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Forex News Timeline

Wednesday, January 18, 2017

Research Team at ANZ notes that the sterling responded positively to the PM May’s speech on Brexit, which amounted to an iron fist in a velvet glove.

Research Team at ANZ notes that the sterling responded positively to the PM May’s speech on Brexit, which amounted to an iron fist in a velvet glove.Key Quotes“The tone of the speech was conciliatory, urged cooperation, and was optimistic. The EU reaction to the speech was welcoming in that it helped to clarify the UK’s position and confirm that it will be leaving the EU. However, negotiations will not begin until Article 50 has been triggered.” “The PM’s objectives are a tariff-free trade agreement with the EU, some form of customs union, and a phasing in of new arrangements.” “Europe remains resolute that access to the single market in goods, services, and capital requires the free movement of people. There will be many twists and turns in the forthcoming negotiations.” “However, the price action in sterling suggested the market is struggling to get new mileage out of the hard Brexit story, at least for now. In other words, the current risk premium for holding UK assets may be sufficient and this week is the first real suggestion since the Brexit vote that that might be the case.” “It would appear that markets will need something fresh to trade off of if sterling is to go lower in the near term, and it is possible that the forthcoming negotiations (once Article 50 is triggered) could provide that.” “Sterling rose sharply after the speech, suggesting that a ‘hard’ Brexit is priced in for now. Potential future downside may require difficult negotiations with the EU.” “Any expectations of a tightening in monetary policy could come sooner rather than later and could provide sterling with some support − especially if trade negotiations go well.” “However, it is also possible that real wage growth could fall into negative territory later this year, which would provide a significant headwind for growth. Average earnings are currently running at 2.6% y/y. For sterling, therefore, two-way risks have returned for the moment and the market will be keenly monitoring the politics of Brexit and the performance of the economy in the coming months.”

It seems the greenback has recovered the smile on Wednesday, now lifting USD/CAD to the area of daily highs around 1.3080. USD/CAD attention to BoC

It seems the greenback has recovered the smile on Wednesday, now lifting USD/CAD to the area of daily highs around 1.3080.USD/CAD attention to BoCAfter bottoming out in fresh 3-month lows near the psychological support at 1.3000 the figure on Tuesday, spot has managed to revert part of the recent bearish note and is now on its way to challenge the 1.3100 handle backed by a sustained bid tone surrounding the buck. On another direction, CAD stayed mostly apathetic to crude oil dynamics in light of the broader consolidative pattern in the West Texas Intermediate, with the barrel still sidelined in the mid-$52.00s ahead of the weekly report on US crude supplies by the API due later today. Later in the session, US December’s CPI and Industrial Production are due followed by the BoC interest rate decision and speeches by Dallas Fed Robert Kaplan (voter, hawkish), Minneapolis Fed Neil Kashkari (voter, centrist) and Chairwoman Janet Yellen, all preceding the Fed’s Beige Book.USD/CAD significant levelsAs of writing the pair is gaining 0.25% at 1.3075 facing the initial hurdle at 1.3191 (high Jan.16) followed by 1.3275 (100-day sma) and then 1.3311 (38.2% Fibo of the 2016 drop). On the flip side, a breach of 1.3016 (low Jan.17) would open the door to  1.3002 (low Oct.19) and finally 1.2996 (low Sep.22).  

Greg Gibbs, Director at Amplifying Global FX Capital, suggests that immigration is a hot-button topic in many countries, particularly in Europe and Ma

Greg Gibbs, Director at Amplifying Global FX Capital, suggests that immigration is a hot-button topic in many countries, particularly in Europe and May’s position leaves no suggestion that this is about xenophobia, and it will sound entirely reasonable to many countries and serve Britain well in negotiations with the EU.Key Quotes“May sought to make it clear that immigration is still wanted, but the desire is to control the numbers.  She said, “Filling skills shortages, delivering public services, making British businesses the world-beaters they often are – when the numbers get too high, public support for the system falters.”She said, “Britain is an open and tolerant country. We will always want immigration, especially high-skilled immigration, we will always want immigration from Europe, and we will always welcome individual migrants as friends.  But the message from the public before and during the referendum campaign was clear: Brexit must mean control of the number of people who come to Britain from Europe. And that is what we will deliver.”“She made a priority seeking certainty for the rights of EU citizens living in the UK and British citizens living in the EU.  Apparently, she is not looking to deport EU citizens and supports ensuring the rights of workers as quickly as possible.  This should go a long way to appeasing the concerns in newer Eastern members of the EU, some of the most strident critics of the UK since the Brexit vote.”

Japanese government spokesman Suga was on the wires last minutes, via Reuters, noting the rhetoric that Japan monitors fx market with vigilance. Key

Japanese government spokesman Suga was on the wires last minutes, via Reuters, noting the rhetoric that Japan monitors fx market with vigilance.Key Headlines:FX stability is ‘very important’ for Japan government Declines to comment on Trump remarks on FX

The GBP/USD pair is seen hovering close to daily lows struck near 1.2330 region, as the bulls continue to consolidate 4 big figures UK May & Trump-led

The GBP/USD pair is seen hovering close to daily lows struck near 1.2330 region, as the bulls continue to consolidate 4 big figures UK May & Trump-led rally.Focus now remains on the UK labor market report due to be published by the Office for National Statistics (ONS) 9.30GMT later in the European session ahead.Jobless claims to increase last monthUK labor market report is expected to show that the number of people seeking jobless benefits to have climbed by 3.7k in the three months to December, compared to an increase of 2.4k booked in the three months to November. The unemployment rate is expected to tick higher to 4.9% during the period from 4.8% last.  Average weekly earnings, including bonuses, in the three months to Nov are estimated to remain to increase 2.6%. While ex-bonuses also the wages are expected to stay flat at 2.6%. Analysts at Danske Bank note, “While we have noticed small signs that the labour market recovery is on pause, the impact of Brexit uncertainties has so far been quite modest. We estimate the unemployment rate (3M average) was unchanged at 4.8% but that average weekly earnings (3M average) fell to 2.5% y/y (from 2.6%).”Deviation impact on GBP/USDReaders can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 20 and 60 pips in deviations up to 2 to -4, although in some cases, if notable enough, a deviation can fuel movements of up to 85 pips.GBP/USD: Key technical levels to watch on UK dataHaresh Menghani, Analyst at FXStreet noted, “A weaker UK employment data could drag the pair back towards 1.2200 handle. A convincing break back below 1.2200 handle would validate Tuesday's strong recovery move as a 'Dead cat bounce' and negate possibilities of any further near-term recovery.” “Alternatively, sustained move back above 1.2400 strong hurdle (50-day SMA) now seems to assist the pair to reclaim 1.2500 psychological mark and head towards testing 38.2% Fibonacci retracement level resistance near 1.2535-40 region. Intermediate resistance, ahead of 1.2500 mark, is pegged near 1.2480-85 region.”

Gold snapped seven consecutive days of winning streak and corrected from nearly eight-week high hit in the previous session.  Currently trading aroun

Gold snapped seven consecutive days of winning streak and corrected from nearly eight-week high hit in the previous session.  Currently trading around $1212 level, a broad based greenback recovery interrupted bullion's well-established recovery trend from 10-1/2 month lows touched in December. Apart from the US Dollar strength, a fresh wave of risk-on trade is further denting the yellow metal's safe-haven appeal and is also collaborating to a minor corrective move witnessed on Wednesday.  On Tuesday, the precious metal rose to the highest level since Nov. 22 and the up-move was supported by a sharp fall in the key US Dollar Index triggered by US president-elect Donald Trump's remarks that a stronger dollar is hurting the economy, which added to the uncertainty around his economic plans aimed at spurring economic growth. Moreover, traders also seem to have turned cautious and preferred to lock-in some profits ahead of the US CPI print later during NA session. A higher-than-expected print would add to December's strong wage growth and revive Fed rate-hike speculations, eventually weigh on the non-yielding yellow metal.  Later during NY session, speech from the Fed Chair Janet Yellen would be looked upon for some fresh clues over the central bank's near-term monetary policy outlook and might also provide fresh impetus for the metal's next leg of directional move.Technical levels to watchImmediate support is pegged near $1208 level below which the commodity is likely to drop towards $1202-1200 strong support. A follow through selling pressure below $1200 psychological mark seems to extend the corrective slide further towards $1190 intermediate support, en-route 50-day SMA support near $1182-80 region. On the flip side, momentum above multi-week highs resistance near $1218 level now seems to pave way for continuation of the metal’s near-term upward trajectory further towards $1230 resistance, with $1221-22 area providing some intermediate hurdle.   

