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    Wednesday, May 22, 2019

    The FOMC minutes, of the April 30-May meeting, will be released on Wednesday at 18:00 GMT. At that meeting, the Federal Reserve kept the Fed Funds rat

    The FOMC minutes, of the April 30-May meeting, will be released on Wednesday at 18:00 GMT. At that meeting, the Federal Reserve kept the Fed Funds rate target unchanged at 2.25% to 2.50% as expected, in a unanimous decision. Key notes At the last meeting, the Fed kept rates unchanged as widely expected, and officials pointed to lack of inflation pressure outweighing the strong economic growth. Today James Bullard, president of the St. Louis Federal Reserve did not rule out a rate cute later this year if inflation continues to disappoint. The minutes are likely to show the cautious tone that prevails at the Fed. During the post-meeting press conference Chair Powell said the current policy was appropriate. At that meeting, the Fed cut the interest rate it pays on excess reserves (IOER).  Analysts at Deutsche Bank point out that usually there would be a reasonable amount of focus on the minutes however, “given the trade developments since then it’s likely that they will be somewhat discounted as being stale. That being said, the inflation debate will still be relevant and as a reminder Powell noted that several “transitory” factors had been weighing on inflation of late.”The coverage in the minutes around the inflation discussion will be its most important market focus, according to Joseph Trevisani, a Senior Analyst at FXStreet. “How many governors expressed concern? Were rate hikes broached as an eventuality if inflation continues to be weak?  The edited minutes of the FOMC meeting permit a more wide ranging view into the deliberations of the FOMC governors.  If they are growing wary about inflation this is where it will show”, he added.  Implications for EUR/USD Compared to the level it had following the meeting, EUR/USD is few pips lower. It rose only momentarily above 1.1250 two weeks ago but then pulled back under 1.1200. Since last week the pair has been falling steadily, moving very slow but with a clear downside bias. Better-than-expected US data has been supporting the greenback that rose despite the decline in US yields.  If the minutes show a “hawkish” surprise, not expected at the moment, the greenback could rally strongly versus the Euro. The EUR/USD pair could drop below the 1.1140/50 support area that would expose the YTD low at 1.1110. Below the next medium-term support is seen at 1.1050. As markets await cautious minutes, it would take a significantly “dovish” minutes to weaken the US Dollar. The immediate support is now seen around 1.1180 and above at 1.1220. The main trend will continue to point to the downside as long as it remains under 1.1300/10 (downtrend line).  Overall, the pair is making small moves and the FOMC minutes are not what it used to be, particularly after every meeting is being followed by a press conference, so the impact could be modest. Price action has been limited over the last six days to a 50-pips range in the EUR/USD pair. Any surprise from the Fed that generates moves would be welcomed by traders.  About the FOMC minutes FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.

    As the political drama in the UK continues to unfold, more rumours of British Prime Minister Theresa May resigning tonight occupy the newswires.

    As the political drama in the UK continues to unfold, more rumours of British Prime Minister Theresa May resigning tonight occupy the newswires.  Sky News political editor in the last minutes said that one lawmaker told that the PM would resign tonight. Earlier in the hour, BBC's political editor tweeted out that the situation was getting "very serious," and added that the Interior Minister Javid wanted to have a meeting with May to ask her to remove the second referendum vote requirement.  

    British Prime Minister Theresa May's spokesman crossed the wires in the last minutes, noting that he was unaware of any specific meetings between the

    British Prime Minister Theresa May's spokesman crossed the wires in the last minutes, noting that he was unaware of any specific meetings between the PM and members of the cabinet.Key quotes (via Reuters)The PM could not have been any clearer she does not believe a second Brexit referendum should be taking place. We continue to have a very long way to go to find a way for parliament to approve the withdrawal agreement bill.

    After closing the previous day below the 0.69 handle on Tuesday, the AUD/USD pair failed to make a meaningful recovery on Wednesday and stays in the n

    AUD struggles to recover on expectations of an RBA rate cut.US Dollar Index posts modest gains above 98.Coming up: FOMC's May meeting minutes.After closing the previous day below the 0.69 handle on Tuesday, the AUD/USD pair failed to make a meaningful recovery on Wednesday and stays in the negative territory as investors are moving to the sidelines while waiting for the FOMC to release the minutes of its May meeting later today. As of writing, the pair was down 0.1% on a daily basis at 0.6875. Heightened expectations of the Reserve Bank of Australia going for a rate cut at its June meeting following Governor Lowe's dovish remarks earlier this week put the AUD under heavy selling pressure. Additionally, the lack of fresh developments surrounding the U.S.-China trade conflict makes it difficult for antipodeans to find demand, keeping the bearish pressure on the pair intact. Earlier today, Treasury Secretary Mnuchin said that he had no plans to travel to Beijing for trade negotiations while adding that President Trump and his counterpart Xi could have a meeting by the end of June. Meanwhile, the lack of significant macroeconomic data releases today is forcing the US Dollar Index to remain stuck in the upper half of its recent trading range near the 98 mark.  Previewing the FOMC event, “Our US economists noted that subsequent Fedspeak since Powell’s press conference suggest that there is a solid contingent of officials that agree with this cut of the data, though some find persistently below target inflation as troublesome, regardless of the causes. Therefore, it will be interesting to see how the debate plays out, especially in light of concerns around inflation expectations and the Fed’s policy framework review.” Deutsche Bank analysts said.FOMC Minutes Preview: Major Banks expectations from meeting minutesIn the remainder of the week, there won't be any macroeconomic data releases from Australia.Key technical levels 

    AUD/USD daily chart AUD/USD is trading in a bear trend below its main simple moving averages (SMAs) as it is trading at multi-month low. The Aussie ha

    The FOMC Minutes will be published at 18:00 GMT this Wednesday. The news can potentially impact USD-related pairs.If the bear trend resumes the Aussie can drop below the 0.6860 support.AUD/USD daily chartAUD/USD is trading in a bear trend below its main simple moving averages (SMAs) as it is trading at multi-month low. The Aussie has been consolidating its loses in the last four days.AUD/USD 4-hour chartAUD/USD is trading near the monthly low and below its main SMAs suggesting bearish momentum in the medium term.AUD/USD 30-minute chart
    The Aussie is trading in a tight range below 0.6900 ahead of the FOMC Minutes. If the market break below the 0.6860 support sellers can target 0.6820 level to the downside. Immediate resistances are seen at 0.6900 and 0.6930 level
    Additional key levels 

    In its weekly petroleum report for the week ending May 17, the Energy Information Administration announced that the commercial crude oil inventories i

    In its weekly petroleum report for the week ending May 17, the Energy Information Administration announced that the commercial crude oil inventories in the U.S. increased by 4.7 million barrels. Key takeaways from the press releaseGasoline production decreased last week, averaging 9.9 million barrels per day. Distillate fuel production decreased last week, averaging 5.2 million barrels per day. U.S. crude oil imports averaged 6.9 million barrels per day last week. Total products supplied over the last four-week period averaged 19.9 million barrels per day, down by 2.7% from the same period last year. 

    United States EIA Crude Oil Stocks Change above expectations (-0.599M) in May 17: Actual (4.74M)

    The U.S. Treasury Secretary Steven Mnuchin crossed the wires in the last minutes saying that President Trump and his Chinese counterpart Xi were likel

    The U.S. Treasury Secretary Steven Mnuchin crossed the wires in the last minutes saying that President Trump and his Chinese counterpart Xi were likely to see each other at the end of June. Earlier today, Mnuchin said that he currently had no plans to travel to Beijing for the next round of trade talks. 

    • Investors looked past Wednesday’s upbeat Canadian monthly retail sales figures. • A modest pickup in the USD demand/wealer Oil prices extended some

       •  Investors looked past Wednesday’s upbeat Canadian monthly retail sales figures.
       •  A modest pickup in the USD demand/wealer Oil prices extended some support.
       •  Short-covering ahead of FOMC meeting minutes further collaborate to the recovery.    The USD/CAD pair rallied around 35-40 pips in the last hour and recovered a major part of its early slide to near one-month lows. With investors looking past Wednesday's release of upbeat Canadian monthly retail sales data, some renewed US Dollar buying helped ease the bearish pressure and turned out to be one of the key factors behind the pair's modest bounce from daily lows.  The pair managed to find decent support ahead of mid-1.3300s and was further supported by weaker sentiment around Crude Oil prices - down around 1% for the day, which tends to undermine demand for the commodity-linked currency - Loonie.  The uptick could further be attributed to some short-covering move ahead of today's key risk - the release of minutes of the latest FOMC monetary policy meeting, which might influence the near-term USD price dynamics and provide a fresh directional impetus. Looking at the technical picture, the pair now seems to have confirmed a near-term bearish break below a four-week-old trading range and hence, any attempted recovery might still be short-lived and seen as an opportunity to initiate some fresh bearish positions.Technical levels to watch 

    New York Fed President Williams crossed the wires in the last hour arguing that the underlying price trends point to inflation staying around the Fede

    New York Fed President Williams crossed the wires in the last hour arguing that the underlying price trends point to inflation staying around the Federal Reserve's 2% target.Key quotes (via Reuters)U.S. economy is still in a very good place. Some risks to global growth have receded. Domestic drivers of U.S. economy are strong, expects growth above 2% this year. Inflationary pressures are essentially nonexistent. We are around neutral interest rate. We should be right where we are in terms of interest rates, no argument to move at this point. Want to see inflation at target for an extended period, little risk of inflation running hot right now.

    Political journalists in the UK report about growing discontent about the Withdrawal Agreement Bill (WAB) that PM Theresa May is set to present to par

    Political journalists in the UK report about growing discontent about the Withdrawal Agreement Bill (WAB) that PM Theresa May is set to present to parliament on Friday and that this brings more of them to support her immediate ousting. Scotland Minister David Mundell has asked for an urgent meeting with May later today. Earlier, there were reports about ministers, including four cabinet ones, that are planning to send a delegation to Downing Street and tell the PM to step down. GBP/USD hit new four-month lows at 1.2624 on the growing political uncertainty and fears of a hard Brexit. Former Foreign Secretary Boris Johnson is the leading candidate to replace May as PM.  

    Russia Industrial Output came in at 4.9%, above expectations (1.5%) in April

    Major equity indexes in the U.S. started the day in the negative territory on Wednesday as investors seem to be opting out to stay on the sidelines wh

    Major equity indexes in the U.S. started the day in the negative territory on Wednesday as investors seem to be opting out to stay on the sidelines while waiting for the FOMC to publish the minutes of the May meeting later in the session. As of writing, the Dow Jones Industrial Average was down 0.32% on the day while the S&P 500 and the Nasdaq Composite were losing 0.35% and 0.3%, respectively. Earlier today, Treasury Secretary Mnuchin said that currently there were no plans to travel to Beijing for the next round of trade talks but noted that it was possible to give exemptions to companies on the hiked tariffs on Chinese imports. On the other hand, China's senior diplomat Wang Yi reiterated that China would "fight to the end" if the U.S. were to use extreme measures, suggesting that the trade dispute is unlikely to be resolved anytime soon. Among the 11 major S&P 500 sectors, the Energy Index and the Consumer Discretionary Index both lose around 0.6% while the defensive Real Estate and Utilities post small gains in the early trade.

    • The EUR/GBP cross built on its strong bullish momentum witnessed over the past few weeks and rallied to over three-month tops on Wednesday, levels

       •  The EUR/GBP cross built on its strong bullish momentum witnessed over the past few weeks and rallied to over three-month tops on Wednesday, levels beyond the 0.8800 handle.   •  After the overnight turnaround from multi-day lows, a sustained move beyond 200-day SMA was seen as a key trigger for bullish traders and fueling the ongoing positive momentum.The mentioned resistance coincides with 50% Fibonacci retracement level of the 0.9119-0.8471 downfall and should now act as a key pivotal point for the pair's near-term trajectory. Given that the cross has found acceptance above the mentioned confluence region, Wednesday’s up-move marks a fresh near-term bullish break out amid mounting Brexit/UK political uncertainty. Meanwhile, technical indicators on 4-hourly/daily charts have started moving into overbought territory and warrant some near-term consolidation before traders start positioning for the next leg of an appreciating move. The cross now seems all set to aim towards testing 61.8% Fibo. level, around the 0.8855-60 region, before eventually darting to reclaiming the 0.8900 handle.EUR/GBP daily chart 

    Analysts at TD Securities note that despite repeated warnings that Libya could be on the verge of a civil war, with military escalations now approachi

    Analysts at TD Securities note that despite repeated warnings that Libya could be on the verge of a civil war, with military escalations now approaching oil fields and oil prices are under pressure as escalating trade woes keep discretionary capital flowing out of the commodities complex.Key Quotes“Geopolitical risks to the global supply remain extremely elevated — particularly as Iranian-centric tensions are at a boil — which should keep a risk premium embedded into prices to reflect higher insurance costs. Meanwhile, with API reporting another large crude build, the DOE's inventory report will take center stage today. As stocks continue to build in the US, our view that Brent-WTI will widen further into 2H19 is strengthening.”

    GBP/JPY daily chart GBP/JPY is trading in a bear trend below its main simple moving averages (SMAs). GBP/JPY 4-hour chart GBP/JPY erased the Brexit-re

    GBP/JPY daily chartGBP/JPY is trading in a bear trend below its main simple moving averages (SMAs).GBP/JPY 4-hour chartGBP/JPY erased the Brexit-related news seen on Tuesday.
    GBP/JPY 30-minute chartGBP/JPY is trading below its main SMAs suggesting bearish momentum. A break below 139.60 support can lead to 139.00 and 138.50 level to the downside. Resistances are seen at 140.65 and 141.70 levels.
    Additional key levels 

    Prices of the barrel of the American benchmark for the sweet light crude oil are trading on the defensive today, briefly dropping to fresh lows in sub

    WTI loses the shine and recedes to the $62.00 mark.EIA weekly report on US supplies coming up next.FOMC minutes seen driving the sentiment later in the day.Prices of the barrel of the American benchmark for the sweet light crude oil are trading on the defensive today, briefly dropping to fresh lows in sub-$62.00 levels.WTI now looks to EIA, FOMCToday’s correction lower in crude oil prices are tracking persistent concerns on the US-China trade dispute, exacerbated after US Secretary S.Mnuchin said there are no plans to resume talks in Beijing for the time being. In addition, and adding to the ongoing weakness in prices, the American Petroleum Institute reported late on Tuesday another weekly build in US crude oil inventories, this time by 2.4M barrels. However, a deeper pullback in crude oil prices seems unsustainable at least in the near term, as geopolitical risks and the OPEC+ agreement are expected to emerge as significant contention. Later in the session, the official weekly report on US supplies by the EIA is expected ahead of the key release of the FOMC minutes.What to look for around WTIPrices of the WTI appear to have met some moderate resistance in the $63.70 region, or multi-day peaks. In the broader picture, and supporting prices, appear rising US-Iran tensions, turmoil in Libya, the so-called ‘Saudi put’ and the ongoing OPEC+ deal to cut oil output. However, US-China trade concerns remain far from abated despite the lack of fresh headlines as of late and emerge as the main hurdle for a more serious advance in crude oil.WTI significant levelsAt the moment the barrel of WTI is losing 0.88% at $62.26 and faces the next support at $61.49 (55-day SMA) followed by $60.29 (200-day SMA) and then $59.98 (low May 6). On the flip side, a break above $63.74 (61.8% Fibo of the October-December drop) would aim for $64.66 (high Apr.30) and then $66.46 (2019 high Apr.23).

    Additional comments on the U.S.-China trade dispute from the U.S. Treasury Secretary Steven Mnuchin continue to cross the wires with key quotes, via R

    Additional comments on the U.S.-China trade dispute from the U.S. Treasury Secretary Steven Mnuchin continue to cross the wires with key quotes, via Reuters, found below. Exemptions possible on latest round of China tariffs. Does not expect there will be a significant cost increase for American families due to tariffs on China.

    According to Amy Yuan Zhuang, analyst at Nordea Markets, Narendra Modi has likely secured five more years in power despite the mixed economic scorecar

    According to Amy Yuan Zhuang, analyst at Nordea Markets, Narendra Modi has likely secured five more years in power despite the mixed economic scorecard from his first term and believes that the INR faces limited upside in the coming year, but we argue that it remains attractive over the long term.Key Quotes“The world's largest democracy, with more than 900 million registered voters, just concluded its month-long general election. The official results, due on 23 May, will likely confirm the exit polls: Prime Minister Narendra Modi will stay in office for another five years. His Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) is predicted to have won more than 60% of the 545-seat parliament.” “While the Indian rupee will likely gain versus the dollar in the coming few months as election uncertainties evaporate, its upside potential on a two-year horizon is limited as the pace of reforms is not expected to exceed that of the past five years.” “The INR remains attractive on a horizon beyond two years, in our view, benefiting from the economy's vast potential, net capital inflows and the government's efforts to diversify the economy. More manufacturing exports should help counterbalance the large oil imports and reverse the current account deficit to a surplus.”  

