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Markets remain in full risk on mode this week. DJIA gained 232.23 pts or 1.12% to close at 20996.12 overnight. S&P 500 also rose 14.46 pts or 0.61% to close at 2388.61. Both indices took out structural resistance at 20887.5 and 2378.36 respectively and should be heading for new record highs. Meanwhile, NASDAQ maintains its lead and closed at new record high at 6025.49, up 0.7%. Treasury yields also jumped with 10 year yield closing up 0.054 at 2.327. That compares to last week's low at 2.177 and structural resistance at 2.391. A break above 2.391 will pave the way for a test on 2.621 key near term resistance. Dollar stays weak against European majors though. But the dollar index is losing some downside momentum below 98.85 support.

Trump administration to deliver tax reform

Markets continue to re-price in June Fed hike. Fed fund futures now suggest over 75% chance of a 25bps hike by Fed at June meeting. And, it was below 50% last week. But the expectation would very much depends on what US President Donald Trump would deliver regarding his tax reforms today. There are talks that Trump would push to lower public companies' income tax rate to 15%, down from 35%. Besides, there would be cut on top tax rate on "pass through" businesses, from 39.6% to 15%. And there would also be tax rate cut on offshore earnings which are repatriated, down from 35% to 10%. Meanwhile, there won't be a so called "border-adjustment" tax on imports. Treasury Secretary Steven Mnuchin and National Economic Director Gary Cohn are scheduled to have a joint pressure conference around 1:30pm ET today, from the White House Briefing Room.

UK required to pay EU contributions until 2020

In UK, it's reported that EU would require UK to pay the committed budget until 2020 before getting reasonable Brexit terms. On the other hand, UK Prime Minister Theresa May would only agree to it in exchange for a transitional deal that both sides would agree on. Meanwhile, May could offer an "ongoing payments" of some sort in exchange for a Free Trade Agreement after Brexit. European Commission President Jean-Claude Juncker and EU's chief Brexit negotiator Michel Barnier will arrive in London today for a meeting with May. EU officials will discuss and approval their own negotiation plan in a summit on April 29.

BOJ Kuroda: G20 and IMF agreed to its monetary policies

Ahead of the two day BoJ monetary policy meeting, Governor Haruhiko Kuroda said yesterday that the G20 and IMF officials agreed with the central bank's monetary policies. Kuroda told the parliament that "the IMF released a statement that re-affirms previous agreements that central banks should pursue their mandate to support economic activity and attain price stability." And he earned "the understanding that we are conducting policy to meet our inflation target."

Meanwhile, it's expected that BoJ would lower inflation forecast in the quarterly Outlook for Economic Activity and Prices report, to be released on Thursday after the policy announcement. But the central bank may upgrade growth forecast. In January forecast, BoJ projected core CPI to hit 1.5% yoy in this fiscal year. But core CPI is currently standing at 0.2% yoy in February with weak momentum in price growth. On the other hand, IMF raised Japan's growth forecast to 1.2% in 2017, up from January estimate of 0.8%. BoJ could share similar view.

Australian CPI back in RBA's target range

Australia CPI rose 0.5% qoq and 2.1% yoy in Q1, up from prior quarter's 0.5% qoq, 1.5% yoy. But missed expectation of 0.6% qoq, 2.2% yoy. That's the first time inflation is back in RBA's target range since 2014. RBA said earlier this month that it expected headline inflation to pick up over the course of 2017. However, it also expected that recovery in underlying inflation to be "a bit more gradual" due to subdued wage growth. Trimmed mean CPI rose to 1.9% yoy, up from 1.6% yoy and beat expectation of 1.8% yoy. Weighted median CPI rose to 1.7% yoy, up from 1.5% yoy, but missed expectation of 1.8% yoy.

Elsewhere...

Japan all industry activity index rose 0.7% mom in February. Swiss UBS consumption indicator will be released in European session. Canada will release retail sales later today.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 140.86; (P) 141.76; (R1) 143.47; More....

