Daily Pivots: (S1) 1.0078; (P) 1.0155; (R1) 1.0255; More.....

USD/CHF is staying in range below 1.0342 and intraday bias remains neutral. Consolidation from there could extend. But still, as long as 1.0019 support holds, near term outlook remains bullish for further rally. Sustained break of 1.0327 key resistance will confirm up trend resumption and target 61.8% projection of 0.9548 to 1.0190 from 1.0019 at 1.0416 and then 100% projection at 1.0661. However, break of 1.0019 should confirm rejection from 1.0327 and turn near term outlook bearish.

In the bigger picture, the corrective fall from 1.0327 should have completed at 0.9443 already. Rise from 0.9443 could be resuming the long term rally from 2011 low at 0.7065. But decisive break of 1.0327 is needed to confirm. In that case, next medium term upside target will be 38.2% retracement of 1.8305 to 0.7065 at 1.1359. Rejection from 1.0327 will extend the sideway pattern with another fall back to 0.9443/9540 support zone.

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Daily Pivots: (S1) 116.28; (P) 116.73; (R1) 117.44; More...

USD/JPY strengthens mildly today but is staying in range below 118.65. Intraday bias remains neutral as consolidation could extend. In case of another fall, downside of retreat should be contained by 114.76 minor support and bring another rise. Above 118.65 will extend the current rally from 98.97 to test 125.854 high. We'd be cautious on topping at 125.85 on first attempt.

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.

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Daily Pivots: (S1) 1.3390; (P) 1.3448; (R1) 1.3496; More...

Intraday bias in USD/CAD remains on the downside for the moment. Rebound from 1.3080 could have completed at 1.3598 after failing to sustain above 1.3588 resistance. Deeper fall would be seen to retest 1.3080. Price actions from 1.2460 low are still 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, sustained break of 1.3588, though, will target next fibonacci level at 1.3838.

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) 0.7182; (P) 0.7214; (R1) 0.7233; More...

AUD/USD recovered ahead of 0.7158 temporary low and intraday bias stays neutral. More consolidations would be seen. In case of another recovery, upside should be limited by 0.7310 support turned resistance and bring fall resumption. As noted before, the whole corrective pattern from 0.6826 bottom should have finished. 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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Happy New Year to our readers!

Aussie and Kiwi open the year mildly higher as lifted by China data. The Caixin PMI manufacturing for China rose to 51.9 in December, much better than expectation of being unchanged at 50.9. That's the best reading in three years since January 2013. Caixin noted that "a further rise in production at Chinese manufacturers supported the higher PMI reading in December. Notably, the rate of output growth accelerated to a 71-month high, with a number of panelists commenting on stronger underlying demand and new client wins." And, "data indicated that improved domestic demand was the key driver of new business growth, however, as new export sales were unchanged in December." Nonetheless, released earlier in the week, the official PMI manufacturing dropped to 51.4, down from 51.7 and below expectation of 51.6. Technically, AUD/USD just defended 0.7158 temporary low and more sideway trading would be seen above this level in near term.

Canadian Dollar is also firm today as WTI crude oil attempts to break recent resistance at 54.51. Nonetheless, WTI is losing some momentum after hitting 54.2. Strong rally in oil price was seen last year since November, driven by announcements of production cut by OPEC and non-OPEC producers. OPEC decided to cut its crude production by 1.2 million barrels, effective January, 2017, while non-OPEC producers, including Russia but not the US, would reduce output by around 0.6M bpd. While execution of OPEC/non-OPEC cuts remains highly uncertain, the Paris-based International Energy Agency (IEA) forecasts global oil surplus would start disappear in 1H17. The agency suggested that "OPEC, Russia, and other producers are looking to speed up the process" of rebalancing this year, adding that "the market is likely to move into deficit in the first half of 2017 by an estimated 600K barrels a day" if all the parties comply to the agreement.

Meanwhile, whether the post election strength in Dollar could sustain depends on incoming data as well as Donald Trump's policies. Currently, markets are pricing around 64% chance of another rate hike by Fed by June. FOMC members projected three rate hikes this year as seen in latest projections. However rally in Dollar, yields and stocks lost steam just before end of 2016. The string of data to be released this week will be closely watched, starting from ISM manufacturing index today, ISM services on Tuesday and non-farm payroll on Friday. FOMC minutes to be released tomorrow will also catch much attention.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7182; (P) 0.7214; (R1) 0.7233; More...

