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The GBP/USD currency pair bounced off a support level at 1.3800 on Friday. As a result, the British Pound surged by 76 pips or 0.55% against the US Dollar during Friday's trading session.

All things being equal, the exchange rate could continue to edge higher during the following trading session. Bullish traders are likely to target the weekly resistance at 1.3920 today.

However, the 200– hour simple moving average at 1.3871 could provide resistance for the currency exchange rate within this session

Downside risks dominated the USD/JPY currency pair lower during Friday's trading session. As a result, the US Dollar fell by 91 pips or 0.83% against the Japanese Yen on Friday.

Currently, the exchange rate is trading near the lower line of a descending channel pattern and could be set for a breakout. If the breakout occurs, bears could target the 109.00 level within the following trading session.

However, if the channel pattern holds, a surge towards the 109.80 area could be expected today.

The yellow metal's price rose by 275 pips or 1.57% on Friday. The commodity breached the 200– hour simple moving average at 1769 during Friday's trading session.

Everything being equal, the XAU/USD exchange rate is likely to continue to edge higher in an ascending channel pattern during the following trading session. The potential target for bulls will be near the 1820.00 level.

However, bullish traders might encounter resistance at 1800.00 within Monday's trading session.

General trend

• Commodity currencies trade lower amid weaker US and CN data, AUD lags; RBA Aug Minutes due on Tuesday (Aug 17th).
• Financials trade generally lower amid drop in 10-yr Treasury yields.
• Nikkei has extended decline amid stronger Yen [Decliners include Exporters and Financials]; Tokyo Electron is due to report earnings.
• Hang Seng has remained lower [TECH index drops over 2%].
• Shanghai Composite outperforms [Property and IT indices rise over 1% during morning session].
• S&P ASX 200 has declined after the flat open [Financials decline; Gold miners rise; Materials index supported by results from Bluescope Steel; Consumer Discretionary index rises following results from JB Hi-Fi].
• BHP is due to report FY21 results on Tuesday (Aug 17th).

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened 0.0%.
• (NZ) RBNZ Shadow Board (NZIER): Calling for tightening at August 18th meeting.
• BSL.AU Reports FY21 (A$) underlying Net 1.17B v 353M y/y; underlying EBIT 1.72B v 0.56B y/y; Rev 12.9B v 11.3B y/y; Announces A$500M share buyback; Special dividend A$0.19/shr.
• BPT.AU Reports FY21 (A$) underlying Net 363.0M v 461.0M y/y; Rev 1.56B v 1.73B y/y.
• (AU) Sydney, Australia expands lockdown to entire NSW for 1 week; Melbourne expected to be extended into Sept (update from Aug 14).

Japan

• Nikkei 225 opened -0.6%.
• (JP) JAPAN Q2 PRELIMINARY GDP Q/Q: 0.3% V 0.1%E; GDP ANNUALIZED Q/Q: 1.3% V 0.5%E.
• (JP) Japan Govt said to be considering extending state of emergency to additional prefectures as soon as this week, after recording 20K new COVID cases in a day - Press.
• (JP) Japan Govt said to be considering extending state of emergency to additional prefectures as soon as this week – Press.
• (JP) Japan Jun Final Industrial Production M/M: 6.5% v 6.2% prelim; Y/Y: 23.0% v 22.6% prelim.

Korea

• Kospi closed for holiday.
• (KR) South Korea records 1.5K new COVID cases (lower on less testing over the weekend).

