys: 111.36 ([pending order] stop loss: 110.83).
• Sells: Flat (stop loss: N/A).

USD/CAD:  

Bolstered by an overall stronger dollar, the USD/CAD exploded to the upside during the course of yesterday's London morning segment. As you can see from the H4 chart, the pair ended the day aggressively whipsawing through a H4 supply area at 1.3123-1.3093 and closed out just below the 1.31 boundary. What this recent up move also accomplished was bringing the daily supply zone at 1.3169-1.3116 into the picture, which happens to support the above noted H4 supply zone.

Ultimately, for our team to become buyers in this market, the H4 mid-way resistance level at 1.3150 will need to be consumed. This would not only likely confirm bullish strength from the current weekly demand area at 1.3006-1.3115, but also open the doors up to 1.32 and possibly beyond. In regards to selling this pair today, there's room seen on the H4 chart for the candles to stretch down to the H4 mid-way support at 1.3050, followed closely by February's opening base at 1.3039.

Our suggestions: To our way of seeing things, an intraday short could be possible today from the 1.31 region. However, we would advise waiting for a lower-timeframe sell signal to form before pulling the trigger, as selling against potential weekly buyers (see above) can be a very risky play indeed! Apart from this, as mentioned above, a H4 close above 1.3150 would need to take shape before we look to buy into this market.

Data points to consider: Canadian trade balance report scheduled for release at 1.30pm.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.31 region ([waiting for a lower-timeframe signal to form is advised prior to pulling the trigger] stop loss: dependent on where one confirms this area).

USD/CHF

Beginning with the weekly timeframe this morning, the Swissy probed the underside of a weekly resistance yesterday at 0.9943, following last week's correction off the weekly trendline support etched from the low 0.9443. Turning our attention to the daily timeframe, we now have two back-to-back daily selling wicks printed at the underside of the aforementioned weekly resistance. This, alongside room seen for the pair to drop down as far as daily support at 0.9841 could very well spark further selling in the days ahead.

While selling the daily bearish candles is tempting, the H4 timeframe seems to be throwing up a red flag! By selling this market, the H4 bears would have to contend with the possibility that the 0.99 handle along with February's opening level at 0.9899 could put the brakes on any downside moves today! Additionally, even with a break below these H4 barriers, H4 demand at 0.9832-0.9865 is seen just below, which happens to merge with the daily support level discussed above at 0.9841.

Our suggestions: In the absence of clear price action, the desk has come to a consensus that remaining flat could very well be the safer route to take.

Data points to consider: There are no scheduled high-impacting news events on the docket today relating to these two markets.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

DOW 30

US equities fell sharply going into yesterday's London lunchtime, but, as you can see, managed to recover relatively quickly after bottoming just ahead of the 20000 mark amid the US open. Despite this, we can see that equity prices are little changed this morning. On the H4 chart, the next upside target, apart from Monday's high point at 20091, is a H4 Quasimodo resistance level fixed at 20125. To the downside, we not only have the 20000 neighborhood representing potential support, there's also a nearby H4 support at 19989, followed closely by daily support penciled in at 19964.

The other key thing to note in this market is that although the DOW closed marginally in the red last week, the unit chalked in a nice-looking weekly bullish tail that missed clipping the 2017 yearly opening level at 19769 by only a few points. In view of this, there are absolutely no weekly resistance levels in this market right now. Therefore, the best we can do for the time being is continue looking to ‘buy the dips'.

Our suggestions: Regardless of the weekly chart (see above), however, the buyers will need to overcome daily supply at 20138-20075 before buying this market medium term is made possible. With this in mind, we unfortunately do not see anything with ‘trade me' written on it at the moment. Therefore, we'll remain on the sidelines and wait for further developments.

Data points to consider: There are no scheduled high-impacting news events on the docket today that will likely affect the US equity market.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

GOLD

As you can see from the charts this morning, the gold market continued to accelerate to the upside yesterday. This was likely helped by the US dollar index topping out just ahead of a H4 resistance at 100.26.

