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Daily Pivots: (S1) 1.3659; (P) 1.3681; (R1) 1.3704; More...

Intraday bias in USD/CAD remains neutral for the moment. Outlook is unchanged that corrective pattern from 1.3845 might have completed with three waves to 1.3588, after hitting 38.2% retracement of 1.3716 to 1.3845 at 1.3589 twice. Above 1.3707 will target 1.3790 resistance first. Break of 1.3790 will argue that larger rise from 1.3716 is ready to resume through 1.3845.

In the bigger picture, price actions from 1.3976 (2022 high) are viewed as a corrective pattern. In case of another fall, strong support should emerge above 1.2947 resistance turned support to bring rebound. Firm break of 1.3976 will confirm up resumption of whole up trend from 1.2005 (2021 low). Next target is 61.8% projection of 1.2401 to 1.3976 from 1.3176 at 1.4149.

Daily Pivots: (S1) 202.23; (P) 203.96; (R1) 204.91; More...

Intraday bias in GBP/JPY is back on the downside as fall from 208.09 resumed. Deeper decline would be seen to 38.2% retracement of 191.34 to 208.09 at 201.69. Strong support is expected there to bring rebound. On the upside, above 205.77 minor resistance will turn intraday bias will turn bias back to the upside for retesting 208.09. However, sustained break of 201.69 will argue that larger correction is already underway.

In the bigger picture, long term up trend is still in progress. Next target is 100% projection of 155.33 to 188.63 from 178.32 at 211.62. Outlook will stay bullish as long as 200.72 resistance turned support holds, even in case of deep pullback.

Daily Pivots: (S1) 170.11; (P) 171.47; (R1) 172.23; More...

EUR/JPY's break of 170.87 resistance turned support argues that fall from 175.41 might be correcting whole rise from 153.15 already. Intraday bias is back on the downside. Sustained trading below 55 D EMA (now at 170.30) will target 38.2% retracement of 153.15 to 175.41 at 166.90. On the upside, though, break of 172.91 resistance will revive near term bullishness and bring retest of 175.41 high.

In the bigger picture, medium term outlook will stay bullish as long as 164.29 resistance turned support holds. Long term up trend is still in favor to continue through 175.41 at a later stage. However, firm break of 164.29 will be a strong sign of bearish trend reversal.

Daily Pivots: (S1) 0.8391; (P) 0.8401; (R1) 0.8419; More....

EUR/GBP recovered quickly after dipping to 0.8392 and intraday bias remains neutral. Further decline is in favor. But considering bullish convergence condition in 4H MACD, downside could be contained by 61.8% projection of 0.8619 to 0.8396 from 0.8498 at 0.8360 on first attempt. On the upside, break of 55 4H EMA (now at 0.8421) will turn bias back to the upside for stronger rebound.

In the bigger picture, down trend from 0.9267 (2022 high) is in progress. Next target is 0.8201 key support (2022 low). For now, outlook will remain bearish as long as 0.8643 resistance holds, even in case of stronger rebound.

Daily Pivots: (S1) 1.6199; (P) 1.6232; (R1) 1.6289; More...

EUR/AUD's break of 1.6211 support turned resistance indicates short term bottoming at 1.5996. More importantly, correction from 1.7062 might have completed with three waves down to 1.5996, after hitting 1.6000 fibonacci support. Intraday bias is back on the upside for 1.6418 resistance. Firm break there will strengthen this bullish case. On the downside, though, below 1.6171 minor support will turn intraday bias neutral first.

In the bigger picture, fall from 1.7062 medium term top is seen as a correction to the up trend from 1.4281 (2022 low) only. Strong support is still expected between 1.5846 and 38.2% retracement of 1.4281 to 1.7062 at 1.6000 to bring rebound. Break of 1.6418 resistance will argue that the correction has completed.

In June, UK payrolled employment rose 16k or 0.1% mom. Median monthly pay increased 3.6%, sharply lower than prior month's 6.0% yoy. This sharper than usual slow down in pay growth is partly because of the comparison with June 2023, which figure was inflated by pay settlements made in the health sector. Claimant count rose 32.3k versus expectation of 23.4k.

