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Intraday technical levels and trading recommendations for EUR/USD for February 7, 2017

In January 2015, the EUR/USD pair moved below the major demand levels near 1.2100 where historical bottoms were previously set in July 2012 and June 2010.
Hence, a long-term bearish target was projected toward 0.9450. In March 2015, EUR/USD bears challenged the monthly demand level around 1.0570, which had been previously reached in August 1997.
Later in April 2015, a strong bullish recovery was observed around the mentioned demand level.
However, next monthly candlesticks (September, October, and November) reflected a strong bearish rejection around the area of 1.1400-1.1500.
In the longer term, the level of 0.9450 remains a projected target if the current monthly candlestick achieves bearish closure below the depicted monthly demand level of 1.0570.
Otherwise, the EUR/USD pair remains trapped within the depicted consolidation range (1.0570-1.1400).

The long-term outlook for the EUR/USD pair remains bearish as the monthly chart illustrates. Bearish persistence below 1.0575 is needed to pursue this bearish scenario.
On November 14, bearish persistence below 1.0825 (Key-Level 2) allowed further decline toward 1.0570 (demand level) where evident bullish rejection was expressed on November 24.
Shortly after, the Fibonacci Level 50% (1.0825) constituted a recent supply level which offered a valid SELL entry on December 8.
Bearish persistence below the depicted demand level (1.0570) was expected to allow further decline toward 1.0220. However, significant bullish recovery was expressed around the price level of 1.0340 on January 3.
Bullish persistence above 1.0600 allowed further bullish advance toward 1.0825-1.0850 (Fibonacci Level 50%) where bearish rejection and a valid SELL entry were anticipated.
Bullish breakout above 1.0570-1.0600 was executed on January 12.
That is why, the price level of 1.0570 at the moment constitutes a recent demand level to be watched for the bullish rejection if any bearish pullback occurs.


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Fxwirepro: South Korean Won Erases Previous Gain Against Euro, Faces Strong Resistance at 1,227

EUR/KRW is currently trading around 1,223 mark.

Pair made intraday high at 1,224 and low at 1,218 levels.

Intraday bias remains slightly bullish till the time pair holds immediate support at 1,217 mark.

A consistent close below 1,218 will drag the parity down towards key supports around 1,210, 1,203, 1,199 and 1,163 marks respectively.

Alternatively, a sustained close above 1,218 will take the parity higher towards key resistances around 1,227, 1,233, 1,242, 1,252, 1,268, 1,272, 1,280, 1,287 and 1,304 marks respectively.

Seoul shares open down 0.13 pct at 2072.58.

We prefer to take long position in EUR/KRW only above 1,227, stop loss at 1,218 and target of 1,235/1,242.

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Disney Posts Strong Quarterly Profit, Unexpected Revenue Drop

Disney posted first-quarter profits that topped estimates, but revenue fell short of expectations.

In its quarterly earnings report, the company reported first-quarter earnings of $1.55 per share on a revenue of $14.78 billion. The figures denote a 3% annual decline in revenue and a 10% decline in per-share profit. Analysts anticipated the company to report earnings per share of $1.49 per share on a revenue of $15.26 billion. Profit was boosted by a 13% jump from Disney's theme parks across the globe.

Revenue in majority of its business segments also missed estimates, according to Disney. Disney's consumer products and interactive media segment cashed in around $1.48 billion revenue, missing estimates of $1.75 billion, as the segment faced toughed comparison to the success of franchises in the year-prior period.

Revenue for the firm's media networks business clocked in at $6.23 billion, under the estimated $6.42 billion. Operating income in the segment also fell 4% year-on-year. The lower-than anticipated revenue for October to December was weighed down by the decline in advertising revenue at ESPN and due to the movie business' performance compared to its record success a year earlier.

The stock was initially down 2% in extended trading, but reversed losses and was last trading 1.4% lower.

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Dollar Weakens as U.S. Treasury Yields Decline

The dollar weakened after two days of gains, weighed down by the decline in U.S. Treasury yields amid market uncertainty regarding President Donald Trump's economic policies. U.S. benchmark 10-year Treasury note yields were down to a three-week low of 2.325 percent.

