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On Friday, the Australian Dollar declined by 61 pips or 0.82% against the US Dollar. The AUD/USD currency pair breached the 50– and 200– hour SMAs during Friday's trading session.

Technical indicators suggest selling signals on the 4H time-frame chart. Most likely, sellers could continue to drive the exchange rate lower during the following trading session.

However, the lower line of a descending channel pattern could provide support for the currency exchange rate within this session.

On Friday, the Eurozone single currency declined by 47 pips or 0.36% against the Japanese Yen. The 50– hour simple moving average pressured the exchange rate lower during Friday's trading session.

Everything being equal, the EUR/JPY currency pair could continue to trend lower during the following trading session. The possible target for bears would be near the 129.40 area.

However, a support level at 129.70 could provide support for the currency exchange rate in the shorter term.

Daily Pivots: (S1) 1.2618; (P) 1.2655; (R1) 1.2726; More...

Intraday bias in USD/CAD remains neutral for the moment. Rise from 1.2005 is in progress with 1.2421 support intact. On the upside, break of 1.2760 will target a test on 1.2947 high. However, break of 1.2492 will resume the fall from 1.2947 to 1.2421 key structural support.

In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). It should have completed after hitting 1.2061 (2017 low) and 50% retracement of 0.9406 to 1.4689 at 1.2048. Sustained break of 38.2% retracement of 1.4667 to 1.2005 at 1.3022 will pave the way to 61.8% retracement at 1.3650 and above. Overall, medium term outlook remains neutral at worst with 1.2048/61 support zone intact.

Daily Pivots: (S1) 0.7332; (P) 0.7371; (R1) 0.7393; More...

Intraday bias in AUD/USD remains neutral for the moment. As noted before, whole corrective pattern from 0.8006 might have completed at 0.7105 already. Further rise is in favor as long as 0.7279 minor support holds. Above 0.7477 will target 0.7530 support turned resistance first. However, break of 0.7279 will dampen our bullish view and turn bias back to the downside for 0.7105 low instead.

In the bigger picture, with 0.6991 cluster support (38.2% retracement of 0.5506 to 0.8006 at 0.7051) intact, we're seeing price action form 0.8006 as a correction only. That is, up trend from 0.5506 low would resume after the correction completes. In that case, main focus will be 0.8135 key resistance (2018 high). Sustained break there will carry larger bullish implications. However, sustained break of 0.6991 will argue that the whole medium term trend has indeed reversed.

Daily Pivots: (S1) 109.47; (P) 109.87; (R1) 110.03; More...

Range trading continues in USD/JPY and intraday bias remains neutral first. On the upside, break of 110.79 will resume the rebound from 108.71 to retest 111.65 high. On the downside, break of 109.10 will target 108.71 support first. Firm break there will resume the decline from 111.65 and target 38.2% retracement of 102.58 to 111.65 at 108.18 next.

In the bigger picture, medium term outlook is staying neutral with 111.71 resistance intact. The pattern from 101.18 could still extend with another falling leg. Sustained trading below 55 day EMA will bring deeper fall to 107.47 support and below. Nevertheless, strong break of 111.71 resistance will confirm completion of the corrective decline from 118.65 (2016 high). Further rise should then be seen to 114.54 and then 118.65 resistance.

Daily Pivots: (S1) 0.9160; (P) 0.9172; (R1) 0.9195; More....

Range trading continues in USD/CHF and intraday bias remains neutral for the moment. On the downside, break of 0.9098 will target 0.9017 support first. Further break there will likely resume the decline from 0.9471 through 0.8925 low. On the upside, break of 0.9241 resistance should resume the rise from 0.8925 through 0.927.

In the bigger picture, USD/CHF is still struggling around 55 week EMA (now at 0.9176) and outlook is mixed for now. Confirmed rejection by the 55 week EMA will retain medium term bearishness. That is, larger fall from 1.0342 would resume through 0.8756 low at a later stage. However, sustained trading above 55 week EMA will tilt favor to the case of bullish reversal. Focus would then be turned to 0.9471 resistance for confirmation.

Daily Pivots: (S1) 1.3809; (P) 1.3849; (R1) 1.3871; More...

Intraday bias in GBP/USD remains neutral for the moment and some more sideway trading could be seen. On the upside, above 1.3890 will resume the rise from 1.3601 for 1.3982 resistance. Decisive break there will indicate that fall from 1.4248 has completed. On the downside, however, break of 1.3725 support will turn bias back to the downside for retesting 1.3570/3601 support zone instead.

In the bigger picture, as long as 1.3482 resistance turned support holds, we'd still treat price actions from 1.4248 as a corrective move. That is, up trend from 1.1409 (2020 low) is in favor to resume. Decisive break of 1.4376 key resistance (2018 high) would indeed carry long term bullish implications. However, sustained break of 1.3482 will at least bring deeper fall to 38.2% retracement of 1.1409 to 1.4248 at 1.3164, or even further to 61.8% retracement at 1.2493.

