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At 08:00 GMT, German IFO – Current Assessment (May) is expected to come in at 105.5 from 105.7 previously. IFO – Expectations (May) is expected to be 98.5 from 98.7 prior. IFO – Business Climate (May) is expected at 102.0 v 102.1 previously. The data is still expected to show a weakening business climate in Germany following on from the fall in the March data. This data cannot be ignored as it surveys 7,000 businesses and is a leading indicator of economic direction. EUR crosses can see a spike in volatility should actual released data differ from the expected consensus.

At 08:00 GMT, German IFO – Current Assessment (May) is expected to come in at 105.5 from 105.7 previously. IFO – Expectations (May) is expected to be 98.5 from 98.7 prior. IFO – Business Climate (May) is expected at 102.0 v 102.1 previously. The data is still expected to show a weakening business climate in Germany following on from the fall in the March data. This data cannot be ignored as it surveys 7,000 businesses and is a leading indicator of economic direction. EUR crosses can see a spike in volatility should actual released data differ from the expected consensus.

At 12:00 GMT, RBA Assistant Governor Bullock is due to speak at De Nederlandsche Bank’s Housing Market seminar, in Amsterdam. Audience questions are expected to follow. AUD pairs can move in reaction to comments made during this event.

At 12:30 GMT, US Durable Goods Orders ex Transportation (Apr) are expected to come in at 0.5% from 0.0% previously. Durable Goods Orders (Apr) is expected at -1.4%% against 2.6% previously. This data series diverged last month with ex-transports missing expectations and the headline data exceeding its consensus. This divergence is expected to continue but the data is expected to show a fall in headline data and a rise in ex-transports. USD crosses can be moved by this data.

At 13:15 GMT, ECBs Coeure is expected to speak today at a high-level panel at Sveriges Riksbank’s 350th anniversary celebration in Stockholm, Sweden. EUR crosses can be moved by comments made during this speech.

At 13:20 GMT, Fed Chair Powell and BOE Governor Carney are both due to participate in a panel discussion titled “The future of central banking?” at the Sveriges Riksbank Anniversary Conference, in Stockholm. USD and GBP crosses can see spikes in volatility during this event.

At 15:45 GMT, FOMC Member Bostic and Kaplan are due to deliver speeches at this time. USD crosses can see spikes in volatility during this time.

At 17:00 GMT, Baker Hughes US Rig Count numbers will be released. The prior number last Friday showed that there were 844 Oil rigs in operation. Oil is close to the highest levels in recent times, but has slipped on the back of a bigger than expected build in inventories on Wednesday. This data can set the tone for traders as they look to the week ahead.

At 19:20 GMT, German Buba President Weidmann is due to speak at the Sveriges Riksbank Anniversary Conference, in Stockholm. EUR crosses can see spikes in volatility during this event.

Daily Pivots: (S1) 108.76; (P) 109.44; (R1) 109.92; More...

No change in USD/JPY's outlook. Price actions from 111.39 is seen as developing into a corrective pattern. We'd expect downside to be contained by 108.82 cluster support (38.2% retracement of 104.62 to 111.39 at 108.80) to bring rebound. On the upside, above 110.32 minor resistance will argue that the pull back is completed. And, in that case, retest of 111.39 high should be seen. However, firm break of 108.82 will dampen our view and bring deeper decline to 61.8% retracement at 107.20 and possibly below.

In the bigger picture, corrective decline from 118.65 (2016 high) has completed with three waves down to 104.62. Rise from 104.62 is possibly resuming the up trend from 98.97 (2016 low). This will be the preferred case as long as108.82 support holds. Decisive break of 114.73 resistance will confirm our view and target 118.65 and above. However, decisive break of 108.82 will dampen the bullish outlook and revive the case of a break of 104.62 low before bottoming.

USDCAD has been developing within the 38.2% Fibonacci retracement level near 1.2723 and the 50.0% Fibonacci level of 1.2930 over the last could of weeks. These levels are taken from the downleg from 1.3800 to 1.2060 in the long term. Moreover, the price has surpassed the 20- and 40-simple moving averages in the near term, suggesting further upside potential move.

Looking at the daily timeframe, based on technical indicators, momentum is too weak to provide a sustained move higher. The MACD oscillator is flattening near its trigger line in the positive area, while the RSI indicator is standing near the 50 threshold and is sloping upwards.

