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Daily Pivots: (S1) 0.9963; (P) 0.9991; (R1) 1.0025; More...

Intraday bias in EUR/USD stays mildly on the downside for retesting 0.9863 low. Firm break there will resume larger down trend. On the upside, break of 1.0197 resistance will now raise the chance of larger trend reversal, and target 1.0368 resistance.

In the bigger picture, down trend from 1.6039 (2008 high) is still in progress. Next target is 100% projection of 1.3993 to 1.0339 from 1.2348 at 0.8694. In any case, outlook will stay bearish as long as 1.0368 resistance holds, in case of strong rebound. However, firm break of 1.0368 will confirm medium term bottom at 0.9863 already.

Daily Pivots: (S1) 1.1434; (P) 1.1495; (R1) 1.1529; More...

Intraday bias in GBP/USD remains neutral first, with near term outlook staying bearish. On the downside, decisive break of 1.1404/9 will resume larger down trend. Next target is 61.8% projection of 1.3748 to 1.1759 from 1.2292 at 1.1063. On the upside, above 1.1737 minor resistance will resume the rebound from 1.1404 to 55 day EMA (now at 1.1871).

In the bigger picture, based on current momentum, fall from 1.4248 (2018 high) is probably resuming long term down trend from 2.1161 (2007 high). Sustained break of 1.1409 will target 61.8% projection of 1.7190 (2014 high) to 1.1409 (2020 low) from 1.4248 (2021 high) at 1.0675. This will remain the favored case for now as long as 1.2292 resistance holds.

Daily Pivots: (S1) 0.9568; (P) 0.9605; (R1) 0.9654; More

Intraday bias in USD/CHF remains neutral at this point. On the upside, firm break of 4 hour 55 EMA (now at 0.9644) will target 0.9868 resistance first. Further break there will argue that larger up trend is ready to resume through 1.0063. On the downside, below 0.9478 will extend the fall from 0.9868 towards 0.9369 support. Overall, corrective pattern from 1.0063 could extend further as long as 0.9868 resistance holds.

In the bigger picture, current development suggests that up trend from 0.8756 (2021 low) is still in progress. Sustained break of 1.0063 will target 100% projection of 0.9149 to 1.0063 from 0.9369 at 1.0283, and then 1.0342 (2016 high). For now, this will remain the favored case as long as 0.9369 support holds, even in case of deep pull back.

Daily Pivots: (S1) 142.94; (P) 143.37; (R1) 143.94; More...

Intraday bias in USD/JPY remains neutral and outlook stays bullish. On the upside, break of 144.98 will resume larger up trend to 147.68 long term resistance. Break there will target 161.8% projection of 126.35 to 139.37 from 130.38 at 151.44 next. While deeper retreat cannot be ruled out, downside should be contained by 139.37 resistance turned support. On the upside, break of 144.98 will resume larger up trend to 147.68 long term resistance. Break there will target 161.8% projection of 126.35 to 139.37 from 130.38 at 151.44 next.

In the bigger picture, up trend from 101.18 is still in progress, as part of the whole up trend from 75.56 (2011 low). Further rise should be seen to 147.68 (1998 high). For now, break of 130.38 support is needed to be the first indication of medium term topping. Otherwise, outlook will stay bullish even in case of deep pull back.

Daily Pivots: (S1) 0.6674; (P) 0.6722; (R1) 0.6748; More...

Intraday bias in AUD/USD remains neutral for the moment, and outlook stays bearish with prior rejection by 55 day EMA. Decisive break of 0.6680 will resume larger down trend. Next target will be 0.6461 long term fibonacci level. On the upside, break of 0.6915 resistance will be a near term bullish signal, and bring stronger rally through 0.7008 towards 0.7135 resistance.

In the bigger picture, price actions from 0.8006 (2021 high) is seen more as a corrective pattern to rise from 0.5506 (2020 low). Or it could also be a bearish impulsive move. In either case, outlook will remain bearish as long as 0.7135 resistance holds. Next target is 61.8% retracement of 0.5506 to 0.8006 at 0.6461.

UK retail sales volume dropped -1.6% mom, -5.4% yoy in August, worst than expectation of -0.6% mom, -4.2% yoy. Ex-fuel sales volume dropped -1.6% mom, -5.0% yoy, versus expectation of -0.7% mom, -3.4% yoy.

Retail sales value also dropped -1.7% mom while ex-fuel sales value dropped -1.4% mom. On a year earlier, headline sales value rose 5.4% yoy while ex-fuel sales value rose 3.7% yoy.

Full release here.

Overall, Dollar remains the strongest one for the week, followed by Swiss Franc and then Yen. Risk aversion support these currencies, on the expectation of another jumbo rate hike by Fed next week. Commodity currencies are the worst performers with Kiwi having an underhand. Euro and Sterling are mixed for now, with Euro having a slight advantage, but that could easily flip.

Technically, a big move came yesterday as Gold dived through key cluster support at around 1680 (which coincides with 38.% retracement of 1046.27 to 2074.84). A long term double top pattern should be formed with tops at 2074.84 and 2070.06. A weekly close below 1680 will affirm this bearish case. The stage would then be set for deeper fall to 61.8% retracement at 1439.18 in Q4. Downside momentum could intensify if US 10-year yield could break through 3.483 high decisively to resume medium term up trend.

In Asia, at the time of writing, Nikkei is down -1.07%. Hong Kong HSI is down -0.52%. China Shanghai SSE is down -1.38%. Singapore Strait Times is down -0.06%. Japan 10-year JGB yield is up 0.0028 at 0.260. Overnight, DOW dropped -0.56%. S&P 500 fell -1.13%. NASDAQ lost -1.43%. 10-year yield rose 0.047 to 3.459.

