Sample Category Title

Notes/Observations

USD weakness on view that Fed lowered its inflation bar thus inflation miss is no longer viewed as transitory

German GFK Confidence data at 16 year high

Overnight

Asia:

South Korea Q2 Preliminary GDP data still looks on course for a solid expansion this year, helped by government stimulus measures (Q/Q: 0.6% v 0.6%e; Y/Y: 2.7% v 2.7%e)

Moody's revised outlook on China banking system to stable from negative

Europe:

ECB's Nowotny (Austria): Confirms discussions have begun about tightening policy; agrees that time to slow take foot off the gas due to technical reason the QE ends at year end; Talks about reducing intensity of activity will be held in autumn

Americas:

Brazil Central Bank (BCB) cut Selic Target Rate by 100bps to 9.25% for its 7th straight cut in the current easing cycle

Economic Data

(DE) Aug GfK Consumer Confidence: 10.8 v 10.6e (highest since Oct 2001)

(FI) Finland July Business Confidence: 8 v 9 prior; Consumer Confidence Index: 22.8 v 23.9 prior

(NO) Norway May AKU Unemployment Rate: 4.3% v 4.5%e

(ES) Spain Q2 Unemployment Rate: 17.2% v 17.8%e (lowest level since financial crisis)

(SE) Sweden July Consumer Confidence: 102.2 v 103.1e v 102.5 prior; Manufacturing Confidence: 120.3 v 117.1e; Economic Tendency Survey: 112.4 v 111.5e

(HU) Hungary Jun Unemployment Rate: 4.2%e v 4.4% prior

(SE) Sweden Jun Unemployment Rate: 7.4% v 7.5%e; Unemployment Rate (Seasonally Adj): 6.4% v 6.6%e

(SE) Sweden Jun Household Lending Y/Y: 7.1% v 6.9%e

(EU) Euro Zone Jun M3 Money Supply Y/Y: 5.0% v 5.0%e

Fixed Income Issuance:

(IT) Italy Debt Agency (Tesoro) sold €6.5B vs. €6.5B indicated in 6-month Bills; Avg Yield: -0.362% v -0.372% prior; Bid-to-cover: 1.62x v 1.54x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.1% at 382.5, FTSE flat at 7449, DAX -0.5% at 12239, CAC-40 flat at 5191, IBEX-35 -0.1% at 10561, FTSE MIB +0.2% at 21613, SMI flat at 8994, S&P 500 Futures +0.2%].

Market Focal Points/Key Themes: European indices trade mixed this morning with volatility seen following a heavy day in terms of corporate earnings. The DAX under performs following weaker results from Bayer, BASF and Deutsche Bank, while in the UK Astrazeneca weighs following their results and their Mystic Lung cancer trial failed to meet primary endpoint. Drink makers Diageo and Anheuser Busch trade higher following strong results, while Telecom names Telefonica and Orange trade over 2% higher after beating views. Looking ahead to the US morning, expecting another heavy dose of earnings, namely from Verizon, Mastercard and P&G, as well as FIAT out of Europe.

Equities

Consumer discretionary [Diageo [DGE.UK] +6% (Earnings), Anheuser Busch InBev [ABI.BE] +5% (earnings), Nestle [NESN.CH] -1.3% (Earnings)]

Consumer Staples [Danone [BN.FR] +1.9% (Earnings)]

Industrials: [Volkswagen [VOW3.DE] -1% (earnings), BASF [BAS.DE] -1.6% (Earnings)]

Financials: [Lloyds [LLOY.UK] -2.2% (Earnings), Deutsche Bank [DBK.DE] -3.6% (Earnings), Allianz [ALV.DE] +1.4% (prelim results) ]

Technology: [Schneider Electric [SU.FR] +3.8% (Earnings, acquisition)]

Telecom: [Orange [ORA.FR] +2.8% (Earnings), Telefonica [TEF.ES] +2.9% (Earnings)]

