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Daily Pivots: (S1) 1.2843; (P) 1.2876; (R1) 1.2899; More...

The consolidation from 1.2840 temporary low is still in progress and intraday bias remains neutral first. Outlook will stay bearish as long as 1.3030 resistance holds. We're preferring the case that correction from 1.1946 is completed at 1.3267. Below 1.2840 will target 1.2588 key support to confirm our bearish view. Nonetheless, break of 1.3030 will dampen our view and turn bias back to the upside for retesting 1.3267.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern. While further rise cannot be ruled out, larger outlook remains bearish as long as 1.3444 key resistance holds. Down trend from 1.7190 (2014 high) is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

Daily Pivots: (S1) 0.9590; (P) 0.9644; (R1) 0.9683; More...

USD/CHF is staying in range of 0.9582/9772 and intraday bias remains neutral at this point. On the upside, decisive break of 0.9772 resistance will revive the bullish case of reversal. That is, whole decline from 1.0342 has completed at 0.9437 after defending 0.9443 support. USD/CHF should then target channel resistance (now at 0.9862) next. Meanwhile, the pair is bounded inside medium term falling channel and limited below 38.2% retracement of 1.0342 to 0.9437 at 0.9783 for the moment. Break of 0.9582 will turn bias back to the downside for 0.9437. This could also extend the fall from 1.0342 through 0.9437/43 key support level.

In the bigger picture, current development argues that USD/CHF has successfully defended 0.9443 key support level. And long term range trading in 0.9443/1.0342 is extending with another rise. At this point, there is no sign of an up trend yet. Hence, while further rise is expected in USD/CHF, we'll start to be cautious on loss of momentum above 61.8% retracement of 1.0342 to 0.9437 at 0.9996. However, firm break of 0.9443 will carry larger bearish implication and would target next key support at 0.9072.

Daily Pivots: (S1) 109.21; (P) 109.79; (R1) 110.13; More...

Intraday bias in USD/JPY is turned back to the downside as fall from 110.94 resumed. Overall, price actions from 118.65 are seen as a correction pattern. There is clear indication that it's completed yet. Break of 108.72 will likely resume the whole decline from 118.65 through 108.12 to next medium term fibonacci level at 106.48. On the upside, above 110.94 will extend the rebound to 112.18 resistance next. Break there will turn focus back to 114.49 key near term resistance.

In the bigger picture, the corrective structure of the fall from 118.65 suggests that rise from 98.97 is not completed yet. Break of 118.65 will target a test on 125.85 high. At this point, it's uncertain whether rise from 98.97 is resuming the long term up trend from 75.56, or it's a leg in the consolidation from 125.85. Hence, we'll be cautious on topping as it approaches 125.85. If fall from 118.65 extends lower, downside should be contained by 61.8% retracement of 98.97 to 118.65 at 106.48 and bring rebound.

Daily Pivots: (S1) 127.96; (P) 128.83; (R1) 129.29; More...

EUR/JPY's fall from 130.38 accelerates further lower and breached 128.04. Based on current momentum, the corrective fall from 131.39 will dip deeper than originally expected. Intraday bias is now on the downside. Break of 38.2% retracement of 122.39 to 131.39 at 127.95 will target 100% projection of 131.39 to 128.04 from 130.38 at 127.03. We'll looking for bottoming above 125.80 cluster support (61.8% retracement at 125.82) . On the upside, break of 130.38 is needed to signal completion of the correction. Otherwise, deeper decline is now mildly in favor.

In the bigger picture, the down trend from 149.76 (2014 high) is completed at 109.03 (2016 low). Current rally from 109.03 should be at the same degree as the fall from 149.76 to 109.03. Further rise is expected to 61.8% retracement of 149.76 to 109.03 at 134.20. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. Medium term outlook will remain bullish as long as 124.08 resistance turned support holds.

Key Points:

• Wedge pattern/channel constricting price actions movements.
• RSI Oscillator demonstrating some divergence as it continues to trend lower.
• Watch for a breakdown back towards the 0.9000 handle over the next few sessions.

The EURGBP has been on a relatively linear run higher of late as the pair has consolidated some of the recent fundamental and technical gains. Subsequently, the pair has climbed through the 0.9100 handle but the momentum could be about to run out given that there are presently some signs of slowing from the technical perspective.