In the event of an upside movement, the 50.0% Fibonacci mark at 1.2930 could act as a barrier before being able to re-challenge the 1.3000 handle. A climb above this significant region would open the way towards the 1.3130 resistance level, identified by the peak on March 19, which coincides with the 61.8% Fibonacci.

Should prices move lower, the next support could come at the 38.2% Fibonacci level. A drop below this area would take the price to the next low of 1.2530 and significantly weaken the bullish medium-term structure.

In the bigger picture, the pair has been trading within a rising sloping channel since September 2017, failing several times to exit from this range.

Markets are rather steady in Asian session today. Major forex pairs and crosses are staying in yesterday's range. Dollar is a bit firmer entering into European session. But there is no follow through buying yet. US President Donald Trump's cancellation of the summit with North Korean leader Kim Jong Un caused some jitters in the markets overnight. But sentiments quickly stabilized. Adding to that, North Korea's diplomatic response today also calmed investors nerve. At least for now, there is no escalation of tension.

Attention will now turn back to economic data. Sterling and Euro are trading as the weakest two for the week. Both are vulnerable to further losses on data miss. German Ifo and UK GDP revision will be closely watched. In particular, BoE Governor Mark Carney has predicted an upward revision in Q1's dismal 0.1% qoq growth. We'll see if he gets what he wants. US will release durable goods orders later today. But the focus will be on 10 year yield. 3% handle was taken out firmly yesterday. And we'll see if there is more bond buying to push yields lower.

Trump's "sudden and unilateral" cancellation of summit with Kim, and North Korea's response

Trump abruptly announced yesterday to cancel the summit with Kim on June 12 in Singapore. The announcement was through a letter to Kim, and tweeted by the White House (here is the letter).

North Korean Vice Foreign Minister Kim Kye Gwan responded today in a statement carried by state media. Kim said that Trump's "sudden and unilateral" announcement to cancel the summit is unexpected. And she added that "we cannot but feel great regret for it". Kim also noted North Korea remained open to dialogue with the US "regardless of ways at any time". Also, "the first meeting would not solve all, but solving even one at a time in a phased way would make the relations get better rather than making them get worse." And, the US should "ponder over it".

Dallas Fed Kaplan not prepared for interest rates to go above neutral

Dallas Fed President Robert Kaplan said he's "not prepared" for interest rates to "go above neutral". And, he estimated that neutral rate is between 2.50% and 2.75%. And that is, after four 25bps hike from the current 1.50-1.75%, fed fund rate will hit the neutral level.

For inflation he said "I want to run around 2, and if we got a little bit above it and I thought it would be short term and not long term, I could tolerate it." On the other hand, "if I thought it would persist I think it would affect my policy views."

Philadelphia Fed Harker could support one more hike if inflation accelerates

Philadelphia Fed President Patrick Harker said if inflation start to "accelerate" then he's "open to a fourth increase" in interest rate this year. But he emphasized that "I'd have to see evidence of that first". And he noted that it's not so much as a number around 2% but it's acceleration or deceleration. He added that "if we're creeping up to 2 percent and we creep up to, say, 2.25 percent, that's a different story than [if] we're accelerating past 2 percent. "

Harker sees neutral rate as between 2.75% and 3.0%. And asked if Fed would end the current tightening cycle in 2019, he said "could be, yeah, it's possible".

Xi hailed Merkel's effort in the bilateral ties

German Chancellor Angela Merkel was welcomed by Chinese President Xi Jinping in Beijing yesterday. Xi hailed her effort in the bilateral ties since the two countries launched an all dimensional strategic partnership in 2014. Xi urged that China and Germany should set an example of "win-win cooperation". And, "this should be the direction that bilateral ties will move to in the next stage."

In addition, Xi said the Chinese "welcome Germany to grasp opportunities arising from China's new round of reform and opening up." And, there should be expanded industrial and market cooperation. Xi added that "we would like to promote global governance and multilateralism together with Germany within the multilateral frameworks."

USD/JPY Daily Outlook

Daily Pivots: (S1) 108.76; (P) 109.44; (R1) 109.92; More...