    Mexico Retail Sales (MoM): -0.2% (March) vs previous 1.2%

    Mexico Retail Sales (YoY) fell from previous 1.8% to 1.6% in March

    • A modest USD pullback/weaker US bond yields provide a minor lift. • Further escalation in the US-China trade tensions remained supportive. • All ey

       •  A modest USD pullback/weaker US bond yields provide a minor lift.
       •  Further escalation in the US-China trade tensions remained supportive.
       •  All eyes remain glued to the upcoming release of FOMC meeting minutes.    Gold finally broke out of its daily consolidative range and was now seen building on the overnight goodish bounce from two-week lows. A modest US Dollar pullback from one-month tops amid a sharp intraday slide in the US Treasury bond yields and turned out to be one of the key factors extending some support the dollar-denominated commodity. This coupled with a further escalation in the US-China trade tensions underpinned the precious metal's safe-haven demand and remained supportive of the intraday positive move.  In the latest trade-related developments, the Trump administration was reported to blacklist Chinese surveillance technology firm - Hikvision and was also considering cutting off the flow of vital American technology to as many as five Chinese companies.   Meanwhile, the latest leg of an uptick since the early North-American session was further supported by news that the US Treasury Secretary Steven Mnuchin is not yet scheduled and has no plans to go to Beijing to resume the next round of trade negotiations.  This followed by comments from China's foreign minister, saying that we will not accept unfair basis in talks with the US and will fight to the end if the US uses extreme pressure, further fueled worries about a full-blown trade war between the world's two largest economies. The uptick, however, lacked any strong bullish conviction as market participants now seemed reluctant to place aggressive bets ahead of the important release of the latest FOMC monetary policy meeting minutes, which might play an important role in determining the next leg of a directional move for the non-yielding yellow metal.Technical levels to watch 

    Nathan Janzen, senior economist at Royal Bank of Canada, notes that Canadian headline sales jumped 1.1% to build on a 1.0% increase in February, altho

    Nathan Janzen, senior economist at Royal Bank of Canada, notes that Canadian headline sales jumped 1.1% to build on a 1.0% increase in February, although the March gain was boosted by a price-led 6% increase in sales at gasoline stations.Key Quotes“Even with an increase in March, retail sale volumes were down slightly in Q1 as a whole – consistent with prior expectations for another soft quarter for consumer spending growth. Job growth has been almost unbelievably strong, supporting overall household income growth despite wage gains that are still lackluster for this point in the economic cycle.” “The intensification of the U.S.-China trade dispute has raised some grey clouds for the U.S. industrial sector and, by extension, Canada’s.  But the removal of U.S. steel and aluminum tariffs on Canada, along with Canada’s retaliatory measures, will provide some offset.  And the tick up in retail sale volumes in March follows earlier-reported bounce-backs in manufacturing sales and exports after likely weather-related drops in February.” “The data on balance is still consistent with GDP growth coming in at a sub-1% rate in Q1 but better reports later in the quarter also still leave the odds on a bounce-back to a 2% rate in Q2.”

    The London-based Evening Standard reports that ministers are plotting to move against UK PM Theresa May. According to the report, ministers, including

    The London-based Evening Standard reports that ministers are plotting to move against UK PM Theresa May. According to the report, ministers, including four cabinet members, plan to send a delegation to the embattled leader and call her to step down. Many members of May's Conservative Party have not been satisfied by the new Brexit deal that May announced on Tuesday. She has announced that the full bill will be presented on Friday.  Tory backbenchers will convene later at 15:00 GMT and May's political future will be on the agenda. Last week, they forced her to pledge she will step down after the vote on the agreement in early June. GBP/USD has been on the back foot and hit new four-month lows at 1.2641 earlier today on the ongoing political uncertainty. 

    British Prime Minister Theresa May's spokesman crossed the wires in the last minutes noting that they were not expecting it to be easy to get enough s

    British Prime Minister Theresa May's spokesman crossed the wires in the last minutes noting that they were not expecting it to be easy to get enough support to pass the Brexit legislation.Key quotes (via Reuters)Would urge all lawmakers to read EU withdrawal legislation when it is published on Friday. We will be making every possible case to lawmakers to get legislation approved by parliament. Asked about calls for PM May's resignation, says PM is focused on task in hand. PM is confident cabinet still supports Brexit position.

    EUR/USD daily chart EUR/USD is trading in a bear trend below its main simple moving averages (SMAs) as the market has been consolidating for the fourt

    The FOMC Minutes will be published at 18:00 GMT this Wednesday. The news can lead to high volatility in USD-related pairs.EUR/USD is consolidating its losses above the 1.1140 level. Will the bear trend resume and bring the single surrency down to 1.1106, the 2019 low ?EUR/USD daily chartEUR/USD is trading in a bear trend below its main simple moving averages (SMAs) as the market has been consolidating for the fourth day in a row.
    EUR/USD 4-hour chartEUR/USD is trading below its main SMAs suggesting a bearish momentum in the near term. EUR/USD 30-minute chartEUR/USD reached the 1.1180 resistance but found no acceptance so far in the New York session. A break above 1.1180 can lead to 1.1200 and 1.1220. Bears would need a convincing break below 1.1140 to reach 1.1106, the current 2019 low.Additional key levels 

    China's senior diplomat Wang Yi crossed the wires in the last minutes saying that China will "fight to the end" if the U.S. were to use extreme measur

    China's senior diplomat Wang Yi crossed the wires in the last minutes saying that China will "fight to the end" if the U.S. were to use extreme measures in the trade war.Key quotesTalks failed as US wasn’t willing to resolve China’s reasonable concerns. China’s open door is always open to U.S. for equal negotiations. China will not accept unfair basis in talks with U.S.

    The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, has now turned negative for the day below the critical 98.

    The index is now correcting lower and drops to 97.90.Yields of the US 10-year note tumble to lows near 2.4%.Markets’ focus remains on the FOMC minutes.The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, has now turned negative for the day below the critical 98.00 the figure.US Dollar Index offered ahead of FOMCThe index is fading part of yesterday’s fresh multi-day peaks beyond 98.10 in tandem with a moderate drop in yields of the US 10-year benchmark, which are now challenging the 2.40% area. In the meantime, the US-China trade dispute remains the top driver of the price action and mood in the global markets. Latest news on this front cited US Treasury Secretary S.Mnuchin ruling out a visit to Beijing to continue trade talks. Moving forward, it will be the turn of the FOMC and its minutes, with the US economy and domestic inflation on top of the agenda. In addition, NY Fed J.Williams (permanent voter, centrist) will host an Economic Press Briefing and Atlanta Fed R.Bostic (2021 voter, centrist) will make Opening Remarks at the Dallas Fed Conference.What to look for around USDWith the US-China trade talks mired in the mud for the time being, investors’ attention have now shifted to the Chinese government and the likeliness of intervention in the Yuan, as the currency slowly approaches the psychological 7.00 mark without any progress in the negotiations, at least in the short-term horizon. On another direction, inflation figures remain in the centre of the debate among Fed members despite the solid labour market and healthy fundamentals, preventing the Fed from fully ruling out a rate hike later in the year. The positive outlook on the buck, however, stays unchanged and sustained by overseas weakness, its safe haven appeal, favourable yield spreads vs. the Fed’s G10 peers and the status of global reserve currency.US Dollar Index relevant levelsAt the moment, the pair is losing 0.04% at 97.98 and a break below 97.70 (21-day SMA) would open the door for 97.25 (55-day SMA) and then 97.03 (low May 13). On the upside, the next up barrier emerges at 98.13 (high May 21) seconded by 98.32 (2019 high Apr.25) and finally 98.97 (78.6% Fibo of the 2017-2018 drop).

    While speaking to CNBC reporter Ylan Mui ahead of the House Financial Services Committee hearing, Treasury Secretary Steven Mnuchin said there were no

    While speaking to CNBC reporter Ylan Mui ahead of the House Financial Services Committee hearing, Treasury Secretary Steven Mnuchin said there were no plans to travel to Beijing for the next round of trade talks.  It's unclear if these comments will weigh on the stock markets on Tuesday. Ahead of the opening bell, the S&P 500 Futures was losing 0.42% on a daily basis.

    Analysts at TD Securities note that UK’s April inflation came in a tick lower than expected, with core inflation unchanged at 1.8% y/y, while headline

    Analysts at TD Securities note that UK’s April inflation came in a tick lower than expected, with core inflation unchanged at 1.8% y/y, while headline inflation rose to 2.1% y/y.Key Quotes“The increase in headline inflation came on the back of higher household energy prices, as the government-set price cap was raised on April 1st; this is likely to unwind in October when the cap is again reviewed (an assumption the BoE is making as well).” “The usually Easter-sensitive Package Holidays component was very weak, leading to a sharp decline in Recreation inflation. This component (which also includes the volatile Video Games category) is largely responsible for the downside miss in core this month.” “The BoE won't be too worried about today's figures in light of ongoing political uncertainty. On that front, Theresa May will take questions for up to 3 hours from MPs this afternoon.”

    • Canadian retail sales come in better than expected and prompt some fresh selling. • A sharp fall in Oil prices does little to lend any support amid

       •  Canadian retail sales come in better than expected and prompt some fresh selling.
       •  A sharp fall in Oil prices does little to lend any support amid a modest USD pullback.
       •  Investors now look forward to the latest FOMC policy minutes for a fresh impetus.    The USD/CAD pair maintained its offered tone through the early North-American session and tumbled to four-week lows in reaction to upbeat Canadian macro data. The pair extended its recent pullback from levels just above the key 1.3500 psychological mark and finally managed to find acceptance below the 1.3400 handle, confirming a near-term bearish broke below a short-term consolidative trading range held over the past three weeks.  The release of stronger than expected Canadian retail sales figures, showing a monthly growth of 1.1% in March provided a strong lift to the Canadian Dollar and turned out to be one of the key factors behind the latest leg of a sudden drop of around 30-pips in the last hour. Bearish traders further took cues from a modest US Dollar pullback, led by weaker US Treasury bond yields, and seemed rather unaffected by a sharp intraday fall in Crude Oil prices, which tend to undermine demand for the commodity-linked currency - Loonie. Moving ahead, focus now shifts to the release of minutes of the latest FOMC monetary policy meeting, which might play an important role in influencing the near-term USD price dynamics and eventually provide a fresh directional impetus.Technical levels to watch 

    The data published by Statistics Canada today revealed that retail sales in March rose by 1.1% on a monthly basis in March to beat the market expectat

    The data published by Statistics Canada today revealed that retail sales in March rose by 1.1% on a monthly basis in March to beat the market expectation of 1%. Furthermore, sales excluding autos rose 1.7%  to surpass the analysts' estimate of 0.9% by a wide margin. The initial market reaction allowed the loonie to gather strength and dragged the USD/CAD pair to a monthly low of 1.3360. "For the first quarter, retail sales edged up 0.1% following a 0.5% decrease in the fourth quarter. In volume terms, retail sales edged down 0.1% in the first quarter," the publication read.

    Canada Retail Sales ex Autos (MoM) came in at 1.7%, above expectations (0.9%) in March

    EUR/USD is prolonging the choppy trade so far this week, always navigating the lower bound of the recent range in the mid-1.1100s. EUR/USD now focused

    EUR/USD gathers momentum and tests 1.1170, daily peaks.The greenback comes under pressure, probes sub-98.00 zone.Attention shifts to the FOMC minutes later in the day.EUR/USD is prolonging the choppy trade so far this week, always navigating the lower bound of the recent range in the mid-1.1100s.EUR/USD now focused on FOMCSpot remains under pressure so far this week, although sellers have not quite succeeded in dragging it further south of weekly lows near 1.1140 recorded yesterday. The likelihood of another visit to YTD lows in the 1.1100 neighbourhood, however, stays well on the cards against the current fragile backdrop. In the meantime, US-China trade effervescence and the recent announcement regarding Chinese smartphone maker Huawei appears to have lent some support to the riskier assets. Later in the day, all the attention will be on the release of the FOMC minutes and particularly on the Committee’s views on the health of the US economy and the absence of upside traction weighing on consumer prices.What to look for around EURRecent data releases in Euroland and Germany have poured cold water over the idea that some healing process could be under way in the region, re-shifting the focus to the ongoing slowdown and its probable duration and extension. In the meantime, the current ‘neutral/dovish’ stance from the ECB is expected to persist for the remainder of the year and probable through H1 2020. The broad-based risk-appetite trends and USD-dynamics should dictate the sentiment surrounding the European currency for the time being, all in combination with the now stalled US-China negotiations and potential US tariffs on EU products. On the political front, Italy has re-emerged as a source of uncertainty and volatility, while investors’ focus has now shifted to the EU parliamentary elections due later this week.EUR/USD levels to watchAt the moment, the pair is gaining 0.11% at 1.1170 and a break above 1.1217 (23.6% Fibo of the 2019 drop) would target 1.1237 (55-day SMA) en route to 1.1264 (high May 1). On the downside, the next support lines up at 1.1135 (low May 3) seconded by 1.1109 (2019 low Apr.26) and finally 1.0839 (monthly low May 2017).

    Canada Retail Sales (MoM) registered at 1.1% above expectations (1%) in March

    While responding to questions in the House of Commons, British Prime Minister Theresa May announced that the Withdrawal Agreement Bill will be publish

    While responding to questions in the House of Commons, British Prime Minister Theresa May announced that the Withdrawal Agreement Bill will be published on Friday. "The opportunity of Brexit is too large and the consequences of failure are too grave to risk delay," May added.

    • The British Pound continues to slide in the aftermath of May's new Brexit plan. • Reports suggest Cabinet ministers might force May out of the offi

       •  The British Pound continues to slide in the aftermath of May's new Brexit plan.
       •  Reports suggest Cabinet ministers might force May out of the office early next week.
       •  Subdued USD demand/oversold conditions do little to ease the bearish pressure.    The bearish pressure surrounding the British Pound remains unabated, with the GBP/USD pair sliding below mid-1.2600s, or fresh multi-month lows in the last hour. The pair continued losing ground through the mid-European session on Wednesday and added to its recent heavy losses recorded over the past two weeks or so, from the vicinity of the 1.3200 handle touched earlier this month. The fact that investors remain convinced that the UK PM Theresa May's new Brexit proposal might struggle to gather enough support from British MPs continued denting the already weaker sentiment around the Sterling.  Adding to this, Cabinet ministers were reported saying that they cannot vote for May's Brexit deal and push to force her out of office as early as next week, which further collaborated towards aggravating the bearish pressure. Meanwhile, a subdued US Dollar demand, amid a mildly softer tone around the US Treasury bond yields ahead of the latest FOMC meeting minutes also did little to hinder the ongoing slide to the lowest level since early Jan.  It, however, remains to be seen if the pair continues with its bearish trajectory or finds some support at lower levels amid highly oversold conditions and mounting Brexit uncertainties and the UK political chaos.Technical levels to watchAs Yohay Elam, FXStreet's own Analyst writes: “the fresh four-month low of 1.2660 provides immediate support. It is followed by 1.2610 which was a temporary low earlier this year and 1.2530 that was a swing low in December 2018.” “Some resistance awaits at 1.2685, Tuesday's low. It is followed by 1.2710 that was a low point late last week. Next up we find 1.2775 which was the low point in February,” he added further.

    Supported by the strong rally witnessed in the major equity indexes and the ongoing recovery in the 10-year US Treasury bond yield on Tuesday, the USD

    Rebound seen in the US T-bond yields boosts USD/JPY this week.US Dollar Index continues to move sideways near 98.FOMC is expected to reiterate its patient stance in May meeting minutes.Supported by the strong rally witnessed in the major equity indexes and the ongoing recovery in the 10-year US Treasury bond yield on Tuesday, the USD/JPY pair climbed to its highest level in two weeks at 110.67. However, with the trading action in the FX space turning subdued ahead of the key FOMC event later today, the pair has struggled to build on its latest upsurge and gone into a consolidation stage below mid-110s. As of writing, the pair was down 0.12% on a daily basis at 110.37. Earlier in the Asian session, the data published from Japan showed that machinery orders increased by 3.8% on a monthly basis in March to beat the market expectation for a decline of 0.7% by a wide margin but didn't receive a significant reaction from the market. Later today, the FOMC will release the minutes of its May meeting. Although the minutes won't include any comments on the escalated trade dispute with China as the May meeting had taken place before President Trump started tweeting, investors will be paying close attention to remarks on the inflation outlook. During the press conference earlier this month, Chair Powell essentially disregarded soft inflation and argued that it was temporary to adopt a hawkish tone and provide a boost to the greenback. Additionally, the reasoning behind the IOER cut is likely to become more clear in today's publication.FOMC Minutes Preview: Major Banks expectations from meeting minutesTechnical levels to watch for 

    India M3 Money Supply: 10.5% (May 17) vs 10%

    Analysts at ABN AMRO point out that Belgium will go to the polls on Sunday 26 May and the polls show that the parties that were in the previous coalit

    Analysts at ABN AMRO point out that Belgium will go to the polls on Sunday 26 May and the polls show that the parties that were in the previous coalition government have each lost support, while far-right, far-left and green parties have gained, so the political landscape has become even more fragmented than it already was.Key Quotes“Similar to the results of the previous two elections, the Flemish-nationalist conservative N-VA is expected to become the biggest individual party, while the Walloon social-democrat PS will become second.” “Formation of a new government could (again) be complicated and might take considerable time as a majority coalition might need as much as five or six individual parties. We think it is most likely that N-VA will fail to form a government and that ultimately a Purple-Green coalition (of centre-left, centre-right and Green parties) will take office.” “Under all likely coalitions, Belgium’s public finances would likely deteriorate modestly compared to the baseline, although the calculations by Belgium’s Federaal Planbureau of the impact of the party programmes on economic growth and government finances have to be taken with a pinch of salt.” “During the coalition talks, the discussion about a break-up of Belgium could move to the headlines again, but the chances of a break-up are low. Belgium’s government bonds are likely to underperform, mainly due to relatively high sensitivity to Italian government bond spreads, which we expect to widen further.”

    Analysts at TD Securities suggest that Canadian retail sales are expected to see a large increase (TD: 1.4%, consensus: 1.2%) in March due to a combin

    Analysts at TD Securities suggest that Canadian retail sales are expected to see a large increase (TD: 1.4%, consensus: 1.2%) in March due to a combination of strong motor vehicle sales and a sharp increase in gasoline prices.Key Quotes“The latter should help to support ex. auto sales, where TD looks for a 1.3% advance. Meanwhile, volumes should underperform the nominal series with a 0.8% advance which would leave them little changed for Q1 as a whole.”

