Sample Category Title

Daily Pivots: (S1) 1.2501; (P) 1.2516; (R1) 1.2531; More...

USD/CAD is staying in range above 1.2421 and intraday bias remains neutral first. Still, further decline is expected was long as 1.2605 resistance holds. On the downside, break of 1.2421 will resume the fall from 1.2805 to 1.2301 cluster support (61.8% retracement of 1.2005 to 1.2805 at 1.2311). On the upside, break of 1.2605 will turn bias back to the upside for retesting 1.2805 high instead.

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.

Daily Pivots: (S1) 1.5975; (P) 1.5995; (R1) 1.6026; More...

EUR/AUD's strong rebound and break of 1.6035 resistance suggests that pull back from 1.6182 has completed at 1.5898 already, ahead of 55 day EMA (now at 1.5891). Intraday bias is back on the upside for 1.6182 resistance first. Break there will resume the choppy rise from 1.5250 towards 1.6827 resistance next. On the downside, sustained break of 55 day EMA will argue that choppy corrective rebound from 1.5250 has completed. Deeper fall would be seen to 1.5614 structural support for confirmation.

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 1.5614 support will indicate that the rebound has completed and bring retest of 1.5250 low.

Daily Pivots: (S1) 0.8493; (P) 0.8505; (R1) 0.8518; More...

Intraday bias in EUR/GBP remains neutral for the moment. Outlook stays mildly bearish as long as 0.8556 resistance holds. On the downside, break of 0.8448 will resume the whole decline from 0.9799, to retest 0.8276 key long term support level. However, break of 0.8556 will bring stronger rebound back to 0.8668 resistance.

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 0.8718 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) 1.0782; (P) 1.0811; (R1) 1.0827; More....

Intraday bias in EUR/CHF remains neutral at this point. With 1.0788 minor support intact, another rise is still mildly in favor. On the upside, above 1.0839 will resume the rebound from 1.0715 short term bottom to 38.2% retracement of 1.1149 to 1.0715 at 1.0881. We'd monitor the reaction to 1.0881 to assess the chance of bullish reversal. On the downside, break of 1.0788 minor support will turn bias back to the downside for retesting 1.0715 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 1.0869) holds. Break of 1.0505 low would be seen at a later stage.

Daily Pivots: (S1) 129.12; (P) 129.41; (R1) 129.58; More....

Intraday bias in EUR/JPY is back on the downside after break of 129.12 minor support. Deeper fall would be seen to 128.58 next. Firm break there will resume whole decline from 134.11 to 127.07 resistance turned support next. On the upside, break of 130.54 resistance will argue that choppy fall from 134.11 has completed. Intraday bias will be turned back to the upside for 132.68 resistance first.

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, and open up the case for retesting 114.42.

Daily Pivots: (S1) 151.77; (P) 152.17; (R1) 152.40; More...

GBP/JPY drops notably today but stays in range of 151.14/153.42. Intraday bias remains neutral at this point. On the downside, firm break of 151.14 will suggest that rebound form 148.43 has completed. Intraday bias will be turned back to the downside for retesting 148.43 low. On the upside, break of 153.42/46 resistance will reaffirm the case that correction from 156.05 has completed at 148.43. Intraday bias will be back on the upside for retesting 156.05.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). Focus remains on 156.59 resistance (2018 high). Sustained break there should confirm long term bullish trend reversal. Next target is 61.8% retracement of 195.86 (2015 high) to 122.75 at 167.93. On the downside, sustained break of 149.03 support, however, 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 to 142.71 resistance turned support first.

Yen rises broadly in Asian session on a couple of risk off factor, all linked to the pandemic. The set of weaker than expected data from China suggested that recovery is losing much momentum as the coronavirus is back. Japan reported surge in infections while Australia is also back in tighter restrictions. Commodity currencies tumble in general, with Aussie hardest hit. European majors are currently mixed, but stays firm against Dollar for now.

Technically, EUR/JPY looks heading back to retest 128.58 support after multiple rejections by 4 hour 55 EMA. GBP/JPY is also eyeing 151.14 support and break will bring deeper fall towards 148.43 support. Developments in these two crosses will be watch to gauge the underlying strength in Yen for the days ahead.

In Asia, at the time of writing, Nikkei is down -1.86%. Hong Kong HSI is down -0.74%. China Shanghai SSE is up 0.37%. Singapore Strait Times is down -0.34%. Japan 10-year JGB yield is down -0.015 at 0.009.

AUD/JPY falls sharp on surging delta infections, tougher restrictions

AUD/JPY drops sharply today on a couple of risk-off factors. Australia itself is troubled by heavier restrictions on surge of Delta variant. New South Wales reported record infections while Melbourne is back in night curfew. Lockdown in the Australian Capital territory was extended for another two weeks. Northern Territory also enters a three day snap lockdown.

