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The Canadian dollar is trading sideways in the Tuesday session. Currently, USD/CAD is trading at 1.3141, up 0.05% on the day. On the release front, there are no Canadian data indicators for a second straight day. Bank of Canada Governor Stephen Poloz will testify before the House of Commons Standing Committee on Finance. In the U.S, CB Consumer Confidence is expected to dip to 136.3 points. On Wednesday, Canada releases GDP and Poloz continues his testimony on Parliament Hill. The U.S will release ADP nonfarm payrolls.

A black October for the stock markets has badly shaken investor confidence, which has translated into softer demand for minor currencies like the Canadian dollar. The currency has slipped 1.73% in October, despite a Bank of Canada rate hike last week. At the forefront of geopolitical tensions is the trade war between the U.S and its major partners, particularly with China. Tensions between the two largest economies show no signs of easing, and the Trump administration continues to threaten further severe tariffs on China. The U.S has also imposed steel tariffs on its two neighbors, Canada and Mexico. On Monday, Mexico’s deputy commerce minister said that Mexico would not sign the new USMCA pact, which replaces NAFTA, unless the U.S agreed to remove the tariffs against Mexico and Canada. We’ll get a look at Canadian GDP for August on Wednesday, which could be a market-mover. The economy expanded 0.2% in July, and the markets will be hoping for a stronger gain on Wednesday.

Daily Pivots: (S1) 1.1350; (P) 1.1384; (R1) 1.1406; More....

EUR/USD remains in consolidation above 1.1335 and intraday bias stays neutral. With 1.1493 resistance intact, further decline is expected. Below 1.1335 will target 1.1300 low first. Decisive break will resume whole down trend from 1.2555 and target 1.1186 fibonacci level next. On the upside, however, break of 1.14983 resistance will likely extend the consolidation pattern from 1.1300 with another rise towards 1.1814 before larger down trend resumption.

In the bigger picture, corrective pattern from 1.1300 could have completed at 1.1814 after hitting 38.2% retracement of 1.2555 to 1.1300 at 1.1779. Decisive break of 1.1300 will resume the down trend from 1.2555 to 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. On the upside, break of 1.1814 will delay the bearish case and extend the correction from 1.1300 with another rise before completion.

Daily Pivots: (S1) 1.2773; (P) 1.2813; (R1) 1.2834; More...

GBP/USD's fall resumed after brief consolidation and intraday bias is turned back to the downside. Current fall from 1.3297 should target a test on 1.2661 low first. Decisive break there will resume larger down trend from 1.4376. Next target is 61.8% projection of 1.4376 to 1.2661 from 1.3297 at 1.2237. On the upside, break of 1.2921 support turned resistance will suggest short term bottoming and turn bias to the upside for stronger rebound.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA. The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

Daily Pivots: (S1) 0.9984; (P) 1.0004; (R1) 1.0041; More...

USD/CHF's break of 1.0026 suggests resumption of rise from 0.9541. Intraday bias is turned back to the upside for 1.0067 resistance. Decisive break there will confirm resumption of larger rise from 0.9186 and should target 1.0342 key resistance next. In any case, near term outlook will remain bullish as long as 0.9848 support holds.

In the bigger picture, the pullback from 1.0067 has completed at 0.9541 already. And rise from 0.9186 is likely resuming. Firm break of 1.0067 will pave the way to retest 1.0342 key resistance. We'd be cautious on strong resistance from there to limit upside to bring another medium term fall to extend long term range trading.

Here are the latest developments in global markets:

• FOREX: Eurozone’s initial GDP growth estimate for the third quarter was rather disappointing, clocking in at 1.7% y/y, the lowest since Q4 2017. On a quarterly basis, expansion unexpectedly slowed to 0.2%, from 0.4% previously. Consumer confidence was confirmed at -2.7 in October, not far above the 1 ½ -year low of -2.9 reached in September. Yet investors’ mood didn’t deteriorate significantly in the wake of the data, even under rising political noises in Italy and Germany, sending euro/dollar slightly down to 1.1349 (-0.15%). Pound/dollar eased to a fresh two-month low of 1.2753 as the dollar continued to gain ground after the US President said that the government will make a great trade deal with China, a few days before US midterm elections take place. That said, headlines stating that the US still considers unleashing tariffs on all Chinese imports kept sentiment somewhat subdued. Speaking in Oslo, the UK PM argued that the government is not planning another general election. Dollar/yen moved up to 112.82 (+0.40%), while the dollar index crawled up to 96.86 (+0.29%). In antipodean currencies, aussie/dollar fully recovered yesterday’s downfall, rising to 0.7089 (+0.49%) before Q3 CPI figures come out of Australia. Kiwi/dollar was also on the upside for a second day, at 0.6542 (+0.34%). Dollar/loonie softened to 1.3120 (-0.08%). In emerging currencies, onshore yuan dropped to a fresh decade-low against the greenback
• STOCKS: European stocks were mostly on the downside at 1200 GMT. The pan-European STOXX 600 and the blue-chip Euro STOXX 50 were almost flat. The German DAX 30 declined by 0.34% as the German Lufthansa air carrier reported disappointing profits for the third quarter and said that the number of flights will rise more modestly this year compared to other airlines. General Electric’s earnings came in weaker than expected, while Volkswagen’s and Coca Cola’s results beat forecasts. The French CAC 40 dipped by 0.29% and the Italian FTSE MIB dropped by 0.33%. On the other hand, the British FTSE 100 was marginally up by 0.14% due to a positive budget update. In Asia, stock indices closed mixed, while in the US, futures tracking the S&P 500, Dow Jones and Nasdaq 100 were flashing green, pointing to a higher open of around 0.5% for these indices today.
• COMMODITIES:  Oil reversed earlier losses and turned negative on the day as investors feared that additional import tariffs on China would harm demand for crude at a time when US crude inventories are still on the rise and US sanctions on Iran are just about to take full effect. WTI crude and Brent were weaker by 0.95% and 1.16% respectively. In metals, copper tumbled by 1.15% and gold extended south to $1221.8 (-0.61%).

Day ahead: German inflation numbers due ahead of Australia’s; BoJ rate decision eyed

The economic calendar is not particularly packed over the remainder of Tuesday’s session, with German inflation figures being the highlight. The Asian session on Wednesday promises to be much more entertaining, with Australia’s own inflation numbers and a rate decision by the Bank of Japan (BoJ) being high on the agenda. As always, any updates on the trade and political fronts could well impact currency, bond, and stock markets.

In Germany, preliminary inflation data for October will hit the markets at 1300 GMT. Forecasts point to an uptick in the EU-harmonized yearly rate to 2.4%, from 2.2% previously. Germany’s numbers come out one day ahead of the Eurozone-wide release and hence, may be seen as a gauge of what is in store for the entire bloc. That said, considering that the regional German CPIs have already been released and were broadly in line with the nationwide forecast, any major surprise and hence reaction in the euro seems unlikely.

In the US, the Conference Board consumer confidence index for October is due out at 1400 GMT and expectations are for a pullback, though from an elevated two-decade high level. The S&P/Case-Shiller house price index for August will also be released earlier at 1300 GMT.

On the equity front, Facebook will publicize its own earnings results after Wall Street’s closing bell.

In energy markets, the weekly private API crude inventory data are due at 2030 GMT.

As for public appearances, ECB Executive Board members Praet and Lautenschlager will deliver remarks at 1330 GMT and 1410 GMT respectively, while Bank of Canada Governor Poloz will speak before lawmakers at 1930 GMT.

Later during the Asian session on Wednesday, the focus will shift to Australia’s CPI prints for Q3, due at 0030 GMT. Projections suggest inflationary pressures cooled a little, with the headline CPI rate expected to dip to 1.9% in yearly terms, from 2.1% previously. That said, measures of underlying inflation (trimmed & weighted mean) are anticipated to have held steady at 1.9% as well, so the pullback in the headline rate may not be particularly worrisome for the RBA – which meets next week.

In China, the official manufacturing and non-manufacturing PMIs for October are due for release at 0100 GMT.

Finally, the BoJ will announce its rate decision. No change in policy is expected, with the reaction in the yen instead likely to depend on any updates in the Bank’s assessment of the economy and forecasts – if any. Although Japan’s inflation picture remains tepid, growth-related indicators have picked up some steam lately, which may lead the BoJ to appear a tad more optimistic on the outlook. While that may prove slightly positive for the yen, the currency’s broader direction will likely be decided by how risk appetite develops in financial markets, given its safe-haven status.

EUR/USD continues with its losing ways in the Tuesday session. Currently, the pair is trading at 1.1349, down 0.21% on the day. On the release front, Eurozone Preliminary Flash GDP dipped to 0.2%, shy of the estimate of 0.4%. Later in the day, Germany releases Preliminary CPI with an estimate of 0.1%. In the U.S, CB Consumer Confidence is expected to dip to 136.3 points.