China/Hong Kong

• Hang Seng opened -0.1%; Shanghai Composite opened -0.1%.
• (CN) CHINA JULY INDUSTRIAL PRODUCTION Y/Y: 6.4% V 7.9%E (slowest growth since Aug 2020); Industrial Production YTD Y/Y: 14.4% v 14.6%e.
• (CN) CHINA JULY RETAIL SALES Y/Y: 8.5% V 10.9%E; Retail Sales YTD Y/Y: 20.7% v 21.2%e.
• (CN) China Stats Agency (NBS): China to maintain stable economic recovery during H2; Prices expected to increase 'mildly'.
• (CN) CHINA JULY YTD PROPERTY INVESTMENT: 12.7% V 12.9%E.
• (CN) CHINA JULY YTD FIXED URBAN ASSETS Y/Y: 10.3% V 11.3%E.
• (CN) CHINA JULY NEW HOMES PRICES M/M: 0.3% V 0.4% PRIOR; Y/Y: 4.6% V 4.7% PRIOR.
• (CN) CHINA PBOC CONDUCTS CNY600B V CNY700B MATURING (V 100B PRIOR) IN 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) AT 2.95% V 2.95% PRIOR; Liquidity released in July RRR cut can partially repay MLF.
• (CN) China Sec Journal: PBOC May increase Reverse Repo injections during the week.
• (HK) Macau said to be allowing certain recreational facility to re-open on Aug 18th.
• (CN) China PBOC sets Yuan reference rate: 6.4717 v 6.4799 prior.
• (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B in 7-day reverse repos prior; Net CNY0B v Net CNY0B prior.
• (CN) China July railway passengers 1.26T passengers/km, +70.9% y/y; Railway freight, -6.8% y/y.

Other

• (TW) Taiwan said to consider extending tax cuts for day trading - Press.

North America

• (CA) Canada Governor General dissolves parliament, triggering an election for Sept 20th.
• KKR Hyatt confirms to acquire Apple Leisure for $2.7B.
• (US) Fed's Kashkari (dove, non-voter): Want a few more strong jobs reports before taper starts; gal is to let labor market back to at least pre-COVID levels.
• (US) Said that 9 Democrats in the House of Representatives have said no to Speaker Pelosi's procedural compromise.
• BILI Daily active user (DAU) said to now exceed 65M (ahead of Youku, and behind Tencent and Iqiyi) - Chinese press.

Europe

• (UK) Aug Rightmove House Prices M/M: -0.3% v +0.7% prior (first decline this year); Y/Y: 5.6% v 5.7% prior.
• (UK) PM Johnson said to be looking to delay his Cabinet reshuffle until the COP26 climate change summit in November - financial press.

Levels as of 01:15ET

• Hang Seng -0.7%; Shanghai Composite +0.4%; Kospi closed for holiday; Nikkei225 -1.7%; ASX 200 -0.4%.
• Equity Futures: S&P500 -0.2%; Nasdaq100 -0.1%, Dax -0.4%; FTSE100 -0.4%.
• EUR 1.1801-1.1790; JPY 109.75-109.33; AUD 0.7373-0.7337; NZD 0.7045-0.7023.
• Commodity Futures: Gold -0.0% at $1,778/oz; Crude Oil -1.1% at $67.44/brl; Copper -0.6% at $4.33/lb.

Market movers today

• In the US, the empire manufacturing index will likely show a moderation in the momentum of the manufacturing sector from waning external demand.
• The key focus this week is Fed Chair Powell's speech and US retail sales tomorrow, Fed minutes from the July meeting on Wednesday, which also brings euro area core inflation for July.

The 60 second overview

Japan: The Japanese economy expanded at a faster pace than expected in Q2. GDP rose 1.3% q/q vs. the consensus expectation of 0.5% q/q. Both private consumption and business spending contributed to a rise in demand.

China: Growth in industrial production fell to 6.4% y/y in July, which was slower than in June and below the consensus expectation.

US: US consumer confidence measured in the survey from University of Michigan dropped sharply in August reflecting both a drop in sentiment around current conditions and the future. Consumer inflation expectations remain elevated.

Equities: Friday completed a week with five consecutive days of rising equities. Despite this catchy headline, the accumulated gain less than 1% and defensives outperformed cyclicals. Several soft indicators have started to fade which typically leads to a more challenging environment for equities. However, the small move higher on Friday secured a new all-time high in many indices not least in the US. Dow +0.1%, S&P 500 +0.2%, Nasdaq +0.04% and Russell 2000 -0.9%.

