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Asia Summary

Asian equity markets opened mixed with little macro data to push FX in a particular direction and little concern for the departure of Steve Bannon from the Trump administration. Regional equity indices took the que from earnings results, which continue with earnest in Hong Kong, China and Australia. Australia names saw some large double digit moves after results (see equity section), with Fortescue in focus after dividend payout adjustment. Offshore yuan nears a fresh 2017 record high, + 0.07% at 6.6786 (2017 high is currently 6.6579) and yuan overnight HIBOR fell 65bps to 1.42%. Thailand posted a stronger than expected Q2 GDP figure, also a 4-yr high. South Korea and the US prepare for its annual joint military drills, President Moon called for calm after North Korea said the drills would be adding fuel to the fire. USD/KRW fell 0.2% to 1,130.20. Later in the week the annual Jackson Hole conference will take place, where ECB's Draghi may make a case to end QE in 2018.

Key economic data

(KR) SOUTH KOREA JUL PPI M/M: +0.1% V -0.4% PRIOR; Y/Y: 3.0% V 2.8% PRIOR

(NZ) New Zealand Jul Net Migration: 5.8K v 6.3K prior

(UK) AUG RIGHTMOVE HOUSE PRICES M/M: -0.9% V 0.1% PRIOR; Y/Y: 3.1% V 2.8% PRIOR

(TH) THAILAND Q2 GDP Q/Q: 1.3% V 1.0%E; Y/Y: 3.7% V 3.4%E (fastest pace in 4-yrs); Raises 2017 projected GDP to 3.5-4.0% (prior 3.3-3.8%)

Speakers and Press

China/Hong Kong

(HK) Cash withdrawals using China UnionPay cards migrating from Macau to Hong Kong – SCMP

(HK) Hang Seng Indexes discussed lowering the weighting limit for stocks, in 2014, the weighting limit was cut to 10% from 15% - HK Press

(CN) PBoC Vice Gov Yin Yong said financial regulators should step up penalties in relation to regulatory arbitrage – financial press

Korea

(KR) On Sunday, North Korea warned that the upcoming US/South Korea military exercises will be ‘adding fuel to the fire' – US press

Japan

(JP) Bank of Japan (BoJ) Gov Kuroda said the central bank has methods to avoid adverse effects when it normalizes policy; wants to avoid creating confusion by discussing specifics – Japanese Press

Other

(DE) German Finance Ministry Aug Report: Monthly data suggests further economic expansion, indicators suggest industrial sector will continue to grow in Q3

(EU) ECB's Draghi may make a case to end QE in 2018 at Jackson Hole this week due to large fall in EU unemployment, increase in growth and progress to inflation target - financial press

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.4%, Hang Seng +0.5%, Shanghai Composite +0.2%, ASX200 -0.7%, Kospi -0.04%

Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax -0.1%, FTSE100 -0.3%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.1764-1.1750; JPY 100.42-109.18; AUD 0.7935-0.7919; NZD 0.7323-0.7305

Dec Gold -0.0% at $1,291/oz; Oct Crude Oil 0.0% at $48.66/brl; Sept Copper +0.0% at $2.95/lb

JGB (JP) Japan MoF said to field additional queries over JGBs from foreigners - Japanese Press

(AU) Australia sells A$800M in 2.75% 2028 bonds; avg yield 2.6998%; bid-to-cover 2.99x

USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6709 V 6.6744 PRIOR

(CN) China PBOC OMO injects CNY180B v CNY120B in 7 and 14-day reverse reports prior: net drains CNY50B v injects CNY20B prior

(KR) South Korea sells KRW 0.6T in 6-month monetary stabilization bonds; avg yield 1.34% v 1.33% prior

(KR) South Korea sells 20-yr bonds; avg yield 2.38%

Equities notable movers

Hong Kong/China

1193.HK Reports H1 Net HK$2.11B v HK$1.96B y/y, Rev HK$17.7B v HK$15.4B y/y; -9.4%

China Unicom, 762.HK Announces 9.04B shares placed at CNY6.83/shr for CNY61.73B; +8%

