Sample Category Title

Daily Pivots: (S1) 113.42; (P) 113.89; (R1) 114.33; More...

Intraday bias in USD/JPY remains neutral for consolidation below 114.36 temporary top. Some more consolidations would be seen. In case of deeper retreat, downside should be contained by 112.08 support and bring another rally. Outlook remains unchanged that correction from 118.65 has completed with three waves down to 108.12. Above 114.36 will target 115.49 resistance first. Break will resume larger rally from 98.97 to 125.85 high.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Meanwhile, break of 115.49 resistance will extend the rise from 98.97 to retest 125.85. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

Daily Pivots: (S1) 1.3637; (P) 1.3704; (R1) 1.3762; More....

Intraday bias in USD/CAD remains neutral for the moment. With 1.3534 support intact, further rise cannot be ruled out. However, the choppy rally from 1.2450 is seen as a corrective pattern. Hence, in case of another rally, we'll be cautious on topping at around 1.3838 fibonacci level. Meanwhile, consider bearish divergence condition in 4 hour MACD, break of 1.3534 support will argue that rise from 1.2968 is already completed. In such case, intraday bias will be turned back to the downside for 1.3222 support.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. Rise from 1.2460 is seen as the second leg and would end at around 61.8% retracement of 1.4689 to 1.2460 at 1.3838. Break of 1.3222 should indicate the start of the third leg while further break of 1.2968 should confirm. Nonetheless, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Daily Pivots: (S1) 0.7347; (P) 0.7365; (R1) 0.7396; More...

Intraday bias in AUD/USD is turned neutral with a temporary low formed at 0.7328. Some consolidations would be seen. But upside of recovery should be limited well below 0.7555 resistance and bring another fall. Break of 0.7382 will extend the decline from 0.7748 to retest 0.7144/7158 support. We'll be cautious on bottoming there as there is no clear sign of larger down trend resumption yet. Meanwhile, firm break of 0.7555 will argue that fall from 0.7748 is completed and turn bias back to the upside.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction pattern. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8115) and above.

Dollar remains the strongest major currency for the week as markets await a bunch of key economic data from US. The list include CPI which is expected to slowed to 2.3% yoy in April. Core CPI is expected to be unchanged at 2.0% yoy. Retail sales is expected to show 0.6% growth while ex-auto sales would show 0.5% rise. U of Michigan consumer sentiment and business inventories will also be released.

Recent comments from Fed officials generally affirmed the markets that the central bank is on track for a June hike. Fed fund futures are pricing in 83% chance for that. Indeed, comments started to lean a bit towards the hawkish side as Boston Fed Eric Rosengren urged three more hikes. But judging from the reactions in the financial markets, investors are still hesitating to bet on a faster path for stimulus removal. Dollar index is struggling to find buying through 100 handle. 10 year yield also lost upside momentum after hitting 2.4.

Released in Asian session today, New Zealand business NZ manufacturing index dropped to 56.8 in April, down fro 58. Japan M2 rose 4.3% yoy in April. Germany GDP will be a major focus in European session and is expected to show 0.6% qoq growth in Q1. Germany will also release CPI final and Eurozone will release industrial production.

G7 finance chiefs will start a two day meeting in Italy today. It's reported that Europe, Japan and Canada are seeking to get a clearer picture of US President Donald Trump's policies, through Treasury Secretary Steven Mnuchin. According to a Treasury spokesman, Mnuchin will brief G7 on the still evolving tax and regulatory reforms. However, trade and protectionism seem to be off the meeting's agenda. In addition, there will be a discussion of Greece's debt ahead of the May 22 meeting of Eurozone finance ministers,. with presence of representatives of ECB and IMF. IMF is believed to be pushing for debt relief measures for Greece which is objected by Eurozone governments for the time being.

Yesterday, BOE left the Bank rate unchanged at 0.25% and the QE program at 435B pound. While this had been widely anticipated, BOE's downgrade of GDP growth outlook was disappointing. Policymakers also raised its inflation forecast for this year, warning that rising inflation begins to hurt consumers, but lowered the forecasts for 2018 and 2019. Expectations of a "smooth" Brexit led members to believe that interest rate may need to go up around the time the UK leaves the EU in 2019.

