Sample Category Title

Daily Pivots: (S1) 1.1753; (P) 1.1778; (R1) 1.1820; More...

Intraday bias in EUR/USD stays neutral first, with focus on 1.1804 resistance. Break there will bring stronger rise to 1.1907 resistance first. Firm 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 holds. In case of another fall, we'd continue to look for strong support from 1.1602/1703 key support zone to bring rebound.

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) 1.3698; (P) 1.3740; (R1) 1.3799; More...

Intraday bias in GBP/USD remains neutral first, with focus on 1.3785 resistance. Break there will turn bias to the upside for 1.3982 resistance. Firm break there will indicate that fall from 1.4248 has completed and bring retest of this high. On the downside, below 1.3601 will resume the fall from 1.4248 to 1.3482 resistance turned support next.

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 form 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) 0.9078; (P) 0.9139; (R1) 0.9172; More....

USD/CHF is still bounded in range of 0.9098/9241 and intraday bias stays neutral first. 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.

General trend

• Nikkei has remained modestly higher; Topix Iron & Steel, Electric Appliances, and Transport indices outperform.
• HK/CN corporate earnings remain in focus; Financials lag after recently reported earnings (including ICBC and China Huarong) and press reports related to margin trading.
• Shanghai Property index drops amid headline related to land auction rules, Vanke drops on profit decline; Industrial and Telecom Services indices outperform.
• Hang Seng has moved slightly higher after the flat open; Meituan is expected to report results later today.
• S&P ASX 200 Resources index rises on earnings from Fortescue; Financials lag amid lower 10-yr yields.

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.2%.
• FMG.AU Reports FY21 Net $10.30B v $4.74B y/y; Underlying EBITDA $16.4B v $8.38B y/y; Rev $22.3B v $12.8B y/y.
• PBH.AU Issues update on Arizona market access - Cliff Castle did not get sports betting license.
• (NZ) Reserve Bank of New Zealand (RBNZ): Mortgage rates move with the OCR but it takes time.
• (AU) AUSTRALIA Q2 CORP OP PROFIT Q/Q: 7.1% V 2.5%E; INVENTORIES Q/Q: 0.2% V 1.2%E.
• (NZ) New Zealand PM Ardern: Confirms all areas outside of Auckland will leave coronavirus alert level 4 on Sept 1st, and move to level 3 on Sept 2nd.

Japan

• Nikkei 225 opened +0.8%.
• (JP) JAPAN JULY RETAIL SALES M/M: 1.1% V 0.4%E; Y/Y: 2.4% V 2.1%E.
• 6502.JP Said that Western Digital's proposal to acquire Kioxia has faced certain hurdles - press.
• (JP) Japan Chief Cabinet Sec Kato: Not enough data to promote mixed-use of coronavirus vaccines.
• (JP) Japan PM candidate Kishida will launch a large new economic stimulus package worth "several tens of trillion yen" if elected - press.

Korea

• Kospi opened +0.9%.
• (KR) South Korea is set to become the first country that will pass a law that will mandate free choice of app payment provider and end dominance of Apple and Google – press.
• (KR) North Korea appears to have resumed operations at its Yongbyon nuclear reactor that produces plutonium – press.
• (KR) South Korea said to set aside KRW6.3T in funds for new industries in next budget - Yonhap.

China/Hong Kong

• Hang Seng opened 0.0%; Shanghai Composite opened +0.4%.
• (CN) China Sec Daily: Certain cities in China have made changes to land auction rules in order to slow price gains.
• 000002.CN Reports H1 (CNY) Net 11.1B v 12.5B y/y; Rev 167.1B v 146.4B y/y.
• 9988.HK Tianjin SASAC has asked SOEs to move their data out of cloud systems belonging to Alibaba and Tencent to state-owned clouds within 2 months of their service expiring - Chinese press.
• (CN) China PBOC sets Yuan reference rate: 6.4677 v 6.4863 prior.
• (CN) China PBOC Open Market Operation (OMO): Injects CNY50B in 7-day reverse repos v CNY50B in 7-day reverse repos prior; Net inject CNY40B v Net Inject CNY40B prior.
• (CN) China issues new guidelines on regulating the "chaotic" celebrity "fan-based economy"; platforms cannot publish popularity lists and sales of fan merchandise to be regulated.
• (CN) China State Council announces plan targeting 55M urban jobs by 2025, capping unemployment rate at 5.5%; seeking stronger rights for workers and increase training - press.
• (CN) China State Planner (NDRC) Official Gao: Confident in ability to achieve this year's employment target, will be some challenges and difficulties in employment plan.

Other

• (TW) Said that chipmakers in Taiwan are looking to sign long term agreements to secure profits – press.
• (KW) Kuwait Oil Min al-Fares: OPEC+ could reconsider output increase - financial press.

