Sample Category Title

Daily Pivots: (S1) 1.2660; (P) 1.2700; (R1) 1.2737; More...

GBP/USD continues to lose downside momentum as seen in mild bullish convergence condition in 4 hour MACD. But there is no clear sign of bottoming yet. As long as 1.2826 minor resistance holds, deeper fall is expected. Current decline is part of the down trend from 1.4376. Next target is 161.8% projection of 1.3362 to 1.2956 from 1.3212 at 1.2555. Though, break of 1.2826 will indicate short term bottoming and bring lengthier consolidation.

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 1.4141). Current downside acceleration argues that it's possibly resuming long term down trend. In any case, outlook will stay bearish as long as 1.3212 resistance holds. Retest of 1.1946 should be seen next.

The forex markets are clearly in consolidation mode today. Yen and Dollar trades broadly lower as they digest recent gains. But Canadian Dollar is, at the time of writing, the weakest one. Australian Dollar and New Zealand Dollar are the strongest one on receding risk aversion. While sentiments could have been lifted by news that US and China are resuming trade talks, the reactions in the markets have already said that investors are not convinced.

Admittedly, Chinese Yuan stages a notable rebound. USD/CNH is now at 6.8780, comparing to yesterday's high at 6.9586. But there is no clear sign of near term reversal before 6.8 support is taken out. In other markets, major Asian indices closed in red earlier today. Nikkei closed slightly down by -0.05%, Hong Hong HSI dropped -0.82%, Singapore Strait Times lost -0.69%. China Shanghai SSE also fell -0.66% to 2705.19, barely defended 2700 handle.

In Europe, FTSE is up 0.69% at 7549.37, DAX is up 0.35% at 12205.60, CAC is up 0.55% at 5334.96. However, all are kept below yesterday's high at 7632, 12428.56 and 5417.18 respectively. Today's recoveries are merely seen as a corrective move only.

Technically, EUR/USD is held below 1.1430 minor resistance, GBP/USD below 1.2826 minor resistance. EUR/JPY is held below 126.98 minor resistance, GBP/JPY below 142.46 minor resistance. There is no indication of short term bottoming yet. Recent decline just "slowed". More is needed to confirm a reversal in the down trend of these pairs.

Low expectation on US-China trade talks because it's low-level, and it's Mnuchin

The biggest news today is the resumption of trade talks between US and China. Other than a notable rebound in the Chinese Yuan and Australian Dollar, reactions from the financial markets are actually rather refrained. Both Hong Kong HSI and Shanghai SSE closed in red. And rebound in European stocks are nothing close to being strong.

China's Ministry of Commerce said in a statement that they accepted invitation by the US to resume trade discussions. Chinese Vice Commerce Minister Wang Shouwen will meet with US Secretary for International Affairs David Malpass in late August. While this is nonetheless a positive development, expectations are rather low for two reasons.

Firstly, the meeting is between rather low-level officials from both sides. Neither Wang nor Malpass could make a decision, nor are they close to the circle. And it's highly doubtful if any one of them know exactly what their leaders want. So, it's mostly a fruitless meeting even on a technical level.

Secondly, and more importantly, Malpass is from Steven Mnuchin's Treasury. He's neither from Secretary of Commerce Wilbur Ross, nor from Trade Representative Robert Lighthizer. It's unknown how much influence Malpass on trade policies. And, Steven is well known to be isolated from the hawks on trade war with China.

Just remember back in May, Mnuchin told the press that "we're putting the trade war on hold". And soon after, Trump slapped tariffs on USD 50B in Chinese goods. Then, there were reports that Mnuchin and Chinese Vice Premier Liu He were working on bring back everyone to the table. Then the same week, Trump raised the stake by increase tariffs on USD 200B in Chinese goods from 10% to 25%. China condemned US for playing "two-handed strategy".

So, is it just Mnuchin's wishing thinking for trade negotiation? Or it's Trump's two-handed strategy?

US initial jobless claims dropped to 212k, Philly Fed business outlook hit 21-month low

US initial jobless claims dropped -2k to 212k in the week ended August 11, slightly below expectation of 215k. Four-week moving average of initial claims rose 1k to 215.5k. Continuing claims dropped -38k to 1.721m in the week ended August 4. Four-week moving average dropped -8k to 1.7385m.

