Daily Pivots: (S1) 1.2422; (P) 1.2480; (R1) 1.2591; More...

Intraday bias in GBP/USD remains neutral for the moment. Overall, rise from 1.1986 is seen as the third leg of the consolidation pattern from 1.1946. Above 1.2543 will extend the rebound but we'd expect strong resistance at 1.2774 to limit upside and bring down trend resumption eventually. On the downside, below 1.2252 minor support will turn bias to the downside for retesting 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) 0.9971; (P) 0.9994; (R1) 1.0032; More.....

Intraday bias in USD/CHF remains on the downside for the moment. As noted before, rise from 0.9443 has completed at 1.0342 already, after failing to sustain above 1.0327 key resistance. Fall from there would now target 61.8% retracement of 0.9443 to 1.0342 at 0.9786 and below. On the upside, break of 1.0121 resistance is needed to indicate short term bottoming. Otherwise, near term outlook will stay bearish in case of recovery.

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 expect the larger rally to resume later to 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

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Daily Pivots: (S1) 112.90; (P) 113.40; (R1) 114.28; More...

Intraday bias in USD/JPY is turned neutral again with 4 hour MACD crossed above signal line. Outlook is unchanged as choppy fall from 118.65 is seen as a corrective move. In case of another fall, downside should be contained by 38.2% retracement of 98.97 to 118.65 at 111.13 to complete the correction and bring rebound. On the upside, above 115.61 will target a test on 118.65 first. Break will resume whole rise from 98.97 and target 125.85 key resistance.

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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Daily Pivots: (S1) 1.3075; (P) 1.3186; (R1) 1.3268; More...

Intraday bias in USD/CAD stays neutral for the moment. At this point, we're still slightly favoring the case that consolidation pattern from 1.3588 is completed with three waves down to 1.3017. Above 1.3387 will target 1.3598 resistance. Break there will extend the whole choppy rise from 1.2460 to next fibonacci level at 1.3838. However, break of 1.3017 will indicate completion of rise from 1.2460 and turn outlook bearish.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg is still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. As rise from 1.2460 is seen as a corrective move, we'd look for reversal signal above 1.3838. Meanwhile, break of 1.3017 will likely start the third leg to 1.2460 and below.

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Daily Pivots: (S1) 0.7553; (P) 0.7580; (R1) 0.7608; More...

AUD/USD continues to lose upside momentum as seen in bearish divergence condition in 4 hour MACD. With 0.7448 minor support intact, there is no confirmation of topping yet. But in case of another rise, we'd expect upside to be limited by 0.7777/7833 resistance zone to bring near term reversal. On the downside, break of 0.7448 will indicate that rebound from 0.7158 is completed and turn bias back to the downside for 0.7144 key support level.

In the bigger picture, AUD/USD is staying inside long term falling channel and it's likely that the down trend from 1.1079 is still in progress. Break of 0.6826 low will confirm this bearish case. We'll be looking for bottoming sign again as it approaches 0.6008 key support level. Meanwhile, sustained break of 0.7833 resistance will be a strong sign of medium term reversal.

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US stocks surged overnight as boosted by strong corporate earnings as led by tech and finance. There was additional support on news that president Donald Trump signed two executive orders with the construction of Keystone XL and Dakota Access oil pipelines. The orders were seen as rolling back Obama administration's environmental actions. S&P 500 closed up 14.87 pts, or 0.66%, at 2280.07, as record high. NASDAQ gained 48.02 pts, or 0.86%, to close at 5600.96, also a record high. DJIA also rose 112.86 pts, or 0.57% to close at 19912.71, heading to 20000 handle again. Treasury yield also rose with 10 year yield up 0.068 at 2.471. 30 year yield rose 0.065 to 3.056, back above 3.000 handle. But both TNX and TYX are stuck in recent range. Dollar index is still trying to defend 100 handle for the moment and probably need range breakout in yield to give it some sustainable momentum.

Released in Australia, CPI rose 0.5% qoq and 1.5% yoy in Q4, below expectation of 0.7% qoq and 1.6% qoq. Down from prior month's 0.7% qoq and 1.3% yoy. RBA trimmed mean CPI rose 0.4% qoq, 1.6% yoy, compares to expectation of 0.5% qoq, 1.6% yoy. RBA weighted mean CPI rose 0.4% qoq, 1.5% yoy, compares to expectation of 0.5% qoq, 1.4% yoy. AUD/USD bottomed at 0.6826 in Feb 2016 and engaged in range trading for nearly a year. While US Dollar was strong, Aussie stayed relatively resilient on fading expectation of more RBA rate cut. But some economists pointed out that today's data are highlighting the downside risks to the country and could prompt RBA to rethink the need to more policy accommodation later in the year. Also from Australia, Westpac leading index rose 0.4% mom in December.

In Japan, trade surplus narrowed to JPY 0.36T in December, above expectation of JPY 0.22T. Looking ahead, German Ifo business climate is the main focus in European session today. Swiss will release UBS consumption indicator and ZEW expectation. UK will release CBI trends total orders. US will release house price index later today.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7553; (P) 0.7580; (R1) 0.7608; More...

AUD/USD continues to lose upside momentum as seen in bearish divergence condition in 4 hour MACD. With 0.7448 minor support intact, there is no confirmation of topping yet. But in case of another rise, we'd expect upside to be limited by 0.7777/7833 resistance zone to bring near term reversal. On the downside, break of 0.7448 will indicate that rebound from 0.7158 is completed and turn bias back to the downside for 0.7144 key support level.

