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• FTSE stabilises as election uncertainty weighs on sentiment;
• EUR tumbles on reports of lower inflation forecasts in draft projection;
• EIA inventories eyed as oil remains under pressure.

We're seeing mild gains in the FTSE in what is otherwise a mixed European session this morning. US futures are pointing a little higher ahead of the open, with little direction coming from across the pond.

The UK index has stabilised in the weeks leading up to the election, with the sudden uncertainty around the outcome appearing to be contributing to the moves. We've seen a similar situation in sterling, which after coming off its highs as the polls showed the Conservatives strong majority being possibly wiped out, has since entered a period of relative stability. I don't think this is helped by the polls with some indicating that the Conservatives have lost their majority altogether and others claiming its very much intact.

This should make for some volatile trade on Thursday evening as the exit polls start to come out. Should the exit polls suggest we're headed for a hung parliament then the knee jerk reaction could be fierce in both the pound and the FTSE. Once this passes then the index could benefit from the weakness in the currency, as it has since the Brexit referendum. The question though is how long this will take. The knee jerk reaction in the FTSE didn't last long after the referendum and the reaction to Trump in the US was much shorter again.

With the last day of campaigning underway and there being little on the economic calendar, attention will likely remain on the UK today. The polls suggest that the Conservatives maintain a six or seven point lead which should be enough to secure a majority, but one that is far smaller than was expected when the election was called. This would come as a relief to the Conservatives and avoid the hung parliament scenario that may be worst case scenario for markets.

The euro has come off this morning after reports of a draft ECB staff projection which showed growth forecasts being revised higher and inflation lower through 2019. Should this be the case, it would support the need for monetary policy to remain very accommodative and either delay tapering or at least slow the pace of it. The dovish nature of this has hit the euro sending it back towards 1.12 against the dollar and below 0.87 against the pound. Should this be rejected, I would expect the moves to quickly reverse.

The only notable data to come today is EIA crude oil inventories which follow an API release on Tuesday that reported a drawdown of 4.62 million barrels. With oil already under pressure as traders appear to question the suitability of the output deal and the latest geopolitical issues in the region weigh, it will be interesting to see whether another large drawdown will offer any support. Having broken below $50 though, Brent continues to look vulnerable to further downside.

A move to own haven assets has lost some of its momentum overnight as investors take a time out ahead of an onslaught of key events tomorrow that include a snap election in the U.K, an ECB policy meeting, and testimony by James Comey, the former FBI chief fired by President Trump.

Currently, U.K polls are suggesting that PM Theresa May might not be able to bolster her majority, while Comey's testimony may offer clues to how the probe into the Trump campaign's contact with Russian officials will impact the administration's ability to push through its policy agenda.

The dollar remains adrift atop of its eight-month low while gold edges lower after touching its highest level since November. U.S Treasuries remain flat after climbing yesterday on news that China is prepared to buy more of the debt. Global equities are mixed.

Speculation about a shift in the ECB's policy stance tomorrow is gaining traction. Increasing signs of a strengthening eurozone and more upbeat official comments has raised some investor expectations that a 'no change' could be seen as a small disappointment.

Nonetheless, with last month's regional inflation reports surprisingly soft, any move by ECB policy makers is likely to be only 'subtle' and possibly limited to just a modification of the forward guidance (FG).

The market majority expects ECB interest rates to remain at 'present or lower levels' for an extended period of time.

1. Stocks mixed results

The aforementioned geopolitical worries have many investors wading to the sidelines to seek sanctuary, at least until there is more market clarity.

In Japan, both the Nikkei and broader Topix closed flat in thin trade as investors continued to shun riskier assets ahead of tomorrow's geopolitical events.

Down-under, Australia's S&P/ASX 200 Index also finished flat, after closing yesterday's sessions at its lowest level in four-months.

In Hong Kong, the Shanghai Composite jumped +1.2% to its highest level in four-weeks, while Hang Seng retreated -0.3% from its two-year high print recorded Tuesday.

In Europe, regional indices are trading mixed, with both Italy and France outperforming while the DAX and Swiss SMI and IBEX trade slightly lower. U.K's FTSE 100 is little changed in thin trade ahead of tomorrow's Parliamentary vote.

