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WTI oil price holds within narrow consolidation on Monday, trading under Friday's high at $48.72, with downside being protected by daily Tenkan-sen at $48.32.

Oil is holding bullish sentiment following Friday's strong rally when oil price was up 3.7% for the day, after news that big refinery in Texas was shut down circulated.

Friday's long bullish daily candle underpins near-term action for further upside and break above $48.89 (Fibo 61.8% of $50.41/$46.44 pullback) to signal higher low at $46.44 and open barriers at $49.50 (200SMA) and $50.00 (psychological).

However, risk of fresh weakness on oversupply fears remain on the table, after report last week showed US domestic production hit its highest level since July 2015 at 9.5 million barrels a day.

Monday's action is holding between Tenkan-sen ($48.32) and 20SMA ($48.72) which mark initial triggers.

Break lower would expose 100SMA / daily Kijun-sen at $47.93/90 and weaken near-term structure on break.

Res: 48.72, 48.90, 49.50, 50.00
Sup: 48.32, 48.00, 47.21, 47.00

Notes/Observations

Departure of Bannon from the White House has led to speculation that President Trump may be trying to reconnect with the GOP's tax reform agenda

Focus on the content of the Jackson Hole symposium (**Note: Starts on Thursday)

Overnight

Asia:

North Korea warned that the upcoming US/South Korea military exercises will be ‘adding fuel to the fire’

South Korea President Moon: US/Korea joint drill is a defensive annual drill, not aimed at heightening tensions

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

Europe:

German Chancellor Merkel: Reiterates view to serve full 4-year term if re-elected; Stands by 2015 decision to open German borders to refugees

German Finance Ministry Aug Report: Reiterates view that monthly data suggested further economic expansion, indicators suggest industrial sector will continue to grow in Q3

German Emnid Poll: Conservative coalition lead continues ahead of Sept elections. CDU/CSU 39% (+1); - SPD 24% (unchanged)

UK Brexit Min Davis: firmly believe early round of negotiations have already demonstrated that many questions around our withdrawal are inextricably linked to our future relationship

UK Brexit Dept: To issue two formal position papers this week along with a batch of proposals for discussions on future relations ahead of upcoming negotiations in October

Fitch raises Greece sovereign rating one notch to B- from CCC; outlook Positive

Americas:

Trump to address US troops and American people on Monday (**Note: VP Pence and Nat Sec Advisor McMaster said to be pushing for increasing US troop strength in Afghanistan

Economic data

(NL) Netherlands July House Price Index M/M: 0.9% v 0.7% prior; Y/Y: 7.6 v 8.0% prior

(JP) Japan July Convenience Store Sales Y/Y: 0.0 v -0.1% prior

(TW) Taiwan July Export Orders Y/Y: 10.5% v 13.0%e

Fixed Income Issuance:

(NO) Norway sold NOK3.0B vs. NOK3.0B in 3-month Bills; Avg Yield: 0.38%; Bid-to-cover: 3.13x

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.2% at 373.4, FTSE -0.5% at 7308, DAX %-0.4 at 12114X, CAC-40 -0.5% at 5088, IBEX-35 -0.1% at 10373, FTSE MIB -0.3% at 21751, SMI +0.3% at 8898, S&P 500 Futures -0.2%]

Market Focal Points/Key Themes:

European Indices trade lower across the board with the exception of the Swiss SMI as the global Geo-Political tensions weigh on a light day for corporate and macro data. M&A activity has dominated headlines this morning, with Fiat Chrysler shares outperforming after Great Wall Motor confirmed interest in company, while Shares of Rathbone Brojhers trade higher after confirming merger talks with Smith and Williamson, elsewhere Maersk Shares trade sharply higher after divesting Maersk Olie Og Gas to Total for $7.5B.

Equities

Consumer discretionary [Fiat Chrysler [FCA.IT] +3.5% (Great Wall motor confirms interest in company), Roulart Media [ROU.BE] -11.7% (Earnings)]

Materials: [Metall Zug [METN.CH] -1.3% (Earnings)]

Industrials: [Maersk [MAERSK.DK] +3.8% (divests Mærsk Olie og Gas A/S to Total S.A. for $7.45bn), Global Ports Holdings [GPH.UK] -8.4% (Earnings)]

Financials: [Rathbone Brothers {RAT.UK] +0.8% (Confirms merger talks)]

Energy: [Interoil Exploration [IOX.NO] -7.2% (Canacol Energy explore strategic alternative with respect to stake)]

Speakers

China Commerce Ministry (MOFCOM): To take all proper measures to ensure interests; expresses strong dissatisfaction on US probe on intellectual property. Urges US to respect facts and multilateral trade principles

China Foreign Ministry spokesperson Hua Chunying stated that US-South Korea military exercises are not conducive to reducing tensions on the Korean Peninsula. Urged an end to vicious escalation on Korean Peninsula

Libya National Oil Company (NOC): Force Majeure declared on loading of Sharara crude from Zawiya oil terminal

Currencies

FX markets saw a quiet start to the week with most focus on the upcoming Jackson Hole conference that begins on Thursday. ECB Chief Draghi will attend the symposium but has a speech in Germany before he departs for the US. Some speculation that ECB announcement of the tapering of its QE program could be a two-step process that is split between the September and October. ECB could make an "announcement in principle" in September, following it up with tapering's practicalities in October

EUR/USD hovering in the mid-1.17 area.

