Sample Category Title

Daily Pivots: (S1) 1.2971; (P) 1.3084; (R1) 1.3155; More....

USD/CAD's decline extends to as low as 1.3005 so far. Intraday bias remains on the downside for 1.2968 cluster support, 61.8% retracement of 1.2460 to 1.3793 at 1.2969. Decisive break there will confirm our bearish view that whole corrective rise from 1.2460 has completed at 1.3793. On the upside, above 1.3116 minor resistance will turn bias neutral and bring recovery. But upside should be limited below 1.3346 resistance to bring fall resumption.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. Rise from 1.2460 is seen as the second leg and has completed at 1.3793, ahead of 61.8% retracement of 1.4689 to 1.2460 at 1.3838. Break of 1.3222 should now indicate the start of the third leg while further break of 1.2968 should confirm. In that case, USD/CAD should decline through 1.2460 support to 50% retracement of 0.9406 to 1.4869 at 1.2048.

USD/CHF - 0.9580

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9579

Kijun-Sen level                    : 0.9604

Ichimoku cloud top                 : 0.9663

Ichimoku cloud bottom              : 0.9629

Original strategy :

Sell at 0.9655, Target: 0.9555, Stop: 0.9690

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.9645, Target: 0.9545, Stop: 0.9680

Position : -

Target :  -

Stop : -

As the greenback has recovered after falling to 0.9561, suggesting minor consolidation would be seen and recovery to 0.9605-10 cannot be ruled out, however, reckon upside would be limited to resistance at 0.9647 and bring another decline, below said support at 0.9579 would signal the decline from 0.9771 top is still in progress and may extend weakness to 0.9545-50 (2 times extension of 0.9771-0.9676 measuring from 0.9738) but reckon downside would be limited to 0.9525-30 (50% projection of 1.10100-0.9613 measuring from 0.9771) and 0.9500 should hold, price should stay above 0.9470 (61.8% projection), bring rebound later. 

In view of this, would not chase this fall here and we are looking to sell dollar on recovery as resistance at 0.9647 should limit upside. Only above previous support at 0.9676 (now resistance) would defer and suggest a temporary low is formed, risk test of another previous support at 0.9692. 

USDCAD has been in a downtrend since May. Yesterday the pair declined by a sizable 1.4%, reaching 1.3012 at its lowest, a four-month low. Should it finish the day lower, it would mark the fourth consecutive day of declines for the pair.

The RSI is projecting a negative short-term picture. The indicator is deep into bearish territory at 28. The MACD histogram supports this negative view, as it is below zero and the red signal line. It should be noted though, that RSI has entered oversold levels by crossing below the 30 level. This renders a reversal possible as well.

If the price advances, the area around 1.3070, which was of significance in the past, could provide resistance. A successful break above this area would bring the 1.31 handle, a potential psychological barrier, into perspective.

Should the price continue declining, yesterday’s low of 1.3012 could act as support. Notice that the price is currently close to this point. Below this, the eight-and-a-half-month low of 1.2968 from January 31 might offer additional support.

Turning to the medium-term picture, the contraction over the last couple of months has more or less offset the pair’s gain during the first months of the year, setting a neutral outlook. Further supporting this is the 200-day moving average line, which is more or less flat at the moment.

Overall, the near-term bias is bearish and the medium-term is neutral.

The dollar index, a broad measure of the greenback's strength, hit a nine-month low, as other major currencies strengthened on the back of their central banks preparing to scale back the accommodative monetary policies.

While yesterday's forex trading session was mostly dominated by central bankers' speeches, whose comments drove most of today's Asian session, the rest of the trading day will likely be commanded by a heavy flow of data releases out of both the eurozone and the US.

The dollar held steady against the yen during the Asian session. With a number of US economic data releases, especially the first quarter GDP later in the day, the pair could be volatile move today.