Indices: Stoxx50 flat at 3555, FTSE +0.2% at 7539, DAX -0.1% at 12681, CAC-40 +0.3% at 5287, IBEX-35 -0.4% at 10838, FTSE MIB +0.5% at 20855, SMI -0.1% at 8899, S&P 500 Futures flat.

2. Oil dips on concerns about rising U.S output, OPEC tensions

Ahead of the U.S open, oil prices have dipped on concerns about the usefulness of OPEC-led production cuts due to rising tensions within the export group over Qatar and growing U.S output.

Currently, Brent crude prices are at +$49.79 per barrel, down -33c. Brent is about -8% below its open on May 25, when OPEC and other producers agreed to extend oil output cuts through to Q1 2018. U.S. light crude (WTI) prices are at +$47.89 per barrel, down -30c.

Yesterday, the EIA said that U.S crude oil production could hit a record +10m bpd next year, up from +9.3m bpd now, putting it nearly on a par with top exporter Saudi Arabia.

Investors will take their cue from today's inventory report from the EIA at 10:30 am. The market is expecting another drawdown (-3.1m vs. -6.4m m/m).

Ahead of the U.S open, gold is holding steady (-0.1% to +$1,292.92), hovering close to its six-week high print in yesterday's session, on weaker global stocks and amid dwindling expectations for aggressive U.S rate hikes this year.

3. U.S Treasury China demand

Yesterday, U.S 10-year yields (+2.147%) closed at its lowest level for 2017, extending its big slide since reaching this year's peak in March (+2.60%).

Aside from the safe haven demand aspect ahead of 'Super Thursday' for product, another boost for debt prices came from 'hearsay' that China is preparing to increase its holdings of U.S product, judging that stateside assets are becoming 'more attractive than other sovereign debt and as the yuan stabilizes.'

Elsewhere, Aussie government notes with a similar maturity rallied +1 bps to +2.38%, while French (OAT's), German (Bunds) and U.K (Gilts) yields were little changed after losing at least -4 bps in yesterday's session.

4. Dollar drifts before D-Day

Overall forex price action remains rather subdued ahead of tomorrows 'Super Thursday' – U.K Parliamentary elections, ECB rate decision and former FBI chief Comey testimony in Congress.

The EUR/USD (€1.1270) trades atop of its seven month high. The single unit has gained strongly since mid-May on market expectations the ECB will announce plans to scale back monetary stimulus tomorrow. This leaves the possibility for 'disappointment,' but the EUR is not expected to ease notably short-term, as the market is assuming deposit rates will start to rise next year.

USD/JPY (¥109.23) is a tad softer – the yen's strength has been driven by risk and safe-haven flows. Lower U.S yields, supported by China's hearsay demand for treasuries, are not supporting the dollar on rate differentials.

The pound's (£1.2920) value is wholly dependent on what happens tomorrow in the U.K election. A strong majority will favor sterling and strengthen PM May's own position ahead of Brexit negotiations.

The pound is expected to plunge to as low as £1.20'ish, a level last seen in January, should the U.K snap election lead to a hung parliament or a Labour win.

Opinium U.K general election poll: Conservatives +43% (unchanged), Labour +36% (-1).

Ashcroft U.K election model: UK conservatives to win total 357 seats in Parliament for a 64-seat majority

Note: compares with 60 projected on June 2.

5. OECD calls for ECB taper and lowers U.S growth

The OECD has reversed its March position on the Eurozone stating this morning that the ECB should taper its bond purchases in 2018, and raise its deposit rate by the end of that year. It was only three-months ago that the research body suggested that Draghi and company should 'continue with what it is doing.'

It has also cut its economic growth forecasts for the U.S for this year and next, stating that the 'stimulative measures it had expected from the Trump administration would now likely be implemented later than it had previously anticipated.' It lowered its projection for 2018 to +2.4% from +2.8%.

'Stronger business and consumer confidence, rising industrial production and recovering employment and trade flows will help global GDP grow +3.6% in 2018, up from +3.0% in 2016.'

