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USDJPY (111.05): USDJPY extended declines, touching a 3-week low. The yen strengthened despite the BoJ standing pat on policy and reiterating its commitment to maintain the QE purchases. With USDJPY now completing the measured target objective of 111.08, we expect to see a near-term rebound to the upside. There is, however, the scope of further declines down to 110.80 which will mark the correction to the previous rally.

Still, USDJPY could be seen maintaining the bearish bias. Resistance is seen at 111.78 and only above this level can we expect to see the bullish bias gain confidence. In the near term, USDJPY could stay range bound within 111.78 resistance and 110.08 support.

GBPUSD (1.3016): The British pound wasn't able to capitalize much on the US dollar weakness. As a result, the GBPUSD fell below 1.3000 last week after briefly rising to levels above 1.3100. Price action suggests an inside bar that was formed on Friday. A breakout from this level will dictate the next leg.

Resistance is seen at 1.3025 with the daily chart showing a consolidation into a rising wedge pattern. A reversal near 1.3025 region could potentially support the bearish case for GBPUSD to decline back to 1.2818 - 1.2800 levels. In the event that GBPUSD manages to break past 1.3025, then establishing support at or above this level could indicate further bullish gains in the cable.

EURUSD (1.1671): The EURUSD maintained its strong gains as EURUSD touched highs of 1.1682. This marked a two-year high in the currency as investors prepare for the European Central Bank to announce the second tapering to the ECB's QE program sometime in autumn. Still, there is scope for disappointment as any tapering is likely to take place only in January or in the early months of next year.

Technically, EURUSD's rally looks a bit overstretched which makes it a bit difficult to take long positions at the current levels. In the short term, support is seen at 1.1475 which could be tested. However, any downside bias is likely to be established only on a convincing close below 1.1635. With the ECB expected to tighten QE, investors will no doubt be focusing on the economic data from the eurozone.

The US dollar closed a second consecutive week with declines. Attributing to the weak sentiment was a mix of political and economic factors. Troubles continue for the Trump administration, and news sources revealed that the Russian hacking scandal could now extend into Trump's business holdings as well. Most recently, Sean Spicer, the White House press secretary resigned. The uncertainty about the Trump administration alongside the Fed sitting on its hand saw the greenback decline.

As a result, the euro managed to maintain its gains at two-year highs into Friday's close. The common currency got a vote of confidence as investors bought the euro after interpreting the ECB's statements and Mario Draghi's comments last Thursday.

Looking ahead, Monday will see the flash manufacturing and services PMI figures for July from the eurozone. Later in the day, the US flash PMI's will also be coming out with expectations showing a relatively stable number for July.

Asia Summary

The markets were mixed in the region, with the USD weaker as the US/Russia investigation related to President Trump’s election continues to widen and Jared Kushner will face a closed door hearing with the US Senate Intelligence Committee today. This combined with the lack of progress on the healthcare bill and tax reform puts US growth into question. The IMF confirmed doubts with its updated GDP forecasts. US was cut for both 2017 and 2018. Canada was raised and given the strongest outlook for 2017. UK was also cut, while France, Germany and Italy were raised.

China increased cash injections through its daily reverse repurchase operations by injecting CNY350B in 7-day and 14-day (the most funds in five weeks), this followed money rates rising last week. According to regional analysts CNY540B of reverse repos are coming due this week and such liquidity is likely to remain tight. Bank of Japan (BOJ) cut its 5-10 year JGB purchases to ¥470B from ¥500B. Markets reacted little as the markets have been expecting a reduction in purchases, though considered a bit earlier than expected.

Key economic data

(JP) JAPAN JUL PRELIM PMI MANUFACTURING: 52.2 V 52.4 PRIOR FINAL (8-month low)

(HK) Macau Jun Visitors 2.38M, -7.5% m/m; +0.9% y/y

Speakers and Press

China

(CN) China Academy of Social Sciences (CASS) report says Q3 GDP may grow 6.8% y/y; Q4 6.7% and 2017 6.8% - Chinese Press

(CN) China Iron and Steel Association (CISA) VP Xinchuang: China should be bold in protecting the interests of its own businesses

USD/CNY (CN) PBOC Adviser: Yuan exchange rate may appreciate in H2

Hong Kong

(HK) Hong Kong Monetary Authority (HKMA) said to have checked property developers' loans

Korea

(KR) South Korea parliament approves KRW11T extra budget plan Sunday July 23rd

(KR) South Korea said to seek capital gains tax increase for large shareholders - South Korean Press

Japan

(JP) In the local Sendai City mayoral elections, opposition candidate Kazuko Kori won - financial press

(JP) Japan Cabinet approval ratings decline in press polls: According to Mainichi Japan Cabinet approval rating fell 10ppts to 26%

Other

OPEC and non-OPEC officials to meet amid mounting concerns over global supply - financial press

OPEC Secretary-General Barkindo: While the rebalancing process may be proceeding at a slower than projected pace, it is expected to accelerate in H2

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.9%, Hang Seng +0.5%, Shanghai Composite +0.2%, ASX200 -0.7%, Kospi -0.2%