Australia

BHP.AU Expected to announce a $0.84/shr, $4.0B dividend this week with FY17 results - UK press

GBT.AU Reports prelim FY17 Op EBITDA A$12.2M v A$20M y/y; Rev A$88.0M v A$108.1M y/y; -23%

VOC.AU Ends takeover talks with KKR and Affinity; Guides FY18 Underlying EBITDA A$370-390M v A$380Me, Rev A$1.9-2.0B v A$1.90Be; -23%

BSL.AU Reports FY17 underlying Net A$650.8M v A$674Me; Rev A$10.63B v A$9.07B y/y; Names Mark Vassella new CEO, Announces A$150M share buyback program; -22%

Taiwan

3673.TW Speculation Apple could add 30% of iPad orders to TPK and General Interface Solution - Taiwanese Press; +0.8%

• US, South Korean military exercises threaten to flare up tensions this week;
• Jackson Hole Symposium eyed as Yellen and Draghi give their views.

Europe is set for a slightly negative start on Monday, threatening to extend its losing streak to three sessions as political and geopolitical risk continue to weigh on risk appetite.

Geopolitical risk could rear its ugly head again this week as the US and South Korea begin planned military exercises on Monday, just as tensions between the North and these two countries appear to have calmed. Should North Korea respond in kind, then we could see a repeat of the safe haven rush from a couple of weeks ago when the situation previously flared up between the countries.

The political situation in the US is another one to watch, with it taking over the reins last week as reports circulated that Donald Trump was about to lose one of his most important members of staff – Gary Cohn – but instead it was Steve Bannon that made way. While this is seen as far more palatable for investors, it still caps off yet another troubling week for the President.

This week could get off to a slightly slower start - barring any escalation between the US and North Korea or in Washington – with the bulk of this weeks scheduled economic events coming later on. The Jackson Hole Symposium is the obvious event people will be most interested in, with both Federal Reserve Chair Janet Yellen and ECB President Mario Draghi making an appearance.

Both central banks are on the cusp of announcing measures aimed at reducing monetary stimulus in the coming months, the question is whether they will use this platform to prepare the markets for such a move. Reports last week suggested that Draghi is unlikely to take the opportunity given how the markets have misinterpreted previous remarks, an odd decision given the number of times the central bank has claimed its not interested in this. Still, we can expect investors to pay very close attention to what he says and respond accordingly.

Yellen may not be so secretive on the other hand, given how open her colleagues have been when discussing plans to start reducing the Fed’s balance sheet, which currently stands at close to $4.5 trillion. Traders, though, may be more interested in hearing whether the latest inflation data has changed the view within the Fed on raising interest rates again this year, with markets currently unconvinced, to say the least.

Market movers today

There are no big market movers today. However, later this week focus will turn to euro area PMI for August and not least the Jackson Hole Symposium hosted by the Kansas City Fed from Thursday-Saturday. ECB President Mario Draghi is set to be among the speakers for the first time in three years. In 2014, he hinted at QE and now the focus is on tapering signals. We expect him to deliver a dovish message and to not give any new communication on the issue of tapering of asset purchases. See Euro Area Research: Draghi returns to Jackson Hole with a dovish message, 18 August 2017. When it comes to the Fed, we do not expect anything dramatic. We look for a repeat of signals that the announcement on balance sheet reduction will come relatively soon (likely September) and that one more rate hike is st ill the base case this year – as signalled by Vice President Bill Dudley last week.

Selected market news

Canadian CPI figures rebounding to 1.2% y/y in July (consensus at 1.2%) on Friday, but remains below the Bank of Canada's (BoC) forecast of 1.3% for Q3 17. More importantly, the BoC's preferred measure for core inflation rises further as t he t rimmed mean and median measures rises. The summer months have shown a significant change in the BoC's rhetoric. As we entered summer, markets were pricing in a 25% probability of a summer cut (among other things on falling inflation). Meanwhile, as summer-end approaches, we have had an actual 25bp hike and the BoC's communication highlight s a strong belief in the output gap being closed soon, i.e. the belief in inflationary pressures rising eventually requires inflation disappointments before the BoC will stop its hiking cycle. Overall, Friday's print makes another hike this autumn very likely.

