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Technical analysis

The price is between EMA(24) and EMA(124), suggesting a flat

The RSI is under 50 suggesting a prevailing downtrend

The CCI suggests correction upwards.

Most likely scenario

SELL

Target prices: 1,809 1,806 1,800

Alternative scenario

BUY

Target prices: 1,815 1,819 1,823

Key levels

Support 1,800 1,806 1,809

Resistance 1,815 1,819 1,823

The EURUSD bullish momentum accelerated in the overnight session as the US dollar declined. The pair rose after weak private payrolls numbers from the United States. Data published by ADP showed that private-sector employers added just 374k jobs in August, signalling that the Delta variant was having an impact on the economy. The pair also rose after strong Eurozone inflation and manufacturing data published on Tuesday and Wednesday, respectively. Later today, the pair will react to the latest US initial jobless claims and trade data.

USDCHF was in a tight range in the overnight session as investors waited for the latest Swiss inflation and GDP data. The data is expected to show that the country’s headline consumer inflation rose from 0.7% in July to 0.8% in August. At the same time, analysts expect the final reading to show that the Swiss economy expanded by 9% in the second quarter. Still, the Swiss National Bank (SNB) has signalled that it will not tighten monetary policy anytime soon.

American stocks jumped in the overnight session as investors remained optimistic about the country’s recovery. The Nasdaq 100 and S&P 500 indices soared to another record high, pushing their year-to-date returns to more than 20%. This growth has been driven by the recent strong quarterly results that revealed that companies were in good shape. Also, the recently-passed infrastructure deal has helped stocks. Elsewhere, crude oil prices rose after the OPEC+ cartel decided to continue with their gradual supply increases despite US opposition.

NDX100

The Nasdaq 100 index rose to an all-time high of $15,680 as investors remained optimistic about corporate earnings. On the daily chart, the index has moved above all moving averages. It has also risen above the key resistance level at $15,155. The Relative Strength Index (RSI) has moved to the overbought level of 70 while the MACD remains above the neutral line. Therefore, the index will likely keep rising as bulls target the key resistance at $16,000.

XBRUSD

The price of Brent erased some of the earlier losses after the OPEC+ meeting. The pair rose to 72.30, which was slightly above the 25-day and 50-day moving averages on the daily chart. The price is slightly below the YTD high of 78.60. It has also formed a bullish flag pattern that is shown in yellow. It is currently below the upper side of this flag. Therefore, the pair will likely break out higher in the coming days.

EURUSD

The EURUSD pair comeback continued in the overnight session. It rose to a high of 1.1845, which is slightly above the key resistance level at 1.1805, which was the highest level on August 13. The pair is slightly above the key moving averages. It has also formed a V-shaped recovery, signalling that the comeback is relatively strong. Therefore, the pair may keep rising as bulls target the key resistance at 1.1905.

General trend

• Nikkei has remained slightly higher, currently trades near the opening level [Topix Banks and Information & Communication indices rise; Airlines and Steelmakers lag].
• Shanghai rebounded from the opening decline, ended morning trading +0.6% [Property index extends gain; Industrials index rises over 1%; Consumer Staples and IT indices lag].
• Hang Seng has pared gain [Financials trade generally lower, Ping An Insurance declines].
• S&P ASX 200 has lagged and remained lower [Resources index weighed down by BHP ex-dividend].

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.4%.
• (NZ) New Zealand Q2 Terms of Trade Index Q/Q: 3.3% v 0.3%e.
• (AU) Australia July Home Loans Value M/M: +0.2% v -0.2%e; Investment lending M/M: 1.8% v 0.7% prior.
• (AU) Australia July Trade Balance (A$): 12.1B v 10.0Be (record high); Exports to China A$19.4B , +72% y/y (record high).
• (AU) ANZ expects RBA to delay plans to taper bond buying (which was planned to start in Sept) at rate decision next week.

Japan

• Nikkei 225 opened +0.3%.
• (JP) Bank of Japan (BOJ) Board Member Kataoka [dovish dissenter]: Need to watch downside risks to global economy; BOJ must strengthen forward guidance on interest rate targets, stronger easing needed.
• (JP) Japan considering extending COVID emergency by 2 weeks past the Sept 12th planned lifting - Japan press.
• (JP) Japan LDP Leadership Candidate Kishida: Must compile and economic stimulus package to get public cooperation in containing the flow of people and increasing hospital beds.
• (JP) Japan MoF sells ¥2.6T v ¥2.6T indicated in 0.1% 10-year JGBs; avg yield 0.0230% v 0.0090% prior; bid to cover: 3.36x v 3.33x prior.

Korea

• Kospi opened -0.3%.
• (KR) South Korea Aug auto sales 544.9K units, -4.5% y/y (decline attributed to chip shortages).
• (KR) SOUTH KOREA Q2 FINAL GDP Q/Q: 0.8% V 0.7%E; Y/Y: 6.0% V 5.9%E (confirms fastest annual pace in 10-years).
• (KR) Bank of Korea (BOK) Gov Lee: Our economy showed a faster than expected recovery in the first half thanks to aggressive policy responses and a global economic recovery.
• (KR) SOUTH KOREA AUG CPI M/M: 0.6% V 0.4%E; Y/Y: 2.6% V 2.4%E (5th consecutive month above target).

