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For the 24 hours to 23:00 GMT, the GBP declined 0.22% against the USD and closed at 1.2689, after dismal economic data.

On the data front, the nation's total trade deficit narrowed to £2.74 billion in April, following a revised deficit of £6.15 billion in the previous month. Markets had expected the nation to post a deficit of £4.7 billion.

On the flipside, UK's gross domestic product (GDP) dropped to its lowest level in 3 years by 0.4% on a monthly basis in April, amid steep decline in factory production and compared to a fall of 0.1% in the previous month. Market participants had envisaged GDP to record a decrease of 0.1%. Further, UK's manufacturing production unexpectedly declined to a 17-year low level of 0.8% on a yearly basis in April, defying market consensus for a rise of 2.0%. In the prior month, manufacturing production had recorded a rise of 2.6%. Moreover, the nation's industrial production surprisingly fell 1.0% on an annual basis in April, defying market expectations for an advance of 0.9%. In the previous month, industrial production had registered a rise of 1.3%. Also, the construction output rose 2.4% on a yearly basis in April, less than market expectations for a rise of 3.3% and following a gain of 3.2% in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.2683, with the GBP trading 0.05% lower against the USD from yesterday's close.

The pair is expected to find support at 1.2648, and a fall through could take it to the next support level of 1.2614. The pair is expected to find its first resistance at 1.2722, and a rise through could take it to the next resistance level of 1.2762.

Looking ahead, investors would keep an eye on UK's ILO unemployment rate and average weekly earnings, both for April, slated to release in a few hours.

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

Daily Pivots: (S1) 1.6182; (P) 1.6225; (R1) 1.6294; More...

EUR/AUD's break of 1.6262 resistance indicates resumption of recent rally from 1.5683. Intraday bias is back on the upside for 61.8% projection of 1.5683 to 1.6262 from 1.6052 at 1.6410 first. Break will target 100% projection at 1.6631 next. On the downside, break of 1.6052 support is now needed to indicate short term topping. Otherwise, outlook will remain cautiously bullish in case of retreat.

In the bigger picture, as long as 1.5346 support holds, outlook will still remain bullish. Up trend from 1.1602 (2012 low) is expected to resume sooner or later. Break of 1.6765 will target 61.8% retracement of 2.1127 (2008 high) to 1.1602 at 1.7488 next. However, firm break of 1.5346 key support will indicate trend reversal, with bearish divergence condition in weekly MACD, and turn outlook bearish.

For the 24 hours to 23:00 GMT, the USD slightly declined against the JPY and closed at 108.43.

In the Asian session, at GMT0300, the pair is trading at 108.61, with the USD trading 0.17% higher against the JPY from yesterday’s close.

The pair is expected to find support at 108.38, and a fall through could take it to the next support level of 108.15. The pair is expected to find its first resistance at 108.78, and a rise through could take it to the next resistance level of 108.95.

Trading trend in the Japanese Yen today, is expected to be determined by Japan’s machine tool orders for May, set to release in a while.

The currency pair is trading above its 20 Hr and 50 Hr moving average.

US stocks closed generally higher overnight even though the rally looks a bit stretched. Positive sentiments continue in Asian session today. Yen is naturally one of the weakest on risk appetite. But Australian and New Zealand Dollar are also among the weakest, continuing recent decoupling with risk markets. We'll see if such decoupling is developing into a long-lasting trend. Meanwhile, Canadian Dollar and Euro are so far the strongest ones for today.

Technically, EUR/AUD's break of 1.6262 indicates resumption of recent rise from 1.5683 and could be targeting 1.6765 high eventually. AUD/USD's recovery from 0.6864 should have completed at 0.7022 and deeper fall would be seen back to retest this low. EUR/USD is so far very resistant despite Dollar's rebound attempts. Euro is partly helped by rises in crosses in particular against Sterling and Aussie. For now, as long as 1.1251 minors support holds, EUR/USD's rebound from 1.1107 is still in favor to continue.

In Asia, currently, Nikkei is up 0.28%. Hong Kong HSI is up 0.86%. China Shanghai SSE is up 2.01%. Singapore Strait Times is up 0.50%. Japan 10-year JGB yield is up 0.010 at -0.111. Overnight, DOW rose 0.30%. However, it actually closed below open, suggesting temporary topping. S&P 500 rose 0.47%. NASDAQ rose 1.05%. 10-year yield rose 0.059 to 2.143.

Trump expects to meet Xi at G20, or raise tariffs

Trump said yesterday that he and Chinese President Xi are "scheduled to have a meeting" at the G20 summit in Osaka. He added, "We're expected to meet and if we do that's fine, and if we don't -- look, from our standpoint the best deal we can have is 25% on $600 billion."

And, "if we don't have a deal and don't make a deal, we'll be raising the tariffs, putting tariffs on more than -- we only tax 35% to 40% of what they said then they had another 60% that'll be taxed."

He repeated, "China is going to make a deal because they're going to have to make a deal". Also, "at the same time it could be very well that we do something with respect to Huawei as part of our trade negotiation with China. China very much wants to make a deal. They want to make a deal much more than I do, but we'll see what happens."

Australia business condition dropped as private sectors continue to lose momentum

Australian NAB Business Condition dropped again in May to 1, down from 3. Private sector continues to lose momentum. Goods distribution industries remain particularly weak, and manufacturing is not far behind. Business Confidence jumped from 0 to 7, in a post-election spike, as well as on RBA rate cut expectations. However, forward looking indicators suggest more weakness lies ahead.