At the time of writing, we believe the yellow metal to be currently underlining overbought conditions. To put it differently, the H4 candles are presently trading within a H4 AB=CD (see black arrows) sell zone comprised of both the 127.2%/161.8% Fib extensions (yellow area – 1232.9/1241.7). Supporting a downside move from this area is also the fact that the top edge is strengthened by a weekly resistance level pegged at 1241.2. With that being the case, there may be trouble ahead for traders who bought into the breakout above daily supply at 1232.9-1224.5!

Our suggestions: For us personally, we have chosen to wait and see if bullion can stretch a little higher into the above noted H4 sell zone, before looking to short. Ideally, the closer the better to the weekly resistance at 1241.2! In addition to this, our trigger to sell will be on the basis that a reasonably sized H4 bear candle forms. Granted, this will by no means guarantee a winning trade, but what it will do is show seller intent within a high-probability reversal zone.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1241.7/1232.9 ([wait for a H4 bear candle to form within the upper limit of this zone before looking to execute a trade] stop loss: ideally beyond the trigger candle).

Currency pair EUR/USD

The EUR/USD completed a bearish turn at the 88.6% Fibonacci resistance and broke below a support trend line (dotted blue), which could be part of a bearish wave 3 (purple). The most momentum should be expected if price manages to break below the next support trend line (blue).

The EUR/USD completed a wave 2 pullback (purple).Price could be in a wave 3 (blue) if it manages to break below the support trend line (green). A break above the 100% level of wave 2 vs 1 invalidates the wave count.

Currency pair GBP/USD

The GBP/USD is building a correction between support (green) and resistance) which is most likely a wave 4 (purple). At the moment a larger ABC (blue) correction seems likely within wave 4 (purple).

The GBP/USD price action seems to be in a wave A (purple) and a break below support (blue) could indicate a continuation towards the Fibonacci levels of wave 5 vs 1+3. A break above resistance (orange) could start wave B (purple). The Fibonacci levels of wave B (purple) should become resistance but the structure is invalidated if price breaks above the 100% Fibonacci level.

Currency pair USD/JPY

The USD/JPY is building a retracement back to the Fibonacci levels of wave 4 (purple). The 38.2% and 50% are likely support levels to complete a wave 4 (purple).

The USD/JPY broke below the support trend line (dotted blue) and has completed the bullish ABC (orange) zigzag within wave X (brown). Price could now be building a bearish ABC zigzag (orange).

Daily Pivots: (S1) 1.2430; (P) 1.2464; (R1) 1.2501; More...

GBP/USD is still staying in range of 1.2411/2705. Intraday bias remains neutral for the moment. As noted before, rise from 1.1986 is seen as the third leg of the consolidation pattern from 1.1946. Hence, in case of another rise, we'd expect upside to be limited by 1.2774 resistance and bring down trend resumption. On the downside, below 1.2411 minor support will argue that rise from 1.1986 is completed and turn bias to the downside for 1.1946 low.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

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Daily Pivots: (S1) 0.9886; (P) 0.9924; (R1) 0.9944; More.....

Intraday bias in USD/CHF will remain neutral for the moment as the consolidation pattern from 0.9860 extends. While further recovery cannot be ruled out, upside should be limited by 1.0043 resistance and bring another decline. Current fall from 1.0342 is seen as the third leg of the pattern from 1.0327. Below 0.9860 will target 61.8% retracement of 0.9443 to 1.0342 at 0.9786 and below. On the upside, break of 1.0043 will indicate short term bottoming and turn bias back to the upside.

In the bigger picture, rejection from 1.0327 resistance suggests that consolidation pattern from there is still in progress. Fall from 1.0342 is seen as the third leg and retest of 0.9443/9548 support zone could be seen. But we'd expect strong support from there to contain downside. At this point, we're still expecting the larger rally to resume later to 38.2% retracement of 1.8305 to 0.7065 at 1.1359, after the consolidation completes.

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Daily Pivots: (S1) 111.30; (P) 112.04; (R1) 112.46; More...

Intraday bias in USD/JPY remains on the downside as the decline from 118.65 extends. We're viewing this choppy fall as a correction. Hence, we'd expect strong support from 38.2% retracement of 98.97 to 118.65 at 111.13 to contain downside and bring rebound. Above 113.44 minor resistance will turn bias neutral first. Break of 115.36 resistance will argue that such correction is finished and turn bias to the upside for 118.65 high.

