Sample Category Title

Notes/Observations

• Markets prepare for what is deemed the most eventful week of the year (two more major central bank meetings and an expected Fed rate cut, major PMI data US jobs report. US-China trade talks also resume
• EU GDP data miss expectations; France economic growth unexpectedly slowed in Q2 adding to risks for a euro area; Sweden misses too
• German July State CPI data slows from month ago levels
• EU July Confidence data disappoints - Risks of a hard Brexit are rising; UK PM combative stance on Irish backstop sends GBP to a fresh 2-year low

Asia:

• Japan Jun Jobless Rate: 2.3% v 2.4%e
• Japan Jun Preliminary Industrial Production saw its largest MoM decline since Jan 2018 (MoM: -3.6% v -1.8%e; YoY: -4.1% v -2.0%e
• BOJ left its policy steady (as expected) and reiterated its forward guidance that that policy rates would be kept at extremely low levels for an extended period of time, at least through around spring 2020.

Europe/Mideast:

• UK PM Johnson said to refuse to meet EU leaders unless they scrap the Irish backstop

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.88% at 387.42, FTSE -0.04% at 7,683.42, DAX -1.25% at 12,261.91, CAC-40 %-0.85 at 5,553.76, IBEX-35 -1.28% at 9,097.00, FTSE MIB -1.62% at 21,357.50, SMI -0.61% at 9,910.50, S&P 500 Futures -0.25%]
• Market Focal Points/Key Themes: European Indices trade mostly lower across the board weighed down by weaker Macro Economic data as well as weaker corporate earnings amid another busy morning on the earnings front. The FTSE continues to outperform on a falling Sterling as Brexit uncertainty ensues. The Dax declines over 1% following weaker earnings from Lufthansa, which is weighing on the sector, as the company reported a sharp drop in net profits; Dax component Bayer falls almost 4% on a top and bottom line miss and continued litigation worries. Elsewhere Grenke declines almost 15% as the company reported and cut its outlook, while Centrica, Reckitt Benckiser, Rexel and Siemens Gamesa are among some of the other names declining on earnings. Meanwhile major UK FTSE component BP trades almost 3% higher helping the index outperforms as profits came ahead of forecasts, while Elementis, Gam Holding and Air Liquide are among the other names trading higher on earnings. In other news Sports Direct rebounds after recent weakness on an update regarding the Belgium Tax Authority; Petra Diamonds rises sharply following reassurance on its Capex plans, while BBA Aviation gains on the sale of Ontic for around $1.37B. Looking ahead notable earners include Eli Lily, Celgene, ConocoPhilips, Proctor & Gamble, Cummins and Ralph Lauren among others.

Equities

• Consumer discretionary: Lufthansa [LHA.DE] -5.5% (earnings), Delivery Hero [DHER.DE] +1% (earnings), Low & Bonar [LWB.UK] -18% (earnings)
• Energy: BP [BP.UK] +3.5% (earnings)
• Financials: Grenke [GLJ.DE] -15% (earnings)
• Healthcare: Bayer [BAYN.DE] -3% (earnings), Fresenius SE [FRE.DE] +0.5% (earnings; raises expectations)
• Industrials: Reckitt Benckiser [RB.UK] -3% (earnings; outlook cut), BBA Aviation [BBA.UK] +6% (unit sale), Air Liquide [AI.FR] +2% (earnings)
• Technology: Dialog Semiconductor [DLG.DE] +1% (earnings)
• Materials: Petra Diamonds [PDL.UK] +21% (comments on recent share price), Fresnillo [FRES.UK] -8% (earnings)

Speakers

• Germany's Constitutional Court ruled that EU's rules on banking supervision and resolution did not violate the country's constitution
• BOE on banking sector: "Too Big to Fail' era to be over by 2022
• BOJ Gov Kuroda post rate decision press conference reiterated view that domestic economy was expanding moderately as a trend; risks for both growth in inflation were to the downside. Inflation remained weak despite the tight labor market. Momentum towards the 2% inflation target remained intact but lacked strength. BOJ would not hesitate to ease more to preempt risk from materializing; He clarified that that the new language did not mean BOJ to act in the near future but would do so if price momentum was at risk. ECB and Fed were changing their respective stance amid global uncertainties; needed to be mindful of shifts in other central banks as risk of protectionism hurting the global economy was rising
• China Politburo said to make plan for H2 economic work; reviews economic condition at meeting

