Sample Category Title

USD/CHF - 0.9649

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As the greenback rebounded after holding above indicated previous support at 0.9583, retaining our view that further consolidation would take place and another bounce to 0.9699 resistance cannot be ruled out, however, reckon upside would be limited to 0.9730-35 and price should falter below resistance at 0.9766-73 resistance area, bring retreat later.

As near term outlook is still mixed, would be prudent to stand aside for now. Below the Kijun-Sen (now at 0.9628) would bring test of said support at 0.9583, however, break there is needed to revive bearishness and signal another leg of decline from 0.9773 is underway and extend subsequent fall to 0.9550, then 0.9515-20 which is likely to hold on first testing.

GBP/USD - 1.2888

Original strategy :

Sell at 1.2935, Target: 1.2835, Stop: 1.2970

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.2935, Target: 1.2835, Stop: 1.2970

Position : -

Target :  -

Stop : -

Although cable fell briefly to 1.2832, lack of follow through selling suggests consolidation would be seen and another corrective bounce to 1.2900 and possibly 1.2920 cannot be ruled out, however, reckon previous support at 1.2933-40 would turn into resistance and limit upside, bring another decline later, below said support at 1.2832 would extend recent selloff to 1.2800, having said that, oversold condition should limit downside to 1.2770 and reckon 1.2750 would hold from here, bring rebound later.

In view of this, would not chase this fall here and would be prudent to sell sterling on recovery as said previous support at 1.2933 should cap cable’s upside, bring another decline. Above 1.2950 would defer and risk a stronger rebound to 1.2990-00 before another decline.

EUR/USD - 1.1772

Original strategy  :

Bought at 1.1715, Target: 1.1815, Stop: 1.1705

Position : - Long at 1.1715

Target :  - 1.1815

Stop : - 1.1705

New strategy  :

Hold long entered at 1.1715, Target: 1.1815, Stop: 1.1720

Position : - Long at 1.1715

Target :  - 1.1815

Stop : - 1.1720

As the single currency found good support at 1.1662 last week and staged a rebound from there, suggesting a temporary low is possibly formed there and consolidation with mild upside bias remains for another test of indicated resistance at 1.1790, however, break there is needed to add credence to this view, bring further gain to 1.1820 but resistance at 1.1847 should hold from here.

In view of this, we are holding on to our long position entered at 1.1715. Below 1.1680-85 would risk retest of 1.1662, break there would extend the erratic decline from 1.1910 top to 1.1640-50 (50% Fibonacci retracement of 1.1370-1.1910 and previous support) but reckon 1.1600 would hold from here.

USD/JPY - 109.01

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Despite falling briefly to 108.60, lack of follow through selling on break of 108.73 support and the subsequent rebound suggest consolidation above 108.60 would take place and test of 109.60-67 resistance cannot be ruled out, however, break there is needed to signal low is formed, bring further gain to 110.00 and possibly towards 110.37 resistance but price should falter well below last week’s high at 110.95.

On the downside, below said support at 108.60 would signal recent decline is still in progress and may extend further weakness to 108.40, then towards 108.20-25, however, near term oversold condition should prevent sharp fall below latter level and reckon 108.00 would hold from here, bring rebound later. As near term outlook is mixed, would be prudent to stand aside in the meantime. 

• Clarity sought on Fed's interest rate plans;
• Will Draghi risk opening up on tapering?
• Geopolitics and US politics to remain in focus.

It's been a very quiet start to trading on Monday in what is expected to be a slow couple of days, with traders eyeing up the Jackson Hole event later in the week.

With both Mario Draghi and Janet Yellen scheduled to appear on Friday, traders are keen to get more insight into the plans of the two central banks, both of which are now pursuing less accommodative monetary policy. The Fed began its tightening cycle almost two years ago now and next month they're expected to announce plans to start winding down its balance sheet which currently stands at close to $4.5 trillion.

Markets have been largely unresponsive to the prospect of balance sheet reduction, which may come as a surprise given how the opposite was true when the quantitative easing programmes were launched. Still, it seems traders are more interested in what the Fed's plans are for interest rates rather than its balance sheet, with expectations for another this year still below 50%. The only thing keeping them elevated even this much has been hawkish comments from William Dudley - typically a dove and close ally of Yellen - who claimed he supports another hike this year if the economy evolves as expected.

The ECB on the other hand is still in the process of ending its QE program, with purchases currently at €60 billion per month - down from €80 billion earlier this year - and likely to be reduced further from the end of this year. That announcement is expected to come in September and people will be looking for clues from Draghi's speech on whether this will happen or whether it could simply be extended in its current form. While inflation has eased off recently, core inflation is on the rise and while it continues to fall well below target, the trajectory may be enough to convince policy makers that another taper is warranted.