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

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RBA on hold with an upbeat view of inflation

Asia Mid-Session Market Update: RBA on hold with an upbeat view of inflation; RBNZ's forecasts rising CPI and lowest unemployment since 2008

US Session Highlights

(EU) ECB's Draghi: Economic situation improving but risks to outlook remain on the downside; reiterates underlying inflation pressures remain very subdued, Euro Zone recovery is firming up

(US) Fed Q4 senior loan officer survey: about a quarter of banks tightened credits standards for commercial real estate loans in Q4

(US) Fed's Harker (hawk, voter): March FOMC should be on the table for rate decision - Q&A with reporters

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

Best Sector in S&P500: Healthcare

Worst Sector in S&P500: Materials

Biggest gainers: HAS +14.1%, CBT +10.7%, NEM +3.2%, FAST +2.8%, MNK +2.7%

Biggest losers: LH -5.7%, NWL -5.7%, XYL -4.2%, FTI -4.1%, MRO -4.1%

At the close: VIX 11.4 (+0.4pts); Treasuries: 2-yr 1.15% (-5bps), 10-yr 2.41% (-8bps), 30-yr 3.05% (-7bps)

US movers afterhours

JLL: Reports Q4 $3.95 v $3.92e, R$2.16B v $2.04Be; Guides initial FY17 fee rev +8-11% y/y; Adj EBITDA margin 10-12%; +7.8% afterhours

ALSN: Reports Q4 $0.36 v $0.27e, R$469M v $430Me; Guides Q1 Rev net sales ~flat y/y; +5.1% afterhours

FN: Reports Q2 $0.91 v $0.79e, R$351M v $336Me; Announces initiation of CEO succession plan; +3.9% afterhours

GPS: Reports Jan SSS +1.0% v +2.1%e; Raises FY16 adj eps $2.01-2.02 v $1.96e ; +2.3% afterhours

FMC: Reports Q4 $0.88 v $0.89e, R$866M v $926Me; -4.4% afterhours

YRCW: Reports Q4 -$0.23 v -$0.09e, R$1.15B v $1.14Be- Tonnage per day up (freight), flat (regional); Adj EBITDA $57.7M v $66.0M y/y; -4.8% afterhours

FXCM: To withdraw its CFTC registration to settle allegations that it concealed from clients that firm had relationship with its “ most important ” market maker; to pay $7.0M fine; -19.7% afterhours

Politics

(US) 9th Circuit Court of Appeals to hear challenge to Trump's ban tomorrow evening - US press

(UK) UK PM May wins commons vote on amendment to Brexit bill - financial press

Asia Key economic data:

(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED

(AU) AUSTRALIA JAN AIG PERFORMANCE OF CONSTRUCTION INDEX: 47.7 V 47.0 PRIOR (4th straight month of contraction, 4-month high)

(NZ) NEW ZEALAND Q1 INFLATION EXPECTATION SURVEY: 2-YEAR INFLATION EXPECTATION 1.92% V 1.68% PRIOR

(SL) Sri Lanka Central Bank (CBSL) leaves key rates unchanged (as expected); 6th straight pause in current itghtening cycle

(PH) PHILIPPINES JAN CPI M/M: 0.3% V 0.4%E; Y/Y: 2.7% V 2.8%E; CORE CPI Y/Y: 2.5% V 2.8%E

(UK) JAN BRC LFL SALES VALUE Y/Y: -0.6% V +0.9%E (first decline in 5 months)

Asia Session Notable Observations, Speakers and Press

Asia indices little changed, tracking mixed sentiment in US session, where investor flows sought the safety of US treasuries; After market close, Fed's Harker (voter) said March rate hike possibility is still on the table, reiterating commitment to raise rates 3 times this year.

US Circuit Court of Appeals to hear arguments for reversing Washington State federal judge who halted Pres Trump's immigration executive order.

AUD/USD volatile with initial decline after S&P said the first step in Australia sovereign downgrade would only affect AAA states, as investors interpreted comments as a warning shot; Later in the day, RBA left rates unchanged but was more hawkish on inflation, forecasting headline CPI to pick up in 2017 above 2%. RBA also added more positive tones on the economy, stating consumption and non-mining investment are expected to pick up this year.

