Dollar is trying to rebound after non-farm payroll report but struggles to find sustainable buying. Headline NFP showed 156k growth in December, below expectation of 178k. Nonetheless, prior month's figure was revised up from 178k to 204k. Unemployment rate rose to 4.7% as expected. Wages showed strong growth with average hourly earnings increased 0.4% mom, above expectation of 0.3%. Also from US, trade deficit widened to USD -45.2b in November. On the other hand, Canadian dollar rises on job data which showed an impressive 53.7k growth in December. Unemployment rate in Canada also rose to 6.9%. Canada trade balance turned into CAD 0.5b surplus in November.

Eurozone confidence indicators came in generally better than expectations. Business climate indicator rose to 0.79 in December, up from 0.41, above consensus of 0.47. Economic confidence rose to 107.8, up from 106.6, above consensus of 106.8. Industrial confidence rose to 0.1, up from -1.1, above consensus of -0.4. Services confidence rose to 12.9, up from 12.2, above consensus of 12.0. Consumer confidence rose to -5.1, up from -6.2, above expectation of -5.3. Eurozone retail sales dropped -0.4% mom in November, in line with expectations. German factory orders dropped -2.5% mom in November, retail sales dropped -1.8% mom.

Elsewhere, Swiss foreign currency reserves dropped to CHF 645b in December. Australia trade balance turned into surplus of AUD 1.24b in November, first surplus since 2014. Japan labor cash earnings rose 0.2% yoy in November.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 114.56; (P) 115.99; (R1) 116.77; More...

USD/JPY recovers ahead of 114.76 support but stays in range below 118.65. Intraday bias remains neutral first. Outlook stays bullish with 114.76 intact and further rise is expected. Above 118.65 will extend the whole rise from 98.97 to 125.85 key resistance next. However, sustained break of 114.76 will confirm short term topping and bring deeper pull back to 55 day EMA (now at 112.76) and possibly below.

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 corrective 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.

Economic Indicators Update

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Although the greenback did find support at 1.2461 in H1 2016 and rebounded, as the move from there still looks corrective in nature, suggesting only wave A of wave iv from 1.4690 (wave iii top) has ended at 1.2461 and the recovery from there is only a wave B, hence upside should be limited to 1.3790-00 and price should falter below 1.4100-10, bring another decline later in wave C of iv. Below 1.3000 would bring test of 1.2820-25 but a sustained breach below 1.2760-65 support is needed to signal C leg of iv is unfolding for another test of said support at 1.2461, below there would extend the fall from 1.4690 for retracement of medium term upmove to 1.2160-70 (50% Fibonacci retracement of the wave iii from 0.9633) but downside should be limited to 1.2000 and support at 1.1920 should hold, bring another rise in late 2017.

On the upside, whilst marginal gain to 1.3790-00 cannot be ruled out, reckon upside would be limited to 1.4000 and resistance at 1.4103 should cap this wave B, bring wave C decline later. A sustained breach above 1.4100-10 would suggest the correction from 1.4690 has possibly ended and bring a stronger rebound to 1.4300 and then 1.4500. Looking ahead, only break of said wave iii top at 1.4690 would confirm upmove has resumed in wave v for headway to 1.4900 and then psychological resistance at 1.5000 but reckon upside would be limited to 1.5410-20 (1.5 times projection of 0.9058-1.3064 measuring from 0.9407).

Euro's rally from 0.6936 (2015 low) above previous resistance at 0.9083 adds credence to our view that the correction from 0.9803 has possibly ended there and although price has retreated quite sharply from 0.9576 and pullback to 0.8300-05 is likely, reckon downside would be limited to 0.8115-20 (previous resistance) and bring another rise later, above 0.9045-50 would bring test of said resistance at 0.9576 but break there is needed to signal early upmove has resumed for subsequent retest of 0.9803 (2008 high) which is likely to hold on first testing, eventual upside target is pointing at psychological level at 1.0000.

On the downside, whilst pullback to 0.8300-10 and 0.8250 is likely, reckon downside would be limited to 0.8200 and previous resistance at 0.8117 should hold, bring another rise later. A drop below 0.8000 psychological level would defer our bullishness and risk weakness to 0.7940-45 (61.8% Fibonacci retracement of 0.6936-0.9576), then 0.7850 but downside should be limited to 0.7700 and support at 0.7565 should remain intact, bring another rise in late 2017.

Daily Pivots: (S1) 0.8502; (P) 0.8542; (R1) 0.8579; More...

Intraday bias in EUR/GBP remains neutral for the moment. On the downside, below 0.8449 will target 0.8303 and break will resume the whole fall from 0.9304. In that case, we'd look for bottoming again at around 0.8116. Meanwhile, sustained break of 38.2% retracement of 0.9304 to 0.8303 at 0.8685 will revive the case of near term reversal. In that case, stronger rise should be seen to 61.8% retracement at 0.8922 and above.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we'd expect strong support around 55 weeks EMA (now at 0.8230) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).