The rest of the week is looking a little quieter though, barring any political and geopolitical events that have kept markets on edge over the last couple of weeks. Scheduled military drills in South Korea - conducted with the US - could heighten the feeling of unrest in the region, despite the drills having been planned long before the recent public war of words. Still, with North Korea having already condemned them as pouring gasoline on fire, there is a risk that a similar show of strength is displayed in response which could trigger further risk aversion.

The political situation at home is providing another distraction for Donald Trump, who will be wanting to put the events of the last week behind him. There had been a lot of speculation that Trump was about to lose Gary Cohn in the aftermath of the events in Charlottesville and his response to them. Instead it was Steve Bannon that departed, a move that some have touted as being a positive for the President's agenda. Whether he will be the final casualty for now is yet to be seen but as ever, Trump will remain very much in the spotlight.

WTI oil price holds within narrow consolidation on Monday, trading under Friday's high at $48.72, with downside being protected by daily Tenkan-sen at $48.32.

Oil is holding bullish sentiment following Friday's strong rally when oil price was up 3.7% for the day, after news that big refinery in Texas was shut down circulated.

Friday's long bullish daily candle underpins near-term action for further upside and break above $48.89 (Fibo 61.8% of $50.41/$46.44 pullback) to signal higher low at $46.44 and open barriers at $49.50 (200SMA) and $50.00 (psychological).

However, risk of fresh weakness on oversupply fears remain on the table, after report last week showed US domestic production hit its highest level since July 2015 at 9.5 million barrels a day.

Monday's action is holding between Tenkan-sen ($48.32) and 20SMA ($48.72) which mark initial triggers.

Break lower would expose 100SMA / daily Kijun-sen at $47.93/90 and weaken near-term structure on break.

Res: 48.72, 48.90, 49.50, 50.00
Sup: 48.32, 48.00, 47.21, 47.00

Notes/Observations

Departure of Bannon from the White House has led to speculation that President Trump may be trying to reconnect with the GOP's tax reform agenda

Focus on the content of the Jackson Hole symposium (**Note: Starts on Thursday)

Overnight

Asia:

North Korea warned that the upcoming US/South Korea military exercises will be ‘adding fuel to the fire’

South Korea President Moon: US/Korea joint drill is a defensive annual drill, not aimed at heightening tensions

Bank of Japan (BoJ) Gov Kuroda said the central bank has methods to avoid adverse effects when it normalizes policy; wants to avoid creating confusion by discussing specifics

Europe:

German Chancellor Merkel: Reiterates view to serve full 4-year term if re-elected; Stands by 2015 decision to open German borders to refugees

German Finance Ministry Aug Report: Reiterates view that monthly data suggested further economic expansion, indicators suggest industrial sector will continue to grow in Q3

German Emnid Poll: Conservative coalition lead continues ahead of Sept elections. CDU/CSU 39% (+1); - SPD 24% (unchanged)

UK Brexit Min Davis: firmly believe early round of negotiations have already demonstrated that many questions around our withdrawal are inextricably linked to our future relationship

UK Brexit Dept: To issue two formal position papers this week along with a batch of proposals for discussions on future relations ahead of upcoming negotiations in October

Fitch raises Greece sovereign rating one notch to B- from CCC; outlook Positive

Americas:

Trump to address US troops and American people on Monday (**Note: VP Pence and Nat Sec Advisor McMaster said to be pushing for increasing US troop strength in Afghanistan

Economic data

(NL) Netherlands July House Price Index M/M: 0.9% v 0.7% prior; Y/Y: 7.6 v 8.0% prior

(JP) Japan July Convenience Store Sales Y/Y: 0.0 v -0.1% prior

(TW) Taiwan July Export Orders Y/Y: 10.5% v 13.0%e

Fixed Income Issuance:

(NO) Norway sold NOK3.0B vs. NOK3.0B in 3-month Bills; Avg Yield: 0.38%; Bid-to-cover: 3.13x

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.2% at 373.4, FTSE -0.5% at 7308, DAX %-0.4 at 12114X, CAC-40 -0.5% at 5088, IBEX-35 -0.1% at 10373, FTSE MIB -0.3% at 21751, SMI +0.3% at 8898, S&P 500 Futures -0.2%]

Market Focal Points/Key Themes:

European Indices trade lower across the board with the exception of the Swiss SMI as the global Geo-Political tensions weigh on a light day for corporate and macro data. M&A activity has dominated headlines this morning, with Fiat Chrysler shares outperforming after Great Wall Motor confirmed interest in company, while Shares of Rathbone Brojhers trade higher after confirming merger talks with Smith and Williamson, elsewhere Maersk Shares trade sharply higher after divesting Maersk Olie Og Gas to Total for $7.5B.

