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For the 24 hours to 23:00 GMT, the USD rose 0.36% against the CHF and closed at 0.9971.

In the Asian session, at GMT0300, the pair is trading at 0.9967, with the USD trading marginally lower against the CHF from yesterday’s close.

The pair is expected to find support at 0.9929, and a fall through could take it to the next support level of 0.9892. The pair is expected to find its first resistance at 0.9991, and a rise through could take it to the next resistance level of 1.0016.

Looking forward, investor sentiment will be determined by Switzerland’s trade balance and industrial production data, scheduled to release next week.

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 0.12% against the CAD and closed at 1.3158.

Data indicated that Canada's manufacturing shipments climbed 1.1% on a monthly basis in June, supported by a sharp increase in oil and coal shipments and more than market expectations for an advance of 1.0%. Manufacturing shipments had risen by a revised 1.5% in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.3149, with the USD trading 0.07% lower against the CAD from yesterday's close.

The pair is expected to find support at 1.3117, and a fall through could take it to the next support level of 1.3085. The pair is expected to find its first resistance at 1.3178, and a rise through could take it to the next resistance level of 1.3207.

Trading trend in the Loonie today is expected to be determined by Canada's consumer price index for July, scheduled to release later in the day

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the AUD rose 0.33% against the USD and closed at 0.7262.

LME Copper prices rose 0.3% or $17.0/MT to $5860.0/MT. Aluminium prices rose 0.2% or $3.5/MT to $1998.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7270, with the AUD trading 0.11% higher against the USD from yesterday’s close.

The pair is expected to find support at 0.7252, and a fall through could take it to the next support level of 0.7233. The pair is expected to find its first resistance at 0.7288, and a rise through could take it to the next resistance level of 0.7305.

Going forward, investors will await Reserve Bank of Australia’s (RBA) meeting minutes and the Westpac leading index, both set to release next week.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, Gold declined 0.13% against the USD and closed at USD1180.70 per ounce.

In the Asian session, at GMT0300, the pair is trading at 1183.40, with gold trading 0.23% higher against the USD from yesterday’s close.

The pair is expected to find support at 1176.80, and a fall through could take it to the next support level of 1170.20. The pair is expected to find its first resistance at 1189.50, and a rise through could take it to the next resistance level of 1195.60.

The yellow metal is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, Silver rose 1.52% against the USD and closed at USD14.65 per ounce.

In the Asian session, at GMT0300, the pair is trading at 14.64, with silver trading 0.10% lower against the USD from yesterday’s close.

The pair is expected to find support at 14.43, and a fall through could take it to the next support level of 14.22. The pair is expected to find its first resistance at 14.83, and a rise through could take it to the next resistance level of 15.03.

The white metal is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, Crude Oil rose 0.79% against the USD and closed at USD65.40 per barrel, amid hopes for US-China trade deal talks.

In the Asian session, at GMT0300, the pair is trading at 65.41, with oil trading slightly higher against the USD from yesterday’s close.

The pair is expected to find support at 64.93, and a fall through could take it to the next support level of 64.46. The pair is expected to find its first resistance at 65.70, and a rise through could take it to the next resistance level of 65.99.

Crude oil is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

The strong stock rallies in the US generally carry through to Asian session. At the time of writing, Nikkei is up trading up 0.45%, Hong Kong HSI up 0.58%, Singapore Strait Times up 0.52%. That followed the impressive 1.58% rebound in DOW overnight, with S&P 500 gained 0.79% and NASDAQ rose 0.42%. 10 year yield also rose 0.019 to 2.871. However, Chinese stocks are quick to reverse gains. The Shanghai SSE is down -0.39% at 2694.52 currently, losing 2700 handles. It suggests that Chinese investors couldn't care less about the resumption of US-China trade talks. Nor do their care about the State Council's plan to boost private investments.

In the currency markets, Swiss Franc is trading as the weakest one today, followed by Dollar and then Yen. Reduced safe haven flow is the key factor in the softness in these three. But it should be noted that we're not seeing equivalent momentum between stocks rally and selloff in these three. On the other hand, New Zealand Dollar is leading Australian and Canadian Dollar higher on improved sentiments. Euro and Sterling are mixed. Gold continues to consolidate above yesterday's temporary low at 1160.37 but struggles to regain 1180 handle.

For the week, New Zealand Dollar is so far the strongest one but that's mainly because it's digesting recent sharp loss. Yen is the the second strongest, followed by Dollar but both have pared some of this week gains. Sterling is the weakest one followed by Australian Dollar and then Euro. The Pound received no support from this week's set of solid job, inflation and retail sales data. Brexit negotiation remains the key for Sterling to have a turnaround.

Technically, the forex markets are, generally speaking, in consolidation mode. The recoveries in EUR/USD, GBP/USD, EUR/JPY and GBP/JPY lack convincing momentum to warrant bullish reversal. Risks in these pairs stay on the downside for the near term. USD/CHF and USD/JPY are bounded in familiar range. USD/CAD continues to attempt to extend the rebound from 1.2961, but there is no follow through buying. The pair might need Canadian CPI to released today to help make up its mind.

