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The France CAC 30 is unchanged in the Wednesday session. Early in the North American session, the CAC is trading at 5341.80 points. On the release front, there are no economic releases out of France or the eurozone. The ECB released its semi-annual Financial Stability Review, and the tone was generally positive. ECB President Mario Draghi delivered remarks at an event in Madrid. The ECB released its semi-annual Financial Stability Review, which was generally positive. Later in the day, ECB President Mario Draghi will speak at an event in Madrid. In the US, today's highlight is the Federal Reserve minutes from the May policy meeting.

The ECB released its Financial Stability Review on Wednesday, and the report found that financial stress in the euro-area remained at low levels, as there was growing optimism about economic conditions in the eurozone. The review found that there financial market and bank stress indicators remained contained, but noted that "sovereign stress" had risen in 2017, due to greater political uncertainty, such as the triggering of Article 52, whereby Britain gave official notice that it was withdrawing from the EU. Another concern highlighted by the review is that government finances in the eurozone "remain fragile", and an increase in interest rates could have a negative effect on the fiscal situation of weaker members, such as Italy and Portugal.

The Federal Reserve raised rates back in March, and the markets are expecting the Fed to press the rate trigger again in June. The odds of a rate hike have increased to 83%, according to the CME Group. Just last week, the likelihood of a rate increase stood at 73%. Despite the market speculation, Fed policymakers are keeping their cards close to their chest, at least in their public appearances. On Tuesday, Philadelphia Fed President Patrick Harker said that a June move was a "distinct possibility", but cautioned that a weak inflation report could delay a rate hike. Earlier in the week, Robert Kaplan, President of the Dallas Fed, stated that three interest increases in 2017 was "appropriate". The Fed min

Daily Pivots: (S1) 1.1148; (P) 1.1208 (R1) 1.1241; More....

Intraday bias in EUR/USD remains neutral for consolidation below 1.1267 temporary top. Overall, we'd stay cautious on strong resistance from 1.1245/98 (138.2% projection of 1.0339 to 1.0828 from 1.0569 at 1.1245) resistance zone to limit upside and bring reversal. But decisive break of 1.1298 will carry larger bullish implication and target 1.1615 resistance next. On the downside, though, break of 1.1020 resistance turned support will indicate rejection from 1.1245/98 and turn bias to the downside for 1.0838 support first.

In the bigger picture, the case for medium term reversal continues to build up with EUR/USD now far above 55 week EMA. Also, bullish convergence condition is seen in weekly MACD. Focus will now be on 1.1298 key resistance. Rejection from there will maintain medium term bearishness and would extend the whole down trend from 1.6039 (2008 high). However, firm break of 1.1298 will indicate reversal. In such case, further rally would be seen back to 1.2042 support turned resistance next.

Daily Pivots: (S1) 0.9719; (P) 0.9741; (R1) 0.9780; More.....

Intraday bias in USD/CHF remains neutral for consolidation above 0.9691 temporary low. Some more consolidations would be seen but upside of recovery is expected to be limited by 0.9858 support turned resistance to bring another decline. Whole fall from 1.0342 is still in progress and below 0.9691 will target 100% projection of 1.0342 to 0.9860 from 1.0099 at 0.9617. We'll start to look for reversal signal below there.

In the bigger picture, USD/CHF is 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.

Daily Pivots: (S1) 111.14; (P) 111.49; (R1) 112.13; More...

No change in USD/JPY's outlook as the rebound from 110.23 might extend higher. But it's still seen as a corrective move. Below 110.85 minor support will turn bias to the downside to extend the fall from 114.36 to 108.12 low. Break there will resume the whole decline from 118.65. In that case, we'll look for bottoming signal again at 61.8% retracement of 98.97 to 118.65 at 106.48.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

Daily Pivots: (S1) 1.2931; (P) 1.2982; (R1) 1.3012; More...

GBP/USD is still bounded in range trading below 1.3047 and intraday bias remains neutral. As long as 1.2844 minor support holds, further rise remains mildly in favor. Nonetheless, as we are still viewing price actions from 1.1946 as a corrective move, we'd expect upside to be limited below 1.3444 resistance to bring near term reversal. On the downside, break of 1.2844 will indicate short term topping and turn bias back to the downside for 1.2614 resistance turned support first.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There are signs of reversal, like breaking of 55 week EMA, weekly MACD turned positive, and monthly MACD crossed above signal line. But still, break of 1.3444 resistance is need to confirm medium term bottoming. Otherwise, outlook will remains bearish for extend the down trend through 1.1946 low.

