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For the 24 hours to 23:00 GMT, the USD declined 0.58% against the CAD and closed at 1.2623.

In the Asian session, at GMT0300, the pair is trading at 1.2638, with the USD trading 0.12% higher against the CAD from yesterday's close.

The pair is expected to find support at 1.2588, and a fall through could take it to the next support level of 1.2538. The pair is expected to find its first resistance at 1.2681, and a rise through could take it to the next resistance level of 1.2724.

Ahead in the day, market participants will look forward to Canada's manufacturing shipments data for May.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

Short term DXY (USD Index) Elliott Wave view suggests the decline from 6/20 peak (97.87) is unfolding as a Zigzag Elliott Wave structure. Down from 97.87 high, decline to 95.47 ended Minor wave A, and bounce to 96.51 high ended Minor wave B. Wave C is unfolding as an Elliott wave Impulse structure with extension where Minute wave ((i)) ended at 95.75, Minute wave ((ii)) ended at 96.2, and Minute wave ((iii)) ended at 94.47. Minute wave ((iii)) is subdivided into another impulsive wave of a smaller degree. Minutte wave (i) ended at 95.51, Minutte wave (ii) ended at 95.98, Minutte wave (iii) ended at 95.01, Minutte wave (iv) ended at 95.24, and Minutte wave (v) of ((iii)) ended at 94.47.

Currently Minutte wave ((iv)) is in progress to correct cycle from 7/10 high, and while pivot at 7/10 high holds, expect Index to turn lower again. We don’t like buying the Index and expect bounces to find offer in 3, 7, or 11 swing for more downside.

DXY 1 Hour Elliott Wave Chart

Daily Pivots: (S1) 1.1488; (P) 1.1536 (R1) 1.1600; More.....

Intraday bias in EUR/USD remains on the upside for 1.1615 key resistance. Decisive break there will pave the way to 1.2 handle next. On the downside, below 1.1489 minor support will turn intraday bias neutral and bring consolidations. But near term outlook will remain bullish as long as 1.1312 support holds.

In the bigger picture, the firm break of 1.1298 resistance further affirm medium term reversal. That is, an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Further rise would be seen to 55 month EMA (now at 1.1756). Sustained break there will pave the way to 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 next. This will now remain the favored case as long as 1.1118 support holds.

Daily Pivots: (S1) 1.2988; (P) 1.3056; (R1) 1.3109; More...

Intraday bias in GBP/USD remains neutral for consolidation below 1.3125 temporary top. Another rise would be seen as long as 1.2811 support holds. Break of 1.3125 will target 61.8% projection of 1.2108 to 1.3047 from 1.2588 at 1.3168. Overall, choppy rebound from 1.1946 is seen as a corrective pattern, hence, we'd be cautious on strong resistance from 1.3168 to limit upside. But firm break of 1.3168 will bring further rise towards 1.3444 key resistance. Meanwhile, break of 1.2811 support will be the first sign of reversal and will turn bias to the downside to target 1.2588 key support next.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern that is still in progress. While further upside is expected, overall outlook remains bearish as long as 1.3444 key resistance holds. Larger down trend from 1.7190 is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

Daily Pivots: (S1) 0.9503; (P) 0.9569; (R1) 0.9614; More...

Intraday bias in USD/CHF remains on the downside for the moment. Current fall from 1.0342 should target 0.9443 key support level next. At this point, we'd expect strong support from there to bring rebound. Nonetheless, break of 0.9699 resistance is needed to indicate short term bottoming. Otherwise, outlook will remain bearish in case of recovery.

In the bigger picture, USD/CHF is still bounded in medium term range of 0.9443/1.0342 for the moment. Consolidative trading would likely continue and medium term outlook remains neutral. Break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. Meanwhile, downside attempts should be contained by 0.9443 key support level. However, sustained break of 0.9443 will carry larger bearish implication and target 0.9 handle.

Daily Pivots: (S1) 111.60; (P) 112.13; (R1) 112.59; More...

Intraday bias in USD/JPY remains on the downside for the moment. Sustained break of 55 day EMA (now at 112.02) will extend the fall from 114.49 to 108.81 support. As noted before, whole correction from 118.65 is possibly still in progress. Break of 108.81 will confirm and target 61.8% retracement of 98.97 to 118.65 at 106.48. On the upside, above 112.86 minor resistance will turn intraday bias neutral first.

