Sample Category Title

EURUSD - The pair looks to weaken further in the days ahead as it retains its downside pressure. On the upside, resistance comes in at 1.1450 level with a cut through here opening the door for more upside towards the 1.1500 level. Further up, resistance lies at the 1.1550 level where a break will expose the 1.1600 level. Conversely, support lies at the 1.1300 level where a violation will aim at the 1.1250 level. A break of here will aim at the 1.1200 level. Below here will open the door for more weakness towards the 1.1150. All in all, EURUSD faces further downside pressure

EUR/USD

Current level - 1.1328

The downtrend has reached 1.1300 major support, but only a return above the crucial 1.1430 could signal a reversal of the direction. So, the bias remains bearish, for a break through 1.1300, en route to 1.1100 area.

USD/JPY

Current level - 111.26

My outlook is bullish, for a rise towards 112.10, en route to 113.20 area. Crucial on the downside is 110.70.

GBP/USD

Current level - 1.2711

The downtrend has been renewed after the corrective pattern to 1.2830, for a slide towards 1.2570. Initial intraday reisitance is projected at 1.2740, followed by the crucial high at 1.2830.

Wednesday August 15: Five things the markets are talking about

Global equities traded mixed overnight as market risk appetite continues to be tested by Turkey’s induced turmoil. U.S Treasuries prices have climbed a tad, while the greenback trades atop its 15-month highs against G20 currency pairs, again putting commodity prices under pressure.

In Turkey, President Erdogan implemented an additional tax on a range of U.S imports (autos, tobacco and alcohol), signalling its squabble with the U.S. will continue. The lira (-6.1% at $6.1148) has, for the time being stabilized, gaining outright, along with other EM pairs.

The market is still trying to gage the possibility of contagion to other emerging markets and to Europe. For now, it’s contained, however, if the crisis drags on or deepens, it has the potential to affect the E.U economy and ECB’s policy.

Will Turkey disappoint?

The Turkish finance minister has a planned conference call tomorrow where he is expected to reassure investors concerned by Erdogan’s influence over the economy and his resistance to interest rate hikes to tackle double-digit inflation.

On tap: U.S retail sales data appears this morning (08:30 am EDT), followed by housing data on Thursday. In Brussels Thursday, Brexit talks between the E.U and the U.K resume.

1. Stocks mixed results

In Japan, the Nikkei dropped overnight, mostly on profit taking after Tuesday’s sharp gains, though the drop was limited as the yen’s (¥111.28) weakness supported investor sentiment. Losses were concentrated in the gaming sector due to concerns over delays in new game releases in China. The Nikkei share average ended -0.7% lower, while the broader Topix declined -0.8%.

Down-under, Aussie shares rallied to a new decade high on strong earnings. The S&P/ASX 200 index firmed +0.5% at the close of trade. The benchmark rose +0.8% on Tuesday. In S. Korea, the Kospi was closed for a holiday.

In Hong Kong, stocks fell overnight; ending atop of their 12-month lows on bearish Chinese investor sentiment and broader concerns about emerging markets. At close of trade, the Hang Seng index was down -1.55%, while the Hang Seng China Enterprises index fell -1.95%.

In China, it was a similar story with stocks extending their losses overnight to a third consecutive day of declines as worries over the country’s cooling economy and the Yuan’s (¥6.8856) descent to a 15-month low knocked investor confidence. The blue-chip CSI300 index fell -2.4%, while the Shanghai Composite Index closed down -2.1%.

In Europe, regional bourses are trading somewhat muted with bank holidays in several European countries – Italy, Austria, Greece, Cyprus and Slovenia.

U.S stocks are set to open small down (-0.1%).

Indices: Stoxx50 +0.1% at 3,413, FTSE -0.1% at 7,604, DAX +0.2% at 12,386, CAC-40 flat at 5,405; IBEX-35 -0.3% at 9,481, FTSE MIB -0.3% at 20,906, SMI -0.4% at 9,004, S&P 500 Futures -0.1%

2. Oil falls on U.S stocks rise, weaker economic outlook, and gold lower

Oil prices trade under pressure, weighed down by a soft global economic outlook and a report of rising U.S crude stocks, despite U.S sanctions on Tehran threatening to curb Iranian crude oil supplies.