The eurozone economy continues to worry policymakers. Economic performance has softened in the third quarter, as Preliminary Flash GDP dipped to 0.2%, down from a 0.4% gain in the second quarter. On an annualized basis, Q3 growth was 1.7%, down from 2.2% in the second quarter. Much of the slowdown can be attributed to the crisis over the Italian budget, which was rejected by the European Commission since it breached EU regulations over debt limits. There was more bad news on Tuesday, as the European Commission reported that economic confidence fell in the eurozone for a tenth straight month. The indicator dropped sharply to 109.8, down from 110.9 points a month earlier. Confidence is lower in the manufacturing and services industries, and retail services managers reported “much grimmer views on the present and expected business situation”. Economic confidence has fallen in Germany, France and Italy, which could translate into further headwinds for the euro in the fourth quarter.

Daily Pivots: (S1) 111.92; (P) 112.24; (R1) 112.70; More..

USD/JPY's rebound from 111.37 extends today. Breach of 112.88 resistance argues that corrective fall from 114.54 has completed earlier than expected, on bullish convergence condition in 4 hour MACD. Intraday bias is turned back to the upside for retesting 114.54.73 key resistance zone. On the downside, break of 112.19 minor support will turn bias back to the downside and will likely extend the fall from 114.54. IN that case, next target is 38.2% retracement of 104.62 to 114.54 at 110.75. As such fall is seen as part of medium term correction, we'll look for bottoming signal above 109.76 key support.

In the bigger picture, corrective fall from 118.65 (2016 high) should have completed with three waves down to 104.62. Decisive break of 114.73 resistance will likely resume whole rally from 98.97 (2016 low) to 100% projection of 98.97 to 118.65 from 104.62 at 124.30, which is reasonably close to 125.85 (2015 high). This will stay as the preferred case as long as 109.76 support holds. However, decisive break of 109.76 will dampen this bullish view and turns outlook mixed again.

Yen trades broadly lower today as stock markets stabilized in both Asian and Europe. Meanwhile, Sterling, and Euro are following as the weakest. There is no sign of breakout of any kind in Brexit negotiation. Economic data out of Eurozone were also disappointing and point to further slow down. Commodity currencies, on the other hand, are generally higher, as led by Australian Dollar. The greenback is mixed for the moment. It was lifted briefly yesterday by news that Trump is going to impose new round of tariffs on China should the summit with President Xi Jinping fails. But there was no follow through buying.

Technically, USD/JPY's breach of 112.88 minor resistance is seen as an indication of near term reversal. USD/CHF and GBP/USD have just resumed recent moves. GBP/AUD's decline also accelerates today and breaks 1.8014 key support. One of the focuses in US session is 1.5984 support in EUR/AUD. Decisive break there will be an early indication of medium term trend reversal.

In other markets, at the time of writing, FTSE is up 0.36%, DAX is flat, CAC is up 0.03%. German 10 year yield is up 0.0054 at 0.386. Italian 10 year yield is up 0.090 at 3.428. German-Italian spread is back above 300. Earlier today in Asia, Nikkei closed up 1.45% at 21457.29. Singapore Strait Times closed down -0.51% at 2966.45. Hong Kong HSI closed down -0.91% at 24585.53. But China Shanghai SSE rose 1.02% to 2568.05

Eurozone GDP growth halved to 0.2% qoq, confidence deteriorated

Eurozone GDP growth slowed notably to 0.2% qoq in Q3, down from 0.4% qoq and missed expectation of 0.4% qoq. For the year, GDP growth slowed to 1.7% yoy, down from 2.2% yoy and missed expectation of 1.9% yoy. For EU28, Q3 GDP growth slowed to 0.3% qoq, down from 0.5% qoq. For the year, EU 28 GDP growth slowed to 1.9% yoy, down from 2.1% yoy.

Italy Q3 GDP stalled, grew 0.0% qoq, slowed from prior 0.2% qoq and missed expectation of 0.2% qoq. There were positive contribution from agriculture, forestry, fishing and services. But there was decrease in industry. With regard to Q3 2017, GDP increased by 0.8% yoy. Carry-over annual GDP growth for 2018 stood at 1.0%. French GDP rose by 0.4% qoq in Q3, accelerated from Q2's 0.2% qoq, matched expectations.

Also released, Eurozone business climate dropped to 1.01, down from 1.21 and missed expectation of 1.15. Economic confidence dropped to 109.8, down from 110.9, missed expectation of 110.0. Industrial confidence dropped to 2.0, down from 4.7 and missed expectation of 3.9. Services confidence dropped to 13.6, down fro 14.7 and missed expectation of 14.0. Consumer confidence was finalized at -2.7. That is, all confidence indicators deteriorated, and worse than expected.

German unemployment dropped -11k in October, unemployment rate was unchanged at 5.1%.

