Sample Category Title

Daily Pivots: (S1) 0.9036; (P) 0.9056; (R1) 0.9072; More....

Intraday bias in USD/CHF remains on the downside at this point. Rebound from 0.8925 should have completed at 0.9273. Deeper fall would be seen to retest 0.8925 low. On the upside, above 0.9116 support turned resistance will mix up the near term outlook and turn intraday bias neutral first.

In the bigger picture, failure to sustain above 55 week EMA (now at 0..9183) affirms 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. For now, risk will stay on the downside as long as 0.9273 resistance holds, in case of rebound.

Daily Pivots: (S1) 109.40; (P) 109.62; (R1) 109.87; More...

Intraday bias in USD/JPY remains neutral as sideway trading continues in range of 109.05/110.58. On the downside, break of 109.05 will resume the decline from 111.65. Next target is 38.2% retracement of 102.58 to 111.65 at 108.18. On the upside, break of 110.58 will resume the rebound from 109.05, for retesting 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. For now, outlook won't turn bullish as long as 111.71 resistance holds, even in case of strong rebound.

Daily Pivots: (S1) 1.2428; (P) 1.2459; (R1) 1.2496; More...

Intraday bias in USD/CAD is turned neutral for some consolidations first. But further fall is expected as long as 1.2605 resistance holds. On the downside, break of 1.2421 will resume the decline from 1.2805 to 1.2301 cluster support (61.8% retracement of 1.2005 to 1.2805 at 1.2311). However, firm break of 1.2605 will turn bias back to the upside for retesting 1.2805 resistance.

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.

STOCKS

Equities broadly retain their overall sideways range. While our bias remains bullish to see an upside breakout of the ranges in equities, a fresh trigger seems to be needed for that. Dow remains at the upper end of its 33000-35100/250 range and has to break above 33250 to move up strongly. DAX oscillates at the middle of its 15200-15800 range. Nikkei has bounced back after testing the lower end of its 27000-29500 range last week. Shanghai can trade in the 3300-3460 range. Sensex and Nifty are likely to retain their 52000-53200 and 15600-15900 range respectively.

Dow (34935.47, −149.06, -0.42%) hovered around 35000 all through last week. 35100 and 35250 are important resistances. We expect the Dow to break 35250 (revised up from 35100 mentioned last week) and rise to 36000 going forward. Inability to break 35250 can drag the Dow to 34500-34000 again. It will then continue to keep the index inside the broad 33000-35100/250 range for some more time.

DAX (15544.39, −96.08, -0.61%) oscillates at the middle of its 15200-15800 range over the last few days. We expect DAX to break this range on the upside and move up towards 16000-16200. The view will turn bearish only on a break below 15200.

The support at 27000 has held very well and Nikkei (27733.32, +449.73, +1.65%) has bounced back. A strong rise above 28000 from here will reduce the danger of seeing the fall to 26000 that we had cautioned last week. For now the 27000-29500 range remains intact and a break above 28000 can take the index towards the upper end of this range.

Shanghai (3416.92, +19.56, +0.58%) has risen back well after testing 3300 last week. 3450-3460 will be a crucial resistance which will have to be broken in order to bring back the bullishness and negate the danger of seeing the deeper fall to 3200 cautioned last week. For now 3300-3460 is the possible trading range that can be seen over the next few days.

Sensex (52586.84, −66.23, -0.13%) continues to trade stable within the 52000-53200 range. We retain our bullish bias to see an upside break of this range above 53200 and a rise to 54000 eventually. 52000 and 51000 are strong supports.

Nifty (15763.05, −15.40, -0.01%) remains stable within the 15600-15900 range. With strong supports at 15600 and 15500, the bias is bullish to see a break above 15900 and a rise to 16000-16200 going forward.

COMMODITIES

Commodities have fallen and trade lower. Brent and WTI remains below respective immediate resistances at 76-77 and 74 respectively and can come down towards 72-70 and 70-69 soon. Gold has held below 1840 and can test 1800-1780 which is a crucial support zone. Silver may remain within the broad 24.50-26 region while Copper is stuck within 4.60-4.40 for now.

Brent (74.27) and WTI (72.95) have fallen from 76+ levels and 74 respectively. Brent needs to break below 74 to again turn bearish towards 72-70 in the near term while WTI is likely to hold below 74 and head towards 69 in the near term.

Gold (1814.70) faced stiff rejection from 1840 on late trade on Friday. While 1840 holds, we expect a fall to 1800-1780 which is a crucial support zone that needs a close watch. In the longer run, while above 1780-1800, there would be hope for bullishness else a break below 1780, if seen will make the price vulnerable to a sharp fall in the longer run.