Alan Oster, NAB Group Chief Economist noted "business confidence saw a sharp increase in the month following the Federal election and a confirmation from the RBA that rates would be cut in June. We think this will be a short-term spike given other forward-looking indicators saw further deterioration in the month. Forward orders declined further and in addition to being well below average are negative. Capacity utilisation has also pulled back in 2019 to date and is now a touch below average".

"While confidence, at least at face value was a positive outcome, business conditions deteriorated further. Trading conditions and profits are particularly weak. The employment index which we are watching closely, partially reversed some of its decline last month, but is only around average".

Looking ahead

UK employment data will be the major focus in European session. Eurozone will also release Sentix investor confidence. Later in the day, US will release PPI inflation.

EUR/AUD Daily Outlook

Daily Pivots: (S1) 1.6182; (P) 1.6225; (R1) 1.6294; More...

EUR/AUD's break of 1.6262 resistance indicates resumption of recent rally from 1.5683. Intraday bias is back on the upside for 61.8% projection of 1.5683 to 1.6262 from 1.6052 at 1.6410 first. Break will target 100% projection at 1.6631 next. On the downside, break of 1.6052 support is now needed to indicate short term topping. Otherwise, outlook will remain cautiously bullish in case of retreat.

In the bigger picture, as long as 1.5346 support holds, outlook will still remain bullish. Up trend from 1.1602 (2012 low) is expected to resume sooner or later. Break of 1.6765 will target 61.8% retracement of 2.1127 (2008 high) to 1.1602 at 1.7488 next. However, firm break of 1.5346 key support will indicate trend reversal, with bearish divergence condition in weekly MACD, and turn outlook bearish.

Economic Indicators Update

For the 24 hours to 23:00 GMT, the USD declined 0.10% against the CHF and closed at 0.9896.

In the Asian session, at GMT0300, the pair is trading at 0.9899, with the USD trading a tad higher against the CHF from yesterday’s close.

The pair is expected to find support at 0.9883, and a fall through could take it to the next support level of 0.9866. The pair is expected to find its first resistance at 0.9918, and a rise through could take it to the next resistance level of 0.9936.

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

For the 24 hours to 23:00 GMT, the USD marginally declined against the CAD and closed at 1.3266.

In economic news, Canada's building permits surged 14.7% on a monthly basis in April, compared to a revised rise of 2.8% in the previous month. Market participants had anticipated building permits to register a climb of 1.8%. Meanwhile, the nation's seasonally adjusted housing starts declined to a level of 202.3K in May, more than market expectations for fall to a level of 207.5K. In the prior month, housing starts had registered a revised level of 233.4K.

In the Asian session, at GMT0300, the pair is trading at 1.3264, with the USD trading a tad lower against the CAD from yesterday's close.

The pair is expected to find support at 1.3250, and a fall through could take it to the next support level of 1.3237. The pair is expected to find its first resistance at 1.3279, and a rise through could take it to the next resistance level of 1.3295.

Amid lack of economic releases in Canada today, traders would focus on global macroeconomic events for further direction.

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

For the 24 hours to 23:00 GMT, the AUD declined 0.32% against the USD and closed at 0.6961.

LME Copper prices rose 0.3% or $18.0/MT to $5788.0/MT. Aluminium prices rose/declined 0.7% or $12.5/MT to $1720.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.6962, with the AUD trading slightly higher against the USD from yesterday's close.

Overnight data showed that Australia's NAB business confidence index rose to a level of 7.0 in May, following a flat reading in the prior month. Meanwhile, the nation's NAB business conditions index fell to a level of 1.0 in May, compared to a level of 3.0 in the previous month.

The pair is expected to find support at 0.6949, and a fall through could take it to the next support level of 0.6935. The pair is expected to find its first resistance at 0.6980, and a rise through could take it to the next resistance level of 0.6997.

Moving ahead, traders would await Australia's Westpac consumer confidence index for June, slated to release overnight.

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

For the 24 hours to 23:00 GMT, Gold declined 0.16% against the USD and closed at USD1332.00 per ounce, after the US President, Donald Trump backed from his decision to impose trade tariffs on Mexico.

In the Asian session, at GMT0300, the pair is trading at 1333.20, with gold trading 0.09% higher against the USD from yesterday’s close.

The pair is expected to find support at 1329.90, and a fall through could take it to the next support level of 1326.60. The pair is expected to find its first resistance at 1335.60, and a rise through could take it to the next resistance level of 1338.00.

The yellow metal is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, Silver declined 0.84% against the USD and closed at USD14.69 per ounce, tracking losses in gold prices.

In the Asian session, at GMT0300, the pair is trading at 14.70, with silver trading a tad higher against the USD from yesterday’s close.

The pair is expected to find support at 14.61, and a fall through could take it to the next support level of 14.52. The pair is expected to find its first resistance at 14.80, and a rise through could take it to the next resistance level of 14.90.

The white metal is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, Crude Oil declined 1.48% against the USD and closed at USD53.34 per barrel, amid a possible delay in OPEC and its allies led output cuts.

In the Asian session, at GMT0300, the pair is trading at 53.48, with oil trading 0.26% higher against the USD from yesterday's close.

The pair is expected to find support at 52.84, and a fall through could take it to the next support level of 52.19. The pair is expected to find its first resistance at 54.34, and a rise through could take it to the next resistance level of 55.19.

Crude oil is trading below its 20 Hr and 50 Hr moving averages.