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GBPUSD - The pair backed off higher prices after failing to follow through on the back of its Monday gain on Tuesday. This development has turned the immediate risk lower. On the downside, support lies at the 1.2850 level where a break will turn attention to the 1.2800 level. Further down, support lies at the 1.2750 level. Below here will set the stage for more weakness towards the 1.2700 l0evel. Conversely, resistance stands at the 1.3050 with a turn above here allowing for more strength to build up towards the 1.3100 level. Further out, resistance resides at the 1.3150 level followed by the 1.3200 level. On the whole, GBPUSD faces pullback risk on price failure.

There was appetite for the British Pound on Tuesday morning following official data that showed UK wage growth accelerating faster than expected. However, gains were later surrendered as investors redirected their focus back toward Brexit developments.

UK wage growth surprised to the upside by rising 2.9% in the three months to July while the unemployment rate remained steady at 4% - its lowest level since March 1975. Although the jobs report illustrates an encouraging picture of the UK economy, this is unlikely to convince the Bank of England to raise interest rates anytime soon. The central bank is poised to remain on hold until the thick smog of uncertainty created by Brexit fully dissipates.

Sterling’s extreme sensitivity to Brexit headlines has clearly become a dominant market theme. The explosive price action witnessed yesterday following encouraging comments from the EU’s chief Brexit negotiator is a testament to this fact. While a renewed sense of optimism over a Brexit deal possibly secured within 6-8 weeks could push Sterling higher, any hiccups during the talks are likely to expose the currency to downside shocks.

Looking at the technical picture, the GBPUSD is turning bullish on the daily charts. Prices are trading above the daily 20 Simple Moving Average while the MACD is in the process of crossing to the upside. Bulls will remain in control as long as the GBPUSD is able to keep above the 1.3000 level. However, a breakdown below 1.3000 could inspire a decline back towards 1.2940.

Across the Atlantic, the Dollar rebounded against a basket of major currencies as rising global trade tensions boosted its safe-haven demand. The Dollar is likely to remain king across currency markets on the back of US rate hike expectations and the bullish sentiment towards the US economy. Taking a peek at the technical picture, the Dollar Index could challenge 95.80 once bulls are able to secure a solid daily close above 95.50.

Daily Pivots: (S1) 0.7097; (P) 0.7115; (R1) 0.7131; More...

AUD/USD's decline resumes after brief consolidation and reaches as low as 0.7086 so far. Intraday bias remains on the downside. Current fall is part of the down trend from 0.8135. Next target is 161.8% projection of 0.7452 to 0.7201 from 0.7361 at 0.6955. Break will target key support level at 0.6826. On the upside, above 0.7131 minor resistance will turn intraday bias neutral and bring consolidations first, before staging another decline.

In the bigger picture, rebound from 0.6826 (2016 low) is seen as a corrective move that should be completed at 0.8135. Fall from there would extend to have a test on 0.6826. There is prospect of resuming long term down trend from 1.1079 (2011 high). Current downside momentum as seen in daily and weekly MACD support this bearish case. Firm break of 0.6826 will target 0.6008 key support next (2008 low). On the upside, break of 0.7361 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will remain bearish even in case of strong rebound.

Market sentiments seem to be hurt by news that China is set to seek WTO backing next week to slap sanctions on the US. The sanctions would be for non-compliance with a WTO ruling over US dumping duties, which China won in 2016. The case was then confirmed in 2017 after the US appealed. Some took that as a signal that China is not going to back down. But indeed, neither side expressed any message that they're going to soften their stance. Trump is ready to impose 25% tariffs on USD 200B in Chinese import any time, as public hearing ended last week already. China is also well prepared for retaliation on USD 60B of US goods, with tariffs from 5% to 25%. Trump is also ready to start the process for tariffs on another USD 267B in Chinese products. Then no more products to tariff, China would seek other measures to counter. The plot is already written, at least until US mid-term elections.

