Sample Category Title

Daily Pivots: (S1) 0.8574; (P) 0.8597; (R1) 0.8639; More....

With 0.8665 support turned resistance intact, rebound from 0.8332 is seen as a corrective move only. Break of 0.8487 will indicate that the rebound has completed, and bring retest of 0.8332 low. However, decisive break of 0.8665 will rise the change of larger trend reversal and target 0.8819 resistance next.

In the bigger picture, outlook in USD/CHF will stay bearish as long as 0.9243 resistance holds. Larger down trend from 1.0146 (2022 high) should extend further to 61.8% retracement of 1.0146 to 0.8551 from 0.9243 at 0.8257.

Daily Pivots: (S1) 146.08; (P) 146.70; (R1) 147.80; More...

USD/JPY's rally from 140.25 continues today, and breaks through 61.8% retracement of 151.89 to 140.25 at 147.4. There is no sign of topping yet and intraday bias stays on the upside. Next target is 151.89/93 key resistance zone. On the downside, below 146.27 minor support will turn intraday bias neutral first. But further rally will remain in favor as long as 55 D EMA (now at 145.67) holds.

In the bigger picture, stronger than expected rebound from 140.25 dampened the original bearish review. Strong support from 55 W EMA (now at 141.89) is also a medium term bullish sign. Fall from 151.89 could be a correction to rise from 127.20 only. Decisive break of 151.89/93 will confirm resumption of long term up trend. This will now be the favored case as long as 140.25 support holds.

Daily Pivots: (S1) 1.3445; (P) 1.3474; (R1) 1.3523; More...

Intraday bias in USD/CAD remains on the upside at this point. Rise from 1.3176 is in progress for 1.3617 cluster resistance (61.8% retracement of 1.3897 to 1.3176 at 1.3622). Decisive break there will pave the way to 1.3897/3976 key resistance zone. On the downside, below 1.3422 minor support will turn intraday bias neutral first.

In the bigger picture, price actions from 1.3976 (2022 high) are viewed as a corrective pattern only. In case of another fall, strong support should emerge above 1.2947 resistance turned support to bring rebound. Overall, larger up trend from 1.2005 (2021 low) is still expected to resume through 1.3976 at a later stage.

In focus today

This morning at 8:00 CET we get inflation data for December from the UK, where consensus expects both headline and core inflation to ease further on a yearly basis. Key will be how service inflation develops as this remains an important input for the Bank of England to determine underlying inflation pressures.

We will also look out for the final euro area inflation figures for December. The final HICP figures includes details on inflation components that will provide important information about the underlying inflationary pressure.

In the US we get retail sales data for December this afternoon. Consensus expects 0.4% m/m compared to 0.3% m/m in November.

In Sweden at 09:10 CET, The Riksbank's first deputy governor Anna Breman gives her view on the economic situation and current monetary policy at a conference on the Swedish housing market.

There are several speeches on the schedule for today with Fed's Bowman and Barr and ECB President Lagarde all speaking in the afternoon and Fed's Williams speaking tonight.

Economic and market news

What happened overnight

Chinese data out this morning disappointed badly. The GDP data looked okay with a 1.0% q/q increase (consensus of 1.1%). This compares with a growth rate of 1.5% q/q for Q3 (revised up from 1.3% q/q). With the Q4 release, Chinese GDP growth for the year 2023 stood at 5.2%, thus beating the government's 5% growth target and in line with consensus. However, data for consumption and housing was weak. Chinese retail sales for December stood at 7.4% y/y missing expectations of 8% y/y, and down from 10.1% y/y in November. Home sales dropped to a new low in December 50% below the pre-pandemic level (link to chart), and house prices fell 0.5% m/m marking the biggest drop since 2015. The numbers raise warnings that the housing crisis continues to deepen, and that the consumer engine is slowing down. The data highlights the need for further stimulus. Chinese population fell for the second year in a row, shrinking by 2m in 2023. Chinese offshore stocks have taken a new hit after the data and is down 3% overnight to the lowest level since November 2022.

What happened yesterday

In Norway, mainland GDP figures for November stood at -0.2% m/m in line with expectations and marginally stronger than what Norges Bank expected (-0.3% m/m) in its December Monetary Policy Report. The slight contraction in November after the 0.4% m/m growth in October is in line with the sideways trend seen in mainland GDP figures since March 2023.