GBP/JPY's rally continues and reaches as high as 143.20 so far. Intraday bias remains on the upside for 144.77 resistance. Consolidation pattern from 148.42 should have completed three waves down to 135.58, after hitting 135.39 fibonacci level. Break of 144.77 should extend whole rise from 122.36 through 148.42. On the downside, break of 140.04 support is needed to indicate short term topping. Otherwise, outlook will remain bullish in case of retreat.

In the bigger picture, price actions from 122.36 medium term bottom are still seen as a corrective pattern. As long as 50% retracement of 122.36 to 148.42 at 135.39 holds, another rising leg would be seen to 38.2% retracement of 195.86 to 122.36 at 150.42 and possibly above. However, firm break of 135.39 will bring retest of 122.36, with prospect of resuming the larger down trend from 195.86.

Economic Indicators Update

Short term Elliott Wave view in USDCAD suggest the decline to 1.322 ended Intermediate wave (X). Revised view suggests that the rally from there is unfolding as a double three Elliott Wave structure where Minute wave ((w)) ended at 1.3525 and Minute wave ((x)) ended at 1.3406. Minute wave ((w)) is subdivided as a Flat Elliott wave structure where Minutte wave (a) ended at 1.3338 and Minutte wave (b) ended at 1.3258. Near term, pair is within Minutte wave (x) pullback to correct the cycle from 4/24 low in 3, 7, or 11 swing before the rally resumes. We don’t like selling the proposed pullback and expect buyers to appear once wave (x) pullback is complete in 3, 7, or 11 swing as far as pivot at 1.3406 stays intact.

USDCAD 1 hour Elliott Wave Chart

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

Going into the early hours of yesterday's US segment, H4 price cleared the 1.09 handle on lower-than-expected US consumer confidence and ended the day touching gloves with mid-level resistance at 1.0950. While the bulls certainly appear in fine form this morning, traders may want to take into account that not only is 1.0950 now in play, but twenty or so pips above here there's a daily resistance sitting at 1.0971 (converges with a trendline resistance taken from the high 1.0828 and an AB=CD completion point at 1.0980 [black arrows]). What is strongly favoring the bulls at the moment, however, is weekly price. Notice how the week's open forced the unit above resistance at 1.0819 and the 2016 yearly opening level at 1.0873, which are both currently being used as support.

Our suggestions: Based on the above structure, we see three possible trade scenarios:

Look to buy the couple on any retest seen at 1.09. There's not much H4 confluence seen here though, so waiting for additional confirmation is advised (a reasonably sized H4 bull candle should suffice – preferably a full-bodied candle).

Wait and see if the daily bulls can close price above the current daily resistance. Should this come to fruition, one could then look to trade any retest seen thereafter.

Go against the grain and consider shorting from 1.0971, given the daily confluence seen at the daily resistance level. To be on the safe side, we would personally wait for a H4 bear candle (preferably a full-bodied close) to form before committing, since ending up on the wrong side of weekly flow would not be pleasant.

Data points to consider: No high-impacting economic events.

Levels to watch/live orders:

• Buys: 1.09 region ([waiting for a reasonably sized H4 bull candle to form before pulling the trigger is advised] stop loss: ideally beyond the candle's tail). Watch for a daily close to be seen above 1.0971.
• Sells: 1.0971 region ([waiting for a reasonably sized H4 bear candle to form before pulling the trigger is advised] stop loss: ideally beyond the candle's wick).

GBP/USD

Since the 19th April, H4 price has been busy chiseling out a consolidation zone fixed between 1.2844/1.2776. Directly below this range sits 1.2750: an interesting level given that there's also a AB=CD 127.2% Fib extension seen nearby at 1.2736 (drawn from the high 1.29) that unites closely with a broken Quasimodo line pegged at 1.2744 (green area).

