Sample Category Title

Canada GDP grew 0.5% mom in March, , well above expectation of 0.3% mom. Goods-producing industries were up 0.7%, offsetting most of the decline in February, while services-producing industries (+0.4%) posted their strongest increase since May 2018. There were gains in 16 of the 20 industrial sectors.

For Q1, GDP grew an annualized 0.4%, well below expectation of 0.7%. Growth in real GDP was driven by a 0.9% increase in household spending and an 8.7% rise in business investment in machinery and equipment. These increases were moderated by a 1.0% decline in exports, coupled with a 1.9% increase in imports. Additionally, investment in housing continued to decline, down 1.6% in the first quarter.

In April, US personal income rose 0.5% or USD 92.8B, above expectation of 0.3%. Spending rose 0.3% or USD 42.7B, above above expectation of 0.2%. Headline PCE rose to 1.5% yoy, up from 1.4% and matched expectations. Core PCE inflation rose to 1.6% yoy, up from 1.5% yoy and matched expectations.

Little reaction is seen in Dollar after the release. The question remains on whether inflation will "persistently" miss 2% target that eventually force a Fed cut. For now, there is no clear evidence for that yet. The greenback might need to look at ISMs and NFP next week for more inspirations.

Full release here.

GER30 index dived below a former key support area of 11,700 on Friday, signalling the continuation of the bearish action. The RSI is backing this view as well as the indicator keeps losing ground under its 50 neutral mark, while the MACD is giving extra negative warnings as long as it extending negative momentum below its red signal line.

Traders however could wait for a decisive close below the 200-day simple moving average and the Ichimoku cloud before rapidly increasing selling volumes. Should the market move accordingly, losses could last until the 38.2% Fibonacci of 11,397 of the downleg from 13,206 to 10,276.

On the flip side, a clear breakout of the 11,980-12,000 area, where the 20- and the 50-day SMAs are currently positioned could open the way towards the previous peak of 12,317.

Meanwhile in the medium-term timeframe, the bullish cross between the 50- and the 200-day SMAs suggests that the market trend is likely to hold on the upside.

Copper futures with delivery on July 2019 are declining with strong momentum over the last three days below the 20- and 40-simple moving averages (SMAs) in the daily timeframe and recording a four-month low of 2.6260 today. The technical indicators are remaining in the bearish territory, with the RSI sloping down in the oversold zone and the MACD posting a bearish cross with its trigger line.

In case the price extends the bearish move, immediate support is expected to come from the 2.5750 barrier, while a significant penetration of this line could meet an obstacle near 2.5380.

On the other side, if there is an upside reversal, the price could reach the 20-SMA currently at 2.7186 and the 2.7475 resistance area. Above these lines, the market may next meet the 40-SMA around 2.8083 and the 2.8295 barrier.

Briefly, copper prices maintain a bearish short-term bias after the bounce off 2.9916 with technical indicators approving the current negative movement.

Global equities are sharply lower as risk off hit all asset classes after President Trump stunned markets with his announcement of tariffs on Mexican imports, an unexpected escalation in the trade war with Mexico. Trump’s move will derail recent progress that was made with the USMCA negotiations and adds concerns trade wars will become the new norm. More importantly, China also announced they will be releasing a blacklist of companies to target that cut supplies and violated their market rules, heightening the economic pain that will hit multi-nationals. Today’s headlines highlight an intensification of trade spats between the US and their first and third largest trading partners. Dow Futures will open sharply lower, breaking below the $25,000 handle, while the Nasdaq continues to lead the way down with a 1.3% decline. Global bond yields are plummeting across the board, while the curve steepens in America. Risk-off flows supported the Japanese yen, Swiss franc and gold prices.

• Trade – Risk off on Trump Mexico tariff and China blacklist
• Bunds – Falls to Record Low
• Turkey – Exits First Recession in a Decade
• Oil – Collapsing on trade worries
• Gold – Struggles despite rate cut bets

Trade

President Trump surprised markets after announcing Thursday night that the US would impose escalating tariffs on all Mexican goods beginning on June 10th, aiming at containing the rise in central American migrants coming to the border. Mexico is America’s third largest trading partner is expected to see a 5% tariff on imports that could grow up to 25% on October 1st. Trump’s decision likely puts a confusing twist to efforts to win congressional support in ratifying the United States- Mexico- Canada agreement. While the sudden aim at Mexico stunned markets, the demands are not as complicated as the ask list for China, so we could see a relatively quicker resolution here. Mexico could easily deliver improved security at the Mexico/Guatemala border, targeting criminal organizations that aid migrants, but may have trouble agreeing on acknowledging Central Americans entering Mexico are not able to ask for asylum with the US.