In the bigger picture, AUD/USD is staying inside long term falling channel and it's likely that the down trend from 1.1079 is still in progress. Break of 0.6826 low will confirm this bearish case. We'll be looking for bottoming sign again as it approaches 0.6008 key support level. Meanwhile, sustained break of 0.7833 resistance will be a strong sign of medium term reversal.

Economic Indicators Update

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Chinese GDP expanded +6.7% in 2016, grabbing the mid-point of government's target of 6.5-7%. Growth is expected to decelerate further, probably reaching +6.5% this year. At the Central Economic Work Conference held last December, top leaders of the Chinese Communist Party indicated the policy would focus on controlling credit and housing risks, compared with stimulating growth in the past year. Yet, growth is still an issue concerning the government, with achieving growth targets a critical factor to ensure smooth leadership transition in late 2017. Meanwhile, renminbi should depreciate further. Besides the broadly-based strength in US dollar, concerns over further renminbi depreciation would continue to lead to huge capital outflow, a behavior that aggravate renminbi's weakness. We expect USDCNY to rise above 7 in 2Q17.

At the last macroeconomic report for 2016, the National Bureau of Statistics reveals that China's GDP expanded +6.8% y/y in 4Q17, up from +6.7% in the prior quarter. Growth in 2016 moderated to +6.7% in 2016, down from +6.9% in 2015 and marking the slowest pace in 26 years. Industrial production grew +6% y/y in December, down from +6.2% in November. Over the full year of 2016, industrial production expanded 6%. Retail sales expanded +10.9% y/y, beating consensus of +10.7% and November's +10.8%. Urban fixed asset investment increased +8.1% for the full year 2016, slowing from +8.3% in the first 11 months of the year. Overcapacity in heavy industries will drag on China's investment activity in 2017.

We expect growth to moderate further this year. Nonetheless, the focus of the government has been shifted to stability, with emphasis put on the management of credit and housing risks. As suggested in the statement accompanying the Central Economic Work Conference held in December, the goal in 2017 is to maintain overall social and economic stability for the upcoming 19th Communist Party Congress, which is scheduled in late 2017, through controlling financial risks and protection of property rights. As growth takes a backseat in the economic plan, and given the fact that economic growth has stabilized last year, the government has delivered a less dovish message on the monetary policy. Such stance is also accompanied with a more flexible growth target. Advisers familiar with the authority signal that the government will target around +6.5% of growth this year, compared with 6.5-7% in 2016.

Renminbi fell against the US dollar for three years in a row. The offshore USDCNY soared +6.95% in 2016, following gains of +2.49% and +4.63% in 2014 and 2015, respectively. Undoubtedly, part of the renminbi's weakness against the greenback was driven by USD's broad-based strength. Yet, massive capital outflow amidst concerns over further renminbi depreciation has also played a critical role in the currency's weakness. We expect both factors to continue to weigh on renminbi in 2017.

China's FX reserve fell -US$41.08B in December, after plunging -US$ 69.57B in the prior month. While at a slower pace, it is estimated that over 60% of the decline last month was due to capital outflow, compared with 50% in November. This has raised doubts over the effectiveness of the restrictive measures, including guidance for using Union Pay at overseas insurer (introduced in October), and restriction to bring renminbi overseas for the purpose of converting into foreign currencies (introduced in late November), implemented so far. Early January, SAFE stepped up the restrictions by imposing new administrative requirement for personal foreign currency purchase in China. For the year ahead, the government remains under pressure to intervene the market to curb renminbi depreciation.

We see several reasons for renminbi to go further lower this year. Despite the retreat since the beginning of the year, we remain constructive over USD this year on anticipation that Donald Trump's pro-growth policy would drive higher economic expansion and inflation, and facilitate a tighter monetary policy stance. Indeed, USDCNY jumped +2.5% after US presidential election, contributing almost 40% to 2016's gain. The “new” US-China trade relations might also weigh on renminbi. Trump indicated during his election campaign that he might impose a 45% tariff on Chinese exports to the US. Uncertainty in the trade policy has raised concerns over China's economic growth outlook which has been anticipated to slow further this year. Meanwhile, the Chinese government is tempted to allow renminbi to weaken further to stimulate exports.

Daily Pivots: (S1) 1.0714; (P) 1.0741 (R1) 1.0790; More.....

EUR/USD's rebound from 1.0339 is still in progress and further rise could be seen. Such rise is seen as a corrective move and should be limited by 1.0872 resistance. On the downside, below 1.0588 minor support will argue that it's completed and turn bias back to the downside for 1.0339 support.

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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Daily Pivots: (S1) 0.9943; (P) 0.9984; (R1) 1.0004; More.....

Intraday bias in USD/CHF remains on the downside for the moment. As noted before, rise from 0.9443 has completed at 1.0342 already, after failing to sustain above 1.0327 key resistance. Fall from there would now target 61.8% retracement of 0.9443 to 1.0342 at 0.9786 and below. On the upside, break of 1.0121 resistance is needed to indicate short term bottoming. Otherwise, near term outlook will stay bearish in case of recovery.

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 expect the larger rally to resume later to 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

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Daily Pivots: (S1) 112.13; (P) 113.27; (R1) 113.85; More...

Intraday bias in USD/JPY remains on the downside as correction from 118.65 extends. Downside should be contained by 38.2% retracement of 98.97 to 118.65 at 111.13 to complete the correction and bring rebound. On the upside, above 115.61 will target a test on 118.65 first. Break will resume whole rise from 98.97 and target 125.85 key resistance.

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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