Dollar retreats mildly as European stocks recover from early losses while US equities also open slightly higher. There is little reaction to poor manufacturing data from US which saw Empire State Manufacturing index dropped sharply from 31.9 to 19.1 in May. TIC report showed net buying of long term US securities rose sharply to $140.5b in March, largest number since last November. The data can be viewed as a sign of increased demand for US investments on optimism for economic recovery, as well as worry on problems in other parts of the world, including the fiscal debt woes in Eurozone.

Sterling lower earlier today after UK Prime Minister Cameron said there were very bad spending decisions by previous administration. But after all, markets are still awaiting Chancellor of Exchequer Osborne's emergency budget plan to be released on June 22. Released earlier today, Rightmove house price index rose merely 0.7% mom in May, which is significantly lower than prior month of 2.6%. More importantly, average house price in London fell -0.4%, the first fall this year. From a year earlier, house prices rose 4.3 percent in May, down from an annual 6 percent in April.

Crude oil breached 70 level briefly earlier today but is trying to draw support for 69.50/70 level and recovers. We might see oil consolidation around 70 for a while and thus, limit dollar's strength. Though, the outlook in crude oil is still bearish as long as 74.51 resistance holds and a final break of 70 psychological level is still anticipated, which should then take dollar index towards 89/90 level with it.

Dollar index also lost some upside momentum after hitting as high as 87.05 earlier today. A temporary top is likely in place and we'd expect some consolidations first. Though, downside should be contained by 4 hours 55 EMA (now at 84.58) and we'd expect another rise to test 2008 high of 89.62 sooner or later.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 1.1210; (P) 1.1273; (R1) 1.1396;

With 1.1259 minor support intact, intraday bias in USD/CHF remains on the upside and recent rally is expected to continue towards 161.8% projection of 1.0131 to 1.0897 from 1.0434 at 1.1673 next. On the downside, below 1.1259 minor support will indicate that a temporary top is formed and bring consolidations. But pull back should be contained above 1.0922 support and bring rise resumption.

In the bigger picture, sustained trading above the medium term falling trend line affirms our view that whole correction from 1.2296 has completed with three waves down to 0.9916. Rise from 0.9916 is tentatively treated as resumption of the whole rise from 2008 low of 0.9634 and should now target a retest on 1.1963/2296 resistance zone and then 100% projection of 0.9634 to 1.2296 from 0.9916 at 1.2578. On the downside, break of 1.0434 support is needed to indicate that such rise from 0.9916 is completed. Otherwise, we'll stay bullish.

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised 23:01 GBP Rightmove House Prices M/M May 0.70% -- 2.60% 23:01 GBP Rightmove House Prices Y/Y May 4.30% -- 6.00% 23:50 JPY Machine Orders M/M Mar 5.40% 5.80% -5.40% -3.80% 23:50 JPY Domestic CGPI Y/Y Apr -0.20% -0.30% -1.30% 12:30 USD Empire Manufacturing May 19.1 30 31.9 13:00 USD Net Long-term TIC Flows Mar 140.5B $50.0B $47.1B 17:00 USD NAHB Housing Market Index May 20 19