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GBPUSD (1.4257): The British pound maintained gains from earlier this week, withGBPUSD trading above the previous highs formed at 1.4232. The retest of this level suggests a short-term consolidation at this level. If this level holds, GBPUSD could be seen posting further gains. Alternately, a breakdown below 1.4232 could signal a sharper correction back toward the 1.4162 level where support could once again be tested. The overall bias in GBPUSD remains to the upside for the moment with the bounce of the support level likely to see price push higher in the short term.

EURUSD (1.2334): The euro currency closed on Friday with price action subdued following last Thursday's decline. The currency pair briefly fell close to the lower support at 1.2300 before posting a modest rebound. In the near term, the EURUSD is expected to remain supported above the 1.2300 level. However, a breakout to the downside below this level cannot be ruled out. We expect to see the EURUSD eventually post the declines back to 1.2250 level where support is yet to be established. To the upside, the currency must clear the resistance level of 1.2385 to post further gains.

The U.S. dollar was seen trading mixed on Friday with lack of any clear fundamentals moving the markets. The overall theme as well as the risk appetite was somewhat mixed.

On the economic front, the Eurozone trade balance data released last week showed a moderate increase to 21 billion euro, up from 20.2 billion euro from the previous month. Germany's final inflation data showed that consumer prices increased at a pace of 0.4% on the month.

Looking ahead, the economic data is relatively quiet with only the retail sales data from the U.S. expected today. Core retail sales is expected to rise 0.2% on the month while headline retail sales are forecast to rise 0.4%, offsetting the 0.1% decline from the previous month.

The news about the U.S. coalition forces strike over Syria is expected to create a standoff between the United States and Russia. This could potentially keep investors on the edge on escalating tensions between the two countries.

Daily Pivots: (S1) 152.30; (P) 153.07; (R1) 153.57; More...

Intraday bias in GBP/JPY remains neutral for consolidation below 153.83 temporary top. Downside of retreat should be contained above 150.58 to bring another rally. Above 153.83 will extend the rise from 144.97 to retest 156.69 high. However, break of 150.58 will suggest that such rebound from 144.97 has completed and bring retest of this support.

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) 131.96; (P) 132.14; (R1) 132.49; More....

Intraday bias bias in EUR/JPY remains neutral for consolidation below 132.89 temporary top. For now, downside of retreat should be contained by 131.09 minor support to bring another rise. Above 132.89 will extend the rebound from 128.94 to 61.8% retracement of 137.49 to 128.94 at 134.22 and above. On the downside, below 131.09 will indicate that the rebound is completed and bring retest of 128.94 low instead.

In the bigger picture, price action from 137.49 medium term top are developing into a corrective pattern. Strong support from 55 week EMA (now at 129.91) suggests that the first leg has completed at 128.94 already. Nonetheless, break of 137.49 is needed to confirm resumption of the rise from 109.03 (2016 low). Otherwise, we'd expect more corrective range trading, with risk of another fall to 38.2% retracement of 109.03 to 137.49 at 126.61 before completion.

General Trend:

• Asian equity markets trade mixed: Shanghai and Hong Kong lag
• Shanghai Composite Property Sub-index declines over 3% amid higher rates
• HK property developer Country Garden [2007.HK] declines over 4%, follows press report regarding sales pressure on workers
• Russian aluminum producer Rusal extends recent declines
• Japan electrical appliances seller Yamada Denki drops over 7% after cutting outlook
• Japanese politics remain in the headlines
• US equity futures rise: Syria fallout seen as limited, according to press reports
• WTI and Brent Crude Futures decline over 0.5%
• US Treasury Dept. declines to name China as currency manipulator
• PBoC injects liquidity amid weak M2 data, raises rate on 14-day reverse repo (in line with rate hike on 7-day maturity)
• Hong Kong money market rates rise after HKMA acted last week to defend currency peg
• China Q1 GDP data and Reserve Bank of Australia (RBA) minutes due for release on Tuesday’s session