Currencies/Fixed Income

• EUR/USD remained with recent post ECB decision trading range despite a slowing of German CPI data and slower GDP growth out of France. Pair steady around 1.1140 area as markets await the FOMC rate decision on Wednesday. The 1.11 handle remains the level to the downside for the pair as it has been the low for the past 2 years.
• GBP/USD tested fresh 2-year lows at 1.2112 area during Asia as PM Johnson raised the stakes over a no-deal Brexit and said to have issued an ultimatum to the European Union that he won't start divorce talks unless the withdrawal agreement was re-opened.
• EUR/SEK was higher by over 0.6% after Swedish Q2 GDP data showed a surprise contraction. Some dealers pondered whether the soft data might derail the next planned rate hike seen in late 2019/early 2020 by the Riksbank.

Economic Data

• (NL) Netherlands July Producer Confidence Index: 3.9 v 3.3 prior
• (FR) France Q2 Preliminary GDP Q/Q: 0.2% v 0.3%e; Y/Y: 1.3% v 1.4%e
• (DE) Germany Aug GfK Consumer Confidence: 9.7 v 9.7e
• (NO) Norway Jun Retail Sales (with auto/fuel) M/M: -0.4% v +0.5%e
• (FR) France Jun Consumer Spending M/M: -0.1% v +0.2%e; Y/Y: -0.6% v 0.0%e
• (FR) France Jun YTD Budget Balance: -€77.3B v -€83.9B prior
• (DE) Germany CPI Saxony M/M: 0.4% v 0.5% prior; Y/Y: 1.6% v 1.8% prior
• (CH) Swiss July KOF Leading Indicator: 97.1 v 93.7e
• (HU) Hungary May Average Gross Wages Y/Y: 11.2% v 10.0%e
• (AT) Austria Q2 Preliminary GDP Q/Q: 0.2% v 0.4% prior; Y/Y: 1.7% v 1.5% prior
• (AT) Austria PPI M/M: -0.4% v -0.2% prior; Y/Y: -0.2% v +0.6% prior
• (TR) Turkey July Economic Confidence: 80.7 v 83.4 prior
• (SE) Sweden Q2 Preliminary GDP Q/Q: -0.1% v +0.3%e; Y/Y: 1.4% v 1.9%e
• (SE) Sweden May Non-Manual Workers Wages Y/Y: 2.4% v 2.2% prior
• (DE) Germany July CPI Baden Wuerttemberg M/M: 0.4% v 0.4% prior; Y/Y: 1.7% v 1.8% prior
• (DE) Germany July CPI Brandenburg M/M: 0.3% v 0.5% prior; Y/Y: 1.5% v 1.8% prior
• (DE) Germany July CPI Hesse M/M: 0.5% v 0.1% prior; Y/Y: 1.4% v 1.5% prior
• (DE) Germany July CPI Bavaria M/M: 0.3% v 0.4% prior; Y/Y: 1.7% v 1.8% prior
• (DE) Germany July CPI North Rhine Westphalia M/M: 0.4% v 0.2% prior; Y/Y: 1.7% v 1.7% prior
• (PT) Portugal July Consumer Confidence Index: -8.0 v -8.3prior; Economic Climate Indicator: 2.3 v 2.4 prior
• (EU) Euro Zone July Business Climate Indicator: -0.12 v +0.08e; Economic Confidence: 102.7 v 102.6e; Industrial Confidence: -7.4 v -7.0e prior; Services Confidence: 10.6 v 10.6e; Consumer Confidence (final): -6.6 v -6.6e
• (UK) Weekly John Lewis Partnership LFL sales w/e July 27th: -0.8% v 0.0% prior
• (BE) Belgium July CPI M/M: +0.1% v -0.1% prior; Y/Y: 1.4% v 0.7% prior