With trade war back in the headlines, Dollar is trading as the strongest one for today, followed by Swiss Franc. Canadian Dollar is the third strongest. Foreign Minister Chrystia Freeland is back in Washington to restart trade talk with the US. But there is little expectation for breakthrough. Sterling was lifted by stronger than expected wage growth earlier today but it's now trading in red against all others as rally lost steam. Australian Dollar and New Zealand Dollar are the next weakest.

In other markets, major European indices are all in red today. FTSE is currently down -0.56%, DAX down -0.65%, CAC down -0.39%. German-Italian yield spread continues to widen, signaling calmness regarding Italy's deficit. In Asia, Nikkei gained 1.3% to 22664.69. But Hong Kong HSI lost -0.72% while Singapore Strait Times dropped -0.35%. In particular, China Shanghai SSE dropped -0.18% to 2664.8, below August's lowest close at 2668.96. Key support level at 2638.30 (2016 low) looks rather vulnerable. And it seems, investors are preparing themselves well for escalation in US-China trade war.

UK wage growth picked up more than expected

Sterling extends this week's strong rally as boosted by stronger than expected wage growth. Average weekly earnings including bonus rose 3.6% 3moy in July, up from 2.4% and beat expectation of 2.5%. Weekly earnings excluding bonus rose 2.9% 3moy, accelerated from 2.7% and beat expectation of 2.7%. Unemployment rate was unchanged at 4.0% as expected. In August, claimant count rose 8.7k, above expectation of 3.6k.

ONS statistician David Freeman said that "earnings have grown faster than prices for several months, especially looking at pay excluding bonuses". Also, "the labour market remains robust, with the number of people working still at historically high levels."

BoE Governor Carney extends his term till Jan 2020

The UK Treasury announced today that BoE Governor Mark Carney will extend his term until January 2020. Carney has originally planned to step down in June 2019. Chancellor of Exchequer Philip Hammond said in the release that I'm delighted that the Governor has agreed to stay in his role for a further seven months to support a smooth exit from the European Union and provide vital stability for our economy. In the same release, Jon Cunliffe was re-appointed as Deputy Governor till October 2023.

Carney said in a letter to Hammond saying "I recognize that during this critical period, it is important that everyone does everything they can to support a smooth and successful Brexit." And, "accordingly, I am willing to do whatever I can in order to promote both a successful Brexit and an effective transition at the Bank of England and I can confirm that I would be honored to extend my term to January 2020."

UK PM May: Salzburg EU meeting a staging post for Chequers Brexit plan

According to UK Prime Minister Theresa May's spokesman, she will travel to Salzburg next Wednesday to attend an EU informal council. And, that will be "both a staging post in exit negotiations and an opportunity to engage with the rest of the EU on shared challenges".

Also, referring to the Chequers plan, "it will also be the first time the leaders will discuss together the UK government's white paper which put forward a series of credible and serious proposals."

German ZEW economic sentiment jumped to -10.6 as considerable fears diminished somewhat

German ZEW Economic Sentiment improved to -10.6 in September, up from -13.7 and beat expectation of -13.4. Current Situation index rose to 76.0, up from 72.6, above expectation of 72.3. Eurozone ZEW Economic Sentiment rose to -7.2, up from -11.1, beat expectation of -14.9. Current Situation index rose 1.7 pts to 31.7.

ZEW President Professor Achim Wambach noted in the release that "during the survey period, the currency crises in Turkey and Argentina intensified, while German industrial production and incoming orders were surprisingly low in July." However, "despite these unfavourable circumstances, economic expectations for Germany improved slightly." And "the considerable fears displayed by the survey participants regarding the economic development have diminished somewhat, which may in part be attributable to the new trade agreement between the USA and Mexico".

Also from Eurozone, employment rose 0.4% qoq, 1.5% yoy in Q2 versus expectation of 0.4% qoq, 1.4% yoy.

German FM Scholz urged to complete EU banking union this year

German Finance Minister Olaf Scholz urged EU to make progress on banking union this year. He said in the Bundestag lower house of parliament that "we must take action so that we can act in a new crisis – not everything has been done." Scholz also said Germany and France laid a foundation with an agreement in Meseberg in June. And so, "we can quickly take the last steps to make Europe stable and to equip ourselves for the next crisis".