Equities

Consumer discretionary [Fiat Chrysler [FCA.IT] +3.5% (Great Wall motor confirms interest in company), Roulart Media [ROU.BE] -11.7% (Earnings)]

Materials: [Metall Zug [METN.CH] -1.3% (Earnings)]

Industrials: [Maersk [MAERSK.DK] +3.8% (divests Mærsk Olie og Gas A/S to Total S.A. for $7.45bn), Global Ports Holdings [GPH.UK] -8.4% (Earnings)]

Financials: [Rathbone Brothers {RAT.UK] +0.8% (Confirms merger talks)]

Energy: [Interoil Exploration [IOX.NO] -7.2% (Canacol Energy explore strategic alternative with respect to stake)]

Speakers

China Commerce Ministry (MOFCOM): To take all proper measures to ensure interests; expresses strong dissatisfaction on US probe on intellectual property. Urges US to respect facts and multilateral trade principles

China Foreign Ministry spokesperson Hua Chunying stated that US-South Korea military exercises are not conducive to reducing tensions on the Korean Peninsula. Urged an end to vicious escalation on Korean Peninsula

Libya National Oil Company (NOC): Force Majeure declared on loading of Sharara crude from Zawiya oil terminal

Currencies

FX markets saw a quiet start to the week with most focus on the upcoming Jackson Hole conference that begins on Thursday. ECB Chief Draghi will attend the symposium but has a speech in Germany before he departs for the US. Some speculation that ECB announcement of the tapering of its QE program could be a two-step process that is split between the September and October. ECB could make an "announcement in principle" in September, following it up with tapering's practicalities in October

EUR/USD hovering in the mid-1.17 area.

USD/JPY trading below the 109 neighborhood with the JPY currency remaining firm on safe-haven flows as US/South Korean begin a 10-day military exercise.

Fixed Income

Bund futures trades at 164.40 up 24 ticks as risk assets suffer with European stocks sliding lower and credit spreads widen from the open. Downside targets 163.50 followed by 162.56. To the upside the 164.50 to 165.20 remains key resistance.

Gilt futures trades at 127.92 up 30 ticks as Bunds track Treasuries. A resumption to the upside could eye 128.25 then 128.75. A move back below 126.51 targets 125.97

Monday's liquidity report showed Friday’s excess liquidity rose to €1.714T from €1.712T and use of the marginal lending facility rose to €157M from €123M prior.

Corporate issuance saw $29B last week with talk that this week could see between $5-10B coming to market, as we enter end of earning season.

Looking Ahead

05:30 (NL) Netherlands Debt Agency (DSTA) to sell €1.0-2.0B in 3-month Bills

06:00 (TR) Turkey to sell 2022 Bonds

06:00 (IL) Israel July Unemployment Rate: No est v 4.5% prior

06:45 (US) Daily Libor Fixing

07:00 (IN) India announces details of upcoming bond sale (held on Fridays)

07:25 (BR) Brazil Central Bank Weekly Economists Survey

08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming actions in week

08:05 (UK) Baltic Dry Bulk Index

08:30 (US) July Chicago Fed National Activity Index: 0.10e v 0.13 prior

08:30 (CA) Canada Jun Wholesale Trade Sales M/M: -0.5%e v 0.9% prior

09:00 (BE) Belgium Aug Consumer Confidence: No est v 2 prior

09:00 (FR) France Debt Agency (AFT) to sell combined €4.3-5.5B in 3-month, 6-month and 12-month Bills

09:30 (EU) ECB announces Covered-Bond Purchases

09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

11:30 (US) Treasury to sell 3-Month and 6-Month Bills

16:00 (US) Weekly Crop Progress Report

19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index

21:00 (US) President Trump to address US troops and American people

Bitcoin is pausing after the massive surge over the past few days. Resistance is at all-time high at 4480 (17/08/2017 high). Hourly support lies very far at 2403 (26/07/2017 low). The road is wide open for another bullish move.

In the long-term, the digital currency has had an exponential growth. There are decent likelihood that the asset will consolidate above $1500. Long-term support is given at $1464 (04/05/2017 low).

Crude oil is trading mixed. Hourly support is given at a distance at 45.40 (24/07/2017 low). Strong resistance can be found at 50.41 (31/07/2017). Expected to show short-term sideways move.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 35.24 (05/04/2016) while resistance can now be found at 55.24 (03/01/2017 high).

Silver's bullish pressures are on. Hourly resistance given at 17.24 (10/08/2017 high) has been broken while support can be found at 16.13 (07/08/2017 high). The commodity lies in a short-term uptrend channel. Expected to show continued current bullish momentum.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).