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Chinese Foreign Ministry spokesman Geng Shuang said at a regular press briefing that it received the invitation from the US for restarting trade talks. And the countries are now in discussion about the details. Geng said that "China has always held that an escalation of the trade conflict is not in anyone's interests. In fact, from last month's preliminary talks in Washington, the two sides' trade talk teams have maintained various forms of contact, and held discussions on the concerns of each side."

Ministry of Commerce spokesman Gao Feng also said the two side are discussing details for future talks. And, he added that trade escalation is not in interest of either country. But he also emphasized that trade deficit with US is due to its low saving and control on export to China. He hoped that US will not find excuses for trade protectionism and urged it to comply with WTO rules.

Pivot (invalidation): 111.15

Our preference Long positions above 111.15 with targets at 111.65 & 111.75 in extension.

Alternative scenario Below 111.15 look for further downside with 111.00 & 110.85 as targets.

Comment The RSI calls for a new upleg.

Pivot (invalidation): 1.3020

Our preference Long positions above 1.3020 with targets at 1.3080 & 1.3110 in extension.

Alternative scenario Below 1.3020 look for further downside with 1.2980 & 1.2950 as targets.

Comment Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

Pivot (invalidation): 1.1610

Our preference Long positions above 1.1610 with targets at 1.1650 & 1.1670 in extension.

Alternative scenario Below 1.1610 look for further downside with 1.1585 & 1.1570 as targets.

Comment The RSI is bullish and calls for further upside.

The Euro maintains bullish tone above 30SMA (1.1560) and holding in green for the fourth straight day, but upside remains capped by thin daily cloud. Risk of another upside failure exists as 14-d momentum on daily chart is weakening and about to penetrate negative territory and daily cloud turns lower on Friday.

Bullish scenario requires close above initial barriers at 1.1650 zone to signal continuation expose falling 100SMA (1.1680) and key barriers at 1.1733/50. Cluster of converging daily MA’s (10/20/55) at 1.1606/14 zone marks solid support, guarding pivotal 30SMA, loss of which would expose key Fibo support at 1.1517 (50% of 1.1300/1.1733 rally).

ECB meeting today is the key event for Euro. Although, no changes in the policy are expected, markets will be looking for signals about start of reducing central bank’s massive monetary stimulus.

The Euro could come under pressure on dovish tone from ECB’s post-meeting message and could risk violation of 1.1517, with clear break here to bring bears fully in play for further retracement of 1.1300/1.1733 rally.

Res: 1.1650, 1.1680, 1.1718, 1.1733
Sup: 1.1614, 1.1606, 1.1560, 1.1526

The USD/JPY is currently range bound but the CPI data could move the cross easily outside the range. The CPI represents the change in the price of goods and services purchased by consumers. Consumer prices account for a majority of overall inflation.

Technically the USD/JPY should drop as more confluence is on the bearish side. A rejection from the POC 111.45-55 below the red trend line should lead the pair down to 111.10, 110.95 and 110.71. However a bouce above 111.60 is bullish with 111.83 and 112.45 as targets.

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Monthly Camarilla Pivot (Very Strong Daily Resistance)

D L3 – Monthly Camarilla Pivot (Daily Support)

D L4 – Monthly H4 Camarilla (Very Strong Daily Support)

POC - Point Of Confluence (The zone where we expect the price to react - aka the entry zone)

Asian markets are adding after reaching 14-month lows the day before. Positive markets are supported by the reports about China’s invitation to trade negotiations. Previous negotiations did not bring any results and led to a tightening of the rhetoric and tariff expansion. However, the positive markets are fuelled by the sentiment that President Trump’s administration will be slightly more inclined to reach an agreement, having faced a public coalition of 85 industrial groups in the US that oppose the trade tariffs.

However, an equally important factor is the 'fatigue' of the market after a prolonged sale. MSCI for Asia ex Japan adds 0.5% this morning after touching the oversold area on RSI. Often, the exit from this area increases the craving for profit by speculators, oriented on technical factors that could support the market in the next few days. Futures on Heng Seng 50 add 1.1% per day. After a long sale, the fixation of profit from the weakening can develop a rebound up to the rest of this week, although it is not yet possible to talk about a fundamental reversal to the growth for EM markets.

In addition, weak U.S. PPI data have a moderately positive impact on the markets. The release below expectations has lowered the fears that the Fed will have to go ahead with raising the rates to suppress inflationary risks having pressed on the dollar and supported the demand for risks.

All of the factors above (positive expectations from trade negotiations, short-term oversold indices and weak statistics on inflation in the USA) are not capable to form a sharp rebound separately, but their combination helps the markets to form the ground.

