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Here are the latest developments in global markets:

FOREX: The dollar is higher by 0.10% against a basket of six major currencies on Wednesday. Although the currency was on the back foot for most of the trading session on Tuesday, it managed to recover most of its losses following the release of upbeat US consumer confidence data. Elsewhere, the loonie continued to advance amid optimism that a resolution to the NAFTA renegotiations may be inching closer.

STOCKS: Wall Street closed higher yet again on Tuesday, albeit only fractionally so. The S&P 500 and Nasdaq Composite inched up by 0.03% and 0.15% respectively, which was still enough for both of these indices to close at new record highs for a third consecutive session. The Dow Jones, meanwhile, gained 0.06%. Futures tracking the Dow, S&P, and Nasdaq 100 are all pointing to a higher open today as well, though much will likely depend on how the US-Canada trade talks in Washington progress. Turning to Asia, it was a mixed session on Wednesday, with Japan’s Nikkei 225 (+0.15%) and the Topix (+0.46%) advancing, but the Hang Seng in Hong Kong staying marginally in the red (-0.02%). In Europe, all benchmarks except for the French CAC 40 were set to open lower today, according to futures.

COMMODITIES: Oil prices were slightly lower on Wednesday, with WTI and Brent edging down by 0.16% and 0.22% respectively, both extending the losses recorded in the previous session. The losses appear to be owed mostly to an announcement by Venezuela’s state-run oil firm that it has signed a major investment agreement valued at $430 million to increase production by 640,000 barrels per day. That said, given the country’s economic troubles, investors may have taken the news with a grain of salt, as it remains doubtful whether that will actually materialize. In precious metals, dollar-denominated gold is up by a little over 0.1% today at $1,204 an ounce, attempting to recoup some of the losses it posted yesterday as the US dollar rebounded.

Major movers: Dollar pares losses after upbeat data; loonie advances on trade hopes

The greenback was on the retreat during the European session on Tuesday, touching a one-month low against the euro as market participants continued to scale back their safe-haven bets on the dollar, amid optimism that trade tensions may subside soon. That said, the world’s reserve currency staged a comeback during the US trading session, recouping almost all its losses to close the day nearly unchanged, after the US Conference Board consumer confidence index for August was released. The figure surprisingly skyrocketed to reach a near two-decade high, generating hopes that the consumer will likely remain the driving force behind strong US economic growth.

Meanwhile, the loonie continued to advance, touching a fresh three-month high against the dollar as speculation that a NAFTA deal could be hashed out soon remained front and center. Canada’s foreign minister met with the US trade representative yesterday, and said afterwards that Mexico’s concessions to the US have “paved the way for what Canada believes will be a good week”. Separately, Canadian press reported that Ottawa is prepared to make concessions on dairy issues with the US, amplifying hopes that an accord may be inching closer. Overall, there appears to be positive momentum in these talks, and should that be confirmed further by the relevant officials in the coming days, then the loonie could remain under buying interest as the NAFTA risk premium on the currency slowly fades.

In Europe, the single currency continued its advance yesterday, with euro/sterling coming 1 pip short of touching the 0.9100 handle. Sterling continues to be clouded by political risks, with the latest media reports suggesting that the EU and UK will push back the timing of when they expect to finalize their divorce terms to mid-November, amid continued lack of progress in the talks.

Day ahead: Updated GDP estimates due out of the US; trade still in focus

Thursday’s releases include updated growth estimates for the second quarter of the year out of the US. Meanwhile, market participants’ attention remains on trade issues.

Out of the US, the second estimate of GDP for Q2 due out at 1230 GMT is anticipated to revise growth slightly lower to 4.0% on an annualized basis, from the 4.1% in the preliminary reading. If the number comes in as expected, it would still constitute a robust figure, matching the highest pace of growth since Q2 2014. Barring a significant deviation from expectations, the dollar is not likely to react much to the release. The prints for Q2’s GDP deflator and core PCE prices will also be released at the same time, while pending home sales for July out of the world’s largest economy will be made public at 1400 GMT.

Canadian current account data for Q2 are due at 1230 GMT and are projected to show the relevant deficit narrowing to C$15.20 billion from Q1’s C$19.50bn. However, the attention in Canada remains on whether the nation will move towards the direction of entering a North American trade deal with the US and Mexico. The local dollar advanced on a report the country was ready to make concessions to enter such a deal, with dollar/loonie last trading not far above Tuesday’s near two-month low of 1.2883.