Headlines/Economic Data

Japan

• Nikkei 225 opened +0.3%; closed +0.2%
• TOPIX Retail Trade index +1%; Securities -0.8%
• (JP) In meeting on Sunday, Japan Foreign Minister Kono and China State Councillor/Foreign Min Wang agreed to improve ties – financial press
• (JP) Japan PM Abe Cabinet approval rating at 31% , according to Asahi poll; Support for Abe declined to 26.7% in Nippon TV poll (lowest since taking office in 2012)
• (JP) Former Japan PM Koizumi said current PM Abe may resign in June – financial press
• (JP) Japan companies raised wages by avg 2.41% in 2018 (largest increase in 20-yrs) - Nikkei

Korea

• Kospi opened +0.5%
• South Korea not labeled currency manipulator by US Treasury
• (KR) Bank of Korea (BoK) sells KRW600B in 6-month monetary stabilization bonds (MSBs): yield 1.69%
• (KR) South Korea Fin Min Kim: Will seek the right way to disclose currency market intervention details; Job weakness not due to minimum wage
• (KR) South Korea sells KRW1.15T in 10-year bonds v KRW1.15T indicated, avg yield 2.62% (updated)

China/Hong Kong

• Hang Seng opened +0.1%, Shanghai Composite -0.2%
• Hang Seng Property/Construction index -2.4%, Materials -2.4%, Industrial Goods -2%, Financials -1.9%
• Gaming names weaker after China announced it would support horse racing and sports lotteries in Hainan
• (CN) Analysts see China Q1 y/y GDP at 6.8% - financial press
• (CN) China halted review of more than 110 companies in China applying for IPO - US financial press
• (CN) China Foreign Min Wang: Talks with Japan important sign of China-Japan ties strengthening
• (CN) China PBoC Open Market Operation (OMO): Injects combined CNY150B in 7-day and 14-day reverse repos v skips prior; Net: injects CNY130B v CNY0B drain prior; raises rate for 14-day to 2.70% from 2.65%
• (CN) China PBoC sets yuan reference rate at 6.2884 v 6.2898 prior
• (CN) China to allow foreign investors to trade Dalian iron ore futures as of Friday, May 4th – financial press
• (HK) Hong Kong HK$ overnight HIBOR rises to 0.18411% from 0.10857%; 1-month rises to 0.85464% from 0.84625%
• (HK) Hong Kong Fin Sec Chan: Weakness in the HK$ is not too much of a concern, as the govt has prepared early and has enough money to deal with the capital outflow; HKMA has intervened in the FX market four times as of Sunday - SCMP
• (CN) China Securities Daily Op Ed sees PBOC to continue to use targeted RRR
• (CN) China State Researcher: See China Q1 GDP at 6.9% - Chinese press

Australia/New Zealand

• ASX 200 opened +0.2%
• ASX 20 Utilities index +1.4%, Energy +0.8%, Resources +0.6%; Financials -0.2%
• (NZ) New Zealand Mar Performance Service Index: 58.8 v 55.3 prior
• (NZ) New Zealand Mar Food Prices m/m: +1.0% v -0.5% prior
• Blue Sky, BLA.AU Cuts FY18 underlying Net A$20-25M (prior A$34-36M); Fee-earning AUM A$4.0-4.235N (prior A$4.25-4.75B); Launches independent review to enhance disclosures
• (AU) RBA Dep Gov Debelle: There is strong evidence that anchoring of inflation expectations has been enhanced over the past 25 years

North America

• (SY) US, UK and France launched missile strikes against Syrian chemical weapons facilities; Pentagon says the strikes successfully hit every target; Trump tweets "Mission Accomplished!"
• (RU) Russian Dep Foreign Minister Ryabkov: supports counter-sanctions in response to U.S. sanctions - Russian press
• (RU) Russia President Putin said further attacks by the West on Syria would bring chaos to global affairs, if such actions [Western strikes in Syria] committed in violation of the U.N. Charter continue, then it will inevitably lead to chaos in international relations.
• (US) Treasury Semi-annual Currency Report: Declines to name China as currency manipulator
• (US) On Saturday, US Vice President Pence said it was possible that a NAFTA deal would be reached in the next several weeks – financial press
• (US) White House economic adviser Kudlow: Optimistic US and China can avoid a broader trade fight; confirms Trump wants to look at entering the TPP-11, but that it was too soon to say how long that process would take - press

