Sample Category Title

Notes/Observations

Asia:

• China Q2 GDP saw its slowest annual growth since 1992 (Q/Q: 1.6% v 1.5%e; Y/Y: 6.2% v 6.2%e
• China Jun data showing positive effects from stimulus measures; Jun Industrial Production handily beat expectations (YoY: 6.3% v 5.2%e; Retail Sales also handily beat expectations (YoY: 9.8% v 8.5%e)
• China National Bureau of Statistics (NBS) Official: China faced more external uncertainties and 'instabilities, domestic economy faced 'new' downward pressure'
• China PBOC statement noted that it implemented its 3rd phase of cuts to Reserve Ratio Requirement (RRR) for county level rural commercial banks which released long term capital worth ~CNY100B (Note: RRR cuts previously announced on May 6th)

Europe/Mideast:

• Italy govt said to remain at risk of a September general election as tensions continue tol simmering within the coalition govt
• PM Candidate Johnson said to be prepared to negotiate a post Brexit trade deal with US as one of his first actions if elected
• Resolution Foundation (think tank): UK recession risk at highest level since 2007 based upon yield curve slope
• Turkey President Erdogan stated that would reduce interest rates significantly

Americas:

• US firms might receive permission to restart sales to Huawei in next 2 -4 weeks

Energy:

• Hurricane Barry downgraded over the weekend to a tropical depression, travelling North of Louisiana into Arkansas. Gulf of Mexico crude oil production cut by 70% (1.33M bpd) and natural gas output cut by 56% due to recent storm preparations in Gulf
• France/Germany/ UK joint statement reiterated commitment to 2015 nuclear deal but preoccupied by the risk that deal could fall apart. Deeply troubled by attacks witnessed in Persian Gulf and elsewhere and by the deterioration of security in the region. Time has come to act responsibly and look for ways to stop tensions increasing & resume dialogue
• Iran President Rouhani stated at was ready and willing to hold talks with the US if sanctions were lifted and US returned to the 2015 nuclear deal it left last year

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.03% at 386.74, FTSE -0.02% at 7,504.92, DAX +0.22% at 12,350.33, CAC-40 -0.12% at 5,565.99, IBEX-35 +0.04% at 9,297.00, FTSE MIB +0.09% at 22,202.50, SMI +0.03% at 9,765.50, S&P 500 Futures +0.13%]
• Market Focal Points/Key Themes: European Indices trade slightly higher across the board, continuing the positive momentum after a mainly lower sessions in Asia and higher US futures. The banks kick off the official start of earnings season today with Citigroup reporting. On the corporate front shares of retailer SportsDirect trades sharply lower after delaying earnings, while Poxel, Class Ohlson trade lower after earnings, with Axfood trading higher after a beat on both the top and bottom line. In other news Kcom Group shares rise once again as the battle for the company continued with Macquarie outbidding Superannuation to acquire the company; Galapagos gains more than 15% following an R&D collab with Gilead, while Micro Focus declines following sale of shares by some of its directors.

Equities

• Consumer discretionary: Anheuser-Busch [ABI.BE] -2% (cancels HK IPO), Sports Direct [SPD.UK] -12% (acquisition update; to delay results), Inwido [INWI.SE] -10% (earnings), Byggmax [BMAX.SE] -13% (acquisition)
• Healthcare: Galapagos [GLPG.BE] +16% (collaboration with Gilead), Poxel [POXEL.FR] -4% (earnings)
• Industrials: Antofagasta [ANTO.UK] +5% (Pakistan ordered to pay Barrick, Antofagasta compensation)
• Technology: IDEX ASA [IDEX.NO] +14% (acquisition)

Speakers

• Germany Economy Ministry Monthly Report: Growth seen weaker in Q2. Manufacturing remained sluggish and signs from services sector suggested thatt growth was weaker in quarter. Brexit and geopolitical tensions were considerable downside risks
• Spain Acting PM Sanchez: Pademos leader Iglesias may not support an investiture vote next week to install a Socialist government
• China PBOC Dep Gov Pan Gongsheng: Urges financial institutions to increase loans to poverty-stricken areas in education, medical and housing sectors
• Iran Nuclear Agency spokesperson reiterated that Iran was reducing its commitment under the nuclear deal so remaining signatories would fulfill their duties
• US President Trump reportedly considers removing Commerce Secretary Ross

Currencies/Fixed Income

• USD: The USD future index traded lower Friday as comments from Feds Evans' dovish comments. To the upside we see the level in the 97.25 region and to the downside we look in the region of 95.50.
• EUR: Friday the Euro traded slightly higher as it approaches the 1.13 handle, if we get a break there we will look to 1.1380. To the downside we would look for a break of the 1.12 handle. Looking forward the Euro zone is quite light on the data front.
• GBP: The cable traded slightly higher as the next potential level to the uposide is in the region of 1.128. The next level to the upside would be 120 pips away in the region of 1.272. The week is full of economic data in the UK with CPI, Jobs and Retail sales.

