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The DAX has edged lower in the Wednesday session, as the index trades at 12,485.50. On the release front, German Unemployment Claims came in at -15 thousand, beating the estimate of -10 thousand. Eurozone Preliminary Flash GDP remained unchanged in the first quarter at 0.5%, matching the forecast. In the US, the Federal Reserve is expected to maintain interest rates at 0.75%. On Thursday, we'll get a look at Services PMI in Germany and the Eurozone, as well as Eurozone Retail Sales.

The eurozone has been hampered by years of high unemployment, but the labor situation has improved considerably. The eurozone economy continues to expand, and more growth has meant more jobs and lower unemployment figures. Just a year ago, the eurozone unemployment rate was at 10.3%, but the rate has been steadily decreasing since then. The March release remained unchanged at 9.5%, within expectations. Germany has led the way, with the unemployment rate dropping to 5.9% in February. Unemployment rolls continue to shrink in Germany, and the decline of 15,000 unemployed persons was better than the estimate of 10,000. US employment numbers will also be in the spotlight this week, with ADP Nonfarm Payrolls kicking things off on Wednesday. The indicator is expected to drop sharply to 178 thousand in March compared to 263 thousand a month earlier. On Friday, we'll get a look at wage growth and the official nonfarm payrolls report. If these indicators are not close to the estimates, we're likely to see some movement from the DAX.

The DAX has not shown significant movement in the second quarter of 2017, but traders should keep in mind that the index has been trading at record highs this week. Will the trend continue? Current economic conditions point to the DAX continuing to climb higher. The index has outperformed most eurozone equity indexes in 2017, benefiting from a strong German economy, marked by steady growth and low unemployment. Stronger global demand has boosted Germany's export sector and the Federal Reserve's plans to continue to hike rates in 2017 has pushed German stocks to higher levels.

French voters will head back to the ballot box on Sunday, with Emmanuel Macron and Marine Le Pen vying for the next president of France. European stock markets have been very steady in the second round of the campaign, as opinion polls continue to show a comfortable majority for Macron:

The polling average line looks at the five most recent national polls and takes the median value, ie, the value between the two figures that are higher and two figures that are lower.

Source - BBC

French Election Timeline

May 3 - TV debate between the two remaining candidates

May 5 - [from midnight] Poll blackout

May 7 - Second round of French presidential elections. Last polls close at 19:00 BST / 14:00 EDT, with an exit poll result announced immediately.

May 11 - Official proclamation of the new President.

May 14 - [from midnight] End of Francois Hollande's mandate

June 11 - First round of legislative elections

June 18 - Second round of legislative elections.

USDJPY: The pair continues to hold on to its upside pressure leaving more strength expected. On the downside, support comes in at the 112.00 level where a break if seen will aim at the 111.50 level. A cut through here will turn focus to the 111.00 level and possibly lower towards the 110.50 level. On the upside, resistance resides at the 112.50 level. Further out, we envisage a possible move towards the 113.00 level. Further out, resistance resides at the 113.50 level with a turn above here aiming at the 114.00 level. On the whole, USDJPY looks to recover further higher.

Sterling was unsettled during Wednesday's trading session with prices violently swinging between losses and gains after reports of Brussels bolstering the Brexit bill to up to $100 billion, which reinforced speculations of the EU playing hardball. Official negotiations of the UK leaving the European Union have yet to begin, but financial heavyweights have already started their battle of words on the Brexit topic. With Theresa May vowing on Tuesday that she will be a "bloody difficult woman" in Brexit talks adding to anxiety, a rocky road filled with obstacles may lie ahead. Sterling could find itself exposed to downside shocks amid the uncertainty, with recent reports of the European Union warning that May could be barred from the negotiations terms, fueling hard Brexit fears.

Focusing on the macro fundamentals, UK construction PMI accelerated in April to 53.1, but this did little to inspire Sterling bulls with prices eventually descending back towards 1.2900. The growing uncertainty around Brexit negotiations, coupled with political instability ahead of the UK general election could create a scenario where markets slightly overlook fundamentals with much of the focus directed towards ongoing Brexit developments.

