Sample Category Title

The US dollar was seen trading mixed yesterday. The US markets were closed on account of the Independence Day holiday. The greenback was seen trading stronger against most of its peers. The exception was the Canadian dollar which fell sharply after comments from the BoC Governor, Poloz. Mr. Poloz said that he expects inflation to be in an uptrend by the first half of 2018 and said that policy normalization would be required.

In the UK, the construction PMI data fell to 54.8 suggesting weaker growth momentum in the construction sector. Survey participants said that there was renewed risk aversion among clients.

Looking ahead, the FOMC meeting minutes will be the main event of the day alongside the US factory orders. In the UK, the services PMI will be released with expectations of a modest decline to 53.6 from 53.8 previously. In the Eurozone, the final services PMI data will be released.

EURUSD intraday analysis

EUR/USD(1.1356): The EURUSD extended the declines for three consecutive days after briefly breaking above the $1.1400 handle. Price action is currently seen consolidating near the 1.1357 level. Resistance is likely to be developed here which could push the currency pair towards 1.1300 in the near term. Below $1.1300, further declines could see EURUSD falling towards the support level at 1.1129. To the upside, considering the three day decline, if price action manages to stay supported above 1.1357, then we can expect some near-term gains back towards 1.1400 handle.

GBPUSD intraday analysis

GBPUSD (1.2932): The British pound continued the declines for a second day and closed below 1.2975. Any near-term gains could see price action testing 1.2975 region where resistance could be developed once again. If the resistance holds, GBPUSD could be seen settling lower in the near term with the support at 1.2800 coming into focus. The services PMI data could be the catalyst for GBPUSD to post the declines. Alternately, in the event that GBPUSD breaks above 1.2975, then we could expect further gains to be maintained in the currency pair.

AUDUSD intraday analysis

AUDUSD (0.7616): The Australian dollar posted strong declines yesterday. The Aussie gave up the gains following the RBA's monetary policy release. The central bank was seen coming down as dovish with references made to the Australian dollar's exchange rate. AUDUSD fell to lows of 0.7591 before closing the day at 0.7605. In the near term, price action could be seen testing the resistance level at 0.7624 with the potential to retest 0.7653 where the next minor resistance level exists. To the downside, expect AUDUSD to post declines towards the support level at 0.7514.

USD/JPY - 113.23

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 113.07

Kijun-Sen level                  : 113.05

Ichimoku cloud top             : 113.07

Ichimoku cloud bottom      : 112.62

New strategy  :

Buy at 112.85, Target: 113.85, Stop: 112.50

Position :  -

Target :  -

Stop : -

As the greenback has continued trading with a firm undertone, suggesting recent upmove may resume after consolidation, above resistance at 113.47 would extend headway to 113.75-80 but loss of momentum should prevent sharp move beyond 114.00, risk from there is seen for a retreat to take place later.

In view of this, we are looking to buy dollar on dips but one should exit on next rise. Below the lower Kumo (now at 112.62) would suggest top is possibly formed, bring weakness to 112.35-40 but break there is needed to add credence to this view, bring correction to 111.90-95 and later towards 111.73 support.

Daily Pivots: (S1) 128.05; (P) 128.51; (R1) 128.98; More...

With 127.43 minor support intact, further rise is expected in EUR/JPY to 61.8% projection of 114.84 to 125.80 from 122.39 at 129.16 first. We'd be aware of strong resistance between 129.16 and medium term projection level at 129.89 to bring short term topping. On the downside, below 1.2743 will bring deeper pull back to 125.80 resistance turned support.

In the bigger picture, the break of 126.09 support turned resistance should have confirmed completion of down trend form 149.76 (2014 high), at 109.03 (2016 low). Current rise from 109.03 should target 100% projection of 109.03 to 124.08 from 114.84 at 129.89 first. Break there will pave the way to 61.8% retracement of 149.76 to 109.03 at 134.20 and above. Medium term outlook will now remain bullish as long as 122.39 support holds.

