Sample Category Title

Daily Pivots: (S1) 0.9596; (P) 0.9632; (R1) 0.9651; More....

EUR/CHF's down trend is still in progress and intraday bias stays on the downside. Next target is 100% projection of 1.1149 to 0.9970 from 1.0513 at 0.9334.On the upside, above 0.9697 minor resistance will turn intraday bias neutral and bring consolidations, before staging another decline.

In the bigger picture, long term down trend from 1.2004 (2018 high) is still in progress. Next target is 138.2% projection of 1.2004 to 1.0505 to 1.1149 at 0.9033. On the upside, break of 0.9970 support turned resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of strong rebound.

Daily Pivots: (S1) 0.6981; (P) 0.7053; (R1) 0.7095; More...

Intraday bias in AUD/USD is turned back to the downside with break of 0.7008 minor support. Deeper fall would be seen back to 0.6868 support first. Decisive break there will argue that whole rebound from 0.6680 is finished. ON the upside, break of 0.7135 will resume the rise from 0.6680 towards 0.7282 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 be a bearish impulsive move. In either case, outlook will remain bearish as long as 0.7282 resistance holds. Next target is 61.8% retracement of 0.5506 to 0.8006 at 0.6461.

Daily Pivots: (S1) 1.2800; (P) 1.2867; (R1) 1.2971; More...

Intraday bias in USD/CAD stays on the upside for 1.2984 resistance. Firm break there will argue that corrective fall from 1.3222 has completed with three waves down to 1.2726. Further rally would be seen back to retest 1.3222 high. On the downside, touching of 4 hour 55 EMA (now at 1.2840) will turn intraday bias neutral first.

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 1.2516 support holds.

Daily Pivots: (S1) 132.71; (P) 133.16; (R1) 133.75; More...

Outlook in USD/JPY is unchanged and intraday bias stays neutral. Range trading between 126.35/139.37 will continue for a while. On the downside, break of 130.38 will target 100% projection of 139.37 to 130.38 from 135.57 at 126.58. On the upside, above 135.57 will resume the rebound form 130.38 to retest 139.37.

In the bigger picture, fall from 139.37 medium term top is seen as correcting whole up trend from 101.18 (2020 low). While deeper decline cannot be ruled out, outlook will stays bullish as long as 55 week EMA (now at 122.70) holds. Long term up trend is expected to resume through 139.37 at a later stage, after the correction finishes.

Daily Pivots: (S1) 0.9425; (P) 0.9448; (R1) 0.9486; More...

Intraday bias in USD/CHF remains neutral as consolidation from 0.9369 is extending. Upside should be limited well below 0.9648 resistance to bring another fall. Break of 0.9369 will resume larger fall to 100% projection of 0.9884 to 0.9468 from 0.9648 at 0.9232.

In the bigger picture, break of 0.9471 support turned resistance argues that medium term up trend from 0.8756 has completed with three waves up to 1.0063. Long term sideway pattern might have started another falling leg. Deeper decline would now be in favor as long as 0.9648 resistance holds, to 0.9149 structural support. Sustained break there could pave the way back to 0.8756.

Daily Pivots: (S1) 1.2020; (P) 1.2084; (R1) 1.2118; More...

Intraday bias in GBP/USD stays neutral for the moment. On the downside, break of 1.2002 minor support will argue that rebound from 1.1759 has completed, after rejection by 55 day EMA. Intraday bias will be back on the downside for retesting 1.1759 low first. Break there will resume larger down trend. On the upside, above 1.2922 will resume the rebound from 1.1759 towards 1.2666 resistance.

In the bigger picture, fall from 1.4248 (2018 high) could be a leg inside the pattern from 1.1409 (2020 low), or resuming the longer term down trend. Deeper decline is expected as long as 1.2666 resistance holds. Next target is 1.1409 low. However, firm break of 1.2666 will bring stronger rise back to 55 week EMA (now at 1.2897).

Daily Pivots: (S1) 1.0120; (P) 1.0194; (R1) 1.0233; More...

EUR/USD's break of 1.0201 minor support suggests that rebound from 0.9951 has completed at 1.0368 already. That came after rejection by 55 day EMA, as well as falling channel resistance. Intraday bias is back on the downside for retesting 0.9951 low. Firm break there will resume larger down trend. For now, risk will stay on the downside as long as 1.0368 resistance holds, in case of recovery.

