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'Consumer confidence is starting to reflect the realities of governing, not the hopes that the swamp will be drained.' - Joel Naroff, Naroff Economic Advisors

The Conference Board Consumer Confidence Index dropped more than experts estimated. In April, it lost 3.8% and reached 120.3, thus, marking the first decline since January. The fall was mainly attributable to the less optimistic view of business conditions and the labour market in the upcoming six months. As a result, the number of respondents, who evaluated business conditions as 'good', decreased from 32.4% to 30.2% and the share of those, who assessed the available number of jobs in the market as 'plentiful', plunged from 31.8% to 30.8%. In addition, the number of people who evaluated business conditions as 'bad' increased slightly from 13.1% to 13.8%. Yet, the share of consumers that believed jobs were 'hard to get' remained unchanged at 19.1%. The Conference Board's data confirmed the view that in the short-run consumers would likely to limit their spending and put more emphasis on savings accumulation. Tuesday's data also showed that the number of people, who thought that business conditions would worsen over the next six months, rose from 8.5% to 10.9%, while the share of those expecting weaker job creation surged from 12.7% to 13.1%. Nevertheless, the majority of respondents still believed that the economy would continue growing in the months ahead.

EUR/USD

Current level - 10931

Yesterday's rise performed a precise test of 1.0950 resistance and the intraday bias is still positive with an initial support at 1.0900. Crucial on the downside is 1.0826.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 111.42

The uptrend is intact, ready for a break through 111.50, towards 112.26 resistance area. Initial support is projected at 110.50, followed by the crucial one at 109.40.

GBP/USD

Current level - 1.2824

The bias remains neutral within the consolidation pattern below 1.2904 peak, with a risk of a dip towards 1.2705 area. 

On the updated chart of USDJPY, we can see a strong recovery taking place, from around the 108.12 level where a bigger three wave A)-B)-C) pattern was completed. That said current reversal is viewed as wave 1, the first wave of a possible five wave development that may take weeks to follow. A breach above the previous wave 4 at 111.64 level would be a confirmation for higher levels to come.

USDJPY, 4H

Daily Pivots: (S1) 1.3502; (P) 1.3564; (R1) 1.3635; More....

Intraday bias in USD/CAD remains on the upside for the moment. Sustained break of 1.3598 will confirm resumption of medium term rise from 1.2460. In that case, USD/CAD should target next medium term fibonacci level at 1.3838. On the downside, below 1.3524 minor support will turn bias neutral and bring retreat. But downside should be contained well above 1.3222 support and bring another rise.

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. The second leg from 1.2460 is likely still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. We'd look for reversal signal there to start the third leg. However, break of 1.2968 will argue that the third leg has already started and should at least bring a retest of 1.2460 low. Meanwhile, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Daily Pivots: (S1) 0.7512; (P) 0.7542; (R1) 0.7564; More...

Intraday bias in AUD/USD is turned neutral first. On the downside, below 0.7490 minor support will likely send the pair through 0.7472 near term support. In that case, whole rise from 0.7150 should be completed at 0.7748. Outlook will then be turned bearish for retesting 0.7144/58 support zone. On the upside, above 0.7609 resistance will turn bias to the upside for retesting 0.7748 instead.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction. 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 0.8144) and above.

Daily Pivots: (S1) 1.0868; (P) 1.0909 (R1) 1.0967; More....

EUR/USD's rise is still in progress and intraday bias remains on the upside. Note again that rise from 1.0339 is in progress and would extend higher towards 1.1298 resistance. But still, such rally is seen as a corrective move. Hence, we'd pay attention to topping signal above 1.0905 and below 1.1298 key resistance. On the downside, below 1.0777 minor support will turn bias to the downside for 1.0569 support first.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.

Asia Mid-Session Market Update: Australia CPI returns to RBA target range; Risk-on flows continue on earnings and Trump tax cut speculation

US Session Highlights

(US) Apr Philadelphia Fed Non-Manufacturing General Regional Business Conditions: 30.1 v 35.4 prior

(CO) Colombia Central Bank Gov Echavarria: Sees room to cut interest rates - financial press

(US) Weekly Redbook Sales w/e Apr 22nd +1.7% y/y; Apr MTD +1.2% m/m; Apr MTD +1.9% y/y

APR RICHMOND FED MANUFACTURING INDEX: 20 V 16E

(US) MAR NEW HOME SALES: 621K V 584KE (strongest level since July)

(US) APR CONSUMER CONFIDENCE: 120.3 V 122.5E (outlook for jobs market was also less upbeat)

Stock markets continue to extend the rally that started the week on renewed confidence in Euro area stability and strong earnings data expectations. S&P profits were estimated to have risen 11% in Q1, the most since 2011. Talk of a new tax deal also helped the Dow break 21,000 and the NASDAQ pierce the 6,000 ceiling for the first time.