Swiss KOF dropped to 100.1, economy to grow with average rates in coming months

Swiss KOF Economic Barometer dropped to 100.1 in October, down from 102.2 and missed expectation of 100.8. It sits just above long-term average of 100, and suggests that the Swiss economy is likely to "grow with average rates" in the coming months.

KOF noted that the "decline is quite broadly visible in various indicator bundles." But the fall in manufacturing sector is "particularly striking". And inside the sector, "downward tendency was led by the machinery and vehicle manufacturers as well as the chemicals, pharmaceuticals and plastics industry".

Japan unemployment rate dropped to 2.3%, BoJ meeting starts

Japan's unemployment rate dropped for the second month by -0.1% to 2.3% in September, better than expectation of 2.4%. That's also just 0.1% above May's low at 2.2%. Unemployment rate has been in steady decline in recent years.

BoJ monetary policy meeting starts today. It's widely expected that the central bank will stand pat in the announcement tomorrow. Interest rate will be held unchanged at -0.1%. A major focus is the new economic forecasts but a majority of economists expect them to be largely unchanged.

A major change in BoJ's communications this year was the explicit allowance of 10 year JGB yield to move in a range of -0.1% to 0.1%. And, JGB is has already moved more than that. Hence, there is possibly unnecessary for BoJ to widen that band further.

Also release in Asian session, Australia building approvals rose 3.3% mom in September, below expectation of 3.9% mom.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 111.92; (P) 112.24; (R1) 112.70; More..

USD/JPY's rebound from 111.37 extends today. Breach of 112.88 resistance argues that corrective fall from 114.54 has completed earlier than expected, on bullish convergence condition in 4 hour MACD. Intraday bias is turned back to the upside for retesting 114.54.73 key resistance zone. On the downside, break of 112.19 minor support will turn bias back to the downside and will likely extend the fall from 114.54. IN that case, next target is 38.2% retracement of 104.62 to 114.54 at 110.75. As such fall is seen as part of medium term correction, we'll look for bottoming signal above 109.76 key support.

In the bigger picture, corrective fall from 118.65 (2016 high) should have completed with three waves down to 104.62. Decisive break of 114.73 resistance will likely resume whole rally from 98.97 (2016 low) to 100% projection of 98.97 to 118.65 from 104.62 at 124.30, which is reasonably close to 125.85 (2015 high). This will stay as the preferred case as long as 109.76 support holds. However, decisive break of 109.76 will dampen this bullish view and turns outlook mixed again.

Economic Indicators Update

WTI contract stands at the back foot on Tuesday, after recovery attempts were repeatedly capped by 200SMA ($67.50) and Monday's pullback and close in red weakened near-term structure.

Persisting concerns that US/China trade conflict could escalate and slow demand and rising global supply despite Iran will be out in a couple of days when US sanctions kick, keep oil prices under pressure. Recent bounce from new multi-week low at $65.73 was seen as correction of broader downtrend from $76.88 (03 Oct peak), before it resumes towards targets at $64.66 (top of rising weekly cloud/16 Aug low).

Scenario is supported by strong bearish momentum and daily MA's in full bearish setup, as falling 10SMA is approaching sideways-moving 200SMA in order to create a death-cross and reinforce bearish stance.

Release of US API crude stocks data, due later today, would provide fresh signal, as recent strong builds in crude inventories kept oil prices under pressure.

Repeated rise in crude stocks would reinforce bearish bias, while stronger draw would give bears a breather.

Only sustained break above 200SMA would sideline downside risk and allow for stronger corrective action and attack at daily cloud top (spanned between 68.58 and 69.55.

Res: 67.50, 67.80, 68.58, 69.55
Sup: 66.18, 65.73, 64.66, 64.43

The Australian dollar trades at the upper side of the range that extends into sixth straight day on Tuesday, boosted by advance in China's stocks.

Optimistic tones that US and China could reach a deal on next month's G20 meeting in Argentina were overshadowed by fears that the US would impose tariffs on all Chinese imports if talks fail.

Mixed signals from fundamentals are accompanied by conflicting daily indicators and lacking firmer direction signal.

Overall bears have weakened after strong rejection on probe through 0.7040 base, with bullish momentum building on daily chart and keeping the downside protected for now. Fresh bulls probe again through pivots at 0.7087/91 (converged 10/20SMA's), following multiple rejections, with sustained break higher to generate bullish signal for stronger recovery.

Conversely, extended sideways mode could be expected on repeated failure at 10/20SMA barriers, with risk to remain shifted lower.

Res: 0.7108, 0.7126, 0.7142, 0.7184
Sup: 0.7076, 0.7050, 0.7040, 0.7020