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The Euro remains within the previous week's range, underpinned by 200SMA but repeated upside rejections at 1.0950, keep the larger rally from 1.0568(10 Apr trough) limited for now. Firm bullish setup of daily MA's that formed multiple bull-crosses and strong momentum studies are supportive but reversal of slow stochastic from overbought territory offsets bullish signals for now. Friday's daily candle with long upper shadow weighs on the near-term structure, however, the price is expected to remain directionless while range boundaries (200SMA at 1.0833 and multiple upside rejection at 1.0950) are intact. From the fundamental side, optimism for Macron's victory on the final round of French election and positive recent EU data are supporting the Euro which is eyeing this week's FOMC policy meeting for further signals. Although, Fed is unlikely to change interest rates at this meeting, markets are focusing on the comments after meeting. More hawkish tone would be a good signal for the action in June's meeting that would boost the dollar and send the Euro into deeper correction. On the other side, dovish tone from Fed, accompanied with rising evidence of dysfunctional US Congress, would have a negative impact on the greenback and eventually send the single currency above 1.0950 barrier towards next target at 1.1000. Markets are also focusing on US Nonfarm Payrolls due on Friday, for more clues. Forecast for April is 185K after surprise drop to 98K in March.

Res: 1.0900, 1.0950, 1.1000, 1.1033
Sup: 1.0850, 1.0833, 1.0804, 1.0776

Asia Mid-Session Market Update: China official PMIs slow to 6-month lows; Risk trade recovers on reports of US govt funding agreement

Friday US Session Highlights

(US) Q1 ADVANCE GDP ANNUALIZED Q/Q: 0.7% V 1.0%E; PERSONAL CONSUMPTION: 0.3% V 0.9%E

(US) Q1 EMPLOYMENT COST INDEX (ECI): 0.8% V 0.6%E

(US) APR CHICAGO PURCHASING MANAGER: 58.3 V 56.2E; new orders and employment show significant m/m growth

(US) APR FINAL MICHIGAN CONFIDENCE: 97.0 V 98.0E

Politics

(US) Congress negotiators from both parties said to have reached a tentative deal on $1.1T omnibus spending bill to fund the govt through Sept 30th - financial press

(FR) French presidential candidate Le Pen indicating she would not rush to leave the euro if elected - press

(US) Pres Trump signs Congressional stopgap funding to keep the govt open until May 5th

Weekend US/EU Corporate Headlines

COH: Coach said to be interested in a possible offer for Jimmy Choo after failed takeover of Burberry - UK press

TRCO: Fox and Blackstone said to be in talks to acquire Tribune Media - financial press

Key economic data:

(CN) CHINA APR MANUFACTURING PMI (GOVT OFFICIAL): 51.2 (6-MONTH LOW) V 51.6E; NON-MANUFACTURING PMI: 54.0 (6-MONTH LOW) V 55.1 PRIOR

(JP) JAPAN APR FINAL PMI MANUFACTURING: 52.7 V 52.8 PRELIM (confirms 8th straight month of expansion)

(AU) AUSTRALIA APR MELBOURNE INSTITUTE INFLATION M/M: 0.5% (3-month high) V 0.1% PRIOR; Y/Y: 2.6% (highest since July 2014) V 2.2% PRIOR

(AU) AUSTRALIA APR AIG MANUFACTURING INDEX: 59.2 V 57.5 PRIOR; 7TH MONTH OF EXPANSION

(AU) AUSTRALIA APR CORELOGIC RPDATA HOUSE PRICES M/M: 0.1% V 1.4% (slowest gain in 16-months)

(KR) SOUTH KOREA APR TRADE BALANCE: $13.3B V $8.6BE

Asia Session Notable Observations, Speakers and Press

Asian trading is light to start the week despite the release of key data out of China, with most markets closed for May 1st Labor Day. April's official manufacturing and non-manufacturing PMIs both hit 6-month low on lower prices and lower demand - new export orders and employment components slumped to a 3-month low, while Input Prices are at a 10-month low. Risk-on flows were initially depressed with firmer JPY and lower US futures at the open before a mid-day reversal on reports that Congressional negotiators from both parties said to have reached a tentative deal on $1.1T omnibus spending bill to fund the govt through Sept 30th. The deal does not include funding for the border wall and was cheered by Senate Minority leader Schumer as a "good agreement".

