AUD/USD – 0.7660

AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081

Aussie has eased after rising to 0.7741, suggesting consolidation below this level would be seen and initial mild downside bias is for pullback to 0.7600, however, reckon support at 0.7512 would limit downside and bring another rise later, above said resistance at 0.7741 would extend recent rise from 0.7158 to resistance at 0.7778. Looking ahead, only a break of this level would suggest another leg of major corrective upmove from 0.6827 low is underway for retest of 0.7835 resistance first, then 0.7900, however, psychological resistance at 0.8000 should hold from here.

We are keeping our count that top has been formed at 1.1081 (wave 5 of V) and major correction (A-B-C-X-A-B-C) has commenced, indicated downside targets at 0.7945 (61.8% Fibonacci retracement of entire rise from 0.6007-1.1081) and 0.7750 had been met and downside bias is seen for further weakness to 0.6800, then 0.6700 but reckon 0.6500 would hold from here.

Our preferred count is that the rally from 0.6007 to 0.7270 (7 Jan 2009) is marked as wave A, the retreat to 0.6248 (2 Feb 2009) is wave B and the subsequent upmove is labeled as wave C with wave (iii) and wave (iv) ended at 0.8265 and 0.7700 respectively and wave (v) as well as 3 ended at 0.9407, then wave 4 ended at 0.8066 (instead of 0.8578). The wave 5 has met our indicated projection target of 1.1060 and could ended at 1.1081, this level is now treated as the peak of wave (C) as well as larger degree wave B, hence major fall in wave C has commenced, our initial downside target at psychological support at 0.7000 has just been met and further weakness to 0.6500 would be seen later.

On the downside, whilst initial pullback to 0.7615-20 and possibly 0.7550-55 cannot be ruled out, reckon 0.7512 support would limit downside and bring another rise later. A daily close below 0.7512 would suggest top is possibly formed, bring weakness to 0.7490 (38.2% Fibonacci retracement of 0.7158-0.7696) and then 0.7455-60 but reckon downside would be limited to 0.7425-30 (50% Fibonacci retracement) and price should stay above 0.7360-65 (61.8% Fibonacci retracement), bring another rise later.

Recommendation: Stand aside for this week.

Our alternate count on the daily chart treated the top formed in 2008 at 0.9851 could be a larger degree wave I and was followed by a deep and sharp correction in wave II to 0.6007 and wave III is unfolding from there.

The long-term uptrend started from 0.4775 (2 Apr 2001) with an impulsive structure. Wave I is labeled as 0.4775 to 0.9851 (15 Jul 2008), wave II has ended at 0.6007 (Oct 2008) and wave III is still in progress which may extend further gain to 1.1265.

The DAX Index has headed higher in the Wednesday session. Currently, the DAX is trading at 11,989.50 points, its highest level since February 23. The index is poised to punch past the symbolic 12,000 level. On the release front, German indicators are in the spotlight. Unemployment Change declined by 14 thousand, above the forecast of -10 thousand. German Final Manufacturing PMI improved to 56.8, close to the estimate of 57.0 points. Later in the day, we'll get a look at Preliminary CPI, which is expected to rebound with a gain of 0.6%. On Thursday, the eurozone releases CPI reports.

There was plenty of anticipation in the air ahead of President Trump's speech to Congress. In the end, however, the speech was short on specifics and the markets haven't shown much reaction in the Wednesday session. Trump promised 'massive' tax relief for the middle class as well as corporate tax cuts. However, he failed to provide details or even timelines on tax reform or infrastructure spending, two themes which he has discussed since the election campaign. Trump stated that he will ask Congress to approve legislation for $1 trillion in infrastructure spending, 'financed through both public and private capital'. Analysts noted that although Trump touched on the protectionist theme, such as the trade imbalance with China, his tone was less belligerent than we've seen in the past.

With Federal Reserve policymakers continuing to sound hawkish about a rate move, the US dollar could make some headway against the euro, which could weigh on the DAX. On Tuesday, FOMC members William Dudley and John Williams both hinted at an imminent hike by the Fed, which raised the odds of a March hike at 66%, according to Reuters. Dudley said the case for a hike is compelling, while Williams noted that a rate increase will be up for 'serious consideration' at the March policy meeting. The markets will be listening closely to speeches from other FOMC members this week, culminating in speeches from Janet Yellen and Fed Governor Stanley Fischer on Friday.

EUR/USD is slightly lower in the Wednesday session. Currently, the pair is trading at 1.0540. It's another full day on the release front, with a host of events in the eurozone and the US. Germany will release inflation, employment and manufacturing reports. The eurozone will also publish Manufacturing PMI. In the US, today's highlight is the ISM Manufacturing PMI. On Thursday, the eurozone releases CPI reports, and the US will publish unemployment claims.