Brent crude oil is down -50c a barrel at +$71.96, while U.S light crude (WTI) is -55c lower at +$66.49.

According to U.S API data yesterday, U.S crude stocks rose by +3.7M barrels in the week to Aug. 10, to +410.8M barrels – crude stocks at the Cushing, Oklahoma delivery hub rose by +1.6M barrels.

Expect dealers to take their cue from today’s official U.S oil inventory data from the EIA (10:30 am EDT).

Ahead of the U.S open, gold prices have fallen to an 18-month low overnight as the ‘big’ dollar hit a 15-month high on risk aversion demand emerging from concerns about Turkey’s financial turmoil. Spot gold is down -0.45% at +$1,189 an ounce, while U.S gold futures are down -0.47% at +$1,195 an ounce.

3. Bank Indonesia continues to prioritize stability

Bank Indonesia surprised the market this morning by hiking its benchmark interest rate a fourth time in three-months, moving quickly to contain the EM volatility and curb a slide in its currency. The seven-day reverse repurchase rate was raised by +25 bps to +5.5%.

Note: Bank Indonesia has been among the most aggressive in Asia in tightening policy this year, raising rates by a total of +125 bps since May.

Policy makers ‘hawkish’ rhetoric suggests that they will continue to prioritize price stability and is willing to do more if required. For now, the aggressive hikes are helping to stabilize the rupiah (IDR), which is one of Asia’s worst performers this year, down about -7% outright.

Note: The rupiah hit a low overnight of $14,646, the weakest level since October 2015.

4. Dollar still moving markets

Currency markets continue to be driven by the strong dollar and U.S trade policy.

EUR/USD is flat at €1.1345, having reached yesterday a more-than-one-year low of €1.1317. If Turkey is adding to the ‘single units’ under-performance, be prepared for event risk over the next 24-hours – whether the U.S pastor is released and whether Turkish authorities will offer anything new in their investor call tomorrow? Italian budget situation is also simmering in the background with yesterday’s bridge collapse in Italy having government officials calling for more infrastructure spending.

USD/TRY ($6.1882) briefly tested below the $6.00 level after hitting a record high of $7.22 Monday. A second session of gains would suggest hat the market is pricing the risk of the Turkish crisis spreading to other emerging markets as being limited.

GBP/USD (£1.2719) tested below £1.27 for its lowest level in 13-months. Today’s U.K CPI reading (see below) has done little to change the outlook of the path for BoE rate hikes.

Hong Kong intervened to defend its peg to the dollar (HK$7.8498) for the first-time in three-months after the local currency fell to the weak end of its trading band.

5. U.K inflation accelerated in July

U.K data this morning showed that annual inflation accelerated in July, which suggests that domestic inflationary pressures persist despite disappointing wage growth.

The ONS reported consumer prices rising +2.5% on the year in July, up from a +2.4% annual gain in June.

Digging deeper, the pickup in inflation was driven by price increases for gas, food and video games.

Other data showed U.K wholesale prices in July also showed inflationary pressures. Prices charged by companies at the factory gate rose +3.1% y/y, while the cost of firms’ raw materials surged +10.9%, the fastest rate of input-price inflation in more than 12-months.

Note: Earlier this month, the Bank of England (BoE) hiked overnight interest rates to +0.75% and also telegraphed two or three more increases in the coming years.

Notes/Observations

• Turkey Lira currency continues its retracement from recent record lows; risk of the Turkish crisis spreading to other emerging markets appears limited for now
• Indonesia Central Bank hikes its key rate for the 4th straight time and maintains its hawkish tone
• UK July CPI in-line with expectations but remained above BOE target for the 20th straight month; data did little to change the outlook of the path for BOE rate hikes of one hike per year
• Assumption day holiday keeps participation at a minimum in Europe

Asia:

