Sample Category Title

Pivot (invalidation): 0.8885

Our preference Long positions above 0.8885 with targets at 0.8900 & 0.8910 in extension.

Alternative scenario Below 0.8885 look for further downside with 0.8875 & 0.8865 as targets.

Comment Technically the RSI is above its neutrality area at 50.

Pivot (invalidation): 7990

Our preference Long positions above 7990 with targets at 8330 & 8500 in extension.

Alternative scenario Below 7990 look for further downside with 7795 & 7600 as targets.

Comment The RSI is bullish and calls for further upside

BoE Governor Mark Carney said in a Bloomberg interview that the world could choose between a "low road of protectionism focused on bilateral goods-trade balances" and a "high road of liberalization of global trade in services." But he warned that the "low road will cost jobs, growth, and stability". Meanwhile, the "high road can support a more inclusive and resilient globalization." Carney said that the trade actions taken by Trump as of June had small impacts. But "a larger increase in tariffs would have a substantial impact".

Domestically, Carney said that it's "more likely than not" that the equilibrium interest rates have risen. But "any given jurisdiction has to take into account its own domestic forces, whether there are headwinds from fiscal policy, headwinds from uncertainty, headwinds from trade discussions or other factors."

He also played down the chance of other EU countries replicating London's success as a global financial center. He said, "in some circles in Europe there is a greater predisposition to ring-fence financial activities," and "that could lead to a very large but effectively local financial center in Europe, as opposed to a global financial center, which I believe London will continue to be."

Markets

On Friday, core bonds ended the day mixed to slightly stronger. German yields were little changed, despite disappointing French Q2 growth. The focus for core bond trading was on the US Q2 GDP. The US economy expanded 4.1% QoQ (annualized), close to expectations (4.2%). The details of the Q2 report were constructive, too. Even so, it failed to inspire any further rise in US yields. On the contrary, US yields declined up to 2 bp, with the 2-10-yr part of the curve showing a slight flattening. Markets already expected strong growth. Most price indicators of the report (including the core PCE deflator) remained rather soft. A risk-off correction on US equity markets also added to a bond friendly sentiment. US yields declined between 2.1 bp (10-y) and 1.2 bp (2-y).

Today, the EMU calendar is interesting with EC confidence data and the German July CPI. German HICP is expected to rise 0.4% M/M and 2.1% Y/Y. Markets will also look forward to several key events/data later this week. The BOJ (tomorrow), the Fed (Wednesday ) and the Bank of England (Thursday) will announce policy decisions. Markets are pondering whether the BOJ will fine-tune its policy, mainly to mitigate side effects. The Fed is expected to leave its policy rate unchanged, but markets will look for clues whether the scenario of two additional rate hikes is still viable. The BoE is expected to raise rates by 25 bp. At the end of the week, key US data including the US payrolls will be published. The price action Friday was slightly disappointing for bond bears. The report suggests that upcoming US eco data should be really strong to inspire a sustained (further) rise in yields. Given this morning's risk-off sentiment in Asia core bonds might remain well supported at the start of this week. For now, at test/re-break of the 3.0% level for US 10-year yields doesn't look that easy.

The US Q2 GDP was also not strong enough to inspire further USD gains. EUR/USD first traded with a negative bias changing hands in the 1.1625 area just before the GDP release. However, the dollar faced some kind of modest ‘buy-the rumour sell, sell the fact' reaction after the publication. EUR/USD closed the session at 1.1657 (from 1.1643). USD/JPY also finished the session slightly softer at 111.05. Some caution on yen shorts ahead of the BOJ and a correction on the equity markets weighed slightly USD/JPY, too. This morning sentiment on risk remains modestly risk-off in Asia. However, both EUR/USD and USD/JPY are trading near Friday's closing levels. Friday's price action was also slightly disappointing for USD bulls. The dollar needs positive surprises to succeed any further sustained gains. EUR/USD is holding firmly within the 1.15/1.1850 trading range. Friday's price action suggests that a downside break also won't be evident. For now there is no sign of a directional break out of the mentioned range.

Sterling even finished the day slightly softer with EUR/GBP closing just below 0.89. The EU rejecting PM May's proposal on the customs issue didn't help sterling. Today, the UK monetary data are on the agenda. Later this week, the focus will turn to the BoE policy decision. A rate hike is more or less discounted. Carney and Co will probably stay cautious on any additional rate hikes. We don't see much reason for a sustained GBP-comeback.

News Headlines

US president Donald Trump has threatened to shut down the government if Democrats do not back his border wall funding (to build that wall on the US-Mexican border) and back immigration law changes. While the big majority of Republicans is backing Trump on the ideas, they do not favor a government shutdown.

After investors were disappointed with the results of Facebook and Twitter last week, plunging their shares, market sentiment worsened (NASDAQ -1.46% on Friday). Asian markets continue this sentiment with all indices opening in red today. The Chinese Shenzhen Comp is outperforming with a 1.25% loss.

The British pound continues to trade on the back-foot against the US dollar on Monday, with price currently trapped around the 1.3100 level. The British pound has also received more bearish Brexit news this morning, with the European Court of Justice being given the final say in a number of important Brexit issues. Sellers will try to target a sustained break below the 1.3080 support level, while buyers will need to hold price above the 1.3177 level to regain bullish momentum.

The GBPUSD pair is bearish while trading below the 1.3100 level, key support is now found at the 1.3080 and 1.3030 levels.

If the GBPUSD pair holds above the 1.3177 level, buyers may test towards the 1.3205 and 1.3245 resistance levels.

The euro has opened the new trading-week around the key 1.1650 level against the US dollar, as traders await a breakout move in the greenback. Central bank action this week should provide the much needed directional catalyst for the EURUSD pair. Sellers will continue to target a strong break below the 1.1600 level, while buyers will try to move price above the 1.1724 resistance level.

