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Wednesday, August 21, 2019

Sonia Meskin, US economist at Standard Chartered, suggests that they have lowered their Fed funds target rate (FFTR) call for year-end 2019 to 1.75% (

Sonia Meskin, US economist at Standard Chartered, suggests that they have lowered their Fed funds target rate (FFTR) call for year-end 2019 to 1.75% (from 2.00%) by adding a 25bps cut in September. Key Quotes “We continue to forecast a cut in December, as well. We believe that heightened trade uncertainty, coupled with ongoing deterioration in global growth, will worry the Committee. The extent to which global growth deterioration will hurt the domestic economy is uncertain, and there is little precedent on which the Fed can confidently rely.” “US economic fundamentals remain solid, for now, supported by a strong labour market and consumer spending. However, both coincident and leading indicators from the goods sector have been deteriorating. In part, this is due to the inventory build-up in Q1-2019, which we expect to spill over into H2-2019, subtracting 0.4-0.5ppt from y/y GDP. However, construction has also weakened, and business sentiment indicators have been flashing warning signals.” “The stronger USD, rising unit labour costs, supply-chain disruptions and weaker revenue from abroad may soon combine to squeeze corporate margins and sap hiring. Meanwhile, core inflation remains below the FOMC’s medium-term 2% objective.” “Against this backdrop, we believe the FOMC will ease further in H2-2019, and we expect the policy stance to remain dovish until either trade and growth concerns abate, core inflation tops 2% or wage growth tops 3.5% y/y, roughly the latest cycle’s peak.”

Deutsche Bank analysts suggest that we’ve got the FOMC minutes from the July meeting out tonight and will be a key economic event for today. Key Quote

Deutsche Bank analysts suggest that we’ve got the FOMC minutes from the July meeting out tonight and will be a key economic event for today. Key Quotes “It’s worth noting that there will be an element of staleness to these now given the tariff developments since then however our economists made the point that they may provide an important benchmark for Fed officials’ outlooks prior to the escalation of trade tensions. They note for example, if the minutes indicate officials’ existing economic views were largely predicated on a flare-up in trade tensions, as St. Louis Fed President Bullard (dove/voter) mentioned last week, this would be relatively hawkish as it would imply officials think they do not need to do much more easing than they have already foreshadowed. However, if trade tensions returning to a boil a day after the July meeting was actually a surprise, which would be implied by Powell saying they had "returned to a simmer" in his prepared remarks to open the press conference, this would be consistent with our economists’ call that more monetary policy easing than was built into the June dot plot is to be expected.”

FX Strategists at UOB Group believe there is still scope for NZD/USD to slip back to the mid-0.6300s in the next weeks. Key Quotes 24-hour view: “Expe

FX Strategists at UOB Group believe there is still scope for NZD/USD to slip back to the mid-0.6300s in the next weeks.Key Quotes24-hour view: “Expectation for “further NZD weakness” did not materialize as NZD traded in a muted manner between 0.6404 and 0.6430. The quiet price action offers no fresh clues and NZD could continue to trade sideways, likely between 0.6400 and 0.6435”. Next 1-3 weeks: “While the overall outlook for NZD still appears to be ‘soft’, it has not been able to make much headway on the downside as it failed to crack 0.6400 over the past two days (low of 0.6404 on both Monday and Tuesday). For now, we continue to hold the view that there is chance for NZD to weaken further to 0.6350. However, in view of the waning downward momentum, a break of 0.6470 (level previously at 0.6500) would indicate that the current downward pressure has eased. To look at it another way, a break of 0.6470 would suggest NZD could trade sideways for up to a few weeks”.

Reuters reports the latest comments from the Chinese Foreign Ministry on the US-China trade issue, with the key highlights found below. US-China relat

Reuters reports the latest comments from the Chinese Foreign Ministry on the US-China trade issue, with the key highlights found below. US-China relationship is one of the most important bilateral relationships in the world. Natural for US and China to have differences on trade, key is to resolve issue through dialogue. The risk-on market profile remains unperturbed by the above comments, as USD/JPY extends the bounce beyond 106.50 levels while the Aussie keeps its range below the 0.68 handle. All eyes now remain on the FOMC meeting’s minutes due later today.

It seems sellers have returned to the market on Wednesday and are now driving EUR/USD lower to the 1.1090/85 area. EUR/USD focused on FOMC, Italy The