    • The USD/CHF pair remained well within a broader trading range held over the past four trading sessions and was once again seen retreating from the

       •  The USD/CHF pair remained well within a broader trading range held over the past four trading sessions and was once again seen retreating from the 1.0120 supply zone.   •  The intraday slide dragged the pair below the 1.0100 round figure mark - an important intraday pivotal point, and closer to the lower end of the mentioned trading range.Technical indicators on the daily chart maintained their bearish bias and have also started gaining negative momentum on hourly charts, pointing to further intraday decline ahead of the key release of the latest FOMC monetary policy meeting minutes. However, any subsequent slide is likely to find decent support near the 1.0070 confluence region - comprising of 50-day SMA and a short-term ascending trend-line extending from yearly lows, which if broken might act as a key trigger for bearish traders. Below the mentioned support, the pair is likely to accelerate the slide back towards challenging the parity market before eventually falling to its next major support near mid-0.9900s.USD/CHF daily chart 

    Adding to his earlier dovish comments James Bullard, president of the St. Louis Federal Reserve, said that he would not rule out a rate cut later this

    Adding to his earlier dovish comments James Bullard, president of the St. Louis Federal Reserve, said that he would not rule out a rate cut later this year. Bullard today argued that a rate cut could become a more attractive option if inflation continued to disappoint. Last week, Bullard told German daily Handelsblatt that he will get more aggressive in pushing FOMC to lower rates.

    The selling mood around the Turkish Lira is picking up further pace today and pushes USD/TRY to fresh tops in beyond the 6.10 mark. USD/TRY keeps look

    USD/TRY pushes higher and surpasses the 6.10 handle.US-China trade, domestic politics remain in focus.Capacity Utilization, Manufacturing Confidence next on the docket.The selling mood around the Turkish Lira is picking up further pace today and pushes USD/TRY to fresh tops in beyond the 6.10 mark.USD/TRY keeps looking to trade, EM sentimentThe pair is threatening to break above the multi-session sideline theme, trading at shouting distance from the key 6.10 handle and posting gains for the second straight session. In the meantime, TRY appears to have resumed the downside as of late, particularly after the Turkish central bank (CBRT) restarted the auctions of the One-Week Repo Rate at 24.0%. It is worth recalling that the CBRT suspended these auctions a couple of weeks ago in order to prevent further deterioration of the currency, forcing banks to borrow at the higher overnight rate at 25.5%. In the domestic calendar, Capacity Utilization figures are due tomorrow seconded by the Manufacturing Confidence gauge, both for the month of May.What to look for around TRYVolatility around the Turkish Lira has subsided somewhat as of late, although the broader sentiment around the EM FX space should continue to influence on the currency as well as tensions on the US-China trade front. In addition, friction between the AKP and its main opposition party ahead of the municipal elections in Istanbul is also emerging as another source for Lira volatility in the next days. Further out, potential US sanctions following the purchase of the Russian missile defence system keeps lingering over the country as well as sanctions over Iranian crude oil exports. Adding insult to injury, the independence and credibility of the CBRT should remain under the microscope against the omnipresent conflict between the Erdogan’s administration and bank’s authorities.USD/TRY key levelsAt the moment the pair is gaining 0.86% at 6.1040 and faces the next hurdle at 6.1311 (high May 13) seconded by 6.2457 (2019 high May 9) and then 6.8353 (high Aug. 30 2018). On the other hand, a breach of 5.9472 (low May 10) would aim for 5.7094 (low Apr.17) and finally 5.6540 (200-day SMA).

    British Prime Minister Theresa May is responding to questions from MPs in the House of Commons with key quotes, via Reuters, found below. Allowing the

    British Prime Minister Theresa May is responding to questions from MPs in the House of Commons with key quotes, via Reuters, found below. Allowing the second reading of the Withdrawal Agreement Bill (WAB) will allow parliament to come to a decision on customs and a second referendum. Parliament divided on customs arrangement with EU. Government has been working tirelessly with owner of British Steel and lenders on all options. Chancellor has agreed an indemnity for British Steel.

    Canadian retail sales overview Wednesday's economic docket highlights the release of Canadian monthly retail sales report for the month of March, sche

    Canadian retail sales overviewWednesday's economic docket highlights the release of Canadian monthly retail sales report for the month of March, scheduled later during the early North-American session at 12:30 GMT. Consensus estimates point to a second consecutive month of solid gains and the headline reading is expected to show that sales at the retail level recorded a growth of 1.0% as compared to a 0.8% rise in the previous month. Meanwhile, core retail sales - excluding automobiles, are also seen to post strong growth of 0.9% during the reported month, up from 0.6% previous. As Analysts at RBC Capital Markets point out: “Recall that the retail sector has underperformed recently with sales volumes effectively flat-lining over the second half of last year. Yes, sales rose at their fastest pace in nine months in February, but that was a low hurdle to clear and a good chunk of the increase was price-related. We think March’s numbers will look better in both the headline and details.”Deviation impact on USD/CADReaders can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to be in the range of 31-38 pips in case of deviations up to -0.14 to +0.51, although in some cases, if notable enough, can fuel movements of up to 60-73 pips in the subsequent 4-hours.How could it affect USD/CAD?Ahead of the key release, the pair fell to near two-week lows and was now seen struggling below the 1.3400 handle but remained well within a broader trading range held over the past four weeks or so. Surprisingly positive readings will be enough to provide a strong boost to the Canadian Dollar and finally confirm a near-term bearish breakdown, turning the pair vulnerable to accelerate the slide towards challenging 100-day SMA support, currently near the 1.3330 region.  Alternatively, a weaker than expected print might provide a minor boost to the major, albeit any meaningful up-move is likely to confront some fresh supply near the 1.3435 horizontal zone. A follow-through buying might boost the pair further but seems more likely to continue facing stiff resistance near the key 1.3500 psychological mark. Key Notes   •  Canada: Retail sales to continue with the run of strong economic data - RBC    •  Canada: Retail sales likely to advance 1.4% in March - TDS    •  USD/CAD Slides Within a RangeAbout Canadian retail salesThe Retail Sales released by Statistics Canada is a monthly data that shows all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. It shows the performance of the retail sector in the short term. Generally speaking, the positive economic growth anticipates bullish movements for the CAD.
     

    United States MBA Mortgage Applications: 2.4% (May 17) vs -0.6%

    After erasing 30 pips on Tuesday, the NZD/USD pair continued to push lower and touched its lowest level since late October at 0.6493 before retracing

    NZD/USD is struggling to stage a meaningful recovery.US Dollar Index stays calm near 98 on Wednesday.FOMC is scheduled to publish its May meeting minutes later in the day.After erasing 30 pips on Tuesday, the NZD/USD pair continued to push lower and touched its lowest level since late October at 0.6493 before retracing its daily drop and turning flat on the day near the 0.65 handle. The data published by the Statistics New Zealand showed that retail sales excluding automobiles in the first quarter of the year expanded by 0.7% on a quarterly basis following the 2% growth witnessed in the previous quarter and fell short of the market expectation of 0.9% to weigh on the kiwi. Furthermore, the bi-weekly GDT auction yielded a 1.2% drop in the price index on Tuesday. Furthermore, the lack of new developments surrounding the U.S.-China trade dispute forced investors to remain on the sidelines and made it difficult for the pair to stage a recovery. On the other hand, the US Dollar Index is moving sideways near the 98 mark on Tuesday, confirming the neutral outlook before the FOMC publishes the minutes of its May meeting later in the day. Previewing the event, “The release of the May FOMC minutes on Wednesday should show a cautious Fed with a majority expecting transitory low inflation. Recall that post-meeting Chair Powell emphasized that the current policy was appropriate and that the FOMC saw no reason to change in either direction,” TD Securities analysts said. Technical levels to watch for0.6500 (psychological level) is the first significant support level ahead of 0.6465 (Oct. 26, 2018, low) and 0.6425 (Oct. 8, 2018, low). On the upside, resistances could be seen at 0.6540 (May 21 high), 0.6580 (May 16 high) and 0.6615 (May 10 high).

    According to Reuters, the European Commission said that they were following the events in London closely and patiently following the backlash to Briti

    According to Reuters, the European Commission said that they were following the events in London closely and patiently following the backlash to British Prime Minister Theresa Mays new Brexit deal. Earlier today, the spokesman for the opposition Labour Party said that it was sensible for May not to put her Brexit deal to a vote. Meanwhile, the Withdrawal Agreement Bill is expected to be published later in the day.

    Italian Prime Minister Giuseppe Conte was out on the wires in the last hour saying that the EU policies that had a devastating social impact urgently

    Italian Prime Minister Giuseppe Conte was out on the wires in the last hour saying that the EU policies that had a devastating social impact urgently need to be changed. We are fiercely committed to exceeding government GDP estimate this year, Conte added further.

    The now improved mood in the risk-associated space is pushing EUR/JPY to advance further north of 123.00 the figure. EUR/JPY higher on risk-on pick up

    EUR/JPY adds to Tuesday’s gains above the 123.00 handle.The better tone around EUR supports the upside.FOMC minutes expected to rule the mood later in the day.The now improved mood in the risk-associated space is pushing EUR/JPY to advance further north of 123.00 the figure.EUR/JPY higher on risk-on pick upThe greenback is now shedding part of recent gains and is supporting the rebound in the demand for the European currency, helping at the same time with the bounce in the cross off daily lows in the 123.00 neighbourhood. In addition, the cross is up for the second session in a row so far today, coming a bit lower after meeting initial resistance near the 21-day SMA in the 123.70/75 band on Tuesday although within the gradual recovery from multi-month lows near 122.00 the figure seen earlier in the month. In the data space, the FOMC minutes will be released later today and are expected to keep the buck under some pressure in the very near term. Earlier in the day, Japanese trade surplus shrunk to ¥60.4 billion in April following another drop in exports (2.4% on a yearly basis) and a stronger-than-expected pick up in imports (6.4% over the last twelve months).EUR/JPY relevant levelsAt the moment the cross is gaining 0.10% at 123.42 and faces initial resistance at 123.75 (high May 21) followed by 124.29 (high May 6) and finally 124.79 (55-day SMA). On the other hand, a breach of 122.08 (low May 15) would aim for 120.54 (monthly low Jan.17 2017) and then 118.82 (2019 low Jan.3 ‘flash crash’).

    Today, markets are keenly awaiting the release of an all-important May meeting minutes of FOMC, and as we move towards the decision timings, here are

    Today, markets are keenly awaiting the release of an all-important May meeting minutes of FOMC, and as we move towards the decision timings, here are the expectations as forecasted by the economists and researchers of major banks.TD Securities“The release of the May FOMC minutes on Wednesday should show a cautious Fed with a majority expecting transitory low inflation. Recall that post-meeting Chair Powell emphasized that the current policy was appropriate and that the FOMC saw no reason to change in either direction.”Danske Bank“In the US, markets will keep an eye on the FOMC minutes from the May meeting set to be released later in the day. As the Fed has clearly communicated that it expects to be on hold for some time, focus will likely be mainly on the reasoning behind the surprise cut in the Interest on Excess Reserves (IOER).”Deutsche Bank“This evening we’ll get the FOMC minutes from the meeting earlier this month. Usually there would be a reasonable amount of focus on the minutes however, given the trade developments since then it’s likely that the they will be somewhat discounted as being stale. That being said the inflation debate will still be relevant and as a reminder Powell noted that several “transitory” factors had been weighing on inflation of late.” “Our US economists noted that subsequent Fedspeak since Powell’s press conference suggest that there is a solid contingent of officials that agree with this cut of the data, though some find persistently below target inflation as troublesome, regardless of the causes. Therefore, it will be interesting to see how the debate plays out, especially in light of concerns around inflation expectations and the Fed’s policy framework review.”Nordea Markets“FOMC talk will be important this week, as one shouldn’t forget that the setback in S&P500 started already with Powells presser 1st of May (before Trumps tweeting). Powell speaks late Monday evening (CET) and he will be given the chance to feed the doves after Trumps re-escalation of trade tensions.” “It may still be more important than usual whether he softens on the “inflation is transitory” stance from 1st of May.”Scotiabank“Powell's … May 1st press conference... tamped down market probabilities for a rate cut this year, but the conflict with China resurrected the bet … (minutes) may be stale because US China trade negotiations basically fell apart thereafter and this contrasts somewhat to Powell's portrayal of diminished risks to the outlook.” “Improved NAFTA prospects are nevertheless a positive offset to trade policy risks.” “In addition, the Fed's concern that inflation expectations are declining were at least partly allayed by the jump in consumer expectations this month that may partly reflect rising consumer aware of tariff influences.” “Also watch for further discussion that reflects the central opinions across FOMC members on topics like whether soft core inflation represents transitory factors.”

    According to analysts at TD Securities, the release of the May FOMC minutes on Wednesday should show a cautious Fed with a majority expecting transito

    According to analysts at TD Securities, the release of the May FOMC minutes on Wednesday should show a cautious Fed with a majority expecting transitory low inflation.Key Quotes“Recall that post-meeting Chair Powell emphasized that the current policy was appropriate and that the FOMC saw no reason to change in either direction.”

    The increasing selling pressure around the British Pound remains the name of the game so far today and is lifting EUR/GBP to fresh multi-month tops be

    The Sterling remains on the defensive, pushes EUR/GBP higher.Brexit concerns and no-confidence vote on May on the rise.UK CPI rose 2.1% on a yearly basis during April.The increasing selling pressure around the British Pound remains the name of the game so far today and is lifting EUR/GBP to fresh multi-month tops beyond 0.8800 the figure.EUR/GBP focused on Brexit, May, dataThe European cross is extending its rally for the third consecutive week on Wednesday - including the breakout of the critical 200-day SMA - always on the back of fresh Brexit jitters and rising uncertainty surrounding (still) PM May’s government. In fact, speculations over the likeliness of a no-confidence vote on Theresa May has gathered further traction today, as MPs continue to push for her resignation, all adding to the already heightened uncertainty surrounding the government. In the UK calendar, inflation figures tracked by the CPI showed consumer prices rose 0.6% MoM during April and 2.1% from a year earlier, both print coming in below expectations and therefore lending extra wings to the selling bias in GBP. Further data saw Public Sector Net Borrowing at £4.97 billion, bettering consensus. Later in the week, Retail Sales for the month of April are due tomorrow.What to look for around GBPUncertainty around the Brexit negotiations and May’s government has been intensifying in past hours, putting the Sterling under extra selling pressure. Investors’ focus now seems to have shifted to a no-confidence vote on the government, May’s potential resignation and the scarce chances of another vote on May’s Brexit plan at the House of Commons. On another direction and centred on the UK economy, recent publications from the industrial sector somewhat confirmed the rebound seen in the previous months, although the bounce in activity was exclusively driven by companies stockpiling in case of a ‘hard Brexit’ scenario rather than in response to a more ‘genuine’ recovery in the sector. Further out, the current steady stance from the Bank of England appears justified by below-target inflation figures, mixed results from key economic fundamentals and somewhat slowing momentum in wage inflation pressures, all adding to speculations of a ‘no-hike’ this year despite some calls signalling a potential hike in November.EUR/GBP key levelsThe cross is gaining 0.34% at 0.8813 and a break above 0.8840 (monthly high Feb.14) would expose 0.9062 (low Jan.11) and finally 0.9092 (2019 high Jan.3). On the downside, initial contention aligns at 0.8742 (high May 21) seconded by 0.8682 (100-day SMA) and then 0.8615 (55-day SMA).

    James Smith, developed markets economist at ING, notes that the UK’s headline inflation moved above the Bank of England’s 2% target in April with a pr

    James Smith, developed markets economist at ING, notes that the UK’s headline inflation moved above the Bank of England’s 2% target in April with a print of 2.1% (YoY), but this is largely down to an increase in a recently-introduced household energy price cap.Key Quotes“The UK energy regulator's decision lifted household electricity/gas prices by roughly 10% in April, but given recent declines in wholesale gas prices, this cap could be lowered again later in the year.” “Housing costs aside, underlying consumer price pressures appear more benign. At 1.8%, core inflation is a touch below target and we expect it to stay there for much of this year. In principle, this is another reason to think the Bank of England will keep rates on hold for the foreseeable future.” “Admittedly, there have been some tentative warning signs emerging on employment - hiring surveys have hinted at a reduced appetite to hire, particularly for full-time positions. This, combined with the fact that Brexit uncertainty will continue to keep a lid on growth (via lower investment), suggests to us that the Bank of England is likely to keep rates on hold through this year.”

    Germany 10-y Bond Auction down to -0.07% from previous 0.02%

    Chinese President Xi Jinping was out with some comments in the last hour saying that we should defeat various domestic, foreign risks and challenges.

    Chinese President Xi Jinping was out with some comments in the last hour saying that we should defeat various domestic, foreign risks and challenges. We will set-up technology innovation and expand the industrial chain, Xi added further. Xi didn't comment directly on the idea of banning exports of rare-element to the US but said that they are important strategic resources. 

