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France PMI Manufacturing dropped from 59.0 to 58.1, below expectation of 58.3. PMI Services dropped from 57.8 to 57.0, below expectation of 59.0. PMI Composite dropped from 57.4 to 56.8.

Joe Hayes, Senior Economist at IHS Markit said: "It's perhaps slightly disappointing to see the headline composite output figure dip slightly in July, but as the French economy normalises to a state of looser lockdown restrictions, it is not so much of a surprise. Regardless, the PMI pointed to another strong month-on-month rate of output growth, with service providers outperforming their manufacturing counterparts once again."

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The US markets closed Thursday with a slight rise of 0.2% in the S&P500. Asian markets showed mixed dynamics on Friday morning. The currency market also has a mixed performance, which, however, has several warning signs.

A so-called golden cross occurs in the DXY Dollar index, where the 50-day simple moving average tops the 200-day one. This is an influential technical signal that often triggers an independent market reaction. In addition, we see further confirmation of the bullish sentiment for the USD, as the price is above the mentioned moving averages, unlike the case with a similar situation in May.

The Dollar index is at 93, in the area of this year's highs. A further rise would be a confirmation of an exit from the prolonged consolidation, which could trigger an impressive reassessment of the markets, forming a new positional trend after the side range.

A strengthening Dollar is usually accompanied by increasing pressure in the stock markets. We have seen a lasting exception to this trend since 2018 with Trump's tax reform, when which capital inflows into the USA have intensified. Now the movement is instead the opposite, and there is more and more talk of tax hikes. The strengthening dollar in recent months reflects the pull into defensive assets and not at all a capital flow into US equities from other markets.

The persistent strengthening of the dollar against the Euro is also worth noting. The EURUSD has been going down in small steps for the last four weeks, and before that, we saw a solid downward momentum from the tops. Slipping to 1.1760, the Euro against the Dollar has been at the lows since late March. Since last September, EUR buying has intensified on declines into the 1.1630-1.1700 area.

A break of the sideways trend in EURUSD would clear the way for a rapid decline in the pair to the 1.1200-1.1400 area and put the fall scenario under 1.0700 - the area of the March 2020 lows - back on the agenda.

Strictly speaking, the technical picture is not a verdict for the Euro as there were plenty of false signals in history.

A "death cross" is forming in the pair, which indicates the potential for impulsive growth of the Dollar in the coming days. However, it is worth paying extra attention to the EURUSD dynamics in the coming days and hours not to miss forming a big trend for the Dollar. Up or down, we may find out definitively before the end of next week.

UK retail sales rose 0.5% mom in June, matched expectations. Sales were up 9.5% comparing to pre-pandemic level in February 2020. ONS said, "the largest contribution to the monthly increase in June 2021 came from food stores where sales volumes rose by 4.2%, with anecdotal evidence suggesting these increased sales may be linked with the start of the Euro 2020 football championship."

The volume of sales for the three months to June was 12.2% higher than in the previous three months. That's driven in large part of particularly strong sales in April.

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Daily Pivots: (S1) 150.98; (P) 151.44; (R1) 152.15; More...

Intraday bias in GBP/JPY remains mildly on the upside at this point. Correction from 156.05 might have completed at 148.43, after defending 38.2% retracement of 136.96 to 156.05 at 148.75 Further rise should be seen to 153.46 resistance first. Break will bring retest of 156.05 high. On the downside, below 150.71 minor support will turn intraday bias neutral again first.

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) 129.35; (P) 129.83; (R1) 130.16; More....

Intraday bias in EUR/JPY remains neutral for the moment and some more consolidation could be seen. Further decline is expected as long as 131.07 resistance holds. Break of 128.58 will resume the fall from 134.11. Such decline is seen as correcting whole up trend from 114.42. Deeper fall would be seen to 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) 0.8524; (P) 0.8567; (R1) 0.8593; More...

Intraday bias in EUR/GBP remains neutral at this point. On the upside, firm break of 0.8670 will affirm the case that whole rebound from 0.8470 is resuming through 0.8718 resistance. However, break of 0.8502 will turn bias back the downside for 0.8470 low again.

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) 1.5900; (P) 1.5978; (R1) 1.6023; More...

Intraday bias in EUR/AUD remains neutral as consolidation from 1.6128 is extending. Further rally is expected as long as 1.5773 support holds. On the upside, break of 1.6128 will resume the whole rise from 1.5250, which correctives the down trend from 1.9799, to 1.6827 resistance next.

In the bigger picture, outlook stays bearish with 1.6033 support turned resistance intact for now. Fall from 1.9799, as a correction to to long term up trend from 1.1602 (2012 low) is still in favor to resume through 1.5250 later. However, firm break of 1.6033 will argue that such decline has completed. Stronger rebound would then be seen 38.2% retracement of 1.9799 to 1.5250 at 1.6988.

Daily Pivots: (S1) 1.0808; (P) 1.0825; (R1) 1.0836; More....

Intraday bias in EUR/CHF remains neutral as consolidation from 1.0802 is still extending. Near term outlook stays bearish as long as 1.0985 resistance intact. On the downside, break of 1.0802 will resume the decline from 1.1149, to 1.0737 cluster support next.

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. Sustained trading below 55 week EMA (now at 1.0882) 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.

Tech crackdown sours China markets

Bloomberg reports that China regulators are considering severe sanctions on Didi Global Inc over its US IPO this morning. The news sent its US-listed stock sharply lower overnight in New York, and that news, part of a relentless domestic big-tech crackdown by China, appears to be weighing on early sentiment in China markets. The Shanghai Composite has opened 0.45% lower, with the CSI 300 down 0.15%, and Hong Kong, home to many China tech-heavyweight listings, falling 0.85%.

That contrasted with a positive session in the US overnight, where a continuous stream of positive earnings results and fading delta fears saw Wall Street rise once again overnight. The S&P 500 gained 0.20%, with the Nasdaq climbing 0.36% and the Dow Jones adding just 0.07%. Beneath the bonnet, though, the quiet rotation back into more defensive 2020 darlings at the expense of growth appears to be continuing.

Impressive results from Twitter and Snap after the market close sent the Nasdaq and S&P 500 futures 0.35% higher, and that appears to be offsetting the China tech-scare in markets ex-China this morning. Japan is closed, but the Kospi has risen by 0.15%, with Taipei 0.35% higher and Singapore and Kuala Lumpur edging 0.15% to the green.

Australian markets are also modestly higher despite an extension to the Sydney lockdown and New Zealand just announcing a suspension to the Australia New Zealand travel bubble. It seems that news was expected, and both the ASX 200 and All Ordinaries remain 0.15% higher for the session.

Asian markets look content to ride out Friday with a no-further-bad-news-is-good news rally. For now, the markets appear unconcerned about either Covid or inflation and the same theme should ensure Europe and US markets finish in much the same manner. German, French Eurozone and US Markit PMI’s this afternoon will be of passing interest to financial markets in a thin data calendar week unless there are some serious downside surprises.

Bullions recover as the US dollar retreats across the board. Silver has so far found buying interest on the daily support level at 24.70.

Once again, a divergent RSI in the demand zone foreshadowed the rebound. The break above 25.25 is an encouraging sign as the price achieves a swing high for the first time in a week. 25.70 would be the next stop if buyers can gather enough support.

Then a bullish breakout may extend the recovery to 26.40. Below the mentioned support, silver could fall towards 24.30.