Economic Data

• (PE) Peru May Economic Activity Index (Monthly GDP) Y/Y: 0.6% v 0.0% prior
• (PE) Peru Jun Unemployment Rate: 6.3% v 6.7% prior
• (SE) Sweden Jun PES Unemployment Rate: 3.6%t v 3.4% prior
• (NL) Netherlands May Trade Balance: €5.6B v €4.1B prior
• (NL) Netherlands May Retail Sales Y/Y: 4.4% v 4.6% prior
• (FI) Finland Jun CPI M/M: +0.1% v -0.2% prior; Y/Y: 1.0% v 1.2% prior
• (FI) Finland May Current Account Balance: +€0.3B v -€4.2B prior
• (FI) Finland May Final Retail Sales Volume Y/Y: 0.0% v -0.3% prelim
• (DK) Denmark Jun PPI M/M: -0.8% v -0.4% prior; Y/Y: -2.5% v -0.4% prior
• (CH) Swiss Jun Producer & Import Prices M/M: -0.5% v 0.0% prior; Y/Y: -1.4% v -0.8% prior
• (IN) India Wholesale Prices (WPI) Y/Y: 2.0% v 2.3%e
• (CH) Swiss Weekly Total Sight Deposits (CHF): 479.0B v 479.0B prior; Domestic Sight Deposits: 480.1B v 476.1B prior
• (PL) Poland Jun Final CPI M/M: 0.3% v 0.3% prelim; Y/Y: 2.6% v 2.6% prelim
• (CZ) Czech May Current Account Balance (CZK): +11.3B v -0.8Be
• (IT) Italy May General Government Debt: €2.365T v €2.373T prior (moved off record highs)

Fixed Income Issuance

• None seen

Looking Ahead

• (NG) Nigeria Jun CPI Y/Y: 11.3%e v 11.4% prior
• 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
• 06:00 (IE) Ireland May Trade Balance: No est v €5.4B prior
• 06:45 (US) Daily Libor Fixing
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey
• 08:00 (IN) India Jun Trade Balance: -$15.0Be v -$15.4B prior; Exports Y/Y: No est v 3.9% prior; Imports Y/Y: No est v 4.3% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (US) July Empire Manufacturing: +2.0%e v -8.6 prior
• 09:00 (FR) France Debt Agency (AFT) to sell combined €3.8-5.0B in 3-month, 6-month and 12-month Bills
• 09:00 (CA) Canada Jun Existing Home Sales M/M: No est v 1.9% prior
• 09:00 (BE) Belgium May Trade Balance: No est v -€1.3B prior - 09:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 11:00 (CO) Colombia May Manufacturing Production Y/Y: No est v -1.3% prior
• 11:00 (CO) Colombia May Retail Sales Y/Y: No est v 4.0% prior
• 11:30 (IL) Israel Jun CPI M/M: No est v 0.7% prior; Y/Y: No est v 1.5% prior
• 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
• 15:00 (AR) Argentina May Capacity Utilization: No est v 61.6% prior

Its been a mixed start to trade on Monday, with Chinese data initially giving a boost to the basic resource sector and sentiment on the whole.

The data was a mixed bag which may explain why it took a little time to settle in. On the one hand, the country has experienced it's slowest quarter of growth in 27 years, on the other we saw some encouraging beats on the accompanying releases.

This was particularly true of the industrial production number which was more than 1% higher and is giving a boost to basic resource stocks. Ultimately, the trade war is clearly taking its toll but importantly, the slowdown is being managed well at the moment which is perhaps a relief. Of course, things could still get better before they improve so we have to bear that in mind.

Earnings recession to add to Q2 gloom

Stock markets may be at record highs in the US but there's a very different feeling going into this earnings season than we've experienced the last few years. After a year of incredible earnings growth, we're now facing down the barrel of an earnings recession, with a drop of almost 3% expected.

That will only further support the case for rate cuts from the Federal Reserve, especially if second quarter growth turns out to be as bad as people fear. We kick things off with focus on the banks this week which should offer some great insight into the economic outlook and impact of lower interest rates to come on earnings.

Bitcoin threatening to break below $10,000

It's been a rocky few days for cryptocurrencies. First Powell lands a blow while facing questions on Libra in Congress and then Trump piles in on Twitter, claiming not to be a fan. This was followed over the weekend with reports of a $32 million theft from a crypto exchange and arrests at a Chinese mining firm to further pile misery on the space.