He added that 'have the task of completing a banking union and we should fulfil the most important steps this year." Under the current EU plan, the Single Resolution Board will be given a clearer mandate to set the level of capital buffers that banks should hold against the risk of failure. However, another pillar of the union, a common bank deposit insurance scheme, is not agreed upon yet.

Australia NAB business confidence hit 2-year low, but business condition rebounded

Australia NAB Business Confidence dropped to 4 in August, down from 7and missed expectation of 5. That's a two year low since August 2016, and it's below long-run average. Confidence is lowest in wholesale and manufacturing, highest in mining and construction. And, confidence declined across all states except Western Australia and Queensland in the month, with New South Wales and Victoria continue to lag.

However, Business Condition rose to 15, up from 12 and matched expectations. Results were driven by increases in the profitability and trading indices. Forward looking indicators also rebounded a little in the month. Surveyed price and wage variables continue to show a gradual building of inflationary pressures.

AUD/USD Mid-Day Outlook

Daily Pivots: (S1) 0.7097; (P) 0.7115; (R1) 0.7131; More...

AUD/USD's decline resumes after brief consolidation and reaches as low as 0.7086 so far. Intraday bias remains on the downside. Current fall is part of the down trend from 0.8135. Next target is 161.8% projection of 0.7452 to 0.7201 from 0.7361 at 0.6955. Break will target key support level at 0.6826. On the upside, above 0.7131 minor resistance will turn intraday bias neutral and bring consolidations first, before staging another decline.

In the bigger picture, rebound from 0.6826 (2016 low) is seen as a corrective move that should be completed at 0.8135. Fall from there would extend to have a test on 0.6826. There is prospect of resuming long term down trend from 1.1079 (2011 high). Current downside momentum as seen in daily and weekly MACD support this bearish case. Firm break of 0.6826 will target 0.6008 key support next (2008 low). On the upside, break of 0.7361 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will remain bearish even in case of strong rebound.

Economic Indicators Update

Here are the latest developments in global markets: 

• FOREX: An upbeat employment report in the UK helped pound/dollar to briefly rally toward a fresh five-week high of 1.3086 during the early European session as the data showed that average weekly earnings picked up speed to 2.6% y/y in July, surpassing the forecast of 2.4%. Excluding bonuses, British wages recorded a stronger growth as well, expanding at 2.9% compared to the 2.8% estimate and the previous mark of 2.7%. Regarding the number of people claiming unemployment benefits, this increased by 8.7k, by less than analysts thought, while the unemployment rate remained unchanged at 4.0% as expected. The pair, however, lost ground soon thereafter, spiking down to 1.2987 before it rebounded to 1.3035 (+0.08%) with Brexit hopes for a deal before November providing support to the market. In the eurozone, the German ZEW Economic Sentiment Index for the month of September came in better than expected as well, though euro/dollar shrugged off the numbers and continued to erase earlier gains which led the pair to an intra-day high of 1.1643. Euro/dollar was last seen at 1.1595 (-0.03%). Meanwhile in Italy, the Minister of Economy provided further relief to investors by saying that the government will go ahead with reforms while reducing the debt ratio. Still, the euro was unable to gain on the comments, as markets remained focused on the US-Sino trade dispute which shows no sign of calm. Based on WTO sources, China prepares to ask the institution for authorization to impose sanctions against the US, probably in case Washington unleashes tariffs on $200 billion Chinese imports as it has warned. Dollar/yen pulled back to 111.38 (+0.25%) after unlocking 1-week highs at 111.75. Dollar/loonie eased slightly to 1.3151 (-0.08%), while the dollar index weakened marginally to 95.10 (-0.05%). In the antipodean currencies, aussie/dollar and kiwi/dollar changed hands lower at 0.7104 (-0.18%) and 0.6522 (-0.08%) respectively, both holding near 2 ½-year lows.
• STOCKS: European stocks were in negative territory at 1000 GMT after a mixed session in Asia, as trade tensions kept investors nervous. The pan-European STOXX 600 and the blue-chip Euro STOXX 50 declined by 0.44% and 0.50% respectively. The Italian FTSE MIB dropped below one-month highs, losing 0.50% on the day, while the German DAX and the UK’s FTSE 100 both fell by 0.70%. Futures tracking US indices were in the red, pointing to a negative open.
• COMMODITIES: Crude oil prices were heading up early in the European session, supported by speculation that renewed US sanctions against Iran in November could limit oil supply and thus add upside pressure to the market. Washington has advised other countries to cut imports from Iran, with Japan, India and South Korea showing signs of obeying. Yesterday, the US Energy Secretary held a meeting with his Saudi Arabian counterpart in Washington, with the US Energy Department asking the Trump Administration to encourage big-oil producing countries to keep output levels high ahead of the sanctions. WTI crude was last seen at $67.63/barrel (+0.13%), while Brent stood at $77.80 (0.54%) a barrel. In precious metals, gold slipped to $1,193.8/ounce (-0.13%).

