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General Trend:

• Asian equities trade generally lower, in line with US session; Japan closed for holiday
• Banks in focus: HSBC and Australia’s Macquarie report better than expected earnings
• China/US trade talks are continuing
• Reserve Bank of Australia (RBA) sees ‘solid’ Q1 growth, notes impact of higher funding costs on banks
• China April Caixin Services PMI beats ests
• Philippines Central Bank Chief says closer to rate hike than before; April CPI remained above target
• Malaysia exports to China declined again in March
• South Korea bonds decline
• South Korea said the US refuted an earlier report which said that US President Trump was said to have ordered the Pentagon to consider cutting troops in South Korea.
• China Dalian iron ore futures are now open to foreign traders as of today
• Next week, Japan PM Abe and China Premier Li are expected to hold a summit in Tokyo

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened flat, closed -0.5%
• (AU) RESERVE BANK OF AUSTRALIA (RBA) QUARTERLY STATEMENT ON MONETARY POLICY (SOMP): RAISES DEC 2018 CORE INFLATION FORECAST BY 25BPS TO 2.00%; If the economy improves as expected, higher rates likely to be appropriate at some point.
• (AU) Australia sells A$600M v A$600M indicated in 2.75% Nov 2029 bonds, avg yield 2.8181% v 2.8600% prior, bid to cover: 3.57x
• (NZ) RBNZ and FMA to seek assurances that New Zealand banks are behaving ethically

China/Hong Kong

• Shanghai Composite opened -0.3%, Hang Seng flat
• (CN) CHINA APR CAIXIN PMI SERVICES: 52.9 V 52.3E; COMPOSITE: 52.3 V 51.8 PRIOR
• (CN) US Treasury Sec Mnuchin comments from China: US and China are having very good conversation
• (CN) China said to expand checks of certain US fruit imports - financial press
• CN) China Banking Insurance Commission Chairman Guo Shuqing said domestic economic risks remain controllable - Chinese Press
• (CN) For the week, PBoC drained a net of CNY110B in open market operations v CNY270B net drain w/w
• (CN) China PBoC sets yuan reference rate: 6.3521 v 6.3732 prior
• (CN) The Governor of China Hainan pledged to limit property speculation – US financial press
• (HK) Hong Kong Apr PMI: 49.1 v 50.6 prior (1.5 year low)
• (HK) HKMA Chan said the Hong Kong dollar (HKD) may again decline to weak end of trading band – Local Media
• (HK) Hong Kong Exchange CEO: Sees substantial autumn for IPOs in Hong Kong

Japan

• Nikkei closed for holiday
• (JP) Japan, China and South Korea Finance leaders meeting statement: Notes risks posed by rising trade protectionism
• (CN) China: Premier Li’s visit to Japan to promote bilateral ties

Korea

• Kospi opened flat
• Samsung Electronics resumes trading after stock split
• (KR) US President Trump said to order Pentagon to consider cutting troops in South Korea - NYT
• (KR) North Korea said to agree to full denuclearization by 2020 - South Korean Press [Reminder: On Apr 18th Reports circulated that the US was seeking to denuclearize North Korea by 2020]
• (KR) Insurance companies in South Korea said to delay foreign investments due to rise in hedging costs – US financial press
• (KR) South Korea Apr Foreign Reserves: $398.4B (record high) v $396.8B prior
• (KR) South Korea Mar BoP Current Account Balance: $5.2B v $4.0B prior; BoP Goods Balance: $9.9B v $6.0B prior

Other

• (PH) Philippines Apr CPI M/M: 0.5% v 0.4%e; Y/Y: 4.5% v 4.5%e
• (SG) Singapore Apr PMI: 55.6 v 53.7 prior
• (TW) Manufacturers of capacitors in Taiwan may raise prices following move by Aihua Group – Taiwanese Press

North America

• US equity markets closed mostly lower: Dow flat, S&P500 -0.2%, Nasdaq -0.2%, Russell 2000 -0.5%
• S&P500 -0.9%, Financials -0.9%
• (US) White House economist Calabria: First day of talks with China have been pretty positive; -Will ask China to lower tariff rates to match US levels; has discreetly given China a list of asks
• Apple [AAPL]: Buffett's Berkshire said to have purchased 75M Apple shares in Q1 - CNBC