The euro continues to have an uneventful week. EUR/USD has inched lower in the Wednesday session, as the pair is currently trading at 1.1270. On the release front, German Factory Orders dropped 2.1%, much weaker than the estimate of a 0.2% decline. It’s a quiet day in the US, highlighted by Crude Oil Inventories. The markets are expecting a decline of 3.1 million barrels, which would mark a ninth consecutive decline. On Thursday, the ECB releases its benchmark rate, which is expected to remain at a flat 0.00%. The US will release unemployment claims, with an estimate of 241 thousand.

If lackluster movement from the euro is a reliable indication, the markets are not expecting any dramatic moves from Mario Draghi & Co. at Thursday’s policy meeting. The central bank has held the benchmark rate at a flat 0.0% since March 2016, and no change is expected on Thursday. Still, with the euro-area economy showing improved growth in 2017, the markets would like to see the ECB at least acknowledge that the economic picture has brightened, and will be looking for a more hawkish tone from the rate statement or the follow-up comments from ECB head Mario Draghi. The ECB has been reluctant to taper its asset-purchase program or raise interest rates, despite grumbling from economic powerhouse Germany, which wants a tighter monetary policy out of Brussels. The markets will be poring over the rate statements and Draghi’s follow-up comments, looking for any nuances which are hawkish in tone. If this occurs, the euro could gain ground.

The Federal Reserve holds its policy meeting next week, and the markets are widely expecting the Fed to raise rates for the second time in 2017. The odds of a rate increase stood at 96%, but the odds have dipped to 91%, in response to the dismal Nonfarm Payrolls report on Friday. An increase in interest rates represents a vote of confidence in the US economy, but the Fed continues to have some concerns. Inflation remains stubbornly low, despite a labor market that remains close to capacity. Fed policy makers are also scratching their heads over soft consumer spending, which has not kept pace with high levels of consumer confidence. As for additional rate hikes in the second half of 2017, the markets remain skeptical, with the odds of a September rate hike at just 22%. However, stronger data in the third quarter will likely raise the likelihood a September hike.

GOLD Riding within uptrend channel.

Gold is pushing higher within uptrend channel. Hourly support is located at 1246 (18/05/2017 low). Stronger support is given at 1195 (10/03/2017 low). Expected to show further upside pressures.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

SILVER Testing 61.8% Fibonacci retracement.

Silver declines. Strong support is given at 15.63 (20/12/2017 low). Closest support is given at 16.20 (04/05/2017 low). Key resistance is given at a distance at 19.00 (09/11/2017 high). Expected to push back towards 61.8% Fibonacci retracement around 17.75.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

CRUDE OIL Strong volatility.

Crude oil is now moving sideways after the recent collapse from $52. Support is given at a distance 43.76 (05/05/2017 low). The technical structure suggests decline towards 43.76.

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 24.82 (13/11/2002) while resistance can now be found at 55.24 (03/01/2017 high). 07 June 2017 DAILY

EUR/CAD – 1.5075


 

EUR/CAD: Wave 4 ended at 1.4380 and wave 5 as well as circle wave C has possibly ended at 1.2129, major (A)-(B)-(C) correction has commenced and indicated target at 1.6000 had been met.



 

Although the single currency did find renewed buying interest at 1.4969 and has resumed recent upmove in line with our bullish expectation (our long position entered at 1.5000 met target at 1.5250), lack of follow through buying and current retreat from 1.5259 suggest consolidation below this level would be seen and pullback to 1.5000 cannot be ruled out, however,  break of support at 1.4969 is needed to signal top is formed, bring retracement of recent upmove to 1.4900 but support at 1.4825 (previous 4th of a lesser degree) should hold from here. 



Our latest preferred count is that larger degree wave [C] from 1.3289 as well as circle wave B ended at 1.7509 in Dec 2008 with (A): 1.6325, (B): 1.4719 followed by wave (C) at 1.7509, hence circle wave C is unfolding with wave 1 ended at 1.5186 (diagonal wave 1), wave 2 at 1.6096, impulsive wave 3 has ended at 1.2451, followed by wave 4 at 1.4380, in view of recent strong rebound, we are now treating the wave 5 as well as larger degree circle wave C has ended at 1.2129, hence (A)-(B)-(C) correction has commenced from there with impulsive wave (C) now unfolding and indicated initial upside target at 1.6000 had been met and reckon 1.6500 would hold.



