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Daily Pivots: (S1) 1.0160; (P) 1.0194; (R1) 1.0227; More.....

USD/CHF's rebound failed below 1.01237 and stays in consolidation. Intraday bias remains neutral for the moment. On the upside, break of 1.0237 will resume larger rise from 0.9186 to 1.0342 key resistance. However, break of 1.0126 will turn bias to the downside for deeper decline to 55 day EMA (now at 1.0076).

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.

Market movers today

Today, markets will continue to focus on the trade negotiations ahead of the beginning of the US-China talks tomorrow. After the US markets closed deep in the red yesterday, the sour risk sentiment on the back of increased trade uncertainty will also be in focus.

In terms of economic data releases, there is not much on the agenda today. In Norway, production data for March is due out and in Sweden we get budget data for April. See more details on page 2. Otherwise we are looking forward to the Norges Bank meeting on Thursday.

In Germany, industrial production data is due out this morning, which markets will scrutinise given the weakness in German manufacturing production in recent months. Given yesterday's downward revision in the EU Commission's growth forecast and soft factory orders, another set of weak data would send bond yields down further.

The ECB's Draghi speaks in Frankfurt this afternoon, but it is not expected to be a market mover.

Selected market news

Yesterday, Italy came under renewed pressure partly due to the risk-off sentiment, given the sell-off in the equity market, but also on the back of the downward revision of growth in 2019 from 0.2% to 0.1% and a deficit in 2020 above 3%. The 10Y spread to Germany widened some 8bp, while the other peripheral markets was also struggling to follow the move in the 10Y German government bond yield.

The US equity markets ended the day with losses across the different categories. Given the negative sentiment in the US equity market, we saw another decent rally in US Treasuries.

The Asian equity markets followed the negative sentiment from the US equity markets this morning on the back of the uncertainty over a trade agreement between the US and China. The New Zealand central bank (RBNZ) became the first central bank in the developed world to cut rates, lowering by 25bp to an historical low, and signalled that one more cut could come given the downward risk for the economic outlook. A rate cut was to some extent priced in and the market is pricing in the possibility of another cut from RBNZ.

General Trend:

• Toyota Motor moves between gains and losses after FY results , guidance and buyback announcement
• Chinese equity markets pare losses as trade-sensitive IT index gains, financials decline
• RBNZ cited inflation and employment for rate cut
• Analysts debate policy outlook for RBNZ following statement
• AUD/NZD rises as Australia and New Zealand now both have official cash rates equal to 1.50%
• USD/JPY tests ¥110.00 area amid equity declines, focus on trade
• China Vice Premier Liu He is expected to visit the US May 9-10th (Thursday-Friday)
• Singapore Central Bank plans to release data on currency interventions, shift reserves to wealth fund
• Some press focus on impact of US/China trade talks on Japan (Nikkei)
• Honda expected to report earnings after Nikkei close

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.2%
• (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) CUTS OFFICIAL CASH RATE (OCR) BY 25BPS TO 1.50%; AS EXPECTED, adjusts rate path for another cut (first rate cut since 2016)
• (NZ) New Zealand Central Bank (RBNZ) Gov Orr: Think we are in a good position to observe data as situation unfolds- post rate decision press conference
• SUN.AU Reports Q3 lending Portfolio A$58.9B, +1% y/y, -0.5% q/q
• CSR.AU Reports FY19 (A$) adj Net 181.7M v 210.6M y/y; EBIT 265.0M v 320.3M y/y; Rev 2.32B v 2.24B y/y
• (AU) Australia sells A$900M v A$900M indicated in 2.75% Nov 2029 bonds, avg yield 1.7652% v 1.8864% prior, bid to cover 3.52x v 2.91x prior
• (NZ) Kiwibank cuts rates on its floating rate home loans by 15bps, follows 25bps rate cut by RBNZ

Japan

• Nikkei 225 opened -1.4%
• Toyota Motors, 7203.JP Reports FY18/19 Net ¥1.88T v ¥2.49T y/y; Op ¥2.47T v ¥2.40T y/y; Rev ¥30.2T v ¥29.4T y/y; to buyback ¥300B in shares (1.73% of shares outstanding)
• (JP) US could pressure Japan into a quick trade deal if talks fall apart with China - Nikkei
• 7203.JP Targeting to produce 400K electric vehicles per year in China, after expanding factory JV with Guangzhou Auto with $1.64B investment - Nikkei
• (JP) Bank of Japan (BOJ) minutes from March policy meeting (two meetings ago): Most: Will take time to hit 2% price target, appropriate to persist with monetary easing
• (JP) Japan Apr PMI Services: 51.8 v 52.0 prior (3-month low); PMI Composite: 50.8 v 50.4 prior
• (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.10% (prior 0.10%) 10-yr JGBs, avg yield -0.060% v -0.060% prior, bid to cover 4.44x v 5.07x prior