    • Brexit-related chaos continues to dent sentiment around the British Pound. • The UK consumer inflation figures miss estimates and do little to lend

       •  Brexit-related chaos continues to dent sentiment around the British Pound.
       •  The UK consumer inflation figures miss estimates and do little to lend support.    The GBP/USD pair maintained its heavily offered tone through the early European session and held near multi-month lows post-UK CPI figures. The British Pound remained depressed and added to its recent heavy losses amid growing market conviction that the UK PM Theresa May won't be able to gather the needed votes to pass her withdrawal agreement bill.  May's new proposal outlined the passage of her Brexit deal as a pre-condition for a vote on a second referendum and given that similar versions were voted down previously, a fourth humiliating defeat was seen imminent. Meanwhile, Wednesday's release of UK consumer inflation figures came in to show a pickup in April but missed consensus estimates and hence, did little to impress the GBP bulls or ease the prevailing bearish pressure. Even a subdued US Dollar demand - amid a softer tone around the US Treasury bond yields ahead of today's important release of the latest FOMC meeting minutes, also failed to lend any support to the major. However, near-term oversold conditions seemed to be the only factor helping limit further downside as investors now look forward to May's statement for further details on her 10-point new Brexit proposal.Technical levels to watch 

    Bill Diviney, senior economist at ABN AMRO, suggests that the UK Prime Minister May made a last-ditch attempt to sell her Brexit deal to MPs today, ou

    Bill Diviney, senior economist at ABN AMRO, suggests that the UK Prime Minister May made a last-ditch attempt to sell her Brexit deal to MPs today, outlining new bill that combines elements where the government was prepared to compromise with the opposition Labour Party until recent talks broke down, with the offer of a vote on a second referendum.Key Quotes“The condition for such a referendum is that the deal passes the first stage of voting, and it is as yet unclear whether the vote will be a ‘free’ one (i.e. without party leaders ‘whipping’ the vote in a particular direction; a free vote would make it more likely a referendum is approved).” “Alongside the referendum pledge, the new bill contains pledges on maintaining worker and environmental rights at a minimum in line with EU rules, and it also offers the option of a permanent customs union – a key Labour demand – by giving parliament a say in the government’s negotiating goals for the post-withdrawal trade deal.” “It is unclear just how many MPs will be won over by these new elements to the bill, and some of the right flank of the Conservative Party who voted in favour last time are now either unlikely to do so this time (eg. Boris Johnson) or have already confirmed that they won’t (David Davis, Jacob Rees-Mogg). PM May is clearly banking on the new elements of the bill to win over enough Labour and other opposition MPs to offset any losses on the Conservative side.” “In the last vote, 30 MPs would have needed to switch votes to get the deal passed. On balance, we think the chances are a little higher the deal passes, but the coming days will be crucial in determining whether the parliamentary arithmetic moves in May’s favour. In light of the considerable political flux in the UK, we are currently reviewing our Brexit scenarios.”

    Jakob Christensen, chief analyst at Danske Bank, suggests that they are stressing that EUR/USD is in the hands of policy makers. Key Quotes “The curre

    Jakob Christensen, chief analyst at Danske Bank, suggests that they are stressing that EUR/USD is in the hands of policy makers.Key Quotes“The current policy inaction will keep EUR/USD in the current range, while it creates downside risks to our 1M and 3M forecasts of 1.12 and 1.13 if it further deteriorates risk sentiment.” “If policy makers in the US and China step up and manage a trade deal and/or ease monetary policy it would create the foundation for a higher EUR/USD. This is not a story for the short-term, though.”

    The UK Consumer Prices Index (CPI) ticked higher in April and came in at 2.1% yearly rate as compared to 1.9% previous, the Office for National Statis

    The UK Consumer Prices Index (CPI) ticked higher in April and came in at 2.1% yearly rate as compared to 1.9% previous, the Office for National Statistics (ONS) reported this Wednesday.  The core inflation (excluding volatile food and energy items) arrived at 1.8% y/y, matching the reading booked in March but missing the consensus forecast of 1.9%. The monthly figures showed that the headline CPI rose by 0.6% during the reported month, missing consensus estimates pointing to a reading of 0.7% but was still above 0.2% previous.

    United Kingdom Producer Price Index - Output (MoM) n.s.a meets forecasts (0.3%) in April

    United Kingdom Retail Price Index (YoY) came in at 3%, above expectations (2.8%) in April

    United Kingdom Producer Price Index - Input (YoY) n.s.a below forecasts (4.5%) in April: Actual (3.8%)

    United Kingdom Consumer Price Index (MoM) below expectations (0.7%) in April: Actual (0.6%)

    United Kingdom DCLG House Price Index (YoY) above forecasts (0.9%) in March: Actual (1.4%)

    United Kingdom Core Consumer Price Index (YoY) below expectations (1.9%) in April: Actual (1.8%)

    United Kingdom Public Sector Net Borrowing below forecasts (£5.1B) in April: Actual (£4.967B)

    United Kingdom PPI Core Output (YoY) n.s.a in line with expectations (2.2%) in April

    United Kingdom Consumer Price Index (YoY) came in at 2.1% below forecasts (2.2%) in April

    United Kingdom Retail Price Index (MoM) above expectations (0.8%) in April: Actual (1.1%)

    United Kingdom PPI Core Output (MoM) n.s.a in line with expectations (0.2%) in April

    United Kingdom Producer Price Index - Input (MoM) n.s.a came in at 1.1%, below expectations (1.3%) in April

    According to Karen Jones, analyst at Commerzbank, USD/JPY’s near term rebound is viewed as corrective only and should terminate ideally around the 50%

    According to Karen Jones, analyst at Commerzbank, USD/JPY’s near term rebound is viewed as corrective only and should terminate ideally around the 50% retracement at 110.71.Key Quotes“The market recently charted a key week reversal from the 112.46 2015-2019 downtrend. Failure here should concentrate attention on the recent low at 109.02. Failure at 109.02 would push the late January low at 108.49 and the 50% retracement at 108.25 to the fore.” “Further down sits the 107.27 61.8% Fibonacci retracement. Minor resistance comes in at the 110.84 April 10 low and the 111.43 200 day ma, these guard the 112.46 downtrend.” “Above the 112.46 downtrend lies the 114.55 October 2018 high.”

    Jakob Christensen, chief analyst at Danske Bank, points out that in the UK, Prime Minister Theresa May yesterday proposed to give Parliament a vote on

    Jakob Christensen, chief analyst at Danske Bank, points out that in the UK, Prime Minister Theresa May yesterday proposed to give Parliament a vote on whether to call another referendum to ratify Britain’s divorce from the EU conditional on MPs backing her overall withdrawal bill first.Key Quotes“The proposal seemed to have little effect in winning over sceptics, with prominent Brexiteers, such as conservative MP Boris Johnson and Labour Party leader Jeremy Corbyn, and May’s Northern Irish allies condemning her proposal. Indeed, consensus is increasingly shifting towards a scenario where either Brexiteer Boris Johnson or Labour’s Corbyn is set to take the UK through some form of Brexit and both are seen by markets as pound-negative.” “In reality, we will not have more certainty before May steps down and domestic politics is reshuffled. Either candidate may indeed show to be more pragmatic but for now a bit more pound volatility has been introduced.”

    • A further escalation in the US-China trade tensions underpins JPY’s safe-haven demand. • Some renewed USD buying interest does little to support or

       •  A further escalation in the US-China trade tensions underpins JPY’s safe-haven demand.
       •  Some renewed USD buying interest does little to support or stall the steady intraday slide.
       •  Investors now look forward to FOMC meeting minutes for a fresh directional impetus.
     
    The USD/JPY pair extended its steady intraday decline and dropped to fresh session lows in the last hour, eroding a part of the previous session's strong up-move to two-week tops. The prevalent cautious mood around equity markets, amid a further escalation in the recent US-China trade tensions, underpinned the Japanese Yen's relative safe-haven status and turned out to be one of the key factors exerting some fresh downward pressure.  The global risk sentiment took a hit after the Trump administration was reported to blacklist Chinese surveillance technology firm - Hikvision and is also considering cutting off the flow of vital American technology to as many as five Chinese companies. Bearish traders seemed rather unaffected by Wednesday's release of Japanese trade balance data, showing that exports contracted for the fifth month in April, with some renewed US Dollar strength also doing little to provide any meaningful boost. Currently trading around the 110.35 region, testing session lows, market participants now look forward to Wednesday's important release of FOMC meeting minutes, which might influence the near-term USD price dynamics and provide a fresh directional impetus.Technical levels to watch 

    South Africa Consumer Price Index (MoM) came in at 0.6%, below expectations (0.8%) in April

    South Africa Consumer Price Index (YoY) registered at 4.4%, below expectations (4.5%) in April

    • The selling pressure around the British Pound picked up the pace during the early European session on Wednesday and dragged the GBP/USD pair to ove

       •  The selling pressure around the British Pound picked up the pace during the early European session on Wednesday and dragged the GBP/USD pair to over four-month lows in the last hour.   •  Despite May's new Brexit deal, the growing market conviction that she won't gather the needed votes to succeed continued denting the already weaker sentiment and kept exerting pressure.The bearish slide has now dragged the pair below mid-Jan. swing lows support near the 1.2670-65 region and despite near-term oversold conditions, the downward trajectory could further get extended towards challenging the 1.2600 round figure mark. Alternatively, any recovery back above the 1.2700 handle might trigger some short-covering bounce but might still be seen as a selling opportunity near the 1.2770 region – marking 61.8% Fibonacci retracement level of the 1.2396-1.3381 up-move.GBP/USD daily chart 

    Karen Jones, analyst at Commerzbank, suggests that GBP/USD pair has reached support offered by the August, October and mid-January lows at 1.2696/62.

    Karen Jones, analyst at Commerzbank, suggests that GBP/USD pair has reached support offered by the August, October and mid-January lows at 1.2696/62.Key Quotes“We note the oversold daily RSI and the TD perfected set up on the daily – both of which suggest the 78.6% retracement at 1.2644 will hold. Minor resistance comes in at the 1.2865 April low.” “Immediate downside pressure will be maintained while no rise above the 200 day moving average at 1.2956 is seen. Next up is the May 10 high at 1.3048. Only if this level were to be exceeded, would we look for the 1.3185/97 April and current May highs as well as the 61.8% Fibonacci retracement to be retested. This currently looks unlikely.”

    EUR/USD daily chart EUR/USD Overview Today last price 1.1153 Today Daily Change 17 Today Daily Change % -0.08 Today daily open 1.1162 Trends Daily SMA

    The pair is trying some consolidation in the lower bound of the range in the mid-1.1100s so far this week.The lack of meaningful upside traction exposes EUR/USD to further downside, where YTD low in the 1.1100 area emerges as the immediate support of relevance.While the negative stance is expected to persist below the multi-month resistance line at 1.1278, occasional bullish attempts should meet interim hurdle at the 55-day SMA at 1.1237.EUR/USD daily chart  

    Sweden Capacity Utilization climbed from previous -0.6% to 0.5% in 1Q

    Analysts at Deutsche Bank point out that this evening we’ll get the FOMC minutes from the meeting earlier this month and will be a key release for tod

    Analysts at Deutsche Bank point out that this evening we’ll get the FOMC minutes from the meeting earlier this month and will be a key release for today’s session.Key Quotes“Usually there would be a reasonable amount of focus on the minutes however, given the trade developments since then it’s likely that they will be somewhat discounted as being stale. That being said the inflation debate will still be relevant and as a reminder Powell noted that several “transitory” factors had been weighing on inflation of late.” “Our US economists noted that subsequent Fedspeak since Powell’s press conference suggest that there is a solid contingent of officials that agree with this cut of the data, though some find persistently below target inflation as troublesome, regardless of the causes. Therefore, it will be interesting to see how the debate plays out, especially in light of concerns around inflation expectations and the Fed’s policy framework review.”

    In an interview with Radio 4, the UK Environment Secretary Gove said that the PM May’s Withdrawal agreement bill will be published later today. This c

    In an interview with Radio 4, the UK Environment Secretary Gove said that the PM May’s Withdrawal agreement bill will be published later today. This comes amidst the latest chatter of potentially getting May ousted as early as Sunday, leaving her with no chance to bring her bill to a vote in parliament. Meanwhile, a UK Labour Party Spokesperson said last hour that “It is sensible for May not to put her Brexit deal to a vote”. The Cable is seen printing fresh 4-month lows near 1.2660 levels ahead of the PM May’s statement.

    DXY daily chart Dollar Index Spot Overview Today last price 98.1 Today Daily Change 12 Today Daily Change % 0.06 Today daily open 98.04 Trends Daily S

    DXY navigates the top end of the recent range around the critical barrier at 98.00 the figure.If the bullish impetus accelerates, the next hurdle of note will be the 2019 high at 98.32 ahead of a Fibo retracement at levels just below 99.00 the figure.The broader constructive outlook is expected to prevail above key 200-day SMA at 96.38, while extra gains remain on the cards while above the short-term support line, today at 97.26.DXY daily chart  

    China’s Foreign Ministry is out with the latest statement, responding to the US blacklisting of five Chinese surveillance companies. Key Headlines: “C

    China’s Foreign Ministry is out with the latest statement, responding to the US blacklisting of five Chinese surveillance companies. Key Headlines: “China opposes US using national powers to smear US companies.” “Urges US to provide a fair and non-discriminatory environment for the Chinese firms.”

    The UK April CPIs Overview The cost of living in the UK as represented by the consumer price index (CPI) is due later on Wednesday at 0830 GMT. The he

    The UK April CPIs OverviewThe cost of living in the UK as represented by the consumer price index (CPI) is due later on Wednesday at 0830 GMT. The headline CPI inflation is expected to arrive at 0.7% inter-month in April while the annualized figure is seen accelerating 2.2%. The core inflation rate that excludes volatile food and energy items is also likely to have ticked higher by 1.9% last month.Deviation impact on GBP/USDReaders can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 15 and 80 pips in deviations up to 2 to -3, although in some cases, if notable enough, a deviation can fuel movements of up to 120 pips.How could it affect GBP/USD?“From a technical perspective, the overnight sharp pullback reaffirmed the near-term bearish bias and hence, a follow-through weakness back below the 1.2700 handle is likely to accelerate the slide further towards January swing lows, around the 1.2670-65 area. The near-term bearish trajectory could further get extended towards the 1.2600 neighborhood (1.2610 support zone). On the flip side, any attempted bounce might now confront some fresh supply near the 1.2770-75 region (61.8% Fibo. level of the 1.2396-1.3381 up-move) and is closely followed by the 1.2800 round figure mark,” FXStreet’s Analyst Haresh Menghani notes.Key NotesFOMC Minutes and UK inflation amongst market movers today – Danske Bank GBP futures: Extra losses stay on the cards UK Labour Spokesperson: It is sensible for May not to put her Brexit deal to a voteAbout the UK CPIThe Consumer Price Index released by the Office for National Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or Bearish).

    EUR/JPY daily chart EUR/JPY Overview Today last price 123.14 Today Daily Change 45 Today Daily Change % -0.15 Today daily open 123.32 Trends Daily SMA

    EUR/JPY attempted a move higher on Tuesday, although it lost momentum at the 21-day SMA in the 123.70 region.The downside pressure should mitigate somewhat if the cross manages to clear the 124.79/89 band, where coincide the 55-day and 100-day SMAs.In the meantime, a visit to recent lows in the 122.00 neighbourhood remains well on the cards in the short-term horizon while below the critical multi-month resistance line, today at 125.79.EUR/JPY daily chart  

    • A modest USD uptick prompts some fresh selling on Wednesday. • The downside remains cushioned amid US-China trade tensions. • Focus on Wednesday’s

       •  A modest USD uptick prompts some fresh selling on Wednesday.
       •  The downside remains cushioned amid US-China trade tensions.
       •  Focus on Wednesday’s key release of the FOMC meeting minutes.    Gold failed to capitalize on the overnight late rebound from over two-week lows and traded with a mild negative bias through the early European session on Wednesday. A modest US Dollar pullback on Tuesday - led by a sharp intraday spike in the British Pound, underpinned demand for the dollar-denominated commodity and helped stall the recent pullback from levels just above the key $1300 psychological mark. The uptick lacked any strong follow-through, rather met with some fresh supply on Wednesday and remained capped in wake of some renewed USD strength, albeit the prevalent cautious mood amid the latest news on US-China trade seemed to limit the downside. Adding to the recent escalation in the US-China trade tensions, the Trump administration was reported to blacklist Chinese surveillance technology firm - Hikvision, and might also be considering cutting off the flow of vital American technology to as many as five Chinese companies. The news weighed on investors' risk sentiment and extended some support to the precious metal's perceived safe-haven status, though failed to provide any meaningful impetus ahead of Wednesday key release of minutes from the latest FOMC policy meeting, due later during the US session.Technical levels to watch 

    Andrew Hanlan, analyst at Westpac, points out that Australian construction sector experienced a further cooling of conditions in early 2019, with cons

    Andrew Hanlan, analyst at Westpac, points out that Australian construction sector experienced a further cooling of conditions in early 2019, with construction work contracting for a third consecutive quarter, falling by: -3.6% in Q3 2018; -2.1% in Q4; and -1.9% in Q1 2019.Key Quotes“The March quarter outcome fell short of expectations, which were for a consolidation (market median flat and Westpac +0.2%).” “With the construction sector accounting for about 14% of the economy, this result will subtract in the order of 0.25ppts from activity in the quarter (depending upon how these quarterly partials flow through to the national accounts).” “The key surprises were: (1) the softness in public works, despite a sizeable work pipeline; and (2) a further wind down of private infrastructure activity, despite the recent lift in commencements and the growing work pipeline.”

    Analysts at TD Securities point out that between May 19 when the polls closed and tomorrow May 23rd when Indian election results are announced, exit p

    Analysts at TD Securities point out that between May 19 when the polls closed and tomorrow May 23rd when Indian election results are announced, exit polls suggest a comfortable Modi win.Key Quotes“We think the NDA alliance which includes Prime Minister Modi's BJP will not garner as many seats as the 2014 election when they gained an absolute majority in the Lok Sabha (lower house) with 282 seats, but will likely gain somewhere between 260-270 seats, implying more reliance on coalition partners but by no means a disaster for the BJP.” “Such an outcome will not be negative for INR but the currency could face pressure amid worsening risk appetite over the short term.”

    Japanese Cabinet Secretary Suga crossed the wires again today, via Reuters, making some comments on the planned October sales tax hike. Main Points: “

    Japanese Cabinet Secretary Suga crossed the wires again today, via Reuters, making some comments on the planned October sales tax hike.Main Points:“No postponement of sales tax hike unless economy suffers Lehman-type shock.” “Would plan stimulus measures if sales tax hike upsets the economy.”