University of Michigan Consumer Confidence for August came out strong on Friday, increasing to 97.6 from 93.4 in June and beating consensus of 94.0 . This adds to signs showing some re-acceleration into H2 17. The details were also strong with US consumer expectations surging. The inflation expectations for one year were unchanged, while 5-10 year inflation expectations fell slightly from 2.6% to 2.5% over the past month.

US equities rebounded slightly on Friday after the White House announced that Stephen Bannon would be leaving his role as Donald Trump's Chief Strategist, capping a tumultuous period for the Trump Administration. Investors interpret ed Bannon's departure as a removal of a powerful advocate for a protectionist agenda and direct confrontation with China over trade.

UK Prime Minister Theresa May's government is preparing to give more details of its Brexit plans this week. The government plans to publish two papers today and more is expected over the following days.

Dollar Moves Away From Friday's 4-Month Low Vs Yen. The dollar inched up early on Monday, moving away from the four-month low against the yen weighed in the previous session on concerns that White House personnel changes will impair President Donald Trump's ability to pass tax reform and stimulus measures. The dollar was up 0.1 percent at 109.265 yen, after it fell as low as 108.605 yen on Friday, the lowest since late April.

Euro Steady Against Its Major Counterparts. European Central Bank will not deliver a new policy message at the Fed conference, two sources familiar with the situation said, tempering expectations for ECB to start charting the course out of stimulus. About $45 billion of euro-dollar currency options on the exchange rate will expire in the three days leading up to the Wyoming meeting.

Oil Stable As Market Conditions Tighten. Oil markets were stable early on Monday, holding on to Friday's big gains despite rising U.S. output that weighed on hopes the market will tighten with crude inventories down 13 percent since March. Traders said the market was somewhat held back by rising U.S. production, which has broken through 9.5 million barrels per day (bpd), its highest since July 2015. The Baker Hughes energy services firm reported on Friday that the rise in U.S. output may soon slow, as energy firms cut rigs drilling for new oil for a second week in three.

Key Points:

• Price action takes a sideways direction.
• RSI Oscillator trending lower within neutral territory.
• Pair likely to remain flat in the week ahead but watch for any upside breakouts.

The Euro continued its process of consolidation over the past week and trended sideways whilst giving up around 75 pips to close at 1.1759. Fundamentally, the pair was impacted by a relatively broad sentiment swing towards the USD which largely overshadowed the stronger than expected EU GDP figures. However, it remains to be seen if the pair will retain this sideways bias in the week ahead. Subsequently, it may be salient to review last week’s events with a view to ascertain what could be potentially looming on the near term horizon.

The Euro Dollar continued to moderate its recent gains over the past week which saw the pair give up around 75 pips in a gradual slow slide to close around the 1.1759 mark. Although, price action did initially move below near term support it soon rose again to retain its largely sideways direction. In addition, there was a very definite bid towards the USD which also impacted the pair. This was fuelled by a fall in the U.S. Initial Jobless Claims figures to 232k as well as a rise to 18.9 in the Philly Fed Business Outlook Index and ongoing speculation that the U.S. Federal Reserve will commence a balance sheet taper in the coming months. Subsequently, this also overshadowed what proved to be a relatively robust EU GDP result of 2.2% and the Euro saw little in the way of a bump from the result.

Looking ahead, the week ahead will be relatively busy for the Euro Dollar given the huge bevy of U.S. Economic data which is due for release. In particular, expect the U.S. Core Durable Goods Orders result, forecast at 0.4% m/m, to make its presence keenly felt. In addition, the German IFO Business Climate numbers are also due out and the market is broadly predicting a 115.5 print from the release. Finally, the Jackson Hole Economic Symposium is happening in the latter part of the week and this always brings with it some interesting information and potential volatility. Janet Yellen is on the schedule to speak this year and is probable to provide plenty of commentary on U.S. economic policy given how close the Fed is to potentially commencing a balance sheet taper. Subsequently, it would pay dividends to monitor the proceedings closely in the coming days.

