Sample Category Title

EUR/USD - 1.0603

Original strategy  :

Buy at 1.0560, Target: 1.0660, Stop: 1.0525

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0560, Target: 1.0660, Stop: 1.0525

Position : -

Target :  -

Stop : -

Yesterday’s strong rebound after finding support at 1.0525 suggests the retreat from 1.0640 has ended at 1.0525 and consolidation with mild upside bias is seen for further gain towards said resistance at 1.0640, however, break there is needed to retain bullishness and signal another leg of the erratic rise from 1.0493 low is underway for retracement of early decline to 1.0660-65 (50% Fibonacci retracement of 1.0829-1.0493) and possibly towards resistance at 1.0680 but price should falter well below 1.0700-05 (61.8% Fibonacci retracement).

In view of this, we are looking to buy euro on dips as 1.0560 should limit downside and bring another rise later. Below said support at 1.0525 would abort and risk test of 1.0493-96 but only break there would shift risk back to the downside and signal recent decline from 1.0829 has resumed for further selloff to 1.0470 and then towards previous support at 1.0454.

USD/JPY - 115.43

Original strategy  :

Buy at 114.90, Target: 115.90, Stop: 114.55

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 114.90, Target: 115.90, Stop: 114.55

Position :  -

Target :  -

Stop : -

As the greenback has surged again today and broke above indicated previous resistance at 115.38, adding credence to our bullishness for recent upmove to extend further gain to another previous resistance at 115.62, however, near term overbought condition should prevent sharp move beyond 115.90-00, risk from there has increased for a retreat to take place later.

In view of this, would not chase this rise here and we are looking to buy dollar on pullback as 114.90-00 should limit downside and bring another rise. Below previous resistance at 114.75-76 would defer and risk test of 114.50-55 but break of support at 114.26 is needed to signal top is formed instead.

USD/CAD is unchanged in the Friday session. In North American trade, the pair is trading at the 1.35 line. On the release front, employment numbers will be on center stage on both sides of the border. The US will release three key indicators – Nonfarm Payrolls, Average Hourly Earnings and the unemployment rate. The Nonfarm payrolls report is expected to drop to 200 thousand, while wages are forecast to improve to 0.3%. Canada will publish Employment Change and the unemployment rate. The markets are expecting the economy to add a negligible 0.6 thousand jobs. Given the host of key events, traders should be prepared of volatility from USD/CAD during the North American session.

Canada's labor market has improved in recent months. Job creation numbers were much higher than expected in the fourth quarter, and this continued into 2017, as the economy added 48.3 thousand jobs. However, the impressive trend may peter out in February, with a forecast of only 0.6 thousand new jobs. The strong US economy, buoyed by a red-hot employment market, has been good news for Canada, which is heavily dependent on its southern neighbor. At the same time, speculation of an imminent rate hike by the Fed has boosted the US dollar, which has jumped 3.5% against the Canadian currency in 2017. On Thursday, USD/CAD pushed above the 1.35 line, which last occurred on at the end of December.

After raising rates in December, the Fed appears ready to make a March move. The odds of a March hike continue to climb, and are currently at 88% percent, according to the CME Group. Fed policymakers have been dropping hints of a March move, and a red-hot labor market and higher inflation levels present further arguments in favor of higher rates. Earlier in the year, the Fed had said that it wanted to wait until it had a clearer idea of President Trump's economic policy before it tightened monetary policy. However, Trump has not backed up his promises to reform the tax code and increase fiscal spending with any details. Some Fed policymakers wanted to raise rates earlier this year, so Fed Chair Yellen is under pressure to make a move, and it appears virtually certain that the Fed will raise rates by a quarter-point on March 15.

