Less than a day after Germany imposed the naked short-selling ban, EU Internal Market Commissioner Michel Barnier urged other Eurozone finance ministers to coordinate their efforts at a European level to impose similar rules. Barnier emphasized to need to avoid 'regulatory arbitrage and fragmentation both within the EU and globally. German Chancellor Merkel said the Euro is at risk and said the naked short-selling ban will remain in place until other rules are established on a European level. However, the call is not getting much support so far. Chairman of the Committee of European Securities Regulators Eddy Wymeersch said that a Europe-wide ban on naked short selling is doubtful. French Finance Minister Christine Lagarde said she doesn't envision doing it. Risk aversion recedes on the news with European major indices recovering from intraday low. Crude oil is also back above 69 level after dipping to 67.9 earlier today. Meanwhile, EUR/CHF jumped sharply from around 1.4 level to as high as 1.4204 on SNB intervention.

BoE minutes released today showed the MPC voted unanimously to keep rates unchanged in May's meeting. There are a range of views on risks to inflation. Some members judged that impact of spare capacity to inflation might be lower than the bank thought. Meanwhile, some members emphasized the rise from credit supply and tension in Eurozone. BOE also reiterated the need to significant fiscal consolidation. After all, the minutes have little impact to the markets and investors are keenly looking forward to the emergency budget from Chancellor Osborne on June 22.

Data released today saw US CPI unexpectedly dropped -0.1% mom in April, first drop in more than a year. Yoy rate also moderated from 2.3% yoy to 2.2% yoy. Core CPI was flat mom and moderated to 1.1% yoy. Other data saw Canadian wholesale sales rose 1.4% mom in March. Japan industrial production rose 1.2% mom in March. Australia Westpac consumer confidence dropped -7.0% in May.

Talking about risk aversion, AUD/JPY is one of the biggest lose today. The break of 77.01 support confirms that whole fall from 88.04 has resumed. The development also affirms out view that whole medium term rise from 55.11 has completed at 88.04 after missing 88.13 resistance. Further fall should now be seen to 38.2% retracement of 55.11 to 88.04 at 75.46 first and should target 61.8% retracement at 67.58 in medium term.

Dollar index retreats mildly after hitting 87.46 today. But after all, we'll stay bullish as long as 85.92 support holds and expect further rise to 2008 high of 89.62. However, a break of 85.92 will indicate that a short term top is formed, possibly with divergence condition in 4 hours MACD, and bring lengthier consolidation first.

EUR/CHF Mid-Day Outlook

Daily Pivots: (S1) 1.3989; (P) 1.4018; (R1) 1.4032;

EUR/CHF jumped sharply to as high as 1.4204 on SNB intervention. The break of 1.4116 resistance flips intraday bias back to the upside and further rise might be seen towards 1.4433 resistance next. Nevertheless, we'd anticipate strong resistance between 1.4333/4465 to limit upside. On the downside, break of 1.4 psychological level is needed to confirm down trend resumption. Otherwise, we'll stay neutral first.

In the bigger picture, whole long term down trend from 2007 high of 1.6827 is still in progress and further fall should be seen to next medium term target will be 61.8% projection of 1.6368 to 1.4315 from 1.5138 at 1.3869. On the upside, break of 1.4465 resistance is needed to be first signal of bottoming. Otherwise, medium term outlook will remain bearish.

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised 00:30 AUD Westpac Consumer Confidence May -7.00% -- -1.00% 04:30 JPY Industrial Production M/M Mar F 1.20% 0.40% 0.30% 08:30 GBP BoE Meeting Minutes 0--0--9 0--0--9 0--0--9 12:30 CAD Wholesale Sales M/M Mar 1.40% 0.40% -1.20% 12:30 USD CPI M/M Apr -0.10% 0.10% 0.10% 12:30 USD CPI Y/Y Apr 2.20% 2.40% 2.30% 12:30 USD CPI Core M/M Apr 0% 0.10% 0.00% 12:30 USD CPI Core Y/Y Apr 0.90% 1.00% 1.10% 14:30 USD Crude Oil Inventories 0.7M 1.9M 18:00 USD FOMC Meeting Minutes -- --