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Daily Pivots: (S1) 1.3814; (P) 1.3842; (R1) 1.3864; More...

GBP/USD's retreat from 1.3890 extends lower today but stays above 1.3730 minor support. Intraday bias remains neutral at this point. On the upside, above 1.3890 will resume the rise from 1.3601 to 1.3982 resistance first. Decisive break there will l indicate that fall from 1.4248 has completed. Near term outlook will be turned bullish for retesting 1.4248. However, on the downside, break of 1.3730 support will bring retest of 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.

Daily Pivots: (S1) 0.9136; (P) 0.9153; (R1) 0.9169; More....

Intraday bias in USD/CHF remains neutral as sideway trading continues. 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) 109.72; (P) 109.84; (R1) 109.97; More...

Intraday bias in USD/JPY remains neutral as sideway trading is still in progress. 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) 0.7422; (P) 0.7442; (R1) 0.7457; More...

Intraday bias in AUD/USD is turned neutral with today's retreat. Some consolidations could be seen. But further rally is in favor as long as 0.7279 support intact. As noted before, correction from 0.8006 should have completed at 0.7105 already. Above 0.7477 will target 0.7530 support turned resistance first. However, firm break of 0.7279 will dampen our bullish view and bring retest of 0.7105 low.

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) 0.8568; (P) 0.8577; (R1) 0.8587; More...

EUR/GBP's break of 0.8601 resistance suggest resumption of rise from 0.8448. Intraday bias is back on the upside for 0.8668 resistance first. Firm break there will be a strong sign of near term bullish reversal at least. Next target is 0.8718 resistance. On the downside, break of 0.8561 support, however, would argue that the rebound has completed, and turn bias back to the downside for retesting 0.8448 low.

In the bigger picture, price actions from 0.9499 (2020 high) are still seen as developing into a corrective pattern. Deeper fall could be seen as long as 0.8668 resistance holds, towards long term support at 0.8276. However, firm break of 0.8668 resistance would argue that a medium term bottom was already formed. Stronger rise would be seen to 0.8861 support turned resistance to confirm completion of the corrective pattern.

Risk sentiment turns a bit weaker today in the stock markets. But benchmark European and US yields are staging a strong rally. In the currency markets, Aussie is sold off is in delayed reaction to RBA's dovish tapering, but Canadian is follow closely with selloff in oil price. Sterling is also falling in European crosses, probably in reaction to the government's plan to raise taxes. On the other hand, Dollar is trying to rebound, other with Euro and Swiss Franc.

Technically, EUR/GBP's break of 0.8601 resistance suggest resumption of rise from 0.8448 for 0.8668 resistance. We'll keep an eye on 1.3730 support in GBP/USD and 151.32 support in GBP/JPY. Break of these levels would indicate more Sterling weakness to come. Meanwhile, we'd continue to pay attention 1804.70 support in Gold. Break there could sign a more sustainable rebound in the greenback.

In Europe, at the time of writing, FTSE is down -0.20%. DAX is down -0.11%. CAC is up 0.01%. Germany 10-yaer yield is up 0.0425 at -0.322. Earlier in Asia, Nikkei rose 0.86%. Hong Kong HSI rose 0.73%. China Shanghai SSE rose 1.51%. Singapore Strait Times rose 0.24%. Japan 10-year JGB yield dropped -0.0041 to 0.041.

Germany ZEW dropped sharply to 26.5, global chip shortage caused significant reduction in profit expectations

Germany ZEW Economic Sentiment dropped sharply from 40.4 to 26.5 in September, well below expectation of 30.2. It's also the fourth consecutive decline. Germany Current Situation index improved form 29.3 to 31.9, below expectation of 33.1. Eurozone ZEW Economic Sentiment also tumbled from 42.7 to 31.3, below expectation of 35.3. Eurozone Current Situation index rose 7.9 pts to 22.5.