From a technical perspective, the pair is now clearly within a consolidation phase from the recent 1.1908 high. Subsequently, what we are currently seeing is plenty of sideways movement which is relieving the pressure on the oscillators. We expect this pattern to continue in the week ahead and our initial bias is, therefore, neutral. Any large downside moves should be capped by support around 1.1606 as the pair continues to consolidate its position. Support is currently in place for the pair at 1.1685, 1.1606, and 1.1478. Resistance exists on the upside at 1.1908, 1.1977, and 1.2179.

Ultimately, the Euro Dollar is likely to take a relatively leisurely sideways direction in the coming week unless a major economic event occurs. However, an upside breakout is highly probably sometime over the near term so watch for any moves back above the 1.1908 high.

Currency pair EUR/USD

The EUR/USD is building a bull flag continuation chart pattern above the long-term trend line (blue), local support (blue), and long-term moving average, which favours a wave 4 (green) correction. A bullish break above resistance (red) would confirm the end of wave 4 and start of wave 5.

The EUR/USD seems to be building a wave 1-2 (purple) as long as price stays above the 100% Fib level of wave 2 vs 1. A break above resistance (red) line could see the start of wave 3.

Currency pair USD/JPY

The USD/JPY has retested key support zone (green lines), which will act as bounce or break spot. A bullish bounce could see price expand a wave B (brown) correction via an ABC (orange) flat whereas a bearish break would indicate a downtrend continuation and the completion of wave B (brown) at 111 (where A orange is now).

The USD/JPY is testing the resistance trend line of the bearish channel (orange lines).

Currency pair GBP/USD

The GBP/USD could have completed a 5th wave (purple) within wave 1 (red). A bearish bounce at the resistance trend line (red) could see price move lower towards the Fib targets of wave 5.

A GBP/USD bullish break above resistance (red/orange) could see the start of a wave 2 (red).

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.

EUR/USD

Weekly gain/loss: – 63 pips

Weekly closing price: 1.1758

Despite weekly action seen trading from resistance at 1.1871, price has yet to generate anything noteworthy to the downside. A similar picture can be seen on the US dollar index (USDX), only inverse from a weekly support drawn in at 11854. A violation of the current resistance level directly exposes another resistance pegged at 1.2044 (not seen on the screen), whereas a move south from current price could see the unit drive into a large support area at 1.1533-1.1278.

Down on the daily timeframe, demand at 1.1650-1.1733 elbowed its way back into the picture early last week and held firm. If this area caves in, a nearby support is seen lurking below at 1.1615. In addition to this, traders may have also noticed that the USDX is trading from daily demand at 11899-11932, which may suggest buyer weakness from 1.1650-1.1733.

A quick recap of Friday's sessions on the H4 timeframe shows the shared currency inched higher, marginally closing the day above the mid-level resistance 1.1750. For breakout traders looking to buy here, you may want to take note that there's limited upside potential from this angle. Directly above sits a supply positioned at 1.1792-1.1777, which intersects with not only a 61.8% Fib resistance at 1.1778 (taken from the high 1.1847), but also a channel resistance extended from the high 1.1910 and the psychological handle 1.18. Further adding to this, we can see that the USDX H4 candles are trading from a trendline support extended from the low 11853.

Suggestions: While it's tempting to look for a shorting opportunity from the noted H4 supply given its surrounding confluence, one still has to remain cognizant of the current daily demand! For that reason we're going to approach this market conservatively. Waiting for additional H4 candle confirmation to form from the H4 supply mentioned above at 1.1792-1.1777 in the shape of a full, or near-full-bodied bearish candle, is the safer route to take we believe.

Data points to consider: No high-impacting events scheduled to be released today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.1792-1.1777 ([waiting for a reasonably sized H4 bearish candle to form – in the shape of either a full, or near-full-bodied candle – is advised] stop loss: ideally beyond the candle's wick).

