Sample Category Title

Daily Pivots: (S1) 0.9172; (P) 0.9213; (R1) 0.9235; More....

Intraday bias in USD/CHF remains neutral as consolidation continues. On the downside, below 0.9156 will target 0.9084 support. Firm break there should confirm that choppy rise from 0.8925 has completed, and suggests that fall from 0.9471 is resuming. Deeper decline would be seen through 0.8925. On the upside, break of 0.9293 will suggest that the pull back from 0.9372 is finished. Intraday bias will be turned back to the upside for 0.9372.

In the bigger picture, the corrective structure of the rebound from 0.8925 argues that fall from 0.9471 is not complete yet. It could either be the second leg of pattern from 0.8756 (2021 low), or resuming larger down trend from 1.0237 (2018 high). We'd pay attention to the downside momentum and assess the odds later. But for now, medium term outlook will be neutral at best as long as 0.9471 resistance holds.

Daily Pivots: (S1) 1.1281; (P) 1.1312; (R1) 1.1359; More...

No change in EUR/USD's outlook as range trading continues. Intraday bias remains neutral for the moment. On the downside, break of 1.1185 will resume larger decline from 1.2348. Next target is 161.8% projection of 1.2265 to 1.1663 from 1.1908 at 1.0934. On the upside, firm break of 1.1382 resistance should confirm short term bottoming at 1.1186. Intraday bias will be turned back to the upside for 55 day EMA (now at 1.1415) and above.

In the bigger picture, there are various ways of interpreting the fall from 1.2348 (2021 high). It could be a correction to rise from 1.0635 (2020 low), the fourth leg of a sideway pattern from 1.0339 (2017 low), or resuming long term down trend. In any case, outlook will now stay bearish as long as 1.1703 support turned resistance holds. Sustained break of 61.8% retracement of 1.0635 to 1.2348 at 1.1289 would pave the way back to 1.0635.

Daily Pivots: (S1) 1.3276; (P) 1.3320; (R1) 1.3398; More...

GBP/USD's rebound from 1.3158 resumes today by breaking 1.3373 and hits as high as 1.3434 so far. Intraday bias is back on the upside. Sustained trading above 55 day EMA (now at 1.3423) will be an early sign of bullish reversal. That is, correction from 1.4248 might have completed with three waves down to 1.3158, after hitting 1.3164 medium term fibonacci level. Further rally would be seen to 1.3570 support turned resistance next. On the downside, break of 4 hour 55 EMA (now at 1.3283) will turn focus back to 1.3164 instead.

In the bigger picture, focus remains on 38.2% retracement of 1.1409 to 1.4248 at 1.3164. Sustained break there will argue that whole rise from 1.1409 has completed at 1.4248, after rejection by 1.4376 long term resistance. That will revive some medium term bearishness and and target 61.8% retracement at 1.2493. However, strong rebound from current level will revive argue that up trend from 1.1409 is still in progress, and probably ready to resume.

Sterling's rally picks up some strong momentum in pre-holiday trading. Meanwhile, overall steady to risk-on sentiment is also lifting Aussie and other commodity currencies. On the other hand, Euro is under tremendous pressure, thanks to selloff against the Pound. Dollar, Yen and Swiss Franc are also soft, with the greenback shrugging off strong PCE inflation data.

Technically, the rallies in both GBP/USD and GBP/JPY carry some significance. Firstly, GBP/USD's break of 1.3373 suggests that 1.3164 medium term fibonacci support was well defended. Similarly, GBP/JPY's break of 152.60 also argues that it has already defended 148.93 structural support and 55 week EMA. Both pairs could be setting up the stage for near term bullish trend reversal. But of course, we'll need to see if momentum could sustain after holidays.

In Europe, at the time of writing, FTSE is up 0.19%. DAX is up 0.62%. CAC is up 0.40%. Germany 10-year yield is up 0.0218 at -0.270. Earlier in Asia, Nikkei rose 0.83%. Hong Kong HSI rose 0.40%. China Shanghai SSE rose 0.57%. Singapore Strait Times rose 0.30%. Japan 10-year JGB yield rose 0.0033 to 0.067.

Merry Christmas to our readers. We'll be back on Dec 28.

US PCE inflation rose to 5.7% yoy, core CPI to 4.7%, highest since 80s

US personal income rose 0.4% mom mama, or USD 90.4B in November, matched expectations. Personal spending rose 0.6% mom or USD 104.7B, also matched expectations.

Headline PCE price index accelerated to 5.7% yoy, up from 5.1% yoy, above expectation of 5.6% yoy. That's the highest level since 1982. Core PCE price index accelerated to 4.7% yoy, up from 4.2% yoy, above expectation of 4.5% yoy. That's the highest level since 1989.