Philadelphia Fed Business Outlook Current Activity indicator dropped sharply to 11.9 in August, down from 25.7 and missed expectation of 22.3. It's also the lowest reading in 21 months. Nonetheless, the Six-Month Forecast indicator rose to 38.8, up from 29.0.

Also from the US, housing starts rose to 1.17m in July, building permits rose to 1.29m.

From Canada, manufacturing sales rose 1.0% mom in June.

UK retail sales rose strongly by 0.7% in July, but Pound shows no reaction

July is a rather strong month in UK retail sales, thanks to World Cup and good whether. Headline retail sales including fuel rose 0.7% mom, 3.5% yoy, well above expectation of 0.2% mom, 2.9% yoy. Ex-auto and fuel sales jumped 0.9% mom, 3.7% yoy, also well above expectation of 0.0% mom, 2.7% yoy. But just like employment and inflation data released earlier this week, the Pound basically has no reaction. It's trading mixed today, digesting this week's loss against Dollar and Yen.

Brexit negotiation restarts in Brussels today but it's sort of low-level meeting. Neither UK Brexit Minister Dominic Raab, nor EU's chief Brexit negotiator Michel Barnier would attend. At the same time, there is increasing talks of a no-deal Brexit recent. Latvia's Foreign Minister Edgars Rinkevics said yesterday that he gives it a 50-50 chance. Barnier's Deputy Sabine Weyand also said warned there is "no guarantee we will succeed" and she urged businesses to prepare for a "disorderly Brexit".

Also released in European session, Eurozone trade surplus narrowed slightly to EUR 16.7B in June.

Australia employment dropped -3.9k, but details solid

Australian job market contracted -3.9k in July, worse than expectation of 15.3k growth. Nonetheless, that's primarily due to -23.2k contraction in part time jobs. There was an impressive 19.3k growth in full-time jobs. Unemployment rate also dropped -0.1% to 5.3% while participation rate also dropped -0.1% to 65.5%. Monthly hours worked rose 0.2%. Overall, the set of data is rather solid despite the headline miss. Also from Australia, consumer inflation expectation rose to 4.0% in August, up from 3.9%.

Also from Asian session, Japan trade balanced turned into JPY -0.05T deficit, seasonally adjusted, in July.

South Korea to increase fiscal spending amid weakened job growth and economic polarization

South Korea  Finance Minister Kim Dong-yeon said today that the government is going to raise fiscal spending to counter the weakening of the job market and economic polarization. 2019 budget spending will increase far more than the original plan of 5.7%. The spending will be on supporting research and development of  advance artificial intelligence, big data and hydrogen vehicles.

Kim described that the job market is "the worst since financial crisis". And "the government's big challenge is how to support the job market through fiscal policies." Additionally. "Polarization issue is very perplexing", and "economic growth and innovation would be difficult to sustain without addressing the issue".

Earlier, the government cut job growth forecast to 180k this year, down from 320k prior estimate.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2660; (P) 1.2700; (R1) 1.2737; More...

GBP/USD continues to lose downside momentum as seen in mild bullish convergence condition in 4 hour MACD. But there is no clear sign of bottoming yet. As long as 1.2826 minor resistance holds, deeper fall is expected. Current decline is part of the down trend from 1.4376. Next target is 161.8% projection of 1.3362 to 1.2956 from 1.3212 at 1.2555. Though, break of 1.2826 will indicate short term bottoming and bring lengthier consolidation.

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 1.4141). Current downside acceleration argues that it's possibly resuming long term down trend. In any case, outlook will stay bearish as long as 1.3212 resistance holds. Retest of 1.1946 should be seen next.

Economic Indicators Update

After recording sharp losses on Wednesday, the DAX index has reversed directions in the Thursday session. In the North American session, the pair is trading at 12,200 up 0.13% on the day. On the release front, there was disappointing news on the inflation front. German Wholesale Price Index dropped to 0.0%, short of the estimate of 0.5%. The eurozone trade surplus narrowed to EUR 16.7 billion, missing the estimate of EUR 17.0 billion. On Friday, eurozone releases Final CPI

European stock markets have endured a dismal August, with the DAX down 4.6 percent. On Wednesday, the DAX dropped to its lowest level since the first week in July. These losses have corresponded with strong losses from the euro in August, reflective of investors showing a preference for assets like the U.S dollar over the euro and European shares. Investors are in a better mood on Thursday, on the news that the U.S and China will be holding trade talks at the end of the month. The negotiations will be handled by low-level officials and are being billed as ‘talks about talks’. Still, the markets are hopeful that the two sides are talking rather than slapping tariffs against each other.

