Dollar continues to attempt to strength in general as mixed data from US provides little inspiration to the markets. Finalized Q1 US GDP was revised up from -5.7% to -5.5% annualized contraction unexpectedly. GDP price index was unchanged at 2.8%. However, initial jobless claims unexpectedly climbed back to 627k. Continuing claims rose again to 6.74m. From Eurozone, industrial new orders dropped much more than expected by -35.5% yoy in April.

Sterling is still feeling the weight from BoE King's comment yesterday that recovery from recession will be slow and “uncertain.. Also King said that “There has to be a risk that it will be a long, hard slog”. GBP/JPY's break of 156.10 minor support now raises the odds that fall from 162.56 is still in progress for at least a test on medium term channel support at 151.69. EUR/GBP is still limited below 0.8603 resistance but is vulnerable to strong rally on head and shoulder bottom reversal.

While Sterling's weakness remains the major theme today but note that from a weekly point of view, Canadian dollar is indeed the worst performer so far, dropping over 2% against dollar, yen and Euro. The Japanese yen is trying to ride on falling stocks in Europe and US to regain momentum. Note that rebounds in yen crosses this week are so far limited by near term resistance. For example, AUD/JPY is still staying well below 78.30 while EUR/JPY is also limited below 135.15 resistance. There is no clear indication that the rebound has completed but we'd continue to favor the case of at least a retest of the medium term trend lines in near term. Indeed, CAD/JPY is the first cross that's sustaining below the medium term trend line support.

Dollar index extends the rebound from 79.56 and is set to take on 80.94. Fall from 81.36 should have completed at 79.56 already and the corrective structure of such fall is supportive to further upside in the index. We're anticipating a break of 80.94 resistance to signal resumption of rise from 78.33, to be confirmed by break of 81.36/47 resistance zone. Further rally should be seen to next key resistance at 82.62 (38.2% retracement of 89.62 to 78.93 at 82.64). in such case.

USD/CAD Mid-Day Outlook

USD/CAD's rally resumes by taking out 1.1581 and reaches as high as 1.1636 so far. At this point, intraday bias remains on the upside as long as 1.1418 minor support holds and further rally should be seen to 1.1814 resistance. Break will target next key cluster resistance at 1.2191. On the downside, below 1.1418 will turn intraday outlook neutral first and bring consolidation. But another rise is still in favor as long as 1.1226 support holds.

In the bigger picture, fall from 1.3063 is treated as correction to impulsive rally from 0.9056 to 1.3063 and has met target support zone of 1.0297/0819 already. We're slightly favoring the case that such correction has completed at 1.0754 already. Break of mentioned 1.1475/1.1814 resistance zone will confirm this case and should at least bring strong rally to key cluster resistance at 1.2191 (61.8% retracement of 1.3063 to 1.7084 at 1.2192). Nevertheless, a break below 1.0784 will indicate that fall from 1.3063 is still in progress, probably to 61.8% retracement of 0.9056 to 1.3063 at 1.0587 before completion.

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised
22:45NZDCurrent Account Balance Q1-1.25B-1.17B-4.03B-4.026B
00:00AUDConference Board Leading Index Apr0.70%--0.40%0.60%
09:00EUREurozone Industrial New Orders M/M Apr-1.00%0.00%-0.60%-0.20%
09:00EUREurozone Industrial New Orders Y/Y Apr-35.50%-32.80%-26.90%-26.50%
12:30USDGDP (Annualized) Q1 F-5.50%-5.70%-5.70%
12:30USDGDP Price Index Q1 F2.80%2.80%2.80%
12:30USDCore PCE Q/Q Q1 F1.60%1.50%1.50%
12:30USDInitial Jobless Claims627K602K608K
14:30USDNatural Gas Storage101B114B