Market movers ahead

• We expect the Fed to hike the target range by 25bp to 0.75-1.00% on Wednesday.
• The US debt limit suspension expires on Wednesday.
• The Dutch general election takes place on Wednesday.
• We expect the Trump administration to publish its budget proposal for the 2018 fiscal year (running from Q4 17 to Q3 18) next week.
• In the UK, the next round of the parliamentary 'ping pong' between the Commons and the Lords has been set for Monday. PM Theresa May may trigger Article 50 as early as next week.
• The meeting of G20 finance ministers in Germany at the end of next week may be interesting given the expectations of easier fiscal policy, especially in the US.

Global macro and market themes

• We expect the Fed to hike next week followed by two additional hikes in 2017.
• Equity markets have taken another leap higher as we called for.
• However, the fixed income and oil markets seem less bullish on long-term growth prospects, as the yield curve has flattened in the US and the oil price has plummeted.
• We expect equity markets to lose a bit of momentum in coming months.
• However, an emerging capex boom could provide further momentum for equity markets later in 2017.

Full Report in PDF

The ever-rising expectations of the Federal Reserve raising US interest rates in March have made the Greenback king this trading week. Although the Dollar Index has found itself under some selling pressure below 102.00 during early trading on Friday, this technical correction could simply provide a foundation for bulls to install fresh rounds of buying in the future. With the blockbuster ADP report boosting the bullish sentiment towards the Dollar, further appreciations could be expected if today's NFP exceeds estimates. Bulls remain in firm control moving forward and it may take an extreme anomaly in the pending US jobs report to abruptly cool the heated expectations of the Fed taking action next week.

From a technical standpoint, the Dollar Index is bullish on the daily charts. A weekly close above 102.00 could encourage a further incline higher towards 102.50.

Euro gifted a hawkish lifeline

The vulnerable Euro received a lifeline during trading on Thursday with prices springing above 1.0600 following the hawkish surprise from the European Central Bank that caught markets off guard. Although key interest rates were kept at record lows as expected, the optimism radiating from Mario Draghi regarding the recovery of the European economy simply inspired the Euro bulls. With the central bank no longer seeing a "sense of urgency" to take further action on monetary stimulus, markets may acknowledge this as a potential inflection point for the ECB to gradually change its monetary stance. The fact that policymakers are already anticipating that it will not be necessary to lower interest rates further in the future could signal a gradual end to an era of negative rates if the European economy continues to stabilize.

Although the outlook for Europe is starting to look somewhat encouraging amid the positive economic data, the uncertainty gravitating around the elections in Europe continues to weigh heavily on sentiment. The threat of political developments overshadowing the positive macroeconomic factors could expose the Euro to sharp losses in the short to medium term. While the current upside momentum on the EURUSD is impressive, gains could be swiftly surrendered today if NFP meets or exceeds expectations. From a technical standpoint, the EURUSD remains trapped in a wide 150 pip range. Bears remain in control below the tough 1.0650 resistance.

Commodity spotlight - Gold

Gold has been sold off incessantly this week with prices crashing below $1200 as speculations heighten over the Federal Reserve raising US interest rates this month. Bears have exploited the Dollar's stability to pressure the yellow metal further during trading on Friday as prices currently trade around $1195. With Gold's sensitivity to US interest rate hike expectations reaching shocking levels this quarter, more downside could be expected as expectations mount over the Fed raising US rates repeatedly in 2017. Although risk aversion from the political uncertainty in Europe, Brexit woes and Trump developments could support the metal in the longer term, bears remain in firm control this month. From a technical standpoint, the zero-yielding metal is firmly bearish on the daily charts and a solid NFP report this afternoon could encourage a steeper decline towards $1190 and potentially lower.

While the world's attention has been on the drop in Gold this week, we shouldn't forget the fireworks amongst its little brothers and sisters.

All eyes will be on the Non-Farm Payrolls tonight with a print at 200,000 or better ticking the final rate hike box for the Fed at next week's FOMC. Gold, as we know, has suffered this week as its appeal diminishes as an asset with U.S. yields rising and the fading of the safe-haven call underpinning it. The world I suspect has yet to price in what may be a series of Fed rate hikes this year with the U.S. economy firing on all cylinders it seems.

