Sample Category Title

The monthly retail sales data released yesterday showed a better than expected headline print which helped to support the US dollar's recovery. Data from the US commerce department showed that retail sales rose 0.6% on the month in July. This was higher than the estimates of a 0.4% increase and marked the biggest monthly gain since December. Excluding autos, retail sales rose 0.5%, more than the estimates of 0.4% increase.

In the UK, consumer prices remained steady, rising 2.6% on the month. This was slightly lower than the estimates of a 2.7% increase, and inflation rose at the same pace as the previous month in July. The British pound weakened, as a result, led by a stronger US dollar.

Looking ahead, the economic calendar is busy today. The Italian preliminary GDP figures are expected to show a 0.4% quarterly growth. In the UK, the monthly wage data suggests that average earnings increased 1.8%, rising at the same pace as the month before, while the unemployment rate is expected to remain steady at 4.5%.

Flash GDP estimate from the Eurozone is also due today and is expected to show a 0.6% GDP growth in the second quarter. Later in the day, the US building permits and housing data is due followed by the FOMC meeting minutes.

Daily Pivots: (S1) 1.4970; (P) 1.4992; (R1) 1.5026; More...

EUR/AUD is losing upside momentum as seen in 4 hour MACD. But with 1.4824 minor support intact, further rise is still expected to 1.5073 resistance. Correction from 1.5226 should have completed with three waves down to 1.4421 already. Firm 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. On the downside, however, break of 1.4824 support will dampen our bullish view and turn bias back to the downside for 1.4564 support instead.

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 extend 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) 1.1377; (P) 1.1427; (R1) 1.1462; More...

EUR/CHF's rebound lost momentum after hitting 1.1477 and intraday bias is turned neutral first. Consolidation from 1.1537 is still in progress and there could be another fall. But downside should be contained by 38.2% retracement of 1.0830 to 1.1537 at 1.1267 to bring rebound. Break of 1.1537 resistance will resume up trend from 1.0629. However, firm break of 1.1267 will extend the correction from 1.1537 and target 61.8% retracement at 1.1100, before completion

In the bigger picture, firm 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.

The GBP/USD fell sharply to the lowest level in four weeks, as the Britain's consumer price inflation report showed weaker than expected reading for July. The Pound retreated versus the US Dollar to the 1.2917 level, falling by 34 base points just after data were published.  

The Office for National Statistics revealed that the UK Consumer Price Index marked a 2.6% yearly increase in July, equal to the previous month's gain, while analysts expected a climb of 2.7%. The inflation growth was dampened by lower oil prices, while the main support came from rising costs of clothing, food and utilities. The weaker-than-expected CPI figure reduced expectations for a higher inflation as well as the prospect of the Bank of England's interest rate hike.

The EUR/USD currency pair dropped sharply owing to the strong US economic release. The Greenback strengthened against the Euro by 0.23% to reach the 1.1713 mark. However, by the end of the Tuesday's session the European single currency recovered to pre-data levels.

The Commerce Department revealed that retail sales in the United States recorder the biggest increase in the last seven months, surging 0.6% month-over-month in July and following an upwardly revised gain of 0.3% in the prior month. July's upbeat figures suggested that the economy kept gaining momentum in the Q3 amid higher confidence in the country's economic outlook. Meanwhile, the Federal Reserve became less likely to delay the next interest rate increase until 2018.

Daily Pivots: (S1) 1.1753; (P) 1.1796 (R1) 1.1822; More...

Intraday bias in EUR/USD remains neutral for the moment as it's bounded in range of 1.1688/1908. The consolidation from 1.1908 could extend with deeper pull back. But downside should be contained by 38.2% retracement of 1.1119 to 1.1908 at 1.1606 to bring rebound. On the upside, break of 1.1908 will extend recent up trend to 1.2042 long term support turned resistance next.

In the bigger picture, an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Sustained trading above 55 month EMA (now at 1.1768) 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) 1.2819; (P) 1.2894; (R1) 1.2943; More...

GBP/USD's decline from 1.3267 is still in progress and intraday bias remains on the downside. As noted before, correction from 1.1946 is likely completed at 1.3267. Deeper fall should now be seen to 1.2588 key near term support. Decisive break there will confirm our bearish view. On the upside, break of 1.3030 resistance is needed to indicate short term bottoming. Otherwise, outlook will stay cautiously bearish in case of recovery.

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.

