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Daily Pivots: (S1) 1.3293; (P) 1.3347; (R1) 1.3417; More...

USD/CAD's break of 1.371 minor resistance suggests that pull back from 1.3467 has completed at 1.3250 already. Intraday bias is turned back to the upside for 1.3467. Break there will revive near term bullishness and further rally should be seen to retest 1.3664 key resistance. On the downside, below 1.3250 will turn bias to the downside for 1.3068/3112 support zone.

In the bigger picture, structure of the medium term rise from 1.2061 (2017 low) to 1.3664 is not clearly impulsive. Hence, we'd stay cautious on strong resistance from 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 and 1.3793 resistance to limit upside, and bring medium term topping. But in any case, medium term outlook will stay bullish as long as channel support (now at 1.3157) holds. Sustained break of 1.3793 will pave the way to retest 1.4689 (2015 high). Firm break of the channel support should confirm reversal target 1.2061 low again.

Daily Pivots: (S1) 110.43; (P) 110.69; (R1) 111.09; More...

Intraday bias in USD/JPY is turned neutral as it recovered after drawing support from 110.35. On the downside, decisive break of 110.35 will confirm completion of the rebound from 104.69 at 112.13. In that case, deeper fall should be seen back to 38.2% retracement of 104.69 to 112.13 at 109.28 next. On the upside, break of 111.15 minor resistance will turn bias back to the upside for retesting 112.13 high instead.

In the bigger picture, strong rebound from 104.69 argues that decline from 118.65 (2016 high) has completed with three waves down to 104.69, after failing 104.62. More importantly, the rise from 98.97 (2016 low) could be resuming. Decisive break of 114.54 resistance will add more credence to this bullish case and target 118.65. This will now be the favored case as long as 110.35 support holds. However, firm break of 110.35 will mix up the medium term outlook again and turn focus back to 104.69 low.

Daily Pivots: (S1) 0.9900; (P) 0.9923; (R1) 0.9943; More.....

USD/CHF's fall from 1.0124 is still in progress and intraday bias remains on the downside. Prior break of 0.9926 support indicates completion of rise from 0.9716 at 1.0124. Further decline should be seen to retest 0.9716 support first. On the upside, break of 1.0010 minor resistance is needed to confirm completion of the fall. Otherwise, near term outlook will remain bearish in case of recovery.

In the bigger picture, focus is back on medium term trend line (now at 0.9803). Decisive break there argue that whole rise from 0.9186 has completed. Further break of 0.9716 will confirm reversal and target next next support level at 0.9541. Nevertheless, there is still a chance that price action from 1.0128 are forming a consolidative pattern with fall from 1.0124 as third leg. If this is the case, stronger support should be seen between 0.9716 and the trend line to contain downside.

Daily Pivots: (S1) 1.1329; (P) 1.1384; (R1) 1.1429; More.....

Intraday bias in EUR/USD is turned neutral with 4 hour MACD crossed below signal line. Another rise is still expected with 1.1335 minor support intact. Prior break of 1.1419 resistance is taken as the first sign of medium term bottom. Break of 1.1448 will target 1.1514/1569 resistance zone first. However, break of 1.1335 will turn bias back to the downside for retesting 1.1176 low.

In the bigger picture, current development suggests that a medium term bottom could be formed at 1.1176 already. That came after hitting 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186, on bullish convergence condition in daily MACD. Further rally could be seen back to 38.2% retracement of 1.2555 to 1.1176 at 1.1703. It's a bit early to confirm medium term bullish reversal. The structure of the rise from 1.1176 and reaction to 1.1703 fibonacci level will be watched for making an assessment later. But in any case, decisive break of 1.1176 is needed to confirm resumption of down trend. Otherwise, outlook is neutral at worst.

Daily Pivots: (S1) 1.2999; (P) 1.3114; (R1) 1.3223; More....

GBP/USD spiked lower to 1.3003 but quickly recovered ahead of 1.2960 support. Intraday bias remains neutral first. With 1.2960 intact, rise from 1.2391 is still in favor to extend. On the upside, firm break of 1.3381 will target 61.8% retracement of 1.4376 to 1.2391 at 1.3618 next. However, on the downside, firm break of 1.2960 will indicate that rebound from 1.2391 has completed earlier than expected. Deeper fall would then be seen to 1.2773 support for confirmation.

In the bigger picture, medium term decline from 1.4376 (2018 high) should have completed at 1.2391. Rise from 1.2391 is now seen as the third leg of the corrective pattern from 1.1946 (2016 low). Further rise could be seen through 1.4376 in medium term. On the downside, though, break of 1.2773 support will dampen this view. Focus will be turned back to 1.2391 low and break will resume the fall from 1.4376 to 1.1946.

After some roller coaster rides, Sterling is trading broadly higher for today after EU approved a short Brexit extension for UK. But overall, the Pound remains the weakest one for the week. Delaying the "cliff edge" by two weeks is just giving the economy a breather. The problem is not solved and uncertainties remain. Nevertheless, focus will turn to economic data from Eurozone and Canada today first.