The euro continued to build on this week's strong momentum against the dollar, hitting a one-year high, amid the hawkish-perceived comments by European Central Bank President Mario Draghi. As the Asian trading session was coming to a close, euro/dollar got a lift on the back of better than expected preliminary Spanish harmonized index of consumer prices (HICP). At 1.6% growth year-on-year, Spanish HICP for June came above the expected level of 1.5%, though below the prior month's 2%. The pair was last trading at 1.1428, up 0.44% on the day.

The eurozone currency's strength against the greenback will be further put to a test as Germany releases its flash HICP number slightly later in the day, which will be followed by June's HICP for the eurozone tomorrow.

The pound also surged against the dollar on the more hawkish tone by Bank of England Governor Mark Carney during his speech in Portugal yesterday. This was a surprise for the markets as the BoE Governor had been maintaining a dovish take regarding the future steps of the UK's monetary policy. Pound/dollar was last trading at 1.2982, up 0.45% on the day.

The Canadian dollar reacted similarly, surging against the greenback as Bank of Canada Governor Stephen Poloz signaled a high chance of a July rate hike. Dollar/loonie continued to fall during the Asian session, last trading at 1.3005. No significant economic data release is expected out of Canada for the rest of the day.

Looking at commodities, WTI was up 1%, last trading at $45.12 a barrel. Reacting to the dollar weakness, gold inched up during the session, last trading at $1,250.80 an ounce.

Daily Pivots: (S1) 0.7594; (P) 0.7619; (R1) 0.7662; More...

AUD/USD's rally finally resumed by taking out 0.7635 and reaches as high as 0.7680 so far. Intraday bias is back on the upside for 0.7748 resistance and above. At this point, there is no clear sign of medium term range breakout yet. Hence, we'd be cautious on topping again as it approaches medium term fibonacci level at 0.7849. On the downside, below 0.7623 minor support will turn bias neutral and bring consolidations first. But near term outlook will remain bullish as long as 0.7534 support holds.

In the bigger picture, we're still treating price actions from 0.6826 low as a corrective pattern. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8116) and above.

GBP/USD - 1.2977

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.2964

Kijun-Sen level                    : 1.2895

Ichimoku cloud top              : 1.2801

Ichimoku cloud bottom        : 1.2784

Original strategy :

Buy at 1.2860, Target: 1.2970, Stop: 1.2825

Position : - 

Target :  -

Stop : -

New strategy  :

Buy at 1.2895, Target: 1.2995, Stop: 1.2860

Position : -

Target :  -

Stop : -

As cable has risen again after brief pullback, suggesting recent upmove is still in progress and may extend further gain to 1.3000 psychological resistance, however, loss of near term upward momentum should prevent sharp move beyond 1.3025-30 and reckon resistance at 1.3048 would hold on first testing, risk from there has increased for a retreat to take place later. 

In view of this, we are looking to buy cable again on pullback as the Kijun-Sen (now at 1.2895) should limit downside. Below previous resistance at 1.2861 would defer and suggest a temporary top is formed instead, risk weakness to 1.2830-35 but support at 1.2794 should remain intact.

The central banking chiefs from the European Central bank, the Bank of England and the Bank of Canada spoke yesterday. Surprising with hawkish comments, the US dollar slipped as the euro, the British pound and the Canadian dollar rose sharply.

Central bankers suggestions that reducing the stimulus program sent the respective yields falling while the currencies appreciated. The Canadian dollar also got a boost from rising oil prices following the EIA report.

BoE's Carney said that an interest rate hike was required noting that this would be discussedin the upcoming meetings. Meanwhile, the BoC Governor, Poloz said that the rate cuts in 2015 did their job and that the central bank will consider its options in terms of the excess capacity being used.

Looking ahead, the US final GDP numbers will be coming out today, but no major changes are expected, with GDP expected to remain steady at 1.2%.

EURUSD intraday analysis

EURUSD (1.1398): The EURUSD continued to the upside closing at 1.1376. The exchange rate briefly fell after rumors emerged from the ECB that Draghi's comments were misjudged. EURUSD fell to 1.1300 on the day before pulling back to close higher. In the near term, if the upside continues, EURUSD could be seen slipping back to 1.1357. This marks the resistance level high from August 2016. Establishing support here could signal further continuation. However, expect to see some weakness with the sideways range being formed at 1.1357 - 1.1300.