On the upside, whilst recovery to 1.5160-70 cannot be ruled out, upside should be limited to 1.5200-10 and bring further consolidation below 1.5259. Only a break of this level would revive bullishness and signal recent upmove has resumed for headway to 1.5350 and possibly 1.5400 but price should falter well below 1.5500, risk from there is seen for a retreat later. 




Recommendation: Long entered at 1.5000 met target at 1.5250 with 250 points profit.


On the bigger picture, our long-term count on the monthly chart is that a big sideways consolidation from 2000 low of 1.2557 has possibly ended at 1.7509 as circle wave B with [A]: 1.6976 ( (A): 1.4513, (B): 1.2612, (C): 1.6976), wave [B]: 1.3289 is a double three with 1st a-b-c: 1.5384, x: 1.6709 and 2nd a-b-c: 1.3289. As indicated above, the wave [C] has ended at 1.7509. The selloff from there is now unfolding which itself should be labeled as an impulsive wave with wave 1: 1.5186 (diagonal wave 1), followed by wave 2: 1.6096 and wave 3: 1.2451, wave 4: 1.4380, wave 5 as well as larger degree circle wave C has possibly ended at 1.2129 and major correction has possibly commenced for retracement of recent decline towards 1.4000, then 1.4180-90 (38.2% Fibonacci retracement of 1.7509-1.2129). Below said support at 1.2129 would risk weakness to psychological support at 1.2000 and then 1.1851 (50% projection of 1.7509-1.2451 measuring from 1.4380) but reckon 1.1500 would remain intact, bring reversal later.

Notes/Observations

'Super Thursday' events loom (UK elections, ECB, former FBI chief Comey testimony)

China FX Reserves rise for the 4th straight increase for its longest streak since Jun 2014)

Germany Factory Orders decline sharply in Apr; likely impacted by Easter

India's RBI keeps policy steady (as expected) and maintains its neutral bias

Overnight

Asia:

Australia Q1 GDP YoY reading beats expectations (Y/Y: 1.7% v 1.6%e) but still the slowest annual pace since 2009

Europe:

PM May: ready to change UK human rights laws in order to do more to fight extremism

Opinium UK general election poll: Conservatives 43% (unchanged), Labour 36% (-1)

Ashcroft UK election model: UK conservatives to win total 357 seats in Parliament for a 64 seat majority (**Note: compares with 60 projected on June 2nd)

Americas:

S&P affirmed United States of America sovereign rating at AA+; outlook remains stable

US Treasury Sec Mnuchin: pleased with the direction the US is heading with China; US must increase exports to address imbalance in trade with China. Market access to China is definitely an issue; seeks a reciprocal trade relationship

Energy:

Weekly API Oil Inventories: Crude: -4.6M v -8.7M prior (3rd straight draw)

Russia Energy Min Novak: Russia doesn't plan to call for extraordinary meeting with OPEC over Qatar dispute; OPEC/non-OPEC deal should continue despite problems between the Gulf states

Economic Data

(DE) Germany Apr Factory Orders (miss) M/M: -2.1% v -0.3%e; Y/Y: 3.5% v 4.7%e

(RO) Romania Q1 Preliminary GDP (2nd reading) Q/Q: 1.7% v 1.7%e; Y/Y: 5.7% v 5.7%e

(CH) Swiss May Foreign Currency Reserves (CHF): 693.7B v 696.6B prior

(UK) May Halifax House Price (beat) M/M: +0.4% v -0.2%e; 3M/Y: 3.3% v 3.0%e

(SE) Sweden Apr Industrial Production M/M: -2.4% v +0.3%e; Y/Y: 0.8% v 4.1%e

(TW) Taiwan May Trade Balance: $3.5B v $3.2Be, Exports Y/Y: 8.4% v 7.0%e, Imports Y/Y: 10.2% v 9.6%e

(CH) China May Foreign Reserves (beat): $3.054T v $3.046Te (4th straight rise and longest streak since Jun 2014)

(IN) India Central Bank (RBI) left its Repurchase Rate unchanged at 6.25%(as expected)

Fixed Income Issuance:

(VN) Vietnam sold total VND4.13T in 5-year, 7-year, 20-year and 30-year bonds

(EU) ESM opened book to sell 1.8% Nov 2046 bond via syndicate; guidance seen 20bps to mid-swaps