In particular, the 4-hour timeframe provides some interesting clues as to which way the pair could move in the near term. A cursory review shows that although price has been moving concertedly to the upside, a small wedge pattern/channel has now formed which is constricting price actions movements. Subsequently, the chance of a breakout increases as the channel continues to narrow and the market is presented with its options.

In addition, the RSI Oscillator has recently exhibited a slightly bearish trend and is presently moving lower, within neutral territory, demonstrating a level of divergence which suggests that a downside move could be underway. The Stochastic Oscillator is also swinging to the downside and largely mirrors the direction which the RSI has recently taken.In fact, price action is now pushing against the lower channel constraint suggesting that there may be some pent up selling pressure.

Fundamentally, there are also many reasons to suggest a correction given the UK's strong Retail Sales figures released overnight. The key macroeconomic indicator largely went unnoticed but it is symptomatic of the broader trend toward increased consumer demand, and by extension inflation. Subsequently, speculation is rife that the Bank of England will need to act, either though monetary policy or a balance sheet taper, over the medium term. This is something which is going to be an ongoing process but may result in significantly stronger valuations for the Pound.

Ultimately, the most likely scenario, at least in the near term, is an eventual breakdown of the bottom of the current channel. This would result in some significant downside moves with price action taking a bearish direction towards support around the key 0.9000 handle, and 0.8950 in extension. This move seems to be relatively likely over the next few session given some of the apparent selling pressures evident within the broader FX book. However, it is worth noting that there are plenty of strong sentiment swings around both the world's current geopolitical risk factors, as well as the Brexit, which would bear watching closely.

Asia Summary

Following the over 2% decline seen in the Nasdaq during NY trading, Asian equities are broadly weaker. Some attributed the weakness in US equities to concerns about President Trump’s economic policies amid speculation (that was later denied) that White House Economic Advisor and former Goldman COO Gary Cohn might consider resigning . The earlier terrorist attack in Barcelona was also said to weigh. During today’s Asian session, Catalonia officials said they thwarted a separate incident in Cambrils, which is south of Barcelona.

In terms of sectors, the Japanese chip equipment sector has been in focus after Applied Materials traded higher on better than expected quarterly results and guidance.

Shares of Lenovo traded lower after the company reported an unexpected Q1 loss, amid declines in gross margins.

Key economic data

(CN) CHINA JUL PROPERTY PRICES M/M: RISE IN 56 OUT OF 70 CITES VS 60 PRIOR; Y/Y RISE IN 70 OUT OF 70 CITIES VS 70 PRIOR

Speakers and Press

China

(CN) People’s Daily: US won’t win and cannot afford trade war against China

(CN) China State Planner (NDRC) Approves CNY165.5B in fixed-asset investment projects in July

(CN) China insurance regulator (CIRC) wants insurers to disclose info related to ‘big’ investment projects and ‘major’ losses – Chinese Press

Other

(ES) Catalonia Government: One police officer was injured in alleged terrorist attack in Cambrils; there are 4 presumed terrorists that have been killed**Note: On Thursday, in Barcelona a van rammed into dozens of people at the Ramblas tourist area; Cambrils is located south of Barcelona.

(NZ) New Zealand Foreign Visitor Spending in June Year at NZ$10.3B, flat y/y; China visitor spending -16%; Avg spending per tourist NZ$3.2K, -8%; Suggests the stronger Kiwi (NZD) could be a factor

Asian Equity Indices/Futures (00:30ET)

Nikkei -1.1%, Hang Seng -0.8%, Shanghai Composite -0.2%, ASX200 -0.7%, Kospi -0.1%

Equity Futures: S&P500 +0.1% ; Nasdaq +0.3% , Dax +0.1% , FTSE100 +0.2%

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.1709-1.1735; JPY 109.30-109.58 ; AUD 0.7870-0.7900; NZD 0.7276-0.7295

Aug Gold +0.1% at 1,293/oz; Aug Crude Oil -0.2% at $47.02/brl; Sept Copper +0.4% at $2.92/lb

GLD SPDR Gold Trust ETF daily holdings unchanged at 795.4 Mt

(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6744 V 6.6709 PRIOR

(CN) China PBOC OMO injects CNY120B v CNY100B in 7 and 14-day reverse reports prior: net injection CNY20B v CNY50B prior

