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Daily Pivots: (S1) 0.9698; (P) 0.9727; (R1) 0.9778; More.....

Despite the strong rebound from 0.9640, USD/CHF is still held below 0.9766 resistance. Intraday bias remains neutral first. On the upside, break firm break of 0.9766 will argue that the fall from 1.0067 is finished. Intraday bias should then be turned back to the upside for 0.9866 support turned resistance for confirmation. On the downside, however, break of 0.9640 will resume the decline from 1.0067 for 0.9523 fibonacci level next.

In the bigger picture, current development suggests that rise from 0.9186 low has completed at 1.0067, after failing to sustain above 1.0037 resistance. Fall from 1.0067 could extend to 61.8% retracement of 0.9816 to 1.0067 at 0.9523 and below. But for now, we don't expect a break of 0.9186 low. On the upside, firm break of 0.9866 support turned resistance will suggests that fall from 1.0067 has completed and rise from 0.9186 is resuming.

General Trend:

• Japan’s Renesas to pay $6.7B to acquire Integrated Device Technology
• Macquarie Group reaffirms FY outlook
• Steelmakers Nippon Steel and Baoshan said to raise prices
• Tier 1 US brokerage firm sees US tariff announcement related to China later this week
• China PBoC says banking liquidity is at ‘reasonable and plentiful’ level; skips OMO for 15th straight session
• Japan Fin Min reiterates not seeking a bilateral trade deal with the US
• Australia NAB business confidence matches the lowest level since 2016

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.1%
• ASX 200 Telecom index +2.6%, Energy +2.1%, Financials +0.9%, REIT +0.8%, Resources +0.7%;Consumer Discretionary -0.3%
• (AU) AUSTRALIA AUG NAB BUSINESS CONFIDENCE: 4 V 7 PRIOR (lowest since Oct 2016): CONDITIONS: 15 V 12 PRIOR
• (AU) Australia ABARES cut 2018/19 wheat output forecast by ~13% vs June estimate; wheat crop now seen at 19.1M tons v 21.9M prior
• (NZ) New Zealand ANZ Aug Inflation Gauge M/M: 0.6%; Y/Y: 2.8% v 2.5% prior
• (NZ) New Zealand Aug Card Spending Retail M/M: 1.0% v 0.5%e; Card Spending Total M/M: 1.1% v 0.5% prior

China/Hong Kong

• Shanghai Composite opened flat, Hang Seng flat
• Hang Seng Services index -2.5%, Materials -1.3%, Consumer Goods -1%, Industrial Goods -1%, Info Tech -0.8%; Energy +0.5%, Financials +0.3%
• (CN) China Environment Ministry said to consider ending the requirement for provinces to set 'specific' output cuts for heavy industry during the winter heating season - financial press
• (CN) China PBoC Open Market Operation (OMO): Skips OMO (15th straight skip); sees banking liquidity at 'reasonable and plentiful' level
• (CN) China PBoC set yuan reference rate: 6.8488 v 6.8389 prior
• (CN) China CPI to keep 'modest' growth in the long-term - China Securities Journal

Japan

• Nikkei 225 opened +0.4%
• TOPIX Securities index+1.1%, Info & Communications +0.9%; Iron & Steel -1.7%
• (JP) Japan Fin Min Aso: Reiterates view that does not want to pursue a bilateral FTA with the US
• (JP) Japan Economy Min Motegi: US and Japan are still negotiating a date for bilateral trade talks, if they are held it would be before the Abe-Trump summit
• (JP) Japan PM Abe reportedly mulling a cabinet reshuffle in early Oct - Japanese press
• (JP) Japan Aug Money Stock M2 Y/Y: 2.9% v 3.0%e; M3 Y/Y: 2.5% v 2.6%e
• (JP) Japan Q3 real GDP is expected to slow to 0.1% q/q or 0.5% annualized (vs. 0.7% and 3.0% in Q2), cites poll of private-sector economists; notes the impact of natural disasters

Nikkei

• (JP) 60% of the top companies in Japan said a trade war would likely hurt their profits – Nikkei
• (JP) Japan MoF sells ¥700B v ¥700B indicated in 0.70% 30-year JGBs, avg yield 0.8380% v 0.850% prior, bid to cover 4.23x v 4.68x prior

Korea

• Kospi opened -0.1%
• (US) White House Press Sec Sanders: Trump has received second letter from North Korea Leader Kim about scheduling second meeting; US is open to it

