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For the 24 hours to 23:00 GMT, the USD rose 0.28% against the JPY and closed at 112.83.

In the Asian session, at GMT0300, the pair is trading at 112.60, with the USD trading 0.20% lower against the JPY from yesterday’s close.

The pair is expected to find support at 112.44, and a fall through could take it to the next support level of 112.29. The pair is expected to find its first resistance at 112.82, and a rise through could take it to the next resistance level of 113.05.

Trading trend in the Japanese Yen today is expected to be determined by Japan’s machine tool orders for September, set to release in a while.

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

Daily Pivots: (S1) 1.2919; (P) 1.3004; (R1) 1.3052; More...

GBP/USD's fall is still in progress and intraday bias remains on the downside for 1.2921 support. Firm break there will add to the case that corrective rise from 1.2661 has completed. Next target will be 1.2661/2784 support zone. On the upside, above 1.3011 minor resistance will turn intraday bias neutral again. Also, in case of another rise, upside should be limited by 1.3316 key fibonacci level to bring down trend resumption eventually.

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.

For the 24 hours to 23:00 GMT, the USD slightly declined against the CHF and closed at 0.9963.

Macroeconomic data showed that Switzerland's M3 money supply climbed 2.3% on an annual basis in September, following a rise of 2.5% in the preceding month. Additionally, the nation's total sight deposits advanced to a level of CHF577.9 billion in the week ended 19 October, from CHF577.6 billion in the previous week.

In the Asian session, at GMT0300, the pair is trading at 0.9968, with the USD trading 0.05% higher against the CHF from yesterday's close.

The pair is expected to find support at 0.9945, and a fall through could take it to the next support level of 0.9923. The pair is expected to find its first resistance at 0.9985, and a rise through could take it to the next resistance level of 1.0003.

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 0.05% against the CAD and closed at 1.3098.

In the Asian session, at GMT0300, the pair is trading at 1.3095, with the USD trading slightly lower against the CAD from yesterday’s close.

The pair is expected to find support at 1.3075, and a fall through could take it to the next support level of 1.3054. The pair is expected to find its first resistance at 1.3121, and a rise through could take it to the next resistance level of 1.3146.

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

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

Daily Pivots: (S1) 0.9940; (P) 0.9961; (R1) 0.9981; More...

Intraday bias in USD/CHF remains neutral at this point. Some more consolidations could be seen. But as long as 0.9848 support holds, further rise is expected. Above 0.9980 will extend the rally from 0.9541 to 1.0067 key resistance. However, considering bearish divergence condition in 4 hour MACD, break of 0.9848 will indicate reversal and turn outlook bearish.

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.

Daily Pivots: (S1) 112.49; (P) 112.68; (R1) 113.02; More..

USD/JPY lost momentum after hitting 112.88 and intraday bias is turned neutral again. Further rise cannot be ruled out yet. But based on the corrective structure, upside should be limited by 61.8% retracement of 114.54 to 111.62 at 113.42. On the downside, below 111.94 minor support will turn bias to the downside to 111.62 low first. Break will resume the corrective fall from 114.54 to 38.2% retracement of 104.62 to 114.54 at 110.75. We'll look for bottoming signal above 109.76 key support in that case.

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.

Daily Pivots: (S1) 1.3077; (P) 1.3103; (R1) 1.3127; More...

USD/CAD lost some upside momentum as seen in 4 hour MACD. But for now, as long s 1.3027 minor support intact, further rise is expected for 1.3225 resistance. Decisive break there will confirm that corrective decline from 1.3385 has completed at 1.2781. In that case, retest of 1.3385 high should be seen next. On the downside, however, break of 1.3027 minor support will suggests rejection from channel resistance. Intraday bias will be turned back to the downside for 1.2916 and below.

In the bigger picture, current development argues that choppy corrective fall from 1.3385 has completed at 1.2781 already. And that in turns suggests that the up trend from 1.2061 is still in progress. Decisive break of 1.3385 will pave the way to 61.8% retracement of 1.4689 to 1.2061 at 1.3685. On the downside, though, break of 1.2916 support will likely extend the fall from 1.3385 to 61.8% retracement of 1.2061 to 1.3385 at 1.2567 before completion.

Daily Pivots: (S1) 0.7063; (P) 0.7095; (R1) 0.7113; More...

AUD/USD's break of 0.7088 minor support should indicate completion of corrective rise from 0.7040 at 0.7159. Intraday bias is back on the downside for 0.7040 low first. Break there will resume recent down from 0.8135. Next target will be 61.8% projection of 0.7314 to 0.7040 from 0.7159 at 0.6990 and then 100% projection at 0.6885. On the upside, in case of another recovery, we'd expect strong resistance from 0.7159 to limit upside to bring down trend resumption eventually.

In the bigger picture, fall from 0.8135 is tentatively treated as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 will target 0.6008 key support next (2008 low). On the upside, break of 0.7314 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook stays bearish even in case of strong rebound.

Australian and New Zealand Dollar are trading as the weakest ones today. Nikkei's sharp, over -2% decline led Asian markets lower. Risk aversion is popping up the Japanese Yen. For today, Canadian Dollar is the second strongest, followed by Dollar. For the week, though, Sterling is the worst performing one so far as UK Prime Minister Theresa May failed to calm the markets with her parliamentary session. Euro is mixed as Italy budget concerns weigh.