AUD/JPY's strong break of 80.69 support suggests that consolidation from 79.82 has already completed at 81.56, capped well below falling 55 day EMA. Deeper fall is now expected to 79.82 support first. Break will resume the whole decline from 85.78. Such decline is possibly correcting the whole up trend from 59.85, and would target 78.44 resistance turned support, or further to 38.2% retracement of 59.85 to 85.78 at 75.87 before completion.

China industrial production, retail sales, investment missed expectations

Industrial production rose 6.4% yoy in July, below expectation of 7.8% yoy. Retail sales rose 8.5% yoy, below expectation of 11.5% yoy. Fixed asset investment grew 10.3% ytd yoy, below expectation of 11.3% ytd yoy.

"Given the combined impact of sporadic local outbreaks of Covid-19 and natural disasters on the economy of some regions, the economic recovery is still unstable and uneven," said NBS. "We should not only look at the growth to analyze the economic situation, but also need to look at the overall picture of employment, prices and residential incomes."

Japan GDP grew 0.3% qoq, 1.3% annualized in Q2

Japan GDP grew 0.3% qoq in Q2, above expectation of 0.2% qoq. The economy was back in growth after -1.0% qoq contraction in Q1. In annualized term, GDP grew 1.3%, above expectation of 0.7%.

Looking at some details, external demand contracted -0.3% qoq, versus expectation of -0.1% qoq. Capital expenditure rose 1.7% qoq, matched expectations. Private consumption grew 0.8% qoq, much better than expectation of -1.0% qoq. Price index dropped -0.7% yoy, worse than expectation of -0.4% yoy.

Fed Kashkari: Ready to start tapering after a few more strong job reports

Minneapolis Fed President Neel Kashkari said in a Bloomberg interview, "if we see a few more jobs reports like the one we just got, then I would feel comfortable saying yeah, we are -- maybe haven't completely filled the hole that we've been in -- but we've made a lot of progress, and now, then will be the time to start tapering our asset purchases."

"I'm not convinced we were actually at maximum employment before the Covid shock hit us. So, that's exactly why I want us to be really humble about declaring, 'This is as good as it can get'," he said.

He added that labor force participation and employment rates have to be "at least back to where they were before" and that's a "reasonable thing for us to try to achieve."

RBNZ to hike, consumers, inflation and employment to watch

RBNZ is set to the the first major central bank to raise interest rate this week, lifting the OCR from 0.25% to 0.50%. There is even some speculation of a 50bps hike, but it's very unlikely for now. Main focus is needed on the central bank's guidance on whether it will hike again later this year, and on what conditions. Minutes of RBA and FOMC meeting will be closely watched too.

On the data front, anything related to US consumers will carry a higher weight for now, like retail sales. UK will also release employment, CPI and retail sales. Canada will release CPI while Australia will release employment. These are the data which could be more market moving. Here are some highlights for the week:

• Monday: Japan GDP, industrial production final; China fixed asset investment, industrial production, retail sales, unemployment; Canada manufacturing sales, wholesale sales; US Empire State manufacturing index.
• Tuesday: RBA minutes, Japan tertiary industry index; UK employment; Eurozone GDP, employment; Canada housing starts, foreign securities purchases; US retail sales, industrial production, business inventories, NAHB housing market index.
• Wednesday: Japan trade balance, machine orders; Australia wage price index; RBNZ rate decision; UK CPI, RPI, PPI; Eurozone CPI final; Canada CPI; US housing starts and building permits; FOMC minutes.
• Thursday: Australia employment; Swiss trade balance; Eurozone current account; Canada ADP employment; US Philly Fed survey, jobless claims, leading indicators.
• Friday: Japan CPI, Germany PPI; UK retail sales, public sector net borrowing; Canada retail sales, new housing price index.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 151.77; (P) 152.17; (R1) 152.40; More...

GBP/JPY drops notably today but stays in range of 151.14/153.42. Intraday bias remains neutral at this point. On the downside, firm break of 151.14 will suggest that rebound form 148.43 has completed. Intraday bias will be turned back to the downside for retesting 148.43 low. On the upside, break of 153.42/46 resistance will reaffirm the case that correction from 156.05 has completed at 148.43. Intraday bias will be back on the upside for retesting 156.05.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). Focus remains on 156.59 resistance (2018 high). Sustained break there should confirm long term bullish trend reversal. Next target is 61.8% retracement of 195.86 (2015 high) to 122.75 at 167.93. On the downside, sustained break of 149.03 support, however, 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 to 142.71 resistance turned support first.