In other key datapoints, Japan Apr Manufacturing PMI was confirmed at an 8-month high, as Markit economist noted growth is supported by strengthening overall demand across the South East Asia region with exports as a key driver of growth. Australia MI inflation also trended hotter, reaching July-2014 highs, while Aussie manufacturing expanded for 8th straight month.

Geopolitical tensions around the Korean peninsula remained an issue following a missile test late on Friday. Even though the projectile had reportedly failed, landing within North Korean territory, US CIA director Pompeo was said to be meeting with South Korea's national security officials about the buildup of nuclear capability of the North. Also out over the weekend, US National Security Advisor McMaster assured South Korea that US is paying for THAAD despite Pres Trump claiming Seoul should pay a $1B for deployment.

Japan

(JP) According to Kyodo poll 49% favor changing Article 9 of Japan constitution (outlaws war as a means to settle international disputes involving the state) v 47% opposed

Australia/New Zealand

(AU) Australia Treasurer Morrison did not commit for ruling Coalition to return govt to surplus by 2021; Looking to lower living costs in upcoming May 9th budget - press

(NZ) RBNZ seeks views on capital adequacy framework for banks

(NZ) New Zealand Treasury: Inflation to hold near 2% over 2017 in absence of any additional shocks - press

Korea

(KR) CIA director Pompeo said to have met South Korea National Security officials in Seoul - Korean press

(KR) South Korea Fin Min Yoo: Already working with US on reducing trade surplus - press

(KR) US National Security Advisor McMaster said to have spoken with South Korea chief Kim Kwan-jin; Assured him that US will pay for THAAD system deployment - press

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.4%, Hang Seng closed, Shanghai closed, ASX200 +0.3%, Kospi closed

Equity Futures: S&P500 flat; Nasdaq +0.1%, Dax closed, FTSE100 closed

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.0890-1.0910; JPY 111.20-111.75; AUD 0.7465-0.7490; NZD 0.6850-0.6880; GBP 1.2900-1.2940

June Gold -0.3% at 1,264/oz; June Crude Oil -0.2% at $49.24brl; July Copper -0.4% at $2.60/lb

(AU) Australia MoF sells A$300M 2.75% 2035 bonds, avg yield 3.1375%, bid-to-cover 3.59x

Asia equities / Notables / movers

Australia

RCG Corp (RCG) -21.7%; Cuts FY17 Underlying EBITDA guidance to A$74-80M (prior A$85-88M)

Saracen Mineral (SAR) +2.9%; Canaccord Genuity Raised SAR.AU to Buy from Hold

Japan

Sojitz (2768) +3.2%; FY16/17 results

Sharp (6753) +2.7%; FY16/17 results

Ricoh (7752) -7.3%; FY16/17 results

Fujitsu (6702) +9.0; FY16/17 results

ANA (9202) -2.8%; FY16/17 results

JAL (9201) -7.3%; FY16/17 results

Honda (7267) +0.3%; FY16/17 results

Tokyo Electron) +13.3%; FY16/17 results

Daily Pivots: (S1) 0.8390; (P) 0.8426; (R1) 0.8447; More...

Intraday bias in EUR/GBP is mildly on the downside for 0.8303/12 support zone. Break there will extend the corrective fall from 0.9304 to to 0.8116/20 cluster support. We'd expect strong support from there to bring rebound. On the upside, above 0.8461 minor resistance will turn bias to the upside for 0.8529. Break will resume the rebound from 0.8312 and target 0.8786 resistance.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. In case of deeper fall, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Rise from 0.6935 (2015 low) will resume at a later stage to 0.9799 (2008 high). However, sustained break of 0.8116 could bring deeper decline to next key support level at 0.7564 before the correction completes.

Daily Pivots: (S1) 1.4496; (P) 1.4573; (R1) 1.4619; More...