USTR Lighthizer: A breakthrough in NAFTA talks in the next several days

US Trade Representative Robert Lighthizer said yesterday that he's "hopeful" that there will be a "breakthrough" in NAFTA talks with Mexico in the "next several days". But he didn't offer any details. It's reported that the two sides have largely agreed on the new rules regarding auto trade. And Lighthizer appeared to be willing to ease on the request of sunset clause in exchange for some concessions from Mexico.

On the other hand, Mexican Economy Minister Ildefonso Guajardo urged that "everybody has got to show some flexibility. And he added that "we have everything on the table, there are no preconditions and we'll see at the end how the whole thing falls into place." Also, Guajardo said the sunset clause will be among the "very last times" to be dealt with.

While there appears to be some progresses, it should be noted that Canada is not involved in the bilateral talks between the US and Mexico. And is unsure how Canada would be reengaged.

Japan manufacturers sentiment hit 7-month high, but non-manufacturing at 1.5 year low

Reuters Tankan manufacturers index rose to 30 in August, up from 25. However, the non-manufacturers index dropped sharply to 25, down from 34.

With the sharp 5 pts rise in index, manufacturer's sentiment, hit the highest level since January. Back then it was an 11-year high of 35. The index is expected to improve further in the new few months. It highlights the robustness of the manufacturing sector despite rising global trade tension and emerging markets risks.

On the other hand, services sentiments tumbled sharply by -9 to the lowest level since December 2016. It's partly due to once-off factors including abnormal whether including flood rains and heat waves. But the deterioration still indicates fragility in the sector and thus casts doubt on domestic demand. Domestic weakness could amply should there be deterioration in global trade tensions.

RBA Lowe warned of trade tension and highly unusual US fiscal stimulus

RBA Governor Philip Lowe appeared before the House of Representatives Standing Committee on Economics today. He reiterated the three points in communications about monetary policy. Firstly, employment and inflation are "moving in the right direction". Secondly, the next move is interest rates is "to be up". Thirdly, progresses is expected to be "gradual" and there is "not a strong case for near term adjustment in interest rates.

Lowe also highlighted a few global risks. Firstly, in some countries, businesses are delaying investment due to rising trade tensions. If it become a "more general story", it's the channel through which trade tensions would "sap the current positive momentum" in the global economy.

Secondly, it's "highly unusual" for the US to have "sizeable fiscal stimulus" at a time of "limited capacity". Growth could "surprise on the upside. And Lowe is "less relaxed" than others on the implications on inflation. He warned that Fed could have to withdraw monetary accommodation "more quickly than currently projected"with possibly disruptive consequences in financial markets.

A third set of global risks are from individual economies with "country-specific structural and/or institutional vulnerabilities", including Argentina, Brazil, Italy and Turkey.

China State Council to boost private investments, remove obstacles

China's official news agency Xinhua reported that the State Council decided on a host of measures to boost private investment, at a meeting yesterday. And, a number of projects should be identified for attracting private investments. Additionally, the State Council meeting called for lowering thresholds, shoring up the weak links, boosting domestic demand, promoting employment and strengthening the impetus for long-term development.

The measures will include tax and fee cutting for private businesses, VAT reforms, improvements in financing transmission mechanism, and risk compensation mechanism. In particular, obstacles in fields like healthcare and aged-care would be removed, including regulations on land use, funding support and personnel training.

Premier Li Keqiang was quoted saying that "the potential of consumption as a driver for growth need to be further unlocked. At the same time, more efforts need to be made to reduce business costs, support export, and make better use of foreign investment."

On the data front

New Zealand PPI input rose 1.0% qoq in Q2 versus expectation of 0.2% qoq. PPI output rose 0.9% qoq versus expectation of 0.1% qoq.

Eurozone current account, CPI will be featured in European session. Canada CPI is the main focus in US session. Canada will also release international securities transactions. US will release leading index and U of Michigan sentiment.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3123; (P) 1.3149; (R1) 1.3185; More...

USD/CAD edges higher again and breaches 1.3170 but upside momentum remains unconvincing. Nonetheless, we're staying cautiously bullish in the pair. The corrective pull back from 1.3385 should have completed at 1.2961 already. Further rise should be seen to 1.3289 resistance for confirmation. Break there will also likely resume larger rise from 1.2061 through 1.3385 high. On the downside, though, break of 1.3049 minor support will dampen this bullish view and turn focus back to 1.2961 low instead.

In the bigger picture, as long as channel support (now at 1.2958) holds, we're holding to the bullish view. That is, fall from 1.4689 (2015 high) has completed at 1.2061, ahead of 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048. Further rally should be seen for 61.8% retracement of 1.4689 to 1.2061 at 1.3685 and above. However, sustained break of the channel support will argue that rise from 1.2061 has completed and will bring deeper fall to 1.2526 support to confirm.

Economic Indicators Update

Daily Pivots: (S1) 1.3123; (P) 1.3149; (R1) 1.3185; More...