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Daily Pivots: (S1) 1.4397; (P) 1.4429; (R1) 1.4477; More...

Intraday bias in EUR/AUD remains neutral for the moment. On the downside, break of 1.4072 will extend the correction from 1.6587 towards next key support level 1.3671. Meanwhile, decisive break of 1.4880 resistance will indicate that such correction from 1.6587 is completed and turn near term outlook bullish for 1.5094 resistance next.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a consolidative pattern. 50% retracement of 1.1602 to 1.6587 at 1.4095 was already met. While further fall cannot be ruled out, we'd expect strong support above 1.3671 to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.5094 will be the first sign of resumption of up trend from 1.1602 and target retesting 1.6587 resistance first.

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Daily Pivots: (S1) 142.24; (P) 143.44; (R1) 144.40; More...

Intraday bias in GBP/JPY remains neutral for the moment. On the downside, break of 142.16 support should confirm short term topping and bring decline to 55 day EMA (now at 140.54) and below. Break of 148.42 will extend the larger rise from 122.36, Still, such rally is seen as a corrective move. Hence, we'd expect strong resistance from 150.43 long term fibonacci level to limit upside.

In the bigger picture, the down trend from 195.86 top (2015 high) should have made a medium term bottom at 122.36 after hitting 100% projection of 195.86 to 154.70 from 163.87 at 122.71. Rise from there is now expected to develop into a medium term corrective pattern. Upside should be limited by 38.2% retracement of 195.86 to 122.36 at 150.4 for setting the medium term range.

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Daily Pivots: (S1) 121.84; (P) 122.47; (R1) 122.97; More...

Intraday bias in EUR/JPY remains neutral as consolidation from 124.08 continues. Overall, further rally is in favor as long as 120.90 support holds. Above 124.08 will target 126.09 key resistance next. Considering bearish divergence condition in 4 hours MACD, we'd be cautious on topping around 126.09. Meanwhile, break of 120.90 will indicate short term topping and turn bias to the downside for 55 days EMA (now at 119.98).

In the bigger picture, price actions from 109.20 medium term bottom are seen as correcting whole down trend from 149.76 to 109.20. There is prospect of another rise towards 126.09 key resistance level before completion. But even in that case, we'd expect strong resistance between 126.09 and 141.04 to limit upside, at least on first attempt.

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Daily Pivots: (S1) 1.0689; (P) 1.0713; (R1) 1.0733; More...

Intraday bias in EUR/CHF remains neutral for the moment. On the upside, above 1.0762 will extend the corrective rise from 1.0677. But overall, outlook will stay bearish as long as 1.0897 resistance holds. Corrective pattern from 1.1198 is still in progress and another fall is expected. Below 1.0677 will target key support level at 1.0620 next. Though, decisive break of 1.0897 resistance will suggest reversal and turn near term outlook bullish.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Such correction is still in progress and retest of 38.2% retracement of 0.9771 to 1.1198 at 1.0653 could be seen. Sustained trading below 1.0653 will target 50% retracement at 1.0485. Meanwhile, break of 1.0897 resistance is needed to be the sign of completion of the correction. Otherwise, risk will stay on the downside in case of recovery.

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Daily Pivots: (S1) 1.3171; (P) 1.3242; (R1) 1.3293; More...

Intraday bias in USD/CAD remains on the downside as the fall from 1.3598 would extend lower to 1.3080 support. As noted before, price actions from 1.2460 are viewed as a corrective move. Decisive break of 1.3080 will indicate that it's completed and turn outlook bearish for retesting 1.2460 low. On the upside, above 1.3383 minor resistance will turn bias neutral again with focus back on 1.3588/98 resistance zone.

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 possibly finished at 1.3588 too after hitting 50% retracement of 1.4689 to 1.2460 at 1.3575. Break of 1.3005 would likely resume the fall from 1.4689 through 1.2460 to 50% retracement of 0.9406 to 1.4689 at 1.2048. We'd start to look for reversal signal below 1.2460 to complete the correction. In case of another rise, we'll look for topping sign at 61.8% retracement of 1.4689 to 1.2460 at 1.3838.

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Daily Pivots: (S1) 0.7289; (P) 0.7323; (R1) 0.7373; More...

Intraday bias remains mildly on the upside as the rise from 0.7158 would extend higher to 38.2% retracement of 0.7777 to 0.7518 at 0.7394, which is close to 55 days EMA. Sustained break there will turn focus back to 0.7777/7833 resistance zone. Meanwhile, rejection from there will retain bearishness for 0.7144 support. Break of 0.7144 support will likely extend the larger down trend through 0.6826.

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 and target 61.8% projection of 0.9504 to 0.6826 from 0.7777 at 0.6122 next. 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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