Senior Analyst at Danske Bank Sverre Holbek sees the greenback gathering further traction in the short to medium term. Key Quotes “The USD lost furt

Senior Analyst at Danske Bank Sverre Holbek sees the greenback gathering further traction in the short to medium term.Key Quotes“The USD lost further ground yesterday after Trump flagged in an interview with the Wall Street Journal that the dollar is too strong, in part because he thinks China is holding down the value of its currency”. “We think the market will now look for clues from the Trump administration when the President-elect is inaugurated on Friday. This regards especially economic policy and the size and timing of expansionary fiscal policy and the possible home investment act”. “We are still looking for a rebound in the USD once the details of the economic policy are revealed, given its impact on growth and relative interest rates versus the euro area”.  

Germany Consumer Price Index (YoY) in line with forecasts (1.7%) in December

A quiet Asian affair, with the USD bulls garner some support as Trump trade unwinds and prompts a corrective rally in the US dollar versus its main co

A quiet Asian affair, with the USD bulls garner some support as Trump trade unwinds and prompts a corrective rally in the US dollar versus its main competitors. The Asian equities dropped further, sending the Japanese Nikkei to fresh five-week lows on overnight rally in the yen. While we had a dozen of headlines from China crossing the wires in Asia, with the Chinese authorities trying every way out to curb capital outflows and step-up economic growth. Moving on, there are plenty of risk events to be reported this Wednesday, with the UK employment to kick-start the European calendar, followed by the final CPI reading from the Euroland. The NA session holds the release of the US inflation and industrial figures, followed by Bank of Canada (BOC) rate decision and a slew of Fedspeaks, including the one from Fed Chair Yellen.Main topics in AsiaFed's Williams: Further gradual U.S. interest rate hikes likely appropriate San Francisco Fed's President John Williams crossed the wires, via Reuters, noting that he sees unemployment rate bottoming out at 4.5 pct in the next year. China said to intervene in stock market - BBG Bloomberg carries an article this Wednesday, quoting people familiar with the matter that China is taking steps to support its stock market this week. GBP/USD consolidates 4 big figures UK May & Trump-led rally The GBP/USD pair embarks upon a corrective mode on Wednesday, after having faced fresh offers at 50-DMA, as the bulls consolidate the recent massive upsurge.  Asian stocks ex-China keep losses amid Trump’s comments Most major Asian indices prolong its losing streak into a third day this Wednesday, as yesterday’s massive gains in the yen versus the greenback continue exert downward pressure on the exports stocks, which in turn sent the Nikkei 225 index to fresh five-week lows. PBOC cash injections surge to record $60 billion before Lunar New Year holidays The Chinese central bank (PBOC) injected a record amount of funds into the financial system on increased demand for cash surges ahead of the Lunar New Year holidays starting next week, Bloomberg reports.Key focus for the day aheadEUR/USD drops further to test daily pivot ahead of CPIs Focus now shifts towards the fundamentals from both continents, with the inflation data release to dominate the moves in EUR/USD in the day ahead. GBP/JPY drops ahead of UK wage growth data The British Pound is heading into the data release on a strong footing, courtesy of UK PM May’s ‘Hard Brexit’ talk on Tuesday. A strong wage growth figure could yield a break above 140.15 levels.  NZ: Expect 0.3% q/q headline CPI result for the December 2016 quarter - ANZ Phil Borkin, Senior Economist at ANZ, expects a 0.3% q/q headline CPI result for the December 2016 quarter (released 26th January) of NZ, which is a touch above the RBNZ’s November MPS pick (0.2%).  

Sylwia Hubar, Research Analyst at Natixis, notes that UK PM Theresa May confirmed that Britain will leave the single market given that EU’s four freed

Sylwia Hubar, Research Analyst at Natixis, notes that UK PM Theresa May confirmed that Britain will leave the single market given that EU’s four freedoms are inseparable.Key Quotes“As a non-member UK: 1/ will not be required to pay in to the EU budget (unless small amounts), 2/ will not be restricted by EU laws, 3/ will be free to strike deals with world’s economies and 4/ will be able to control immigration from the EU. The government is set to strive for a partial membership of the customs union and the parliament will have a vote on the final Brexit deal.”  “May’s 12-point plan to exit the EU 1. provide as much certainty about the exit process as possible 2. take control of Britain’s laws and thus make Britain stronger 3. reinforce the Union between England, Scotland, Wales and Northern Ireland (government will take papers from devolved governments into consideration in its Brexit strategy) 4. maintain the common travel area between Ireland and Northern Ireland 5. Britain’s exit must mean control of the immigration from Europe 6. rights for EU nationals living in Britain and British nationals living in the EU 7. protection of workers' rights 8. ambitious free trade agreement with European markets, not memebership 9. new trade deals with other countries 10. leading place for science and innovation 11. cooperation on issues like crime, terrorism and foreign affairs 12. smooth and orderly Brexit process” “In her speech, Theresa May stressed that Britain is set to become more global in the period ahead, which will be possible owing to only a partial membership of the customs union with the EU (as opposed to the full membership of the EU). As a non-member UK: 1/ will not be required to pay in to the EU budget (unless small amounts), 2/ will not be restricted by EU laws, 3/ will be free to strike deals with world’s economies, 4/ will be able to control immigration from the EU.” “The government is unlikely to deliver a running commentary on Brexit and although Theresa May agreed to a “flexible” Brexit transitional deal, with varying aspects taking different amounts of time, she also opposed infinite transition period, saying that government will push for an early agreement. On the positive side, Theresa May promised that the UK parliament will get a vote on the final Brexit deal, which rises anticipations that the deal will be debated and the best option will be chosen.”

In view of the Greg Gibbs, Director at Amplifying Global FX Capital, the market is well aware of what Britain stands to lose as it leaves the EU singl

In view of the Greg Gibbs, Director at Amplifying Global FX Capital, the market is well aware of what Britain stands to lose as it leaves the EU single market, but it has focused less on what the UK stands to gain as it seeks trade and economic relationships outside of Europe. Key Quotes“This is a point that PM May attempted to drive home in her speech on Tuesday.” “She said, “Important though our trade with the EU is and will remain, it is clear that the UK needs to increase significantly its trade with the fastest growing export markets in the world.Since joining the EU, trade as a percentage of GDP has broadly stagnated in the UK. That is why it is time for Britain to get out into the world and rediscover its role as a great, global, trading nation.This is such a priority for me that when I became Prime Minister I established, for the first time, a Department for International Trade, led by Liam Fox.We want to get out into the wider world, to trade and do business all around the globe. Countries including China, Brazil, and the Gulf States have already expressed their interest in striking trade deals with us. We have started discussions on future trade ties with countries like Australia, New Zealand and India. And President Elect Trump has said Britain is not “at the back of the queue” for a trade deal with the United States, the world’s biggest economy, but front of the line”“Prioritizing new global trade dealsA significant area of concern in the market is whether the UK can begin and finalize trade agreements outside of the EU before it has completed Brexit.  At issue is whether the UK can continue to enjoy tariff-free trade with the EU remaining inside the EU Customs Union. PM May could not provide clarity on this issue, but she sees a way for the UK to push on with trade deals outside the EU while seeking on-going benefits of the Customs Union.   One might conclude from the overall tone of her speech that seeking new trade deals outside of the EU is a priority, but she will work hard to maintain as much free trade with the EU as she can.” “She said, “I want Britain to be able to negotiate its own trade agreements.  But I also want tariff-free trade with Europe and cross-border trade there to be as frictionless as possible.That means I do not want Britain to be part of the Common Commercial Policy and I do not want us to be bound by the Common External Tariff.  These are the elements of the Customs Union that prevent us from striking our own comprehensive trade agreements with other countries.  But I do want us to have a customs agreement with the EU.Whether that means we must reach a completely new customs agreement, become an associate member of the Customs Union in some way, or remain a signatory to some elements of it, I hold no preconceived position. I have an open mind on how we do it. It is not the means that matter, but the ends.And those ends are clear: I want to remove as many barriers to trade as possible. And I want Britain to be free to establish our own tariff schedules at the World Trade Organisation, meaning we can reach new trade agreements not just with the European Union but with old friends and new allies from outside Europe too.”

Analysts at Danske Bank suggest that the UK labour market report for November is due out at 10:30 CET and will be the main economic release for the da

Analysts at Danske Bank suggest that the UK labour market report for November is due out at 10:30 CET and will be the main economic release for the day.Key Quotes“While we have noticed small signs that the labour market recovery is on pause, the impact of Brexit uncertainties has so far been quite modest. We estimate the unemployment rate (3M average) was unchanged at 4.8% but that average weekly earnings (3M average) fell to 2.5% y/y (from 2.6%).”

