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For the 24 hours to 23:00 GMT, the USD declined 0.43% against the CAD and closed at 1.3414 on Friday.

Data indicated that Canada's building permits rebounded 2.1% on a monthly basis in March, amid advanced construction plans in the four Western provinces and compared to a revised fall of 5.1% in the previous month. Market participants had anticipated building permits to record an advance of 2.4%. Additionally, the nation's unemployment rate unexpectedly slid to 5.7% in April, compared to 5.8% in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.3438, with the USD trading 0.18% higher against the CAD from Friday's close.

The pair is expected to find support at 1.3386, and a fall through could take it to the next support level of 1.3333. The pair is expected to find its first resistance at 1.3486, and a rise through could take it to the next resistance level of 1.3533.

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 rose 0.17% against the USD and closed at 0.6999 on Friday.

LME Copper prices rose 0.4% or $23.5/MT to $6135.5/MT. Aluminium prices declined 0.1% or $1.5/MT to $1765.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.6977, with the AUD trading 0.31% lower against the USD from Friday's close.

Overnight data showed that Australia's seasonally adjusted home loan approvals declined 2.8% on a monthly basis in March, compared to a revised advance of 0.5% in the previous month. Market participants had anticipated home loan approvals to record a fall of 0.5%.

The pair is expected to find support at 0.6962, and a fall through could take it to the next support level of 0.6947. The pair is expected to find its first resistance at 0.7004, and a rise through could take it to the next resistance level of 0.7031.

Looking ahead, traders would await Australia's NAB business confidence index for April, 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, Gold rose 0.16% against the USD and closed at USD1287.00 per ounce on Friday, after the US raised tariffs on Chinese goods.

In the Asian session, at GMT0300, the pair is trading at 1285.20, with gold trading 0.14% lower against the USD from Friday’s close.

The pair is expected to find support at 1282.70, and a fall through could take it to the next support level of 1280.20. The pair is expected to find its first resistance at 1289.00, and a rise through could take it to the next resistance level of 1292.80.

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

For the 24 hours to 23:00 GMT, Silver rose 0.14% against the USD and closed at USD14.78 per ounce on Friday, tracking gains in gold prices.

In the Asian session, at GMT0300, the pair is trading at 14.71, with silver trading 0.47% lower against the USD from Friday’s close.

The pair is expected to find support at 14.66, and a fall through could take it to the next support level of 14.60. The pair is expected to find its first resistance at 14.81, and a rise through could take it to the next resistance level of 14.90.

The white metal is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, Crude Oil declined 0.08% against the USD and closed at USD61.67 per barrel on Friday, amid mounting trade tensions between US-China.

Meanwhile, fresh figures from Baker Hughes disclosed that the number of active oil rigs fell by 2 to 805 in the week ended 10 May 2019.

In the Asian session, at GMT0300, the pair is trading at 61.61, with oil trading 0.10% lower against the USD from yesterday’s close.

The pair is expected to find support at 61.06, and a fall through could take it to the next support level of 60.52. The pair is expected to find its first resistance at 62.30, and a rise through could take it to the next resistance level of 62.99.

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

Home loans in Australia contracted in March, another sign that the nation’s housing market may be coming under additional pressure. Data from the Australian Bureau of Statistics showed loans fell 2.5%, much less than the +0.4% economists had forecast and a deterioration from the 0.8% expansion seen in February.

The Australian dollar was marked lower after the data, with AUD/USD dropping as much as 0.3% to 0.6972 while AUD/JPY slid 0.5% to 76.48. AUD/USD continues to hold above the 61.8% Fibonacci retracement of the January rally at 0.6940 as the FX pair consolidates below the key 0.70 handle.

AUD/USD Daily Chart

Three issues to overcome in trade deal

Local Chinese press reported at the weekend that negotiators are facing three hurdles for the conclusion of a trade deal between the US and China. The three obstacles are disagreement on the removal of ALL remaining tariffs, the matching of purchases and demand (China thinks US import targets are unrealistic) and differences over the wording of the final agreement.

In order tariff-related news, speculation is mounting that Presidents Trump and Xi will talk directly at the G-20 meeting scheduled to be held in Japan at the end of next month. Meanwhile, the White House has confirmed that China has invited Trade Representative Lighthizer and Treasury Secretary Mnuchin to China to continue talks, though no schedule has yet been fixed.