US durable goods orders rose 2.5% in Nov, ex-transport orders up 0.8%

US durable goods orders rose 2.5% mom to 268.3B in November, above expectation of 2.5% mom. That's also the sixth increased of the last seven months.

Excluding transportation, new orders rose 0.8% mom, above expectation of 0.6% mom. Ex-defense orders rose 2.0% mom. Transportation equipment rose 6.5% mom.

US initial jobless claims unchanged at 205k, matched expectations

US initial jobless claims was unchanged at 205k in the week ending December 17, matched expectations. Four-week moving average of initial claims rose 3k to 206k.

Continuing claims dropped -8k to 1859k in the week ending December 11. Four-week moving average of continuing claims dropped -49k to 1920k. Both are the lowest since March 14, 2020.

Canada GDP grew 0.8% mom in Oct, 0.3% mom in Nov

Canada GDP grew 0.8% mom in October, matched expectations. Goods-producing sector rose 1.6% mom while services-producing sector rose 0.6% mom. 17 of 20 industrial sectors posted gains.

According to advance information, GDP increased 0.3% in November, led by accommodation and food services, wholesale trade, construction and the arts and entertainment sectors, while the mining, quarrying, and oil and gas extraction sector offset some of the gains.

Japan raises fiscal 2022 GDP growth forecast to 3.2%

Japan's government slashed the current fiscal 2021 real GDP growth forecast from 3.7%, down from 2.6% as estimated in July. However, for fiscal 2022 starting April, real GDP growth forecast was upgraded from 2.2% to 3.2%. That would be the fastest growth rate since fiscal 2020 with GDP hitting a record JPY 556.8T.

"The economy has shown signs of picking up, so we must ensure the current positive momentum moves to sustainable economic recovery," a Cabinet Office official told reporters. "We have not yet reached autonomous growth but we're making steady progress to generate a virtuous cycle of growth and wealth distribution."

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3276; (P) 1.3320; (R1) 1.3398; More...

GBP/USD's rebound from 1.3158 resumes today by breaking 1.3373 and hits as high as 1.3434 so far. Intraday bias is back on the upside. Sustained trading above 55 day EMA (now at 1.3423) will be an early sign of bullish reversal. That is, correction from 1.4248 might have completed with three waves down to 1.3158, after hitting 1.3164 medium term fibonacci level. Further rally would be seen to 1.3570 support turned resistance next. On the downside, break of 4 hour 55 EMA (now at 1.3283) will turn focus back to 1.3164 instead.

In the bigger picture, focus remains on 38.2% retracement of 1.1409 to 1.4248 at 1.3164. Sustained break there will argue that whole rise from 1.1409 has completed at 1.4248, after rejection by 1.4376 long term resistance. That will revive some medium term bearishness and and target 61.8% retracement at 1.2493. However, strong rebound from current level will revive argue that up trend from 1.1409 is still in progress, and probably ready to resume.

Economic Indicators Update

Canada GDP grew 0.8% mom in October, matched expectations. Goods-producing sector rose 1.6% mom while services-producing sector rose 0.6% mom. 17 of 20 industrial sectors posted gains.

According to advance information, GDP increased 0.3% in November, led by accommodation and food services, wholesale trade, construction and the arts and entertainment sectors, while the mining, quarrying, and oil and gas extraction sector offset some of the gains.

Full release here.

US durable goods orders rose 2.5% mom to USD 268.3B in November, above expectation of 2.5% mom. That's also the sixth increased of the last seven months.

Excluding transportation, new orders rose 0.8% mom, above expectation of 0.6% mom. Ex-defense orders rose 2.0% mom. Transportation equipment rose 6.5% mom.

Full release here.

US personal income rose 0.4% mom mama, or USD 90.4B in November, matched expectations. Personal spending rose 0.6% mom or USD 104.7B, also matched expectations.

Headline PCE price index accelerated to 5.7% yoy, up from 5.1% yoy, above expectation of 5.6% yoy. That's the highest level since 1982. Core PCE price index accelerated to 4.7% yoy, up from 4.2% yoy, above expectation of 4.5% yoy. That's the highest level since 1989.

Full release here.

US initial jobless claims was unchanged at 205k in the week ending December 17, matched expectations. Four-week moving average of initial claims rose 3k to 206k.

Continuing claims dropped -8k to 1859k in the week ending December 11. Four-week moving average of continuing claims dropped -49k to 1920k. Both are the lowest since March 14, 2020.

Full release here.

The Canadian dollar is trading quietly ahead of the release of Canada’s GDP for October later today. The loonie took advantage of broad US weakness on Wednesday, posting gains of 0.53%, its best daily showing since December 7th.

Canada GDP expected to rebound

Canada’s economy was stagnant in September, with a paltry gain of 0.1%. October, however, is expected to show a strong rebound. Statistics Canada is projecting a gain of 0.8% m/m, but some solid data since this projection has added upside risk, which could translate into a gain of 1.0%. I would expect a GDP reading of 0.8% or higher to provide a boost for the Canadian dollar.