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 1.0773 resistance holds, in case of strong rebound.

Yen and Dollar are so far stronger for the week, with recession as a main theme in the markets. Yet, their upside is relatively limited, as US stocks managed to extend near term rally overnight. Commodity currencies are generally on the softer side, but Aussie, Kiwi and Loonie are all staying inside last week's ranges. Euro and Sterling are mixed for now, while Swiss Franc is firm.

Technically, EUR/USD's break of 1.0201 minor support argues that rebound from 0.9951 has already completed at 1.0368. Deeper fall is in favor back to retest 0.9951 low. Some attention will also be on Gold, which lost much upside momentum after hitting 1807.66. Break of 1764.77 support will also argue that rebound from 1680.83 has completed, and bring retest of this low. Developments in EUR/USD and Gold could reinforce each other.

In Asia, Nikkei dropped -0.01%. Hong Kong HSI is down -0.99%. China Shanghai SSE is up 0.12%. Singapore Strait Times is down -0.18%. Japan 10-year JGB yield is down -0.016 at 0.171. Overnight, DOW rose 0.45%. S&P 50 rose 0.40%. NASDAQ rose 0.62%. 10-year yield dropped -0.058 to 2.791.

UK payrolled employment rose 73k in Jul, unemployment rate unchanged at 3.8% in Jun

UK payrolled employment increased by 73k, or 0.2% mom, in July. Comparing with the same month a year ago, payrolled employees rose 29.7m, or 2.9% yoy. Claimant count dropped -10.5k, smaller than expectation of -32.9k. Median monthly pay rose 6.6% yoy to GBP 2108.

In the three months to June, unemployment rate was unchanged at 3.8%, matched expectations. Average earnings excluding bonus rose 4.7% 3moy, above expectation of 4.4%. Average earnings including bonus rose 5.1% 3moy, below expectation of 5.2%.

RBA Minutes: Further monetary policy normalization expected

In the minutes of the August 2 meeting, RBA expects to "take further steps in the process of normalizing monetary conditions over the months ahead". However, it is "not on a pre-set path." The path is a "narrow one" and "subject to considerable uncertainty". The size of timing of future rate hikes will be guided by incoming data and the assessment of the outlook for inflation and labor market, including the risks.

RBA said that inflation is expected to "peak later in 2022", then decline to top of 2-3% target range by the end of 2024. The expected moderation reflected "the ongoing resolution of global supply-side problems, the stabilization of commodity prices and the impact of rising interest rates in Australia and overseas". Medium-term inflation expectation remained "well anchored".

The Australian economy was "growing strongly" with resilient consumer spending and positive investment outlook. National income was boosted by rise in terms of trade to record high". Outlook is expected to "remain strong" for the rest of 2022, then slow in 2023 and 2024. Employment was "growing strongly" and further declines in unemployment rate were expected over the months ahead.

Looking ahead

Germany ZEW economic sentiment will be the main feature in European session. Eurozone will release trade balance. Later in the day, Canada CPI will take center stage. US will publish housing starts and building permits, and industrial production.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.0120; (P) 1.0194; (R1) 1.0233; More...

EUR/USD's break of 1.0201 minor support suggests that rebound from 0.9951 has completed at 1.0368 already. That came after rejection by 55 day EMA, as well as falling channel resistance. Intraday bias is back on the downside for retesting 0.9951 low. Firm break there will resume larger down trend. For now, risk will stay on the downside as long as 1.0368 resistance holds, in case of recovery.

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 1.0773 resistance holds, in case of strong rebound.

Economic Indicators Update

Lack of direction is what investors will be suffering until we see clearer signs of inflation abating. And that will take time, as we must see a couple of encouraging data points to call the central banks’ inflation fight successful.

The lack of clear direction is driving the markets up and down. Yesterday, the weak economic data from China and the US killed joy, but equity bulls still took the upper hand, and maintained the major stock indices above zero. The S&P500 gapped lower at the open but closed the session 0.40% up despite, or thanks, to a sharp fall in the latest Empire Manufacturing index that printed a scary -31 versus +5 expected by analysts and +11 printed a month earlier.

The weak data again made its magic: revived the expectation that the Federal Reserve (Fed) could not raise the rates at full speed, if economy starts crumbling. Nasdaq gained 0.62% as big technology names, including Apple, Tesla and Microsoft extended their July rally.

Could the stock recovery extend?