In the three months to May, unemployment rate was unchanged at 4.4%, matched expectations. Growth of average earnings including bonus slowed from 5.9% yoy to 5.7% yoy. Growth of average earnings excluding bonus slowed from 6.0% yoy to 5.7% yoy. Both earnings growth matched expectations.

Full UK labor market release here.

While everyone is speculating on how the ongoing international trade war could worsen if Donald Trump returns to the White House, it was Joe Biden who delivered a blow to the market yesterday as his administration told allies that it’s considering severe restrictions if companies like the Japanese Tokyo Electron and Dutch ASML keep providing China the tools they need to access advanced chip technology. And indeed, despite restrictions, the surging sales to China accounted for almost half of ASML’s revenue in Q2 according to Bloomberg. As such, despite a breathtaking rise in orders from around $3.9bn to $6.1bn that the company announced yesterday, ASML shares tanked nearly 13%, pulling the Stoxx 50 down with it. Tokyo Electron dived 7% on Wednesday and another 9% today. Nvidia fell more than 6.5%, Broadcom dropped almost 8% as AMD crashed more than 10%. Even Tesla fell more than 3% despite Cathie Wood’s prediction that the robotaxi platform that Elon Musk is working on could boost the company’s stock price by 10-fold! Always humble and reasonable, this Cathie Wood. As such, the S&P500 fell from a record as the technology-heavy Nasdaq 100 fell almost 3% - printing its worse day since 2022.

Let’s see if earnings from Netflix and TSM could put a smile back on investors’ face and help TSM – which lost 8% yesterday – recover a part of these losses. But yesterday came as a proof that we don’t necessarily need Donald Trump in the White House to fuel the trade tensions with China and wreak havoc across allies. Biden is good at doing that job, too.

Yesterday’s big tech selloff hit sentiment in small caps too. The Russell 2000 gave back 1% as the US 2-year yield rebounded slightly on cautious comments from the Federal Reserve (Fed) Christopher Waller’s comments that the Fed is getting ‘closer’ to cutting rates but he needs more evidence that inflation is on a solid downside trajectory to back a concrete move.

The selloff in the US dollar index accelerated as the index pulled out a crucial Fibonacci support – the major 38.2% retracement on year-to-date rally. The sharp rise in the Japanese yen amid a suspected FX intervention, and the rally in sterling following a stronger-than-expected British inflation data helped fueling the bearish action in the greenback yesterday. As such, the US dollar index has now stepped into the medium-term bearish consolidation zone with potential for a further weakness. And the fundamentals including a full conviction that the Fed will start cutting the interest rates in September support the negative dollar outlook.

Cable cleared the 1.30 offers after a set of stronger-than-expected CPI figures hammered the expectations that the Bank of England (BoE) would cut rates in August meeting. Yes, the headline CPI is now at 2% in the UK but the services inflation remains sticky near 5.7% and given that services make up to 80% of the British economy, worries regarding the sticky services inflation are funded. What’s encouraging however is that the latest rise in British services inflation was due to a 10% rise in hotel and restaurant prices amid the effects of an almost 10% rise in the minimum wage and Taylor Swift tour. The Euro 2024 – where Brits played the final – will probably have a temporary boosting effect on services and beer inflation as well. But then, if all goes well, we shall start seeing the services inflation figures wane and help the BoE move toward rate cutting near fall. For now, the rapid rise of BoE hawks backs the appreciation of the British pound and could support a further advance in Cable. But given that the Fed rate cut bets went probably a bit far, and that the BoE rate cut bets dropped enough, the upside potential in Cable should be limited. Solid resistance is eyed near 1.3150/1.32 area.

Across the Channel, the EURUSD consolidates gains near 1.0930-1.0940 this morning. The European Central Bank (ECB) will probably announce no change to interest rates at today’s meeting. Any hint that the ECB could cut rates in September should slow down the euro purchases today, but investors are more convinced than not that the ECB will announce a second cut in September. Therefore, if today’s presser doesn’t bring new and unexpected elements on the table, the EURUSD outlook should remain slightly positive faced with the rising Fed cut expectations.