Healthcare: [Bayer [BAYN.DE] -2.9% (Earnings, cuts outlook), Astrazeneca [AZN.UK] -15.7% (Earnings, Mystic trial misses primary endpoint), Roche [ROG.CH] +1.1% (Earnings)]

Real Estate: [Foxtons [FOXT.UK] -5% (Earnings)]

Speakers

EU might delay the next stage of Brexit talks until December

Financial Conduct Authority (FCA) stated that Libor to end in 2021; not enough transactions to give data

Japan Economic Adviser Takahashi: Economy does not need a stimulus package at this time; no reason for a supplementary budget

India Commerce Ministry official Manoj Dwivedi: Current-account deficit is comfortable now and there is a case for lowering import tax on gold

China Finance Leading Group's Yang Weimin: To curb risks in local govt debts in H2. China could have both deleveraging and stable growth and could not let leverage rise to boost economic growth. To keep liquidity ample in H2

Currencies

USD consolidated some of its recent weakness in the aftermath of Thursday's Fed rate decision and policy statement. The greenback was softer as dealers believed that the Fed lowered its inflation bar thus believing recent inflation miss was no longer viewed as transitory. The language on soft inflation was more explicitly than before.

EUR/USD tested a 2 1/2 year at 1.1778 before consolidating. European data continued to back up recent ECB speak as German GFK Confidence hot a fresh 16 year high. USD/JPY holding above the 111 level while the GBP/USD hovered around 1.3150 area

Fixed Income

Bund futures trade at 162.39 up 40 ticks and took out the key July 20th low of 161.55.. Resistance lies near the 162.75 level followed by 163.50. A break of the 160.00 support level could see lows target 159.25 followed by 157.50.

Gilt futures trade at 126.44 up 54 ticks, following the rally with Bunds and T-notes. Price finds key support at the 125.42 support level. An acceleration lower could test the 122.88 region. Resistance remains the noted 126.51 region, followed by 127.50.

Thursday's liquidity report showed use of the marginal lending facility rose to €1.2B from €496M prior.

Corporate issuance saw $1B come to market via 1issuer, Suntrust's senior unsecured note offering.

Looking Ahead

(CA) Canada July CFIB Business Barometer: No est v 60.9 prior

(BR) Brazil Jun Govt Budget Balance (BRL): -19.8Be v -29.4B prior

(ES) Spain Jun YTD Budget Balance: No est v -€16.2B prior

05:30 (ZA) South Africa Jun PPI M/M: 0.1%e v 0.5% prior; Y/Y: 4.4%e v 4.8% prior

05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills

05:30 (HU) Hungary Debt Agency (AKK) to sell Floating Bonds

06:00 (UK) July CBI Retailing Reported Sales: 10e v 12 prior; Total Distribution 15e v 17 prior

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

06:00 (RO) Romania to sell 3.4% 2022 Bonds

06:45 (US) Daily Libor Fixing

07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to keep key rates unchanged; Expected to leave Benchmark Repurchase unchanged at 8.00%; Expected to leave Overnight Lending Rate unchanged at 9.25%; Expected to leave Overnight Borrowing Rate unchanged at 7.25%; Expected to leave Late Liquidity Lending Rate unchanged at 12.25%

08:00 (BR) Brazil Jun PPI Manufacturing M/M: No est v 0.6% prior; Y/Y: No est v 2.1% prior

08:00 (UK) Baltic Dry Bulk Index

08:30 (US) Jun Preliminary Durable Goods Orders: +3.5%e v -0.8% prior; Durables Ex Transportation: 0.4%e v 0.3% prior; Capital Goods Orders (Non-defense/ex-aircraft): 0.3%e v 0.2% prior; Capital Goods Shipments (Non-defense/ex-aircraft): 0.3%e v 0.1% prior; Durables Ex-defense: No est v -0.5% prior

08:30 (US) Initial Jobless Claims: 240Ke v 233K prior; Continuing Claims: 1.96Me v 1.98M prior

08:30 (US) Jun Advance Goods Trade Balance: -$65.5Be v -66.3B prior (revised from -$65.9B)

