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Currency pair EUR/USD

The EUR/USD is building a WXY correction (blue/green) within wave 2 (purple) unless price breaks above the 100% level of wave 2 vs 1 (purple) which invalidates the wave structure. The Fibonacci retracement (purple) levels are potential bouncing spot and reversal levels.

The EUR/USD is building an ABC (blue) zigzag correction unless price breaks below the 100% level of wave B vs A (invalidation).

Currency pair GBP/USD

The GBP/USD is still stuck in a larger triangle pattern with support (blue) and resistance (dark red) nearby. A bearish breakout below support (blue) could see price start a wave 3 (green).

The GBP/USD is building an ABC (orange) zigzag correction unless price breaks below the 100% level of wave B vs A (invalidation).

Currency pair USD/JPY

The USD/JPY probably completed an ABC (brown) zigzag correction within a wave 2 (blue) pullback. A break below the bottom of wave 1 (blue line) invalidates the wave structure. A break above resistance (orange line) could indicate that the correction is finished.

The USD/JPY respected the 88.6% Fibonacci retracement level of wave 2. A break above resistance (orange line) could indicate a potential bullish breakout as part of waves 3 (brown/blue).

Australia Current Account hints at stronger Q4 GDP

Asia Mid-Session Market Update: Japan industrial output contracts; Australia Current Account hints at stronger Q4 GDP

US Session Highlights

(US) Jan Building Permits revised higher from 1.285M to 1.293M

(US) JAN PRELIMINARY DURABLE GOODS ORDERS: 1.8% V 1.7%E; DURABLES EX-TRANSPORTATION: -0.2% V +0.5%E

(US) President Trump: defense budget increases will be offset by savings elsewhere; tomorrow's address will have big statement on infrastructure spending

(US) JAN PENDING HOME SALES M/M: -2.8% V +1.0%E; Y/Y: +2.7% V -2.0% PRIOR (falls to one-year low)

(US) White House spokesperson: budget plan to request $54B increase in defense spending; will look for corresponding cuts across other agencies - press

(US) FEB DALLAS FED MANUFACTURING ACTIVITY: 24.5 V 19.4E

US markets on close: Dow +0.1%, S&P500 +0.1%, Nasdaq +0.3%

Best Sector in S&P500: Energy

Worst Sector in S&P500: Telecom

Biggest gainers: ILMN +4.3%, SWN +3.5%, TGNA +3.5%, REGN +3.3%, JWN +3.3%

Biggest losers: AES -6.6%, NEM -5.9%, NRG -4.0%, MDLZ -3.6%, HBI -3.4%

At the close: VIX 12.1 (+0.6pts); Treasuries: 2-yr 1.20% (+4bps), 10-yr 2.37% (+5bp), 30-yr 2.99% (+3bps)

US movers afterhours

NTRI: Reports Q4 $0.29 v $0.22e, R$108.9M v $100Me; Guides Q1 GAAP $0.14-0.19 v $0.10e, R$202-207M v $180Me; EBITDA $11.6-13.6M; +17.9% afterhours

SBY: To be Acquired by Tricon Capital Group Inc. in $1.4B in All-Cash Transaction, or $21.50/shr; +16.9% afterhours

KND: Reports Q4 $0.08 v $0.06e, R$1.75B v $1.73Be; Guides initial FY17 $0.55 v $0.43e, R$7.1-7.3B v $6.8Be, EBITDAR $910-950M; +5.1% afterhours

PCLN: Reports Q4 $13.47 v $13.06e, R$2.35B v $2.33Be; +3.3% afterhours

HTZ: Reports Q4 -$0.71 v -$0.54e, R$2.01B v $2.03Be; +2.0% afterhours

WDAY: Reports Q4 $0.07 v -$0.01e, R$436.7M v $430Me; Guides initial FY18 R$2.01-2.03B v $1.99Be; -2.1% afterhours

FTR: Reports Q4 -$0.12 v -$0.03e, R$2.41B v $2.50Be; approves stock split; Guides initial FY17 Capex $1-1.25B, ~ unch y/y; -8.5% afterhours

PRGO: Reports FY16 $5.6B v $5.44Be; To divest Tysabri royalty stream to Royalty Pharma in $2.9B deal; Guides FY17 adj $7.10-7.25 v $7.21e, R$5-5.2B v $5.51Be; -10.7% afterhours

FRGI: Reports Q4 $0.27 v $0.27e, R$171.3M v $176Me; Halts strategic alternatives search; -13.3% afterhours

THC: Reports Q4 $0.06 v $0.20e, R$4.86B v $4.97Be; Guides Q1 -$0.60 to -$0.45 v $0.45e, R$4.75-4.95B v $4.95Be, adj EBITDA $475-525M; -14.3% afterhours

Politics

(US) Wilbur Ross confirmed as US Commerce Sec by US Senate in 72-27 vote - press

(US) Former US Ambassador to China Jon Huntsman said to be in talks to become No 2 official at the State Dept - press

Asia Key economic data:

(JP) JAPAN JAN RETAIL SALES M/M: 0.5% V 0.3%E; RETAIL TRADE Y/Y: 1.0% (3rd straight increase) V 1.0%E