It could be a busy day for euro, as Germany, the largest economy in Europe, releases a host of key indicators. After a decline in January, Preliminary CPI is expected to rebound with a gain of 0.6% in February. The markets are also expecting strong numbers from unemployment claims and Manufacturing PMI. Last week, Ifo Business Climate improved to 111.0, beating the estimate of 109.6. The revised GDP posted a gain of 0.4% in the fourth quarter, unchanged from Preliminary GDP. If Wednesday's releases meet expectations, the euro could respond with gains.

Currency markets showed muted reaction to President Trump's speech to Congress on Tuesday. Trump promised “massive” tax relief for the middle class as well as corporate tax cuts. However, he failed to provide details or even timelines on tax reform or infrastructure spending, two themes which he has discussed since the election campaign. Trump stated that he will ask Congress to approve legislation for $1 trillion in infrastructure spending, “financed through both public and private capital”. Analysts noted that although Trump touched on the protectionist theme, such as the trade imbalance with China, his tone was less belligerent than we've seen in the past.

With Federal Reserve policymakers continuing to sound hawkish about a rate move, the US dollar could make some headway against the euro and other major currencies. On Tuesday, FOMC members William Dudley and John Williams both hinted at an imminent hike by the Fed, which raised the odds of a March hike at 66%, according to Reuters. Dudley said the case for a hike is compelling, while Williams noted that a rate increase will be up for “serious consideration” at the March policy meeting. The markets will be listening closely to speeches from other FOMC members this week, culminating in speeches from Janet Yellen and Fed Governor Stanley Fischer on Friday.

Reflation trade not just for America as German State Feb CPI readings confirm rebound remains on course

Notes/Observations

President Trump speech to Congress focused on rebuilding middle class and putting US interests first. Tone seen as conciliatory and much less combative

Major European Manufacturing PMIs remain establish in expansion territory (beats: Italy, Swiss, Norway, Turkey, Hungary, Poland, Czech; misses: UK, Germany, France, Euro Zone, Spain)

Germany employment continues its improving trend; unemployment remains at post reunification lows

German State Feb CPI readings confirms the rebound and on course for fresh 3 1/2 year high but likely seen as transitory by ECB - French presidential candidate Fillon postpones farm fair visit; wife said to be in custody

Overnight:

Asia:

Australia Q4 GDP beats expectations (Q/Q: 1.1% v 0.8%e; Y/Y: 2.4% v 2.0%e

China Feb Manufacturing PMI (Govt Official): 51.6 v 51.2e

Europe:

ECB plans to test large European banks on their sensitivity to interest rate changes

UK Gov facing a first defeat for its Brexit bill in the House of Lords regarding rights of EU nationals to remain in the UK after Brexit; Peers are expected to agree to amend the draft legislation to protect the rights of EU citizens living in the UK

Scottish First Min Sturgeon (SNP): new independence vote may be the only way forward for Scotland

UK Feb BRC Shop Price Index came in better than expected as food prices increased for first time since April 2016 (Y/Y: -1.0% v -1.4%e)

Americas:

US President Trump speech to Congress: To provide massive tax relief for middle class; To seek $1T infrastructure investment program financed through public and private capital

Fed's Harker (hawk, voter) reiterated three interest rate hikes is appropriate this year

Fed's Dudley (dove, FOMC voter): Case for raising rates "had become a lot more compelling";

Energy:

Weekly API Oil Inventories: Crude: +2.5M v -0.9M prior (5th build in the past 6 weeks)

Economic data

(IN) India Feb PMI Manufacturing: 50.7 v 50.4 prior

(IE) Ireland Feb Manufacturing PMI: 53.8 v 55.5 prior (45th month of expansion)

(RU) Russia Feb PMI Manufacturing: 52.5 v 54.7 prior (7th month of expansion)

(UK) Feb Nationwide House Prices M/M: 0.6% v 0.2%e; Y/Y: 4.5% v 4.1%e

(CH) Swiss Jan UBS Consumption Indicator: 1.43 v 1.50e

(TR) Turkey Feb PMI Manufacturing: 49.7 v 48.2e

(FI) Finland Q4 GDP Q/Q: 0.0% v 0.4% prior; Y/Y: 1.6% v 1.6% prior

(SE) Sweden Feb PMI Manufacturing: 60.7 v 60.0e

(DE) Germany Feb CPI Saxony M/M: +0.5% v -0.5% prior; Y/Y: 2.4% v 2.3% prior

(NL) Netherlands Feb Manufacturing PMI: 58.3 v 56.5 prior

(NO) Norway Feb Manufacturing PMI: 52.6 v 51.7e

(HU) Hungary Feb Manufacturing PMI: 59.5 v 57.0e

(PL) Poland Feb Manufacturing PMI: 54.2 v 54.1e

(ES) Spain Feb Manufacturing PMI: 54.8 v 55.8e (41st month of expansion)

