Sample Category Title

US durable goods orders dropped -0.1% mom to USD 257.2B in July, better than expectation of -0.2% mom. Ex-transport orders rose 0.7% mom, above expectation of 0.5% mom. Ex-defense orders dropped -1.2% mom. Transportation equipment, dropped -2.2% to USD 75.3B.

Full release here.

Strong two-day rally on Monday and Tuesday (the contract was up 9.6%), which erased the most of Aug 12-20 steep fall, was capped by daily cloud base and bulls are taking a breather on Wednesday.

Fresh bulls started to lose traction on news that Mexico is going to resume production, disrupted by a fire on oil platform that resulted and smaller than expected fall in US crude stocks (API report), but expected to remain in play as global oil market is heavily in deficit.

Two massive bullish candles (Mon/Tue) underpin the action, along with improving daily studies.

Shallow consolidation was contained by 20DMA’s, keeping bulls intact for renewed probe through cloud base ($71.18) and attack at 12 Aug lower top ($71.87) which guards next pivot at $72.35n (cloud top).

Res: 71.52, 71.87, 72.41, 72.70.
Sup: 70.48, 70.00, 68.99, 68.49.

The USDJPY edged higher in European trading on Wednesday, just to return to the middle of the range that extends into six straight day.

Long shadows of daily candle of past few days signal strong indecision, as market awaits fresh signals from Jackson Hole symposium and a speech from Fed Chairman Powell later this week.

Near-term action continues to move between 100 and 55 DMA’s, with neutral daily studies lacking direction signals and keeping the pair in sideways mode.

Lift above psychological 110 barrier and 55DMA (110.12) would revive bulls for potential acceleration towards targets at 110.53 (Fibo 61.8% 111.65/108.72 descend) and 110.80 (Aug 11 peak).

Alternatively, firm break of 100DMA (109.63) and extension below Tuesday’s spike low (109.41) would bring bears in play.

Res: 109.88, 110.00, 110.12, 110.22.
Sup: 109.63, 109.41, 109.11, 108.87.

Notes/Observations

• German Aug IFO Survey misses consensus with supply chain bottlenecks and rising commodity costs as factors.
• Awaiting for clues on taper from Powell at upcoming Jackson Hole symposium but Powell likely not to announce anything at this time.

Asia

• BOJ Member Nakamura reiterated overall assessment stance that the economy was picking up as a trend but outlook uncertain due to recent resurgence in Covid-19 cases.
• US have approved Huawei’s license application for auto chips worth hundreds of millions of dollars.
• China PBOC increased short-term cash injections as liquidity tightens; Open Market Operation (OMO) injected CNY50B in 7-day reverse repos against CNY10B maturing.
• China Ningo Port to reopen previously closed terminal on Wed, Aug 25th (terminal has through put of ~25% port capacity).

Coronavirus

• Japan Econ Min Nishimura: Seeking to expand state of emergency to 8 additional prefectures.
• Japan to spend additional ¥1.4T on COVID, using reserves.

Americas

• House advanced $3.5T budget framework package after ending stalemate between Speaker Pelosi and centrists. Clears the way for Democrats to pursue a massive social spending package that could pass both chambers without Republican support.
• House Speaker Pelosi stated that she was committed to passing the bill by Sep 27th and would also advance the $1.0T infrastructure bill (Note: most likely outcome is that both plans are finally approved).
• President Biden agreed with Pentagon recommendation to stick to Aug 31st Afghan pullout citing the very high risk of terrorism.

Energy

• Weekly API Crude Oil Inventories: -1.6M v -1.2M prior.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.11% at 472.30, FTSE +0.15% at 7,136.45, DAX -0.11% at 15,888.65, CAC-40 +0.10% at 6,670.88, IBEX-35 +0.21% at 8,967.00, FTSE MIB -0.13% at 25,993.50, SMI -0.20% at 12,407.80, S&P 500 Futures %].
• Market Focal Points/Key Themes: European indices open modestly higher across the board and again slipped to trad mixed later in the session; sectors trending into the green include technology and consumer discretionary; underperforming sectors include materials and utilities; Salmar takes stake in Refsnes Laks; Augean to be acquired by Fierra and Ancala; reportedly Blackstone takes majority stake in ASK Group; earnings expected in the upcoming US session include National Bank of Canada, Dick’s Sporting Goods and Autodesk.

