Markets are generally staying in tight range in early US session. US GDP growth for Q1 was revised lower from 3.0% to 2.7% annualized but triggered little reaction to markets. Yuan was the major topic today as it rose to record high just ahead of G20 meeting. Other data released today saw German Import price index rose 0.6% mom in May. Japan national core CPI improved more than expected to -1.2% yoy in May while Tokyo core CPI also improved to -1.3% yoy in June. New Zealand trade surplus widened more than expected to NZD 814M in May.

SNB quarterly bulletin points echoed it's statement on June 17 and said that the risk of deflation in Switzerland has largely disappeared.However, there are out that considerable uncertainties persist regarding the prospects for the European economy, potential exchange rate movements, and the future interest rate situation. And, should these downside risks materialize and, via an appreciation of the Swiss franc, lead to a renewed threat of deflation, the SNB would take all the measures necessary to ensure price stability.

In the Financial Stability Report, BoE warned of continuing market pressures and its impact of UK's financial system. Also, there are risks to UK financial institutions when dealing with European banks that have direct exposures to countries facing increased sovereign risks. UK banks remains vulnerable to further writedowns on assets.

Canadian dollar remains the weakest currency this week, down over -3% against yen and over -2.5% against swiss franc. Markets perceive recent batch of data a signal that recovery is losing momentum. Traders are starting to price out the chance of another hike from BoC in next meeting. Markets are pricing in less than 70% chance of another 25bps high at the July 20 meeting, comparing to 80% chance at the start of the week.

CAD/JPY stabilized a bit after diving to as low as 85.25 yesterday but there is no change in the bearish outlook for 82.23 low next. Indeed, we'd anticipate a break of 82.23 later this month to resume whole fall from 94.46 to 80 psychological level and below.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2267; (P) 1.2327 (R1) 1.2393;

EUR/USD continues to stay in tight range below 1.2466 and intraday bias remains neutral. On the downside, below 1.2209 will revive the case that rebound from 1.1875 is already completed at 1.2466 and will target a retest on 1.1875. On the upside, above 1.2446 will bring another rise to target 38.2% retracement of 1.3691 to 1.1875 at 1.2569. But strong resistance should be seen at 1.2671 to limit upside and bring reversal finally.

In the bigger picture, fall from 1.5143 is part of the whole down trend from 2008 high of 1.6039. Such decline is expected to develop into a five wave sequence and target 100% projection of 1.6039 to 1.2329 from 1.5143 at 1.1433. We'd expect the current rebound from 1.1875, which is viewed as the fourth wave inside the five wave sequence from 1.5143, to be limited by 1.2671 resistance and bring one more fall. Nevertheless, sustained trading above 1.2671 will be the first alert that EUR/USD has bottomed earlier than we thought and will turn focus to 1.3266/3691 resistance zone.

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised 22:45 NZD Trade Balance (NZD) May 814M 767M 656M 665M 23:01 GBP BOE Financial Stability Report -- -- 23:30 JPY Tokyo CPI Core Y/Y Jun -1.30% -1.40% -1.60% -1.50% 23:30 JPY National CPI Core Y/Y May -1.20% -1.30% -1.50% 06:00 EUR German Import Price Index M/M May 0.60% 0.20% 2.00% 09:00 EUR SNB Quarterly Bulletin 12:30 USD GDP (Annualized) Q1 F 2.70% 3.00% 3.00% 12:30 USD GDP Price Index Q1 F 1.10% 1.00% 1.00% 12:30 USD Core PCE Q/Q Q1 F 0.70% 0.60% 0.60% 13:55 USD U. of Michigan Confidence Jun F 75.5 75.5