(CZ) Czech Feb Manufacturing PMI: 57.6 v 56.0e

(CH) Swiss Feb Manufacturing PMI: 57.8 v 55.5e

(IT) Italy Feb Manufacturing PMI: 55.0 v 53.5e (6th month of expansion and highest since Dec 2015)

(FR) France Feb Final Manufacturing PMI: 52.2 v 52.3e (confirm its 5th month of expansion)

(DE) Germany Feb Final Manufacturing PMI: 56.8 v 57.0e (Confirms 27th month of expansion and highest since May 2011)

(DE) Germany Feb Unemployment Change: -14K v -10Ke; Unemployment Rate: 5.9% v 5.9%e

(EU) Euro Zone Feb Final Manufacturing PMI: 55.4 v 55.5e (44th straight month of growth and highest since April 2011)

(GR) Greece Feb Manufacturing PMI: 47.7 v 46.6 prior (6th month of contraction)

(ZA) South Africa Feb Manufacturing PMI: 52.5 v 50.9 prior

(DE) Germany Feb CPI Brandenburg M/M: +0.5% v -0.7% prior; Y/Y: 2.0% v 1.7% prior

(DE) Germany Feb CPI Hesse M/M: +0.6 v -0.5% prior; Y/Y: 2.5% v 2.4% prior

(DE) Germany Feb CPI Bavaria M/M: +0.6% v -0.8% prior; Y/Y: 2.1% v 1.7% prior

(IT) Italy 2016 Annual GDP Y/Y: 0.9% v 1.0%e, Deficit to GDP Ratio: 2.4% v 2.4%e

(UK) Feb Manufacturing PMI: 54.6 v 55.8e (7th month of expansion)

(UK) Jan Net Consumer Credit: £1.4B v £1.4Be; Net Lending: £3.4B v £3.7Be

(UK) Jan Mortgage Approvals: 69.9K v 68.7Ke

(DE) Germany Feb CPI North Rhine Westphalia M/M: +0.6% v -0.6% prior; Y/Y: 2.3% v 2.1% prior

Fixed Income Issuance:

(EU) ECB allotted $490M in 7-day USD Liquidity Tender at 1.16% vs. $930M prior

(NO) Norway sold NOK4.0B vs. NOK4.0B indicated in 2027 bond; Avg Yield: 1.74% v 1.82% prior; Bid-to-cover: 2.41x v 2.69x prior

(SE) Sweden sold SEK7.5B vs. SEK7.5B indicated in 6-month Bills; Avg Yield: -0.6599% v -0.9176% prior; bid-to-cover: 1.78x v 1.11x prior

(GR) Greece Debt Agency (PDMA) sold €1.12B vs. €875M indicated in 26-Week Bills; Avg yield: 2.97% v 2.97% prior; Bid-to-cover: 1.3x v 1.3x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 +1.2% at 3,365, FTSE +0.7% at 7,135, DAX +1.3% at 11,988, CAC-40 +1.3% at 4,922, IBEX-35 +1.3% at 9,679, FTSE MIB +1.6% at 19,219, SMI +0.7% at 8,606, S&P 500 Futures +0.5%]

Market Focal Points/Key Themes: European equity indices are trading sharply higher after US President Trump's speech on tax reforms overnight added positive sentiment to the markets; Trump stating his "economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone"; Banking sector leading the gains across the European indices; shares of CRH the notable gainer in the FTSE 100 and Eurostoxx after releasing their FY16 results; energy, commodity and mining stocks trading sharply higher as copper and oil prices rally intraday; Asia ending the session generally positive overnight.

A plethora of upcoming scheduled US earnings (pre-market) include American Eagle Outfitters, Best Buy, BMC Stock Holdings, Core-Mark, Crocs, Donaldson, Dollar Tree Stores, Dycom Industries, Hospitality Properties Trust, HERC Holdings, Icahn Enterprises, Impax Laboratories, Lowes Cos, National Bank of Canada, Office Depot, SunOpta, Tribune Media, Vitamin Shoppe, and Windstream Corp.

Equities (as of 09:50 GMT)

Consumer Discretionary: [Inchcape INCH.UK +0.7% (FY16 results), ITV ITV.UK +1.8% (prelim FY16 results), Zalando ZALG.DE -2.8% (FY16 results)]

Consumer Staples: [Ahold Delhaize AD.NL +3.4% (Q4 results, raises dividend)]

Energy: [Areva AREVA.FR +0.9% (FY16 results), Eni ENI.IT +3.0% (Q4 results), Nordex NDX1.DE +3.5% (FY16 results)]

Financials: [Man Group EMG.UK -5.1% (FY16 results)]

Healthcare: [Biomerieux BIM.FR +0.3% (FY16 results)]