    The latest comments are crossing the wires on the Brexit deal vote from the UK opposition Labour party spokesperson. Key Headlines: “It is sensible fo

    The latest comments are crossing the wires on the Brexit deal vote from the UK opposition Labour party spokesperson. Key Headlines: “It is sensible for May not to put her Brexit deal to a vote.” “May could pull the deal and address Labour's concerns on the public vote.”

    The selling pressure around the shared currency remains well and sound so far this week and is now taking EUR/USD to once again test the mid-1.1100s.

    EUR/USD moves within the familiar range in the mid-1.1100s.ECB’s President M.Draghi speaks later in the day.Attention will also be on the release of the FOMC minutes.The selling pressure around the shared currency remains well and sound so far this week and is now taking EUR/USD to once again test the mid-1.1100s.EUR/USD does not rule out a test of 1.1100Spot is down for the second session in a row following Monday’s unsuccessful bullish attempt and yesterday’s bull run to the 1.1180 region. In the meantime, trade concerns stemming from the US-China dispute keep dictating the price action and the sentiment in the global markets and stay unabated despite the Trump’s administration lifted the ban on Chinese tech Huawei for 90 days on Tuesday. Moving forward, still no significant releases in Euroland should leave the bulk of attention to the speeches by President M.Draghi and Board member P.Praet. Across the Atlantic, the FOMC will publish the minutes from its last meeting, while Fed’s Williams and Bostic are also due to speak.What to look for around EURRecent data releases in Euroland and Germany have poured cold water over the idea that some healing process could be under way in the region, re-shifting the focus to the ongoing slowdown and its probable duration and extension. In the meantime, the current ‘neutral/dovish’ stance from the ECB is expected to persist for the remainder of the year and probable through H1 2020. The broad-based risk-appetite trends and USD-dynamics should dictate the sentiment surrounding the European currency for the time being, all in combination with the now stalled US-China negotiations and potential US tariffs on EU products. On the political front, Italy has re-emerged as a source of uncertainty and volatility, while investors’ focus has now shifted to the EU parliamentary elections due later this week.EUR/USD levels to watchAt the moment, the pair is losing 0.04% at 1.1154 and faces the next support at 1.1135 (low May 3) seconded by 1.1109 (2019 low Apr.26) and finally 1.0839 (monthly low May 2017). On the other hand, a break above 1.1217 (23.6% Fibo of the 2019 drop) would target 1.1237 (55-day SMA) en route to 1.1264 (high May 1).

    • RBA rate cut speculations/disappointing domestic data weigh on the Aussie. • A further escalation in the US-China trade tensions does little to len

       •  RBA rate cut speculations/disappointing domestic data weigh on the Aussie.
       •  A further escalation in the US-China trade tensions does little to lend support.
       •  A subdued USD demand helped limit losses ahead of FOMC meeting minutes.    The AUD/USD pair struggled below the 0.6900 handle through the Asian session on Wednesday and remained well within the striking distance of multi-month lows. With investors looking past a surprise election victory for the incumbent Aussie PM Scott Morrison, the Australian Dollar came under some intense selling pressure on Tuesday after the latest RBA policy meeting minutes revealed that the central bank is willing to cut benchmark interest rates.  Apart from growing bets over an eventual RBA rate cut, the domestic currency was further weighed down by Wednesday's disappointing release of Australian construction data - showing a contraction of 1.9% in the first three months of 2019 as against expectations for a no change. The already weaker sentiment deteriorated further on reports that the Trump administration could blacklist Chinese surveillance technology firm - Hikvision and is also considering cutting off the flow of vital American technology to as many as five Chinese companies. The news added to the recent escalation in the US-China trade tensions and weighed on investors' risk sentiment, doing little to lend any support to the China-proxy Australian Dollar or provide any immediate respite to the perceived riskier currency.  Meanwhile, a subdued US Dollar price action, consolidating the recent strong gains to multi-week tops, seemed to be the only factor helping limit further downside ahead of today's key risk - the release of minutes from the latest FOMC monetary policy meeting, due later during the US session.Technical levels to watch 

    According to analysts at Danske Bank, in the Euro area, it's quiet on the data front ahead of 'Super Thursday', but markets will stay tuned for any po

    According to analysts at Danske Bank, in the Euro area, it's quiet on the data front ahead of 'Super Thursday', but markets will stay tuned for any policy hints from ECB President Draghi when he opens a farewell colloquium in honour of the departing Chief Economist Peter Praet at 09:30 CEST.Key Quotes“In the UK, European elections kick off today. Normally, the elections would not be a major market mover but, given Brexit, it is more interesting this time, not least because the Conservative Party is likely to suffer a heavy defeat and Nigel Farage's new Brexit party may be the biggest party of all. In our view, it is likely this would increase pressure on Prime Minister Theresa May to resign. Furthermore, CPI inflation for April is also on the agenda.” “In the US, markets will keep an eye on the FOMC minutes from the May meeting set to be released later in the day. As the Fed has clearly communicated that it expects to be on hold for some time, focus will likely be mainly on the reasoning behind the surprise cut in the Interest on Excess Reserves (IOER).”

    According to Karen Jones, analyst at Commerzbank, EUR/USD remains on the defensive while capped by the 55 day moving average at 1.1238. Key Quotes “Wh

    According to Karen Jones, analyst at Commerzbank, EUR/USD remains on the defensive while capped by the 55 day moving average at 1.1238.Key Quotes“While we remain unable to rule out a test of the 1.1110 April low, we look for this to hold. We note the 13 count on the 60 minute chart but suspect that we need to regain the 55 day ma in order to alleviate immediate downside pressure.” “Be advised that as long as 1.1110 holds, though, the pattern being traced out is a potential large bullish reversal pattern. Overhead lie the 55- and 100-day moving averages at 1.1238 and 1.1302 as well as the September-to-May resistance line at 1.1318. Further up meanders the 200 day moving average at 1.1390.” “Support at 1.1110 is regarded as the break down point to the 2018-2019 support line at 1.1096 and the 1.0814 78.6% Fibonacci retracement.”

    Investors scaled back their open interest positions in JPY futures markets by nearly 4.5K contracts on Tuesday vs. an increase of almost 26.5K contrac

    Investors scaled back their open interest positions in JPY futures markets by nearly 4.5K contracts on Tuesday vs. an increase of almost 26.5K contracts in volume, as per flash data from CME Group.USD/JPY meets resistance near 110.60The recovery in USD/JPY appears to have met an important hurdle in the mid-110.00s for the time being. Shrinking open interest calls for a correction lower, although choppy activity in volume could force some consolidation in the short-term horizon.

    Open interest in GBP futures markets rose for the seventh session in a row on Tuesday, this time by around 4.7K contracts. In the same line, volume po

    Open interest in GBP futures markets rose for the seventh session in a row on Tuesday, this time by around 4.7K contracts. In the same line, volume posted the largest single day build since March 29, all amidst the broader erratic performance.GBP/USD focused on 1.2670Cable’s downside remains unabated around the 1.2700 handle so far. Rising volume and open interest amidst declining prices carry the potential to drag GBP/USD lower with the immediate target at the 1.2670 region, mid-January lows.

    GBP/USD's latest bounce off 1.2685 isn’t strongly indicating the pair’s strength as it takes the rounds near 1.2715 ahead of the UK markets open on Wednesday.

    Multiple upside resistance-lines stand tall to question the pair’s recent recovery.Bears can jump back should prices break latest lows.GBP/USD's latest bounce off 1.2685 isn’t strongly indicating the pair’s strength as it takes the rounds near 1.2715 ahead of the UK markets open on Wednesday. The pair needs to surpass near-term trend-line resistance, near 1.2795/1.2800, in order to aim for another resistance-line around 1.2870/75. Should there be an increase upside bias past-1.2875, 50% Fibonacci retracement of present month downturn at 1.2935 and 61.8% Fibonacci retracement level of 1.2990 can please buyers. Meanwhile, a downside break of 1.2685 can trigger the quote’s fresh south-run towards January 15 low at 1.2672 and 1.2600 round-figure.GBP/USD hourly chartTrend: Bearish 

    According to preliminary data for EUR futures markets from CME Group, investors added 714 contracts to their open interest positions on Tuesday, reach

    According to preliminary data for EUR futures markets from CME Group, investors added 714 contracts to their open interest positions on Tuesday, reaching the fourth consecutive build in a row. Volume, in the meantime, rose by around 64.7K contracts, extending the choppy activity for yet another session.EUR/USD keeps looking to 1.1100The leg lower in EUR/USD remains well in place today, leaving the chances intact for another probable test of 2019 lows in the 1.1100 neighbourhood in the near term. This view remains supported by rising open interest.

    FX option expiries for May 22 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts 1.1180 1.5bn 1.1260 637m 1.1275 550m

    FX option expiries for May 22 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts 1.1180 1.5bn 1.1260 637m 1.1275 550m - GBP/USD: GBP amounts 1.2665 327m 1.2750 306m - USD/JPY: USD amounts 110.25 1.0bn 110.50 544m 110.80 500m - AUD/USD: AUD amounts 0.6850 616m

    The Bank of Japan (BOJ) board member Yutaka Harada is back on the wires now, extending his earlier comments on the economy and monetary policy. Main P

    The Bank of Japan (BOJ) board member Yutaka Harada is back on the wires now, extending his earlier comments on the economy and monetary policy.Main Points:The domestic economy has entered into a delicate state. Q1 GDP appears strong but driven by a fall in imports, inventories. Hard to say that the economy is recovering. Raising sales tax now risks causing a recession. Japan's fiscal stimulus is improving under QQE. MMT is questionable as unlimited debt issuance would cause unwelcome inflation.

    TD Securities analysts point out that UK’s April inflation is released, and they are looking for core inflation to pick up to 2.0% y/y (consensus: 1.9

    TD Securities analysts point out that UK’s April inflation is released, and they are looking for core inflation to pick up to 2.0% y/y (consensus: 1.9%) while headline inflation jumps to 2.2% y/y (consensus: 2.2%, BoE: 2.2%).Key Quotes“Easter effects will likely artificially boost the core number in April on stronger travel prices in 2019 vs 2018 (which saw an earlier Easter), while the Ofgem price cap lift will lead to a jump in energy prices that is likely to be sustained until a downward adjustment to the cap in October.”

    Measured by the US Dollar Index (DXY), the greenback manages well to keep the trade at/above the key barrier at 98.00 the figure for the time being. U

    The index hovers around the 98.00 handle so far.Yields of the US 10-year note reclaimed the 2.43% handle.FOMC minutes, Fedspeak next of note in the docket.Measured by the US Dollar Index (DXY), the greenback manages well to keep the trade at/above the key barrier at 98.00 the figure for the time being.US Dollar Index focused on trade, FOMCThe broad sentiment around the index remains constructive for yet another session on Wednesday, navigating the area of weekly highs while investors’ attention remains mainly focused on trade concerns. Still around trade, news that the White House lifted the ban on Chinese tech giant Huawei for 90 days on Tuesday boosted tech stocks in Wall St. and brought in some respite among traders following a couple of sessions in red figures. Further out, Chicago Fed C.Evans ruled out yesterday negative interest rates as a potential tool to be used in the future. On his turn, Boston Fed E.Rosengren regarded the lack of traction in inflation as temporary, while he noted that trade uncertainty should have a modest impact on the economy. Later in the session, the FOMC will publish its minutes from the last meeting in what will be the salient event today. In addition, NY Fed J.Williams (permanent voter, centrist) will host an Economic Press Briefing and Atlanta Fed R.Bostic (2021 voter, centrist) will make Opening Remarks at the Dallas Fed Conference.What to look for around USDPrices of the WTI appear to have met some moderate resistance in the $63.70 region, or multi-day peaks. In the broader picture, and supporting prices, appear rising US-Iran tensions, turmoil in Libya, the so-called ‘Saudi put’ and the ongoing OPEC+ deal to cut oil output. However, US-China trade concerns remain far from abated despite the lack of fresh headlines as of late and emerge as the main hurdle for a more serious advance in crude oil.US Dollar Index relevant levelsAt the moment, the pair is gaining 0.04% at 98.06 and faces the next up barrier at 98.13 (high May 21) seconded by 98.32 (2019 high Apr.25) and finally 98.97 (78.6% Fibo of the 2017-2018 drop). On the other hand, a break below 97.70 (21-day SMA) would open the door for 97.25 (55-day SMA) and then 97.03 (low May 13).

    USD/CAD took a U-turn from 50-day SMA amid declining WTI prices and also ahead of the key data/events from the US and Canada on Wednesday.

    WTI pullback triggered recovery from 50-day SMA.Canadian retail sales and FOMC minutes are in the spotlight.Noises surrounding the US-Iran relations and optimism concerning the removal of metal tariffs pleased USD/CAD sellers recently, the pair took a U-turn from 50-day SMA on early Wednesday as crude prices slip while traders await monthly Canadian retail sales data. Crude is the largest export item of Canada and has a positive correlation with the Canadian Dollar (CAD). The energy benchmark was on rising earlier as deteriorating political relations between the US and Iran signaled a war. However, a surprise increase in the weekly US crude oil stocks data from the American Petroleum Institute (API) joined hands with the absence of further Geopolitical salvo to drag the black gold down off-late. It should also be noted the latest headlines relating to the trade negotiations between the US and China also directed near-term Loonie moves. Investors will now focus on the March month retail sales data for fresh impulse whereas minutes of the latest FOMC meeting could also offer directives to price sentiment. Canadian retail sales may increase 1.1% against 0.8% prior with the retail sales ex-Autos, also known as core retail sales, likely rising 0.9% over 0.6% earlier. Minutes of the latest Federal Open Market Committee (FOMC) meeting is less likely to offer any news guidelines for future policy moves. However, details for a number of policymakers in support of a rate change will be observed closely.Technical AnalysisNot only 50-day simple moving average (SMA) level of 1.3400 but an upward sloping trend-line since February 27 can also question the pair’s downside at 1.3380, if not then 100-day SMA level of 1.3330 might lure sellers. On the upside, 1.3440, 1.3500 and an ascending trend-line joining highs since January 07 at 1.3555 could limit the quote’s advances.

    Analysts at ANZ note that the New Zealand government’s books are in a healthy position, and the Treasury’s Budget Economic and Fiscal Update forecasts

    Analysts at ANZ note that the New Zealand government’s books are in a healthy position, and the Treasury’s Budget Economic and Fiscal Update forecasts should show this persisting.Key Quotes“We expect a slightly softer economic outlook to drive a small deterioration in the fiscals compared to December’s Half-Year Update.” “Despite the softer economy there should be enough wiggle room for the Government to still meet its 20% debt objective.”

    St Louis Fed president James Bullard is back on the wires now, via Reuters, with the key comments found below. “Rate cut may become 'a more attractive

    St Louis Fed president James Bullard is back on the wires now, via Reuters, with the key comments found below. “Rate cut may become 'a more attractive option' if inflation keeps disappointing.” “Any adjustment in monetary policy would be in response to incoming data and not part of ongoing normalization.” “2019 inflation may fall short of target.” “Fed needs to tread carefully to sustain US expansion.” “Current trade disputes could become entrenched.” “That could alter global trade patterns over the medium-term.”

    Bill Evans, analyst at Westpac, points out that for the Australian economy’s six month annualised growth rate in the Westpac– Melbourne Institute Lead

    Bill Evans, analyst at Westpac, points out that for the Australian economy’s six month annualised growth rate in the Westpac– Melbourne Institute Leading Index, declined from –0.13% in March to –0.47% in April.Key Quotes“The Index growth rate has been consistently negative over the last five months, a clear signal that economic growth through the three quarters of 2019 is likely to be below trend.” “As noted last month, the improved signal in March was entirely due to a sharp lift in one component – dwelling approvals – which saw a spike in high rise activity drive a 19.1% surge. A 15.5% fall back in this component accounts for almost all – 0.32ppts out of 0.34ppts – of this month’s lapse in the Leading Index growth rate to more negative territory.” “This consistent ‘below trend’ signal from the Index is in line with Westpac’s growth forecast for 2019 of 2.2%. We note that the Reserve Bank has recently lowered its growth forecast for 2019 from 3% to 2.6%. That adjustment is in the right direction and is official recognition that growth in 2019 will be below trend (generally accepted as around 2.75%).”