GBP/USD:  

Weekly gain/loss: – 138 pips

Weekly closing price: 1.2870

Last week's sharp run to the downside pushed the British pound into further losses, stripping close to 150 pips off its value. From the weekly timeframe, the next notable area to keep an eye on is the demand base coming in at 1.2589-1.2759. What's also notable from a technical perspective on this chart is the two intersecting trendline supports positioned just beneath the demand zone (1.2774/1.1986).

Meanwhile, on the daily timeframe there's a nearby support area marked at 1.2818-1.2752, seen intersecting nicely with a channel support line etched from the low 1.2365 (green circle). Also of particular interest is this area happens to be glued to the top edge of the aforementioned weekly demand.

Since Tuesday, the H4 candles have been consolidating between the 1.29 handle and the mid-level support at 1.2850 (encased within this range is June's opening level at 1.2870). Early on in Friday's US segment, nevertheless, the pair whipsawed through the lower edge of this range, and came within a few pips of testing a Quasimodo support level printed at 1.2831.

Suggestions: In view of the unit's close proximity to the top edge of the daily support area at 1.2818, we have our eye on the 1.28 handle drawn on the H4 timeframe for possible longs. Given the support and resistance delivered from this psychological band in the past, and its connection with the converging daily support area and channel support, we feel a long from here is high probability.

However, since round numbers are prone to fakeouts, we would not feel comfortable placing pending orders here. Instead, we'll wait for a H4 bull candle to form in the shape of a full, or near-full-bodied candle, before pulling the trigger. As for take-profit targets, we'll be looking to the 1.2850 neighborhood as the initial area of concern.

Data points to consider: No high-impacting events scheduled to be released today.

Levels to watch/live orders:

• Buys: 1.28 region ([waiting for a reasonably sized H4 bullish candle to form – in the shape of either a full, or near-full-bodied candle – is advised] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

AUD/USD:  

Weekly gain/loss: + 32 pips

Weekly closing price: 0.7924

Over the course of last week's trading, the commodity currency remained above the weekly support area coming in at 0.7849-0.7752. Providing that the bulls continue to bid this market higher from here, the next upside target can be seen at 0.8075: a resistance that stretches as far back as September 2008.

The response from the weekly support zone, coupled with daily flow bouncing from a demand base seen at 0.7786-0.7838 (encases a broken Quasimodo level at 0.7819), could lead to a move north up to the Quasimodo resistance level at 0.7988 sometime this week.

A brief look at recent dealings on the H4 timeframe, however, shows price reclaimed the 0.79 handle and ended the day shaking hands with a trendline resistance extended from the high 0.8065. Consequent to this recent movement, the large psychological 0.80 level has appeared on our radar. Apart from 0.80 being a watched round number, there are several nearby structures that deserve mention:

The daily Quasimodo resistance level at 0.7988.

A H4 Quasimodo resistance level at 0.8007.

A H4 127.2% Fib ext. point at 0.80 taken from the low 0.7807.

August's opening level at 0.7998.

A H4 Harmonic Gartley reversal point at the 78.6% Fib resistance line drawn from 0.8011.

Suggestions: While the above structures (H4 green sell zone) boast attractive confluence, one must take into account the possibility that a fakeout may be seen up to the daily Quasimodo resistance level at 0.8030 sited just above the green zone. Traditionally, when trading the Gartley Harmonic pattern the stop-loss order should go beyond the X point (0.8065). If you were to follow this, a fakeout up to the daily Quasimodo resistance is not a concern. It is more for the aggressive traders who will likely look to position stops just beyond the green zone. Should you be one of those traders, you may want to consider waiting for the H4 candles to prove seller intent (in the form of either a full, or near-full-bodied candle), before pressing the sell button. This will help avoid a fakeout should it occur.

Data points to consider: No high-impacting events scheduled to be released today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.8011/0.7988 (stop loss: either wait for a H4 bearish candle to form in the shape of a full, or near-full-bodied candle, and place stops above the candle's wick. Another option is to simply enter at 0.80 and place stops above the H4 Harmonic X point at 0.8067).

