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US Pending home sales (YoY) released yesterday saw a 3.3% drop in April, from a 0.8% growth in March, marking the biggest drop since June 2014.

After the release of the data USD weakened across the board. USD/JPY hit a 2-week low of 110.47.

On Thursday, June 1st, in early European trading session, the USD/JPY bulls have regained momentum due to the rebound of USD.

On the 4-hourly chart the USD/JPY bulls have breached the near-term major downtrend line resistance, where another resistance level at 111.00 converges, indicating increased bullish momentum.

If the bulls can successfully hold above the level at 111.00 we will likely see USD/JPY continuing edging up.

The resistance level is at 111.20 followed by 111.40 and 111.70.

The support line is at 111.00 followed by 110.70 and 110.50.

The crucial US ISM manufacturing PMI for May will be released this afternoon at 15:00 BST with a market consensus 54.5 after the previous reading of 54.8.

It has remained above 50 since October 2016 but has experienced a falling trend over the past three months. Be aware that it will likely cause volatility for USD/JPY.

• Sterling offers slight recovery
• Aussie data disappoints but Chinese data is worse
• Butter prices sharply higher

The Leader 'nearly all' the leaders debate yesterday didn't tell us much we didn't already know. Whether Theresa May's decision to stop the event will prove damaging is another thing. The BBC is clearly in love with Jeremy Corbyn and are trying hard not to make it too obvious (maybe Laura Kuenssberg could try harder) but the markets haven't really reacted much. Sterling is a tad stronger against the US Dollar, but remains subdued against the Euro; wallowing in the €1.14 area.

Sterling rose against the Australian Dollar after last night's data releases. Much stronger than expected Australian retail sales numbers showed a monthly rise in sales of 1.0% was more than three times the consensus forecast, but that was offset by the much weaker than forecast personal capital expenditure data and a poor release from China. Their Manufacturing Purchasing Managers' Index (PMI) was below the magic 50. That's the demarcation line between growth and contraction, so it has repercussions for the countries that supply China with its raw materials and that very definitely includes Australia. At the time of writing, we have not yet seen Australia's Commodity Index, but that too will impact the Aussie Dollar.
Today's data diary includes a smattering of manufacturing data from across the Eurozone, but nothing that spans the whole currency sharing bloc. The Eurozone Manufacturing PMI is looking good once more, at 57.0 for May, and employment across Europe in the sector growing rapidly.

UK data is limited to the Manufacturing PMI - posting another healthy growth figure of 56.7 - and a 10-year government bond auction. These are always interesting as a litmus test of the bond market's view of future interest rates.

US data is also dominated by manufacturing sector stuff, but we will also see the weekly Jobless Claims statistics and the Private Payroll data from ADP. I suspect these figures will be little more than a sideshow, because tomorrow brings the official employment report and that is still the first piece of data that covers the previous month. Whilst the Non-Farm Payroll count doesn't carry the same weight and excitement it did a decade ago, it is still a bellwether for the US economy.

And a lot of newswires are carrying the story that wholesale butter prices have soared since reports were published suggesting the belief that butter is bad for you is a myth. The story is slightly skewed, because butter prices slumped last year, so the recovery is from a very low level, but it does serve to highlight the ebb and flow of scientific opinion. It reminds me of the Woody Allen film, Sleeper, where, in the future, cabbage is bad for you, but smoking is encouraged for its health benefits. It could happen.

Oh - and stronger dairy prices are very good news for the Kiwi Dollar, so it will strengthen if this trend continues.

Late night in the office

Jenny the receptionist has worked late to finish a report and as she is packing up her things she sees the Chairman of the company standing in front of the shredder looking puzzled.

"Can I help you Mr Charterhouse?" she says.

"Oh can you Jenny? This is a highly confidential document. How do you work this thing?"

She puts down her handbag and walks across. "You just turn it on here and put the paper in there," she says.

"The Chairman does as she suggested and the turns to her. "Thanks Jenny. You're a lifesaver. Now how do I tell it I need three copies?"