Equity indices traded in the red from the outset today, most giving back the surprising gains that were made on Friday when the additional tariffs were introduced. The hopes for the tête-à-tête between the two presidents possibly influencing the bullish tone. We have yet to hear China’s retaliatory response, which they have promised.

US indices Fell 1.0%-1.2%, matching the 1.2% decline of Chinese shares. The CN50 index is still holding above the convergence area of the 100-day moving average at 12,245 and the 50% retracement of the 2019 rally at 12,198.

China50 Daily Chart

GBP/USD declined recently below the 1.3080 and 1.3050 support levels. USD/CAD tested the 1.3380 level and recently started a fresh increase above the 1.3410 level.

Important Takeaways for GBP/USD and USD/CAD

• The British Pound declined heavily and even spiked below the 1.3000 support area.
• There is a major bearish trend line forming with resistance near 1.3025 on the hourly chart of GBP/USD.
• USD/CAD started a decent upward move after it declined towards the 1.3380 level.
• The pair is currently struggling near the previous bullish trend line at 1.3440 on the hourly chart.

GBP/USD Technical Analysis

The British Pound started a fresh decline after it failed to break the 1.3180 resistance area against the US Dollar. The GBP/USD pair traded below the 1.3120 and 1.3080 support levels to move into a bearish zone.

The pair even broke the 1.3050 support level and the 50 hourly simple moving average. Finally, there was a spike below the 1.3000 support area and the pair traded as low as 1.2967 on FXOpen.

Recently, the pair started a decent recovery and traded above the 1.3000 resistance. There was a break above the 1.3020 level, 50 hourly simple moving average, and the 50% Fib retracement level of the last decline from the 1.3088 high to 1.2967 low.

However, the upward move was capped by the 1.3045 level and the 61.8% Fib retracement level of the last decline from the 1.3088 high to 1.2967 low.

There is also a major bearish trend line forming with resistance near 1.3025 on the hourly chart of GBP/USD. In the short term, there could be swing moves, but the pair is likely to break the 1.3020 and 1.3025 resistance levels.

The main resistance is near the 1.3080 level, where sellers are likely to appear and protect additional gains. On the downside, an immediate support is at 1.3000, followed by the 1.2985 level.

If GBP/USD fails to move above the 1.3025 resistance, there is a risk of a fresh decrease below the 1.2980 and 1.2960 levels in the near term.

USD/CAD Technical Analysis

The US Dollar failed on multiple occasions near the 1.3490 and 1.3500 resistance levels against the Canadian Dollar. As a result, the USD/CAD pair declined heavily and broke the 1.3450 and 1.3400 support levels.

The pair settled below the 50 hourly simple moving average and even spiked below the 1.3400 level. A swing low was formed at 1.3380 before the pair recovered nicely.

It broke the 1.3420 level and the 50% Fib retracement level of the last decline from the 1.3479 high to 1.3380 low. However, the pair is currently facing a strong resistance near the 1.3440 level and a previous connecting bullish trend line on the hourly chart.

Above 1.3440, there is a connecting bearish trend line at 1.3455 and the 50 hourly simple moving average. Therefore, there are many hurdles for USD/CAD buyers near 1.3440 and 1.3455 levels.

The 61.8% Fib retracement level of the last decline from the 1.3479 high to 1.3380 low is also acting as a resistance.

Overall, as long as the pair is below the 1.3455 level and the 50 hourly SMA, there is a risk of a fresh decline towards the 1.3400 support level in the near term.

Daily Pivots: (S1) 0.6980; (P) 0.6999; (R1) 0.7019; More...

AUD/USD weakens today but stays above 0.6962 temporary low. Intraday bias remains neutral first and some more consolidations could be seen. In case of another recovery, upside should be limited by 0.7069 resistance to bring fall resumption. On the downside, break of 0.6962 will resume the fall from 0.7295 to 100% projection of 0.7295 to 0.7003 from 0.7205 at 0.6913. Decisive break there will indicate further downside acceleration and pave the way to retest 0.6722 low. However, considering bullish convergence condition in 4 hour MACD, firm break of 0.7069 will indicate near term bottoming and turn bias back to the upside for 0.7205 resistance and above.