EURUSD

The EURUSD was indecisive yesterday. The bias is neutral in nearest term. Overall I remain bullish as price is still convincingly moves above the EMA 200 and the trend line support as you can see on my H4 chart below, but price is still in a bearish correction phase testing 1.1285 support area. Immediate resistance is seen around 1.1425. A clear break and daily close above that area could end the bearish correction phase testing 1.1500 – 1.1530 region. On the downside, a clear break and daily close back below 1.1285 would expose 1.1180 region but key support remains at 1.1080. Fundamental focus will be on the US NFP data on Friday.

GBPUSD

The GBPUSD was indecisive yesterday but overall still able to maintain its bearish short term bias after the rejection to move above 1.3050 key resistance as you can see on my H4 chart below. The bias remains bearish in nearest term testing 1.2900 – 1.2875. A clear break below 1.2875 would expose 1.2815/00 region. Immediate resistance is seen around 1.3000. A clear break above that area could lead price to neutral zone in nearest term retesting 1.3050 key resistance which is a good place to sell with a tight stop loss as a clear break above that area would activate my bullish mode. Fundamental focus will be on the US NFP number on Friday.

USDJPY

The USDJPY attempted to push lower yesterday bottomed at 112.74 but closed higher at 113.27. The bias remains bullish in nearest term testing 114.30 region. Immediate support is seen around 112.75/60 area. A clear break below that area could lead price to neutral zone in nearest term testing 112.00 region or lower but overall I remain bullish and any downside pullback should be seen as a good opportunity to buy. On the upside, a clear break and daily close above 114.30 would expose 115.50 region. Fundamental focus will be on the US NFP number on Friday.

USDCHF

The USDCHF was indecisive yesterday but overall still able to maintain its bullish correction bias after bounced off 0.9550 support area. The bias remains bullish in nearest term testing 0.9675. A clear break above that area could trigger further bullish pressure testing 0.9765. Immediate support is seen around 0.9600. A clear break below that area could lead price to neutral zone in nearest term testing 0.9550 – 0.9450 key support area which remains a good place to buy with a tight stop loss below 0.9450 as a clear break below that area would expose 0.9250 region.

AUDUSD is making a corrective move lower after rising from 0.7328 to 0.7711. This pullback is not surprising after such a strong rally that brought the market to overbought conditions, as indicated by the RSI being at 70 at the end of June when the market peaked.

It remains to be seen whether this move lower is a temporary correction of the May 9 to June 30 uptrend. A sustained downside move is not expected and for now there is no indication of a change in this trend as long as RSI remains in bullish territory above 50 and while AUDUSD remains above its 200-day moving average.

MACD is above zero, in bullish territory. However, it is starting to plateau, suggesting a loss in upside momentum, giving another indication that the market seems to have peaked for now.

It is important to note that AUDUSD has not retraced more than 50% of its rise from 0.7328 to 0.7711 and so remaining above the 50% Fibonacci level at 0.7518 is helping maintain the short-term bullish market structure. A move below this level would bring into view support at the 61.8% and 78.6% Fibonacci levels at 0.7474 and 0.7410 before reaching 0.7328, which would result in a full reversal of the May 9 to June 30 uptrend.

Alternatively, any renewed upside would find immediate resistance at 0.7620 (23.6% Fibonacci) before retesting the June 30 peak at 0.7711. From here, there would be a resumption of the uptrend that started at 0.7328.

The horizontal alignment of the 50-day and 200-day moving averages suggests a potential neutral short-term outlook especially if prices remain trapped between 0.7320 and 0.7518. In the bigger picture, AUDUSD is also neutral and trading within a range of 0.7160 and 0.7760.