Notes/Observations

UK house prices fell for the 3rd month in a row (first time since 2009)

European Manufacturing PMI data mixed (Beats: Germany, UK, Spain, Russia, Hungary, Turkey; Misses: France, Italy, Sweden, Norway, Poland)

Swiss Q1 GDP misses expectations (QoQ: 0.3% v 0.5%

Overnight

Asia:

China May Caixin PMI Manufacturing registered its 1st contraction in 11 months (49.6 v 50.1e)

BoJ Harada: Current stimulus policy would be sufficient to achieve 2% inflation target; will withdraw stimulus when program succeeds

Europe:

ECB's Weidmann (Germany): Current outlook suggested ECB should start to discuss whether and when to change forward guidance. Believed that inflation would be higher even with reduced stimulus

ECB's Nowotny (Austria): possible that inflation rates will remain low in the long term; one could question whether current 2% ECB inflation target as still realistic. Before any rate changes, purchase of govt bonds will probable be cut as first step

Times/YouGov general election weekly poll: Conservatives 42% (-1pts), Labour 39% (+3pts)

(UK) Sun/SurveyMonkey general election poll: Conservative Party 44% (unch), Labour Party 38% (+2ppts)

Americas:

President Trump: I will be announcing my decision on Paris Accord, Thursday at 3:00 P.M E

Fed's Williams (moderate, non-voter): 3 rate increases for this year is base line view; 4 hikes possible if US economy strengthens Energy:

Weekly API Oil Inventories: Crude: -8.7M v -1.5M prior (biggest draw since Sept 2016)

Economic Data

(IE) Ireland May Manufacturing PMI: 55.9 v 55.0 prior (48 straight month of expansion)

(IN) India May Manufacturing PMI: 51.6 v 52.5 prior

(CH) Swiss Q1 GDP (miss) Q/Q: 0.3% v 0.5%e; Y/Y: 1.1% v 1.3%e

(UK) Nationwide House Price Index (miss)M/M: -0.2% v +0.2%e (3rd straight decline); Y/Y: 2.1% v 2.4%e

(RU) Russia May PMI Manufacturing PMI: 52.4 v 50.8e (10th month of expansion)

(FI) Finland Q1 GDP Q/Q: 1.2% v 1.0%e; Y/Y: 2.7% v 1.7%e

(SE) Sweden May Manufacturing PMI (miss): 58.8 v 62.4e

(NL) Netherlands May Manufacturing PMI: 57.6 v 57.8 prior

(NO) Norway May Manufacturing PMI: 54.3 v 55.0e

(HU) Hungary May Manufacturing PMI: 62.1 v 56.6e

(PL) Poland May Manufacturing PMI: 52.7 v 54.5e (30th month of expansion)

(TR) Turkey May Manufacturing PMI: 53.5 v 51.4e (3rd month of expansion)|

(ES) Spain May Manufacturing PMI (beat): 55.4 v 54.7e (43rd month of expansion)

(CZ) Czech May PMI Manufacturing: 56.4 v 57.9e (9th month of expansion)

(CH) Swiss May PMI Manufacturing: 55.6 v 57.8e

(IT) Italy May Manufacturing PMI (miss): 55.1 v 56.0e (9th month of expansion)

(FR) France May Final Manufacturing PMI (miss): 53.8 v 54.0e (confirmed 8th month of expansion)

(DE) Germany May Final Manufacturing PMI (beat): 59.5 v 59.4e (confirmed 30th month of expansion and highest since Apr 2011)

(EU) Euro Zone May Final Manufacturing PMI: 57.0e v 57.0 prelim (confirmed 46th straight month of growth and highest since April 2011

(GR) Greece May Manufacturing PMI: 49.6 v 48.2 prior(9th month of contraction)

(IT) Italy Q1 Final GDP (beat) Q/Q: 0.4% v 0.2%e; Y/Y: 1.4% v 0.8%e

(UK) May Manufacturing PMI (miss): 56.7 v 56.5e (10th month of expansion)

Fixed Income Issuance:

(ES) Spain Debt Agency (Tesoro) sold total €4.14B vs. €3.5-4.5B indicated range in 2021 and 2066 bonds

Sold €2.7B in new 0.05% 2021 SPGB; Avg yield: +0.021% v -0.142% prior, Bid-to-cover: 1.96x v 1.44x prior (under 1.15% July 2020 SPGB on May 18th 2017)

Sold €1.44B in 3.45% July 2066 SPGB; Yield: 3.249% v 2.688% prior; Bid-to-cover: 1.3x v 1.56x prior (Oct 20th 2016