Industrials: [Carillion CLLN.UK -5.4% (FY16 results), Elementis ELM.UK -4.3% (FY16 results), Flughafen Wien FLU.AT -0.6% (FY16 results), Kloeckner & Co KCO.DE +2.0% (Q4 results), Kuehne & Nagel KNIN.CH -2.2% (FY16 results), Sulzer SUN.CH +5.6% (FY16 results)]

Materials: [Covestro 1COV.DE -7.5% (Bayer confirms sale of 1.5M Covestro shares at €66.5/shr), CRH CRH.UK +3.5% (FY16 results, development strategy update), Rheinmetall RHM.DE +3.8% (prelim FY16 results)]

Utilities: [Suez Environment SEV.FR -2.4% (FY16 results)]

Speakers

Sweden Central Bank (Riksbank) Feb Minutes noted it was satisfied that economic activity was strong

Sweden Central Bank (Riksbank) Gov Ingves noted that monetary policy needed to continue to be highly expansionary. Increasingly strong level of economic activity was contributing towards that inflation target would be achieved in 2018. Risk of rapidly appreciating SEK currency (Krona) remained

German Chancellor Merkel said to be ready to ease Greek bonds' inclusion in the ECB's asset-purchase following new fiscal measures as an incentive for Greece. The country would have to approve new fiscal measures of 2%/GDP

BOJ board member Sato (dissenter): BOJ may struggle to keep 10-year JGB yield target around zero if CPI accelerated. BoJ would adjust yield targets if economy and prices improved. Reiterated BOJ should not raise yield targets just because long term rates are rising in tandem with US yields

Currencies

Continued hawkish rhetoric from voting Fed members (Harker, Dudley, Willaims) kept the USD on firm footing as President Trump's 1st major policy speech offers no detail on stimulus spending. The USD index hit a 7-week high in early European trading aided by 10-year Treasury yields testing 2.42% overnight

EUR/USD hit a 1-week low at 1.0525 before consolidating. Pair at 1.0540 just ahead of the NY morning. Better German employment data and PMI manufacturing for the region staying in expansion helped

The GBP/USD moved off the session bet levels after Feb PMI Manufacturing missed expectations

Fixed Income:

Bund futures trade at 165.55 down 44 ticks trading in the lower part of today's range, with price continuing coming off the February highs. Key resistance remains the 166.22 level. Downside momentum targets 165.52 initially followed by 165.31. A resumption higher targets 165.10 followed by 163.50.

Gilt futures trade at 127.95 down 33 ticks with volatility likely to increase due to futures rolling to the June contract this week. Resistance remainsthe 128.34 Monday high then 128.50. Support lies at 127.50 followed by 126.80 then 125.90.

Political/In the Papers:

France Presidential candidate Fillon said to have canceled a campaign stop at France's premier farm fair. Fillon's wife said to be currently held in custody with a search ongoing

Looking Ahead

(RO) Romania Feb International Reserves: No est v $38.3B prior

(RU) Russia Feb Sovereign Wealth Fund Balances: Reserve Fund: No est v $16.2B prior; Wellbeing Fund: No est v $72.5B prior

(IT) Italy Feb Budget Balance: No est v €2.0B prior

05:30 (DE) Germany to sell €3.0B in 0.25% Feb 2027 Bunds

06:00 (PT) Portugal Q4 Final GDP Q/Q: No est v 0.6% prelim; Y/Y: No est v 1.9% prelim

06:00 (FR) France Presidential Candidate Fillon statement

06:00 (RU) Russia to sell combined RUB35B in OFZ Bonds

06:30 (CL) Chile Central Bank (BCCh) Feb Minutes

06:45 (US) Daily Libor Fixing

07:00 (US) MBA Mortgage Applications w/e Feb 24th: No est v -2.0% prior

07:00 (CA) Canada Jan Leading Indicator M/M: No est v 0.6% prior

07:00 (UK) PM May weekly question time in House of Commons

08:00 (CZ) Czech Feb Budget Balance (CZK): No est v 9.1B prior

08:00 (DE) Germany Feb Preliminary CPI M/M: +0.6%e v -0.6% prior; Y/Y: 2.1%e v 1.9% prior

08:00 (DE) Germany Feb Preliminary CPI EU Harmonized M/M: +0.6%e v -0.8% prior; Y/Y: 2.1%e v 1.9% prior

(ZA) South Africa Feb Naamsa Vehicle Sales Y/Y: No est v 3.7% prior

08:15 (UK) Baltic Dry Bulk Index

08:30 (US) Jan Personal Income: 0.3%e v 0.3% prior; Personal Spending: 0.3%e v 0.5% prior; Real Personal Spending: 0.0%e v 0.3% prior

