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For the 24 hours to 23:00 GMT, the GBP rose 0.11% against the USD and closed at 1.3023.

Yesterday, the IMF slashed Britain's growth forecast for 2017 by 0.3% to 1.7%, factoring in a weaker-than-expected first quarter economic growth.

In the Asian session, at GMT0300, the pair is trading at 1.3027, with the GBP trading slightly higher against the USD from yesterday's close.

The pair is expected to find support at 1.2991, and a fall through could take it to the next support level of 1.2956. The pair is expected to find its first resistance at 1.3060, and a rise through could take it to the next resistance level of 1.3094.

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

For the 24 hours to 23:00 GMT, the USD rose 0.22% against the JPY and closed at 111.17.

Yesterday, the IMF stated that it expects Japanese economy to expand by 1.3% this year, buoyed by stronger private consumption, investment and exports. The organisation had projected a growth of 1.2% in April.

On the data front, Japan's final leading economic index rose to a level of 104.6 in May, compared to a reading of 104.2 in the prior month, while the preliminary figures had indicated an advance to a level of 104.7. On the other hand, the nation's final coincident index fell less than initially estimated to a level of 115.8 in May, compared to a reading of 117.1 in the prior month. The index had registered a drop to a level of 115.5 in the flash estimate.

In the Asian session, at GMT0300, the pair is trading at 111.07, with the USD trading 0.09% lower against the JPY from yesterday's close.

Earlier today, minutes of the Bank of Japan (BoJ) showed that board members were divided on how much information they should disclose to the public about a possible exit from ultra-loose monetary policy.

The pair is expected to find support at 110.68, and a fall through could take it to the next support level of 110.29. The pair is expected to find its first resistance at 111.4, and a rise through could take it to the next resistance level of 111.73.

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

For the 24 hours to 23:00 GMT, the USD rose 0.11% against the CHF and closed at 0.9472.

In economic news, Switzerland's total sight deposits rose to a level of CHF579.1 billion in the week ended 21 July, compared to a level of CHF578.9 billion in the previous week.

In the Asian session, at GMT0300, the pair is trading at 0.9466, with the USD trading 0.06% lower against the CHF from yesterday's close.

The pair is expected to find support at 0.9448, and a fall through could take it to the next support level of 0.9431. The pair is expected to find its first resistance at 0.9481, and a rise through could take it to the next resistance level of 0.9497.

Amid a lack of any macroeconomic releases in Switzerland today, trading trend in the CHF is expected to be determined by global macroeconomic factors.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.3% against the CAD and closed at 1.2510.

Yesterday, the IMF raised its growth outlook for Canadian economy, now expecting it to grow by 2.5% in 2017, up from its April projection of 1.9%.

On the macro front, Canada's wholesale sales climbed 0.9% MoM in May, higher than market expectations for an advance of 0.5%. Wholesale sales had recorded a revised rise of 0.8% in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.2505, with the USD trading a tad lower against the CAD from yesterday's close.

The pair is expected to find support at 1.2475, and a fall through could take it to the next support level of 1.2446. The pair is expected to find its first resistance at 1.2543, and a rise through could take it to the next resistance level of 1.2582.

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

Daily Pivots: (S1) 1.2478; (P) 1.2514; (R1) 1.2546; More....

Intraday bias in USD/CAD remains on the downside for 1.2460 key support level. Considering bullish convergence condition in 4 hour MACD, we'll be cautious on strong support from there to contain downside and bring rebound. On the upside, break of 1.2608 minor resistance will indicate short term bottoming and turn bias back to the upside for 1.2968 support turned resistance. However, firm break of 1.2460 will target next key fibonacci level at 1.2048.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. Fall from 1.3793 is seen as the third leg and should target 50% retracement of 0.9406 to 1.4869 at 1.2048. At this point, we'd look for strong support from there to contain downside and bring rebound. However, firm break there will target 100% projection of 1.4689 to 1.2460 from 1.3793 at 1.1564.

