Sample Category Title

Daily Pivots: (S1) 1.5604; (P) 1.5634; (R1) 1.5673; More...

EUR/AUD's fall resumed after brief consolidation. Intraday bias is back on the downside. As noted before, rebound from 1.5354 should have completed with three waves up to 1.6168. Deeper fall would be seen to 1.5250/5354 support zone. On the upside, break of 1.5898 is needed to indicate short term bottoming. Otherwise, further decline is in favor in case of recovery.

In the bigger picture, medium term outlook remains neutral for the moment. Rise from 1.5354 is seen as the third leg of the corrective pattern from 1.5250 low. Further rise cannot be ruled out, but even in that case, strong resistance should be seen at 38.2% retracement of 1.9799 to 1.5250 at 1.6988. Larger down trend from 1.9799 is in favor to extend through 1.5250 at a later stage.

Daily Pivots: (S1) 1.0364; (P) 1.0379; (R1) 1.0389; More....

Breach of 1.0365 suggests resumption of down trend from 1.1149. Intraday bias in EUR/CHF is back on the downside for 161.8% projection of 1.1149 to 1.0694 from 1.0936 at 1.0200 next. On the upside, however, break of 1.0432 minor resistance will indicate short term bottoming, and turn bias back to the upside for 1.0465 resistance and above.

In the bigger picture, long term down trend from 1.2004 (2018 high) is now extending. Next target is 61.8% projection of 1.2004 to 1.0505 to 1.1149 at 1.0223. On the upside, break of 1.0505 support turned resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will remain bearish even in case of rebound.

Daily Pivots: (S1) 129.56; (P) 129.90; (R1) 130.18; More....

EUR/JPY is losing some upside momentum as seen in 4 hour MACD. But further rise remains in favor with 129.25 minor support intact. Whole consolidation from 134.11 could have completed with three waves down to 127.36, ahead of 126.58 medium term fibonacci level. Further rally would be seen to retest 133.44/134.11 resistance zone. On the downside, however, break of 129.25 minor support will dampen this bullish view and turn intraday bias neutral first.

In the bigger picture, as long as 38.2% retracement of 114.42 (2020 low) to 134.11 at 126.58 holds, up trend from 114.42 is still in favor to continue. Break of 134.11 will target long term resistance at 137.49 (2018 high). However, sustained break of 126.58 will raise the chance of medium term bearish reversal. In this case, deeper decline would be seen to 61.8% retracement at 121.94, and possibly below.

General trend

• Markets traded lower as China continues to layout new regulatory moves, today issued its first white paper on exports. Australia was the only positive performer with its first day of trade after Christmas holiday.
• Yen traded in a tight range with large options expiring today, analysts note its unlikely to break 115 until the new year. With little major news currencies were little changed.
• COVID cases continue to rage in South Korea and Australia, while manufactures in Xi'an China make alternative plans while COVID cases are addressed.
• China uses another large OMO operation, sending the overnight repurchase rate down 29bps.
• Japan press focuses on self driving tech in autos.
• Musk sells another $1.02B in Tesla shares.
• China Taiwan Affairs Office takes a tough stance on relations in 2022.
• With a 30 day grace period, Evergrande has not commented if they had made or made plans to pay bond payment that was due Dec 28th.

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened flat.
• SYR.AU Gives additional update on Tesla agreement: Contract must reach agreement on AAM specs by the end of 2022.
• (AU) Australia PM Morrison: National cabinet meeting on COVID will take place on Thursday Dec 30th.
• (AU) China sets 2022 Australia wool import tariff quota at 40.2Kt.

Japan

• Nikkei 225 opened -0.3%.
• (JP) Japanese car makers said to plan fitting their produced cars with self-driving features as soon as in 2022 - Nikkei.
• (JP) Japan set to keep border rules against Omicron variant spread for now - press.
• 3086.JP Reports 9M Net +¥3.7B v -¥15.6B y/y; Op +4.4B v -18.5B y/y; Rev ¥237.5B v ¥230.7B y/y ( shares +10%).