China’s retaliatory tariffs begin tonight and it seems the next round of wave of risk-off trade could get even uglier. China will establish a list of unreliable entities that will take aim at foreign firms that cut supplies to China. The curbing of exports of rare earth to US manufacturers is likely to become a reality too.

Trade tensions were supposed to be entering a state of calm and not flare up. Fear is that once these tariffs are implemented, economic activity and sentiment will see markets price in further economic weakness, that will have lasting impact and will not go away easily even if we do see trade deals in near future.

Bunds

German yields are plummeting as risk aversion sees investors fleeing to German bonds. The yield on 10-year German bund fell to a record low, surpassing the one made back when Brexit happened. Many analysts are wondering if the entire German curve will go negative, a blow to German banks. The ECB is likely going to need to step up QE and deliver further rate cuts. The euro is still holding onto the 1.11 level.

Lira

The Turkish lira rallied after the country officially exited a recession, however it was mainly driven by surge in lending by state banks. The 1.3% expansion in Q1 was expected and the lira rallied 0.3% to the dollar. Turkey remains a political mess and the longer-term bearish outlook for the economy remains in place. The lira is down roughly 5% this quarter and with consumer confidence at record lows, prospects for further Turkish growth are slim.

Oil

Oil bearish momentum remains on overdrive as trade fears have dealt a strong blow to demand expectations. President Trump’s latest tariffs on Mexico will also punish US gulf refiners, adding a few dollars to Maya crude, the only type of oil Pemex has been selling. West Texas Intermediate crude is down over 2% and back to the mid-50s. Glut concerns will also grow as stockpiles are growing as we enter the summer driving season. Oil could see a run for the $50 a barrel level as global growth concerns increase and are combined with a recent run of bearish EIA weekly crude and gasoline inventory reports.

Gold

Gold is back above $1,300 an ounce on Trump’s latest tariff theatrics. The yellow metal has underperformed as a safe-haven but could see further gains as technical traders appreciate the breakout from a recent tight range.

USD/CAD has posted considerable gains in the Friday session. Currently, the pair is trading at 1.3558, up 0.43% on the day. On the release front, there are key events on both sides of the border. Canadian GDP is expected to rebound in March, with a gain of 0.4%, after a decline of 0.1%. The Raw Materials Price Index is expected to slow to 2.3%. In the U.S., consumer data also in the spotlight. The Federal Reserve’s preferred inflation gauge, Core PCE Price Index, is expected to improve to 0.2%. However, personal spending is projected to slow to o.2%, after a strong gain of 0.9% in the previous release. Traders should be prepared for further movement from the pair in the North American session.

The Canadian dollar is sensitive to trade risks, and has lost ground on Friday after President Trump threatened to slap tariffs on all Mexican products, due to the illegal immigration problem. Although Trump said that tariffs would be set at just 5%, risk appetite has fallen, sending the Canadian dollar lower. There was more negative news out of China, as manufacturing PMI dipped into contraction territory, with a reading of 49.4, shy of the estimate of 49.9 points. The Chinese economy has been hit hard by the trade war with the U.S., which has weakened global demand. This, in turn, has hurt export-reliant economies such as Canada, and has weighed on the Canadian dollar.

Which way is the Canadian dollar headed? There are factors which could support a move in either direction. The labor market has improved, and created a record number of jobs in April. Consumer spending, a key driver of economic growth, also remains strong. On the negative side, trade tensions between the U.S. and China have soared, which has hurt risk appetite towards minor currencies like the Canadian dollar. As well, oil prices have fallen, which has weighed on the Canadian currency.

Just as the Chinese Communist Party run hawkish tabloid Global Times warned that "major retaliative measures' on US for Huawei are underway, the Commerce Ministry announced to set up a list of "unreliable entities" targets companies that violate market rules, cut off supply to the country.

The ministry noted that for non-commercial purposes, some foreign entities impose blockades, confessions and other discriminatory measures against Chinese enterprises and damage their legitimate rights and interests". Such entities endanger China's national security and interests, and also pose a threat to global supply chain. Detailed measures regarding the list will be announced later.

Off shore Chinese Yuan is back under pressure today, with USD/CNH hitting as high as 6.9472 so far. 6.9488 resistance is back in focus. Overall, we're not expecting a sustainable top in USD/CNH at current level, not even at the psychologically important 7 handle.