Despite the parties making up the NAFTA deal either agreeing or appearing to come closer to a deal, hopes for a breakthrough in Sino-US relationships remain under question.

Elsewhere, Brexit headlines and commentary are likely to move sterling – yesterday PM May said that a no-deal Brexit “is not the end of the world” –, while Italian budget angst may weigh on the euro.

In energy markets, EIA data on US crude stocks for the week ending August 24 are due at 1430 GMT. A drawdown by around 0.7 million barrels is expected after the previously tracked week’s larger-than-anticipated drop of roughly 5.8m barrels that led to an oil price surge.

Technical Analysis: WTI oil futures looking mostly neutral in the short-term

WTI oil futures (October delivery) have largely moved sideways after touching a three-week high of 69.28 on Friday. The RSI is also moving sideways, in support of a neutral picture in the short-term.

A larger-than-expected drawdown in crude stocks out of today’s EIA report may boost prices. Immediate resistance to advances may be taking place around the current level of the 100-day moving average at 68.58; the 50-day MA and Friday’s high lie not far above at 69.08 and 69.28 correspondingly. Further above, the attention would turn to the area around the upper Bollinger band at 70.14 that also encapsulates the 70 round figure.

Conversely, a smaller-than-projected drop in crude inventories (or a build) is likely to act as a drag on prices. Support to declines may take place around the middle Bollinger line at 67.39, and further below around the lower Bollinger band at 64.64 – the region around the latter also includes the two-month low of 64.40 recorded on August 16.

AUDUSD has lost its positive momentum after the rebound on the 20-month low of 0.7200 on August 15, trading sideways between 0.7236 and 0.7380. In the short-term, the market could retain the range-bound trading as the RSI holds near its 50 neutral mark and the MACD remains around zero and close to its red signal line. The bearish trend though could stay in place given that prices continue to fluctuate below the Ichimoku cloud. Still, the bullish doji created around 0.7200 makes an uptrend possible.

Should the pair stretch south, Friday’s low of 0.7236 could provide immediate support before the pair touches the 0.7200 bottom. A significant step lower could bring the bearish sentiment back into play, sending the price probably towards 0.7160, which was a strong barrier back in December 2016. If the selloff extends, attention could then turn to the 0.7100 psychological level.

On the flip side, the 50-day SMA currently at 0.7369 and marginally below the 38.2% Fibonacci of the downleg from 0.7675 to 0.7200 may halt upside movements as it did a several times from July onwards, shifting some interest to the area. If traders continue to buy the pair, the price could rise until the 50% Fibonacci of 0.7433, while steeper increases could also touch the 61.8% Fibonacci of 0.7486. The latter move would also clearly violate the blue long-term downtrend triggered from the 0.8135 peak, confirming the start of a bullish pattern.

In the medium-term picture, AUDUSD has been trading bearish in the past three months after the close below the 0.7400 round level, with the bearish cross between the negatively sloped 50- and 200-day SMAs holding since April and hinting that the downtrend is not near to its end. Still, if the pair manages to cross above 0.7675, the bearish outlook could switch into a bullish one.

To sum up, the market is expected to hold neutral in short-term and bearish in the medium-term.

The euro continues to trade close to the 1.1700 resistance level against the greenback, as the US dollar remains under heavy selling pressure. The EURUSD pair will soon need to break above the 1.1750 resistance or risk losing short-term positive trading momentum. A bullish inverted head and shoulders pattern is now clearly visible on the EURUSD pair across the lower time frames.

The EURUSD pair remains intraday bullish while trading above the 1.1681 level, key resistance is found at the 1.1750 and 1.1800 levels.

If the EURUSD pair moves under the 1.1681 level, sellers will likely target the 1.1650 and 1.1630 support levels.

The British pound has started to trade lower against the US dollar, after finding strong technical resistance from the 1.2930 level on Tuesday. The GBPUSD pair may start to attract selling interest if buyers fail to push the price back above the 1.2900 resistance level. The MACD and RSI indicators across the four-hour time frame are all starting to turn lower.

The GBPUSD pair is only bullish while trading above the 1.29000 level, key resistance is found at the 1.2930 and 1.2958 levels.

If the GBPUSD pair fails around the 1.2900 level, it is increasingly likely price may correct back towards the 1.2850 and 1.2828 levels.

