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Daily Pivots: (S1) 0.9845; (P) 0.9872; (R1) 0.9888; More....

Intraday bias in EUR/CHF stays neutral at this point. In case of another fall, downside should be contained by 38.2% retracement of 0.9407 to 1.0095 at 0.9832, to complete the corrective pattern from 1.0095. Break of 0.9923 will turn bias back to the upside for stronger rebound towards 1.0067/0095 resistance zone.

In the bigger picture, the rejection by 55 week EMA (now at 1.0025) mixed up the outlook. On the upside, sustained trading above 55 week EMA will raise the chance of bullish trend reversal. Rise from 0.9407 should then target 1.0505 cluster resistance (2020 low at 1.0505, 61.8% retracement of 1.1149 to 0.9407 at 1.1484). However, firm break of 0.9832 support will revive medium term bearishness and bring retest of 0.9407 low instead.

Chinese equities were boosted on Monday by a report from Goldman Sachs predicting that the MSCI China index could rally as much as 24% by the end of the year.

And it’s not necessarily a crazy bet. The index rebounded by more than 60% between last October and the end of this January. And even with a 24% rally this year, the MSCI China index would be around 30% lower than the February 2021 peak.

Yet, the rising geopolitical tensions with the US are obviously not appetizing for an average investor, on top of the massive loss of investor confidence during the government crackdown that started by end of 2020, and may have not ended just yet, given the news that a star banker in China called Bao Fan has simply… disappeared.

The thing is, the Chinese reopening story, backed by supportive fiscal and monetary policies should help the Chinese economy recover.

To what extent the government help will help equities recover is yet to be seen.

China’s real activity index is now around the pre-Covid levels, more or less matching the Trump-era trade war levels, the equity valuations are sputtering after an initial jump between October and the beginning of this year.

The rapid reopening will certainly boost activity and give a chance for stocks to rebound. But for that to happen, the relationship between the US and China should not get worse, and ideally improve. And that is not a given.

One man’s meat is another man’s poison

Anyway, Goldman Sachs is positive for China. And mining stocks hope they are right because BHP announced a 32% drop in half-year profit as a result of rising costs and soft commodity prices, mostly hit by subdued activity in China. The share price tipped a toe below the 50-DMA in Australia, though losses were limited on hope that the reopening China will finally give a boost to commodity prices.

Chinese reopening is undeniably a good scenario for mining stocks, and the British FTSE 100 which finally stepped above the 8000p mark last week, and holding gains at these levels.

However, rising commodity prices is a scenario of catastrophe for global inflation, and the central bank expectations.

The latest minutes from the Reserve Bank of Australia (RBA) showed that the Australian policymakers considered a 50bp hike at the latest meeting, before agreeing on a 25bp hike.

The latter raised worries that the era of 50bp hikes is not yet a history, and it could happen at the Federal Reserve (Fed) as soon as its March meeting.

Across the Atlantic, the European Central Bank (ECB) is also considering raising the rates by 50bp at the next meeting.

But, for now, China-led bulls fail to gain momentum

For now, the oil bears defy all news of Chinese reopening. The latest Bloomberg news suggested that demand from China will climb by 800’000bpd this year, and take the consumption to an all-time high, of about 16mbpd.

In vain. Yesterday’s rebound in US crude remained capped into the 50-DMA, a touch below the $78pb mark.

Trainwreck in slow motion

Facebook’s Meta announced a plan to roll out paid subscriptions to compensate for the revenue loss from advertisements – which topped $10 billion last year after Apple changed its security settings.

Metaverse, which was the company’s best option for future growth, is also sputtering.

Facebook had a nice start to the year, and jumped impressively after its latest quarterly results, but the early optimism is fading.

Therefore, giving an energy boost and hope to investors may not be a bad idea in the short run. Though, the Twitter experience is a warning that users may not be excited by the news. The only thing that could save Meta Verified from being a similar flop to Twitter Blue is the fact that Meta asks government ID to verify accounts.