Over on the weekly chart, we can see price trading marginally above resistance coming in at 1.2789, which could eventually encourage further buying up to supply at 1.3120-1.2957. Down on the daily chart, nevertheless, the candles are seen consolidating between support at 1.2774 and a H4 61.8% Fib resistance at 1.2859 (taken from the high at 1.3445).

Our suggestions: Technically speaking, we see two possible trade setups:

The H4 zone marked in green at 1.2736/1.2750 is, in our opinion, a nice area to consider an intraday bounce from. Apart from the H4 confluence, this zone is also seen planted directly beneath both the H4 range and the said daily support. For that reason, it could perhaps be a nice base to help facilitate a fakeout! The only grumble, of course, is that weekly sellers could still be active from resistance at 1.2789, hence the reason for not expecting much more than an intraday bounce from the H4 area.

A H4 close above the aforementioned H4 range could be considered an important cue for longs. A retest to the top side of this broken area as support followed by a reasonably sized H4 bull candle (preferably a full-bodied candle) would be sufficient enough to enter long, targeting 1.29, followed by 1.2920 (weekly 161.8% Fib ext. taken from the low 1.2108) and then the underside of weekly supply at 1.2957.

Data points to consider: No high-impacting economic events.

Levels to watch/live orders:

• Buys: 1.2736/1.2750 (stop loss: at least five pips beyond the lower edge of the area). Watch for price to engulf 1.2844 and then look to trade any retest seen thereafter ([waiting for a H4 bull candle to form following the retest is advised] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

AUD/USD

Helped by US dollar weakness, the commodity currency found a pocket of bids around H4 demand at 0.7515-0.7527, which happens to fuse together with a H4 61.8% Fib support at 0.7527 (taken from the low 0.7491). Despite this, the bulls appear to be struggling to register any noteworthy moves from here, with an array of H4 selling wicks seen forming overhead.

Climbing up to the weekly chart, the bulls have so far failed to generate anything of note out of the support area marked at 0.7524-0.7446. There's not much difference seen on the daily chart as price is currently trading from a support area at 0.7449-0.7506 seen lodged within the said weekly support area at 0.7449-0.7506.

Our suggestions: We see very little to hang our hat on here this morning. Even if the weekly and daily charts emphasized strong buying pressure, a long from the current H4 demand would be difficult from a risk/reward perspective, given how close the H4 mid-level resistance is at 0.7550. Therefore, opting to stand on the sidelines today may very well be the better path to take.

Data points to consider: Aussie inflation data at 2.30am GMT+1.

Levels to watch/live orders:

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

USD/JPY

The value of the US dollar strengthened in aggressive fashion against the Japanese yen yesterday, despite US consumer confidence coming in lower than expected. As can be seen from the H4 chart, the day ended with price closing above the 111 handle. Should the bulls remain in the driving seat here, there's a good chance that the pair will strike April's opening level at 111.41/Quasimodo resistance at 111.45.

Our suggestions: To make a long story short, our desk has placed a pending sell order at 111.41 with a stop set at 111.60 (above the H4 Quasimodo apex). Our rationale behind this simply comes from seeing the two H4 levels positioned around not only a weekly resistance area at 111.44-110.10, but also a daily resistance area coming in at 111.35-112.37.

The first take-profit target is set at 111, and upon a decisive close seen beyond this number, we'll be looking to initiate a trailing stop.

Data points to consider: No high-impacting economic events.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 111.41 ([pending order] stop loss: 111.60).

USD/CAD

During the course of yesterday's sessions the USD/CAD aggressively punched its way through 1.36 and tapped a high of 1.3626, before collapsing lower. Although the nearby H4 demand seen marked with a green arrow at 1.3545-1.3559 could hold price higher today, it is not this area that we're interested in. It's the H4 demand base seen below that's wrapped around the 1.35 handle at 1.3497-1.3515.

