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'There is no other way than looking bullish at gold for the moment. There are extended positions in dollar. We are going to see this dollar correction running for a while, which will support gold.' – Jaffrey Halley, OANDA (based on Reuters)

Pair's Outlook

During the early hours of Tuesday's trading session the yellow metal's price declined and fell below the 1,230 mark. This seems to be a consolidation of positions in the aftermath of a steady surge of more than three percent since the start of last Tuesday's trading session. It is most likely that the bullion will soon make an attempt of breaking the monthly PP, which is located at the 1,236.39 level. However, it is also possible that the commodity price will first retreat down to the 20-day SMA, which was located at 1,222.94 on Tuesday morning.

Traders' Sentiment

SWFX traders are neutral on the metal, as 50% of open positions are long. However, 65% of trader set up orders are to buy the bullion.

The Euro is in fresh acceleration higher and posts new, marginally higher highs after two-day consolidation was contained above 1.0700 handle.

The single currency received strong support from news of French presidential candidate Macron is leading the election race after winning French TV presidential debate on Monday that eased fears about potential France exit from the EU.

Friday's long red candle and Monday's Doji with long upper shadow, did little as bearish signals to intensify downside pressure, as strong post-FED bullish sentiment remains firmly in play.

The pair is eyeing psychological 1.0800 barrier and key resistance at 1.0827 (02 Feb peak, also near 50% retracement of larger 1.1298/1.0339 descend) in extension.

Sustained break here would signal bullish continuation of broader recovery rally from 1.0339 (2017 low).

Overbought slow stochastic on daily chart suggests that the pair may show hesitation ahead of 1.0827 pivot, but no firmer bearish signal seen so far.

Hourly Ichimoku cloud (spanned between 1.0743/50) marks initial support, guarding Monday's low at 1.0719 and 1.0700 handle.

Rising 10SMA continues (currently at 1.0680) to underpin and should contain extended downticks.

Res: 1.0800, 1.0827, 1.0872, 1.0931
Sup: 1.0758, 1.0743, 1.0719, 1.0700

Daily Pivots: (S1) 0.8664; (P) 0.8685; (R1) 0.8712; More...

Consolidation from 0.8786 is still in progress and intraday bias stays neutral in EUR/GBP further. In case of another fall, we'd expect support from 38.2% retracement of 0.8402 to 0.8786 at 0.8639 to contain downside. Break of 0.8786 will target 0.8851 resistance and above. Price actions from 0.8303 are seen as the second leg of the corrective pattern from 0.9304. Hence, we'd expect strong resistance from 100% projection of 0.8303 to 0.8851 from 0.8402 at 0.8950 to limit upside. On the downside, sustained trading below 0.8693 will bring deeper fall to 61.8% retracement 0.8549 and below.

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) 1.3857; (P) 1.3909; (R1) 1.3946; More...

EUR/AUD is still holding on to 1.3874 minor support for the moment and intraday bias stays neutral first. We'd slightly favoring the case of trend reversal after defending key support level at 1.3671, on bullish convergence condition in daily MACD. On the upside, above 1.4183 will turn bias to the upside for 1.4289 resistance next. Break will affirm our view and target next key resistance level at 1.4721. However, break of 1.3874 minor support will invalidate our view and turn bias back to the downside for retesting 1.3624 low.

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.

Sunrise Market Commentary

• Rates: More consolidation ahead?
  In a data-poor session, US Treasuries rallied, confirmed recent positive sentiment. We suspect that technicals are at play since the FOMC cleared the way with a rate hike. Today, the calendar is nearly empty. So, we expect more consolidation of core bonds. Macron's good performance in the election debate may result in an outperformance French bonds.
• Currencies: Dollar still looking for a solid bottom
  Yesterday, the post-Fed decline of the dollar slowed, but there was sustained rebound yet. This morning, the picture of the dollar remains mixed as the euro rebounds on a good performance of Macron in the French election debate. More USD consolidation might be on the cards. Sterling traders will keep an eye on the UK price data