But in all cases, in the longer run, it’s a sad turn of things for an innovative technology company. Meta was looking to revolutionize social media by migrating users on to a virtual world. Instead, they will be asking them to pay… for better data – a thing that should be a given.

Meta Verified will cost up to $15 for a mobile subscription. Revenues may jump as Meta has 3.74 billion active users and even a small proportion of them migrating to a verified account could bring cash. Yet revenues may not jump to replace advertising revenue.

Therefore, advertising will remain the major revenue stream for the company in the foreseeable future.

If Facebook wants to stay in the Big Tech race, it must find a way to make its metaverse dream come true.

Daily Pivots: (S1) 1.0669; (P) 1.0687; (R1) 1.0703; More...

EUR/USD is staying in consolidation above 1.0610 temporary low and intraday bias remains neutral. Risk stays on the downside with 1.0803 resistance intact. On the downside, break of 1.0610 will resume the corrective fall from 1.1032 and 38.2% retracement of 0.9534 to 1.1032 at 1.0463. Strong support should be seen around there to bring rebound, at least on first attempt.

In the bigger picture, the rally from 0.9534 low (2022 low) is a medium term up trend rather than a correction. Further rise is in favor to 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273 next. This will remain the favored case as long as 1.0482 support holds.

Daily Pivots: (S1) 1.2018; (P) 1.2037; (R1) 1.2060; More...

GBP/USD is staying in consolidation above 1.1914 temporary low and intraday bias remains neutral. For now, risk stays on the downside as long as 1.2269 resistance holds. Break of 1.1914 will resume the fall from 1.2446, as the third leg of the corrective pattern from 1.2445, to 1.1840 support and possibly below.

In the bigger picture, rise from 1.0351 medium term bottom is at least correcting whole down trend from 1.4248 (2021 high). Further rise is expected as long as 1.1644 resistance turned support holds. Next target is 61.8% retracement of 1.4248 to 1.0351 at 1.2759. Sustained break there will pave the way back to 1.4248.

Daily Pivots: (S1) 0.9213; (P) 0.9238; (R1) 0.9255; More...

Intraday bias in USD/CHF stays neutral at this point, and outlook is unchanged. On the upside, break of 0.9331 will resume the rebound from 0.9058 to 38.2% retracement of 1.0146 to 0.9058 at 0.9474. However, break of 0.9135 will indicate that the rebound has completed and bring retest of 0.9058 low.

In the bigger picture, decline from 1.0146 is seen as part of a long term sideway pattern. As long as 38.2% retracement of 1.0146 to 0.9058 at 0.9474 holds, another fall is in favor through 0.9058. However, sustained trading above 0.9474 will indicate that the medium term trend has reversed, and open up further rally to 1.0146 again.

Daily Pivots: (S1) 133.97; (P) 134.25; (R1) 134.58; More...

USD/JPY is staying in consolidation below 135.09 temporary top and intraday bias remains neutral first. On the upside, break of 135.09 will resume the rise from 127.20 to 38.2% retracement of 151.93 to 127.20 at 136.64. Strong resistance could be seen there to complete the corrective rebound. On the downside, break of 132.89 resistance turned support will bring deeper fall to 129.79 support.

In the bigger picture, prior break of 55 week EMA (now at 131.47) raises the chance of medium term bearish reversal, but that's not confirmed yet. Strong rebound from current level, followed by sustained break of 38.2% retracement of 151.93 to 127.20 at 136.64 will argue that price actions from 151.93 is merely a corrective pattern. However, rejection by 136.64 will solidify medium term bearishness for 61.8% retracement of 102.58 to 151.93 at 121.43 and 38.2% retracement of 75.56 to 151.93 at 122.75.

Daily Pivots: (S1) 0.6875; (P) 0.6898; (R1) 0.6933; More...