European Union Chamber of Commerce in China, also carried out a survey regarding US-China tariff war. Results showed that 53.9% responding said US tariffs on China affected their company. 42.9% said China tariff on US products affected their company. There is, roughly 11% difference. The Chamber said that "the high rate of negative views on either side of the trade war is emblematic of the degree of interconnectivity in the global economy." But at the same time 72.5% said they're taking no action to cope with the trade war, but just monitoring the situation.

Mats Harborn, president of the European Union Chamber of Commerce in China said "the effects of the US-China trade war on European firms in China are significant and overwhelmingly negative." The Chamber shared the concerns regarding China's trade and in vestment practices. However, Harborn warned that "continuing along the path of tariff escalation is extremely dangerous". He added "it threatens to dismantle the entire global, rules-based system at a time when we should be working together to modernise it."

Full release here.

The US dollar fell slightly after the Federal Reserve released the Beige Book yesterday. The Beige Book is a publication by the Fed that highlights the current economic situation across 12 Fed districts. The document showed that officials believe that the economy is doing well with the tighter labour market leading to significant skilled worker shortages.

The document also highlighted that business and consumer confidence was rising across the country. Many business executives, however, pointed to concerns about trade as the US and its largest trading partners confront each other. The Beige Book was released a few hours after data from the Census Bureau found that personal incomes rose to more than $60,000 in 2017. This was the highest level recorded as poverty rates declined significantly.

The dollar movement came as Fed governor Lael Brainard said that further gradual interest rate rises were likely to be appropriate over the next few years due to the current strength of the economy. With unemployment at 3.9% and inflation near the Fed’s 2.0% goal hikes can be expected.

The euro and pound were little moved against the USD as traders wait for monetary policy decisions from the ECB and BoE. The BoE will be the first bank to release its interest rate decision at 1100 (GMT). Traders don’t expect any changes on monetary policy. However, they will look at the number of officials who will favour tightening. Thirty minutes later, the ECB will release its decision. Still, traders don’t expect any changes from the ECB. They will look ahead to the statement for clarity about the QE and interest rates hikes.

The Aussie jumped in the Asian session after Australia released better-than-expected employment numbers for August. During the month, 44K people were employed, which was higher than the 16.5K traders were expecting. It was a jump from July’s job losses of 4.3K. The participation rate moved higher to 65.7%, which was higher than the 65.6% traders were expecting. The unemployment rate remained unchanged at 5.3%. These numbers were positive for an economy that is facing a challenging drought.

EUR/USD

The euro moved up slightly against the dollar during the Asian session. It is now trading at 1.1635, which is slightly above the upper side of the triangle line shown below. It is also above the 61.8% Fibonacci Retracement level and along the important resistance line of 1.1658. Today, the pair will remain within this range as traders wait for the ECB.

AUD/USD

The AUD/USD pair reached the lowest level since 2016 yesterday. Today, the pair jumped after positive employment numbers from Australia. It is now trading at 0.7190, which is the highest level since Friday last week. This level is along the 23.6% Fibonacci Retracement line and above the 28 and 14-day EMA. With the two EMAs crossing one another, it could be an indication that an upward trend is beginning.

EUR/GBP

Today, the ECB and BoE will release their monetary policy decision. This means that the EUR/GBP pair will be very active today. On Friday, the pair crossed the important support level of 0.8945. This was a major trendline that the pair has been following since April. This week, it has stayed below the level and yesterday, it reached a low of 0.8870. Today, it is trading at 0.8920. On the four-hour chart below, the 100 and 50-day EMA crossed over, which is an indication that the downward momentum could continue. However, this will depend on the monetary policy from the BoE and ECB.

A joint survey by AmCham China and AmCham Shanghai showed that over nearly two-thirds of survey respondents experienced negative impact from US-China tariff war. Moreover, for additional US tariffs, 74.3% expected negative impact and 47.2% expected "strong negative impact. For additional China tariffs, 67.6% expected negative impact and 38.2% expected "strong negative impacts". Increased cost of manufacturing (47.1) and decreased demand for products (41.8%) were the to most significant downside of the tariffs.

William Zarit, Chairman of AmCham China said "the White House has threatened to fire the next barrage of tariffs at $200 billion more Chinese goods, expecting with this onslaught, or subsequent ones, China will wave a white flag. But that scenario risks underestimating China's capability to continue meeting fire with fire."

Eric Zheng, Chairman of AmCham Shanghai warned that "tariffs are already negatively impacting U.S. companies and the imposition of a proposed $200 billion tranche will bring a lot more pain". And "if almost a half of American companies anticipate a strong negative impact from the next round of U.S. tariffs, then the U.S. administration will be hurting the companies it should be helping."

The survey was conducted between August 29 and September 5, 2018. Over 430 companies responded.

Press release here and survey results here.