Silver (25.47) fell from immediate resistance at 26 last week and while that holds, a fall back to 25.0-24.50 cannot be negated. A range of 24.50-26.00 may hold for medium term.

Copper (4.4865) is stuck within 4.40-4.60 region and may trade so for a few more sessions. Thereafter a fall towards 4.20 looks possible while resistance at 4.60 holds. Only a sustained break above 4.60, if seen will indicate bullishness towards 4.80 or higher in the longer run but such a rise looks less likely.

FOREX

Currencies look mixed today. Dollar index may remain within 91.75-92.25 before breaking on either side while Euro is bullish while above 1.1850. Aussie and Dollar Yen can remain within 0.73-0.74 and 109-110 respectively. EURJPY holds below 130.50 and unless a break above 130.50 is seen view is to see a ranged movement between 130.50 and 129. USDINR needs to break below the 74.60-74.40/20 region to head lower towards 74.0-73.80 region. Else the range may hold on for a few more sessions.

Dollar Index (92.088) has bounced from 91.78. A range of 92.25-91.75 may hold just now but the index needs to break below 91.75 to head to 91.50 and even lower in the coming sessions. A rise above 92.25 may take it higher to 92.50 before a dip from there is seen. For now watch price action from 91.75-92.25 range.

Euro (1.1869) has dipped from 1.1908 but is likely to hold above 1.1850 in the near term slowly turning bullish towards 1.1950. While above 1.1850, view is bullish.

EURJPY (130.19) holds below 130.50 which has been tested over the last 3-sessions. A range of 130.50-130 may hold for the next few sessions while a break below 130 if seen may take it down towards 129.50-129. Watch price action near 130.50.

Dollar-Yen (109.65) is holding below 110 and could test 109 before bouncing back from there. 110-109 could be the near term trade region.

Aussie (0.7342) fell from 0.74 but has bounced from 0.7329 today. A range of 0.74-0.73 is likely to hold for now.

Pound (1.3894) has fallen sharply unable to test or rise above 1.40. While below 1.40, view is bearish towards 1.3850-1.38 before a bounce back is seen in the longer run.

USDCNY (6.4666) has risen well from 6.45 as expected and could again be headed towards 6.48/49 on the upside. A sideways broad range of 6.49-6.45 may hold for now.

USDINR (74.42) held above 74.20 last week but the view is bearish for a fall towards 74.0-73.80 in the medium term. We need to keep a close watch today to see if the pair continues to trade between 74.60-74.40/20 or attempts to break lower.

INTEREST RATES

The US Treasury yields have dipped and can test their key supports within the overall downtrend. We expect the supports to hold and see a corrective rally in the coming weeks before the overall downtrend resumes. The German yields are inching closer to their supports. A corrective bounce can be seen in the short-term before a fresh fall happens. The 10Yr GoI is likely to move up amid muted trading and the 5Yr is also heading up towards 5.76% in line with our expectation.

The US 2Yr (0.18%), 5Yr (0.69%) and 10Yr (1.25%) Treasury yields have dipped on Friday while the 30Yr (1.90%) remained stable. Our view remains the same. We see supports at 1.2%-1.1% (10Yr) and 1.9%-1.8% (30Yr) which are likely to hold for now. A corrective bounce to 1.45%-1.5% (10Yr) and 2.1%-2.2% (30Yr) is a possibility in the coming weeks. Thereafter the broader downtrend can resume again taking the yields below the above mentioned support levels.

The German 2Yr (-0.77%), 5Yr (-0.75%), 10Yr (-0.46%) and 30Yr (0.01%) yields have dipped further. The 10Yr and 30Yr have come closer to their key supports within their broader downtrend at -0.45%/-0.5% and 0%/-0.05% respectively. We expect the yields to see a corrective bounce from there to -0.30%/-0.25% (10Yr) and 0.10% (30Yr) in the coming weeks. Thereafter a fresh fall can happen again.

The 10Yr GoI (6.2273%) can test 6.3%-6.32% while it remains above 6.2% amid muted trading. The 5Yr GoI (5.7359%) has moved up further and keeps our view intact of testing 5.76%-5.77% on the upside. Thereafter a pull-back is possible.

Daily Pivots: (S1) 0.7317; (P) 0.7361; (R1) 0.7391; More...

Intraday bias in AUD/USD remains neutral for the moment, as consolidation from 0.7288 is extending. Near term outlook stays bearish with 0.7443 support turned resistance intact, and further decline is in favor. On the downside, break of 0.7288 will resume the whole fall from 0.8006 and target 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.

The market opened the month with mildly positive sentiment, with major Asian indexes trading higher. But there is little reaction in the currency markets. Commodity currencies are generally soft for now, with slight losses in particular in Kiwi and Loonie. On the other hand, Dollar, Yen and Euro are trading mildly higher. Overall, however, there are no big moves yet as traders are awaiting a very busy week ahead, with two central bank meetings, and lots of heavy weight data releases.