From a technical standpoint, the GBPUSD could come under renewed selling pressure if bears are able to break below 1.2875. A breakdown below 1.2875 may encourage a further decline towards 1.2775. In an alternative scenario, an intraday breakout above 1.2940 could pave the way to 1.3000.

Fed meeting and ADP in focus

The main event on Wednesday that could rattle financial markets is the Federal Reserve meeting which is widely expected to conclude with interest rates left unchanged. With economic data from the US mostly mixed since the previous Fed meeting and first quarter growth in 2017 cooling at 0.7%, investors may heavily scrutinize the statement to see if there is a change in rhetoric. The Dollar could be at risk of depreciating further if "doves" exploit the softening economic outlook to make a guest appearance today.

On the other hand, if the Federal Reserve maintains its hawkish bias and offers clarity on US rate hike timing, Dollar bulls could be given enough confidence to challenge 99.50.

Some attention may also be directed towards the pending ADP Nonfarm data, which could be treated with some skepticism after it reported a mammoth gain in March jobs, while NFP tumbled well below expectations under 100,000.

Euro searches for direction

The Euro has been on cruise control this week with investors observing the currency from a distance ahead of the second round of the French Presidential election voting on 7 May. With the current polls showing that Emmanuel Macron is holding a solid 20 point lead over Marine Le Pen, markets may have already priced in a Macron victory. Although the Macron outcome on Sunday has the ability to elevate the Euro higher, an unexpected Marine Le Pen victory could still rattle the financial markets with parity on the EURUSD becoming a possibility. From a technical standpoint, a failure for bulls to secure control above 1.0900 may open a path towards 1.0800.

WTI Crude dips below $48

WTI Crude was exposed to heavy losses this week as anxiety over the rising output in Libya and Canada, coupled with concerns of a dip in compliance with OPEC's production cuts enticed sellers to attack. It is becoming increasingly clear that oil prices remain gripped by the oversupply fears with confidence rapidly diminishing over OPEC's ability to stabilize the saturated oil markets. Although some still remain cautiously optimistic that an extension of the production cut deal may limit the global glut, the incessant pumping of US Shale has left most investors skeptical, questioning whether prices will ever balance out. Much attention may be directed towards the pending crude oil inventory report which may pressure oil markets further if there is a build in US crude inventories. From a technical standpoint, WTI Crude is heavily bearish on the daily charts and a breakdown below $47.50 could open a path towards $44.00.

• Sterling steady as election gets underway
• NZD strengthens as unemployment drops below 5%

As from today, we have no MPs in the UK, just candidates. Oddly, you will probably hear more from your local MP over the next 5 weeks than you will for the following 5 years but that's politics.

Sterling seems to be taking all this electioneering in its stride and is trading in narrow ranges at the top end of its recent ranges. The lack of UK data today will probably leave Sterling in that cryogenic state for now. However, a statement from the EU's chief Brexit negotiator has definite 'cat amongst the pigeons' potential.

As the UK election campaign starts to gather momentum, the French presidential elections draw nearer to a conclusion and it looks like Monsieur Macron is likely to take the win. That likelihood has calmed the nerves of Euro traders and the Euro has settled down a little. We get the preliminary calculation of Eurozone economic growth for the first three months of the year today. Quarterly growth is expected to match the previous 0.4% growth but some are forecasting a small uptick in that number. That would boost the Euro; especially if the Producer Price data; also due this morning, is above 4.4% for March.

US data today is slim but the service sector Institute for Supply Management (ISM) report is very influential on sentiment in the Federal Reserve and that is expected to be rather upbeat. If that proves to be the case, then the USD may recover some of its lost ground.

The New Zealand Dollar has gained some ground overnight after positive unemployment data. The rate of unemployment dropped to 4.9% in the 3 months to March and the labour market participation rate hit an all-time high. The only downer on the data was the fact that hourly earnings increased only marginally and missed the forecasts.

And I know it is puerile and childish to mock Diane Abbott after her scattergorical interview yesterday, but it does highlight the way that some politicians are either uninformed or ill-informed. If that had been a performance in front of the Dragon's Den, they would all be out.

Quote

"Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies."