• China PBoC set the Yuan Reference Rate at 6.8856 v 6.8695 prior for its weakest CNY currency fix since May 12th 2017
• China State Planner (NDRC) Spokesman reiterates there was no winner from trade war; Jan-July data showed limited impact on China's economy from trade frictions; Trade frictions would have negative impact on domestic economy. Reiterated that China would ensure the achievement of annual economic growth target, despite trade war. And to keep economic growth within a reasonable range in H2

Europe:

• Turkey has raised tariffs on some US imports including raising passenger cars tariffs by 120%, alcohol tariffs by 140% & tobacco tariffs by 60%

Americas:

• White House official: more economic pressure could be in store for Turkey if it does not release Pastor Brunson
• State Dept spokesperson: conversations are continuing with Turkey about Brunson

Energy:

• Weekly API Oil Inventories: Crude: +3.7M v -6.0M prior

Economic Data:

• (PE) Peru Jun Economic Activity Index (Monthly GDP) Y/Y: 2.0% v 6.4% prior
• (DK) Denmark July PPI M/M: 0.2% v 1.5% prior; Y/Y: 6.7% v 6.8% prior
• (FI) Finland Jun Current Account Balance: -€0.4B v -€0.5B prior
• (NO) Norway July Trade Balance (NOK): 25.3B v 22.0B prior
• (TR) Turkey May Unemployment Rate: 9.7% v 9.6% prior
• (ID) Indonesia Central Bank (BI) raised the 7-day Reverse Repoby 25bps to 5.50% (not expected) for its 4th straight hike in the current tightening cycle.
• (TR) Turkey July Central Gov't Budget Balance (TRY): +1.1B v -25.6B prior
• (UK) July CPI M/M: 0.0% v 0.0%e; Y/Y: 2.5% v 2.5%e; CPI Core Y/Y: 1.9% v 1.9%e; CPIH Y/Y: 2.3% v 2.3%e
• (UK) July RPI M/M: 0.1% v 0.2%e; Y/Y: 3.2% v 3.4%e, RPI-X (ex-mortgage interest payment) Y/Y: 3.3% v 3.5%e, Retail Price Index: 281.7 v 282.1e
• (UK) July PPI Input M/M: 0.5% v 0.1%e; Y/Y: 10.9% v 10.3%e
• (UK) July PPI Output M/M: 0.0% v 0.2%e; Y/Y: 3.1% v 3.0%e
• (UK) July PPI Output Core M/M: 0.0% v 0.2%e; Y/Y: 2.2% v 2.1%e
• (UK) Jun ONS House Price Index Y/Y: 3.0% v 2.6%e

Fixed Income Issuance:

• (DK) Denmark sold total DKK2.83B in 2020 and 2027 bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx50 +0.1% at 3,413, FTSE -0.1% at 7,604, DAX +0.2% at 12,386, CAC-40 flat at 5,405; IBEX-35 -0.3% at 9,481, FTSE MIB -0.3% at 20,906, SMI -0.4% at 9,004 , S&P 500 Futures -0.1%]
• Market Focal Points/Key Themes: European stocks open slightly higher but later moved towards mixed as the session progressed; trading somewhat muted with bank holidays in several European countries; materials stocks impacted following disappointing economic news from China; focus on UK economic data; markets closed for holiday include Italy, Austria, Greece, Cyprus and Slovenia; Chile and Costa Rica closed for holiday; upcoming earnings expected in the US session include Super Micro Computer, Macy's and Ability

Equities

• Consumer discretionary: Aeroflot AFLT.RU +2.2% (share buyback)
• Energy: Vestas Wind VWS.DK +4.6% (results)
• Healthcare: ALK-Abello ALKB.DK +9.8% (results), GlaxoSmithKline GSK.UK +1.6% (study results), Hikma Pharmaceuticals HIK.UK +8.6% (results), Stratec Biomedical SBS.DE -13.4% (results)
• Industrials: Balfour Beaty BBY.UK +2.9% (results), Heijmans HEIJM.NL +3.9% (results), Leoni LEO.DE -5.0%(results), William Demant WDH.DK -8.0% (results)
• Financials: Admiral Group ADM.UK +2.3(results), Amundi AMUN.FR +2.9% (analyst action), Royal Bank of Scotland RBS.UK -0.2% (confirms dividend), Selvaag Bolig SBO.NO +6.6% (results)

