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Daily Pivots: (S1) 0.8581; (P) 0.8592; (R1) 0.8610; More...

With 0.8541 support intact, EUR/GBP's rise from 0.8448 is in progress for 0.8668 resistance. Decisive break there will be a strong sign of near term bullish reversal at least. Further rally would be seen to 0.8861 support turned resistance. On the downside, however, break of 0.8534 will turn bias back to the downside for retesting 0.8448 low instead.

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.

Daily Pivots: (S1) 1.6033; (P) 1.6093; (R1) 1.6130; More...

EUR/AUD's fall from 1.6434 is still in progress and intraday bias stays on the downside for 1.5898 support. Sustained break there will argue that choppy rise from 1.5250 has completed already. Outlook will be turned bearish for retesting 1.5250 low. On the upside, however, above 1.6263 minor resistance will revive near term bullishness, and turn bias back to the upside for retesting 1.6434 high instead.

In the bigger picture, rise from 1.5250 medium term bottom is currently seen as a correction to the down trend from 1.9799 first. Stronger rise would be seen to 38.2% retracement of 1.9799 to 1.5250 at 1.6988 next. We'd tentatively expect strong resistance from there to limit upside, at least on first attempt. Meanwhile, break of 1.5898 support will indicate that the rebound has completed and bring retest of 1.5250 low.

Daily Pivots: (S1) 1.0815; (P) 1.0833; (R1) 1.0859; More....

EUR/CHF's breach of 108.39 resistance suggests that the fall form 1.1149 has completed at 1.0694. Intraday bias stays mildly on the upside for 1.0863/0985 resistance zone. On the downside, however, break of 1.0780 minor support will turn bias back to the downside for retesting 1.0694 low instead.

In the bigger picture, rebound from 1.0505 (2020 low) should have completed at 1.1149 already. The three-wave corrective structure argues that the downtrend from 1.2004 (2018 high) is not over yet. Medium term outlook will now stay bearish as long as 55 week EMA (now at 1.0859) holds. Break of 1.0505 low would be seen at a later stage.

Daily Pivots: (S1) 151.21; (P) 151.58; (R1) 151.88; More...

No change in GBP/JPY's outlook and rise from 149.16 is in favor to extend higher as long as 150.43 support holds. Next target is 153.42 resistance. Firm break there will argue that whole corrective pattern from 156.05 has completed, and bring retest of this high. On the downside, however, below 150.43 minor support will turn bias back to the downside for 149.16 support and below.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). As long as 149.03 support holds, such rise would still resume at a later stage. However, sustained break of 149.03 support will indicate rejection by 156.59. Fall from 156.05 would be at least correcting the whole rise from 123.94. Deeper fall would be seen back 38.2% retracement of 123.94 to 156.05 at 143.78 first.

Daily Pivots: (S1) 129.95; (P) 130.21; (R1) 130.53; More....

EUR/JPY's rebound from 127.91 short term bottom is still in progress and intraday bias stays on the upside for 130.54 resistance. Sustained break there will argue that whole correction from 134.11 has completed and turn near term outlook bullish. Further rise should then be see back to retest 134.11 high. On the downside, however, below 129.14 minor support will turn bias back to the downside for retesting 127.91 low instead.

In the bigger picture, rise from 114.42 is seen as a medium term rising leg inside a long term sideway pattern. As long as 127.07 resistance turned support holds, further rise is still expected to retest 137.49 (2018 high). However, firm break of 127.07 will argue that the medium term trend has reversed, deeper fall would be seen to 61.8% retracement of 114.42 to 134.11 at 121.94.

While NASDAQ surged to new record high overnight, overall closes were mixed with DOW slightly down. Asia markets also lack a clear direction. Investors appear to remain cautious ahead of US non-farm payroll report tomorrow. So far, New Zealand and Australian Dollars are the strongest ones for the week. Canadian Dollar is lagging far behind with WTI oil price struggling around 68 handle. Swiss Franc and Yen are the worst performing ones. But both are just range bound against the greenback, which is clearly weak against other Europeans and commodity currencies.