Trump is set to meet Japanese Prime Minister Shinzo Abe and the U.S. president is expected to reiterate his opposition to a firm dollar and a weak yen, which might further weigh on the greenback. The Japanese yen climbed, amid the unease surrounding global political risks in Europe, which eventually pulled down U.S. Treasury yields. The dollar index was down 0.2 percent to 100.27, as the US currency weakened by 0.3 percent to 112.05 yen. The euro edged higher versus the dollar from more than one-week lows. Its recent path has been tied to the developments regarding the French presidential elections.

The euro fell 0.3 percent versus the Japanese yen at 119.76 yen, and was higher by 0.1 percent against the dollar at $1.0687.

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Fxwirepro: Japanese Yen Marginally Lower Despite Higher Than expected Core Machinery Orders Data

USD/JPY is currently trading around 112.11 marks.

It made intraday high at 112.13 and low at 111.73 levels.

Intraday bias remains neutral for the moment.

A daily close above 111.93 will take the parity higher towards key resistances around 112.54, 113.48, 113.96, 114.95, 115.61, 117.21, 118.18, 118.66, 119.52 and 120.46 levels respectively.

On the other side, a sustained close below 111.93 will drag the parity down towards key supports around 111.35, 110.85, 109.72, 106.72, 106.03 and 104.96 levels respectively.

Japan’s December machinery orders m/m increases to 6.7 % (forecast 3.1 %) vs previous -5.1 %.

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Wall Street Advances After Trump Promises Announcement on Taxes

U.S. stocks rallied following U.S. President Donald Trump's promise to give an announcement on taxes in the next few weeks. The fourth-quarter earnings season has mostly been strong, as combined earnings of S&P 500 companies have climbed 8.3 percent, its highest in nine quarters.

The Dow Jones industrial average climbed 0.59 percent to finish at 20,172.40, as Nike led advances while Intel lagged behind. The S&P 500 rose 0.58 percent at 2,307.87, as financials led nine sectors higher and utilities and materials were the only decliners. The Nasdaq composite gained 0.58 percent to end at 5,713. Shares of Apple added 0.38 percent and was its largest driver. Eight of the 11 major S&P sectors traded higher.

Coca-Cola dropped 2.6 percent to $40.96 after the company forecasts a decline in full-year adjusted profit. The stock added the most pressure on the Dow and S&P. Shares of Twitter plunged ten percent after the website posted its slowest revenue growth since going public in 2013. Viacom was the largest gainer on the S&P, climbing 4.3 percent after its quarterly profit exceeded analysts' forecasts.

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Fxwirepro: Japanese Yen falls in Early Hours of Asia Despite Higher Than expected Ppi Data

USD/JPY is currently trading around 113.72 marks.

It made intraday high at 113.79 and low at 113.22 levels.

Intraday bias remains bullish till the time pair holds key support at 112.64 marks.

A daily close above 113.22 will take the parity higher towards key resistances around 113.96, 114.95, 115.61, 117.21, 118.18, 118.66, 119.52 and 120.46 levels respectively.

On the other side, a sustained close below 113.22 will drag the parity down towards key supports around 112.64, 111.35, 110.85, 109.72, 106.72, 106.03 and 104.96 levels respectively.

Japan’s January corporate goods price y/y increase to 0.5 % (forecast 0.0 %) vs previous -1.2 %.

Japan’s January corporate goods price m/m stays flat at 0.6 % (forecast 0.2 %) vs previous 0.6 %.

BOJ increases purchase of superlong JGBs in Friday's operation.

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Japan GDP Adds 0.2% On Quarter In Q4

Gross domestic product in Japan gained 0.2 percent on quarter in the fourth quarter of 2016, the Cabinet Office said on Monday.

That missed expectations for an increase of 0.3 percent, which would have been unchanged from the previous three months.

On a yearly basis, GDP gained 1.0 percent - also missing forecasts for 1.1 percent and down from 1.4 percent in the third quarter.

Nominal GDP was up 0.3 percent on quarter, shy of expectations for 0.5 percent and up from 0.2 percent in the three months prior.

The GDP deflator eased 0.1 percent on year - unchanged from the third quarter but beating estimates for a decline of 0.2 percent.

Private consumption was flat on quarter, matching forecasts and down from 0.3 percent in Q3. Business spending was up 0.9 percent on quarter, missing forecasts for 12 percent following the 0.3 percent decline in the previous three months.