Gold itself is down over 3% for the week, but the action hasn't been confined to just it in the precious metal universe. Platinum and Palladium have also suffered to the same extent, and for Silver, it is a whopping six-plus percent correction. Silver tends to overshoot Gold moves as a function of liquidity or lack there-off. The exit door always being smaller then Golds.

A quick glance at the charts though shows all four of the precious metals groups have broken some interesting downside levels.

GOLD

It's hard to believe that 1262 the 200-day moving average (DMA) was only tested and failed at 11 days ago. In the last two days, Gold has also broken it's 55 and 100 DMA's as well at 1210.30 and 1207.25 which now become resistance.

Gold is trading below 1200 at 1197 as we speak with the last clear support on the daily chart at the 1180 level, the January low. A close below here sees a lot of clear air to these wizened eyes, and a break could open a move to the distant 1122.50 level.

SILVER

Down over six percent for the week, there has been no silver bullet for Silver bulls unless it was one to the heart. Silver failed numerous times at the 18.4500/18.5000 region before an ugly descent through the 200-dma at 18.0400.

Silver has since broken the 55 and 100-dma's as well at 17.2600 and 17.2000 respectively, and these become first resistance.

Like Gold, it has one major support level just below at the 16.6300 area before a hole opens up on the charts to 15.6350.

Palladium

To be fair to Palladium, it has had a stellar year amongst the precious metals group. Palladium at one stage was up 42% from its 2016 lows! Thus in the scale of things, it's pullback is a mere flesh wound. Part of this maybe that Palladium is also a heavily used industrial metal and has benefited from the rise in hard commodities in general over the last 12 months.

Resistance is just above its 745.70 level at 752.60, the 55-dma. After that, we have the formidable 796.50 area where Palladium has failed numerous times but with a relatively small pullback, until now.

There are a lot of technical supports below. The days low and also a double bottom at 741.00. The 100-dma at 725.70. Previous lows at 710.00 with the 200-dma at 688.00 and Decembers low at 653.00 below. Although it has been an ugly few days, from a bigger picture and technical perspective, Palladium is far more constructive than its brother and sisters.

Platinum

Platinum is already 21% lower than its 2016 highs in July. If Platinum's price action were a roller coaster over the last year, it would probably be shut down for safety reason. The chart appears to be showing a giant head and shoulders formation forming which could imply a significant move down is on the cards. I will come back to this next week once I have observed more price action. Watch this space!

Zeroing into the here and now, Platinum has broken its 200,55 and 100-dma at 1006.60, 978.90 and 963.45 respectively, all within the last seven days! These all become resistance now along with 952.40 the original break-up level early January.

With platinum trading at 939.00, the first support is the overnight lows at 933.70. After that, yet again, a lot of clear air opens up on the charts until December's lows at 888.60.

Summary

Although most of the charts look negative from a technical perspective, it is important to note we have come a long way in a short time. That said, the short-term price action will be determined by today's Non-Farm Payrolls and their effect on the FOMC rate decision next week. A big miss to the downside could possibly see some relief for precious metals. A number near to or above could see more downside pain ahead.

Friday March 10: Five things the markets are talking about

An upbeat payrolls report will add to expectations that the Fed will raise rates next week (Mar 14-15).

Today's headline print is expected to be high (+197k and +4.7%) given the extremely high ADP employment figures we have seen this week. Any serious deviation to the downside and the U.S bond market will be aggressively unwinding the almost 'slam dunk' expectation that fixed income dealers have already priced into the short-end of their treasury curve.

Yesterday, ECB President Draghi sent some confusing signals in his rate announcement press conference. While the main message is that the ECB is inching toward a policy exit, he undermined the forward guidance by reading out a year-old statement stating that the ECB does "not expect a further rate cut," and also said that the ECB's forecast on wages, productivity and core inflation "looks ambitious."

Despite the 'no rate change' decision, the somewhat less 'dovish' press conference has given the EUR (€1.0611) some stamina for now.