Equities

• Financials: Augean [AUG.UK] +16% (agrees with the offer).
• Healthcare: Bavarian Nordic [BAVA.DK] -5% (earnings), Elekta [EKTAB.SE] -7% (earnings).
• Industrials: Stadler Rail [SRAIL.CH] +4% (earnings).
• Technology: Sopheon [SPE.UK] +9% (earnings).

Speakers

• ECB’s De Guindos (Spain) noted that it could revise Staff Projections higher in Sept as Q3 indicators were positive.
• German IFO Economists noted that almost 75% of businesses complain about supply chain bottlenecks. Export expectations had fallen but remain at a good level. Approx 67% of companies in both manufacturing and retail sought higher prices to cover rising costs.
• Iceland Central Bank Policy Statement noted that the economic outlook had improved since May driven by tourist arrivals. Inflationary pressures remained relatively high but appeared to be subsiding; Outlook was for CPI to ease more slowly compared to May forecast while the rise in inflationary expectations appeared to be reversing.
• Japan govt FY22/23 budget said to total over ¥110T.
• US Senate said to offer simpler alternative to Pres Biden's tax plan; Proposes to increase penalties on companies sending profit abroad.
• President Biden expected to host executives from major technology, financial and energy companies on Wednesday (Aug 25th) for a summit on national cybersecurity.

Currencies/Fixed income

• USD retraced a bit of its recent strength with a focus on the upcoming Jackson Hole symposium. Markets seemed to have discounted the likelihood of any details on Fed tapering plans at this time but Fed Powell speech on Friday was expected to remain cautious.
• EUR/USD managed to shake off a mixed German IFO survey and hovered above 1.1750by mid-session.

Economic data

• (ES) Spain July PPI M/M: 1.7% v 2.2% prior; Y/Y: 15.3% v 15.4% prior.
• (TR) Turkey Aug Real Sector Confidence (seasonally adj): 112.2 v 112.1 prior; Real Sector Confidence NSA (unadj): 113.9 v 114.8 prior.
• (TR) Turkey Aug Capacity Utilization: 77.1% v 76.7% prior.
• (DE) Germany Aug IFO Business Climate Survey: 99.4 v 100.4e; Current Assessment: 101.4 v 100.8e; Expectations Survey: 97.5 v 100.0e.
• (CH) Swiss Aug Expectations Survey: -7.8 v +42.8 prior.
• (IS) Iceland Central Bank (Sedabanki) raised 7-Day Term Deposit Rate by 25bps to 1.25%.

Fixed income issuance

• (IN) India sold total INR 170B vs. INR170B indicated in 3-month, 6-month and 12-month bills.
• (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 1.375% Aug 2030 Bonds, Avg Yield: 1.22% v 1.44% prior; bid-to-cover: 2.68x v 2.06x prior.
• (SE) Sweden sold total SEK3.5B vs. SEK3.5B indicated in 2026 and 2032 Bonds.