Groucho Marx

The NZD/JPY made a strong break to the upside following the surge in equities and Yen weakness. At this point an Inner trend line (black) is making a nice resistance just above 1-3 Wolfe Wave. What does it mean? If we see a price spike towards 1-3 trend line we could see another rejection towards 1-4 target. 78.00-78.15 is the zone where the pair could reject if we see a retracement. If we don't see any retracement, the pair could proceed below 1-4 (77.50) towards 77.25. Further weakness is expected below 77.20.

USDCAD Elliott Wave 1 Hour Chart 04.27.2017

As our members know, we were pointing out that USDCAD is having incomplete bullish swings sequnces from the 04/13 low . Structure has been calling for more strength in 7th swings once (x) blue pull back completes as Expanded flat. As far as short term pivot at 1.3406 low holds, the pair will be ideally targeting 1.3713 area. . At the chart below we can see that 6th swing is unfolding as expanded flat looking for 1.3526-1.34977 area to complete. Due to incomplete bullish sequences we recommended our members to avoid selling the pair, keep favoring the long side

USDCAD Elliott Wave 1 Hour Chart 05.02.2017

Eventually the pair has reached propoes 50 fibs area at 1.35267 and completed (x) blue there as irregular flat structue. We got nice reaction higher. Currently approaching ideal target area at 1.3715-1.3788 and it’s already close to ending the cycle from the 04/13 low . Current price structure met minimum requirements already, and we should be careful chasing the strengths at this stage.

The Fed is widely expected to keep interest rates unchanged today with the focus on language for its next move in June.

The market risk is the central bank adopting a more-cautious description of U.S economic performance amidst recent data. If Ms. Yellen and company happen to do so, it will put renewed pressure on the ‘mighty' dollar and on U.S rates.

Currently, investors are pricing a less than +5% chance of a rate rise today; instead, they will be looking for any hints at a rate increase next month.

Fed Fund futures are pricing in a +66% chance of a hike in June. The current state of affairs suggests that the Fed does not need to work as hard to manage those expectations as they had to in early Q1. U.S policy makers have two more employment reports, including this Friday's, ahead of that decision.

In France, Emmanuel Macron and the far right's Marine Le Pen, go head-to-head today in a televised French Presidential election debate. Opinion polls still show Macron holding a strong lead of +20 points over the National Front's Le Pen with just four days to go to the final vote.

1. Equities react negatively to earnings

Declines in materials shares and disappointing earnings news, particularly from Apple, have sent global stocks lower overnight ahead of today's update from the Fed.

Note: Markets in Japan, South Korea and Hong Kong were closed for holidays.

Down-under, financials have dragged down Aussie bourses for a second consecutive session with the S&P ASX 200 off -1%.

In China, equities were mostly weaker as investors sold stocks related to the designated economic zone. The Shanghai Composite Index was down -0.3%.

In Europe, indices trade slightly lower across the board as U.S earnings again weighed on investor sentiment. Energy and commodity shares are supporting the FTSE ahead of the U.S open.

U.S stocks are set to open in the red (-0.2%).

Indices: Stoxx50 -0.1% at 3573, FTSE -0.3% at 7226, DAX -0.2% at 12481, CAC-40 -0.3% at 5287, IBEX-35 -0.1% at 10810, FTSE MIB -0.2% at 20689, SMI 0.0% at 8873, S&P 500 Futures -0.2%.

2. Oil rebounds from yearly lows, gold lower

Oil prices have rebounded from yesterday's fresh yearly lows after preliminary data yesterday showed a much higher-than-expected fall in U.S crude stocks.

Ahead of the U.S open, Brent crude futures are up +37c at +$50.83 a barrel, while U.S West Texas Intermediate (WTI) crude is at +$47.96 a barrel, up +30c from yesterday's close.

WTI had slid -2.4% yesterday on concerns about falling OPEC compliance with its production-curbing deal.

Yesterday's API data revealed that crude stocks had fallen last week by -4.2m, nearly double the drop expected by the market.

Note: The U.S government will release ‘official' inventory data from the EIA at 2:30 pm EST.

Gold prices are holding atop of their three-week low hit Tuesday on rising equities and a firmer dollar. The markets are waiting for cues on a U.S interest rate hike from the Fed. Yesterday, the yellow metal hit a low of +$1,251.37 per ounce, its worst level since April 10.