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.

Markets are back in risk averse mode in Asian session, with heavy selloff see in Chinese stocks and Yuan. Some noted that the gulf between US and China in trade talks have widened since last week's development. But the "gulf" has always been there. The negotiations just reached a point that both sides have to admit the differences in principles. New tariffs had took effect and more are coming. Trade war is going to drag on with no end in sight.

In the currency markets, Australian Dollar opens the weak as the weakest one, followed by New Zealand Dollar. Canadian Dollar quickly pared back last week's employment data inspired gains and turned into the third weakest. Yen and Swiss Franc are naturally the strongest ones for today so far. Sterling is the third but it's just paring some of last week's losses. There is no turnaround seen in the Pound yet.

Technically, USD/JPY, EUR/JPY and GBP/JPY are staying in consolidations above last week's temporary lows. For now, such consolidations are expected to be brief and we'd expect more downside ahead, maybe rather soon. GBP/USD will look at last week's low at 1.2967. Break will put 1.2865 support into focus and break there will confirm bearish reversal. AUD/USD continues to look at 0.6962 temporary low and break will confirm decline resumption. EUR/USD, USD/CHF and USD/CAD are staying an consolidations. We'd continue to favor upside breakout in Dollar in these three pairs.

In Asia, currently, Nikkei is down -0.52%. Hong Kong HSI is on holiday. China Shanghai SSE is down 0.99%. Singapore Strait Times is down -1.17%. Japan 10-year JGB yield is down -0.0022 at -0.048. US DOW future is down -245 pts.

US-China trade talks "have not broken down" but significant differences on issues of principle remain

Last week's US-China negotiations ended with practically no progress, but just confirmation that the tariff war will drag on. New round of tariffs already took effect on Friday and paperwork for tariffs on USD 325B in Chinese goods has started. For now, no new round of talks is scheduled. China's retaliations are awaited and could be announced any time soon.

Chines Vice Premier Liu He told reporters on Friday that the "negotiations have not broken down". He also tried to talked down the situation and said mall setbacks are normal and inevitable during the negotiations of both countries. Looking forward, we are still cautiously optimistic" . Yet, he added that "right now, both sides have reached mutual understanding in many things, but frankly speaking, there are also differences."

Liu emphasized "differences are significant issues of principle," and "we absolutely cannot make concessions on such issues of principle." One of the issues is over the current tariffs. Liu told Phoenix television in Hong Kong that if both sides wanted to reach an agreement, then all tariffs must be eliminated. Also, both sides have different opinions on the volume of additional purchase of US goods from China. As noted by a commentary by state news agency Xinhua, any purchases should be "in line with reality".

The biggest issue, though, is likely on the text regarding law changes regarding core issues like IP theft, which China sees as intrusion of sovereignty. Liu said that "every nation has its dignity, so the text ought to be balanced." the People's Daily, China's propaganda media, echoed on Monday. It said that "at no time will China forfeit the country's respect, and no one should expect China to swallow bitter fruit that harms its core interests." This, indicates that China is in no position to back down.

Trump continued to be hard line on China, warned of tougher deal ahead

Trump sounded hard line on China with a series of tweets. He said China was "beaten so badly" in recent negotiations and they may as well "wait around for next election" to see if they can "get lucky and have a Democratic win". He said "the only problem is that they know I am going to win… and the deal will become far worse for them if it has to be negotiated in my second term. Would be wise for them to act now, but love collecting BIG TARIFFS!". Later, he reiterated and said "China is DREAMING that Sleepy Joe Biden, or any of the others, gets elected in 2020. They LOVE ripping off America!"

He also indicated no intention to back down as he "loved tariffs". He said the US is "right where we want to be with China". And he criticized again that China "broke the deal with us & tried to renegotiate". And the US is taking in "Tens of Billions of Dollars in Tariffs". He reiterated that the tariffs collected could be spend on "Great Patriot Farmers" and "distribute the food to starving people" in other nations.

WH Kudlow: No appreciable impact on economy from new tariffs on China

White House economic adviser Larry Kudlow told Fox News Sunday that the trade negotiations "seemed to be taking too long" and the administration "can't accept any backtracking." He also complained that China hasn't come far enough.