USD/CAD edges higher again and breaches 1.3170 but upside momentum remains unconvincing. Nonetheless, we're staying cautiously bullish in the pair. The corrective pull back from 1.3385 should have completed at 1.2961 already. Further rise should be seen to 1.3289 resistance for confirmation. Break there will also likely resume larger rise from 1.2061 through 1.3385 high. On the downside, though, break of 1.3049 minor support will dampen this bullish view and turn focus back to 1.2961 low instead.

In the bigger picture, as long as channel support (now at 1.2958) holds, we're holding to the bullish view. That is, fall from 1.4689 (2015 high) has completed at 1.2061, ahead of 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048. Further rally should be seen for 61.8% retracement of 1.4689 to 1.2061 at 1.3685 and above. However, sustained break of the channel support will argue that rise from 1.2061 has completed and will bring deeper fall to 1.2526 support to confirm.

Key Highlights

• The US Dollar remains in a short-term downtrend below the 111.50 pivot level against the Japanese Yen.
• There is a declining channel forming with resistance near 111.20 on the 4-hours chart of USD/JPY.
• The US Initial Jobless Claims for the week ending August 11, 2018 declined from 214K to 212K.
• Today, the Euro Zone CPI figure for July 2018 will be released, which is forecasted to rise 2.1% (YoY).

USDJPY Technical Analysis

The US Dollar recovered recently after trading to a new monthly low at 110.10 against the Japanese Yen. The USD/JPY pair corrected above 111.00, but it failed to move above the 111.50 pivot zone.

Looking at the 4-hours chart, the pair failed near the 111.40-50 zone and the 200 simple moving average (green, 4-hours). It declined below 111.00 and the 50% Fib retracement level of the last wave from the 110.10 low to 111.41 high.

On the downside, the 110.40 level is a decent support since it is the 76.4% Fib retracement level of the last wave from the 110.10 low to 111.41 high. Below 110.40, the pair could retest the last low at 110.10.

On the upside, the 111.10-20 zone is a major hurdle for buyers along with the 100 SMA (red, 4-hours). More importantly, there is a declining channel forming with resistance near 111.20 on the same chart.

Therefore, a break and close above 111.20 and 111.50 may well open the doors for a bullish wave towards 112.00 and 112.20. On the flip side, a break below 110.10 will most likely lead the pair towards 109.60.

Recently, the US Initial Jobless Claims figure for the week ending August 11, 2018 was released by the US Department of Labor. The market was looking for a rise from the last reading of 213K to 215K.

The actual result was positive as there was a decline in claims from the last revised reading of 214K to 212K. The report added that:

The 4-week moving average was 215,500, an increase of 1,000 from the previous week’s revised average. The previous week’s average was revised up by 250 from 214,250 to 214,500.

Overall, the US Dollar traded higher versus the Euro and the British Pound, but it struggled to gain momentum against the Japanese Yen.

Economic Releases to Watch Today

• Euro Zone CPI for July 2018 (YoY) – Forecast +2.1%, versus +2.1% previous.
• Euro Zone CPI for July 2018 (MoM) – Forecast -0.3%, versus +0.1% previous.
• Canadian Consumer Price Index July 2018 (MoM) – Forecast +0.1%, versus +0.1% previous.
• Canadian Consumer Price Index July 2018 (YoY) – Forecast +2.5%, versus +2.5% previous.

Yuan fixed higher for first time in seven days

At this morning's yuan fix, the People's Bank of China strengthened the yuan for the first time in seven days, moving the mid-rate to 6.8894 from 6.8946 yesterday. Despite the fix, USD/CNH rose marginally on the day, up 0.16% at 6.8721. Coming on the back of yesterday's news that US and China were planning to sit down for trade negotiations later this month, the move helped most equity markets across the region, with the Japan225 index currently up 0.08% and the HongKong33 CFD 0.11% higher though the ChinaA50 shares slid 0.2%.

Cloud still hangs over Turkey

Despite the more positive vibes elsewhere, the Turkey situation remains a thorn in the side of risk appetite. The US has warned the country to expect more sanctions if it does not hand over the detained American pastor quickly. USD/TRY is currently up 0.3% at 5.8488, snapping a three-day losing streak.

Low Aussie rates here to stay

In a speech before the House of Representatives Standing Committee on Economics, RBA Governor Lowe said the domestic economy was moving in the right direction, though reiterated there is not a strong case for any near-term adjustment in policy and would likely keep the current policy in place until benchmarks for unemployment and inflation are closer. He expects the next move in interest rates to be upwards with only a minute chance of a rate cut, only if there is a “China shock” or if there is a domestic housing market collapse.

On the Australian dollar, he expressed the opinion that a lower Aussie would be beneficial, helping to boost inflation and stimulate growth. The Aussie showed little reaction to the comments, instead posting gains after China announced a higher fix for the yuan versus the US dollar. AUD/USD is now up 0.17% at 0.7272.

European and Canadian CPI on the data slate

Today's European calendar is filled with Euro-zone data. The June current account balance sets things going followed by consumer price readings for July. Prices are seen rising at the same pace as June on an annual basis but seen slipping 0.3% month-on-month. The later session is more Canada-centric, with both national CPI data and the Bank of Canada's core CPI readings scheduled. The US' Michigan sentiment index is seen ticking higher to 98.0 in August from 97.9 the previous month.