Technically, one key question is that whether Dollar would solidify last week's decline into general near term bearish reversal. In particular, EUR/USD needs to break through 1.1907 temporary top to resume the rebound from 1.1751 low first. Then, follow through buying is needed to push the pair through 1.2 handle decisively. We'll if that would happen.

In Asia, at the time of writing, Nikkei is up 1.68%. Hong Kong HSI is up 1.26%. China Shanghai SSE is up 1.50%. Singapore Strait Times is down -0.27%. Japan 10-year JGB yield is up 0.0008 at 0.021.

Australia AiG manufacturing dropped to 60.8, further easing ahead

Australia AiG Performance of Manufacturing Index dropped -2.4 pts to 60.8 in July. Looking at some details, production rose 1.1 to 61.8. Employment rose 0.5 to 60.8. New orders dropped sharply by -8.1 to 62.5. Exports dropped -6.6 to 53.6. Input prices rose 5.8 to 84.6. Selling prices rose 1.1 to 64.7.

Ai Group Chief Executive Innes Willox said: "While COVID-19 outbreaks and associated restrictions in some states undoubtedly dampened the upswing in activity and shook confidence, the manufacturing sector recorded another strong month of expansion in July.... The slower pace of the manufacturing upswing in July and the slower pace of growth in new orders suggest further easing in the months ahead. A significant headwind for the sector is that Sydney's toughest restrictions relate to local government areas where there is a concentration of manufacturing sites and the manufacturing workforce."

Japan PMI manufacturing finalized at 53.0 in Jul, sharp rise in cost burdens

Japan PMI Manufacturing was finalized at 53.0 in July, up from June's 52.4. Markit said output and new orders rose at faster rates. There were sharp rise in cost burdens amid supply chain disruption. Businesses reported softer optimism regarding future output.

Usamah Bhatti, Economist at IHS Markit, said: "The Japanese manufacturing sector continued to see an improvement in operating conditions... the pace of expansion quickened as firms recorded stronger growth in both output and new orders... supply chain disruption continued to impact activity within the sector, with firms recording the second greatest deterioration in lead times in over a decade. Material shortages and logistical disruption contributed to a rapid rise in average cost burdens, as input prices rose at the fastest pace since September 2008.

China Caixin PMI manufacturing dropped to 50.3 in Jul, recovery not yet solid

China Caixin PMI Manufacturing dropped to 50.3 in July, down from 51.3, below expectation of 51.0. Caixin said output growth slowed amid slight drop in new orders. Staffing levels were broadly unchanged while inflationary pressures eased.

Wang Zhe, Senior Economist at Caixin Insight Group said: "China's official second-quarter economic figures were in line with expectations, but the Caixin China manufacturing PMI in July and relevant data suggested the recovery of the economy is not yet solid. The economy is still facing huge downward pressure, and we need to ensure entrepreneurs' confidence."

RBA and BoE to meet, US to release ISMs and NFP

Two central banks will meet this week. Given recent surge in delta variants and accompanying lockdowns, RBA is generally expected to reverse it's tapering decision made just a month ago. For the very least, it's likely that asset purchases would continue at a weekly pace of AUD 5B starting September. There are also speculations that RBA could indeed raise the pace to AUD 6B to show it's flexibility and commitment.

BoE is widely expected to keep monetary policy unchanged, even though some officials have openly voiced concerns about inflation. The MPC would instead wait and see how the economy cope with fiscal tightening, as government support schemes come to an end. Nevertheless, new quarterly economic projections would still trigger some volatility in the Pound.

On the data front, US ISMs and non-farm payrolls will take center stage. Also watched include Canada employment, New Zealand employment, and China PMIs. Here are some highlights for the week:

• Monday: Australia AiG manufacturing, MI inflation gauge; Japan PMI manufacturing final, consumer confidence; China Caixin PMI manufacturing; Germany retail sales; Swiss CPI, retail sales, PMI manufacturing; Eurozone PMI manufacturing final; UK PMI manufacturing final; US ISM manufacturing, construction spending.
• Tuesday: RBA rate decision; building approvals; Japan Tokyo CPI, monetary base; Swiss SECO consumer climate; Eurozone PPI; Canada PMI manufacturing; US factory orders.
• Wednesday: Australia retail sales, AiG construction; New Zealand employment; China Caixin PMI services; Eurozone PMI services final, retail sales; UK PMI services final; Canada building permits; US ADP employment; ISM services.
• Thursday: Australia trade balance; Germany factory orders; France industrial production; ECB monthly bulletin; UK PMI construction, BoE rate decision; Canada trade balance; US Challenger job cuts, jobless claims, trade balance.
• Friday: Australian AiG services; Japan household spending, average cash earnings, leading indicators; Germany industrial production; France trade balance; Swiss foreign currency reserves; Italy industrial production; Canada employment, Ivey PMI; US non-farm payrolls.