Dollar is trading in tight range today with mild strength against Japanese Yen and Swiss Franc. Markets are looking into today's FOMC minutes to solidify the expectation of a June Fed hike. Euro, despite the retreat against Dollar and Sterling, stays firm with near term bullish outlook. Meanwhile, the financial markets elsewhere are generally steady. European indices are weighed down mildly by news of Moody's downgrade of China, but loss is very limited. US futures are pointing to a flat open. Gold hovers in tight range around 1250.

** Quick update: Canadian Dollar jumps after BoC left interest rate unchanged at 0.50%. The central noted in the statement that "the Canadian economy's adjustment to lower oil prices is largely complete and recent economic data have been encouraging, including indicators of business investment. Consumer spending and the housing sector continue to be robust on the back of an improving labour market, and these are becoming more broadly based across regions."

CAD looks into BoC and OPEC

Canadian Dollar retreats mildly today as markets await BoC rate decision as well as OPEC meeting. BoC is widely expected to keep interest rate unchanged at 0.50%. Recent economic data from Canada have been solid with job gains for six straight month. Consumer spending grew at healthy pace with support from rising home values. But BoC Governor Stephen Poloz has been reluctant to turn more upbeat on the economy and maintained that it's still playing catch up to the US.

Meanwhile, OPEC is generally expected to agree to extend production cut by nine months to March 2018. Kuwaiti oil minister Essam al-Marzouq said that "all options are on the table" and the discussions would include the possibility of deeper production cut or extension by 12 months. WTI crude oil edges higher to 51.88 earlier today but turns cautious then. It's trading at 51.25 at the time of writing.

Top ECB officials sound cautious

ECB Vice President Vitor Constancio said today that the central bank is "fully aware" of the call for ECB to wind down the stimulus measures given the improvement in the economic outlook. And he noted that "there's even a unanimous view about economic developments, that the situation is improving and this will of course be fully reflected in our future decisions." But Constancio noted that caution is warranted given the large slack in labor market and weak wage growth.

On the other hand, ECB chief economist Peter Praet cautioned that "underlying inflation pressures still give scant indications of a convincing upward trend as domestic cost pressures, notably wage growth, remain subdued." Praet also noted that "overall, while we are certainly seeing a firming, broadening and more resilient economic recovery, we still need to create a sufficiently broad and solid information basis to build confidence that the projected path of inflation is robust, durable and self-sustained."

Moody's downgraded China's rating for the first time since 1989

Moody's Investors Service lowered China's credit rating to A1 today, down from Aa3. That's the first downgrade of China in nearly 30 years sin 1989. Moody's noted in a statement that "the downgrade reflects Moody's expectation that China's financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows." The rating agency also warned that "while ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government."

China's Finance Ministry criticized the that the downside was based on "in appropriate methodology". And, "Moody's views that China's non-financial debt will rise rapidly and the government would continue to maintain growth via stimulus measures are exaggerating difficulties facing the Chinese economy, and underestimating the Chinese government's ability to deepen supply-side structural reform and appropriately expand aggregate demand."

Japanese parliament approved two new BoJ board members

In Japan, the upper house of parliament approved two government nominees for BoJ policy board. The two include economist at Mitsubishi UFJ Research and Consulting Goushi Kataoka and Director of Bank of Tokyo Mitsubishi UFJ Hitoshi Suzuki. Kataoka is known to be a vocal advocate of Prime Minister Shinzo Abe's economic policies and the BoJ's asset purchase program. Outgoing board member Takahide Kiuchi and Takehiro Sato are both known to oppose to BoJ's unorthodox policy. Markets generally view the nomination as supportive to BoJ Governor Haruhiko Kuroda's ultra loose monetary policies.

Former Fed Chair Bernanke urged explicit coordination of monetary and fiscal policies in Japan

Former Fed Chair Ben Bernanke said at the BoJ in Tokyo today that "if all goes well, the BOJ's current policy framework may yet be sufficient to achieve the inflation objective." However, "if not, there are relatively few options available." Meanwhile Bernanke also emphasized that "the most promising possibility -- should we get to that point -- is more explicit coordination of monetary and fiscal policies." He explained that "monetary policy that is aimed at limiting the impact of fiscal expansion on the government's debt could both make fiscal policy makers more willing to act and increase the impact of their actions,"

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2931; (P) 1.2982; (R1) 1.3012; More...