Asian markets are mostly lower this morning led by Japan falling almost 2%. The Delta variant keeps spreading in Japan and Chinese data this morning are on the weak side. Both European and US futures signalling a lower start to the week.

FI: US government bond yields declined Friday afternoon after weaker than expected consumer data on the back of rising infections and the expected negative impact on the US economy. The decline in US Treasury yields continued in Asian trading this morning and 10Y Treasury yields have declined some 10bp since Thursday. Hence, there will be focus on US data this week such as the retail sales and the minutes from the latest FOMC meeting.

FX: EUR/USD rose back to 1.18 on Friday after consumer confidence disappointed. EUR/SEK traded below 10.20 and EUR/NOK briefly touched 10.36.

Credit: Credit markets barely moved on Friday, with iTraxx Xover tightening 0.4bp and Main 0.2bp. Both IG and HY bonds were unchanged.

Daily Pivots: (S1) 1.1749; (P) 1.1777; (R1) 1.1824; More...

Intraday bias in EUR/USD remains mildly on the upside at this point. Rebound from 1.1705 short term bottom is in progress for 1.1907 resistance. Firm break there will suggest that fall from 1.2265, as well as consolidation pattern from 1.2348, have completed. Near term outlook will be turned bullish for retesting 1.2265/2348 resistance zone. However, below 1.1705 will turn focus back to 1.1602/1703 key support zone again.

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). Reaction from 1.2555 should reveal underlying long term momentum in the pair. However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again.

Daily Pivots: (S1) 1.3816; (P) 1.3846; (R1) 1.3899; More...

Intraday bias in GBP/USD remains neutral at this point as consolidation from 1.3982 is extending. Outlook is unchanged that corrective pattern from 1.4240 could have completed with three waves down to 1.3570. On the upside, break of 1.3982 will resume the rise from 1.3570 to retest 1.4248 high. However, break of 1.3766 support will dampen this bullish view and bring retest of 1.3570.

In the bigger picture, as long as 1.3482 resistance turned support holds, up trend from 1.1409 should still continue. Decisive break of 1.4376 resistance will carry larger bullish implications. However, firm break of 1.3482 support will argue that the rise from 1.1409 has completed. GBP/USD would then be seen in another leg of long term range pattern between 1.1409 and 1.4376. Deeper fall could then be seen to 61.8% retracement of 1.1409 to 1.4248 at 1.2493, and even below.

Daily Pivots: (S1) 109.28; (P) 109.87; (R1) 110.19; More...

Intraday bias in USD/JPY remains mildly on the downside for 108.71 support first. 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, above 109.74 minor resistance will turn intraday bias neutral first. But risk will stay mildly on the downside as long as 110.79 resistance holds.

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) 0.9123; (P) 0.9181; (R1) 0.9211; More....

Intraday bias in USD/CHF remains neutral at this point. On the upside, firm break of 0.9273 resistance will resume the whole rise from 0.8925 to 100% projection of 0.8925 to 0.9273 from 0.9017 at 0.9365. On the downside, however, break of 0.9128 will turn bias back to the downside for 0.9017 support instead.

In the bigger picture, the failure to sustain above 55 week EMA (now at 0.9184) retains medium term bearish 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) 0.7341; (P) 0.7362; (R1) 0.7390; More...

Intraday bias in AUD/USD remains neutral as sideway trading continues above 0.7288. As long as 0.7443 resistance holds, outlook stays bearish for further decline. On the downside, break of 0.7288 will resume the fall from 0.8006 to 161.8% projection of 0.8006 to 0.7530 from 0.7890 at 0.7120 next. On the upside, break of 0.7443 will bring stronger rebound to 0.7530 support turned resistance instead.

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.