(IT) Italy Debt Agency (Tesoro) opened its book to sell new Mar 2048 BTP bond via syndicate; guidance seen +12bps to mid-swaps

(IN) India sold total INR140B vs. INR140B indicated in 3-month and 12-month Bills

(DK) Denmark sold total DKK3.35B in 2020 and 2027 bonds

(SE) Sweden sold SEK10B vs. SEK10B indicated in 6-month Bills; Avg Yield: -0.7361% v -0.6603% prior; bid-to-cover: 3.48x v 1.74x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 flat at 3555, FTSE +0.2% at 7539, DAX -0.1% at 12681, CAC-40 +0.3% at 5287, IBEX-35 -0.4% at 10838, FTSE MIB +0.5% at 20855, SMI -0.1% at 8899, S&P 500 Futures flat]

Market Focal Points/Key Themes European indices trade mixed this morning, with out performance in Italy, and France whilst the Dax and Swiss SMI and IBEX trade slightly lower. Recent speculation over the future of Banco Popular was resolved following its acquisition by Santander, with a €7B capital raise announced to help fund the acquisition. Else where European utilities trade at 1 and half year highs, up 22% since the November lows after the German constitutional court ruled against the Nuclear fuel tax with companies expected to be refunded taxes paid plus interest. Notable risers include RWE, EON and EDF.

Equities

Industrials: [RPC [RPC.UK] -2.5% (FY Earnings) ]

Financials: [ Santander [SAN.ES] -2.4% (To acquire Banco Popular; To raise €7B in capital raise to fund transaction), Workspace Grp [WKP.UK] +2.3% (Earnings)]

Healthcare: [Covestro [1COV.DE] -4.4% (Bayer to sell 17.25M shares, reduces stake to 44.8%), Astrazeneca [AZN.UK] -1.5% (Signs agreement with Grünenthal for rights to Zomig; Grünenthal will pay $200M upon completion)]

Energy: [RWE [RWE.DE] +4.4%, EON [EOAN.DE] +4.4%, EDF [EDF.FR] +1.2% (German Constitutional Court strikes down nuclear fuel tax; companies to receive interest on paid taxes)]

Speakers

OECD updated its Economic Outlook which raised its 2017 Global GDP forecasts from 3.3% to 3.5% while maintaining the 2018 forecast at 3.6%

Norway FSA: Signs that mainland activity was picking up but vulnerability of financial system had risen. Development in consumer loans was a concern

India Central Bank (RBI) Policy Statement noted that its stance was neutral.

India Central Bank (RBI) Gov Patel post rate decision press conference noted that Apr inflation surprised to the downside but awaited for greater clarity on data (refers to maintaining its neutral stance)

China FX regulator SAFE noted that it saw stabilizing capital flows: Forex supply and demand are basically balanced. USD currency depreciation and asset price rise were among reasons for rising forex reserves

China PBOC adviser Huang Yiping urged forex reform in China

Currencies

Overall FX price action remained subdue ahead of 'super Thursday' which will UK Parliamentary elections, ECB rate decision and former FBI chief Comey testimony in Congress. Gold held near 7-month high as political worries buoyed safe-haven demand.

EUR/USD was just off its 7-month high and holding around 1.1250 area. Dealers are focused on any tweaking of the ECB's forward guidance which currently stands that rates to stay low or lower beyond the forecast horizon period.

USD/JPY was slightly softer at 109.20. Dealers noted that the recent yen's strength was being driven by risk and safe-haven flows. The lower US yields are also a catalyst after reports that China could be ready to buy more Treasuries as yuan currency stabilized.

Fixed Income

Bund futurestrade at 164.92 up 3 ticks, after hitting a new high at 165.03 and appears to well supported at the moment. Resistance lies near the 165.95 level followed by 167.79. A break of the 162.65 support level could see lows target 159.96 followed by 157.50.

Gilt futurestrade at 129.43 down 4 ticks, as investors take cover ahead of Thursday's election. Last week's decline fell back below both the 129.00 handle and the 129.14 April 18th high. Price finds key support at the 128.27 support level. An acceleration lower could test the 127.43 region. Resistance remains the noted 129.00/129.14 region, then 129.75 followed by 130.28.

