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Daily Pivots: (S1) 1.1377; (P) 1.1427; (R1) 1.1462; More...

EUR/CHF's rebound lost momentum after hitting 1.1477 and intraday bias is turned neutral first. Consolidation from 1.1537 is still in progress and there could be another fall. But downside should be contained by 38.2% retracement of 1.0830 to 1.1537 at 1.1267 to bring rebound. Break of 1.1537 resistance will resume up trend from 1.0629. However, firm break of 1.1267 will extend the correction from 1.1537 and target 61.8% retracement at 1.1100, before completion

In the bigger picture, firm break of 1.1198 key resistance confirms resumption of the long term rise from SNB spike low back in 2015. In this case, EUR/CHF would eventually head back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.1087 resistance turned support holds.

The GBP/USD fell sharply to the lowest level in four weeks, as the Britain's consumer price inflation report showed weaker than expected reading for July. The Pound retreated versus the US Dollar to the 1.2917 level, falling by 34 base points just after data were published.  

The Office for National Statistics revealed that the UK Consumer Price Index marked a 2.6% yearly increase in July, equal to the previous month's gain, while analysts expected a climb of 2.7%. The inflation growth was dampened by lower oil prices, while the main support came from rising costs of clothing, food and utilities. The weaker-than-expected CPI figure reduced expectations for a higher inflation as well as the prospect of the Bank of England's interest rate hike.

The EUR/USD currency pair dropped sharply owing to the strong US economic release. The Greenback strengthened against the Euro by 0.23% to reach the 1.1713 mark. However, by the end of the Tuesday's session the European single currency recovered to pre-data levels.

The Commerce Department revealed that retail sales in the United States recorder the biggest increase in the last seven months, surging 0.6% month-over-month in July and following an upwardly revised gain of 0.3% in the prior month. July's upbeat figures suggested that the economy kept gaining momentum in the Q3 amid higher confidence in the country's economic outlook. Meanwhile, the Federal Reserve became less likely to delay the next interest rate increase until 2018.

Daily Pivots: (S1) 1.1753; (P) 1.1796 (R1) 1.1822; More...

Intraday bias in EUR/USD remains neutral for the moment as it's bounded in range of 1.1688/1908. The consolidation from 1.1908 could extend with deeper pull back. But downside should be contained by 38.2% retracement of 1.1119 to 1.1908 at 1.1606 to bring rebound. On the upside, break of 1.1908 will extend recent up trend to 1.2042 long term support turned resistance next.

In the bigger picture, an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Sustained trading above 55 month EMA (now at 1.1768) will pave the way to key fibonacci level at 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. While rise from 1.0339 is strong, there is no confirmation that it's developing into a long term up trend yet. Hence, we'll be cautious on strong resistance from 1.2516 to limit upside. But for now, medium term outlook will remain bullish as long as 1.1295 support holds, in case of pull back.

Daily Pivots: (S1) 1.2819; (P) 1.2894; (R1) 1.2943; More...

GBP/USD's decline from 1.3267 is still in progress and intraday bias remains on the downside. As noted before, correction from 1.1946 is likely completed at 1.3267. Deeper fall should now be seen to 1.2588 key near term support. Decisive break there will confirm our bearish view. On the upside, break of 1.3030 resistance is needed to indicate short term bottoming. Otherwise, outlook will stay cautiously bearish in case of recovery.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern. While further rise cannot be ruled out, larger outlook remains bearish as long as 1.3444 key resistance holds. Down trend from 1.7190 (2014 high) is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

Asia Summary

Asian equity markets opened mixed, with the biggest mover the Singapore Straits Times index falling 1.1%, led by banks. Most of the move is attributed to the fact that the odds for a Fed Dec rate hike his risen back up to 50/50 following US data. Late yesterday a PBOC adviser said that China is unlikely to raise rates or use RRR, more likely to use other measures. The PBOC did resume open market operations after skipping yesterday, with a next injection of CNY180B. An analyst report noted that China state owned firms are dominating M&A deals, accounting for 60% in H1 of 2017. As tensions continue to ease on the Korea peninsula, BOK Gov Lee and Fin Min Kim hold a meeting and jointly agree that any action from their respective offices will be harmonious. USD?KRW rose over 0.5% to 1,142 today.