USD/JPY:  

Weekly gain/loss: + 2 pips

Weekly closing price: 109.19

USD/JPY prices are little changed this morning, despite the pair ranging 230 pips last week. Weekly price, as you can see, struggled to gain momentum from the demand area at 108.13-108.95 and, as a result, has recently chalked up an inverted pin-bar candle. To candlestick enthusiasts, this is considered a buy signal.

After a rather dominant selloff from the daily resistance at 110.76 last week, daily price ended the week retesting a Quasimodo support at 109.11 and its converging trendline support etched from the low 100.08. To our way of seeing things, apart from 17/04/17 low 108.13, the next support hurdle on the hit list (should the current daily supports give way that is) is seen as far down as the broken daily Quasimodo support drawn from 106.81.

Looking at the H4 timeframe this morning, Friday's trade saw price aggressively whipsaw through both the 109 hurdle and AB=CD (black arrows) 161.8% Fib ext. point 108.87, and end the week retesting the mid-level resistance at 109.50. A close above 109.50 would, in our humble opinion, be a sign of strength from both the weekly and daily supports currently in play.

Suggestions: Essentially, we're going to be watching for the H4 candles to close above 109.50. This – coupled with a retest at this mid-level number and a H4 bullish rotation candle (preferably a full, or near-full-bodied candle) would, in our view, be enough to justify a long entry. As far as targets go, the daily resistance at 110.76 is of interest, but it'd be great if we could trail this beauty as far north as the weekly supply coming in at 115.50-113.85.

Data points to consider: No high-impacting events scheduled to be released today.

Levels to watch/live orders:

• Buys: Watch for H4 price to engulf 109.50 and then look to trade any retest seen thereafter ([waiting for a reasonably sized H4 bullish candle to form following the retest – in the shape of either a full, or near-full-bodied candle – is advised] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

USD/CAD:  

Weekly gain/loss: – 95 pips

Weekly closing price: 1.2582

Despite the stronger-than-expected rebound seen from the weekly support area given at 1.2433-1.2569 three weeks ago, weekly sellers came into the fray last week and retested the top edge of this zone.

Technically speaking, the selloff was likely due to the daily resistance area coming in at 1.2831-1.2763. Should the bears continue to dominate from this zone, the next area on the hit list is the demand penciled in at 1.2303-1.2423 (positioned just below the aforementioned weekly support area).

Looking across to the H4 timeframe, nonetheless, we have a beautiful Harmonic bat pattern forming. Not only is the powerful XA retracement (88.6% Fib retracement at 1.2455) located just ahead of the mid-level support 1.2450, it is also positioned within the noted weekly support area and its converging weekly trendline support taken from the low 0.9633.

Suggestions: In the event that the Harmonic pattern completes, we will be interested buyers here. Additional confirmation, in our opinion, is not required since we can comfortably place stops beyond the X point (1.2413). Given the lack of economic data in the market, however, it is doubtful we'll see this area come into view today. So, we'd advise setting an alert at this zone as this will be an area that'll likely come into play later on in the week.

Data points to consider: No high-impacting events scheduled to be released today.

Levels to watch/live orders:

• Buys: 1.2450 (stop loss: 1.2411).
• Sells: Flat (stop loss: N/A).

USD/CHF:  

Weekly gain/loss: + 28 pips

Weekly closing price: 0.9646

The weekly trendline resistance extended from the low 0.9257 was brought into view over the past few weeks. The bearish selling wick recently printed from this line has, in our opinion, firmly placed the weekly support area at 0.9443-0.9515 back on the hit list.

Also of particular interest is the daily timeframe. The chart shows room for the pair to trade as far down as support coming in at 0.9546, which happens to unite with a channel support etched from the low 0.9438 and a AB=CD 127.2% Fib ext. at 0.9532.

