Sample Category Title

EUR/USD is showing little movement in the Monday session. Currently, the pair is trading at 1.1614, up 0.10% on the day. On the release front, eurozone and German Final Manufacturing PMIs both softened in August, but were within expectations. U.S markets are closed for Labor Day. On Tuesday, the U.S releases ISM Manufacturing PMI.

The eurozone manufacturing sector continues to expand, but there is concern in the markets as the downward trend continued in August. This was evident in Eurozone Final Manufacturing PMI, which lost ground for an eighth straight month. The reading of 54.6, which matched the estimate, marked the lowest level since November 2016. In Germany, Final Manufacturing PMI fell from 56.9 to 55.9. Although this is a respectable reading, it is significantly lower than the readings we saw early in 2018, when the indicator was above the 60-level. German manufacturers remain generally optimistic, but have growing concerns over tariffs which the U.S has slapped on China and the EU.

Investors are keeping a nervous eye on the tariff spat between China and the U.S. So far, the two economic giants have imposed $50 billion in tariffs on each other, and President Trump has threatened further tariffs worth some $200 billion, which could be imposed as early as this week. The U.S could elect to impose the tariffs in smaller bites, such as a $50 billion tariff. With the U.S economy booming, there is little pressure on the Trump administration to shy away from imposing further tariffs. The current trade spat has already seen the U.S dollar gain ground against rivals such as the euro, and further tariffs could boost the U.S dollar.

Notes/Observations

• Major European PMI Manufacturing data (Beats: Spain, Netherlands, Swiss, Norway, Hungary; Misses: Germany, France, Italy, UK, Czech, Poland; In-line: Euro Zone )
• Turkey inflation rate hits highest annual pace since Sept 2003; central bank vows adjustment in policy coming this month
• Risk appetite remains fragile

Asia:

• China Aug Caixin PMI Manufacturing at a 14-month low (50.6 v 50.7e) with new export orders contracting for the 5th straight month.
• Japan Aug Final Manufacturing PMI: 52.5 v 52.5 prelim
• Australia July Retail sales miss expectations (M/M: 0.0% v 0.3%e)
• Bank of Japan (BoJ) Gov Kuroda reiterated the central bank's forward guidance, unlikely to raise interest rates for 'quite some time'

Europe:

• Fitch revised Italy sovereign debt rating outlook to Negative from Stable; affirms BBB rating
• UK PM Ma stated that there would be no compromise with EU on Brexit plan, reiterated stance that would not give in to those calling for a second referendum on Brexit
• ECB's De Guindos (Spain): Euro Zone economic growth remained solid and broad-based. Expected underlying inflation to pick up towards the end of the summer; uncertainty around projected path of inflation had diminished

Americas:

• President Trump tweeted that a trilateral NAFTA deal with Canada was not necessary and Congress should not "interfere" with trade negotiations; Canada must agree to new terms or US would terminate and "go back to pre-NAFTA"
• Brazil electoral court (TSE) ruled that Lula could NOT run as a candidate in the Presidential election; Lula expected to appeal. Court ruled 6 to 1 that Lula should be barred from running

Economic Data:

• (IN) India Aug Manufacturing PMI: 51.7 v 52.3 prior (13th month of expansion)
• (IE) Ireland Aug Manufacturing PMI: 57.5 v 56.3 prior (63rd month of expansion)
• (JP) Japan Aug Vehicle Sales Y/Y: -0.2% v +1.2% prior
• (RU) Russia Aug Manufacturing PMI: 48.949.3e (4th month of contraction)
• (AU) Australia Aug Commodity Index (AUD): 113.6 v 111.5 prior; Commodity Index SDR Y/Y: 6.7% v 7.5% prior
• (SE) Sweden Aug Manufacturing PMI: 52.5 v 57.4 prior
• (TR) Turkey Aug CPI M/M: 2.3% v 1.8%e; Y/Y: 17.9% v 17.6%e (highest annual pace since 2003); CPI Core Index Y/Y: 17.2 v 15.1% prior
• (TR) Turkey Aug PPI M/M: 6.6 v 1.8% prior; Y/Y: 32.1% v 25.0% prior
• (NL) Netherlands Aug Manufacturing PMI: 59.1 v 57.6e (60th month of expansion)
• (NO) Norway Aug Manufacturing PMI: 60.5 v 54.4e (2nd month of expansion)
• (HU) Hungary Aug Manufacturing PMI: 56.2 v 53.1e (33rd month of expansion)
• (PL) Poland Aug Manufacturing PMI: 51.4 v 53.0e (45th month of expansion but lowest since Oct 2016)
• (TR) Turkey Aug Manufacturing PMI: 46.4 v 49.0 prior (5th straight contraction)
• (ES) Spain Aug Manufacturing PMI: 53.0 v 52.5e(58th month of expansion)
• (CH) Swiss July Real Retail Sales Y/Y: -0.3% v +0.2% prior
• (CZ) Czech Aug Manufacturing PMI: 54.9 v 55.2e (25th month of expansion but lowest since Aug 2017)
• (CH) Swiss Aug Manufacturing PMI: 64.8 v 61.0e (32 months without a contraction)
• (TH) Thailand Aug Business Sentiment Index: 51.4 v 52.0 prior
• (IT) Italy Aug Manufacturing PMI: 50.1 v 51.2e (24th month of expansion but lowest since Aug 2016)
• (FR) France Aug Final Manufacturing PMI: 53.5 v 53.7e (confirmed its 23rd month of expansion)
• (DE) Germany Aug Final Manufacturing PMI: 55.9 v 56.1e (confirmed its 44th month of expansion)
• (EU) Euro Zone Aug Final Manufacturing PMI: 54.6 v 54.6e (confirmed 61st month of expansion)
• (GR) Greece Aug Manufacturing PMI: 53.9 v 53.5 prior (15th month of expansion)
• (CH) SNB Total Sight Deposits for Week Ended Aug 31st (CHF): 576.2B v 576.8B prior
• (UK) Aug Manufacturing PMI: 52.8 v 53.9e (25th month of expansion but lowest since July 2016)
• (GR) Greece Q2 Final GDP Q/Q: 0.2% v 0.9% prior; Y/Y: 1.8% v 2.5% prior, GDP (unadj) Y/Y: 1.8% v 2.6% prior
• (ZA) South Africa Aug Manufacturing PMI: 43.4 v 50.0e - (DK) Denmark Aug Manufacturing PMI Survey: 59.1 v 55.8 prior

Fixed Income Issuance:

• (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 6-month bills; Avg Yield: 0.72% v 0.71% prior; Bid-to-cover: 3.17x v 2.58x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx50 -0.1% at 3,388, FTSE +0.8% at 7,492, DAX -0.3% at 12,333, CAC-40 flat at 5,406; IBEX-35 +0.1% at 9,404, FTSE MIB +0.2% at 20,313, SMI +0.1% at 8,986, S&P 500 Futures closed]
• Market Focal Points/Key Themes: European indices opened mixed and traded largely sideways as the session wore on; trading light due to restricted equity news flow and holidays in the US and Canada; attention on Brexit concerns after weekend reporting that Foreign Secretary Johnson my challenge May's leadership; energy stocks supported by brent prices; underperformers include auto sector and consumer discretionary stocks

Equities

• Consumer discretionary: Casino CO.FR +0.8% (outlook), Safestyle SFE.UK +20.4% (settlement), WPP WPP.UK +0.1% (New CEO)
• Consumer staples: Ontex ONTEX.BE -18.8% (Rejects final offer from PAI)
• Energy: SBM Offshore SBMO.NL +8.3% (agreement with Brazilian prosecutor)
• Healthcare: Dechra Pharmaceuticals DPH.UK -15.3% (results), Medigene MDG.DE -0.3% (CFO resigns)
• Industrials: Fincantieri FCT.IT +5.9% (analyst action), Maire Technimont MT.IT +3.8% (order)