Europe

• (ES) Moody' raises Spain sovereign rating by 1 notch to Baa1 from Baa2; outlook Stable
• (UK) Apr Rightmove House Prices m/m: 0.4% v 1.5% prior; y/y: 1.6% v 2.1% prior
• (UK) Q1 Visa Spending y/y: -1.4% v -1.3% prior (largest fall since Q4 2012)
• (GE) Germany Interior Minister rejected the 6% wage increase demanded by the Verdi public sector union – German Press
• (CH) SNB's Jordan: its not the right time to change Swiss monetary policy; changes in monetary policy in other countries could give the SNB more room to maneuver
• Whitbread [WTB.UK]: Elliott Advisors believes it is now Whitbread's largest holder with more than 5% stake
• WPP [WPP.UK]: CEO Sorrell steps down, effective immediately; Names current Chairman Roberto Quarta as Executive Chairman until new CEO is named; Mark Read and Andrew Scott named as joint COOs

Levels as of 02:00ET

• Hang Seng -1.8%; Shanghai Composite -1.8%; Kospi +0.1%; ASX 200 +0.2%
• Equity Futures: S&P500 +0.3%; Nasdaq100 +0.3%, Dax +0.3%; FTSE100 +0.1%
• EUR 1.2342-1.2325; JPY 107.61-107.13; AUD 0.7783-0.7760;NZD 0.7363-0.7347
• Jun Gold +0.0% at $1,348/oz; May Crude Oil -0.9%at $66.81/brl; May Copper +0.1% at $3.07/lb

Daily Pivots: (S1) 1.5800; (P) 1.5850; (R1) 1.5924; More....

Intraday bias in EUR/AUD remains neutral for consolidation above 1.5773 temporary low. Upside of recovery should be limited below 1.6055 minor resistance to bring another fall. Break of 1.5773 will target 1.5621 support first. Decisive break there will be another indication of medium term trend reversal. However, break of 1.6059 will turn focus back to 1.6189 high instead.

In the bigger picture, the case for medium term reversal is building up in EUR/AUD. Bearish divergence condition in daily MACD indicates further loss of upside momentum ahead of 1.6587 key resistance (2015 high). Break of 1.5621 should confirm medium term topping and bring deeper fall back to 1.5153 and possibly below. Meanwhile, even in case of up trend resumption, we'd be cautious on strong resistance from 1.6587 to limit upside and bring reversal.

Daily Pivots: (S1) 0.8634; (P) 0.8650; (R1) 0.8672; More...

Intraday bias in EUR/GBP stays neutral for some consolidations first. While stronger rebound might be seen, recovery should be limited well below 0.8796 resistance to bring another decline. Break of 61.8% projection of 0.9305 to 0.8745 from 0.8967 at 0.8621 will pave the way to 100% projection at 0.8407.

In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of deeper fall. And in that case, EUR/GBP could have a retest on 0.8303. But 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) 1.1844; (P) 1.1862; (R1) 1.1874; More...

Intraday bias in EUR/CHF remains neutral for consolidation below 1.1888 temporary top. Downside of retreat should be contained by 1.1748 minor support to bring rise resumption. Above 1.1888 will target 1.2 handle, and then 61.8% projection of 1.0629 to 1.1832 from 1.1445 at 1.2188.

In the bigger picture, decisive break of 1.1832 should now extend the medium term up trend through prior SNB imposed floor at 1.2000. 2013 high at 1.2649 should be the next target. Outlook will remain bullish as long as 1.1445 support holds, even in case of deep pull back.

Daily Pivots: (S1) 1.2568; (P) 1.2593; (R1) 1.2634; More....

Intraday bias in USD/CAD remains neutral for consolidation above 1.2544 temporary low. Stronger recovery could be seen to 4 hour 55 EMA (now at 1.2684). But upside should be limited well below 1.2814 support turn resistance to bring decline resumption. On the downside, break of 1.2544 will target 1.2061/2246 support zone.

In the bigger picture, current development turns favors to the case that rise from 1.2061 is a corrective three wave pattern. It could have completed at 1.3124 after hitting 38.2% retracement of 1.4689 to 1.2061 at 1.3065. Focus is now back on 1.2061 and 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048. Decisive break there will resume larger down trend from 1.4689 (2016 high) to 61.8% retracement of 0.9406 to 1.4689 at 1.1424.