Korea

• Kospi opened -0.6%.
• (KR) South Korea Jan Business Manufacturing Survey: 92 v 88 prior; Non-Manufacturing Survey: 78 v 83 prior.
• (KR) South Korea Nov terms of trade: 88.3, -10.1% y/y (9-year low).
• (KR) South Korea Ruling Party and Govt have agreed on need to extend coronavirus measures.
• 005930.KR Have flexibility in chip production lines in Xi'an China plants (city currently having a COVID outbreak).
• (KR) South Korea Foreign Min Chung: South Korea and the US have 'effectively' agreed on a draft to end the Korean War – Yonhap.

China/Hong Kong

• Hang Seng opened -0.1%; Shanghai Composite opened flat.
• (CN) China PBOC sets Yuan reference rate: 6.3735 v 6.3728 prior.
• (CN) China PBOC Open Market Operation (OMO): Sells CNY200B in 7-day reverse repos v CNY200B prior; Net inject: CNY190B v CNY190B prior.
• (CN) China Q4 Beige Book shows companies cut investment and remained cautious on borrowing.
• (CN) China PBOC to conduct CNY5.0B in 3-month Central Bank Bill Swap (CBS) operation on today's session v CNY5.0B prior.
• (TW) China Taiwan Affairs Office Official Ma: Will be more forceful against Taiwan independence; To query on the report that China spies have infiltrated the Taiwanese military.
• (CN) China releases an export control white paper - China state media.
• (CN) Expects that China will set the TC/RC floor for copper in Q1 at $70/t and $0.07/lb, flat q/q - Press.
• (CN) Shanghai Sec News: China is planning to add participants and derivatives into the national carbon trading market.
• (CN) China State Planner (NDRC) has approved building clusters of data centers in the Inner Mongolia, Gansu, Guizhou, and Ningxia provinces.
• 1810.HK Expected to announce CNY100B 5 year R&D plan, targeting to be top mobile phone brand within 3 years - HK press.
• JD Enters into 5-year $2.0B green loan facility; Raises share buyback amount by $1.0B to $3.0B and extends length through Mar 2024.
• 3333.HK Have ~$7.4B of bond coupon payments and repayments due during 2022 (reminder had 2 USD bond payments due on Dec 28th, have a 30 day grace period before a default can be declared).

Other

• (TW) China Official Ma: Will be more forceful against Taiwan independence.
• (SL) Sri Lanka Central Bank Gov Cabraal: Official reserve position at $3.1B, reserves to remain around current level through end of year.

North America

• (US) Weekly API Crude Oil Inventories: -3.1M v -3.7M prior.
• TSLA CEO Musk files form 4 to exercise ~1.56M options at $6.24/shr; Sells ~$1.0B in shares.

Europe

• (IE) Ireland Dec Economic Pulse: 79.9 v 83.2 prior.
• (RU) Russia Dep PM Novak: Russia is ready to export more gas to EU if long term supply contracts are signed, have enough resources to meet any EU Demand; Oil price of $65-80/barrel is comfortable in 2022.
• GAZP.RU Has not booked gas transit capacity for exports via the Yamal-Europe pipeline for Dec 29th (9th day in a row).

Levels as of 00:15ET

• Hang Seng -0.9%; Shanghai Composite -0.7%; Kospi -0.8%; Nikkei225 -0.8%; ASX 200 +1.2%.
• Equity Futures: S&P500 +0.1%; Nasdaq100 +0.3%, Dax -0.0%; FTSE100 +0.3%.
• EUR 1.1315-1.1298; JPY 114.88-114.74; AUD 0.7236-0.7213; NZD 0.6813-0.6791.
• Commodity Futures: Gold -0.3% at $1,806/oz; Crude Oil +0.1% at $76.02/brl; Copper -0.7% at $4.41/lb.

Daily Pivots: (S1) 153.97; (P) 154.27; (R1) 154.54; More...

GBP/JPY is losing some upside momentum as seen in 4 hour MACD. But further rise is expected with 153.02 minor support intact. Firm break of 154.70 should confirm the bullish case that correction from 158.19 has completed at 148.94, after defending 148.93 key support. Further rally should then be seen to retest 158.19 next. On the downside, however, break of 153.02 minor support will mix up the near term outlook and turn intraday bias neutral again first.

