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The pair is holding within narrow range on Wednesday and consolidating strong fall in past four days which found footstep at 1.2339. Today's BoC rate decision meeting is in focus. Minimum expectations in the markets are for hawkish tone from BoC, regarding to recent strong Canadian GDP data, with 22% chances for another 25 bps hike. Loonie is expected to receive strong boost if the central bank raises rates and may accelerate towards 1.2300 zone which is seen as initial target. On the other side, unchanged BoC may not produce too much thrust to the US dollar, with falling 10SMA (1.2466) and daily Tenkan-sen (1.2501) expected to cap recovery rally. BoC interest rate decision is due at 14:00 GMT.

Res: 1.2415, 1.2466, 1.2501, 1.2552
Sup: 1.2364, 1.2339, 1.2274, 1.2188

The Aussie dollar pulled back from 0.8000 zone which was repeatedly dented in Asia on Wednesday (session high at 0.8020 vs Tuesday’s peak at 0.8028) after Australian GDP miss.

Gross Domestic Product for the second quarter came at 0.8% (q/q) vs forecasted 0.9% while annualized release was at 1.8% vs 1.9% forecast.

However, Q2 numbers are better than in the first quarter which is seen as positive signal.

The pair eased from 0.8000 zone which proves to be strong barrier, dragged by softer GDP numbers, but overall bullish structure keeps bullish bias in play.

Limited dips are expected before fresh attempts higher, with solid supports at 0.7948/44 (rising 10SMA / Fibo 38.2% of 0.7807/0.8028 upleg) which should ideally contain and guard pivotal support at 0.7920 (20SMA).

Final close above 0.8000 barrier is needed to signal further upside which could extend to 0.8165, as previous probes above at the end of July (which resulted in spikes to 0.8065/42) also failed to close above 0.8000.

Alternative scenario sees increased risk of deeper pullback on loss of 0.7920 support.

Res: 0.8000, 0.8028, 0.8042, 0.8065
Sup: 0.7975, 0.7948, 0.7920, 0.7900

The pair stands at the back foot on Wednesday, following previous day's sharp fall which completed 108.60/110.66 corrective phase. Strong bids at 108.50 so far contained attempts lower but recovery attempts are likely to stay limited under 109.00 barrier (hourly Kijun-sen), with extended upticks to be capped by daily Tenkan-sen/10SMA at 109.50 zone. Bears are looking for final break below 108.60 base for test of 2017 low at 108.11 and fresh acceleration lower on break as significant stops lay below 108.00 level. Persisting geopolitical risks keep safe-haven yen favored and expected to further weigh on the pair.

Res: 109.00, 109.32, 109.50, 109.83
Sup: 108.49, 108.26, 108.11, 107.35

Cable is holding firm bullish tone in early Wednesday's trading, following strong rally on Tuesday (0.77% up for the day, the biggest one-day rally since 31 July). Bullish acceleration on Tuesday eventually broke and closed above key barriers at 1.3000 (psychological) and 1.3020 (daily cloud top/Kijun-sen line). This generated strong bullish signal for extension towards next target at 1.3079 (Fibo 61.8% of 1.3268/1.2773 descend and possible further advance on break of the latter. Former key barriers at 1.3020/00 are now reverted to supports which should ideally contain, but deeper corrective dips on overbought daily studies cannot be ruled out. Next good supports lay at 1.2978 (30SMA) and 1.2960 (55SMA).

Res: 1.3044, 1.3079, 1.3100, 1.3151
Sup: 1.3020, 1.3000, 1.2978, 1.2960

The Euro is slightly bid in early Wednesday's trading but showing no clear direction as traders are waiting for the ECB meeting tomorrow.

The pair traded within 1.1900/30 range in Asia, denting daily Tenkan-sen (1.1921) which marks the upper boundary of the action in past two days, entrenched within Kijun-sen and Tenkan-sen lines.

Near-term action is supported by hourly cloud (spanned between 1.1900 and 1.1914) and is expected to maintain bullish bias while holding above the cloud.

Bullish daily studies are supportive, with rising 10SMA tracking the advance and offering immediate support.

However, the pair would likely stay within 1.1900/1.2000 range today, looking for firmer signals from Mario Draghi on Thursday.

With no releases from the Eurozone scheduled today, focus turns towards US data (ISM Non-Manufacturing PMI is due at 14:00 GMT and forecasted at 55.4 in August vs 53.9 in July).

Res: 1.1940, 1.1979, 1.2000, 1.2070
Sup: 1.1914, 1.1900, 1.1868, 1.1839

Daily Pivots: (S1) 129.12; (P) 129.88; (R1) 130.37; More...

Break of 129.65 minor support argues that rise from 127.55 is completed at 131.69. Intraday bias is turned back to the downside for 127.55 support first. Firm break there will indicate near term reversal and deeper fall would be seen back to 122.39/125.80 support zone. On the upside, break of 131.69 is needed to confirm rally. Resumption. Otherwise, we'd expect more corrective price action in near term, with risk of deeper fall.

In the bigger picture, the down trend from 149.76 (2014 high) is completed at 109.03 (2016 low). Current rally from 109.03 should be at the same degree as the fall from 149.76 to 109.03. Further rise is expected to 61.8% retracement of 149.76 to 109.03 at 134.20. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. Medium term outlook will remain bullish as long as 124.08 resistance turned support holds. However, firm break of 124.08 will argue that rise from 109.03 is completed and turn outlook bearish.

