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Daily Pivots: (S1) 1.7860; (P) 1.7905; (R1) 1.7977; More...

EUR/AUD recovers mildly today but stays below 1.7972 resistance, and intraday bias stays neutral. Decisive break of 1.7972 should confirm that corrective pattern from 1.8094 has completed at 1.7671. Further rise should then be seen through 1.8094, to resume the rebound from 1.7245. Next target is 61.8% projection of 1.7245 to 1.8094 from 1.7671 at 1.8196. On the downside, below 1.7671 will bring deeper fall back to 1.7459 support instead.

In the bigger picture, price actions from 1.8554 medium term top are seen as a corrective pattern. Such pattern could extend further with another falling leg. But even in that case, downside should be contained by 38.2% retracement of 1.4281 (2022 low) to 1.8554 at 1.6922 to bring rebound. Uptrend from 1.4281 is expected to resume at a later stage.

Daily Pivots: (S1) 0.9397; (P) 0.9414; (R1) 0.9425; More....

EUR/CHF is staying in consolidations below 0.9438 temporary top and intraday bias remains neutral first. On the upside, decisive break of 0.9445 resistance will resume the whole rebound from 0.9218. Next target is 100% projection of 0.9218 to 0.9445 from 0.9265 at 0.9492. However, sustained trading below 55 4H EMA (now at 0.9394) will extend the corrective pattern from 0.9445 with another falling leg.

In the bigger picture, the down trend from 0.9204 (2018 high) might still be in progress considering that EUR/CHF is staying well inside the long term falling channel. However, with bullish convergence condition in W MACD, downside position should be limited in case of another fall. Instead, firm break of 0.9660 resistance will be an important sign of medium term bullish trend reversal.

Daily Pivots: (S1) 1.1615; (P) 1.1665; (R1) 1.1700; More...

Intraday bias in EUR/USD remains neutral and more consolidations could be seen below 1.1729 temporary top. Further rise is expected as long as 1.1589 support holds. Above 1.1729 will target a retest on 1.1829 high. Firm break there will resume larger up trend to 1.1916 projection level. On the downside, however, break of 1.1589 support will delay the bullish case and extend the corrective pattern from 1.1829 with another falling leg.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will remain the favored case as long as 1.1604 support holds.

Daily Pivots: (S1) 146.66; (P) 147.31; (R1) 148.40; More...

Intraday bias in USD/JPY stays neutral for the moment. Further decline is mildly in favor as long as 148.51 resistance holds. On the downside, firm break of 146.85 support will suggest that whole rebound from 139.87 has completed at 150.90, and turn outlook bearish. Next target is 142.66 support. On the upside, above 148.51 will bring retest of 150.90 instead.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.

Daily Pivots: (S1) 1.3502; (P) 1.3549; (R1) 1.3576; More...

Intraday bias in GBP/USD remains neutral for consolidations below 1.3594 temporary top. Further rally is expected as long as 1.3398 support holds. Above 1.3594 will extend the rise from 1.3140 to retest 1.3787 high.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3068) holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8044; (P) 0.8069; (R1) 0.8099; More….

Intraday bias in USD/CHF remains neutral for the moment. On the downside, break of 0.8020 will revive that case that the corrective pattern from 0.7871 has completed, and target a retest on 0.7871 low. On the upside, firm break of 0.8710 will resume the corrective from 0.7871. Intraday bias will be back on the upside for 38.2% retracement of 0.9200 to 0.7871 at 0.8379.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8475 resistance holds.

Daily Pivots: (S1) 1.3768; (P) 1.3795; (R1) 1.3844; More...

USD/CAD breached 1.3809 resistance but failed to sustain above there. Intraday bias stays neutral first. Firm break of 13809 will bring retest of 1.3878. Further break there will extend the corrective rebound from 1.3538 with another rising leg. On the downside, break of 1.3720 will reaffirm the case that corrective pattern from 1.3538 has completed at 1.3878. Further decline should then be seen back to retest 1.3538 low.

In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 resistance holds. Next target is 61.8% retracement of 1.2005 (2021 low) to 1.4791 at 1.3069.

The Fed doves hit a wall yesterday after US PPI data came in far hotter than analysts pencilled in, raising doubts that consumer prices will remain immune to tariff effects and that the Federal Reserve (Fed) can fully deliver the cuts the government wants. Headline PPI jumped from 2.4% to 3.3% (vs. 2.5% expected) while core inflation surged from 2.6% to 3.7% (vs. 2.9% expected) — the biggest leap in three years. The surprise leaves the Fed doves rattled.