"Expectations fell markedly once more in September 2021. Although financial market experts expect further improvements of the economic situation over the next six months, the expected magnitude and the dynamics of the improvements have decreased considerably. Global chip shortage in the automobile sector and shortage of building material in the construction sector have caused a significant reduction in profit expectations for these sectors. This may have had a negative effect on economic expectations," comments ZEW President Professor Achim Wambach.

Also from Germany, industrial production rose 1.0% mom in July, versus expectation of 0.7% mom.

Eurozone GDP grew 2.2% qoq in Q2, -2.5% below pre-pandemic level

Eurozone GDP grew 2.2% qoq in Q2, revised up from prior estimate of 2.0% qoq. Comparing with same quarter of previous year, GDP grew 14.3% yoy. GDP was -2.5% below the pre-pandemic level of Q4, 2019. Household final consumption expenditure rose 3.7% qoq. Government final consumption expenditure rose 1.2% qoq. Gross fixed capital formation rose 1.1% qoq. Exports rose 2.2% qoq. Imports rose 2.3% qoq.

EU GDP grew 2.1% qoq, 13.8% yoy. Ireland (+6.3%) recorded the sharpest increase of GDP compared to the previous quarter, followed by Portugal (+4.9%), Latvia (+4.4%) and Estonia (+4.3%). Declines were observed in Malta (-0.5%) and Croatia (-0.2%).

From Swiss, foreign currency reserves rose to CHF 929B in Aug. Unemployment rate dropped to 2.9%, matched expectations.

BoE Saunders concerned with continuing with asset purchases

BoE hawk Michael Saunders said he believed that the economy was now close to the pre-pandemic level. He's worried that continuing with the asset purchase program would cause rise in medium-term expectation.

"I also worry that continuing with asset purchases, when CPI inflation is 4% and the output gap is closed - that is the likely situation later this year - might well cause medium-term inflation expectations to drift higher," he said.

"Such an outcome could well require a more substantial tightening of monetary policy later, and might limit the committee's scope to respond promptly the next time the economy needs more stimulus," he added.

RBA tapers but extends QE, Delta to delay but not derail recovery

RBA kept with its tapering plan and announced to lower purchase of government securities at AUD 7B a week. But the program is extended until at least mid-February 2022, from mid November. At the same time, cash target rate is held at 0.10%. Target for April 2024 Australian government bond yield was also kept at 0.10%.

The central bank said the economy has been "interrupted by the Delta outbreak and the associated restrictions on activity". GDP is expected to "decline materially" in Q3 with unemployment rate moving high over coming months. But the setback to economic expansion is "expected to be only temporary". The Delta outbreak is expected to "delay, but not derail" the recovery. Economy will be growing again in Q4 and back to pre-Delta path in H2 of next year.

The decision to "extend" the asset purchases "reflects the delay in the economic recovery and the increased uncertainty associated with the Delta outbreak". RBA pledged o continue to review on the program. Also, it maintained that the condition for rate hike "will not be met before 2024".

Suggested reading on RBA:

• RBA Adopts Dovish Tapering as Delta Outbreak Expected to Hurt Growth in 3Q
• RBA Confirms Taper but Extends Current Pace from November to February
• RBA Taper Creates Turbulence For AUDUSD

Australia AiG services dropped to 56.6, outlook weak for another month or two

Australia AiG Performance of Services Index dropped sharply from 51.7 to 45.6 in August. That's the lowest level since September 2020. Looking at some details, sales dropped -13.2 to 40.0. Employment rose 2.4 to 53.4. New orders dropped -9.3 to 47.4. Supplier deliveries dropped -1.3 to 44.0. Finished stocks dropped -9.3 to 37.7. Input prices dropped -2.6 to 71.5. Selling prices dropped -11.4 to 55.3.