General trend

• Nikkei has traded modestly lower after flat open [Toyota drops on reduced production guidance; Topix Information & Communication index declines; Topix Banks index rises after recent gain in UST yields, M&A has also been a focal point].
• Hang Seng has extended decline [TECH index drops amid Nasdaq decline and continued regulatory concerns; Property firms generally decline, Evergrande’s CNY bonds again halted]; EV stocks decline, China says it has too many EV startups.
• Shanghai Composite ended morning trading +0.1% [Property index gains over 2%; Consumer, Industrial, and IT indices drop].
• S&P ASX 200 pares gain [Energy and Resources indices rise, Financials lag].

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened 0.0%.
• RIO.AU US House Natural Resources Committee has voted to include language in a wider budget reconciliation package that would block the building of Resolution copper mine in Arizona – press.
• (NZ) RBNZ Shadow Board (NZIER) quarterly report: Sees 2021/22 GDP 4.5% (prior 5.0%); 2022/23 GDP 4.5% (prior 3.7%).
• SYD.AU Confirms received revised proposal for A$8.75/shr in cash from Sydney Aviation Alliance ; Will provide due diligence to bidders.
• QAN.AU ACCC denies alliance with Japan Airlines (JAL); not in best interests of public.
• (AU) Reserve Bank of Australia (RBA): Introduces new criteria for securities to be accepted as collateral in its open market ops: Robust Fallbacks Required for BBSW Securities.
• (NZ) New Zealand bond market has priced in two 25bps rate hikes before the end of 2021 - press.

Japan

• Nikkei 225 opened 0.0%.
• (JP) Japan candidate Kono leader in latest Asahi poll with 33% for LDP leadership race.
• (JP) JAPAN Q3 BSI LARGE ALL INDUSTRY Q/Q: +3.3 V -4.7 PRIOR; LARGE MANUFACTURING Q/Q: +7.0 V -1.4 PRIOR.
• (JP) Japan Aug PPI (CGPI) M/M: 0.0% v 0.3%e; Y/Y: 5.5% v 5.7%e.
• 7203.JP In North America, projecting reduction of ~60-80K vehicles in October, does not anticipate any impact to employment at this time (Friday US hours).

Korea

• Kospi opened -0.3%.
• (KR) North Korea has test fired new long range cruise missile – Yonhap.
• (KR) South Korea Sept 1-10th Imports Y/Y: 60.6% v 63.1% prior; Exports Y/Y: 30.7% v 46.4% prior; Chip Exports y/y: -2.1% v +44.6% prior.

China/Hong Kong

• Hang Seng opened -1.2%; Shanghai Composite opened -0.1%.
• 6688.HK Said that China is seeking to break up Alipay from company, China is now requesting the further breakup of Huabei and Jiebei into two independent apps - China Press.
• (CN) Analysts note with the release of Aug data from China shows new loans were at the slowest pace since Dec 2018, which is attributed to tightening property market, the lack of demand for long term loans highlights the downward pressure on the economy – press.
• (CN) China Sec Journal: China said to be seeking to increase industrial automation and innovation with robotics under new 5-year plan.
• (CN) China Ministry of Industry and Information Technology (MIIT) has requested tech companies stop blocking rival services and links. given time frame to comply - China press.
• (CN) China PBOC sets Yuan reference rate: 6.4497 v 6.4566 prior.
• (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B in 7-day reverse repos prior; Net CNY0B v Net CNY0B prior.
• (CN) Trading volumes on the Shanghai and Shenzhen Exchanges have hit >CNY1.0T for 38 straight trading sessions [vs record 43 days seen in 2015] - China Securities Journal.

North America

• KSU Confirms received revised stock-cash proposal (2.884 CP shares, $90 in cash) from Canadian Pacific that Board of Directors determines is a "Company Superior Proposal".
• PFE Speculation that the Pfizer/BioNTech COVID vaccine could be approved by the FDA for children ages 5-11 by the end of October - US press.
• (US) NHC issues update on Tropical Storm Nicholas: The Hurricane Watch has been extended eastward to Freeport Texas, Louisiana has declared state of emergency.
• (US) Said that Democrats are considering various tax increases to increase (long term) Capital gains to 28.8% (25% + 3.8% surcharge), 26.5% corporate tax rate.
• (US) Fed’s Harker (non-voter): Hope the tapering process will start sometime this year, weaker than expected employment data largely to supply issues - Nikkei interview.

Europe

• ZO1.DE Hellman & Friedman raises offer to €460/shr cash (prior €390/shr), declared superior offer.