Overnight, DOW closed down -0.50% at 25317.41, showing no reaction to Trump's unsubstantiated tax cut claim. S&P 500 lost -0.43%. But NASDAQ eked out small gain of 0.26%. Treasury yields were relatively steady, with 10 year yield closed down -0.001 at 3.383. In Asia, Nikkei is currently down -2.3%, or -522.9 pts. Hong Kong HSI follows and is down -2.18% or -571.3 pts. China Shanghai SSE is down -1.27% and Singapore Strait Times is down -1.05%.

Technically, AUD/USD's solid break of 0.7088 minor support now suggests that recent down trend might be ready to resume. Retest of 0.7040 low should be seen soon. Other dollar pairs are generally in consolidative mode. While USD/JPY extend the rebound from 111.62, upside momentum has been very unconvincing. USD/CAD also faced resistance from near term falling channel and turned sideway. GBP/JPY will be a pair to watch today as it breached 145.81 temporary low already. 145.67 key structural support is in radar.

Markets shrug Trump's unsubstantiated tax cut for middle class

Trump talked about the plan to give middle class 10% tax cut yesterday. He said "we're putting in a resolution some time in the next week and a half to two weeks [and] we're giving a middle-income tax reduction of about 10 percent." He insisted that the plan will go through Congress rather than executive order. And the vote will be done after mid-term election.

But the initiative is widely criticized as unsubstantiated as Republican congressional leaders and White House officials were reported to have heard nothing about the plan. Additionally, Congress is in recess ahead of mid-term election and there is no plan to return to Washington for the matter.

White House spokeswoman Lindsay Walters clarified yesterday that "as part of Tax Reform 2.0, the first elements of which were passed the House in September, the President would like to see an additional tax cut of 10% for middle-income families." That effectively confirmed that the idea of 10% tax cut is something entirely new.

The three bills of the so called Tax Reform 2.0 was passed in the House in late September. And it's already facing a tough batter in the Senate. It is seen as nearly impossible to add additional deficit ballooning 10% tax cut to the plan and get through either House or Senate. The claimed 10% tax cut for the middle class is seen as campaign gimmick rather than anything with substance.

The US markets shrugged off the news with DOW closing down -0.50% at 25317.41.

European Commission to discuss actions on Italy's budget today

European Commission is set to discuss the actions regarding Italy's draft budget today. Italy sent a three-page letter to the Commission yesterday, explaining its position on the budget, but without directly addressing the questions as presented by the Commission's letter to them. Instead, Economy Minister Giovanni Tria tried to pain the budget plan, raising deficit target to 2.4% of GDP, as a "hard but necessary" decision after considering "macroeconomic and social conditions". Prime Minister Giuseppe  Conte, also expressed the willingness for a "constructive dialogue" but reject any prejudice.

European Commissioner for Economic Affairs Pierre Moscovici emphasized the "the European commission does not want a crisis between Brussels and Rome." But he added that "the maximum that we can do … is to ask Italy to resubmit another budget, which takes account of the observations, of the questions, and also of European rules."

While attentions are mainly on the top line 2.4% of GDP deficit target, there are other issues that are yet to be addressed by Italy. In particular, the Italian government forecasts the economy to growth 1.5% in 2019, based on the budget. However, as the Commission pointed out in its letter, the plan has not been endorsed by any "independent fiscal monitoring institution", like the Parliamentary Budget Office. And that's a breach of EU rules. The growth projection is the basis for deficit target calculation and Italy has to either ask the PBO to reveal and endorse it, or explain why they just come up with the numbers on their own.

UK May: Brexit transition extension or backstop is a sovereign choice

Speaking to the Parliament yesterday, UK Prime Minister Theresa May outlined four more steps to complete the remaining 5% of Brexit agreement with the EU. Those include a firm commitment to EU-UK temporary customs arrangement; an option to extend the implementation period as alternative to Irish backstop; the flexibility for the UK to leave as will; and, ensuring full access for all of Northern Ireland business to the Great Britain.

May added that both the option of transition extension and backstops only insurance policy and are undesirable. And the best outcome is for the future arrangement to be in place by December 2020. And she added that it would be a "sovereign choice" on whether an extension or a UK-EU customs backstop would be preferable.

May also said that "95 per cent of the Withdrawal Agreement and its protocols are now settled." But Labor leader Jeremy Corbyn criticized that "nothing is agreed until everything is agreed."

On the data front

German will release PPI in European session. UK will release CBI trends total orders. Later in the day, Eurozone will release consumer confidence.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7063; (P) 0.7095; (R1) 0.7113;More...

AUD/USD's break of 0.7088 minor support should indicate completion of corrective rise from 0.7040 at 0.7159. Intraday bias is back on the downside for 0.7040 low first. Break there will resume recent down from 0.8135. Next target will be 61.8% projection of 0.7314 to 0.7040 from 0.7159 at 0.6990 and then 100% projection at 0.6885. On the upside, in case of another recovery, we'd expect strong resistance from 0.7159 to limit upside to bring down trend resumption eventually.

In the bigger picture, fall from 0.8135 is tentatively treated as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 will target 0.6008 key support next (2008 low). On the upside, break of 0.7314 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook stays bearish even in case of strong rebound.

Economic Indicators Update

For the 24 hours to 23:00 GMT, the AUD declined 0.38% against the USD and closed at 0.7079.

LME Copper prices rose 1.5% or $92.5/MT to $6284.0/MT. Aluminium prices declined 0.9% or $20.0/MT to $2002.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7070, with the AUD trading 0.13% lower against the USD from yesterday’s close.

The pair is expected to find support at 0.7048, and a fall through could take it to the next support level of 0.7025. The pair is expected to find its first resistance at 0.7109, and a rise through could take it to the next resistance level of 0.7147.

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