Ai Group Chief Executive, Innes Willox, said: "Increased COVID-19 cases and the lockdowns aimed at constraining the spread of the virus saw the performance of the services sector slump in August... With lockdowns in Victoria, the ACT and NSW set to continue this month and with new orders down on previous levels, the immediate outlook is for another weak month or two. In the meantime, a lot hinges on the healthy supply of vaccines, success in overcoming hesitancy about vaccination and clear and convincing leadership from across the National Cabinet."

China exports rose 25.6% yoy in Aug, imports up 33.1% yoy, trader surplus at USD 58.3B

In August, in USD term, China's total trade rose 28.8% yoy to USD 530.3B. Exports rose 25.6% yoy to USD 294.3B. Imports rose 33.1% yoy to USD 236.0B. Trade surplus came in at USD 58.3B, above expectation of USD 52.3B.

Year-to-August, total trade rose 34.2% yoy to USD 3827.8B. Exports rose 33.7% yoy to USD 2095.1B. Imports rose 34.8% yoy to USD 1732.7B. Trade surplus came in at USD 362.5B.

From Japan, labor cash earnings rose 1.0% yoy in July, versus expectation of 0.8% yoy. Household spending rose 2.9% yoy, versus expectation of 2.9% yoy.

EUR/GBP Mid-Day Outlook

Daily Pivots: (S1) 0.8568; (P) 0.8577; (R1) 0.8587; More...

EUR/GBP's break of 0.8601 resistance suggest resumption of rise from 0.8448. Intraday bias is back on the upside for 0.8668 resistance first. Firm break there will be a strong sign of near term bullish reversal at least. Next target is 0.8718 resistance. On the downside, break of 0.8561 support, however, would argue that the rebound has completed, and turn bias back to the downside for retesting 0.8448 low.

In the bigger picture, price actions from 0.9499 (2020 high) are still seen as developing into a corrective pattern. Deeper fall could be seen as long as 0.8668 resistance holds, towards long term support at 0.8276. However, firm break of 0.8668 resistance would argue that a medium term bottom was already formed. Stronger rise would be seen to 0.8861 support turned resistance to confirm completion of the corrective pattern.

Economic Indicators Update

The USD/CHF currency pair has been trading sideways since August 18. The exchange rate traded between the 0.9240/0.9100 levels during last week's trading sessions.

All things being equal, the US Dollar against the Swiss Franc could continue to trade sideways during the following trading sessions.

However, technical indicators suggest that the currency exchange rate could edge lower during this week's trading sessions.

The common European currency depreciated by 41 pips or 0.47% against the British Pound last week. The currency pair tested the lower line of an ascending channel pattern at 0.8560 on Friday.

Currently, the exchange rate is trading near the lower boundary of the channel pattern and could be set for a breakout.

If the breakout occurs, a decline towards the 0.8500 level could be expected during this week's trading sessions.

However, if the ascending channel pattern holds, buyers could pressure the currency exchange rate higher in the nearest future.

The summer high levels provided enough resistance for the yellow metal's price to decline to previous trading levels. At mid-day on Tuesday, the price passed the support of the 200-hour SMA and the 1,810.00 level.

In the near term future, the metal was expected to continue to decline, as it had no technical support. However, most likely round price levels are bound to impact the price. For example, the 1,800.00 could once again provide support.

Meanwhile, a potential recovery would most likely face the resistance of the 200-hour SMA near 1,811.00 and the 55 and 100-hour SMAs near 1,820.00.

At mid-day on Tuesday, the USD/JPY currency exchange rate passed the resistance of the weekly simple pivot point and the 100 and 200-hour simple moving averages in the 109.92/109.95 zone. However, the rate's attempts at surging higher were immediately stopped by the 110.00 mark.

If the rate manages to passed the resistance of the 110.00 level, the pair could reach for the 110.24 level, where the weekly R1 simple pivot point would provide resistance. In addition, the zone that surrounds the pivot point kept the rate down during August.

On the other hand, a potential decline would look for support first in the 100 and 200-hour SMAs and the weekly simple pivot point. Afterwards, the 55-hour SMA at 109.84 might keep the pair up.