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Daily Pivots: (S1) 1.3005; (P) 1.3041; (R1) 1.3064; More....

Intraday bias in USD/CAD mains on the downside for the moment. Sustained trading below 1.3052/68 cluster support should confirm medium term reversal. Deeper decline should then be seen to 1.2781 support next. On the upside, break of 1.3143 resistance is needed to indicate short term bottoming. Otherwise, near term outlook will remain bearish in case of recovery.

In the bigger picture, the case of bearish reversal continues to build up. Decisive break of 1.3068 cluster support (38.2% retracement of 1.2061 to 1.3664 at 1.3052) will confirm completion of up trend from 1.2061 (2017 low). Further fall should be seen to 61.8% retracement at 1.2673 next. On the upside, sustained break of 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685, is needed to confirm resumption of up trend from 1.2061 (2017 low). Otherwise, risk will stay on the downside.

GDP growth eased to +6.2% y/y in 2Q19, down from +6.4% in the prior quarter. This marks the weakest growth in 27 years. On a q/q saar basis, GDP growth moderated sharply to +5.6% from first quarter's +6.9%. For the first half of the year, the economy expanded +6.3%.

Growth in the second quarter was dragged by net exports growth as well as softer domestic consumption. As more negative impacts of US-China trade war surface, growth in the second half of the year should decelerate further. We expect year- over- year growth in the final quarter to falter below +6%.

Concerning major activity data in June, industrial production grew +6.3% y/y, picking up from +5% in May. The improvement came from a low base and a narrowed contraction in metal smelting.

Retail sales jumped +9.8% y/y in June , after gaining +8.6% a month ago. The strong growth, probably coming from front-loaded auto sales, would likely dissipate in coming months.

Urban fixed asset investment increased +5.8% in the first half of the year, compared with +5.6% in the first 5 months. Looking into details, government-driven infrastructure investment expanded +4.1%, up slightly from +4% in the first 5 months of the year. The growth could continue as the government implement fiscal stimulus to boost the economy. Deceleration in real estate investment growth would persist as the government tightened developer financing and mortgage loans. Moreover, downside pressure on manufacturing investment is expected to remain.

As we mentioned in the previous report, China's monetary policy would stay accommodative. We believe of a rate cut has increased, given Fed funds rate cuts later this year are a done deal. PBOC would continue to cut RRR. As Premier Li Keqiang noted recently, the government would cut the RRR to help reduce funding costs for SMEs. Meanwhile, Sun Guofeng, director of the central bank's Monetary Policy, suggested last Friday that the central bank would, in addition to the traditional monetary measures,  continue to deepen market-oriented interest rate reforms to lower the loan interest rates especially for SMEs.

The USD/JPY seems to be building a deep bearish ABC zigzag (purple) correction within the wave 2 (pink). This wave outlook remains valid as long as price stays above the 100% Fibonacci retracement level of wave 2 vs 1. A break above the resistance trend lines (red) could confirm a larger bullish breakout and continuation towards wave 3 (purple).

The USD/JPY bullish price action could either be the start of a larger bullish reversal or a small pullback (wave 4 blue) as part of a wave C (purple). The decisive factor is the price action at the previous bottom (orange line) of wave 1 (blue): a bullish breakout could indicate a reversal and new uptrend whereas a bounce and continuation lower favors the wave 5 (blue) of wave C (purple).

Daily Pivots: (S1) 0.6986; (P) 0.7006; (R1) 0.7040; More...

Intraday bias in AUD/USD remains on the upside for 0.7047 resistance. Break will resume the rebound from 0.6831 and target 61.8% retracement of 0.7295 to 0.6831 at 0.7118. Sustained trading above will pave the way to 0.7205 resistance next. On the downside, break of 0.6983 minor support will turn bias to the downside for 0.6910 support instead.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

Markets are in mild risk seeking mode in Asian session, following record run in the US. China's GDP data slowed to 27-year low in Q2, but strong June data offered glimpse of hope. New Zealand and Australian Dollar follow the trend and strength today. Yen and Swiss Franc soften naturally. A large number of important economic data are featured ahead, which will surely make it an interesting week.

Technically, immediate focus will be on 0.7047 resistance in AUD/USD. Firm break will confirm resumption of recent rebound from 0.6831 for 0.7118 fibonacci level next. EUR/AUD is also pressing 1.6025 support and firm break will resume the fall from 1.6448 towards 1.5683 low. 0.8954 in EUR/GBP is another focus. Break will be an early sign of near term bearish reversal. That is, fortune of Euro and Sterling would start to reverse in that case.