Here's the idea. The weekly chart shows that price is not only respecting the 2017 yearly opening level at 1.3434 as support, it also recently broke above a well-defined double-top formation seen around the 1.3588 neighborhood (green circle). The daily supply at 1.3598-1.3559 currently in play, which was also aggressively spiked yesterday, will likely help in pushing things down to our H4 demand.

Our suggestions: Wait and see if H4 price can stretch down to H4 demand at 1.3497-1.3515. Dependent on the time of day, a long from here without the need for additional confirmation is possible.

Data points to consider: Canadian retail sales at 1.30pm, Crude oil inventories at 3.30pm GMT+1.

Levels to watch/live orders:

• Buys: 1.3497-1.3515 ([dependent on the time of day, a long from here without the need for additional confirmation is possible] stop loss: 1.3495).
• Sells: Flat (stop loss: N/A).

USD/CHF

H4 bulls, as you can see, were unable to sustain gains above the mid-level resistance at 0.9950 yesterday. Price closed below the number amid the early hours of London and sold off from this region going into the opening of the US segment, eventually bringing price down to a low of 0.9918. Given this factor, the nearby 0.99 handle may very well come into play today. 0.99 is an interesting number. Not only because it is likely being watched by the majority of the market, but also for the reason that it is seen positioned nearby February's opening level at 0.9890 and the top edge of a daily support area at 0.9842-0.9884 (green area). The only grumble we would have if we were to take a long position from this area is the fact that weekly price could potentially push the market through our H4 buy zone to shake hands with support at 0.9861.

Our suggestions: Watch for H4 price to attack the 0.9884/0.9900 region today. Should this come to fruition, and price chalks up a reasonably sized H4 bull candle (preferably a full-bodied candle), then our team would have no hesitation in pressing the buy button. As of this point it is difficult to pin-point a take-profit target since we are yet to see the approach.

Data points to consider: No high-impacting economic events.

Levels to watch/live orders:

• Buys: 0.9884/0.99 ([waiting for a reasonably sized H4 bull candle to form before pulling the trigger is advised] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

DOW 30

The DOW aggressively climbed higher on Tuesday, following Monday's rally. Several H4 tech resistances were wiped out during the bullish onslaught, with H4 price not stabilizing until reaching resistance drawn from 21020. Over on the daily candles, the unit crossed above a Quasimodo resistance at 20977 thanks to the recent advance. In the event that this line is now respected as support, we could potentially see US equities pop to fresh highs sometime this week.

Our suggestions: An ideal scenario would be to see H4 price print a decisive close beyond resistance at 21020. This – coupled with a retest and a reasonably sized H4 bull candle (preferably a full-bodied close) would, in our opinion, be enough to validate a long trade here, targeting H4 supply at 21139-21101, and then possibly on to fresh record highs.

Data points to consider: No high-impacting economic events.

Levels to watch/live orders:

• Buys: Watch for H4 price to engulf H4 resistance at 21020 and then look to trade any retest seen thereafter ([waiting for a H4 bull candle to form following the retest is advised] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

GOLD

Kicking this morning's report off with a look at the weekly chart, it's relatively easy to see what side is in control at the moment. Weekly bears, after engaging with the two Fibonacci extensions 161.8/127.2% at 1313.7/1285.2 taken from the low 1188.1 (green zone), have brought the yellow metal down to a support level drawn in at 1263.7. The story on the daily chart, nevertheless, shows the candles to be trading within the walls of a support area at 1265.2-1252.1 (encapsulates the said weekly support level). However, should the H4 resistance area at 1266.0-1270.7 hold ground today, this could spell trouble for the bulls.

Our suggestions: Neither a long nor short seems attractive at this time. While entering long would see you trading in line with the current weekly support level and daily support area, it would also mean buying into a H4 resistance zone! By the same token, a short from the H4 resistance area would potentially position you against weekly and daily flow. So, we have come to the conclusion that remaining flat for the time being may be the better path to take.

