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Mid-Day Report: Sterling Soars as Unemployment Dropped to 7.1% Sterling strengthens broadly today, except versus Aussie, after stronger than expected employment data. Unemployment rate dropped to 7.1% in November, down from 7.4% and beat expectation of 7.3%. The unemployment rate is now just 0.1% above the 7% threshold, which BoE stated in the forward guidance that they will start considering rate hikes from the current 0.50% level. There are some talks that BoE would revise the forward guidance and lower the unemployment threshold to 6.5%. This was supported by the minutes which noted that "members... saw no immediate need to raise Bank Rate even if the 7% unemployment threshold were to be reached in the near future". On the other hand, some economists argued that BoE wouldn't change the threshold, but opt for rate hike later in the year. Also released from UK, the claimant count dropped less than expected by -24k in December. Public sector net borrowing dropped to GBP 10.4b in December. Full Report Here...
Featured Technical Report
GBP/USD Mid-Day Outlook Daily Pivots: (S1) 1.6420; (P) 1.6453; (R1) 1.6507; More... GBP/USD rises sharply today and intraday bias is now mildly on the upside for 1.6603 resistance. Break will confirm resumption of the larger up trend and should target 61.8% projection of 1.4813 to 1.6259 from 1.5853 at 1.6747, which is close to 1.6476 next medium term resistance. On the downside, below 1.6450 minor support will delay the bullish case and suggest that consolidation pattern from 1.6603 is going to extend further sideway. But in any case, outlook will stay bullish as long as 1.6126 support holds. Read more... EURUSD Technical Outlook USDJPY Technical Outlook GBPUSD Technical Outlook USDCHF Technical Outlook USDCAD Technical Outlook AUDUSD Technical Outlook EURJPY Technical Outlook EURGBP Technical Outlook EURCHF Technical Outlook GBPJPY Technical Outlook

FX Outlook 2014

GBP To Outperform Euro, Underperform USD

Strong economic growth in the UK should support GBP against other key European currencies, resulting in our forecasts that the pound would strengthen against both the euro and the defensive Swiss franc. UK's job market has improved significantly and the BOE would likely revised lower its threshold of unemployment rate that might lead the consideration of a rate hike. Yet, the revision should only have short-term, if any, negative impacts, on sterling. With domestic demand the key driver of recent growth, the economic environment in the country should allow greater tolerance of currency strength. We remain cautious in GBPUSD, anticipating the pair to fall this year amid expectations that US' growth would be stronger. Moreover, the Fed's kickoff of QE tapering vs BOE's sidelined stance could widen the yield differential.

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2014 Elliott Wave Forecast

Economic Indicators Update

GMT	Ccy	Events	Actual	Consensus	Previous	Revised
0:30	AUD	CPI Q/Q Q4	0.80%	0.50%	1.20%
0:30	AUD	CPI Y/Y Q4	2.70%	2.50%	2.20%
0:30	AUD	CPI RBA Trimmed Mean Q/Q Q4	0.90%	0.60%	0.70%
0:30	AUD	CPI RBA Trimmed Mean Y/Y Q4	2.60%	2.30%	2.30%
0:30	AUD	CPI RBA Weighted Median Q/Q Q4	0.90%	0.60%	0.60%
0:30	AUD	CPI RBA Weighted Median Y/Y Q4	2.60%	2.30%	2.30%
3:30	JPY	BoJ Rate Decision
4:30	JPY	All Industry Activity Index M/M Nov	0.30%	0.40%	-0.20%	-0.40%
9:30	GBP	Claimant Count Change Dec	-24.0K	-32.3K	-36.7K
9:30	GBP	Claimant Count Rate Dec	3.70%	3.70%	3.80%
9:30	GBP	ILO Unemployment Rate (3M) Nov	7.10%	7.30%	7.40%
9:30	GBP	BoE Minutes	0--0--9	0--0--9	0--0--9
9:30	GBP	Public Sector Net Borrowing (GBP) Dec	10.4B	12.3B	14.8B
10:00	CHF	ZEW(Expectations) Jan	36.4		39.4
15:00	CAD	BoCRate Decision	1.00%	1.00%	1.00%

Orders and Options Watch

US Session: Orders and Options Watch

GBP: The British pound has rallied in London on stronger-than-expected UK job report, offers at 1.6490-1.6520 area, 1.6545 and 1.6575 were filled, however, more sell orders are still seen from 1.6590 up to 1.6610 (more stops above). On the downside, bids are raised to 1.6520-30 and also in good size at 1.6490-00, more buy orders are noted at 1.6450 and 1.6435, fresh demand should emerge from 1.6410 down to 1.6390.

Trade Idea Update: EUR/USD - Hold short entered at 1.3580

Current rebound suggests caution on our bearishness but as long as intra-day resistance at 1.3580 holds, bearishness remains for recent decline to resume after consolidation, below support at 1.3508 would confirm recent decline from 1.3894 top has resumed for weakness to 1.3480-85 (61.8% projection of 1.3894-1.3548 measuring from 1.3699) but oversold condition should limit downside and 1.3450 would hold

Trade Idea Update: USD/JPY - Hold long entered at 104.30

Despite intra-day initial brief fall to 103.97, as the greenback found renewed buying interest there and has rebounded, retaining our bullishness for recent upmove to resume after consolidation, above last week's high of 104.92 would signal correction from 105.44 has ended at 102.86 earlier and bring further gain towards 105.35, break there would confirm upmove has resumed for retest of 105.44