In the bigger picture, the corrective structure of the fall from 118.65 suggests that rise from 98.97 is not completed yet. Break of 118.65 will target a test on 125.85 high. At this point, it's uncertain whether rise from 98.97 is resuming the long term up trend from 75.56, or it's a leg in the consolidation from 125.85. Hence, we'll be cautious on topping as it approaches 125.85. If fall from 118.65 extends lower, down side should be contained by 61.8% retracement of 98.97 to 118.65 at 106.48 and bring rebound.

Daily Pivots: (S1) 0.7821; (P) 0.7881; (R1) 0.7977; More...

Intraday bias in AUD/USD remains on the upside for 61.8% projection of 0.6826 to 0.7833 from 0.7328 at 0.7950. Decisive break there will target 100% projection at 0.8335 next. On the downside, below 0.7838 minor support will turn intraday bias neutral and bring pull back. But downside should be contained by 0.7711 resistance turned support to bring rally resumption.

In the bigger picture, current development suggests that rebound from 0.6826 is developing into a medium term rise. There is no confirmation of trend reversal yet and we'll continue to treat such rebound as a corrective pattern. But in any case, further rise is now expected to 55 month EMA (now at 0.8100) or even further to 38.2% retracement of 1.1079 to 0.6826 at 0.8451. Break of 0.7328 support is needed to confirm completion of the rebound. Otherwise, further rise is now expected.

Daily Pivots: (S1) 1.2571; (P) 1.2636; (R1) 1.2692; More....

USD/CAD continues to lose downside momentum as seen in 4 hour MACD. But there is no sign of bottoming yet. Intraday bias stays on the downside. Current decline from 1.3793 should target a test on 1.2460 low next. Meanwhile, considering bullish convergence condition in 4 hour MACD, break of 1.2770 will indicate short term bottoming In such case, there will be lengthier consolidation before staging another decline.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. Fall from 1.3793 is seen as the third leg and should target 50% retracement of 0.9406 to 1.4869 at 1.2048. At this point, we'd look for strong support from there to contain downside and bring rebound. However, firm break there will target 100% projection of 1.4689 to 1.2460 from 1.3793 at 1.1564.

Dollar index continues to hover around 10 month low as the greenback stays generally weak, except versus Sterling. Treasury yields also extended recent pull back overnight. 10 year yield dropped -0.046 to close at 2.263, comparing to this month's high at 2.396. Markets saw the collapse of the second healthcare bill in US Senate as another sign of US President Trump's failure in pushing through his agenda. And it's doubtful when Trump would finally start working his pro-growth policies, including tax reforms, through the Congress. On the other hand, stocks were resilient on receding expectation of more policy tightening by Fed. Indeed, both NASDAQ and S&P 500 closed at record highs at 6344.31 and 2460.61 respectively.

Sterling maintains post CPI losses

Meanwhile, Sterling remains broadly weak after suffering deep selloff from CPI miss. BoE Governor Mark Carney said that the "big picture" of inflation remained the same even though CPI slowed from 2.9% yoy to 2.6% yoy in June. He also noted that the main driver of inflation is depreciation of the Pound. And, "that's what's pushing inflation up, and inflation will be above target for a period of time and today's figures are consistent with that." BoE hawks, on the other hand, have been saying that the driver of inflation has fundamentally changed. The debate between MPC members will continuing in the coming months. But for now, it's unlikely that more members would turn hawkish and vote for a hike.

GBP/CHF is one of the biggest movers this week on selloff of Sterling. The development now argues that choppy rise from 1.2239 is a corrective move and could have completed at 1.2636. Deeper fall might now be seen back to 1.2239. Break there would extend the whole decline from 1.3067 and would target a test on 1.1635 low. As GBP/CHF, is limited below long term fibonacci level of 38.2% retracement of 1.5570 to 1.1635 at 1.3138. Price actions from 1.1635 also look corrective. Medium term outlook stays bearish for extending the down trend from 1.5570.

Euro firm ahead of ECB

Euro is, on the other hand, relatively firm as markets await ECB rate decision and press conference on Thursday. It's reported that ECB staff are looking at scenarios of future policy path and decisions could be made in September. The details might include the path tapering, extension of asset purchase as a slow pace, or a combination. There is no solid proposal for the moment and ECB policy makers are unlikely to change the language to signal a policy shift yet. Yet, it should be consensus that the central bank has to take the shift very carefully. Recent comments from ECB President Mario Draghi has also shot up the Euro and yields in Eurozone, that pushed global yields much higher.