The economic calendar picks up on Wednesday with a spate of market-moving releases covering Europe and the United States. Chief among them is the US Commerce Department’s second reading of Q2 GDP.

Action begins at 06:00 GMT with a report on German consumer confidence courtesy of GfK. The consumer confidence index for September is forecast to remain at 10.6, unchanged from August.

At 06:45 GMT, the French government will report on consumer spending for the month of July. Consumption is forecast to have risen 0.1% in July following a similar increase the previous month.

At the same time as the consumption report, the French government will release revised second-quarter GDP numbers. The French economy is forecast to have grown 0.2% in the second quarter.

US government economists will release revised second-quarter growth projections at 12:30 GMT. The world’s largest economy is forecast to have expanded 4% annually between April and June, down slightly from the initial estimate of 4.1%. The report will also include a revised reading of core personal consumption expenditures, the Federal Reserve’s preferred measure of inflation.

At 14:00 GMT, the National Association of Realtors will report on pending home sales for the month of July. The indicator is expected to rise 0.4% compared to June.

Thirty minutes later, the US Energy Information Administration (EIA) will release its weekly crude inventory report for the period ended 24 August. Analysts in a median estimate are expecting crude stockpiles to fall by 522,000 barrels the previous week.

EUR/USD

Although Europe’s common currency remains in an uptrend, buyers have run into resistance near 1.1700 – a key psychological threshold. At the time of writing, the EUR/USD exchange rate was trading at 1.1687, where it was down slightly from the previous close. The pair faces two imminent resistance zones: 1.1700 and 1.1730. Blowing past these two levels are needed to sustain the upward trajectory.

GBP/USD

Like the euro, cable has also run into resistance recently. The GBP/USD exchange rate is currently holding at 1.2864, where it was down sharply from the intraday high. The pair faces immediate resistance at 1.2928, the high from Tuesday. On the opposite side of the spectrum, immediate support is located at 1.2835, the swing low from Monday.

USD/JPY

The dollar-yen exchange rate has been locked in a lateral move over the past four sessions. After successfully crossing the 111.00 handle, the upside has been firmly capped in the 111.40-111.50 region. At the time of writing, USD/JPY was trading at 111.25, where it was little changed. In terms of technical, the pair faces immediate support at 111.00, followed by 111.75, which is the low from 23 July. On the opposite side of the spectrum, immediate resistance is located at 111.45, the high from 8 August.

Rates: Technically-inspired trading ahead

Technically-inspired trading might be today's recipe on core bond markets. Investors eye tomorrow and Friday's inflation data. The negative impact of supply might be matched by some extension flows. The risk rally seems to be losing steam. Technical pictures of the US and German 10-yr yield suggest more upward potential within established trading ranges.

Currencies: EUR/USD rally to run into resistance

Yesterday, the dollar decline slowed after a strong US consumer confidence. Today, eco data will probably be second tier for trading. Global risk sentiment, the US-Canada trade talks and headlines on Italy might inspire EUR/USD trading. The jury is still out, but it looks like the EUR/USD rally is losing momentum

The Sunrise Headlines

• US stock markets closed yesterday's session with marginal gains, with NASDAQ (+0.15%) slightly outperforming. Asian markets opened in green this morning, with China as the exception showing losses.
• Senior officials on both EU and UK side are said to have admitted that the chance of reaching a brexit agreement by the EU summit mid-October is very unlikely. They now aim to reach an agreement by mid-November.
• Canada is ready to negotiate with the US, as it re-joins Nafta-discussions after Mexico and the US struck a deal on Monday. The country has signalled it is ready to make dairy concessions, a key sticking point in negotiations.
• Yesterday's announcement that Germany was ready to provide emergency financial assistance has been retracted. A German official said that his country is not considering a financial lifeline to help Turkey overcome their crisis.
• After meeting with Italian Interior Minister Matteo Salvini, Hungarian Prime Minister Viktor Orban said Europe needs a new European Commission and parliament that will protect the borders and put a halt to migration.
• Since 2014, the German government has run a budget surplus. Chancellor Merkel and her coalition partners have agreed to ease tax burdens on German citizens, by reducing the contributions to the unemployment benefit system.
• Today's eco calendar contains barely anything, with only second readings of US GDP and Core PCE (QoQ) for the second quarter. Germany and the US tap the bond market.