The Sunrise Headlines

• US equities ended yesterday's listless session narrowly mixed. The NASDAQ tried to break all-time highs but this attempt failed. Asian equities trade constructive.
• RBA, Australia's central bank, is becoming more concerned with the state of the national property market, amid a leap in investment borrowing and strong price growth in the nation's most populous cities (Minutes). Aussie dollar lost marginal ground.
• Greek bailout talks made progress in Brussels. Discussion will continue to resolve outstanding issues, Mr. Dijsselbloem said. Greece's FM Tsakalotos said negotiators will stay in Belgium for a few days to try and wrap up an agreement
• Emmanuel Macron fared best in the five-way French presidential debate, according to an early poll. The 39-year-old attacked anti-euro, anti-immigration candidate Marine Le Pen for her lack of ethics and lifelong presence in politics. The euro trades a bit stronger overnight.
• FBI Director Comey dealt Trump a stinging rebuke before the House Committee. He confirmed that Russia's interference in the presidential election is being investigated and said there is no evidence to back the president's charge his predecessor had wiretapped him. Markets shrugged off these comments.
• Metals led declines in commodities, with copper falling for a second day and gold retreating from a two-week high, amid 'dollar strength'.
• Today, the eco calendar only contains UK data: CPI, PPI, public finance figures and CBI orders. Fed governors Dudley, Mester and George speak. The Ecofin will meet in Brussels.

Currencies: Dollar Still Looking For A Solid Bottom

USD still looking for a solid bottom

On Monday, in technical trading deprived of any important news, the post-Fed decline of US yields continued. Interest rate differentials between the dollar and the euro narrowed further. However, these moves had only a limited impact on USD trading. The setback of the dollar petered out. EUR/USD closed the session at 1.0739 hardly changed from Friday. USD/JPY finished day at 112.55 (from 112.70). .

Overnight, Asian equities (ex Japan) are trading constructively. The moderate global reaction to last week's Fed decision (including a soft dollar) is supporting regional markets (ex Japan). The dollar continues to trade mixed. Comments from Fed members didn't change investor perception that the Fed normalisation will be gradual. USD/JPY reversed an early session dip, trading in the 112.80 area. The pattern of EUR/USD is slightly different. The euro regained ground as Macron solidified his lead over Le Pen after a first French election debate. The Minutes of the RBA warns on the rise of house prices in some regions and on rising household debt. At the same time, the RBA still sees spare capacity in the economy. AUD/USD is drifting lower to the 0.77 area.

Today, eco calendar in EMU and the US are empty, but several Fed members are scheduled to speak (NY Fed Dudley, Cleveland Fed Mester and Kansas city Fed George). However, we expect them to defend their 'usual positions' (cf. FI part of this report) and don't expect them to change the picture for USD trading. Last week, USD yields and the dollar drifted south even as the Fed raised rates. At the same time, the euro was well bid as markets pondered the chances of an early change in the ECB policy after hawkish comments from ECB's Nowotny. In a longer term perspective, policy divergence between the Fed and the ECB will probably remain big enough to support further USD gains. Yellen suggested that, considering the eco developments, the Fed policy might follow closely to the 'dotpath' (still 2 rate hikes in 2017). In a day-to-day perspective, the dollar shows no clear trend. The USD/JPY decline looks slowing down. At the same time, EUR/USD is holding near the recent top, partially on relative euro strength. We want more convincing signs that the USD has found a bottom before adding USD long exposure.

Global context. EUR/USD 1.0874 resistance remains the line in the sand with intermediate resistance at 1.0829. We maintain the view that a sustained break of EUR/USD above this area will be difficult. The US/German (EMU) interest rate differential remains at an absolute high level. Especially at the short end of the curve, the differential might even re-widen. The fundamentals/ interest rate differentials are also supportive for USD/JPY, but of late the momentum/technical picture is not really convincing. We maintain the working hypothesis that the 111.60 range bottom should hold.

EUR/USD holding near ST top on dollar softness and euro rebound

EUR/GBP

EUR/GBP to resume rebound?

On Monday, sterling trading was driven by technical considerations. Early in European dealings, sterling gained a few ticks but trading was confined to tight ranges. Around noon, a spokesman of PM May announced that the UK will trigger article 50 of the Lisbon treaty on March 29. The move was no surprise, but sterling reversed the intraday gains against the euro and the dollar as investors realize that a period of heightened political uncertainty is on the horizon. EUR/GBP closed the session at 0.8690 (from 0.8662). Cable finished the session at 1.2358 (from 1.2396).

This morning, cable gains a few ticks, but so does EUR/GBP on a broad-based bid in the euro (Macron). Today, the UK price data (CPI &PPI), the monthly public finance data and the CBI trends orders will be published. Last week, the BoE sounded a bit more attentive to a potential overshoot of inflation. Kristin Forbes voted for a rate hike and some other members are inclined to do so if growth and inflation were to surprise on the upside. We are not convinced that the majority of the BoE is already close to a rate hike. Sterling might get some support from higher rate hike expectations in case of an upward surprise of the inflation data. However, this might be counterbalanced by investor caution on sterling going into the start of the Brexit procedure. We assume that a big deviation from consensus is needed to unlock clear directional move of sterling.

