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Daily Pivots: (S1) 1.6142; (P) 1.6192; (R1) 1.6251; More....

Intraday bias in EUR/AUD remains on the upside for 1.6353 resistance. Break there will resume larger up trend and should target 1.6587 key resistance next. On the downside, break of 1.6051 will extend the correction from 1.6353 lower instead.

In the bigger picture, up trend from 1.3624 (2017 low) is still in progress. Further rise should be seen to retest 1.6587 (2015 high). Decisive break there will resume the long term rally and target 1.7488 fibonacci level. On the downside, break of 1.5886 resistance turned support is need to be the first sign of medium term reversal. Otherwise, outlook will remain bullish in case of deep pull back.

Daily Pivots: (S1) 1.1279; (P) 1.1309; (R1) 1.1364; More...

EUR/CHF's break of 1.1342 resistance suggests that rebound from 1.1178 has resumed. Also, it affirms the case of bullish reversal after hitting 1.1154/98 key support zone. Intraday bias is back on the upside for 1.1452 resistance for confirmation. On the downside, in case of another fall, we'd continue to expect strong support from 11.1154/98 to bring rebound.

In the bigger picture, for now, the price actions from 1.2004 medium term top is seen as a correction only. Downside should be contained by support zone of 1.1198 (2016 high) and 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to complete it and bring rebound. This cluster level is in proximity to long term channel support (now at 1.1207) too. A break of 1.2 key resistance is still expected in the medium term long term. However, sustained break of the mentioned support zone will mark reversal of the long term trend. In that case, 1.0629 key support will be back into focus.

GBPUSD erased some of Friday's significant losses yesterday and still remains above the 23.6% Fibonacci retracement level of the downleg from 1.4375 to 1.2660. The buying interest following the rebound on the 1.2660 support level has shifted the bearish outlook to a neutral one. Moreover, the 20-day simple moving average (SMA) created a bullish crossover with the 40-day SMA in the near-term, indicating a continuation of the upside correction move.

However, the momentum indicators are losing their positive momentum. The RSI indicator is moving slightly lower in the bullish zone, while the MACD oscillator remains flat near the trigger line and above the zero line.

Should the pair manage to strengthen its bullish bias, the next resistance could come around the 38.2% Fibonacci mark of 1.3315. A break above this region would shift the near-term tendency to a more bullish one and open the way towards the immediate resistance of 1.3360 and then until the 1.3475 barrier, taken from the peak on June 7.

If prices are unable to break the upper band of the Bollinger Band in the next few sessions, the risk would shift back to the downside, with the mid-level of the Bollinger band once again coming into focus, as well as the 1.3040 support level. A drop below this zone would signal a resumption of the longer-term downtrend. The next key level support to watch is 1.2780.

Having a look at the bigger view, sterling has been developing in a bearish structure against the greenback since April and it seems set for a possible upside retracement. However, it needs first to surpass the 38.2% Fibonacci before switching to a possible bullish short-term bias.

General Trend:

• Equity markets in Asia trade mixed: Hong Kong and Korea closed for holiday
• BoJ debated the range of yield movements and communication issues in connection with yield curve control (July minutes)
• China Commerce Ministry official said the government is considering zero tariffs on some products
• Last week, China local governments were said to have issued ~CNY379B in debt (record weekly high) - Chinese Press

Headlines/Economic Data

• ASX 200 opened -0.2%
• (AU) Australia corporate regulator AISC: Review found unacceptable reporting delays by finance companies
• (AU) Reserve Bank of Australia (RBA) issues discussion paper on wage growth and technology
• (AU) Australia Treasurer Frydenberg: Final budget outcome for FY17/18 is A$10.1B deficit (smallest deficit in 10 years); affirms on track to return to budget surplus in 2020
• (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: our challenge now is to get inflation up, not down - radio interview
• (NZ) New Zealand Shadow Board: Recommends no change in Reserve Bank of New Zealand (RBNZ) cash rate

China/Hong Kong

• Shanghai Composite opened -0.8%, Hang Seng closed for holiday
• (CN) China NDRC Vice Chairman Lian: Reiterates domestic economy is resilient, to cut taxes and fees to counter impact of trade war
• (CN) China Commerce Ministry (MOFCOM) Vice Commerce Min Fu Ziying: Reiterates normal for US/China to have trade disputes, China is always open to trade talks; talks should be based on principle of mutual respect
• (CN) China Industry Ministry (MIIT) Official: US tariffs on China to damage global supply chain, posing risks for fragmentation and disorder: likelihood of global trade war is rising
• (CN) FTSE Russell said to plan to announce inclusion of China A-shares into index this week - US financial press
• (CN) China PBoC Open Market Operation: Injects CNY60B in 14-day reverse repos v skipped prior: Net: CNY90B drain v CNY110B drain prior
• (CN) China PBoC set yuan reference rate: 6.8440 v 6.8357 prior
• (CN) China said to create a national system to monitor government spending and local government debt; Last week China local governments were said to have issued ~CNY379B in debt (record weekly high) - Chinese Press
• (CN) Regulator: China banking sector total assets as of the end of Aug at CNY255.5T, +6.9% y/y