This week’s CPI and PPI prints suggest companies have mostly swallowed the tariff costs so far, but that could change, with higher prices soon passed on to consumers. In normal times, such numbers would make a rate cut highly unlikely — let alone a jumbo cut that risks stoking inflation and eroding the Fed’s future policy room. But these are not normal times. The White House pressure is mounting, and the September rate cut looks inevitable — come hell or high water. Markets now see a 93% probability of a 25bp cut in September. A 50bp cut, despite political noise, is hopefully off the table. I believe that 25bp cut will be the only one this year. The US 2-year yield jumped on the data, the dollar rebounded but still hovers near its 50-DMA, while the S&P 500 inexplicably shrugged off worries. Firms are absorbing tariffs — for now — but that will likely bite into margins when earnings season arrives.

In the corporate spotlight, Intel jumped 7% yesterday after the US government said that they could build a stake in the once-iconic US company. But this time last week, Trump was calling for the resignation of the company’s new CEO, Lip-Bu Tan, for having a track record for investing in China. The two men than met at the White House and now, all is well. If we put the pieces together, the US government will get a 15% cut from Nvidia and AMD, and invest in Intel – which was originally not willing to expand production plans before confirmation from clients. While the Ohio plant would be the biggest chip factory in the world, churning out chips clients don’t want isn’t exactly a solid foundation for capital markets. In short, Trump looks ready to play Santa for America’s chip industry… but mixing up the pieces on this board could be a game that spooks investors.

Across the Atlantic, UK GDP surprised to the upside, easing pressure on Chancellor Rachel Reeves but complicating the Bank of England’s (BoE) November decision. Growth is slowing, but not alarmingly; inflation is rising, strengthening the case against another cut. Still, tight fiscal policy and possible tax hikes in the Autumn Budget could weigh on growth — though the BoE can’t act on speculation. Cable touched 1.36 before easing on a firmer dollar, while the EURGBP slipped below its 50-DMA on stronger-than-expected UK and softer-than-expected European growth data. The eurozone expanded just 0.1% in Q2, with weak industrial output and employment holding European Central Bank (ECB) doves in check. The EURUSD remains supported near its 50-DMA, its direction still driven more by US dollar moves than by the euro itself. Rising US inflation concerns should temper dovish Fed bets, but with the US economy slowing, the greenback’s broader downtrend is unlikely to reverse.

Elsewhere, Japan’s GDP beat forecasts, while Chinese industrial production, investment, and retail sales all disappointed.

In energy, US crude consolidates after a nearly 2% bounce on Thursday on geopolitical jitters. Trump warned of ‘severe consequences’ — including sanctions — if Ukraine peace talks stall, raising the risk of tensions with Russia. The upcoming meeting looks more likely to sour than succeed, with oil flows potentially caught in the crossfire. US crude recently breached the $65 support and is consolidating in a medium-term bearish zone, where ample supply and cloudy demand argue for further downside — though a softer dollar is cushioning the slide.

In focus today

In the US, focus will be on July retail sales and industrial production data. Retail sales are expected to showcase still solid consumer demand, but markets will keep a close eye on potential signs of consumers turning more cautious amid the tariff uncertainty. Have a great weekend!

Economic and market news

What happened overnight

In China, weak data points to new stimulus soon. The monthly batch of data for July for a wide range of areas including retail sales, housing and industrial production were weak and showed a further softening of economic growth on top of the loss of momentum seen in recent months. Retail sales dropped from 4.8% y/y to 3.7% y/y (consensus 4.6% y/y) and industrial production declined from 6.8% y/y to 5.7% y/y (consensus 6.0% y/y). The housing sector also weakened again with home sales falling back to cycle lows after some improvement in H1. Home prices also dropped again (new home prices down -0.31% m/m from -0.27% m/m in June). The only bright spot currently is strong exports, but it is paramount for the economy that domestic demand gets on a stronger footing. It is also a high priority for China's leaders, and we expect to see a new batch of stimulus soon to underpin consumption and housing, see also China Headlines released yesterday. Chinese offshore stocks dropped a little more than 1% overnight while USD/CNY moved slightly higher above 7.18.

