OUTLOOK: Price Signal Summary - Bullish Trend Structure In Gold Intact

Treasuries are off lows that were inspired by earlier EGB pressure but have still broadly extended a bear cycle that has seen a number of steps lower. Today’s focus is squarely on the FOMC decision, SEP and Powell’s press conference whilst data is headlined by the delayed ECI for Q3. 

• Cash yields are 0.3-1.1bp higher on the day, with increases led by 5s and 7s.
• 2Y yields sit at 3.621% (+0.7bp) having earlier seen 3.625% for the highest since Nov 5, Oct 30 and before that late September.
• 5s30s have slowly extended a sizeable flattening since mid-last week, at 101.3bp vs a fresh two and a half month high of 111bp on Dec 3.
• TYH6 trades at 111-31 (-04) off an earlier latest low 111-29, on reasonable cumulative volumes of 290k for an overnight session ahead of a FOMC decision.
• It has previously cleared an important short-term support at 112-07 (Nov 5 low) and opened 111-19/111-11 (Fibo projections of Oct 17-Nov5-25 price swing) after which lies the round 111-00. In the event the SEP and Powell fail to meet hawkish expectations, resistance meanwhile is seen at 112-10+ (Nov 20 low) before 112-25+ (20-day EMA).
• FOMC decision + SEP (1400ET), Powell press conference (1430ET)
• Data: Weekly MBA mortgage data (0700ET), Employment Cost Index Q3 (0830ET – shutdown catch-up), Monthly Treasury Statement (1400ET)
• Bill issuance: US Tsy $69B 17W bill auction (1130ET)
• Politics: Trump participates in roundtable (1400ET), Trump greets pastors (1700ET)

• In FX, EURUSD is in consolidation mode but continues to trade closer to its recent highs and a bull cycle remains intact. The breach of key short-term resistance at 1.1656, the Nov 13 high and a bull trigger, highlights a potential reversal and opens 1.1694 next, the 50.0% retracement of the Sep 17 - Nov 5 bear leg. A breach of this retracement point would strengthen the developing bull theme. Initial support to watch is 1.1607, the 20-day EMA. A breach of the EMA would be bearish.
• The latest pause in GBPUSD appears to be a flag formation - a bullish continuation signal. This reinforces the current uptrend. The breach of the 50-day EMA undermined a recent bearish theme and highlights a stronger reversal. Scope is seen for a climb towards 1.3452, a 50.0% retracement of the Sep 17 - Nov 4 bear leg. Initial firm support is seen at 1.3241, the 20-day EMA. A move below this average would be a bearish development.
• Recent weakness in USDJPY appears to have been a correction and the recovery from last Friday’s low signals the end of the corrective phase. Moving average studies are in a bull-mode position highlighting a dominant medium-term uptrend. Sights are on the 158.00 handle. Key short-term support to watch lies at the 50-day EMA at 153.71. A clear breach of the average would signal scope for a deeper retracement.

Reeves on UK-US deal on drug pricing which is reported to cost an extra GBP3bln/year: "That was part of the agreement in the Spending Review that... would be absorbed. The costs are actually quite low in the first couple of years... But obviously at future spending obviously, everything in the next spending review will be set out in the next spending review.