Levels to watch/live orders:

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

Global Markets:

• Asian stock markets: Nikkei up 0.35 %, Shanghai Composite gained 0.30 %, Hang Seng rose 0.60 %, ASX 200 rallied 0.65 %
• Commodities: Gold at $1265 (-0.10 %), Silver at $17.66 (+0.05 %), WTI Oil at $49.45 (-0.20 %), Brent Oil at $52.50 (-0.20 %)
• Rates: US 10 year yield at 2.34, UK 10 year yield at 1.09, German 10 year yield at 0.39

News & Data:

• Australia CPI (YoY) (Q1): 2.10% (est 2.20%, prev 1.50%)
• Australia CPI (QoQ) (Q1): 0.50% (est 0.60%, prev 0.50%)
• Australia CPI Trimmed Mean (YoY) (Q1): 1.90% (est 1.80%, prev 1.60%)
• Australia CPI Trimmed Mean (QoQ) (Q1): 0.50% (est 0.50%, prev 0.40%)
• Australia CPI Weighted Median (YoY) (Q1): 1.70% (est 1.80%, prev 1.50%)
• Australia CPI Weighted Median (QoQ) (Q1): 0.40% (est 0.50%, prev 0.40%)
• Australia ANZ Roy Morgan Weekly Consumer Confidence Index (23/Apr): 111.2 (prev 112.6)
• Australia Skilled Vacancies (MoM) (Mar): -0.60% (prev 0.10%)
• Asian stocks hover near two-year highs on U.S. optimism, euro steady – RTRS
• Nasdaq tops 6,000 as earnings boost Wall St; U.S. tax code eyed – RTRS

Markets Update:

The Australian Dollar came under pressure following weaker than expected inflation data. The headline CPI figure arrived at 2.10 % y/y, slightly below the forecast. AUD/USD fell from 0.7545 to 0.7505. The technical outlook for the currency pair is rather poor as well. Should it break below 0.7480 support, it is likely to reach 0.73 quite soon.

The Canadian Dollar has received plenty of attention in the past two trading days. Announcements about US tariffs on Canadian products and a decline in Oil prices led to a decline of the currency. USD/CAD broke through 1.36 yesterday and rallied to 1.3625. While the pair retraced somewhat in Asia, it will likely remain bid, and further gains seem likely.

USD/JPY was boosted by the rally in equity markets. The break above 110.50 resistance suggests that the pair will test 112 resistance soon. Meanwhile, the Euro and Pound are consolidating. Traders are now looking forward to tomorrow’s ECB rate decision.

Upcoming Events:

• 13:30 GMT – Canadian Retail Sales
• 15:30 GMT – US Crude Oil Inventories

For the 24 hours to 23:00 GMT, the AUD declined 0.38% against the USD and closed at 0.7538.

LME Copper prices rose 0.7% or $40.5/MT to $5652.5/MT. Aluminium prices rose 0.8% or $15.0/MT to $1943.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7512, with the AUD trading 0.34% lower against the USD from yesterday's close, following the release of a softer-than-expected inflation data.

Early morning data revealed that Australia's consumer price index (CPI) climbed 0.5% on a quarterly basis in 1Q 2017, falling short of market expectations for a rise of 0.6% and compared to a similar rise in the previous quarter. Meanwhile, on an annual basis, the CPI advanced 2.1% in the first quarter of 2017, surpassing the 2.0% mark for the first time since 2014, thus easing the threat of deflation in the nation. The CPI had advanced 1.5% in the prior quarter, whereas markets anticipated for a rise of 2.2%.

The pair is expected to find support at 0.7489, and a fall through could take it to the next support level of 0.7466. The pair is expected to find its first resistance at 0.7549, and a rise through could take it to the next resistance level of 0.7586.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR rose 0.56% against the USD and closed at 1.0928.

