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Litecoin continues to slide lower in early Wednesday trade after bulls failed to hold the cryptocurrency above the pivotal $90.00 resistance level. The LTCUSD pair may start to fall back towards its 200-day moving average where bargain hunters could start to pick up at the crypto at a more attractive price. Overall, the current downmove looks set to continue until we see stabilization above the $90.00 level.

The LTCUSD pair is only bullish while trading above the $90.00 level, key resistance is found at the $100.00 and $107.00 levels.

If the LTCUSD pair trades below the $90.00 level, key support is found at the $73.00 and $60.00 levels.

Daily Pivots: (S1) 0.9845; (P) 0.9870; (R1) 0.9903; More...

Intraday bias in USD/CHF remains neutral for the moment. On the downside, below 0.9817 will resume the decline from 0.9951 to retest 0.9695 low first. On the upside, above 0.9951 will extend the rebound from 0.9695. In that case, upside should be limited by 61.8% retracement of 1.0237 to 0.9695 at 1.0030.

In the bigger picture, up trend from 0.9186 (2018 low) should have completed at 1.0237 already. Deeper decline would be seen to 61.8% retracement of 0.9186 to 1.0237 at 0.9587 and below. For now, USD/CHF is seen as in long term range pattern between 0.9186 and 1.0342. Hence, we'd pay attention to bottoming signal below 0.9587. However, sustained break of 1.0014 will revive medium term bullishness and turn focus back to 1.0237 high.

The British pound remains extremely weak against the US dollar on Wednesday, following a breakout move below the current yearly trading low for the pair. If bulls can defend the 1.2380 level the GBPUSD pair could bounce back towards the 1.2470 level over the coming sessions. A breach of the 1.2380 level is likely to see the GBPUSD sold down towards the 1.2340 support region.

The GBPUSD pair is only bullish while trading above the 1.2440 level, key resistance is found at the 1.2470 and 1.2510 levels.

If the GBPUSD trades below the 1.2440 level, key support is located at the 1.2400 and 1.2380 levels.

The euro is back under downside pressure against the US dollar, after the pair was sold heavily following much worse than expected German data. The EURUSD pair is vulnerable to further losses while trading below the 1.1220 level and could easily test its former weekly low. The June monthly trading low is the key support level to watch if the 1.1200 support region is convincingly broken.

The EURUSD pair is bearish while trading below the 1.1220 level, key support is found at the 1.1185 and 1.1168 levels.

If the EURUSD pair trades above the 1.1220 level, bulls could test back towards the 1.1248 and 1.1270 levels.

The price of crude oil declined sharply in overnight trading after US Secretary of the State, Mike Pompeo said that Iran had approached the US for talks. While not much information was shared, investors interpreted this to mean that the US could ease the sanctions it has put in place with Iran. This would then see the country return to the oil market. The news came at a time when the Iranian economy is in a depression, following the US exit from the Joint Comprehensive Plan of Action (JCPOA). It also came at a time when Javad Zarif, the country’s Foreign Affairs Minister was in the United States. In the US, data from the American Petroleum Institute (API) showed that inventories declined by more than a million barrels. Later today, data from the EIA is expected to show that inventories declined by almost 3 million barrels.

The US earnings season will continue today. The main companies that will report are Bank of America (BOA), Alcoa, Abbott Laboratories, Crown Holdings, IBM, Kinder Morgan, PNC Financial, Progressive, Texas Instruments and United Rentals. Overall, the earnings season so far has been good. Yesterday, companies like Goldman Sachs, JP Morgan, and J&J released earnings that were better than expected. However, this was not good enough to lift the major indices, which ended the day in the red.

Other than earnings, investors will receive other important data today. In the UK, the Office for National Statistics will release the inflation numbers for the month of June. This data is expected to show that the country’s headline CPI remained unchanged at 2.0%. On a MoM basis, the headline CPI is expected to remain unchanged at 0.3%. The core CPI is expected to increase slightly to 1.8% after rising by 1.7% in May. The Retail Price Index (RPI) is expected to decline slightly from 3.0% to 2.9% in June. Meanwhile, in the European Union, data is expected to show that the headline CPI remained unchanged at 1.2%. In the US, the building permits are expected to have increased slightly from 1.299M to 1.30M and in Canada, the core CPI is expected to increase from 2.1% to 2.6%.