Fixed Income Issuance

• (DK) Denmark sold total DKK5.62B in 1-month and 3-month bills
• (ID) Indonesia sold total IDR21.45T vs.IDR target in 3-month and 12-month Bills and 5-year, 10-year, 15-year, and 20-year Bonds
• (CH) Switzerland sold CHF446.7M in 3-month bills; Avg Yield: -0.918% v 0.888% prior
• (IT) Italy Debt Agency (Tesoro) sold total €6.0B vs. €5.0-6.0B indicated range in 5-year and 10-year BTP bonds
• Sold €2.75B vs. €2.25-2.75B indicated range in 1.75% July 2024 BTP bonds; Avg Yield: 0.80% v 1.34% prior; Bid-to-cover: 1.37x v 1.48x prior
• Sold €3.25B vs. €2.75-3.25B indicated range in 3.00% Aug 2029 BTP; Avg Yield: 1.60% v 2.09% prior; Bid-to-cover: 1.30x v 1.32x prior
• (ZA) South Africa sold total ZAR3.3B vs. ZAR3.3B indicated in 2035, 2037 and 2040 bonds
• (IT) Italy Debt Agency (Tesoro) sold €1.25B vs. €0.75-1.25B indicated range in 2025 CCTeu (Floating rate Notes)

Looking Ahead

• 05:30 (ZA) South Africa Q2 South Africa Unemployment Rate: 27.7%e v 27.6% prior
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
• 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
• 05:30 (DE) Germany to sell €4.0B in 0% Jun 2021 Schatz
• 05:30 (BE) Belgium Debt Agency (BDA) to sell 0.6-1.0B in 3-month bills
• 06:00 (IE) Ireland July Unemployment Rate: No est v 4.5% prior
• 06:00 (PT) Portugal Jun Industrial Production M/M: No est v -0.6% prior; Y/Y: No est v -0.6% prior
• 06:00 (PT) Portugal Jun Retail Sales M/M: No est v 1.4% prior; Y/Y: No est v 4.4% prior
• 06:00 (PT) Portugal Jun Unemployment Rate: No est v 6.6% prior
• 06:30 (IS) Iceland to sell 9-month bills
• 06:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
• 07:00 (BR) Brazil July FGV Inflation IGPM M/M: 0.5%e v 0.8% prior; Y/Y: 6.6%e v 6.5% prior
• 07:45 (US) (US) Goldman Economist Chain Store Sales
• 08:00 (DE) Germany July Preliminary CPI M/M: 0.3%e v 0.3% prior; Y/Y: 1.5%e v 1.6% prior
• 08:00 (DE) Germany July Preliminary CPI EU Harmonized M/M: 0.3%e v 0.3% prior; Y/Y: 1.4%e v 1.5% prior
• 08:00 (ZA) South Africa Jun Budget (ZAR): No est v -17.5B prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (US) Jun Personal Income: 0.4%e v 0.5% prior; Personal Spending: 0.3%e v 0.4% prior; Real Personal Spending (PCE): 0.2%e v 0.2% prior
• 08:30 (US) Jun PCE Deflator M/M: 0.1%e v 0.2% prior; Y/Y: 1.5%e v 1.5% prior
• 08:30 (US) Jun PCE Core Deflator M/M: 0.2%e v 0.2% prior; Y/Y: 1.7%e v 1.6% prior
• 08:55 (US) Weekly Redbook LFL Sales data
• 09:00 (US) May S&P Caseshiller 20-City M/M: 0.20%e v 0.00% prior; Y/Y: 1.20%e v 2.54% prior; House Price Index (HPI): No est v 215.68 prior
• 09:00 (US) May S&P Caseshiller (overall) Y/Y: No est v 3.54% prior; Overall HPI Index: No est v 207.97 prior
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:00 (BE) Belgium Q2 Preliminary GDP Q/Q: No est v 0.3% prior; Y/Y: No est v 1.2% prior
• 09:00 (RU) Russia announces upcoming OFZ Bond issuance
• 10:00 (US) Jun Pending Home Sales M/M: 0.4%e v 1.1% prior; Y/Y: No est v -0.8% prior
• 10:00 (US) July Consumer Confidence: 125.0e v 121.5 prior
• (BR) Brazil Jun Central Govt Budget Balance (BRL): -15.2Be v -14.7B prior
• (MX) Mexico Jun YTD Budget Balance (MXN): No est v 32.4B prior
• 16:30 (US) Weekly API Oil Inventories

The pair eases on Tuesday, following re-peated rejection under key barriers at 108.92/99 (Fibo 38.2% of 112.40/106.78 / 10 July high), weighed by losses of GBPJPY which leads JPY gamma.