In economic news, industrial business climate index in France remained steady at a level of 104.0 in April, meeting market expectations.

The greenback traded mixed against a basket of major currencies, after the latest economic data painted a gloomy picture of the world’s largest economy.

The US consumer confidence index fell more-than-expected to a level of 120.3 in April, from a revised sixteen-year high level of 124.9 in the prior month, as optimism about the economy dwindled. Markets had anticipated the index to drop to a level of 122.5.

On the other hand, the nation’s new home sales registered an unexpected rise of 5.8% on a monthly basis, to a level of 621.0K in March, accelerating at its fastest pace in eight months, thus underlining strength in the economy, despite an apparent slowdown in the first quarter. Markets were expecting new home sales to ease to a level of 584.0K, compared to a revised level of 587.0K in the prior month. Further, the nation’s housing price index surged to a nearly three-year high level, after it rose 0.8% MoM in February, surpassing market consensus for a gain of 0.4% and compared to a revised rise of 0.2% in the previous month.

Other economic data revealed that the US Richmond Fed manufacturing index dropped less-than-anticipated to a level of 20.0 in April, following a level of 22.0 in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.0938, with the EUR trading 0.09% higher against USD from yesterday’s close.

The pair is expected to find support at 1.0875, and a fall through could take it to the next support level of 1.0813. The pair is expected to find its first resistance at 1.0975, and a rise through could take it to the next resistance level of 1.1013.

In absence of any major economic releases in the Euro-zone today, traders would focus on the US MBA mortgage applications data, due later today. Meanwhile, investors will seek details on the US President, Donald Trump’s tax reform plan, scheduled to be announced later today.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 0.35% against the USD and closed at 1.2830.

On the macro front, UK's public sector net borrowing posted a more-than-expected deficit of £4.4 billion in March, after recording a revised surplus of £0.7 billion in the previous month, whereas markets were expecting a deficit of £1.5 billion.

In the Asian session, at GMT0300, the pair is trading at 1.2840, with the GBP trading 0.08% higher against the USD from yesterday's close.

The pair is expected to find support at 1.2794, and a fall through could take it to the next support level of 1.2749. The pair is expected to find its first resistance at 1.2865, and a rise through could take it to the next resistance level of 1.2891.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 1.05% against the JPY and closed at 110.96.

In the Asian session, at GMT0300, the pair is trading at 111.23, with the USD trading 0.24% higher against the JPY from yesterday's close.

Overnight data revealed that Japan's all industry activity index rose more-than-anticipated by 0.7% MoM in February, compared to an advance of 0.1% in the prior month. Markets were expecting the index to rise 0.6%.

The pair is expected to find support at 110.26, and a fall through could take it to the next support level of 109.28. The pair is expected to find its first resistance at 111.79, and a rise through could take it to the next resistance level of 112.34.

Looking ahead, investors will concentrate on Bank of Japan's (BoJ) interest rate decision, due to be announced tomorrow.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.25% against the CHF and closed at 0.9933.

In the Asian session, at GMT0300, the pair is trading at 0.9923, with the USD trading 0.1% lower against the CHF from yesterday's close.

The pair is expected to find support at 0.9904, and a fall through could take it to the next support level of 0.9884. The pair is expected to find its first resistance at 0.9956, and a rise through could take it to the next resistance level of 0.9988.

Ahead in the day, market participants will look forward to Switzerland's ZEW expectations index for April and UBS consumption indicator for March.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.43% against the CAD and closed at 1.3572.

In the Asian session, at GMT0300, the pair is trading at 1.3568, with the USD trading slightly lower against the CAD from yesterday's close.

The pair is expected to find support at 1.3531, and a fall through could take it to the next support level of 1.3495. The pair is expected to find its first resistance at 1.3615, and a rise through could take it to the next resistance level of 1.3663.

Moving ahead, Canada's retail sales data for February, scheduled to release later in the day, will keep investors on their toes.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.