Looking ahead

• (PT) Portugal Debt Agency (IGCP) to hold switch auction.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (EU) ECB allotment in 3-month LTRO tender.
• 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).
• 06:00 (UK) Aug CBI Retailing Reported Sales: 20e v 23 prior; Total Distributed Reported Sales: No est v 41 prior.
• 06:00 (RU) Russia to sell 2029 and 2036 OFZ bonds.
• 06:00 (CZ) Czech Republic to sell 2029 and 2037 bonds.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (US) MBA Mortgage Applications w/e Aug 20th: No est v -3.9% prior.
• 07:00 (MX) Mexico Q2 Final GDP Q/Q: 1.6%e v 1.5% prelim; Y/Y: 19.7%e v 19.7% prelim; GDP Nominal Y/Y: No est v 1.8% prior.
• 07:00 (MX) Mexico Jun IGAE Economic Activity Index (Monthly GDP) M/M: -0.3%e v +0.6% prior; Y/Y: 13.8%e v 25.1% prior.
• 07:00 (BR) Brazil Aug FGV Consumer Confidence: No est v 82.2 prior.
• 08:00 (BR) Brazil mid-Aug IBGE Inflation IPCA-15 M/M: 0.8%e v 0.7% prior; Y/Y: 9.2%e v 8.6% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:30 (US) July Preliminary Durable Goods Orders: -0.3%e v+ 0.9% prior; Durables (ex-transportation) 0.5%e v 0.5% prior; Capital Goods Orders (non-defense/ex-aircraft): 0.5%e v 0.7% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.7%e v 0.6% prior.
• 08:30 (BR) Brazil July Current Account Balance: -$0.5Be v +$2.8B prior; Foreign Direct Investment (FDI): $4.7Be v $0.2B prior.
• 09:00 (BE) Belgium Aug Business Confidence Index: No est v 10.1 prior.
• 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (7-20 years).
• 10:00 (MX) Mexico Q2 Current Account Balance: +$3.8Be v -$5.1B prior.
• 10:30 (US) Weekly DOE Oil Inventories.
• 11:00 (BR) Brazil July Tax Collections (BRL): 161.6Be v 137.2B prior.
• 12:00 (RU) Russia July Industrial Production Y/Y: 8.0%e v 10.4% prior.
• 13:00 (US) Treasury to sell 2-Year FRN Reopening.
• 13:00 (US) Treasury to sell 5-Year Notes.
• 13:30 (BR) Brazil July Total Federal Debt (BRL): No est v 5.330T prior.
• 19:50 (JP) Japan July PPI Services Y/Y: 1.3%e v 1.1% prior.
• 20:00 (US) Jackson Hole agenda published.
• 21:00 (KR) Bank of Korea (BoK) Interest Rate Decision: Expected to leave 7-Day Repo Rate unchanged at 0.50%.
• 21:30 (AU) Australia Q2 Private Capital Expenditure: 2.6%e v 6.3% prior.
• 22:00 (KR) South Korea July Department Store Sales Y/Y: No est v 12.8% prior; Discount Store Sales Y/Y: No est v -2.4% prior.
• 22:00 (KR) South Korea July Retail Sales Y/Y: No est v 11.4% prior.
• 23:35 (JP) Japan to sell 20-Year JGB Bonds.

• Stocks pause after recent run-up.
• Powell’s Jackson Hole speech could provide more tapering clues.
• US data to add additional colour to policy outlook.
• Oil markets digest Delta variant concerns ahead of OPEC+ decision.

The surge in risk assets appears to be on a mid-week break. US equity futures are holding steady after the S&P 500 and the Nasdaq posted fresh record highs thanks to ample buy-the-dip action. Asian stocks are mixed after the rebound in Chinese tech stocks petered out. The dollar index (DXY) is resting around the 93 line for now, while gold has moderated back into sub-$1800 territory.

Traders and investors worldwide may have to wait until Friday before sending asset prices on their next big move, with Fed Chair Jerome Powell’s speech eagerly awaited as the next big potential catalyst.

Should he lean closer towards his more hawkish colleagues on the FOMC suggesting that the Fed’s tapering will happen sooner rather than later, the DXY could push onto fresh year-to-date highs and the 94 handle for the first time since November.

However, if Powell sticks to his message of patience, we may see the dollar unwind more of its recent gains while boosting stock markets, as equity bulls continue to gorge on the Fed’s stimulus.

US data still a major influence on investor sentiment

If Jackson Hole proves to be a non-event, then market attention could be swayed by the incoming US economic data, with the latest readings on jobless claims, personal income and spending, as well as the Fed’s preferred inflation gauge all due in the coming days. In the absence of any discernable policy hints out of Powell this week, investors and traders will take bigger cues from the latest figures as they portend to the Fed’s next policy move.

Strong data that pushes markets into thinking that the tapering has to happen sooner rather than later might reinvigorate tailwinds for bond yields and the dollar, at the expense of commodities and stocks.

Oil bulls contend with Delta variant concerns

Oil prices are taking a slight breather after the sharp rebound earlier this week, while the steadying US dollar is also giving oil bulls reason to pause. Still, oil futures have yet to break out of the series of lower highs since the start of July.

The global demand outlook has to turn more optimistic and overcome the persistent concerns surrounding the Delta variant in order for prices to unwind recent losses and claim a higher high. Markets need to be shown more signs that global demand can truly absorb any incoming OPEC+ supply, with the alliance set to make a key decision on output next week.

Much of the uncertainty surrounding the supply-demand equation lies in whether the Delta variant’s spread can be contained in major economies. The lockdowns in China, Australia and New Zealand have all shown that oil markets have to stay vigilant over the stubborn threats posed by the coronavirus on the demand recovery picture.