08:30 (US) Jan PCE Deflator M/M: 0.5%e v 0.2% prior; Y/Y: 2.0%e v 1.6% prior

08:30 (US) Jan PCE Core M/M: 0.3%e v 0.1% prior; Y/Y: 1.7%e v 1.7% prior

08:30 (CA) Canada Q4 Current Account: -$9.8Be v -$18.3B prior

09:30 (CA) Canada Feb RBC Manufacturing PMI: No est v 53.5 prior

09:45 (US) Feb Final Markit Manufacturing PMI: 54.5e v 54.3 prelim

10:00 (US) Feb ISM Manufacturing: 56.0e v 56.0 prior; Prices Paid: 68.0e v 69.0 prior

10:00 (US) Jan Construction Spending M/M: +0.6%e v -0.2% prior

10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rates unchanged at 0.50%

10:00 (MX) Mexico Jan Total Remittances: $2.1Be v $2.3B prior

10:30 (MX) Mexico Feb PMI Manufacturing: No est v 50.8 prior

10:30 (US) Weekly DOE Crude Oil Inventories

12:00 (IT) Italy Feb New Car Registrations Y/Y: No est v 10.1% prior

13:00 (BR) Brazil Feb Trade Balance: $3.3Be v $2.7B prior; Exports: $14.7Be v $14.9B prior; Imports: $11.4Be v $12.2B prior

13:00 (MX) Mexico Feb IMEF Manufacturing Index: 49.2e v 49.0 prior; Non-Manufacturing Index: 48.0e v 47.1 prior

13:30 (MX) Mexico Central Bank (Banxico) Quarterly Inflation Report (QIR)

14:00 (US) Federal Reserve Beige Book

News and Events:

Trump's speech drives dollar rebound

The greenback extended gains across the board amid Donald Trump's use of a more pacifying tone during his address before Congress. The dollar index surged 0.60% during the Asian session as it tested 101.73, but was unable to break the resistance implied by the high from February 15th. Equity markets also welcomed Trump's speech as Asian regional exchanges were trading in positive with the Nikkei rising 1.44%. In Hong Kong the Hang Seng was up 0.21%, while in mainland China the Shanghai Composite was up 0.16%. US futures also climbed higher as the S&P futures rose 0.33%, while the ones on the Nasdaq were up 0.31%.

Despite the market's positive response, investors remain sceptical that Trump will in fact deliver what he has promised. Indeed, zero progress has been made with the president continuing to avoid providing any insight regarding his tax cut plan. Instead he simply reiterated his pledge to spend “big” on infrastructure. At this point Trump is simply buying time as he slowing understands that there is a whole world of difference between talking and taking action. For now, it seems as though investors are satisfied with his call to end “trivial fights” - but for how long?

South Korea's exports jump to 5-year high

Exports surged 20.2%y/y in February, the fastest pace since February 2012, amid strong demand from its main trading partners, namely China (+28.7%y/y). Exports to the US, the country's second largest trade partner were up 1.7%y/y after shrinking for two consecutive months. This is definitely good news for export-oriented countries such as South Korea as it tends to confirm that global demand is finally picking up after a rough couple of years. The won did not react much overnight - mostly due to the fact that South Korea is celebrating its Independence Movement Day and financial markets are closed - the news was already widely anticipated by market participants after a clear hint last week from the finance minister. USD/KRW rose more than 1% to 1,144 as investors remained exclusively focused on Trump's Congress address.

Today's Key Issues (time in GMT):

