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Market movers today

• Another quiet day in terms of economic data releases. Today's highlights are preliminary US core CAPEX orders and shipments for June, which will shed light on investment growth in Q2. Also, look out for the US house prices at 15:00 CEST. Besides that, we get US consumer confidence (Conference Board) in the afternoon at 16:00 CEST.
• Look out for negotiations on a new US infrastructure package.

The 60 second overview

US-China relations: The poor relationship between US and China was once again underlined in the meeting in Tianjin between Deputy Secretary of State Wendy Sherman and foreign policy officials from China. However, both sides are at least focused on how to avoid the strained relationship to move into direct conflict. But there is little sign of movement on either side when it comes to accommodating any requests from the other side.

COVID-19: In the UK the 7-day moving average has moved lower for six days now. Cases in the US show tentative signs of stabilization. Concerns over new possible waves in the autumn will continue to linger, though, not least in the US where some groups are still against taking the vaccine, which can make it a challenge to reach herd immunity through vaccines alone.

Equities and bond yields: Markets have been quiet overnight. Chinese stocks continue lower after the recent crackdown on big tech and lately the education sector. Tesla presented a strong earnings report and delivered $1 billion in net income, a milestone for the 18-year-old company. Bond yields are unchanged from yesterday.

FX: It was a rough day for the USD yesterday, which lost out to the rest of the G10 sphere, while Scandies and GBP came out on top. The worthy highlights were EUR/SEK that fell below 10.20 and EUR/USD that rebounded above 1.18.

Credit: Sentiment in credit was slightly weak yesterday where iTraxx Xover widened almost 3bp (closing in 234bp) and Main close to ½bp wider (to 46½bp). HY bonds widened 1bp while IG closed ½bp tighter.

General trend

• Nikkei has remained modestly higher[Topix Air Transportation and Banks indices outperform]; Mitsubishi Motors is due to report financial results.
• Hang Seng continues to decline [HK TECH index extended drop; Banks trade generally higher]; Evergrande drops on special dividend news.
• Shanghai Composite also pared decline [IT index rises over 4%; Property and Financial indices extend declines].
• S&P ASX 200 has moved higher [Resources index outperforms after rise in copper prices, Bluescope Steel and OZ Minerals rise after corporate updates; Consumer indices decline].
• Hynix trimmed gain amid Q2 results and outlook.
• Companies due to report during the NY morning include Asbury Automotive, Archer-Daniels-Midland, Arch Resources, Armstrong World Industries, Boston Scientific, CIT Group, Centene, Ecolab, Fiserv, GE, Corning, Graphic Packaging, IQVIA, JetBlue, Lincoln Electric, Melco Resorts, 3M, MSCI, Paccar, PulteGroup, Polaris, Pentair, Rockwell Automation, Raytheon, Sherwin-Williams, Sirius XM, Sensata Technologies, Stanley Black & Decker, Teck Resources, TransUnion, UPS, Waste Management, Xerox.
• RBA Dep Gov Debelle is due to speak on the FX Global Code at 12:35 PM GMT.
• Australia Q2 CPI data is due on Wed (Jul 28th).

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened +0.2%.
• (AU) Australia Treasurer Frydenberg is being ‘pushed’ to increase the federal government’s welfare support measures for those impacted by lockdowns – Australian press.
• OZL.AU Reports Q2 Gold Production 57.9K oz v 68.7K oz y/y; Copper Production 32.7Kt v 24.6Kt y/y; Raises FY21 Gold Production 205-228K oz (prior 190-215K oz), Maintains Copper Production 120-145Kt, affirms AISC $1.30-1.45/lb.
• BSL.AU Guides FY21 (A$) underlying EBIT ~1.72B, all operating results had significantly better results than FY20.
• (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence: 100.7 v 104.3 prior (lowest since Nov 2020).

Japan

• Nikkei 225 opened +0.3%.
• 7203.JP Press notes that Toyota has turned into the lone voice quietly opposing a full shift to only electric vehicles (EV).
• (JP) Japan MoF sells ¥500B v ¥500B indicated in 0.70% (prior 0.50%) 40-year JGBs, Yield at lowest accepted price 0.7350% v 0.710% prior, bid to cover: 2.72x v 2.80x prior.

