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Daily Pivots: (S1) 1.1113; (P) 1.1143; (R1) 1.1161; More.....

EUR/USD is still bounded in consolidation from 1.1111 and intraday bias remains neutral. More corrective trading could be seen and another recovery cannot be ruled out. But upside should be limited by 1.1263 resistance to bring down trend resumption. On the downside, firm break of 1.1107 will target 100% projection of 1.1448 to 1.1183 from 1.1324 at 1.1059. However, sustained break of 1.1263 resistance will now be an early sign of trend reversal and turn bias to the upside for 1.1448 key resistance.

In the bigger picture, down trend from 1.2555 (2018 high) is still in progress. Such decline would target 78.6% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.0813 next. Sustained break there will pave the way to retest 1.0339. On the upside, break of 1.1448 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

Daily Pivots: (S1) 1.2602; (P) 1.2636; (R1) 1.2661; More....

GBP/USD is staying in consolidation from 1.2605 and intraday bias stays neutral for the moment. More sideway trading could still be seen. In case of another recovery, upside should be limited by 1.2865 support turned resistance to bring fall resumption. On the downside, break of 1.2605 will target a test on 1.2391 low first. Firm break there will resume larger down trend to 61.8% projection of 1.4376 to 1.2391 from 1.3381 at 1.2154 next.

In the bigger picture, current development suggests that medium term decline from 1.4376 (2018 high) is not completed, and is possibly ready to resume. Decisive 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.

Daily Pivots: (S1) 1.0058; (P) 1.0073; (R1) 1.0096; More...

USD/CHF is staying in range above 1.0008 and intraday bias remains neutral first. On the upside, decisive break of 1.0119 resistance will suggest that decline from 1.0237 is merely a correction and has completed. Intraday bias will be turned back to the upside for retesting 1.0237. That will also retain medium term bullishness in the pair. On the downside, however, firm break of 1.0008 should pave the way to retest 0.9879 key support next.

In the bigger picture, USD/CHF is losing upside momentum ahead of 1.0342 key resistance (2016 high). There is no clear sign of reversal yet. But even in case of another rise, we'd be cautious on strong resistance from 1.0342 to limit upside. On the downside, break of 0.9879 support will suggest that larger rise from 0.9186 (2018 low) has completed. Deeper fall will be seen to 0.9716 support for confirmation.

Daily Pivots: (S1) 109.26; (P) 109.48; (R1) 109.81; More...

USD/JPY recovered ahead of 109.02 support. Intraday bias stays neutral as consolidation from 109.02 is extending. In case of another rise upside should be limited below 110.67 resistance to bring fall resumption eventually. On the downside, break of 109.02 will resume the fall from 112.40 and target 61.8% retracement of 104.69 to 112.40 at 107.63 next.

In the bigger picture, USD/JPY is staying inside falling channel from 118.65. Current development suggests that rebound from 104.69 is only a corrective move. And fall from 118.65 is not completed yet. Decisive break of 104.69 will extend the down trend towards 98.97 support (2016 low). For now, we'd expect strong support above there to bring rebound.

Daily Pivots: (S1) 0.6903; (P) 0.6918; (R1) 0.6931; More...

No change in AUD/USD's outlook as consolidation from 0.6864 is in progress. Further recovery could be seen but upside should be limited by 0.6988 support turned resistance to bring fall resumption. On the downside, break of 0.6864 resume the fall from 0.7295 to 161.8% projection of 0.7295 to 0.7003 from 0.7205 at 0.6733, which is close to 0.6722 low.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

Daily Pivots: (S1) 1.3485; (P) 1.3516; (R1) 1.3551; More...

USD/CAD rose to as high as 1.3546 and the breach of 1.3521 resistance suggests that larger rise from 1.3068 is resuming. Intraday bias is back on the upside for retesting 1.3664 high. For now, break of 1.3429 support is needed to be the first sign of near term reversal. Otherwise, outlook will remain bullish in case of retreat.

In the bigger picture, USD/CAD is staying well inside medium term rising channel (support at 1.3321). Thus, the up trend from 1.2061 (2017 low) should be in progress. On the upside, decisive break of 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 will pave the way to 78.6% retracement at 1.4127 next. This will remain the favored case as long as 1.3068 support holds. However, sustained break of the channel support will be the first sign of medium term reversal. Firm break of 1.3068 would confirm.