Risk-off sentiment persists, Aussie growth disappoints

Stock market

Global equities tumbled on Wednesday as the uncertainties stemming from the North Korean situation returns. The Japanese Nikkei was down 0.14%, while the broader Topix edged up 0.08%. In offshore China, Hong Kong’s hang Seng was down 0.60% while in Taiwan the Taiex slid 0.66%. The picture is not much brighter in Europe: the Euro Stoxx 50 was down 0.30%, the DAX fell 0.20% and the CAC 40 slip 0.27%.

In spite of this small equity sell-off, demand for safe-haven assets remained subdued. The yellow metal was even edging lower, down 0.20% to $1,337 an ounce. In the FX market, the Swiss franc and Japanese yen were trading sideways. It seems that investors do not where to stands and are becoming increasingly impatient to get out this rollercoaster. Draghi will - mostly likely - unveil the ECB monetary policy plan tomorrow. This should at least reduce uncertainty partially. They will have to wait until September 20 for Yellen.

AUD

The Australian dollar took a hit overnight amid disappointing growth figures. The GDP grew 1.8%y/y, slightly below the 1.9% expected by most economists. On a quarter-over-quarter basis the economy grew 0.8% compared to 0.9% medina forecast. Nevertheless, the jump in growth compared to previous quarter data is quite substantial as the expansion was limited to 0.3%q/q. The only blot in this otherwise encouraging landscape is the drop in household saving ratio from 5.3% in the March quarter to 4.6% in the June quarter, while at the same time household spending increased 0.7%q/q. This raise the question whether the pace of growth is sustainable in the medium to long-term and if not when it will kick back economy growth as Australian start to save money again.

AUD/USD eased as low as $0.7974 this morning before stabilising slightly below $0.80. On the medium-term, the pair is still trading within its multi-month channel (0.7787-0.8066). it should remain so ahead of Draghi and most importantly Yellen in two weeks.

BoC to hike

Watch CAD on BoC meeting today

At today’s Bank of Canada monetary policy meeting we now expected a 25bp hike. The Canadian economy has accelerated for multiple quarters and expectations for rapid rise in inflation will persuade the bank to act now. However, there is a high probability the bank opts to hold to due to high level of household indebtedness and interest to monitor developments at the Fed. Either way we suspect that long CAD short USD would be a solid way to play the current environment. As strong worded comment that indicates further tightening (October if not today) will likely catch the markets behind the curve with only 65bp of hikes priced in until the end of 2018. USDCAD downtrend still in play with break of 1.2414 signaling a bearish extension targeting 1.2128.

Singapore a proxy for solid global growth

Singapore provides a solid barometer for the health of the global economy. In the Monetary Authority of Singapore (MAS) quarterly near-term outlook, called “Recent Economic Developments in Singapore” there is a clear expression of optimism in the outlook for the global and domestic economy. In particularly the bank highlighted sustained momentum in electronic industry. The MAS stated, “firm external demand conditions, coupled with the upturn in the global IT cycle, will continue to impart positive spillovers.” The MAS report revised higher G3 growth projections for both 2017 and 2018 to 1.9% from 1.8% in June. Despite negative geopolitical headlines clouding the markets outlook (North Korea a primary disturbance to investors risk appetite), according to the MAS conditions remain positive. Slow and steady global growth continues to support demand for EM currencies in the near term.

Daily Pivots: (S1) 141.38; (P) 141.93; (R1) 142.38; More

Intraday bias in GBP/JPY remains mildly on the downside for 139.29 support. Break will extend the fall from 147.76 and target 135.58 key support level. At this point, price actions from 148.42 are seen as a sideway consolidation pattern. Hence, we'll expect strong support from 135.58 to contain downside and bring rebound. Meanwhile, break of 143.18 will indicate short term reversal and turn bias back to the upside.

In the bigger picture, the sideway pattern from 148.42 is still unfolding. In case of deeper fall, we'd expect strong support from 135.58 and 50% retracement of 122.36 to 148.42 at 135.39 to contain downside. Medium term rise from 122.36 is expected to resume later. And break of 38.2% retracement of 196.85 to 122.36 at 150.43 will carry long term bullish implications. However, firm break of 135.58/39 will dampen the bullish view and turn focus back to 122.36 low.

Daily Pivots: (S1) 1.4827; (P) 1.4903; (R1) 1.4971; More....

At this point, deeper decline is mildly in favor in EUR/AUD for 1.4732 support. Break there will confirm that fall from 1.5173 is the third leg of consolidation pattern from 1.5226. In that case, further fall should be seen to 1.4421 again. But we'd expect strong support from there to contain downside and bring rebound. On the upside, above 1.5042 minor resistance will turn bias back to the upside for 1.5173 resistance instead.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. The corrective structure of the price actions from 1.5226 is affirming this view. Above 1.5226 will target a test on 1.6587 key resistance. However, break of 1.4421 will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.

Crude Oil is drifting after break declining trendline. Strong resistance can be found at 50.41 (31/07/2017). Hourly support is given at 45.40 (17/08/2017 high). Expected to show continued short-term bearish move.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 35.24 (05/04/2016) while resistance can now be found at 55.24 (03/01/2017 high).