Dollar's recovery against Euro and Swissy was rather brief and is back pressing recent low in early US session as Gold is back above 1000 level after dipping to 994.4 earlier today. Commodity currencies fall broadly today on the back of weakness in global stocks. Investor sentiments are somewhat hurt by speculation of escalating trade dispute between China and US. Canadian dollar is additionally pressured dipped further to as low as 68.02 level. New Zealand dollar remains soft after disappointing retail sales released overnight. On the other hand, yen crosses rebound strongly in early US session following rebound in treasury yield which saw yield on 10 year note touches 3.4 level.

Sterling also drops sharply against dollar and euro. Moody's Investors Services said that UK banks are just less than half way through posting of 240b pounds of losses on loans and securities. Moody's also expects sustained weakness of macroeconomic environment to feed through to higher loan arrears with ensuing pressure on profitability and capital. Ernest & Young's Item Club said the UK housing market will resume the slump next year as squeeze on mortgage lending persists.

We have pointed out the double top reversal pattern (1.8111, 1.8087) in GBP/CHF before and the development so far is still in line with the view the top cross has topped. Retest of the double top neckline at 1.7388 should be completed and GBP/CHF is set to resume the fall from 1.8087. Break of 1.7154 will confirm this bearish case and should target cluster support at 1.6620 next (50% retracement of 1.5111 to 1.8111).

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On the data front, Canadian capacity utilization rate dropped less than expected to 67.4% in Q2. Eurozone industrial production dropped -0.3% mom in July, inline with consensus. Q2 employment dropped -0.5% qoq. Swiss combined PPI rose 0.1% mom in August, inline with expectation. New Zealand retail sales unexpectedly dropped -0.5% mom in July while prior month's data was also revised down to -0.1%. Japanese industrial production rose more than expected by 2.1% mom in July, revised up from 1.9%.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.4537; (P) 1.4586; (R1) 1.4618; More

Consolidation in EUR/USD is possibly still in progress and intraday outlook remains neutral for the moment. On the upside, above 1.4633 will target key resistance level at 1.4687. However, we'd continue to expect strong resistance as EUR/USD approaches this level and bring reversal finally. On the downside, below 1.4515 will bring another fall. ALso, note that break of 1.4177 support will be an important signal that EUR/USD has topped out after meeting 61.8% retracement of 1.6039 to 1.2329 at 1.4622.

In the bigger picture, there is no change in the view that rise from 1.2456 is the third leg of the whole consolidation pattern that started at 1.2329. Price actions from 1.3747 may be developing into a diagonal triangle as the fifth wave in such five wave sequence from 1.2456 and should be close to completion. Further rise is still possible after EUR/USD took out 1.4446 high, but, upside should be limited by resistance zone of 61.8% retracement of 1.6039 to 1.2329 at 1.4622 and 1.4867 and finally bring reversal. On the downside, below 1.4177 support will be a signal that EUR/USD has already topped out and break of 1.3747 support will be the confirmation. In such case, deeper decline should be seen that sends EUR/USD through 1.2329 low eventually.

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