Global FX Insights by LMAX Exchange Research & Analytics Comprehensive daily market research and analytics, with insightful commentary and charts

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Get Global FX Insights via email - click here Global FX Insights by LMAX Exchange Research & Analytics Comprehensive daily market research and analytics, with insightful commentary and charts ECB

at his press conference, clearly a worry to those who have priced in a lot of their Dollar bullishness on these campaign promises. ECB Minutes and Fed speak ahead.

1 Get Global FX Insights via - click here Global FX Insights by LMAX Exchange Research & Analytics Comprehensive daily market research and analytics, with insightful commentary and charts ECB Minutes and Fed Speak Wake-up Call Into Thursday, we have many Dollar bulls reassessing the Trump trade after the President-elect failed to make any mention of taxes, deregulation or fiscal stimulus at his press conference, clearly a worry to those who have priced in a lot of their Dollar bullishness on these campaign promises. ECB Minutes and Fed speak ahead. Technical highlights EURUSD Bearish below GBPUSD Upside still limited USDJPY Seeking higher low EURCHF Gravitating to base AUDUSD Should be well capped USDCAD Dips to be supported NZDUSD Waiting for next drop US SPX 500 Strong uptrend GOLD (spot) Sights on 1200 Feature USDTRY Parabolic Daily Video Fundamental highlights EURUSD Euro looks to tone of ECB Minutes GBPUSD Pound quickly forgets about trade data USDJPY Yen gets set to take in wave of Fed speak EURCHF Risk liquidation a worry for SNB policy AUDUSD Run in base metals gives added prop USDCAD OIL demand continue to benefit Loonie NZDUSD ANZ commodity price decline ignored US SPX 500 Investors keep ignoring warning signs GOLD (spot) Yellow metal increasingly attractive Feature USDTRY CBRT closely monitoring Five day performance v. US dollar Suggested reading Heed Those Asian Bond Bankers, C. Langner, Bloomberg (January 11, 2017) VIX Depressed, Uncertainty Elevated. Huh?, J. Thomson, Gavekal (January 11, 2017) Page 1 of 12

2 EURUSD technical overview The major pair remains confined to a downtrend, recently trading to its lowest levels since Next key support comes in the form of the 2003 low at , below which exposes an immediate drop to parity. At this point, look for the current rally to be very well capped ahead of , with only a break back above to compromise the bearish outlook. R Dec high Strong R Jan high Medium S Jan low Medium S Jan low Strong EURUSD fundamental overview The Euro has enjoyed an impressive recovery post Trump press conference after the President-elect let down US Dollar bulls after failing to make and mention of taxes, deregulation or fiscal stimulus. Today the focus will shift to the ECB Minutes and Eurozone industrial production, followed by US initial jobless claims and wave of Fed speak from Fed's Harker, Evans, Lockhart, Bullard and Kaplan, capped off with a Town Hall speech from the Fed Chair late in the day. As far as the ECB Minutes go, expect Draghi and company to continue to err on the dovish side. Page 2 of 12

3 GBPUSD technical overview The latest round of setbacks have stalled out just shy of major psychological barriers at and ahead of the critical +30 year low from October 2016 at Wednesday s impressive bullish outside day performance could now set the stage for a more significant corrective rally towards But overall, while the market holds below , the downtrend remains firmly intact. R Jan high Strong R Jan high Medium S Jan low Medium S Jan low Strong GBPUSD fundamental overview Wednesday was a wild day for the Pound which initially came crashing down on discouraging UK trade data and pre- Trump enthusiasm, before reversing course sharply after the President-elect s press conference. Trump s failure to make and mention of taxes, deregulation or fiscal stimulus was the driving force behind the Pound s jump into the end of the day as many Dollar bulls reconsidered long exposure and the Trump trade. Still, with the Brexit overhang not going away, it seems any upside could continue to be met with formidable sell interest. Looking ahead, we get US initial jobless claims and a wave of Fed speak featuring Harker, Evans, Lockhart, Bullard, Kaplan and Yellen. Page 3 of 12