Eurozone GDP in the second quarter managed to beat the estimate, but investors were not impressed. The economy posted a modest gain of 0.4% for a second straight quarter. The estimate stood at 0.3%. Concern about the eurozone economy was underscored by another negative reading from the German Economic Sentiment. The indicator gained ground in August but still remains in negative territory, with a reading of -13.7 points. This marked a fourth straight decline.

US initial jobless claims dropped -2k to 212k in the week ended August 11, slightly below expectation of 215k. Four-week moving average of initial claims rose 1k to 215.5k. Continuing claims dropped -38k to 1.721m in the week ended August 4. Four-week moving average dropped -8k to 1.7385m.

Full release here.

Philadelphia Fed Business Outlook Current Activity indicator dropped sharply to 11.9 in August, down from 25.7 and missed expectation of 22.3. It's also the lowest reading in 21 months. Nonetheless, the Six-Month Forecast indicator rose to 38.8, up from 29.0.

Full release here.

Also from the US, housing starts rose to 1.17m in July, building permits rose to 1.29m. From Canada, manufacturing sales rose 1.0% mom in June.

Here are the latest developments in global markets:

FOREX: Investors continued to look for riskier assets early in the European session on hopes that US-Sino trade tensions could deescalate following Beijing’s willingness to hold trade talks with the US later in August. Dollar/yen inched up to 110.90 (+0.15%), while the dollar index which gauges the greenback’s strength against six major currencies turned slightly lower to 96.59 (-0.11%) as trade hopes shifted some demand towards the euro. Still, trade stats out of the Eurozone showed that the bloc’s trade surplus with the US widened in June, a signal that Trump might keep adding pressure on his European counterparts. Euro/dollar strengthened by 0.25% on the day to trade at 1.1371 despite Washington refusing to remove its steel tariffs on Turkey, thereby reducing the chances for Ankara to release the American pastor. Pound/dollar failed to gain on upbeat British retail sales readings. While it stretched up to touch a high of 1.2731 after the data showed that retail sales expanded by 3.5% y/y in July compared to 3.0% expected and the 2.9% seen in June, the pair soon eased to 1.2699, near today’s opening price. In antipodean currencies, aussie/dollar and kiwi/dollar were in bullish mode, with the former changing hands higher at 0.7272 (+0.48%) and the latter crawling up to 0.6584 (+0.34%). Dollar/loonie was weaker at 1.3120 (-0.15%). The Turkish lira continued to pare loses against the greenback, sending dollar/lira down to 5.79 (-3.08%).

STOCKS: European stocks opened higher on Thursday except for the Italian FTSE MIB, which was down by 1.64% at 16-month lows at 0850 GMT, posting losses it missed on Wednesday as the Italian stock market was closed for the Ferragosto holiday. A 24% drop in Atlantia’s Spa stocks, a large Italian motorway group, weighed on the index after the deadly collapse of Genoa’s bridge on Wednesday. Meanwhile, the pan-European STOXX 600 and the blue-chip Euro STOXX 50 were up by 0.23% and 0.10% respectively, gaining on news that China will hold trade talks with the US later this month. The German DAX 30 climbed by 0.35%, the French CAC 40 increased by 0.43%, while the Spanish IBEX 35 rose by 0.38%. UK’s FTSE 100 was the best performer among European major indices, advancing by 0.50%. In the US, futures tracking S&P 500, Dow Jones and Nasdaq 100 were flashing green, pointing to a positive open later today.

COMMODITIES: Crude oil prices were mixed as investors worried about the sharp rise in US crude oil inventories as indicated by the EIA weekly report on Wednesday, but still stood somewhat optimistic that the US-Sino trade dispute could be resolved, or at least subside a little. Ongoing tensions between the US and Turkey, which put emerging markets under pressure earlier this week, were also a source of uncertainty. WTI crude and Brent were last seen at $64.97 (-0.06%) and at $70.87 (+0.16%) per barrel respectively. In precious metals, gold continued its rebound off the 20-month low of $1160 per ounce reached today, surging by 0.53% to $1180.45.