Sunrise Market Commentary

• Rates: Bund cannot move away from major support
  Today's calendar is rather unattractive with the exception of the FOMC Minutes, to be published after the European close. US traders rejoin the trading. Geopolitical tension surrounding N-Korea affected early Asian trading, but the effects again seem to fade going into the European session. We expect sentiment-driven technically-orientated (sideway) trading.
• Currencies: USD continues cautious comeback ahead of US data
  Yesterday, the dollar continued trading with a cautious positive bias. Today's eco data are no market movers. The Fed Minutes might be slightly USD supportive. However, sustained dollar gains need convincing US data and they won't be released today.

The Sunrise Headlines

• Stocks in Asia endured a choppy session without any lead in from Wall Street. Initial losses on political tension were reversed later in the trading session.
• An emergency UN Security Council will try to formulate a response to N-Korea's test of an intercontinental ballistic missile that could hit the US mainland. In response to the test, the US and S-Korea held a joint military drill.
• Moody's cut Qatar's credit outlook to negative on concern there won't be a quick resolution to the spat with its Arab neighbours. Qatar did keep its long-term issuer rating of Aa3.
• The Caixan Chinese services PMI, that focusses on smaller and private firms, showed the pace of growth slipping in June (from 52.8 in May to 51.6) while the official PMI (mostly state-owned firms) rose to its highest level in Q2.
• Official government sources have stated that Russia would oppose deeper OPEC cuts and that it wants to stick to the current deal. Further reductions would suggest the cartel is nervous the pact isn't supporting prices enough.
• Europe's almost 1 trillion euros in non-performing loans is one of the greatest challenges facing the bloc and requires a coordinated response, ECB Vice President Constancio wrote, who announced that the ABS part of the APP should be reviewed.
• The most interesting items on the eco-calendar are the FOMC meeting minutes. In Europe and the UK, the services PMI will be released (final readings in Europe) and Germany will try to sell €4B worth of bonds

Currencies: USD Continues Cautious Comeback Ahead Of US Data

Fed Minutes to support gradual USD rebound?

Yesterday morning, it appeared like a risk-off sentiment would hamper Monday's USD rebound. However, European markets ignored the Asian tensions. In a market deprived of important eco news, the dollar found its composure and continued an, albeit very modest, rebound. EUR/USD closed the session at 1.1346 (from 1.1346). USD/JPY finished the day at 113.28 (from 113.38).

This morning, Asian equity markets took again a hesitant start as geopolitical tensions on North Korean continued to dominate. However, market sentiment improved throughout the session. USD/JPY dropped temporary to the 112.83 area, but is again trading north of 113. In technical trade, EUR/USD is marginally stronger at 1.1355.

The eco calendar is fairly thin with the US factory orders, the final June EMU services PMI's and May EMU retail sales. The former is no market mover as the durable orders, the most cyclical part of the factory orders, have already been published. Similarly, the final EMU service PMI is rarely revised substantially. Retail sales are very volatile. The FOMC Minutes are more interesting. The Fed unveiled after the June meeting details on the tapering of its balance sheet, but not the starting date. Some governors suggested it could start soon. As Yellen may leave the Fed early 2018, she will probably put this tapering in motion. A start in September is possible. The third FED rate hike for 2017 (dots) may then be postponed to December. With the Fed diverging from its double mandate of full employment and 2% inflation in opposite sense, we hope to read in the Minutes what is their biggest concern: too low inflation or too tight labour market?

Yesterday and on Monday, the dollar made a gradual comeback as investors anticipated good US data this week. However, today's data are no market movers. Technical trading might prevail. The Fed Minutes might be slightly USD supportive (continuation of the normalisation). A scenario of the Fed reducing its balance sheet soon, combined with a possible delay of the next rate hike is probably more supportive for USD/JPY than for USD/EUR. USD/JPY is potentially more sensitive to a rise in LT US yields than USD/EUR. Aside from the Fed minutes, the dollar needs strong data. We won't get this kind of strong/important data today. Geopolitical tensions in Asia remain a wildcard for USD (USD/JPY) trading.