Europe

• (UK) UK may not be able to leave customs union until 2023; Civil servants briefing ministers this week told them that the UK may take 5 years to implement the technological Irish border fix ('max-fac') that cabinet Brexiters favor. - UK press
• (UK) UK PM May Conservative Party said to hold on to overall control of London’s Wandsworth council in local government elections – financial press
• (UK) NIESR cuts UK 2018 growth forecast to 1.5% (from 1.9% prior forecast) - Telegraph
• Axa [CS.FR]: Reports Q1 Rev €30.8B v €31.6B y/y

Levels as of 02:00ET

• Hang Seng -0.5%; Shanghai Composite -0.1%; Kospi -0.6%
• Equity Futures: S&P500 flat; Nasdaq100 -0.1%, Dax -0.1%; FTSE100 -0.3%
• EUR 1.1979-1.1996 ; JPY 108.93-109.25 ; AUD 0.7526-0.7562 ;NZD 0.7021-0.7053
• Jun Gold +0.1% at $1,314/oz; May Crude Oil +0.2% at $68.53/brl; May Copper +0.4% at $3.104/lb

Eurozone PMI services was finalized at 54.7 in April, revised down from 55.0. Prior month's reading was 54.9.

Eurozone PMI composite was finalized at 55.1, revised down from 55.2. Prior month's reading was 55.2.

German PMI composite dropped to 19-month low at 54.6. Italy PMI composite dropped to 15-month low at 52.9.

On the other hand, France PMI composite rose to 2 month high at 56.9. Ireland PMI composite rose to 3 month high at 57.6.

Quote from Chris Williamson, Chief Business Economist at IHS:

"The final PMI numbers confirm the marked, broadbased fading of the eurozone's growth spurt so far this year. The headline index has fallen from an eleven-and-a-half year peak in January to a 15- month low in April. Despite the drop, the PMI is not yet at a worryingly low level, but the survey details hint at further easing in the coming months.

"While the expansion signalled by April's PMI is disappointing relative to the elevated levels seen at the start of the year, the survey remains indicative of the eurozone economy growing at a robust quarterly rate of approximately 0.5-0.6%. Employment growth is also still booming, with the rate of job creation in the service sector at its highest for over a decade.

"Employment is a lagging indicator, however, and two reliable leading indicators have turned down, suggesting that both output and hiring trends will weaken further, at least into May. First, backlogs of uncompleted orders grew at the slowest rate for eight months. Second, companies' expectations about future output hit a five-month low. Any further deterioration could herald new concerns among policymakers regarding the economic outlook."

While there is no official communications regarding the so-called trade "negotiation" between US and China, WSJ reported the "detailed list of asks" that the US delegates gave to China during the meeting in Beijing.

In short, US asks China to:

• narrow trade surplus by US 200B by 2020
• reduce trade imbalance immediately
• halt subsidies for advanced tech
• cut tariffs on all products to levels no higher than that of US
• refrain from targeting US farmers and agricultural products
• refrain from retaliating against US restrictions on investments from China

It's unsure what the US has offered on the table.

When you ask for something without offering anything, that's not really negotiation. From there, it's unsure how seriously the US is taking the so called trade negotiation.

Daily Pivots: (S1) 147.39; (P) 148.42; (R1) 149.26; More...

Intraday bias in GBP/JPY remains on the downside for the moment. With 148.37 support taken out, fall from 153.84 should extend to 144.97 low first. Break there will target 143.51 fibonacci level. On the upside, above 149.45 minor resistance will turn intraday bias neutral and bring recovery. But upside should be limited well below 152.71 resistance to bring another decline.

In the bigger picture, price actions from 156.59 are viewed as a corrective pattern. For now, we'd expect at least one more fall for 38.2% retracement of 122.36 to 156.59 at 143.51 before the consolidation completed. Though, firm break of 156.59 will resume whole up trend from 122.36 (2016 low) to 50% retracement of 195.86 (2015high) to 122.36 at 159.11 next.

Daily Pivots: (S1) 130.23; (P) 130.94; (R1) 131.63; More....

Intraday bias in EUR/JPY remains on the downside as fall from 133.47 should target 128.94 low. Break there will resume whole fall from 137.49 and target 126.61 fibonacci level next. On the upside, above 131.66 minor resistance will turn intraday bias neutral first. But recovery should be limited well below 133.47 resistance to bring another fall.

In the bigger picture, price action from 137.49 medium term top are developing into a corrective pattern. The first leg has completed at 128.94. The second leg might be finished at 133.47 or it might extend. But after all, we'd expect another decline through 128.94 to 38.2% retracement of 109.03 to 137.49 at 126.61 before completing the correction.