The result has been a more than 10% decline and has seen pressure building on the $9,500-10,000 area. A lot of this is being attributed to Trump's comments and may become more severe if the attacks are repeated, as they often are. If so its a bit of a slow burn, given that initially bitcoin only fell around $500 and then quickly rebounded.

Retail sales numbers out of the United States will be scrutinized on Tuesday as investors try to keep alive hopes of a 0.50% rate cut by the Fed later this month. The retail sales data will be published at 12:30 GMT and will be followed by industrial production figures at 13:15 GMT. With the Fed July meeting fast approaching, the data could determine whether policymakers decide to go for a 25-basis points reduction, or a steeper 50-bps cut. The dollar is likely to continue its knee-jerk reactions to the incoming data, moving in tandem with fluctuating expectations of a 50-bps rate cut.

Retail sales forecast to moderate slightly in June

Consumers in the United States form the backbone of the economy, hence, any deterioration in retail spending is seen as a sign of slower growth. Ordinarily, temporary weakness in consumption would be offset by one of the other main components of US GDP, such as business spending or net exports. But with both business investment and exports being weighed by the worsening trade uncertainty, they’re unlikely to provide much of a boost, leaving the economy even more reliant on domestic demand to drive growth.

Retail sales are forecast to have increased by 0.2% month-on-month in June, moderating somewhat from May’s 0.5% gain. Excluding autos, sales are also expected to have edged up by 0.2% m/m, while the ‘retail control group’ measure, which is used in GDP calculations and excludes autos, gasoline, building materials and food services, is also projected to rise by 0.3% m/m.

Dollar to remain hostage to swinging rate cut bets

If the numbers come in as expected, they might not do much in shifting the market odds of a July rate cut as it would neither be bad enough to make the case for an aggressive easing by the Fed, nor would it be strong enough to give policymakers second thoughts about the need to lower rates.

The US dollar is likely to trade sideways in such a scenario. But with market expectations of 50-bps cut having risen to more than 20% following the Jerome Powell’s dovish testimony last week, stronger-than-expected retail sales figures could see those odds reverse again, lifting the greenback. Dollar/yen could recover towards the 50% Fibonacci retracement of the January-April upleg, around 108.68, with any break above it bound to meet stiff resistance at the 109 handle.

But should the data disappoint, speculation of an aggressive cut would intensify and drag the dollar lower. Dollar/yen could slip below immediate support at the 61.8% Fibonacci around 107.80, taking the pair closer to June’s 6-month low of 106.77.

Industrial output growth to stay positive

Apart from the retail sales report, investors will also be monitoring the latest numbers on industrial production on Tuesday. Industrial output is forecast to have grown by 0.1% month-on-month in June, slowing from the prior month’s 0.4% m/m rate. Manufacturing output is projected to have fared slightly better, expanding by 0.2% m/m. If these numbers are confirmed, they would ease fears of an immediate recession. Another indicator on the US manufacturing sector will come on Thursday from the Philly Fed manufacturing index.

Should the data fail to provide a clear assessment on the American economy, investors will likely turn to the Fed speakers due to take to the podium this week, which include NY Fed President John Williams and Boston Fed President Eric Rosengren. Traders have so far brushed away hints of scepticism about the urgency for a rate cut by some FOMC members so any further signs of doubts in the run up to the July meeting has the potential to cause some upset in the markets.

On Monday morning, the EUR/USD traded above the support of the 55-hour simple moving average. Meanwhile, the rate had no technical resistance as high as the weekly R1 at 1.1307.

In general, it was expected that the rate will reach for the technical resistance level, as soon as the support of the 100 and 200-hour simple moving averages approaches from below.

On the other hand, note that the 1.1300 level has been providing resistance to the currency exchange rate in the past. It could stop a surge.

During the early hours of Monday's London trading session, the GBP/USD had retreated down to the technical support levels near 1.2545.

In general, the rate was expected to be strengthened by the 55-hour simple moving average and move upwards to the resistance of the weekly R1 at 1.2627.

On the other hand, it is possible that a solo moving average will not have enough strength to push the rate upwards, as it can be observed that the 200-hour SMA was broken by the rate.

On Monday, the USD/JPY traded above the monthly pivot point that is located at 107.84.

The currency pair was expected to fall below the pivot point, as the resistance of the 55, 100 and 200-hour simple moving averages was approaching from above. Moreover, the rate has broken an ascending pattern, signaling a decline.

On the other hand, note that the rate might trade sideways until all of the SMAs approach it.

Gold has made an attempt to surge, which was stopped by the psychological resistance of the 1,420.00 level.

During Tuesday's trading session, the rate was expected to surge, as it was supported by the hourly simple moving averages and there was no technical resistance as high as the 1,430.00 level.

Although, watch the resistance of round levels like the 1,420.00 and 1,425.00. They might slow down price surges.