Net exports, or shipments minus imports, added 0.2 percentage points to GDP.

The Japanese economy has expanded in four straight quarters, the first such streak in more than three years.

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Indian Government Bond Volatility Surges on RBI’s Unexpected Decision

The Reserve Bank of India's policy making committee ruled to keep interest rates unchanged on Wednesday and shifted from an accommodating stance towards a neutral gear, catching investors and traders off-guard.

The unexpected decision caused India's 10-year yield to jump 31 bps on Wednesday and another 12 bps the following day as investors began to taper their bets for additional easing. A measure of 10-day volatility on noted has since risen to 26.7%, its highest since 2013 from the 4.6% on Thursday. Forex reserves of local government and corporate debt fell by 8.3 billion rupees or $124 million during the release of the policy statement, ending a six-day winning streak.

RBI's decision marks the third time that the panel has taken the route contrary to market expectations since it was established in October. It prompted a fivefold surge in bond volatility and caused benchmark notes to record the biggest lost in almost four years.

Authorities maintained borrowing costs despite stating that the economy was unlikely to rise beyond its inflation target of 5% in March. Consumer prices growth decelerated to 3.41% in December, the slowest since November 2014. RBI is eyeing 4% inflation through 2021 in the medium-term, while allowing it to move in a range between 2%-6%.

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Australia Business Confidence Picks Up Steam - NAB

Business confidence in Australia gained momentum in January, the latest survey from National Australia Bank revealed on Tuesday with an index score of +10.

That's up from +6 in December, and it marks the highest reading in almost three years.

Business conditions also spiked in January with a reading of +16 - up from +10 and touching an almost 10-year high.

"These outcomes are certainly pointing to an improvement in the domestic economy after a soft patch through much of the second half of 2016," NAB chief economist Alan Oster said.

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Greek finance chief chides IMF for delaying bailout deal

Greece's finance head lambasted the International Monetary Fund for wasting its time on internal disaccords, saying it defers a decision on their third rescue agreement.

Greek Finance Minister Euclid Tsakalotos urged the global institution to decide on its participation in the country's €86 billion ($91 billion) bailout package as he reiterated the latter's demands were anchored on wrong figures.

IMF Managing Director Christine Lagarde previously warned Greece won't secure a special sweet accord as she implied the international organization won't withdraw its demands for reforming pension and tax policies.

She said the IMF needs to apply the principles which they apply to all nations since they lend money to the international community. It is determined to avoid repeating events which led to the country's first and second rescue deals.

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Fxwirepro: Usd/sgd Consolidates Around 1.42 Mark, Bias Remains Neutral

USD/SGD is currently trading around 1.4219 marks.

It made intraday high at 1.4232 and low at 1.4191 levels.

Intraday bias remains neutral till the time pair holds key resistance at 1.4250 marks.

A daily close above 1.4250 will test key resistances at 1.4297, 1.4409, 1.4506, 1.4568, 1.4686 and 1.4851 levels respectively.

Alternatively, a consistent close below 1.4200 will drag the parity down towards key supports at 1.4136/1.4083/1.3972/1.3819/1.3775/1.3704/1.3646 levels respectively.

Important to note here that 20D, 30D and 55D EMA heads up and confirms the bullish trend in a daily chart. Current downside movement is short term trend correction only.

Positioning is inconclusive at this point, with prices offering no clear cut signal to initiate a long or short trade. We will continue to remain on sidelines for the time being.

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Gold Prices Lower After Yellen Hints Rate Hike

Gold prices inched down on a higher dollar after U.S. Federal Reserve Chair Janet Yellen indicated a raise in interest rates in the upcoming meeting of the central bank. Spot gold dropped 0.24 percent to $1,225.20 an ounce and U.S. gold futures settled 0.11 percent higher at $1,226.7.

According to Yellen, the Federal Reserve will likely hike interest rates in the upcoming meeting, however she indicated uncertainty regarding economic policy under the administration of U.S. President Donald Trump. Yellen responded to claims on global regulatory talks and said that the Fed holds the authority and has the responsibility to consult with foreign counterparts in order to benefit the United States.

New York's SPDR Gold Trust GLD climbed 0.50 percent. The world's biggest gold-backed exchange-traded-fund (ETF) stated that it has been certified as shariah compliant. In an attempt to spur demand for bullion form investors in majority-Muslim countries.