• Feb Manufacturing PMI, exp 51,7, last 51,4, rev 51,7 NOK / 08:00
• Feb Markit Spain Manufacturing PMI, exp 55,8, last 55,6 EUR / 08:15
• Feb PMI Manufacturing, exp 55,5, last 54,6 CHF / 08:30
• Feb Markit/ADACI Italy Manufacturing PMI, exp 53,5, last 53 EUR / 08:4
• Feb F Markit France Manufacturing PMI, exp 52,3, last 52,3 EUR / 08:50
• Feb F Markit/BME Germany Manufacturing PMI, exp 57, last 57 EUR / 08:55
• Feb Unemployment Change (000's), exp -10k, last -26k, rev -25k EUR / 08:55
• Feb Unemployment Claims Rate SA, exp 5,90%, last 5,90% EUR / 08:55
• Feb F Markit Eurozone Manufacturing PMI, exp 55,5, last 55,5 EUR / 09:00
• Feb Barclays Manufacturing PMI, last 50,9 ZAR / 09:00
• 2016 GDP Annual YoY, exp 1,00%, last 0,80%, rev 0,70% EUR / 09:00
• 2016 Deficit to GDP, exp 2,40%, last 2,60%, rev 2,70% EUR / 09:00
• Feb Markit UK PMI Manufacturing SA, exp 55,8, last 55,9, rev 55,7 GBP / 09:30
• Jan Net Lending Sec. on Dwellings, exp 3.7b, last 3.8b, rev 3.7b GBP / 09:30
• Jan Mortgage Approvals, exp 68.7k, last 67.9k, rev 68.3k GBP / 09:30
• Jan Money Supply M4 MoM, last -0,50% GBP / 09:30
• Jan M4 Money Supply YoY, last 6,20% GBP / 09:30
• Jan M4 Ex IOFCs 3M Annualised, last 3,50%, rev 3,10% GBP / 09:30
• Feb Danish PMI Survey, last 59,9 DKK / 10:00
• Feb 24 MBA Mortgage Applications, last -2,00% USD / 12:00
• Jan MLI Leading Indicator MoM, last 0,60% CAD / 12:00
• Feb 27 CPI WoW, last 0,10% RUB / 13:00
• Feb 27 CPI Weekly YTD, last 0,80% RUB / 13:00
• Feb P CPI MoM, exp 0,60%, last -0,60% EUR / 13:00
• Feb P CPI YoY, exp 2,10%, last 1,90% EUR / 13:00
• Feb P CPI EU Harmonized MoM, exp 0,60%, last -0,80% EUR / 13:00
• Feb P CPI EU Harmonized YoY, exp 2,10%, last 1,90% EUR / 13:00
• 4Q Current Account Balance, exp -$9.75b, last -$18.30b CAD / 13:30
• ECB's Weidmann Speaks in Ljubljana EUR / 13:30
• Jan Personal Income, exp 0,30%, last 0,30% USD / 13:30
• Jan Personal Spending, exp 0,30%, last 0,50% USD / 13:30
• Jan Real Personal Spending, exp -0,10%, last 0,30% USD / 13:30
• Jan PCE Deflator MoM, exp 0,50%, last 0,20% USD / 13:30
• Jan PCE Deflator YoY, exp 2,00%, last 1,60% USD / 13:30
• Jan PCE Core MoM, exp 0,30%, last 0,10% USD / 13:30
• Jan PCE Core YoY, exp 1,70%, last 1,70% USD / 13:30
• Feb Markit Canada Manufacturing PMI, last 53,5 CAD / 14:30
• Feb F Markit US Manufacturing PMI, exp 54,5, last 54,3 USD / 14:45
• Bank of England Bond Buying Operation GBP / 14:50
• mars.01 Bank of Canada Rate Decision, exp 0,50%, last 0,50% CAD / 15:00
• Central Bank Weekly Economists Survey (Table) BRL / 15:00
• Feb ISM Manufacturing, exp 56,2, last 56 USD / 15:00
• Feb ISM Prices Paid, exp 68, last 69 USD / 15:00
• Feb ISM New Orders, last 60,4 USD / 15:00
• Feb ISM Employment, last 56,1 USD / 15:00
• Jan Construction Spending MoM, exp 0,60%, last -0,20% USD / 15:00
• Feb 24 DOE U.S. Crude Oil Inventories, exp 3000k, last 564k USD / 15:30
• Feb 24 DOE Cushing OK Crude Inventory, exp -400k, last -1528k USD / 15:30
• Bundesbank's Beermann Speaks in London EUR / 15:30
• Feb New Car Registrations YoY, last 10,08% EUR / 17:00
• Fed's Kaplan Speaks in Dallas USD / 18:00
• U.S. Federal Reserve Releases Beige Book USD / 19:00
• RBNZ Governor Wheeler Speaks NZD / 20:00
• Feb Commodity Price Index YoY, last -9,10% BRL / 23:00
• Feb Commodity Price Index MoM, last -1,13% BRL / 23:00
• Jan Formal Job Creation Total, exp -35575, last -462366 BRL / 23:00

The Risk Today:

EUR/USD remains trapped in a sideways range below 1.0600. Hourly resistance is given at 1.0679 (16/02/2017 high) while hourly support can be found at 1.0521 (15/02/2017 low). The technical structure suggests deeper consolidation. 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 has broken trend support area defined by 1.2426 (17/0272017 low). Hourly resistance is given at 1.2582 (09/02/2017 high) while support area is given around 1.2400. Key support is given at 1.2347 (07/02/2017 low). The pair is still lying below strong resistance given at 1.2771 (05/10/2016 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 is showing limited short -terms buying interest after reversing off base lows. Key resistance is given at 115.62 (19/01/2016 high). The technical structure suggests further weakness around support given at 111.36 (28/11/2017 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 continues to improves after testing 1.0021 support. 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.

Weekly

• Last Candlesticks pattern: Shooting star
• Time of formation: 5 Sep 2016
• Trend bias: Down

Daily

• Last Candlesticks pattern: Doji
• Time of formation: 25 Jul 2016
• Trend bias: Near term up

NZD/USD – 0.7180

Kiwi has dropped again and broke below support at 0.7130, suggesting another leg of decline from 0.7376 top is underway for retracement of early upmove to 0.7065-70 and later towards 0.7000-05, however, reckon support at 0.6949 would contain downside and bring another rise later. Only a drop below 0.6949 support would retain bearishness and signal the rebound from 0.6862 has ended at 0.7376 and bring further fall towards 0.6900 later which is likely to hold from here.