RBNZ's inflation/GDP/employment outlook over next 2 years saw improved conditions across the board. GDP seen at its highest level in 2.5 years, while unemployment the lowest since Q3 2008.

PBOC has once again skipped reverse repo operations after a 10bp increases in offer rates on Friday, claiming liquidity is ample.

China:

(CN) China economic downward pressures are large currently, will give priority to employment amid the downward pressure - press

(CN) China Jan new Yuan loans said to top the prior monthly record of CNY2.5T - press

(CN) China Securities Journal: PBoC's suspension of open market operations suggests current economic fundamentals do not support a tightening of monetary policy

(CN) China State Council plans to create more than 50M new jobs by 2020 while keeping the urban unemployment rate below 5%

(CN) PBoC urging China banks to curb lending - The Paper

Japan:

(JP) Japan Fin Min Aso and Foreign Min Kishida and Trade Min Seko said to travel with PM Abe to US for meetings - financial press

(JP) Japan Fin Min Aso: FX stability is important; Improving economic links with US in both countries' benefit

Australia/New Zealand:

(AU) S&P: First step in Australia sovereign downgrade would only affect AAA states - press

(AU) S&P/ASX200 falls below 5,600, 6-week low

(NZ) RBNZ Wheeler will not seek second term; Dep Gov Spencer to be acting Gov starting Sept 27th

(NZ) Fixed income markets have started to price in some chance of RBNZ rate hike this year, but consensus among New Zealand economists is that it is unlikely - NZ press

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.1%, Hang Seng flat, Shanghai Composite -0.4%, ASX200 flat, Kospi -0.1%

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

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

EUR 1.0705-1.0750; JPY 111.60-111.95; AUD 0.7630-0.7680; NZD 0.7300-0.7375

Apr Gold +0.2% at $1,235/oz; Mar Crude Oil +0.3% at $53.16/brl; Mar Copper -0.5% at $2.64/lb

SPDR Gold Trust ETF daily holdings rise 4.2 tonnes to 818.7 tonnes; 4th straight increase; Highest since Dec 30th

(CN) PBOC SETS YUAN MID POINT AT 6.8604 V 6.8606 PRIOR

(CN) PBOC skips reverse repo operations (3rd consecutive halt)

(JP) Japan MoF sells 10-yr 0.1% inflation linked bonds; bid-to-cover 2.61x v 2.85x prior

(KR) South Korea sells 30-yr Govt bonds; Avg yield 2.19%

Asia equities/Notables/movers by sector

Consumer discretionary: NEC.AU Nine Entertainment -1.5%, SWM.AU Seven West -2.3% (Deutsche Bank cuts rating); HUB.AU Hub24 +4.3% (Q2 result); 2914.JP Japan Tobacco -1.8% (FY16 result)

Financials: 993.HK Huarong International Financial +5.2% (profit alert); SCP.AU SCA Property +2.8% (H1 result); MQG.AU Macquarie Group -1.7% (Q3 trading statement); 8053.JP Sumitomo Corp +1.4% (writedown speculation); 8031.JP Mitsui & Co +0.6% (earnings speculation)

Industrials: 2333.HK Great Wall Motor -1.9% (FY16 result); 175.HK Geely Automobile -2.7% (Jan result); 1777.HK Fantasia Holdings +2.1% (Jan result); GNC.AU Graincorp +3.2% (Goldman Sachs raises rating); RWH.AU Royal Wolf Holdings -6.7% (H1 result); 7203.JP Toyota -2.2% (9-month result); 010140.KR Samsung Heavy Industries -3.8% (concerns on drill ship delivery)

Technology: 1063.HK Suncorp Technologies -1.8% (profit warning); 6146.JP Disco Corp +13.6% (Macquarie raises rating, 9-month result)

Materials: 1332.HK Qualipak International -10.6% (profit warning); RSG.AU Resolute Mining +5.5%, NST.AU Northern Star +3.3%, NCM.AU Newcrest +3.0%, EVN.AU Evolution +4.4% (gold rises); 5938.JP LIXIL Group +2.0% (9-month result); 5302.JP Nippon Carbon Co +7.8% (adjusts guidance)

Energy: 3303.HK Jutal Offshore Oil Services -1.5% (profit warning)

Utilities: TCL.AU Transurban +5.8% (H1 result)