(ES) Spain Debt Agency (Tesoro) sold €500M vs. €250-750M indicated range in 1.0% Nov 2030 I/L bond; Real Yield: 0.832% v 0.679% prior; Bid-to-cover: 3.26x v 1.76x prior

(FR) France Debt Agency (AFT) sold total €8.273B vs. €7.5-8.5B indicated range in 2027, 2032 and 2039 Oats

Sold €5.08B in 1.00% May 2027 Oat; Avg Yield: 0.72% v 0.81% prior; Bid-to-cover: 1.76x v 2.02x prior

Sold €1.72B in 5.75% Oct 2032 Oat; Avg Yield: 1.10% v 0.52% prior; Bid-to-cover: 1.86x v 1.49x prior

Sold €1.473B in1.75% 2039 green Oat; Avg Yield: 1.51% v 1.48% prior; Bid-to-cover: 1.87x v 1.92x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 +0.5% at 3573, FTSE +0.3% at 7545, DAX %+0.4 at 12670, CAC-40 +0.8% at 5325, IBEX-35 +0.1% at 10893, FTSE MIB +1.3% at 20993, SMI +0.6% at 9068, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes

European Indices trade higher across the board with notable outperformance in Italy, and France. In a busy morning for Macro news Germany, UK and Spain saw Manufactring PMI beat forecasts whilst Italy, Switzerland and France saw slight misses. On the corporate front UK traded First Group trades down over 5% following their FY results and recommendation not to pay a dividend, whilst shares of Inmarsat one of the leading risers following reports that Softbank is looking into the company, Johnson Matthey trades lower after missing on Rev. Looking head, earnings expected from Tech Data, Express and Dollar General out of the US.

Equities

Consumer discretionary[FirstGroup [FGP.UK] -6% (Earnings, Recommends no div), 888 [888.UK] -3.6% (O Shaked shares trust sell 40M shrs at 270p/shr), Watkins Jones [WJG.UK] -1.2% (Earnings)]

Materials: [Johnson Matthey [JMAT.UK] -0.9% (Earnings), Voestalpine [VOE.AT] +0.2% (Earnings)]

Financials: [Barclays [BARC.UK] -0.4% (Places 286M shares of BAGL)]

Telecom: [Inmarsat [ISAT.UK] +5.8% (Reports Softbank is interested)]

Healthcare: [Genfit [GNFT.FR +6% (Positive Outcome from the 1-year Pre-Planned Safety Review by the DSMB, in RESOLVE-IT Phase 3 Clinical Trial with Elafibranor)]

Speakers

German Chancellor Merkel: Germany and China jointly stand for free trade; cited concerns over global uncertainty. Both leaders supported WTO rules (**Note: comments alongside China Premier Li in Berlin)

Netherlands Fin Min Dijsselbloem: 2017 budget surplus revised lower from 0.5% to 0.2% citing need to spend €200M extra a year for education and more expenses for health care

Russia Econ Min Oreshkin: May CPI YoY reading seen around 3.9-4.0%. Inflation may slow below the year-end forecast of 3.8%. To see lower inflation and a smaller budget deficit if OPEC and non-OPEC oil producers agree to extend a production cut deal

Poland Dep Fin Min Skiba: Q2 GDP growth to be close Q1 levels (**Note: Q1 data beat expectations with YoY at 4.0%)

China Premier Li: Germany was China most important partner within the EU. China would stand by pledges tied to Paris accord on climate

Currencies

USD tried to find some steady legs as the month of June began as the greenback tried to solidify expectations of a rise in interest rates this month. The next few session will see various job-related data out of the US (ADP today, jobless claims on Thursday and Non-Farm payrolls on Friday).

EUR/USD probed its recent 7-month highs as the month began aided by German central bank speak that current outlook suggested ECB should start to discuss whether and when to change forward guidance. The Euro drifted off its best levels and was around 1.1230 area just ahead of the NY morning.

GBP/USD was holding just under the 1.29 area but faced headwinds ahead of next week's Parliamentary election. More polls showing Conservative in front but its lead dwindling a bit in most polls.