Intraday bias in AUD/USD remains neutral for the moment. Risk stays mildly on the downside with 0.7028 resistance intact. On the downside, break of 0.6180 will resume the corrective fall from 0.7156, and target 100% projection of 0.6854 to 0.7028 from 0.6854 at 0.6736, which is close to 0.6721 key structural support. Strong support is expected there to bring rebound.

In the bigger picture, corrective decline from 0.8006 (2021 high) should have completed with three waves down to 0.6169 (2022 low). Further rally should be seen to 61.8% retracement of 0.8006 to 0.6169 at 0.7304. Sustained break there will pave the way to retest 0.8006. This will now remain the favored case as long as 0.6721 support holds.

Daily Pivots: (S1) 1.3432; (P) 1.3464; (R1) 1.3485; More....

USD/CAD retreated after hitting 1.3536 and intraday bias is turned neutral first. Outlook is unchanged that corrective pattern from should have completed at 1.3261. Above 1.3536 will turn bias to the upside for 1.3684 resistance. Nevertheless, break of 1.3356 minor support will dampen this bullish case and bring retest of 1.3261 instead.

In the bigger picture, as long as 1.3222 cluster support (38.2% retracement of 1.2005 to 1.3976 at 1.3223) holds, larger up trend from 1.2005 (2021 low) is still expected to resume through 1.3976 high at a later stage. However, firm break of 1.3222/3 will indicate that the trend might have reversed. Deeper fall would be seen to next cluster support at 1.2726 (61.8% retracement at 1.2758).

Markets are generally staying in consolidation mode in Asian session today. The retreat in Dollar this week is so far shallow, suggesting more upside is in favor. But the next move will still be dependent on overall risk sentiment. As for today, focuses will be on PMIs from Eurozone and UK, as well as Germany ZEW. Larger reactions could be found to Canada CPI and retail sales.

Technically, Gold's pull back from 1959.47 halted after hitting 1818.69. Some support was seen from 38.2% retracement of 1614.60 to 1959.47 at 1827.72. Bullish convergence is also seen in 4 hour MACD. Break of 1861.23 resistance will argue that such correction has completed and bring stronger rebound back towards 1959.47 high. However, another fall below 1818.69 will now likely extend the correction to 61.8% retracement at 1746.34. The development will be used to confirm Dollar's next move (in opposite direction).

In Asia, Nikkei closed down -0.21%. Hong Kong HSI is down -1.64%. China Shanghai SSE is down -0.08%. Singapore Strait Times is down -0.14%. Japan 10-year JGB yield is up 0.0028 at 0.508.

SNB Schlegel: Still willing to intervene in the currency markets

Vice Chairman Martin Schlegel said yesterday that SNB is "still willing" to be active in currency intervention. "If the Swiss franc depreciates we are ready to sell foreign exchange, if the Swiss franc appreciates strongly we are willing to buy foreign exchange," he said.

He also noted that SNB had to "react forcefully" to fight inflation, which peaked at 3.5% last year. "The most important contribution we can do for society is to have stability-orientated policy and maintain price stability."

RBA minutes: 25bps and 50bps hike considered at Feb meeting

Minutes of RBA's February 7 meeting revealed that both the options of 25bps and 50bps hike were considered. But the case for a 25bps hike was stronger, with "the monthly meetings provided the Board with frequent opportunities to assess how these uncertainties were being resolved and to adjust policy if needed".

The minutes also noted, "members agreed that further increases in interest rates are likely to be needed over the months ahead to ensure that inflation returns to target and that the current period of high inflation is only temporary."

Australia PMI composite rose to 49.2, on the narrow path to achieve soft landing

Australia PMI Manufacturing ticked up from 50.0 to 50.1 in February. PMI Services rose from 48.6 to 49.2. PMI Composite also rose from 48.5 to 49.2.