Key economic data

(AU) AUSTRALIA JUL WESTPAC LEADING INDEX M/M: +0.12% V -0.14% PRIOR

(AU) AUSTRALIA Q2 WAGE PRICE INDEX Q/Q: 0.5% V 0.5%E; Y/Y: 1.9% V 1.9%E

(CN) China July yuan forex positions down CNY4.65B m/m to CNY21.5T

Speakers and Press

China/Hong Kong

(CN) According to Rhodium Group, China state-owned firms accounted for almost 60% of total M&A deal value in H1 - financial press

(CN) Moody's: China non-performing loan (NPL) securitization performance solid, though information limited – Xinhua

(CN) PBOC Adviser: Cut of RRR is not in line with China's policy, more likely to use SLF, MLF and PSL

Korea

(KR) US intel officials: North Korea has ability to produce missile engines and is not reliant on imports to do so – press

(KR) Bank of Korea (BOK) Gov Lee: Market volatility rising on North Korea risks; South Korea to put in efforts to stabilize markets

(KR) South Korea Fin Min Kim: Government will discuss with BOK and take "stern" action to stabilize markets if needed

Japan

(JP) Japan PM Abe: Govt is on high alert to deal with the possible threat faced by the prefectures over which North Korean missiles en route to Guam could fly

Asian Equity Indices/Futures (00:00ET)

Nikkei 0.0%, Hang Seng +0.5%, Shanghai Composite -0.2%, ASX200 0.0%, Kospi +0.5%

Equity Futures: S&P500 +0.4%; Nasdaq100 -0.1%, Dax -0.1%, FTSE100 -0.1%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.1746-1.1729; JPY 110.77-110.55; AUD 0.7838-0.7817; NZD 0.7241-0.7224

Dec Gold -0.1% at $1,278/oz; Sept Crude Oil +0.5% at $47.77/brl; Sept Copper +0.0% at $2.89/lb

(AU) Australia sells A$900M in 3.25% 2029 bonds; avg yield 2.7608%; bid-to-cover 2.96x

(JP) Bank of Japan (BoJ) announces expected purchase amounts for daily operation: Offers to purchase ¥440B in 5-10 yr JGBs v ¥470B prior

(CN) China PBoC OMO injects CNY280B v skips in 7 and 14-day reverse repos

USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.6779 V 6.6689 PRIOR

(KR) Bank of Korea sells KRW2.2T in 2-year monetary stabilization bonds at 1.74% v 1.64% prior

(CN) China sells 7-yr bonds; avg yield 3.6518%; bid-to-cover 2.89x

(TH) Thailand sells THB20B in 9.34-yr govt bonds; avg yield 2.4389%; bid-to-cover ratio 2.34x

Equities notable movers

Hong Kong/China

Carnival Group, 996.HK Announces rights offering to raise HK$1.72B; -12%

Geely, 175.HK Reports H1 (CNY) Net profit 4.34B v 4.04Be, Rev 39.4B v 18.1B y/y; +0.4%

Australia

Aveo Group, AOG.AU Reports FY17 adj Net A$252.8M, +118% y/y; FFO A%163.9M v A$141.3M y/y; Announces up to 54.3M share buyback; +10.5%

iSelect, ISU.AU Reports FY17 Net A$16.4M v A$18Me; EBIT A$22.5M v A$24Me; Rev A$185.1M v A$196Me; -14%

Daily Pivots: (S1) 0.9699; (P) 0.9728; (R1) 0.9755; More...

