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Daily Pivots: (S1) 1.1271; (P) 1.1295; (R1) 1.1309; More...

Intraday bias in EUR/CHF remains neutral for the moment. More consolidation could be seen above 1.1264 temporary low first. Still, further decline is expected as long as 1.1350 support tuned resistance holds. On the downside below 1.1264 will extend the corrective fall from 1.1476 towards 1.1162 low. We'd expect strong support above there to bring rebound. On the upside, break of 1.1350 will suggest that the pull back has completed. Intraday bias will be turned back to the upside for 38.2% retracement of 1.2004 to 1.1162 at 1.1484 again.

In the bigger picture, at this point, we're slightly favoring the case that corrective fall from 1.2004 has completed after being supported by 61.8% retracement of 1.0629 to 1.2004 at 1.1154. Decisive break of 1.1501 resistance should confirm and target 1.1713 resistance next. On the downside, firm break of 1.1154 is needed to confirm down trend resumption. Otherwise, medium term outlook will be neutral at worst.

Daily Pivots: (S1) 0.6874; (P) 0.6904; (R1) 0.6921; More...

AUD/USD falls to as low as 0.6879 so far today and intraday bias stays on the downside. Now that 100% projection of 0.7295 to 0.7003 from 0.7205 at 0.6913 was taken out, next target is 161.8% projection at 0.6733, which is close to 0.6722 low. On the upside, above 0.6923 minor resistance will turn intraday bias neutral and bring consolidation. But recovery should be limited by 0.6988/7069 resistance zone to bring fall resumption.

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) 1.3417; (P) 1.3444; (R1) 1.3489; More...

No change in USD/CAD's outlook as it's still bounded in consolidation from 1.3521. Intraday bias remains neutral and more sideway trading could be seen. In case of deeper retreat, downside should be contained above 1.3274 support to bring rally resumption. On the upside, firm break of 1.3521 will resume the whole rise from 1.3068 to retest 1.3664 high. However, decisive break of 1.3274 support will indicate completion of rise from 1.3068 and turn outlook bearish.

In the bigger picture, USD/CAD is staying well inside medium term rising channel (support at 1.3278). 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 the channel support will be the first sign of medium term reversal. Firm break of 1.3068 would confirm.

Daily Pivots: (S1) 1.1148; (P) 1.1187; (R1) 1.1213; More.....

The breach of 1.1173 minor support suggests that consolidation from 1.1111 has completed at 1.1263. Intraday bias is mildly on the downside for retesting 1.1111. Decisive break there will resumer larger down from from 1.2555 to 100% projection of 1.1448 to 1.1183 from 1.1324 at 1.1059. Though, on the upside, above 1.1224 minor resistance will turn bias back to the upside to extend the consolidation from 1.1111 first.

In the bigger picture, down trend from 1.2555 (2018 high) has just resumed. 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186 was also taken out. Current fall should now target 78.6% retracement at 1.0813. Sustained break there will pave the way to retest 1.0339. On the downside, 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) 1.2768; (P) 1.2815; (R1) 1.2842; More....

Intraday bias in GBP/USD remains on the downside for the moment. Current fall from 1.3381 is in progress to retest 1.3381 low. On the upside, above 1.2851 minor resistance will turn intraday bias neutral for consolidation first. But recovery should be limited well below 1.3176 resistance to bring fall resumption.

In the bigger picture, medium term decline from 1.4376 (2018 high) halted and made a medium term bottom after hitting 1.2391. Rebound from 1.2391 is seen as a corrective move for now. In case of another rise, strong resistance could be seen around 61.8% retracement of 1.4376 to 1.2391 at 1.3618 to limit upside. On the downside, break of 1.2773 support will suggests that such corrective rise is completed and bring retest of 1.2391 low first.

Daily Pivots: (S1) 1.0079; (P) 1.0094; (R1) 1.0115; More...

Intraday bias in USD/CHF remains neutral as consolidation from 1.0050 is still in progress. IN case of another rise, upside of recovery should be limited by 1.0126 minor resistance to bring fall resumption. On the downside, break of 1.0050 will resume the fall from 1.0237 to retest 0.9879 key support. However, firm break of 1.0126 will turn bias back to the upside for 1.0237 resistance.

In the bigger picture, as long as 0.9879 support holds, medium term up trend form 0.9186 is still in progress. Break of 1.0237 will target 1.0342 resistance next. For now, we'd be cautious on strong resistance from there to limit upside, until we see medium term upside acceleration. However, decisive break of 0.9879 will be a strong sign of medium term reversal. Focus will be turned back to 0.9716 support for confirmation.