In Asia, currently, Japan is on holiday. Hong Kong HSI is up 0.08%. China Shanghai SSE is up 0.30%. Singapore Strait Times is down -0.07%.

China Q2 GDP slowed to 27-year low, but June data beat expectations

GDP growth slowed to 6.2% yoy in Q2, down from Q1's 6.4% yoy, matched expectations. That's also the slowest pace in at least 27 years. However, quarterly growth actually accelerated to 1.6% qoq, up from Q1's 1.4% qoq and beat expectation of 1.5% qoq.

Also June's data come in stronger than expected. But it remains to be seen if the momentum towards the end of the quarter could sustain. Headwinds from US tariffs and weaker global growth would still likely drag down China's growth ahead.

Fixed assessment investment, excluding rural, rose 5.8% ytd yoy in June, up from 5.6% and beat expectation of 5.6%. Industrial production rose 6.3% yoy in June, up from 5.0% and beat expectation of 5.2%. Retail sales jumped 9.8% yoy, up from 8.6% yoy and beat expectation of 8.5% yoy. Surveyed unemployment rate rose from 5.0% to 5.1%.

USD/CNH (offshore Yuan), dips mildly in Asian session but that's mainly due to mild weakness in Dollar. Recent consolidation from 6.9620 is still in progress and would extend further in range.

Important data for many currencies ahead

More Fed officials will speak this week and it's important to see how the neutrals/doves split in FOMC. At the same time economic data from US will play an important role in Fed's rate cut decision on July 31. Some fed officials have noted that consumer spending has been resilient recently but business investments slowed due to lower confidence. Thus, while retail sales are watched closely, industrial productions and regional fed surveys might carry a bigger weight.

Elsewhere, the high profile events are also featured for many other major currencies, including UK employment, CPI and retail sales. German ZEW, Canada CPI and retail sales, Japan CPI, Australian employment and RBA minutes, New Zealand employment will also be featured. It's surely an interesting week.

Here are some highlights for the week:

• Monday: Swiss PPI; US Empire state manufacturing.
• Tuesday New Zealand CPI; RBA minutes; UK employment; German ZEW; Eurozone trade balance; Canada foreign securities purchases; US retail sales, import prices, industrial production, business inventories, NAHB housing index.
• Wednesday: UK CPI, PPI; Canada CPI, manufacturing sales; US building permits and housing starts, Fed's Beige Book.
• Thursday: Japan trade balance; Australia employment, NAB business confidence; Swiss trade balance; UK retail sales; US Philly Fed survey, jobless claims.
• Friday: Japan national core CPI, all industrial index; Germany PPI; Eurozone current account; UK public sector net borrowing; Canada retail sales; US U of Michigan consumer confidence.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.6986; (P) 0.7006; (R1) 0.7040; More...

Intraday bias in AUD/USD remains on the upside for 0.7047 resistance. Break will resume the rebound from 0.6831 and target 61.8% retracement of 0.7295 to 0.6831 at 0.7118. Sustained trading above will pave the way to 0.7205 resistance next. On the downside, break of 0.6983 minor support will turn bias to the downside for 0.6910 support instead.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

Economic Indicators Update

General Trend:

• Shanghai Property index pares over 2% loss, gov’t said property market was stable in H1
• Samsung Electronics said to have secured emergencies supplies of certain materials amid export restrictions announced by Japan, it was not initially known how Samsung obtained the supplies (US financial press)
• US companies may receive approval for licenses to resume sales to Huawei within 2-4 weeks (financial press)
• Asia session participation limited by Japanese holiday
• Rio Tinto expected to report quarterly production update on Tuesday, BHP’s production update is expected on July 17th (Wed)
• China’s June industrial production rebounds from slowest growth pace since 2002, retail sales supported by auto and online sales
• China said recent data was supported by gov’t stimulus measures
• Kiwi rises after China data, New Zealand Q2 CPI data seen on Tuesday
• Aussie in focus amid China data and Tuesday’s expected release of RBA minutes, Australia monthly jobs data due on July 18th (Thursday)

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.1%
• Uranium miners stronger after Trump decides to continue to allow uranium to be purchased overseas and imported without a quota
• (AU) Australia sells A$400M v A$400M indicated in 2.75% May 2041 bonds, avg yield 1.9944%, bid to cover 1.77x

Japan

• Nikkei 225 closed for holiday
• (JP) According to survey from Teikoku Data Bank ~50% of business in Japan do not see any front loading of sales ahead of sales tax hike in October
• (KR) UN report shows Japan illegally exported military and luxury items to North Korea - Korean Press