Fixed Income

Bund futures trade at 162.18 up 1 ticks, near the mid-point of this week's trading range as investors appear reluctant to swing bunds either direction. Resistance remains near the 162.81 level followed by 163.54. A break of the 161.65 support level could see lows target 159.96 followed by 157.50

Gilt futures trade at 128.71 lower by 10 ticks, following better than expected UK Manufacturing PMI data. Last week's rally took out both the 129.00 handle and the 129.14 April 18th high, but yesterday's decline was unable to hold that key region. Price finds key support at the 128.68 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.

Thursday's liquidity report showed Wednesday's excess liquidity fell to €1.623T a rise of €10.3B from €1.6127T prior. Use of the marginal lending facility rose to €177M from €148M prior.

Corporate issuance saw over $6.9B come to market via 3 issues headlined by Goldman Sachs $5B in an 3-part senior unsecured note offerings and William Partners $1.45B of senior notes due 2027

Looking Ahead

(RO) Romania May International Reserves: No est v $39.8B prior

(RU) Russia May Sovereign Wealth Fund Balances: Reserve Fund: No est v $16.3B prior; Wellbeing Fund: No est v $73.6B prior

(ZA) South Africa May Naamsa Vehicle Sales Y/Y: -0.4%e v -13.4% prior

(IT) Italy May Budget Balance: No est v -€5.2B prior

05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills

05:30 (HU) Hungary Debt Agency (AKK) to sell Floating Bonds

05:30 (UK) DMO to sell £2.5B in 1 25% 2027 Gilts;

06:00 (IE) Ireland May Live Registry Monthly Change: No est v -4.6K prior; Live Registry Level: No est v 266.6K prior

06:30 (ZA) South Africa Q1 Unemployment Rate: 27.0%e v 26.5% prior

06:45 (US) Daily Libor Fixing - 07:00 (CA) Canada Apr MLI Leading Indicator M/M: No est v 0.5% prior

07:00 (ZA) South Africa Apr Electricity Production Y/Y: No est v 2.7% prior; Electricity Consumption Y/Y: No est v 2.7% prior

07:30 (US) May Challenger Job Cuts: No est v 36.6K prior; Y/Y: No est v -42.9% prior

08:00 (BR) Brazil Q1 GDP Q/Q: +1.0%e v -0.9% prior; Y/Y: -0.5%e v -2.5% prior; GDP 4-quarters accumulated: -2.3%e v -3.6% prior

08:00 (BR) Brazil May Manufacturing: No est v 50.1 prior

08:00 (PL) Poland Central Bank (NBP) May Minutes

08:00 (CZ) Czech May Budget Balance (CZK): No est v 6.3B prior

08:00 (EU) EU's Moscovici speaks at Brussels Economic Forum

08:00 (IT) Italy Fin Min Padoan on panel at Brussels Economic Forum in Brussels

08:15 (US) May ADP Employment Change: +180Ke v +177K prior

08:15 (UK) Baltic Dry Bulk Index

08:30 (US) Initial Jobless Claims: 238Ke v 234K prior;Continuing Claims: 1.92Me v 1.923M prior

08:30 (US) Weekly USDA Net Export Sales

09:00 (RU) Russia Gold and Forex Reserve w/e May 26th: No est v $405.0B prior

09:30 (CA) Canada May Manufacturing PMI: No est v 55.9 prior

09:45 (US) May Final Markit Manufacturing PMI: 52.5e v 52.5 prelim

10:00 (US) May ISM Manufacturing: 54.6e v 54.8 prior; Prices Paid: 67.0e v 68.5 prior

10:00 (US) Apr Construction Spending M/M: +0.5%e v -0.2% prior

10:00 (BR) Brazil Apr CNI Capacity Utilization: No est v 77.1% prior

10:00 (MX) Mexico Apr Total Remittances: $2.3Be v $2.5B prior

10:00 (MX) Mexico Central Bank (Banxico) May Minutes

10:00 (MX) Mexico Central Bank Economist Survey

10:30 (US) Weekly EIA Natural Gas Inventories

10:30 (MX) Mexico May PMI Manufacturing: No est v 50.7 prior

11:00 (US) Weekly DOE Crude Oil Inventories

11:00 (BR) Brazil to sell LTN 2018, 2019 and 2020 Bills

11:00 (BR) Brazil to sell 2023 LFT

12:00 (IT) Italy May New Car Registrations Y/Y: No est v -4.6% prior

13:00 (MX) Mexico May IMEF Manufacturing Index: 46.0e v 45.0 prior; Non-Manufacturing Index: 48.0e v 47.2 prior

