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Daily Pivots: (S1) 1.2981; (P) 1.3014; (R1) 1.3038; More....

Intraday bias in GBP/USD remains neutral with focus on 1.2967 minor support. On the downside, break of 1.2967 will turn bias to the downside for 1.2865 support. Decisive break there will revive the bearish case that rebound from 1.2391 has completed at 1.3381. Near term outlook will turn be turned bearish. On upside, above 1.3176 will retain the bullish case and target a retest on 1.3381 high next.

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) 1.0093; (P) 1.0127; (R1) 1.0154; More...

USD/CHF's corrective fall from 1.0237 is in progress and deeper fall could be seen. But downside should be contained by 55 day EMA (now at 1.0081) to bring rebound. On the upside, break of 1.0237 will resume larger rise from 0.9186 to 1.0342 key resistance. However sustained break of the 55 day EMA would pave the way back to 0.9879 key support.

In the bigger picture, medium term up trend from 0.9186 is extending. Current rise should 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. On the downside, break of 0.9879 support is needed to indicate reversal. Otherwise, outlook will stay bullish in case of deep pull back.

Daily Pivots: (S1) 109.60; (P) 109.82; (R1) 110.18; More...

Intraday bias in USD/JPY remains neutral for consolidation above 109.47 temporary low. More sideway trading could be seen first. In case of stronger recovery, upside should be limited below 110.95 resistance to bring fall resumption. On the downside, break of 109.47 and sustained trading below 109.72 key support will confirm completion of rebound from 104.69 at 112.40 on bearish divergence condition in daily MACD. Deeper decline should then be seen back to retest 104.69 low.

In the bigger picture, USD/JPY is staying inside falling channel from 118.65. Thus, there is no confirmation of trend reversal yet. Sustained break of 109.71 will argue that rebound from 104.69 is completed. And the down trend from 118.65 is still in progress. But at this stage, in case of break of 104.69, we'd expect strong support above 98.9 (2016 low) to contain downside an bring rebound.

Daily Pivots: (S1) 1.3368; (P) 1.3426; (R1) 1.3474; More...

USD/CAD is staying in consolidation from 1.3521 and intraday bias remains neutral first. While deeper decline cannot be ruled out, 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.

General Trend:

• Telecom Services, Financial and Consumer Discretionary firms weigh on Shanghai Composite in early trading
• ZTE pares some of Friday’s gain
• Disappointing debut for Uber’s shares weighs on Softbank
• Commonwealth Bank of Australia declines on lower quarterly profits
• Australian plumbing supplies company Reliance Worldwide declines over 15% on reduction in outlook
• China continues to refrain from announcing trade countermeasures on the US
• There has been renewed speculation that Trump and China’s Xi could meet around the June 28-29th G20 meetings in Japan
• PBOC official said decline in overnight rates is ‘normal’
• China smartphone shipments rise in April (first rise of 2019)
• South Korea’s exports continue to decline into early May, chip exports decline again; Korean Won (KRW) declines over 0.8%
• Asian currencies trade generally weaker on trade uncertainty, track decline in yuan
• Australian poll tightens ahead of May 18th (Saturday) elections
• Saudi and Iranian officials comment on Sunday’s explosions at the UAE Fujiariah port (near Strait of Hormuz), cause of explosions still unknown

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.2%
• (AU) AUSTRALIA MAR HOME LOANS M/M: -2.8% V -0.5%E; Investment Lending m/m: -2.7% v -1.5%e ; Owner Occupied Loan Value m/m: -3.4% v -0.5%e
• CBA.AU Reports Q3 (A$) Cash profit 1.70B* v 2.35B y/y
• LLC.AU Confirms have not received any approach
• RWC.AU Cuts FY19 EBITDA guidance to A$260-270M (guided A$280-290M prior)
• Looking ahead: New Zealand Fin Min Robertson will make a pre-budget speech ahead of May 30th budget release

Japan

• Nikkei 225 opened -0.8%
• (JP) According to analysts 849 earnings from Japan companies show avg Net profit -2% y/y, noting slowdown in demand and US/China trade war - Nikkei
• (JP) US sought a quick agreement with Japan on bilateral trade deal today in a phone call between Trade Rep Lighthizer and Japan's Motegi – Nikkei (Friday)
• Toshiba, 6502.JP Reports FY18/19 Net ¥1.0T v ¥0.8T y/y; Op ¥35.5B v ¥86.2B y/y; Rev ¥3.69T v ¥3.95T y/y
• (JP) Japan Mar Preliminary Leading Index CI: 96.3 v 96.3e; Coincident Index: 99.6 v 99.6e

Korea

• Kospi opened -0.8%
• (KR) South Korea Apr Foreign Investment in local bonds (KRW): +0.53T v +1.47T prior; Foreign investment in local stock: 2.6T v -0.6T prior
• (KR) South Korea's military has not yet determined the details of the short-range missiles that North Korea fired last week – Yonhap
• (KR) South Korea sells KRW1.7T v 1.7T indicated in 5-yr bonds, avg yield 1.76% v 1.86% prior; bid to cover 2.98x