XBR/USD

The XBR/USD pair declined sharply yesterday after the US announced that Iran was ready to talk. The pair declined to a low of 63.45, which was the lowest level since July 11. On the four-hour chart, the pair’s price is along the lower line of the Bollinger Bands while the RSI has moved to the oversold level of 30. The moving average oscillator remains in the lower side while the price is along the 38.2% Fibonacci Retracement level. The pair will likely hold at the current level as investors wait on the developments on trade.

AUD/USD

The AUD/USD pair started declining yesterday after reaching the important resistance level of 0.7045. The pair had just completed forming the cup part of the cup and handle pattern. It is now trading at 0.7000, which is an important psychological level. On the hourly chart, this level is slightly above the 61.8% Fibonacci Retracement level and below the short and medium-term moving averages. The RSI is slightly above the oversold level. The pair will likely continue moving lower and test the 61.8% Fibonacci level of 0.6995.

EUR/USD

The EUR/USD pair was unchanged in the Asian session after the sharp decline in the European session yesterday. The pair is now trading at 1.1212, which is slightly below the 21-day and 42-day moving averages. The RSI has moved slightly higher from the oversold level of 16 while the accumulation/distribution has been unchanged. The pair will likely move in either direction depending on the European CPI data.

Daily Pivots: (S1) 1.1187; (P) 1.1225; (R1) 1.1249; More...

Intraday bias in EUR/USD remains neutral for now with focus on 1.1193 minor support. Break will resume the fall from 1.1412 to retest 1.1107 low. On the upside, above 1.1285 resistance will turn bias back to the upside for 1.1412 resistance.

In the bigger picture, bullish convergence condition in daily and weekly MACD suggests that 1.1107 is a medium term bottom. However, rejection by 55 EMA retains medium term bearish. Outlook will be neutral for now. On the downside, break of 1.1107 will resume the down trend from 1.2555 (2018 high) to 78.6% retracement of 1.0339 to 1.2555 at 1.0813. Meanwhile, break of 1.1412 will resume the rebound to 38.2% retracement of 1.2555 to 1.1107 at 1.1660.

• Rates: Strong retail sales vs Fed comments
  US Treasuries underperformed German Bunds yesterday even if part of the losses, inflicted by strong US retail sales, were eventually undone by Fed comments and signs of short term fatigue on the stock market. Trading will remain sentiment-driven and technical in nature today in absence of big eco data/events.
• Currencies: Dollar keeps benefit of the doubt. Sterling drops below important support
  EUR/USD declined on a soft ZEW confidence while US retail sales printed strong. Fed's Powell confirming the case for a July rate cut had less impact on the dollar than on US yields. Today, data will probably be of second tier significance for FX trading. EUR/USD 1.1181 remains a key support. Sterling is losing further ground as Brexit fears are mounting further

The Sunrise Headlines

• Wall Street closed a choppy session in red after US president Trump raised the tariff threat again. The Nasdaq underperformed (-0.43%). Asian markets are trading mixed with Korea (up to -1.8%) underperforming.
• President Trump said they “have a long way to go” on trade with China, adding he could still impose additional tariffs on $325 bn worth of Chinese imports although agreeing not to do so during the G20-summit in late-June.
• Powell said the Fed still expects solid growth but “carefully monitors” downside risks. He added that some FOMC members flagged concerns about a longer lasting inflation shortfall, echoing his congressional testimony last week.
• The European Parliament confirmed Germany's Ursula von der Leyen as next president of the European Commission with a narrow majority of 9 votes. She now faces the task to assemble a balanced college of commissioners.
• PM candidate Boris Johnson wants to hold an early general election, according to The Times. Senior allies of Johnson told the newspaper he wants to benefit from the division within the Labour Party.
• The US and Japan might thrash out a trade deal by September that would give the US agriculture a better access to the market in return for reduced tariffs on Japanese cars, industry sources said.
• Today's event calendar contains US housing data and inflation figures in the UK. The Fed releases its Beige Book. G7 finance ministers and central bank heads meet. The fist high-profile non-bank earnings are due. Germany issues bonds.

Currencies: Dollar Keeps Benefit Of The Doubt. Sterling Drops Below Important Support

Sterling drops below important technical levels

End week and on Monday, EUR/USD failed to take out first resistance near 1.1285 even as Fed's Powell kept the door open for a July rate cut. Yesterday, EUR/USD declined further in the 1.12 figure. The move was partially dollar strength supported by solid US retail sales. A pinch of euro weakness was also in play as German ZEW confidence disappointed again. Late in the session, US yields reversed most intra-day gains as Fed's Powell reiterated its dovish message from last week. Still the dollar maintained most gains. EUR/USD closed at 1.1211 (from 1.1258). USD/JPY held north of 108 to close at 108.25 (from
107.91)

This morning, Asian equities mostly show modest losses, in line with WS yesterday. Trade tensions resurfaced as a (minor?) factor for trading as US president Trump reiterated the US can still impose tariffs on $ 325 bln of Chinese goods. The direct impact on the dollar is limited. EUR/USD hovers in the 1.1210/15 area. USD/JPY is losing marginal ground (108.15 area). USD/CNY
is still going nowhere (6.88 area).