Speakers

• BOE Gov Carney said to signal willingness to extend his term. UK Treasury said to open talks with BOE Gov Carney to stay on in position. Concerned that trying to complete the process of finding a new governor would be difficult
• Italy Dep PM Di Maio: Introduction of citizens' income remains a top priority and to be put in place by 2019
• Spain PM Sanchez: Confident of budget approval for 2019 and would provide €9.0B to regions if budget approved . Would not allow referendum on Catalan independence
• Turkey Central Bank (CBRT): Will take necessary actions; monetary policy stance to be adjusted in Sept. Recent developments regarding the inflation outlook indicated a significant risks to price stability
• Turkey Fin Min Albayrak: Short-term inflation spikes were normal; central bank had stated it would not hesitate to take necessary steps. Needed full-fledged fight against inflation at this point. Monetary policy would continue to be shaped within target of price stability. Under new presidential system the central bank policy was now coordinated with fiscal policy which means the central bank had a much stronger and effective hand. Not expecting any problems within the banking system and saw no problems or risks from overall debt levels (still low compared to international averages)
• Indonesia Fin Min Indrawati: Anticipating ongoing market pressure from Argentina; to monitor sentiment coming from that turmoil and focus on addressing Balance of Payment (BOP) concerns
• China President Xi reiterated view that unilateralism and protectionism were on the rise. Willing to work on Belt &Road initiative with international partners
• Russia Energy Min Novak: Sept oil production seen at level registered in July-Aug (approx 11.2M bpd)
• Oman Oil Min: Some OPEC+ members had difficulties reaching their own production quota due to lack of investment. Saw oil in range between $70-80 in 2018

Currencies

• The USD began the session near 1-wek highs as the global risk appetite remained fragile.
• EUR/USD had difficulties staying above the 1.16 handle as the week began and remained susceptible to technical headwinds.
• GBP currency began the session on softer footing as dealers noted that PM May’s Chequers plan continued to be attacked by EU and her own party officials. PM May also ruled out a second referendum on Brexit . GBP/USD approaching the lower end of the 1.29 handle in the session and dipped bwelow the level after the Aug PMI reading came in below expectations. Dealers noted that BOE Gov Carney said to signal willingness to extend term with markets now looking for confirmation in the near future. UK Treasury said to open talks with BOE Gov Carney to stay on in position
• TUR currency Lira was off its worst level despite inflation hitting a 15-year high at 17.9%. Dealers noted that market participants seemed to had expected worse news on inflation and a relief rally ensure for the Lira. Turkey Central Bank (CBRT) stated that it would take necessary actions and the monetary policy stance would be adjusted in Sept

Looking Ahead

• (AR) Argentina Aug Government Tax Revenue (ARS): No est v 293.9B prior
• (BR) Brazil July CNI Capacity Utilization: No est v 76.7% prior
• (IT) Italy Aug Budget Balance: No est v €10.6B prior
• (RO) Romania Aug International Reserves: No est v $34.8B prior
• (RU) Russia Aug Sovereign Wealth Funds: Wellbeing Fund: No est v $77.2B prior
• (ZA) South Africa Aug Naamsa Vehicle Sales Y/Y: No est v 2.6% prior
• 05:30 (NL) Netherlands Debt Agency (DSTA) to sell 6-month Bills
• 06:45 (US) Daily Libor Fixing
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey
• 08:00 (CL) Chile July Retail Sales Y/Y: 3.5%e v 6.3% prior, Commercial Activity Y/Y: No est v 9.1% prior
• 08:00 (CZ) Czech Aug Budget Balance (CZK): No est v 16.6B prior
• 08:05 (UK) Baltic Dry Bulk Index
• 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions
• 08:55 (FR) France Debt Agency (AFT) to sell combined €4.1-5.3B in 3-month, 6-month and 12-month BTF Bills
• 09:00 (BR) Brazil Aug Manufacturing PMI: No est v 50.5 prior
• 09:00 (SG) Singapore Aug Purchasing Managers Index (PMI): No est v 52.3 prior, Electronics Sector Index: No est v 51.6 prior
• 09:30 (EU) ECB announces Covered-Bond Purchases
• 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
• 10:00 (MX) Mexico July Total Remittances: $2.9Be v $3.1B prior
• 10:00 (MX) Mexico Central Bank Economist Survey
• 10:30 (MX) Mexico Aug Manufacturing PMI: No est v 52.1 prior
• 11:00 (CO) Colombia July Exports: $3.4Be v $3.3B prior
• 11:00 (IS) Iceland Q2 Current Account ISK): No est v 0.0B prior
• 12:00 (IT) Italy Aug New Car Registrations Y/Y: No est v 4.4% prior
• 13:00 (MX) Mexico Aug IMEF Manufacturing Index: No est v 50.0 prior; Non-Manufacturing Index: No est v 49.7 prior
• 14:00 (BR) Brazil Aug Trade Balance: $4.0Be v $4.2B prior
• 14:30 (US) Fed's Evans (non-voter, dove) - 16:00 (US) Weekly Crop Progress Report