08:30 (US) Jun Preliminary Wholesale Inventories M/M: 0.3%e v 0.4% prior; Retail Inventories M/M: No est v 0.6% prior

08:30 (US) Jun Chicago Fed National Activity Index: +0.35e v -0.26 prior

08:30 (US) Weekly USDA Net Export Sales

09:00 (RU) Russia Gold and Forex Reserve w/e July 21st: No est v $412.6B prior

09:00 (MX) Mexico Jun Trade Balance: -$0.3Be v -$1.1B prior

09:30 (BR) Brazil Jun Total Outstanding Loans (BRL): No est v 3.065B prior; M/M: No est v -0.2% prior; Personal Loan Default Rate: No est v 5.9% prior

10:30 (US) Weekly EIA Natural Gas Inventories

11:00 (US) July Kansas City Fed Manufacturing Activity Index: 11e v 11 prior

11:00 (BR) Brazil to sell 2023 LFT bills

11:00 (BR) Brazil to sell 2018, 2019 and 2022 LTN Bills

12:00 (CA) Canada to sell 10-Year Bonds

13:00 US) Treasuries to sell 7-Year Notes

15:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to cut Overnight Lending Rate by 25bps to 5.50%

The Aussie dollar pulled back from fresh 26-month high at 0.8065 posted in Asia, but dips on profit-taking were so far contained at 0.8000 zone.

Daily close above former high at 0.7988 on Wednesday was bullish signal for continuation of broader uptrend which took a breather on 0.7988/0.7874 consolidation. Bulls need close above 0.8000 handle for confirmation and extension towards next target at 0.8161 (14 May 2015 high / 50% retracement of larger 0.9503/0.6825 downtrend).

However, downside remains vulnerable as overbought daily RSI and bearish divergence on slow stochastic warn of pullback. We look for today’s close, which would increase downside risk on close below 0.8000.

Res: 0.8065, 0.8100, 0.8161, 0.8200
Sup: 0.8000, 0.7988, 0.7956, 0.7923

The common European currency was positioned to suffer losses against the US Dollar on Wednesday morning. However, that did not occur, as due to the US Federal Reserve the EUR/USD currency exchange rate jumped at 18:00 GMT on Wednesday. As a result of the move the currency pair traded just below the 1.1750 mark on Thursday morning. The rate was squeezed in between the weekly R1 at 1.1753 from the upside and the support of the upper trend line of the now broken ascending channel pattern. Most likely the resistance of the weekly R1 will be broken. As a result of such move the currency exchange rate would jump up to the 1.1842 mark. At that level the next notable resistance would be located at, as the weekly R2 is at that level.

Contrary to the relatively flat movement sideways that was apparent during the last two trading days, the Pound surged against the US Dollar mid-Wednesday after not being able to pass through the weekly PP at 1.3019. Along the way, the rate was supported by the 55– and 200-hour SMAs and the weekly R1 until the upper boundary of the ascending wedge circa 1.3160 was reached on Thursday morning. It seems that the previous momentum upwards has lost some ground, indicating to a possible reversal south. However, the Pound may still test either the monthly R1 or the weekly R2 at 1.3177 and 1.3211, respectively. In general, the rate should trade lower, thus respecting the bounds of the aforementioned wedge at least until the 1.3040/80 area where the up-trend line is located.

Thursday's morning started relatively calm, as USD/JPY was driven by low volatility for most of the session. It met resistance at the 200-hour SMA which was eventually breached, thus allowing the US Dollar to approach the upper boundary of a symmetrical triangle. However, strong downside risks pressured the rate for a plunge down to the lower boundary of this pattern. The Greenback subsequently made a U-turn, demonstrating its willingness to edge higher once again. The closest resistance cluster is formed by the monthly PP and the 100-hour SMA circa 111.40, while the 20-, 55– and 200-hour SMAs are not distant either. In case nothing shakes the market unexpectedly, the pair is likely to push up to the 200-hour SMA where it may meet hindrance or even halt its upward motion. Bottom limit—110.50.