(JP) JAPAN JAN PRELIMINARY INDUSTRIAL PRODUCTION M/M: -0.8% (biggest decline since May 2016, first decline in 6 months) V +0.4%E; Y/Y: 3.2% V 4.3%E

(JP) JAPAN JAN VEHICLE PRODUCTION Y/Y: 3.8% V 4.2% PRIOR

(AU) AUSTRALIA Q4 CURRENT ACCOUNT BALANCE (A$): -3.9B V -4.0BE; NET EXPORTS OF GDP: 0.2% V 0.2%E

(AU) AUSTRALIA JAN HIA NEW HOME SALES M/M: -2.2% (First decline in 3 months) V +0.2% PRIOR

(AU) AUSTRALIA JAN PRIVATE SECTOR CREDIT M/M:0.2% V 0.5%E; Y/Y: 5.4% V 5.6%E

(NZ) NEW ZEALAND JAN TRADE BALANCE (NZ$): -285M V -25ME (7th straight deficit)

(NZ) NEW ZEALAND FEB ANZ ACTIVITY OUTLOOK: 37.2 (5-month low) V 39.6 PRIOR; BUSINESS CONFIDENCE: 16.6 (5-month low) V 21.7 PRIOR

Asia Session Notable Observations, Speakers and Press

Asian indices traded mixed after consecutive down days, with funds flowing out of Treasuries and seeking riskier assets. Nikkei is outperforming as USD/JPY broke a string of 3 straight down days with a rally. Reversals in Treasuries and the greenback are construed as technically driven, with all eyes on President Trump's first speech to a joint session of Congress on Tuesday night and hopes of more concrete outline of promised tax cuts and infrastructure spending initiatives.

Also due out tomorrow is Australia's Q4 GDP, and analysts are increasingly more upbeat following today's narrower than expected current account deficit as well as anticipated rise in Exports % of GDP component. This follows strong corporate profits data overnight and mixed CapEx figures last week, leading some analysts to revises their growth targets slightly higher.

Japan industrial output surprised with its first sequential decline in 6 months. While METI raises its Feb forecast to 3.5% m/m v 0.8%, March is seen contracting again at -0.5% as JPY remains stubbornly stronger in the first two months of the year.

China's Vice Premier Yang took a more conciliatory tone ahead of Trump's address tomorrow, calling for Beijing to maintain non-confrontational principle with the US despite the recent press reports of both sides boosting their military spending. Overnight, a PBoC official also called for monetary policy to be more neutral, as China govt looks ahead to Trump's address and any further mention of Beijing being the "grand champion" Of currency manipulation.

Asian Equity Indices/Futures (00:30ET)

Nikkei +0.6%, Hang Seng -0.1%, Shanghai Composite +0.2%, ASX200 -0.2%, Kospi +0.3%

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

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.0570-1.0595; JPY 112.45-112.80; AUD 0.7665-0.7690; NZD 0.7175-0.7195

Apr Gold -0.4% at $1,254/oz; Apr Crude Oil +0.3% at $54.20/brl; May Copper flat at $2.69/lb

(CN) PBOC SETS YUAN MID POINT AT 6.8750 V 6.8814 PRIOR

(CN) PBOC to inject combined CNY30B v CNY30B prior in 7-day, 14-day and 28-day reverse repos

(JP) Japan MoF sells ¥2.09T v ¥2.3T indicated in 2-yr 0.1% JGBs; Avg yield: -0.252% v -0.173% prior; bid to cover: 3.93x (lowest since Sept 29) v 5.19x prior

Asia equities/Notables/movers by sector

Consumer discretionary: HVN.AU Harvey Norman +0.3% (H1 result); MBE.AU Mobile Embrace -9.0% (H1 result); VTG.AU Vita Group +7.1% (H1 result)

Financials: 1233.HK Times Property Holdings +6.6%, 388.HK Hong Kong Exchanges & Clearing -0.9% (FY16 result); SPO.AU Spotless -13.7% (guidance); EGH.AU Eureka Group Holdings -14.0% (H1 result)

Industrials: WOR.AU Worley Parsons +30.2% (receives proposal); 7013.JP IHI Corp +3.6% (booked gain); CDD.AU Cardno +11.9% (Morgans Financial raises rating)

Technology: 018260.KR Samsung SDS Co Ltd -1.9% (momentum)

Materials: RSG.AU Resolute Mining -12.8% (H1 result); FMG.AU Fortescue -0.3% (no interest in Wesfarmers coal assets); ORE.AU Orocobre -14.6% (H1 result)

Energy: AWE.AU AWE +3.2% (H1 result)

Healthcare: CAJ.AU Capitol Health -6.1% (H1 result)

Telecom: SDA.AU SpeedCast International -6.0% (FY16 result)

Daily Pivots: (S1) 139.37; (P) 139.86; (R1) 140.73; More...

GBP/JPY is still bounded in range of 138.53/142.79 and intraday bias remains neutral for the moment. Overall, price actions from 148.42 are seen as a corrective pattern. Below 138.53 will bring deeper fall, possibly through 136.44 support. But strong support could be seen at 50% retracement of 122.36 to 148.42 at 135.39 to bring rebound. Above 142.79 will turn bias back to the upside for 144.77 and above.

