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Daily Pivots: (S1) 152.65; (P) 152.99; (R1) 153.34; More...

Range trading continues in GBP/JPY and intraday bias remains neutral at this point. 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. On the downside, though, below 151.14 will bring deeper fall back to retest 148.43.

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 argue that rise from 123.94 has completed. Further break of 142.71 would open up the bearish case for retesting 122.75 low.

Daily Pivots: (S1) 129.54; (P) 129.68; (R1) 129.80; More....

Consolidation form 128.58 is still extending and intraday bias remains neutral at this point. Outlook stays bearish with 131.07 resistance intact. On the downside, break of 128.85 will resume the fall from 134.11 to 127.07 resistance turned support next. On the upside, break of 131.07 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.

General trend

• Nikkei has pared gain [Topix Marine Transportation index outperforms]; Companies expected to report earnings include Toshiba, JFE Holdings, McDonald’s Japan, Yamato Holdings, Trend Micro, Recruit Holdings].
• Equity markets in China have remained modestly lower; Shanghai Consumer Staples index drops.
• Li Auto declines in HK debut.
• Hong Kong earnings remain in focus [Li Ning, Baidu, China Mobile, Galaxy Entertainment, WH Group, Swire Pacific, MTR, Hua Hong Semi].
• S&P ASX 200 is flat amid earnings; Telecom index rises on earnings from Telstra; Consumer Staples supported by Graincorp’s guidance; Rio Tinto weighed down by ex-dividend.
• Hon Hai expected to report earnings.
• Companies due to report during the NY morning include Broadridge Financial, Canadian Solar, CyberArk, National Vision Holdings, iQiyi, Palantir, Carrols Restaurant,
• China’s Commerce Ministry (MOFCOM) sometimes holds weekly news conferences on Thursday.

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened 0.0%.
• (NZ) New Zealand Q3 Inflation Expectation Survey: 2-year Outlook: 2.3% v 2.1% prior; 1-year inflation expectations: 3.0% v 1.9% prior.
• QBE.AU Reports H1 Cash profit $467M v -$682M y/y; Rev $9.13B v $7.99B y/y.
• TLS.AU Reports FY21 (A$) Net 1.86B v 1.82B y/y; Underlying EBITDA 6.7B v 7.4B y/y; Rev 23.1B v 26.2B y/y, To begin A$1.35B on market buyback.
• NAB.AU Reports Q3 (A$) Cash profit 1.70B v 1.55B y/y.
• (AU) Australia Aug Consumer Inflation Expectations: 3.3% v 3.7% prior.
• (AU) Sydney (New South Wales) to strengthen lockdown for an additional 3 areas.
• (NZ) Reserve Bank of New Zealand (RBNZ) sells NZ$265M in LGFA bonds in QE auctions v NZ$270M sought.

Japan

• Nikkei 225 opened +0.4%.
• (JP) Japan July PPI (CGPI) M/M: 1.1% v 0.5%e; Y/Y: 5.6% v 5.0%e.
• (JP) Japan govt reportedly considering expanding areas that are under a virus state of emergency; May extend current Covid emergency measures to the end of Sept – press.
• (JP) Fitch affirms Japan sovereign rating at A; outlook negative.

Korea

• Kospi opened -0.2%.
• (KR) Foreign investors remained net sellers of South Korea equities in July – Yonhap.

China/Hong Kong

• Hang Seng opened -0.1%; Shanghai Composite opened -0.3%.
• (CN) China said to be urging local authorities to buy Chinese products under procurement guidelines for high-tech items - Nikkei.
• (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 PBOC sets Yuan reference rate: 6.4754 v 6.4831 prior.
• (CN) China Industry Ministry (MIIT): Automakers should strengthen data protection in autos; Issues guidelines on Smart Vehicle Management.
• (CN) CHINA JULY NEW YUAN LOANS (CNY): 1.080T V 1.200TE.
• (CN) CHINA JULY AGGREGATE FINANCING (CNY): 1.060T V 1.70TE.
• (CN) CHINA JULY M2 MONEY SUPPLY Y/Y: 8.3% V 8.7%E.

Other

• ST.SG Reports Q1 (S$) Net 451M v 345M y/y; EBTIDA 997M v 897M y/y; Rev 3.80B v 3.54B y/y.

North America

• NIO Reports Q2 (CNY) ADS -0.21 v -1.08 y/y, Rev 8.45B v 3.72B y/y, Total deliveries 21.9K v 20.1K q/q v 10.3K y/y.
• (US) Treasury Sec Yellen said to be considering a trip to China in the coming months - press.
• (US) Fed's Daly (non-voter, dove): Reiterates may start asset purchase tapering by end of year - FT.

Europe

• (UK) July RICS House Price Balance: 79% v 82% prior.

Levels as of 01:15ET

• Hang Seng -0.4%; Shanghai Composite -0.2%; Kospi -0.2%; Nikkei225 -0.1%; ASX 200 -0.1%.
• Equity Futures: S&P500 -0.0%; Nasdaq100 -0.1%, Dax -0.1%; FTSE100 +0.1%.
• EUR 1.1746-1.1734; JPY 110.46-110.32; AUD 0.7377-0.7362; NZD 0.7048-0.7030.
• Commodity Futures: Gold +0.0% at $1,753/oz; Crude Oil +0.0% at $69.28/brl; Copper +0.9% at $4.41/lb.