Other

• (PH) Philippines July Trade Balance: -$3.6B v -$3.1Be
• (SG) Fitch affirms Singapore sovereign rating at AAA; Outlook Stable

North America

• US equity markets ended mixed: Dow -0.2%, S&P500 +0.2%, Nasdaq +0.3%, Russell 2000 +0.3%
• S&P500 Healthcare -0.3%; Utilities +0.5%, Industrials +0.5%, Real Estate +0.5%
• Integrated Device Technology [IDTI]: Renesas to pay $6.7B or $49/share to acquire the company (vs ~$6.0B speculated)

Europe

• (UK) UK Tory 'Eurosceptics' said to have been unable to reach agreement on alternate Brexit plan – FT
• (RU) Russia Energy Min Novak: OPEC and allies to discuss cooperation post 2018 in Algeria; OPEC+ has the tools to use quotas if the market needs; OPEC+ cooperation can continue without output quotas post 2018

Levels as of 01:30ET

• Nikkei 225, +1.1%, ASX 200 +0.6%, Hang Seng -0.4%; Shanghai Composite -0.1%; Kospi -0.4%
• Equity Futures: S&P500 +0.2%; Nasdaq100 +0.3%, Dax +0.2%; FTSE100 +0.1%
• EUR 1.1605-1.1577 ; JPY 111.49-111.05 ; AUD 0.7127-0.7091 ;NZD 0.6533-0.6518
• Dec Gold -0.1% at $1,198/oz; Oct Crude Oil flat at $67.56/brl; Dec Copper +0.2% at $2.631 /lb

Daily Pivots: (S1) 110.90; (P) 111.07; (R1) 111.30; More...

Intraday bias in USD/JPY remains neutral as it's still bounded in range of 110.37/111.82. On the upside, break of 111.73 minor resistance will resume the rebound from 109.76. In that case, intraday bias will be turned back to the upside for retesting 113.17 high. Decisive break there will resume larger rally from 104.62. On the downside, below 110.37 will bring deeper fall. But strong support is expected from 38.2% retracement of 104.62 to 113.17 at 109.90 to contain downside and bring rebound.

In the bigger picture, corrective fall from 118.65 (2016 high) should have completed with three waves down to 104.62. Decisive break of 114.73 resistance will likely resume whole rally from 98.97 (2016 low) to 100% projection of 98.97 to 118.65 from 104.62 at 124.30, which is reasonably close to 125.85 (2015 high). This will stay as the preferred case as long as 109.36 support holds. However, decisive break of 109.36 will mix up the outlook again. And deeper fall should be seen back to 61.8% retracement of 104.62 to 113.17 at 107.88 and below.

Daily Pivots: (S1) 1.2932; (P) 1.2992; (R1) 1.3087; More...

GBP/USD's breach of 1.3042 suggests that corrective rebound from 1.2661 is resuming. Intraday bias is back on the upside for 100% projection of 1.2661 to 1.3042 from 1.2784 at 1.3165, and possibly above. However, we'd expect upside to be limited by 1.3316 key fibonacci level to complete the corrective rise and bring near term reversal. On the downside, break of 1.2896 minor support will now argue that rebound from 1.2661 has completed. In such case, intraday bias will be turned back to the downside for 1.2784 and then 1.2661.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA (now at 1.4099). The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

Yen and Dollar are trading as the weakest ones in Asian session as risk aversion receded. In particular, Nikkei rebounds over 1% as concerns eased about last week's typhoon and earthquake. Canadian Dollar is the strongest one at the time of writing, followed by Australian Dollar and Sterling. But for the week so far, Sterling is the star performer on Brexit deal optimism, followed by Euro. Swiss Franc, on the other hand, is the weakest one, followed by Yen. The Pound will look into today's job data for more inspirations.

Overnight, US indices ended mixed with DOW down -0.23%. But S&P 500 and NASDAQ gained 0.19% and 0.27% respectively. There was little reaction to Republican's tax cut 2.0, as it's mainly seen as a political move without substance. Treasury yield also ended mixed, with five year yield up 0.005, 10-year yield down -0.005 and 30-year yield down -0.015. In Asian, Nikkei is trading up 1.12%, Hong Kong HSI down -0.31%, Singapore Strait Times down -0.27%. China Shanghai SSE is up 0.10% but remains in proximity to key support level at 2638.3. Strength of rebound from this key support continues to get weaker and weaker.