On the impact of the tariffs that took effect last week, Kudlow said "the economic consequences are so small" as the US economy is "in terrific shape". He estimated US might only lose 0.2% of GDP. And, "this is a risk we should and can take without damaging our economy in any appreciable way.

On more tariffs on currently untaxed USD 300B in Chinese imports, Trade Representative Robert Lighthizer said the details would be released on Monday. But Kudlow said it could probably be "months" before they take effect.

Meanwhile, he added that talks are on-going. And, there is a G-20 meeting in Japan toward the end of June next month and the chances that President Trump and President Xi will get together at that meeting are pretty good."

Focus turns back to economic data from US, Germany, UK, Canada, Australia and China

It's clear that there is no quick fix to US-China trade tensions. Attentions will turn back to economic data this week. There are something important for many major currencies. For US, main focus will be on retail sales. The US economy has been performing rather well, except inflation. Retail sales will likely provide another piece of evidence of underlying robustness of the economy, and its preparedness for prolonged trade war with China.

German ZEW economic sentiment will be watched for more sign of stabilization in Eurozone slowdown. UK will release job data but might be shrugged off like others as Brexit remains the key risk. After last week's record job data, Canada CPI will probably provide more support for BoC to turn its rate path back on track. RBA is clear that employment is now the key factor for the next rate move. This will feature Australian wage price index and employment.

April data of China were so far disappointing. The seasonal recovery in March could just be false dawn. This week's batch of data including fixed asset investment, industrial production and retail sales will be watched closely. Renewed weakness will raise doubt on whether China could endure full-blown trade war with US.

Here are some highlights for the week:

• Monday: Australia home loans, Japan leading indicator;
• Tuesday: Japan current account; German CPI final, ZEW economic sentiment; Eurozone industrial production; Swiss PPI; UK employment; US import prices;
• Wednesday: Japan M2, machine orders; Australia Westpac consumer sentiment, wage price index; China fixed asset investment, industrial production, retail sales, unemployment rate; Eurozone GDP revision, employment; Canada CPI; US retail sales, Empire state manufacturing, industrial production, business inventories, NAHB housing index
• Thursday: Japan PPI; Australia employment; Eurozone trade balance; Canada manufacturing sales, foreign securities purchases, US housing starts and building permits, Philly Fed survey; jobless claims;
• Friday: New Zealand Business NZ manufacturing index, PPI; Japan tertiary industry index; Eurozone CPI final; US U of Michigan consumer sentiments, leading indicator;

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.6980; (P) 0.6999; (R1) 0.7019; More...

AUD/USD weakens today but stays above 0.6962 temporary low. Intraday bias remains neutral first and some more consolidations could be seen. In case of another recovery, upside should be limited by 0.7069 resistance to bring fall resumption. On the downside, break of 0.6962 will resume the fall from 0.7295 to 100% projection of 0.7295 to 0.7003 from 0.7205 at 0.6913. Decisive break there will indicate further downside acceleration and pave the way to retest 0.6722 low. However, considering bullish convergence condition in 4 hour MACD, firm break of 0.7069 will indicate near term bottoming and turn bias back to the upside for 0.7205 resistance and above.

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.

Economic Indicators Update

STOCKS

• Asians are trading in red in spite of a strong bounce in the US equities on Friday. The uncertainty prevailing over the US-China trade negotiations continue to keep the sentiment negative. As such any bounce in the equities in the coming days could be short-lived. The broader picture remains bearish and further fall is likely in the equity segment in the coming weeks.
• Dow (25942.37, +114.01, +0.44%) has to surpass 26250 to bring back the bullish sentiment completely. But that might be difficult given the uncertainty prevailing in the market. While below 26250, the outlook is bearish for a fall to 25000 or even lower in the coming weeks.
• DAX (12059.83, +85.91, +0.72%) remains bearish for a fall to 11900-11850. It has resistance between 12100 and 12200.
• Nikkei (21244.29, -100.63, -0.47%) has strong resistances at 21500 and 21750 which can keep the index pressured on the downside to test 20500 or even lower levels in the coming weeks.
• Shanghai (2918.48, -20.73, -0.71%) has resistance at 2950 which will need a close watch. A break of it can take it to 3000. But while below 2950 a fall to 2820-2800 is likely.
• Sensex (37462.99, -95.92, -0.26%) and Nifty (11278.90, -22.90, -0.20%) remains bearish. Sensex can test 37000-36800 while the Nifty has room for a fall to 11100-11000 in the coming days.