A tighter U.S labor market, stock market boom and rising global inflation supports the Fed increasing interest rates, but how many for this year?

Canada will also be releasing its job numbers at 08:30am. Will the headline print (-4k exp.) again sideswipe the market?

Note: Daylight savings time in North America begins on Mar 12

1. Global stocks get the green light

In Japan, the Nikkei closed at a 15-month high on a weaker yen (¥115.41) benefiting exporters. The index added +1.5% Friday, its highest closing level since Dec. 7, 2015. For the week, the benchmark index has climbed +0.7%. The broader Topix was up +1.2%.

In Hong Kong, its main index ends up despite oil prices dropping. The Hang Seng index gained +0.3%, while the Hong Kong China Enterprises Index shed -0.3%, dragged by Chinese energy giants. For the week, the market was roughly flat.

In China, stocks ended flat overnight, as investor excitement towards the country's annual parliamentary meeting petered out. The Shanghai Composite Index was down -0.1%.

In Europe, equity indices are trading sharply higher after ECB President Draghi's comments yesterday continue to add support. Financial stocks across Europe are trading notably higher on the Eurostoxx, while energy names are supporting the FTSE 100.

U.S equities are set to open in the black (+0.3%).

Indices: Stoxx50 +0.7% at 3,434, FTSE +0.4% at 7,344, DAX +0.5% at 12,044, CAC-40 +0.5% at 5,008, IBEX-35 +0.7% at 10,069, FTSE MIB +0.8% at 19,727, SMI +0.2% at 8,654, S&P 500 Futures +0.3%

2. Oil edges off three-month low but glut worries persist

Oil prices have recovered a tad overnight after dropping to their lowest in more than three months yesterday, pressured by heavy oversupply despite OPEC's production cuts.

Brent crude is up +35c at +$52.54 a barrel, after falling -1.7% yesterday and -5% Wednesday in its biggest percentage decline in 12-months. U.S light crude (WTI) is up +40c at +$49.68 a barrel. It fell below -$50 on Thursday for the first time in three-months and is on track for a drop of more than -7% this week.

Market confidence is low after another big rise in U.S crude inventories this week - EIA data mid-week shows crude oil inventories swelled by +8.2m barrels last week to a record +528.4m barrels.

Also providing pressure is U.S oil and gas drilling has also picked up, with producers planning to expand crude production in North Dakota, Oklahoma and other shale regions.

Metals prices are also under pressure, weighed by expectations of a Fed hike next week. Gold for April delivery was recently down -0.4% at +$1,204.20 a troy ounce and remains on track for its longest losing streak in nearly 12-months.

Elsewhere, Copper for May delivery is down -1% at +$2.5750 a pound, trading at a two-month low.

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p>3. Bond rout eases

The nine-day slide in U.S debt prices has eased ahead of this morning's job's report. The yield on U.S 10's has backed up +1bps to +2.61%. Yesterday, it climbed +5bps to exceed the +2.60% watermark that many dealers believe signals the start of a 'bear' market, should it hold on a weekly basis.

In Europe, the ECB did not signal cuts in asset buying yesterday, but after its optimistic comments on the economy, money markets is pricing in an ECB rate hike by March 2018. Current futures price suggest there is a +80% chance of a +10bps by the meeting on Jan. 25, 2018 and a +60% chance by Dec. 2017.

Elsewhere, the yield on Aussie 10-year bonds has backed up +5bps to +2.97%. The yield on similar-dated debt in Japan was down -0.5% bps at +0.085%.

4. The dollar waits for NFP

Dollar bulls will be looking to today's average hourly earnings for support rather than the NFP headline print. Any signs to support inflation expectations will go a long way in pricing in the number of Fed rate hikes in 2017 - currently seen at three hike.