The market viewed the downgrade of GDP growth this year and inflation outlook in 2018 and 2019 as dovish. We were a bit surprised by the 7-1 vote (Kristin Forbes the only dissenter) to maintain the monetary policy status quo. We had expected a more divided committee with one more member joining the rate hike camp.

More in Dovish BoE Sent British Pound Lower

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7347; (P) 0.7365; (R1) 0.7396; More...

Intraday bias in AUD/USD is turned neutral with a temporary low formed at 0.7328. Some consolidations would be seen. But upside of recovery should be limited well below 0.7555 resistance and bring another fall. Break of 0.7382 will extend the decline from 0.7748 to retest 0.7144/7158 support. We'll be cautious on bottoming there as there is no clear sign of larger down trend resumption yet. Meanwhile, firm break of 0.7555 will argue that fall from 0.7748 is completed and turn bias back to the upside.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction pattern. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8115) and above.

Economic Indicators Update

Currency pair EUR/USD

The EUR/USD is in a mini bearish trend channel which is marked by trend lines (red/green). Once wave 1 is completed, the EUR/USD could start a bullish retracement that challenges the Fibonacci resistance levels of wave 2.

The EUR/USD break above or below the bearish channel (green/red) will indicate whether price will continue as part of the wave 5 (blue) of wave 1 (brown) or whether price will potentially retrace within wave 2 (brown).

Currency pair USD/JPY

The USD/JPY is approaching the support trend line (blue) of the uptrend channel (blue/resistance). A bearish break could start a larger bearish correction where as a bullish bounce could extend the 5th wave (brown).

The USD/JPY wave count will depend on whether price bounces at or breaks through the support trend line (blue). A bounce could indicate that a wave 4 (grey) is still uncompleted. A break means that wave 4 and 5 (grey) are finished.

Currency pair GBP/USD

The GBP/USD is challenging the support (green) line of the bullish channel (red/green). A bearish break could see a larger retracement or reversal whereas a bullish bounce could see price challenge resistance again.

The GBP/USD needs to break above the resistance levels (red/orange) before a continuation is likely. A break below support (blue) could start a bearish reversal and continuation of 5 waves (blue).

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

EUR/USD

EUR/USD prices, as you can see, are effectively unchanged this morning. The H4 candles, despite a minor break seen to the downside going into the early hours of yesterday's US segment, remain trading amid 1.0850/1.0873. Made up of a weekly support level (2016 yearly opening line) at 1.0873 and a daily support band at 1.0850, the buyers and sellers have been battling for position within/around this area since Tuesday.

With the US dollar seen forming a strong H4 selling wick (see US dollar index) around the 99.70ish mark during yesterday's sessions, we may see H4 buyers register some noteworthy interest from 1.0850/1.0873 sometime today.

Our suggestions: Given the above notes, our team has decided that in order to become buyers from 1.0850/1.0873, we would need to witness a reasonably sized H4 bullish rotation candle form within the noted green zone (preferably a full-bodied candle). A strong H4 rotation – coupled with the aforementioned higher-timeframe support structures would, in our opinion, be enough evidence to suggest the bulls are back in the game and are likely going to push above the 1.09 neighborhood.

Data points to consider: German Prelim GDP at 7am. US Inflation data and Retail sales figures at 1.30pm, FOMC member Evans speaks at 2pm, US Prelim UoM consumer sentiment at 3pm , FOMC member Harker speaks at 5.30pm GMT+1.

Levels to watch/live orders:

• Buys: 1.0850/1.0873 ([waiting for a reasonably sized H4 bull candle, preferably a full-bodied candle, to form before pulling the trigger is advised] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

GBP/USD

The GBP/USD sold off yesterday in response to the BoE's decision to keep monetary policy unchanged. Easily clearing bids from the 1.29 handle this led to price testing the H4 mid-level support at 1.2850. As is evident on the H4 chart, this has placed the candles in a somewhat restricted state. Not only is the unit now confined between 1.2850/1.29, there's also the two converging H4 trendlines to contend with (1.2804/1.2965).