COMMODITIES

• Weak equities continue to provide support for gold to retain its sideways range. Silver and copper looks weak for further fall in the coming days. Oil remains stable and might see some upticks in the near-term before the overall downtrend resumes.
• Gold (1285.9) remains stable between 1280-1292 over the last few days. The broader 1266-1292 range remain intact. The bias is bearish for gold to break this range below 1266 and fall to 1260-1255 going forward.
• Silver (14.72) is much weaker than gold. It can test 14.65-14.60 in the near term. indeed, while below 15, it can inch slowly lower to even 14 in the coming weeks.
• Copper (2.75) retains our bearish outlook intact for a test of 2.68. Immediate resistance is in between 2.78 and 2.80.
• Nymex (61.78) has been oscillating around 62. We need to wait and see to get some clarity of whether it is going to go up to 64-65 before reversing lower or will it fall from current levels itself. While above 60.80, the chances are high for a rise first before we see a fresh fall.
• Similarly, Brent (69.81) has a chance to test 71.50-72 within its overall downtrend in the near term.

FOREX

• Since the beginning of the month, Dollar Index has risen sharply on an attempt to break below 97.25, unable to sustain at lower levels. 97.00 is an important support for the near term and while that holds, we could expect some sideways movement in the 97.00-98.00 region with a gradual rise towards 98-99 in the medium term.
• Euro (1.1231) is likely to hold below 1.1275-1.1250 in the near term, seeing another dip back towards 1.1200-1.1150. A fall towards 97 in Dollar Index if seen could pull Euro towards 1.13 on the upside but that, if seen would be short lived. Preference is for a fall back towards 1.1150 or lower in the medium term.
  However, we keep a close watch on the German-US 10YR yield (refer interest rates section below) which if rises from here could pull up Euro towards 1.13 or higher.
• USDCNY (6.8552) has risen sharply breaking above our expected resistance near 6.85. While the pair sustains above 6.85, we could expect a rise towards 6.90-6.91 in the coming sessions. Above 6.85, we have two important levels at 6.90/91 and 6.9550 respectively.
• The Euro-Yen (123.28) is stuck in the 123.50-122.50 region and is likely to remain so for now. A downside extension to 122 could be possible in the near term from where a bounce looks possible.
• Dollar Yen (109.76) is trading above immediate support levels of 109.00-109.50 and while the support holds, Dollar Yen could move higher towards 110.50 again in the medium term.
• Aussie (0.6979) is trading just below 0.70. Below this level, there could be scope of testing 0.6950-0.6900 on the downside. Near term is bearish while below 0.70.
• Dollar-Rupee (69.92) came down a bit on Friday to close at 69.91. We could see another attempt to rise back towards 70.00-70.30 over the next 2-3 sessions. Downside is expected to be limited to 69.75.

INTEREST RATES

• The US yields are trading lower and look bearish for the near term. The 30Yr (2.86%), 10Yr (2.44%) and 5Yr (2.23%) have fallen. Near term looks weak for the yields and have scope for them to fall towards 2.80% (30Yr), 2.40% (10YR) and 2.20% (5Yr).
• The US-JGB 10Yr (2.49%) has fallen and looks bearish for the medium term towards 2.45%.
• The German-US 10Yr (-2.48%) is trading just above immediate trend support and while that holds, the yield spread could start to move up towards -2.45%. This is indicative of Euro strength possibly towards 1.13 in the near term.
• The UK yields have bounced a bit from levels seen on Friday. The 5YR (0.82%), 10Yr (1.14%) and the 20Yr (1.59%) are up by 1bps but look bearish for the medium term and could fall towards 0.75%, 1% and 1.50% respectively.
• The Indian 10Yr GOI (7.5077%) could have scope of testing 7.55% on the upside before falling towards 7.40% support. The yield could move up for the next 2-3 sessions followed by a fall by the week end.