Korea

• Kospi opened +0.6%.
• (KR) SOUTH KOREA Q2 PRELIMINARY GDP Q/Q: 0.7% V 0.8%E; Y/Y: 5.9% V 6.0%E (fastest pace in 10-years).
• (KR) Bank Of Korea (BOK) Official Park: Domestic economy on track to grow in line with projections, outlook dependent on how coronavirus wave unfolds.
• 000660.KR Reports Q2 (KRW) Net 2.0T v 1.26T y/y (2.0Te); Op 2.7T v 1.95T y/y (2.7Te); Rev 10.3T v 8.61T y/y (10.0Te).
• (KR) South Korea extended the highest distancing measures of Level 4 in the Seoul metropolitan area for another two weeks through Aug 8th, as COVID cases continue to rise.
• (KR) South Korea Fin Min Hong: To expand tax credits on research for microchips, batteries, and vaccine developments (yesterday after the close).
• (KR) Said that Inter Korea communication lines have reopened [first time in 14 months] – Press.
• (KR) South Korea Jun Retail Sales Y/Y: 11.4% v 12.9% prior.

China/Hong Kong

• Hang Seng opened -0.7%; Shanghai Composite opened 0.0%.
• 3333.HK Cancels special dividend proposal after taking into consideration the current market environment, the rights of the shareholders and creditors, and the long-term development of the various businesses under the Group.
• (CN) China Vice Premier Liu: Calling for support for Small and Medium Business Development.
• (CN) China Jun Industrial Profits Y/Y: 20.0% v 36.4% 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 PBOC sets Yuan reference rate: 6.4734 v 6.4763 prior.
• (CN) China Securities Times: Fall in China stocks is temporary, overall fundamentals are unchanged.
• (CN) China NDRC to cut retail fuel prices, effective Tues, July 27th.
• (CN) China Foreign Min Wang Yi: China is opposed to Biden administration's increased oppression of China; Call on US to remove all unilateral sanction and tariffs, up to US to make right choice for Sino-US relations.
• (HK) Banks in Hong Kong have reduced margin loans related to China education stocks - press.

North America

• TSLA Reports Q2 $1.45 adj v $0.90e, Rev $12.0B v $11.4Be; While we saw ongoing semiconductor supply challenges in Q2, we were able to further grow our production.
• AMZN Denies they will accept Bitcoin this year, also denies it plans to launch a crypto coin in 2022 – press.
• (US) June Port of Los Angeles 478K loaded inbound TEUs, +26.7% y/y, -12.7% m/m; Port of Long Beach 357K loaded inbound TEUs, +18.8% y/y, -19.7% m/m.
• (US) SEMI June North America-based Manufacturers of Semi Equipment Billings: $3.67B, +2.3% m/m and +58.4% y/y.
• (US) Follow up: Fed Chair Powell has gained support among senior Senate Democrats for re-election, though not Warren and Brown yet - US financial press.
• LOGI Reports Q1 $1.22 v $0.64 y/y, Rev $1.31B v $791.9M y/y; Affirms FY22 guidance.

Europe

• (CN) China Spokesperson: Hopes UK Can offer a fair environment for China companies.
• (UK) UK said to consider easing rules for entry into country from EU and the US - FT.

Levels as of 01:15ET

• Hang Seng -1.6%; Shanghai Composite -0.0%; Kospi +0.6%; Nikkei225 +0.5%; ASX 200 +0.5%.
• Equity Futures: S&P500 -0.2%; Nasdaq100 -0.1%, Dax -0.2%; FTSE100 -0.1%.
• EUR 1.1812-1.1799; JPY 110.41-110.18; AUD 0.7389-0.7370; NZD 0.7007-0.6986.
• Commodity Futures: Gold -0.1% at $1,796/oz; Crude Oil +0.2% at $72.08/brl; Copper +0.0% at $4.59/lb.

Daily Pivots: (S1) 151.75; (P) 152.18; (R1) 152.94; More...