In view of Karen Jones, Head of FICC Technical Analysis at Commerzbank, the pair appears initially supported near 1.0550 amidst a broader ‘a-b-c’ corr

In view of Karen Jones, Head of FICC Technical Analysis at Commerzbank, the pair appears initially supported near 1.0550 amidst a broader ‘a-b-c’ correction higher.Key QuotesEUR/USD saw a minor erosion of the 1.07 recent spike high, the Elliott wave count is suggesting that this is an ‘a-b-c’ correction higher and we have a 13 count on the 240 minute chart so will attempt tentative shorts. Should the market go above 1.0720, we remain unable to rule out a move to 1.0820 50% retracement and 1.0875 the December high. Nearby the support line lies 1.0549 and failure here would cast attention back to the 1.0372/40 recent lows”. “Below 1.0340 will target parity and the 78.6% retracement at .9900 of the move 2000 to 2008”.    

According to Brian Hilliard, Research Analyst at Societe Generale, the UK Prime Minister’s speech yesterday laid out her objectives for the Brexit pro

According to Brian Hilliard, Research Analyst at Societe Generale, the UK Prime Minister’s speech yesterday laid out her objectives for the Brexit process.Key Quotes“Whilst light on detail, as was right, it did at least provide the skeleton of a coherent plan. Mrs May fully understands that the immigration controls that she is certain to impose are equally certain to lead to the UK losing full access to the Single Market.” “But what does that mean? Her aim is to retain some modified form of customs union and some kind of trade access will, of course, ultimately be agreed upon.” “The government expects to continue to make “appropriate contributions” to the EU Budget but not the “huge sums” currently paid each year.” “She would like a transitional deal but seems to imply that the details of the final destination will be agreed “before the 2-year Article 50 process has concluded”.” “Parliament will have a vote on the terms of that deal so presumably that vote will also take place within that 2-year period.” “She does not rule out the possibility of exit with no deal in which case the UK “would have the freedom to set the competitive tax rates and embrace the policies that would attract the world’s best companies and biggest investors to Britain.” 

Having touched a fresh six week low near 112.60 region, the USD/JPY pair staged a goodish rebound and built on to its recovery back above 113.00 handl

Having touched a fresh six week low near 112.60 region, the USD/JPY pair staged a goodish rebound and built on to its recovery back above 113.00 handle. Currently trading around 113.25 region, testing session peaks, reviving US treasury bond yields is helping the greenback to reverse part of yesterday's sharp slide. On Tuesday, the key US Dollar Index fell sharply after the US President-elect Donald Trump and his senior adviser commented over the risk of a stronger greenback.  Meanwhile, improving investor risk-appetite, as depicted by positive sentiment surrounding equity markets, is further driving flows away from safe-haven currency Japanese Yen and assisting the pair's recovery move from the lowest level since Nov. 30. Later during NA session, US economic docket, featuring the release of US CPI, capacity utilization and industrial production data, would be looked upon for fresh impetus. Also in focus would be the Fed Chair Janet Yellen's speech, which might provide some fresh insight over the central bank's near-term monetary policy outlook and eventually derive greenback demand.Technical levels to watchThe ongoing recovery move is likely to confront immediate resistance near 113.65 level (Jan. 16 low) above which the pair is likely to head towards testing 50-day SMA resistance near 113.85 region ahead of 114.00 round figure mark.  On the downside, 112.60 level now seems to have emerged as immediate support, which if broken is likely to accelerate the slide towards 112.00 round figure mark with some intermediate support near 112.35 level.  

The Sterling is surrendering part of yesterday’s sharp gains and is now pushing GBP/USD back to the 1.2330 area, or daily lows. GBP/USD offered ahead

The Sterling is surrendering part of yesterday’s sharp gains and is now pushing GBP/USD back to the 1.2330 area, or daily lows.GBP/USD offered ahead of UK dataSpot is giving away some of yesterday’s impressive advance to fresh 2-week tops above the 1.2400 handle amidst quite a moderate recovery of the US Dollar. GBP gained more than three cents on Tuesday, climbing from daily lows near 1.2040 to the area just above 1.2400 the figure boosted by higher-than-expected inflation figures in the UK during December and a positive message from PM Theresa May at her speech, calling for a more united UK while she insisted on maintaining strong ties with the European Union. Ahead in the session, UK’s labour market figures are due, with consensus expecting the Claimant Count to have increased by 3.7K during the last month of 2016 and the jobless rate to advance to 4.9%. In the US, inflation figures tracked by the CPI will grab all the attention ahead of Industrial Production, the NAHB index and the Fed’s Beige Book. Additionally, Dallas Fed Robert Kaplan (voter, hawkish), Minneapolis Fed Neil Kashkari (voter, centrist) and Chairwoman Janet Yellen are due to speak later in the day.GBP/USD levels to considerAs of writing the pair is retreating 0.49% at 1.2649 and a break below 1.2260 (20-day sma) would aim for 1.2014 (low Jan.17) and finally 1.1979 (low Jan.16). On the other hand, the next resistance aligns at 1.2415 (high Jan.17) ahead of 1.2437 (high Jan.6) and finally 1.2557 (100-day sma).    

China's National Development and Reform Commission (NDRC), the country’s state planner, came out with a statement to implement certain measures in ord

China's National Development and Reform Commission (NDRC), the country’s state planner, came out with a statement to implement certain measures in order to step up economic growth.Key Headlines via Reuters:Companies are more sensitive about Govt fees amid "relatively big" economic downward pressures The NDRC conducted an investigation after receiving a complaint from Hangzhou Wahaha Group on 533 types of fees it paid to Govt since 2013

According to the Greg Gibbs, Director at Amplifying Global FX Capital, the risk related to Brexit remains high, but it has not got any worse over rece

According to the Greg Gibbs, Director at Amplifying Global FX Capital, the risk related to Brexit remains high, but it has not got any worse over recent months. Key Quotes“Britain under PM May has been talking in terms of a hard Brexit for months, so it is difficult to understand why the market turned more bearish ahead of the speech by May on Tuesday.  The snap-back since her speech suggests that a lot of the downside risk associated with Brexit is in the price.” “We see scope for sentiment towards the UK, in an albeit uncertain future, to improve from current levels.  Part of the reason is that Brexit is the manifestation of the anti-establishment nationalist sentiment that has become apparent in most developed economies and, to some extent, the UK may be viewed as an early-mover rather than a maverick.” “PM May has the cache to make it workAn important factor in support of the UK Brexit outcome is that UK PM May appears to be very sensible, credible and has the respect and support of her party and the public.  She is likely to command respect in negotiations with the EU.  The same cannot be said for many other leaders of countries that have experienced or are in the process of experiencing a rise in nationalist public sentiment.”

Yujiro Goto, Research Analyst at Nomura, notes that the expectations for near-term BOJ easing have declined further among BOJ watchers, according to t

Yujiro Goto, Research Analyst at Nomura, notes that the expectations for near-term BOJ easing have declined further among BOJ watchers, according to the JCER survey (28 December to 10 January).Key Quotes“Only 3% of economists expect the Bank to ease by February, while three-month expectations have also fallen. The consensus forecast remains more pessimistic on an inflation recovery than the BOJ, as consensus expects FY17 core inflation to be just 0.77% (BOJ forecast: 1.5%). Nonetheless, positive financial market developments since the US election lowered near-term easing expectations further, while expectations had already declined after the introduction of the yield curve control.”  “At the same time, expectations for tightening have not increased yet. 90% of respondents expect the policy rate to stay at -0.10% to 0.00% by end-December, expecting no changes in policy rate. The 10yr yield target is also expected to stay at 0.00% to +0.10%. In December expectations for the policy rate and 10yr yield target were more divergent, but expectations have now converged to no changes.”  “Weak expectations for BOJ tightening are reasonable, as expectations for wage hikes remain subdued. The consensus expectation for base salary increases in FY2017 is just +0.5% y-o-y, largely unchanged from +0.3% for FY2016. Our economists expect wage increases to remain small. Japanese wage formation tends to be more backward-looking and the BOJ needs to be patient this year. The recent USD/JPY depreciation should also keep the BOJ cautious at its next meeting on 30-31 January. We expect Governor Kuroda to maintain his dovish stance.”   “USD/JPY has been trading weakly while its correlation with the rate differential remains high. As market expectations for BOJ policy changes continue to decline, moves in the rate differential are currently dominated by US factors. The sensitivity of JGB yields to foreign yields remains low under the yield curve control policy. Market expectations for quicker Fed hikes have declined after President-elect Trump’s press conference last week, putting downside pressure on USD/JPY.”  “In the short term, policy communications from US cabinet members and Fed Chair Yellen this week will be important for USD/JPY, and further near-term downside risks cannot be ruled out. The real rate difference is currently pointing to range trading at 110-115. In the medium term, recent US data still warrant at least two hikes by the Fed, even if fiscal stimulus is delayed. High correlation between USD/JPY and US rates suggest the risks of USD/JPY breaking below 110 remain limited.”  