GBP/USD is still bounded in range trading below 1.3047 and intraday bias remains neutral. As long as 1.2844 minor support holds, further rise remains mildly in favor. Nonetheless, as we are still viewing price actions from 1.1946 as a corrective move, we'd expect upside to be limited below 1.3444 resistance to bring near term reversal. On the downside, break of 1.2844 will indicate short term topping and turn bias back to the downside for 1.2614 resistance turned support first.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There are signs of reversal, like breaking of 55 week EMA, weekly MACD turned positive, and monthly MACD crossed above signal line. But still, break of 1.3444 resistance is need to confirm medium term bottoming. Otherwise, outlook will remains bearish for extend the down trend through 1.1946 low.

Economic Indicators Update

USD/CHF - 0.9756

Original strategy :

Bought at 0.9700, Target: 0.9800, Stop: 0.9700

Position : - Long at 0.9700

Target :  - 0.9800

Stop : - 0.9700

New strategy  :

Hold long entered at 0.9700, Target: 0.9800, Stop: 0.9700

Position : - Long at 0.9700

Target :  - 0.9800

Stop : - 0.9700

As the greenback has rebounded after holding above this week’s low at 0.9692, retaining our view that further consolidation above this level would be seen and mild upside bias remains for another rebound to 0.9790-00, however, break of resistance at 0.9825 is needed to low is formed, bring retracement of recent decline to previous resistance at 0.9851 which is likely to hold from here.

In view of this, we are holding on to our long position entered at 0.9700. Below said support at 0.9692 would signal recent decline has resumed and extend weakness to 0.9670-75 but reckon downside would be limited to 0.9650 and 0.9620-25 should hold, bring another rebound later. 

GBP/USD - 1.2965

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Cable’s retreat after faltering below indicated resistance at 1.3048 (last week’s high) has retained our view that further choppy trading below this level would be seen and pullback to 1.2950 cannot be ruled out, however, reckon downside would be limited to 1.2920-25 and said support at 1.2889 should remain intact, bring another rebound later.

On the upside, although recovery to 1.3000-10 cannot be ruled out, reckon said resistance at 1.3048 would hold, bring further consolidation. Only a break of said resistance at 1.3048 would confirm recent upmove has resumed an extend further gain to 1.3075-80 and possibly towards 1.3100-10 later. As near term outlook is mixed, would be prudent to stand aside in the meantime.

EUR/USD - 1.1197

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Despite yesterday’s marginal rise to 1.1268, the subsequent retreat suggests a temporary top is possibly formed and test of support at 1.1161 cannot be ruled out, however, break there is needed to add credence to this view, bring further fall to 1.1130 but reckon downside would be limited to 1.1100-05 (38.2% Fibonacci retracement of 1.0839-1.1268) and price should stay well above support at 1.1076, bring rebound later.

On the upside, whilst recovery to 1.1200 cannot be ruled out, reckon the Kijun-Sen (now at 1.1220) would limit upside and 1.1250 should hold, bring retreat later. Only break of said resistance at 1.1268 would extend recent upmove to extend further gain to 1.1280-85 (61.8% projection of 1.0839-1.1172 measuring from 1.1076) and possibly towards 1.1300-10. 

USD/JPY - 111.81

Original strategy  :

Sell at 112.40, Target: 111.00, Stop: 112.75

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 112.40, Target: 111.00, Stop: 112.75

O.C.O.

Buy at 111.50, Target: 112.50, Stop: 111.15

Position :  -

Target :  -

Stop : -

The greenback has rebounded after holding above support at 110.86, suggesting near term upside risk remains for the corrective rise from 110.24 low to extend gain to 112.05 (50% Fibonacci retracement of 113.85-110.24), then 112.36 (100% projection of 110.4-11174 measuring from 110.86) but upside should be limited to 112.45-50 (61.8% Fibonacci retracement) and bring another decline later, below 111.30-35 would bring test of said support at 110.86 but break there is needed to signal the rebound from 110.24 has ended, bring further fall to 110.50 first. 

In view of this, whilst we are still looking to sell dollar on further recovery, we would turn long on dips as the Kijun-Sen (now at 111.50) should limit downside and bring another rebound. Above 112.70-75 would abort and signal recent decline has ended, bring further gain to 113.00.