Japan

• Nikkei 225 opened flat
• (JP) Japan Chief Cabinet Sec Suga: Confirms US/Japan trade talks to occur on Tuesday (Sept 25th)
• (JP) Bank of Japan (BoJ) July 30-31 Monetary Policy Meeting Minutes (2 meetings ago): Most said appropriate to continue easing 'persistently'
• (JP) Japan Aug PPI Services Y/Y: 1.3% v 1.1%e

Korea

• Kospi closed for holiday
• (KR) Pres Trump: a second summit meeting with North Korea's Kim will happen soon - press

Other

• (IN) India Securities & Exchange Board (SEBI) said to tell rating agencies to track bond spreads - Local Media
• S&P: Asia Pacific rating uptrend flattens as risks rise
• (TH) Thailand Aug Manufacturing Production Index Y/Y: 0.7% v 3.1%e; Capacity Utilization: 65.9% v 67.2% prior
• (TW) Taiwan government sells NT$20B in 5-year bonds: avg yield 0.753% v 0.70-0.72%e; bid to cover 1.3x

North America

• US equity markets ended mixed: Dow -0.7%, S&P500 -0.4%, Nasdaq +0.1%, Russell 2000 -0.4%
• Ford: Executive Hinrichs said the company may increase production of cars in China to avoid new tariffs - financial press
• Alphabet [GOOGL]: CEO Pichai said to plan to meet with Republican lawmakers on Friday - US financial press
• (US) US Justice Dept Official: DoJ to meet with over 12 state officials on Tuesday at 10 AM EDT to discuss consumer protection and the technology industry
• Facebook [FB]: The co-founders of Instagram, Kevin Systrom and Mike Krieger, said to step down; expected to leave the company in the coming weeks - NYT

Europe

• (UK) Prime Min May Brexit plan reportedly to be given two weeks to make progress by cabinet - UK press
• (UK) Labour Party spokesperson: UK govt has no credible plan for Brexit; Labour is preparing to vote against any Brexit deal reached by PM May as they're increasingly likely to fail six key requirements
• (UK) Cabinet comes to agreement on compromise regime for migration post Brexit – FT
• (EU) EU Foreign Policy Head Mogherini: EU will establish a legal entity to facilitate legitimate financial transactions with Iran to allow continued trade

Levels as of 01:30ET

• Nikkei 225, +0.1%, ASX 200 -0.1%, Hang Seng closed; Shanghai Composite -0.7%; Kospi closed
• Equity Futures: S&P500 flat; Nasdaq100 -0.1%, Dax flat; FTSE100 -0.1%
• EUR 1.1759-1.1730 ; JPY 112.99-112.74 ; AUD 0.7265-0.7235 ;NZD 0.6653-0.6630
• Dec Gold -0.9% at $1,203/oz; Oct Crude Oil +0.2% at $72.25/brl; Dec Copper -0.7% at $2.804/lb

Market movers today

With no major economic releases today, market focus will be on political developments around the Brexit negotiations and US-China trade dispute as well as ECB speeches.

With Draghi yesterday joining the hawkish chorus from the ECB over the past week, the speeches by Praet and Coeuré today will be scrutinised for nuances in their views on the euro area economy and Draghi's statement about a 'relatively vigorous pick-up in underlying inflation' .

The trade dispute between China and the US could enter a new phase anytime, as Trump called for tariffs on the remaining USD267bn of imports from China after the Chinese government retaliated against Trump's second round of tariffs.

Swedish parliament may hold a Prime Minister confidence vote today.

Selected market news

Markets reacted yesterday on the back of more hawkish ECB comments from President Draghi. Draghi said that the ECB sees ' a relatively vigorous pick-up in underlying inflation' , which is really hawkish from Draghi, as he never chooses words by accident. On the ECB's forward guidance, he said that ' first, the 'through the summer of 2019' formulation is a calendar-based element, which refers to when we anticipate conditions that might warrant a first rate increase' which means the ECB meeting in September next year will definitely be a live meeting (our base case is that the first hike arrives in December 2019). Markets sent European yields and EUR/USD higher on the back of his comments.

After the Salzburg meeting ended terribly, attempts to kick-start the Brexit negotiations have started. German Chancellor Angela Merkel said the EU and the UK must lay out a 'fundamental vision' for the future relationship by November and that while trade should remain as frictionless as possible, it was difficult to avoid some control. Merkel also hinted that technological solutions may help resolve the Irish border issue.