EUR/USD’s reversal from six-week tops gained further traction in early Europe, now pushing the rate further below 1.07 handle. EUR/USD awaits German,

EUR/USD’s reversal from six-week tops gained further traction in early Europe, now pushing the rate further below 1.07 handle.EUR/USD awaits German, Euroland and US CPI dataCurrently, the spot now drops -0.26% to 1.0684, wavering within close proximity to the daily lows struck previously at 1.0681 levels. The EUR/USD pair fell back into the red zone after an extensive rally witnessed a day before, as the traders are seen unwinding the Trump trade ahead of the highly-influential US CPI figures due later on Wednesday. The US dollar experienced a double whammy and was sold-off aggressively amid a GBP shorts-squeeze and Trump’s caution over a stronger USD, which tempered hopes of a fiscal stimulus and weighed dramatically on the US treasury yields across the time horizon. Focus now shifts towards the fundamentals from both continents, with the inflation data release to dominate the moves in EUR/USD in the day ahead. The German CPI data will be published before the Eurozone final CPI reading, while the US CPI, industrial production and Fedspeaks will wrap up an eventful economic calendar for today.EUR/USD Technical Levels In terms of technicals, the pair finds the immediate resistance 1.0700 (round figure). A break beyond the last, doors will open for a test of 1.0746 (Nov 17 high) and from there to 1.0776 (100-DMA). On the flip side, the immediate support is placed at 1.0654 (5-DMA) below which 1.0612 (10-DMA) and 1.0556 (50-DMA) could be tested.  

Latest Reuters poll of Japanese analysts suggests that Japan’s growth is expected to accelerate in FY 2018, while government won’t tolerate USD/JPY ra

Latest Reuters poll of Japanese analysts suggests that Japan’s growth is expected to accelerate in FY 2018, while government won’t tolerate USD/JPY rate above 130 levels.Key findings from the survey:Japan FY2017 GDP growth seen at 1.1%, FY2018 at 1.0% (vs +1.0; +1.0% in December poll) Japan's economic growth likely led by exports, public spending and weak yen Japan govt would be unwilling to tolerate any yen weakness beyond 130 yen per dollar Japan FY2017 core CPI seen +0.8%, FY2018 core CPI seen 1.0% (vs +0.7%, +1.0% in December poll)

Sylwia Hubar, Research Analyst at Natixis, notes that the UK inflation jumped to 1.6% in December boosted by rises in air fares and lower declines in

Sylwia Hubar, Research Analyst at Natixis, notes that the UK inflation jumped to 1.6% in December boosted by rises in air fares and lower declines in prices for food and motor fuels than a year ago.Key Quotes“The inflation increased in part as producers have been passing upturns in their prices onto consumers. In the period ahead, increasing raw material costs are set to further drive factory prices higher. Subsequently, we expect UK consumer price inflation to continue accelerating over the coming months to hover above 3% in the second half of 2017. The BoE will attempt to look through a temporary rise in inflation as the amount of slack in the economy is expected to widen anew in a less favorable labor market environment.” “The consumer prices rose by 0.5% over the month in December compared to 0.1% increase in the same period last year. The majority of goods and services have made a positive contribution to December’s inflation.” “UK consumer price inflation will continue accelerating over the coming months as rising oil prices and pound weakness increasingly feeding through are set to drive import prices higher. In contrast, the upside pressures should be in part offset by weaker economic activity and less buoyant labor market conditions controlling domestic price pressures.” “All in all, we expect that inflation accelerating to above 3% in the second half of 2017 will be met with relative modest increase in demand pressures for higher wages, as companies will keep earnings growth contained in an uncertain Brexit environment and to offset rising import costs. As a result, the economic slack is set to expand anew and so BoE will likely hold a wait-and-see stance throughout 2017.”

Phil Borkin, Senior Economist at ANZ, expects a 0.3% q/q headline CPI result for the December 2016 quarter (released 26th January) of NZ, which is a t

Phil Borkin, Senior Economist at ANZ, expects a 0.3% q/q headline CPI result for the December 2016 quarter (released 26th January) of NZ, which is a touch above the RBNZ’s November MPS pick (0.2%).Key Quotes“Annual inflation is forecast to lift to 1.2% – back in the RBNZ’s target band for the first time since Q3 2014.” “Higher petrol prices and base effects largely account for the lift in annual inflation. Retail fuel prices are estimated to have risen by 5% over Q4, in stark contrast to the 7% drop seen in the same quarter a year earlier. This results in a mechanical bounce in annual CPI inflation. New Zealand is not unique in this phenomenon; headline inflation is rising globally as oil prices stabilise after the late 2015/early 2016 falls.” “More importantly, there should be further evidence of a turn in the domestic inflation cycle. While non-tradable inflation, at an estimated 0.5% q/q (2.3% y/y), is still low historically, it is trending higher and we see risks skewed to a modestly stronger outcome in Q4. Our Monthly Inflation Gauge is hinting at price increases beyond just housing, which is consistent with growing capacity strains across the economy.” “Tradable inflation should remain soft, however, at -0.1% q/q and -0.5% y/y. While still negative, this would represent the highest annual tradable inflation since Q2 2014, largely reflecting petrol prices. Outside of petrol, tradable inflation is expected to print at -0.7% q/q (-0.5% y/y).” “Inflation pressures should continue to gradually build over 2017. Deflationary influences are certainly still present (NZD, technology, competitive retail environment etc), which will ensure inflation doesn’t run away. But these factors are expected to be increasingly usurped by traditional demand-pull forces and the simple mechanics of falls in oil (petrol) prices being replaced by increases. Inflation has been a missing element of the expansion to date, but evidence is building (rising firm pricing intentions, positive output gap, tighter labour market, stronger global inflation etc) that it is now starting to return. The Q4 inflation figures will be a step in that direction.” “However, that doesn’t necessarily suggest that the OCR should follow inflation upwards in quick succession. Given two false starts to tightening since the financial crisis, the hurdle for lifting the OCR should be high. The RBNZ needs (and will likely want) to see the whites of the eyes of inflation before tightening, rather than risking taking another pre-emptive strike that eventually proves unwarranted.”

The EUR/JPY cross clings onto recovery gains so far this session, having halted two back-to-back sessions of losses amid a rebound staged by USD/JPY.

The EUR/JPY cross clings onto recovery gains so far this session, having halted two back-to-back sessions of losses amid a rebound staged by USD/JPY.EUR/JPY firmer on USD/JPY pullbackThe EUR/JPY pair now gains +0.20% to trade at 120.88, unable to chew offers lined up just below 121 handle. The recovery in EUR/JPY fails to garner some support, as gains from a higher USD/JPY is partly offset by the EUR/USD retreat, in wake of broad based US dollar rebound from Trump’s comments-led massive sell-off seen yesterday. Next of relevance for the cross remains the inflation figures due on the cards from Germany, Eurozone and US, with the US CPI report closely eyed as we head towards the Trump’s inauguration later this week.EUR/JPY: Technical LevelsHigher side: 121.19 (5-DMA), 121.80 (10 & 50-DMA) Lower side: 120.29 (daily S1), 119.37 (Nov 30 low)  

Research Team at ANZ notes that the Dudley and Brainard spoke from the FOMC yesterday and presented their views on the US economy. Key Quotes “Dudle

Research Team at ANZ notes that the Dudley and Brainard spoke from the FOMC yesterday and presented their views on the US economy.Key Quotes“Dudley expects the US expansion to continue in coming years, says inflation is simply not a problem (although the Fed thinks the economy is near maximum sustainable employment) and that the USD rise may exert some downward pressure on prices.” “Brainard noted that the FOMC may have to tighten policy more aggressively if fiscal policy absorbs slack in the economy faster. She also noted that balance sheet reinvestment may end sooner.”

