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Global Markets:

• Asian stock markets: Nikkei down 0.15 %, Shanghai Composite gained 0.75 %, Hang Seng lost 0.05 %, ASX 200 up 0.05 %
• Commodities: Gold at $1294 (-0.25 %), Silver at $17.64 (-0.40 %), WTI Oil at $48.15 (-0.10 %), Brent Oil at $50.10 (-0.10 %)
• Rates: US 10-year yield at 2.16, UK 10-year yield at 0.99, German 10-year yield at 0.26

News & Data

• Australia GDP q/q 0.3 % vs 0.2 % expected
• Australia GDP y/y 1.7 % vs 1.5 % expected
• Australia GDP Capital Expenditure -0.6 % vs 2.5 % previous
• Australia GDP Final Consumption 0.6 % vs 0.7 % previous
• Australia AIG Construction Index 56.7 vs 51.9 previous
• Asian stocks wary ahead of risk events this week, dollar struggles – RTRS
• Oil eases on oversupply, but Mideast tension and falling U.S. stocks support – RTRS

Markets Update:

Risk appetite remains low ahead of tomorrow's events which could rattle the markets. Former FBI chief Comey will testify about his conversations with US President Trump, the ECB will decide on interest rates and UK voters are heading to the polls.

Gold is benefiting from the uncertainty. It reached a high of $1294 overnight, and it is likely that resistance at $1300 will be tested soon. A break above that level would signal a rally towards $1350.

EUR/USD consolidated in a 1.1260-80 range in Asia. It is unlikely that the pair will break above 1.13 resistance ahead of the ECB meeting tomorrow. Until then, further consolidation seems likely. No changes in rates or QE are expected from the central bank, but EUR longs are hoping that the ECB will have a slightly hawkish tone following solid economic data in the recent months.

Volatility in the GBP pairs will increase as the election day approaches. The key levels to watch are 1.2840 and 1.2780, as well as 1.2940 and 1.30 to the topside. Meanwhile, USD/JPY remains weak. The risk-off sentiment has pushed the pair to a low of almost 109. The charts are suggesting further losses are ahead, but much will depend on the outcome of tomorrow's events.

Upcoming Events:

• 07:00 BST – German Factory Orders
• 08:30 BST – UK Halifax House Price Index
• 09:00 BST – Italian Retail Sales
• 10:00 BST – Euro Zone GDP
• 15:30 BTS – US Crude Oil Inventories

Short Term Elliott Wave view in AUDUSD suggests the rally from 5/9 low is unfolding as a double three Elliott Wave structure. Up from 5/9 (0.7325) low, Minute wave ((w)) ended at 0.7517 and Minute wave ((x)) ended at 0.7368. Pair has since broken above 0.7517, adding validity that the next leg higher has started.

From 0.7368 low, the rally is also unfolding as a double three Elliott Wave structure. Minutte wave (w) ended at 0.7498 and Minutte wave (x) ended at 0.7453. Near term, while pullbacks stay above 0.7452, but more importantly as far as pivot at 0.7368 stays intact, expect pair to extend higher towards 0.756 – 0.7607 area to end cycle from 5/9 low. We don’t like selling the pair and expect buyers to appear in any dips in 3, 7, or 11 swing provided that pivot at 0.7368 remains intact.

AUDUSD 1 Hour Elliott Wave View

Market movers today

Final euro area GDP figures are due today, providing insights into the composition of Q1 growth, which accelerated to 0.5% q/q. It will be particularly interesting to see whether the expected pickup in investments and slowing of private consumption growth is confirmed by the data. In 2017, we still expect solid GDP growth of 1.7% in the euro area. Today also brings German factory orders for April. Following two months of increases, we expect a decline in factory orders of about 0.7% for April.

In China, FX reserve data is released. We expect FX reserves in May to increase due to valuation as the USD weakened significantly and thus increased the USD value of euro reserves for example and as out flows have stopped following the tightening measures of the government . The Polish central bank holds its monetary policy meeting today, but we expect the bank to keep its policy rate unchanged at 1.5%.

In the Scandi countries, the focus today is one the industrial production data in Denmark and not least Sweden. Given the weaker-than-expected exports and production numbers in the latest Swedish Q1 GDP data, it will be interesting to see how Q2 starts out . In Denmark, bankruptcies and repossessions for May are also released, see next page.