In the bigger picture, strong rebound from 148.93 key structural support will retain medium term bullishness. Firm break of 158.19 high will resume whole up trend from 123.94 (2020 low), to 61.8% retracement of 195.86 to 122.75 at 167.93. Nevertheless, firm break of 148.93 will bring deeper correction to 38.2% retracement of 123.94 to 158.19 at 145.10, and possibly further lower, as a correction to up trend from 123.94 at least

Risk-on sentiment is somewhat taking a breather as S&P closed slightly lower after making new high. But Yen remains overwhelmingly the worst performing one for the week, followed by Kiwi and then Euro. On the other hand, Sterling is currently the strongest one together with Swiss Franc, thanks additional to Euro's weakness. Aussie is firm too while Dollar is mixed.

Technically, both Aussie and Canadian appear to be losing momentum against Dollar. Break of 0.7205 minor support in AUD/USD and 1.2846 minor resistance in USD/CAD would signal that Dollar is coming back against commodity currencies, probably as risk-on sentiment recedes further ahead of new year holiday.

In Asia, at the time of writing, Nikkei is down -0.76%. Hong Kong HSI is down -0.88%. China Shanghai SSE is down -0.79%. Japan 10-year JGB yield is down -0.0036 at 0.061. Overnight, DOW rose 0.26%. S&P 500 dropped -0.10%. NASDAQ dropped -0.56%. 10-year yield closed flat at 1.481.

Gold and Silver edged higher in weak momentum

Both Gold and Silver edged higher yesterday but quickly lost momentum and retreated. At this point, Gold's rebound from 1752.32 should still extend higher as long as 1784.78 support holds. We're seeing fall form 1877.05 as complete in 1752.43. Above 1820.02 will target 61.8% retracement of 1877.05 to 1752.32 at 1829.40 first. Sustained break there will pave the way back to retest 1877.05 resistance.

Silver's picture is similar. Fall from 25.39 should have completed at 21.39 already. Rise from 21.39 is in favor to extend higher as long as 22.17 support holds. Break of 23.42 will target 61.8% retracement of 25.39 to 21.39 at 23.86 first. Sustained break there will pave the way to retest 25.39 resistance.

CHF/JPY to break through 125.48 to resume up trend

Selloff in Yen gathers momentum this week on the back of risk-on sentiment. Even CHF/JPY manages to accelerate to as high as 125.37. We're seeing the correction from 125.48 has completed at 122.10 after drawing support from 55 day EMA. Immediate focus is now on this 125.48 resistance. Firm break there will resume larger up trend to 61.8% projection of 117.51 to 125.48 from 122.10 at 127.02.

The bigger question is whether there would be more upside acceleration after breaking through 125.48. The key channel is the long term channel resistance. Sustained break there could easily send CHF/JPY to 100% projection at 130.07. And that would be a strong signal of Yen weakness elsewhere. Nevertheless, rejection by the channel resistance will just keep the selling in Yen steady.

Looking ahead

Swiss Credit Suisse economic expectations and Eurozone M3 money supply will be released in European session. US will release goods trade balance, wholesale inventories and pending home sales later in the day.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 153.97; (P) 154.27; (R1) 154.54; More...

GBP/JPY is losing some upside momentum as seen in 4 hour MACD. But further rise is expected with 153.02 minor support intact. Firm break of 154.70 should confirm the bullish case that correction from 158.19 has completed at 148.94, after defending 148.93 key support. Further rally should then be seen to retest 158.19 next. On the downside, however, break of 153.02 minor support will mix up the near term outlook and turn intraday bias neutral again first.

In the bigger picture, strong rebound from 148.93 key structural support will retain medium term bullishness. Firm break of 158.19 high will resume whole up trend from 123.94 (2020 low), to 61.8% retracement of 195.86 to 122.75 at 167.93. Nevertheless, firm break of 148.93 will bring deeper correction to 38.2% retracement of 123.94 to 158.19 at 145.10, and possibly further lower, as a correction to up trend from 123.94 at least

Economic Indicators Update

Both Gold and Silver edged higher yesterday but quickly lost momentum and retreated. At this point, Gold's rebound from 1752.32 should still extend higher as long as 1784.78 support holds. We're seeing fall form 1877.05 as complete in 1752.43. Above 1820.02 will target 61.8% retracement of 1877.05 to 1752.32 at 1829.40 first. Sustained break there will pave the way back to retest 1877.05 resistance.