On the upside, whilst initial recovery to 0.7185-90 cannot be ruled out, reckon resistance at 0.7247 would cap upside and bring another decline later. Only a daily close above this level would signal the retreat from 0.7376 top has ended and bring a stronger rebound to indicated previous resistance at 0.7403, above there would signal the rise from 0.6862 has resumed for retest of said resistance at 0.7486. Looking ahead, above there would confirm medium term upmove from 2015 low at 0.6074 has resumed for headway to 0.7550, then 0.7600.

Recommendation: Sell at 0.7180 for 0.7000 with stop above 0.7280

On the weekly chart, kiwi has retreated after rising to 0.7376 earlier, retaining our view that further consolidation below this level would be seen and initial downside bias is seen for weakness to 0.7050, then 0.7000, however, reckon downside would be limited to 0.6940-50 and reckon 0.6900 would hold from here, price should stay well above indicated support at 0.6862, bring further choppy trading.

On the upside, expect recovery to be limited to 0.7200 and resistance at 0.7247 should hold. A weekly close above this level would signal the retreat from 0.7376 has ended, bring another test of this level, above there would extend the rebound from 0.6862 to previous resistance at 0.7403 but a sustained breach above there is needed to retain bullishness and signal the pullback from 0.7486 has ended at 0.6862, then the rise from 2015 low at 0.6074 may extend further gain to 0.7550 and later 0.7600, however, reckon upside would be limited to 0.7680 (1.618 times projection of 0.6074-0.6898 measuring from 0.6347), bring retreat later.

Weekly

• Last Candlesticks pattern: Shooting star
• Time of formation: 5 Sep 2016
• Trend bias: Down

Daily

• Last Candlesticks pattern: Shooting star
• Time of formation: 8 Sep 2016
• Trend bias: Down

As aussie has retreated after marginal rise to 0.7741, suggesting consolidation below this level would be seen and pullback to 0.7606-18 support area is likely, however, still reckon downside would be limited to support at 0.7512 and bring another rise later, above said resistance at 0.7741 would extend gain to previous chart resistance at 0.7778, however, a break above there is needed to retain bullishness and signal early erratic upmove from 0.6827 (2016 low) has resumed for retest of 0.7835 (2016 high) first. Looking ahead, once this level is penetrated, this would encourage for headway to 0.7890-00 but upside should be limited to 0.7950.

On the downside, although initial pullback to 0.7610-15 cannot be ruled out, reckon downside would be limited to support at 0.7512 and bring another rise later. A daily close below the upper Kumo (now at 0.7452) would abort and suggest top is formed instead, bring weakness to 0.7390-00 and possibly towards 0.7350 but reckon 0.7300-10 would remain intact, bring rebound later.

Recommendation: Buy at 0.7515 for 0.7715 with stop below 0.7415.

On the weekly chart, as aussie has continued trading a firm undertone after staging a strong rebound from 0.7158, suggesting further gain towards resistance at 0.7778 cannot be ruled out, however, as broad outlook remains consolidative, reckon upside would be limited and price should falter below 2016 high at 0.7835. Looking ahead, only above this level would suggest an upside break of recent established broad range has occurred, bring further subsequent rise towards 0.7900.

On the downside, although initial pullback to 0.7600 cannot be ruled out, reckon minor support at 0.7512 would limit downside and bring another rise later. A weekly close below the Kijun-Sen (now at 0.7468) would abort and suggest top is possibly formed, bring weakness to the Tenkan-Sen (now at 0.7427), break there would add credence to this view, bring subsequent weakness to the lower Kumo (now at 0.7331) but break of 0.7285-90 support is needed to signal the rebound from 0.7158 has ended and bring further decline to 0.7200-10, then towards strong support area at 0.7145-58.

EUR/USD

Current level - 10553

The second failure at 1.0630 resistance signals a reversal and the bias is negative, for a slide towards 1.0493, en route to 1.0450. Initial intraday resistance lies at 1.0580.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 113.50

Yesterday's downswing to 111.67 was the final leg of the downtrend from 114.95 and the outlook is bullish, for a break through 113.80, en route to 115.+ area. Key intraday support lies at 112.80.

GBP/USD

Current level - 1.2364

The support zone around 1.2380 has been cleared and the outlook is bearish, for a slide towards 1.2240. Initial intraday resistance lies at 1.2400, followed by the crucial high at 1.2467.

The eyes of the world have been hooked on President Trump overnight as he delivered his first speech to congress. There was an element of surprise for viewers because Trump actually appeared Presidential during his speech, following what has been quite a rough first 40 days in office.

While the US markets slipped lower and there was still no real clarity provided towards how Trump will implement his campaign promises, the shift in tone from the US President was more guided towards how he publically appeared after winning the election back in November where he soothed investor's nerves with messages around the need for partnership and peace. Nevertheless, the undertone of "America First, And Always" was still very much present but the US President was at least not just pushing his far-right agenda on this occasion.