Economic Indicators Update

Key Highlights

• EUR/USD started an upside correction from the 1.1700 region.
• It broke a key bearish trend line with resistance near 1.1745 on the 4-hours chart.
• GBP/USD managed to stay above the 1.3800 support zone.
• USD/JPY declined below the 109.80 support level.

EUR/USD Technical Analysis

The Euro extended its decline below 1.1750 against the US Dollar. EUR/USD traded as low as 1.1705 before it started an upside correction.

Looking at the 4-hours chart, the pair recovered above the 1.1740 and 1.1750 resistance levels. There was also a break above a key bearish trend line with resistance near 1.1745.

The pair surpassed the 23.6% Fib retracement level of the key decline from the 1.1908 swing high to 1.1705 low. However, it is now facing a strong resistance near the 1.1800 zone and the 100 simple moving average (red, 4-hours).

The 50% Fib retracement level of the key decline from the 1.1908 swing high to 1.1705 low is also near 1.1807. The next key resistance could be 1.1815 and the 200 simple moving average (green, 4-hours).

To move into a positive zone, EUR/USD must break the 1.1800 and 1.1815 resistance levels. In the stated case, it could recover towards the 1.1900 resistance.

If not, there is a risk of a fresh decline from 1.1800. The key support is now near 1.1750, below which the pair is likely to visit 1.1700.

Looking at GBP/USD, the pair is still above the 1.3800 support zone, but it is facing a strong resistance near 1.3900 and 1.3920.

Economic Releases

• NY Empire State Manufacturing Index for August 2021 – Forecast 35, versus 43 previous.

STOCKS

Equities remain positive overall except the Nikkei that fell sharply amongst the rising global equity indices. Dow sustains well above 35500 and is bullish to test 36000. DAX is bullish towards 16000-16200 while above 15800. Nikkei has fallen contrary to our expectation and is bearish towards 27000-26500 before a bounce is seen in the longer run. Shanghai can move up to 3580-3600 while above 3500. Sensex and Nifty have broken their sideways consolidation and keep our bullish view intact. As mentioned earlier, Sensex and Nifty can outperform others rising towards 56000 and 16600+ eventually.

Dow (35515.38, +15.53, +0.044%) has risen slightly in line with our expectation of a rise towards 35600. The view is bullish for this week. As mentioned on Friday, 35250-35000 will now act as a good support and limit the downside for now.

DAX (15977.44, +39.93, +0.25%) has sustained the breakout of the 15200-15800 range. This keeps our bullish view intact of seeing 16000-16200 in the coming days. 15800 will now be a good resistance-turned-support and can limit the downside.

Nikkei (27441.12, -536.03, -1.92%) has fallen below 28000 which was crucial support that we had mentioned last week. While the index holds below 28000, there is scope to fall towards 27000-26500 in the coming sessions. We need a strong break above 28000 again to turn bullish on Nikkei.

Shanghai (3528.82, +12.52, +0.36%) on the other hand is holding above 3500 and is eventually bullish to rise towards 3600. Thereafter, a strong rise past 3600 will negate the danger of seeing a fall to 3400 in the coming sessions.

Sensex (55437.29, +593.31, +1.08%) has also risen sharply in line with our expectations. The view is still bullish to see a break above 56000 before we see a corrective fall towards 54500 again.

Nifty (16529.10, +164.70, +1.01%) has made a strong close above the level of 16500 in line with our expectations. The view is bullish to see a break above 16600 as well in the coming sessions. A corrective fall towards 16400/350 is possible from 16600 but could be short lived.

COMMODITIES

Brent and WTI have come down and looks bearish towards $65.Gold has risen slightly, While above 1750 the view is bullish to see a test of 1800-1820.Silver has bounced back from the low of 23.2 in line with our expectations and looks bullish towards 24.50 in the coming sessions. Copper is stable near 4.40, a sharp break above 4.40 will be needed for it to rise towards 4.60 else a fall towards 4.20 is possible.

Brent (69.72) and WTI (67.57) have come down significantly. The fall is seen because the U.S encouraged OPEC and its allies to increase production to lower the prices and fuel an economic recovery. Adding to this, the International Energy Agency (IEA) lowered its forecast for oil demand for the rest of the year as Covid cases spike again globally. The view is now bearish to see a fall towards $65 on both Brent and WTI in the near term.

Gold (1779.20) is holding above 1750 and while that holds, the view is bullish towards 1800/1820. On the contrary, if gold fails to sustain above 1750, we may have to allow for a fall back to 1700 in the next few sessions.

Silver (23.68) tested 23.20 before bouncing back to higher levels as expected. While above 23, a rise to 24.50 looks likely.