In the UK, the labour market report for November/December was fairly in line with expectations. The 3m/3m annualised wage growth for the private sector stood at 2.6% down from 3.8%, which is sustainable with a 2% inflation target (assuming 1% productivity growth).

In China, Bloomberg reported that Chinese leadership were considering issuing CNY1tn (USD139bn) of bonds in a 'special sovereign bond plan', corresponding to around 0.8% of Chinese GDP. The funds raised would be used to finance projects related to food, energy, supply chains and urbanization. At the end of 2023 China also lifted the budget deficit for the year, providing support to growth in H1 this year. The potential new stimulus would likely add support to growth in H2.

In the ECB, moderate Governing Council member Villeroy commented the next move from the ECB should be a rate cut this year, but he would not comment on any specific time this may happen. This is in contrast to the recent comments from other GC members (Nagel, Holzmann, Lane, etc.) that in the past days have generally pushed back on market expectations of a rate cut this spring and guided for summer at the earliest. The ECB survey for November on consumer expectations for eurozone inflation showed expectations for inflation three years ahead had dropped to 2.2% y/y from 2.5% y/y.

In Germany, ZEW economic sentiment for January rose to 15.2 from 12.8 marking the sixth consecutive monthly rise. The current conditions index is however still weak and has been only slightly improving over the last couple of months, as also reflected in the more comprehensive Ifo survey.

In the Red Sea, another dry bulk carrier ship was hit by a missile. The ship, a Greek-owned vessel sailing under Maltese flag, is the second commercial vessel hit by a missile off the coast of Yemen in two days. Energy company Shell and Japanese shipping operator NYK Line were the latest major companies to halt transport through the Red Sea. US military carried out another strike against Houthi missile capabilities.

Equities: Global equities were lower yesterday after weak macro data and yields ticking higher. Just like Monday, this was not a full-blown risk-off session with strong defensive rotation, but rather a profit-taking session after the strong year-end rally. That being said, one could easily have feared a much more negative reaction to the macro data but weak manufacturing data was more or less ignored since the service-driven economic pick-up post Covid. In US yesterday, Dow -0.6%, S&P 500 -0.4%, Nasdaq -0.2% and Russell 2000 -1.2%. Asian markets are lower this morning led by China after a broad set of weak data was released. Especially the housing market continues to struggle and calling for more public support. European and US futures all lower this morning as well.

FI: US bond yields rose significantly on the back of hawkish comments from Fed Governor Waller regarding the timing of the rate cut from the Federal Reserve as well as the number of rate cuts in 2024. Hence, 10Y US Treasury yields rose some 11bp yesterday and are back above 4%.

FX: EUR/USD declined below 1.09 due to rising yields and poor risk appetite. The increasing yields propelled USD/JPY above 147. Meanwhile, EUR/GBP initially jumped higher on the release of the November/December UK Job report but reversed the move during the afternoon, settling around the 0.86 mark. The Scandies remain weak this week, with both EUR/NOK and EUR/SEK consolidating above 11.30.

UK CPI rose 0.4% mom in December, well above expectation of 0.2% mom. For the 12- month period, CPI accelerated from 3.9% yoy to 4.0% yoy, above expectation of 3.8% yoy. That's the first time the rate has increased since February 2023.

CPI core (excluding energy, food, alcohol and tobacco) was unchanged at 5.1% yoy, above expectation of 4.9% yoy. CPI goods slowed from 2.0% yoy to 1.9% yoy. CPI services rose from 6.3% yoy to 6.4% yoy.

Full UK CPI release here.

• Current bout of risk-off behaviour has triggered an underperformance of higher beta risk-sensitive currencies such as the AUD.
• China Premier Li Qiang’s speech in Davos has signalled “a lesser need” for China to enact massive stimulus measures which in turn may see lesser industrial commodities exports from Australia in the near term.
• AUD’s weakness has led to a short-term uptrend unfolding in the EUR/AUD cross pair.

The risk-off behaviour has continued to spill over to today’s 17 January Asian session where the US dollar has continued to strengthen after it hit a 1-month high and benchmark Asian stock indices have recorded intraday losses across the board led by the underperformers (China & Hong Kong); CSI 300 (-0.84%), Hang Seng Index (-3%), Hang Seng TECH Index (-4.10%), and Hang Seng China Enterprise Index (-3.14%). Even the recent outperformer, Japan’s Nikkei 225 is not spared from today’s bearish onslaught with an intraday loss of -0.40%.