The US dollar is still probing close to the 108.00 support level against the Japanese yen, following a bearish weekly price close. The 108.23 level is the key weekly pivot point for the USDJPY pair, with a strong technical rejection from this level likely to accelerate selling. Overall, unless the key pivot point is breached, traders should expect the overall downtrend in the USDJPY pair to continue.

The USDJPY pair is bullish while trading above the 108.23 level, key technical resistance is found at the 108.45 and 108.60 levels.

If the USDJPY pair trades below the 108.23 level, key technical support is found at the 107.80 and 107.00 levels.

The British pound is starting to reverse against the US dollar as bulls struggle to move price above the pairs former weekly trading high. The GBPUSD pair could weaken back towards its weekly pivot point, at 1.2530, if the important 1.2550 support level is broken. Short-term technical indicators may also need to correct lower before the next storng move attack starts to take place.

The GBPUSD pair is bullish while trading above the 1.2550 level, key resistance is found at the 1.2580 and 1.2610 levels.

If the GBPUSD trades below the 1.2550 level, key support is located at the 1.2530 and 1.2505 levels.

AUD/USD marked slight gains as the Chinese GDP rates for Q2 (+1.6% qoq), outperformed expectations (+1.5% qoq). It should be noted though, that on a year on year basis China's GDP rate slowed down (+6.2% yoy) as expected, reaching its lowest level for years. On the flip side, China's industrial production, which is considered a key sector, picked up pace reaching +6.3% yoy, once again outperforming expectations and easing worries somewhat. Worries about China's growth rate are expected to continue to feed headlines and could be indicative of a coming global economic slowdown. We expect that renewed headlines could increase the risk off sentiment of the markets in the coming days, which in turn could weaken the AUD. It should be noted that the release of RBA's meeting minutes tomorrow during the Asian session could affect the Aussie's strengthening, should there be extensive dovishness about a coming rate cut. AUD/USD continued to rise on Friday and during today's Asian session, breaking the 0.7000 (S1) resistance line, now turned to support. We maintain a bullish outlook for the pair, as long as the upward trendline incepted since the 10th of July, remains intact. Should the bulls maintain control over the pair's direction, we could see it breaking the 0.7065 (R1) resistance line and aim for higher grounds. Should the bears take over, we could see the pair breaking the prementioned upward trendline and the 0.7000 (S1) support line, aiming for the 0.6925 (S2) support level.

Bitcoin drops during the weekend

Bitcoin tumbled during the weekend as at some point reached below the reading of 10000, before correcting higher. Main fundamental reason cited by analysts seems to be the negative tweets posted by US president Trump. Analysts are also mentioning that the cryptocurrency's stellar run, could be tested in the next days as the U.S. Financial Stability Oversight Council is also expected to conduct a review. It should be noted that the 5 Billion fine imposed from the US Federal Trade Commission on Facebook, may not be connected to Libra and the cryptomarket, yet predisposes for a tougher stance of US authorities for Facebook and its intentions to release Libra. Should negative headlines continue to reel in about the cryptomarket, we could see Bitcoin dropping further. Bitcoin prices tumbled during the weekend breaking the 11580 (R2), the 11000 (R1) support lines (now turned to resistance) and temporarily the 10200 (S1) support level. Should the bearish sentiment for the cryptocurrency be maintained, we could see Bitcoin's value dropping even further. Should the cryptocurrency remain under the selling interest of the market, we could see it breaking the 10200 (S1) support line once again and aim for the 9350 (S2) support level. On the flip side, should the market favor the pair's long positions, we could see it aiming if not breaking the 11000 (R1) resistance hurdle.

Other economic highlights, today and early tomorrow

Today during the American session, we get from the US the NY Fed Manufacturing Index for July. In tomorrow's Asian session, we get New Zealand's CPI rate for Q2 and from Australia, RBA's meeting minutes are to be released. Also bear in mind that NY Fed President Williams is scheduled to speak today and could move the USD

As for the rest of the week:

On Tuesday, we get UK's employment data for May, Germany's ZEW indicator for July and the US retail sales and industrial production for June. On Wednesday, we get UK's and Canada's CPI rates, both for June. On Thursday, we get Japan's trade balance from June, Australia's employment data for June, UK's retail sales for June and from the US the Philadelphia Fed business index for July. On Friday, we get CPI rates for June, Canada's retail sales for May and from the US the preliminary U. Michigan Consumer Sentiment for July.

AUD/USD H4

Support: 0.7000 (S1), 0.6925 (S2), 0.6860 (S3)
Resistance: 0.7065 (R1), 0.7115 (R2), 0.7165 (R3)

Bitcoin H4

Support: 10200 (S1), 9350 (S2), 8680 (S3)
Resistance: 11000 (R1), 11580 (R2), 12360 (R3)