Most patterns and technical analysis in general has become obsolete on the XAU/USD chart. As the FOMC Statement was released, the US Dollar fell all across the trading board. In regards to the price of the yellow metal, the commodity price jumped from levels below the 1,250 mark and reached above the 1,264 level. Although a surge was previously expected, such sharp jump was not expected. Due to the changes in the fundamental situation first a consolidation period will begin, which means that the metal's price might decline by the end of Thursday's trading session. Afterwards the Dukascopy Research team will do a full review of the technical situation on the metal's charts.

Wednesday's preliminary estimate of the UK's gross domestic product for the second quarter matched analysts' estimates, but signalled that the expansion lost some momentum from the previous year. This reflected in the instant fall of the GDP/USD exchange rate, which was seen trading at 1.3028 just after the data were published. The Office for National Statistics reported that Britain's GDP rose 0.3% in the June quarter as anticipated, while the yearly growth slowed from 2% to 1.7% in the same period. The UK services sector, which makes up the largest part of the economy, remained the main contributor to the growth, offsetting weakness in manufacturing and construction.

Following the release of the FOMC statement, the US Dollar lost ground against the Japanese Yen, sending the currency pair to the 111.84 area from earlier highs of above 112.0. As it was widely expected by the market, the Federal Reserve decided to leave its interest rates unchanged, keeping the target range for the federal funds rate between 1.00% and 1.25%. However, the FOMC appeared to be once again concerned over inflation, saying that, overall, inflation has declined and is running below the Fed's 2% target. Furthermore, due to a lack of hawkishness of the statement and no clear hints on how the process of the balance sheet shrinkage will evolve, the market sentiment regarding the US economic outlook remained relatively subdued.

• Earnings filling the void left by Trump's failures;
• USD softer as Fed inflation concerns grow;
• GBPUSD trades at 10-month high on USD weakness.

US futures are pointing to a stronger open on Thursday, with the NASDAQ seen leading the way boosted by earnings from Facebook as we await results from a number of other companies on what is likely to be one of the biggest days of earnings reports this year.

Earnings season has arguably taken on additional importance this quarter due to the inability of Donald Trump to, so far, deliver on the growth agenda that won him the White House back in November. While US Treasury yields have come off their post-election highs and the dollar has fallen to a more-than one year low, the three major stock indices – which are up around 20% since early November – continue to trade at record highs.

Even in the absence of tax cuts and fiscal stimulus, corporate America has continued to perform well as is once again evident in this seasons results, with companies exceeding expectations on both the top and bottom line. With so many companies reporting today – 73 of those on the S&P 500 – a continuation of this performance could see more record highs being registered in the US, even as investors continue to question whether there remains value in the country compared to other areas such as Europe.

The US dollar is under pressure again on Thursday after the FOMC statement on Wednesday failed to convince traders that the pace of tightening won't slow in the years ahead. While the Fed did suggest that the unwinding of its balance sheet will begin relatively soon, it also repeatedly referred to inflation running below target, a concern that has been highlighted by policy makers in recent months. With traders already not convinced that we'll see another rate hike this year, these statements don't do anything to change that.

The pound hit a new 10-month high against the dollar, aided by the weakness in the greenback and a break through 1.31 which had previously been a strong resistance zone. While gains today have been more moderate, the break could be quite a bullish signal for the pair and see it possibly heading back towards last summer's levels of 1.35 in the months ahead. The move has also seen the pound make gains against the euro and yen, although the former still appears to be very much in the driving seat at the moment.

Earnings aside, we'll get some data from the US today with durable goods orders and jobless claims being released. The more closely watched core durable goods orders number can be quite volatile from month to month but the last few have disappointed and it will be interesting to see whether this trend can be broken today.

Crude Oil is trading higher Hourly support is given at 45.40 (24/07/2017 low). Strong resistance given at 50.28 (29/05/2017). Expected to show further bearish consolidation before another leg higher.

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).