Bulls face difficulties to progress within thick falling daily cloud, with negative signal developing on daily stochastics’ reversal from overbought zone and RSI turning south.

Flat momentum at the centerline adds to signals.

Fresh easing pressures pivotal support at 108.50 (55DMA), break of which is needed to generate initial bearish signal and expose key support at 108.24 (daily cloud base / near Fibo 38.2% of 107.21/108.94 bull-leg / converged 10/20DMA’s).

Pullback needs to find ground above cloud base and turn up to keep bulls in play, while firm break lower would confirm reversal and open way for further weakness.

Ability to hold above 55DMA would keep immediate focus at the upside for renewed attack at 108.99 pivot.

Res: 108.92, 108.99, 109.59, 109.69
Sup: 108.50, 108.24, 108.08, 107.87

Without much surprise, the Bank of Japan (BoJ) has not decided to implement additional monetary policy easing measures, as its practicability remains a major challenge for central bank members. Yet the sudden rise in JPY across the board strongly highlights the fact that investors consider the BoJ’s room of maneuver to be very limited, as the Fed is likely to reduce interest rates tomorrow for the first time in over a decade. The scenario of further JPY appreciation is therefore highly plausible since major central banks are expecting to cut rates while uncertainties in the global economic outlook and dragging US – China trade dispute remain.

The BoJ kept its monetary policy unchanged, with its short-term interest rate target at -0.10% and its long-term 10-year JGB yields along 0%. Furthermore, it maintains its pledge to increase government bonds holdings by JPY 80 trillion ($684 billion) and purchases of JPY 6 trillion ($55 billion) in Japanese shares per annum. While both the BoJ and Japan’s Cabinet lowered growth forecasts by respectively 0.70% (prior: 0.80%) for FY 2019 and 0.90% (prior: 1.30%) through March 2020, the BoJ added in its statement “it will not hesitate to take additional easing measures if there is a greater possibility that the momentum toward achieving the price stability target will be lost”. Japan’s core inflation continues to disappoint, with June year-on-year core CPI (ex. food) pointing to 0.60% from 0.80% in prior month, while BoJ core CPI forecast for FY 2019 is projected to rise 0.80% (prior: 0.90%), suggesting that additional expansionary measures are likely to come sooner or later. Accordingly, JPY momentum is likely to stay.

The US Dollar traded with low volatility against the Canadian Dollar on Monday. The currency pair made about 31 base points movement during yesterday's trading session.

The exchange rate reversed from the bottom line of an ascending trendline during the morning hours of Tuesday's trading session and gradually edging up.

Most likely, the currency exchange rate could aim for a swing high at 1.3200 during the following trading session.

However, technical indicators suggest that the USD/CAD pair might continue to trade with low volatility today.

The New Zealand Dollar maintained the descending channel pattern against the US Dollar on Monday. The 50– hour simple moving average provided resistance for the currency pair at 0.6633 during Tuesday's session.

Everything being equal, it is likely that the exchange rate continues to maintain the descending channel pattern today. The NZD/USD pair could aim for a support level at 0.6575 within this session.

On the other hand, given that the currency exchange rate is trading near the upper boundary of the channel pattern, a breakout might occur today.

If this breakout occurs, a surge towards the 100-hour SMA at 0.6661 could be expected.

The common European currency bounced off a support level formed by the 100-hour simple moving average at 120.74 on Monday. As a result, the currency pair gained about 64 base points during yesterday's trading session.

The exchange rate made a U-turn south from the monthly S1 at 121.28 during the first part of Tuesday's trading session.

By and large, it is likely, that the currency exchange rate will continue to edge lower today.