Wednesday's liquidityreport showed Tuesday's deposits dropped rose to €597.6B from €592.6B prior. Use of the marginal lending facility increased to €285M from €221M prior.

Corporate issuancesaw over $5.65B come to market via 6 issues headlined by Citibank $2.5B in an 2-part 3-year notes offering and Coach $1B in a 2-part unsecured senior note offering

Looking Ahead

(IL) Israel May Foreign Currency Balance: No est v $105.1B prior

(FI) Finland announces upcoming RAGB bond for Jun 14th

(NL) Netherlands Debt Agency (DSTA) announces upcoming DSL auction for Jun 13th

05:30 (ZA) South Africa May Sacci Business Confidence: No est v 94.9 prior

05:30 (DE) Germany to sell €3.0B in 0% Apr 2022 BOBL

06:00 (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 1.50%

06:00 (IE) Ireland Apr Property Prices M/M: No est v 0.1% prior; Y/Y: No est v 9.6% prior

06:00 (RU) Russia to sell combined RUB35B in 2024 and 2033 OFZ bonds

06:45 (US) Daily Libor Fixing

07:00 (UK) Prime Minister's Question Time in House of Commons

07:00 (US) MBA Mortgage Applications w/e Jun 2nd: No est v -3.4% prior

07:00 (BR) Brazil May FGV Inflation IGP-DI M/M: -0.6%e v -1.2% prior; Y/Y: 1.0%e v 2.7% prior

07:45 (DE) German Chancellor Merkel on EU matters in Berlin

08:00 (PL) Poland May Official Reserves: No est v $109.4B prior

08:00 (HU) Hungary Central Bank (NBH) May Minutes

08:15 (UK) Baltic Dry Bulk Index

08:30 (CA) Canada Apr Building Permits M/M: +3.0%e v -5.8% prior

08:30 (CL) Chile May Trade Balance: $0.5Be v $0.5B prior, Total Exports: $5.4Be v $5.0B prior, Total Imports: $5.0Be v $4.5B prior, Copper Exports: No est v $2.2B prior

08:30 (CL) Chile May International Reserves: No est v $39.0B prior

09:00 (RU) Russia May Official Reserve Assets: $404.8Be v $401B prior

09:00 (CL) Chile Apr Nominal Wage M/M: No est v 0.8% prior; Y/Y: 4.2%e v 4.3% prior

09:30 (SE) Sweden Central bank (Riksbank) Dep Gov Skingsley participates in panel debate

10:00 (PL) Poland Central Bank Gov Glapinski to hold post rate decision press conference

10:30 (US) Weekly DOE Crude Oil Inventories

12:00 (CA) Canada to sell 2-Year Bonds

15:00 (US) Apr Consumer Credit: $15.0Be v $16.4B prior

EUR/JPY Downside pressures.

EUR/JPY is trading lower. Hourly support is given at 122.56 (18/05/2017 low). Hourly resistance can be found at 125.82 (16/05/2017 high). Major support is given at 114.90 (18/04/2017low).

In the longer term, the technical structure validates a medium-term succession of lower highs and lower lows. As a result, the resistance at 149.78 (08/12/2014 high) has likely marked the end of the rise that started in July 2012. Strong support at 94.12 (24/07/2012 low) looks nonetheless far away.

EUR/GBP Fading.

EUR/GBP's bullish momentum is fading. The technical structure had turned positive since the pair has broken resistance at 0.8530 (25/04/2017 low). Strong support can be found at 0.8304 (05/12/2017 low). Expected to see a further bullish breakout towards resistance at 0.8787 (13/03/2017 high).

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level.

EUR/CHF Continued weakness.

EUR/CHF is trading lower. The pair has broken support given at 1.0866 (18/05/2017 low). We believe that the medium-term pattern suggests us to see continued bearish pressures towards hourly support that can be found at 1.0792 (03/05/2017 low).