Technically, NZD/JPY's breach of 77.91 resistance suggests that correction from 80.17 has completed at 74.54 already. It's also the first sign that Yen crosses are staging bullish reversals. But, to play safe, we'd like to firstly see sustained trading above this 77.91 resistance in NSD/JPY. Additionally, AUD/JPY and EUR/JPY should take out corresponding resistance levels at 81.56 and 130.54 respectively, to add to the case of Yen crosses bullish reversal.

In Asia, at the time of writing, Nikkei is up 0.26%. Hong Kong HSI is up 0.08%. China Shanghai SSE is up 0.55%. Singapore Strait Times is down -0.30%. Japan 10-year JGB yield is up 0.0041 at 0.035. Overnight, DOW dropped -0.14%. S&P 500 rose 0.03%. NASDAQ rose 0.33% to new record at 15309.38. 10-year yield dropped -0.02 to 1.302.

Australia trade surplus hit record AUD 12.12B, as exports to China rose

Australia goods and services exports rose 5% mom in July to AUD 45.94B. The strong rise is exports was based on strong Asian demand for LNG and thermal coal, combined with sharply higher prices for iron ore. Exports to China also rose to record AUD 19.4B. Goods and services imports rose 3% mom to AUD 33.83B, due to sharp increase in parts and accessories for telecommunications equipment.

Trade surplus widened to AUD 12.12B, above expectation of AUD 10.1B., hitting a new record.

New Zealand terms of trade rose 3.3% in Q2 as export prices surged

New Zealand merchandise terms of trade rose 3.3% in Q2, well above expectation of 0.3%. Export prices for goods rose 8.3% while import prices rose 4.8%. Export volume for goods rose 2.9% while import volumes rose 4.4%. Export values rose 9.2% and import values rose 4.6%. Services terms of trade dropped -8.5%. Services export prices fell -1.6% while import prices rose 7.7%.

Terms of trade measures New Zealand's purchasing power for import goods, based on the prices it receives for exports. An increase in terms of trade means that New Zealand can buy more import goods for the same quantity of exports.

BoJ Kataoka: BoJ must strengthen monetary easing

BoJ board member Goushi Kataoka, a known persistent dove, warned that the Japan economy remained in a "severe state". The economy is heading toward recovery but "not fast enough.

He added that risks to the outlook are skewed to the downside. In particular, "risks to consumption are heightening" due to surge in Delta infections. "There's a good chance the impact of the pandemic may last longer than expected," he added.

Kataoka also continued his push for more aggressive monetary policy easing. "Personally, I believe the BoJ must strengthen monetary easing," he said, as inflation would remain distant from the 2% target for years.

Looking ahead

Swiss retail sales, CPI and GDP will be released in European session while Eurozone will release PPI. Canada will release building permits and trade balance. US will release jobless claims, trade balance, factory orders and non-farm productivity.

EUR/JPY Daily Outlook

Daily Pivots: (S1) 129.95; (P) 130.21; (R1) 130.53; More....

EUR/JPY's rebound from 127.91 short term bottom is still in progress and intraday bias stays on the upside for 130.54 resistance. Sustained break there will argue that whole correction from 134.11 has completed and turn near term outlook bullish. Further rise should then be see back to retest 134.11 high. On the downside, however, below 129.14 minor support will turn bias back to the downside for retesting 127.91 low instead.

In the bigger picture, rise from 114.42 is seen as a medium term rising leg inside a long term sideway pattern. As long as 127.07 resistance turned support holds, further rise is still expected to retest 137.49 (2018 high). However, firm break of 127.07 will argue that the medium term trend has reversed, deeper fall would be seen to 61.8% retracement of 114.42 to 134.11 at 121.94.

Economic Indicators Update

BoJ board member Goushi Kataoka, a known persistent dove, warned that the Japan economy remained in a "severe state". The economy is heading toward recovery but "not fast enough.

