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Highlights:

• The upward revision to headline GDP was slightly stronger than expectations for a 2.0% reading
• Consumer spending growth was revised up to 3.5% from 3.0% in the second estimate (and 2.5% in the advance estimate). The build in inventories was also slightly larger with partial offset from moderately less net exports and non-residential business investment.
• Risks have increased that fiscal stimulus we've incorporated into our outlook later this year will not be as large as previously assumed. Nonetheless, we expect positive momentum in the economy will persist going forward at a pace that is strong enough to warrant further Fed interest rate hikes. Our forecast assumes 2 additional 25 basis point increases in the fed funds target range this year following the hike in March.

Our Take:

Although somewhat stronger than expected (and arguably with more encouraging details given the upgrade to consumer spending growth), changes in the third (and 'final') estimate of Q4 GDP growth were minor on balance and had little impact on our assessment of the underlying pace of growth in the economy which remained above-trend over the second half of last year. Looking ahead to Q1/17, growth in consumer spending appears to have slowed to a pace less than half of the average 3 1/2% increase over the last three quarters; however, continued strong improvement in labour markets and household incomes, low interest rates and surging consumer confidence all suggest that pause will be short-lived while tomorrow's monthly consumer spending report (which will provide the monthly detail behind the upward revision to quarterly consumer spending reported today) will provide more clarification on the extent to which upward revisions to Q4 spending are reflected in stronger momentum early in 2017 than has previously been reported. There also remains some downside risk to near-term growth from the often-volatile net trade and inventory components; however business fixed investment in Q1, encouragingly, looks on track to rise at its strongest pace in since Q3/14. On balance, data released to-date remains consistent with our forecast that GDP growth overall was little changed in Q1 at 2.0%.

Daily Pivots: (S1) 1.3299; (P) 1.3349; (R1) 1.3378; More....

USD/CAD's break of 1.3220 minor support suggests that whole fall from 1.3534 is likely resuming. Intraday bias is turned back to the downside for 1.3263 and possibly below. Nonetheless, price actions from 1.3534 are viewed as a correction. Hence, we'd expect strong support from 1.3211 cluster level (61.8% retracement of 1.3008 to 1.3534 at 1.3209) to contain downside and bring rebound. On the upside, above 1.3413 will target a test on 1.3534 resistance first. Overall, rise from 1.2968 is expected to resume later to extend through the whole medium term rise from 1.2460 through 1.3598.

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 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. Break of 1.2968 wold at least bring at retest of 1.2460 low. However, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

USD/CHF - 0.9954

Original strategy :

Buy at 0.9910, Target: 1.0010, Stop: 0.9875

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9910, Target: 1.0010, Stop: 0.9875

Position : -

Target :  -

Stop : -

The greenback has continued trading with a firm undertone after this week’s rally from 0.9813, adding credence to our view that recent decline has ended at 0.9813, hence upside bias remains for this rise from 0.9813 to bring retracement of recent decline and further gain to resistance at 1.0003 would be seen but break there is needed to provide confirmation and retain bullishness for further rise to 1.0030 but previous support at 1.0060 should remain intact.

In view of this, would not chase this rise here and would be prudent to buy dollar on pullback as 0.9920-25 should limit downside. Below the upper Kumo (now at 0.9909) would suggest top is formed instead, bring weakness to the lower Kumo (now at 0.9879) but break of said support at 0.9831 is needed to revive bearishness for retest of 0.9813 first.

GBP/USD - 1.2490

Original strategy :

Sell at 1.2500, Target: 1.2365, Stop: 1.2535

Position : -

Target :  -

Stop : -

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As cable has rebounded in NY morning, suggesting near term upside risk remains for the corrective bounce from 1.2377 (yesterday’s low) to extend gain to 1.2520-25, however, break of previous support at 1.2539 is needed to signal the fall from 1.2616 has ended, bring further rise to 1.2555-60 but reckon upside would be limited to 1.2595-00 and price should falter below resistance at 1.2616.

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below 1.2450-55 would suggest an intra-day top is possibly formed, bring weakness to 1.2425-30 but break of 1.2395-00 is needed to signal the rebound from 1.2377 has ended, brig retest of this level, then 1.2360-65 (50% Fibonacci retracement of 1.2109-1.2616), however, support at 1.2335 should limit downside and reckon 1.2300-05 (61.8% Fibonacci retracement) would hold.

Daily Pivots: (S1) 0.8608; (P) 0.8671; (R1) 0.8720; More...