China/Hong Kong

• Hang Seng opened +0.7%; Shanghai Composite opened -0.2%.
• 388.HK CEO: IPO pipeline is still strong, have about 20 companies in the 18a biotech.
• (CN) China to increase support for smaller businesses and enhance cross cyclical adjustment - regional press.
• (CN) China Sec Journal: PBOC will address the Sept funding gap; Liquidity in money markets to remain 'reasonably ample'.
• (CN) Surprise contraction in the China Aug Caixin Mfg PMI has sparked talk about support for the manufacturing sector - China Daily.
• (CN) China PBOC sets Yuan reference rate: 6.4594 v 6.4680 prior.
• (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY50B in 7-day reverse repos prior; Net drain CNY40B v Net drain CNY40B prior.

Other

• OPEC+ producers confirm agree to keep production road map of 400K bpd capacity increase in Oct.
• (TW) Taiwan proposed consumption vouchers of NT$5.000/person are expected to help boost GDP to as high as 6% - Taiwan press.

North America

• AAPL Said that company is in talks with Japan and South Korea suppliers for new Apple Car - Press.
• (US) New York, New Jersey seeing record levels of rainfall, causing flooding and power outages, tornado touchdowns in South Jersey, as remnants of Ida make their way north.
• AAPL To make update to App Store that will close investigation by the Japan Fair Trade Commission.
• AAPL Japan FTC: Future anti-monopoly investigation into Apple App games is possible.
• PFE (US) FDA advisory panel (VRBPAC) to hold meeting about vaccine boosters on Sept 17th (HHS previously noted their preparedness to begin rolling out COVID-19 booster vaccines beginning week of September 20).
• GOOGL DOJ reportedly preparing antitrust lawsuit over ad technology business; Would be a second separate antitrust suit against Google - press.
• CHWY Reports Q2 Net -$16.7M v -$32.8M y/y, Rev $2.16B v $2.17Be.

Europe

• (EU) US considering a quota system in an attempt to end EU dispute on steel tariffs - press.
• (UK) Press notes that newly named BOE chief economist Huw Pill, is considered a "hawk" - FT.

Levels as of 01:15ET

• Hang Seng +0.1%; Shanghai Composite +0.6%; Kospi -1.0%; Nikkei225 +0.3%; ASX 200 -0.8%.
• Equity Futures: S&P500 -0.0%; Nasdaq100 +0.0%, Dax -0.2%; FTSE100 -0.1%.
• EUR 1.1846-1.1835; JPY 110.11-109.92; AUD 0.7374-0.7355; NZD 0.7073-0.7355.
• Commodity Futures: Gold -0.2% at $1,812/oz; Crude Oil -0.4% at $68.31/brl; Copper +0.3% at $4.29/lb.

Daily Pivots: (S1) 1.1803; (P) 1.1830; (R1) 1.1866; More...

Intraday bias in EUR/USD stays mildly on the upside at this point. Rise from 1.1663 short term bottom is on track to 1.1907 resistance first. Decisive break there will indicate that fall from 1.2265, as well as the consolidation pattern from 1.2348, have completed. Near term outlook will be turned bullish for 1.2265/2348 resistance. On the downside, break of 1.1778 resistance turned support will turn bias back to the downside for 1.1602/63 support zone instead.

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.

Daily Pivots: (S1) 1.3733; (P) 1.3766; (R1) 1.3800; More...

With 1.3678 minor support intact, further rise is expected in GBP/USD. Rebound from 1.3601 would target 1.3982 resistance first. Decisive break there will pave the way back to retest 1.4248 high. On the downside, break of 1.3678 will turn bias back to the downside for 1.3570 low, and possibly further to 1.3482 key resistance turned support.

In the bigger picture, current development argues that rise from 1.1409 (2020 low) has completed at 1.4248, after failing 1.4376 resistance. Fall from there could either be correcting the rise from 1.1409, or starting another falling leg inside long term sideway pattern. In either case, sustained break of 1.3482 resistance turned support will target 38.2% retracement of 1.1409 to 1.4248 at 1.3164 first. Break there will pave the way to 61.8% retracement at 1.2493.

Daily Pivots: (S1) 0.9135; (P) 0.9162; (R1) 0.9185; More....

Intraday bias in USD/CHF remains neutral as it's still bounded in sideway trading inside 0.9098/9241. 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, the failure to sustain above 55 week EMA (now at 0.9176) retains medium term bearishness in USD/CHF. Break of 0.8925 support should resume the whole decline form 1.0342 (2016 high) through 0.8756 low. However, break of 0.9273 resistance and sustained trading above 55 week EMA will be an early sign of bullish trend reversal. Focus will then turn to 0.9471 resistance for confirmation.

Daily Pivots: (S1) 109.81; (P) 110.11; (R1) 110.35; More...

Range trading continues in USD/JPY and intraday bias remains neutral first. 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. On the upside, break of 110.79 will resume the rebound from 108.71 to retest 111.65 high.