USD/JPY trading below the 109 neighborhood with the JPY currency remaining firm on safe-haven flows as US/South Korean begin a 10-day military exercise.

Fixed Income

Bund futures trades at 164.40 up 24 ticks as risk assets suffer with European stocks sliding lower and credit spreads widen from the open. Downside targets 163.50 followed by 162.56. To the upside the 164.50 to 165.20 remains key resistance.

Gilt futures trades at 127.92 up 30 ticks as Bunds track Treasuries. A resumption to the upside could eye 128.25 then 128.75. A move back below 126.51 targets 125.97

Monday's liquidity report showed Friday’s excess liquidity rose to €1.714T from €1.712T and use of the marginal lending facility rose to €157M from €123M prior.

Corporate issuance saw $29B last week with talk that this week could see between $5-10B coming to market, as we enter end of earning season.

Looking Ahead

05:30 (NL) Netherlands Debt Agency (DSTA) to sell €1.0-2.0B in 3-month Bills

06:00 (TR) Turkey to sell 2022 Bonds

06:00 (IL) Israel July Unemployment Rate: No est v 4.5% prior

06:45 (US) Daily Libor Fixing

07:00 (IN) India announces details of upcoming bond sale (held on Fridays)

07:25 (BR) Brazil Central Bank Weekly Economists Survey

08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming actions in week

08:05 (UK) Baltic Dry Bulk Index

08:30 (US) July Chicago Fed National Activity Index: 0.10e v 0.13 prior

08:30 (CA) Canada Jun Wholesale Trade Sales M/M: -0.5%e v 0.9% prior

09:00 (BE) Belgium Aug Consumer Confidence: No est v 2 prior

09:00 (FR) France Debt Agency (AFT) to sell combined €4.3-5.5B in 3-month, 6-month and 12-month Bills

09:30 (EU) ECB announces Covered-Bond Purchases

09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

11:30 (US) Treasury to sell 3-Month and 6-Month Bills

16:00 (US) Weekly Crop Progress Report

19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index

21:00 (US) President Trump to address US troops and American people

Bitcoin is pausing after the massive surge over the past few days. Resistance is at all-time high at 4480 (17/08/2017 high). Hourly support lies very far at 2403 (26/07/2017 low). The road is wide open for another bullish move.

In the long-term, the digital currency has had an exponential growth. There are decent likelihood that the asset will consolidate above $1500. Long-term support is given at $1464 (04/05/2017 low).

Crude oil is trading mixed. Hourly support is given at a distance at 45.40 (24/07/2017 low). Strong resistance can be found at 50.41 (31/07/2017). Expected to show short-term sideways move.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 35.24 (05/04/2016) while resistance can now be found at 55.24 (03/01/2017 high).

Silver's bullish pressures are on. Hourly resistance given at 17.24 (10/08/2017 high) has been broken while support can be found at 16.13 (07/08/2017 high). The commodity lies in a short-term uptrend channel. Expected to show continued current bullish momentum.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

Gold has broken strong resistance given at 1296 (06/06/2017 high). Hourly support is given at 1251 (08/08/2017 low). Stronger support lies at 1204 (10/07/2017 high). Expected to show continued buying pressures.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low)

EUR/CHF's volatility is important. Hourly support is located at 1.1260 (04/08/2017 low). Expected to show further consolidation.

In the longer term, the technical structure has reversed. Strong resistance at 1.1200 (04/02/2015 high) has been broken. Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

EUR/GBP is trading around its highest levels of the year despite ongoing consolidation. Hourly resistance lies at 0.9087 (08/08/2017 high) has been broken. Hourly support is given at a distance at 0.8742 (16/06/2017 low). Downside risks are nonetheless important.

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level.

AUD/USD's short-term technical structure has reversed. Hourly support can be found at 0.7786 (18/07/2017 low). Hourly resistance is given at 0.8066 (27/07/2017 high). Expected to show continued growth.

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

USD/CAD's short-term bullish momentum is ending. Hourly support is given at a distance at 1.2414 (27/07/2017 low). Expected to show continued short-term bearish move.

In the longer term, the pair has broken longterm support that can be found at 1.2461 (16/03/2015 low) before bouncing back. Strong resistance is given at 1.4690 (22/01/2016 high). The pair should head further lower.