GBPUSD intraday analysis

GBPUSD (1.2954): The British pound rose steadily breaking past the 1.2800 resistance level. Any declines could be limited to this level which could now act as support. Price action is seen reaching towards 1.2970 minor resistance level from May this year. In the near term, GBPUSD could see a pullback that could potentially see price action test the support at 1.2800, as seen on the 4-hour chart. A breakout above 1.2976 will, however, require further upside in GBPUSD with the potential to reach out above 1.3000.

USDJPY intraday analysis

USDJPY (112.10): USDJPY managed to break past the resistance and yesterday's price action also closed above this level. However, the price action suggests that we could see some downside unless today's daily close is above the recent highs at 112.46. On the 4-hour chart, the bullish flag pattern remains in play. Following the initial target at 112.43, USDJPY will be seen testing the next main target level at 113.36.

Sunrise Market Commentary

• Rates: German inflation numbers could test investors' resolve
  The most interesting item on today's eco calendar are German inflation numbers. We see risks on the downside of expectations which could immediately test market's resolve in Draghi's contested comments. If the Bund isn't able to recover the neckline of the bearish double top formation (164.76), it would comfort our sell-on-upticks strategy.
• Currencies: Euro extends post-Draghi rally. Dollar continues to struggle
  Yesterday, EUR/USD showed sharp intraday swings, but in the end, the post-Draghi rally continued. At the same time, USD/JPY hardly profited from an intraday equity rebound. EUR/USD is setting new highs this morning. Will soft German CPI data, if they occur, be able to slow the euro rebound?

The Sunrise Headlines

• US equities rose on financial sector strength and tech rebound and closed with gains of 0.88% (S&P) and more (NASDAQ +1.43%). Positive sentiment extended into Asia trading but at a somewhat more moderate pace.
• Oil continued its six day rebound with Brent oil now at $47.5/barrel. Before talking about a sustained rise, we would like to see the Brent oil price breaking the technical $48.29/barrel level.
• For the first time since the start of the stress tests 7 years ago, US regulators are allowing all tested banks to pay out almost all their earnings to shareholders. This signals the regulators' confidence in the health of the financial system.
• UK Prime Minister May's minority administration won the first parliamentary test yesterday ahead of the final vote of her Queen's Speech later today. We expect May to win the final vote with help of the DUP party.
• The eco-calendar is quite light today with the third US GDP-reading and American jobless claims. In the EMU, EC confidence indicators will shed light on Eurozone sentiment and German CPI on inflation dynamics

Currencies: Euro Extends Post-Draghi Rally. Dollar Continues To Struggle

EUR/USD maintains post-Draghi gains

The Draghi comments from Tuesday still dominated EUR/USD trading yesterday. The pair extended its rally to the high 1.13 area early in the session. Market rumours suggesting that the ECB-president was misinterpreted caused a temporary correction. However, it was soon undone as BoE's Carney said that the BoE also considered a gradual tightening. EUR/USD closed session at 1.1378, within reach of the correction top. USD/JPY hovered mostly in the low 112 despite an intraday equity rebound.

Overnight, Asian equities go higher in the slipstream of WS. The dollar remains in the defensive. EUR/USD touched a new correction top north of 1.14. USD/JPY still doesn't profit from the broad equity rebound. The pair hovers in the 112.25 area. The Yuan continues its rebound against the dollar, trading at USD/CNY 6.78.

Today, the EC economic confidence should confirm the strong EMU recovery. German inflation is expected flat on the month and 1.3% Y/Y, down from 1.4% Y/Y in May. The June Italian inflation surprised on the downside 0.2% M/M decline). So, there are some downside risks. Even an expected outcome would confirm that inflation is cooling. Yesterday, rumours that Draghi's hawkish comments were misinterpreted, failed to stop the euro rebound. Will soft EMU inflation data be able to do the job? The final Q1 US GDP release is outdated. Initial claims stabilized at very low levels and no change is expected. Weekly 'noise probably won't change fortunes for the dollar. Fed Bullard speaks on monetary policy, but as he did so several times in recent days, no new info is expected.