Intraday bias in EUR/AUD remains neutral for consolidation below 1.4649 temporary top. We're holding on to the view of trend reversal after defending 1.3671 key support. Hence, downside of retreat should be contained by 1.4334 resistance turned support and bring another rally. Above 1.4649 will target 1.4721 key resistance. Decisive break of 1.4721 will confirm our bullish view. However, break of 1.4334 will suggest rejection from 1.4721 and turn bias back to the downside for 1.3980 support instead.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Such correction could be completed after defending 1.3671 key support. Break of 1.4721 cluster resistance (38.2% retracement of 1.6587 to 1.3624 at 1.4756) should confirm this case and target 61.8% retracement at 1.5455 and above. Overall, we'd expect the up trend from 1.1602 to resume later. However, sustained break of 1.3671 will invalidate our bullish view and would turn extend the fall from 1.6587 towards 1.1602 long term bottom.

Daily Pivots: (S1) 143.53; (P) 144.01; (R1) 144.74; More....

While GBP/JPY is losing upside momentum, there is no sign of topping yet. Intraday bias remains on the upside for 144.77 resistance. As noted before, consolidation pattern from 148.42 has completed at 135.58, ahead of 135.39 medium term fibonacci level. Break of 144.77 will resume the whole rebound from 122.36 through 148.42 resistance. On the downside, break of 143.13 minor support will turn bias neutral and bring consolidation before staging another rally.

In the bigger picture, based on current momentum, rise from 122.36 bottom should be developing into a medium term move. Break of 38.2% retracement of 195.86 to 122.36 at 150.42 should pave the way to 61.8% retracement at 167.78. This will now be the favored case as long as 135.58 support holds.

Daily Pivots: (S1) 120.79; (P) 121.39; (R1) 122.09; More...

No change in EUR/JPY's outlook as further rise is expected as long as 118.91 support holds. As noted before, correction from 124.08 should have completed with three waves down to 114.84. Break of 122.88 resistance will extend larger rise from 109.20 through 124.08 high. On the downside, however, break of 118.91 will turn focus back to 114.84 instead.

In the bigger picture, focus is back on 126.09 support turned resistance. Decisive break there will confirm completion of the down trend from 149.76. And in such case, rise from 109.20 is at the same degree and should target 141.04 resistance and above. Meanwhile, rejection from 126.09 and break of 114.84 will extend the fall from 149.76 through 109.20 low.

Daily Pivots: (S1) 1.0807; (P) 1.0826; (R1) 1.0853; More...

Intraday bias in EUR/CHF remains neutral for consolidation below 1.0869 temporary top. Downside of retreat should be contained by 1.0781 support and bring another rally. Above 1.0869 will target 1.0897 resistance next. Decisive break there should confirm our bullish view of reversal. However, break of 1.0781 will bring deeper fall back towards 1.0652 support instead.

In the bigger picture, the price actions from 1.1198 are seen as a corrective move. Current strong rebound is raising the chance that it's completed after defending 38.2% retracement of 0.9771 to 1.1198 at 1.0653. Decisive break of 1.0999 resistance will target a test on 1.1198 high. For now, this will be the preferred case as long as 1.0652 support holds.

Market movers today

It is a very quiet day in terms of major economic data releases.

In the US today, PCE inflation data for March is due out. However, these numbers will probably not at t ract very much at tent ion, as we received PCE inflation figures for Q1 on Friday, from which we can implicit ly calculate the monthly numbers for March.

More interestingly in the US, ISM manufacturing figures for April and final PMI manufacturing figures for Apri l are due out. Over the past few months, we have seen a divergence between ISM, PMI and regional manufacturing indices. The preliminary PMI figures for April fell back slightly but the regional indices continued climbing higher. We estimate ISM fell further in April. Our models continue to point towards a deceleration of economic growth and, therefore, we put less weight on the regional manufacturing indices.

Later this week (on Wednesday), the FOMC is set to meet. This meeting is one of the small meetings (no updated project ions and no press conference) and we do not expect any changes in monetary policy or any major changes in the statement .

There are no market movers in Scandi today.