Silver's picture is similar. Fall from 25.39 should have completed at 21.39 already. Rise from 21.39 is in favor to extend higher as long as 22.17 support holds. Break of 23.42 will target 61.8% retracement of 25.39 to 21.39 at 23.86 first. Sustained break there will pave the way to retest 25.39 resistance.

Selloff in Yen gathers momentum this week on the back of risk-on sentiment. Even CHF/JPY manages to accelerate to as high as 125.37. We're seeing the correction from 125.48 has completed at 122.10 after drawing support from 55 day EMA. Immediate focus is now on this 125.48 resistance. Firm break there will resume larger up trend to 61.8% projection of 117.51 to 125.48 from 122.10 at 127.02.

The bigger question is whether there would be more upside acceleration after breaking through 125.48. The key channel is the long term channel resistance. Sustained break there could easily send CHF/JPY to 100% projection at 130.07. And that would be a strong signal of Yen weakness elsewhere. Nevertheless, rejection by the channel resistance will just keep the selling in Yen steady.

STOCKS

Dow and Dax have risen sharply today and can test 37000 and 16200 on the upside respectively. Nikkei and Shanghai have come down, but have supports at current levels which if holds can produce a bounce towards 29500 & 3650/3700 in the coming sessions, else a fall to 28000 & 3550 is possible respectively. Nifty needs to rise above 17400 to test 17800 else can fall back to 17000. Sensex can rise towards 58000-59000 in the coming sessions.

Dow (36398.20, +95.83, +0.26%) has risen again today. The index tested a high of 36527.26 before coming down. The view is bullish to see a test of 37000 on the upside while above 36000.

DAX (15963.70, +128.45, +0.81%) has risen again today. The index has room to rise towards 16200 before we see a fall down to 15200 is seen.

Nikkei (28809.86, -259.30, -0.89%) has come down after reaching a high of 29106.28. The index needs a sustained break above 29000 to test 29500. While below 29000 a fall back to 28500/28000 is possible.

Shanghai (3604.8, -25.53, -0.70%) has come down today. The index has a good support at 3600 which if broken can take the index down towards 3550-3500. A bounce from the support at 3600, if seen can take index up towards 3700 in the coming sessions.

Nifty (17233.25, +147.00, +0.86%) rose sharply yesterday. The 17400 level is a good resistance, which broken can take the index up towards 17800, else a fall to 17000 will be on the cards.

Sensex (57897.48, 477.24, +0.83%) has risen yesterday. The view is bullish to see s rise towards 58000 and 59000 eventually while the index holds well above 57000.

COMMODITIES

Crude prices continue to rise towards expected resistances before a decline is seen. Gold has also dipped while below 1820 keeping the 1820-1760 range intact for now. Silver needs to sustain above 23 to move up. Copper has scope to rise to 4.60/65 on a break above 4.45/50.

Brent (78.97) and WTI (75.92) continue to trade higher and could test 81-83 and 79-80 respectively before we see a fall in the medium term. Immediate view is bullish for the near term.

Gold (1805.60) has dipped further today not able to rise to test 1815/20 as expected indicating that the resistance is holding strong. While below 1820, we continue to look at a range of 1760-1820 to continue.

Silver (23.04) is stable near levels seen yesterday. The price needs to sustain above 23 to rise higher slowly towards 24-24.50 on the upside.

Copper (4.4235) has dipped slightly. While above 4.38/40, there is scope for a rise towards 4.50 which needs to break in order to head higher towards 4.60/65. Watch price action near 4.45/50 for now.

FOREX

Dollar index is trading along the trend support near 96, unable to decide which way to move to. A break below 96 can drag it lower to 95.50-95 before a rise is again seen. Euro is holding below 1.1350 and can test 1.1250-1.12 if 1.1350 holds strong. EURJPY trades below 130.50 and can fall to 129. Aussie and Pound are stable just now. USDINR can rise from 74.60 towards 75-75.20/25 else can fall to 74.20-74.00. Watch price action near 74.60 today. USDCNY and USDJPY are stable just now.

Dollar Index (96.158) is trading above 96 unable to break lower just now although it is trying to attempt over the last few sessions. While below 96.50, there can be scope of a an eventual break below 96 to head lower towards 95.50-95.00 before a sharp reversal is seen. Watch closely for a break below 96

Euro (1.1306) has fallen from levels seen yesterday indicating that the 1.1350 resistance seems to be holding for now. While below 1.1350, we may expect a dip back to 1.1250-1.12 on the downside.