After encountering resistance at the 1,810.00 level, the price for gold began a decline. On Wednesday, the decline had reached the 1,792.40/1,795.60 support zone. Since reaching the zone, the commodity price has been trading sideways in it.

In the case of a recovery, the price for gold would most likely make another attempt at passing the 1,810.00 level before aiming at the previous July and August high levels near 1,830.00.

Meanwhile, a decline of the price below the mentioned support zone would look for support in the 200-hour simple moving average near 1,785.00 and round price levels.

The USD/JPY dipped to the 109.42 level on Tuesday. With it, the pair confirmed that there is a support zone in the 109.42/109.49 zone. Meanwhile, the recent August high levels have been marked to reveal a resistance zone at 110.15/110.23.

In addition, the currency exchange rate continues to ignore the 55, 100 and 200-hour simple moving averages and the weekly simple pivot point at 109.72.

A potential surge would have to pass the 110.15/110.23 zone before reaching the weekly R1 simple pivot point at 110.32. On the other hand, a decline below the 110.15/110.23 zone could look for support in the weekly S1 simple pivot point at 109.21.

Since the middle of Monday's trading, the GBP/USD has continued to trade between the 1.3700 and 1.3750 levels. On Wednesday morning, the rate was approached by the support of the 55-hour simple moving average near 1.3710 and the 200-hour simple moving average at 1.3740.

A breaking of the resistance of the 1.3750 level could result in a surge to the 1.3800 mark. Note that the 1.3800 level's resistance was being strengthened by the weekly R1 simple pivot point at 1.3805.

However, a decline below the 1.3700 level and the weekly simple pivot point at 1.3704 could look for support in the 100-hour simple moving average at 1.3680. A failure of the SMA to provide support would most likely result in another decline to the 1.3600 mark.

On Tuesday, the EUR/USD found support in the 1.1730 level and afterwards reached the resistance of the 1.1760 mark, which was tested two times. In the meantime, it was spotted that the rate appears to have started to respect the support of the 200-hour simple moving average.

Meanwhile, the currency exchange rate appears to be trading in a still not confirmed channel up pattern. Namely, the rate has not confirmed the support line of the pattern, as it has been simply set parallel to the resistance line, which has been touched three times.

If the rate finds support in the 200-hour simple moving average and the lower trend line of the channel up pattern, a surge should follow up. A potential surge would test the resistance of round exchange rate levels at 1.1750, 1.1760 and 1.1770 before reaching the resistance of the weekly R1 simple pivot point at 1.1782.

On the other hand, a decline below the SMA and the trend line could look for support in the combination of the weekly simple pivot point at 1.1723 and the 100-hour simple moving average nearby the pivot point. Below these levels, the 1.1700 mark together with a 61.80% Fibonacci retracement level would provide support.

Australian dollar drifting

After plenty of volatility over the past week, the Australian dollar has settled down on Wednesday. AUD/USD is currently trading at 0.7251, down 0.09% on the day. The Aussie has sparkled this week, with gains of 1.5%. This follows a fall of 3% a weak earlier.

With markets in a wait-and-see mode ahead of the Jackson Hole meeting, which begins on Thursday, the currency markets could be on hold for the next day or two. The lack of activity is likely change on Friday, when Fed Chair Jerome Powell addresses the symposium. The million-dollar question on the minds of the markets is whether Powell will provide any insight into the timing of a Fed taper. Risk sentiment has improved with the Biden Administration making progress on its budget and infrastructure proposals, but the mood could quickly shift, depending on what Powell says – if he hints that a taper is imminent, that would likely give the dollar a boost. If, however, Powell chooses to lay low and doesn’t say much about a taper, risk sentiment could improve and weigh on the greenback.

The Australian dollar has enjoyed a strong week, despite soft manufacturing and services PMIs and lockdowns which have been imposed on half of the population of 25 million. The country had done a remarkable job in containing Covid, but the delta variant has sent infections soaring, while the vaccination rate remains low. If the lockdowns are extended, there are concerns that the weak Australian economy could totter into a recession.

In economic news, the construction sector continued to expand in Q2, with a gain of 0.8%, down from 2.4% (est. 2.5%). Still, the sector is in recovery mode, posting its second straight gain after a nasty steak of contraction in 10 straight quarters.

AUD/USD Technical

• There is resistance at 0.7306, followed by 0.7473
• On the downside, 0.7225, a monthly line, is providing weak support. Below, there is support at 0.7103, protecting the round number of 0.7100