The current bout of risk-off negative feedback loop has been triggered by a rising geopolitical risk premium arising from the hostilities in the Middle East region and the Red Sea shipping route.

In addition, Fed Speak from Federal Reserve Governor Christopher Waller (voting FOMC member) poured cold water on the expected Fed’s dovish pivot narrative by stating that the Fed may not need to cut as quickly as in the past which suggests potential guidance that tries to push back the current dovish expectations of six cuts in 2024 on the Fed funds rate as priced by in the interest rates futures market.

AUD & NZD worst performers

Fig 1: 5-day rolling performances of US dollar against other currencies as of 17 Jan 2024 (Source: TradingView, click to enlarge chart)

The net effect so far in the foreign exchange market is the significant underperformance of the higher beta risk-sensitive currencies; AUD and NZD where it shed -2.10% and -1.60% respectively against the US dollar based on a 5-day rolling basis at this time of the writing.

The AUD also took a double whammy from a China-related news flow via a commodities export perspective. China’s Premier Li Qiang said in Davos, during one of the sessions of the ongoing World Economic Forum that China has managed to achieve an annualized GDP growth of 5.2% in 2023 without resorting to massive stimulus measures.

This remark has implied that China’s top policymakers are comfortable with the current pace of growth trajectory in China which in turn has dampened hopes of more forceful fiscal and monetary stimulus measures in 2024. Hence, China may not need to import massive amounts of industrial commodities such as copper which Australia is a major exporter to China.

EUR/AUD short-term bullish trend is taking shape

Fig 2: EUR/AUD medium-term trend as of 17 Jan 2024 (Source: TradingView, click to enlarge chart)

Fig 3: EUR/AUD minor short-term trend as of 17 Jan 2024 (Source: TradingView, click to enlarge chart)

The EUR’s intraday weakness seen in the past two days is not as pronounced as the AUD which in turn gives an opportunity for the EUR/AUD cross pair to evolve into a short-term bullish trend in place since the start of this year; it has rallied by +440 pips/+2.7% from its 2 January low of 1.6129 to current intraday high of 1.6570 at this time of the writing.

Medium and short-term momentum readings as indicated by the daily and hourly RSI are still showing bullish momentum conditions which may support a further potential upmove in price actions that have also just surpassed the 200-day moving average.

Watch the 1.6450 short-term pivotal support (also the 50-day moving average) with the next intermediate resistances coming in at 1.6655 and 1.6720.

On the other hand, failure to hold at 1.6450 negates the bullish tone to expose the next intermediate support at 1.6300 (also the 20-day moving average & 61.8% Fibonacci retracement of the ongoing minor rally from the 2 January 2023 low to today’s current intraday high).

Short term Elliott Wave View suggests $EURUSD ended wave 1 rally at 1.11395. Pair is now doing wave 2 pullback to correct cycle from 10.03.2023 low. Wave 2 subdivides into a zigzag Elliott Wave structure. Zigzag is a 5-3-5 structure with ABC as the label. Wave A and C in zigzag subdivide into 5 waves as the chart of EURUSD shows. Down from wave 1, wave (i) ended at 1.10434 and rally in wave (ii) ended at 1.10808. Pair then resumes lower in wave (iii) towards 1.0892 and wave (iv) rally ended at 1.0972. Final leg down wave (v) ended at 1.0876 which completed the first leg of the zigzag wave ((a)).

Wave ((b)) rally ended at 1.1 with internal subdivision as a zigzag in lesser degree. Up from wave ((a)), wave (a) ended at 1.0999, wave (b) ended at 1.0909, and wave (c) higher ended at 1.099. This completed wave ((b)) in higher degree. Pair has resumed lower in wave ((c)). Down from wave ((b)), wave i ended at 1.0929 and wave ii ended at 1.0987. Wave iii lower ended at 1.08729 and wave iv ended at 1.0898. Expect wave v lower to end soon which should complete wave (i). Pair should then rally in wave (ii) to correct cycle from 1.11.2024 high in 3, 7, or 11 swing before pair resumes lower. Near term, as far as pivot at 1.099 high stays intact, expect rally to fail in 3, 7, 11 swing for further downside.

EURUSD 60 Minutes Elliott Wave Chart

EURUSD Elliott Wave Video

https://www.youtube.com/watch?v=-oVUVewktls

DXY:

The DXY (US Dollar Index) chart currently exhibits an overall bullish momentum. In this context, there is a potential scenario for price to make a bullish continuation towards the 1st resistance.