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Australia January Unemployment Rate Dips To 5.7%

The jobless rate in Australia came in at a seasonally adjusted 5.7 percent in January, the Australian Bureau of Statistics said on Thursday.

That beat forecasts for 5.8 percent, which would have been unchanged from the December reading.

The Australian economy added 13,500 jobs in January to 11,998,200, beating forecasts for 10,000 after collecting 13,500 jobs in the previous month.

Full-time employment decreased 44,800 to 8,125,700 and part-time employment increased 58,300 to 3,872,500.

"We are still seeing strong growth in part-time employment in January 2017, and in recent months, increasing growth in full-time employment," said the General Manager of ABS' Macroeconomic Statistics Division, Bruce Hockman.

The participation rate slipped to 64.6 percent, shy of expectations for 64.7 percent, which would have been unchanged.

Unemployment decreased 19,300 to 720,200. The number of unemployed persons looking for full-time work decreased 16,000 to 511,000 and the number of unemployed persons only looking for part-time work decreased 3,300 to 209,200.

Monthly hours worked in all jobs increased 10.2 million hours to 1,682.7 million hours.

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Yahoo and Verizon Nears Closing Revised Acquisition Agreement

Verizon Communications Inc. is on the verge of brokering a revised agreement to takeover Yahoo's core internet segment, sources said.

The deal will be valued $250-$250 million less than the initially agreed price of $4.38 billion, according to people privy to the matter, as the internet group reportedly agreed to a price cut.

The deal was put cast under doubt last year after the internet company disclosed two massive cyber attacks which compromised the information and data of millions of its users. Verizon is looking to combine Yahoo's internet assets and ad tech tools with its AOL unit.

Since last year Verizon has been trying convince Yahoo to revise the sale terms agreement in order to mirror the economic damage from the cyber attacks. A source stated that the deal, which could be closed as early as this week, will the two parties sharing liability from possible lawsuits linked to the data breaches.

Reports of the renegotiated terms of the deal was first seen on Bloomberg. A source said the price cut was likely to be close to $250 million.

Shares of Yahoo advanced 1.5% to $44.69 in afternoon trading while Verizon shares edged down 0.7% $47.93.

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OPEC could prolong output curb pact if glut remains: sources

OPEC could apply deeper cuts or prolong the production limit pact it struck with non-members should global oil inventories fail to hit its output goal, people familiar with the group disclosed.

Sources said participating nations must fully adhere with the deal and the expansion in crude demand will need to remain strong in order for global crude stockpile to decline by around 300 million barrels to the five-year average.

They added inventories will drop if everybody will adhere to the accord 100%. By around mid-year, sources noted it will reach close to the five-year median.

The oil cartel will gather on May 25 to determine on supply rules. Non-members are invited to participate in the meeting as well.

Last month, OPEC and non-OPEC members fulfilled 93% adherence with the committed cuts, with Saudi Arabia, the institution's de facto chief, contributing the largest portion.

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Fxwirepro: Kiwi falls Against Major Peers As New Zealand’s Retail Sales, Core Retail Sales Data Fail to Meet Expectations

AUD/NZD is currently trading around 1.0670 marks.

Pair made intraday high at 1.0675 and low at 1.0655 marks.

Intraday bias remains bullish till the time pair holds immediate support at 1.0634 marks.

A daily close below 1.0662 will take the parity down towards key supports around 1.0594, 1.0552, 1.0516, 1.0460, 1.0412, 1.0370, 1.0326, 1.0237, 1.0184, 1.0109 and 1.0053 marks respectively.

On the other side, a sustained close above 1.0662 will drag the parity higher towards key resistances at 1.0735/1.0754/1.0823/1.0976 (January 2016 high) /1.1062 (30D EMA) levels respectively.

New Zealand’s Q4 s/adj real retail sales +0.8 pct q/q.

New Zealand’s Q4 s/adj actual retail sales +4.2 pct y/y.

New Zealand’s January month s/adj PMI 51.6.

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UK House Prices Rise 2.0% In February

The average asking price for a house in the United Kingdom was up 2.0 percent on month in February, the latest survey from property tracking website Rightmove showed on Monday.

That was roughly in line with estimates, and up from 0.4 percent in January.

On a yearly basis, house prices were up 2.3 percent - shy of forecasts for 2.8 percent and down from 3.2 percent in the previous month.