General Trend:

• China State Media Commentary: China may have no interest in continuing trade talks with the US for now; sees little "sincerity" in Pres Trump's approach
• USD/CNH trades above 6.94 for the first time since late Nov 2018; yuan weakens amid PBoC fixing and China commentary piece related to US trade talks
• Declining sectors in Shanghai include Property, Materials, Energy and Consumer Discretionary
• US chip-related earnings in focus: Shares of NVIDIA and Applied Materials rise in after-hours trading following results
• Nikkei rises as banks rebound after recent losses, Softbank Group tracks gains in shares of Uber
• Sony rises over 10% amid buyback announcement, exploration of partnership with Microsoft
• Virgin Australia declines on cautious outlook, notes impact of Easter holiday timing and elections on corporate sector
• Australian equities hit highest level since 2007 ahead of the upcoming May 18th (Saturday) elections
• Australian energy company Ausdrill canceled planned bond offering, noted escalation of US/China trade war
• Key RBA events are seen for next week: On Tuesday (May 21st), the RBA is due to release the minutes for its May policy meeting.
• RBA Gov Lowe is also due to speak on May 21st at the Economic Society of Australia Business Lunch
• More analysts call for June RBA rate cut after disappointing April unemployment data
• China Vice Premier calls for increased pork production in the face of shortages
• Meanwhile, China said to have canceled a US pork import order amid trade war escalation

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.2%
• (AU) NAB now sees RBA rate cuts in June and Aug 2019 (previously saw rate cuts in July and Nov 2019)
• (AU) RBA Watcher Terry McCrann said to have come into line with the view that the RBA will cut rates - US financial press
• (NZ) New Zealand Q1 PPI Input q/q: -0.9% v 1.6% prior; PPI Output q/q: -0.5% v 0.7% prior

China/Hong Kong

• Shanghai Composite opened flat, Hang Seng +0.5%
• (CN) China Vice Premier: urges hog producers to boost production to increase pork supply; calls for increase in poultry production to cover pork shortage; boosting pork production is vital for economic and social stability
• (CN) China NDRC: Reiterates trade friction's impact on the Chinese economy is 'under control', domestic CPI and PPI growth to stay stable in future; Pork prices stabilized and declined m/m in April
• (US) Reportedly China has canceled a US pork import order – press
• (CA) China said to have rejected two Canadian soybean shipments last week amid increase in scrutiny - press
• (CN) China NDRC: To cut capital ratio requirement on infrastructure projects
• (CN) China PBoC sets yuan reference rate: 6.8859 v 6.8688 prior
• (CN) China PBoC Open Market Operation (OMO): Skips for 6th consecutive session: Net: CNY0B v CNY0B prior
• (CN) China Finance Ministry sells 30-year bonds: yield 3.9284% v 3.88%e, bid to cover: 1.97x
• Huawei: Follow Up: Said to have contingency plan to cut reliance on US chips - Chinese Press

Japan

• Nikkei 225 opened +0.9%
• (JP) BoJ Gov Kuroda: China economy continues to expand firmly, but weak signs broadening due to trade friction, IT sector adjustment
• (JP) Japan PM Abe said to have been warned of credit downgrade risk if sales tax hike is again delayed - US Financial Press
• (JP) Japan Fin Min Aso: Reiterates Japan will try to limit impact on economy from tax hike; hard to see impact of US Huawei move on Japan companies but need to brace for some sort of impact
• (JP) Japan MOF Asakawa (Japan's top currency official): Won't intervene to seek solution to US-China trade frictions at G20; won't include language in communique saying members will fight protectionism

Korea

• Kospi opened +0.7%
• (KR) South Korea Finance Ministry: Capital spending and exports remain weak

Other

• (ID) Indonesia Central Bank Gov Warjiyo: Liquidity is heading towards tightness
• (SG) SINGAPORE APR NON-OIL DOMESTIC EXPORTS M/M: -0.6% V 5.0%E; Y/Y: -10% V -4.6%E; Exports to Europe -25.4% y/y; China -5.8% y/y

North America

• Cray Inc [CRAY]: Reportedly near deal to be acquired by HP Enterprise, announcement could come by as early as this week - US Financial Press

Europe

• (TU) White House issues notice on Turkey metal tariffs: Confirms US is terminating Turkey preferential treatment under GSP, effective on Friday (as expected); US to impose 25% ad valorem tariff on Turkey steel imports, down from 50% prior
• (DE) Germany Bundesbank VP Buch: Recent weakness in German economy seems only a 'dip'; More bank consolidation in Europe could provide stability - German press

Levels as of 1:20 ET

• Nikkei 225, +1.1%, ASX 200 +0.5%, Hang Seng -1%; Shanghai Composite -1.3%; Kospi -0.1%
• Equity Futures: S&P500 -0.3%; Nasdaq100 -0.4%, Dax -0.3%; FTSE100 -0.3%
• EUR 1.1181-1.1170 ; JPY 110.03-109.67 ; AUD 0.6898-0.6882 ;NZD 0.6543-0.6527
• Gold flat at $1,286/oz; Crude Oil +0.4% at $63.12/brl; Copper -0.5% at $2.735/lb

Market movers today

The US-China trade war might be entering a quiet phase after the recent round of escalation. The next thing to look for is any news on more Chinese stimulus and more specific information on when the next round of talks in Beijing could take place. While things may calm down for now, we still see a risk of another flare-up later as the two sides seem far from each other on the final critical bits of the deal. More financial stress is needed, in our view, to get enough pressure to reach a deal. For more on this see also China Weekly Letter - China strikes defiant tone, recovery postponed, 16 May 2019.