Technical picture: USD looking for a bottom

A combination of hawkish ECB comments and weaker US eco data pushed EUR/USD last week above the 1.1300/66 resistance area with a new high at 1.1448. The next resistance is now the 1.15 area. Further out LT-correction tops are coming in at 1.1616/1.1714. A break would end the long consolidation period that followed the sharp decline of EUR/USD in 2014/early 2015. Such a key area will be difficult to break for now. A Return below the 1.13 area would be first indication of a loss of upside momentum. 1.1119 is the next important support.

The USD/JPY rally ran into resistance in early May and the pair returned lower in the 108.13/114.37 range. The post-Fed USD rebound pushed the pair the 112.13 correction top early last week, but follow-through gains were modest. So, the jury is still out. A sustained break would improve the ST-picture. Were remain cautious on further USD/JPY gains LT.

EUR/USD correcting off last week's top, but no clear technical signal yet

EUR/GBP

EUR/GBP: consolidation persists

Yesterday, cable and EUR/USD drifted south in lockstep, mirroring a cautious intraday USD rise. The UK construction PMI dropped slightly more than expected from 56.00 to 54.8, without lasting impact on sterling. BoE's McCafferty in an interview reiterated that a rate hike would be prudent. His view is no surprise as he already voted for a rate hike in June. The impact on sterling trading today was again limited, but it did illustrate the internal debate within the Bank of England. EUR/GBP closed the session unchanged at 0.8781. Cable finished the day at 1.2920 area.

Today, the UK services PMI is expected to decline from 53.8 to 53.5. After the publication of the manufacturing and the construction PMI's, we see slight downside risks compared to the consensus. A weaker than expected figure could suggest that the debate on a rate hike within the BoE isn't finished yet, despite recent comments from BoE's Carney. This could be a mildly negative for sterling, but probably won't change the broader picture. Short-term, we see EUR/GBP staying below the resistance of 0.8866/80 as markets are still digesting the recent decline of sterling/rise of EUR/GBP.

From a technical point of view, EUR/GBP set a minor top north of the 0.8854/66 resistance (2017 top). A sustained break didn't occur, causing a correction on the recent EUR/GBP rebound. A return below the 0.8655 correction low would indicate easing pressure on sterling but such a break lower will be difficult. A EUR/GBP buy-on-dips approach remains favoured

EUR/GBP topside test rejected. A modest/temporary sterling comeback might be on the cards

Download entire Sunrise Market Commentary

The markets on Tuesday erred towards a risk-off sentiment, with the typical 'safe haven' instruments such as gold and JPY in demand whilst equities dipped following an apparent milestone in North Korea's weapons program. North Korea said it had conducted a test of a newly developed intercontinental ballistic missile that can carry a large and heavy nuclear warhead, moving North Korea closer to its goal of building a device capable of reaching the continental U.S. Geo-Political tensions will add to the G20 summit in Germany this week as President Trump and Chinese counterpart Xi Jinping seek a 'solution' to escalating tensions.

As a result, JPY initially gained over 0.6% against USD. This morning USDJPY has traded down to 112.819 in early trading but has rebounded off the low to currently trade around 113.25.

Markets were disappointed that the Reserve Bank of Australia kept interest rates on hold, failing to join their global counterpart's recent rhetoric of policy tightening. AUDUSD, which hit almost four-month highs in last week's moves, fell 0.8 percent on the day to $0.75907. Currently AUDUSD is trading around 0.7620.

Sweden's Riksbank also adhered to forecasts for rates not to rise until the middle of next year and stated, 'while it did not expect to cut borrowing costs again, it did not rule that out, pushing its crown currency lower'. EURSEK traded up to 9.69802 on Tuesday before retracing back to currently trade around 9.6700.

Gold headed for its first upward advance in four days reaching a high of $1,228.75 overnight before falling back to currently trade around $1,225.