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CNPC Purchases Stake in $22 Billion Oil Venture from Abu Dhabi

China National Petroleum Corp. purchased a stake in Abu Dhabi's biggest oil concession as the emirate, which holds six percent of global crude reserves, resorts to Asia for investment in order to increase output capacity. Abu Dhabi National Oil Co. granted CNPC an eight percent stake in its onshore venture in exchange for a $1.8 billion signing bonus, according to Adnoc.

CNPC will join the Abu Dhabi firm for the Onshore Petroleum Operations, or ADCO. Other companies like BP and Total respectively hold ten percent stakes in the venture, while South Korea's Energy Corp. owns three percent and Inpex Corp. of Japan holds five percent. Abu Dhabi is planning to keep a 60 percent stake in ADCO and is looking for an investor for the remaining four percent, according to a statement from Adnoc.

Abu Dhabi intends to raise production capacity to 3.5 million barrels per day by 2018. ADCO produces nearly half of Abu Dhabi's approximately three million barrels of daily crude output.

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Announcement: Moody's: Singapore Banks' Under Cost and Net Interest Margin Pressures, But Should Subside in 2017

Moody's Investors Service says that the full year and Q4 2016 (October-December 2016) financial results of the three largest banks in Singapore by assets reveal a further decline in profitability and mixed asset quality performance, but pressure on credit costs and net interest margins (NIMs) should subside in 2017, providing support to profitability.

"The continued asset quality challenges at DBS Bank Ltd. (DBS, Aa1/Aa1 stable, a1) and Oversea-Chinese Banking Corp Ltd (OCBC, Aa1/Aa1 stable, a1) are in line with our expectations, and were mainly driven by their exposures to the embattled oil & gas service industry," says Eugene Tarzimanov, a Moody's Vice President and Senior Credit Officer.

"By contrast, asset performance at United Overseas Bank Limited (UOB, Aa1/Aa1 stable, a1) has improved, and was better than we had expected, driven by fewer new nonperforming loans (NPLs) related to the oil & gas industry, as well as recoveries and write-offs," adds Tarzimanov.

Moody's conclusions were contained in a just-released report on banks in Singapore, "Banks - Singapore: Full Year and Q4 2016 Results Reflect Mixed Asset Quality and Lower Profitability".

Moreover, return on assets continued to decline for the three banks in 2016, due to elevated credit costs and weaker revenue growth, with revenue pressured by NIM compression. The banks' asset quality and profitability challenges were key drivers behind our downgrade of their baseline credit assessments in December 2016.

"Despite these challenges, the three banks' loss-absorption buffers have remained robust; specifically, they recorded higher fully loaded Common Equity Tier 1 ratios (CET1) during 2016 — due to slow growth in risk-weighted assets (RWAs) — which provide support to their very high credit ratings," says Tarzimanov.

While we expect asset quality challenges posed by the troubled oil & gas service companies to persist over the next few quarters, we note that new non-performing asset formation rates fell in Q4 2016 from their peaks in Q2 2016, signaling a potential stabilization in asset quality metrics for the banks in 2017.

Furthermore, even if oil market conditions deteriorate, we see the banks as more resilient in coping with such a situation, because many weak firms in the oil and gas service industry have either already defaulted, or restructured their liabilities. The banks had also mostly trimmed their exposure to oil & gas service companies during 2016, and related loans now represent only 2% of their total loans.

Outside their oil & gas exposure, the quality of the banks' remaining loan portfolio, including their regional exposures, was fairly stable in 2016.

As for events overseas that will affect the banks, we expect around three interest rate increases by the US Federal Reserve Board in 2017. This development will have a pass-through effect on interest rates in Singapore through the currency channel. According to the banks in Singapore, the pass-through effect could be in the 40%-60% range.

Capital strengthening measures — such as the application of scrip dividend schemes where shareholders receive shares instead of cash dividends — will also help the banks maintain their current capital levels. We note that DBS and UOB will offer scrip dividends for 2016.

Moreover, the banks have indicated that the incremental increase to RWAs resulting from the impending changes to Basel regulatory rules (Basel 3.5) would be fairly small. DBS and OCBC have indicated that the changes will result in an increase in RWAs of around 2%-4%, while UOB has put the impact at less than 1%.

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