He added that risks to the outlook are skewed to the downside. In particular, "risks to consumption are heightening" due to surge in Delta infections. "There's a good chance the impact of the pandemic may last longer than expected," he added.

Kataoka also continued his push for more aggressive monetary policy easing. "Personally, I believe the BoJ must strengthen monetary easing," he said, as inflation would remain distant from the 2% target for years.

STOCKS

Equities are in a short corrective dip mode and could soon bounce back after a few sessions. Dow and Dax can fall to 35250/200 and 15800/750 respectively while Nifty and Sensex could bounce back from 16800/500 and 57000 soon. Nikkei and Shanghai however have immediate resistances at current levels which if fails to hold can indicate medium term bullish to continue. Watch price action closely at current levels.

Dow (35312.53, -48.20, -0.14%) has fallen further in line with our expectations and can extend to 35250/200 or even 35000 before bouncing back again to higher levels. The fall is likely to be short lived.

DAX (15824.29, -10.80, -0.068%) has dipped too and could extend to 15800/750-15600 before a bounce back towards 16000+ is seen in the medium term.

Nikkei (28491.81, +40.79, +0.14%) has risen well but has immediate resistance near 28500 just now which if holds could push the index sharply down towards 28000 or even lower. A sustained break above 28500 is needed for the price to rise towards 29000-30000 eventually. For now watch price action at 28500.

Shanghai (3577.69, +10.59, +0.30%) has risen to test immediate resistance near 3580 which if breaks and sustains higher could extend to 3620-3630 or even to 3650 in the medium term. For now, watch price action near 3580 to see if the index moves higher or faces rejection from here. A break on the upside looks more likely.

Nifty (17076.25, -55.95, -0.33%) dipped yesterday after testing 17225. If the index bounces back immediately, we may open up chances of a rise to 17400 else the corrective dip may extend to 16800/500 in the near term before a bounce is seen. Extension of the corrective dip looks more likely today although it would sustain only for a few sessions and not expected to be deep.

Sensex (57338.21, -214.18, -0.37%) fell yesterday as expected but the dip could be short lived and extend to 57000 before a bounce is seen.

COMMODITIES

Brent and WTI can consolidate between 72.50-67.50 and 65-68 respectively for the near term while Gold has to rise above 1820/25 to see a rise towards 1840. Silver can dip towards 23.50-23.00 while below 24.50. Copper has scope to test 4.20 on a fall below 4.30..

Brent (71.28) and WTI (68.22) have fallen. Resistances at 72.50-74 on Brent is holding well and that near 70 on WTI. While the above resistances hold, prices may fall in the near term. Brent may range within 72.50-67.50 fr now while WTI may held towards 65.

Gold (1815.20) is stuck in a sideways range of 1820/25-1800 and needs to break on either side to give directional clarity.

Silver (24.21) has risen well and is sustaining above 24 for now. While below 24.5 a dip to 23.5 is possible. Only a break above 24.50 will indicate any bullishness.

Copper (4.3010) has fallen. A further fall to 4.20 is possible on a break below 4.30.

FOREX

Dollar Index has surprisingly fallen and if it breaks below 92.50/40, it would be significant and indicate medium term bearishness. Euro has risen well and needs to break and sustain above 1.1850 to head higher. Watch price action near 1.1850. EURJPY has resistance at 130.50 which has to break to turn bullish afresh. USDCNY can range between 6.45-6.48 within which a bounce is expected. USDJPY tested 110.40 before coming off and could trade within 109-110.50/40 for now. USDINR is bullish towards 73.40/50 while above 72.90.

Dollar Index (92.50) fell from 92.80 itself contrary to our expectation of a rise to 93. Note that 92.50/40 is now an immediate support which needs to break to bring in further bearishness for the index in the near term towards 92.20/92.00. Watch price action near current levels.