The eco calendar is only moderately interesting today with the final EMU CPI's (expected 1.2% headline, 1.1% Core). In the US, housing starts and permits will be published. US housing data recently had only a limited impact on FX. There is a slight chance of a upward revision to the EMU CPI, but it probably won't change fortunes for the euro in a profound way. The global risk sentiment looks like easing a bit as the record rally of US equities ran into resistance yesterday. If this would lead to lower core yields it might be a slight USD negative. Still, we see no big case for EUR/USD to break out of the 1.1285/1.1181 ST range. Global picture: EUR/USD drifted lower in the 1.11/1.14 range but rebounded from recent lows after Powell paved the way for a July rate cut. A rebound to the 1.13 would further ease the downside momentum. With the most important eco data before the FOMC July meeting printed, we expect more range trang
near current levels.

Sterling declined further as both candidates to become UK PM hardened their stance for talks with the EU. EUR/GBP settled north of 0.90. Cable dropped below the 1.2440 support. Brexit remains key for sterling trading, but UK CPI data are interesting, too. Headline CPI is expected unchanged at 2.0% (core to rise to 1.8%). CPI's probably won't change markets' view that the BoE will likely be forced to cut rates due to the growing negative impact of Brexit on the UK economy. Sterling probably remains in the defensive. EUR/GBP 0.91 area is the next key reference.

EUR/USD nears 1.1181 support area

Daily Pivots: (S1) 1.2361; (P) 1.2441; (R1) 1.2486; More....

Intraday bias in GBP/USD remains on the downside as recent decline is in progress. Sustained break of 1.2391 low will confirm resume larger down trend for 61.8% projection of 1.4376 to 1.2391 from 1.3381 at 1.2154 next. On the upside, break of 1.2579 resistance is needed to indicate short term bottoming. Otherwise, outlook remains bearish in case of recovery.

In the bigger picture, down trend from 1.4376 (2018 high) is still in progress. Break of 1.2391 would target a test on 1.1946 long term bottom (2016 low). For now, we don't expect a firm break there yet. Hence, focus will be on bottoming signal as it approaches 1.1946. In any case, medium term outlook will stay bearish as long as 1.3381 resistance holds, in case of strong rebound.

Dollar turns into consolidation in Asian session but it's able to maintain most of this week's gain. The greenback's fate remains heavily dependent on whether Fed will cut interest rates later in the month. Strong economic data so far argue against a move. Yet, it seems they're not strong enough to convince FOMC members to dismiss the chance of a move. On the other hand, European majors are staying as the worst performing ones. Euro is weighed down by poor data that reaffirm ECB's easing stance. Sterling is pressured by renewed no-deal Brexit fear.

Technically, GBP/USD is in proximity to 1.2391 key support (2019 low). Firm break there will resume down rend from 1.4376 (2018 high). EUR/USD is also eyeing 1.1193 temporary low. Break will bring 1.1107 (2019 low) into focus. USD/CAD is stuck in tight range for now. Canadian CPI would be the trigger for the Loonie to finally confirm medium term bearish reversal in USD/CAD.

In Asia, Nikkei closed down -0.31%. Hong Kong HSI is down -0.27%. China Shanghai SSE is down -0.26%. Singapore Strait Times is up 0.01%. Japan 10-year JGB yield is down -0.0012 at -0.121. Overnight, DOW dropped -0.09%. S&P 500 dropped -0.34%. NASDAQ dropped -0.43%. 10-yer yield rose 0.030 to 2.122.

Fed Powell reiterates pledge to act as appropriate

Fed Chair Jerome Powell's speech in Paris on Tuesday was largely similar to what he's said recently. He reiterated the pledged to "act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective."

In the baseline outlook, Fed expected growth to "remain solid, labor markets to stay strong, and inflation to move back up and run near 2 percent". However, "uncertainties about this outlook have increased", particularly regarding "trade developments and global growth".

Powell also noted the influences between monetary policies in different countries, "financial markets, trade, and confidence channels". And he noted, "pursuing our domestic mandates in this new world requires that we understand the anticipated effects of these interconnections and incorporate them into our policy decision making.