Day ahead: Brexit talks resume, with trade developments also in the spotlight

The highlight of the remainder of Thursday’s calendar will likely be the resumption of the Brexit negotiations in Brussels, and any potential comments from the relevant officials. Any developments on the trade front or the situation in Turkey will also be closely watched.

After some relatively encouraging UK data releases this week, which despite confirming that the economy remains on a healthy track still failed to lift the British pound, investors’ attention now turns back to Brexit. Markets will look out for any signs of progress in the negotiations, or the lack thereof. Note that the pound has recorded significant losses lately amid speculation that a no-deal Brexit is becoming more likely and hence, the Brexit risk-premium on the currency is probably quite high already. This suggests the risks surrounding the pound from these talks may now be somewhat asymmetrical, and tilted to the upside. Whereas continued lack of progress could keep the currency at current low levels or even trigger some further moderate losses, any hints that the negotiations are set to move forward may come as a positive surprise and thereby, lead to an outsized relief bounce.

Turning to trade, overnight news suggest China will send a delegation to the US in late August to hold another round of negotiations aimed at resolving the trade dispute between them. The headlines supported risk sentiment earlier on Thursday, lifting the euro – which had been hurt by trade woes in recent months – and weighing on the yen as well as on the dollar that have been attracting safe-haven flows lately. Any comments by the two sides that set the stage for what to expect from these talks could well impact risk appetite again. Anything pointing to a negotiated solution becoming more likely could benefit risk-sensitive currencies like the aussie to the detriment of havens like the yen, and vice versa.

The situation in Turkey will also remain on investors’ radars. The lira staged a notable comeback in recent days, aided by some technical adjustments by the central bank. That said, the diplomatic showdown with the US over the release of pastor Brunson remains in full swing, while the broader macroeconomic picture has not improved in a meaningful manner, which suggests risks are still present.

In terms of economic data, housing figures out of the US at 1230 GMT may attract attention. Both building permits and housing starts are forecast to have risen in July. Meanwhile, the Philly Fed business activity index for August, which will be released at the same time, is projected to decline. In Canada, manufacturing sales for June – due out at 1230 GMT as well – are anticipated to have risen again, albeit at a slower pace than previously.

In equities, Walmart and Nvidia will release quarterly earnings on Thursday; the former before the US market open, and the latter after the closing bell.

EUR/USD has posted small losses in the Thursday session. Currently, the pair is trading at 1.1372, up 0.24% on the day. On the release front, the German Wholesale Price Index dropped to 0.0%, short of the estimate of 0.5%. The eurozone trade surplus narrowed to EUR 16.7 billion, missing the estimate of EUR 17.0 billion. In the U.S, there are a host of key indicators. Building Permits and Housing Starts are both expected to rise, with estimates of 1.31 million and 1.27 million, respectively. The Philly Fed Manufacturing Index is forecast to drop to 21.9 points and unemployment claims is expected to edge up to 215 thousand. On Friday, the eurozone releases Final CPI and the U.S publishes Preliminary UoM Consumer Sentiment.

The euro has endured a rough August, losing 2.7 percent in that time. Weak growth in the eurozone and trade tensions with the U.S have affected investor sentiment, and the euro has struggled as a result, trading this week at 14-month lows against a strong U.S dollar. However, the euro’s fortunes could improve, with news that the U.S and China will be holding trade talks. The negotiations will be handled by low-level officials and are being billed as ‘talks about talks’. Still, the markets are hopeful that the two sides are talking rather than slapping tariffs against each other.

Eurozone GDP in the second quarter managed to beat the estimate, but investors were not impressed. The economy posted a modest gain of 0.4% for a second straight quarter. The estimate stood at 0.3%. Concern about the eurozone economy was underscored by another negative reading from the German Economic Sentiment. The indicator gained ground in August but still remains in negative territory, with a reading of -13.7 points. This marked a fourth straight decline.

Entering into US session, Yen continues to trade as the weakest one as market sentiments improved. Swiss Franc follows as the second weakest. Meanwhile, Australian and New Zealand Dollar are the strongest ones. Apparently, both Aussie and Kiwi are lifted by news that US and China are going too resume trade talk later in the month. This can also be clearly reflected in the recovery in the Chinese Yuan, as USD/CNH (offshore Yuan) dipped to as low as 6.8694 so far today, and broke yesterday's low. However optimism is indeed not seen in Asian equities.