Euro (1.1838) rose to 1.1857 before coming off from there. Immediate level of 1.1850 seems to be holding for now but it may soon break on the upside if dollar Index continues to fall below 92.40.

EURJPY (130.18) is holding below 130.50 now and needs to break on the upside to see fresh bullishness. Else a fall back to 129.50 can be seen.

Dollar-Yen (109.96) tested 110.42 before coming off from there. Broad range of 110.40/50-109.00 looks likely to hold for the near term within which 109.60/40 is immediate support.

Aussie (0.7360) seems be holding below 0.74 but the price may soon bounce bac from 0.7350 and head towards 0.7450 soon. Corrective dip could be short lived.

Pound (1.3774) is holding below 1.38 and may test 1.3825/30 before rising back to higher levels eventually. Looking at the rising momentum, it see sPound can soon break on the upside to head higher.

USDCNY (6.4624) has bounced after testing 6.4533 this week. While above 6.45, a bounce back to 6.47/48 looks likely eventually from where another dip can be seen. A range of 6.48-6.45 can hold for now.

USDINR (73.09) bounced from initial support at 72.90 instead of heading to lower supports of 72.75/50. While above 72.90, the pair can see a test of 73.40/50 before a rejection is seen from there.

INTEREST RATES

The US Treasury yields have dipped slightly at the far-end. Though the immediate outlook is unclear with one day of upmove and another day of dip, we expect the yields to rise in the near-term and then reverse lower to resume the overall downtrend. The German Yields have inched up further and keeps intact our view of seeing a corrective rise and then fall-back again. The Indian 10Yr and 5Yr have declined sharply and are bearish to fall further in the coming days.

The US 2Yr (0.21%) and the 5Yr (0.78%) Treasury yields remain stable while the 10Yr (1.30%) and the 30Yr (1.92%) have dipped slightly. The immediate outlook is unclear with equal chances of seeing either 1.4%-1.45% on the upside or 1.2%-1.18% on the downside on the 10Yr. However, the 30Yr looks relatively bullish to see 2%-2.1% on the upside while above 1.87%. As such we prefer to see 1.4% on the upside first on the 10Yr as well before the broader downtrend resumes.

The German 2Yr (-0.73%) and the 5Yr (-0.69%) yields remain stable while the 10Yr (-0.38%) and 30Yr (0.11%) have inched up slightly. Our view of seeing a corrective rise to -0.30%/-0.25% (10Yr) is intact. The 30Yr can extend the rise to 0.20% while it sustains above 0.10%. Thereafter a fresh fall can happen to keep the broader downtrend intact.

The Indian 10Yr GoI (6.1988%) has been coming down over the last few days amid muted trading. A sustained break below 6.2% can drag it to 6.1% in the coming days. The 5Yr GOI (5.6109%) has declined sharply below the key support at 5.63%. From a bigger picture, the 5Yr has room to test 5.5% on the downside in the coming weeks while it remains below 5.7%.

Australia goods and services exports rose 5% mom in July to AUD 45.94B. The strong rise is exports was based on strong Asian demand for LNG and thermal coal, combined with sharply higher prices for iron ore. Exports to China also rose to record AUD 19.4B. Goods and services imports rose 3% mom to AUD 33.83B, due to sharp increase in parts and accessories for telecommunications equipment.

Trade surplus widened to AUD 12.12B, above expectation of AUD 10.1B., hitting a new record.

Full release here.

New Zealand merchandise terms of trade rose 3.3% in Q2, well above expectation of 0.3%. Export prices for goods rose 8.3% while import prices rose 4.8%. Export volume for goods rose 2.9% while import volumes rose 4.4%. Export values rose 9.2% and import values rose 4.6%. Services terms of trade dropped -8.5%. Services export prices fell -1.6% while import prices rose 7.7%.

Terms of trade measures New Zealand's purchasing power for import goods, based on the prices it receives for exports. An increase in terms of trade means that New Zealand can buy more import goods for the same quantity of exports.

Full release here.