WTI gained 0.5% on Tuesday trading up to $47.41pb gaining for a successive ninth day. The past 6 weeks were bearish as U.S. output rose and doubts grew over the ability of OPEC to hold back production to tighten the market. However, sentiment shifted in the last 2 weeks as data showed a dip in US Oil output and a slight fall in drilling for new production. Currently WTI is trading around $47.20 and Brent is trading around $49.75.

At 14:00 BST we will have US Factory Orders being released. Factory Orders are expected to show a further decline to 0.5% from the previous poor release of 0.2%. More impactful to the markets will be the FOMC Minutes, from their June 13-14 policy meeting, that are scheduled to be released at 19:00 BST.

The market does not envisage another rate hike until the December FOMC meeting, but it may be forced to re-evaluate that expectation if the minutes imply there is a prevailing indication to raise rates again beforehand.

Daily Pivots: (S1) 0.8761; (P) 0.8776; (R1) 0.8795; More...

Intraday bias in EUR/GBP remains neutral for consolidation below 0.8879. On the downside, break of 0.8718 support will argue that rise from 0.8312 has completed. In that case, intraday bias with be turned back to the downside for lower side of the range at 0.8312. Meanwhile, break of 0.8879 and sustained trading above 0.8851 will pave the way to retest 0.9304 high.

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.

Asia Summary

Markets traded higher as regional focus remained on North Korea's ICBM launch. South Korea and the US stepped up their stance against North Korea actions, including rhetoric and joint drills. Overnight Russia and China agreed to work together on North Korea action. The UN Security Council will meet later today to discuss the situation. The Won gained 0.3% against the dollar to 1,147; Yen also saw a surge against the dollar testing 112.82. Financial press explored the view that the Fed could announce balance sheet reduction in September.

Overnight the PBOC released its quarterly meeting statement, reiteratingto pursue prudent neutral monetary policy. PBOC also affirmed its stance to continue to tighten down on regulation and use tools available to keep liquidity basically stable. By mid-day offshore USD/CNY rose 0.18% to 6.7940, heading towards the first gain in 3 days against the USD. PBOC also skipped open market operations for the 9th consecutive day, the longest streak since April. China State Council approved an increase in Hong Kong's Renminbi Qualified Foreign Institutional Investors (RQFII) quota to CNY500B (prior CNY270B).

Key economic data

(CN) CHINA JUN CAIXIN PMI SERVICES: 51.6 V 52.8 PRIOR (13-month low)

(JP) JAPAN JUN SERVICES PMI: 53.3 V 53.0 PRIOR (22-month high); COMPOSITE PMI: 52.9 V 53.4 PRIOR

(KR) SOUTH KOREA JUNE FOREIGN RESERVES: $380.6B V $378.5B PRIOR

(NZ) New Zealand Jun QV House Prices Y/Y: 8.1% v 9.7% prior (weakest gain since March 2015)

(AU) AUSTRALIA JUN AIG PERFORMANCE OF SERVICE INDEX: 54.8 V 51.5 PRIOR (6-month high)

(SG) Singapore Jun PMI: 50.7 v 51.4 prior (lowest reading since Oct 2016)

(HK) HONG KONG JUN PMI: 51.1 V 50.5 PRIOR

(NZ) NEW ZEALAND JUN ANZ COMMODITY PRICE M/M: 2.1% V 3.2% PRIOR

Speakers and Press

China

(CN) China Economic Monitoring and Analysis Center of the National Bureau of Statistics deputy Dir Pan Jiancheng: China H1 GDP growth expected to hit 6.8-6.9% - Chinese Press

(CN) Xinhua Op Ed discusses recent liquidity conditions in China; suggests the PBoC's recent suspensions of open market operations was indicative of abundant liquidity with no manifestation of a June-end liquidity crunch this year

(CN) Moody's: Growth in China's shadow banking is slowing due to coordinated government action to contain systemic financial risks