4 USDJPY technical overview Daily studies are now unwinding from stretched levels which suggests additional upside could be limited in favour of a more significant healthy corrective pullback. The recent bearish break below confirms and could open a deeper drop towards But ultimately, any setbacks are expected to be well supported ahead of in favour of that next higher low and bullish resumption towards R Jan high Strong R Jan high Medium S Jan low Medium S Dec low Strong USDJPY fundamental overview The major pair continues to extend its correction lower into Thursday, with this latest round of setbacks coming from broad based US Dollar selling in the aftermath of the President-elect s press conference. Trump s failure to talk about taxes, deregulation and fiscal stimulus was a major let down for Dollar bulls, opening the door for some players to reconsider their long US Dollar exposure. Looking ahead, we get US initial jobless claims and a wave of Fed speak featuring Harker, Evans, Lockhart, Bullard, Kaplan and Yellen. Page 4 of 12

5 EURCHF technical overview A recent close below which had been defined as the bottom of a multi-week range strengthens the bearish outlook and opens the door for an acceleration of declines towards the 2016 low at At this point, a daily close back above would be required to take the immediate pressure off the downside and suggest the market is once again looking settle back into the previous range. R Dec high Strong R Dec high Strong S Mid-Figure Medium S Jun/2016 low Strong EURCHF fundamental overview The SNB has unquestionably had a challenging time of late, with the central bank forced to contend with an ongoing wave of demand for the Swiss Franc. The central bank has been committed to its mandate of ensuring the Franc does not appreciate further through monetary policy and intervention tools. Though despite all efforts, the Franc continues to want to appreciate against the Euro. It seems the strategy has been to buy Euro when risk comes off and to do nothing when risk is back on and natural flows should be CHF bearish. But the trouble is, with risk on and global equities elevated, the Franc is still not depreciating as much as the SNB would probably like to see and if global risk sentiment deteriorates, it could invite a massive wave of demand for the Franc that the SNB will be unable to offset. Page 5 of 12

6 AUDUSD technical overview The market has entered a healthy corrective phase after setbacks stalled shy of key medium-term support at in late December. Still, overall, the broader downtrend remains intact, with only a break and daily close back above to compromise this outlook. Look for a fresh lower top over the coming sessions ahead of renewed downside. R Dec high Strong R Psychological Medium S Jan low Medium S Jan low Strong AUDUSD fundamental overview The Australian Dollar was a big winner in Wednesday trade, outperforming across the board on impressive performance in the base metals. Of course, the commodity currency also got a major lift from the broad based wave of US Dollar selling after Trump let USD bulls down in his press conference, failing to touch on some of the major campaign topics of taxes, deregulation or fiscal stimulus. Looking ahead, we get US initial jobless claims and a wave of Fed speak featuring Harker, Evans, Lockhart, Bullard, Kaplan and Yellen. Page 6 of 12

7 USDCAD technical overview This market looks to be in the process of carving out a longer-term base off the , 2016 low. Look for any additional weakness to be supported above in favour of the next major upside extension towards a measured move objective into the area. Ultimately, only a daily close back below would delay the constructive outlook. R Jan high Strong R Jan high Medium S Figure Medium S Dec low Strong USDCAD fundamental overview The latest recovery in the price of OIL certainly has been a big help to the Canadian Dollar, with the Loonie rallying back towards its December high against the Buck. Of course, the broad based selling in the US Dollar post Trump presser has also contributed to Canadian Dollar gains. Looking ahead, we get some Canada housing data, US initial jobless claims and wave of Fed speak from Harker, Evans, Lockhart, Bullard, Kaplan and Yellen. Page 7 of 12

8 NZDUSD technical overview Despite this latest correction, the overall pressure remains on the downside with the market expected to be very well capped on rallies ahead of A recent break below confirms a lower top at , opening the next major downside extension towards medium-term support at R Dec high Strong R Figure Medium S Jan low Medium S Dec low Strong NZDUSD fundamental overview The New Zealand Dollar hasn t really been bothered by the December ANZ commodity price which came in a good deal lower than the previous print. Instead, this currency is tracking with the rest of the currency market, benefitting from the post Trump press conference US Dollar selloff and rallying commodities prices. Looking ahead, we get US initial jobless claims and a wave of Fed speak featuring Harker, Evans, Lockhart, Bullard, Kaplan and Yellen. Page 8 of 12