Levels as of 01:15ET

• Hang Seng -2.4%; Shanghai Composite -0.2%; Kospi -0.5%; Nikkei225 -0.3%; ASX 200 +0.0%.
• Equity Futures: S&P500 +0.1%; Nasdaq100 +0.1%, Dax +0.1%; FTSE100 -0.1%.
• EUR 1.1817-1.1792; JPY 109.98-109.85 ;AUD 0.7369-0.7340; NZD 0.7121-0.7100.
• Commodity Futures: Gold -0.0% at $1,792/oz; Crude Oil +0.3% at $69.91/brl; Copper +0.1% at $4.43/lb.

Market movers today

• We have a lot of interesting data this week, but will start out quiet today with no tier-1 data.
• In the US the week will bring both CPI inflation, retail sales, small business optimism and regional business surveys from Empire and Philadelphia.
• Focus in the euro area will be on ECB speakers and German election polls.
• In Scandi, Swedish inflation and Norway's regional network survey are the main events.

The 60 second overview

EU fiscal deficits: During the weekend, EU finance ministers discussed tweaking the EU debt & deficit rules. Most finance ministers agree that fiscal support will have to be scaled back eventually as output returns to pre-pandemic levels, but there are big rifts over the speed of retrenchment and how rules should be adapted to higher post-corona debt levels and allowing for sufficient investments, not least in light of Europe's green transition ambitions. One proposal is to loosen the 1/20th per annum debt reduction rule for countries with debt ratios above 60% of GDP. Another is to exempt green investments from the debt and deficit calculations though naturally, such can pose substantial challenges in practice. See more in FT (11 September).

Equities sour: US stocks ended the week lower and dollar strengthened in tandem, marking at least a pause in the recent weakening of dollar. Market themes continue to centre on Fed tapering (likely to be announced in September or November), a cyclical slowdown amid high growth rates and amid this, notably a focus towards Chinese regulatory risks. On net, there appears to be a shift towards large caps, low debt and US versus Emerging Markets as investors probably are adding resilience to their portfolios.

Norwegian elections: Based on the recent polls there will likely be a change of government in Norway after today's general election. The Labour party may regain the power with the support of the Centrists Political Part and the Social Lefts Party and may need further support. Important to stress, we expect no market reaction as the effect on the economic policy in the short and medium term should be limited. The result of the election will probably not be ready until late this evening.

Equities: Equities fell Friday and hence had a rare week of losses here in 2021. It is not in any way that much but simply just a bit choppier than earlier this year. No huge difference between sectors and styles but a shift away from the leadership we have seen earlier. This type of market conditions fits well with a macro environment where momentum is fading but growth is still very solid and this time around well above trend. Worth nothing is the downside hedging taking place and VIX is now north of 20. In US Friday, Dow -0.8%, S&P 500 -0.8%, Nasdaq -0.9% and Russell 2000 -1.0%. This morning, most Asian markets are the moves from Friday. Hong Kong leading the way down with Hang Seng down 2% at the time of writing. European futures are slightly lower while US futures holding on to small gains.

FI: We have a busy week ahead of us with plenty of supply in the European government bond market as well as plenty of key economic data from the US. In the US, the CPI data for August is expected to stabilise, this should ease the speculation regarding stagflation even though we need more data to show that the spike in inflation is transitory.

FX: In the short term, we are likely to continue to see very high correlation between spot EUR/USD and equities where strong equities weaken dollar a tad, and conversely for equity weakness.

Credit: CDS indices sold off slightly on Friday where iTraxx Xover widened 16bp (to 227.3bp) and Main 0.2bp (to 44.7bp). Cash bonds fared better, with HY and IG tightening 1bp and 0.5bp, respectively.

Nordic macro

Based on the recent polls there will likely be a change of government in Norway after today's general election. The Labour party may regain the power with the support of the Centrists Political Part and the Social Lefts Party and may need further support. Important to stress, we expect no market reaction as the effect on the economic policy in the short and medium term should be limited. The result of the election will probably not be ready until late this evening.

Daily Pivots: (S1) 1.1797; (P) 1.1824; (R1) 1.1838; More...

EUR/USD's break of 1.1792 support argues that rebound from 1.1663 has completed at 1.1908, after rejection by 1.1907 key structural resistance. The development also dampened our original bullish view. Intraday bias is back on the downside for retesting 1.1663 support. Break there will extend the whole pattern from 1.2348 towards 1.1602 key support level. On the upside, above 1.1850 minor resistance will turn bias back to the upside for another test on 1.1907/8 resistance.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally remains in favors long as 1.1602 support holds, to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again. Deeper fall would be seen to 61.8% retracement of 1.0635 to 1.2348 at 1.1289 and below.