In view of weekly supply at 1.3120-1.2957 and its partner supply on the daily timeframe at 1.3058-1.2979, further downside is still favored. That is, of course, until we reach the 1.28 region which is positioned nearby weekly support at 1.2789.

Our suggestions: At the time of writing, our team's focus is on looking for a close beyond 1.2850/H4 trendline support. A close beyond this angle, followed with a retest as well as a lower-timeframe sell signal (see the top of this report for ideas on how to use the lower timeframes for entry) would, in our opinion, be enough confirmation to sell, targeting the 1.28 neighborhood.

Data points to consider: US Inflation data and Retail sales figures at 1.30pm, FOMC member Evans speaks at 2pm, US Prelim UoM consumer sentiment at 3pm , FOMC member Harker speaks at 5.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch for H4 price to engulf 1.2850 and then look to trade any retest seen thereafter ([waiting for a lower-timeframe sell signal to form following the retest is advised] stop loss: dependent on where one confirms this level).

AUD/USD:  

The technical picture on the AUD/USD is interesting. Up on the weekly chart, price shows room to continue selling off until we reach the trendline support extended from the low 0.6827/2016 yearly opening level at 0.7282. Down on the daily chart, the unit also displays room to trade lower to a support area drawn from 0.7284-0.7326.

Looking over to the H4 chart, we have two potential AB=CD formations in play:

1. A H4 AB=CD bullish pattern taken from the high 0.7426 that terminates a few inches below the 0.73 handle.

2. A H4 AB=CD bearish pattern drawn from the low 0.7328, which happens to complete around the 0.74 handle.

The first AB=CD pattern is incredibly attractive. Not only does it merge closely with the 0.73 handle, it also sits within the said daily support area, which itself intersects with the aforementioned weekly trendline support and is beautifully positioned a few pips above the 2016 yearly opening level! Not a bad place to look for longs!

The second AB=CD pattern is equally attractive. The termination point fuses with the following: a 0.74 handle, a H4 trendline resistance extended from the low 0.7475, a 127.2% H4 Fib ext. at 0.7409 taken from the low 0.7328 and a 38.2% H4 Fib resistance at 0.7415 pegged from the high 0.7556.

Our suggestions: Look for shorting opportunities between 0.7415/0.74, and l longs from around the 0.73 neighborhood.

Data points to consider: US Inflation data and Retail sales figures at 1.30pm, FOMC member Evans speaks at 2pm, US Prelim UoM consumer sentiment at 3pm , FOMC member Harker speaks at 5.30pm GMT+1.

Levels to watch/live orders:

• Buys: 0.73 region (stop loss: 0.7275 [beyond the daily support area/yearly opening level]).
• Sells: 0.7415/0.74 ([waiting for a reasonably sized H4 bear candle, preferably a full-bodied candle, to form before pulling the trigger is advised] stop loss: ideally beyond the candle's wick).

USD/JPY:  

Despite having broken above 114 for a second consecutive time this week, the pair, yet again, failed to sustain gains beyond this number. This could very well have something to do with the weekly candles seen trading from supply marked at 115.50-113.85. However, according to daily structure, the pair may still pop north to a resistance zone coming in at 115.62-114.60. Also noteworthy in this market at the moment is the nearby H4 supply zone drawn from 114.88-114.58. Not only is this base lodged within both weekly supply and the daily resistance area, it also boasts strong downside momentum!

Our suggestions: With the above taken into consideration, our team still has a pending sell order placed at 114.57 with a stop set at 114.90. Nevertheless, we will not allow these orders to remain in the market during high-impacting events (see below). The first take-profit target, should this trade come to fruition, will highly likely be the 114 handle.

Data points to consider: US Inflation data and Retail sales figures at 1.30pm, FOMC member Evans speaks at 2pm, US Prelim UoM consumer sentiment at 3pm , FOMC member Harker speaks at 5.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 114.57 ([pending order] stop loss: 114.90).