The 1st resistance level at 103.50 is identified as a pullback resistance that aligns with the 78.60% Fibonacci retracement level. Higher up, the 2nd resistance level at 104.23 is also noted as a pullback resistance, further reinforcing its significance as a potential resistance zone.

To the downside, the 1st support level at 103.06 is identified as an overlap support. Further below, the 2nd support level at 102.07 is marked as a pullback support that aligns with the 50.00% Fibonacci retracement level, further reinforcing its importance as a key support level.

EUR/USD:

The EUR/USD chart currently exhibits an overall bearish momentum. In this context, there is a potential scenario for price to drop towards the 1st support.

The 1st support level at 1.0813 is identified as a pullback support that aligns with the 78.60% Fibonacci retracement level. Further below, the 2nd support level at 1.0742 is marked as a swing-low support, further reinforcing its importance as a key support level.

To the upside, the 1st resistance level at 1.0893 is identified as a pullback resistance that aligns with the 23.60% Fibonacci retracement level. Higher up, the 2nd resistance level at 1.0998 is also noted as a pullback resistance, suggesting a potential barrier for further upside movement.

EUR/JPY:

The EUR/JPY chart currently displays a bullish overall momentum, indicating a positive trend direction. Traders may anticipate a potential bullish continuation towards the 1st resistance level.

The 1st support at 158.61 is considered favorable, being identified as a swing low support. This level suggests historical significance as a point where buying interest has emerged in the past. Additionally, the 2nd support at 157.25 is another swing low support, adding to the confluence of support levels.

On the resistance side, the 1st resistance at 160.53 is identified as an overlap resistance and aligns with the 61.80% Fibonacci Projection. This confluence of technical factors adds strength to the potential resistance level. Furthermore, the 2nd resistance at 161.55 is recognized as an overlap resistance, with the additional support of the 78.60% Fibonacci Retracement.

EUR/GBP:

The EUR/GBP chart currently exhibits a bullish overall momentum, indicating a positive trend direction. Several factors contribute to this bullish momentum, suggesting potential upward movement in the price.

The 1st support at 0.8579 is considered favorable due to its identification as an overlap support and coincides with the 78.60% Fibonacci Retracement. This level indicates historical significance, suggesting a strong level of support. Additionally, the 2nd support at 0.8556 is recognized as a multi-swing low support, providing additional strength to the support zone.

On the resistance side, the 1st resistance at 0.8616 is identified as a swing high resistance and aligns with the 23.60% Fibonacci Retracement. This confluence of technical factors adds strength to the potential resistance level. Furthermore, the 2nd resistance at 0.8646 is acknowledged as an overlap resistance and corresponds to the 50% Fibonacci Retracement.

GBP/USD:

The GBP/USD chart currently exhibits an overall bearish momentum. In this context, there is a potential scenario for price to drop towards the 1st support.

The 1st support level at 1.2612 is identified as an overlap support that aligns with the 78.60% Fibonacci projection level. Further below, the 2nd support level at 1.2508 is marked as a swing-low support that aligns with the 161.80% Fibonacci extension level, further reinforcing its importance as a key support level.

To the upside, the 1st resistance level at 1.2695 is identified as an overlap resistance that aligns close to the 50.00% Fibonacci retracement level. Higher up, the 2nd resistance level at 1.2781 is noted as a swing-high resistance, suggesting a potential barrier for further upside movement.

GBP/JPY:

The GBP/JPY chart currently shows a bullish overall momentum, indicating an upward trend. There’s a potential for a bullish continuation towards the 1st resistance.

The 1st support at 184.64 is a swing low support, suggesting a historical area with significant buying interest. The 2nd support at 184.18 is labeled as a pullback support, indicating a potential zone for buying interest following a retracement.

On the resistance side, the 1st resistance at 183.37 is an overlap resistance, aligned with the 78.60% Fibonacci Retracement and the 61.80% Fibonacci Projection, suggesting a strong resistance zone. The 2nd resistance at 188.30 is a swing high resistance, representing a historical point of selling interest. Traders should closely monitor these levels for potential bullish movements in the GBP/JPY chart.

USD/CHF:

The USD/CHF chart currently exhibits an overall bullish momentum. In this context, there is a potential scenario for price to make a bullish continuation towards the 1st resistance.

The 1st resistance level at 0.8635 is identified as an overlap resistance that aligns with the 61.80% Fibonacci retracement level. Higher up, the 2nd resistance level at 0.8711 is noted as a pullback resistance that aligns with the 78.60% Fibonacci retracement level, further reinforcing its significance as a potential resistance zone.