Yesterday, the euro remained the 'by default' winner, despite attempts to downplay the Draghi comments. Soft Germany inflation data and ST overbought conditions might slow the euro rally. However, it is unlikely to cause a ST trend reversal. At the same time, sentiment on the USD remains fragile. The US dollar desperately needs good news (both on activity and price data) for markets to become again more confident on further Fed policy normalisation. We are neutral EUR/USD and look for a breather on the recent EUR/UJSD rally.

Yesterday's intraday price development in USD/JPY was again disappointing. Core yields more or less maintained Tuesday's increases and equities rebounded. Evens so, the pair hardly made any further headway. We remain cautious on USD/JPY longs.

Technical picture: Euro prevails. USD struggles

Early May, EUR/USD failed to break below the 1.0821/1.0778 support. Poor US data and US political upheaval propelled EUR/USD to a test of the 1.1300 area going into the FOMC decision, but the test was rejected. Earlier this week, a combination of hawkish ECB comments and negative US headlines pushed EUR/USD for an intensive test of the 1.1300/66 resistance are. The area is broken, if the break is confirmed, it would be a significant technical signal and open the way to the 1.1616/1.1714 LT correction tops. A return below 1.1220 (STMA) would be a first indication that the euro rally is easing. A drop below 1.1119 would call off the downward alert.

The USD/JPY rally ran into resistance in early May and the pair returned lower in the 108.13/114.37 range. The post-Fed USD rebound pushed the pair beyond a first minor resistance at 110.81. The pair regained the 112.13 correction top early this week, but there are no real follow-through gains , So, the break isn't confirmed yet. A break would improve the ST-picture. Even so, were remain cautious on further USD/JPY gains.

EUR/USD tends to break above the key 1.1300/66 resistance on Draghi comments

EUR/GBP

EUR/GBP: topside test rejected

Yesterday, it looked like sterling traders were heading for a calm session…. till late in the afternoon. Cable traded sideways in the lower half of 1.28. The price moves in EUR/GBP were primarily swings in the euro in the wake of Tuesday's Draghi comments. EUR/GBP traded at minor new highs in the 0.8870/80 area, but lost gradually a few ticks. Early afternoon, the pair tumbled to the low 0.88 on the rumours that Draghi was misinterpreted by markets. However, BoE's Carney changed the script again as he indicated that some tightening might be warranted if the growth/inflation trade-off lessens. Quite a big U-turn from recent comments of the BoE governor. Sterling jumped sharply higher. EUR/GBP closed the session at 0.8802. Cable rallied against a weak dollar and closed at 1.2926.

Today, the UK money supply and credit data will be published. A slightly easing is expected, but we doubt the data will change the debate on monetary policy. There will also be plenty of headliners on the vote on the program of the May minority government. However, markets will ponder the consequences from Carney's hawkish U-turn. The Carney comments will probably put a floor for the dollar short-term. However, we don't expected a protracted sterling rally anytime soon, especially not against the euro. We still look to buy EUR/GBP in case of more pronounced downticks

From a technical point of view, EUR/GBP set a minor top north of the 0.8854/66 resistance (2017 top), but a sustained break didn't occur. Yesterday's setback probably block further gains ST. A return below the 0.8655 correction low would indicate easing pressure on sterling. Such a break lower will be difficult. A EUR/GBP buy-on-dips approach remains favoured.

EUR/GBP: topside test rejected

Download entire Sunrise Market Commentary

Asia Mid-Session Market Update: Japan retail sales fall for the first time in 5 months; New Zealand Business Confidence improves

US Session Highlights

(US) MAY ADVANCE GOODS TRADE BALANCE: -$65.9BE V -$66.0BE

(US) MAY PRELIMINARY WHOLESALE INVENTORIES M/M: 0.3%E V 0.2%E

Pres Trump tweets: "The #AmazonWashingtonPost, sometimes referred to as the guardian of Amazon not paying internet taxes (which they should) is FAKE NEWS!"