US markets on close: Dow 1.1%, S&P500 0.6%, Nasdaq 0.7%

Best Sector in S&P500: Materials

Worst Sector in S&P500: Telecommunication

Biggest gainers: CAT +7.9%; FCX +7.1%; WAT +6.9%; NFLX +5.8%

Biggest losers: R -13.8%; ESRX -10.7%; TROW -4.2%; LH -3.9%

At the close: VIX 10.8 (-0.1pts); Treasuries: 2-yr 1.28% (+5bps), 10-yr 2.33% (+5bps), 30-yr 2.98% (+5bps)

US movers afterhours

IRBT Reports Q1 $0.58 v $0.26e, R$168.5M v $151Me; +9.9% afterhours

EW Reports Q1 $0.94 v $0.82e, R$884M v $777Me- Guides Q2 $0.82-0.92 v $0.86e, R$810-850M v $817Me - Raises FY17 $3.43-3.55 v $3.40e; +8.5% afterhours

DECK Announces review of strategic alternatives; +5.7% afterhours

CMG Reports Q1 $1.60 v $1.28e, R$1.07B v $1.05Be; Discloses recent incident of unauthorized activity on its payment network; +2.9% afterhours

COF Reports Q1 $1.75 v $1.93e, R$6.5B v $6.59Be; -3.3% afterhours

DFS Reports Q1 $1.43 v $1.42e, R$1.89B v $1.81Be; Provision for loan losses $586M v $424M y/y; -3.5% afterhours

CREE Reports Q3 $0.11 v $0.14e, R$341.5M v $325Me; to form JV with China's San'an Optoelectronics Co; -7.5% afterhours

X Reports Q1 -$0.83 v +$0.30e, R$2.73B v $2.92Be; Cuts FY17 adjusted EBITDA $1.1B v $510M y/y (prior FY17 adjusted EBITDA $1.3B); -16.9% afterhours

Key economic data

(AU) AUSTRALIA Q1 CONSUMER PRICES (CPI) Q/Q: 0.5% V 0.6%E; Y/Y: 2.1% (highest since Q2 of 2014) V 2.2%E; TRIMMED MEAN Q/Q: 0.5% V 0.5%E ; Y/Y: 1.9% (5-quarter high) V 1.8%E

(AU) AUSTRALIA MAR SKILLED VACANCIES M/M: -0.6% V -0.3% PRIOR

(NZ) New Zealand Mar Net Migration: 6.1K v 6.0K prior

(NZ) NEW ZEALAND MAR CREDIT CARD SPENDING M/M: +0.8% V -1.4% PRIOR; Y/Y: 7.1% V 5.3% PRIOR

(US) Kelley Blue Book: New-car sales to fall 3% to 1.45M units in April 2017; 2017 forecast calls for 16.8-17.3M in sales, first y/y decline after 7 years of increases

Asia Session Notable Observations, Speakers and Press

Asian equity indices remain bid, tracking 2nd straight day of strong gains on Wall St. Optimism from weekend French election has been displaced by expectation of pro-business tax reform announcement from the White House on Wednesday. One press report anticipates the plan to feature tax cuts for small pass-through businesses to 15% from 39.6%, along with a 10% levy on US companies offshore profits. Treasury Sec Mnuchin and EA Cohn have met with Congressional leaders Tues evening, and White House suggests "everyone is on the same page". The tax plan will also reportedly not contain House Speaker Ryan's border-adjustment proposal.

In FX, dollar majors were rangebound for much of the Asia session. USD/JPY tracked rick-on flows to the upside, regaining ¥111 handle to approach 111.50 for a 2-week high. AUD/USD was also volatile following mixed Q1 CPI data from Australia. While headline y/y moved back into RBA 2-3% target range for the first time in 2 years, it missed expectations, sending AUD down over 30pips toward $0.75 level. Analysts also noted that much of the price increase was in auto fuel and housing, ominously implying living costs are outpacing wage gains. Capital Economics said it no longer expects RBA rate cuts after the CPI data, but Barclays believes RBA will wait for CPI to be consistent above 2% before signalling policy shifts.