The US dollar remains under pressure against the Japanese yen on Monday after the Chinese economy posted weaker than expected Manufacturing PMI data. The USDJPY pair is likely to remain under pressure while trading below key trendline resistance, located at the 111.00 level. A bearish head and shoulders pattern may also be forming across the four-hour time frame.

The USDJPY pair is only bullish while trading above the 111.00 level, key resistance is found at the 111.39 and 111.80 levels.

If the USDJPY pair continues to trade below 111.00 level, sellers may test towards the 110.65 and 110.40 support levels.

The British pound remains under pressure against the US dollar after the United Kingdom Manufacturing PMI missed market expectations with a 52.8 reading. The GBPUSD pair is likely to come under additional selling pressure while trading below the 1.2900 level. The MACD indicator is also now starting to trend lower across the one-hour time frame.

The GBPUSD pair is strongly bearish while trading below the 1.2900 level, key support is found at the 1.2850 and 1.2800 levels.

If the GBPUSD pair moves above the 1.2900 level, buyers may test towards the 1.2930 and 1.2955 resistance levels.

The EUR/USD was at the 1.1607 mark on Monday morning. The main rate was located near the weekly pivot point at the 1.1641 mark during the morning hours. The main pair broke the pattern during Friday's session, slumped below the junior descending line.

It is expected that the European Single Currency might move upwards to fit back into the pattern which was drawn last week. On the other side, the European Single Currency might to go downwards due to a strong resistance of the weekly PP and the 200-hour simple moving average.

The British pound was testing the monthly PP at the 1.2924 level during the Monday's morning hours. The currency exchange rate broke the junior ascending line and broke through the Fibonacci 61.80% retracement level facing downwards after the fundamental date release at 8:30 GMT.

The rate might go to the weekly S1 at the 1.2848 mark which is supported by the previous senior descending pattern.

The USD/JPY was at the 110.96 mark on Monday. The currency exchange rate tested the monthly pivot point at the 111.02 during morning hours. Moreover, the 55-hour and the 100-hour SMAs crossed each other near the weekly pivot point at the 111.22 mark at the same time during morning hours.

In regards to the near future, the 55-hour and the 200-hour SMAs will meet each other which will force the US Dollar to go downwards. In addition, there is strong resistance given by the Fibonacci 61.80% retracement level.

The gold price appreciated 0.59% to the 1,203.00 mark on Monday. The monthly pivot point at 1,196.00 supported the yellow metal and pushed the price upwards during the morning hours.

It is expected that the yellow metal most likely will bounce off the upper line of the junior descending channel or the 100-hour simple moving average will push the rate downwards.

On the other hand, the yellow metal might move sideways until it breaks the junior descending line and creates a new pattern.

The common European currency has appreciated substantially against the Australian Dollar since mid-August. During this period, the currency pair gained about 574 base points and reached its highest position since March 28 at the 1.6175 regions.

This bullish momentum has been bounded by an ascending channel and the 50-hour simple moving average. The pair hindered near its upper boundary at the time of this analysis.

The long-term technical sentiment is located in the overbought zone. Thus it is likely that a new wave down starts this week. This prediction will likewise be strengthened if the pair fails to reach the upper boundary of an ascending channel during the following sessions

The EUR/CAD currency pair has been bounded in an ascending triangle pattern since mid-August. The rate tested the lower boundary of the medium-term ascending triangle pattern on August 14 and subsequently made a U-turn north.

As a result, the exchange rate breached the 50-, 100-, and 200-hour SMAs. Moreover, the price has reached near the upper boundary of the triangle pattern, and a breakout could be a possibility in this session.

Given that the three simple moving averages have fallen below the price action, bulls could continue to have the upper hand over the currency exchange rate during the following trading sessions.