Currencies: EUR/USD Rally To Run Into Resistance

USD correction to slow?

Yesterday, USD softness initially persisted, in line with Monday's price action. Global sentiment remained constructive on the US/Mexican trade deal even as the reaction on European markets was more guarded than in the US. Still, EUR/USD temporarily regained the 1.17 level. Fortunes changed in favour of the dollar later. US data were mixed, but consumer confidence was strong. The S&P 500 and the Nasdaq touched new record levels, but the rally eased later. Interest rate differentials also widened slightly in favour of the US dollar. The trade-weighted dollar closed at 94.72, off the intraday low. EUR/USD finished at 1.1695. This morning, Asian equities are trading mixed. China underperforms. The dollar is trading off yesterday's 'bottom level', but shows no clear trend. Later today, there are few EMU data. US Q2 GDP is expected to be revised slightly lower to 4.0% (from 4.1%), but probably won't change fortunes for global (USD) trading. Global sentiment on risk and the US trade policy will remain the main drivers for USD trading. Regarding Nafta, there are tentative signs that Canada is considering making concessions in order to join the US/Mexican trade deal. A deal with Canada might be slightly supportive for risky assets and is in theory slightly USD negative. However, we don't expect it to change the picture for EUR/USD or USD/JPY in any profound way. Headlines on Italy remain a potential (negative) wildcard for the euro. In a broader perspective, the dollar reversed the early August gain. EUR/USD returned in the previous 1.15/1.1850 consolidation pattern. The USD momentum eroded further after Friday's comments from Fed's Powell and due to a positive risk sentiment. The jury is still out, but the easiest part of this trade might be behind us. The EUR/USD rebound might slow. We assume that a EUR/USD break beyond 1.1791/1.1850 will be difficult.

Yesterday, EUR/GBP extended its break above the 0.9033/44 resistance. UK PM May downplaying the consequences of a no-deal brexit didn't help sterling. EUR/GBP came close to 0.9100. The EUR/GBP rally might take a breather. However, sterling will probably remain in the defensive unless there is meaningful progress on brexit. This morning, headlines suggest that the EU and the UK are inclined to delay the deadline for a brexit deal from October to November. So uncertainty might persist. The sterling decline might slow temporarily, but the technical picture of EUR/GBP improved after the break beyond 0.9033/44. 0.9306 is the next high profile target on the charts

EUR/USD rally running into resistance?

The GBP/USD made a bearish bounce at the previous top, and the price is now challenging the support trend line (blue). The price will remain indecisive when in between the triangle chart pattern, which is indicated by the support (blue) and resistance (red) trend lines. A bearish breakout indicates an extended WXY correction (green), as shown in the image, or an immediate downtrend continuation within wave 5, whereas a bullish break could be part of a WXY (blue) within wave 4 (purple).

The GBP/USD has probably completed an ABC (orange) zigzag pattern within wave X (green), and the price could now be ready for a new ABC (orange) within wave Y (green). A bullish break above the resistance trend line (orange) invalidates the bearish ABC pattern, whereas a bearish breakout could confirm an ABC or 123 wave pattern.

The USD/JPY is moving sideways in a chart pattern which could be a bull flag or triangle chart pattern (purple lines). Price needs a clear breakout to determine the next swing.

The USD/JPY bullish break could see price move towards the 61.8% Fibonacci retracement level (green arrow), which is a new resistance spot. A break below the flag could price start the wave Y (pink).

The USD/JPY seems to have built an ABC correction (green) within wave 4 (blue) as long as price stays above the support trend line (blue). A bullish breakout could be a wave 5 of wave C (purple).

German Gfk consumer climate for September dropped -0.1 to 10.5 , below expectation of 10.6. Gfk noted that consumer mood "did not present a uniform picture". There was improvement in economic expectations, stopping multi-month downswing. consumers believed in the economy's solid growth trend despite trade conflict with the US. But income expectations and propensity to buy declined. Higher energy prices could have been a reason. Also, savings are increasingly losing value due to inflation.

Over all, Gfk noted that "the positive outlook for the consumer economy will only continue as is if the job market remains stable, which is the current assumption, and there are no additional risks threatening from the price front. A further increase in inflation would certainly dampen the consumer climate. "

From France, Q2 GDP grew 0.2% qoq, unrevised from initial estimate.