Last week, the sterling decline took a breather. Some time ago, EUR/GBP cleared the 0.8592 resistance, improving the MT technical EUR/GBP picture. We don't expect a sustained EUR/USD rebound, but a combination of temporary euro consolidation and ongoing sterling softness as the Brexit negotiations are nearing, might trigger some more ST EUR/GBP gains. The 0.8854 correction top is the next key resistance. The nervous swings over the previous days suggest that a clear break beyond 0.8854 will be difficult without important (UK negative) news.

EUR/GBP: post-BoE sterling rebound to slow as political uncertainty grows? Euro is also better bid

Download entire Sunrise Market Commentary

Markets were unmoved by yesterday's political risk events. Donald Trump's job approval rating took a hit, declining to 37% according tothe Gallup poll. The U.S. President took another hit from FBI director, James Comey who said no information supported his tweets contending that Former President Barak Obama wiretapped his campaign before the election. Meanwhile, investigations on Russia's interference in the presidential election is ongoing.

These recent developments were totally ignored in financial markets, but the two-month-old new administration is already under pressure due to lack of clarity on tax reforms and regulation cuts. U.S. Senate Majority Leader, Mitch McConnell, believes getting tax reforms done, along with repealing Obamacare, will take longer than the Trump administration claims. This shows how slowly things are moving and may be only a matter of time until markets lose their patience and push the sell button.

The U.S. dollar continued to move on the back of Fed comments. Chicago Fed President, Charles Evan echoed Fed's decision last week that the Central Bank won't accelerate the pace of monetary policy tightening, but he also kept the door open for three rate hikes if conditions warranted. Dollar bulls wanted a more hawkish statement to rebuild long positions, but it doesn't seem we'll be getting one this week, suggesting that some consolidation and range-bound trading will resume unless a surprise occurs.

In Europe, Theresa May will officially trigger Article 50 on March 29, but formal talks may not start until June according to European sources. Yesterday's GBP price action suggests that triggering Article 50 seems completely priced in, and I won't be surprised if GBPUSD shoots higher on March 29. However, with the countdown set to begin on negotiating the terms of the breakup, Sterling will likely be on a roller-coaster. Today's U.K. CPI release will remind us why BoE's Kristin Forbes's voted for a rate hike in last week's meeting. Inflation is expected to shoot above the BoE's target of 2% but I don't expect much of a reaction unless the number deviates a lot from expectations at 2.1%.

The fight between populism and globalism was live in yesterday's French presidential debate. EURUSD declared that centrist and former investment banker, Emmanuel Macron, won this round, as the currency pair shot higher. However, I suggest not to jump into conclusions given that 40% of voters have not decided whom to back yet, and we already learned a lesson from the Brexit vote and U.S. Presidential Elections.

Daily Pivots: (S1) 120.59; (P) 121.01; (R1) 121.30; More...

Intraday bias in EUR/JPY is turned neutral with today's recovery. On the upside, above 122.24 minor resistance will suggest that fall from 122.88 is merely a pull back. And intraday bias will be turned back to the upside for retesting 124.08 high. Decisive break of 124.08 will extend whole rally from 109.20. On the downside, break of 120.65 will likely extend the fall from 122.88. But we'd expect strong support from 118.345 (38.2% retracement of 109.20 to 124.08 at 118.39) to contain downside and bring rebound.

In the bigger picture, we're holding on to the view that medium term rise from 109.20 is still in progress. Focus is on 126.09 key resistance level. Sustained break will confirm completion of the whole decline from 149.76. And rise from 109.20 is of the same degree as the fall from 149.76. In such case, further rally would be seen to 104.04 resistance and possibly above before topping. Meanwhile, rejection from 126.09, or firm break of 118.45 cluster support, will likely extend the fall from 149.76 through 109.20 low.

Daily Pivots: (S1) 138.60; (P) 139.37; (R1) 139.84; More...

GBP/JPY is still staying in tight range above 138.53 support and intraday bias stays neutral. Price actions from 148.42 are forming a consolidation pattern. And there is no clear sign of completion yet. On the downside, break of 138.53 support would trigger bring deeper fall to 136.44 support and possibly below. We'd expect strong support from 50% retracement of 122.36 to 148.42 at 135.39 to contain downside and bring rebound. On the upside, break of 142.79 resistance will turn bias to the upside and send GBP/JPY through 144.77 resistance.