In view of the analysts at BBH, the rise of the populist-nationalism over the past year or so is partly predicated on a realist view of international

In view of the analysts at BBH, the rise of the populist-nationalism over the past year or so is partly predicated on a realist view of international relations.  Key Quotes“In the realist school of thought, the nation-state is the main actor, and international relations is characterized by competition between states.”“Many take away from this that competition is competition: it takes place on different fronts simultaneously, and that strategy is more or less than same, increase one's powers and minimize the adversaries' power and opportunities.  Drilling down from that generalization, two broad expansion strategies emerge.” “The first is the traditional export-oriented strategy.  We are all familiar with it.  To service foreign demand, business ships their domestically produced output across the border.  There are certain policies that facilitate such a strategy, such as a weak currency, a free-trade international regime that reduces trade barriers and domestic demand often needs to be repressed to ensure.”  “Some see this strategy to be a developmental strategy in the sense that emerging market economies may pursue such a strategy to provide the critical scale and investment for industrialization and modernization.  However, as advanced industrial countries like Germany, Switzerland, Finland and Sweden for example, demonstrate, export-oriented strategies are not limited to emerging market economies or is moving past them some kind of natural evolution.”  “The export-oriented model fit well into the traditional approach to international relations.  Countries sought spheres of influence.  These were non-domestic areas where a country dominated.”“Specifically, as several European countries (Britain, France, Germany, and Portugal) and Japan were carving up China into spheres of influence that the US defended China's territorial integrity and offered a non-imperialist expansion strategy and the basis of a different world order.  Rather than fixed spheres of influence, the US vision was based on variable shares of the world economy.  The variability depended on one's economic prowess not political concessions from a country's emperor or officials.    It was the basis of what was called the Open Door.”  “After WWII, with European countries and Japan using tariffs to facilitate the rebuilding of domestic industries, and the over-valued dollar, US companies, developed an alternative to the export-oriented strategies.  This strategy was based on direct investment, the building of production facilities.  Service foreign demand through local production.   Since US records have been kept (more than 50 years), the sales by majority-owned affiliates have outstripped US exports.  In 2014, local sales outstripped exports by a factor of nearly 5 to 1.”  “As a consequence, the value-added by the affiliates of US companies contributes to local GDP is a palatable way, unlike exports.  For example, in 2014, the value-added by US affiliates accounted for nearly 32% of Ireland's GDP, 15% of Singapore's GDP and 4% of Australia's GDP.”  “The latest academic findings suggest that the impact of the direct investment strategy on domestic employment is more nuanced than might be suspected.  Unskilled labor hired by the foreign-based affiliate of US companies competes with unskilled labor in the US.  However, skilled labor hired abroad appears to lead to more skilled domestic workers.   If barriers are erected to deter hiring unskilled workers abroad, it does not mean more unskilled or low-skilled domestic workers would be hired.  Rather, businesses would be incentivized to replace workers with machines, of which robots are just the newest form.”

The Chinese central bank (PBOC) injected a record amount of funds into the financial system on increased demand for cash surges ahead of the Lunar New

The Chinese central bank (PBOC) injected a record amount of funds into the financial system on increased demand for cash surges ahead of the Lunar New Year holidays starting next week, Bloomberg reports. The PBOC pumped a net 410 billion yuan ($60 billion) through open-market operations (OMOs) on Wednesday, the biggest daily addition since Bloomberg began compiling the data in 2004. That brings the total injections so far this week to 845 billion yuan. Bloomberg notes, “Demand for cash tends to increase before the Lunar New Year holidays, when households withdraw money to pay for gifts and get-togethers.”

Research Team at Nomura notes that the US Empire State Survey’s headline index was at 6.5 in January, slightly below expectations (Nomura: 7.0, Consen

Research Team at Nomura notes that the US Empire State Survey’s headline index was at 6.5 in January, slightly below expectations (Nomura: 7.0, Consensus: 8.5), suggesting manufacturers in New York State reported continued growth in business activity.Key Quotes“Details were mixed, with the new orders index at 3.1, down 7.3pp from the prior reading. The unfilled orders index improved, but remained negative at -1.7. The number of employees index indicates contraction in hiring activity, despite a decent improvement to -1.7 from -12.2. But the top-line reading is little changed compared to the December reading, which was lowered to 7.6 (previously reported as 9.0) by annual benchmark revisions to reflect the latest seasonal factors.” “Six-month-ahead business conditions index was unchanged from the prior month, implying steady near-term optimism. This appears consistent with our expectation that the optimism after the election may not improve further without additional clarity in potential policy changes proposed by the incoming administration.”

Analysts at ANZ note that the UK PM Theresa May outlined her government’s objectives for Brexit negotiations overnight. Key Quotes “Essentially the

Analysts at ANZ note that the UK PM Theresa May outlined her government’s objectives for Brexit negotiations overnight.Key Quotes“Essentially the UK wants a new partnership to include a tariff-free trade agreement, some form of customs union and a phased introduction of new arrangements. The tone of the speech was constructive and optimistic. However, it shed no light on the EU's possible response. Tariff-free trade across goods and services is effectively what the single market is, along with its other two freedoms – the movement of capital and people.” “The UK taking advantage of the free trade element without the other aspects will be a source of huge debate and something the Europeans have been opposed to. In the short term, the GBP seems to have been discounted enough with inflation now rising and the BoE indicating it is more even-handed in its assessment of the economy and monetary policy.”

Increased capital outflows from China have fuelled serious concerns amongst the Chinese authorities, with China’s state asset regulator initiating the

Increased capital outflows from China have fuelled serious concerns amongst the Chinese authorities, with China’s state asset regulator initiating the latest move to curb outflows, by issuing rules on outbound investment for state owned firms.Key Headline via Reuters:The regulator says it will strengthen supervision of firms' outbound investment

The bulls were rescued by a bounce witnessed in the greenback across the board, lifting USD/JPY from fresh six-week lows struck at 112.57 in Asia open

The bulls were rescued by a bounce witnessed in the greenback across the board, lifting USD/JPY from fresh six-week lows struck at 112.57 in Asia opening trades today. The spot was last seen exchanging hands at 113.09, up +0.40% on the day, and hovering close to session highs reached at 113.14 last hour. The major is back on the bids this Wednesday, as the bulls fought back control and brought an end to a week-long run of losses, with the move prompted by a corrective rally staged by the US dollar against its six major peers in wake of a recovery in the treasury yields after yesterday’s Trump’s comments induced massive slump. Markets now eagerly await the US CPI figure to gauge next direction in the major. The consumer price index (CPI) is expected to rise to 2.1% annually from 1.7% last. The core figure is expected to tick up to 2.2% from the prior 2.1%. Apart from the data, Fed Chair Yellen’s speech could also have a significant impact on the spot.USD/JPY Technical levels to watch  The major finds immediate resistance at 113.50 (psychological levels). A break above the last, the major could test 113.74 (5-DMA) and 114 (zero figure) beyond the last. While to the downside, the immediate support is seen at 112.57 (6-week low) next at 112.04 (daily S1) and below that at 111.58 (Nov 29 low).  

The EUR/USD is trading in the sideways manner around 1.07 as investors await US CPI data and Yellen speech. The currency pair rose to a high of 1.072

The EUR/USD is trading in the sideways manner around 1.07 as investors await US CPI data and Yellen speech. The currency pair rose to a high of 1.0720 on Tuesday; its highest since December 8, on the back of broad based USD weakness.Eyes US CPI releaseThe consumer price index (CPI) is seen improving to 2.1% annually from the last reading of 1.7%. The core figure is expected to tick up to 2.2% from the prior 2.1%. A strong headline figure may do little to help the battered US dollar, as much of the rise in the headline figure is likely to be fuelled by an uptick in the energy prices. However, an uptick in core inflation could offer support to the US dollar. Yellen speech due later today during the market hours could include comments on the monetary policy outlook. In the meantime, German and Eurozone CPI release could receive little attention from the markets, unless the final print shows a significant deviation from the preliminary numbers.EUR/USD Technical LevelsA break above the previous day’s high of 1.0720 could yield a rally to 1.0768 (Dec 7 high), above which the psychological level of 1.08 could be put to test. On the other hand, a breakdown of support at 1.0685 (Jan 12 high) would expose support at 1.0652 (5-DMA) and 1.0627 (Jan 10 high).  