Daily Pivots: (S1) 0.8805; (P) 0.8823; (R1) 0.8847; More...

Intraday bias in EUR/GBP is back on the upside as rebound from 0.8620 resumes. Further rise would be seen to 0.8967 cluster resistance next (50% retracement of 0.9305 to 0.8620 at 0.8963). Firm break there will confirm neat term reversal. On the downside, below 0.8781 minor support will turn focus back to 0.8679 support. Break there will suggests that larger decline from 0.9305 is resuming.

In the bigger picture, for now, the decline from 0.9305 is seen as a leg inside the long term consolidation pattern from 0.9304 (2016 high). Such consolidation pattern could extend further. Hence, in case of strong rally, we'd be cautious on strong resistance by 0.9304/5 to limit upside. Meanwhile, in another decline attempt, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Daily Pivots: (S1) 1.5881; (P) 1.5924; (R1) 1.5956; More....

Intraday bias in EUR/AUD remains on the downside for 1.5773 support and possibly below. Still, price actions from 1.6189 are seen as a consolidation pattern. Hence, downside should be contained above 1.5621 to bring rise resumption. On the upside, above 1.5966 support turned resistance will turn bias to the upside for 1.6139 and then 1.6189 high.

In the bigger picture, while there is bearish divergence condition in daily MACD, there is no clear sign of reversal yet. EUR/AUD also drew strong support from 55 day EMA and rebounded. Current rally from 1.3624 could still extend to 1.6587 key resistance (2015 high). Nonetheless, we'd expect further loss of upside momentum, and strong resistance from 1.6587 to limit upside and bring reversal. On the downside, sustained break of 1.5621 support should confirm reversal and turn outlook bearish for 1.5153 support and below.

Daily Pivots: (S1) 1.1940; (P) 1.1954; (R1) 1.1974; More...

Intraday bias in EUR/CHF remains neutral as consolidation from 1.2004 is extending. As long as 1.1888 minor support holds, further rise is expected. On the upside side, decisive break of 1.2 will pave the way to 61.8% projection of 1.0629 to 1.1832 from 1.1445 at 1.2188. However, consider bearish divergence condition in 4 hour MACD, break of 1.1888 will indicate short term topping. In that case, deeper pull back would be seen back to 1.1445/1832 support zone.

In the bigger picture, long term up trend in EUR/CHF is still in progress. Prior SNB imposed floor at 1.2003 was already met but there is no sign of reversal yet. As long as 1.1445 support holds, we'd expect the up trend to extend to 2013 high at 1.2649 next.

Daily Pivots: (S1) 1.1954; (P) 1.1981 (R1) 1.2015; More....

While EUR/USD continues to lose downside momentum as seen in 4 hour MACD, there is no sign of a rebound yet. Intraday bias remains on the downside. Current fall should target 200% projection of 1.2475 to 1.2214 from 1.2413 at 1.1891. Break will target 261.8% projection at 1.1730. On the upside, though, break of 1.2031 will indicate short term bottoming and bring stronger rebound back to 4 hour 55 EMA (now at 1.2090) or above.

In the bigger picture, current decline and firm break of 1.2154 support confirms rejection by 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. A medium term top should be in place at 1.2555 and deeper decline would be seen back to 38.2% retracement of 1.0339 to 1.2555 at 1.1708 first. With current downside acceleration, there is prospect of hitting 61.8% retracement at 1.1186 before completing the decline. But still, we'll need to look at the structure to before deciding if it's a corrective or impulsive move.

Daily Pivots: (S1) 1.3532; (P) 1.3580; (R1) 1.3624; More...

Even though GBP/USD continues to lose downside momentum as seen in 4 hour MACD, there is no sign of rebound yet. intraday bias remains on the downside 1.3448 fibonacci level next. On the upside, above 1.3628 minor resistance will argue that a short term bottom is formed. In that case, stronger recovery could be seen back to 4 hour 55 EMA (now at 1.3770) or above before staging another fall.

In the bigger picture, current development suggests that whole medium term rebound from 1.1936 (2016 low) has completed at 1.4376 already, with trend line broken, on bearish divergence condition in daily MACD, after rejection from 55 month EMA (now at 1.4248). Deeper decline should be seen to 38.2% retracement of 1.1936 (2016 low) to 1.4376 at 1.3448 first. Break will target 61.8% retracement at 1.2874 and below. Outlook will stay bearish as long as 55 day EMA (now at 1.3955) holds, even in case of strong rebound.