Elsewhere, US crude rallied yesterday on the back of an almost 5-mio-barrel fall in US oil inventories last week. Trump’s ambitions to boost the US oil production could be a turn off for oil bulls. But the Trump trade on oil is not that clear. Yes, Trump wants to pump more, but he also wants to scrap the shift toward alternative energy sources and keep demand for fossil fuel intact. Therefore, a Trump win could be more positive for oil than the contrary. In the short-run, the reflation-positive environment could reasonably keep the price of US crude on a positive track above the $80pb key support level and help the barrel of oil make another attempt on the $85pb level. Appetite above this level will likely remain limited, however, as higher oil prices boost inflation expectations and Fed hawks, and have a natural cooling effect on bullish bets.

Daily Pivots: (S1) 0.9629; (P) 0.9692; (R1) 0.9726; More....

EUR/CHF's steep decline suggests that rebound from 0.9476 has completed at 0.9772 already. Intraday bias is back on the downside. Firm break of 38.2% retracement of 0.9476 to 0.9772 at 0.9659 will target 61.8% retracement at 0.9589 and possibly below. On the upside, above 0.9772 will resume the rally from 0.9476 towards 0.9928 high instead.

In the bigger picture, rebound from 0.9252 medium term bottom might not be completed yet. But even in case of resumption, strong resistance could emerge from 1.0095 to limit upside. Medium term outlook will be neutral at best as long as 1.0094 structural resistance holds. Meanwhile, break of 0.9476 will bring retest of 0.9252 low.

While Euro maintains its strength against Dollar, its performance is more mixed against other major currencies. The market's attention is now focused on the upcoming ECB rate decision and press conference. It is broadly anticipated that ECB will maintain deposit rate at 3.75% and main refinancing rate at 4.25% correspondingly.

President Christine Lagarde is expected to continue signaling the possibility of further monetary easing, yet she will likely reiterate the bank's commitment to a data-dependent, meeting-by-meeting approach, without giving any concrete forward guidance.

Lagarde has previously highlighted that policymakers "need a lot of data," which isn't always available at every Governing Council meeting. This is seen as an indication the ECB will wait for comprehensive data and updated economic forecasts before making further moves, likely in September and December.

Market analysts are largely in consensus, predicting two additional quarter-point rate cuts for the year, although a minority foresees only one. Market sentiment aligns closely with this outlook, fully pricing in one cut and strongly leaning towards a second.

In terms of currency performance, New Zealand Dollar remains the weakest this week. The Kiwi continues to be under pressure as expectations for the first RBNZ rate cut have been moved forward from February to November. Australian Dollar also struggles, weighed down by a risk-off mood prevalent in Asia, with today's stronger-than-expected job data from Australia offering little relief. Meanwhile, Loonie is currently the third worst.

On the other hand, Swiss Franc is surprisingly the strongest performer this week, further boosted by its rebound against Euro. Japanese Yen holds the second spot, buoyed another round of alleged intervention by Japan yesterday. Euro stands strong in third place, while Dollar and Sterling are mixed in the middle of the pack.

Technically, EUR/CAD's break of 1.4927 resistance this week argues that consolidation pattern from 1.5041 has completed with three waves to 1.4592 already. Further rally is in favor as long as 1.4883 minor support holds. Next target is 61.8% projection of 1.4155 to 1.5041 from 1.4592 at 1.5140. However, break of 1.4883 will delay the bullish case and bring more sideway trading first.

In Asia, at the time of writing, Nikkei is down -2.11%. Hong Kong HSI is up 0.57%. China Shanghai SSE is up 0.22%. Singapore Strait Times is down -0.62%. Japan 10-year JGB yield is up 0.0182 at 1.050. Overnight, DOW rose 0.59%. S&P 500 fell -1.39%. NASDAQ fell -2.77%. 10-year yield fell -0.021 to 4.146.

Japan's exports rise 5.4% yoy in June, but volume down -6.2% yoy

In June, Japan's exports grew by 5.4% yoy to JPY 9209B, falling short of 6.4% yoy expected. This marks the seventh consecutive monthly increase in export value. However, export volume fell by -6.2% yoy, indicating that the rise in export value was driven primarily by higher prices and falling Yen rather than increased demand.

By destination, shipments to the US increased by 11% yoy. Exports to China grew by 7.2% yoy, marking the seventh consecutive month of growth. Overall, exports to Asia rose by 7.7% yoy, but exports to the EU declined by -13.4% yoy.