In Asia, Nikkei closed slightly down by -0.05%, Hong Hong HSI dropped -0.82%, Singapore Strait Times lost -0.69%. China Shanghai SSE also fell -0.66% to 2705.19, barely defended 2700 handle.

The picture in Europe is slightly better. At the time of writing, FTSE is up 0.65% at 7546.92. DAX is up 0.51% at 12224.54, CAC is up 0.63% at 5338.71. However, all are kept below yesterday's high at 7632, 12428.56 and 5417.18 respectively. Today's recoveries are merely seen as a corrective move only.

Gold dropped to as low as 1160.37 and broke 1172.09 fibonacci level. But it rides on Dollar's pull back to recover and is back pressing 1180. Some consolidations is likely in near term. But outlook stays bearish as long as 1217.20 resistance holds. We'd still expect further fall into 1046.54/1122.81 long term support zone before bottoming.

Notes/Observations

• Risk sentiment improves on US-China trade dialogue set to resume but remains fragile due to Turkish and Italian concerns
• UK July Retail sales data handily beats expectations aided by discounts, world cup and hot weather
• Norway Central Bank keeps policy steady and poised to hike at its next meeting in Sept

Asia:

• Australia Aug Consumer Inflation Expectation: 4.0% v 3.9% prior
• Australia July Employment Change: -3.9K v +15.0Ke; Unemployment Rate: 5.3% v 5.4%e ((lowest unemployment rate since Nov 2012)
• Japan July Trade Balance registers a larger-than-expected deficit ( -¥231.2B v -¥41.2Be) as exports slow
• China Commerce Ministry (MOFCOM): China Vice Commerce Min to visit the US for trade talks in late Aug, to meet with US Treasury Undersecretary Malpass. China reiterated its stance that it would not accept any unilateral trade measures and its opposition to trade protectionism. Reiterated that China welcomed dialogue.
• Hong Kong Monetary Authority (HKMA): Reiterates to continue to buy Hong Kong dollar (HKD) currency at 7.85 when weak-side of trading band is triggered
• Former BoJ Official Hayakaw: BoJ might tolerate bond yield rises to around 0.4% under the new guidance adopted in July. With the new guidance, the BoJ couldn now conduct 'stealth' rate hikes.

Europe:

• Turkish Foreign Min: Turkey is prepared to discuss issues with the United States without threats
• Qatar has pledged to invest $15B in Turkey economy
• Turkey Fin Min Albayrak: Turkey-Qatar will improve cooperation; Turkey tol emerge with rational policies, strong strategies, friends, cooperation
• IMF Official stated that it had not received any indication from Turkey authorities that they were considering a request for IMF financial assistance

Americas:

• White House Press Sec Sanders: Turkey's tariff announcement is regrettable and was a step in the wrong direction
• US govt issues new North Korea-related sanctions; to implement sanctions on Chinese, Russian firms over North Korea connections

Economic Data:

• (NL) Netherlands July Unemployment Rate: 3.8% v 3.9%e
• (DE) Germany July Wholesale Prices M/M: 0.0% v 0.5% prior; Y/Y: 3.5% v 3.4% prior
• (CZ) Czech Jun Export Price Index Y/Y: +0.5% v -1.5% prior; Import Price Index Y/Y: +0.7% v -2.3% prior
• (CZ) Czech July PPI Industrial M/M: 0.3% v 0.1%e; Y/Y: 3.4% v 3.1%e
• (TR) Turkey Jun Industrial Production M/M: -2.0% v -1.6% prior; Y/Y: 3.2% v 5.0%e
• (NO) Norway Central Bank (Norges) left the Deposit Rates unchanged at 0.50%, as expected
• (UK) July Retail Sales (Ex-Auto Fuel) M/M: 0.9% v 0.0%e; Y/Y: 3.7% v 2.8%e
• (UK) July Retail Sales (Including Auto/Fuel) M/M: 0.7% v 0.2%e; Y/Y: 3.5% v 2.9%e
• (EU) Euro Zone Jun Trade Balance (Seasonally Adj): €16.7B v €16.9Be v €16.9B prior; Trade Balance NSA (unadj): €22.5Bv €16.5B prior