To the downside, the 1st support level at 0.8554 is identified as a pullback support that aligns with the 23.60% Fibonacci retracement level. Further below, the 2nd support level at 0.8493 is also marked as a pullback support, further reinforcing its importance as a key support level.

USD/JPY:

The USD/JPY chart currently exhibits an overall bullish momentum. In this context, there is a potential scenario for price to make a bullish continuation towards the 1st resistance.

The 1st resistance level at 147.62 is identified as an overlap resistance that aligns close to the 61.80% Fibonacci retracement level. Higher up, the 2nd resistance level at 148.35 is noted as a pullback resistance, further reinforcing its significance as a potential resistance zone.

To the downside, the 1st support level at 146.45 is identified as an overlap support. Further below, the 2nd support level at 144.75 is marked as a pullback support, further reinforcing its importance as a key support level.

USD/CAD:

The USD/CAD chart currently exhibits an overall bullish momentum. In this context, there is a potential scenario for price to rise towards the 1st resistance.

The intermediate resistance level at 1.3500 is identified as an overlap resistance while the 1st resistance level at 1.3548 is marked as a pullback resistance. Higher up, the 2nd resistance level at 1.3620 is also noted as a pullback resistance that aligns close to the 61.80% Fibonacci retracement level, further reinforcing its significance as a potential resistance zone.

To the downside, the 1st support level at 1.3443 is identified as an overlap support that aligns close to the 23.60% Fibonacci retracement level. Further below, the 2nd support level at 1.3341 is marked as a pullback support that aligns with the 50.00% Fibonacci retracement level, further reinforcing its importance as a key support level.

AUD/USD:

The AUD/USD chart currently exhibits an overall bearish momentum. In this context, there is a potential scenario for price to drop towards the 1st support.

The 1st support level at 0.6534 is identified as a pullback support that aligns with the 61.80% Fibonacci retracement level. Further below, the 2nd support level at 0.6449 is marked as an overlap support that aligns with a confluence of Fibonacci levels i.e. the 78.60% retracement and the 127.20% extension, further reinforcing its importance as a key support level.

To the upside, the 1st resistance level at 0.6614 is identified as a pullback resistance. Higher up, the 2nd resistance level at 0.6654 is also noted as a pullback resistance that aligns close to the 23.60% Fibonacci retracement level, suggesting a potential barrier for further upside movement.

NZD/USD

The NZD/USD chart currently exhibits an overall bearish momentum. In this context, there is a potential scenario for price to drop towards the 1st support.

The intermediate support level at 0.6132 is identified as a pullback support that aligns with the 78.60% Fibonacci projection level while the 1st support level at 0.6084 is noted as an overlap support that aligns with the 100.00% Fibonacci projection level. Further below, the 2nd support level at 0.6012 is also marked as an overlap support that aligns with the 127.20% Fibonacci extension level, further reinforcing its importance as a key support level.

To the upside, the 1st resistance level at 0.6160 is identified as a pullback resistance. Higher up, the 2nd resistance level at 0.6203 is noted as an overlap resistance, suggesting a potential barrier for further upside movement.

DJ30:

The DJ30 chart currently exhibits a neutral overall momentum, indicating a lack of a clear trend direction. The price could potentially experience fluctuations between the 1st resistance and 1st support levels.

The 1st support at 37247.85 is considered favorable due to its identification as a swing low support, indicating a historical level where buying interest has emerged. Additionally, this level aligns with the 78.60% Fibonacci Retracement, adding confluence to its potential as a support zone. The 2nd support at 37078.09 is recognized as a swing low support, further reinforcing its significance as a potential level of buying interest.

On the resistance side, the 1st resistance at 37433.50 is identified as an overlap resistance, suggesting a historical point where selling interest has been present. The 2nd resistance at 37814.50 is associated with multi-swing high resistance, indicating a zone where selling pressure may intensify.

GER40:

The GER40 chart currently displays a bearish overall momentum, indicating a prevailing downward trend. Several factors contribute to this bearish momentum, suggesting a potential continuation of the downtrend.

The 1st support at 16440.30 is considered favorable due to its identification as an overlap support. This level also coincides with the 23.60% Fibonacci Retracement, indicating historical significance and suggesting a potential level where buying interest has previously emerged. Additionally, the 2nd support at 16328.20 is recognized as a pullback support and aligns with the 127.20% Fibonacci Extension, providing additional strength to this potential support level.