GBP/JPY faced rejection at 140.15 (38.2% of 126.70-148.46) in the late North American session and dropped to 139.50 levels in Asia.  Focus on UK data

GBP/JPY faced rejection at 140.15 (38.2% of 126.70-148.46) in the late North American session and dropped to 139.50 levels in Asia.  Focus on UK data The UK data due for release later today is expected to show the average earnings including bonus ticked higher to 2.6% in three months to November. Meanwhile, the unemployment rate is seen rising to 4.9% from 4.8%.  The British Pound is heading into the data release on a strong footing, courtesy of UK PM May’s ‘Hard Brexit’ talk on Tuesday. A strong wage growth figure could yield a break above 140.15 levels.  GBP/JPY Technical Levels A break above 140.15 (38.2% fib) would open the doors to 140.54 (10-DMA) and then to 141.30 (50-DMA). On the lower side, a breach of 139.16 (5-DMA support) could yield a sell-off to 138.52 (Nov 29 low). A violation there would expose strong support at 137.58 (50% fib).   

Most major Asian indices prolong its losing streak into a third day this Wednesday, as yesterday’s massive gains in the yen versus the greenback conti

Most major Asian indices prolong its losing streak into a third day this Wednesday, as yesterday’s massive gains in the yen versus the greenback continue exert downward pressure on the exports stocks, which in turn sent the Nikkei 225 index to fresh five-week lows. Investors turn cautious ahead of the US President-elect Donald Trump's inauguration on Friday, with hopes of Trump’s fiscal spending plans already tempered, after he cautioned yesterday over a rising USD, particularly versus the Yuan. Trump’s comments, however, emerged positive for the Chines equities. Alex Wong, a portfolio manager at Ample Capital, “Trump's comments on the dollar has helped relieve downward pressure on the renminbi and on Chinese equities and we have seen a steady pick up in capital flows from mainland investors into Hong Kong stocks."  The Japanese benchmark, the Nikkei 225 index drops -0.30% to 18,758. The Australian benchmark, ASX 200 index drops -0.61% to 5,664 points. Mainland Chinese markets edge higher, with both Shanghai composite and Shenzhen’s CSI 300 index rising +0.20% and 0.46% respectively. Hong Kong's Hang Seng rallies +1.23% to 23,120. 

Treasury yields dropped on Tuesday after President-elect Donald Trump expressed concerns regarding strong dollar and criticized Republican border-tax

Treasury yields dropped on Tuesday after President-elect Donald Trump expressed concerns regarding strong dollar and criticized Republican border-tax plan. The yield on the 10-year Treasury note dropped 5.2 basis points (bps) to 2.327%. The 2-year Treasury note declined 3.7 bps to 1.135%. Treasury yields have been steadily losing height since December Fed rate hike. Moreover, markets had run ahead of themselves while anticipating higher growth/inflation under Trump Presidency. Investors now turn their attention to the US consumer price index release and Yellen speech.

According to the Nikkei Asian Review, efforts to improve Japan's fiscal health are being knocked off track as lower-than-expected revenues put the fis

According to the Nikkei Asian Review, efforts to improve Japan's fiscal health are being knocked off track as lower-than-expected revenues put the fiscal 2018 target out of reach. The article reports, “Even with the global economy picking up and the yen having weakened sharply, improvements in Japan's fiscal health have been delayed. Balancing economic growth and fiscal responsibility will be a challenge for the government.” “The government sees its goal of achieving a primary surplus in fiscal 2020 as a promise to the world. Fiscal 2018, when the primary deficit-to-GDP ratio was initially projected to drop to around 1%, was positioned as a milestone toward this end.”

Brent oil ticked higher in Asia, but is having a tough time taking out the resistance offered by 10-DMA on expectations that US producers will boost t

Brent oil ticked higher in Asia, but is having a tough time taking out the resistance offered by 10-DMA on expectations that US producers will boost their output  At the time of writing, Brent oil was trading at $55.63; up 0.30% or 16 cents.  Prices retreated from the high of $56.92 to $55.39 on Tuesday after the US government said the oil production set to rise towards 9 million barrels per day.  The focus today is on the weekly American Petroleum Institute (API) oil inventory data that will be followed by the IEA weekly inventory release tomorrow. 

EUR/GBP momentum switched to negative

Increased downward momentum in the EUR/GBP has brought the 4hr MACD to step in the red zone.

This technical condition would certainly not be of much help if the MACD hasn't been under zero for at least one week of trading. This reinforces the argument that room for further EUR/GBP depreciation is there.

The signal may be either taken by trend-following traders as a trigger to liquidate long positions as by potential sellers to prepare their short commitments.

EUR/GBP momentum switched to negative

Increased downward momentum in the EUR/GBP has brought the 4hr MACD to step in the red zone.

This technical condition would certainly not be of much help if the MACD hasn't been under zero for at least one week of trading. This reinforces the argument that room for further EUR/GBP depreciation is there.

The signal may be either taken by trend-following traders as a trigger to liquidate long positions as by potential sellers to prepare their short commitments.

Demand is still healthy and oil “will be with us for decades”, said Saudi Aramco’s chief executive Amin Nasser at the World Economic Forum in Davos.

Demand is still healthy and oil “will be with us for decades”, said Saudi Aramco’s chief executive Amin Nasser at the World Economic Forum in Davos. He added that the world needs to invest US $25 trillion in new oil-producing capacity over the next 25 years to meet growing demand.

The GBP/USD pair embarks upon a corrective mode on Wednesday, after having faced fresh offers at 50-DMA, as the bulls consolidate the recent massive u

The GBP/USD pair embarks upon a corrective mode on Wednesday, after having faced fresh offers at 50-DMA, as the bulls consolidate the recent massive upsurge.  GBP/USD back below 1.2400, where 50-DMA intersectsGBP/USD surrenders 1.24 handle and now looks to stabilize around the mid-point of 1.23 handle amid renewed USD buying, as the treasury yields attempt minor-recovery from yesterday’s steep drop sparked by Trump’s comments on recent USD appreciation. On Tuesday, the cable witnessed a solid 400-pips comeback from ahead of 1.20 handle, mainly helped by the UK PM May’s strong and clear talks on Brexit, while Trump’s warning over a stronger yuan, particularly against the Yuan, provided extra legs to the GBP rebound.Market wrap: Trump and May made the day - WestpacAttentions now turns towards a fresh batch of critical US economic data due to be reported in the NA session, following the release of the UK jobs data. In the US, we have the CPI and industrial production up on the sleeves. Besides, Fed speaks, including Yellen’s, will also grab the eyeballs.GBP/USD Levels to consider             In terms of technical levels, upside barriers are lined up at 1.2401 (50-DMA), 1.2415/29 (weekly high/ 100-DMA) and 1.2500 (zero figure). While supports are aligned at 1.2300 (round figure) and 1.2281 (daily pivot) and below that at 1.2249 (20-DMA).

USD/CAD pair recovered from the three-month low of 1.3019 in the Asian session in what appears to be a chart driven move. Eyes US CPI, Yellen speech

USD/CAD pair recovered from the three-month low of 1.3019 in the Asian session in what appears to be a chart driven move.Eyes US CPI, Yellen speech and BOC rate decisionThe consumer price index (CPI) is expected to improve to 2.1% annually from the last reading of 1.7%. The core figure is expected to tick up to 2.2% from the prior 2.1%. USD traders would also keep an eye on Yellen speech, which may provide more insights into the monetary policy outlook. Meanwhile, the CAD side of the story is dependent on Bank of Canada’s policy tone. The central bank is expected to keep the interest rates unchanged at 0.5%.USD/CAD Technical LevelsThe pair was last seen trading around 1.3065. A break above 200-DMA of 1.3096 would open doors for 1.3119 (Jan 11 low), above which gains could be extended to 1.3162 (10-DMA). On the other hand, a breakdown of support at 1.3038 (session low) could yield a sell-off to 1.30, under which the losses could be extended to 1.2965 (Aug 22 high).    

Bloomberg out with yet another headlines on the Chinese economy, this time citing that China’s government is promoting a new tool to raise funds for i

Bloomberg out with yet another headlines on the Chinese economy, this time citing that China’s government is promoting a new tool to raise funds for infrastructure projects as debt levels at municipalities mount.Key Points:China is seeking to lure more private money into infrastructure projects, while limiting its responsibility for the debt needed to fund them Debt levels at municipalities have risen, this is intended to ease the burden on them Intended to bring more private money into infrastructure projects, and therefore less government debt

The AUD/USD pair extended its overnight rally and scored fresh nine-week highs at 0.7569 at Asia open, before meeting fresh supply to now meander near

The AUD/USD pair extended its overnight rally and scored fresh nine-week highs at 0.7569 at Asia open, before meeting fresh supply to now meander near daily troughs of 0.7540.AUD/USD tracks USD price-actionCurrently, the AUD/USD pair drops -0.30% to 0.7544, eyeing a test of next 5-DMA support located at 0.7519 in the day ahead. The Aussie is seen back on the offers so far this session, reversing a minor-portion of yesterday’s extensive upsurge, triggered by a massive slump in the US dollar, following Trumps comments citing caution on a stronger USD, which squashed hopes over his fiscal spending plans and sent the US treasury yields down in the dumps. The latest upmove in the AUD/USD pair can be mainly attributed to a corrective rally witnessed in the greenback versus its major peers, while Fed’s Williams hawkish tone during his speech last hours, also weighed down on the major. Later today, the major will get influenced by the much-awaited US inflation figures, while Fed Chair Yellen and Fed member Kashkari’s speech will be also heard. AUD/USD Levels to watch    The pair finds the immediate resistance at 0.7569 (9-week tops) above which gains could be extended to the next hurdle located 0.7600 (round figure) and 0.7650 (psychological levels). On the flip side, the immediate support located 0.7419 (5-DMA). Selling pressure is likely to intensify below the last, dragging the Aussie to 0.7505 (200-DMA) and below that 0.7484 (100-DMA).  