Day Ahead: JOLTs Job Openings awaited; Canadian housing starts on the agenda

With the economic calendar lacking major releases, the trade turmoil will remain front and center as China has no intention to give up the trade game despite Trump’s recent threats. Trump threatened to escalate tensions by targeting $267 billion Chinese imports on top of the $200 billion of Chinese products which are expected to come into effect soon.

As of data releases today, US JOLTs Job Openings will gather some attention at 1400 GMT, while in Canada, the Mortgage and Housing Corporation will deliver figures on housing starts for the month of August at 1215 GMT. The number of new constructions is anticipated to tick higher by 4,000 to 210,300.

Later at 2030 GMT, the focus will turn to the API weekly oil report which will indicate changes in US crude inventories in the week ending September 3. Crude prices and the oil-linked loonie are expected to face some volatility in the wake of the data.

Brexit will also keep investors busy following worrisome remarks by the former Conservative leader William Hague on Tuesday, who said that Britain will face the “most serious constitutional crisis” for at least a century if the Chequers-Brexit deal fails. On the other hand on Monday the European Union’s chief Brexit negotiator Michel Barnier raised optimism that an agreement with the UK is “realistic” and “possible” within eight weeks.

In terms of public appearances, at 1245 GMT Riksbank Governor Stefan Ingves will discuss the Swedish central bank’s monetary policy at an event arranged by Goldman Sachs. Moreover, Russia’s President Vladimir Putin will have a meeting with Chinese President Xi Jinping.

Entering into US session, while Sterling remains the strongest one for the week, it continues to ignore solid economic data. Pound's rally is losing some steam with Swiss Franc and Canadian Dollar trading as the strongest one for today. Dollar is following as the third strongest. ON the other hand, Japan is the weakest one, followed by Australian and then New Zealand Dollar. The markets lack clear direction after the Brexit run. And investors are probably waiting for new developments in trade cautiously.

European stocks are back under selling pressure today with FTSE trading down -0.68%, DAX down -0.68% and CAC down -0.37% at the time of writing. US futures also point to lower open. In Asia, Nikkei gained 1.3% to 22664.69. But Hong Kong HSI lost -0.72% while Singapore Strait Times dropped -0.35%.

In particular, China Shanghai SSE dropped -0.18% to 2664.8, below August's lowest close at 2668.96. Key support level at 2638.30 (2016 low) looks rather vulnerable. And it seems, investors are preparing themselves well for escalation in US-China trade war.

According to UK Prime Minister Theresa May's spokesman, she will travel to Salzburg next Wednesday to attend an EU informal council. And, that will be "both a staging post in exit negotiations and an opportunity to engage with the rest of the EU on shared challenges".

Also, referring to the Chequers plan, "it will also be the first time the leaders will discuss together the UK government's white paper which put forward a series of credible and serious proposals."