There were talks that USD/CNH above 7 would cause serious capital outflow and risks delaying internationalization of the Yuan. But it's also noted that the government has implement measures already, including tighter compliance requirements. For, we'd believe that all the official would try is only slowing Yuan's decline, rather than blocking it.

Notes/Observations

• Risk aversion continues to peculate after Trump dropped a Mexico tariff bombshell; suggest that Trump is not afraid of a multi-front trade war
• Safe haven flows has German 10-year Bund yield testing record lows of -0.20%
• German State CPI data for May showed a decleration in inflation but resulting in any major market moves ahead of next week's ECB decision
• Italy Final Q1 GDP revised lower but confirmed its move out of a technical recession
• BOJ altered its monthly bond-buying plan for a third time this year paving the way for it to buy less debt in June

Asia:

• China Govt said to have plan ready to cub rare earth sales to US if needed with measures likely to focus on heavy rare earths
• China May Manufacturing PMI saw its 1st contraction in 3 months( 49.4 v 49.9e); data raises expectation of policy support
• Bank of Korea (BOK) left its 7-Day Repo Rate unchanged at 1.75% (as expected). Decision was not unanimous with 1 dissenter calling for rate cut
• Japan Apr Jobless Rate: 2.4% v 2.4%e
• Japan May Tokyo CPI Y/Y: 1.1% v 1.2%e; CPI Ex-Fresh Food Y/Y: 1.1% v 1.2%e
• Japan Apr Preliminary Industrial Production M/M: 0.6% v 0.2%e; Y/Y: -1.1% v -1.5%e
• Japan Apr Retail Sales M/M: 0.0% v 0.6%e; Y/Y: 0.5% v 0.9%e

Europe/Mideast:

• Italy Five Star Party members voted to support Di Maio to continue as party leader after the EU Parliamentary election defeat

Americas:

• US President Trump stated that US to impose 5% tariff on all goods from Mexico. Tariffs would gradually increase to 25% "until illegal immigration problem was remedied"
• US Senator Grassley (R): Trump announcement on Mexico was a misuse of tariff authority; trade policy and border security are separate issues
• Mexican Dep Foreign Min Seade: If the US imposed new tariffs, Mexico would respond strongly
• President Trump said to trigger process that would allow him to submit USMCA to Congress in an expedited 30 days, which could raise ire of congressional Democrats who have said they need more time to study the bill
• House Speaker Pelosi (D-CA): Trump decision to expedite USMCA process was 'not a positive step '

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -1.10% at 368.00, FTSE -0.91% at 7,152.14, DAX -1.59% at 11,712.35, CAC-40 -1.27% at 5,182.30, IBEX-35 -1.58% at 9,013.42, FTSE MIB -1.61% at 19,627.50, SMI -0.32% at 9,511.80, S&P 500 Futures -1.02%]
• Market Focal Points/Key Themes: European Indices trade sharply lower across the board following a mixed session in Asia and lower US futures, as German 10 year yields hit a record low following further tariff action from the US, imposing a 5% tariff on all goods from Mexico in an effort to combat illegal immigration. European export names trade under pressure with the like of Renault, Volkswagen, Continental, ArcelorMittal among the names declining following the Mexico tariff announcement. Shares of Stride Gaming gains on M&A talk with Rank Group as well as earnings. Savannah Petroleum gains on earnings, while Flex Lng and Wizz Air decline on earnings. In other news Kiadis Pharma is a notable decliner following a placing, while Wirecard declines on fresh allegations of payment handing from illegal firms like Option888. Looking ahead notable earners include Big Lots, Conn's and Genesco.

Equities

• Consumer discretionary: Wizz Air [WIZZ.UK] -2.5% (earnings), Stride Gaming [STR.UK] +23% (offer), H&M [HMB.SE] -3.5% (Gap earnings)
• Energy: FLEX LNG [FLNG.NO] -6% (earnings)
• Financials: BBVA [BBVA.ES] -4% (Mexico-US trade tensions), Legal & General Group [LGEN.UK] -1%, Allianz [ALV.DE] -1.5% (divestment), Commerzbank [CBK.DE] -3% (yields renew multi-year lows)
• Healthcare: Bayer [BAYN.DE] -2.5% (Los Angeles County sues company), SHL Telemedicine [SHLTH.CH] +5.5% (offer revised)
• Industrials: Volkswagen [VOW3.DE] -2.5%, Tenaris [TEN.IT] -4%, Fiat Chrysler [FCA.IT] -4% (Mexico-US trade tensions)
• Technology: Wirecard [WDI.DE] -9.5% (German press report on investigation)