9 US SPX 500 technical overview While this latest surge back to a fresh record high could compromise what has been the possibility for a toppish structure, the risk is still tilted to the downside if the market fails to sustain gains beyond 2200 over the coming weeks. But ultimately, at this point, any topside failure will also need to be met with a break back below 2180 to once again encourage the possibility for a significant bearish structural shift. Next resistance comes in at 2300, while initial support comes in at 2232, with a break below to take the immediate pressure off the topside. R Psychological Strong R Jan/Record high Medium S Dec low Strong S Dec low Strong US SPX 500 fundamental overview The ongoing support for US equities has been more than impressive, particularly at a time when the Fed is embarking on a more hawkish path to policy normalisation and the Trump administration could bring in policies that threaten prospects for global growth. This leaves financial markets vulnerable to any shocks and exposed to intense periods of additional risk liquidation going forward, especially at a time when monetary policy around the rest of the globe is exhausted with very little left in the tank. Last Friday s uptick in hourly earnings and another round of hawkish Fed speak, with some officials even warning of the possibility for more than three hikes this year, should be a concern to investors. Looking ahead, investors will get more insight from the Fed, with Harker, Evans, Lockhart, Bullard, Kaplan and Yellen all due. Page 9 of 12

10 GOLD (SPOT) technical overview The market has bounced out from critical 1120 area support in the form of a 78.6% fib retracement off of the low-high move, with the hold above this level keeping the longer-term basing outlook intact. Daily studies are confirming, looking more constructive after trading into oversold territory. A daily close above 1200 will strengthen the bullish shift in structure and open the door for a push back towards the 2016 peak at Only below 1120 negates. R Nov high Strong R Psychological Strong S Jan low Medium S Dec low Strong GOLD (SPOT) fundamental overview Solid demand from medium and longer-term players continues to emerge on dips despite an intense round of setbacks in late 2016, with these players more concerned about the limitations of exhausted monetary policy, extended global equities, systemic risk and a bet that record low inflation will turn up even faster in a Trump presidency. All of this will almost certainly continue to keep the commodity in demand, with many market participants fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax. Page 10 of 12

11 Feature technical overview USDTRY has exploded to the topside, with the market extending its violent run of fresh record highs, closing in on critical psychological barriers at The parabolic price action does however warn of some form of an intense corrective pullback around the corner to allow for severely stretched studies to unwind. The market is highly extended across all three major time frames, with the daily weekly and monthly charts severely overbought. A break and close back below is required to take the immediate pressure off the topside. R Psychological Strong R Jan/Record High Medium S Jan low Medium S Jan low Strong Feature fundamental overview The Turkish Lira has been in an absolute freefall these past several months, with the currency s declines accelerating dramatically in early 2017 to fresh record lows. Political instability, terrorist activity and an already vulnerable Turkish economy have contributed to the declines, while on the other side, the Lira isn t getting any help from the US Dollar, which has been driving higher on favourable interest rate differentials. Attempts to calm the market have done nothing to slow the depreciation thus far after the CBRT announced a 50bp cut to reserve requirements across all maturities and reduced interbank borrowing limits. But the CBRT has also said that market developments will be closely watched with additional steps to be taken if necessary. Page 11 of 12

12 Any opinions, news, research, analyses, prices or other information ("information") contained on this document, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Exchange has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry. LMAX Exchange will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Exchange does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Exchange or any other FX, Spread Betting and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately. LMAX Exchange will clearly identify and mark any content it publishes or that is approved by LMAX Exchange. FX and CFDs are leveraged products that can result in losses exceeding your deposit. They are not suitable for everyone so please ensure you fully understand the risks involved. The information on this website is not directed at residents of the United States of America, Australia (we will only deal with Australian clients who are wholesale clients as defined under the Corporations Act 2001), Canada (although we may deal with Canadian residents who meet the Permitted Client criteria), Singapore or any other jurisdiction where FX trading and/or CFD trading is restricted or prohibited by local laws or regulations. LMAX Limited operates a multilateral trading facility. LMAX Limited is authorised and regulated by the Financial Conduct Authority (firm registration number ) and is a company registered in England and Wales (number ). Our registered address is Yellow Building, 1A Nicholas Road, London, W11 4AN. Page 12 of 12

Global FX Insights by LMAX Exchange Research & Analytics Comprehensive daily market research and analytics, with insightful commentary and charts

Get Global FX Insights via email - click here Global FX Insights by LMAX Exchange Research & Analytics Comprehensive daily market research and analytics, with insightful commentary and charts Yellen Props