Korea

(KR) North Korea leader Kim Jong Un: Will not put nuclear and ICBM on negotiating table until US abandons its hostile policy against North Korea

(KR) South Korea's Joint Chiefs of Staff (JCS): missile units of South Korea and the US carried out joint ballistic missile drills in the East Sea at 7 am local time (2200 GMT on Tuesday) in response to the North Korea's repeated ballistic missile provocations

Asian Equity Indices/Futures (00:30ET)

Nikkei -0.1%, Hang Seng +0.4%, Shanghai Composite +0.3%, ASX200 -0.3%, Kospi +0.1%

Equity Futures: S&P500 +0.0%; Nasdaq -0.1%, Dax +0.0%, FTSE100 +0.1%

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.1369-1.1345; JPY 113.35-112.82; AUD 0.7624-0.7603; NZD 0.7297-0.7276

Aug Gold +0.8% at 1,228/oz; Aug Crude Oil -0.2% at $46.97/brl; Sept Copper +0.1% at $2.68/lb

(AU) Australia (AOFM) sells A$800M in 3.25% 2029 bonds; avg yield 2.72% v 2.5171% prior; bid-to-cover 4.47x v 4.16x prior

(CN) PBOC reports State Council approved an increase in Hong Kong's Renminbi Qualified Foreign Institutional Investors (RQFII) quota to CNY500B (prior CNY270B)

(CN) PBOC skips open market operations (9th consecutive skip)

USD/CNY *(CN) PBOC SETS YUAN MID POINT AT 6.7922 V 6.7889 PRIOR (3rd consecutive weaker setting)

(CN) China MOF sells 1-yr upsized bonds at 3.4629%, bid to cover 2.27x ; 10 year upsized bonds at 3.5661% v 3.59%e, Bid to cover 4.2x

Asia equities notable movers

Australia

Vocus Communications, VOC.AU To grant KKR non-exclusive due diligence in connection with previously announced A$3.50/share bid; +2.4%

Flight Centre,FLT.AU Guides FY17 Underlying pretax profit A$325-330M (guided A$300-330M on May 4th); +8.7%

Pepper Group,PEP.AU Confirms non-binding proposal from KKR worth A$3.60/share; -6.9%

Liquefied Natural Gas,LNG.AU Magnolia LNG secures A$1.5B commitment from Stonepeak; +26.8%

Japan

Toshiba, 6502.JP Consortium may delay closing on purchase of Toshiba's chip unit due to court decision - Japan press; -1.4%

Hong Kong/China

China Unicom, CHU UPDATE: Morgan Stanley Cuts CHU to Underweight from Overweight, price target: HK$10.00; -4.5%

Tencent, 700.HK Introduced restrictions on minors playing mobile games, including its most popular, Honor of Kings (HoK), following articles published on People.cn; -3%

Xiamen ITG Group Corp,600755.CN NAVs of the 5 funds, with ~CNY1.3B of total assets under management, have fallen to levels that trigger forced liquidation – filing; -2.9%

US Session Highlights

US markets closed for 4th of July holiday, to re-open today

Daily Pivots: (S1) 1.4822; (P) 1.4887; (R1) 1.4976; More...

Intraday bias in EUR/AUD remains neutral for the moment. Further rise is in favor with 1.4796 minor support intact. We're holding on to the bullish view that pull back from 1.5226 has completed at 1.4625, ahead of 38.2% retracement of 1.3624 to 1.5226 at 1.4614. Above 1.4997 will turn bias back to the upside for 1.5226 first. However, firm break of 1.4796 will dampen this view and turn bias back to the downside for 1.4625 support.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Such correction should be completed at 1.3624 after defending 1.3671 key support. Rise from 1.3642 would extend to 61.8% retracement of 1.6587 to 1.3624 at 1.5455. Sustained break there will pave the way to retest 1.6587. However, sustained break of 1.4669 support will dampen this bullish view. We'll assess the outlook later after looking at the structure and depth of the pull back.