What happened yesterday

In the US, producer price inflation surprised to the upside, contrasting with the CPI release earlier this week. Core goods PPI rose relatively modestly (+0.38% m/m SA), while services and the volatile trade services recorded sharper increases. Food price inflation accelerated notably from June (+1.4% m/n SA, from +0.12%). The mixed details suggest tariff pressures are building but not as much as the headline figure implies, which may explain why part of the initial market reaction seemed to fade quickly.

In the euro area, the first estimate of Q2 employment growth landed at 0.1%, slowing slightly from 0.2% in Q1. The slight rise was in line with market expectations and seen as a continued sign of a resilient labour market. The second estimate of Q2 GDP growth was unchanged from the first release at 0.1% q/q, in line with consensus. The low growth rate follows a very strong first quarter of the year, where the economy grew 0.6% q/q. Evaluating the first half of the year, growth has been higher than expected.

In Sweden, the final inflation figures confirmed last week's flash estimate: CPI m/m at 0.2% and y/y at 0.8%, CPIF m/m at 0.3% and y/y at 3.0%. CPIF-XE m/m at 0.2% m/m and y/y at 3.2%. However, food prices surprised on the upside, rising by 1.1% m/m, and the overall picture is still that inflation is too high and higher than Riksbank's forecast.

In Norway, Norges Bank kept the policy rate unchanged at 4.25%, as expected. In the press release, the MPC reiterated the signal of a rate cut in September: "The economic outlook is uncertain, but if the economy evolves broadly as currently envisaged, the policy rate will be reduced further in the course of 2025."

In geopolitics, President Trump expressed optimism about discussions with Russian President Putin to end the Ukraine war, as Putin mentioned the possibility of a nuclear arms agreement ahead of their summit. Ukrainian and European leaders remain wary, concerned that any agreement could risk Ukraine's security or reward Russia's territorial advances.

Equities: Equities were mixed on Thursday. Regional leadership reversed as Europe caught up to the prior session (Stoxx 600 +0.6%), while US took a breather (S&P 500 unchanged). There was some risk-off sentiment in the US, reflected in negative market breadth, with the equal-weight index down nearly -0.7%. Similarly, the small-cap Russell 2000 pulled back -1.3%. The trigger for the pullback was a hotter-than-expected PPI print, which sparked significant moves in the bond market. European and Nordic markets were more buoyant, with banks performing extremely well - the sector is up 4% for the week. Asian markets are higher this morning, and futures are modestly higher in both Europe and the US.

Asia is outperforming this morning, led by the tech-heavy Shenzhen index, up 1.4%. Emerging markets have performed very well over the past month in general, with gains ranging between 5-10%. We have held a regional preference for Emerging markets over summer, as a weaker dollar and stronger Chinese stimulus have provided a solid tailwind. That said, some positive drivers have recently lost momentum, including a Chinese credit impulse that has stalled for three consecutive months and a pause in the dollar's decline. Fresh data this morning showed another weak set of Chinese macro numbers, including falling house prices and softer-than-expected retail sales. In short, household sentiment has yet to turn the corner.

FI and FX: Global yields moved higher in yesterday's session, with a much hotter-than-expected US July PPI print acting as the catalyst. Markets responded with a risk-off tone: yields rose, equities declined, and the USD broadly appreciated across the G10. EUR/USD slipped below 1.17, while USD/JPY fell below 147 as markets gained renewed confidence that the BoJ could hike again before year-end. GBP FX has had a strong week so far edging closer to the 0.86 mark as data releases over the past week have been to the hawkish side. As expected, Norges Bank kept its policy rate unchanged at 4.25%, with NOK initially strengthening before partially reversing, leaving EUR/NOK around 11.90.

Daily Pivots: (S1) 0.6463; (P) 0.6516; (R1) 0.6549; More...

Intraday bias in AUD/USD is turned neutral first with the current steep retreat. On the downside, firm break of 0.6481 support will argue that corrective pattern from 0.6624 is extending with another falling leg. Intraday bias will be back on the downside for 0.6418 first. Break there will target 38.2% retracement of 0.5913 to 0.6624 at 0.6352. On the upside, above 0.6567 will extend the rebound from 0.6418 to retest 0.6624 high.

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. While stronger rally cannot be ruled out, outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Nevertheless, considering bullish convergence condition in W MACD, even in case of another fall through 0.5913, downside should be contained above 0.5506 (2020 low).