However, a support cluster formed by the combination of the 100– and 200– hour SMAs located near the 120.89 regions could hinder such decline.

The Australian Dollar has been trading sideways movement against the US Dollar since yesterday's trading session. The monthly S1 at 0.6895 provided support for the currency pair on Monday.

If the support level as mentioned earlier holds, a surge towards a resistance cluster formed by the combination of the weekly and the monthly pivot points at 0.6961 could be expected today.

However, if the exchange rate breaks the monthly S1, a breakout through the bottom border of a descending channel pattern is likely to occur during the following trading session.

The US dollar continues to move higher against the Japanese yen, with the pair moving to a fresh monthly trading high on Tuesday. The 110.00 level is the preferred upside target for the USDJPY pair now that the 109.00 resistance level has been breached. USDJPY bears may also be looking to sell into strength around the 110.00 level if Sino-U.S trade talks fail to find a resolution.

The USDJPY pair is bullish while trading above the 108.60 level, key resistance is found at the 109.55 and 110.00 level.

The USDJPY pair is only bearish while trading below the 108.60 level, key technical support is found at the 108.40 and 108.00 levels.

Gold price is trading in an upward channel on a 30 minute time frame, an intra-day time frame for day traders. On a daily frame, the uptrend is still in place as the price is trading above the two important moving averages: 50-day and 100-day (50 shown in pink and 100 in orange).

The gold price is also trading above these moving averages on the current (30 min) time frame and this further strengthens the bull case. However, it is important to note that the price is going to face some difficulty or perhaps some retracement as it comes closer to the downward trend line shown in dark brown colour. However, if the price breaks this trend line to the upside, it means that the odds would be stronger for this bull move to continue its move.

The RSI is also approaching its oversold reading and traders do use this reading as an opportunity to sell. So, the current upward move which is likely to face resistance near the downward trend line isn’t that strong as it appeared before.

Minor support 1,412
Major support 1,401
Minor resistance 1,440
Major resistance 1,453

Traders are content with their approach today after a flat trading session over on Wall Street yesterday. There wasn’t much action over in Asia as well, and this is despite the fact that the Bank of Japan kept the powder dry- the bank left the interest rate unchanged.

No surprise there and this is the reason that we have not seen much movement in the dollar-yen pair. The bank did acknowledge the spill over effect of slower growth over in the US and China due to the ongoing trade war between the US and China. It is in this essence that traders have started to bet on the possibility of a dovish monetary policy from the BOJ.

But for now, everyone is focused on one important event, the Federal Reserve’s monetary policy decision. It is ironic that market participants do know that the Fed is going to cut the interest rate during this meeting but still they are not willing to jump in the ring. The preference among them is to stay on the side line because you can never be hundred percent certain about the Fed monetary policy decision.

The chief reason that investors are reluctant to bet on the market is that they are not sure how dovish the Fed is going to be in their statement. The only thing that they can do is to pay extra attention to economic numbers and try to make sense out of that.

Thus, the upcoming US core PCE data commands some extra attention. Fed has paid extraordinary attention to Core PCE data and it is their preferred matrix to measure inflation. The expectations are that this number will come in at 1.7%, slightly higher from its previous reading of 1.6%. Remember, the Fed’s target rate is 2% but this is only one of the measure, so even if the number jumps more one tenth of one percent, it would not take the interest rate cut off the table.

Closer to home, it is all about Sterling’s pain and it seems that the path of the least resistance for Sterling is skewed to the downside. Traders are betting for the price to come close to an area which the price hasn’t visited since the Brexit referendum day. Thanks to the country’s new Prime Minister, Boris Johnson, who is trying to show the EU that he is not afraid of no deal Brexit. His first order as a prime minister was to prepare for the no deal Brexit.

Obviously, the new prime minister wants to limit the damage but this is an uncharted territory and one can never prepare for such. The best way to fight this is to remove the original problem out of the equation that is either give public another chance to vote on referendum or to work with the EU to minimise the damage .

Nonetheless, the old trick is still working that is the weakness in Sterling is pushing the FTSE 100 higher and this is the chief reason that we saw the index gained some points yesterday.