On the resistance side, the 1st resistance at 16620.20 is identified as an overlap resistance, indicating a historical point where selling interest has been present. The 2nd resistance at 16828.60 is associated with swing high resistance, suggesting a zone where selling pressure may intensify.

US500:

The US500 chart currently reflects a neutral overall momentum, indicating a lack of a clear trend direction. Several factors contribute to this neutral momentum, suggesting potential fluctuations between the 1st resistance and 1st support levels.

The 1st support at 4729.7 is considered favorable due to its identification as a pullback support. This level also coincides with the 61.80% Fibonacci Projection, adding confluence to its potential as a support level. Additionally, the 2nd support at 4679.4 is recognized as a swing low support, providing additional strength to the support zone.

On the resistance side, the 1st resistance at 4794.8 is identified as a multi-swing high resistance, indicating a historical point where selling interest has been present. Furthermore, the intermediate resistance at 4817.0 is associated with swing high resistance, suggesting a zone where selling pressure may intensify.

BTC/USD:

The BTC/USD chart currently displays a bearish overall momentum, indicating a downward trend. There is a potential scenario where the price could experience a bearish reaction off the 1st resistance and drop to the 1st support.

The 1st support at 41639 is considered favorable due to its identification as a multi-swing low support. This level suggests historical significance, serving as a point where buying interest has previously emerged. Additionally, the 2nd support at 40679 is recognized as another multi-swing low support, adding confluence to the potential support zone.

On the resistance side, the 1st resistance at 43492 is identified as an overlap resistance and aligns with the 23.60% Fibonacci Retracement. This confluence of technical factors adds strength to the potential resistance level. Furthermore, the 2nd resistance at 45492 is acknowledged as a pullback resistance and corresponds to the 50% Fibonacci Retracement.'

ETH/USD:

The ETH/USD chart currently exhibits a neutral overall momentum, suggesting a lack of a clear trend direction. There is a potential scenario where the price could make fluctuations between the 1st resistance and 1st support levels.

The 1st support at 2568.90 is considered favorable due to its identification as a pullback support. This level suggests historical significance, acting as a point where buying interest has previously emerged. Additionally, the 2nd support at 2415.42 is recognized as another pullback support, adding confluence to the potential support zone.

On the resistance side, the 1st resistance at 2658.57 is identified as a swing high resistance and aligns with the 78.60% Fibonacci Retracement. This confluence of technical factors adds strength to the potential resistance level. Furthermore, the 2nd resistance at 2726.59 is acknowledged as a swing high resistance.

WTI/USD:

The WTI (West Texas Intermediate) chart currently exhibits a neutral bias, indicating a potential for price to fluctuate between the 1st resistance and the 1st support.

The 1st resistance level at 73.98 is identified as a pullback resistance that aligns close to the 61.80% Fibonacci retracement level. Higher up, the 2nd resistance level at 75.24 is noted as a swing-high resistance, suggesting a potential barrier for further upside movement.

To the downside, the 1st support level at 71.26 is identified as a pullback support that aligns with a confluence of Fibonacci levels i.e. the 78.60% retracement and the 61.80% projection. Further below, the 2nd support level at 69.94 is marked as a swing-low support, further reinforcing its importance as a key support level.

XAU/USD (GOLD):

The XAU/USD (Gold/US Dollar) chart currently shows an overall bearish momentum. In this context, there is a potential scenario for price to make a bearish continuation towards the 1st support.

The 1st support level at 2,016.90 is marked as an overlap support that aligns with a confluence of Fibonacci levels i.e. the 61.80% retracement and the 61.80% projection. Further below, the 2nd support level at 1,976.18 is categorized as a swing-low support, further reinforcing its significance as a potential support zone.

On the resistance side, the 1st resistance level at 2,059.26 is identified as an overlap resistance that aligns with the 61.80% Fibonacci retracement level. Higher up, the 2nd resistance level at 2,087.79 is marked as a multi-swing-high resistance, indicating a significant potential resistance point.

Daily Pivots: (S1) 0.6552; (P) 0.6608; (R1) 0.6641; More...

AUD/USD's fall from 0.6870 continues today and intraday bias stays on the downside. Deeper fall would be seen to 61.8% retracement of 0.6269 to 0.6870 at 0.6497. Sustained break there will argue that whole rebound from 0.6269 has completed, and bring deeper fall to this support. On the upside, above 0.6632 minor resistance will turn intraday bias neutral first.