RBA Lowe: Rate at 2.35% is still too low

RBA Governor Philip Lowe told the House of Representatives Standing Committee on Economics, interest rate at 2.35% is "still too low". He added that over the longer term, the cash rate "should at least average the mid point of the inflation target", which is 2.5%, if not a bit higher. Also, an average interest rate of about 3% was "possible", and we'll cycle around some number between 2.5 and 3.5."

Lowe also warned that the longer inflation stays above 3%, "the more difficult it's going to become" for Australians. If that. happens "then we have higher interest rates and a recession, which is damaging. "So we've got two difficult kind of positions at the moment: some pain now and hopefully real wages start rising again next year against the risk of not doing anything, just sitting on our hands and having inflation stay higher."

NZ BusinessNZ manufacturing rose to 54.9, improving tone around underlying growth

New Zealand BusinessNZ Performance of Manufacturing Index rose slightly from 53.5 to 54.9 in August. Production rose from 50.8 to 54.6. Employment rose from 52.9 to 53.6. New orders rose from 50.8 to 59.2. Finished stocks rose from 48.7 to 50.8. Deliveries rose from 50.1 to 53.7.

BNZ Senior Economist, Craig Ebert stated " that manufacturing production, in general, was holding its own in Q2, rather than drooping, was portrayed in the PMI readings for April May and June. And in July and August the PMI has moved on to suggest an improving tone around underlying growth."

China data beat, but USD/CNH stays above 7

China industrial production rose 4.2% yoy in August, above expectation of 4.0% yoy. Retail sales rose 5.4% yoy, above expectation of 3.2% yoy. That's the fastest pace since January-February period this year. Fixed asset investment rose 5.8% ytd yoy, above expectation of 5.6%.

"The economy held out against multiple unexpected headwinds in August and showed a positive recovery with the help of more additional supportive policies," the NBS said in a statement. "The manufacturing needs are steady and rising, employment and prices are stable, most indices are better than last month."

The set of better than expected data provided little support to the decline Yuan, with USD/CNH breaking through 7 psychological resistance this week. There is no sign of topping in the pair yet. USD/CNH is on track to 61.8% projection of 6.3057 to 6.8372 from 6.7159 at 7.0444. Firm break there will set the stage for pandemic high at 7.1961.

Elsewhere

UK retail sales dropped -1.6% mom in August, versus expectation of -0.6% mom. Ex-fuel sales dropped -1.6% mom, below expectation of -0.7% mom.

Looking ahead, Italy trade balance and Eurozone CPI final will be released in European session. Later in the day, Canada will release wholesales sales. US will release U of Michigan consumer sentiment.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3175; (P) 1.3208; (R1) 1.3261; More...

USD/CAD's break of 1.3222 resistance confirms resumption of up trend from 1.2005. Intraday bias is back on the upside. Next target is 100% projection of 1.2005 to 1.2947 from 1.2401 at 1.3343. On the downside, below 1.3238 minor support will turn intraday bias neutral first. But retreat should be contained well above 1.2952 support to bring another rally.

In the bigger picture, down trend from 1.4667 (2020 high) should have completed at 1.2005, after defending 1.2061 long term cluster support. Rise from there should target 61.8% retracement of 1.4667 to 1.2005 (2021 low) at 1.3650. This will remain the favored case now as long as 1.2726 support holds.

Economic Indicators Update

Daily Pivots: (S1) 1.3175; (P) 1.3208; (R1) 1.3261; More...

USD/CAD's break of 1.3222 resistance confirms resumption of up trend from 1.2005. Intraday bias is back on the upside. Next target is 100% projection of 1.2005 to 1.2947 from 1.2401 at 1.3343. On the downside, below 1.3238 minor support will turn intraday bias neutral first. But retreat should be contained well above 1.2952 support to bring another rally.

In the bigger picture, down trend from 1.4667 (2020 high) should have completed at 1.2005, after defending 1.2061 long term cluster support. Rise from there should target 61.8% retracement of 1.4667 to 1.2005 (2021 low) at 1.3650. This will remain the favored case now as long as 1.2726 support holds.

China industrial production rose 4.2% yoy in August, above expectation of 4.0% yoy. Retail sales rose 5.4% yoy, above expectation of 3.2% yoy. That's the fastest pace since January-February period this year. Fixed asset investment rose 5.8% ytd yoy, above expectation of 5.6%.

"The economy held out against multiple unexpected headwinds in August and showed a positive recovery with the help of more additional supportive policies," the NBS said in a statement. "The manufacturing needs are steady and rising, employment and prices are stable, most indices are better than last month."

The set of better than expected data provided little support to the decline Yuan, with USD/CNH breaking through 7 psychological resistance this week. There is no sign of topping in the pair yet. USD/CNH is on track to 61.8% projection of 6.3057 to 6.8372 from 6.7159 at 7.0444. Firm break there will set the stage for pandemic high at 7.1961.

New Zealand BusinessNZ Performance of Manufacturing Index rose slightly from 53.5 to 54.9 in August. Production rose from 50.8 to 54.6. Employment rose from 52.9 to 53.6. New orders rose from 50.8 to 59.2. Finished stocks rose from 48.7 to 50.8. Deliveries rose from 50.1 to 53.7.

BNZ Senior Economist, Craig Ebert stated " that manufacturing production, in general, was holding its own in Q2, rather than drooping, was portrayed in the PMI readings for April May and June. And in July and August the PMI has moved on to suggest an improving tone around underlying growth."

Full release here.