Fed Evans: On basis of inflation alone, a couple of rate cuts could be needed

Chicago Fed President Charles Evans, probably most dovish FOMC member, said "on the basis of inflation alone, I could feel confident in arguing for a couple of rate cuts before the end of the year."

He said in a CNBC interview yesterday that "in order to get inflation up to 2.25% over the next three years, I need 50 basis points of more accommodation." And, "maybe that's not quite enough".

Though, he also acknowledged that the economy is "doing well" and "we are ten years into an expansion." But after missing the inflation target for a decade, "two and a quarter or a little bit more would be about appropriate."

Fed Kaplan: Tactical rate cut could address risks seen in bond markets

Dallas Fed President Robert Kaplan said yesterday that "the best argument" for him to support rate cut is the "shape" of the yield curve. And, a "tactical" reduction of a quarter point could address the risks seen by bond investors.

He also said that inflation is likely to remain low because of the change in the economy and the link between wages and prices. He added businesses are not able to pass on higher costs to customers because of stiff competition. They have to absorb lower profits so they don't lose market share.

Separately, San Francisco Fed President Mary Daly said she's not leaning one way or the other on July interest rate decision. And, she will learn a lot in the next two months regarding whether rates would be lower by year end.

On the one hand, she noted it's too early to tell if additional stimulus was needed. And she saw no clouds looming on consumer spending and labor market. On the other hand, Daly noted business felt uncertain. She saw potpourri of headwinds, including trade, mood, uncertainty, global slowdown.

Fitch affirmed Japan's A rating, expects grow to lose steam after robust Q1

Fitch Ratings has affirmed Japan's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'A' with a stable outlook. In the statement, Fitch noted that the ratings " balance the strengths of an advanced and wealthy economy, with high governance standards and strong public institutions, against weak medium-term growth prospects and high public debt."

The rating agency projects GDP growth of 0.8% in 2019 despite an unexpectedly robust 2.1% in Q1. And, GDP growth is expected to lose steam through early 2020 from "weakening exports and industrial production." Japan and other countries in the region are reeling from the effects of the "global trade downturn" associated with the escalation in the US-China trade dispute. And, a further escalation of global trade tensions could pose a "significant risk" to the outlook for Japan. Also, "recent imposition of export restrictions on Korea has increased geopolitical tensions".

BoE Cunliffe: Could see stockpiling cycle build up again in Q3 on Brexit

In an interview with Newcastle Journal yesterday, BoE Deputy Governor Jon Cunliffe said "I haven't picked up a strong sense that the economy is contracting and people are seeing big drops in demand".

Q2 will likely be weak due to unwinding of stocks. But he added "with Q1 and the second quarter of this year, you won't get a very accurate read on the underlying nature of the economy".

Additionally, there is a Brexit "decision point" coming up on October 31. And, "we don't know whether we'll leave, or stay, or whether there'll be an extension". He added "we could see that stockpiling cycle build up again".

Looking ahead

Inflation data will be major focus today. UK will release CPI, RPI, PPI and house price index. Eurozone will release June CPI final. Later in the day, Canada will release CPI and manufacturing sales. US will release housing starts and building permits. Fed will also release Beige Book economic report.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.2361; (P) 1.2441; (R1) 1.2486; More....

Intraday bias in GBP/USD remains on the downside as recent decline is in progress. Sustained break of 1.2391 low will confirm resume larger down trend for 61.8% projection of 1.4376 to 1.2391 from 1.3381 at 1.2154 next. On the upside, break of 1.2579 resistance is needed to indicate short term bottoming. Otherwise, outlook remains bearish in case of recovery.

In the bigger picture, down trend from 1.4376 (2018 high) is still in progress. Break of 1.2391 would target a test on 1.1946 long term bottom (2016 low). For now, we don't expect a firm break there yet. Hence, focus will be on bottoming signal as it approaches 1.1946. In any case, medium term outlook will stay bearish as long as 1.3381 resistance holds, in case of strong rebound.

Economic Indicators Update

Chicago Fed President Charles Evans, probably most dovish FOMC member, said "on the basis of inflation alone, I could feel confident in arguing for a couple of rate cuts before the end of the year."

He said in a CNBC interview yesterday that "in order to get inflation up to 2.25% over the next three years, I need 50 basis points of more accommodation." And, "maybe that's not quite enough".

Though, he also acknowledged that the economy is "doing well" and "we are ten years into an expansion." But after missing the inflation target for a decade, "two and a quarter or a little bit more would be about appropriate."