The forex markets are treading water in a rather dull start to the week, staying mostly in ranges. Other financial markets are mixed too. NASDAQ hit record high overnight and closed up 0.36% at 6410.81. But DOW and S&P 500 closed down by -0.31% at 21513.17 and -0.11% at 2469.91 respectively. Treasury yield staged a mild recovery with 10 year yield closed up 0.022 at 2.254. Asian markets are trading in tight range with mild loss in Nikkei as it struggles to regain 20,000 handle. In other markets, Gold is losing some upside momentum ahead of 1260 but is staying near term bullish. WTI crude oil is back above 46.6 on recovery and helped keeping USD/CAD below 1.25 handle.

BoJ minutes showed members divided on revealing exit strategy

The minutes of the June 15-16 BoJ meeting showed that board members were divided on how much information about exit strategy should be revealed to the public. The minutes noted that "some members said it was important to thoroughly explain the BOJ's thinking on how it will manage policy and the impact on the central bank's finances to gain understanding." On the other hand, "several members said providing uncertain information before meeting the inflation target could cause market confusion, so it is important to continue internal analysis on this subject." BoJ will released summary of opinions in the July meeting later on Friday, which could more information on the discussions afterwards.

Crude Oil Recovers as Saudi Arabia Promised to Cut Exports in August

Oil price recovered mildly after Saudi Arabia's oil minister Khalid Al-Falih announced that it would cap its exports at 6.6M bpd in August, 1M bpd below that the same period last year. He acknowledged that "the market has turned bearish with several key factors driving these sentiments", admitting that weaker compliance with cuts by some OPEC states and a rise in OPEC exports were one of the factors leading to weaker oil prices. He added that "some countries continue to lag which is a concern we must address head on" and "exports have now become the key matrix to financial markets and we need to find a way to reconcile credible exports data with production data". On the global oil demand outlook, Falih expect growth would reach +1.4- 1.6M bpd in 2018, a rate that should offset US output expansion.

Markets awaiting FOMC

FOMC meeting is the highlight of the week even though Fed is not expected to make any change to its monetary policies. Opinions are divided on what Fed would do in the second half of the year. One more rate hike and an announcement to shrink the balance is still the base case for most analysts. But more are now leaning towards the case for Fed to hike in December, rather than September. Fed fund futures are pricing in less that 10% chance of a September hike, and around 50% chance of December hike.

While Fed officials are seeing the slow down in inflation in Q2 as due to temporary factors, it might take a few more months to convince them that this is the correct view. Also, there are still a lot of uncertainties on what fiscal policies US President Donald Trump would deliver. IMF lowered growth forecasts for US to 2.1% in 2017 and 2.1% in 2018, sharply down from April projection of 2.3% and 2.5% respectively. And, "uncertainty about the timing and nature of U.S. fiscal policy changes" was cited as the key reason behind the downgrade. Hence, Fed could just announce a change in its reinvestment plan in September to start unwinding the balance sheet first.

Looking ahead for today

German Ifo business climate will be the main focus in European session. Germany will release import price index while UK will release CBI trends total orders. US will release house prices and consumer confidence.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.2478; (P) 1.2514; (R1) 1.2546; More....

Intraday bias in USD/CAD remains on the downside for 1.2460 key support level. Considering bullish convergence condition in 4 hour MACD, we'll be cautious on strong support from there to contain downside and bring rebound. On the upside, break of 1.2608 minor resistance will indicate short term bottoming and turn bias back to the upside for 1.2968 support turned resistance. However, firm break of 1.2460 will target next key fibonacci level at 1.2048.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. Fall from 1.3793 is seen as the third leg and should target 50% retracement of 0.9406 to 1.4869 at 1.2048. At this point, we'd look for strong support from there to contain downside and bring rebound. However, firm break there will target 100% projection of 1.4689 to 1.2460 from 1.3793 at 1.1564.

Economic Indicators Update

STOCKS

No major movement visible in the stock market ahead of the FED policy meeting due tomorrow. Most of the indices are trading low and are in a corrective mode. There could be some more falls in the near term.

Dow (21513.17, -0.31%) has come off well from the long term resistance of 21600 and could now test an interim support near 21460 which if holds could keep the Dow ranged sideways for a few sessions else the index could head lower towards 21400 over this week.

Dax (12208.95, -0.25%) is looking bearish for the near term and could test 12000-11870 levels in the coming sessions.

