Markets sentiments are mildly hit by renewed concern in the financial health of Eurozone countries. European major indices give up earlier gains and turned read but loss is so far limited. DOW opens lower but is being resilient to 11000 level so far. Crude oil continues to struggle around 70 level while gold is attempting to rebound back above 1190. Existing home sales in US rose more than expected to 5.77m annualized rate in April but the data has little impact to markets so far.

Euro is slightly softer today on news that Bank of Spain took over savings bank CajaSur after a planned merger with another small lenders failed, the take over will cost up to EUR 2.7b . Bank-to-bank funding costs are generally higher with spreads that Libor rates trade over the equivalent Overnight Index Swaps, a gauge of money market stress, stayed elevated with the three-month dollar Libor/OIS spread at nine-month highs near 25 basis points. Nevertheless, the Euro's loss is so far limited with EUR/USD staying above 1.23 level.

Sterling is mixed in spite of news on GBP 6b spending cuts announced by Chancellor Osborne. The cuts include freezing of civil-service recruitment, spending on technology, advertising and travel, as well as renegotiation of existing contractions with businesses. Osborne said 500 million pounds of the cuts will be recycled into growth-nurturing projects and most of the savings will go toward cutting the deficit this year.

EUR/AUD is sharply lower today and breaches 1.49 level. Nevertheless, we'd maintain the view that a medium term bottom is in place at 1.3927. Current fall from 1.5455 is treated as a correction and we'd expect strong support fro 55 days EMA (now at 1.4618) to continue downside. We'd expect another rise towards 50% retracement of 1.8098 to 1.3927 at 1.6013.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 1.1479; (P) 1.1486; (R1) 1.1499;

USD/CHF's break of 1.1585 resistance suggests that recent rally has resumed. Intraday bias is back on the upside for 161.8% projection of 1.0131 to 1.0897 from 1.0434 at 1.1673 first. Break will target medium term resistance of 1.1963 next. On the downside, note that break of 1.1447 support will indicate that a short term top is formed formed with bearish divergence condition in 4 hours MACD. In such case, deeper pull back would be seen towards 1.0922/1244 support zone before staging another rise.

In the bigger picture, as noted before, rise from 0.9916 is treated as resumption of the long term rise from 2008 low of 0.9634. Such rise is expected to have a test on 1.1963/2296 resistance zone first and then 100% projection of 0.9634 to 1.2296 from 0.9916 at 1.2578. On the downside, break of 1.0897 resistance turned support is needed to be the first sign of reversal. Otherwise, we'll stay bullish.

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised 4:30 JPY All Industry Activity Index M/M Mar -0.80% -0.70% -2.30% 5:00 JPY BoJ Monthly Report -- -- 14:00 USD Existing Home Sales Apr 5.77M 5.60M 5.35M Swiss; German; France; Canada bank holiday