Fixed Income Issuance:

• (SE) Sweden sold SEK500M vs. SEK500M indicated in 0.125% I/L Dec 2027 Bond; Avg Yield: -1.5104% v -1.3716% prior; Bid-to-cover: 5.53x v 1.90x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx50 +0.8% at 3,376, FTSE +0.3% at 7,518, DAX +0.4% at 12,209, CAC-40 +0.4% at 5,326; IBEX-35 +0.7% at 9,451, FTSE MIB -1.0% at 20,700, SMI +0.6% at 8,983, S&P 500 Futures +0.3%]
• Market Focal Points/Key Themes: Euopean indices open higher across the board, excepting Italy dragged down by repercussions from Genoa bridge collapse, and playing catch-up after being closed for holiday yesterday; risk sentiment supportive; improved commodity prices support materials stocks; Amazon reportedly to open a car insurance comparison website in the UK; Italy PM said is looking forward to cancelling Autostrade's licence, dragging on construction stocks including ACS and Hochtief; earnings expected in the upcoming US session include Walmart, JCPenny and Applied Materials

Equities

• Consumer discretionary: Carlsberg CARLB.DK +3.3% (results), JC Decaux DEC.FR +6.5% (analyst action), Kingfisher KGF.UK -2.0% (results), Lagardere MMB.FR +0.6% (acquisition), Rank Group RNK.UK -2.8% (results)
• Consumer staples: ForFarmers FFARM.NL +1.8% (results), ICA Gruppen ICA.SE -5.8% (results)
• Financials: Aegon AGN.NL +1.3% (results)
• Industrials: Atlantia ATL.IT -25.8% (potential termination of highways contract - halted), Boskalis Westminster BOKA.NL -6.7% (results), Henkel HEN3.DE -4.1% (results)
• Materials: KAZ Minerals KAZ.UK +7.5% (results)
• Technology: Wirecard WDI.DE +4.4% (results)

Speakers

• Norway Central Bank (Norges) Policy Statement noted that the decision to keep policy steady was unanimous and reiterated its view that the 1st potential rate hike likely to be in September. The outlook and the balance of risks did not appear to have changed substantially since the June report. Underlying inflation was below inflation target, but the driving forces indicated it would rise further out
• Netherlands Bureau for Economic Policy Analysis (CPB): Cuts 2018 GDP growth forecast from 2.9% to 2.8%. Maintained 2018 inflation at 2.0% while raising 2019 inflation from 2.4% to 2.5%
• Indonesia President Widodo budget speech forecasted 2019 GDP growth at 5.3% and proposes 2019 budget deficit to GDP ratio of 1.84% vs. 2.12% y/y
• China PBoC said to ban commercial banks from using interbank accounts to either deposit or lend yuan offshore through free trade zone scheme

Currencies

• The USD retraced some of its recent strength as risk appetite improved over the past 24 hours.
• US and China have agreed on a new round of trade talks, while Turkey has managed to halt the rout of the Lira and secure major investments from Qatar
• EUR/USD higher by 0.2% but unable to break above the 1.14 level as Italian budget concerns continue to linger in the background.
• GBP received a small lift after UK July Retail sales data handily beat expectations. GBP/USD holding above the 1.27 level as a result.
• TRY currency (Lira) appreciated for the 3rd straight day and briefly moved below 5.70 level against the USD. Focus will be on the upcoming an investor call later today . Reports that Qatar had already pledged to invest $15B in Turkish economy

Fixed Income

• Bund Futures trades at 163.42 down 14 ticks retracing some of the move seen yesterday as European Indices. Resistance moves to 163.82 then 164. A downside break of 163.00 sees 162.69 initially.
• Gilt futures trades at 123.64 down 9 ticks benefiting from better UK Retail sales numbers. Continued support at 123.12, with a continued move higher targeting 123.93 then 124.00.
• Thursday 's liquidity report showed Wednesday's excess liquidity rose from €1.913T to €1.918T. Use of the marginal lending facility fell from €115M to €100M.
• Corporate issuance saw a quieter day in terms of issuance with two issuers raising $1.5B in the primary market.