In the bigger picture, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern to the down trend from 0.8006 (2021 high). Sideway trading could continue in range of 0.6169/7156 for some more time. But as long as 0.7156 holds, an eventual downside breakout would be mildly in favor.

Prevailing mood of risk aversion was evident in Asian session today. Hong Kong stocks led the region lower, reflecting investors' dissatisfaction with the latest batch of Chinese economic data. While China's Q4 GDP growth wasn't far off from analysts' expectations, it still fell short for some, contributing to the market's cautious stance. Additionally, concerns were heightened by the weak retail sales growth and China's continuing population shrinkage, underscoring deeper economic challenges. Japan's Nikkei index stood out as the only exception, remaining relatively stable.

In the currency markets, Dollar is standing out as the best performer for the week so far. The prevailing risk-off sentiment is providing sustained boost to the greenback. Concurrently, reports have surfaced, mentioning an "extreme scenario" where no major central bank might cut interest rates this year. This perspective, highlighted by a Bank of America FX strategist, brings into question the potential scenario where central banks remain on hold due to persistent inflation and ongoing robust economic growth. That's a stark contrast to current market pricing that suggests six Fed cuts this year, which is also "unrealistic" at the other end.

Australian and New Zealand Dollars are facing considerable pressure, primarily due to their economic linkages with China. Japanese Yen, too, is among the weaker currencies at the moment. On the flip side, Canadian Dollar and Euro are showing some resilience, with Canadian Dollar being the second strongest. Sterling and Swiss Franc are showing mixed performances, with the Pound particularly focused on the upcoming UK CPI data, which could provide further direction.

Technically, focus is now on 0.6083 support after this week's decline in NZD/USD. Firm break there will argue that rebound from 0.5771 has completed at 0.6368 already. More importantly that would argue that whole corrective pattern from 0.6537 is still in progress. Deeper fall would be seen towards 0.5771 support. On other hand, stronger rebound from 0.6083, followed by break of 0.6277 resistance, will retain near term bullishness for a test on 0.6537 high next.

In Asia, Nikkei closed down -0.22%. Hong Kong HSI is down -3.31%. China Shanghai SSE is down -0.98%. Singapore Strait Times is down -1.06%. Japan 10-year JGB yield is up 0.0123 at 0.610. Overnight, DOW fell -0.62%. S&P 500 fell -0.37%. NASDAQ fell -0.19%. 10-year yield rose 0.0116 to 4.066.

Fed's Waller anticipates rate cuts this year, stresses upcoming CPI revisions

Fed Governor Christopher Waller expressed growing confidence bring inflation down to target. He noted in a speech overnight that Fed is "within striking distance of achieving a sustainable level of 2 percent PCE inflation". However, he also emphasized the need for more data in the coming months to confirm or challenge the notion that inflation is moving sustainably toward Fed's goal.

Waller also mentioned that he perceives the risks to employment and inflation mandates as "more closely balanced" now. His focus is on watching for sustained progress on inflation and a modest cooling in the labor market.

Regarding interest rate cuts, Waller expressed that "as long as inflation doesn't rebound and stay elevated", he believes Fed will be able to lower the target range for the federal funds rate "this year". But he also clarified, "Clearly, the timing of cuts and the actual number of cuts in 2024 will depend on the incoming data."

Waller also highlighted the importance of the upcoming revisions to CPI inflation scheduled for next month. He recalled that last year's annual update to the seasonal factors reversed what initially appeared to be a decline in inflation. The January CPI report and revisions for 2023, due in mid-February, are anticipated to potentially alter the current understanding of inflation. Waller expressed hope that these revisions would confirm the progress observed so far but emphasized that good policy must be based on data rather than hope.

ECB's Simkus and Müller urge caution over aggressive rate cut expectations

ECB Governing Council Gediminas Simkus expressed a conditional optimism about rate reductions within the year, stating, "If we don't see any surprises that would change the data and the thinking, I'm positive about rate cuts this year."

However, Simkus tempered his outlook with a dose of realism regarding the timing of these cuts. He clarified, "I'm far less optimistic than markets about rate cuts in March or April."

Separately, another Governing Council member Madis Müller commented on the aggressiveness of market expectations for ECB rate cuts in 2024. He observed that these expectations do not align with the current data available to the central bank.