Bouncing over to the H4 timeframe, the 0.96 handle bolstered the market on Friday. This, as you can see, brought price action up to within shouting distance of June and August's opening levels at 0.9680/0.9672. Seeing as how there's space for the market to trade lower on the higher timeframes, the two noted monthly levels could be an area for a potential short trade today. Still, with the 0.97 handle lurking just above here, a fakeout through the two monthly levels could be seen.

Suggestions: Wait for a H4 bearish candle to take shape from 0.9680/0.9672. Ideally the candle should be in the shape of a full, or near-full-bodied candle. This, to us, shows seller intent and is a strong signal that the trade will move in favor.

Data points to consider: No high-impacting events scheduled to be released today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.9680/0.9672 ([waiting for a reasonably sized H4 bearish candle to form – in the shape of either a full, or near-full-bodied candle – is advised] stop loss: ideally beyond the candle's wick).

DOW 30:  

Weekly gain/loss: – 171 points

Weekly closing price: 21694

The US equity market sustained further losses for a second straight week, erasing over 170 points. The move forced the index to shake hands with weekly demand seen at 21462-21645. In view of the incredibly strong uptrend this market has been in since, well, forever, we feel the current demand will hold ground this week.

Converging nicely with the top edge of the weekly demand is a daily AB=CD (black arrows) 127.2% Fib ext. point at 21683, and a daily 50% support line at 21680 drawn from the low 21192. Having seen little buyer intent generated from this line, we're eyeing the daily support level seen below it at 21541 for longs, which happens to fuse with a daily AB=CD 161.8% Fib ext. point at 21549.

Levels to watch/live orders:

• Buys: 21541 region (stop loss: beyond the daily low marked with a green arrow at [21462] at 21460).
• Sells: Flat (stop loss: N/A).

Global Markets:

• Asian stock markets: Nikkei down 0.39 %, Shanghai Composite rose 0.30 %, Hang Seng climbed 0.52 %, ASX 200 fell 0.64 %
• Commodities: Gold at $1291.03 (-0.04 %), Silver at $16.93 (-0.51 %), WTI Oil at $48.66 (-0.00 %), Brent Oil at $52.70 (-0.04 %)
• Rates: US 10-year yield at 2.19, UK 10-year yield at 1.09, German 10-year yield at 0.41

News & Data:

• USD Prelim UoM Consumer Sentiment 97.6 vs 94.0 expected
• NZD Credit Card Spending y/y 7.2 % vs 8.3 % expected
• JPY All Industries Activity m/m 0.4 % vs 0.5 % expected
• CAD CPI m/m 0.0% vs -0.1 % previous
• CAD Common CPI y/y 1.4 % vs 1.4 % previous
• CAD Median CPI y/y 1.7 % vs 1.6 % previous
• CAD Trimmed CPI y/y 1.3% vs 1.2% previous
• Oil steady as market conditions tighten despite rising U.S. output- RTRS

CFTC Positioning Data:

• EUR long 79K vs 94K long last week. Longs trimmed 15K
• GBP short 32K vs 25K short last week. Shorts increased 7K
• JPY short 77K vs 96K short last week. Shorts trimmed by 19K
• CHF short 1K vs 1K short last week. No change
• CAD long 51K vs 63K long. CAD longs trimmed by 12K
• AUD long 60k vs 58k last week. Longs increased by 2K
• NZD long 25K vs 33K long last week. Longs trimmed by 8K

Markets Update:

Asian equities markets opened mixed on Monday as investors remained unconvinced due to political uncertainties in the U.S and the war drills scheduled for the Korean peninsula.

USD/JPY is little changed this morning, despite the pair ranging 230 pips last week, The Yen is currently seen trading at 109.22 after falling 0.1 percent against the US Dollar, not far from Friday's four-month low of 108.605.

EUR/USD has barely moved in the session so far with a range of just around 10 pips, Notably the Euro continues to be stuck in its rough $1.17-$1.18 range in the past two weeks. The ranging is likely to continue as there are No high-impacting events scheduled to be released today.

AUDUSD was little changed and continued to trade in a small range with not much volatility, The Aussie is currently seen trading at 79.29 U.S. cents after gaining 0.6 percent on Friday.