Selected market news

Risk sentiment has remained sour ahead of 'Super Thursday' with most major equity indices in the 'red' this morning while the traditional safe havens have rallied. 10Y US treasuries have benefited from the global environment , which alongside stories of increased future Chinese demand have pushed the 10Y US yield to the lowest level since the US presidential election. Apart from the ECB meeting and the UK parliamentary election, Thursday will also bring former FBI Director James Comey testifying to Congress. The testimony will be followed closely by markets as new information could affect the policy agenda of the Trump administ ration. Yesterday, equities temporary halted losses on the story that Comey will presumably stop short of giving his own view on whether Trump obst ructed a federal probe.

Over the past few days, Trump's personal twitter account has been subject to several controversial tweets on the travel ban, a confrontation with the London Mayor and the Qatar diplomatic crisis in the Middle East . In relation to Comey's testimony, according to White House sources Trump will stand ready to live-comment 'if he feels the need to respond'.

In Norway, the monthly house price statistics from Real Estate Norway revealed the lowest May house price growth in 14 years (-0.7% m/m). The cooling housing market reflects not least a more balanced demand-supply side and tighter regulatory measures introduced at New Year. The release brought the yearly national growth rate to 8.3%, which is almost 2.5pp below Norges Bank's own forecast from t he last monet ary policy report. Meanwhile, we do not see this as an argument for an out right lower rate path at the forthcoming monetary policy meeting; rather it reduces the upside pressure on rates. However, it does remove an 'obstacle' for turning more dovish at a later stage if inflation were to disappoint strongly (not our base case).

For the 24 hours to 23:00 GMT, the AUD rose 0.36% against the USD and closed at 0.7514.

LME Copper prices declined 0.8% or $46.0/MT to $5540.5/MT. Aluminium prices declined 1.3% or $24.5/MT to $1893.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7536, with the AUD trading 0.29% higher from yesterday's close, following robust Australian gross domestic product (GDP) numbers.

Early morning data revealed that Australia's seasonally adjusted GDP expanded more-than-expected by 1.7% on an annual basis in 1Q 2017, thus painting a healthy picture of the nation's economy. Markets expected the nation's GDP to grow by 1.6%, following an advance of 2.4% in the prior quarter. Also, on a quarterly basis, the nation's economy climbed 0.3% in the first three months of 2017, at par with market expectations. GDP had recorded a rise of 1.1% in the prior quarter.

Other economic data indicated that the nation's AIG performance of construction index increased to a level of 56.7 in May, expanding at its fastest pace in more than two years. The index had registered a level of 51.9 in the previous month.

The pair is expected to find support at 0.7485, and a fall through could take it to the next support level of 0.7433. The pair is expected to find its first resistance at 0.7566, and a rise through could take it to the next resistance level of 0.7595.

Looking ahead, traders will closely monitor Australia's trade balance data for April, scheduled to release tomorrow.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR rose 0.16% against the USD and closed at 1.1277, after the Euro-zone's Sentix investor confidence index unexpectedly rose to a nearly 10-year high level of 28.4 in June, as the upturn in investor sentiment was boosted by stronger growth and falling unemployment across the common currency region, while markets expected the index to remain steady at a level of 27.4.

Meanwhile, the region's seasonally adjusted retail sales rose less-than-expected by 0.1% on a monthly basis in April, rising for the fourth consecutive month and compared to market consensus for an advance of 0.2%. In the previous month, retail sales had registered a revised rise of 0.2%.

In the US, data revealed that JOLTs job openings surprisingly advanced to a record-high level of 6044.0K in April, compared to investor consensus for a drop to a level of 5750.0K. In the previous month, JOLTs job openings had registered a revised reading of 5785.0K.

In the Asian session, at GMT0300, the pair is trading at 1.1266, with the EUR trading 0.1% lower against the USD from yesterday's close.

The pair is expected to find support at 1.1243, and a fall through could take it to the next support level of 1.1219. The pair is expected to find its first resistance at 1.1287, and a rise through could take it to the next resistance level of 1.1307.

Going ahead, investors will look forward to Germany's factory orders for April and construction PMI for May, along with the OECD's economic outlook report for the Euro-zone, slated to release in a few hours.