China

(CN) China Iron and Steel Association (CISA): Increase in domestic output and decline in export demand to weigh on prices - press

(CN) China NDRC: To monitor long term coal supply contract implementation

(CN) China's monetary policy does not need to be too tight - Chinese press citing unidentified analysts

Japan

(JP) Japan Fin Min Aso: Regional economies are experiencing moderate recovery

Australia/New Zealand

(AU) Capital Economics: No longer expect RBA to cut rates further after today's CPI data - SMH

(NZ) New Zealand's Home Loan Affordability Reports sees prices in Auckland the least affordable on record (since 2004) - NZ press

Korea

(KR) US military reportedly starts moving THAAD anti-ballistic missile system into planned site in South Korea - Korea press

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.7%, Hang Seng +0.6%, Shanghai Composite +0.4%, ASX200 +0.7%, Kospi +0.3%

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

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

EUR 1.0920-1.0945; JPY 110.95-111.35; AUD 0.7505-0.7555; NZD 0.6920-0.6955

June Gold -0.1% at 1,266/oz; June Crude Oil -0.2% at $49.44/brl; July Copper -0.1% at $2.60/lb

(US) Weekly API Oil Inventories: Crude: +0.9M v -0.8M prior; first buld in 4 weeks

SLV iShares Silver Trust ETF daily holdings rise to 10,178 tonnes from 10,119 tonnes prior

GLD SPDR Gold Trust ETF daily holdings fall 5.9 tonnes to 854.3 tonnes

USD/CNY (CN) PBOC SETS YUAN MID POINT AT 6.8845 V 6.8833 PRIOR

(CN) PBOC to inject combined CNY80B v CNY80B prior in 7-day, 14-day and 28-day reverse repos, 7th straight injection

(CN) China MoF sells 3-yr bonds; avg yield 3.23%; bid-to-cover 1.59x

Asia equities / Notables / movers by sector

Australia

A2 Milk (A2M) +6.7%; Harbour Asset Management announces notice of initial substantial holder with 5.1% stake

BHP (BHP) +0.7%; Q3 production

Beadell (BDR) -16.7%; Q3 production

Japan

Mitsui OSK (9104) +2.4%; FY17 earnings speculation

Hitachi (6501) +3.1%; May sell chip unit

Toshiba (6502) +2.7%; May change auditing firms

Asahi Kasei (3407) +1.4%; FY16/17 earnings speculation

Hong Kong

China Vanke (2202) -3.1%; suspected to sell property in 2 Xian projects illegally

Wynn Macau (1128) +4.8%; Q1 results

China CITIC (998) -0.8%; Q1 results

Daily Pivots: (S1) 1.2792; (P) 1.2818; (R1) 1.2863; More...

Intraday bias in GBP/USD remains neutral for consolidation below 1.2903. As long as 1.2614 resistance turned support holds, further rally is expected. Firm break of 100% projection of 1.2108 to 1.2614 from 1.2365 at 1.2871 will target 161.8% retracement at 1.3184. Still, price actions from 1.1946 are seen as a correction. Hence we'd expect strong resistance below 1.3444 to bring larger down trend resumption. On the downside, break of 1.2614 resistance turned support will turn bias back to the downside for 1.2365 support first.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Daily Pivots: (S1) 0.9911; (P) 0.9940; (R1) 0.9962; More.....

Downside momentum in USD/CHF remains a bit unconvincing as seen in 4 hour MACD. But with 0.9999 minor resistance intact, deeper fall is still expected. Current decline from 1.0107 will extend to 0.9812 support and below. Fall from 1.0342 is seen as a correction. Hence, we'll look for bottoming signal below 0.9812. Meanwhile, on the upside, above 0.9999 minor resistance will turn bias back to the upside for 1.0107 resistance instead.

In the bigger picture, we're still maintaining that firm break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the cross. However, the corrective nature of the fall from 1.0342 is starting to give the medium term outlook a bullish favor. Hence, in stead of looking for topping signal around 1.0342, we'd now pay closer attention to upside acceleration as USD/CHF approaches this level again.

Daily Pivots: (S1) 110.04; (P) 110.62; (R1) 111.65; More....

USD/JPY's rise is still in progress and reaches as high as 111.50 so far. Intraday bias remains on the upside for 111.58 support turned resistance. Decisive break there will indicate that t fall from 118.65 is merely a corrective move and has completed. Outlook will then be turned bullish for 115.49 resistance and above. Meanwhile, below 109.58 minor support will turn bias to the downside and extend the whole decline from 118.65 to 61.8% retracement of 98.97 to 118.65 at 106.48.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. Current development suggests that it's not completed yet and is extending. In case of deeper decline, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Rise from 75.56 is still expected to resume later after the correction from 125.85 completes.