Upcoming Events:

• 12:00 GMT – (CAD) Wholesale Sales m/m

The Week Ahead:

Tuesday, August 22nd

• 08:30 GMT – (GBP) Public Sector Net Borrowing
• 09:00 GMT – (EUR)German ZEW Economic Sentiment
• 12:30 GMT – (CAD) Core Retail Sales m/m
• 12:30 GMT – (CAD) Retail Sales m/m

Wednesday, August 23rd

• 07:00 GMT – (EUR) ECB President Draghi Speaks
• 07:00 GMT – (EUR) French Flash Manufacturing PMI
• 07:00 GMT – (EUR) French Flash Services PMI
• 07:30 GMT – (EUR) German Flash Manufacturing PMI
• 07:30 GMT – (EUR) German Flash Services PMI
• 08:00 GMT – (EUR) Flash Manufacturing PMI
• 08:00 GMT – (EUR) Flash Services PMI
• 13:05 GMT – (USD) FOMC Member Kaplan Speaks
• 14:00 GMT – (USD) New Home Sales
• 14:30 GMT – (USD) Crude Oil Inventories

Thursday, August 24th

• 08:30 GMT – (GBP) Second Estimate GDP q/q
• 08:30 GMT – (GBP) Prelim Business Investment q/q
• 12:30 GMT – (USD) Unemployment Claims
• 14:00 GMT – (USD) Existing Home Sales

Friday, August 25th

• 08:00 GMT – (EUR) German Ifo Business Climate
• 12:30 GMT – (USD) Core Durable Goods Orders m/m
• 12:30 GMT – (USD) Durable Goods Orders m/m
• 19:00 GMT – (USD) ECB President Draghi Speaks

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For the 24 hours to 23:00 GMT, the AUD rose 0.53% against the USD and closed at 0.7933 on Friday.

LME Copper prices declined 0.1% or $8.0/MT to $6452.0/MT. Aluminium prices rose 0.4% or $8.5/MT to $2104.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7931, with the AUD trading a tad lower against the USD from Friday’s close.

The pair is expected to find support at 0.7896, and a fall through could take it to the next support level of 0.7861. The pair is expected to find its first resistance at 0.7955, and a rise through could take it to the next resistance level of 0.7979.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR rose 0.3% against the USD and closed at 1.1763 on Friday.

On the economic front, the Euro-zone's seasonally adjusted current account surplus narrowed to a level of €21.2 billion in June, hitting its lowest level since August 2014. The region had registered a revised surplus of €30.5 billion in the previous month. Moreover, the region's seasonally adjusted construction output declined 0.5% on a monthly basis in June, easing for the second consecutive month. In the previous month, construction output had registered a revised drop of 0.2%.

Separately, Germany's producer price index rose more-than-expected by 2.3% on an annual basis in July, topping market consensus for a gain of 2.2%, but growing at its slowest pace in seven months. The index had posted an increase of 2.4% in the prior month.

The greenback traded in negative territory against its key peers on Friday, after the removal of the White House chief strategist, Steve Bannon, sparked fresh concerns over the US President, Donald Trump's ability to deliver on its pro-growth agenda.

However, losses in the US Dollar were capped, after the release of an upbeat US economic data.

The flash Reuters/Michigan consumer confidence index in the US jumped more-than-expected to a level of 97.6 in August, surging to a seven-month high as Americans grew optimistic about the nation's economic outlook. The index recorded a reading of 93.4 in the previous month, while market participants were anticipating for an advance to a level of 94.0.

In the Asian session, at GMT0300, the pair is trading at 1.1759, with the EUR trading slightly lower against the USD from Friday's close.

The pair is expected to find support at 1.1729, and a fall through could take it to the next support level of 1.1698. The pair is expected to find its first resistance at 1.1782, and a rise through could take it to the next resistance level of 1.1804.

Moving ahead, investors will look forward to the German Buba monthly report, slated to release in a few hours. Also, the US Chicago Fed national activity index for July, due to release later in the day, will be on investors radar.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.