At this point, intraday bias in USD/CHF remains mildly on the upside for 0.9772 resistance first. Decisive break there will revive the bullish case of reversal. That is, whole decline from 1.0342 has completed at 0.9437 after defending 0.9443 support. USD/CHF should then target channel resistance (now at 0.9862) next. On the downside, below 0.9675 minor support will turn intraday bias neutral first. Also, the pair is bounded inside medium term falling channel and limited below 38.2% retracement of 1.0342 to 0.9437 at 0.9783 for the moment. Break of 0.9582 will dampen our bullish view and turn bias back to the downside for 0.9437. This could also extend the fall from 1.0342 through 0.9437/43 key support level.

In the bigger picture, current development argues that USD/CHF has successfully defended 0.9443 key support level. And long term range trading in 0.9443/1.0342 is extending with another rise. At this point, there is no sign of an up trend yet. Hence, while further rise is expected in USD/CHF, we'll start to be cautious on loss of momentum above 61.8% retracement of 1.0342 to 0.9437 at 0.9996. However, firm break of 0.9443 will carry larger bearish implication and would target next key support at 0.9072.

Daily Pivots: (S1) 109.90; (P) 110.37; (R1) 111.14; More...

Intraday bias in USD/JPY remains mildly on the upside for the moment. Current development argues that fall from 114.49 could have completed at 108.72. Further rise would be seen back to 112.18 resistance first. Break there will target 114.49 key near term resistance again. On the downside, break of 108.79 minor support will turn focus back to 108.72 instead.

In the bigger picture, the corrective structure of the fall from 118.65 suggests that rise from 98.97 is not completed yet. Break of 118.65 will target a test on 125.85 high. At this point, it's uncertain whether rise from 98.97 is resuming the long term up trend from 75.56, or it's a leg in the consolidation from 125.85. Hence, we'll be cautious on topping as it approaches 125.85. If fall from 118.65 extends lower, downside should be contained by 61.8% retracement of 98.97 to 118.65 at 106.48 and bring rebound.

U.S. Retail Sales Post Biggest Rise In Seven Months. The dollar inched slightly lower on Wednesday but held most of its gains made after U.S. retail sales data suggested the economy continued to gain momentum in the third quarter and kept alive hopes for another Federal Reserve interest rate increase this year. U.S. retail sales rose 0.6% and core sales rose 0.5% in July beating economists’ estimate of a 0.4% and 0.4% reading. Minutes from the Fed’s July meeting will be watched for clues on the timing of rate hikes as well as whether the Fed is likely to announce a reduction in its balance sheet at its September meeting.

Gold Falls On U.S. Retail Sales Data. Gold prices were moderately lower prior to the release largely due to profit-taking pressure after prices hit a nine-week high on Friday. But, immediately after the data was published, December Comex gold fell even further, trading at $1,274.20, down 1.26% on the day. Gold prices firmed early on Wednesday as the dollar weakened slightly, with investors waiting for the release of minutes from the U.S. Federal Reserve’s last meeting in July for clues on the pace of potential interest rate hikes.

Oil Prices Edge On Falling US Crude Inventories. Oil prices rose early on Wednesday on a fall in U.S. crude inventories, although analysts said that markets were still being weighed down by general oversupply. Brent crude futures, the international benchmark for oil prices, were at $51.01 per barrel at 0023 GMT, up 21 cents, or 0.4 percent, from their last close.

Daily Pivots: (S1) 1.2723; (P) 1.2750; (R1) 1.2784; More....

USD/CAD's recovery from 1.2412 resumed and reaches as high as 1.2777 so far. Intraday bias is mildly on the upside for further rise. Nonetheless, such rise is viewed as a corrective move. And based on current momentum, upside should be limited by 38.2% retracement of 1.3793 to 1.2412 at 1.2940 to bring fall resumption. On the downside, below 1.2652 minor support will argue that the recovery is completed and turn bias back to the downside for retesting 1.2412.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. Such corrective fall is still expected to extend to 50% retracement of 0.9406 to 1.4869 at 1.2048. At this point, we'd look for strong support from there to contain downside and bring rebound. Nonetheless, on the upside, sustained break of 1.2968, 38.2% retracement of 1.3793 to 1.2412 at 1.2940 will be the first sign of completion of the correction and will turn focus back to 1.3793 key resistance.