Shanghai (3243.10, -0.23%) is down from levels near 3260 which is an immediate resistance as mentioned yesterday. The fall could extend towards 3220 or lower before again resuming the rise towards 3260-3270.

Nikkei (19950.11, -0.13%) is almost stable and could possibly stay above 19750 levels in the near term. Some indication from Dollar Yen and the US-Japan 10Yr yield spread could be crucial to have more clarity on further direction in Nikkei.

Nifty (9966.40, +0.52%) has been moving up in line with our expectations and could test the 10000-10050 levels today. Thereafter a corrective dip is possible towards 9900 in the coming sessions.

COMMODITIES

Bullion has strengthened as no sign of recovery had been seen from Dollar Index (93.80). Gold (1254) and Silver (16.46) are hovering around their crucial resistance of 1260 and 16.50 respectively. Gold looks overbought and immediate trading range could be 1246-1260. A fall below 1246 could take it lower towards 1230 as well. Silver is trading within the range of 16.20-16.50 and well supported by the recent strength in copper. A close above 16.50 could open up 16.85 and 17 levels as well.

Copper (2.75) is moving higher during last few trading sessions, though it is still trading within the range of 2.66-78. Only above 2.78, higher resistances of 2.85 and 2.89 can come into consideration. In the medium term 2.55-60 are going to be a strong support and we will remain bullish while it is trading above those levels.

Oil Prices rose higher in line with our expectation as Saudi Arabia pledge to cut export during August to reduce the Global (mainly U.S) crude glut. Both Brent (48.96) and WTI (46.80) are trading within the ranges of 48-50.20 and 45.80-48.30 respectively. We are bullish on oil since 10th of July onwards and there is no reason to change our bullish stance in near term while Brent and WTI are trading above 48 and 46 on a weekly closing basis. Only a close below those levels could bring the near term bearish possibilities into consideration.

FOREX

The majors may not move much today as it waits for the FOMC policy statement tomorrow.

Euro (1.1652) is trading in a very narrow range of 1.16-1.17 for the last 3 sessions and we wait to watch if it manages a break above the final horizontal resistance of 1.1712 while Dollar Index (93.93) remains very weak as usual with the downside target of 93.00 unchanged. The next phase of the price action may be decided by the FOMC policy statement due tomorrow.

Dollar Yen (111.06) has registered a low of 110.58, very close to our target/support of 110.50, before attempting a recovery in line with our expectations but it needs a break above 111.50 to confirm an upside reversal. Till then, the chances of a retest of the support of 110.50-35 remain open.

Aussie (0.7928) is consolidating its recent gains as it trades sideways in 0.7850-0.80 but the rise for 0.80+ levels may resume in the next 2-4 sessions.

Dollar-Rupee (64.34) closed almost flat yesterday after a brief rally above 64.40 but persistent Euro strength keeps Rupee strong. Repeat - The charts themselves suggest greater chances of further downside towards 64.10 in case the immediate Support at 64.28 breaks.

INTEREST RATES

FED policy meeting is due tomorrow. No change is rate is expected.

The US yields have bounced a bit contrary to our expectation of a further fall from current levels. The 10Yr (2.25%) is trading higher from 2.23% seen yesterday and could possibly head towards 2.28% before again coming off from there.

The US-Japan 10YR (2.18%) has moved up as expected and if it continues to rise, Nikkei and dollar Yen could also move up in the coming sessions.

The German-US 10Yr (-1.74%) is testing a decent support near current levels and if that holds, it could bounce back towards -1.70% indicating a rise in Euro in the near term; else the spread could move down towards -1.80% which could bring in some dip in Euro in the near term. Ned to wait and watch for more clarity.

Today's BoJ meeting revealed little new to traders, although despite speculative positioning increasing their short holdings, price action suggests near-term strength for the Yen.

Whilst BoJ members unanimously agreed policy was to remain easy, they were less congruent on how much information should be provided for a QE winddown due to fears of market turbulence. The key take home here is we can expect policy to remain unchanged for quite some time and forward guidance for a balance sheet reduction may not be their style, as it is with ECB and the Fed.