Looking Ahead

• (CO) Colombia July Consumer Confidence: 17.8e v 15.5 prior
• (EG) Egypt Central Bank Interest Rate Decision
• 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds (3 tranches)
• 05:30 (IN) India to sell combined INR120B in 2020, 2026, 2031, 2033 and 2045 bonds
• 06:00 (IL) Israel Q2 Advance GDP Annualized (1st reading): 2.5%e v 4.7% prior
• 06:45 (US) Daily Libor Fixing
• 08:00 (PL) Poland July CPI Core M/M: 0.0%e v 0.1% prior; Y/Y: 0.6%e v 0.6% prior
• 08:05 (UK) Baltic Dry Bulk Index
• 08:30 (US) Initial Jobless Claims: 215Ke v 213K prior; Continuing Claims: 1.74Me v 1.755M prior
• 08:30 (US) July Housing Starts: 1.26Me v 1.173M prior; Building Permits: 1.31Me v 1.292M prior (revised from 1.273M)
• 08:30 (US) Aug Philadelphia Fed Business Outlook: 22.0e v 25.7 prior
• 08:30 (CA) Canada Jun Manufacturing Sales M/M: 1.0%e v 1.4% prior
• 08:30 (CA) Canada July ADP Payrolls Report: No est v -10.5K prior
• 08:30 (US) Weekly USDA Net Export Sales
• 09:00 (RU) Russia Gold and Forex Reserve w/e Aug 10th : No est v $458.0B prior
• 09:00 Turkey Fin Min Albayrak holds investor call
• 10:00 (MX) Mexico Central Bank (Banxico) Aug Minutes
• 10:30 (US) Weekly EIA Natural Gas Inventories

Thursday August 16: Five things the markets are talking about

This week, the mighty U.S dollar has gained traction from safe-haven investment flows on the back of trade disputes between the U.S and China.

Nonetheless, investor risk sentiment has received a boost overnight on two-fronts – reports that China has accepted a U.S invitation to trade talks in late August and news that Qatar has pledged to invest +$15B in Turkey are helping market risk sentiment and pressuring the dollar a tad. The Turkish lira has erased nearly all of its “economic attack” losses, with USD/TRY trading down -3.2% at $5.7682.

Note: Market focus now turns to the Turkish Finance Minister, Berat Albayrak, who is to address some of the key issues looked at by investors when he speaks to investors later this morning on a conference call (09:00 am EDT).

The de-escalation of trade tensions is providing both Euro stocks and U.S equity futures a bid, while Treasury prices dip. Elsewhere, metals prices are rebounding after yesterday’s session hammering, while oil prices claw back some of Wednesday’s losses.

On tap: Brexit talks between the E.U and the U.K resume in Brussels today, while stateside, U.S housing data is released at 08:30 am EDT.

1. Asian stocks hit one-year low, Euro equities higher

Overnight, equity prices stayed lower in most Asian markets, pressured by disappointing tech earnings. Although most bourses pared some of their steep declines after China indicated that its commerce minister would visit the U.S for talks later this month.

In Japan, the Nikkei share average ended -0.1% lower, while the broader Topix slumped -0.6%, after touching its lowest since late March.

Down-under, Aussie shares closed unchanged overnight, as a sell-off in materials was offset by gains in the telecommunications sector. The S&P/ASX 200 index inched -0.01% lower at the close of trade after the benchmark rallied +0.5% on Wednesday. In S. Korea, the Kospi index declined -0.8%, tracking declines in the Chinese market.

In Hong Kong and China, stocks declined for a fifth and fourth consecutive session respectively as concerns over slower growth in China and Turkey’s currency crisis weighed on regional markets, but hopes of a possible reconciliation between the U.S and China helped cut the worst of the losses.

Weakness overnight was centered in energy and infrastructure names again. At the close of trade, the Hang Seng index fell -0.8%, while the China Enterprises Index lost -0.5%. In China, the blue-chip CSI300 index fell -0.4%, while the Shanghai Composite Index closed -0.7% lower.

In Europe, regional bourses have opened higher across the board on improved risk sentiment, except Italian stocks, which are under pressure from Genoa’s bridge collapse – Italy’s PM is looking to cancel Autostrade’s licence, dragging on construction sector.

U.S stocks are set to open in the ‘black’ (+0.3%).