GBP/JPY's rebound from 148.43 resumed after brief retreat. Intraday bias is back on the upside for 153.46 resistance first. . Firm break there will pave the way to retest 156.05 high. On the downside, however, break of 151.37 minor support will turn bias back to the downside for retesting 148.43 again.

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) 129.86; (P) 130.10; (R1) 130.53; More....

Intraday bias in EUR/JPY remains neutral first as consolidation from 128.58 could extend further. Near term outlook stays bearish as long as 131.07 resistance holds. On the downside, break of 128.58 will resume the fall from 134.11, and target 127.07 resistance turned support next.

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) 0.8529; (P) 0.8551; (R1) 0.8566; More...

Intraday bias in EUR/GBP stays neutral first, with mixed near term outlook. On the upside, firm break of 0.8670 resistance will revive that case that rebound from 0.8470 is resuming. Intraday bias will be turned back to the upside for 0.8718 resistance first. However, break of 0.8502 will resume the choppy corrective fall from 0.8718 towards 0.8470 low.

In the bigger picture, price actions from 0.9499 are still seen as developing into a corrective pattern. That is, up trend from 0.6935 (2015 low) would resume at a later stage. This will remain the favored case as long as 0.8276 support holds. However, firm break of 0.8276 support will suggest that rise from 0.6935 has completed and turn medium term outlook bearish.

Daily Pivots: (S1) 1.5955; (P) 1.6008; (R1) 1.6046; More...

Intraday bias in EUR/AUD remains neutral as consolidation from 1.6128 is extending. Overall, near term outlook stays bullish as long as 1.5773 support holds. On the upside, break of 1.6128 will resume the rise from 1.5250, as a correction to fall from 1.9799, to 1.6827 resistance next.

In the bigger picture, current development argues that a medium term bottom is formed at 1.5250, on bullish convergence condition in daily MACD. Rise from 1.5250 is 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. This will remain the favored case for now, as long as 1.5614 support holds.

Daily Pivots: (S1) 1.0798; (P) 1.0818; (R1) 1.0828; More....

EUR/CHF's breach of 1.0802 suggests decline resumption and intraday bias is back on the downside. Current fall from 1.1149 should target 1.0737 cluster support next. On the upside, break of 1.0863 resistance is needed to indicate short term bottoming. Otherwise, outlook will stay bearish in case of recovery.

In the bigger picture, current development argues that rebound from 1.0505 (2020 low) might be completed with three waves up to 1.1149 already, after hitting 1.1078 long term fibonacci level. On the downside, sustained trading below 55 week EMA (now at 1.0880) will affirm this bearish case. Further break of 1.0737 cluster support (61.8% retracement of 1.0505 to 1.1149 at 1.0751) will bring retest of 1.0505 low.

Daily Pivots: (S1) 0.7344; (P) 0.7367; (R1) 0.7404; More...

AUD/USD is staying in consolidation from 0.7288 and intraday bias remains neutral. Further fall is expected as long as 0.7443 support turned resistance holds. On the downside, break of 0.7288 will resume the whole decline 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 indicate short term bottoming, and 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) 1.2546; (P) 1.2576; (R1) 1.2598; More...

Outlook in USD/CAD is unchanged and intraday bias remains neutral first. Further rally is still expected as long as 1.2485 resistance turned support holds. On the upside, break of 1.2805 will extend the rise from 1.2005 to 1.3022 medium term fibonacci level next. On the downside, however, break of 1.2485 will bring deeper fall back to next cluster support at 1.2301 (61.8% retracement of 1.2005 to 1.2805 at 1.2311).

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) 1.1772; (P) 1.1795; (R1) 1.1825; More...

Intraday bias in EUR/USD remains neutral as consolidation from 1.1751 is still extending. On the downside, break of 1.1751 will resume the fall from 1.2265, as the third leg of correction from 1.2348, to 1.1703 support. However, on the upside, break of 1.1880 resistance will indicate short term bottoming and turn bias back to the upside, for stronger rebound to 1.1974 resistance first.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally could be seen to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). This will remain the favored case as long as 1.1602 support holds. 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.