Daily Pivots: (S1) 1.5885; (P) 1.5940; (R1) 1.5978; More...

Intraday bias in EUR/AUD remains mildly on the downside as fall from 1.6182 short term top would extend. Sustained break of 55 day EMA (now at 1.5879) would argue that choppy corrective rebound from 1.5250 has completed. Deeper fall would be seen to 1.5614 structural support for confirmation. On the upside, above 1.6035 minor resistance will turn bias back to the upside for retesting 1.6182 high instead.

In the bigger picture, a medium term bottom was formed at 1.5250, on bullish convergence condition in daily MACD. Rise from 1.5250 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.

Market movers today

• Euro area industrial production for June is expected to be constrained by global supply problems despite strong demand.
• The central bank of Turkey is expected to keep rates unchanged, with the central bank caught between significant upward inflation pressures and on the other hand political pressure from President Erdogan who wants lower rates amid an economy struggling to overcome the COVID-19 wave and wildfires.
• In the US, some attention will be given to the producer price inflation which is expected to temper somewhat in July compared to June like the CPI inflation yesterday.

The 60 second overview

Macro: Japan's PPI surprised on the upside in July increasing 1.1% m/m vs 0.6% in June and 0.5% expected by consensus.

Oil: Brent rebounded firmly above USD71/bbl yesterday. The sell-off Monday, likely related to concerns over rising infections in China, thus only lasted briefly. Oil followed the trend in rest of commodity markets, which have also recovered again.

Fed: Another round Fed speakers yesterday signalled that tapering of bond purchases is likely to start over the coming months.

Equities: Equities moved higher again in Wednesday's trading, nudging at new highs for MSCI world and S&P500. Value companies remained in favour, with financials, industrials and materials the standouts while high flying healthcare was the only sector in red. In the US, this summarized to Dow closing up 0.6%, S&P 0.3%, Nasdaq -0.2% and Russell 2000 0.5%. Asian markets are more muted this morning with value-intense Japan the only exception. US futures signals a slow opening.

FI: It was a fairly uneventful session yesterday, leaving EGBs trading in a tight range through most of the day.

FX: NOK came out on top yesterday in the G10 currency sphere as oil prices extended the rebound from Tuesday further. USD lost out after the CPI release slightly disappointed expectations.

Credit: Credit remained under pressure yesterday where iTraxx Xover widened 1bp (to 236½bp) and Main 0.2bp (to 46.8bp). HY bonds widened 2bp and IG 1bp.

Short-term Elliott wave view in FTSE suggests that the pullback to 19 July 2021 low (6812.84) ended wave (4). Up from there, the index is nesting higher as an impulse sequence within wave (5) favoring more upside extension to take place. While the initial bounce to 6929.8Hh9 high ended wave ((i)), wave ((ii)) pullback ended at 6827.26 low, wave ((iii)) completed in lesser degree 5 waves at 7018.95 high. Wave ((iv)) ended at 6956.24 low, wave ((v)) ended at 7033.27 high thus completed wave 1.

Down from there, the index made a pullback in wave 2 to correct the cycle from 7/19/2021 low. The internals of that pullback unfolded as Elliott wave flat structure where wave ((a)) ended at 6980.67 low. Wave ((b)) ended at 7038.65 high and wave ((c)) ended at 6929.64 low. Above from there, the index started the next leg higher in wave 3 and ended lesser degree wave ((i)) at 7093.93 high. Then wave ((ii)) pullback ended at 6996.93 low and resume the rally higher again.

Whereas lesser degree wave (i) ended at 7142.54 low, wave (ii) ended at 7089.74 low. Near-term, as far as dips remain above 7089.74 low and more importantly above 6812.84 low then FTSE is expected to extend higher in lesser degree wave (iii) towards 7236.10- 7326.35 area higher before entering into a wave (iv) pullback. We don’t recommend selling and expect dips to find support in 3, 7, or 11 swings for further upside.

FTSE 1 hour Elliott Wave chart

Daily Pivots: (S1) 1.0813; (P) 1.0820; (R1) 1.0829; More....

Intraday bias in EUR/CHF stays mildly on the upside first. Rebound from 1.0715 short term bottom is in progress for 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 1.1149 resistance holds. Break of 1.0505 low would be seen at a later stage.

Daily Pivots: (S1) 1.2482; (P) 1.2515; (R1) 1.2540; More...

Range trading continues in USD/CAD and intraday bias remains neutral for the moment. As long as 1.2605 resistance holds, further decline is expected. 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) 0.7334; (P) 0.7362; (R1) 0.7400; More...

AUD/USD is staying in consolidation form 0.7288 and intraday bias remains neutral first. Outlook stays bearish as long as 0.7443 resistance holds. 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.

Daily Pivots: (S1) 110.23; (P) 110.52; (R1) 110.72; More...

Intraday bias in USD/JPY remains neutral at this point. Corrective fall from 111.65 should have completed with three waves down to 108.71. Another rise is in favor with 110.01 support intact. Break of 110.79 will turn bias to the upside for retesting 111.65 high. However, break of 110.01 will dampen this bullish view, and turn bias to the downside for 108.71 support.

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.