China/Hong Kong

• Hang Seng closed for holiday; Shanghai Composite opened -1.2%
• (US) White House Economic adviser Kudlow: China has invited Trade Rep Lighthizer and Treasury Sec Mnuchin to China to continue trade talks; Noted that Americans, not the Chinese, pay the tariffs (opposite of what Trump says); China will sugger GDP loss as a result
• (CN) US President Trump tweets on China: "...deal will become far worse for them if it has to be negotiated in my second term"; We are right where we want to be with China, remember they broke the deal not us
• (CN) China allows trading of two matured defaulted corporate bonds for the first time on state-owned platforms - Chinese Press
• (CN) According to Citi analysts US trade tariffs on China will take away 0.8% of China GDP on an annual basis if sustained and -0.3% from South Korea GDP
• 002450.CN China police have taken criminal compulsory measures against major shareholder for suspected crime
• (CN) China PBoC sets yuan reference rate: 6.7954 v 6.7912 prior (weakest fix since Jan)
• (CN) China PBoC Open Market Operation (OMO): Skips for 3rd consecutive session: Net injection: CNY20B drain v CNY0B prior
• (CN) China April smartphone shipments ~34.8M units, +6.5% y/y (first rise in 2019) vs -4.1% prior - China Academy of Information and Communications (CAICT)

Other Asia

• Looking ahead: Philippines mid-term election results expected tomorrow, newly elected officials to take office June 30th, results expected to strengthen President Duterte’s power

North America

• (RU) US Sec of State Pompeo cancels part of trip that will take him to Moscow, but will meet with Lavrov and Putin in Sochi as planned Tuesday

Europe

• (UK) PM May may be asked to step down this week as her talks with Labour Leader Corbyn continue - UK press
• (UK) UK Labour Trade Policy chief Gardiner: We do not know whether successor to PM May will deliver on any Brexit deal negotiated with Govt, that is the biggest sticking point - UK press
• VOD.UK Expected to cut its dividend ~50% to £0.075 from £0.15 in order to finance 5G - UK press (will report on Tuesday)
• (ZA) South Africa election results: Ruling ANC Party wins with 57% of vote (down from 62% in 2014), vows to purge the party of "deviant tendencies"
• (AT) ECB's Nowotny (Austria): ECB did not mean to tell markets easy policy will be prolonged , when Draghi said it would consider steps to mitigate impact of negative rates on banks; Next policy steps will depend on data, premature to talk about what to do if growth slows further - Nikkei (update)
• (AE) Several powerful explosions reported early Sunday morning at United Arab Emirates port of Fujairah, targeting 7 tankers; have not said what caused the fire; called it sabotage; Saudi Energy Min addresses the explosions
• Saudi Energy Min condemns attack on 2 Saudi vessels that targeted security of oil supply; attack caused significant damage to the structure of the 2 Saudi vessels; one of the ships was bound for Aramco customers in US - Saudi State media

Levels as of 01:20ET

• Hang Seng closed; Shanghai Composite -1.0%; Kospi -1.1%; Nikkei225 -0.8%; ASX 200 -0.4%
• Equity Futures: S&P500 -1.0%; Nasdaq100 -1.2%, Dax -0.9%; FTSE100 -0.9%
• EUR 1.1227-1.1245; JPY 109.60-109.86; AUD 0.6974-0.7005; NZD 0.6577-0.6605
• Commodity Futures: Gold -0.2% at $1,284/oz; Crude Oil -0.0% at $61.65/brl; Copper -1.2% at $2.75/lb

Market movers today

Today's data calendar is quite thin, although the Norwegian GDP number will attract some attention. The number is widely expected to fall short of Norges Bank's March estimate for Q1, but given the temporary nature of the disappointment (even emphasised by NB itself last week), and given the latest strong NAV labour market report, the market impact should be limited.

Naturally, European and US markets will digest the latest on the US-China trade war (more below).

Later this week, we are set to get some information on the solid Q1 euro area GDP growth, with both the March industrial production and May ZEW index. In China, we look out for the April industrial production, retail sales and fixed asset investments. In Sweden, inflation will take centre stage. Our forecast for CPIF excluding energy is in line with the Riksbank's at 1.6% y/y.

Selected market news

Global risk sentiment had a tough week last week with the renewed US-China trade war tensions. By the end of the week, the US-China trade talks in Washington ended in what looked like a deadlock - positions that seem to have been further entrenched. Both sides sent signals of cautious optimism but the underlying development suggests a bigger crisis in the negotiations. The trade teams have agreed to meet again in Beijing, but not when. At the same time, President Trump's economic advisor said there was a 'strong possibility' for Trump and Xi to meet at next month's G20 in Japan. The US has given China a month to make concessions or otherwise face tariffs on all imports. In this case the tariffs could come into force in early August. We see an increasing risk that the trade talks drag out into H2 and that it will get worse before it gets better, see more in US-China trade - Talks in Washington end with signs of deadlock.