Korea

• Kospi opened -1.2%
• (KR) South Korea Mar Current Account Balance: $4.8B v $3.6B prior; Balance of Goods (BOP): $8.5B v $5.5B prior
• (KR) South Korea Fin Min Hong: Reiterates downside risks to economy are increasing; Sluggish exports and uncertainties over US/China trade talks are some factors driving weakness in Korean Won ; need to pass extra budget swiftly
• (KR) South Korea sells KRW1.8T v KRW1.8T indicated in 30-yr bonds; avg yield 1.90% v 1.91% prior

China/Hong Kong

• Hang Seng opened -1.3%; Shanghai Composite opened -1.8%
• (CN) China Foreign Ministry spokesperson Geng Shuang: Raising tariff will not resolve issues; reiterates that hope to meet the US half-way on trade issues
• (CN) China Commerce Ministry (MOFCOM): Vice Premier Liu He to visit US this week for trade talks (scheduled for Thur-Fri, May 9-10th)
• (CN) CHINA APR TRADE BALANCE (CNY): 93.6B V 216.8BE; Exports Y/Y: 3.1% v 8.0%e; Imports Y/Y: 10.3% v 3.0%e; YTD yuan denominated imports from the US -26.8%
• (CN) CHINA APR TRADE BALANCE: $13.8B V $34.6BE; Exports Y/Y: -2.7% v +3.0%e; Imports Y/Y: +4.0% v -2.1%e
• (CN) CHINA APR FOREIGN RESERVES: $3.0950T V $3.100TE (1st decline in 7 months)
• (CN) China corporate defaults in the first 4 months of 2019 total CNY39.2B, +3.4x y/y - financial press
• (CN) China PBoC sets yuan reference rate: 6.7596 v 6.7614 prior
• (CN) China PBoC Open Market Operation (OMO): Injects CNY10B in 7-day Reverse Repos v CNY20B prior; Net injects CNY10B v CNY20B prior
• 388.HK Reports Q1 (HK$) Net 2.661B v 2.56B y/y ; Rev 4.29B v 4.15B y/y

Other Asia

• (SG) Monetary Authority of Singapore (MAS): Official foreign reserves (OFR) have grown steadily over the years, to assesses size of OFR to support monetary policy, should maintain OFR amounting to at least 65% of GDP

North America

• (US) Weekly API Oil Inventories: Crude: +2.8M v +6.8M prior
• PBR Reports Q1 (BRL) Net 4.0B v 6.9B y/y, Rev 80.0B v 84.2Be

Europe

• (UK) UK Apr Barclaycard Consumer Spending Y/Y: 2.5% v 3.1% prior
• (UK) Apr BRC Sales Like-For-Like Y/Y: 3.7% v +2.5%e (largest rise since April 2017)
• (UK) Official: European Parliament elections will go forward in UK

Levels as of 1:20 ET

• Nikkei 225, -1.7%, ASX 200 -0.5%, Hang Seng -0.8%; Shanghai Composite -0.5%; Kospi -0.2%
• Equity Futures: S&P500 flat; Nasdaq100 flat, Dax +0.1%; FTSE100 flat
• EUR 1.1207-1.1188 ; JPY 110.31-109.96 ; AUD 0.7027-0.6999 ;NZD 0.6613-0.6525
• Gold +0.1% at $1,287/oz; Crude Oil +0.8% at $61.89/brl; Copper +0.5% at $2.805 /lb

For the 24 hours to 23:00 GMT, the EUR declined 0.07% against the USD and closed at 1.1192, after the European Commission downgraded its growth forecasts for the euro area.

The European Union (EU), in its latest report, slashed Euro-zone's 2019 growth forecast to 1.2% from 1.9% predicted earlier, amid uncertainty over trade conflicts and Brexit worries. Further, the estimate for 2020 was lowered to 1.5% from 1.6%. Additionally, the EU cut Germany's growth outlook for this year to 0.5% from 1.8%, citing weakness in the auto industry. However, the Commission stated that inflation is likely to stay at this year's levels and below the European Central Bank's target.

In economic news, Germany's seasonally adjusted factory orders rose less-than-anticipated by 0.6% on a monthly basis in March, compared to a revised fall of 4.0% in the prior month. Market participants had envisaged factory orders to record a gain of 1.5%. Meanwhile, the nation's construction PMI dropped to a level of 53.0 in April, amid sluggish growth in commercial, housing and civil engineering operations and following a reading of 55.6 in the prior month.

In the US, data showed that consumer credit rose by $10.3 billion in March, rising at its slowest pace in 9-months and undershooting market expectations for an advance of $16.0 billion. In the prior month, consumer credit had recorded a revised rise of $15.5 billion. Moreover, the US JOLTs job openings jumped more than expected to a level of 7488.0K in March, compared to a revised level of 7142.0K in the prior month. Markets were anticipating the JOLTs job openings to register a gain of 7350.0K.