The UK Treasury announced today that BoE Governor Mark Carney will extend his term until January 2020. Carney has originally planned to step down in June 2019. Chancellor of Exchequer Philip Hammond said in the release that I'm delighted that the Governor has agreed to stay in his role for a further seven months to support a smooth exit from the European Union and provide vital stability for our economy.

In the same release, Jon Cunliffe was re-appointed as Deputy Governor till October 2023.

Carney said in a letter to Hammond saying "I recognize that during this critical period, it is important that everyone does everything they can to support a smooth and successful Brexit." And, "accordingly, I am willing to do whatever I can in order to promote both a successful Brexit and an effective transition at the Bank of England and I can confirm that I would be honored to extend my term to January 2020."

Notes/Observations

• Improved risk sentiment continued in for bulk of session; but soured a bit just ahead of the NY morning
• UK wage data beats expectations and justifies recent BOE rate hike
• China to ask WTO for authorization to impose trade sanctions on $8.4B worth of exports stemming from a 2013 dispute (Note: years of legal wrangling seen forthcoming here)

Asia:

• China PBoC says banking liquidity is at ‘reasonable and plentiful’ level; skips OMO for 15th straight session
• Japan Fin Min Aso reiterated view that did not want to pursue a bilateral FTA with the US
• Japan Economy Min Motegi: US and Japan were still negotiating a date for bilateral trade talks, if they were held it would be before the Abe-Trump summit (expected on Sept 25th). US and Japan had some differences on trade
• White House Press Sec Sanders: Trump has received second letter from North Korea Leader Kim about scheduling second meeting; US was open to it

Europe:

• UK Tory 'Eurosceptics' said to have been unable to reach agreement on alternate Brexit plan for UK exit from EU
• Brexit supporters in UK said to be preparing for a new fight over EU laws. Preparing over how EU laws will apply in Britain after it leaves the EU (Reminder: On Sept 6th Group of Brexiteers in PM May's cabinet said to advocate for new Brexit strategy based on EU
• Canada free trade deal rather than make new concessions if EU dismisses Chequers plan)

Americas:

• Mexico Fin Min said to be prepared to sign bilateral trade agreement with the US if the US could not reach a deal with Canada
• Fed's Bostic (dove, voter): tariffs could start to be a bind for US businesses; inflation might ramp up due to tariff impacts

Energy:

• Russia Energy Min Novak: OPEC and allies to discuss cooperation agreement post 2018 in Algeria; OPEC+ had the tools to use quotas if the market needs

Economic Data:

• (FR) France Q2 Final Private Sector Payrolls Q/Q: 0.1% v 0.2%e; Total Payrolls: 0.0% v 0.2%e
• (NO) Norway July GDP M/M: -0.2%; Mainland GDP M/M: 0.2%
• (RO) Romania Aug CPI M/M: 0.3% v 0.1%e; Y/Y: 5.1% v 4.8%e
• (JP) Japan Aug Preliminary Machine Tool Orders Y/Y: 5.3% v 13.1% prior
• (HU) Hungary Aug CPI M/M: +0.1% v -0.1%e; Y/Y: 3.4% v 3.3%e (annual pace remains at 5-year high)
• (NO) Norway Aug Region Survey; Output Past 3 Months: 1.35 v 1.23 prior, Output Next 6 Months: 1.46 v 1.47 prior
• (UK) July Average Weekly Earnings 3M/Y: 2.6% v 2.4%e v; Weekly Earnings (ex-bonus) 3M/Y: 2.9% v 2.8%e
• (UK) Aug Jobless Claims Change: +8.7K v +10.2K prior; Claimant Count Rate: 2.5% v 2.5% prior
• (UK) July ILO Unemployment Rate: 4.0% v 4.0%e; Employment Change 3M/3M: +3K v +10Ke
• (DE) Germany Sept ZEW Current Situation: 76.0 v 72.0e; Expectations Survey: -10.6 v -13.5e
• (EU) Euro Zone Sept ZEW Expectations Survey: -7.2 v -11.1 prior

Fixed Income Issuance:

• (ES) Spain Debt Agency (Tesoro) opened its book to sell Nov 2033 Inflation-linked bonds; guidance seen -135-137bps to SPGB
• (NL) Netherlands Debt Agency (DSTA) sold €875M vs. €0.75-1.25B indicated in 4% Jan 2037 DSL; Yield: 0.850% v 0.298% prior
• (ES) Spain Debt Agency (Tesoro) sold total €4.54B vs. €4.0-5.0B indicated range in 6-month and 12-month Bills
• (ZA) South Africa sold total ZAR2.4B vs. ZAR2.4B indicated in 2030, 2031 and 2048 bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.5% at 373.6, FTSE -0.6% 7233, DAX -0.9% at 11879, CAC-40 -0.2% at 5257, IBEX-35 -0.3% at 9240, FTSE MIB -0.7% at 20775, SMI -0.1% at 8919, S&P 500 Futures -0.2%]
• Market Focal Points/Key Themes: European Indices trade lower across the board as the downtrend continues tracking US futures lower after a mixed session yesterday. On the corporate from Amer Sports was among the biggest gainers on the Eurostoxx 600 following reported bid interest; Aryzta also gains on a standby underwriting agreement for €800M capital raise. Elsewhere ArelorMittal declines as its reported the company has raised its offer for Essar Steel, and Orexo gains sharply in Sweden after wining a rivival ruling for patent on Zubsolv Opiod addiction drug. Looking ahead notable earners include Peak Resorts and Francesca Holdings.

Movers

• Consumer Discretionary Aryzta [ARYN.CH] +14% (standby underwriting agreement for €800M capital raise), Amer Sports [AMEAS.FI] +12% (Reported bid interest from Anta Sports)
• Industrials Elementis [ELM.UK] -3.2% (To cut acquisition price for Mondo Minerals to $500M from $600M; announces ~$230M rights issue to fund the transaction)
• Materials Arcelor Mittal [MT.NL] -2.2% (Raises offer for Essilor Steel)
• Healthcare Orexo [ORX.SE] +32% (Wins revival ruling for patent on Zubsolv opioid addiction drug (buprenorphine and naloxon)
• Technology Midwich Group [MIDW.UK] -5.5% (Earnings)

Speakers

• Sweden Central Bank (Riksbank) First Deputy Gov Af Jochnick: Swedish economy was doing well but difficult to get inflation to 2%. Underlying inflation continued to be quite weak but view the overall trend as rising. Reiterated view that 1st potential rate hike could come in Dec-Feb period
• German Fin Min Scholz: Consequences of financial crisis still being felt; crucial steps on banking union needed this year
• Italy Fin Min Tria reiterated stance that both citizens income and tax cuts could be done gradually. Wanted to close the growth gap between Italy and Euro region and this could not be done without deficit spending
• Russia Econ Min Oreshkin: RUB currency (Ruble) was considerably below its equilibrium level at this time. Ruble currency might target 63-64 area in the medium term. Raised its short-term capital outflow forecast but saw no reason to change to long-term outflows forecast.
• China to ask WTO for authorization to impose trade sanctions on the US due to non-compliance of the 2017 trade dispute ruling (**Note: Request relates to 2013 dumping dispute issue)

Currencies

• Safe-haven flows continued to reverse for the USD and JPY-related pairs as improved risk sentiment continued to reverberate as trade and Brexit fears dissipated for the time being - Over the past 24 hours the Brexit headlines appear more positive as EU’s seemed more willing to compromise to achieve an agreement with the UK.
• UK wage data beat expectations and again justified the recent BOE rate hike. GBP/USD initially trading above 1.3070 before some retracement
• The continued conciliatory tone from Italian officials on the 2019 budget matters also aiding sentiment. EUR/USD higher by 0.3% to test 1.1625. Dealers note that 1.1750 will be the key resistance level should the EUR rally continue.