Speakers

• Italy Interior Min Salvini (also Dep PM): To invest in infrastructure despite EU limits. The 2019 budget to include funds for infrastructure
• UK Foreign Sec Hunt stated that he was worried that the negotiations with the EU might not result in a Brexit deal but was very confident that govt would weather the storms ahead. No-deal Brexit would have a short-term impact on economy
• Turkish Court reportedly rejected appeal to release US Pastor Brunson from House Arrest
• Turkey Presidential aide Kalin stated that would continue abiding by free market rulles, don't want economic warfare with anyone. Improvement trend in markets over the past two days were noted; expected the trend in Turkish markets expected to continue
• Indonesia Central Bank (BI) Policy Statement reiterated it would remain preemptive and front-loaded on monetary policy. Decision to hike was consistent with efforts to keep competitiveness. The rate hike was needed to keep financial markets attractive and keep the current account deficit at a safe level. Domestic economy was resilient with consumption to support growth going forward. Global uncertainty was rising due to contagion risks from Turkey's fragility; to watch all impact of Turkey's slowdown. Indonesia FX Reserves level was seen as sufficient (**Note: July Foreign Reserves at $118.3B and has fallen for the past 6 months) . Saw a narrowing of the current account deficit on import reduction and reiterated to guard IDR currency (Rupiah) to be in-line with fundamentals; to maintain duel interventions

Currencies

• Overall the USD maintaining its firm tone against the major European pairs; rebound in the Turkish lira continued for a 2nd session.
• USD/TRY briefly tested below the 6.00 level after hitting a record high of 7.22 earlier in the week. Analysts noted that risk of the Turkish crisis spreading to other emerging markets seemed limited
• GBP/USD tested below 1.27 for its lowest level since Jun 2017 but moved off its worst levels. The 2.5% annual CPI reading for July did little to change the outlook of the path for BOE rate hikes of one hike per year.
• EUR/USD probing the lower end of the 1.13 handle as technical damage of the recent break of 1.15 keeps the downside possibilities open. Italian budget situation also simmering on the back burner with the recent bridge collapse in Italy having govt official there call for more infrastructure spending.

Fixed Income

• Bund Futures trades at 163.19 down 2 ticks little changed on a quiet trading day as many European nations observe various holidays. Support remains at 163.63 then 164. A downside break of 163.00 sees 162.69 initially.
• Gilt futures trades at 123.44 up a tick with little reaction after inline inflation readings. Continued support at 123.12, with a move higher targeting 123.58 then 123.74.
• Wednesday 's liquidity report showed Tuesday's excess liquidity rose from €1.908T to €1.913T. Use of the marginal lending facility rose from €31M to €115M.
• Corporate issuance saw a further 7 issuers raising $8.9B bringing this weeks issuance to $23.2B.