In the Asian session, at GMT0300, the pair is trading at 1.1200, with the EUR trading 0.07% higher against the USD from yesterday's close.

The pair is expected to find support at 1.1172, and a fall through could take it to the next support level of 1.1144. The pair is expected to find its first resistance at 1.1223, and a rise through could take it to the next resistance level of 1.1246.

Moving ahead, traders would closely monitor Germany's industrial production for March, slated to release in a few hours followed by the ECB President, Mario Draghi's speech, for further direction. Later in the day, the US MBA mortgage applications, will keep traders on their toes.

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

For the 24 hours to 23:00 GMT, the GBP declined 0.18% against the USD and closed at 1.3070.

On the data front, UK's Halifax house price index rose 0.1% on a monthly basis in April, at par with market consensus. In the prior month, the index has recorded a fall of 1.6%.

In the Asian session, at GMT0300, the pair is trading at 1.3077, with the GBP trading 0.05% higher against the USD from yesterday's close.

Overnight data indicated that Britain's BRC retail sales across all sectors climbed 3.7% on an annual basis in April, compared to a drop of 1.1% in the previous month. Market participants had expected the BRC retail sales to register an advance of 2.5%.

The pair is expected to find support at 1.3034, and a fall through could take it to the next support level of 1.2992. The pair is expected to find its first resistance at 1.3125, and a rise through could take it to the next resistance level of 1.3174.

Going forward, traders would keep an eye on UK's RICS house price balance for April, slated to release overnight.

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 USD declined 0.48% against the JPY and closed at 110.25.

In the Asian session, at GMT0300, the pair is trading at 110.04, with the USD trading 0.19% lower against the JPY from yesterday's close.

The minutes of the Bank of Japan's March monetary policy meeting revealed that members saw no immediate need to expand an already massive stimulus programme and warned of heightening risks to Japan's recovery. Additionally, the officials cautioned that the central bank's prolonged ultra-loose monetary policy could impact regional banks' profits.

Overnight data showed that Japan's Nikkei services PMI dropped to a level of 51.8 in April, following a reading of 52.0 in the prior month.

The pair is expected to find support at 109.72, and a fall through could take it to the next support level of 109.41. The pair is expected to find its first resistance at 110.60, and a rise through could take it to the next resistance level of 111.17.

In absence of key economic releases in Japan today, investor sentiment would be determined by global macroeconomic events.

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 0.20% against the CHF and closed at 1.0195.

In the Asian session, at GMT0300, the pair is trading at 1.0191, with the USD trading marginally lower against the CHF from yesterday’s close.

The pair is expected to find support at 1.0159, and a fall through could take it to the next support level of 1.0128. The pair is expected to find its first resistance at 1.0224, and a rise through could take it to the next resistance level of 1.0258.

Looking ahead, investors would closely watch Switzerland’s unemployment rate for April, slated to release in a while.

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

For the 24 hours to 23:00 GMT, the USD rose 0.14% against the CAD and closed at 1.3470.

On the macro front, Canada’s Ivey Purchasing Managers Index climbed to 55.9 in April, compared to a level of 54.3 in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.3464, with the USD trading a tad lower against the CAD from yesterday’s close.

The pair is expected to find support at 1.3420, and a fall through could take it to the next support level of 1.3375. The pair is expected to find its first resistance at 1.3499, and a rise through could take it to the next resistance level of 1.3533.

Trading trend in the Loonie today, is expected to be determined by Canada’s housing starts for April, scheduled to release later in the day.

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

For the 24 hours to 23:00 GMT, the AUD rose 0.30% against the USD and closed at 0.7012.

LME Copper prices declined 0.1% or $6.0/MT to $6174.0/MT. Aluminium prices rose 0.9% or $16.5/MT to $1767.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7022, with the AUD trading 0.14% higher against the USD from yesterday’s close.

The pair is expected to find support at 0.6987, and a fall through could take it to the next support level of 0.6953. The pair is expected to find its first resistance at 0.7052, and a rise through could take it to the next resistance level of 0.7083.

Amid lack of economic releases in Australia today, traders would focus on global macroeconomic events 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, Gold rose 0.15% against the USD and closed at USD1285.00 per ounce, as US-China trade tensions increased demand for safe haven assets.

In the Asian session, at GMT0300, the pair is trading at 1287.20, with gold trading 0.17% higher against the USD from yesterday’s close.

The pair is expected to find support at 1281.40, and a fall through could take it to the next support level of 1275.60. The pair is expected to find its first resistance at 1290.70, and a rise through could take it to the next resistance level of 1294.20.

The yellow metal is trading above its 20 Hr and 50 Hr moving averages.