In the longer term, the technical structure is mixed. Resistance can be found at 1.1200 (04/02/2015 high). Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

AUD/USD     –  0.7562






AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081




Aussie found decent demand at 0.7372 and has staged a stronger-than-expected rebound, the breach of previous resistance at 0.7518 signals the fall from 0.7750 has ended at 0.7329 and mild upside bias is seen for further gain towards resistance at 0.7611, however, break there is needed to retain bullishness and signal the fall from 0.7750 has ended there, bring further gain towards another previous resistance at 0.7680 but price should falter below said resistance at 0.7750.




We are keeping our count that top has been formed at 1.1081 (wave 5 of V) and major correction (A-B-C-X-A-B-C) has commenced, indicated downside targets at 0.7945 (61.8% Fibonacci retracement of entire rise from 0.6007-1.1081) and 0.7750 had been met and downside bias is seen for further weakness to 0.6800, then 0.6700 but reckon 0.6500 would hold from here.



 

Our preferred count is that the rally from 0.6007 to 0.7270 (7 Jan 2009) is marked as wave A, the retreat to 0.6248 (2 Feb 2009) is wave B and the subsequent upmove is labeled as wave C with wave (iii) and wave (iv) ended at 0.8265 and 0.7700 respectively and wave (v) as well as 3 ended at 0.9407, then wave 4 ended at 0.8066 (instead of 0.8578). The wave 5 has met our indicated projection target of 1.1060 and could ended at 1.1081, this level is now treated as the peak of wave (C) as well as larger degree wave B, hence major fall in wave C has commenced, our initial downside target at psychological support at 0.7000 has just been met and further weakness to 0.6500 would be seen later.



 

On the downside, whilst pullback to 0.7500 cannot be ruled out, reckon downside would be limited to 0.7455-60 and bring another rise later. Only below support at 0.7415 would abort and suggest top is possibly formed, bring weakness towards said strong support at 0.7372 which is likely to hold from here. Looking ahead, a break below this support is needed to signal the rebound from 0.7329 has ended and revive bearishness for retest of this level later.   



Recommendation: Exit short entered at 0.7490 and stand aside.



Our alternate count on the daily chart treated the top formed in 2008 at 0.9851 could be a larger degree wave I and was followed by a deep and sharp correction in wave II to 0.6007 and wave III is unfolding from there.

The long-term uptrend started from 0.4775 (2 Apr 2001) with an impulsive structure. Wave I is labeled as 0.4775 to 0.9851 (15 Jul 2008), wave II has ended at 0.6007 (Oct 2008) and wave III is still in progress which may extend further gain to 1.1265.

USD/CHF Heading lower.

USD/CHF continues its decline below support given at 0.9692 (22/05/2017 low). Strong resistance is given at 1.0107 (10/04/2017 high). Expected to show continued weakness towards hourly support at 0.9550 (09/11/2017 low).

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/CAD Edging lower

USD/CAD is trading below 1.3500. The pair has exited short-term uptrend channel. Hourly support can be found at 1.3424 (28/05/2017 low) then 1.3388 (25/01/2017 high). Expected to show continued very short-term bearish pressures.

In the longer term, there is now a death cross with the 50 dma crossing below the 200 dma indicating further downside pressures. Strong resistance is given at 1.4690 (22/01/2016 high). Long-term support can be found at 1.2461 (16/03/2015 low).

AUD/USD Strong upside.

AUD/USD is pushing higher since the pair has failed to reach hourly support given at 0.7329 (09/05/2017 low). As long as prices remain below resistance at 0.7608 (17/04/2017 high), there are nonetheless strong downside risks.

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

EUR/USD Stalling below 1.1300.

EUR/USD is consolidating below strong resistance given at 1.1300 (09/11/2017 high). Hourly support is given at 1.1110 (22/05/2017 low) has been broken. Stronger support lies at 1.0842 (11/05/2017 low) and key support is given at 1.0494 (22/02/2017 low). Expected to show continued bullish pressures.

In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD Sideways price action.

GBP/USD keeps on bouncing from hourly support given at 1.2757 (21/04/2017 low). Hourly resistance lies at 1.3046 (18/05/2017 high). Expected to show continued bullish pressures.

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY Continued bearish pressures.

USD/JPY is trading lower. The road seems wide open towards strong support located at 108.13 (17/04/2017 low). Hourly resistance is given at 112.13 (24/05/2017 high). Other key supports lie at a distance 106.04 (11/11/2016 low).

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).