Looking Ahead

• 05:30 (DE) Germany to sell €1.0B in 2.5% July 2046 Bunds
• 05:30 (PT) Portugal Debt Agency (IGCP) to sell combined €0.75-1.0B in 3-month and 12-month Bills
• 06:00 (IE) Ireland Jun Trade Balance: No est v €5.2B prior
• 06:45 (US) Daily Libor Fixing
• 07:00 (US) MBA Mortgage Applications w/e Aug 10th: No est v -3.0% prior
• 07:00 (BR) Brazil Aug FGV Inflation IGP-10 M/M: 0.6%e v 0.9% prior
• 07:00 (ZA) South Africa Jun Retail Sales M/M: No est v 1.1% prior; Y/Y: 2.2%e v 1.9% prior
• 07:00 (RU) Russia to sell RUB10B in Dec 2021 OFZ Bonds
• 07:30 (BR) Brazil Jun Economic Activity Index (Monthly GDP) M/M: No est v -3.3% prior; Y/Y: +1.6%e v -2.9% prior
• 08:05 (UK) Baltic Dry Bulk Index
• 08:30 (US) Aug Empire Manufacturing: 20.0e v 22.6 prior
• 08:30 (US) Q2 Preliminary Nonfarm Productivity: 2.4%e v 0.4% prior; Unit Labor Costs: 0.2%e v 2.9% prior
• 08:30 (US) July Advance Retail Sales M/M: 0.1%e v 0.5% prior; Retail Sales Ex Auto M/M: 0.3%e v 0.4% prior, Retail Sales Ex Auto and Gas: 0.4%e v 0.3% prior; , Retail Sales Control Group: 0.4%e v 0.0% prior
• 09:00 (CA) Canada July Existing Home Sales M/M: No est v 4.1% prior
• 09:15 (US) July Industrial Production M/M: 0.3%e v 0.6% prior; Capacity Utilization: 78.2%e v 78.0% prior, Manufacturing Production: 0.3%e v 0.8% prior
• 10:00 (US) Jun Business Inventories: 67e v 0.4% prior
• 10:00 (US) Aug NAHB Housing Market Index: No est v 68 prior
• 10:30 (US) Weekly DOE Crude Oil Inventories
• 11:30 (IL) Israel July CPI M/M: 0.2%e v 0.1% prior; Y/Y: 1.6%e v 1.3% prior
• 12:00 (CO) Colombia Q2 GDP Q/Q: No est v 0.4% prior; Y/Y: 2.6%e v 2.2% prior
• 15:00 (AR) Argentina July National CPI M/M: 3.0%e v 3.7% prior; Y/Y: No est v 29.5% prior
• 15:00 (CO) Colombia Jun Economic Activity (monthly GDP) Y/Y: 2.7%e v 2.4% prior
• 16:00 (US) Jun Total Net TIC Flows: No est v $69.9B prior; Net Long-Term Flows: No est v $45.6B prior

Dont take your eyes off US data

American economic developments are as critical as US-Turkey relations. Today’s report on retail sales is expected to show a 0.4% monthly rise in July. Consumer fundamentals continue to improve, while businesses are driving on domestic demand. Amazon’s Prime Day sale lasted six-additional hours, boosting upside expectations. Spending on food services has risen steadily, industrial production is expected to rise 0.3% monthly in July, manufacturing output excluding autos should improve after a 0.3% rise in the prior month. While President Trump’s erratic trade policy has weighed on manufacturers, demand has firmed, suggesting growth will improve. Net-net: we expect further monetary tightening, which will follow through into treasury yields.

Markets are stable today: sentiment remains cautions, but for now TRY can breathe relief. USD/TRY fell sharply to 5.88, suggesting a coordinated action. The probability of a broader contagion, specifically into Europe, has fallen as financial institutions have time to clean their balance sheets and trade out of worrisome positions. Turkey might have been squarely in international markets, but with rising inflation and rate hikes ahead, USD strength is seeking unresponsive currencies. Central banks with weak foundations and policies unwilling to accept realties will come under pressure. It’s clear which direction the US economy and rates are heading, making USD carry and easy trade.

Euro struggles vs dollar

Trading sideways against the greenback since June in the 1.16 range, EUR fell most during last week’s Turkish lira collapse. Despite growth and improving sentiment indicators, the single currency continues to weaken against the USD while USD/TRY trend goes in the opposite direction. Fact: the euro does not constitute a safe haven. Currently trading at 1.1327, EUR/USD is expected to decline further, approaching the 1.1300 range

Supported by stronger than expected German Q2 GDP and inflation at 2%, the EU economy is doing well. Given at 0.40% and 2.20% on quarterly and yearly basis, GDP remains strong, a reassuring sign for the European Central Bank, whose normalization schedule remains: next rate hike expected in Q3 2019. However, as Italian debt continues to grow and concerns over Italy’s Prime Minister Giuseppe Conte’s plan to increase tax cuts and benefit spending are rising, the EU will probably face headwinds in coming months. Due in October, Italy’s budget, if increased, could raise Italy’s costs and cause a domino effect on EU banks holding Italian debt. Although economic vital signs favour a rate rise in 2019, the ECB will stay cautious in the coming months, as further uncertainties would delay a rate hike, a non-EUR-positive argument for the single economy.