Risk sentiments stabilized somewhat in Asian session today. While major Asian indices are down, losses are so far limited. Late buying in the US overnight argues that the markets are not in a crash yet despite all the talks on trade war escalation. DOW has indeed reached as low as 24938.24 but recovered to close at 25126.41, defended 25000 handle and down only -0.87%. Nevertheless, it's now a given that US-China trade war to staying for now. And, it should be just a matter of time when data finally show the deterioration in global economic outlook.

In the currency markets, Australian Dollar leads commodity currencies higher today. Yen and Dollar are so far the weakest ones. For the week, Australian Dollar is also the strongest, followed by Dollar and then Yen. Sterling is the weakest one for the week so far, followed by Euro and then Swiss Franc.

Technically, USD/CAD's breach of 1.3521 suggests that recent rise from 1.3068 is resuming, even though upside momentum is weak. USD/JPY recovered ahead of 109.02 support. Thus, recent fall from 112.40 is not ready to resume yet. More upside on USD/JPY could help lift EUR/JPY and GBP/JPY for mild recoveries. EUR/GBP is struggling in tight range below 0.8840 resistance. GBP/USD is also holding above 1.2605 temporary low. It looks like both EUR/GBP and GBP/USD will continue consolidative trading for a while. But a downside breakout in the Pound in either one might trigger breakout in the other too.

In Asia, Nikkei is currently down -0.46%. Hong Kong HSI is down -0.51%. China Shanghai SSE Is down -0.68%. Singapore Strait Times is down -0.80%. Japan 10-year JGB yield is up 0.015 at -0.078. Overnight, DOW dropped -0.87%. S&P 500 dropped -0.69%. NASDAQ dropped -0.79%. 10-year yield dropped -0.032 to 2.236.

China: US Provoking trade dispute is naked economic terrorism, economic homicide, economic bullying

Rhetorics from Chinese officials regarding trade war with US continued to be hard-line. The ruling Communist Party is clearly preparing their citizens for the "new long march" in prolonged trade war.

Chinese Vice Foreign Minister Zhang Hanhui said today "we oppose a trade war but are not afraid of a trade war." He went further to accuse the US that "this kind of deliberately provoking trade disputes is naked economic terrorism, economic homicide, economic bullying."

He added: "This trade clash will have a serious negative effect on global economic development and recovery... We will definitely properly deal with all external challenges, do our own thing well, develop our economy... At the same time, we have the confidence, resolve and ability to safeguard our country's sovereignty, security, respect and security and development interests."

Yesterday, stock markets were rocked by news that China is going to weaponize its rare earths in the trade war. The state-run China Daily newspaper said today "it would be naive to think that China does not have other countermeasures apart from rare earths to hand". "As Chinese officials have reiterated, they have a 'tool box' large enough to fix any problem that may arise as trade tensions escalate, and they are ready to fight back 'at any cost'."

BoC stood pat and struck a neutral tone

Yesterday, BoC kept overnight rate unchanged at 1.75% as widely expected. The central bank assessed that economic developments were broadly in line with the April MPR, including growth and inflation. While refraining from the comment that interest rate would need to increase, BOC also attempted to temper market speculations that a rate cut would be needed.

BOC concluded that recent slowdown in the economy was driven by "temporary" factor, while "global trade risks" have undeniably increased". Policymakers judged the "degree of accommodation being provided by the current policy interest rate remains appropriate", while they pledged to monitor incoming data on future adjustment of the monetary policy.

Despite BOC's effort to temper the need of a rate cut, the market is obviously unconvinced. Market participants continue to price in about 30% chance of rate cut later this year and USDCAD surged to the highest level since January.

More in Market Not Convinced by BOC's Intentionally Neutral Tone

BoJ Sakurai: Shouldn't recklessly seek to hit price target with additional easing

BoJ board member Makoto Sakurai said the central bank "shouldn't recklessly seek to achieve our price target with additional easing". Instead, the best monetary policy approach was to "patiently maintain" the current stimulus program. He acknowledged that "achievement of our price target is being delayed". But that's because "the relationship between monetary policy and price moves are changing and becoming more complex."

Sakurai also said BoJ should be very mindful of the negative effects of the ultra-loose monetary policy. He added, "while financial institutions' capital-to-asset ratios are sufficient from a regulatory standpoint, what's important to note is that they are declining as a trend." Hence, "the BoJ must make appropriate policy decisions by scrutinizing the merits and demerits, including the risk our policy is building up financial imbalances."