Speakers

• ECB's Visco (Italy): Italy 2019 debt load may rise more than govt estimate; is a serious constraint on economy
• Italy Fin Min Tria reiterated govt stance that the country's debt is manageable and sustainable
• Japan Econ Min Motegi reiterated view that domestic recovery would gradually continue; more attention needed to be paid to overseas conditions
• China Foreign Ministry spokesperson Geng Shuang: US and China to maintain contact through various means
• S&P raised Indonesia sovereign rating from BBB- to BBB; outlook stable
• Secretary of State Pompeo: China represents security risk to the US, have been clear about the risks presented by Huawei

Currencies/Fixed Income

• The theme of the markets today is risk off again as the trade war deepens after Trump placed tariffs on Mexico until the "illegal immigration problem is remedied". The dollar index started the day strong as it briefly traded above the 98 handle only to retreat after the comments. However after the comments we did see the Swiss Franc and yen both appreciate as funds retreated to safe havens.
• USD/MXN The comments from Trump sent the Mexican Peso higher with it up at one point over 3%, a 5 month high.
• EUR/USD The Euro saw German state CPIs this morning with mixed results as we prepare for the ECB conference next week. Trade action wise we saw the Euro trade higher breaking the previous day's high and breaking the week long sell off. The EUR/USD strength could also be tied to dollar weakness. we also saw the 10 year Bund yield pair its yield for a record low of -0.2%, a level reached back in July 2016.
• GBP/USD The cable also saw some trading movement as we broke the 1.26 handle yesterday only to be pushed right back above. Nothing further with the Brexit front and the short term volatility could be tied to the USD

Economic Data

• (DE) Germany Apr Retail Sales M/M: -2.0% v +0.1%e; Y/Y: 4.0% v 1.4%e
• (UK) May Nationwide House Prices M/M: -0.2% v 0.0%e; Y/Y: 0.6% v 1.2%e
• (FI) Finland Mar Final Trade Balance: -€0.1B v -€0.1B prelim
• (ZA) South Africa Apr M3 Money Supply Y/Y: 8.8% v 7.0%e; Private Sector Credit Y/Y: 8.0% v 6.2%e
• (CH) Swiss Apr Real Retail Sales Y/Y: -0.7% v -0.8%e
• (DE) Germany May CPI Saxony M/M: 0.3% v 0.9% prior; Y/Y: 1.4% v 1.9% prior
• (CZ) Czech Q1 Preliminary GDP (2nd reading) Q/Q: 0.6% v 0.5%e; Y/Y: 2.6% v 2.5%e
• (TR) Turkey Q1 GDP Q/Q: 1.2% v 1.2%e; Y/Y: -2.6% v -2.8%e
• (TR) Turkey Apr Trade Balance: -$3.0B v -$2.8Be
• (HU) Hungary Mar Final Trade Balance: €0.6B v €0.7B prelim
• (HU) Hungary Q1 Final GDP Q/Q: 1.5% v 1.5%e; Y/Y: 5.3% v 5.3%e
• (CN) Weekly Shanghai copper inventories (SHFE): 165.4K v 172.3K tons prior
• (TH) Thailand Apr Current Account Balance: $1.8B v $2.0Be; Overall Balance of Payments (BOP): -$1.2B v -$0.1B prior; Trade Account Balance: $0.1B v $3.6B prior; Exports Y/Y: -2.9% v -4.2% prior; Imports Y/Y: -0.4% v -5.8% prior
• (DE) Germany May CPI Brandenburg M/M: 0.3% v 0.8% prior; Y/Y: 1.3% v 1.9% prior
• (DE) Germany May CPI Hesse M/M: 0.4% v 0.9% prior; Y/Y: 1.4% v 1.8% prior
• (DE) Germany May CPI Bavaria M/M: 0.1% v 0.9% prior; Y/Y: 1.6% v 2.2% prior
• (IT) Italy Q1 Final GDP Q/Q: 0.1% v 0.2%e; Y/Y: -0.1% v +0.1%e
• (PL) Poland Q1 Final GDP Q/Q: 1.5% v 1.4% prelim; Y/Y: 4.7% v 4.6% prelim
• (ES) Spain Mar Current Account Balance: €0.0B v -€2.8B prior
• (NO) Norway May Unemployment Rate: 2.1% v 2.1%e
• (NO) Norway Central Bank (Norges) Jun Daily FX Purchases(NOK): -600M v -600M prior
• (RU) Russia Narrow Money Supply w/eMay 24th (RUB): 10.30T v 10.40T prior
• (CZ) Czech Apr M2 Money Supply Y/Y: 6.3%v 5.7% prior
• (UK) Apr Net Consumer Credit: £0.9B v £1.0Be v £0.5B prior; Net Lending £4.3B v £3.7Be
• (UK) Apr Mortgage Approvals: 66.3K v 63.7Ke
• (UK) Apr M4 Money Supply M/M: +0.9% v -0.5% prior; Y/Y: 3.0% v 2.2% prior; M4 Ex IOFCs 3M Annualized: 2.9% v 0.7% prior
• (DE) Germany May CPI North Rhine Westphalia M/M: 0.3% v 1.0% prior; Y/Y: 1.6% v 2.1% prior
• (PT) Portugal May Preliminary CPI M/M: 0.1% v 0.6% prior; Y/Y: 0.5% v 0.8% prior
• (PT) Portugal May Preliminary CPI EU Harmonized M/M: 0.3% v 1.0% prior; Y/Y: 0.4% v 0.9% prior
• (HK) Hong Kong Apr Retail Sales Value Y/Y: -4.5% v -0.2%e; Retail Sales Volume Y/Y: -5.0% v -0.7%e
• (IT) Italy May Preliminary CPI M/M: 0.1% v 0.2%e; Y/Y: 0.9% v 1.0%e
• (IT) Italy May Preliminary CPI EU Harmonized M/M: 0.1% v 0.2%e; Y/Y: 0.9% v 0.9%e
• (IS) Iceland Q1 GDP Q/Q: % v 2.7% prior; Y/Y: 1.7% v 5.2% prior
• (IS) Iceland Apr Final Trade Balance (ISK): -15.1B v -15.9B prelim
• (GR) Greece Mar Retail Sales Value Y/Y: 4.6% v -3.1% prior; Retail Sales Volume Y/Y: +5.1% v -2.2% prior