AUD/USD recovered ahead of 0.7158 temporary low and intraday bias stays neutral. More consolidations would be seen. In case of another recovery, upside should be limited by 0.7310 support turned resistance and bring fall resumption. As noted before, the whole corrective pattern from 0.6826 bottom should have finished. 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.

Economic Indicators Update

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The British pound finally resumed indicated major downtrend from 1.7192 and broke below previous support at 1.3504 in mid-2016, indicated downside targets at 1.3500 and 1.3000 had been met, however, as cable found good support at 1.1476 and staged a rebound, suggesting initial consolidation above this level would be seen and recovery to 1.2500 and possibly 1.2775-80 cannot be ruled out but reckon upside would be limited to 1.3000 and resistance at 1.3445 should hold, bring another decline later. Below 1.2000 would bring weakness to 1.1700, then retest of 1.1476. Our preferred count remains that the rise from 1.0520 (Feb 1985) to 2.0100 (September 1992) is treated as wave (A), the decline to 1.3682 is labeled as (B) and (C) wave rally has ended at 2.1162 (9 Nov, 2007) which is also the top of larger degree circle wave B. The selloff from there is either a 5-waver with wave 3 ended 1.3504 and wave 4 has ended at 1.7192 or is another A-B-C decline (i.e. (A)-1.3500, (B)-1.7192, followed by a wave C selloff). In either case, bearishness remains for further fall, a break of 1.1476 support would extend weakness to 1.1200, then 1.1000 but reckon downside would be limited to 1.0500 and price should stay well above psychological support at 1.0000.

On the upside, whilst initial upside bias is seen for the rebound from 1.1476 to bring retracement to 1.2500 and then 1.2775-80, reckon upside would be limited to 1.3000 and resistance at 1.3445 should hold, bring another decline. Only above previous support at 1.3836 would abort and suggest a temporary low is formed instead, bring a stronger rebound to 1.4000 and later towards 1.44-45 level but price should falter well below resistance at 1.5018, bring another selloff in late 2017.

Despite falling sharply to 0.7401 in early 2015, the subsequent quick and strong rebound retained our view that further consolidation above major low at 0.7069 (2011 low) would take place and mild upside bias remains for the erratic rise from there (wave v as well as larger degree wave (C) trough) to bring major correction of intermediate downtrend from 1.8222 (Wave (B) top), hence further gain to 1.0350, then 1.0500 would be seen, next upside target is 1.0620-30 (100% projection of 0.7069-1.0296 measuring from 0.7401), however, reckon upside would be limited to 1.0800 and 1.1000 should hold on first testing. Looking ahead, the greenback shall head towards 1.1320-30 (38.2% Fibonacci retracement of entire wave (B) from 1.8222-0.7069) but previous 4th at 1.1731 should remain intact.

On the downside, whilst initial pullback to 1.0100 and 1.0010-20 cannot be ruled out, reckon downside would be limited to 0.9900 and 0.9800 should hold, bring another rise to aforesaid upside targets. Below 0.9800 would defer and suggest a temporary top is formed instead, risk weakness to 0.9700 but only a sustained breach below support at 0.9550 would signal the corrective rise from 0.7069 low has ended and bring further fall to support at 0.9444, having said that, only a firm break below there would shift risk to the downside and further fall to 0.9300, then 0.9200 would follow but psychological support at 0.9000 should hold from here.

The greenback did retreat in H1 of 2016, adding credence to our view for further consolidation below 2015 high of 125.86 and indicated retracement targets at 116.16, 113.30, 112.00 and 110.00 had all met met, although the correction was a bit deeper than expected and pressed the pair to as low as 99.01 in mid-2016, dollar found renewed buying interest there and staged a strong rebound in Q4 2016, suggesting the correction from 125.86 has possibly ended at 99.01, hence consolidation with upside bias is seen for gain to 119.00 and 120.00, however, reckon 121.65-70 would hold on first testing. Only a break of resistance at 123.76 would confirm correction from 125.86 has ended, bring resumption of medium term rise from major low of 75.57 (formed back in 2011), then retest of 125.86 would follow. Looking ahead, a break above this level is needed to extend headway to 127.00, then 129-130.00 level but near term overbought condition should limit upside to 133.00 and price should falter below previous chart resistance at 135.18 (2002 high).