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. Or, sustained break of 50% retracement of 122.36 to 148.42 at 135.39 will turn outlook bearish for a test on 122.36 low. Though, sustained break of 150.42 will extend the rebound towards 61.8% retracement of 195.86 to 122.36 at 167.78.

Daily Pivots: (S1) 1.0705; (P) 1.0725; (R1) 1.0745; More...

EUR/CHF recovers today but stays in range below 1.0823. Intraday bias remains neutral for the moment. On the upside, break of 1.0823 resistance will re-affirm the case of trend reversal. And intraday bias will be turned back tot he upside for 1.0897 resistance for confirmation. However, break of 1.0683 minor support will turn bias to the downside for 1.0620 key support level again.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Decisive break of 1.0897 resistance should confirm that it's completed. And in that case, larger up trend is resuming for another high above 1.1198. Meanwhile, sustained trading below 38.2% retracement of 0.9771 to 1.1198 at 1.0653 will target 50% retracement at 1.0485.

RBA minutes balance rising property prices and slower wage growth

Asia Mid-Session Market Update: RBA minutes balance rising property prices and slower wage growth; Strong performance by Macron in France debates lifts EUR

US Session Highlights

(US) Fed's Kashkari (dove, dissenting vote): job market showing more signs of slack and we are still short on inflation; The economy is growing more slowly than we would like - CNBC interview

(US) Fed's Evans (dove, voter): Three rate hikes in 2017 is possible; could be more or less - Fox Business interview

(US) Fed's Harker (hawk, FOMC voter): Would not rule out more than three rate hikes this year; all meetings are live for rate decisions; Would like to get well north of 1% rates before halting bond reinvestments, maybe close to 1.5% - CNBC interview

(US) House Intel Chair Nunes: there was not a wiretap of Trump Tower; it is possible there was other surveillance against Trump and his aides - hearings on Russia interference in elections

(US) FBI Director Comey: confirms that FBI is investigating Russian govt efforts to interfere in election, including potential links between Trump campaign and Russia - press

US markets on close: Dow flat, S&P500 -0.2%, Nasdaq flat

Best Sector in S&P500: Materials

Worst Sector in S&P500: Financials

Biggest gainers: CF +3.8%, NVDA +3.2%, CAT +2.7%, BHI +2.5%, IFF +2.5%

Biggest losers: KSS -4.8%, FSLR -4.7%, M -3.8%, JWN -3.1%, GPS -2.7%

At the close: VIX 11.3 (+0.1 pts); Treasuries: 2-yr 1.30% (flat), 10-yr 2.47% (-3bps), 30-yr 3.09% (-2bps)

US movers afterhours

FSM: Announces possible delay in filing its annual financial results; -2.5% afterhours

GEL: Offering 4M Common Units (3.4% of outstanding); -5.7% afterhours

Politics

(FR) France Elabe poll: Macron was most convincing in presidential debate; Melenchon 2nd; Le Pen and Fillon tied for 3rd

(US) Pres Trump: Preparing executive order to put coal miners back to work; Working to remove regulations in auto industry

Asia Key economic data:

(AU) AUSTRALIA Q4 HOUSE PRICE INDEX Q/Q: 4.1% (biggest increase in 5 years) V 2.5%E; Y/Y: 7.7% V 6.3%E

(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 112.0 v 113.1 prior

(NZ) NEW ZEALAND FEB CREDIT CARD SPENDING M/M: -1.4% V 0.4% PRIOR; Y/Y: 5.3% V 7.1% PRIOR

(NZ) New Zealand Feb Net Migration: 6.0K v 6.4K prior (6-month low)

Asia Session Notable Observations, Speakers and Press

Asian equity markets traded mixed and mostly in narrow ranges, tracking another flattish day on Wall St. Bullish sentiment has been tempered by uncertainty regarding Pres Trump's pro-business tax agenda as the cabinet continues to wrestle with Congressional inquiry into Russia election ties as well as negotiation on Obamacare repeal legislation that needs to get passed before tax reform can begin. Modest safehaven bid of US Treasuries continued on Monday as yield curve flattened and financials struggled.

In Asian hours, futures are pointing to more optimism attributed to initial response from Elabe poll in France that showed Macron as the most credible candidate in today's debate, potentially defusing concerns of a populist revolt propelling Le Pen to a surprise victory in May. EUR/USD bounced on the poll release, rising some 50pips to 1.0770, while USD/JPY reversed some of the early pressure to rise over 40pips above 112.70.