Fixed Income Issuance

• (IN) India sold total INR170B vs. INR170B indicated in 2021, 2026, 2031, 2039 and 2059 bonds

Looking Ahead

• 05:30 (SL) Sri Lanka May CPI Y/Y: No est v 4.5% prior
• 05:30 (IN) India to sell combined INR170B in 2021, 2026, 2031, 2039 and 2059 bonds
• 06:00 (IT) Italy Apr PPI M/M: No est v 0.0% prior; Y/Y: No est v 3.7% prior
• 06:00 (PT) Portugal Q1 Final GDP Q/Q: 0.5%e v 0.5% prelim; Y/Y: 1.8%e v 1.8% prelim
• 06:00 (UK) DMO to sell €4.5B in 1-month, 3-month and 6-month bills £0.5B, £1.5B and £2.5B respectively)
• 06:45 (US) Daily Libor Fixing
• 07:30 (IN) Weekly India Forex Reserves
• 08:00 (DE) Germany May Preliminary CPI M/M: 0.3%e v 1.0 % prior; Y/Y: 1.6%e v 2.0%% prior
• 08:00 (DE) Germany May Preliminary CPI EU Harmonized M/M: 0.3%e v 1.0% prior; Y/Y: 1.4%e v 2.1% prior
• 08:00 (IN) India Q1 GDP Y/Y: 6.3%e v 6.6% prior; GVA Y/Y: 6.1%e v 6.3% prior
• 08:00 (IN) India 2019 GDP Annual Estimate Y/Y: 7.0%e v 7.0% prior
• 08:00 (ZA) South Africa Apr Trade Balance (ZAR): 1.3Be v 5.0B prior
• 08:00 (BR) Brazil Apr National Unemployment Rate: 12.6%e v 12.7% prior
• 08:00 (UK) Baltic Dry Bulk Index
• 08:00 (ES) Spain Debt Agency (Tesoro) a announces upcoming issuance
• 08:30 (US) Apr Personal Income: 0.3%e v 0.1% prior; Personal Spending: 0.2%e v 0.9% prior; Real Personal Spending (PCE): 0.0%e v 0.7% prior
• 08:30 (US) Apr PCE Deflator M/M: 0.3%e v 0.2% prior; Y/Y: 1.6%e v 1.5% prior
• 08:30 (US) Apr PCE Core Deflator M/M: 0.2%e v 0.0% prior; Y/Y: 1.6%e v 1.6% prior
• 08:30 (CA) Canada Mar GDP M/M: +0.4%e v -0.1% prior; Y/Y: 1.2%e v 1.1% prior; Q1 Quarterly GDP Annualized: 0.7%e v 0.4% prior
• 08:30 (CA) Canada Apr Industrial Product Price M/M: 0.7%e v 1.3% prior; Raw Materials Price Index M/M: No est v 2.8% prior
• 08:30 (US) Weekly USDA Net Export Sales
• 09:00 (MX) Mexico Mar Gold Production: No est v 6.6K kilograms prior; Silver Production: No est v 298.8K kilograms prior; Copper Production: No est v 38.8K tons prior
• 09:00 (CL) Chile Apr Unemployment Rate: 6.8%e v 6.9% prior
• 09:00 (CL) Chile Apr Industrial Production Y/Y: +1.5%e v -0.8% prior; Manufacturing Production Y/Y: 0.2%e v 1.3% prior; Total Copper Production: No est v 479.1K tons prior
• 09:30 (BR) Brazil Apr Primary Budget Balance (BRL): +8.4Be v -18.6B prior; Nominal Budget Balance: -26.2Be v -62.2B prior; Net Debt to GDP: 54.1%e v 54.2% prior
• 09:45 (US) May Chicago PMI: 54.0e v 52.6 prior
• 10:00 (US) May Final University of Michigan Confidence: 101.5e v 102.4 prelim
• 10:00 (MX) Mexico Apr Net Outstanding Loans (MXN): No est v 4.536T prior
• 11:00 (CO) Colombia Apr National Unemployment Rate: No est v 10.8% prior; Urban Unemployment Rate: 11.5%e v 12.0% prior
• 11:00 (EU) Potential sovereign ratings after European close