AUD/JPY cross staged a rebound from near 85.00 levels for the third straight session, although the upside is being capped around 85.30 levels. The Ja

AUD/JPY cross staged a rebound from near 85.00 levels for the third straight session, although the upside is being capped around 85.30 levels. The Japanese Yen outperformed the Aussie amid the unwinding of the Trump trade. Consequently, the AUD/JPY cross enjoyed a three-week losing streak However, the bearish momentum ran out of steam at 85.00 levels in the previous two sessions. A similar exhaustion has been seen today as the cross recovered from the low of 85.05 to 85.25 levels. The Aussie data calendar is thin; hence the cross remains the mercy of the broader market action - unwinding of Trump trade”.AUID/JPY Technical LevelsA break above 85.28 (1-hr 50-MA) would expose 85.47 (1-hr 200-MA), above which the gains could be extended to 85.60 (hourly chart hurdle). On the other hand, a breakdown of support at 85.00 (zero levels) would open the doors to 84.55 (Jan 5 low) and then to 84.25 (50-DMA).

Bloomberg reported a piece from the China Daily earlier on the day, quoting comments on the Chinese currency from Fan Gang, An advisor to the Monetary

Bloomberg reported a piece from the China Daily earlier on the day, quoting comments on the Chinese currency from Fan Gang, An advisor to the Monetary Policy Committee of the People's Bank of China.Key Headlines:The recent yuan fall was a reasonable response to stronger USD  after Trump's election win & fed rate hike Expects China eco growth to be about twice as fast the US in coming years, inflation unlikely to be higher US national debt could soar if Trump honours his spending promises So yuan to become stronger against USD in future

The safe haven yellow metal is one of the major beneficiaries of the ongoing unwinding of the Trump trade. Gold clocked an 8-week high of $1218.75/Oz

The safe haven yellow metal is one of the major beneficiaries of the ongoing unwinding of the Trump trade. Gold clocked an 8-week high of $1218.75/Oz on Tuesday and was last seen trading around $1215 levels. The Greenback was offered across the board after Trump expressed concerns regarding strength in the US dollar. The treasury yields dropped as well, leading to a weakness in the US banking stocks and equity market losses.Eyes US CPIThe consumer price index (CPI) is expected to improve to 2.1% annually from the last reading of 1.7%. The core figure is expected to tick up to 2.2% from the prior 2.1%. An uptick in core inflation could increase demand for the yellow metal. Gold traders would also watch out for Yellen’s comments on the monetary policy outlook.Gold Technical LevelsA break above $1217.35 (Nov 21 high) could yield a rally to $$1229.30 (Nov 16 high), above which a major resistance is seen directly at $1250 (October 2016 low). On the other hand, a breakdown of support at $1207 (Nov 20 low) would expose $1200 (zero figure), under which losses could be extended to $1194.80 (Nov 29 high).  

Bloomberg carries an article this Wednesday, quoting people familiar with the matter that China is taking steps to support its stock market this week.

Bloomberg carries an article this Wednesday, quoting people familiar with the matter that China is taking steps to support its stock market this week.Key Details:State-owned investors bought shares to steady the market on Monday, while some funds were guided on Tuesday not to sell holdings with big weightings in benchmark indexes China’s securities regulators asked funds and brokerages to trade prudently this week and directed exchanges to report any abnormal transactions

The NZD/USD is trading at the highest level since December 14 on the back of a broad based US dollar sell-off and an upbeat GDT price auction. Hovers

The NZD/USD is trading at the highest level since December 14 on the back of a broad based US dollar sell-off and an upbeat GDT price auction.Hovers around 0.72 handleThe spot was last seen trading around 0.72 handle. The pair clocked a high of 0.7220 in the overnight trade. The USD sell-off gathered pace after Trump expressed concerns regarding the strength in the US dollar. Similar concerns were expressed by Anthony Scaramucci, a senior member of Trump’s economic advisory council, while speaking at the Davos Economic Forum. Meanwhile, average prices climbed 0.6% at the Global Dairy Trade auction, which offered relief following a 3.9% drop in the previous auction and strengthened the bid tone around the Kiwi. The pair could remain solidly bid ahead of the US CPI release and Yellen speech as the unwinding of the Trump trade appears to have gathered pace.NZD/USD Technical LevelsA break above 0.8239 (Dec 14 high) would open the doors to 0.7260 (resistance offered by the rising trend line drawn from Jan 2016 low and May 2016 low) and then to 0.73 (zero levels). On the other hand, a breakdown of support at 0.7189 (Dec 9 high) would expose 0.7150 (100-DMA), under which the losses could be extended to 0.71 (zero levels).

PBOC sets USD/CNY at 6.8525 vs 6.8892

PBOC sets USD/CNY at 6.8525 vs 6.8892

Analysts at ANZ explained that UK PM Theresa May outlined her government’s objectives for Brexit negotiations overnight. Key Quotes: "Essentially th

Analysts at ANZ explained that UK PM Theresa May outlined her government’s objectives for Brexit negotiations overnight.Key Quotes:"Essentially the UK wants a new partnership to include a tariff-free trade agreement, some form of customs union and a phased introduction of new arrangements. The tone of the speech was constructive and optimistic. However, it shed no light on the EU's possible response. Tariff-free trade across goods and services is effectively what the single market is, along with its other two freedoms – the movement of capital and people. The UK taking advantage of the free trade element without the other aspects will be a source of huge debate and something the Europeans have been opposed to. In the short term, the GBP seems to have been discounted enough with inflation now rising and the BoE indicating it is more even-handed in its assessment of the economy and monetary policy."

Fed's Williams keeps crossing the wires, now noting that there is a good case for 3 hikes in 2017 even without fiscal stimulus, adding that there is n

Fed's Williams keeps crossing the wires, now noting that there is a good case for 3 hikes in 2017 even without fiscal stimulus, adding that there is no rate threshold to trigger balance sheet move.

Nomura''s model projects the fix to be 515 pips lower than the previous fix (6.8477 from 6.8992) and 251 pips lower than the previous official spot US

Nomura''s model projects the fix to be 515 pips lower than the previous fix (6.8477 from 6.8992) and 251 pips lower than the previous official spot USD/CNY close of 6.8728. The basket implied change is 565 pips lower than the previous official spot USD/CNY close (6.8163 from 6.8728), Nomura adds. 

Currently, USD/JPY is trading at 112.90, up 0.22% on the day, having posted a daily high at 113.02 and low at 112.57. Wall Street falls back as refla

Currently, USD/JPY is trading at 112.90, up 0.22% on the day, having posted a daily high at 113.02 and low at 112.57.Wall Street falls back as reflation trades take a hit on TrumpUSD/JPY is consolidated in Tokyo after a day of losses overnight on the back of US interest rates falling with the 10yr slipping 5bp to 2.347% on the back of the Trump stimulus and tax reform hopes diminishing by the day, today on the back of Trump's recent comments. The US dollar was also sold off on Trump saying that it is too strong in comparison to the Yuan in particular. USD/JPY dropped from the mid way point of the 113 handle to score lows 100 pips lower overnight.  For the day ahead, attention will be on US headline CPI that has continued to firm as energy deflation drops out. Analysts at Westpac explained that core inflation is to remain a little above 2%yr, where it has been for many months. Also, they note, "Chair Yellen to speak in San Francisco. Detail on potential impact of Trump's policies will be watched out for. Kashkari also speaking."USD/JPY levelsSpot is presently trading at 112.90, and next resistance can be seen at 113.02 (Daily High), 113.04 (Weekly Classic S1), 113.10 (Hourly 20 EMA), 113.20 (Daily Classic S2) and 113.67 (Daily Classic S1). Next support to the downside can be found at 112.78 (Daily Classic S3), 112.66 (Daily Open), 112.63 (Yesterday's Low), 112.57 (Daily Low) and 111.50 (Weekly Classic S2).  

