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As OPEC began its 2-day meeting in Abu Dhabi on Monday, to align its members to adherence to output reductions, data from S & P Platts revealed that Libya and Nigeria pushed OPEC’s crude oil output in July to the highest level this year at 32.82 million barrels a day. Per Platts; Libya and Nigeria (both exempt from the cuts agreed last year) oil production went up 210K barrels per day in July, 210K bpd and 1.81 million bpd respectively. If the data from Platts is correct then OPEC’s output in July was 920K bpd above the ceiling of 31.9 million bpd OPEC set last year. It is evident that compliance with the cuts is not being made, thus leading to an oversupply that has kept WTI below $50. The markets will be waiting to see if OPEC makes further demands of its members to reduce production and, more importantly, that its members abide by such demands.

In currencies, USD edged lower on Monday, giving back some of its gains from Friday, as the markets became cautious ahead of inflation data this week that may signal a reversal in USD weakness. Finally, the latest economic data out of China pointed to steady global demand. While exports missed market estimates, rising 11.2% in July in yuan terms, demand for Chinese goods held up in the face of escalating tensions with the US.

EURUSD trading was relatively light on Monday, trading in a narrow 43.7 pip range as it made some gains from Fridays sell-off. Currently, EURUSD is trading around 1.1805.

USDJPY was also trading in a narrow range of less than 28 pips on Monday. Currently, USDJPY is trading around 110.60.

GBPUSD appears to have found some support just above 1.30 on Monday in relatively light trading. Currently, GBPUSD is trading around 1.3045.

Gold edged lower on Monday, failing to gain support from a weaker USD, as the markets digested sharp losses in the previous session and worried about further U.S. rate hikes. Currently, Gold is trading around $1,260.00.

WTI lost 1.2% on the day, as Oil failed to recover from recent USD strength. WTI currently trades around $49.40pb.

Economic data releases on Tuesday are, somewhat, second tier – with little expected impact on the markets.

Day 2 of the OPEC meeting in Abu Dhabi ends. The main focus being members’ compliance to the output pact the cartel inked with 10 other oil suppliers, including Russia, in late 2016. The deal so far has not produced meaningful effects to reduce global output or inventories.

Asia Summary

Asian markets opened mixed, with USD weakening during the session. China reported its July trade balance data, exports slowed for the 5th consecutive month. The yuan rose 0.25% against the USD, after trade data, to 6.7044. Notably steel product exports were down ~29% y/y at a 2013 low. AUD/USD rose after July business confidence and conditions rose. Fresh talks recirculated that the yuan trading band could be expanded later this year. Japan and Korea markets were little moved on the report that Japan and North Korea foreign ministers briefly met yesterday. No further details were given on the meeting.

Key economic data

(CN) CHINA JULY TRADE BALANCE (CNY): 321.2B V 297.4BE; Exports Y/Y: 11.2% v +15.2%e, Imports Y/Y: 14.7% v 22.6%e

(CN) CHINA JULY TRADE BALANCE: $46.7B V $45.0BE; Exports Y/Y: 7.2% v +11.0%e; Imports Y/Y: 11.0% v +18.0%e

(JP) JAPAN JUN TOTAL CURRENT ACCOUNT: ¥934.6B V ¥860.5BE; ADJ TOTAL CURRENT ACCOUNT: ¥1.52T V ¥1.50TE; TRADE BALANCE BOP BASIS: ¥518.5B V ¥571.5BE

(JP) JAPAN JUL BANK LENDING (INC TRUSTS) Y/Y: 3.3% V 3.3% PRIOR; BANK LENDING (EX-TRUSTS) Y/Y: 3.4% V 3.3%E

(AU) Australia July NAB Business Confidence: 12 v 8 prior; Conditions: 15 v 14 prior

Speakers and Press

China

(CN) Trump delays intellectual property investigation into China by at least 1-week after China backed UN sanctions against North Korea

Australia

(AU) Australia Trade Min Ciobo: Stronger A$ is making exports less competitive

(AU) Australia July Port Hedland Iron Ore Exports: 37.9Mt v 43.1M tons prior; Iron ore exports to China 32.0Mt v 36.6M tons prior

Korea

(KR) North Korea Foreign Min Yong Ho: Will not give up its nuclear weapons under any circumstances

Japan

(JP) Japan Chief Cabinet Sec Suga: Japan and North Korea Foreign Mins met briefly yesterday