North America

• AAPL Reportedly CEO Cook plans to retire only after launching at least one more major Apple's product – press.
• PFE New Zealand reports first death of a woman related to getting her COVID vaccine - press.
• (US) Hurricane Ida impacting state of Louisiana expected to see damages exceeding $40B according to some analysts - press.

Europe

• (DE) Germany Social Democrats with 24% surpass Merkel's CDU's 21% in latest election poll - press.
• (DE) GERMANY AUG CPI NORTH RHINE WESTPHALIA M/M: 0.1% V 0.8% PRIOR; Y/Y: 4.2% V 4.1% PRIOR.

Levels as of 01:15ET

• Hang Seng +0.2%; Shanghai Composite +0.3%; Kospi +0.2%; Nikkei225 +0.5%; ASX 200 +0.2%.
• Equity Futures: S&P500 +0.1%; Nasdaq100 +0.1%, Dax +0.0%; FTSE100 market closed for holiday.
• EUR 1.1810-1.1793; JPY 109.89-109.71 ;AUD 0.7319-0.7297; NZD 0.7015-0.6994.
• Commodity Futures: Gold -0.0% at $1,819/oz; Crude Oil -0.3% at $69.56/brl; Copper +0.7% at $4.36/lb.

Daily Pivots: (S1) 109.67; (P) 109.97; (R1) 110.16; More...

USD/JPY drops slightly today but stays inside range of 109.10/110.79. Intraday bias remains neutral at this point. 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.

Trading is relatively subdued in Asian session today with most major pairs and crosses staying inside Friday's range. Some additional pressure is seen in USD/JPY but loss is so far limited. Markets seemed to have well digested Fed Chair Jerome Powell's balanced message on tapering already. Attention will turn to this week's heavy-weight data like ISMs and NFP to gauge the timing of tapering, and thus the next direction in the greenback.

Technically, we'd pay special attention to 1.1804 resistance in EUR/USD, 1.3785 resistance in GBP/USD, 0.9098 support in USD/CHF, 109.10 support in USD/JPY and 1.2577 support in USD/CAD. Synchronized break of these levels would indicate that Dollar sellers are back in full force.

In Asia, Nikkei closed up 0.44%. Hong Kong HSI is up 0.55%. China Shanghai SSE is up 0.19%. Singapore Strait Times is up 0.81%. Japan 10-year JGB yield is down -0.006 at 0.019.

AUD/NZD staying in down trend as AU and NZ lockdowns extend

Australia's coronavirus deaths surpassed 1000 over the weekend, as New South Wales reported four deaths, with a new daily record of 1290 infections. As lockdown continues, Premier Gladys Berejiklian emphasized in the updated that "when we get to 70 per cent double dose, the freedoms we are expecting will be [for] those of [us who] are fully vaccinated." Victoria also announced on Sunday that lockdown, the sixth one, would be extended.

Separately, New Zealand announced to extend level 4 restrictions in Auckland today, for at least another two weeks. Nevertheless, alert level for other parts of the country is lowered. Prime Minister Jacinda Ardern said it's too soon to say whether the outbreak had peaked. But Director-general of health Dr Ashley Bloomfield noted the encouraging sign that the "R number" was already one.

AUD/NZD is still in a near term down trend even though downside momentum is diminishing, as seen in daily MACD. As long as 1.0538 resistance holds, current fall from 1.0944, as the third leg of the pattern from 1.1042, could still extend to 100% projection of 1.1042 to 1.0415 from 1.0944 at 1.0317.

Focus turns to US NFP to gauge the timing of tapering

Fed Chair Jerome Powell has somewhat presented the "center" among FOMC members regarding policy. A start of tapering this year is very likely, but the timing would depend on upcoming economic data. In particular, August non-farm payroll report from US will be a key. Additionally, Fed and markets will also look into consumer confidence and ISMs.

The calendar is also busy elsewhere, in particular with CPI flash and unemployment from Eurozone, Japan industrial production, Canada GDP, Australia GDP and AiG indexes, and China PMIs. Here are some highlights for the week:

• Monday: Japan retail sales; Germany CPI flash; Swiss KOF economic barometer; Canada current account; US pending home sales.
• Tuesday: New Zealand ANZ business confidence; Australia current account, building approvals; Japan unemployment rate, industrial production, consumer confidence, housing starts; China PMIs; France GDP, consumer spending; Germany unemployment; UK M4 money supply, mortgage approvals; Eurozone CPI flash; Canada GDP; US house price index, Chicago PMI, consumer confidence.
• Wednesday: Australia GDP, AiG manufacturing; Japan PMI manufacturing final, capital spending; China Caixin PMI manufacturing; Swiss PMI manufacturing; Eurozone PMI manufacturing final, unemployment rate; UK PMI manufacturing final; Canada PMI manufacturing; US ADP employment, ISM manufacturing, construction spending.
• Thursday: Japan monetary base; New Zealand terms of trade; Australia trade balance; Swiss GDP, retail sales, CPI; Eurozone PPI; Canada trade balance, building permits; US jobless claims, trade balance, factory orders, non-farm productivity.
• Friday: Australia retail sales, AiG construction; China Caixin PMI services; Eurozone PMI services final, retail sales; UK PMI services final; Canada labor productivity; US non-farm payrolls, ISM services.