Technically, EUR/USD defended 1.1529 again yesterday and the rebound from 1.1300 is still in favor to extend higher. But even if 1.1733 near term resistance could be breached, we'd continue to expect strong resistance from 1.1779 medium term fibonacci level to limit upside. USD/CHF and EUR/CHF are yet to break 0.9766 and 1.1319 to confirm near term reversal. These two levels will continue to be watched. GBP/USD breached 1.3042 yesterday, which suggests near term rise resumption. Strong UK job data today could help push GBP/USD towards 1.3165 near term projection levels.

US House Republicans released Tax Reform 2.0 as political move

In the US, House Republicans released the so called "Tax Reform 2.0" yesterday, aiming to put it to committee-level vote this Thursday, and a full House vote on October 1. There are three major elements in the new package. Firstly, the temporary individual rates lowered in the December tax cut plan would be make permanent. Secondly, maximum age for some contributions to retirement accounts would be eliminated. Thirdly, new businesses would be allowed to write-off more start-up costs.

But some analysts saw the new tax plan as merely a political move ahead of mid-term elections. There is no chance of passing the Congress in short term. However, it will put Democrats in the position of opposing the tax cuts just ahead of November 6 elections. And there are also criticisms on adding another several billion dollars to the deficit.

Canada-US trade talk to resume as EU-US talks ended

Canada and the US will restart high-level trade talks in Washington today. Whether it's still NAFTA or not, the two sides reached a deadlock in three key issues, Canadian dairy market access, cultural exemption for Canada and Chapter 19 dispute resolution mechanism. Not much news is released regarding the discussions as both sides agreed not to negotiate in public.

Canadian Prime Minister Justin Trudeau just reiterated yesterday that "we continue to work hard and we are positively optimistic that we can get a win-win-win for all three countries." Foreign Minister Chrystia Freeland, who'll be in Washington today, said last week that the negotiation has entered into a "very intense phase" and the officials have been working 24-7.

US Trade Representative Robert Lighthizer just finished a meeting with European Trade Commissioner Cecilia Malmstrom  in Brussels yesterday. Malmstrom said in a tweet that "Lighthizer discussed how the EU-US achieves concrete results in the short to medium term towards a free trade agreement." And they'll meet again at the end of September.

Lighthizer's office described the talks as constructive. Also, work would be done in October to identify tariff and non-tariff barriers that could be cut. And trade chiefs of EU and US will follow up in November to finalize certain results.

Sterling surged as EU Barnier said Brexit deal possible within 6-8 weeks

Sterling surged broadly yesterday as lifted by comments from EU chief negotiator Michel Barnier again. He said in a forum in Slovenia that "if we are realistic we are able to reach an agreement on the first stage of the negotiation, which is the Brexit treaty, within 6 or 8 weeks." And, "taking into account the time necessary for the ratification process, the House of Commons on one side, the European Parliament and the Council on the other side … we must reach an agreement before the beginning of November. I think it is possible." Also, it's reported that EU will announce next week to hold a special summit for Brexit in November, possibly on Nov 13.

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.

Elsewhere

Japan M2 rose 2.9% yoy in August, tertiary industry index rose 0.1%. UK employment data will be the main focus in European session and Germany will also release ZEW economic sentiment. Later in the day, Canada housing starts is the main feature.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.2932; (P) 1.2992; (R1) 1.3087; More...

GBP/USD's breach of 1.3042 suggests that corrective rebound from 1.2661 is resuming. Intraday bias is back on the upside for 100% projection of 1.2661 to 1.3042 from 1.2784 at 1.3165, and possibly above. However, we'd expect upside to be limited by 1.3316 key fibonacci level to complete the corrective rise and bring near term reversal. On the downside, break of 1.2896 minor support will now argue that rebound from 1.2661 has completed. In such case, intraday bias will be turned back to the downside for 1.2784 and then 1.2661.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA (now at 1.4099). The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

Economic Indicators Update

Market movers today

It is a relatively light day on the data front. Financial markets will focus on political events , such as the Brexit negotiations, where EU negotiator Michel Barnier yesterday flagged optimism about a deal in six to eight weeks' time, and the possible announcement by US President Trump of new tariffs on Chinese imports.

In the euro area, German ZEW Economic Sentiment data is due for September. Our main focus will be on economic expectations, which saw a rebound in July and it will be interesting to see whether this trend has continued, especially in light of the decreasing risk of a US-EU trade war.

The UK jobs report is due out today. We estimate the unemployment rate (3M average) was unchanged at 4.0%. Average weekly earnings excluding bonuses (3M average) surprised on the upside last time, so we think the monthly increase will decline but it should still be sufficient to lift the annual growth rate to 2.8% y/y from 2.7% y/y.