The US dollar continues to move to fresh weekly trading highs against the Japanese yen on Wednesday, as the US dollar index soars to its highest level since June 2017. The USDJPY pair retains its bullish intraday bias while trading above the 111.10 level, traders should also note that the pair may be in the process of forming a bullish inverted head and shoulders pattern.

The USDJPY pair is bullish while trading above the 111.10 level, key resistance is now found at the 111.37 and 112.05 levels.

If the USDJPY pair trades below the 111.10 level, sellers could test towards the 110.80 and 110.55 support levels.

The British pound continues to trade towards the key 1.2700 level against the US dollar, with the sentiment towards sterling remaining weak after the United Kingdom economy released more soft inflation data this morning. The GBP/USD is likely to weaken further if traders can hold price below the 1.2722 support level, with sellers targeting the 1.2650 level.

The GBPUSD pair is strongly bearish while trading below the 1.2722 level, key intraday support remains at the 1.2650 and 1.2610 levels.

If the GBPUSD pair moves above the 1.2722 level, key resistance is located at the 1.2740 and 1.2775 levels.

SNB Vice Chairman Fritz Zurbruegg said in an even in Zurich that recent developments have shown that "the currency markets remain fragile". And that could lead to "safe have flows in the Swiss Franc".

And that means, the central bank's current ultra loose monetary policy with negative interest rate is justified. And SNB stands ready to intervene when necessary.

Some analysts tipped 1.2 as a level where SNB would start being active in intervention.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.14099
Open: 1.13460
% chg. over the last day: -0.54
Day's range: 1.13334 – 1.13442
52 wk range: 1.0571 – 1.2557

During yesterday's trading session, the bearish sentiment was observed on the EUR/USD currency pair. Demand for the US currency is at a high level, while the euro is declining. The drop in quotes exceeded 70 points. At the moment, the local support and resistance levels are 1.13100 and 1.13600, respectively. We recommend opening positions from these marks. In the near future, we do not exclude the technical correction of the EUR/USD currency pair.

The news feed on 15.08.2018:

Data on retail sales in the US at 15:30 (GMT+3:00).

Indicators point to the power of sellers: the price has fixed below 50 MA and 200 MA.

The MACD histogram is located in the negative zone, but above the signal line, which gives a weak signal to sell EUR/USD.

Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which indicates a corrective movement.

Trading recommendations

Support levels: 1.13100, 1.12600
Resistance levels: 1.13600, 1.14000, 1.14400

If the price fixes above the resistance level of 1.13600, correction of the EUR/USD currency pair is expected. The movement is tending to 1.14000-1.14200.

Alternative option. If the price fixes below 1.13100, it is necessary to look for entry points to open short positions. The movement is tending to 1.12800-1.12600.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.27577
Open: 1.27201
% chg. over the last day: -0.39
Day's range: 1.27039 – 1.27238
52 wk range: 1.2361 – 1.4345

Yesterday, the bearish sentiment was observed on the GBP/USD currency pair. The British pound weakened after the publication of a weak report on the UK labor market. At the moment, the key support and resistance levels are 1.26900 and 1.27500, respectively. In the near future, a technical correction is not ruled out. Positions should be opened from the key levels.

At 11:30 (GMT+3:00), the consumer price index will be published in the UK.

Indicators point to the power of sellers: the price has fixed below 50 MA and 200 MA.

The MACD histogram is in the negative zone, but above the signal line, which gives a weak signal to sell GBP/USD.

Stochastic Oscillator is located in the neutral zone, the %K line is above the %D line, which indicates the GBP/USD quotes growth.

Trading recommendations

Support levels: 1.26900, 1.26500
Resistance levels: 1.27500, 1.28000, 1.28500

If the price fixes above 1.27500, corrective movement is expected. The target level for profit-taking is 1.28000-1.28200.

An alternative may be a decline in the GBP/USD quotes to 1.26500-1.26300.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.31259
Open: 1.30567
% chg. over the last day: -0.58
Day's range: 1.30534 – 1.30565
52 wk range: 1.2059 – 1.3795

Yesterday, sales prevailed on the USD/CAD. The decline in quotes was caused mostly by the technical factors. At the moment, the technical pattern is ambiguous. Financial market participants expect additional drivers. The key support and resistance levels are 1.30600 and 1.30900, respectively. We recommend opening positions from these marks.