Outside of the political risks, the absence of meaningful economic data has otherwise contributed to a fairly lackluster session. Release of RBA March meeting minutes produced a brief ripple in AUD with an initial 10pips rise to session highs of 0.7735 followed by steady retreat to 0.77 handle. RBA expanded on its statement with growing concern over home prices, improved global conditions, and forecast commodity prices to remain firm for longer than expected. On the other hand however, RBA was more downbeat about sustained momentum in wage inflation following latest disappointing labor data, while also maintaining focus on uncertainty in policies of China and US. Traders will look ahead to tomorrow's speech from RBA's Debelle for any more clarity, though analyst consensus of a neutral RBA over the near term is likely to be maintained.

China

(CN) China Ministry of Commerce (MOFCOM) and National Development Reform Commission (NDRC) may announce rules this year restricting outbound investment

(CN) China Vice Foreign Minister Zheng Zeguang: Premier Li's upcoming visit to Australia and New Zealand will send a positive message to the world that the nations are bundled with free trade

Japan

(JP) Japan Chief Cabinet Sec Suga: Japan to actively engaged in macro and FX talks at G-20

(JP) Japan said to mull shortening period between auction and issuance of some JGB's - financial press

Australia/New Zealand

(AU) RBC: Today's RBA minutes erred more on the hawkish side - SMH

(NZ) NZ Institute of Economic Research (NZIER) shadow board: RBNZ should keep interest rates at 1.75% with a tightening bias

Korea

(KR) South Korea Acting President Hwang Need to closely monitor financial markets - press

Asian Equity Indices/Futures (00:30ET)

Nikkei -0.3%, Hang Seng +0.2%, Shanghai Composite +0.2%, ASX200 -0.1%, Kospi +1.0%

Equity Futures: S&P500 +0.2%; Nasdaq +0.2%; Dax +0.2%; FTSE100 +0.2%

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

EUR 1.0720-1.0770; JPY 112.30-112.80; AUD 0.7700-0.7740; NZD 0.7040-0.7065

Apr Gold -0.5% at $1,228/oz; May Crude Oil +0.4% at $49.11/brl; May Copper -1.0% at $2.63/lb

SPDR Gold Trust ETF daily holdings fall 3.8 tonnes to 830.3 tonnes; 3rd straight decline

iShares Silver Trust ETF daily holdings rise to 10,342 tonnes from 10,303 tonnes prior

(CN) PBOC SETS YUAN MID POINT AT 6.9071 V 6.8998 PRIOR; weakest Yuan setting since Mar 15th; 3rd straight weaker setting

(CN) PBOC to inject combined CNY80B v CNY100B prior in 7,14, and 28-day reverse repos

(KR) South Korea MoF sells 10-yr pre-issuance Govt bond at 2.2%

Asia equities/Notables/movers by sector

Consumer discretionary: 1107.HK Modern Land China -10.0% (FY16 result); HVN.AU Harvey Norman +3.3% (denies speculation about ASIC review of reporting); TGA.AU Thorn Group -7.5% (guidance)

Consumer staples: 1432.HK China Shengmu Organic Milk -3.8% (FY16 result)

Financials: 1528.HK Red Star Macalline Group -6.6% (FY16 result); 1238.HK Powerlong Real Estate Holdings +5.5% (FY16 result); SPO.AU Spotless Group +48.6% (bid by Downer)

Industrials: 3836.HK China Harmony Auto Holding -7.5% (guidance); AZJ.AU Aurizon -0.9% (UBS cuts rating); 6448.JP Brother Industries +4.2% (Goldman Sachs raises rating)

Technology: 698.HK Tongda Group Holdings -3.1% (FY16 result); 1357.HK Meitu -10.3% (regulator requests trading records); 6502.JP Toshiba Corporation +3.2% (Westinghouse Electric bankruptcy consideration)

Materials: 2068.HK China Aluminum International Engineering Corp +14.2% (FY16 result); 5423.JP Tokyo Steel Mfg -4.9% (maintains steel prices); NHC.AU New Hope Corporation +4.9% (H1 result)

Energy: 2386.HK Sinopec Engineering Group Co +4.7% (JPMorgan raises rating)

Healthcare: VRT.AU Virtus Health -3.7% (Morning star cuts rating); BKL.AU Blackmores +13.4% (China has indefinitely delayed new cross-border e-commerce laws)

Telecom: TPM.AU TPG Telecom +5.6% (affirms guidance)