USD/CAD

Since the beginning of the week, the USD/CAD has been seen consolidating between 1.3750/1.3650. Beneath this range is a round number seen at 1.36, which happens to sit two pips above a daily support area at 1.3598-1.3559. Above, however, sits the 1.38 handle. This level is interesting due to it being positioned just below the 2016 yearly opening level seen on the weekly chart at 1.3814.

With daily price seen lurking around the lower edge of supply at 1.3859-1.3700, a break below the current H4 range is likely. With that being said though, there's an equal chance that this range could suffer a breach to the upside as 1.38, given its relationship with the 2016 yearly opening level, is attractive for shorts.

Our suggestions: Given our conservative nature, we would not be looking to sell this piece until price has connected with the above noted 2016 yearly opening level (essentially around the 1.38 region seen circled in green on the H4 chart). The reason being is that this line firmly located within the upper limits of the said daily supply and thus allows the trader to conservatively place stops above this area. However, should the unit close below our H4 range before testing 1.38, we might consider looking to sell from here. It really depends on how far price extends following the break, since 1.36 would be the take-profit target.

Data points to consider: US Inflation data and Retail sales figures at 1.30pm, FOMC member Evans speaks at 2pm, US Prelim UoM consumer sentiment at 3pm , FOMC member Harker speaks at 5.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.3814/1.38 region is an ideal place for shorts since this area requires no additional confirmation (stop loss: conservative at 1.3861).

USD/CHF

Once again, we're seeing March's opening level at 1.0066 holding firm. This is somewhat surprising knowing that weekly price recently came into contact with the underside of supply drawn from 1.0170-1.0095, and the daily candles are currently seen roaming within supply drawn from 1.0107-1.0072.

In view of the higher-timeframe structures, our team favors the downside at the moment. Despite this, we would not look to become sellers in this market until March's opening line has been consumed as this could still be potentially problematic!

Our suggestions: A decisive H4 close beyond 1.0066, coupled with a retest and a reasonably sized H4 bearish candle (preferably a full-bodied candle) would, in our experience, be enough evidence to sell, targeting April's opening level at 1.0016/1.0000 (parity).

Data points to consider: US Inflation data and Retail sales figures at 1.30pm, FOMC member Evans speaks at 2pm, US Prelim UoM consumer sentiment at 3pm , FOMC member Harker speaks at 5.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch for H4 price to engulf 1.0066 and then look to trade any retest seen thereafter ([waiting for a reasonably sized H4 bearish candle to form following the retest is advised, preferably in the shape of a full-bodied candle] stop loss: ideally beyond the candle's wick).

DOW 30

During the course of yesterday's segment, daily price beautifully connected with a support area coming in at 20714-20821, and formed an even more beautiful-looking bullish buying tail! The weekly candles remain trading nearby record highs at 21170, but have begun to print bearish intentions, already wiping out all of the prior week's gains.

Bouncing across to the H4 chart, we can see that movement is currently restricted by May's opening level at 20929 and March's opening base line drawn in at 20824.

Our suggestions: Personally, we are not seeing much to hang our hat on at this time. A long at current market prices would place you against not only May's opening line, but also the daily resistance area at 21022-20933. Similarly, a short would position one against the nearby daily support area mentioned above and against the overall trend of the market (see the weekly trend)! Therefore, remaining flat for the time being may very well be the better path to take.

Data points to consider: US Inflation data and Retail sales figures at 1.30pm, FOMC member Evans speaks at 2pm, US Prelim UoM consumer sentiment at 3pm , FOMC member Harker speaks at 5.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

GOLD

The bulls are finally beginning to express some interest from within the weekly demand base marked at 1194.8-1229.1. In the event that this area continues to be respected and price rallies, there's a good chance that the market could retest the two weekly Fibonacci extensions 161.8/127.2% at 1313.7/1285.2 taken from the low 1188.1 (green zone). Popping down to the daily chart, the support area at 1216.7-1225.7 (bolstered by a trendline support at 1180.4) is also looking in better shape at the moment. The next upside hurdle from this angle can be seen around a resistance area pegged at 1265.2-1252.1.