On the downside, whilst initial pullback to 115.00 cannot be ruled out, reckon downside would be limited to 112.90-00 and bring another rise later. Below 112.00 would bring pullback to 110.00 but downside should be limited to 107.00 and bring another rise later. Only a drop below 105.50-55 would defer and prolong choppy trading below 2015 high of 125.86, then weakness to 103.00 and then 102.00 would follow but still reckon downside would be limited to 101.00-10 and price should stay above said 2016 low of 99.01, bring another rise later. In the event dollar drops below 99.01 support, this would shift risk back to downside for the retreat from 125.86 to bring a stronger correction of the aforesaid rise from 75.57 low to 97.00 and possibly 95.80-85 but downside should be limited 94.75-80 (61.8% Fibonacci retracement of 75.57-125.86) and support at 93.79 should remain intact.

The single currency did spend most of 2016 within indicated established range of 1.0462-1.1714 and the pair met renewed selling interest at 1.1616 in mid-2016 then started to fall late last year, euro finally broke below 2015 low at 1.0462 last month in line with our bearish expectation, adding credence to our bearish count for an impulsive decline unfolding from 1.6040 top (2008 high), hence downside bias remains for further weakness to 1.0350, then 1.0200, however, a sustained breach below psychological support at 1.0000 is needed to signal wave 3 of larger degree wave III has commenced for further decline to 0.9945-50 (50% projection of 1.3993-1.0462 measuring from 1.1714). Our bearish count remains that the major wave C with circle ended at 1.6040 back in July 2008, the series of (I)(II), I II, 1-(1.2042) 2-(1.3993) impulsive wave structure from 1.6040 is unfolding, bearishness remains for further decline to 1.0300, then 1.0150 but reckon psychological support at 1.0000 would limit downside and 0.9945-50 (50% projection of 1.3993-1.0462 measuring from 1.1714) would hold on first testing. Eventual downside targets are pointing at 0.9530-35 (61.8% projection of 1.3993-1.0462 measuring from 1.1714) and later towards 0.9300-05 (1.618 times projection of 1.4940-1.2042 measuring from 1.3993) but next psychological support at 0.9000 should hold.

On the upside, whilst initial recovery to 1.0900 or even 1.1000 cannot be ruled out, upside should be limited and price should falter well below resistance at 1.1300, bring another decline to aforesaid downside targets. A sustained breach above 1.1300 would defer and suggest a minor wave v of 3 has ended instead and risk a stronger rebound to 1.1500 and then towards resistance at 1.1616 but still reckon resistance at 1.1714 would remain intact and bring another decline later. Only a firm break above 1.1714 resistance would defer and risk a stronger retracement of the fall from 1.3993 to 1.1800-10 and then towards 1.1900, however, reckon upside would be limited to previous support at 1.2042 (wave 1 trough) and bring another decline later.

Euro spiked higher in Asian session on ultra thin market condition but quickly retreated. EUR/USD hit as high as 1.0653 but is back at 1.0530 at the time of writing. The pair is also limited well below 1.0669 resistance so far which maintains near term bearishness. EUR/JPY jumped to 122.14 but failed to take out 124.08 near term resistance and is back at 122.70. EUR/JPY is still seen as engaging in sideway consolidation. The more important move is in EUR/GBP which took out 0.8577 resistance and is staying above for the moment. It's seen as a sign that recent pull back from 0.9304 is completed and we'd probably seen more upside in the cross soon. The development is in line with the outlook in EUR/AUD which suggests some near term bullishness. We'd be paying attention to whether Euro would gain additional momentum against Sterling and commodity currencies.

Dollar, on the other hand, continues to pull back on position rebalancing. The post election rally in the greenback was built on expectation of Donald Trump's expansive policies, including cutting tax and raising spending. Stocks surged with DJIA closing 20000 handle as the policies would be a boost to the economy. Yields jumped as the policies mean US would have to raise debts with a surge supply in bonds. And, Dollar rose on expectation that Fed would hike rate faster in 2017 due to better economy, higher yield and inflation. So, expectations on Trump's policies are high and eyes will be closely on what he will deliver in January.

Happy new year to our readers! We'll be back on January 3.

EUR/GBP Daily Outlook

Daily Pivots: (S1) 0.8513; (P) 0.8548; (R1) 0.8587; More...

EUR/GBP jumped to as high as 0.8666 and the break of 0.8577 resistance is seen as a sign of reversal. Recent decline from 0.9304 is seen as a corrective move and could have completed at 0.8303 after breaching 0.8332 support briefly. Intraday bias is back on the upside. Break of 38.2% retracement of 0.9304 to 0.8303 at 0.8685 will pave the way to 61.8% retracement at 0.8922 and above. On the downside, below 0.8488 minor support will likely extend the fall from 0.9304 through 0.8303. But in that case, we'd look for bottoming around 0.8116.

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 0.8219) 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).

Economic Indicators Update

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