Imports increased by 3.2% yoy to JPY 8985B, below the expected 9.3% yoy. Import volume also decreased by -8.9% yoy. For June, Japan recorded a trade surplus of JPY 224B.

In seasonally adjusted terms, exports declined by -0.2% mom h to JPY 8961B, while imports rose by 1.6% mom to JPY 9778B, leading to a trade deficit of JPY -817B.

Australia's employment grows 50.2k, labor market remains relatively tight

Australia's employment figures for June showed a strong increase, with employment rising by 50.2k, well above the expected 20.0k. This growth included 43.3k full-time jobs and 6.8k part-time jobs.

Unemployment rate edged up from 4.0% to 4.1%, in line with expectations. Participation rate also increased from 66.8% to 66.9%, just 0.1% below the historical high of 67.0% set in November 2023. Additionally, the employment-to-population ratio rose by 0.1% to 64.2%, close to its historical peak of 64.4% from November 2023. Monthly hours worked increased by 0.8% mom.

Bjorn Jarvis, head of labour statistics at ABS, observed that both the employment-to-population ratio and the participation rate are still near their 2023 highs. He added that together the persistently high level of job vacancies indicates the labor market "remains relatively tight", even though unemployment rate has been above 4.0% since April.

Australia's NAB business confidence ticks up to -1 in Q2, conditions tumbles to 5

Australia's NAB Quarterly Business Confidence improved marginally, rising from -2 to -1 in Q2. However, business conditions overall weakened, with the index falling from 10 to 5. Trading conditions dropped from 15 to 9, profitability conditions fell from 8 to 2, and employment conditions decreased from 7 to 5.

Cost pressures persisted, with labor costs growing at 1.2%, unchanged from the previous quarter, and purchase costs growing at 0.9%, down from 1.1%. Price growth measures showed some relief, with final product price growth at 0.6% quarter-on-quarter, down from 0.8%. Retail price growth eased to 0.7% from 0.9%, and recreation and personal services price growth slowed to 0.6% from 0.8%.

NAB Chief Economist Alan Oster noted that the survey shows mixed results on cost pressures and prices. While materials cost growth is improving, labor costs remain high. He highlighted that 30% of firms are facing significant challenges with labor availability, and wage costs continue to be a major concern.

Looking ahead

Swiss trade balance and UK emplooyment data will be released in European session. But main focus will be on ECB rate decision. Later in the day, US will release jobless claims as usual on a Thursday.

EUR/CHF Daily Outlook

Daily Pivots: (S1) 0.9629; (P) 0.9692; (R1) 0.9726; More....

EUR/CHF's steep decline suggests that rebound from 0.9476 has completed at 0.9772 already. Intraday bias is back on the downside. Firm break of 38.2% retracement of 0.9476 to 0.9772 at 0.9659 will target 61.8% retracement at 0.9589 and possibly below. On the upside, above 0.9772 will resume the rally from 0.9476 towards 0.9928 high instead.

In the bigger picture, rebound from 0.9252 medium term bottom might not be completed yet. But even in case of resumption, strong resistance could emerge from 1.0095 to limit upside. Medium term outlook will be neutral at best as long as 1.0094 structural resistance holds. Meanwhile, break of 0.9476 will bring retest of 0.9252 low.

Economic Indicators Update

Australia's NAB Quarterly Business Confidence improved marginally, rising from -2 to -1 in Q2. However, business conditions overall weakened, with the index falling from 10 to 5. Trading conditions dropped from 15 to 9, profitability conditions fell from 8 to 2, and employment conditions decreased from 7 to 5.

Cost pressures persisted, with labor costs growing at 1.2%, unchanged from the previous quarter, and purchase costs growing at 0.9%, down from 1.1%. Price growth measures showed some relief, with final product price growth at 0.6% quarter-on-quarter, down from 0.8%. Retail price growth eased to 0.7% from 0.9%, and recreation and personal services price growth slowed to 0.6% from 0.8%.

NAB Chief Economist Alan Oster noted that the survey shows mixed results on cost pressures and prices. While materials cost growth is improving, labor costs remain high. He highlighted that 30% of firms are facing significant challenges with labor availability, and wage costs continue to be a major concern.

Full Australia NAB quarterly business confidence release here.