Although the H4 candles are showing strength from the support zone at 1218.5-1223.4, there's still an awful amount of wood to chop through seen marked with a green circle at 1236.0/1228.0. Therefore, despite what the higher-timeframe structures suggest, going long right now might not be such a good idea.

Our suggestions: While entering long may be attractive in respect to the bigger picture, buying into the mess seen on the H4 chart is just too risky for our liking! To that end, lying low and remaining on the sidelines may be the best position in this market for now.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

Gold finally picks itself up off the floor, following copper higher as OPEC rhetoric keeps the nascent oil rally alive.

Oil

Crude oil continued to rally overnight, dusting itself off after being knocked to the floor of the ring last week. Whether this is a case of where reality meets hope or a genuine turn in sentiment remains to be seen. The price action last night was driven by more innocuous production cut extension comments by various 2nd tier Non-OPEC members. Both Brent and WTI rallied by one present initially before giving up half those gains later in the session for a 0.5 percent gain.

The Baker Hughes Rig Count data out later this evening will no doubt give the street a dose of reality with yet another climb in active rigs, mostly shale. The reality is that OPEC/NOPEC have no choice but to extend the production cut deal just to maintain the present status quo against the increase in non-traditional production and returning members, Libya and Nigeria.

Brent spot opens at 50.50 this morning with resistance at 50.90 and then its 200-day moving average at 51.20. Support lies intra-day at 49.80 and then 49.00.

WTI spot opens at 47.70 with resistance at 48.10 and then its 200-day moving average and a double daily top at 49.00. The level is formidable technical resistance. Intra-day support sits at 47.20 and then 45.85.

Gold

After a week of negative price action, gold finally shook off its malaise last night to rally from 1219 to 1228 before settling at 1225 in early Asia. The pullback in U.S. stocks has certainly played its part, as has the risk aversion as the political “noise” increases yet again in the United States. Gold has also tailgated copper’s overnight rally as well.

The rally has left gold flirting with its 100-day moving average which is just above at 1225.50. A daily close above here being a constructive technical development. Tonight’s U.S. CPI numbers will be a key determinant of how gold finishes the week with a high print most likely taking the wind out of gold’s sails as the street prices the odds of a Federal Reserve hike higher for June’s meeting and vice versa.

Intra-day, we would expect Asia to be keen to buy dips ahead of the weekend. Gold has resistance at the 1230 and 1240 regions with the critical support being around 1214.50. A move through the lower level suggesting that a further dip to 1200 could be on the cards.

Copper

Copper leapt nearly 2.50% overnight at one stage to 2.5375, before tumbling back to open around 2.4950 in early Asia, still up just shy of one percent. The rally was fuelled by declining LME stocks and a tightening of the Shanghai forward delivery curve. However with the PBOC declining to add liquidity in today open market operations, copper gives back much of its gains.

Copper’s price action, however, has been constructive over this week marking out a series of higher lows each day and holding above its 200-day moving average at 2.4425. Initial support lies at 2.4575, just ahead of the critical 200-day. The overnight high at 2.5375 is the first initial resistance and a close above there could suggest copper attempts a rally to its 100-day moving average at 2.6115.

STOCKS

Overall the global indices are trading low. Shanghai is weakening at the fastest pace when compared to the other indices. Worries over Chinese stocks would continue next week also.

Dow (20919.42, -0.11%) came down to 20798 as mentioned yesterday and while above 20780, we could expect a sideways consolidation in the 20780-20980 region. On a confirmed break below 20780, we may see a test of 20600 in the medium term.

Dax (12711.06, -0.36%) is testing support near 12690 and could remain stable in the 12600-12800 region for a few sessions or bounce back immediately towards 12800 and higher.

Shanghai (3065.58, +0.13%) is in a downtrend as expected and is headed towards 3000 and lower in the near term. We look for a fall to 2978 within the next week.

Nikkei (19828.92, -0.66%) has come off sharply from just below crucial resistance near 20010, in line with our expectation. While this holds, we could see a fall towards 19600 in the coming sessions. Only on a break above 20010, would we focus on the next resistance near 21000. For now a short corrective dip is possible.