(CN) PBoC auctions 3-month MOF deposits at yield of 4.46%

(AU) Australia sells A$500M in 2.0% 2021 bonds, avg yield 2.1077%%, bid to cover 5.62x

Equities notable movers

Australia

Kingsgate Consolidated, KCN.AU Favorable regulatory decision in Thailand; +35%

Kogan.com, KGN.AU FY17 net profit more than doubled; +7%

Hong Kong/China

Lenovo, 992.HK, Reported unexpected Q1 Net loss as gross margins missed ests; -2.3%

US markets on close: Dow -1.2%, S&P500 -1.5%, Nasdaq -1.9%, Russell -1.8%

Best Sector in S&P500: Utilities, Real Estate -0.7%

Worst Sector in S&P500: Tech -2%

At the close: VIX 15.55 (+3.81pts); Treasuries: 2-yr 1.31% (-2bps), 10-yr 2.19% (-4bps), 30-yr 2.78% (-3bps)

US Market Summary

Unfounded market speculation that White House economic advisor Gary Cohn was considering stepping down sent prices tumbling in the morning, followed by more pressure on equities as reports came in of a horrendous terrorist attack in Barcelona, Spain. The S&P extended its fall to the lowest level in a month, while the VIX index gained 28%, rising above 15.00 for the first time in a week. Treasury yields continued to decline as investors sought safety, with the 10-year yield down 3 bps to 2.19. Gold also on the rise today amid uncertainty, with the precious metal rising 0.4% to $1,288.00

US Afterhours Mover

SPWH Reports Q2 $0.15 v $0.13e, Rev $191.5M v $192Me; Guides Q3 $0.23-0.26 v $0.24e, Rev $220-225M v $228Me, SSS -6 to -8%; +14.2% afterhours

ROST Reports Q2 $0.82 v $0.76e, Rev $3.43B v $3.37Be- Guides Q3 $0.64-0.67 v $0.77e, SSS +1-2% - Guides Q4 $0.88-0.92, SSS +1-2% +10.1% afterhours

GPS Reports Q2 $0.68 v $0.52e, Rev $3.80B v $3.77Be- Raises FY17 $2.02-2.10 v $2.00e (prior $1.95-2.05) +6.3% afterhours

ZOES Reports Q2 $0.00 v $0.02e, Rev $74.3M v $75.4Me; affirms FY17 Rev $314-322M v $316Me, SSS flat to -3%; -2.0% afterhours

Global Markets:

• Asian stock markets: Nikkei lost 1.25 %, Shanghai Composite dropped 0.20 %, Hang Seng down 0.75 %, ASX lost 0.67 %
• Commodities: Gold at $1292.88 (+ 0.05%), Silver at $16.96 (- 0.55 %), WTI Oil at $47.05 (-0.08 %), Brent Oil at $50.98 (-0.10 %)
• Rates: US 10-year yield at 2.20, UK 10-year yield at 1.09, German 10-year yield at 0.41

News & Data:

• GBP Retail Sales m/m 0.3 % vs 0.2 % expected
• EUR Final CPI y/y 1.3 % vs 1.3 % expected
• CAD Manufacturing Sales m/m -1.8 % vs -1.0 % expected
• USD Unemployment Claims 232 K vs 240 K expected
• USD Philly Fed Manufacturing Index 18.9 vs 18.3 expected
• USD Industrial production m/m 0.2 % vs 0.3 % expected
• Dollar slips vs yen, dented by doubts over U.S. policy agenda – RTRS
• Oil prices fall amid broader market selloff, despite tightening supplies – RTRS

Markets Update:

Equity markets across the Asia-Pacific region were down early on Friday as a sense of growing unease gripped financial markets over concerns of Terrorist attack in Barcelona as well as political uncertainties in the U.S

USD/JPY dropped below 109.40 as The dollar posted its third session of losses against the yen, falling 0.15 percent in value. Meanwhile the EUR/JPY approached 128.00 and is currently seen Trading around today’s open at around 128.30 now.

EUR/USD up almost 0.1 percent on Friday gaining from its lows (circa 1.1710) to $1.17305, making up some of the previous session's 0.4 percent drop. From a technical perspective, the Euro aggressively whipsawed through the 1.17 handle yesterday, challenging the demand at 1.1650-1.1664.