    FX today experienced cautious sentiment, as risk appetite soured in Wednesday’s Asian trading amid renewed US-China trade woes on the fresh reports th

    FX today experienced cautious sentiment, as risk appetite soured in Wednesday’s Asian trading amid renewed US-China trade woes on the fresh reports that the US is considering blacklisting up to 5 Chinese surveillance companies. The news overshadowed the optimism fuelled by Huawei’s reprieve. The JPY bulls fought back control as a flight to safety returned that sent USD/JPY back below 110.50 levels. However, the downside appeared limited amid weak Japanese exports data and dovish comments from the BOJ board member Harada. The Antipodeans traded on the defensive amid dismal fundamentals and softer risk tones. The AUD/USD pair remained offered near 0.6880 levels, as downbeat Australian construction Output and Westpac Leading Index data weighed. Meanwhile, the Kiwi breached the 0.6500 support, in sympathy with the Aussie and the drop in oil prices. The black gold dropped on Saudi comments and rising US oil supplies. Despite the oil price weakness, the Loonie wavered in a tight range around the 1.34 handle. Among other commodities, gold futures on Comex traded modestly flat near 1273, as all eyes remain on the Fed minutes for fresh direction. Amongst the European currencies, the EUR/USD pair traded weaker near 1.1150 levels while the Cable remained supported above the 1.2700 level heading into the UK CPI report.  Main Topics in AsiaChina’s Ambassador to the US: China remains ready to continue trade talks with US colleagues USTR Lighthizer to talk with EU, Japan amid concerns over Chinese subsidies – Reuters Japan: Topic of auto export restriction to US not raised during talks – Jiji Japan’s Suga: Auto import restriction by US would adversely impact us, global economy UK PM May faces new coup after gamble to force deal through by offering second referendum backfired – The Sun New Zealand retail sales rises 0.7% q/q in Q1 2019, beats estimates Fed’s Bullard: Fed may have overdone it with December hike Japan manufacturers' morale boosted in May - Reuters Tankan Japan exports fall for fifth month in April amid US-China trade war - Reuters US Pres. Trump: USMCA must be passed before any infrastructure bill Australia’s Q1 construction work drops 1.9%, a negative surprise (Aussie keeps lows) BOJ’s Harada: There is a risk declines in exports, output could spread to employment, consumption Asian stocks tentative as Hikvison news overshadows Huawei reprieve AUD-positive news: Dalian iron ore hits record highKey Focus AheadMarkets buckle up for a busy EUR calendar today, with the UK inflation data for April likely to headline at 0830 GMT. The UK Consumer Price Index (CPI) is seen accelerating 2.2% y/y in April while the core figures are also seen a tad firmer at 1.9% y/y in the reported month. The Producer Price Index (PPI), Retail Price Index and Public Sector Net Borrowing data will be also published parallelly. Meanwhile, the EUR docket remains data-empty, as all eyes remain on the ECB President Draghi’s speech due at 0730 GMT and outgoing Chief Economist Praet’s speech at 0930 GMT. On the Brexit front, PM May will present statement providing details of her 10-point Brexit proposal during the Wednesday’s parliament session. In the NA session, the Canadian retail sales data will drop in at 1230 GMT and will be closely eyed amid a lack of significant news from the US docket. Also, the EIA crude stockpiles report will draw some attention for fresh oil trades. The main event risk for today remains the FOMC latest meeting’s minutes that will be published at 1800 GMT. Any dovish title revealed in the minutes amid escalating US-China trade woes would trigger an extensive pullback in the US dollar from the recent peaks.  EUR/USD: Two-way business ahead of Draghi speech The EUR may remain under pressure today if the yield differentials continue to widen in favor of the US dollar. Further, riskier assets will likely remain on the defensive on reports that the Trump administration is planning to blacklist China's Hikvision - a major surveillance technology firm. GBP/USD: Pullback moves active ahead of UK CPI, PM May’s statement Oversold RSI conditions trigger the GBP/USD pair’s recovery to 1.2720 as traders await monthly inflation data and PM May’s statement in the UK parliament while heading into the London open on Wednesday.´ UK CPI preview: Higher inflation may provide a selling opportunity on GBP/USD According to the economic calendar, the headline consumer price index is expected to advance from 1.9% year over year in March to 2.2% in April, crossing above the central bank's target of 2%. Core inflation is also set to accelerate, from 1.8% to 1.9% this month. FOMC Minutes Preview: Inflation, inflation, where's the Fed's inflation? The coverage in the minutes around the inflation discussion will be its most important market focus. How many governors expressed concern? Were rate hikes broached as an eventuality if inflation continues to be weak?   

    Miles Workman, senior economist at ANZ, notes that New Zealand’s retail sales volumes rose 0.7% q/q in Q1 (sa) following Q4’s solid 1.7% q/q rise. Key

    Miles Workman, senior economist at ANZ, notes that New Zealand’s retail sales volumes rose 0.7% q/q in Q1 (sa) following Q4’s solid 1.7% q/q rise.Key Quotes“A slightly softer print in Q1 was due, and we had pencilled in a 0.6% rise. Annual growth slowed 0.2%pts from Q4 to 3.3%, but remains above the run rate of the previous three quarters.” “Core retail volumes, which exclude volatile components like petrol, were also up 0.7% q/q – to be up 3.9% over the past year. All up, there still appears to be a healthy spending pulse out there, but the 4.7% drop in accommodation and 0.3% fall in food and services spending suggest the recent dip in international visitor arrivals has weighed.” “Today’s print was broadly as expected, so is not a game changer for our Q1 GDP pick of 0.5% q/q. But there’s still plenty more information to come on that front. That said, with the RBNZ forecasting GDP growth of 0.4% q/q, the hurdle for disappointment remains high. But we need to keep an eye on capacity indicators too.” “Overall, consumer spending appears to be holding at a healthy level, but high levels of household debt, slowing population growth, a softer housing market, around-average consumer confidence, and some concerning global growth signals mean upside is limited.”

    Despite breaking four-week-old trend-line resistance, the USD/JPY pair couldn’t cross 21-day simple moving average (SMA) on early Wednesday.

    Break of short-term descending trend-line favors advances if buyers clear 21-day SMA.Immediate upward sloping support-line can limit the declines.Despite breaking four-week-old trend-line resistance, the USD/JPY pair couldn’t cross 21-day simple moving average (SMA) as it slips beneath 110.50 ahead of the European session on Wednesday. With this, prices are likely to revisit 110.30 and 50% Fibonacci retracement of January 10 to April 24 upside, at 110.10. However, an ascending trend-line stretched since May 13 may limit the pair’s further declines at 109.80/75. In a case where sellers dominate market sentiment, 61.8% Fibonacci retracement around 109.55 and current month lows near 109.00 could become their favorites. Alternatively, a successful break of 110.65 comprising 21-day SMA could further escalate the pair’s rise towards 50-day SMA level of 111.00. Also, pair’s extended north-run past-111.00 can avail 111.70 and 112.20 as intermediate halts ahead of highlighting April highs adjacent to 112.40.USD/JPY daily chartTrend: Pullback expected 

    Bloomberg quotes people familiar with the matter, as saying that the US is considering cutting off the flow of vital American technology to as many as

    Bloomberg quotes people familiar with the matter, as saying that the US is considering cutting off the flow of vital American technology to as many as five Chinese companies including Hangzhou Hikvision Digital Technology. The sources also added that the US is deliberating whether to add Hikvision, Zhejiang Dahua Technology and several others to a blacklist that bars them from US components or software. Earlier today, the New York Times also reported the Trump administration could blacklist Chinese surveillance technology firm, Hikvision. 

    Analysts at ANZ are keeping their dairy price forecasts unchanged at $6.40/kg MS this season and $7.30 next. Key Quotes “Dairy markets have strengthen

    Analysts at ANZ are keeping their dairy price forecasts unchanged at $6.40/kg MS this season and $7.30 next.Key Quotes“Dairy markets have strengthened over the past six months on the back of improved returns for dairy commodities and a softer New Zealand dollar.” “Fonterra is on track to finalise its milk price for the 2018/19 season within its current forecast guidance range of $6.30-$6.60/kg milksolid (MS). Our forecast for this season remains at $6.40/kg MS.” “Stronger returns are forecast for the 2019/20 season. Our forecast for next season remains at $7.30/kg MS. This price assumes dairy commodity prices will hold near current levels for the remainder of the 2019 calendar year, then ease slightly in the later part of the season.”

    Satish Ranchhod, senior economist at Westpac, notes that New Zealand’s retail spending rose by 0.7% in the March quarter and was another solid gain fo

    Satish Ranchhod, senior economist at Westpac, notes that New Zealand’s retail spending rose by 0.7% in the March quarter and was another solid gain following a very strong end to 2018.Key Quotes“We expect to see continued moderate growth in spending over 2019 and 2020, supported by increases in government spending, a firming in the labour market and low interest rates.” “Even with firm spending in recent quarters, retail price growth remains muted and businesses are continuing to highlight pressure on margins.”

    Catherine Birch, senior economist at ANZ, Australia’s construction activity fell 1.9% q/q in Q1 2019 following an upwardly-revised 2.1% fall in Q4 201

    Catherine Birch, senior economist at ANZ, Australia’s construction activity fell 1.9% q/q in Q1 2019 following an upwardly-revised 2.1% fall in Q4 2018 (from -3.1%).Key Quotes“Housing (-2.5% q/q) and engineering construction (-3.9% q/q) continued to decline, while non-residential building strengthened (+3.6% q/q). Public sector construction (-3.7% q/q) fell further than private sector construction (-1.3% q/q), which is surprising given the infrastructure pipeline.” “Private sector construction was dragged down by engineering construction (-5.0% q/q) and residential construction (-2.4% q/q). Both new building (-2.2% q/q) and renovations (-3.6% q/q) fell. Private non-residential building, on the other hand, was a bright spot, recording its strongest quarterly increase since 2012 (+7.8%).” “The sharper-than-expected contraction in residential activity during the quarter and the ongoing decline in engineering construction will undermine GDP growth in Q1 2019 and puts downside risk on our pick for the quarter.”

    The Indian Rupee (INR) is seen reversing Tuesday’s pullback to near 70.00 levels against its American peer, knocking-off the USD/INR cross back toward

    INR bulls fight back control, knock-off USD/INRIndian election outcome due tomorrow – key focusThe Indian Rupee (INR) is seen reversing Tuesday’s pullback to near 70.00 levels against its American peer, knocking-off the USD/INR cross back towards the 69.60 region The Indian currency regains poise heading into Thursday’s outcome of the general election. The optimistic outlook around the Rupee was painted after the exit polls“ results showed that the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) is likely to win over 300 seats in India’s 543-seat lower house. The opposition, the Congress-led United Progressive Alliance (UPA), will win an estimated 132 seats, exit polls showed. On the exit polls results, the USD/INR pair fell 0.7%, with the Rupee registering its biggest single-day gains since 19 March to close near a two-week high. Meanwhile, the bond yields fell 8 basis points, the most since 2 April, to hit a seven-week low.  Amid increased bets of incumbent Prime Minister Modi returning to power, the foreign fund inflows have aided the Rupee in the recent past.  “Indian markets have been pricing in the return of the BJP government since tensions with Pakistan broke out in late February and led to a surge in support for PM Modi”, as cited by Reuters. All eyes remain on the election outcome due tomorrow, a majority for BJP-led NDA is likely to be positive for the Rupee, but the upside will remain limited, as explained by FXStreet’s Analyst Omkar Godbole. USD/INR Technical Levels

    Oversold RSI conditions trigger the GBP/USD pair’s recovery to 1.2720 as traders await monthly inflation data and PM May’s statement on early Wednesday.

    Political pessimism remains active ahead of PM May’s statement and CPI data.Oversold RSI and 1.2700 round-figure also play their roles.Oversold RSI conditions trigger the GBP/USD pair’s recovery to 1.2720 as traders await monthly inflation data and PM May’s statement in the UK parliament while heading into the London open on Wednesday. The Pound dropped yesterday as members of the parliament (MPs) reacted negatively to the Prime Minister Theresa May’s incentive to vote for her Brexit proposal. Those included promise to have a right to conduct another referendum and also have a say on the customs union issue. PM May will present statement providing details of her 10-point Brexit proposal during the Wednesday’s parliament session. Be it opposition Labour party’s revolt over little change in the deal or Tory leaders’ problems with the second referendum and customs union, majority of the British policymakers are likely to turn down Mrs. May’s Brexit proposal when it is likely to appear for voting in the week that begins on June 03. At the economic calendar, April month consumer price index (CPI) data will be the key to watch. The headline price increase gauge may rise to 2.2% from 1.9% on a yearly basis whereas core CPI is likely to register a 1.9% increase versus 1.8% previous readout. On the US side, political plays surrounding trade deal with China and geopolitical problems with Iran, coupled with FOMC minutes, could direct immediate US Dollar (USD) moves.Technical AnalysisFebruary month lows near 1.2770/75 could restrict immediate upside of the pair, a break of which can propel prices towards 1.2800 and then to two-week-old trend-line resistance of 1.2870. Meanwhile, sellers’ rejection of 14-day relative strength index (RSI) condition can lure them towards January 15 bottom around 1.2670 and 1.2600 downside numbers.

    EUR/USD is currently sidelined around 1.1162, having hit a high and low of 1.1188 and 1.1142 in the last 24 hours. The two-way business could be assoc

    EUR/USD swung ways on Tuesday amid Huawei reprieve and widening US-Geman yield differential.Draghi unlikely to sound hawkish.The EUR and other risk assets may remain under pressure on Hikvision news.EUR/USD is currently sidelined around 1.1162, having hit a high and low of 1.1188 and 1.1142 in the last 24 hours. The two-way business could be associated with the widening US-German yield differential and Huawei reprieve. The US stocks picked up a bid and the Chinese Yuan sell-off stalled on Tuesday after the US government allowed Huawei to purchase products from the US suppliers. The pair, therefore, rose to a high of 1.1188 in the North American session only to surrender gains on Eurozone growth concerns. Notably, the spread between the US and German two-year bond yield rose to 289 basis points on Tuesday, the highest level since May 10, strengthening the bearish pressures around the common currency. The EUR may remain under pressure today if the yield differentials continue to widen in favor of the US dollar. Further, riskier assets will likely remain on the defensive on reports that the Trump administration is planning to blacklist China's Hikvision - a major surveillance technology firm. The shared currency, however, would find takers if the European Central Bank (ECB) President Draghi, during his speech at 07:30 GMT, sounds hawkish. However, with the recent string of weak German and Eurozone data and uncertainty ahead of EU elections, Draghi is more likely to reiterate the need to keep the monetary policy accommodative. Post-Draghi, the focus will shift to German 10-year bond auction. The pair may be sidelined in the US session on account of caution ahead of the Fed minutes scheduled for release at 18:00 GMT.Pivot points 

    Even if two-month-old descending trend-line restricts NZD/USD upside, oversold RSI conditions limit further downside around 0.6500.

    Three-month-old descending trend-line continue limiting the upside.The oversold conditions of 14-day relative strength index (RSI) and 0.6500 mark trouble sellers.Even if two-month-old descending trend-line restricts NZD/USD upside, oversold RSI conditions limit further downside around 0.6500 ahead of the European open on Wednesday. As a result, the Kiwi pair might bounce back to confront the aforementioned resistance-line near 0.6540/45, a break of which could escalate the quote’s recovery towards 0.6570 and 21-day simple moving average (SMA) level of 0.6590. In a case where prices keep rising past-0.6590, 61.8% Fibonacci retracement of its October to December 2018 upside at 0.6635, followed by 50% Fibonacci retracement and 50-day SMA around 0.6700/05, could entertain buyers. Given the bear's dominance over sentiment remains intact, a downward sloping trend-line connecting March and April months lows near 0.6485 and October 26 low adjacent to 0.6465 could become their next targets ahead of watching over October 2018 bottom at 0.6425.NZD/USD daily chartTrend: Pullback expected  

    The most-traded iron ore futures on China's Dalian Commodity Exchange rose 3.3 percent on Wednesday to 727.5 yuan ($105.34) a tonne, the highest since

    The most-traded iron ore futures on China's Dalian Commodity Exchange rose 3.3 percent on Wednesday to 727.5 yuan ($105.34) a tonne, the highest since contracts were launched in 2013, according to Reuters.  The record high on iron ore futures is an AUD-positive development as the commodity makes up the bulk of Australian exports. However, with markets penciling in two RBA rate cuts by November and deepening trade tensions, the AUD/USD may have a hard time cheering the iron ore rally. The AUD/USD pair is currently trading largely unchanged on the day at 0.6882. 

    Reuters is out with key insights on the Japanese trade balance report published earlier today that saw the country’s exports falling for the fifth str

    Reuters is out with key insights on the Japanese trade balance report published earlier today that saw the country’s exports falling for the fifth straight month in April, as escalating US-China trade war started to have its adverse impact on the Japanese shipments of chip-making equipment to China.Key Points:“Japan’s trade surplus with the United States rose for a second month as auto exports accelerated, which could draw U.S. President Donald Trump’s ire before U.S.-Japan trade negotiations begin this week followed by a leaders’ summit a few days later. Ministry of Finance (MOF) data showed on Wednesday Japan’s exports fell 2.4% in April from a year earlier, down for a fifth straight month. That compared with a 1.8% drop seen by analysts in a Reuters poll, and a similar 2.4% decline in March. Exports to China fell 6.3% in April from a year earlier, down for the second consecutive month.”

    Oil prices on both sides of the Atlantic fell on Wednesday after industry showed an uptick in US crude oil production. Brent crude fell 0.30% to 471.

    US oil stocks rise by 2.4 mln barrels to 480.2 mln last week.US-Iran tensions will likely restrict downside in oil prices. Oil prices on both sides of the Atlantic fell on Wednesday after industry showed an uptick in US crude oil production. Brent crude fell 0.30% to 471.75 per barrel and West Texas Intermediate (WTI) slipped lower by 0.54% to $62.61 per barrel. The American Petroleum Institute(API) said on Tuesday that US crude inventories rose by 2.4 million barrels last week, to 480.2 million barrels, topping the expectations for a decrease of 599,000 barrels by a big margin, according to Reuters news. The black gold may further drop later today if the US Energy Information Administration's reports a big jump in the oil stockpiles. The price dip, however, could be short-lived, courtesy of escalating tensions between the US and Iran. President Donald Trump on Monday threatened Iran with "great force" if it attacked US interests in the Middle East. Further, acting US Defense Secretary Patrick Shanahan said threats from Iran remained high.  

    Australia's Treasurer Josh Frydenberg on Wednesday said the economy needs a "pro-growth strategy". The Labor party, however, believes the coalition go

    Australia's Treasurer Josh Frydenberg on Wednesday said the economy needs a "pro-growth strategy". The Labor party, however, believes the coalition government needs to do more than tax cuts.Key quotes by Frydenberg"Australia does face some headwinds." "Domestically, we've seen some significant impacts of the floods and the drought. The housing market has slowed." "It is not the time for higher taxes, it is time for a pro-growth strategy." "We don't just have immediate (tax) relief, but we have long-term relief."Key quotes by Labor senator Penny Wong"We've had very tepid economic growth in recent times and some of the signs aren't good," she told reporters in Adelaide. "My greater fear is that it doesn't appear this government has any plan ... to deal with an economy that is not as strong as we would want it to be."  

    Japanese Cabinet Secretary Suga was reported by Reuters, as saying that the auto import restriction by the US would adversely impact us and the global

    Japanese Cabinet Secretary Suga was reported by Reuters, as saying that the auto import restriction by the US would adversely impact us and the global economy.Earlier today, Japanese trade negotiator, Kazuhisa Shibuya, noted that the topic of the country’s auto export restriction to the US did not come up during talks, as cited by Jiji.