A strong GDP report could also have an impact on the Bank of Canada, which has signalled that it plans to embark on a series of hikes in 2022 (a much faster pace than the Fed). A rate hike is widely expected in Q1 2022, but the date of lift-off remains uncertain and will likely be determined by the strength of economic indicators. April is the most likely date at the present time, but an acceleration in the October GDP and higher inflation could push that date forward, perhaps as early as January.

There is a lot of uncertainty surrounding the Omicron variant, and the screaming headlines continue to impact risk appetite as well as risk barometers such as the Canadian dollar. The currency slid 1.3% last week, as Omicron raged across Europe and the US, raising fears of new health restrictions and possible lockdowns. Risk sentiment has rebounded sharply this week, as more reports show that although Omicron is much more contagious than Delta, the symptoms have been less severe. The positive news has sent the Canadian dollar higher this week.

The roller-coaster in the currency markets could well continue for the rest of December, as the markets are being driven by headline volatility rather than market trends. Therefore, caution in these turbulent, illiquid markets is strongly recommended.

USD/CAD Technical

• USD/CAD has support at 1.2756. Below, there is support at 1.2615
• There is resistance at 1.2987. Above, there is resistance at 1.3077

Notes/Observations

• Risk appetite continues to find legs as concerns about Omicron's severity ease (infections continue to rise sharply).
• Overall price action relatively quiet ahead of the Christmas period.
• German Nov Import Prices registers its highest annual pace since October 1974.

Asia

• Japan Govt confirmed to raise real FY22/23 GDP forecast (next fiscal year) from 2.2% to 3.2% (as speculated).

Coronavirus

• German Health Min Lauterbach stated that a lockdown was currently not necessary but could not be ruled out.

Europe

• Northern Ireland DUP party said to pressure Brexit negotiator Truss to trigger 'nuclear option' of triggering Article 16 in negotiations.

Americas

• President Biden announced extension of federal student loan forbearance until May 1st to start repayments.
• Canada PM Trudeau announced to temporarily expand eligibility for key programs to help people overcome losses suffered from Omicron.

Energy

• Russia's Yamal-Europe gas pipeline flows remain in reverse for the 3rd straight day (from Germany to Poland).

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.42% at 480.36, FTSE +0.23% at 7,358.83, DAX +0.39% at 15,653.94, CAC-40 +0.20% at 7,066.21, IBEX-35 +0.84% at 8,530.22, FTSE MIB +0.24% at 26,893.00, SMI +0.13% at 12,730.37, S&P 500 Futures +0.11%].
• Market Focal Points/Key Themes: European indices open generally higher and stayed in the green as the session progressed; light trading ahead of the holiday; better performing sectors include consumer discreationary and industrials; while laggards include financials and real estate; Holcim to acquire Malarkey Roofing in the US; NewRiver sells Poole Retail Park; Flutter acquires Sisal; no major earnings scheduled for the upcoming US session.

Equities

• Consumer discretionary: Flutter Entertainment [FLTR.UK] +3% (acquisition).
• Energy: Gazprom [GAZP.UK] -1% (said to have not booked gas transit capacity for exports via the Yamal-Europe pipeline for Dec 23rd).
• Healthcare: Astrazeneca [AZN.UK] -1% (antiviral drug and vaccine booster work against Omicron), Pharming [PHARM.NL] -1.5% (agreement with Sanofi).
• Industrials: Continental [CON.DE] +2% (profit alert).

Speakers

• France European Affairs Min Beaune: EU to meet in early January to decide on legal steps against the UK over fishing licenses.
• UK PM Johnson said to be not planning on announcing any post-Christmas virus restrictions this week.
• Russia President Putin held his annual press conference and noted that 2021 GDP growth was seen at 4.5% with inflation seen at 8.0%. Not interfering into Russian Central Bank (CBR) work but added Russia could end up like Turkey without rate hikes.
• China Commerce Ministry (MOFCOM): Hope that US can create good conditions for both sides to expand trade cooperation; Both US and China maintaining normal communication.
• China Premier Li reiterates view that Trade was facing 'rising' uncertainties. To maintain the CNY currency (Yuan) basically stable to support trade. Sought additional agreements between trade and shipping companies.
• Reports circulate that string 2 of the Nord Stream 2 pipeline to be ready by year-end.

Currencies/Fixed Income

• USD and JPY currencies softer in session as easing fears about the omicron variant dampened demand for safe-haven assets as more studies suggest that the variant posed a smaller threat than expected.
• EUR/USD at 1.1325 by mid-session and USD/JPY at 114.25.
• GBP/USD higher in session. Money markets currently pricing 100bps of policy tightening from the BOE during 2022. Sentiment aided after UK PM Johnson noted that would not be planning on announcing any post-Christmas virus restrictions this week.