(JP) Former BOJ Deputy Gov Iwata: BOJ should proceed with current slowdown in JGB buying so annual pace of buying eventually falling to ¥40T from ¥80T

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.3%, Hang Seng +0.1%, Shanghai Composite -0.2%, ASX200 -0.7%, Kospi -0.1%

Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax -0.2%, FTSE100 -0.2%

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

EUR 1.1824-1.1791; JPY 110.81-110.57; AUD 0.7939-0.7906; NZD 0.7369-0.7351

Dec Gold +0.1% at 1,265/oz; Sept Crude Oil -0.3% at $49.23/brl; Sept Copper -0.3% at $2.90/lb

(AU) Australia sells A$150M in 2030 bonds; avg yield 0.8959%; bid-to-cover 7.04x

(CN) China PBOC OMO injects CNY140B in 7 and 14-day reverse repos v CNY250B prior; Drains net CN0Y v CNY60B prior

USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.7184 V 6.7228 PRIOR

JGB (JP) Japan MoF sells ¥647B v ¥800B indicated in 0.8% (0.8% prior) 30-yr bonds; Avg yield: 0.8760% v 0.8780% prior; Bid to cover: 3.90x v 3.62x prior (highest bid-to-cover since March 2016)

Equities notable movers

Hong Kong/China

Geely, 175.HK Reports July Vehicle sales 91.1K units +88% y; +3.8%

Japan

Suntory Beverage, 2587.JP Reports Q1 Net ¥20.5B v ¥17.9B y/y; Op ¥43.0B v ¥39.9B y/y; Rev ¥689.6B v ¥679.1B y/y; -4.5%

Korea

Kia, 000270.KR Seoul Court to rule on base pay case on Aug 17th - South Korean press; -4.5%

Australia

Mobile Embrace, MBE.AU Reports FY17 EBITDA A$5.3M v A$5-6M guided; Rev A$52.1M v A$52M guided: Names Neil Wiles new CEO; +18.7%

Cudeco,CDU.AU Reports July Rocklands shipment of 8,620 WMT, valued at A$17.4M; +10%

James Hardie, JHX.AU Reports Q1 Net $57.4M v $87.1M y/y; Rev $507.7M v $477.7M y/y; -5.3%

CBA.AU Says CEO Narev retains 'full confidence of the board'; Narev short-term variable pay to be cut to zero; -1.2%

Other

Shin Kong Financial, 2888.TW Reports July Net NT$6.84B v NT$2.07B m/m; +10%

Daily Pivots: (S1) 144.08; (P) 144.40; (R1) 144.62; More

GBP/JPY is staying in range and intraday bias remains with focus on 144.01 support. Break will turn bias to the downside for trend line support (now at 141.87). Further break there will target 135.58/138.65 support zone. However, above 146.77 will turn bias to the upside. Further break of 147.76/148.42 key resistance zone will resume larger rebound from 122.36.

In the bigger picture, rise from medium term bottom at 122.36 is expected to continue to 38.2% retracement of 196.85 to 122.36 at 150.43. Decisive break there will carry long term bullish implications and pave the way to 61.8% retracement at 167.78. In case the sideway pattern from 148.42 extends, we'd be looking for strong support from 135.58 and 50% retracement of 122.36 to 148.42 at 135.39 to contain downside.

Daily Pivots: (S1) 0.9027; (P) 0.9043; (R1) 0.9066; More

Intraday bias in EUR/GBP remains on the upside for the moment. Current rise from 0.8312 should extend towards 0.9304 key high. At this point, there is no clear sign of up trend resumption yet. Hence, we'll be cautious on strong resistance from 0.9304 to limit upside and bring another fall. Meanwhile break of 0.8922 support will indicate short term topping and turn bias to the downside for 0.8742 support.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. It's uncertain whether it is finished yet. But in case of another fall, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside and bring rebound. Whole up trend from 0.6935 is expected to resume after consolidation from 0.9304 completes.

Daily Pivots: (S1) 1.4849; (P) 1.4887; (R1) 1.4939; More...

Intraday bias in EUR/AUD stays neutral at this point. Near term outlook remains bullish with 1.4777 support intact and further rally is expected. As noted before, correction from 1.5226 should have completed with three waves down to 1.4421 already. Above 1.4964 will target 1.5073 resistance first. Break of 1.5073 will likely resume the rise from 1.3624 and target 61.8% projection of 1.3624 to 1.5226 from 1.4421 at 1.5411 next. However, firm break of 1.4777 will dampen this bullish view and turn bias to the downside for 1.4564 support. Break will extend the correction from 1.5226 through 1.4421.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term has completed at 1.3624. Rise from 1.3624 is expected to resume to retest 1.6587. The corrective structure of the fall from 1.5226 is affirming this view. Above 1.5226 will target a test on 1.6587 key resistance. However, another decline will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.