Staying in the currency markets, New Zealand Dollar is the second strongest for today, following Sterling. Swiss Franc is the weakest one, followed by Australian Dollar. But all major pairs and crosses are bounded inside Thursday's range. As for the week, Sterling is the weakest, followed by Canadian and then Dollar. Swiss Franc is the strongest, followed by Kiwi and Yen.

In Asia, Nikkei closed up 0.09%. Hong Kong HSI is down -0.19%. China Shanghai SSE is up 0.09%, staying above 3000 handle. Singapore Strait Times is up 0.01%. Japan 10-year JGB yield is down -0.0335 at 0.071. Overnight, DOW rose 0.84%. S&P 500 rose 1.09%. NASDAQ rose 1.42%. 10-year yield rose 0.002 to 2.537.

EU approved short Brexit extension, cliff edge delayed to April 12

At the European Council meeting in Brussels, EU approved a short Brexit extension for UK to decide which way they'd choose to go. If not Brexit deal is approved by the House of commons, The extension will be until April 12, when UK has to indicate a way forward. If a Brexit deal is approved, the extension will be until May 22. The offer is accepted by UK Prime Minister Theresa May.

EU President Donald Tusk said "the cliff edge will be delayed", adding that "I was really sad before our meeting, now I'm much more optimistic." He also noted, until April 12, "all options will remain open" and "the UK government will still have a choice between a deal, no deal, a long extension or revoking Article 50 "

May said after the summit that "what the decision today underlines is the importance of the House of Commons passing a Brexit deal next week so that we can bring an end to the uncertainty and leave in a smooth and orderly manner". She added "tomorrow morning, I will be returning to the U.K. and working hard to build support for getting the deal through."

Japan CPI core slowed to 0.7% yoy, drifting away from BoJ's target

Japan national CPI core (all items less fresh food) slowed to 0.7% yoy in February, down from 0.8% yoy and missed expectation of 0.8% yoy. CPU core-core (all items less food and energy) remained sluggish at 0.4% yoy, unchanged from January. Headline all items CPI was unchanged at 0.2%.

Despite BoJ's massive monetary stimulus, there is no sign for CPI core to achieve the 2% target. And even worse, it's actually moving farther away from the goal. Sluggish core-core reading is providing no help too. Moreover, there are risks of drag by slowdown in overseas economy. For now, there is practically no case for BoJ to exit ultra-loose policy any time soon.

Japan PMI manufacturing unchanged at 48.9, sustained downturn

Japan PMI manufacturing was unchanged at 48.9 in March, missed expectation of 48.9. Markit noted there are "further production cutbacks amid weaker new order inflows". Also, "business confidence remains below long-run average".

Joe Hayes, Economist at IHS Markit, said: "Further struggles for Japanese manufacturers were apparent at the end of Q1, with latest flash PMI data showing a sustained downturn. Slack demand from domestic and international markets prompted the sharpest cutback in output volumes for almost three years. With input purchasing falling, firms appear to be anticipating further troubles in the short-term. Indeed, concern of weaker growth in China and prolonged global trade frictions kept business confidence well below its historical average in March."

Looking ahead

Eurozone PMIs will be the major focus in European session. Later in the day, Canadian data will take center stage with CPI and retail sales futures. US will release PMI, wholesale inventories and existing home sales.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.2999; (P) 1.3114; (R1) 1.3223; More....

GBP/USD spiked lower to 1.3003 but quickly recovered ahead of 1.2960 support. Intraday bias remains neutral first. With 1.2960 intact, rise from 1.2391 is still in favor to extend. On the upside, firm break of 1.3381 will target 61.8% retracement of 1.4376 to 1.2391 at 1.3618 next. However, on the downside, firm break of 1.2960 will indicate that rebound from 1.2391 has completed earlier than expected. Deeper fall would then be seen to 1.2773 support for confirmation.

In the bigger picture, medium term decline from 1.4376 (2018 high) should have completed at 1.2391. Rise from 1.2391 is now seen as the third leg of the corrective pattern from 1.1946 (2016 low). Further rise could be seen through 1.4376 in medium term. On the downside, though, break of 1.2773 support will dampen this view. Focus will be turned back to 1.2391 low and break will resume the fall from 1.4376 to 1.1946.

Economic Indicators Update

Market movers today

After the EU27's decision to grant a very short unconditional extension of Brexit (see more below), we will follow closely the response from leading UK politicians today and over the weekend ahead of next week's decisions in the House of Commons.

In the US, we get Markit PMIs (preliminary) for March, which will be particularly interesting on the back of this week's Fed meeting, where the central bank signalled concern about the momentum in the US economy. We still think Markit manufacturing PMI will stabilise, so we expect the manufacturing index to come in at 54, up from 53.

We also get euro area March flash PMIs, where we expect some stabilisation in the manufacturing index, which we see arriving at 49.1, while we see services PMI continuing to rebound to 53.1 due to solid domestic demand. Today also brings German PMI; improving activity in Germany's industry will be an important ingredient for the euro area growth rebound we still expect to take shape in Q2.