July recovery could extend, but we need a series of persistently encouraging economic data to support the stock recovery – and a -30 print on Empire Manufacturing is not what I call encouraging. Yesterday’s data softens the case for the continuation of the steep recovery, and throws the foundation of a period of consolidation, and perhaps a downside correction.

Is crude below $90 sustainable?

Crude oil fell 5% on Monday. The selloff was triggered by weak economic data and encouraging geopolitical news.

Aramco said on Sunday that they could raise their output to the maximum capacity of 12 million barrels per day, if the Saudi government orders to. And the growing prospect of Iranian oil is playing in favour of the downside, as the latest news revealed that Iran responded to the EU’s proposal for reviving the 2015 nuclear deal between the US and Iran, and European politicians now push the US to adopt a’ realistic approach and flexibility’ to resolve the couple of remaining issues. A nuclear deal between the US and Iran should unlock up to 4 million barrels of Iranian oil per day and help easing the supply crisis.

The barrel of American crude trades below the $90 mark, but the downside potential seems limited near the current levels, as the global energy crisis, and tight supply, are the now-hidden factors to which the market rhetoric could rapidly shift to.

In the FX

The dollar index rebounded, and the stronger greenback sent the EURUSD below the 1.02 mark on Monday. The euro bears bring parity back to their target range, thinking that the European Central Bank (ECB) can’t become too aggressive on its rate hikes, when the energy crisis deepens and threatens to send the Eurozone economy into a deep recession.

The dollar-CAD is, on the other hand, swinging between the Canadian dollar bulls’ hope of seeing a recovery in oil prices, and the persistently strong US dollar. Canada will reveal its latest inflation data today. Inflation in Canada is expected to have slowed to 7.6% in July, from 8.1% printed a month earlier. A soft-enough read could soften the Bank of Canada (BoC) hawks, but a single month easing in inflation won’t mean that the BoC would weaken its policy stance when inflation remains near multi-decade peak.

Market movers today

The German ZEW index should give more insights into the severity of the downturn in the euro area. It has proven a good leading indicator in this cycle as PMI's have tended to follow it with a short lag. The expectations index in July hit the lowest level since 2011 highlighting the risk of recession and with the recent further headwind from higher electricity prices it may not improve in August.

UK releases its labour report with data on unemployment and wage growth. Especially the latter is a key input to the inflation picture.

US housing starts probably dropped further in July as home sales has declined sharply and inventories of new homes have moved a lot higher lately. US industrial production figures are also due today.

The 60 second overview

The risk of recession continues to weigh on the markets as yields and commodity prices decline. Central banks apart for from that of China continue to focus on bringing down inflation, while more indicators show a risk of a recession. More and more forecasters are seeing a risk of a hard landing rather than a soft landing for the US economy, and in Europe the risk of stagflation is increasing.

The oil price has dipped below USD 90 and this is likely to be related to Iran and US getting closer to deal a deal on oil exports. A deal which should be supportive for lower oil prices.

We have several key numbers today, first the German ZEW indicator and later the UK labour market report as well as US housing market data and industrial production.

Equities: Global equities higher yesterday in a defensive growth and quality rotation. The stagflation winners are energy, materials and financials underperforming and hence everything at first glance looking okay and in line with our strategy. However, the rotation came on the back of plunging macro data, increasing the risk of recession significantly. Hence, we would have argued this rotation should happen with sharply negative equity markets and increasing volatility. Yes, Min Vol outperformed yesterday but to no extent as much as expected given the set of data we got yesterday. There is still a lot of buying on the back of lower inflation expectations and the dropping volatility. However, it is a matter of time before that ends if key figures continue to deteriorate at yesterday's pace. In US yesterday, Dow +0.5%, S&P 500 +0.4%, Nasdaq +0.6% and Russell 2000 +0.2%. Asian markets are higher this morning and the same goes for European futures. US futures are slightly lower.

FI: Global bond yields decline as the risk of a hard landing is increasing in both the US and Europe. Yesterday, 10Y German government bond yields fell almost 10bp. The US market also saw declines in the bond yields and modest bullish steepening between 2Y and 10Y.

FX: USD strengthened broadly yesterday as US economic data hints at a further slump in manufacturing.

Credit: Yesterday, credit markets were relatively uneventful with one primary deal in GBP leaving ITraxx Main unchanged (+0.3bp) to close at 92.2bp, while Xover widened 1.4bp to close at 464bp.