Nifty (9422.40, +0.16%) closed higher making fresh highs. As mentioned yesterday, we watch closely the immediate resistance near 9500.

COMMODITIES

Gold (1226) traded within the 1220-31 region this week, could be ended on a higher side. If the rise continues we may possibly see a test of 1255-65 levels in the next week. A failure to break above 1265 could keep the price range-bound in the 1220-1265 regions.

Similar kind of trading pattern has been seen in Silver (16.36) also. The scrip is highly oversold in near term chart, thus a possibility of a rise towards 17 levels can’t be ruled out.

Copper (2.50) is hovering around its crucial support of 2.48-50 and if these levels hold then we might see a bounce towards 2.60 regions. But we will remain bearish on copper while t is trading below 2.67-72 levels.

Sideways consolidation in the broader ranges of 49.50-51.36 for Brent and 46.80-49.30 for WTI continues as expected. Holding above the interim supports of 49.50 in Brent and 46.80 in WTI implies strength in oil prices in the extreme short term.

In the Morning Briefing dated 10th of May, 2017, it was written – “Brent and WTI may consolidate within these levels for few more sessions though the possibility of a corrective bounce towards resistance can’t be ruled out. We have U.S weekly crude inventory today at 8:00 pm with an expectation of decrease by 2 million barrels. If the actual figure could match the expectation then we might see some short term rally in both Brent and WTI”.

Still, the bulls will be assured of strength of Brent (50.80) and WTI (47.88) only when a firm closing above 53 and 51 are made by both Brent and WTI respectively.

FOREX

While the US CPI & Retail Sales data may affect the Dollar tonight, Rupee may wait for the Inflation and Trade Balance data due today.

Dollar Index (99.57) has registered a high at 99.89, just a bit lower from our initial target of 100.00, before a minor correction but the bullish momentum remains intact above 99.35-25.

Dollar Yen (113.67) is undergoing a similar correction from 114.37, not far away from our target of 114.60 but if it manages to hold above the support of 113.30-10, another bounce may emerge. On the other hand, Nikkei (19823.28, -0.69%) being rejected from the major resistance around 20000 may boost Yen against Dollar. So while the bullish preference remains in place for now, a break below 113.10 may force adjustment to that view.

Euro (1.0877) has taken a pause and may consolidate for a couple of sessions in the range of 1.0840-1.0940 before resumption of the near term downtrend.

Pound (1.2887) corrected sharply to test the support of 1.2860 after the BOE May’17 minutes showed expectations of slower than anticipated growth in 2017 and the real earnings to fall this year. The weakness may be used by the global investors to buy, especially if it comes near 1.2800 as the larger trend still remains up.

Aussie (0.7375) is stuck in the range of 0.7325-0.7425 for the week but a resumption of the major downtrend may resume in the next week for the target/support of 0.7300-0.7290 from where a significant recovery may be expected.

Dollar Rupee (64.38) corrected more than expected as it made a low at 64.33, beyond our expected 64.40. Bidirectional possibilities visible at the moment. Bounce from 64.30-25 can push it higher once more but a failure to hold 64.25 can push it down to 64.00. Wait for clarity.

INTEREST RATES

The US yields are trading lower. The 5Yr (1.91%), 10Yr (2.38%) and the 30Yr 93.02%) are down from 1.94%, 2.40% and 3.04% respectively.

The Japan yields have moved up sharply this month. The 5Yr (-0.12%) is testing immediate resistance and could come off in the near term. The 10Yr (0.05%) and the 30Yr (0.84%) could also pause for sometime after the recent rally.

The UK yields have stated to fall and could remain stable or come off to lower levels just now. Near term looks bearish.

The German-US 2yr (-2.01%) is almost stable and could possibly bounce back in the coming sessions. We need to keep a closer watch on this. The German-US 10yr (-1.95%) is however headed higher and may not pause or come off immediately. A clearer picture is needed to determine the further course of movement.

The Japan-US 10Yr (2.33%) has come off a bit as Nikkei faced rejection from resistance levels, pulling down Dollar-Yen also to levels below 114. While the immediate resistance on Nikkei holds, we may expect some more Yen strength in the near term and a fall in the Japan-US yield spread towards 2.25%.