Economic data

• (FI) Finland Nov PPI M/M: 0.9% v 1.2% prior; Y/Y: 21.1 v 20.8% prior.
• (DE) Germany Nov Import Price Index M/M: 3.0% v 1.0%e; Y/Y: 24.7% v 22.3%e (highest annual pace since Oct 1974).
• (DK) Denmark Q3 Final GDP Q/Q: 1.1% v 0.9% prelim; Y/Y: 3.6% v 3.6% prelim.
• (NO) Norway Oct AKU Unemployment Rate: 3.6% v 3.6% prior.
• (TW) Taiwan Nov Industrial Production Y/Y: 12.2% v 9.9%e.
• (ES) Spain Q3 Final GDP Q/Q: 2.6% v 2.0% prelim Y/Y: 3.4% v 2.7% prelim.
• (HK) Hong Kong Q3 Current Account Balance: $96.7B v$69.2B prior; Overall Balance of Payments (BOP): +$27.2B v -$37.6B prior.
• (HU) Hungary Central Bank raised its One Week Deposit Rate by another 20bps to 3.80% (more-than-expected and 6th straight weekly increase).
• (IT) Italy Dec Consumer Confidence Index: 117.7 v 116.3e; Manufacturing Confidence: 115.2 v 115.3e; Economic Sentiment: 113.1 v 114.8 prior.
• (PL) Poland Nov Unemployment Rate: 5.4% v 5.4%e.
• (GR) Greece Q3 Unemployment Rate: 13.0% v 15.8% prior.

Fixed income Issuance

• None seen.

Looking ahead

• (IL) Israel Nov Leading 'S' Indicator M/M: No est v 0.3% prior.
• (BE) Belgium Dec CPI M/M: No est v 1.3% prior; Y/Y: No est v 5.6% prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds.
• 06:00 (BR) Brazil Dec FGV Construction Costs M/M: 0.4%e v 0.7% prior.
• 07:00 (BR) Brazil mid-Dec IBGE Inflation IPCA-15 M/M: 0.8%e v 1.2% prior; Y/Y: 10.5%e v 10.7% prior.
• 07:00 (MX) Mexico Nov Unemployment Rate NSA (unadj): 3.7%e v 4.0% prior; Unemployment Rate (Seasonally adj): No est v 3.9% prior.
• 08:00 (RU) Russia Gold and Forex Reserve w/e Dec 17th: No est v $625.5B prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:30 (US) Initial Jobless Claims: 205Ke v 206K prior; Continuing Claims: 1.84Me v 1.845M prior.
• 08:30 (US) Nov Personal Income: 0.4%e v 0.5% prior; Personal Spending: 0.6%e v 1.3% prior; Real Personal Spending (PCE): 0.2%e v 0.7% prior.
• 08:30 (US) Nov PCE Deflator M/M: 0.6%e v 0.6% prior; Y/Y: 5.7%e v 5.0% prior.
• 08:30 (US) Nov PCE Core Deflator M/M: 0.4%e v 0.4% prior; Y/Y: 4.5%e v 4.1% prior.
• 08:30 (US) Nov Preliminary Durable Goods Orders: +1.8%e v -0.4% prior; Durables (ex-transportation): 0.6%e v 0.5% prior; Capital Goods Orders (non-defense/ex-aircraft): 0.7%e v 0.7% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.7%e v 0.4% prior.
• 08:30 (CA) Canada Oct GDP M/M: 0.8%e v 0.1% prior; Y/Y: 3.6%e v 3.4% prior.
• 08:30 (US) Weekly USDA Net Export Sales.
• 09:00 (BE) Belgium Dec Business Confidence: No est v 4.0 prior.
• 10:00 (US) Dec Final University of Michigan Confidence: 70.4e v 70.4 prelim.
• 10:00 (US) Nov New Home Sales: 770ke v 745K prior.
• 10:30 (US) Weekly EIA Natural Gas Inventories.
• 13:00 (US) Weekly Baker Hughes Rig Count.
• 14:00 (AR) Argentina Nov Trade Balance: No est v $1.6B prior.
• 14:00 (AR) Argentina Oct Economic Activity Index (Monthly GDP) M/M: No est v 1.2% prior; Y/Y: No est v 11.6% prior.
• 18:30 (JP) Japan Nov National CPI Y/Y: 0.5%e v 0.1% prior; CPI ex-fresh food (core) Y/Y: 0.4%e v 0.1% prior; CPI ex-fresh food/energy (core-core) Y/Y: -0.7%e v -0.7% prior.
• 18:50 (JP) Japan Nov PPI Services Y/Y: 1.0%e v 1.0% prior.