EUR/GBP's break of 0.8604 minor support indicates resumption of fall from 0.8786. Intraday bias is back on the downside for 0.8402 support next. Price actions from 0.8303 are forming a corrective pattern, as the second leg of the correction from 0.9304. Break of 0.8402 will extend the correction from 0.9304 through 0.8303 low. In that case, we'd expect strong support from 0.8116 cluster support to contain downside and bring rebound.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).

The Japanese yen has ticked lower in the Thursday session. In North American trade, USD/JPY is trading at 111.40. On the release front, US Final GDP posted a gain of 2.1%, edging above the estimate of 2.0%. Unemployment claims jumped to 258 thousand, above the forecast of 244 thousand. Later in the day, Japan releases Household Spending and Tokyo Core CPI. The markets are braced for declines from both indicators. On Friday, the US releases UoM Consumer Sentiment, which is expected to improve to 97.8 points.

The markets are likely to be treated to "more of the same" from the Bank of Japan as far as monetary policy. Earlier in the week, the BoJ released a summary of the minutes of its policy meeting from March 16. There were no surprises, as policymakers said the BoJ's ultra-easy monetary stance would continue as long as inflation remains well below the target of 2 percent. Japan's economy has improved in recent months, boosted by a stronger manufacturing sector and an increase in exports. At the same time, domestic demand remains soft, which has resulted in weak inflation levels. Japan will release key consumer spending and inflation numbers on Thursday, and soft readings could hurt the Japanese yen.

EUR/USD - 1.0731

Original strategy  :

Sell at 1.0820, Target: 1.0720, Stop: 1.0855

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0820, Target: 1.0720, Stop: 1.0855

Position : -

Target :  -

Stop : -

As the single currency has remained under pressure after this week’s selloff from 1.0906 top, suggesting bearishness remains for further decline towards previous support at 1.0719, however, break there is needed to retain downside bias and signal recent rise has ended at 1.0960, then further weakness to 1.0695-00 and possibly 1.0670 would be seen but oversold condition would limit downside and reckon 1.0650 would hold from here, risk from there is seen for a rebound to take place later.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 1.0827 resistance should limit upside and bring another decline. Above 1.0845-50 would abort and signal the fall from 1.0906 has ended instead, bring test of 1.0873 resistance first.

WTI oil came ticks ahead of psychological $50 barrier on extension of yesterday's strong rally.

Oil price was boosted by oil stocks reports that showed lower than expected build in US stockpiles; supply disruption in Libyan oil fields and rumors that OPEC's production cut deal could be extended beyond June 2017.

Strong rally that extends into third straight day improved oil's technical outlook, as the price regained strong bullish momentum.

The price is looking for clear break above psychological $50.00 barrier and $50.10 (Fibo 38.2% of $55.00/$47.07 descend) to extend recovery from $47.07 double-top.

Daily close above these pivots is needed to confirm bullish continuation and expose next target at $51.00 (daily Kijun-sen line).

Meantime, overbought studies suggest correction, as $50.00 marks very significant resistance.

Session low at $49.28 marks solid support, reinforced by rising 4-hr SMA and guarding strong support at $48.80 (200SMA).

Res: 50.00; 50.53; 51.00; 51.14
Sup: 49.50; 49.28; 48.80; 48.59

USD/JPY - 111.47

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

As the greenback has risen again after finding support around the upper Kumo, suggesting the erratic rise from 110.11 low is still in progress and near term upside risk remains for this move to bring retracement of recent decline, hence gain to 111.80-85 (61.8% Fibonacci retracement of 112.90-110.11) cannot be ruled out, however, reckon upside would be limited to 112.00 and price should falter below previous support at 112.26, bring retreat later.

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below 110.90-95 would suggest an intra-day top is formed and bring further fall to 110.45-50, then towards this week’s low at 110.11, however, only break there would revive bearishness and extend recent decline to 109.95-00, then towards 109.70-75.

Daily Pivots: (S1) 1.2381; (P) 1.2428; (R1) 1.2482; More...

GBP/USD's rebound and break of 1.2475 minor resistance argues that pull back from 1.2614 might be completed. Intraday bias is turned back to the upside for 1.2614. Break will extend the rise from 1.2108. Overall, price actions from 1.1946 are viewed as a consolidation pattern pattern. Upside should be limited by 1.2705/2774 resistance zone to bring larger down trend resumption eventually. On the downside, below 1.2376 will target 1.2108 support next.

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.