GBP/USD has ticked up from lows of around 1.2860 and is currently seen trading around 1.2890. It is notable that since Tuesday, the Cable has been Consolidating between the 1.29 handle and the mid-level support at 1.2850.

Upcoming Events:

• 12:30 GMT – (CAD) CPI m/m
• 12:30 GMT – (CAD) Core Retail Sales m/m
• 12:30 GMT – (CAD) Common CPI y/
• 12:30 GMT – (CAD) Retail Sales m/m
• 14:00 GMT – (CAD) Prelim UoM Consumer Sentiment
• 14:15 GMT – (USD) FOMC Member Kaplan Speaks

For the 24 hours to 23:00 GMT, the AUD declined 0.43% against the USD and closed at 0.7891.

LME Copper prices rose 0.4% or $27.0/MT to $6460.0/MT. Aluminium prices rose 1.0% or $20.5/MT to $2095.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7896, with the AUD trading 0.06% higher against the USD from yesterday’s close.

Earlier today, in China, Australia’s largest trading partner, the house price index climbed 9.7% YoY in July. The index had risen 10.2% in the prior month.

The pair is expected to find support at 0.7856, and a fall through could take it to the next support level of 0.7817. The pair is expected to find its first resistance at 0.7949, and a rise through could take it to the next resistance level of 0.8003.

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

For the 24 hours to 23:00 GMT, the EUR declined 0.42% against the USD and closed at 1.1728, following the release of dovish minutes from the European Central Bank's July meeting.

According to minutes, policymakers expressed concerns over stubbornly low inflation as well as continuous strength in the Euro and were highly aware of the risk that an excessive rise in the currency could threaten the central bank's efforts to spur inflation.

On the macro front, the Euro-zone's final consumer price index (CPI) rose 1.3% on an annual basis in July, confirming the preliminary print. In the prior month, the CPI had registered a similar rise. Additionally, the region's seasonally adjusted trade surplus widened more-than-anticipated to a level of €22.3 billion in June, notching its highest in six-months. Markets were expecting the region to post a surplus of €20.3 billion, after recording a revised surplus of €19.0 billion in the previous month.

The US Dollar traded mostly higher against a basket of currencies, after data indicated that initial jobless claims in the US dropped to a six-month low level of 232.0K in the week ended 12 August, higher than market consensus for a fall to a level of 240.0K. In the prior week, initial jobless claims had recorded a level of 244.0K. Moreover, the nation's leading indicators rose 0.3% in July, meeting market expectations and compared to an advance of 0.6% in the previous month.

Another set of data showed that industrial production in the US climbed 0.2% on a monthly basis in July, undershooting market consensus for a gain of 0.3%. Industrial production had risen 0.4% in the previous month. On the other hand, the nation's manufacturing production recorded an unexpected drop of 0.1% MoM in July, defying market expectations for a rise of 0.2%. In the previous month, manufacturing production had increased 0.2%.

In the Asian session, at GMT0300, the pair is trading at 1.1733, with the EUR trading slightly higher against the USD from yesterday's close.

The pair is expected to find support at 1.1667, and a fall through could take it to the next support level of 1.1600. The pair is expected to find its first resistance at 1.1795, and a rise through could take it to the next resistance level of 1.1856.

Going ahead, investors will look forward to the Euro-zone's construction output data for June, slated to release in a few hours. Additionally, the US flash Reuters/Michigan consumer confidence index for August, scheduled to release later today, will be on investors' radar.

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

For the 24 hours to 23:00 GMT, the GBP declined 0.16% against the USD and closed at 1.2874.

Macroeconomic data revealed that Britain's retail sales advanced above market expectations by 0.3% on a monthly basis in July, driven by strong sales in food. Retail sales had registered a revised similar rise in the prior month, while markets anticipated for a gain of 0.2%.

In the Asian session, at GMT0300, the pair is trading at 1.2886, with the GBP trading 0.09% higher against the USD from yesterday's close.

The pair is expected to find support at 1.2856, and a fall through could take it to the next support level of 1.2827. The pair is expected to find its first resistance at 1.2912, and a rise through could take it to the next resistance level of 1.2939.

With no economic releases in the UK today, investors will keep a close watch on Britain's 2Q GDP report, slated to release next week, to gauge strength in the nation's economy.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.