AUD/USD Daily Report

Daily Pivots: (S1) 0.7317; (P) 0.7361; (R1) 0.7391; More...

Intraday bias in AUD/USD remains neutral for the moment, as consolidation from 0.7288 is extending. Near term outlook stays bearish with 0.7443 support turned resistance intact, and further decline is in favor. On the downside, break of 0.7288 will resume the whole fall from 0.8006 and target 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.

Economic Indicators Update

China Caixin PMI Manufacturing dropped to 50.3 in July, down from 51.3, below expectation of 51.0. Caixin said output growth slowed amid slight drop in new orders. Staffing levels were broadly unchanged while inflationary pressures eased.

Wang Zhe, Senior Economist at Caixin Insight Group said: "China's official second-quarter economic figures were in line with expectations, but the Caixin China manufacturing PMI in July and relevant data suggested the recovery of the economy is not yet solid. The economy is still facing huge downward pressure, and we need to ensure entrepreneurs' confidence."

Full release here.

Japan PMI Manufacturing was finalized at 53.0 in July, up from June's 52.4. Markit said output and new orders rose at faster rates. There were sharp rise in cost burdens amid supply chain disruption. Businesses reported softer optimism regarding future output.

Usamah Bhatti, Economist at IHS Markit, said: "The Japanese manufacturing sector continued to see an improvement in operating conditions... the pace of expansion quickened as firms recorded stronger growth in both output and new orders... supply chain disruption continued to impact activity within the sector, with firms recording the second greatest deterioration in lead times in over a decade. Material shortages and logistical disruption contributed to a rapid rise in average cost burdens, as input prices rose at the fastest pace since September 2008.

Full report in PDF.

Australia AiG Performance of Manufacturing Index dropped -2.4 pts to 60.8 in July. Looking at some details, production rose 1.1 to 61.8. Employment rose 0.5 to 60.8. New orders dropped sharply by -8.1 to 62.5. Exports dropped -6.6 to 53.6. Input prices rose 5.8 to 84.6. Selling prices rose 1.1 to 64.7.

Ai Group Chief Executive Innes Willox said: "While COVID-19 outbreaks and associated restrictions in some states undoubtedly dampened the upswing in activity and shook confidence, the manufacturing sector recorded another strong month of expansion in July.... The slower pace of the manufacturing upswing in July and the slower pace of growth in new orders suggest further easing in the months ahead. A significant headwind for the sector is that Sydney's toughest restrictions relate to local government areas where there is a concentration of manufacturing sites and the manufacturing workforce."

Full release here.

Key Highlights

• EUR/USD started a decent recovery from the 1.1750 zone.
• It broke a major bearish trend line at 1.1830 on the 4-hours chart.
• GBP/USD climbed above 1.3900, but it is still below 1.4000.
• The Euro Zone Manufacturing PMI is likely to remain stable near 62.6 in July 2021.

EUR/USD Technical Analysis

The Euro formed a base above the 1.1750 level against the US Dollar. As a result, EUR/USD started a decent upward move and it broke the 1.1800 resistance level.

Looking at the 4-hours chart, the pair gained pace above the 1.1800 level and the 100 simple moving average (red, 4-hours). It surpassed a major bearish trend line at 1.1830. The upward move gained pace above the 1.1850 resistance.

The pair even broke the 1.1900 level and the 200 simple moving average (green, 4-hours). A high was formed near 1.1908 before the pair corrected lower.

There was a dip below the 23.6% Fib retracement level of the upward move from the 1.1751 swing low to 1.1908 high. The first major support on the downside is near the 1.1830 level. It is close to the 50% Fib retracement level of the upward move from the 1.1751 swing low to 1.1908 high.

On the upside, the bears are likely to remain active above 1.1900. The next major resistance is near 1.1920, above which the pair might rise towards 1.1980.

Looking at GBP/USD, the pair gained strength above the 1.3900 resistance level. However, it must clear 1.4000 for a larger increase.

Economic Releases

• Germany's Manufacturing PMI for July 2021 - Forecast 65.6, versus 65.6 previous.
• Euro Zone Manufacturing PMI for July 2021 – Forecast 62.6, versus 62.6 previous.
• UK Manufacturing PMI for July 2021 – Forecast 60.4, versus 60.4 previous.
• US Manufacturing PMI for July 2021 – Forecast 63.2, versus 63.1 previous.
• US ISM Manufacturing Index for July 2021 – Forecast 60.8, versus 60.6 previous.