USD/JPY Daily Outlook

Daily Pivots: (S1) 109.67; (P) 109.97; (R1) 110.16; More...

USD/JPY drops slightly today but stays inside range of 109.10/110.79. Intraday bias remains neutral at this point. 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.

Economic Indicators Update

Market movers today

• We kick off this week with the flash August print for German CPI. We will likely see slowing growth mom but still see yoy inflation above 3%.
• Overnight we also get the official NBS August manufacturing PMIs out of China. We look for a small further decline.
• Through the rest of the week, we will be looking out for Euro Area HICP and the August jobs report from the US in particular.

The 60 second overview

Tapering but when and how much? Fed Chair Powell held his long-awaited speech on Friday but he was interpreted as dovish, as he avoided delivering any details on the Fed's tapering plan, besides that the conditions are likely met later this year. As most expect the Fed to announce a tapering plan this year, the main question is the exact beginning of tapering and not least how fast the Fed is going to taper. We stick to our view that the Fed will announce more details at the upcoming meeting here in September (after what we expect is a good jobs report on Friday) and that the Fed will conclude tapering mid-2022. Asian markets advanced overnight digesting Powell's Jackson Hole speech.

German Kanslerdebate: With four weeks to the German election, the CDU/CSU's Laschet, Greens' Baerbock, and SPD's Scholz met in the first of three major debates. A snap poll pointed to Scholz winning the debate. The German election is shaping up to a close call, with Scholz currently the chancellor favorite, however, his party may still be the biggest hurdle to success.

Equities: Equities ended last week on a high note as Powel gave investors a bit more time to enjoy the goldilocks scenario. Gains were broad-based but investors had a clear preference for cyclical and small-cap stocks (Russel 2000 having its best week since March). It was interesting to see Powel's effect on markets and it goes without saying that Fed and Powel will have a massive impact on equities in H2. In US Friday, Dow +0.7%, S&P 500 +0.9%, Nasdaq +1.2% and Russell 2000 +2.9%. The positive sentiment continues this morning with all Asian markets in green and both European and US futures higher.

FI: Yields fell slightly lower on Powell's speech.

FX: EUR/USD was briefly above 1.18 and EUR/NOK and EUR/SEK fell below 10.30 and 10.20, respectively, after Fed Chair Powell failed to deliver more precise details about the Fed's tapering plans.

Credit: Credit markets tightened post the marginally dovish signals from the Jackson Hole symposium. iTraxx main tightened slightly by 0.8bp to 45.2bp. The HY segment also edged tighter with the Xover index shedding 3.4bp taking it to +229bp.

Australia's coronavirus deaths surpassed 1000 over the weekend, as New South Wales reported four deaths, with a new daily record of 1290 infections. As lockdown continues, Premier Gladys Berejiklian emphasized in the updated that "when we get to 70 per cent double dose, the freedoms we are expecting will be [for] those of [us who] are fully vaccinated." Victoria also announced on Sunday that lockdown, the sixth one, would be extended.

Separately, New Zealand announced to extend level 4 restrictions in Auckland today, for at least another two weeks. Nevertheless, alert level for other parts of the country is lowered. Prime Minister Jacinda Ardern said it's too soon to say whether the outbreak had peaked. But Director-general of health Dr Ashley Bloomfield noted the encouraging sign that the "R number" was already one.

AUD/NZD is still in a near term down trend even though downside momentum is diminishing, as seen in daily MACD. As long as 1.0538 resistance holds, current fall from 1.0944, as the third leg of the pattern from 1.1042, could still extend to 100% projection of 1.1042 to 1.0415 from 1.0944 at 1.0317.

AUD/USD rallied 2 cents last week, driven by rebounding equities and commodities and a US dollar undermined by a cautious tone from Fed Chair Powell. In the week ahead, Australia’s busy data calendar includes Q2 GDP but the FX market tone is likely to be set by Friday’s US employment report.

The Aussie's best week of 2021

AUD/USD rallied from just above 0.7100 to just above 0.7300 last week, its 2.5% gain the largest since November 2020. The drivers of the Aussie recovery do not appear to be very mysterious. Global equities (MSCI World Index) closed at a record high Friday, with nerves over Fed tightening somewhat soothed. This undermined the US dollar, which fell against most major currencies on the week.

