Risk rally is taking a breathe as European stocks pare gains and retreat mildly. Nevertheless, we're not seeing any massive profit taking yet as the reaction to disappointing US retail sales is muted so far. Headline sales dropped more than expected by -0.5% in June while ex-auto sales also dropped -0.2%. Import price index dropped -1.3% mom in June. The recovery in dollar and yen remain unconvincing and we'd probably continue to see more downside ahead in US session.

Euro struggles to extend this week's gain as Bank of Spain revealed that a record figure was borrowed by Spanish Banks from ECB in June which the total lent by ECB to Eurozone financial institutions dropped. A total of EUR 126.3b was borrowed by Spanish banks, representing 78.6% rise from a year ago and 47.5% rise from May. Total lent by ECB dropped from EUR 518.6b to EUR 496.7b. The figures raised some concerns on the health of Spanish banks as well as their ability to raise funds from the markets. Data from EUrozone saw CPI finalized at 0.0% mom, 1.4% yoy in June. Industrial production rose 0.9% mom, 9.4% yoy in May.

Sterling was lifted earlier today by better than expected job data. Unemployment rate dropped to 7.8% in May, lowest since January. Claimant count also dropped slightly more than expected by -20.8k. Nationwide consumer confidence dropped less than expected to 63 in June.

Australian dollar was slightly softer against dollar after government revised down growth forecast from 3.25% to 3.00% this year and from 4.0% to 3.75% next year. New Zealand dollar is also soft after disappointing retail sales report which showed 0.4% growth in May with ex-auto sales down -0.2%.

GBP/CAD is so far the biggest winner this week, up more than 1.16%. However, the cross drew support from 55 days EMA and recovered strongly However, the sustainability of the current rise is in doubt. We're viewing price actions from 1.4831 has consolidation in the larger down trend. Such correction might have completed at with three waves up to 1.6203 and more downside would be in favor for a retest of 1.4831. The better scenario is that rise from 1.4831 is just the first leg of a longer consolidation but even in such case, strong resistance should be seen near to 1.6203 resistance to limit upside.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 1.0541; (P) 1.0608; (R1) 1.0670; More.

USD/CHF's sideway consolidation from 1.0479 is still in progress and intraday bias remains neutral. Another rise cannot be ruled out but still, there is no indication of reversal as long as 1.1009 resistance holds and another fall is still in favor. Break of 1.0479 will confirm fall resumption towards 1.0434 support next.

In the bigger picture, current development suggests that whole rise from 0.9916 is finished at 1.1729 already. Fall from there is possibly part of the medium term sideway pattern that started at 2007 low of 0.9634. Further fall could now be seen to outer trend line support (0.9634, 0.9916, now at 1.0009). On the upside, break of 1.1009 resistance will revive the case that fall from 1.1729 is merely a correction and rise from 0.9916 is still set to resume for 1.2296 resistance next.