In Europe, with dealers perceiving a "hawkish" tilt from Draghi yesterday has instigated a sell-off in bunds and a higher EUR - currently testing above the psychological €1.0600 handle. German yields, which are set for biggest 14-day rise in nearly two-years has FX traders reconsidering paring current 'short' positions. The JPY has managed to drop to a seven-week low outright (¥115.43) on rate differentials. The pound (£1.2158) is little changed despite a plethora of mixed economic data for January (see below).

Elsewhere, EUR/NOK cross is higher (€9.1355) after Norway's Feb CPI data came in below expectations. The Norges Bank will have a tricky balancing act to pull off at its meeting next week.

5. U.K manufacturing has a weak start to 2017

Data this morning shows that U.K. industrial production declined in January, falling -0.4% m/m. A fall in manufacturing output mostly drove the slowdown, concentrated largely in the volatile pharmaceuticals sector.

Other data also shows the U.K's trade deficit (-£10.8B vs. -£11.1B) narrowed in January, while construction output declined.

Overall, the data paints a mixed picture of activity for the U.K at the start of the year and any squeeze on consumer spending from quickening inflation is also expected to weigh on growth later in the year.

EUR/USD Ready for another leg lower.

EUR/USD has consolidated higher but the demand seems to weaken. Hourly resistance is given at 1.0679 (16/02/2017 high) while hourly support at 1.0493 (22/02/2017 low). The technical structure suggests deeper consolidation towards 1.0500. • 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 Starting a new consolidation phase.

GBP/USD continues to edge lower since the pair has broken support given at 1.2254 (19/01/2017 low). The road is wide-open for further decline. Hourly resistance is now given at 1.2214 (09/03/2017 high).

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 Renewed buying pressures.

USD/JPY is pushing higher towards key resistance given at 115.62 (19/01/2016 high). Hourly support can be found at 113.56 (06/03/2017 low).

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 Consolidating above 1.0100.

USD/CHF continues to improves. Hourly resistance is implied by upper bound of the uptrend channel. Key resistance is given at a distance at 1.0344 (15/12/2016 high). Expected to see further strengthening.

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

USD/CAD Wide-open toward resistance at 1.3599.

USD/CAD's bullish pressures are definitely on after breaking key resistance at 1.3353 (20/01/2017 high). Yet, as long as this resistance was not broken (20/01/2017 high), bullishness was limited. Expected to see further upside potential for the pair.

In the longer term, there is a golden cross with the 50 dma crossing the 200 dma indicating further upside pressures. Strong resistance is given at 1.4690 (22/01/2016 high). Long-term support can be found at 1.2461 (16/03/2015 low).

AUD/USD Wide-open for further weakness.

AUD/USD keeps on declining since its exit from uptrend channel. The road is wide-open for further weakness. Key resistance is given at 0.7778 (08/11/2016 high).

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

EUR/CHF Holding above 1.0700.

EUR/CHF's bullish pressures have increased sharply. Strong resistance given at 1.0762 (27/12/2016 high) seems nonetheless far. Anyway, the medium-term pattern suggests us to see continued bearish pressures towards key support that can be found at 1.0623 (24/06/2016 low). Temporary surges seem the new normal for the CHF.

In the longer term, the technical structure is mixed. Resistance can be found at 1.1200 (04/02/2015 high). Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low)

EUR/JPY Strong bullish pressures.

EUR/JPY's demand has rejuvenated . Hourly resistance at 121.34 (10/02/2017 high) has been broken. Strong resistance is given at a distance at 123.31 (27/01/2017 high). Expected to show further consolidation. • In the longer term, the technical structure validates a medium-term succession of lower highs and lower lows. As a result, the resistance at 149.78 (08/12/2014 high) has likely marked the end of the rise that started in July 2012. Strong support at 94.12 (24/07/2012 low) looks nonetheless far away.

EUR/GBP Breaking resistance at 0.8707.

EUR/GBP has pushed higher towards strong resistance at 0.8707 (18/01/2017 high) which has been broken. We rule out further weakness towards supports given at 0.8450 (03/01/2016 low) and at 0.8304 (05/12/2016). Expected to pause below resistance at 0.8707.

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level