Copper (4.3610) is almost stable. We would see if it manages to break above 4.40 or come off towards 4.20 in the near term. A break above 4.40, if seen and sustained, can take it higher towards 4.60/80 eventually. Watch price action closely near 4.40.

FOREX

Dollar Index fell after the preliminary estimate of the August Michigan Consumer Sentiment Index, plunged to 70.2, its lowest in almost a decade. But the index needs to break below 92.0-91.75 to head lower else a bounce back could be seen soon. Euro can rise to 1.1850 but unless a sharp and sustained break above that is seen, we may expect a pullback in the next 1-2 weeks. Aussie is stable while pound has bounced well and looks bullish for the very near term. USDCNY is stable too while above 6.47. USDJPY may test 109-108.50/30 before bouncing from there. Need to keep a close watch on USDINR to see if it breaks below 74.20 this week.

Dollar Index (92.50) has fallen sharply. The index needs to sustain the fall and break below 92-91.75 to decline sharply in the medium term. Watch price action near 91.75 while the index looks bearish for the near term.

Euro (1.1796) has bounced well from 1.17 but unless a sustained break above 1.18-1.1850 is seen, we cannot turn bullish for the medium term. Watch interim resistance near 1.1835/40 which could produce a short rejection.

EURJPY (129.02) is falling sharply and could test 128.50 before attempting to bounce back from there. Immediate view is bearish.

Dollar-Yen (109.35) has fallen sharply and is headed towards 109 which if breaks can drag the pair towards 108.30-108.00 before another bounce from there is seen. Overall a broad range of 110.50/80-108.30/00 can hold for the next 1-2 weeks. Immediate view is bearish towards 109 and lower.

Aussie (0.7345) is almost stable. There is support near 0.7325 from where a bounce looks possible.

Pound (1.3865) has held above 1.38 to bounce back sharply. While above 1.38, we may expect Pound to trade within 1.38-1.39 for sometime before breaking on either side of the range.

USDCNY (6.4765) fell from 6.4890 last week but is holding above 6.47, unable to fall further. Failure to fall below 6.47 could keep the range of 6.47-6.49/50 possible for this week.

USDINR (74.25) has held above 74.20 last week but we need to see if this manages to hold above 74.20 this week or breaks lower to test 74.00-73.80 eventually. Watch price action near 74.20 this week.

INTEREST RATES

The US Treasury yields have declined sharply on Friday. A preliminary data release from the University of Michigan showing a sharp fall in the consumer sentiment for August had dragged the yields sharply lower. A further fall from here will reduce the chances of seeing an extended corrective rally that we have been mentioning so far. The German yields continue to trade stable above their key supports. We expect the supports to hold and trigger a corrective rally in the coming weeks before the broader downtrend resumes. The 5Yr GoI looks mixed and unclear. It can remain in a broad sideways range for some time.

The US 2Yr (0.21%) Treasury yield has dipped slightly, while the 5Yr (0.76%), 10Yr (1.26%) and the 30Yr (1.91%) have declined sharply on Friday. The 10Yr has declined below 1.3% and can extend the fall to 1.18% while it remains below 1.3%. The 30Yr can test 1.85%-1.8% on a break below 1.9%. Such a fall will reduce the chances of seeing an extended corrective rally to 1.4%-1.45% (10Yr) and 2.1%-2.2% (30Yr) that we have been mentioning. We will have to wait and see.

The German 2Yr (-0.75%), 5Yr (-0.73%), 10Yr (-0.47%) and 30Yr (-0.03%) yields remain lower and stable in the key support zone. The 10Yr is poised in the -0.45%/-0.50% zone and the 30Yr is just above its support at -0.05%. We retain our view of seeing a corrective rally to -0.30%/-0.25% (10Yr) and 0.10% (30Yr) in the coming weeks from here. Thereafter the broader downtrend can resume again.

The 5Yr GOI (5.7326%) dipped to 5.72% but has bounced back again into the 5.73%-5.78% range again on Friday. The near-term outlook is mixed. We can expect the 5Yr GoI to oscillate in a broad range of 5.7%-5.78%/5.8% in the coming days.

AUD/JPY drops sharply today on a couple of risk-off factors. Australia itself is troubled by heavier restrictions on surge of Delta variant. New South Wales reported record infections while Melbourne is back in night curfew. Lockdown in the Australian Capital territory was extended for another two weeks. Northern Territory also enters a three day snap lockdown.

AUD/JPY's strong break of 80.69 support suggests that consolidation from 79.82 has already completed at 81.56, capped well below falling 55 day EMA. Deeper fall is now expected to 79.82 support first. Break will resume the whole decline from 85.78. Such decline is possibly correcting the whole up trend from 59.85, and would target 78.44 resistance turned support, or further to 38.2% retracement of 59.85 to 85.78 at 75.87 before completion.