The EURUSD pair remains bearish while trading below the 1.1650 level, key support is found at the 1.1600 and 1.1554 levels.

If the EURUSD pair trades above the 1.1650 level, buyers will likely target the 1.1680 and 1.1724 resistance levels.

On Friday, the price of Bitcoin slipped to $7700 after the SEC rejected an ETF proposal presented by the famous Winklevoss twins. The two twins are the founders of the successful cryptocurrencies exchange and custodian, Gemini which provides services to individuals and institutions.

Today, the BTC/USD pair jumped to $8205 which is the highest level since Friday. It is a few pips below the two-month high. The current jump is attributed to the optimism that the SEC will accept an ETF proposal submitted by VanEck ETF. This is because the ETF is designed for the institutional investors and not the average traders. Their contract size will be 25 bitcoins, which is equivalent to more than $200,000.

This is a good thing for hedge fund and institutional investors who want to diversify their portfolios. At their level, they don’t want to deal with things like cold storage and private keys. In addition, they need the assurance of a counterparty that is regulated by the SEC. A recent study found that in the United States, only 2% of the investors own Bitcoins while 26% of them are intrigued about the industry. A credible ETF could increase this percentage of ownership.

Other significant recent news was that Google was following the footsteps of Apple in banning apps that mine cryptocurrencies. This comes a few months after Google banned cryptocurrency related ads on its platform.

BTC/USD pair has held above the important $8,000 level as traders wait for a decision from the SEC. on the 4-hour chart below, this price is between the 50% and 61.8% Fibonacci Retracement levels and above the 50 and 100-day Exponential Moving Averages (EMA). More upside movements could come if the pair crosses the 61.8% Fibonacci level.

Daily Pivots: (S1) 0.7376; (P) 0.7396; (R1) 0.7422; More...

Intraday bias in AUD/USD remains neutral as consolidation from 0.7309 is extending. On the upside, above 0.7483 resistance will bring stronger rebound. But upside should be limited below 0.7676 resistance to bring larger fall resumption eventually. On the downside, break of 0.7309 and sustained trading below 0.7328 cluster support (61.8% retracement of 0.6826 to 0.8135 at 0.7326) will extend the fall from 0.8135 to 0.7158 support next.

In the bigger picture, medium term rebound from 0.6826 is seen as a corrective move that should be completed at 0.8135. Deeper decline would be seen back to retest 0.6826 low. This will now remain the favored case as long as 0.7676 resistance holds.

Economic data and monetary policy headline a highly active week in the financial markets. On Monday, attention turns to the eurozone.

Action begins at 08:30 GMT with reports from the United Kingdom covering net lending to individuals, consumer credit and mortgage approvals. Pound traders are in for an active week as the Bank of England (BOE) looks poised to raise interest rates to their highest level in a decade.

The European Commission's statistical agency will release a batch of sentiment indicators Monday. Business climate, economic sentiment, industrial confidence, service sentiment and consumer confidence are all scheduled for release at 09:00 GMT. The gauges on business climate and services sentiment are forecast to rise in July. The other indicators are projected to either hold steady or decline slightly.

Germany, Europe's largest economy, will release its latest consumer price index (CPI) at 12:00 GMT. July consumer prices are forecast to rise 0.4%, which translates into a year-over-year gain of 2.1%. Germany's harmonised index of consumer prices (HICP), which calculates inflation via eurozone methodology, likely rose 2.1% annually.

Shifting gears to the United States, the National Association of Realtors (NAR) will report on pending home sales at 14:00 GMT. The pending home sales index, which is a forward-looking indicator of closings, is forecast to rise 1.1% in June. However, in annualised terms, that translates into a 6% drop.

Thirty minutes later, the Federal Reserve Bank of Dallas will produce the manufacturing business index for the month of July. The gauge is forecast to decline sharply to 23.7 from 36.5 in June, signaling a sharp slowdown in regional business activity.

EUR/USD

Europe's common currency is coming off a turbulent week that saw prices swing from multi-week highs to more than one-week lows. At the time of writing, EUR/USD is trading at 1.1657, where it was relatively unchanged. From a technical point of view, the pair faces immediate support at 1.1620, followed by 1.1590. On the opposite side of the spectrum, resistance is likely found at 1.1720, followed by 1.1750.

GBP/USD

Like the euro, cable downshifted at the end of last week as the dollar regained momentum against a basket of its peers. GBP/USD now sits just above 1.3100 but could be poised to continue higher this week as the BOE gets ready to raise interest rates. The BOE has been one of the slowest central banks to normalize monetary policy after more than a decade of stimulus.

USD/JPY

Since plunging more than 2% in the span of three days, the USD/JPY exchange rate has shown signs of stabilizing. The pair is currently trading just above 111.00 ahead of the Bank of Japan policy decision later in the week. Immediate resistance is likely found at 111.40. On the flipside, the first support cluster is located at 110.55.

Daily Pivots: (S1) 1.3041; (P) 1.3061; (R1) 1.3080; More...

Intraday bias in USD/CAD stays neutral for consolidation above 1.3023 temporary low. With 1.3114 minor resistance intact, deeper decline is still expected. Break of 1.3023 will target 100% projection of 1.3385 to 1.3063 from 1.3289 at 1.2967 and possibly below. But, we'd expect strong support from rising channel line (now at 1.2902) to contain downside and bring rebound. On the upside, above 1.3114 is the first sign of bottoming and will turn bias back to the upside for 1.3289 resistance. Overall, the larger rally from 1.2061 is expected to resume later.

In the bigger picture, as long as channel support (now at 1.2902) 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.