Today, the news feed on the economy of Canada is calm.

The price has fixed between 50 MA and 200 MA, which are strong dynamic support and resistance levels.

The MACD histogram is in the negative zone, but above the signal line, which gives a weak signal to sell USD/CAD.

Stochastic Oscillator is located in the overbought zone, the %K line is below the %D line, which indicates a decrease in the USD/CAD quotes.

Trading recommendations

Support levels: 1.30600, 1.30300, 1.30000
Resistance levels: 1.30900, 1.31200, 1.31600

If the price fixes below 1.30600, the USD/CAD quotes are expected to fall further. The movement is tending to 1.30300-1.30000.

Alternative option. If the price fixes above the already "mirror" resistance of 1.30900, it is necessary to consider purchases of USD/CAD. The movement is tending to 1.31200-1.31600.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 110.640
Open: 111.112
% chg. over the last day: +0.47
Day`s range: 111.111 – 111.239
52 wk range: 104.56 – 114.74

The bullish sentiment is prevailing on the USD/JPY currency pair. At the moment, the key support and resistance levels are 111.150 and 111.450, respectively. The trading instrument has the potential for further growth. Positions should be opened from the key levels. We recommend paying attention to economic reports from the US.

The news feed on the economy of Japan is calm.

Indicators point to the power of buyers: the price has fixed above 50 MA and 200 MA.

The MACD histogram is in the positive zone, but below the signal line, which gives a weak signal to buy USD/JPY.

Stochastic Oscillator is located in the neutral zone, the %K line is crossing the %D line. There are no accurate signals.

Trading recommendations

Support levels: 111.150, 110.800, 110.500
Resistance levels: 111.450, 111.800

If the price fixes above the resistance level of 111.450, the USD/JPY currency pair is expected to grow. The movement is tending to 111.800-112.000.

Alternative option. If the price fixes below the level of 111.150, it is necessary to consider sales of USD/JPY. The movement is tending to 110.800-110.600.

AUD/USD hits lowest in 19-months

Further signs that China’s economy may be slowing helped push the Australian dollar to its lowest level since January 2017, with the antipodean currency poised for its fifth consecutive daily loss. The Aussie is trading about 7.4% lower versus the US dollar since the beginning of the year. It could not gain any traction despite another up day for the Turkish lira, which rose as much as 5.8%.

Aussie was probably more affected by local and China data rather than the sentiment from emerging currencies. Fixed asset investment rose 5.5% y/y from January to July in China, less than the 6.0% forecast and the smallest increase since data began in early 2008.

Elsewhere, in line with USD/TRY’s movements, USD/MXN rose 0.7% while USD/SGD, a good barometer of the dollar’s direction, rose 0.1% to 1.3800, its highest level in just over a year.

Australia wages growth hits forecast

Wages growth in Australia remains slow, with the county’s wage price index rising 0.6% q/q in Q2, a slight pickup from the 0.5% rate in Q1 though has consistently held in the 0.4% to 0.6% range for the past four years. Slow wages growth (combined with high household debt) has been cited by the RBA as a reason for keeping interest rates at record lows. Consumer confidence, as measured by the Westpac index was down 2.3% in August after registering and improvement of 3.9% the previous month.

UK inflation seen ticking higher

UK producer and consumer prices are on tap today together with DCLG’s reading of house prices in July. Consumer prices are expected to rise 2.5% y/y, according to the latest survey of economists, as the Bank of England citied taming consistently high inflation as one of the reasons for hiking rates earlier this month. An above-forecast reading today will no doubt stir the hawks into talking about the next BOE hike, which could help the Pound halt a 10-day losing streak which has seen it drop to a 14-month low earlier today.

The US session features US retail sales, the industrial production/capacity utilization combo and business inventories. Closing the session we see net inflows/outflows of financial resources in the US with the monthly TIC flows data.