• 12:00 (US) Fed's Williams (moderate, voter)
• 13:00 (US) Weekly Baker Hughes Rig Count data
• 15:00 (US) Apr Agricultural Prices Paid: No est v % prior; Agriculture Prices Received: No est v % prior
• 20:00 (KR) South Korea Apr Trade Balance: $2.5Be v $4.0B prior (revised from $4.1B); Exports Y/Y: -6.6%e v -2.0% prior; Imports Y/Y: 0.5%e v 2.4% prior
• (BE) ECB's Preat (Belgium) terms expires

The DAX has declined sharply in the Friday session. Currently, the index is at 11,685, down 1.82% on the day. In economic news, German consumer data is in focus. Retail sales declined by 2.0% in April, much worse than the estimate of a 0.4% gain. Later in the day, Germany releases CPI, with an estimate of 0.3%.

Equity markets are in red territory on Friday, in response to President Trump’s threat to slap tariffs on all Mexican products, due to the illegal immigration problem. Although Trump said that tariffs would be set at just 5%, risk appetite has fallen sharply. On the DAX, which is especially vulnerable to trade risks, bank and automaker listings are deep in negative territory. Deutsche Bank has declined 2.16%, while Daimler has fallen 3.33%, BMW is down 2.50%, and Volkswagen has plunged 4.2%.

Is the German locomotive slowing down? The normally strong labor market shocked investors as unemployment rolls soared by 60,000. This was the first gain in almost two years. There was more negative news on Friday, as retail sales fell 2.0%, its sharpest drop since January. German inflation is next, with Preliminary CPI projected to slow to 0.3% in May, after a strong gain of 1.0% in April.

The GBPJPY cross fell nearly 1% in Asian / European trading on Friday, extending steep downtrend from 3 May high at 146.50.

Fresh bearish acceleration was sparked by announcement on US tariffs on imports from Mexico that triggered strong demand for safe-haven assets and boosted yen.

On the other side, pound remains under strong pressure on rising fears for no-deal Brexit.

The cross hit the lowest levels since early Jan (136.72 so far) after Thursday’s close below important Fibo support at 138.21 (61.8% of 131.62/148.87 ascend) generated initial bearish signal, which was boosted by the latest news of spread of trade war.

Bears can extend to 135.69 (Fibo 76.4%) as there are no obstacles en-route and sentiment remains firmly bearish.

The pair is on track for the fourth straight bearish week and also about to register the biggest monthly fall since June 2016 (when sterling collapsed after Britain voted for Brexit) that adds to strong bearish outlook.

Oversold daily studies warn of corrective action, but lacking any firmer signal for now.

Res: 137.37, 137.75, 138.21, 138.83
Sup: 136.72, 136.00, 135.69, 135.00