On your MT4 platform's market watch, scroll through the CFDs tab and add the US Dollar Index to your watch list.

Even if you're not one to trade directly off the volatile index, it's definitely worth having major levels marked if you're trading any of the majors.

Let's take a look at the daily chart below:

USDX Daily:

While in an overall bullish trend, price has spent 2017 moving in the opposite direction. Price has pulled back and gapped down through the higher time frame bullish trend line, but now has been creeping back up the underside of it.

It's actually quite common to see a chart break out of a higher time frame trend line, only to creep back in the direction of the original trend. Look for price to tuck back above the broken trend line and possibly reactivate it as support once again

Headline and Yo-Yo Syndrome takes grip

With the major US CPI data on tap, markets trod cautiously but were getting tugged in every direction due to the fallout from the FBI Director Comey saga, North Korea, and the markets take on US PPI data. Overall, the markets had a risk-off tinge to them.

The risk-off mood took a grip in early New York trade after geopolitical angst lurched back into the headlines when the annual “US threats” report from the US Director of National Intelligence said North Korea is poised to test the first inter-continental ballistic missile (ICBM) flight this year.Again, It highlights the markets acuteness to ominous North Korea geopolitical headlines.

The political noise continues to escalate over Trump's firing of FBI Directory Comey as White House critics continue to probe for a smoking gun, where the President is deliberately trying to thwart the FBI's probe of “Russigate”. This storyline has clearly rattled equity investors, given this political cloud could cripple the fragile support for Trump's tax policy.

Following a soft March reading, the significant beat on the PPI caught the market's attention as US yields rose sharply, and the dollar firmed. While the strength in both headline and core could suggest a possible beat on tonight's US CPI print, keep in mind, this is second tier stuff. Despite the upside surprise, it's wise not to read too much into the PPI print as the surprise correlations are not high and as suggested by the current market lean and the lack of CPI revisions, the street is not putting too much credence yesterday's print.

Australian Dollar

Commodity currencies are trading better against USD this morning as oil and copper continue to trade higher. The view that commodity prices are basing gathers momentum.

The USD is weighed down by the Trump/Comey sideshow which has seen the greenback move lower against most of the G-10.

Ahead of tonight's key US data dump (CPI and Retails), the Aussie dollar is in range trade mentality with positions looking neutral as dealers await the next catalyst. But the Aussie seems unable to stage any meaningful rally despite better buyers over the last 24 hours. We should expect the currency to trade with heavy bias until the bounce on commodity prices is confirmed, and lingering concerns over China's de-leverage abate.

It's still too early to confirm that the low is in for commodities, but with a good portion of the recent unwind likely attributed to China tightening their financial regulations, bargain hunters will probably return sooner than later; supporting the view that the worst of the commodity rout may be behind us.

Japanese Yen

Last night's US economic data had traders thinking a repricing of the Fed curve is in order, playing off Fed President Eric Rosengren's surprising call for three more rate hikes in 2017 causing the dollar to firm. However, geopolitical concerns swung uncomfortably back to the forefront for the dollar bulls while at the same time the Trump/Comey sideshow noise was ramping up. In whipsaw fashion, USDJPY plummeted 113.45 on a combination of stop loss and profit taking before bouncing back above 114 only to drift lower into the Asia session.

With CPI on tap and both geo and US political risk ratcheting higher, I suspect dealers will take a nimble approach and keep positioning relatively tight. Furthermore, given Rosengren's hawkish banter this week, there will be heightened focus on Fed Evans later today (traditional Dove) so position with care.

Overall, I expect the USDJPY to shrug off the headline risk and failing any major downside; CPI surprise should continue to trade constructively.

VIX

With gallons of ink spilt and perma-bears in full swing, vexing the Vix remains top of the investment news topic list. While the comparison is made to the GFC 2007-08, given the current upswing in global growth and extremely dovish global central banker (look no further than yesterday's RBNZ dovish statement ), shouldn't this low volatility be expected?