Müller further emphasized that wage growth in Eurozone remains out of sync with the ECB's current inflation targets. He noted that ECB cannot proceed with cutting rates until data reflects the desired price growth conditions.

China's 2023 economic growth at 5.2%, population shrinks for second year

China's GDP grew 5.2% yoy in Q4, an uptick from Q3's 4.9% yoy. For the full year of 2023, the economy also recorded a growth rate of 5.2%. On a quarter-by-quarter basis, GDP growth rate was 1.0% qoq, matched expectation, though this marked a slowdown from the previous quarter's revised 1.5% qoq gain.

In the industrial sector, production rose by 6.8% yoy in December, slightly higher than the previous month's 6.6%, meeting market forecasts. However, retail sales growth decelerated to 7.4% yoy, a drop from November's 10.1% yoy and below the expected 8.1% yoy.

Investment patterns showed a mixed trend. Overall fixed asset investment in 2023 grew by 3.0%, slightly exceeding the 2.9% expectation. Within this category, real estate investment saw a significant drop of -9.6%. Conversely, investment in infrastructure and manufacturing rose by 5.9% and 6.5%, respectively, signaling growth in these areas.

Amidst these economic developments, China faces a demographic challenge as its population fell for the second consecutive year in 2023. Total population decreased by -2.75m to 1.409B, a more rapid decline than in 2022.

Looking ahead

UK CPI data is the main focus in European session while Eurozone will publish CPI final too. Later in the day, US retail sales will catch most attention. US import price, industrial production, business inventories and NAHB housing index will also be released. Fed will release Beige Book economic report too.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6552; (P) 0.6608; (R1) 0.6641; More...

AUD/USD's fall from 0.6870 continues today and intraday bias stays on the downside. Deeper fall would be seen to 61.8% retracement of 0.6269 to 0.6870 at 0.6497. Sustained break there will argue that whole rebound from 0.6269 has completed, and bring deeper fall to this support. On the upside, above 0.6632 minor resistance will turn intraday bias neutral first.

In the bigger picture, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern to the down trend from 0.8006 (2021 high). Sideway trading could continue in range of 0.6169/7156 for some more time. But as long as 0.7156 holds, an eventual downside breakout would be mildly in favor.

Economic Indicators Update

GMT	Ccy	Events	Actual	Forecast	Previous	Revised
02:00	CNY	GDP Y/Y Q4	5.20%	5.20%	4.90%
02:00	CNY	Industrial Production Y/Y Dec	6.80%	6.80%	6.60%
02:00	CNY	Retail Sales Y/Y Dec	7.40%	8.10%	10.10%
02:00	CNY	Fixed Asset Investment YTD Y/Y Dec	3.00%	2.90%	2.90%
07:00	GBP	CPI M/M Dec		0.20%	-0.20%
07:00	GBP	CPI Y/Y Dec		3.80%	3.90%
07:00	GBP	Core CPI Y/Y Dec		4.90%	5.10%
07:00	GBP	RPI M/M Dec		0.40%	-0.10%
07:00	GBP	RPI Y/Y Dec		0.40%	5.30%
07:00	GBP	PPI Input M/M Dec		-0.70%	-0.30%
07:00	GBP	PPI Input Y/Y Dec		-1.90%	-2.60%
07:00	GBP	PPI Output M/M Dec		-0.20%	-0.10%
07:00	GBP	PPI Output Y/Y Dec		0.40%	-0.20%
07:00	GBP	PPI Core Output M/M Dec			0.00%
07:00	GBP	PPI Core Output Y/Y Dec			0.20%
10:00	EUR	Eurozone CPI Y/Y Dec F		2.90%	2.90%
10:00	EUR	Eurozone CPI Core Y/Y Dec F		3.40%	3.40%
13:30	CAD	Industrial Product Price M/M Dec		-0.70%	-0.40%
13:30	CAD	Raw Material Price Index Dec		-2.10%	-4.20%
13:30	USD	Retail Sales M/M Dec		0.40%	0.30%
13:30	USD	Retail Sales ex Autos M/M Dec		0.20%	0.20%
13:30	USD	Import Price Index M/M Dec		-0.50%	-0.40%
14:15	USD	Industrial Production M/M Dec		-0.10%	0.20%
14:15	USD	Capacity Utilization Dec		78.70%	78.80%
15:00	USD	Business Inventories Nov		-0.10%	-0.10%
15:00	USD	NAHB Housing Index Jan		39	37
19:00	USD	Fed's Beige Book