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

For the 24 hours to 23:00 GMT, the GBP rose slightly against the USD and closed at 1.2908.

In the Asian session, at GMT0300, the pair is trading at 1.2901, with the GBP trading marginally lower against the USD from yesterday’s close.

The pair is expected to find support at 1.2865, and a fall through could take it to the next support level of 1.283. The pair is expected to find its first resistance at 1.2943, and a rise through could take it to the next resistance level of 1.2986.

Moving ahead, market participants would eye the release of UK’s Halifax house prices data for May, scheduled to release in a few hours.

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 0.93% against the JPY and closed at 109.42.

The Japanese Yen gained ground, as demand for safe-haven currency increased after a fresh wave of uncertainty washed across markets ahead of major events ahead this week.

In the Asian session, at GMT0300, the pair is trading at 109.48, with the USD trading a tad higher against the JPY from yesterday’s close.

The pair is expected to find support at 109.17, and a fall through could take it to the next support level of 108.85. The pair is expected to find its first resistance at 109.86, and a rise through could take it to the next resistance level of 110.23.

Going ahead, market participants will keep a close watch on Japan’s final 1Q GDP data, slated to release overnight.

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

For the 24 hours to 23:00 GMT, the USD declined 0.22% against the CAD and closed at 1.3448.

On the macro front, Canada's seasonally adjusted Ivey PMI registered a drop to a level of 53.8 in May, compared to a level of 62.4 in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.3450, with the USD trading marginally higher against the CAD from yesterday's close.

The pair is expected to find support at 1.3429, and a fall through could take it to the next support level of 1.3408. The pair is expected to find its first resistance at 1.3479, and a rise through could take it to the next resistance level of 1.3508.

Ahead in the day, traders would focus on Canada's building permits data for April.

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

For the 24 hours to 23:00 GMT, the USD declined 0.22% against the CAD and closed at 1.3448.

On the macro front, Canada's seasonally adjusted Ivey PMI registered a drop to a level of 53.8 in May, compared to a level of 62.4 in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.3450, with the USD trading marginally higher against the CAD from yesterday's close.

The pair is expected to find support at 1.3429, and a fall through could take it to the next support level of 1.3408. The pair is expected to find its first resistance at 1.3479, and a rise through could take it to the next resistance level of 1.3508.

Ahead in the day, traders would focus on Canada's building permits data for April.

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

Key Points:

• The long-term trend line is likely to encourage a reversal.
• Numerous technical reading suggestive of a near-term rally.
• Fundamental outlook is also rather bullish.

The Loonie is poised to have yet another bump in buying pressure as the week closes which could see it back up at around the 1.3554 handle within a week or so. Indeed, the recent decline is already beginning show signs of slowing which is due, in part, to the weaker Canadian economic news. However, the technical bias is also signalling that a change in momentum is now warranted which could really set a fire under the pair.

Specifically, if we take a look at the daily chart, that same trend line that saw the pair reverse only a week or so ago is once again making its presence felt. As a result, we have sound reason to suspect the pair to make a push higher once again. What’s more, the 100 day EMA – an average that has reliably been a source of dynamic support – is well positioned to cap downside risks significantly moving ahead.

In addition to these technical readings, the Stochastics and Parabolic SAR are both indicating that buying pressure should return in short order. Importantly, whilst not currently oversold, the stochastics oscillator is flirting with the vital 20.0 level which will help to put a pin in the bear’s plans to remain in control of the USDCAD. Similarly, the Parabolic SAR reading is yet to invert to bearish which will help to rally the bulls once a green candle is finally seen.

As for the fundamental outlook, this is pretty much in line with the technical bias which comes, primarily, as result of the forecasted Canadian employment data. In particular, the unemployment rate is expected to jump to 6.6% (up from 6.5% previously) which should see the USDCAD receive a bid. Notably, this uptick would come in the wake of an anaemic Ivey PMI figure of 53.8 which could exacerbate buying pressure.

Ultimately, due to both the technical and fundamental biases, we expect to see the Loonie reverse in the very near future. Nevertheless, gains will likely be limited to the 1.3554 mark which is not only a historical high point but also the 38.2% Fibonacci retracement. If gains do extend beyond this level in the near-term, it will likely come as a result of a major fundamental upset – the kind that is notoriously hard to predict.