Accord to a quarterly survey by ECB, banks in the region are set to expand lending in Q3. ECB said that "while most factors contributed to a net easing of credit standards on loans to enterprises in the second quarter of 2017, competitive pressure remained the main contributing factor." And, "for loans to households for house purchase and for consumer credit and other lending to households, competitive pressure and risk perceptions had an easing impact on credit standards."

Markets look into BoJ board shuffle

BoJ will also announce policy decision later in the week. While no change is expected by the central bank, the markets are eager to see how the reshuffle in the board would shape the balance. New member Goushi Kataoka is a known dove who advocate massive stimulus. He wrote in a research note at Mitsubishi UFJ Research and Consulting earlier this year that "full-blown monetary and fiscal policies coupled with a growth strategy are crucial to break completely out of prolonged economic stagnation." Another new member Hitoshi Suzuki is believed to be a neutral. On the other hand, the usual dissenters Takehiro Sato and Takahide Kiuchi left.

Light day ahead

On the data front, Australia Westpac leading index dropped -0.1% mom in June. Canada will release manufacturing shipments today. US will release housing starts and building permits.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.2571; (P) 1.2636; (R1) 1.2692; More....

USD/CAD continues to lose downside momentum as seen in 4 hour MACD. But there is no sign of bottoming yet. Intraday bias stays on the downside. Current decline from 1.3793 should target a test on 1.2460 low next. Meanwhile, considering bullish convergence condition in 4 hour MACD, break of 1.2770 will indicate short term bottoming In such case, there will be lengthier consolidation before staging another decline.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. Fall from 1.3793 is seen as the third leg and should target 50% retracement of 0.9406 to 1.4869 at 1.2048. At this point, we'd look for strong support from there to contain downside and bring rebound. However, firm break there will target 100% projection of 1.4689 to 1.2460 from 1.3793 at 1.1564.

Economic Indicators Update

The GOP's infighting weakens the dollar, boosting gold, whilst oil consolidates its recent gains.

OIL

Oil flip flopped in a choppy one dollar range overnight with both Brent and WTI spot ending up almost unchanged for the New York session at 48.60 and 46.25 respectively. Crude rose initially on reports that the Saudi's had further cut production and with the U.S. dollar being sent to the naughty corner in general. The rally petered out in New York's afternoon. It mostly unwound after the American Petroleum Institutes, (API) inventory data came in at a disappointing +1.62 million barrels after last weeks goliath draw down.

The ranging nature of the past two days reflects our view that that positioning is now much more neutral in the oil futures markets. Having been so viciously whipsawed over the previous month, traders are tentative about holding strong views at these levels. More clarity may come tonight from the official U.S. Crude Inventories data where the street is looking for a -3.5 million barrel drawdown. A number less than this or even positive like the overnight API data may undo some of the good work in oil over the last week.

Brent spot trades at 48.60 this morning with support at 48.00 and resistance at 49.30.

WTI spot trades at 46.20 this morning with support at 45.75 and resistance at 47.20 followed by 48.00, the 100-day moving average.

GOLD

Gold continued its march higher overnight thanks to a confluence of positive factors. Gold rose from 1233.50 to close in New York 1242.70. Gold's rise was sustained by a generally weaker dollar post a dovish Governor Yellen last week. The reassessment by the street of the U.S. interest rate outlook to more dovish has seen gold's appeal as an asset markedly increase.

Political uncertainty is another factor that gold usually finds supportive, and Washington D.C. has been delivering it in spades. In this case, it has not been the rumours swirling around the President, but more the GOP's failure to yet again raise enough votes to repeal Obamacare. This has thrown the entire legislative agenda into doubt. With the GOP's inability to organise even a beer tasting in a brewery, let alone cross the road to the other side, investors have been deserting the Trump trade in droves, and this has been supportive of gold.

Gold is trading at 1241.00 in early Asia with some short term profiting taking seen initially. Resistance sits initially at 1245.00 followed by the 100-day moving average at 1247.50. A daily close above the latter being a bullish technical development. Initial support rests at 1240.00 followed by 1232.00 and then the 200-day moving average at 1230.40. It would probably take a daily close under the last level to make the street reassess its bullish view.