General Trend:

• Asian equity markets trade generally higher, Shanghai lags
• Bank of China declines in Hong Kong post earnings
• BoJ board member Suzuki plays down impact of slight yield rise, talks policy side-effects

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.1%
• ASX 200 Financials index +0.8%, REIT +0.7%, Utilities +0.4%; Telecom -1.2%, Energy -0.3%
• (AU) Australia sells A$1.0B v A$1.0B indicated in 2.75% Nov 2029 bonds, avg yield 2.6052%, bid to cover 2.69x
• Westpac [WBC.AU]: Raises standard variable home loan rate by 14bps to 5.38%; Cites increase in wholesale funding costs.

China/Hong Kong

• Shanghai Composite opened -0.1%, Hang Seng flat
• Hang Seng Telecom index +0.6%, Property/Construction +0.5%, Materials +0.4%, Energy +0.4%, Services +0.3%, Consumer Discretionary +0.1%; Info Tech -0.5%, Financials -0.2%, Utilities -0.2%
• (US) Commerce Sec Ross: there was no breakthrough in last week's US-China trade talks; Pres Trump is interested to see how new duties will impact the China talks
• (CN) NDRC: China faces more difficulties in achieving stable and healthy economic development; needs more efforts to achieve growth targets related to consumption, outstanding social financing and disposable income; reiterates to ensure economic growth in 'reasonable' range
• (CN) China PBoC set yuan reference rate: 6.8072 v 6.8052 prior
• (CN) China PBoC Open Market Operation (OMO): Skips OMO v skipped prior (6th straight skip)
• (CN) China Vice Premier Liu reiterates to safeguard the multilateral trade system - Chinese Press
• (CN) Power exchanges in China are planning to introduce private investors - Chinese Press

Japan

• Nikkei 225 opened +0.7%
• TOPIX Marine Transportation index +2.8%, Iron & Steel +0.9%, Electric Appliances +0.9%, Securities +0.5%; Retail Trade -0.5%
• Megabanks outperform amid comments from BoJ's Suzuki
• (JP) Bank of Japan (BOJ) Board Member Suzuki: Need to continue to monitor impact of low rates on banks
• (JP) Japan Chief Cabinet Sec Suga: Declines comment on Washington Post article about secret meeting between Japan and North Korea
• (JP) Japan Aug Consumer Confidence: 43.3 v 43.3e

South Korea

• Kospi opened +0.1%
• (KR) North Korea letter to US Sec of State Pompeo said to warn that denuclearization talks could fall apart - financial press
• (KR) Follow Up: North Korea letter rejected US demand for nuclear removal - US financial press

Other

• (TH) Thailand Central Bank Chief Veerathai: Relative strength in the Thai Baht currency (THB) 'a concern'; Not under pressure to raise interest rates like other EM countries
• (TW) Taiwan Central Bank Gov to hold capital-flow briefing at 4:20 PM (local time)

North America

• US equity markets ended mixed: Dow +0.1%, S&P500 flat, Nasdaq +0.2%, Russell 2000 flat
• S&P500 Real Estate +1.2%; Communication Services -0.4%, Energy -0.4%, Materials -0.4%
• (US) Weekly API Oil Inventories: Crude: 0M v -5.2M prior
• (US) Senate approves appointment of economist Richard Clarida as Vice Chairman of the Fed Reserve Board of Governors
• (CA) Canada Foreign Min Freeland: 'Very constructive' meeting with USTR Lighthizer; returning tomorrow to continue trade talks
• (CA) Canada said to be prepared to make concessions related to dairy for NAFTA - Canada Press

Europe

• (UK) UK and EU officials said to see mid-November as the new Brexit deal deadline, said to see deal by October as not likely - US financial press
• (UK) UK Aug BRC Shop Price Index Y/Y: +0.1% (first rise in over 5-years) v -0.3% prior
• Levels as of 01:30ET
• Nikkei 225, +0.2%, ASX 200 +0.7%, Hang Seng +0.1%; Shanghai Composite -0.3%; Kospi +0.2%
• Equity Futures: S&P500 +0.2%; Nasdaq100 +0.3%, Dax +0.1%; FTSE100 +0.3%
• EUR 1.1698-1.1682; JPY 111.33-111.12 ; AUD 0.7351-0.7332 ;NZD 0.6720-0.6703
• Aug Gold -0.3% at $1,210/oz; Sept Crude Oil flat at $68.55/brl; Sept Copper +0.3% at $2.752 /lb