14:00 (BR) Brazil May Trade Balance: $7.5Be v $7.0B prior; Total Exports: $20.5Be v $17.7B prior; Total Imports: $12.9Be v $10.7B prior

15:00 (US) President Trump decision on Paris Climate agreement

British pound volatility has recently increased, not only because the general election is approaching, but also because some opinion polls suggest a hung parliament. The latest YouGov/ Time voting intention survey shows that support for the Conservatives declined markedly to 42% while the Labours gained +3 points to 39%. The 3-point lead by the Conservatives is the narrowest since PM Theresa May has called for the snap election in April. The Liberal Democrats hovered around single-digit, the UKIP remained on 4% and votes for other parties are at 8% (from 7%). Converting percentages to numbers, PM May's Conservative Party, while remaining the biggest party, might lose as much as 20 seats, down from 330 to 310, in the upcoming general election. If the election outcome results in a hung parliament, it would be the second time since 1974, and the seventh time since the beginning of the 20th century.

A hung parliament occurs when no party has won enough seats in a general election to have a majority in the House of Commons. If it really happens, Theresa May, the incumbent prime minister, would stay in office until it is decided who will attempt to form a new government. As the Cabinet Manual suggested, an incumbent government "is expected to resign if it becomes clear that it is unlikely to be able to command that confidence and there is a clear alternative".

Back in 2010, the general election resulted in a hung parliament as no party was able to get 326 seats (out of 650) needed for an overall majority. Winning 306 seats, the Conservative Party eventually had to form a coalition government with the Liberal Democratic Party with David Cameron and Nick Clegg being the Prime Minister and the Deputy Minister, respectively.

What if a Hung Parliament Occurs Again?

If YouGov's polling result materializes, Conservatives would win 310 seats, compared with 330, while Labors would gained +28 seats to 229. LibDem would get 10 seats while the SNP would get 50 seats. In this case, A Coservative-LibDem coalition would still be 6 seats short of majority. Meanwhile, a Labor-SNP coalition, resulting in 307 seats, would also not be workable. Ironically, while the Conservative-SNP coalition would work out in terms of the number of seats, it would unlikely be an appropriate option due to the fundamental conflicts, such as Brexit and Scottish independence, between the two parties.

Poll of Polls Suggests Conservatives Would Gain Overall Majority

Yet, polls of polls compiled by several agencies continue to project that Conservatives would win with overall majority, though it would not be a landslide victory as depicted in mid-April. In our opinion, it would be a disappointment to the market if Conservatives' seats shrink from 2015 or a Conservatives' majority is less than 50 seats, compared with expectation of over 100 seats shortly after the snap election was announced. Recall that PM May's intention to call for the snap election is to cement her mandate in negotiating the Brexit terms with the EU. Obviously, the size of the Conservative majority would affect the flexibility that PM May has in the negotiations

The euro has posted small losses in the Thursday session. Currently, EUR/USD is trading at 1.1220. On the release front, German and the Eurozone Manufacturing PMIs both indicated expansion. German Manufacturing PMI improved to 59.4, a shade under the estimate of 59.5. The Eurozone report rose to 57.0, matching the forecast. The US will release ISM Manufacturing PMI. Employment data is in the spotlight for the remainder of the week. Thursday's releases include ADP Nonfarm Payrolls and unemployment claims. On Friday, we'll get a look at the official Nonfarm Employment Change, which is expected to drop to 186 thousand. The US will also release wage growth and the unemployment rate.

The markets were all ears on Monday as ECB President Mario Draghi testified before the EU parliamentary committee for economic affairs. Draghi acknowledged that the euro-area economy was improving, but said that inflation and wage growth remained weak, requiring the ECB to continue its asset-purchase program. The scheme is due to wind up in December, and stronger data had raised speculation that the central bank might revisit its monetary stance and perhaps taper the program at the June policy meeting. Draghi's message remains one of caution, and appears to be putting the markets on notice that any moves in June will likely be of a minor nature.