(US) MAY PENDING HOME SALES M/M: -0.8% V +1.0%E; Y/Y: 0.5% V 0.5%E

(JP) BOJ Gov Kuroda: firms remain cautious on spending - comments in Portugal

(US) DOE CRUDE: +0.1M V -2.5ME; GASOLINE: -0.9M V -0.5ME; DISTILLATE: -0.2M V +0.5ME; total US production fell 1%

Fed did not object to the capital plans of all 34 bank holding companies participating in the Comprehensive Capital Analysis and Review (CCAR). Capital One is the only bank that will need to resubmit within six months, although its plan was not entirely rejected.

US markets on close: Dow +0.7%, S&P500 +0.9%, Nasdaq +1.4%

Best Sector in S&P500: Financials

Worst Sector in S&P500: Utilities

Biggest gainers: SPLS +8.4%; ARNC +5.8%; TRIP +4.5%

Biggest losers: AAP -4.3%; ORLY -2.2%; FE -2.1%

At the close: VIX 10.0 (-1.0pts); Treasuries: 2-yr 1.35% (-2bps), 10-yr 2.22% (+2bps), 30-yr 2.77% (+3bps)

US movers afterhours

GEMP Announces top-line data from COBALT-1 Phase 2b clinical trial in HoFH patients ; +10.0% afterhours

PRGS Reports Q2 $0.42 v $0.37e, Rev $93.4M v $90.9Me; Guides Q3 $0.41-0.43 v $0.44e, Rev $93-96M v $97.6Me; +5.6% afterhours

COF Fed requires resubmission of its CCAR plan; Only US bank to require such; to maintain dividend at $0.40/shr (indicated yield 1.93%); to buy back $1.85B (4.5% of market cap); -1.3% afterhours

PIR Reports Q1 -$0.04 v -$0.05e, Rev $409.5M v $421Me; Guides Q2 -$0.08 to -$0.04 v -$0.03e, SSS flat to 2%, net sales growth flat y/y ; -10.8% afterhours

Politics

(BR) Brazil President Temer said to name Raquel Dodge as new top prosecutor; Temer’s residence subsequently attacked (Temer not inside) - US financial press

(US) Brendan Carr expected to be nominated to a position at the FCC by President Trump as soon as today - recode

Key economic data

(JP) JAPAN MAY RETAIL SALES M/M: -1.6% (first decline in 5 months) V -1.0%E; RETAIL TRADE Y/Y: 2.0% V 2.6%E

(JP) Japan May Loans & Discounts Corp y/y: 3.9% v 3.7% prior

(AU) AUSTRALIA MAY HIA NEW HOME SALES M/M: 1.1% (2nd straight increase and 6-month high) V 0.8% PRIOR

(AU) AUSTRALIA MAR-MAY SKILLED VACANCIES Q/Q: 1.5% V 2.1% PRIOR

(NZ) NEW ZEALAND JUNE ANZ BUSINESS CONFIDENCE: 24.8 (8-month high) V 14.9 PRIOR; ACTIVITY OUTLOOK 42.8 (3-year high) V 38.3 PRIOR

(KR) South Korea May Department Store Sales Y/Y: -1.9% v +0.5% prior; Discount Store Sales Y/Y: 1.6% v +2.3% prior

Speakers and Press

China

(CN) Former China State Administration of Foreign Exchange (SAFE) Official Guan Tao: China economy to stabilize in H2; Ease in capital outflow to result in a rise in FX reserves - press

(CN) China Vice Fin Min Zhu: Major economies should return to rate normalization

(CN) According to a large China insurance company, China regulators have signaled to insurers that they will relax restrictions on overseas investments in 2018

(CN) Moody's: China property sales are stronger in the lower tier cities

Japan

(JP) Japan 2016 tax Rev said to be lower y/y for the first time in 7 years - Kyodo