In the bigger picture, price actions from 122.36 medium term bottom are still seen as a corrective pattern. Main focus is on 38.2% retracement of 195.86 to 122.36 at 150.42. Rejection from there will turn the cross into medium term sideway pattern with a test on 122.36 low next. Though, sustained break of 150.42 will extend the rebound towards 61.8% retracement at 167.78.

Daily Pivots: (S1) 118.54; (P) 119.00; (R1) 119.75; More...

Intraday bias in EUR/JPY is turned neutral with the current recovery. At this point, we're slightly favoring the bearish case that whole rebound from 109.20 has completed at 124.08 already. Sustained trading below 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39) will confirm. In such case, EUR/JPY should target 61.8% retracement at 114.88 and below. On the upside, though, break of 119.85 minor resistance will indicate short term bottoming and turn bias back to the upside for 121.32 resistance instead.

In the bigger picture, price actions from 109.20 medium term bottom are seen as part of a medium term corrective pattern from 149.76. Current development argues that it's completed at 124.08, ahead of 126.09 key resistance level. Deeper fall would be seen back to 109.20 low. Break there will extend the whole medium term down trend from 149.76 high.

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Daily Pivots: (S1) 1.3732; (P) 1.3774; (R1) 1.3836; More...

Intraday bias in EUR/AUD remains neutral for the moment. At this point, we'd still expect strong support from 1.3671 to contain downside to complete the correction from 1.6587. This is supported by bullish convergence condition in 4 hour MACD. Break of 1.3900 resistance will confirm short term bottoming and turn bias back to the upside for 1.4289 resistance. However, sustained break of 1.3671 will invalidate our view.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. We'd expect strong support from 1.3671 key level to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.4721 resistance will indicate completion of such correction and turn outlook bullish for retesting 1.6587 high. However, sustained break of 1.3671 will invalidate our bullish view and would turn focus back to 1.1602 long term bottom.

Daily Pivots: (S1) 0.8465; (P) 0.8502; (R1) 0.8544; More...

EUR/GBP is staying in corrective trading above 0.8402 and intraday bias remains neutral at this point. With 0.8590 resistance intact, we're holding on to our bearish view. That is, fall from 0.8851 is the third leg of the whole corrective pattern from 0.9304. Below 0.8402 will turn bias to the downside for 0.8303 first. Break will confirm our bearish view and target 0.8116 key cluster support level. However, on the upside, break of 0.8590 resistance will dampen our view and turn bias back to the upside.

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 from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) 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).

Daily Pivots: (S1) 1.0548; (P) 1.0589 (R1) 1.0627; More.....

Intraday bias in EUR/USD strays neutral as consolidation from 1.0493 temporary low continues. With 1.0678 minor resistance intact, deeper decline is still expected. We're viewing fall from 1.0828 as resuming the larger down trend. Below 1.0493 will target 1.0339 low first. Break will confirm our bearish view and target parity. However, break of 1.0678 will dampen our view and turn focus back to 1.0828 resistance instead.

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.

Daily Pivots: (S1) 1.2390; (P) 1.2434; (R1) 1.2486; More...

GBP/USD continues to gyrate in range of 1.2346/2705. Intraday bias remains neutral first and outlook is unchanged. Price actions from 1.1946 are viewed as a consolidation pattern, with rise from 1.1986 as the third leg. In case of another rise, we'd expect upside to be limited by 1.2774 to bring larger down trend resumption. On the downside, below 1.2346 will revive the case that such consolidation is completed at 1.2705 already. In that case, intraday bias will turn back 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.

Daily Pivots: (S1) 1.0058; (P) 1.0077; (R1) 1.0110; More.....

USD/CHF is bounded in consolidation below 1.0140 temporary top and intraday bias stays neutral first. With 0.9966 support intact, further rise is in favor. Above 1.0140 will turn bias to the upside and target a test on 1.0342 resistance. Based on neutral medium term outlook, we'd be cautious on topping at around 1.0342. Meanwhile, break of 0.9966 will indicate completion of the rebound from 0.9860. And intraday bias will be turned back to the downside for 0.9860.

In the bigger picture, prior rejection from 1.0327 resistance argues that USD/CHF is staying in a medium term sideway pattern. In any case, decisive break of 1.0342 resistance is needed to confirm underlying strength. Otherwise, we'll stay neutral in the pair first. In case of another fall, we'd expect strong support from 0.9443/9548 support zone. Meanwhile firm break of 1.0342 will target 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

Daily Pivots: (S1) 112.13; (P) 112.48; (R1) 113.06; More...

USD/JPY is still bounded in range of 111.58/114.94 and intraday bias remains neutral. The corrective fall from 1118.65 could extend lower. But we'd still expect strong support from 38.2% retracement of 98.97 to 118.65 at 111.13 to contain downside and bring rebound. On the upside, above 114.94 resistance should confirm completion of pull back from 118.65. In such case, intraday bias will be turned back to the upside for retesting 118.65.

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.