Summary of the BoJ Minutes

Many members agreed:

• Need to keep policy easy because 2% inflation target is still distant

Several members said:

• Providing information on exit could cause market turbulence
• Companies are taking steps to absorb upward pressure on wages
• Important to continue internal analysis on possible exit strategies and impact

A few members said:

• Important to explain how exit will impact BoJ's finances

One member said (not necessarily the same member for each comment):

• 2% inflation target is a global standard and can contribute to FX stability
• 2% inflation target allows for less freedom and should be more flexible

Tomorrow, Japan releases retail sales, employment and inflation data. With low hopes of inflation returning (and BoJ once again lowering and delaying their return to target) it is the employment sector we are most interested in. Overall data remains solid but every turn for the worst must start somewhere, which may have been signalled by unemployment rising above its 12-month average. At 3.1% unemployment remains very low but the 0.3-point rise is large by historical standards, and the move above or below the 12-month MA has been associated with major turning points.

Throughout 2007, unemployment meandered around the 1yr MA before finally rising, but indeed it did rise once it got started. The relationship between unemployment and job/applicants is inverted yet there is no clear relationship between which one turns first. But if we are to see unemployment rise form here we would expect job/applications to move lower over the coming months. This will only undermine reflationary efforts even further.

USDJPY found grounding above 110.63 support but whilst we remain below 112.42 the trend is technically bearish. This allows a lot of headroom for upside spikes to consider fading into any rallies around the Fed meeting although for the near-term traders are likely to take notice of the bearish channel. The tight channel also has the monthly and weekly pivot to reaffirm resistance upon a bullish attempt to breakout which leaves USDJPY vulnerable to another leg lower. A break of the 110.63 low assumes a run towards 109.83 where the monthly S1 and weekly S2 provide a tight zone of resistance.

The Fed meeting is a calendar highlight for trades, yet an event which may not provide much more than we already know. Traders are pricing in a 47% chance of a hike in December which brings the 3rd hike this year into question. Data since June has not warranted a hawkish meeting tomorrow, which leaves the remote possibility of balance sheet reduction being mentioned as the potential highlight. It is expected to be the September meeting which provides such information, yet perhaps they'll surprise markets with some details at this year's Jackson Hole symposium on 31st July.

AUDJPY has stabilised below Y82 as it finds resistance at the weekly pivot. A break above this level assumes a bullish resumption although we also warn that the RSI is sending bearish signals for the near-term and we also remain a little extended from the bullish trendline. The bearish divergence which formed prior to the top has been confirmed but the index also broke its own bullish trendline to warn of a change in sentiment at the highs. As RSI has not yet tested 30 and AUDJPY remains elevated, we see downside potential.

For now, however, we prefer to step aside until a clearer picture emerges as the reward / risk potential below the weekly pivot and above the bullish trendline is too low. Instead we prefer to await a break above 82 or a bearish break of the trendline. The latter scenario is not an unreasonable one as the daily RSI has now crossed back below 70 twice since the beginning of July and the peaks do not match the momentum seen on price, which is forming a slight divergence.

Despite bearish speculators piling into Yen short futures, prices have gained these past two weeks and the rally on AUD crosses is looking stretched. Guy Debelle could also jawbone AUD once more tomorrow which leaves AUDJPY vulnerable to be knocked off of its perch.

Price decreased in the second part of the day and erased some of the morning impressive gains, the bulls look exhausted on the short term, so a minor retreat is favored.

Price could drop further in the upcoming day after the failure to reach and retest the first warning line (wl1) of the ascending pitchfork and the 0.7989 static resistance. Is moving sideways between the 0.7989 and the 0.7874 level, we'll have a clear direction after a breakout from this range.

A valid breakdown below the upper median line (uml) of the minor ascending pitchfork will open the door for more declines in the upcoming weeks.

The Brent Oil rebounded today and tries to stay in the buyer’s territory, is located above the 48.50 level, but he needs a bullish spark to be able to resume the short term throwback.

Price rallied after the false breakdown below the upper median line (UML) of the major descending pitchfork and now is approaching the 50% retracement level. Only a valid breakout above this level will bring us a good buying opportunity.

Resistance can be found also at the 50.10 previous high and higher at the sliding line (SL), we’ll have a broader rebound if will escape from the descending channel between the SL and the 50% Fibonacci line.