Australia building approvals dropped -4.7% mom, capital expenditure dropped -1.7%

Australia dwelling approvals contracted by -4.7% mom in seasonally adjusted terms in April. That's well below expectation of 0.0% mom. Regionally, the decline was driven by falls in Tasmania (19.1%), Victoria (16.1%), Western Australia (6.7%) and South Australia (3.3%). Private dwellings excluding houses fell 6.5% while private house approvals decreased 2.6%.

Seasonally adjusted new capital expenditure dropped -1.7% in Q1, also way below expectation of 0.5% qoq. Buildings and structures fell -2.8% while equipment, plant and machinery fell -0.5%

Looking ahead

The calender is empty in European session with Swiss, France and Germany on bank holiday. Later in the day, US will release GDP revision, trade balance, jobless claims, wholesale inventories and pending home sales. Canada will release current account balance.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3485; (P) 1.3516; (R1) 1.3551; More...

USD/CAD rose to as high as 1.3546 and the breach of 1.3521 resistance suggests that larger rise from 1.3068 is resuming. Intraday bias is back on the upside for retesting 1.3664 high. For now, break of 1.3429 support is needed to be the first sign of near term reversal. Otherwise, outlook will remain bullish in case of retreat.

In the bigger picture, USD/CAD is staying well inside medium term rising channel (support at 1.3321). Thus, the up trend from 1.2061 (2017 low) should be in progress. On the upside, decisive break of 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 will pave the way to 78.6% retracement at 1.4127 next. This will remain the favored case as long as 1.3068 support holds. However, sustained break of the channel support will be the first sign of medium term reversal. Firm break of 1.3068 would confirm.

Economic Indicators Update

For the 24 hours to 23:00 GMT, the EUR declined 0.25% against the USD and closed at 1.1137.

On the macro front, Germany's seasonally adjusted unemployment rate unexpectedly climbed to 5.0% in May, rising for the first time since 2013 and defying market expectations for a steady reading. Unemployment rate had registered a rate of 4.9% in the previous month. Separately, in France, the final gross domestic product (GDP) rose 0.3% on a quarterly basis in the first quarter of 2019, in line with market expectations and confirming the preliminary print. In the previous quarter, GDP had registered a similar rise.

In the US, data indicated that the Richmond Fed manufacturing index advanced less than expected to a level of 5.0 in May, compared to a level of 3.0 in the prior month. Market participants had expected the index to rise to a level of 6.0. Meanwhile, the US MBA mortgage applications fell to its lowest level in 1 month by 3.3% on a weekly basis in the week ended 24 May 2019, following a gain of 2.4% in the previous week.

In the Asian session, at GMT0300, the pair is trading at 1.1138, with the EUR trading slightly higher against the USD from yesterday's close.

The pair is expected to find support at 1.1119, and a fall through could take it to the next support level of 1.1100. The pair is expected to find its first resistance at 1.1163, and a rise through could take it to the next resistance level of 1.1188.

Amid lack of macroeconomic releases in the Euro-zone today, investors would focus on the US annualised GDP for the first quarter 2019 along with initial jobless claims. Later in the day, the US pending home sales and advance goods trade balance, both for April, will keep investors on their toes.

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 GBP declined 0.22% against the USD and closed at 1.2629, amid ongoing Brexit uncertainty.

In the Asian session, at GMT0300, the pair is trading at 1.2628, with the GBP trading a tad lower against the USD from yesterday’s close.

The pair is expected to find support at 1.2603, and a fall through could take it to the next support level of 1.2578. The pair is expected to find its first resistance at 1.2662, and a rise through could take it to the next resistance level of 1.2696.

Moving ahead, traders would await UK’s GfK consumer confidence and Lloyds business barometer for May, slated to release overnight.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.21% against the JPY and closed at 109.60.

In the Asian session, at GMT0300, the pair is trading at 109.57, with the USD trading slightly lower against the JPY from yesterday’s close.

The pair is expected to find support at 109.25, and a fall through could take it to the next support level of 108.94. The pair is expected to find its first resistance at 109.79, and a rise through could take it to the next resistance level of 110.02.

Looking ahead, traders would closely monitor Japan’s jobless rate, industrial production, retail trade and large retailers’ sales, all for April, set to release overnight.

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