Daily Pivots: (S1) 1.1451; (P) 1.1476; (R1) 1.1505; More...

Intraday bias in EUR/CHF remains neutral for the moment. A short term top should be formed at 1.1537 on bearish divergence condition in 4 hour MACD, after hitting a key projection level. More corrective trading and deeper fall is expected in near term. Below 1.1411 will target 4 hour 55 EMA (now at 1.1385) and below. But downside should be contained by 38.2% retracement of 1.0830 to 1.1537 at 1.1267 and bring rebound.

In the bigger picture, sustained break of 1.1198 key resistance confirms resumption of the long term rise from SNB spike low back in 2015. In this case, EUR/CHF would eventually head back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.1087 resistance turned support holds.

Daily Pivots: (S1) 0.7893; (P) 0.7920; (R1) 0.7942; More...

AUD/USD is staying in consolidation from 0.8065 and intraday bias remains neutral. As long as 0.7877 support holds, another rise remains mildly in favor. Break of 0.8065 will target 100% projection of 0.6826 to 0.7833 from 0.7328 at 0.8335. Nonetheless, break of 0.7877 will indicate short term topping, with bearish divergence condition in 4 hour MACD. In such case, intraday bias will be turned back to the downside for 0.7711 resistance turned support.

In the bigger picture, current development suggests that rebound from 0.6826 is developing into a medium term rise. There is no confirmation of trend reversal yet and we'll continue to treat such rebound as a corrective pattern. But in any case, break of 55 month EMA (now at 0.8100) will target 38.2% retracement of 1.1079 to 0.6826 at 0.8451. Break of 0.7328 support is needed to confirm completion of the rebound. Otherwise, further rise is now expected.

Daily Pivots: (S1) 1.2633; (P) 1.2673; (R1) 1.2719; More....

Intraday bias in USD/CAD remains on the upside as rebound from 1.2412 short term bottom continues. Such rebound should be corrective whole fall from 1.3793. Further rise would be seen back to 38.2% retracement of 1.3793 to 1.2412 at 1.2940. On the downside, break of 1.2552 minor support will indicate completion of the rebound. In such case, intraday bias will be turned back to the downside for 1.2412 low.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. A short term bottom is formed at 1.2412 after hitting 61.8% projection of 1.4689 to 1.2460 from 1.3793 at 1.2415. But there is no sign of completion of the correction yet. Break of 1.2412 will target 50% retracement of 0.9406 to 1.4869 at 1.2048. At this point, we'd look for strong support from there to contain downside and bring rebound. Meanwhile, sustained break of 1.2968, 38.2% retracement of 1.3793 to 1.2412 at 1.2940 will be the first sign of completion of the correction and will turn focus back to 1.3793 key resistance.

Daily Pivots: (S1) 1.1769; (P) 1.1792 (R1) 1.1816; More...

EUR/USD is staying in range of 1.1727/1908 and intraday bias remains neutral at this point. As noted before, a short term top is formed at 1.1908 on divergence condition in 4 hour MACD. Deeper correction is expected as long as 1.1908 holds. Below 1.1727 minor support will turn bias to the downside for 38.2% retracement of 1.1119 to 1.1908 at 1.1606. We'd expect strong support there to bring rebound.

In the bigger picture, an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Sustained break of 55 month EMA (now at 1.1760) will pave the way to key fibonacci level at 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. While rise from 1.0339 is strong, there is no confirmation that it's developing into a long term up trend yet. Hence, we'll be cautious on strong resistance from 1.2516 to limit upside. But for now, medium term outlook will remain bullish as long as 1.1295 support holds, in case of pull back.

Daily Pivots: (S1) 1.3011; (P) 1.3034; (R1) 1.3056; More...

Intraday bias in GBP/USD remains on the downside for 1.2932 support first. Price actions from 1.1946 are seen as a corrective pattern, no change is this view. Such correction could have completed at 1.3267 already. Break of 1.2932 will affirm this bearish case and target 1.2588 key near term support for confirmation. On the upside, however, above 1.3111 minor resistance will turn bias back to the upside for 1.3267 instead.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern that is still in progress. While further upside is expected, 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.