Warren Hogan, Chief Economic Advisor at Judo Bank said: "Australian business activity improved in February 2023 with a second consecutive small rise in the flash composite output index to 49.2. The economy has slowed from the strong rates of growth in 2022 to be on a more sustainable footing in early 2023. We still appear to be on the narrow path to achieve a soft landing for the economy in 2023...

"At this stage the Judo Bank PMIs are pointing to a welcome slowdown in the economy that may help take upward pressure off interest rates. While this will do little to alter the RBA's intentions to raise interest rates further over the months ahead, it does indicate that we may be close to the point where the RBA Board can pause the current tightening cycle."

Japan PMI manufacturing dropped to 47.4, services rose to 53.6

Japan PMI Manufacturing dropped from 48.9 to 47.4 in February, below expectation of 49.3. It's also the worst reading in over two-and-a-half years. Manufacturing Output dropped sharply from 47.2 to 44.9. PMI services, on the other hand, rose from 52.3 to 53.6. PMI Composite was unchanged at 50.7.

Andrew Harker, Economics Director at S&P Global Market Intelligence, said:

"The modest, stable growth signalled by the au Jibun Bank Flash Japan Composite PMI in February masked widely differing trends between the manufacturing and service sectors midway through the first quarter of the year.

"Service providers posted sharper rises in activity and new business as the latest wave of the COVID-19 pandemic faded, providing a boost to demand.

"The picture was much less positive in the manufacturing sector, however, where new orders and production dropped to the greatest extents in just over two-and-a-half years."

Looking ahead

Swiss trade balance, Eurozone PMIs, UK PMIs, Germany ZEW economic sentiment will be released in European session. Later in the day, Canada CPI and retail sales will take center stage. US will release PMIs and existing home sales.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3432; (P) 1.3464; (R1) 1.3485; More....

USD/CAD retreated after hitting 1.3536 and intraday bias is turned neutral first. Outlook is unchanged that corrective pattern from should have completed at 1.3261. Above 1.3536 will turn bias to the upside for 1.3684 resistance. Nevertheless, break of 1.3356 minor support will dampen this bullish case and bring retest of 1.3261 instead.

In the bigger picture, as long as 1.3222 cluster support (38.2% retracement of 1.2005 to 1.3976 at 1.3223) holds, larger up trend from 1.2005 (2021 low) is still expected to resume through 1.3976 high at a later stage. However, firm break of 1.3222/3 will indicate that the trend might have reversed. Deeper fall would be seen to next cluster support at 1.2726 (61.8% retracement at 1.2758).

Economic Indicators Update

Since forming the low on September 2022 at 11862.84, DAX shows an incomplete higher high (bullish) sequence. This favors further upside against 12.20.2022 low at 13791.52. Cycle from 12.20.2022 low ended as an impulsive Elliott Wave structure with wave 1 at 15660.63, as the 30 minutes chart below shows. Pullback in wave 2 is currently in progress to correct cycle from 12.20.2022 low. Structure of the pullback takes the form of a double three Elliott Wave structure. Down from wave 1, wave (a) ended at 15410.82, wave (b) ended at 15475.05, and wave (c) lower ended at 15246.39 which completed wave ((w)).

Rally in wave ((x)) ended at 15634.04 with subdivision as a zigzag Elliott Wave structure. Up from wave ((w)), wave (a) ended at 15526.28, pullback in wave (b) ended at 15366.37, and wave (c) higher ended at 15634.04 which completed wave ((x)) in higher degree. Wave ((y)) lower is now in progress with internal subdivision as another double three in lesser degree. Down from wave ((x)), wave (w) ended at 15300.42 and rally in wave (x) ended at 15532.44. Near term, as far as Index stays below 15660.63, expect the Index to extend lower to reach 14964.25 – 15219.25. This is the support zone for the Index, which is the 100% – 161.8% Fibonacci extension of wave ((w)). From this area, DAX can extend higher or rally in 3 waves at least.

DAX 30 Minutes Hour Elliott Wave Chart