No change in USD/JPY's outlook. Price actions from 111.39 is seen as developing into a corrective pattern. We'd expect downside to be contained by 108.82 cluster support (38.2% retracement of 104.62 to 111.39 at 108.80) to bring rebound. On the upside, above 110.32 minor resistance will argue that the pull back is completed. And, in that case, retest of 111.39 high should be seen. However, firm break of 108.82 will dampen our view and bring deeper decline to 61.8% retracement at 107.20 and possibly below.

In the bigger picture, corrective decline from 118.65 (2016 high) has completed with three waves down to 104.62. Rise from 104.62 is possibly resuming the up trend from 98.97 (2016 low). This will be the preferred case as long as108.82 support holds. Decisive break of 114.73 resistance will confirm our view and target 118.65 and above. However, decisive break of 108.82 will dampen the bullish outlook and revive the case of a break of 104.62 low before bottoming.

Economic Indicators Update

The British pound continues to consolidate below the 1.3400 level against the US dollar, ahead of the release of key UK GDP data this morning. GBPUSD buyers are currently struggling to keep price above the 1.3400 level, after a strong rally to towards the 1.3420 level on Thursday. Sterling traders now await the latest revision of Q1 UK GDP and Federal Reserve Chair Jerome Powell’s speech later today.

The GBPUSD pair is only intraday bullish while trading above the 1.3400 level, key technical resistance is located at the 1.3450 and 1.3500 levels.

If the GBPUSD pair continues to fail around the 1.3400 level, we may see sellers move price back towards the 1.3354 and 1.3300 support levels.

The US dollar has come under further selling pressure against the Japanese yen, after US President Donald Trump canceled his upcoming meeting with the North Korean leader Kim Jong-Un. The USDJPY pair currently trades around the 109.50 level, after falling to the 108.93 level on Thursday, as traders sold the US dollar on the news. Traders now await the release of US Durable Goods Orders and a scheduled speech from Federal Reserve Chair Jerome Powell.

The USDJPY pair is further bearish while trading below the 109.50 level, key technical support is found at the 109.00 and 108.50 levels.

If USDJPY buyers hold price back above the 109.50 level, we may correct back towards the 110.00 and 110.33 levels.

A series of high-profile data releases will make their way through the financial markets on Friday, giving investors the latest glimpse of key European and North American economies. On the monetary policy front, central bank speakers from the Eurozone, United Kingdom and United States will also influence investor sentiment.

Action begins in Europe at 08:00 GMT with a report on German business sentiment. The IFO business climate index is forecast to dip slightly to 102.0 in May from 102.1 the previous month. The gauge for expectations is also projected to ease to 98.5 from 98.7.

The United Kingdom's statistics agency will release revised first-quarter GDP figures at 08:30 GMT. Britain's economy is projected to grow 1.2% annually in the first quarter.

Shifting gears to North America, a US report on durable goods orders could generate heavy traffic beginning at 12:30 GMT.

US orders for manufactured goods meant to last three years or more are forecast to fall 1.4% in April after climbing 2.6% the month before. However, the declines are expected to be concentrated in the transportation category. Excluding this volatile category, orders are forecast to jump 0.5%.

In terms of monetary policy, European Central Bank (ECB) official Benoit Coeure will deliver a speech at 13:15 GMT. Around the same time, Bank of England (BOE) Governor Mark Carney and Federal Reserve Chairman Jerome Powell will also deliver speeches.

The minutes of the July Federal Open Market Committee (FOMC) meeting, which were released earlier this week, gave a strong hint that the US central bank will hike interest rates next month. However, the transcript also showed no urgency on the part of officials to hasten their rate hike cycle for the remainder of the year.

EUR/USD

Europe's common currency succumbed to bearish pressure on Thursday, as prices fell to a low of 1.1684. EUR/USD has since recovered to around 1.1722 but faces a dire short-term outlook. A break below the Thursday low could expose the 1.1668 target, which is the low from early October. On the opposite side of the ledger, immediate resistance is located at 1.1733 followed by 1.1829.

GBP/USD

Cable extended its losing streak on Thursday, with prices bottoming in the low 1.3300 region. GBP/USD would later recover to 1.3380 as demand for the US dollar softened in the latter half of the session. The pair is eyeing immediate resistance around 1.3425. On the flipside, support is located at 1.3306.

USD/CAD

USD/CAD rallied to a high near 1.2910 on Thursday before retracing back toward the 1.2880 handle. The pair risks a double-top formation north of 1.2900, which could generate significant headwinds for the bulls. Durable goods orders on Friday could set the tone for the pair heading into the weekend.