Is the German locomotive slowing down? As the eurozone's largest economy, a strong and reliable German economy has been instrumental in the eurozone's impressive improvement in the first quarter of 2017. However, the latest consumer spending numbers disappointed the markets. In April, retail sales declined 0.2%, compared to a forecast of +0.4%. This marked the third decline in 2017, and if there is further contraction in the second quarter, the eurozone economy could be in trouble. Although the German labor market remains strong, this has not translated into higher inflation, which declined 0.2% in May, after a flat reading of 0.0% in April.

The US economy expanded at an annual rate of 1.2% in the first quarter, according to its second estimate for GDP. This was considerably higher than the 0.7% gain which was reported in the first estimate in April. Still, this figure is the lowest in a year, and well off the 2.1% gain in Q4. Business spending remains weak, and although consumer confidence remains at high levels, consumer spending has not kept up, as retail sales was softer than expected in April. Will this lead to the Fed rethinking a June rate hike? The markets don't appear concerned, as the odds of a 0.25% rate hike have increased to 84%. At the same time, the likelihood of a rate hike in the second half of 2017 are low. The odds for a September rate are just 26%, with the markets unclear on whether the Fed will make further moves this year if inflation remains below the Fed target. Political uncertainty remains a serious concern, as the Trump administration is embroiled in scandals, with several congressional investigations probing into Trump's alleged connections with Russian politicians. A weakened White House raises doubts if Trump will be able to keep his election promises to lower taxes and cut government spending.

Investors avoided Sterling during trading on Thursday amid fears of UK Prime Minister Theresa May losing her grip onparliament afterBritain’s June 8 election. Recent polls indicatea potential scenario where Theresa May could be short of the seats requiredto form a government, which has sparked concerns of political instability prior to the Brexit negotiations. With the growing threat of a nightmare “hung parliament” scenario likely to weigh heavily on Sterling, further downside should be expected in the short to medium term.

Focusing on the macroeconomics, UK Manufacturing PMI fell less than expected in May, slightly easing some concerns over the UK economy. Although the firm PMI figure of 56.7 suggests that the manufacturing sector is building some momentum in the second quarter, Sterling bears were unaffected. The fact that short term gains on the GBPUSD were swiftly relinquished after the PMI report continues to highlight how UK politics and Brexit continue to dictate where Sterling trades with economic data almost becoming secondary.

Withthe UK election only a week away, investors will be paying very close attention to the polls, which should inject Sterling with explosive levels of volatility. With Brexit already having some undesirable impacts on the UK economy, the last thing investors need is a messy Brexit deal that will surely addto the current woes.

Technical traders may pay attention to how the GBPUSD reacts to the tough 1.2775 support level. A breakdown below 1.2775 should encourage a further depreciation lower towards 1.2600.

ADP NFP report in focus

The Greenback struggled to regain its charisma this week with prices sinking towards 97.00 on Wednesday following the mixed batch of economic data from the US which weighed on sentiment. Although there are high expectations over the Federal Reserve raising US interest rates in June, the longer-term hiking path remains clouded and as such, continues to pressure the Dollar.

Dollar weakness is likely to persist moving forward, especially when considering how bears are exploiting the uncertainty over Trump and ongoing political instability in Washington to attack prices ruthlessly. Investors may direct their attention towards the pending ADP NFP Report this afternoon which could provide some minor support for the Dollar if the data released exceeds estimates. From a technical standpoint, the Dollar Index remains heavily bearish on the daily charts. Repeated weakness below 97.00 should encourage a further decline towards 96.00.

Oil bears remain dominant

WTI Crude edged towards $49 on Thursday following reports of US Crude stockpiles extending declines, slightly easing oversupply concerns. Regardless of the recent gains, the lingering disappointment from last week’s OPEC meeting continues to haunt investor attraction towards oil with the upside limited. Sentiment remains firmly bearish towards oil and sellers are likely to exploit the fact that OPEC’s oil output in May rose despite constant talks of balancing the markets. Although OPEC and Non-OPEC members remain committed to bringing global oil inventories down to a five-year average, it remains a question of how US Shale reacts and benefits from OPEC’s actions. I remain bearish on WTI Crude moving forward and a breakdown below $48 should open a path towards $46.