Korea

• Kospi opened -0.2%
• 005930.KR Said to have secured emergency supplies of 3 materials impact by Japan export curbs - US financial press
• (KR) Follow Up: South Korea to raise 2020 minimum wage 2.9% to KRW8,590 ($7.30) (3rd smallest increase since minimum wage was started in 1988) v +10.9% in 2019 and +16.4% in 2018

China/Hong Kong

• Hang Seng opened -0.6%; Shanghai Composite opened -0.3%
• (CN) CHINA Q2 GDP Q/Q: 1.6% V 1.5%E; Y/Y: 6.2% V 6.2%E; GDP YTD Y/Y: 6.3% v 6.3%e
• (CN) CHINA JUN INDUSTRIAL PRODUCTION Y/Y: 6.3% V 5.2%E; YTD Y/Y: 6.0% v 5.9%e
• (CN) China National Bureau of Statistics (NBS) Official: China faces more external uncertainties and 'instabilities, domestic economy faces 'new' downward pressure' - comments after June and Q2 data
• (CN) CHINA JUN RETAIL SALES Y/Y: 9.8% V 8.5%E; YTD Y/Y: 8.4% V 8.2%E
• (CN) China Jun Property Investment YTD Y/Y: +10.9% v 11.2% prior
• (CN) CHINA JUN FIXED URBAN ASSETS Y/Y: 5.8% V 5.6%E
• (CN) China Jun Surveyed Jobless Rate: 5.1% v 5.0% prior
• (CN) China former PBoC Gov Zhou: Beijing could model digital currencies based on the examples of Facebook and Hong Kong currency models; Libra shows the potential for a 'strong international currency'
• (CN) Study from Harvard and German think tank Kiel estimates sovereign debt to China increased from $500B in 2000 to $5T in 2017; China now largest global creditor
• (CN) China PBOC sets yuan reference rate:6.8677 v 6.8662 prior
• (CN) China PBoC Open Market Operation (OMO): Skips for the 16th consecutive session
• (CN) CHINA JUN NEW HOME PRICES M/M: 0.7% V 0.7% PRIOR; Y/Y: 10.3% V 10.7% PRIOR
• (CN) China PBoC offers CNY200B 1-year medium term lending facility (MLF) v CNY240B prior at 3.3% v 3.3% prior
• (CN) China PBOC: Implements 3rd phase of cuts to Reserve Ratio Requirement (RRR) for county level rural commercial banks, effective today; releases long term capital worth ~CNY100B (previously announced)

Data released after the close Friday

• (CN) CHINA JUN TRADE BALANCE (CNY): 345.2T V 278.5TE; Exports Y/Y: 6.1% v 6.9%e; Imports Y/Y: -0.4% v +3.7%e; May Rare Earth exports 4.0Kt v 3.6Kt prior; Iron Ore imports 75.2M tons v 80.7M m/m (lowest level since Feb 2016)
• (CN) CHINA JUN TRADE BALANCE: $51.0B V $45.0BE; Exports Y/Y: -1.3% v -1.7%e; Imports Y/Y: -7.3% v -4.6%e; May Trade Surplus with the US: $29.9B v $26.9B prior
• (CN) CHINA H1 TRADE BALANCE (CNY): 1.23T, +3.9% y/y; H1 Exports to U.S. -2.6% y/y, Imports from U.S. -25.7% y/y
• (CN) China Jun New Yuan Loans (CNY): 1.66T v 1.70Te (highest level since March)
• (CN) China Jun M2 Money Supply Y/Y: 8.5% v 8.6%e
• (CN) China Jun Aggregate Financing (CNY): 2.26T v 1.90Te

Other

• (IR) Iran President Rouhani: Ready and willing to hold talks with the US if sanctions are lifted and US returns to the 2015 nuclear deal it left last year

North America

• (US) President Trump will not impose uranium quotas; against Commerce Department assessment that America’s use of foreign uranium raises national security concerns
• BA Sources saying that the grounding of the 737 Max could last until January 2020, as Boeing works out fixes and roll out of fixes - US financial press
• (US) Draft regulation put together that will prevent big technology companies from acting as financial institutions or issuing digital currencies, being circulated by Democratic majority that leads the House Financial Services Committee - US press

Europe

• (UK) PM Candidate Johnson will seek trade deal with US as one of his first actions if elected - UK Press
• (UK) Jul Rightmove House Prices M/M: -0.2% v 0.3% prior; y/y: -0.2% v 0.0% prior