Overnight, the Asian markets are trading in classical a risk-off reaction mode, as major equity indices are down, the yen stronger and treasury futures up.

Yesterday, Bloomberg via the Italian news outlet Corriere della Sera, reported that Italian Prime Minister Conte suspected deputy Salvini of bringing down the coalition government in an end to a bad week for the Italian bond market (also after the EC's revision earlier last week). Recall that the Italian government coalition partners (M5S and Lega) are not natural coalition partners, which may raise the risk of renewed pressure on the Italian economic outlook should the political instability rise again.

During the weekend, the final count of Wednesday's election in South Africa gave the ANC 57.5% of the votes (up from of 54.5% in the local elections three years ago). This raises the prospect of a more forceful implementation of the reform agenda in South Africa by Ramaphosa, which is dearly needed to increase the country's lacklustre growth prospects. However, EM currencies may face a challenging period ahead following the US-China trade war.

For the 24 hours to 23:00 GMT, the EUR rose 0.09% against the USD and closed at 1.1230 on Friday.

On the macro front, Germany's seasonally adjusted trade surplus widened to €22.7 billion in March, compared to a surplus of €17.9 billion in the previous month. Market participants had envisaged the surplus to advance to €18.2 billion.

The US dollar declined against major currencies, amid weaker-than-expected inflation data.

In the US, data indicated that the consumer price index (CPI) climbed 2.0% on a yearly basis in April, undershooting market expectations for a rise of 2.1%. In the prior month, the CPI had recorded a gain of 1.9%. Additionally, the nation's budget surplus narrowed to $160.30 billion in April. The US had registered a surplus of $214.30 billion last year.

In the Asian session, at GMT0300, the pair is trading at 1.1233, with the EUR trading a tad higher against the USD from Friday's close.

The pair is expected to find support at 1.1216, and a fall through could take it to the next support level of 1.1199. The pair is expected to find its first resistance at 1.1252, and a rise through could take it to the next resistance level of 1.1271.

Amid lack of macroeconomic releases in the Euro-zone today, traders would focus on global macroeconomic releases for further cues.

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

For the 24 hours to 23:00 GMT, the GBP declined 0.05% against the USD and closed at 1.3003 on Friday.

In economic news, UK's preliminary gross domestic product (GDP) advanced 0.5% on a quarterly basis in 1Q 2019, meeting market expectations. The GDP had risen 0.2% in the prior quarter. Moreover, Britain's industrial production rose 0.7% on a monthly basis in March, compared to a gain of 0.6% in the previous month. Market participants had expected industrial production to record a climb of 0.1%. Further, the manufacturing production jumped 2.6% on a yearly basis in March, surpassing market consensus for an advance of 1.1%. In the prior month, manufacturing production had recorded a revised rise of 1.2%. Additionally, the nation's construction output climbed 3.2% on an annual basis in March, compared to a revised similar rise in the previous month. Market participants had anticipated construction output to register an increase of 4.5%.

Meanwhile, UK's total trade deficit widened to £5.4 billion in March, from a revised deficit of £6.2 billion in the previous month. Market participants had envisaged the nation to record a deficit of £4.6 billion.

In the Asian session, at GMT0300, the pair is trading at 1.3014, with the GBP trading 0.08% higher against the USD from Friday's close.

The pair is expected to find support at 1.2987, and a fall through could take it to the next support level of 1.2961. The pair is expected to find its first resistance at 1.3044, and a rise through could take it to the next resistance level of 1.3075.

Amid no major economic news in the UK today, investors would focus on global macroeconomic factor for further direction.

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

For the 24 hours to 23:00 GMT, the USD rose 0.19% against the JPY and closed at 109.93 on Friday.

In the Asian session, at GMT0300, the pair is trading at 109.73, with the USD trading 0.18% lower against the JPY from Friday’s close.

The pair is expected to find support at 109.46, and a fall through could take it to the next support level of 109.19. The pair is expected to find its first resistance at 110.02, and a rise through could take it to the next resistance level of 110.31.

Trading trend in the Japanese Yen today, is expected to be determined by Japan’s leading index and coincident index, both for March, set to release in a while.

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

For the 24 hours to 23:00 GMT, the USD declined 0.32% against the CHF and closed at 1.0119 on Friday.

In the Asian session, at GMT0300, the pair is trading at 1.0108, with the USD trading 0.11% lower against the CHF from Friday’s close.

The pair is expected to find support at 1.0087, and a fall through could take it to the next support level of 1.0065. The pair is expected to find its first resistance at 1.0144, and a rise through could take it to the next resistance level of 1.0179.

With no macroeconomic releases in Switzerland today, investors would look forward to global macroeconomic releases for further direction.

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