Commodity spotlight – Gold

In times of uncertainty and periods of anxiety, Gold becomes a trader's popular choice which was seen on Wednesday when the metal lurched towards $1275. Although US rate hike expectations in June have slightly hindered the upside on Gold, short-term bulls are looking beyond this to propel prices higher. Although a positive ADP NFP Report this afternoon could expose the yellow metal to some downside pressure, bulls remain in control above $1260. From a technical standpoint, Gold needs to break above $1275 for the upside to continue.

The Aussie dollar is in red for the second day and fell sharply on Thursday, pressured by weak data from China. Chinese Caixin Manufacturing PMI unexpectedly fell in to 49.6 in May, missing the forecast at 50.1 and previous month's 50.3 release.

Extension of bear-leg from 0.7475 (31 May high) cracked strong support at 0.7400 (Fibo 61.8% of 0.7328/0.7517 rally) with close below to signal further weakness.

Thursday's fresh bearish acceleration also completed Failure Swing pattern on daily chart which is seen as strong bearish signal.

Below 0.7400, next target lies at 0.7373 (Fibo 76.4% retracement), with extension towards key support at 0.7328 (09 May low/weekly cloud top) not ruled out.

Corrective upticks should be ideally capped by broken 20SMA at 0.7425, with next strong barrier at 0.7450 (daily Tenkan-sen).

Res: 0.7425, 0.7450, 0.7475, 0.7500
Sup: 0.7373, 0.7350, 0.7328, 0.7300

• ADP, jobless claims and manufacturing PMIs the key releases on Thursday;
• GBP remains under pressure as election uncertainties weigh;
• Oil stages minor recovery after API report, EIA confirmation could boost it further.

It's been a busy morning on the economic data side, with manufacturing PMIs being released across Europe and that's set to continue as we enter into the US session.

Ahead of tomorrow's jobs report, the ADP release will be the most closely watched, despite its tendency to not provide an accurate indication of the official NFP release. A number in line with expectations would suggest tomorrow's number will be good enough to convince the Federal Reserve that a hike at the meeting in two weeks' time is still a good decision. Given the data we've seen since the start of the year though, a bad report tomorrow may worry some officials and it will be interesting to see what that does to market expectations, with a hike currently 91% priced in, according to the CME Group FedWatch Tool. Other data to come from the US today includes jobless claims and manufacturing PMIs from both Markit and ISM.

Sterling is coming under some pressure once again on Thursday as the election continues to weigh on the currency. Despite staging a recovery on Wednesday when a poll from Panelbase called into doubt one earlier released by YouGov, the pound has once again fallen victim to the uncertainty surrounding the election outcome next week. What once looked like being an easy campaign for Theresa May and a question of just how large the majority could get has been clouded by problems, which doesn't bode well for the Brexit negotiations.

Whether May can stage a recovery over the next week and settle traders nerves is yet to be seen but in the absence of this – and momentum is very much against her – sterling continues to look vulnerable. On the bright side, this is good news for the FTSE which has tended to benefit from the weaker currency due to the global nature of the companies that make it up.

Oil is staging a modest recovery on Thursday after enjoying a small bounce late in yesterday's session. Brent crude has stabilised around $51 today after finding support yesterday around $50, an important psychological level. The bounce was aided by the API report on Wednesday evening which suggested inventories had fallen by 8.67 million last week which was far more than what was expected.

Should EIA confirm this number today – or a number close to it – it would be the largest drawdown since September and could offer further reprieve for oil, which has been sold heavily over the last week since the output cut was extended by another nine months. It would appear the markets were both expecting and demanding more in terms of the size of the cut and were disappointed that participating members took a more cautious approach. It will be interesting to see whether today's inventory number extends the number of weekly drawdowns to eight and perhaps convinces people that the cut is working more than markets would suggest.

GOLD Demand is strong.

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 Short-term bullish momentum continues.

Silver increases. 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 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 Wide-open for further decline.

Crude oil is still collapsed after the bounce following the short-squeeze move towards $52. Support is given at a distance 43.76 (05/05/2017 low). The technical structure suggests further strengthening towards $50.

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).

EUR/JPY Increasing.

EUR/JPY is trading higher. 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). Expected to see the pair increasing towards 125.82..

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 Stalling below resistance area.

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 Declining.

EUR/CHF is trading mixed. We believe that the medium-term pattern suggests us to see continued bearish pressures towards key support that can be found at 1.0623 (24/06/2016 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).