Selected market news

The EU Council decided to offer the UK a very short unconditional extension of the Brexit deadline of two weeks to 12 April, with a possible extension to 22 May if the House of Commons passes the Withdrawal Agreement before that. If the House of Commons rejects the deal again, the UK will either leave without a deal on 12 April or alternatively indicate a way forward for the EU Council to consider (i.e., among other things, accept participating in the European Elections in May). PM Theresa May accepted the terms. Basically, the EU leaders' agreement means that the UK has one more time to pass the deal but keeping the option of a long extension on the table. At the moment, a long extension seems more likely than the deal passing, as during the many votes in the House of Commons we saw a majority wanting to take a no deal Brexit off the table while May has still not found a majority for her deal as of now. That said, we have to watch the response from UK politicians in the coming days to see whether there will be a change of positions in British politics.

After the announcement, the GBP reversed earlier losses in Asian trading. US equity index futures, Treasuries and the USD were mostly steady, while 10Y Japanese bond yields fell to their lowest levels since November 2016 after disappointing inflation numbers.

While the Bank of England remained on hold amid mixed UK figures and growing Brexit uncertainties, yesterday Norges Bank (NB) hiked policy rates by 25bp as widely expected, but still delivered a hawkish surprise to the market by adjusting the rate path upwards. As Norges Bank supports our view on the relative performance of the Norwegian economy, we now expect NB to hike rates again in June, and deliver another rate hike in December (previous call was one 2019 hike in September). EUR/NOK continues to test the 9.60 support level and we think the carry-momentum argument has been significantly strengthened, with June becoming a live meeting

For the 24 hours to 23:00 GMT, the EUR declined 0.45% against the USD and closed at 1.1375.

Data indicated that the Euro-zone's flash consumer confidence index rose to a level of -7.2 in March, compared to a reading of -7.4 in the prior month. Market participants had envisaged the index to climb to a level of -7.1.

In the US, data showed that the US Philadelphia Fed manufacturing index advanced to a level of 13.7 in March, surpassing market expectations for a rise to a level of 4.8. In the previous month, the index had recorded a reading of -4.1. Moreover, the nation's leading indicator rebounded 0.2% on a monthly basis in February, compared to a revised flat reading in the prior month. Also, the seasonally adjusted initial jobless claims dropped to a level of 221.0K in the week ended 16 March 2019, following a revised reading of 230.0K in the prior week. Markets participants had anticipated the initial jobless claims to fall to a level of 225.0K.

In the Asian session, at GMT0400, the pair is trading at 1.1376, with the EUR trading slightly higher against the USD from yesterday's close.

The pair is expected to find support at 1.1336, and a fall through could take it to the next support level of 1.1295. The pair is expected to find its first resistance at 1.1424, and a rise through could take it to the next resistance level of 1.1471.

Going ahead, traders would await the Markit manufacturing and services PMIs for March, scheduled to release across the euro-bloc. Later in the day, the US Markit manufacturing and services PMIs for March and existing home sales for February, will keep traders on their toes. Additionally, the US monthly budget statement for February, will be on investors radar.

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

Japan PMI manufacturing was unchanged at 48.9 in March, missed expectation of 48.9. Markit noted there are "further production cutbacks amid weaker new order inflows". Also, "business confidence remains below long-run average".

Commenting on the Japanese Manufacturing PMI survey data, Joe Hayes, Economist at IHS Markit, which compiles the survey, said:

"Further struggles for Japanese manufacturers were apparent at the end of Q1, with latest flash PMI data showing a sustained downturn. Slack demand from domestic and international markets prompted the sharpest cutback in output volumes for almost three years. With input purchasing falling, firms appear to be anticipating further troubles in the short-term. Indeed, concern of weaker growth in China and prolonged global trade frictions kept business confidence well below its historical average in March."

Full release here.

For the 24 hours to 23:00 GMT, the GBP declined 0.61% against the USD and closed at 1.3118, amid growing fears that a no-deal Brexit would become a reality.

On the macro front, UK’s public sector net borrowing surplus narrowed to a 17-year low level of £0.7 billion in February, compared to a revised surplus of £14.1 billion in the prior month. Markets had anticipated the public sector net borrowing to post a surplus of £0.8 billion. Meanwhile, Britain’s retail sales climbed 4.0% on a yearly basis in February, beating market expectations for a rise of 3.3%. In the previous month, retail sales had registered a revised gain of 4.1%.

The Bank of England, in its latest monetary policy meeting, kept its key interest rate unchanged at 0.75%, as widely expected. Additionally, the central bank reiterated that a further tightening of policy at a gradual pace may be required, if the economy expands in line with projections. Meanwhile, the central bank forecasted a 0.3% GDP growth for the first quarter.

In the Asian session, at GMT0400, the pair is trading at 1.3140, with the GBP trading 0.17% higher against the USD from yesterday’s close.

The pair is expected to find support at 1.3021, and a fall through could take it to the next support level of 1.2901. The pair is expected to find its first resistance at 1.3243, and a rise through could take it to the next resistance level of 1.3345.

Amid no major economic releases in UK today, investors would focus on global macroeconomic events for further direction.

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