Fixed Income

• Bund Futures trades at 159.44 down 30 ticks with the focus on Thursday's ECB meeting. Resistance moves to 161.82 then 163. A downside break of 159.85 sees 158.69 initially.
• Gilt futures trades at 121.73 down 22 ticks following the move in Treasuries. Continued support at 122.50, with a continued move higher targeting 123.93 then 124.00.
• Tuesday 's liquidity report showed Monday's excess liquidity fell from €1.921T to €1.901T. Use of the marginal lending facility rose from €35M to €41M.
• Corporate issuance saw 6 issuers raise $8.6B in the primary market

Looking Ahead

• 05.30 (UK) Weekly John Lewis LFL sales data
• 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 (BE) Belgium Debt Agency (BDA) to sell €2.4-2.8B in 3-month and 12-month bills
• 05:30 (UK) DMO to sell £2.5B in new conventional 1.75% Jan 2049 Gilts
• 06:00 (US) Aug NFIB Small Business Optimism: 108.0e v 107.9 prior
• 06:00 (IE) Ireland July Property Prices M/M: No est v 1.1% prior; Y/Y: No est v 12.0% prior
• 06:00 (TR) Turkey to sell 23% 2020 Bonds on Sept. 11th
• 06:30 (EU) EFSF to sell €1.0B in 0.10% Mar 2021 bonds
• 06:45 (US) Daily Libor Fixing
• 07:00 (BR) Brazil Sept IGP-M Inflation (1st Preview): 0.7%e v 0.7% prior
• 07:00 (ZA) South Africa July Manufacturing Production M/M: 0.6%e v 0.3% prior; Y/Y: 0.9%e v 0.7% prior
• 07:30 (CL) Chile Central Bank Economists Survey
• 07:45 (US) Weekly Goldman Economist Chain Store Sales
• 08:00 (EU) ECB's Nouy (SSM chief) in Strasbourg, France
• 08:05 (UK) Baltic Dry Bulk Index
• 08:15 (CA) Canada Aug Annualized Housing Starts: 216.3Ke v 206.3K prior
• 08:55 (US) Weekly Redbook Sales
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:00 (MX) Mexico July Industrial Production M/M: -0.2%e v +0.3% prior; Y/Y: 1.0%e v 0.2% prior, Manufacturing Production Y/Y: 2.2%e v 2.0% prior
• 09:00 (RU) Russia July Trade Balance: $14.5Be v $15.6B prior
• 10:00 (US) July JOLTS Job Openings: 6.675Me v 6.662M prior
• 10:00 (US) July Final Wholesale Inventories M/M: 0.7%e v 0.7% prelim, Wholesale Trade Sales M/M: +0.1%e v -0.1% prior
• 11:30 (US) Treasury to sell 4-Week and 52-Week Bills
• 12:00 (IS) Iceland Aug International Reserves (ISK): No est v 670B prior
• 13:00 (US) Treasury to sell $35B in 3-Year Notes
• 16:00 (AR) Argentina Central Bank (BCRA) Interest Rate Decision: Expected to leave LELIQ Rate unchanged at 60.00%
• 16:30 (US) Weekly API Oil Inventories
• (MX) Mexico Aug ANTAD SSS Y/Y: No est v 4.8% prior
• (PE) Peru July Trade Balance: No est v $1.1B prior

The cross advanced on stronger Euro, pulled by fresh advance of pound and weaker yen on strong sell-off in Asian emerging markets.

Extension of Monday's strong rally which formed bullish outside day and signaled further upside, stalled on approach to key barrier at 130.00 (top of thick daily cloud / psychological level), despite upbeat German / EU ZEW data, with subsequent pullback bringing the price back to cloud's mid-point at to 129 zone.

Fresh advance lacked momentum for eventual break above the cloud, as 14-d momentum continues to trend lower and approaches the border of negative territory, while daily MA's are in mixed setup.

Close above cracked daily Tenkan-sen (129.36) is seen as minimum requirement to keep in play bullish bias for renewed attempt at cloud top.

Otherwise, risk of renewed attack at daily cloud base (128.30), after attempts on Fri/Mon failed, could be likely near-term scenario.

Res: 129.36, 129.82, 130.00, 130.86
Sup: 128.77, 128.30, 127.90, 127.35