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) 0.7322; (P) 0.7353; (R1) 0.7398; More...

Intraday bias in AUD/USD remains on the upside as rise form 0.7105 short term bottom is in progress for 0.7425 resistance. Sustained break there will argue that whole correction from 0.8006 has completed at 0.7105 already, just above 0.6991/7051 support zone. Stronger rise would be seen to 0.7530 support turned resistance for confirmation. On the downside, below 0.7283 minor support will turn intraday bias neutral first.

In the bigger picture, rise from 0.5506 medium term bottom could have completed at 0.8006, after failing 0.8135 key resistance. Correction from there could target 0.6991 cluster support (38.2% retracement of 0.5506 to 0.8006 at 0.7051). We'd look for strong support from there to bring rebound. However, sustained break of this level would argue that the whole medium term trend has indeed reversed. Deeper decline would be seen to 61.8% retracement at 0.6461.

Market movers today

• Today we have a few market movers in the afternoon.
• First we get US jobless claims, where we will likely see a further decline below 350,000.
• In Denmark, we get August FX reserves and we expect an increase, although not due to intervention (see more below).

The 60 second overview

ECB: More comments from ECB members hit the wires yesterday. Bundesbank President Weidmann mirrored the hawkish comments of Knot and Holzmann and warned that ECB should not disregard the risk that inflation could accelerate faster than currently anticipated. In contrast, Bank of Greece governor Stournaras countered that the ECB should not over-interpret the current spike in inflation, a view echoed later in the day by Slovenia's Vasle. With inflation expected to print above the ECB's new 2% symmetric inflation target for the remainder of this year, hawks in the ECB's Governing Council have become more vocal about pro-inflationary risks and the need to slow bond purchases. This sets the scene for some interesting discussions at next week's ECB meeting. That said, we expect the big debate about the future of the PEPP programme only to take place at the December meeting.

Employment: While European manufacturing employment continued to increase during August, US employment indicators disappointed yesterday with the ISM manufacturing employment index falling back into contraction territory and the private sector ADP employment report showing only 374k jobs created during August (vs. expected 638k). This leaves some downside risks for tomorrow's non-farm payroll report, which will be crucial for the Fed's tapering plans. EUR/USD advanced, while 10Y US Treasury yields fell back below 1.30%.

Oil: OPEC+ agreed to proceed with its existing plan for gradual oil supply increases, as ministers ratified the 400,000 barrel-a-day output hike scheduled for October. Oil price increases have been an important global inflation driver this year, but despite the planned supply increase, oil prices were little changed on the announcement, with Brent holding broadly steady at USD/bbl 71.3.

Equities: Equities started September on a positive note with gains in most regions and across most sectors. Energy and materials the only sectors lower as metal and oil price fell yesterday. Growth and small cap stocks outperformed as the sweet spot for equities got more support from macro data yesterday. Asian stocks mixed this morning as China on the one hand continues to crack down on big tech while the PBOC on the other hand softened a bit by making more low-cost funding available for SMEs. European and US futures are slightly lower this morning.

FI: The recent rise in yields took at bit of a pause yesterday, while we wait for the US labour market report tomorrow. Furthermore, spreads between the core-EU and periphery tightened a few bp yesterday. Germany sold EUR 5.5bn in a new 30Y benchmark at a very tight price, where investors paid 1bp relative to fair value and with a bid-to-cover for more than 3.

FX: Yesterday brought yet a session with modest losses to the greenback while commodity and industrial sensitive currencies gained. The terms of trade impact from rising metal prices has hit JPY somewhat in recent sessions and also EUR/CHF has edged higher this week. EUR/NOK is now testing 10.30 while EUR/SEK is hovering below 10.20.

Credit: CDS indices continued to outperform cash bonds yesterday with iTraxx Xover tightening 2bp, taking it to 226bp (thus touching the post-pandemic low) and Main tightening 0.3bp (to 44.5bp). HY bonds closed unchanged and IG saw a small widening of around ½bp.

Nordic macro

Danmarks Nationalbank is set to release FX reserve figures for August today. There are several issues to keep an eye on this time. The FX reserve will likely increase significantly after Danmarks Nationalbank was allocated DKK 29bn in August in so-called Special Drawing Rights from the IMF. Meanwhile, public finances have developed somewhat better than expected in August, so the Debt Management Office may well have decided to reduce the issuance of Commercial Papers further from around DKK40bn in July. This would pull in the opposite direction. Finally, Danmarks Nationalbank may have intervened to buy additional foreign currency in August, which would add to FX reserves. That being said, the Danish krone has been trading a tad weaker against the euro in the past month, so Danmarks Nationalbank is probably more likely to have taken a break after intervening every month since February.

Daily Pivots: (S1) 1.2588; (P) 1.2613; (R1) 1.2644; More...

With 1.2706 resistance intact, USD/CAD's fall from 1.2947 is in favor to continue to 1.2421 support. Sustained break there will suggest rejection by 1.3022 fibonacci level. Rise from 1.2005 could have completed in this case and deeper fall would be seen to retest this low. On the upside, break of 1.2701 minor resistance will retain near term bullishness, and turn bias back to the upside for retesting 1.2947 high.

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.