I believe that the USD should now strengthen over the near-term, not because of President Trump's speech but because Federal Reserve officials are providing ongoing clues to the market that a possible interest rate rise in March is not something to completely rule out of the equation. While the markets might not have been pricing in a US interest rate rise this month, US economic data is maintaining its consistent strength and the Federal Reserve is maintaining its public intention towards raising US interest rates around three times in 2017.

Basically my opinion is that the markets will now begin to shift focus away from Trump slightly, and more importantly begin to price in the possibility that the Federal Reserve could pull the trigger in March.

Gold slipping from its highs

Gold has continued its weakness early Wednesday morning and if this momentum continues, it looks like the precious metal will enter a three-day losing streak. The main catalyst for the near three-month high seen late last week was due to investors hedging against political risk, but I believe that Gold is at risk to further losses as investors begin to price in at least the possibility that the Federal Reserve could pull the trigger and raise interest rates this month.

Investors need to be aware to the risks that Federal Reserve officials do appear to be preparing the financial markets for another US interest rate rise fairly soon, even if it does not occur as early as March.

GBPUSD still at risk

While it might appear like the GBPUSD is attempting to consolidate after suffering three days of successive losses, there are still risks ahead for the British Pound and it wouldn't surprise me if the Cable dipped even lower.

When it comes to the technicals, I am going to keep my eye out for whether the GBPUSD closes below 1.2350 in trading today because this would be seen as a possible signal that the Pound is at risk to falling back towards 1.20.

From a fundamental basis, the impending delivery of Article 50 from Theresa May and the reemergence of a Scottish Referendum round 2 threat later in the future does favour a negative outlook for the Pound.

Australia avoids recession!

Australia has managed to continue its remarkable run of 25 years recession free after it was confirmed early this morning that the Australian economy has not slipped into a recession.

The AUDUSD has popped higher on the news, but I still feel that the Australian currency is likely to surrender some more of its gains over the past couple of weeks.

India GDP reading exceeds expectations

This might not have been viewed as the most critical data release of the week by any means, but the GDP reading from India has defied expectations with the economy growing at 7%. Although this represents a slowdown from the previous level at 7.4%, it has defied the forecast just below 6.5% and counters the fears that the controversial note ban from the government last year was going to derail the outstanding economic progress that India has made over the past couple of years.

Perhaps it will take more time and there will be a bit of a lag before it can really be analysed what impact the completely unexpected, and controversial decision to withdrawal highdenomination banknotes as part of an anti-corruption drive is going to have on the Indian economy.

Overnight, President Trump delivered his joint address to Congress. Overall, the speech gave an overview of Trump's accomplishment so far and what he wants to focus on throughout his presidency and thus the speech included little new information. The speech was not only about economics but also about crime, immigration, border control and Obamacare.

From a market perspective, it was most interesting to hear what Trump had to say on his tax reform and infrastructure, as we have not had much new information since his election victory. However, as somewhat expected, the speech was scant on details on his economic policy. Trump repeated that he is working on a 'historic tax reform', which will lower taxes significantly for both corporates and persons. He also hinted that the US needs to fix its taxation of imports and exports without being specific about whether we should expect border adjustment taxation (as suggested by Paul Ryan) or old-style tariffs.

On infrastructure, Trump said the time has come for 'a new program of national building' and that he will ask 'Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States'.

In the speech, Trump also said that he believes in free but fair trade. Yesterday, we wrote that there is a risk that the US will take protectionist measures against WTO rules and a new story on Reuters supports this. The story says that the US administration is looking to simply ignore WTO rules going forward, as the US is only 'subject to laws and regulations made by the US government'.

On foreign policy, Trump repeated that the US 'strongly supports NATO' but that member countries 'must meet their financial obligations'.

In a recent interview, Treasury Secretary Steven Mnuchin said that the administration hopes to see the economic plan passed before Congress' August recess but that it is an ambitious deadline and it could easily slip further into the year. He also said that he expects the biggest growth impact from next year, supporting our long-held view.

While the market reaction after Trump's speech was fairly muted as expected, markets reacted to hawkish Fed comments by Williams and Dudley before the speech sending US yields higher and EUR/USD lower. Dudley (voter, dovish) said that the case for tightening has become 'a lot more compelling' and that the 'risks to the outlook are now starting to tilt to the upside'. Williams (non-voter, neutral) said that he expects the Fed to consider a March hike seriously. Both were on the hawkish side compared to the minutes, which signalled that only 'a few' FOMC members seem ready to hike already in March. This only makes Janet Yellen's speech on Friday more interesting, as we have had mixed signals from the Fed recently. Our base case is still that the Fed skips March. Markets now price in a March hike by nearly 70%, a May hike by nearly 85% and 1.3 hikes are priced in by June.