In Norway, Norges Bank's regional network survey (10.00 CEST) is the final piece in the puzzle before the rate setting meeting on 20 September.

Selected market news

In Russia, the Eastern Economic Forum starts today and China's Xi Jinping will meet with Vladimir Putin in Vladivostok. The Chinese and Russian presidents are likely to discuss North Korea, among other issues. Yesterday, Putin met with Japan's Shinzo Abe. Abe is due to meet the leaders of Mongolia and South Korea today.

Argentina's central bank will decide on its key rate. It is highly likely that the rate will remain the world s highest at 60% today. The central bank has calmed the markets previously via direct FX intervention. All eyes are now on the government s efforts to get a loan from the IMF. Despite the recent positive developments, the ARS is still seeking a clear direction.

For the 24 hours to 23:00 GMT, the EUR rose 0.37% against the USD and closed at 1.1595.

In the economic news, the Euro-zone's Sentix investor confidence index slid to a level of 12.0 in September, compared to a reading of 14.7 in the prior month. Market participants had envisaged the index to decline to a level of 14.3.

In the US, data showed that consumer credit advanced $16.6 billion in July, compared to a revised gain of $8.5 billion in the previous month. Market participants had anticipated consumer credit to climb to a level of $14.0 billion.

In the Asian session, at GMT0300, the pair is trading at 1.1591, with the EUR trading slightly lower against the USD from yesterday's close.

The pair is expected to find support at 1.1539, and a fall through could take it to the next support level of 1.1488. The pair is expected to find its first resistance at 1.1629, and a rise through could take it to the next resistance level of 1.1668.

Moving ahead, investor's will closely monitor the Euro-zone's ZEW economic sentiment index for September along with Germany's ZEW survey indices for September, set to release in a few hours. Also, the US NIFB small business optimism index for August, due to be released in a few hours, will garner significant amount of investors' attention.

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 0.80% against the USD and closed at 1.3028, after the European Union's Chief Brexit Negotiator, Michel Barnier raised hopes for a smooth Brexit with an ‘realistic' departure agreement in the next 6 to 8 weeks.

On the macro data front, the nation's gross domestic product (GDP) advanced 0.3% on monthly basis in July, surpassing market expectations for a rise of 0.2%. In the previous month, the GDP had recorded a reading of 0.1%. Additionally, the nation's total trade deficit unexpectedly narrowed to £0.11 billion in July, following a revised deficit of £0.94 billion in the previous month. Market participants had anticipated to report a deficit of £2.10 billion. Further, industrial production climbed 0.9% on a yearly basis in July, compared to a rise of 1.1% in the previous month. Market participants had expected the industrial production to climb 1.1%. Moreover, manufacturing production advanced 1.1% on an annual basis in July, less than market expectations for a gain of 1.4%. In the previous month, manufacturing production had registered a rise of 1.5%. Meanwhile UK's construction output climbed 3.5% on an annual basis in July, compared to a rise of 2.2% in the previous month. Market participants had envisaged construction output to increase 2.6%.

In the Asian session, at GMT0300, the pair is trading at 1.3034, with the GBP trading 0.05% higher against the USD from yesterday's close.

The pair is expected to find support at 1.2937, and a fall through could take it to the next support level of 1.2839. The pair is expected to find its first resistance at 1.3092, and a rise through could take it to the next resistance level of 1.3149.

Going ahead, traders would await UK's ILO unemployment rate and average weekly earnings, both for July, due to be released in a few hours.

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 0.18% against the JPY and closed at 111.14.

In the Asian session, at GMT0300, the pair is trading at 111.36, with the USD trading 0.20% higher against the JPY from yesterday’s close.

The pair is expected to find support at 111.03, and a fall through could take it to the next support level of 110.71. The pair is expected to find its first resistance at 111.58, and a rise through could take it to the next resistance level of 111.81.

Moving forward, traders will await Japan’s machine tool orders for August, 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 0.54% against the CHF and closed at 0.9747.

On the macro front, Switzerland’s total sight deposits rose to a level of CHF576.5 billion in the week ended 07 September, from CHF576.2 billion in the previous week.

In the Asian session, at GMT0300, the pair is trading at 0.9750, with the USD trading a tad higher against the CHF from yesterday’s close.

The pair is expected to find support at 0.9708, and a fall through could take it to the next support level of 0.9665. The pair is expected to find its first resistance at 0.9776, and a rise through could take it to the next resistance level of 0.9801.

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