While the US dollar was under pressure for most of the week, the sharpest movement came in response to Federal Reserve Chair Jay Powell’s keynote speech to the annual Jackson Hole conference on Friday. Much of Powell’s speech was positive on the US economy and it still seems likely that the Fed will announce a reduction in the pace of its bond purchases this year (“tapering”).

But Powell also warned against when “a central bank tightens policy in response to factors that turn out to be temporary.” Markets judged that there was no new urgency to act and the 2 year Treasury note yield dropped from 0.24% to 0.21%, while the Aussie broke through 0.7300 for the first time since 17 August.

The Aussie also found support from a rebound in many key commodity prices. Iron ore futures bounced about $20 over the week to around $158/tonne. Copper rose about 4% and aluminium hit a fresh 3 year high Friday as Chinese authorities issued new output curbs.

But Australia’s domestic news has had precious little to do with the A$ rebound. New South Wales broke the 1000 new daily coronavirus case mark and Victoria’s hoped-for short lockdown is now 25 days and unlikely to end soon, at least in Melbourne. There is hope on the horizon in the form of an accelerating vaccination program, but any substantial relaxation of activity restrictions is a Q4 story.

This leaves the Australian economy facing a substantial contraction in Q3, with Westpac forecasting -2.6% and a rebound in Q4 almost entirely dependent on state governments loosening restrictions as vaccinations hit key targets. Meanwhile we have the rather historical Q2 GDP report due this week. Westpac looks for 0.5%qtr growth, with Sydney’s restrictions only imposed late in the quarter.

Also on the domestic data calendar are updates on the still-strong housing market and what could be another resources-fuelled record high trade surplus (Westpac forecast: $12.3bn).

But given Australia’s pandemic news is likely to remain grim near term, any further AUD/USD gains are likely to rely on further US dollar decline. This leaves all eyes on Friday’s employment report, the final such survey before FOMC members update their quarterly forecasts for the 21-22 September policy meeting. The median forecast is for a steep 750k rise in non-farm payrolls and a 5.2% unemployment rate.

Event risk this week

Aust Q2 company profits, wages & inventories, UK public holiday (Mon), Aust Jul dwelling approvals, Jul private credit, Q2 balance of payments, Q2 public demand, China Aug manufacturing & services PMIs, Eurozone Aug CPI, US Aug consumer confidence (Tue), Aust Q2 GDP, Aug house prices, US Aug ADP private payrolls, Aug manufacturing ISM (Wed), Aust Jul trade balance, Jul housing finance (Thu), US Aug employment report, Aug services ISM (Fri)

Key Highlights

• EUR/USD started an upside correction above 1.1750 and 1.1800.
• It broke a major bearish trend line with resistance near 1.1725 on the 4-hours chart.
• GBP/USD is still struggling to clear the 1.3800 resistance zone.
• The Euro Zone Consumer Confidence could remain at -5.3 in August 2021.

EUR/USD Technical Analysis

The Euro formed a base above the 1.1660 zone against the US Dollar. EUR/USD started a fresh increase and it broke the key 1.1750 resistance zone.

Looking at the 4-hours chart, the pair was able to gain strength above the 1.1750 and 1.1760 resistance levels. There was a break above the 50% Fib retracement level of the downward move from the 1.1908 swing high to 1.1663 swing low.

There was also a break above a major bearish trend line with resistance near 1.1725. The pair is now trading above 1.1800, the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).

An immediate resistance is near the 1.1815 level. It is near the 61.8% Fib retracement level of the downward move from the 1.1908 swing high to 1.1663 swing low.

The next major resistance is near the 1.1850 level. Any more gains could lead the pair towards the 1.1900 resistance region. On the downside, an initial support is near the 1.1785 level and the 200 simple moving average (green, 4-hours).

The main support is now forming near 1.1740 and the 100 simple moving average (red, 4-hours). A close below the 1.1740 level might open the doors for more losses. The next major support is near the 1.1665 level.

Looking at GBP/USD, the pair broke the 1.3700 zone but it is still facing hurdle near 1.3800. Besides, gold price gained strength above the $1,800 level.

Economic Releases

• Euro Zone Consumer Confidence for August 2021 – Forecast -5.3, versus -5.3 previous.
• German Consumer Price Index for August 2021 (YoY) (Prelim) – Forecast +3.9%, versus +3.8% previous.
• German Consumer Price Index for August 2021 (MoM) (Prelim) – Forecast +0.1%, versus +0.9% previous.
• US Pending Home Sales for July 2021 (YoY) - Forecast +0.1%, versus -1.9% previous.