    Asian stocks are lacking a clear directional bias this Wednesday morning, despite the overnight gains in the US stocks, possibly due to reports that t

    Asian stocks are struggling to cheer the overnight gains in the US stocks, due to trade tensions. Shanghai Composite is flatlined, Nikkie is up 0.28%. Asian stocks are lacking a clear directional bias this Wednesday morning, despite the overnight gains in the US stocks, possibly due to reports that the Trump administration is considering blacklisting Hikvison - a major Chinese surveillance technology firm. MSCI's broadest index of Asia-Pacific shares outside Japan is currently reporting marginal losses, having edged up in early trade following gains on Wall Street. Shares in Australia are down 0.14%, South Korea's Kospi is reporting a 0.20% drop and the Shanghai Composite is trading largely unchanged on the day. Meanwhile, Hang Seng and Nikkei are up 0.14% and 0.28%, respectively. The major US indices rallied on Tuesday with technology shares leading the way after Washington eased curbs on Huawei. The US chipmaker stocks supplying to China's Huawei had taken a hit last week due to the decision by the Trump administration to block Huawei Technologies Co Ltd from buying US goods. So far, however, the rally in the US stocks has not had a positive impact on the Asian markets. This is because The New York Times reported earlier today that the US may blacklist China's Hikvison - one of the world’s largest manufacturers of video surveillance products. That could only lead to further escalation of trade tensions between the world's two biggest economies. That said, the stocks may pick up a bid if the Chinese yuan shows signs of life. That would imply the trade war fears have peaked. As of writing, the USD/CNH pair is trading at 6.9050.

    More comments are hitting the wires from the Bank of Japan (BOJ) board member Yutaka Harada, as he continues to speak on the economic situation and mo

    More comments are hitting the wires from the Bank of Japan (BOJ) board member Yutaka Harada, as he continues to speak on the economic situation and monetary policy outlook. Sees an increase in data pointing to weakness. Need to add stimulus if 2% target becomes hard. FX stability, high economic growth are needed for capex to recover. QQE helped boost bank profits. There is a risk declines in exports, output could spread to employment, consumption. BOJ must raise rates only after confirming that price increases have gained enough momentum. Impact of sales take hike in October on economy is a concern.

    GBP/JPY is currently trading at 140.67 and could soon revisit the psychological resistance of 141.00. The currency pair rose to a high of 141.73 in th

    GBP/JPY is eyeing corrective rally on a bullish divergence of the 4-hour chart indicator.The pair could test the 10-day moving average, currently placed just above 141.00, in the next few hours.GBP/JPY is currently trading at 140.67 and could soon revisit the psychological resistance of 141.00. The currency pair rose to a high of 141.73 in the US trading hours on Tuesday only to close with moderate gains at 140.38. Despite the pullback, the bullish divergence of the 4-hour chart relative strength index (RSI) is valid. Further, the daily chart RSI is bouncing up from oversold levels, signaling scope for a corrective rally. As a result, the pair may challenge the descending (bearish) 10-day moving average (MA) of 141.10 in the next couple of hours. 4-hour chartTrend: Corrective bouncePivot levels 

    Gold struggles around 9-month support-line amid changing risk catalysts on early Wednesday.

    Avoiding war with Iran and relief to Huawei didn’t stop the US from being tough on China.FOMC minutes and risk catalysts to watch for targeting a move under medium-term trend-line support.Although diminishing chances of the US-Iran war and positive news reports from the US and China compress the yellow metal’s gains, upward sloping trend-line limits the Gold’s declines as it trades near $1274 during early Wednesday. Not only the US President Donald Trump’s readiness to talk to Iran but comments turning down the threat of war from the US Defence Secretary Patrick Shanahan also affected the safe-haven demand of the bullion. On the other hand, the US offered an intermediate relief to China’s Huawei after banning to trade earlier. That follows the latest comments from China’s ambassador to the US that the dragon nation stands ready to go on the trade negotiation table and import more goods and services from the US. Additionally, the 10-year yield of the US government bond, considered as a global risk barometer, is within the positive territory to 2.433% by the press time. However, the New York Times reports that the Trump administration could blacklist Chinese surveillance technology firm continued entertaining risk-prone traders. Moving forward, minutes of the Federal Open Market Committee (FOMC) might act as a trigger from the economic calendar while developments surrounding the political plays mentioned above could keep the precious metal markets lively.Technical AnalysisOn the break of $1271 support-line, April low near $1265 can act as an intermediate halt during the downturn to 200-day simple moving average (SMA) around $1258/57. Meanwhile, $1280 and $1288/89 could keep restricting the metal’s near-term upside ahead of fuelling it to current month high surrounding $1311.

    The analysts at Societe Generale offer their outlook on the EUR/USD pair, in the wake of the recent weakness in the pound and the Chinese Yuan. Key Qu

    The analysts at Societe Generale offer their outlook on the EUR/USD pair, in the wake of the recent weakness in the pound and the Chinese Yuan. Key Quotes: “Over 6-12 month horizon, given positions and valuation, it's easier to see EUR/USD at 1.20 than 1.05. But, in the one to the three-month horizon: There are two clear downside risks. A weaker Yuan … A near-term break of USD/CNY 7 may be unlikely, but it would drag EUR/USD through the year's lows and could trigger stops. And a weaker pound … If sterling takes another significant knock that too will hurt the Euro.  It’s difficult to gauge the probability of the Chinese authorities allowing USD/CNY to break higher, or of another sterling confidence crisis.”

    The AUD/USD pair may have a hard time cheering a potential risk reset in the financial markets, as the Construction Work Done (Q1) - a key metric that

    AUD/USD remains on the back foot near 0.6880 following the release of Australian construction data.The Construction Work Done (Q1), which directly flows into the GDP, missed estimates, strengthening the case for an RBA rate cut in June.The AUD/USD pair may have a hard time cheering a potential risk reset in the financial markets, as the Construction Work Done (Q1) - a key metric that flows directly into the GDP - has missed estimates. The amount of construction work contracted 1.9% in the first three months of 2019, the data released by the Australian Bureau of Statistics soon before press time showed. The markets were expecting no change following a 3.1% drop in the final three months of 2018. The below-forecast GDP input comes a day after the RBA Governor Lowe almost pre-announced a June rate cut, sending the Australian government bond yields to record lows. The data released today will likely boost the probability of the central bank lowering interest rates next month. The financial markets, however, have fully priced for the RBA to deliver two 25 basis point rate cuts by November. As a result, the AUD may not suffer big losses during the day ahead due to the weaker-than-expected construction data. The AUD may even pick up a bid if the oversold Chinese Yuan's starts recovering ground, however, the upside will likely be capped by the strengthening case for an RBA rate cut in June. As of writing, the AUD/USD is trading at 0.6880, representing marginal losses on the day, having hit a low of 0.6873 a few minutes ago.Pivot levels 

    Bank of Japan (BOJ) board member Yutaka Harada was on the wires last minutes, via Reuters, making a scheduled speech on the monetary policy and inflat

    Bank of Japan (BOJ) board member Yutaka Harada was on the wires last minutes, via Reuters, making a scheduled speech on the monetary policy and inflation outlook. Key Headlines:“The sales tax hike may make the economy worse and slow inflation.” “Soft inflation could weigh on inflation expectations, delay an acceleration of inflation.” “BOJ must strengthen monetary easing without hesitation if the economy worsens.”

    With the five-week-old ascending support-line continues to limit the USD/IDR pair’s immediate declines, the quote trades around 14,500 on early Wednesday.

    Overbought RSI and failure to successfully cross 200-day SMA question buyers.Sellers can sneak in if breaking short-term support-line.With the five-week-old ascending support-line continues to limit the USD/IDR pair’s immediate declines, the quote trades around 14,500 by the press time of early Wednesday. However, overbought levels of 14-day relative strength index (RSI) and failure to provide a sustained rise beyond 200-day simple moving average (SMA) portrays the momentum weakness. Hence, sellers can slip in if prices drop beneath 14,440 support-line but need to validate the downturn by conquering 61.8% Fibonacci retracement of June to October 2018 upside and March 2019 high surrounding 14,430/10. If that happens, 14,300, 14,180 and 14,100 can quickly appear on the chart whereas 14,000 and April low near 13,980 can lure bears afterward. Should there be a successful rise above 200-day SMA level of 14,480, 50% Fibonacci retracement level near 14,630 and a horizontal line connecting December 2018 top to April 2019 high at 14,720 may become buyers’ favorites. Additionally, pair’s sustain trading past-14,720 may challenge 14,870 and 14,940 ahead of aiming 15,000 round-figure.USD/IDR daily chartTrend: Pullback expected  

    The pace of construction work done in Australia unexpectedly deteriorated during the March quarter of 2019. The value of construction work done, a key

    The pace of construction work done in Australia unexpectedly deteriorated during the March quarter of 2019. The value of construction work done, a key component within the GDP reading, arrived at -1.9% q/q to a seasonally-adjusted A$ 50.79 millon in the three months to March 31, according to the latest data published by the Australian Bureau of Statistics (ABS). Markets had predicted a 0.0% print while the previous figure stood at -3.1%.MARCH KEY POINTSVALUE OF WORK DONE, CHAIN VOLUME MEASURESTOTAL CONSTRUCTIONThe trend estimate for total construction work done fell 2.4% in the March quarter 2019. The seasonally adjusted estimate for total construction work done fell 1.9% to $50,787.9m in the March quarter.BUILDING WORK DONEThe trend estimate for total building work done fell 0.9% in the March quarter 2019. The trend estimate for non-residential building work done rose 1.6% and residential building work fell 2.4%. The seasonally adjusted estimate of total building work done fell 0.4% to $29,835.1m in the March quarter.ENGINEERING WORK DONEThe trend estimate for engineering work done fell 4.0% in the March quarter. The seasonally adjusted estimate for engineering work done fell 3.9% to $20,952.8m in the March quarter.

    Australia Construction Work Done below forecasts (0%) in 1Q: Actual (-1.9%)

    The People's Bank of China (PBOC) set the yuan reference rate at 6.8992 vs Tuesday's fix of 6.8990.

    The People's Bank of China (PBOC) set the yuan reference rate at 6.8992 vs Tuesday's fix of 6.8990.

    Even if challenges to the UK PM May’s “new and bold” Brexit proposal stand tall, GBP/USD recently witnessed pullback moves from 1.2700 on early Wednesday.

    Risks to PM May’s position and Brexit plan remain highlighted despite her latest efforts.UK Retail sales and FOMC minutes will decorate today’s economic calendar.Even if challenges to the UK PM May’s “new and bold” Brexit proposal remain on the card, the GBP/USD pair witnessed pullback moves from 1.27 the figure during early Asian session on Wednesday. The British Prime Minister Theresa May tried luring members of the parliament (MPs) by producing a list of amendments she is ready to undertake in her previous Brexit proposal that was turned down. Important points among them were the rights to vote to hold a second referendum and form of a possible customs union with the EU. Though, both the incentives couldn’t lure MPs as they were offered on the condition to first approve the present deal. Majority of the lawmakers, including some headline Tories, immediately showed their anger towards PM May’s plan and said they’ll turn down any such proposal if it reached the parliament during the early June month. The Sun also came out with the report mentioning that nearly 20 Tory MPs stand ready to oust Mrs. May during today’s parliament session while the opposition Labour party and Brexit party stand ready to turn down this fresh Brexit plan. In addition to political plays, April month consumer price index (CPI) from the UK and the US FOMC minutes will also gain market attention. While CPI is expected to increase to 2.2% from 1.9% prior on a YoY basis, core CPI may also advance to 1.9% versus 1.8% earlier. Even if the FOMC is likely to liquidate its control over neutral tone, traders may look how far the recent change in global central banks’ bias has affected the US central bank.Technical AnalysisMultiple lows marked from January 07 highlights the importance of 1.2700 round-figure as support especially when the 14-day relative strength index (RSI) is in the oversold territory. Should the pair slips beneath 1.2700, January 15 bottom around 1.2670 and 1.2600 could be on sellers’ list to target. On the flipside, February month low near 1.2770 acts as immediate important resistance, a break of which can recall 1.2800 on the chart.

    EUR/JPY closed at 123.31 on Tuesday, confirming an upside break of the trendline connecting April 17 and May 2 highs. The upside break of the falling

    EUR/JPY closed above key falling trendline on Tuesday, validating the bullish divergence of a 4-hour chart indicator.A corrective rally, however, may remain elusive, courtesy of trade tensions.EUR/JPY closed at 123.31 on Tuesday, confirming an upside break of the trendline connecting April 17 and May 2 highs. The upside break of the falling trendline coupled with the 4-hour chart relative strength index's (RSI) move above 50.00 has opened the doors to 123.89 (23.6% Fib R of 126.81/122.08). The rally to 123.89, however, could be preceded by a fall back to 123.00, as reports that the Trump administration is planning to blacklist a major Chinese surveillance technology firm are seen inflaming trade tensions, leading to a minor rally in the anti-risk Japanese Yen. That said, the prospects of a corrective rally to 123.89 would weaken only if the cross finds acceptance below the previous day's low of 122.68. Daily chart 4-hour chartTrend: 30-pip drop likely before a corrective rallyPivot points 

    The Trump administration is considering limits to a Chinese video surveillance company's ability to buy American technology, people familiar with the

    The Trump administration is considering limits to a Chinese video surveillance company's ability to buy American technology, people familiar with the matter said, according to The New York Times.  The move would effectively place the company, Hikvision, on a United States blacklist and will likely inflame the trade tensions. Hikvision is one of the world’s largest manufacturers of video surveillance products and American companies may have to obtain an approval from supplying equipments to Hikvison if Trump does place the company on the blacklist.     

    USD/JPY is currently trading largely unchanged on the day near 110.55 but may extend the 0.40% rally seen on Tuesday if the oversold offshore Chinese

    CNH stability is a boon for the USD/JPY bulls.Japan data released earlier today showed exports dropped 2.4%, the trade surplus narrowed in April.USD/JPY looks set to extend Tuesday's rally, unless CNH slides, leading to risk aversion.USD/JPY is currently trading largely unchanged on the day near 110.55 but may extend the 0.40% rally seen on Tuesday if the oversold offshore Chinese Yuan's (CNH) recovery gathers pace. The US' decision to ease some Huawei restrictions put a bid under riskier assets on Tuesday, helping stabilize the Chinese currency. The USD/CNH pair fell to a low of 6.9201, having hit a high of 6.9491 on Friday. Meanwhile, US stocks rallied with Dow Jones Industrial Average gaining 0.85%. As a result, the haven demand for the JPY weakened and the USD/JPY pair rose from 110.00 to 110.67. Investors may continue to buy the risk and sell safe havens like JPY today if the oversold CNH's recovery picks up pace. That would imply the trade war fears have peaked. As of writing, USD/CNH is trading at 6.9311, representing marginal losses on the day. Further, the Japanese data released earlier today was JPY-bearish. Notably, Japan’s exports fell 2.4% in April from a year earlier, down for a fifth straight month and imports rose 6.4%, leading to a surplus of ¥60.4 billion. Further, the US 10-year treasury yield is looking north, having ticked higher for the fourth consecutive day on Tuesday. So, there is little incentive to buy the Japanese Yen. The USD/JPY pair, however, may fall back to the 5-day moving average, currently at 110.19, if the CNH slides toward 7.00 per US Dollar, triggering a fresh round of risk aversion.Pivot Levels 

    With its latest pullback from 76.15, AUD/JPY portrays a short-term symmetrical triangle formation on the hourly chart during early Wednesday.

    Short-term symmetrical triangle limits trading within 76.20 and 75.70.Another downward sloping trend-line acts as additional upside resistance.With its latest pullback from 76.15, AUD/JPY portrays a short-term symmetrical triangle formation on the hourly chart during early Wednesday. As a result, the quote may now revisit 75.90 immediate support ahead of highlighting pattern’s lower-line at 75.70. Should there be increased selling pressure beneath 75.70, 75.50, 75.30 and 75.00 are likely consecutive rests that bears may target. Meanwhile, pair’s break of 76.20 resistance can trigger its recovery to another descending trend-line stretched since May 08, at 76.55, a break of which may question 61.8% Fibonacci retracement level of current month decline, at 76.60. If prices rally past-76.60, 77.00, 77.25 and 77.40 should be the next landmarks for buyers to watch.AUD/JPY hourly chartTrend: Pullback expected 

    Australia Westpac Leading Index (MoM) down to -0.1% in April from previous 0.2%

    The US President Trump wrote in a letter to House Speaker Nancy Pelosi and top Senate Democrat Chuck Schumer that lawmakers should pass the United Sta

    The US President Trump wrote in a letter to House Speaker Nancy Pelosi and top Senate Democrat Chuck Schumer that lawmakers should pass the United States-Mexico-Canada (USMCA) trade agreement before taking up any infrastructure bill. Trump said: “Before we get to infrastructure, it is my strong view that Congress should first pass the important and popular USMCA trade deal. ... Once Congress has passed USMCA, we should turn our attention to a bipartisan infrastructure package.” 

    With an absence of escalation in the US-Iran saga, coupled with higher than forecast API inventory data, WTI is declining to $62.80 during early Wednesday.