Selected market news

On Friday, euro area HICP inflation rose more than expected to 1.9% y/y in April from 1.5% y/y in March. The euro area core inflation also came out stronger than expected at 1.2% from 0.7%. The higher core inflation was driven by service price inflation, which was 1.8% from 1.0%, whereas inflation in non-energy industrial goods was unchanged at 0.3%. This was clearly good news for the ECB. However, as there is a lot of uncertainty with inflation around the timing of Easter, westick to our view that the ECB will continue its QE purchases at EUR60bn per month going into 2018.

On Friday, in Sweden, retail sales figures decreased by 0.4% m/m in March. Retail sales came out at 1.9% y/y in March, which was much lower than the market expected (3.1% y/y). Retail sales in consumables (such as goods sold in department stores and specialised grocery stores) increased by 0.2% y/y, while durables (such as clothing stores, furniture stores, second-hand goods stores and mail order houses) increased by 2.4% y/y. Notably, one important explanat ion for the weak y/y outcome of the month is that the comparison is made with the Easter month of March 2016.

On Sunday, the US congress negotiators reached a tentative deal on an USD1.1trn bill to avert a shutdown of government this week, according to Republican and Democratic aides . The news triggered a subdued relief as Asian equities rose slightly and the USD/JPY soared. In fixed income markets, the 10-year US government bond yield has climbed by 1bp since Friday night . On the data front this morning, the Nikkei Japan Manufacturing PMI for April came out at 52.7 from 52.4 in March.

Daily Pivots: (S1) 0.7459; (P) 0.7475; (R1) 0.7501; More...

Intraday bias in AUD/USD remains neutral for consolidation above 0.7439 temporary low. Upside of recovery should b limited by 0.7609 resistance and bring another fall. Rise from 0.7158 should have completed at 0.7748 already. Below 0.7439 will target a test on 0.7144/7158 support zone. At this point, there is no clear sign of larger down trend resumption yet. Hence we'll be cautious on strong support from0.7144/58 to contain downside and bring rebound. On the upside, break of 0.7609 will argue that the fall from 0.7748 has completed. In such case, bias will be turned back to the upside for 0.7748 resistance.

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 0.8118) and above.

Key Points:

• Bearish week looking likely ahead.
• ABC wave seems to be intact.
• Busy news week should see volatility spike.

It's a busy week ahead for the Kiwi Dollar which means it's worth taking a closer look at the pair to try to establish both a fundamental and technical bias moving forward. Additionally, we should investigate what happened over the prior sessions and how this has positioned the NZD ahead of the slew of data that is coming down the line.

Starting with how the pair got to where it is now, the Kiwi Dollar came under some heavy fire last week, eroding a fortnight's worth of recovery in only three sessions. Specifically, Monday through Wednesday saw the pair plunge from 0.7038 to just 0.6893 as a lack of NZ data left it exposed to the influence of the surge in US New Home Sales to 621K m/m. However, the severity of the slide indicates that the sharp reversal could be more down to the return of that ABC wave that had, until recently, been thought to have been disrupted.

But what do the technicals indicate is on the cards for the week to come? Well, the revival of that ABC wave is likely going to keep the NZDUSD under pressure throughout the week which could lead to substantial losses if the current support level is broken which presently looks rather likely. Indeed, the highly bearish Parabolic SAR and EMA biases are suggesting that such a breakout is warranted which leaves us with quite a bearish forecast for the week ahead if the fundamental results underwhelm.

Speaking of which, as mentioned, it's rather busy on the fundamental news front which could mean some decent price movements lay ahead. Most of the NZ-centric news is scheduled for Tuesday and includes the GDT Price Index, Employment Change, and Unemployment Rate figures. Of course, the dairy price data will be the major driver of prices as is usual but don't discount the impact of the employment figures. Notably, given that we are expecting the jobless rate to hold steady at 5.2%, stay alert for any surprises during the release as they could amplify or curtail fallout of the GDT figure.

Ultimately, we will simply have to wait and see if the above mentioned fundamentals prove to be disruptive or in line with the bearish technical forecast. Regardless, even if we see a strong uptick in the GDT figure or a major drop in unemployment, gains will be limited by the technicals which minimizes upside risks moving forward.