Asia Summary

Asian equity markets opened mixed, with the biggest mover the Singapore Straits Times index falling 1.1%, led by banks. Most of the move is attributed to the fact that the odds for a Fed Dec rate hike his risen back up to 50/50 following US data. Late yesterday a PBOC adviser said that China is unlikely to raise rates or use RRR, more likely to use other measures. The PBOC did resume open market operations after skipping yesterday, with a next injection of CNY180B. An analyst report noted that China state owned firms are dominating M&A deals, accounting for 60% in H1 of 2017. As tensions continue to ease on the Korea peninsula, BOK Gov Lee and Fin Min Kim hold a meeting and jointly agree that any action from their respective offices will be harmonious. USD?KRW rose over 0.5% to 1,142 today.

Key economic data

(AU) AUSTRALIA JUL WESTPAC LEADING INDEX M/M: +0.12% V -0.14% PRIOR

(AU) AUSTRALIA Q2 WAGE PRICE INDEX Q/Q: 0.5% V 0.5%E; Y/Y: 1.9% V 1.9%E

(CN) China July yuan forex positions down CNY4.65B m/m to CNY21.5T

Speakers and Press

China/Hong Kong

(CN) According to Rhodium Group, China state-owned firms accounted for almost 60% of total M&A deal value in H1 - financial press

(CN) Moody's: China non-performing loan (NPL) securitization performance solid, though information limited – Xinhua

(CN) PBOC Adviser: Cut of RRR is not in line with China's policy, more likely to use SLF, MLF and PSL

Korea

(KR) US intel officials: North Korea has ability to produce missile engines and is not reliant on imports to do so – press

(KR) Bank of Korea (BOK) Gov Lee: Market volatility rising on North Korea risks; South Korea to put in efforts to stabilize markets

(KR) South Korea Fin Min Kim: Government will discuss with BOK and take "stern" action to stabilize markets if needed

Japan

(JP) Japan PM Abe: Govt is on high alert to deal with the possible threat faced by the prefectures over which North Korean missiles en route to Guam could fly

Asian Equity Indices/Futures (00:00ET)

Nikkei 0.0%, Hang Seng +0.5%, Shanghai Composite -0.2%, ASX200 0.0%, Kospi +0.5%

Equity Futures: S&P500 +0.4%; Nasdaq100 -0.1%, Dax -0.1%, FTSE100 -0.1%

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

EUR 1.1746-1.1729; JPY 110.77-110.55; AUD 0.7838-0.7817; NZD 0.7241-0.7224

Dec Gold -0.1% at $1,278/oz; Sept Crude Oil +0.5% at $47.77/brl; Sept Copper +0.0% at $2.89/lb

(AU) Australia sells A$900M in 3.25% 2029 bonds; avg yield 2.7608%; bid-to-cover 2.96x

(JP) Bank of Japan (BoJ) announces expected purchase amounts for daily operation: Offers to purchase ¥440B in 5-10 yr JGBs v ¥470B prior

(CN) China PBoC OMO injects CNY280B v skips in 7 and 14-day reverse repos

USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.6779 V 6.6689 PRIOR

(KR) Bank of Korea sells KRW2.2T in 2-year monetary stabilization bonds at 1.74% v 1.64% prior

(CN) China sells 7-yr bonds; avg yield 3.6518%; bid-to-cover 2.89x

(TH) Thailand sells THB20B in 9.34-yr govt bonds; avg yield 2.4389%; bid-to-cover ratio 2.34x

Equities notable movers

Hong Kong/China

Carnival Group, 996.HK Announces rights offering to raise HK$1.72B; -12%

Geely, 175.HK Reports H1 (CNY) Net profit 4.34B v 4.04Be, Rev 39.4B v 18.1B y/y; +0.4%

Australia

Aveo Group, AOG.AU Reports FY17 adj Net A$252.8M, +118% y/y; FFO A%163.9M v A$141.3M y/y; Announces up to 54.3M share buyback; +10.5%

iSelect, ISU.AU Reports FY17 Net A$16.4M v A$18Me; EBIT A$22.5M v A$24Me; Rev A$185.1M v A$196Me; -14%

Daily Pivots: (S1) 0.9699; (P) 0.9728; (R1) 0.9755; More...

At this point, intraday bias in USD/CHF remains mildly on the upside for 0.9772 resistance first. Decisive break there 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. On the downside, below 0.9675 minor support will turn intraday bias neutral first. Also, 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 dampen our bullish view and 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) 109.90; (P) 110.37; (R1) 111.14; More...

Intraday bias in USD/JPY remains mildly on the upside for the moment. Current development argues that fall from 114.49 could have completed at 108.72. Further rise would be seen back to 112.18 resistance first. Break there will target 114.49 key near term resistance again. On the downside, break of 108.79 minor support will turn focus back to 108.72 instead.

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.