Indices: Stoxx50 +0.8% at 3,376, FTSE +0.3% at 7,518, DAX +0.4% at 12,209, CAC-40 +0.4% at 5,326; IBEX-35 +0.7% at 9,451, FTSE MIB -1.0% at 20,700, SMI +0.6% at 8,983, S&P 500 Futures +0.3%

2. Oil edges up as China and U.S set trade talks, gold higher

Oil prices are small better bid on news that Beijing would send a delegation to Washington in the next two-weeks to try to resolve their trade dispute with the U.S. Nonetheless, market sentiment remains bearish amid the dispute and on concerns of an economic slowdown in emerging markets.

Brent crude is at +$71.11 per barrel, up +35c, or +0.5% from yesterday’s close, while U.S West Texas Intermediate (WTI) crude is up +15c, or +0.2%, at +$65.17 a barrel, held back somewhat by rising U.S crude production and storage levels.

Note: Both benchmarks lost more -2% in yesterday’s session.

EIA data this week showed that output of U.S crude rose by +100K bpd in the week ending Aug. 10, to +10.9M bpd. At the same time, U.S crude inventories climbed by +6.8M barrels, to +414.19M barrels.

Ahead of the U.S open, gold prices have clawed back from their 19-month intraday overnight on short covering and as the U.S dollar softened. Spot gold is up +0.1% at +$1,175.07 an ounce, while U.S gold futures are down -0.2% at +$1,182.1.

3. Sovereign yields back up

Earlier this morning, Norway’s central bank (Norges) kept rates unchanged at +0.5% as expected. The decision was unanimous. Policy makers reiterated that the first potential rate hike would likely occur next month, and that the outlook and the balance of risks do not appear to have changed substantially since the June report.

Norway’s underlying inflation remains below the inflation target, but the driving forces indicate it will rise further out. At the June meeting Norges Bank stated that the policy rate would most likely be increased by +0.25% to +0.75% in September.

Elsewhere, the yield on U.S 10-year notes has backed up +1 bps to +2.88%. In Germany, the 10-year Bund yield has advanced +1 bps to +0.31%, while in the U.K 10-year Gilt yield has increased +1 bps to +1.225%, the largest increase in more than a week. In Italy, the 10-year BTP yield has declined -2 bps points to +3.151%.

4. Turkish lira pares recent losses

The Turkish lira has erased nearly all its recent losses, with USD/TRY trading down -3.2% at $5.7682, after Qatar overnight offered Turkey an economic support package worth +$15B. On Monday, TRY broke record lows outright has threatened to lift inflation even higher, causing concerns of an economic meltdown in Turkey.

Note: Market focus now turns to the Turkish Finance Minister, Berat Albayrak, who is to address some of the key issues looked at by investors when he speaks to investors later this morning on a conference call (08:00 am EDT).

Other emerging market currencies, which suffered from Turkish contagion, have gained some ground as well. USD/ZAR is down -1.3% at $14.3777 and USD/RUB has fallen -0.5% to $66.9961.

EUR/USD (€1.1386) is higher by +0.1%, but is unable to break above the key psychological €1.14 level as Italian budget concerns continue to linger in the background.

GBP (£1.2706) temporarily received a small lift after U.K July Retail sales data beat expectations (see below).

And again, the Hong Kong Monetary Authority (HKMA) reiterated to continue to buy HKD currency at $7.85 when weak-side of trading band is triggered.

5. U.K retail sales rebounded in July

Data this morning showed U.K retail sales rebounding last month following a soft June fuelled by sales of food and drink during the soccer World Cup.

According to the ONS, sales in July were +0.7% higher than in June and +3.5% higher than a year earlier. The market was expecting a +0.2% headline print.

The rise was driven by sales of food and drink as well as sales online, which offset a decline in sales at department stores and a fall in gas sales.

Note: The U.K economy shook off a poor start to the year to grow +0.4% in Q2.

No significant changes were introduced to the AUD/USD exchange rate positioning on Wednesday, as the pair remained trading inside the one-week junior descending channel. The situation, however, remained the same on Thursday, as the price continued to bounce between the upper and lower borders of Monday's trading range of 0.7273/0.7200.

Given that the AUD/USD currency exchange rate has moved near the 0.7257 mark, a breakout from the trading range is likely to occur during the following trading session. Furthermore, technical indicators support bearish momentum is expected to continue today.