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

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

EUR 1.1684-1.1658; JPY 111.20-110.77; AUD 0.7931-0.7904; NZD 0.7456-0.7433

Aug Gold 0.0% at 1,254/oz; Aug Crude Oil +0.2% at $45.85/brl; Sept Copper +0.1% at $2.72/lb

(JP) Bank of Japan (BOJ) cuts JGB buying of 5-10 yr to ¥470B from ¥500B

(CN) China PBOC OMO injects CNY350B in 7 and 14 day reverse repos v CNY140B prior

USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT V 6.7410 V 6.7415 PRIOR

(KR) South Korea sells 20-year government bonds, avg yield 2.29%

(TH) Thailand sells THB20B in 3-month and 6-month treasury bills

Equities notable movers

Australia

Newcrest Mining,NCM.AU Reports Q4 gold production 552K ozs, -7.8% q/q; copper production 13kt, -41.3% q/q; +1.8%

Hong Kong/China

China Power International,2380.HK Profit Warning: H1 Profit to decrease over 70% y/y; -5.4%

Japan

Tokyo Electric Power, 9501.JP Underwater robot has captured images of what is likely to be melted nuclear fuel at the bottom of one of its damaged reactors – Nikkei; -0.4%

South Korea

Ottogi Corp,007310.KR Strength attributed to invitation to high-level business meeting with President Moon; +7.3%

Samsung Electronics,005930.KR Said to have cut FY17 TV target to 45M units (prior 48M units) - Korean press; -0.6%

Other

BMW, BMW.DE Denies claims it formed a cartel with Daimler and Volkswagen to hold down the prices of crucial technology and that they had agreed to install emissions equipment that was inadequate to do the job - financial press

For the 24 hours to 23:00 GMT, the AUD declined 0.44% against the USD and closed at 0.7916 on Friday.

LME Copper prices rose 1.2% or $71.5/MT to $6001.5/MT. Aluminium prices rose 0.2% or $3.0/MT to $1901.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7921, with the AUD trading 0.06% higher against the USD from Friday’s close.

The pair is expected to find support at 0.7885, and a fall through could take it to the next support level of 0.7848. The pair is expected to find its first resistance at 0.7948, and a rise through could take it to the next resistance level of 0.7974.

Amid a lack of any macroeconomic releases in Australia today, trading trend in the AUD is expected to be determined by global macroeconomic events.

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

For the 24 hours to 23:00 GMT, the EUR rose 0.36% against the USD and closed at 1.1670 on Friday.

In the Asian session, at GMT0300, the pair is trading at 1.1668, with the EUR trading slightly lower against the USD from Friday’s close.

The pair is expected to find support at 1.1633, and a fall through could take it to the next support level of 1.1599. The pair is expected to find its first resistance at 1.1693, and a rise through could take it to the next resistance level of 1.1719.

Going ahead, investors will look forward to the flash Markit manufacturing and services PMIs for July across the Euro-zone, slated to release in a few hours. Moreover, in the US, preliminary Markit manufacturing and services PMIs for July, followed by existing home sales data for June, due to release later in the day, will garner significant amount of market attention.

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

For the 24 hours to 23:00 GMT, the GBP rose 0.23% against the USD and closed at 1.2993 on Friday.

In economic news, data showed that UK's public sector net borrowing posted a more-than-expected deficit of £6.3 billion in June, from a revised deficit of £6.4 billion in the prior month, while markets were anticipating public sector net borrowing to record a deficit of £4.2 billion.

In the Asian session, at GMT0300, the pair is trading at 1.301, with the GBP trading 0.13% higher against the USD from Friday's close.

The pair is expected to find support at 1.2973, and a fall through could take it to the next support level of 1.2935. The pair is expected to find its first resistance at 1.3034, and a rise through could take it to the next resistance level of 1.3057.

In absence of any crucial economic releases in the UK today, investor sentiment will be governed by global macroeconomic factors.

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

For the 24 hours to 23:00 GMT, the USD declined 0.7% against the JPY and closed at 111.11 on Friday.

In the Asian session, at GMT0300, the pair is trading at 111.05, with the USD trading marginally lower against the JPY from Friday's close.

Overnight data indicated that Japan's flash Nikkei manufacturing PMI dropped to a level of 52.2 in July, expanding at its weakest pace in eight months, amid weakness in export orders. The PMI had registered a level of 52.4 in the previous month.

The pair is expected to find support at 110.52, and a fall through could take it to the next support level of 109.99. The pair is expected to find its first resistance at 111.83, and a rise through could take it to the next resistance level of 112.61.

Looking ahead, traders will await the release of the Bank of Japan's (BoJ) June meeting minutes, scheduled tomorrow.

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

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For the 24 hours to 23:00 GMT, the USD declined 0.66% against the CHF and closed at 0.9452 on Friday.

In the Asian session, at GMT0300, the pair is trading at 0.9464, with the USD trading 0.13% higher against the CHF from Friday's close.

The pair is expected to find support at 0.9429, and a fall through could take it to the next support level of 0.9394. The pair is expected to find its first resistance at 0.9509, and a rise through could take it to the next resistance level of 0.9554.

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