EURJPY short-term Elliott Wave view suggests that the bounce to 5/14 high at 131.38 ended Minor wave B. Down from there, the decline is unfolding as Elliott wave impulsive structure in Minor wave C lower. The internal sub-division of each leg lower is showing 5 waves structure in lesser degree cycles, which is characteristic of an an impulse. Also, it's important to note here that the below chart is showing a bearish sequence tag, which refers to the incomplete downward structure in the pair.

Below from 131.38 high the lesser degree Minutte wave (i) of ((i)) ended in 5 waves structure at 129.49. Above from there, the bounce to 131.35 high ended Minutte wave (ii) of ((i)) as a double three structure. Then the decline to 128.22 low ended in Minutte wave (iii) of ((i)) with another 5 waves structure. Up from there, the lesser degree Minutte wave (iv) of ((i)) ended at 129.06 high. Down from there, Minutte wave (v) of ((i)) ended at 127.94 low in another 5 waves. Above from there, the pair is correcting the short-term cycle from 131.38 high within Minute wave ((ii)) bounce which is epxected to fail in 3, 7 or 11 swings for further downside extension. We don't like buying it into a proposed bounce.

EURJPY Elliott Wave 1 Hour Chart

For the 24 hours to 23:00 GMT, the EUR rose 0.12% against the USD and closed at 1.1721, after data indicated that Germany's seasonally adjusted final gross domestic product (GDP) rose 0.3% on a quarterly basis in the first quarter of 2018, confirming the preliminary figures. In the prior quarter, GDP had risen 0.6%.

On the contrary, the nation's Gfk consumer confidence index unexpectedly declined to a level of 10.7 in June, confounding market expectations for it to remain steady at 10.8.

The US Dollar declined against its key peers, after the US President, Donald Trump cancelled a North Korean nuclear summit, thus reigniting fears over trade war.

Macroeconomic data showed that first time claims for the US unemployment benefits unexpectedly climbed to a 7-week high level of 234.0K in the week ended 19 May, compared to a revised reading of 223.0K in the previous week. Markets were anticipating initial jobless claims to ease to 220.0K. Moreover, the nation's existing home sales eased 2.5% on a monthly basis, to a level of 5.46 million in April, declining for the first time in three months. Existing home sales had registered a level of 5.60 million in the previous month, while markets were expecting for a fall to a level of 5.50 million.

In the Asian session, at GMT0300, the pair is trading at 1.1708, with the EUR trading 0.11% lower against the USD from yesterday's close.

The pair is expected to find support at 1.1683, and a fall through could take it to the next support level of 1.1657. The pair is expected to find its first resistance at 1.1742, and a rise through could take it to the next resistance level of 1.1775.

Looking forward, traders would focus on Germany's Ifo business climate and expectations indices for May, slated to release in a few hours. Additionally, the US flash durable goods orders for April and the final Michigan consumer sentiment index for May, both due to release later in the day would garner significant amount of market attention. Moreover, a speech by the Federal Reserve Chair, Jerome Powell, will be eyed by market participants.

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

For the 24 hours to 23:00 GMT, the GBP rose 0.19% against the USD and closed at 1.3384, following upbeat retail sales report in the UK.

Data showed that UK's retail sales rebounded 1.6% on a monthly basis in April, jumping by the most in 18 months, thus suggesting that fears about a slump in consumer spending may be overblown. Retail sales had fallen by a revised 1.1% in the previous month, while market participants had envisaged for a gain of 0.9%.

Separately, the Bank of England's (BoE) Governor, Mark Carney, stated that Brexit negotiations were entering a crucial juncture and added that the central bank stands ready to pump more stimulus into the British economy if the negotiations result in a “disorderly” Brexit.

In the Asian session, at GMT0300, the pair is trading at 1.3370, with the GBP trading 0.10% lower against the USD from yesterday's close.

The pair is expected to find support at 1.3339, and a fall through could take it to the next support level of 1.3309. The pair is expected to find its first resistance at 1.3411, and a rise through could take it to the next resistance level of 1.3453.

Trading trend in the Pound today is expected to be determined by the release of UK's flash 1Q GDP numbers. Also, investors would closely monitor the nation's BBA mortgage approvals for April and total business investment data for 1Q, both due to release in a few hours.

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