    Receding war threats from the US and Iran questions energy bulls while inventory levels increase.EIA data and Geopolitical news will be the key to follow.With an absence of escalation in the US-Iran saga, coupled with higher than forecast API inventory data, WTI is declining to $62.80 during the early Asian session on Wednesday. Following the US President Donald Trump’s comments that he stands ready to talk to Iran, speculations concerning a war between the two nations declined. Adding to the optimism was the BBC report quoting the US Defence Secretary Patrick Shanahan that mentioned the potential of attacks by Iran has been "put on hold" by US counter-measures. While receding fearing of supply outage due to Geopolitical factors initially dragged the black gold down, a weekly release of the US crude oil stock by the American Petroleum Institute (API). The inventory level grew past market forecast of -599,000 barrels to 2.4 million barrels. It should also be noted that the downside was largely confined as global oil producers recently agreed to hold their supply cut agreement intact for the rest of the year. Looking forward, official US crude oil stocks change from the Energy Information Administration (EIA) will be in the energy traders’ radar for now. The EIA stockpiles for the week ended on May 17 are likely to decline by -2.530 million barrels from 5.431 million barrels.Technical Analysis50-day simple moving average (SMA) level of $62.10 and $60.30 mark comprising 100-day SMA are likely the key support for the energy benchmark ahead of highlighting $60.00 round-figure. On the upside, $63.80 and $64.00 can question immediate advances whereas $64.70/80 area including early April highs and $65.70 may challenge buyers then after.

    Japan Adjusted Merchandise Trade Balance below expectations (¥-1.3B) in April: Actual (¥-110.9B)

    Japan Adjusted Merchandise Trade Balance below forecasts (¥-1.3B) in April: Actual (¥-110B)

    Japan Merchandise Trade Balance Total below expectations (¥203.2B) in April: Actual (¥60.4B)

    Japan Imports (YoY) registered at 6.4% above expectations (4.8%) in April

    Japan Machinery Orders (YoY) above forecasts (-3.4%) in March: Actual (-0.7%)

    Japan Exports (YoY) came in at -2.4%, below expectations (-1.8%) in April

    Japan Machinery Orders (MoM) registered at 3.8% above expectations (-0.7%) in March

    The US House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer said late-Tuesday that talks with Republican lawmakers and White House of

    The US House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer said late-Tuesday that talks with Republican lawmakers and White House officials on the federal spending were “productive,” as reported by Reuters. The two top Democrats in Congress said in a joint statement: “We look forward to continuing to meet to discuss how we can best address the needs of hard-working families, as we again work across the aisle to avert sequestration.” 

    Further comments are out on the wires from the St. Louis Fed President Bullard, as he continues to speak on the central bank’s monetary policy. “Polic

    Further comments are out on the wires from the St. Louis Fed President Bullard, as he continues to speak on the central bank’s monetary policy. “Policy normalization in the US has been quiet successful.” “If a recession occur the fed will have enough policy ammunition.”

    Forex today remained mostly risk-on as positive news concerning the US-China and the US-Japan trade negotiations initially built the sentiment on Wednesday.

    Renewed optimism surrounding trade joined welcome data.Brexit risk and the key data/events remain in the spotlight.Forex today remained mostly risk-on as positive news concerning the US-China and the US-Japan trade negotiations initially built the sentiment while better than forecast quarterly retail sales from New Zealand held the recovery intact during the early Asian session on Wednesday. While Japanese trade negotiator confirmed work done for minister-level trade talks, the Chinese ambassador to the US showed readiness to break the trade deadlock and import more goods and services from the world’s largest economy. New Zealand’s first quarter (Q1) 2019 retail sales grew past 0.0% forecast to +0.7% while retail sales ex-autos, mostly known as core retail sales, also rose 0.7% but lagged behind 0.9% market consensus and 2.0% previous readout. Wall Street cheered the US Commerce Department’s temporary relief to China’s Huawei with a 90-day window. Dow Jones Industrial Average (DJIA) marked +0.8% gains while S&P500 and Nasdaq grew 0.85% and 1.08% respectively. Global risk barometer, the US 10-year bond yields, was in the green region to 2.428%. Brexit news was all around in the market by the end of Tuesday as the UK PM Theresa May outlined her 10-point Brexit plan to the members to the British parliament (MPs). Commitment to hold votes on the form of a possible customs union with the EU and a second referendum grabbed major market attention. However, the condition that those benefits could only be availed if MPs vote for the present deal hurt risk tone afterward. Looking forward, the UK consumer price index (CPI), Canadian retail sales and minutes of the latest Federal Reserve monetary policy meeting will be the key economic data to watch. While UK CPI may rise to 2.2% from 1.9% on YoY, Canadian retail sales could also grow 1.1% from 0.8% earlier on a monthly basis. Further, the Fed minutes might reiterate its neutral tone but recent positive data could be spotted as a support to avoid bearish bias. Meanwhile, political plays concerning the US, UK, Iran, and China could keep entertaining momentum traders.Key NotesNZD/USD crosses 0.6500 as New Zealand retail sales beat forecast Wall Street closes decisively higher on Tuesday AUD/USD seesaws near 0.6880 ahead of domestic data

    The latest monthly Reuters poll, which tracks the Bank of Japan’s (BOJ) closely-watched Tankan quarterly survey, found manufacturers’ mood improved in

    The latest monthly Reuters poll, which tracks the Bank of Japan’s (BOJ) closely-watched Tankan quarterly survey, found manufacturers’ mood improved in May and is expected to rise further over the coming three months. Key Findings:           “Highlighting uncertainties, nearly two-thirds of companies saw growth remaining flat in the second quarter, nearly two-fifth saw it slowing and just 17 percent saw it accelerating. In the poll of 477 large- and mid-sized companies, many manufacturers voiced worry about the Sino-U.S. trade war, which has disrupted supply chains and hit Japan’s export-led economy. Around 230 firms in the poll responded on condition of anonymity. The sentiment index for manufacturers stood at 12 in May, up four points from the previous month, led by oil refiners, food processing firms, autos and precision machinery, according to the poll conducted May 8-17. The index is expected to rise further to 15 in August. The service-sector index grew to 27 in May from 24 in the previous month, led by information/communications, transport/utility and other service firms. The index is expected to slip to 26 in August.”

    James Bullard, President of the St. Louis Federal Reserve, is on the wires now, via Reuters, commenting on the impact of the tariffs on the Fed policy

    James Bullard, President of the St. Louis Federal Reserve, is on the wires now, via Reuters, commenting on the impact of the tariffs on the Fed policy. Key Points:“Tariffs would have to stay six months to impact the Fed policy.” “Can see a boom in China after a trade deal.” “Farming communities very concerned about trade war.” “Rates are in a good place in us right now.” “If anything the US rates are a bit restrictive.” “Fed may have overdone it with December hike.”

    The Japanese news agency, Jiji, reports the latest comments by the Japanese trade negotiator, Kazuhisa Shibuya, as he says that the topic of the count

    The Japanese news agency, Jiji, reports the latest comments by the Japanese trade negotiator, Kazuhisa Shibuya, as he says that the topic of the country’s auto export restriction to the US did not come up during talks. Shibuya noted: “The United States thinks there is a gap between the two nations over trade issues and both nations agreed to continue talks.” Earlier today, the Japanese Economy Minister Motegi said the current status on tariffs on goods discussed, way is clear for minister-level talks.

    A White House statement released earlier today said the US President Trump had accepted Vardakas’s invitation to visit Ireland on June, 5th during the

    A White House statement released earlier today said the US President Trump had accepted Vardakas’s invitation to visit Ireland on June, 5th during their upcoming trip to Britain and France. Ireland’s Newstalk radio said last week that Trump, who cancelled his first visit to Ireland in November for scheduling reasons, would return to the Irish west coast after his visit to France, as cited by Reuters.

    NZD/USD rose to 0.6510 after the first quarter (Q1) 2019 retail sales crossed forecast on early Wednesday.

    Quarterly retail sales grew beyond market consensus while core reading remained soft.The US-China trade negotiations and FOMC minutes will be in the spotlight for now.NZD/USD rose to 0.6510 after the first quarter (Q1) 2019 retail sales crossed forecast on early Wednesday. The headline retail sales grew 0.7% versus 0.0% forecast and 1.7% prior while retail sale ex-autos, also known as core retail sales, lagged behind +0.9% market consensus and 2.0% prior to +0.7%. Latest news reports from China pleased Antipodeans initially as the dragon nation’s ambassador to the US showed readiness to talk upon the trade deal and buying more goods and services from the US. Having witnessed the market reaction to the quarterly retail sales data, traders may now shift their focus back to trade developments between the US and China whereas minutes of the US Federal Open Market Committee (FOMC) meeting can entertain traders afterward. Even if the US central bank holds its neutral bias, latest data from the world’s largest economy has been positive amid global rush towards rate cuts and monetary policy easing, which in turn makes today’s minute statement even more interesting to observe.Technical AnalysisSustained downturn under 0.6500 highlights the importance of October 2018 bottom near 0.6425 and January 2016 low near 0.6350. Alternatively, eight-week-old descending trend-line at 0.6540 and 0.6580 can limit the quote’s near-term upside.

    New Zealand's retail sales report showed better than expected figures in the first quarter of 2019, according to the latest data published by the Stat

    New Zealand's retail sales report showed better than expected figures in the first quarter of 2019, according to the latest data published by the Statistics New Zealand on early Wednesday. Headline retail sales increased by 0.7% q/q in the quarter, beating estimates of a 0.0% figure and when compared to the fourth quarter retail sales increase of 1.7%.         Core retail sales gained 0.7%, missing estimates of +0.9% and down from a fourth quarter's 2.0% print.

    New Zealand Retail Sales ex Autos (QoQ) below forecasts (0.9%) in 1Q: Actual (0.7%)

    New Zealand Retail Sales (QoQ) registered at 0.7% above expectations (0%) in 1Q

    The AUD/USD pair trades little positive near 0.6885 during the early Asian session on Wednesday.

    Looming rate cut compresses the Aussie gains.Latest positive news from the US-China trade front pleases buyers ahead of domestic data.The AUD/USD pair trades little positive near 0.6885 during the early Asian session on Wednesday. The Aussie pair witnessed downpour on Tuesday after RBA minutes and comments from Governor Lowe highlighted chances of a rate cut in June. However, latest statements from China’s Ambassador to the US, Cui Tiankai, seems to brighten the mood as it signals brighter chances to break the impasse in the US-China trade talks and China’s readiness to buy more goods and services from the US. Risk tone in the market remains a bit up with the US 10-year treasury yields holding more than two basis points’ gain to 2.428%. Traders may now look forward to April month Westpac leading index and first quarter (Q1) 2019 construction work done data for fresh impulse. While Westpac gauge grew +0.2% in its previous release, construction work is likely to reverse previous -3.1% decline with 0.0% mark. FOMC minutes will also be on the investors’ radar during the US session as global central bankers have started showing readiness for rate cuts.Technical AnalysisPair’s failure to slip beneath latest lows of 0.6860 can trigger its pullback to A downward sloping trend-line since April 18, at 0.6930 now, a break of which can recall 0.7000 and 0.7030 on the chart. Should prices slip under 0.6860, January 2016 low surrounding 0.6830 and 0.6800 could flash on the bear’s radar.

    China’s Ambassador to the US, Cui Tiankai, was on wires during early Wednesday mentioning brighter chances of the US-China trade talks.

    China’s Ambassador to the US, Cui Tiankai, was on wires during early Wednesday. He said that China remains ready to continue trade talks with the US. Mr. Tiankai further added that the US changed its mind more than once while China is still committed to addressing the trade imbalance with the US by buying more products and services. The AUD/USD showed little reaction to the news report as it trades near 0.6885 by the press time.

    The British Prime Minister Theresa May faces a fresh coup by Tory Brexiteers today, as conveyed by The Sun.

    The British Prime Minister Theresa May faces a fresh coup by Tory Brexiteers today to oust her before she can offer MPs a second referendum that could reverse Brexit, as per The Sun news report published during the early Asian session on Wednesday. The news report further said that at least 20 Tory MPs who had backed PM May’s deal previously announced they would switch their vote and oppose it, giving her a mountain to climb with Labour votes to replace them by 20:00 GMT on Tuesday. It was also mentioned in the news report that pro-EU Labour MPs also slammed Mrs May for not going far enough while Labour People’s Vote supporter Peter Kyle also said he would be voting it down as it was just “a whole load of promises on behalf of a next Prime Minister”, adding: “No thanks”.

    Amid the ongoing trade talks between the US and Japan, a negotiator from the later was on wires during early Wednesday.

    Amid the ongoing trade talks between the US and Japan, a negotiator from the later was on wires during early Wednesday. Japan’s Trade Negotiator, Toshimitsu Motegi, said that the US and Japan went over the current status of tariffs on goods. It was further mentioned that both the nations have sorted out points to be discussed at the minister level talks that are to take place soon.

    Early on Wednesday, Reuters came out with the news report stating that the US Trade Representative Robert Lighthizer to meet with officials from Japan and EU.

    Early on Wednesday, Reuters came out with the news report stating that the US Trade Representative Robert Lighthizer to meet with officials from Japan, EU on Thursday in a joint effort to address non-market-oriented policies of other countries amid concerns over China. The news report further said that the meeting, which is expected to focus largely on Chinese subsidies, will take place on the sidelines of the ministerial meeting of the 36-member Organization for Economic Co-operation and Development (OECD) in Paris on Wednesday and Thursday. Lighthizer will also hold several bilateral meetings with key trading partners, and attend an informal ministerial meeting of the World Trade Organization, the news report said while quoting USTR office statement.

    Overview of quarterly retail sales Early Wednesday at 22:45 GMT sees the quarterly retail sales data from the Statistics New Zealand.

    Overview of quarterly retail salesEarly Wednesday at 22:45 GMT sees the quarterly retail sales data from the Statistics New Zealand. Despite a 25 basis points (bps) cut to the benchmark cash rate, the Reserve Bank of New Zealand (RBNZ) hasn’t stopped favoring bears, which in turn highlights the importance of each incoming data to strongly affect the Kiwi central bank’s next policy moves. With the recently announced Retail card spending being on the downside, chances of a soft print from the headline retail sales data can’t be denied. Forecast suggests a 0.0% figure for the first quarter (Q1) 2019 retail sales compared to 1.7% prior while retail sales ex-autos, also known as core retail sales, might weaken to +0.9% from 2.0% prior. TD Securities expect little change in the upcoming data as it said, Real retail sales for Q1 is expected to post a reasonable +0.6% q/q (consensus: +0.6% q/q; range a head-scratching +0.2% to +1.0% q/q) after the outsized +1.7% q/q for Q4. Retail card spending was crimped by rising fuel costs and so volumes are highly unlikely to match the prior quarter.How could it affect NZD/USD?The NZD/USD pair is already on the back-foot amid soft data, doubts over global trade and pessimism surrounding the largest trading partners like Australia and China. As a result, any more weakness in the headline economic data could further weaken the Kiwi pair towards the south. On the contrary, the pair is less likely to gain much on the upbeat releases (except extremely strong data) as the RBNZ holds its bearish bias intact. Technically, sustained break of 0.6500 could further drag the quote down towards October 2018 low near 0.6425 and then to January 2016 bottom around 0.6350. Alternatively, a descending trend-line from March 26 could limit immediate upside at 0.6540, a break of which can recall 0.6580 and 0.6600 back to the chart.Key NotesNZD/USD: Bears dominate around 0.6500, all eyes on New Zealand’s quarterly retail sales NZD/USD technical analysis: Kiwi is under pressure near 0.6500 figure ahead of NZ Retail SalesAbout New Zealand Retail SalesThe retail Sales released by the Statistics New Zealand measures the total receipts of retail stores. Quarterly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. A high reading is seen as positive (or bullish) for the NZD, while a low reading is seen as negative (or bearish).

    Having witnessing sluggish GDT data and a disappointment from its largest trading partner, NZD/USD is taking rounds near 0.6500 at the start of Wednesday.

    Pessimism at home and largest trading partner weigh on sentiment.Quarterly retail sales data could offer fresh impulse.Having witnessing sluggish GDT data and a disappointment from its largest trading partner, NZD/USD is taking rounds near 0.6500 at the start of Wednesday’s Asian session. Despite the US Commerce Department’s temporary relief to China’s Huawei supporting the risk sentiment on Tuesday, the Kiwi pair couldn’t benefit soft credit card spending at home signaled soft retail sales print, up for release in next few hours. Adding to the weakness was Reserve bank of Australia’s (RBA) meeting minutes that sound mostly dovish while comments from the RBA Governor that emphasized the need of June rate cut. Australia is the largest customer to New Zealand, any challenges to the Aussie can be well received by the Kiwi as well. Recently the bi-monthly release of GDT price index slipped to -1.2% from +0.4% prior whereas prices of whole mild power (WMP) dropped for a fourth consecutive month to -2.1%. Traders now look forward to the first quarter (Q1) 2019 retail sales data for fresh impulse. The forecast suggests 0.0% against +1.7% prior on a quarterly basis while retail sales ex-autos, also known as core retail sales, may grow +0.9% from 2.0%.Technical AnalysisThe Kiwi is yet to provide a sustained break of 0.6500, which in turn could drag the quote to October 2018 low near 0.6425, until then chances of the oversold levels of 14-day relative strength index (RSI) to trigger the prices rise to eight-week-old descending trend-line at 0.6555 and 0.6580 can’t be denied.

    S&P500 daily chart The S&P500 Index is trading in a bull trend above its 100 and 200-period simple moving averages (SMAs). The index is up as investor

    The U.S. Commerce Department announced a 90-day license for mobile phone companies and internet providers to work with Huawei to keep the existing networks online and to protect current users from security risks.Google can send software updates to Huawei phones with Android operating system until August 19.S&P500 daily chart
     
    The S&P500 Index is trading in a bull trend above its 100 and 200-period simple moving averages (SMAs). The index is up as investors as the tensions between Google and Huawei are slightly easing. S&P500 4-hour chart
    The market is consolidating above the 50 SMA.
    S&P500 30-minute chart
    The level to beat for bulls is 2,870.00 resistance. If the market can break above it then 2,890.00 can be on the cards on Wednesday. On the flip side, if the buyers fail in their attempt, bears can step back in and drive the market towards 2,845.00 and potentially to 2,835.00 levels. Additional key levels 

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