Trump signed his first renegotiated trade deal with South Korea yesterday. While trade analysts say the changes and hence the economic impact is small, it adds to the impression that the Trump administration is trying to close the negotiations with other countries so that it can focus on China, with whom the US has the largest trade deficit. The deal does not change our view that there is a risk the US-China trade conflict may escalate further and that it may get worse before it gets better. It is difficult to see a solution before we are well into 2019.

For the 24 hours to 23:00 GMT, the EUR rose 0.09% against the USD and closed at 1.1750, after the European Central Bank Chief, Mario Draghi stated that he expects “vigorous” pickup in Eurozone's inflation.

On the macro front, Germany's Ifo current assessment index eased to a level of 106.4 in September, overshooting market expectations for a drop to a level of 106.0. In the previous month, the index had registered a revised reading of 106.5. Meanwhile, the business expectations index slid to a level of 101.0 in September, higher than market expectations for a fall to a level of 100.5. In the preceding month, the index had recorded a revised reading of 101.3. Further, the nation's Ifo business climate index declined to a level of 103.7 in September, more than market consensus for a drop to a level of 103.2. The index had registered a revised level of 103.9 in the prior month.

In the US, data showed that the Dallas Fed manufacturing business index unexpectedly eased to a level of 28.1 in September, defying market expectations for an advance to a level of 31.0. The index had registered a level of 30.9 in the prior month. Moreover, the nation's Chicago Fed national activity index remained steady at 0.18 in August, defying market expectations of a rise to 0.20.

In the Asian session, at GMT0300, the pair is trading at 1.1738, with the EUR trading 0.10% lower against the USD from yesterday's close.

The pair is expected to find support at 1.1703, and a fall through could take it to the next support level of 1.1668. The pair is expected to find its first resistance at 1.1794, and a rise through could take it to the next resistance level of 1.1850.

Amid lack of macroeconomic releases in the Euro-zone, investors would focus on the US house price index for July, followed by the Richmond manufacturing index and consumer confidence index, both for September, due to release later in the day.

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

For the 24 hours to 23:00 GMT, the GBP rose 0.28% against the USD and closed at 1.3115, amid hopes for a UK-EU Brexit deal.

In the economic news, UK's CBI trends total orders declined to a level of -1.0 in September. The total orders had registered a level of 7.0 in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.3106, with the GBP trading 0.07% lower against the USD from yesterday's close.

The pair is expected to find support at 1.3057, and a fall through could take it to the next support level of 1.3008. The pair is expected to find its first resistance at 1.3161, and a rise through could take it to the next resistance level of 1.3216.

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

For the 24 hours to 23:00 GMT, the USD rose 0.19% against the JPY and closed at 112.79.

In the Asian session, at GMT0300, the pair is trading at 112.84, with the USD trading slightly higher against the JPY from yesterday's close.

The minutes of the Bank of Japan's (BoJ) September monetary policy meeting showed that the economy continues to expand at a moderate pace and policymakers expect Japan's economy to grow above potential in fiscal 2018. Additionally, the central bank expects annual inflation to rise gradually towards its 2.0% target. However, members warned that sentiments could worsen if US-China trade friction intensifies.

The pair is expected to find support at 112.53, and a fall through could take it to the next support level of 112.21. The pair is expected to find its first resistance at 113.07, and a rise through could take it to the next resistance level of 113.29.

Going ahead, investors would await Japan's leading index and coincident index, scheduled to release in a while.

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

For the 24 hours to 23:00 GMT, the USD rose 0.52% against the CHF and closed at 0.9647.

Data showed that total sight deposits rose to a level of CHF577.6 billion in the week ended 21 September, compared to a level of CHF577.1 billion in the previous week.

In the Asian session, at GMT0300, the pair is trading at 0.9663, with the USD trading 0.17% higher against the CHF from yesterday’s close.

The pair is expected to find support at 0.9608, and a fall through could take it to the next support level of 0.9552. The pair is expected to find its first resistance at 0.9691, and a rise through could take it to the next resistance level of 0.9718.

In absence of key economic releases in Switzerland today, traders would keep an eye on global macroeconomic releases 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 rose 0.16% against the CAD and closed at 1.2951.

In the Asian session, at GMT0300, the pair is trading at 1.2960, with the USD trading 0.07% higher against the CAD from yesterday’s close.

The pair is expected to find support at 1.2924, and a fall through could take it to the next support level of 1.2888. The pair is expected to find its first resistance at 1.2981, and a rise through could take it to the next resistance level of 1.3002.

With no macroeconomic releases in Canada today, investors would look forward to global macroeconomic releases for further directions.

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