EURJPY (129.88) has dipped from 130.22 and while the fall sustains, it can fall to 129.50-129.30 in the near term. Only a sustained break above 130.50 if seen will be bullish for the cross for the medium term. Till then a range of 129-130.50 may hold.

Aussie (0.7224) has dipped. We may expect immediate range of 0.72-0.7250/70 to hold for now.

Pound (1.3436) has risen well and can continue to rise towards 1.35-1.3550 on the upside before declining from there.

Dollar-Yen (114.83) has paused below 115 and may reamin in a sideways narrow range of 115-114.70/50 for the near term. A break above 115 is needed to trigger a possible rise towards 117/118 in the longer run. For now, watch price action near 115.

USDCNY (6.3712) is stable and may continue to trade within 6.3732-6.3646 region for the near term.

{USDINR (74.6450) can bounce from 74.60 to head towards 75.0-75.20/25 on the upside. Failure to hold above 74.60 can take it down towards 74.20-74.00 on the downside in the coming 2-4 weeks. Watch price action near 74.60 today.

INTEREST RATES

The US Treasury yields broadly remain stable across tenors. We expect the yields at the far-end to break above their near-term resistances and move up within their broad expected sideways range. The German yields sustain higher and remain stable. The view is bullish to see a further rise from here. The 10Yr has risen contrary to our expectation to see a fall. It has room to move up further and then come down again. The 5Yr GoI has also risen and can move up in the near-term before reversing lower again.

The US 2Yr (0.74%), 5Yr (1.24%) and the 10Yr (1.47%) Treasury yields remain stable while the 30Yr (1.90%) has inched up slightly. We expect the yields at the far-end can rise to 1.6%-1.65% (10Yr) and 2% (30Yr) in the coming weeks. A break above 1.53% (10Yr) and 1.93% (30Yr) can accelerate the rally. Overall, we reiterate that 1.3%-1.65% (10Yr) and 1. 7%-2% (30Yr) will be the range of trade for some time.

The German 2Yr (-0.66%), 5Yr (-0.50%), 10Yr (-0.24%) and 30Yr (0.10%) continues to remain higher and stable. We retain our bullish view of seeing a rise to -0.1%/-0.05% (10Yr) and 0.25% (30Yr) in the coming days.

The Indian 10Yr (6.4901%) GoI has risen breaking above 6.48%. This has negated the fall to 6.44%-6.4% that we have been mentioning over the last few days. The 10Yr GoI can now test 6.55% in the near-term and then reverse lower again to 6.5% and maybe even lower thereafter.

The 5Yr (5.8397%) GoI has also risen above 5.82% and can now test 5.85%-5.86% on the upside before reversing lower again. A fall below 5.8% will be needed to drag it down to 5.74%.

Key Highlights

• AUD/USD started a fresh increase above the 0.7200 resistance.
• A key rising channel is forming with support near 0.7180 on the 4-hours chart.
• EUR/USD is still struggling below the 1.1350 resistance zone.
• Crude oil price extended rally above the $75.00 resistance.

AUD/USD Technical Analysis

The Aussie Dollar started a major increase from the 0.7000 support against the US Dollar. AUD/USD gained pace for a move above the 0.7120 pivot level.

Looking at the 4-hours chart, the settled above the 0.7150 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

There was a decent close above the 0.7200 level. The pair even spiked above 0.7250 and it seems like the bulls are aiming more upsides. The next major resistance is near the 0.7280 level. If there is a clear move above 0.7280, the pair could even rise above 0.7300.

The next major resistance is near the 0.7350 level. A clear move above 0.7350 could start a major increase towards the 0.7500 level.

On the downside, an immediate support is near the 0.7200 level. There is also a key rising channel forming with support near 0.7180 on the same chart. Any more losses might send the pair towards the 0.7150 level.

Looking at EUR/USD, the pair is facing a strong resistance near the 1.1350 zone, above which it could gain bullish momentum.

Economic Releases

• US Pending Home Sales for Nov 2021 (MoM) - Forecast +0.5%, versus +7.5% previous.