San Francisco Fed President Williams made further remarks on the state of the US economy, noting that more fiscal stimulus could cause higher growth. 

San Francisco Fed President Williams made further remarks on the state of the US economy, noting that more fiscal stimulus could cause higher growth. Headlines via ReutersSays he anticipates a gradual process of rate hikes over next couple of years Says maintaining independence of the Fed is very important We are starting to see some signs of wages picking up More fiscal stimulus could cause growth to be higher than expected Biggest downside risk to US growth is international, particularly China European economy as well as politics also a downside risk to the US Compared with before the election it looks like three will be more fiscal stimulus than we thought Corporate tax system is well overdue for a refresh, very much out of step Will be reassessing forecast as sees new economic and regulatory policies

Analysts at Westpac offered an outlook for the antipodean cross and rates. Key Quotes: "AUD/NZD 1 day: Corrections appear to be continuing and could

Analysts at Westpac offered an outlook for the antipodean cross and rates.Key Quotes:"AUD/NZD 1 day: Corrections appear to be continuing and could run as far as 1.0450 during the days ahead. Thereafter the multi-week rally should resume. AUD/NZD 1-3 month: Higher to the 1.0650-1.0770 area, mainly for valuation reasons. The cross remains well below fair value estimates implied by interest rates, commodity prices and risk sentiment. However we acknowledge the AUD’s higher sensitivity to China news, as well as Australia’s AAA downgrade risk, any such action likely to delay any return towards fair value during the next few months. AU swap yields 1 day: The 3yr and 10yr should open around 2.10% and 2.90%, respectively. AU swap yields 1-3 month: The 3yr has probably based at 1.60%, the RBA expected to sit tight at a 1.5% cash rate for some time. (7 Nov) NZ swap yields 1 day: NZ 2yr swap rates should open at 2.40%, the 10yr at 3.40%. NZ swap yields 1-3 month: The RBNZ ended its easing cycle on 10 Nov and will remain on hold for a long time. That will anchor the short end somewhat (although the 2yr-OCR spread – one measure of stretchedness – could rise further given historical precedents) with the long end free to follow offshore yields. The curve steepening trend should continue."

Australia Westpac Consumer Confidence rose from previous -3.9% to 0.1% in January

Australia Westpac Consumer Confidence Index increased to 97.4 in January from previous 97.3

Analysts at Rabobank explained that though the still weak inflation data and the uncertainty surrounding the 2017 political scene were the reasons for

Analysts at Rabobank explained that though the still weak inflation data and the uncertainty surrounding the 2017 political scene were the reasons for the ECB to prolong QE until year-end, a number of hawks has become uncomfortable with QE.Key Quotes:"We therefore believe that, if we don’t see any major upset in European politics and no new economic headwinds, the Council will not extend QE again. Indeed, talk from various Governing Council members indicates that the December decision was a compromise between the hawks –the most hawkish members didn’t even want to extend at all– and the doves. While the doves may have been able to convince the hawks of the necessity to continue purchases (albeit at a slower pace) by pointing at these uncertainties in the economic outlook, this smoke will have largely cleared come December. Therefore, we currently foresee that the Council (i.e. demanded by the hawks) will want to announce the start of a formal tapering path in December (recall, the April reduction will not be referred to as a taper step by the ECB). Our baseline scenario is for a tapering pace that will bring asset purchases down to zero by mid-2018 (at an average adjustment pace of EUR 10bn/month). Of course, if this is part of the GC’s current plan, they will have to start sounding a bit more hawkish well-ahead of year-end. As explained above, we believe that there is currently no reason for the Council to do this yet and it would definitely need more tangible evidence that underlying inflation is not only moving in the desired direction but also to such an extent that the ECB would have to adjust its medium-term projection higher. However, if the GC doesn’t want to find itself in a similar position as last year –where extension was virtually the only option– that means that Draghi’s speeches will have to turn a bit more hawkish around the middle of this year."

San Francisco Fed's President John Williams crossed the wires, via Reuters, noting that he sees unemployment rate bottoming out at 4.5 pct in the next...

San Francisco Fed's President John Williams crossed the wires, via Reuters, noting that he sees unemployment rate bottoming out at 4.5 pct in the next year.Key headlines (via Reuters):We've reached Fed's goal of full employment U.S. GDP growing 1.5 pct to 1.75 pct this year and next Sees inflation reaching 2 pct in next couple of years Says goal is to support trend GDP growth, not to overshoot too much Sees risks to outlook roughly balanced

USD/JPY MACD opens the gates for further depreciation

A bearish MACD line cross below its median on a daily chart suggests that momentum is to the downside at the moment.

Traders following this technical signal will now more confident that serious inroads to the USD/JPY downside can be achieved. Potential and long-term sellers should find comfort in the fact that this signal hasn't occurred for more than three weeks on the daily charts.

EUR/GBP bears remain unobstructed

The hourly ADX(14) has just crossed above 50, emerging from below the 30 levels where it has been seen during the previous market session.

This is a less frequent technical set-up which suggests the EUR/GBP pair should be on its way to achieve further lows the days ahead.

Caution is advised on a possible overshoot threat to the falling 200-SMA, now printing above the recent close.

USD/CAD staged an extra selloff

Another technical signal, supportive of earlier notions of a bearish development in the USD/CAD is the rate cross below its 200-day SMA.

The move below the moving average is an eye-catching event on the daily time frame charts as it has not happened in several weeks of activity.

USD/JPY MACD opens the gates for further depreciation

A bearish MACD line cross below its median on a daily chart suggests that momentum is to the downside at the moment.

Traders following this technical signal will now more confident that serious inroads to the USD/JPY downside can be achieved. Potential and long-term sellers should find comfort in the fact that this signal hasn't occurred for more than three weeks on the daily charts.

Analysts at ANZ explained that the main action was concentrated in currency and commodity markets overnight. Key Quotes: "The USD weakened across th

Analysts at ANZ explained that the main action was concentrated in currency and commodity markets overnight.Key Quotes:"The USD weakened across the board after Donald Trump called the USD “too strong” in part because China holds down its own currency." "In contrast the GBP rose (1.24 vs USD) on the back of a stronger than expected CPI print and as Theresa May outlined Brexit plans. Global commodity prices pushed to six month highs." "Grains and precious metals led the charge overnight. Grains pushed higher on the back of Argentina floods, reducing yield expectations, and strong US corn and ethanol exports. Elsewhere fixed income markets were choppy, but within tight ranges." "Equity markets were a touch softer with the Dow Jones and S&P 500 both down 0.2%. The FTSE 100 closed down 1.5% due to GBP strength, but other European stock indices were only down 0.1-0.5%."

Currently, AUD/USD is trading at 0.7560, down -0.03% on the day, having posted a daily high at 0.7571 and low at 0.7559. AUD/USD benefited from the T

Currently, AUD/USD is trading at 0.7560, down -0.03% on the day, having posted a daily high at 0.7571 and low at 0.7559. AUD/USD benefited from the Trump reflation trade being unwound some more today after Trump's comments about the dollar and corporation tax with US markets returning from their holidays and long weekend. The DXY dropped after an initial spike and trades on thin ice.US dollar index tumbles toward 100.00Analysts at Westpac explained that the Aussie continues to gain support from solid Chinese bulk prices and the general correction in USD with scope for a test of 0.7570/85 in the very near term, "Should risk aversion build, the 0.7430-50 should provide support."US dollar index tumbles toward 100.00AUD/USD 1-3 month:Analysts at Westpac are expecting the Aussie to drop back below 0.7200 in the medium term, "The US dollar has had an impressive rise since the US election and has potential to rise further during the months ahead. The Fed's assertive tightening projections plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar. Against that coal and iron ore are likely to sustain a good portion of their dramatic rises, and economic data should improve in Q4 and Q1, but these forces are subservient to the US dollar's trend."AUD/USD levelsSpot is presently trading at 0.7560, and next resistance can be seen at 0.7563 (Daily Open), 0.7563 (Monthly High), 0.7563 (Weekly High), 0.7567 (Yesterday's High) and 0.7571 (Daily High). Next support to the downside can be found at 0.7559 (Daily Low), 0.7553 (Daily Classic R3), 0.7536 (Hourly 20 EMA), 0.7530 (Daily Classic R2) and 0.7503 (Daily Classic R1).  

United States 4-Week Bill Auction climbed from previous 0.5% to 0.52%