Levels as of 01:20ET

• Hang Seng +0.1%; Shanghai Composite +0.3%; Kospi -0.2%; Nikkei225 closed for holiday; ASX 200 -0.5%
• Equity Futures: S&P500 +0.1%; Nasdaq100 +0.0%, Dax +0.2%; FTSE100 +0.1%
• EUR 1.1264-1.1276; JPY 107.80-108.11; AUD 0.7012-0.7036; NZD 0.6684-0.6724
• Commodity Futures: Gold +0.1% at $1,412/oz; Crude Oil -0.4% at $59.98/brl; Copper +0.6% at $2.71/lb

Market movers today

It is a quiet day on the data release front. A speech by Fed's William (voter, neutral) ahead of the crucial Fed meeting at the end of July will be in focus. The market is looking for hints on how forceful the Fed's rate cut will be (25 or 50bp cut). There are set to be more speeches by Fed board members later this week.

In the UK, the leadership contest in the conservative party is heating up ahead of the vote on who should become the next leader of the country. Focus is on the extent to which Boris Johnson can force through a no-Brexit deal by suspending the Parliament.

Later this week, US confidence indicators such as the Philly Fed index will provide fresh signs about the strength of the US companies in July.

Selected market news

Asian equities are mixed this morning as China's economic releases showed that the Chinese economy slowed to the weakest pace since the early 1990s amid the ongoing trade standoff with the US. Real GDP growth slowed to 6.2% y/y in the second quarter. Meanwhile, industrial production in June expanded by 6.3%, stronger than expected by financial market analysts and faster than in May, indicating that a stabilisation is emerging amid the impact of loosening monetary conditions, evident from Friday's monetary numbers. In addition, fixed assets investments were stronger than expected in June.

On Friday, US President Trump criticised China for not purchasing enough US agricultural products as agreed at the G20 meeting in Japan earlier this month. The comment underscores the challenges in finding an agreement between the two sides amid considerable distrust between the two sides. Furthermore, Trump is probably encouraged by the buoyant US stock market, where the S&P 500 broke through the 3000 level for the first time last week.

The Turkish lira is under pressure this morning following Fitch's decision to cut Turkey's sovereign further to Junk over the weekend. Fitch reduced the nation's long-term foreign currency debt rating to BB-, three notches below investment grade and on par with Brazil, Greece and Bangladesh. The ratings company warned of deteriorating institutional independence and economic policy credibility after President Recep Tayyip Erdogan unexpectedly removed Cetinkaya as his central bank chief last week. On top of the concerns of institutional independence in the country, there is a looming risk of tightening US sanctions, as the delivery of parts of a Russian missile system is taking place, which has been sharply criticized by the US. We expect the Turkish Lira to weaken in the coming months against the USD.

For the 24 hours to 23:00 GMT, the EUR rose 0.12% against the USD and closed at 1.1270 on Friday.

On the macro front, the Euro-zone's seasonally adjusted industrial production rose 0.9% on a monthly basis in May, more than market consensus for a gain of 0.2%. In the preceding month, industrial production had recorded a revised drop of 0.4%.

In the US, data showed that the producer price index climbed 1.7% on a yearly basis in June, surpassing market expectations for an advance of 1.6%. In the prior month, the index had registered a rise of 1.8%.

In the Asian session, at GMT0300, the pair is trading at 1.1272, with the EUR trading a tad higher against the USD from Friday's close.

The pair is expected to find support at 1.1248, and a fall through could take it to the next support level of 1.1225. The pair is expected to find its first resistance at 1.1285, and a rise through could take it to the next resistance level of 1.1299.

Amid lack of macroeconomic releases in the Euro-zone today, traders would keep an eye on the US Empire State Manufacturing Index for July, set to release later in the day.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 0.36% against the USD and closed at 1.2573 on Friday.

In the Asian session, at GMT0300, the pair is trading at 1.2568, with the GBP trading slightly lower against the USD from Friday's close.

Overnight data revealed that UK's Rightmove house price index eased 0.2% on a yearly basis in July, declining for the first time in 7-months and following a flat reading in the previous month.

The pair is expected to find support at 1.2533, and a fall through could take it to the next support level of 1.2498. The pair is expected to find its first resistance at 1.2591, and a rise through could take it to the next resistance level of 1.2614.

Amid lack of economic releases in UK's today, traders would focus on global macroeconomic events for further direction.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.58% against the JPY and closed at 107.85 on Friday.

In the Asian session, at GMT0300, the pair is trading at 108.04, with the USD trading 0.18% higher against the JPY from Friday’s close.

The pair is expected to find support at 107.74, and a fall through could take it to the next support level of 107.43. The pair is expected to find its first resistance at 108.41, and a rise through could take it to the next resistance level of 108.77.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.