3. Global yields to take directions from the Fed

U.S 10-year yields have edged down a touch to +2.29% from +2.30% overnight ahead of today's Fed meeting.

Note: The U.S Treasury releases its quarterly refunding plans for issuance of longer-term debt – this will get more attention than usual after Treasury Secretary Mnuchin flagged potential interest in selling bonds with maturities beyond 30 years. If so, it should steepen up the U.S curve.

Elsewhere, French 10-year yields (OAT's) have edged lower to +0.740% while German Bund yields have fallen to +0.31% ahead of a today's televised debate between Macron and Le Pen. Earlier this morning, Germany sold €2.4B 10-year Bunds at an average yield of +0.33% vs. +0.21% on April 12 with a bid-to-cover ratio of +1.5 vs. +1.4.

Down-under, the yield on Aussie debt with a similar maturity dropped -1 bps to +2.59%.

4. Dollar firms ahead of Fed decision

The dollar is finding some support ahead of the Fed decision. Markets will be looking for clues about the timing of the next hike, and how and when, the Fed will shrink its balance sheet.

The EUR is down -0.15% at €1.0911, while the pound is down -0.1% at £1.2925.

Note: Any weakness in this morning's ADP payrolls data, or a less “hawkish” tone from the Fed could help push both currency pairs towards their medium term targets of €1.1000 and £1.3000 respectively. However, if far-right French Presidential candidate Le Pen does well in today's debate expect the Eurozone's single unit to come under immediate pressure.

USD/JPY up +0.2% at ¥112.21.

5. Eurozone grew in Q1

Data this morning showed that the combined GDP of the 19-member Eurozone was +0.5% higher than in the final three months of 2016, and +1.7% higher than in the first quarter of that year.

That is the equivalent to an annualized growth rate of +1.8%, stronger than the +0.7% expansion recorded by the U.S and the +1.2% expansion recorded by the U.K in the same period.

GOLD Wide-open for further decline.

Gold continues its decline after the yellow metal has faded near the hourly resistance at 1295 (18/04/2017 high). Hourly support located at 1260 (26/04/2017 low) has been broken. The road is wide-open for further decline.

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 Strong downside risk.

Silver continues its decline. Strong support given at 16.82 (15/03/2017 low) has been broken. Strong resistance is given at a distance at 19.00 (09/11/2017 high). Expected to see continued bearish pressures.

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 Back below $48.

Crude oil is trading mixed, breaking the support at 50.71, yet now has paused. Support now lies at 48.87 (25/04/2017 low). Resistance for a short-term bounce can be found at 50.71 (old support) and 53.70 (12/04/2017 high).

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).

Short term Elliott Wave view in Nikkei ( NKD_F) suggests that the decline to 4/16 low (18255) ended primary wave ((4)). Up from there, the rally is unfolding as an impulse Elliott wave structure where Minute wave ((i)) ended at 18590, Minute wave ((ii)) ended at 18315, Minute wave ((iii)) ended at 19355, and Minute wave ((iv)) ended at 19170 low. Near term index has reached the minimum extension area in Minute wave ((v)) already, however another push higher towards 19579 area can be seen before index ends cycle from 4/17 lows in Minor wave A. Afterwards index is expected to see a pullback in 3, 7 or 11 swings within Minor wave B before further upside is seen. We don’t like selling the proposed pullback and expect buyers to appear again once Minor wave X pullback is complete in 3, 7, or 11 swing provided that pivot at 4/16 low (18255) remains intact.

Nikkei 1 Hour Elliott Wave Chart

EUR/JPY Targeting resistance at 123.31.

EUR/JPY's buying pressures are there. Key resistance area given around 122.00 has been broken. Strong resistance stands at 123.31 (27/01/0217 high). Major support is given at 114.90 (18/04/2017low). Expected to see further increase.

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 Trading sideways.

EUR/GBP is trading mixed. The technical structure remains negative as long as the resistance at 0.8596 holds. Expected to show continued weakness until resistance given at 0.8304 (05/12/2017 low).

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 Failed to break key resistance.

EUR/CHF has bounced back lower. Despite the sharp increase and the recent bullish breakout which is very likely psychological, we believe that the medium-term pattern suggests us to see at some point renewed 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).