Korea

(KR) South Korea Pres Moon: Govt planning comprehensive job policy; Growth cannot become reality until peninsula has peace

Asian Equity Indices/Futures (00:30ET)

Nikkei +0.5%, Hang Seng +0.9%, Shanghai Composite +0.3%, ASX200 +1.1%, Kospi +0.6%

Equity Futures: S&P500 +0.2%; Nasdaq +0.1%, Dax +0.1%, FTSE100 +0.1%

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.1375-1.1420; JPY 112.15-112.40; AUD 0.7580-0.7615; NZD 0.7260-0.7285

Aug Gold +0.3% at 1,253/oz; Aug Crude Oil +0.4% at $44.95/brl; Sept Copper +0.7% at $2.69/lb

iShares Silver Trust ETF daily holdings fall to 10,551 tonnes from 10,571 tonnes prior; first decline since June 20th

(CN) PBoC: To skip today's open market operation (OMO); 5th consecutive skip

(CN) PBOC SETS YUAN MID POINT AT 6.7940 V 6.8053 PRIOR (2-week high)

Asia equities notable movers

Australia

Prime Media (PRT) +5.8%; Raises FY17 guidance

Wesfarmers Ltd (WES) +0.4%; Said to be considering an industrial acquisition - Australian press

Vocus Group (VOC) -0.3%; KKR said to be losing interest in a takeover of Vocus - Australian

Japan

Honda (7267) +0.3%; Toyota (7203) +0.2%; Nissan (7201) +1.5%; May vehicle production

Obic Co (4684) +1.6%; may report Q1 op profit ¥7B, +15% y/y; Rev ¥15B, +10% y/y - Nikkei

Hong Kong

Tiangong International Company (826) +6.1%; Guides H1

Sparkle Roll Group (970) +3.4%; Reports FY17

Kingmaker Footwear Holdings (1170) +3.3%; Reports FY17

Ngai Shun Holdings (1246) -4.4%; Reports FY17

Central bankers don't seem to have learnt from the former Fed Chair, Ben Bernanke, when he first mentioned the idea of tapering the amount of money being pumped into the economy in May 2013.

Back then, the news sent risk assets south, and the volatility index surged 63% in less than a month, while U.S. 10-year Treasury yields climbed 25%.

Both the ECB's Mario Draghi and the BoE's Mark Carney have now sent a message to investors from Sintra, Portugal, that the era of cheap money is close to an end. This time, the reaction was mainly felt in fixed income and currency markets.

Draghi's comments were intended to signal more confidence in the economic recovery and not an immediate call to withdraw stimulus; however, bonds were sold heavily, and the Euro marched above 1.14, a new 52-week high. Similarly, Carney's remarks sent the Pound to 1.2972, recovering all losses that stemmed from Theresa May's failure to win a majority vote in the recent snap elections, as he indicated the possibility of raising rates. I think going forward, central bankers will be more careful and cautious when passing on similar messages. In other words, they should be uninteresting not to disrupt financial markets.

Although I'm bullish on the Euro on the longer run, I think the market's reaction is a bit too exaggerated. I would rather wait for hard data to confirm the hawkish stance, especially on inflation, since the recent slide in oil prices may mean that inflation stays low for a prolonged period. If the Eurozone's headline and core CPI disappoints on Friday, there's a high chance that traders will book some profits.

Financial stocks are the biggest beneficiaries from the surging yields and the Fed's upbeat assessment on the U.S. banking sector. The biggest U.S. banks are now able to boost share buybacks and dividend payouts by almost 50% compared to 2016. This would likely lead to the continued rotation from bond proxies such as utilities to financials.

In commodity markets, gold recovered most of Monday's losses to trade above $1,250 as the U.S. currency continued to weaken against its major counterparts. Meanwhile, crude prices were higher on both sides of the Atlantic, despite U.S. inventories unexpectedly rising by 118,000 barrels last week. The supporting piece of news from EIA was the 100,000 barrel decline in production last week, but it's too early to jump to conclusions at this stage since this is likely to reverse in the weeks ahead.