On the data front it is a very light day. We have the final euro area HICP for April out, where we see scope for an upward revision in both core and headline inflation by 0.1pp. In the afternoon the US releases preliminary consumer confidence for May from the University of Michigan. We also have the Fed's Williams (voter, neutral) speaking tonight.

Selected market news

After a dreadful start to the week, risk sentiment recovered some ground on Thursday, despite President Trump's decision to add more fuel to the fire with his executive order that effectively bans Chinese telecom firms Huawei and ZTE doing business in the US. We still struggle to see a trade deal coming until there has been another round of escalation and sell-off in the markets that creates the needed pressure for both sides to meet each other halfway.

European equities shrugged off the trade 'angst' and advanced for a third day in a row, while Bunds sold off slightly and peripherals performed, with the 10Y Italian government bond yield tightening some 7bp vs Germany. However, considering the recovery in European equities, the change in 10Y Bund yields was still limited, underlining that yields are not just depressed due to weak risk appetite but also due to a general pessimism in the market about the outlook for growth and inflation. Market inflation expectations headed further South with 2y2y inflation swaps dropping below 1% for the first time since 2016, see here . Hence, even if the positive risk appetite continues next week, we do not expect any significant fixed income sell-off in core markets.

In the US, the market also reversed some of the pricing of Fed cuts seen earlier in the week, after Fed speakers Brainard and Kashkari did little to support the market's expectation of the Fed cutting rates before year-end. Treasuries gave back some of this week's gains, lifting 10Y yields back above 2.40%. An outlier to the risk-on move was emerging markets equities, with the MSCI Emerging Markets Index falling to its lowest level against developed markets stocks since November.

In the UK, pressure on PM Theresa May to resign over her failure to deliver Brexit is mounting. After a meeting with the Conservatives Party leadership, the embattled premier agreed to set out a timetable for a Tory leadership race after the Withdrawal Agreement Bill is put to a vote in the House of Commons in the first week of June.

For the 24 hours to 23:00 GMT, the EUR declined 0.29% against the USD and closed at 1.1174.

Data showed that, in the Eurozone, seasonally adjusted trade surplus narrowed to €17.9 billion in March, driven by higher imports and following a surplus of €19.5 billion in the previous month. Market participants had expected trade surplus to narrow to €19.0 billion.

The US dollar rose against the Euro yesterday, on the back of robust economic data.

Separately, in the US, data showed that housing starts registered a rise of 5.7% to an annual rate of 1235.0K in April, compared to a revised reading of 1168.0K in the prior month. Additionally, building permits advanced 0.6% to an annual rate of 1296.0K in April. Building permits had recorded a revised reading of 1288.0K in the prior month. Further, seasonally adjusted initial jobless claims fell to a level of 212.0K in the week ended 11 May 2019, more than market expectations for a fall to a level of 221.0K. Initial jobless claims had recorded a level of 228.0K in the prior week. Moreover, the Philadelphia Fed manufacturing index recorded a more-than-expected rise to 16.6 in May, amid rise in the shipments index. In the prior month, the index had recorded a level of 8.5.

In the Asian session, at GMT0300, the pair is trading at 1.1179, with the EUR trading marginally higher against the USD from yesterday’s close.

The pair is expected to find support at 1.1155, and a fall through could take it to the next support level of 1.1132. The pair is expected to find its first resistance at 1.1213, and a rise through could take it to the next resistance level of 1.1248.

Looking ahead, traders would keep a close watch on the Euro-zone’s consumer price index for April and construction output for March, slated to release in a few hours. Later in the day, the US leading index for April and the Reuters/Michigan consumer sentiment index for May, will keep investors on their toes.

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

For the 24 hours to 23:00 GMT, the GBP declined 0.39% against the USD and closed at 1.2796.

In the Asian session, at GMT0300, the pair is trading at 1.2791, with the GBP trading slightly lower against the USD from yesterday’s close.

The pair is expected to find support at 1.2765, and a fall through could take it to the next support level of 1.2740. The pair is expected to find its first resistance at 1.2834, and a rise through could take it to the next resistance level of 1.2878.

With no macroeconomic releases in Britain today, investor sentiment would be governed by global macroeconomic events.

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