EUR/USD moves a tad lower to the 1.1090 region.The Greenback resumes the upside and trades near daily highs.FOMC minutes next of relevance in the day.It seems sellers have returned to the market on Wednesday and are now driving EUR/USD lower to the 1.1090/85 area.EUR/USD focused on FOMC, ItalyThe pair has interrupted a five-day negative streak on Tuesday, as renewed jitters on the US-China trade front plus falling US yields weighed on the buck and forced the US Dollar Index to give away part of the recent rally. However, the resurgence of political effervescence in Italy is expected to start weighing on the sentiment around the European currency sooner rather than later. Yesterday, (now former) PM G.Conte stepped down over increasing frictions with Lega Nord’s M.Salvini and his plans for a ‘no confidence’ vote against the government. Still in Italy, President Mattarella should now decide whether to form a new coalition government (although the ‘majority’ will be a key issue here), call for snap elections or appoint a German-style ‘institutional’ government. Any solution, however, is not expected to come without further frictions among parties and swelling effervescence, at least in the next few months. Nothing scheduled data-wise in Euroland today, whereas all the attention should be on the publication of the FOMC minutes, due later in the NA session. Later in the week, markets’ focus is expected to remain across the pond and on the speech by Fed’s J.Powell at the Jackson Hole Symposium.What to look for around EUREUR has finally succumbed to the downside pressure although another test of YTD lows in the proximity of 1.1020 remains elusive for the time being. Renewed buying interest surrounding the buck, expectations of ECB easing and Italian politics are seen driving the mood around the shared currency at the moment. That said, sustained bullish attempts in the pair still look flimsy amidst ECB’s preparations for a fresh wave of monetary stimulus (most likely to be announced in September), including a potential reduction of interest rates, the re-start of the QE programme and a probable tiered deposit rate system. This scenario has been confirmed as of late following poor results from the euro-docket, adding to the unremitting deterioration of the economic outlook in the region.EUR/USD levels to watchAt the moment, the pair is losing 0.04% at 1.1094 and faces the next contention at 1.1065 (low Aug.20) seconded by 1.1026 (2019 low Aug.1) and finally 1.0839 (monthly low May 11 2017). On the upside, a break above 1.1140 (21-day SMA) would target 1.1222 (55-day SMA) en route to 1.1282 (high Jul.19).

Italy’s League party’s Economics Chief Claudio Borghi was reported by Reuters, as saying that Lega-Five Star coalition is still viable without Conte.

Italy’s League party’s Economics Chief Claudio Borghi was reported by Reuters, as saying that Lega-Five Star coalition is still viable without Conte. The recent comments from the Italian government officials are having little impact on the shared currency, as the EUR/USD pair remains stuck in a tight range just under the 1.1100 level.Also Read: Ex-Italian PM Renzi: Ready to work with 5-Star Movement

Meanwhile, technical indicators on the daily chart have been recovering from the negative territory and maintained their bullish bias on hourly charts

The USD/JPY pair regained positive traction on Wednesday - marking the fourth day of an uptick in the previous five - and recovered a major part of the overnight modest pullback.The intraday up-move is now testing a key resistance marked by 100-period EMA on the 4-hourly chart, which if cleared might be seen as a key trigger for short-term bullish traders.Meanwhile, technical indicators on the daily chart have been recovering from the negative territory and maintained their bullish bias on hourly charts, supporting prospects for an extension of the recovery move from multi-month lows set last week.
 
A sustained breakthrough the mentioned barrier will reinforce the bullish bias and set the stage for a move beyond the 107.00 handle towards testing the 107.20 region - a resistance marked by 50% Fibo. level of the 109.32-105.05 recent downfall.
 
The momentum could further get extended towards mid-107.000s en-route 61.8% Fibo. level - around the 107.70-75 region - which if cleared might negate any near-term bearish bias and lift the pair further towards the 108.00 round figure mark ahead of the 108.45-50 supply zone.
 
On the flip side, the 106.20 horizontal zone now seems to have emerged as an immediate strong support, below which the pair might turn vulnerable to head back towards challenging the 105.00 round figure mark with some intermediate support near the 105.65 region.USD/JPY 4-hourly chart 

Ireland's Foreign Minister Simon Coveney is on the wires now, via Reuters, expressing his take on the current UK political/ Brexit scenario. Coveney s

Ireland's Foreign Minister Simon Coveney is on the wires now, via Reuters, expressing his take on the current UK political/ Brexit scenario. Coveney said that the UK Government’s position on Brexit is now less compromising. Nothing further is reported from the Foreign Minister, as markets eagerly await the meeting between the UK PM Johnson and his German counterpart Merkel for fresh updates on the likely Brexit outcome. At the time of writing, the GBP/USD pair is losing further ground, as the bears look to test the 1.2100 support.

In opinion of FX Strategists at UOB Group, a close above 1.2195 would indicate that the negative phase has ended. Key Quotes 24-hour view: “Expectatio

In opinion of FX Strategists at UOB Group, a close above 1.2195 would indicate that the negative phase has ended.Key Quotes24-hour view: “Expectation for ‘sideway trading’ yesterday was incorrect as GBP had a relatively active session as it reversed an initial dip to 1.2065 and surged to an overnight high of 1.2180. While the rapid rise appears to be running ahead of itself, there is room for GBP to extend its gain. That said, any advance is expected to face solid resistance at 1.2195 (next resistance is at 1.2220). Support is at 1.2135 followed by 1.2100. The 1.2065 low is unlikely to come into the picture for today”. Next 1-3 weeks: “We highlighted yesterday (20 Aug, spot at 1.2130) that “shorter-term indicators continue to suggest that the odds for further GBP weakness have diminished” and added, “in order to revive the current flagging downward momentum, GBP has to move and stay below 1.2070 soon”. GBP subsequently dipped below 1.2070 (low of 1.2065) before soaring to 1.2180. From here, a break of 1.2195 (no change in ‘key resistance’ level) would suggest the ‘negative phase’ that started in late July has ended. While a break of 1.2195 would indicate that last week’s 1.2015 low is a short-term bottom, it is premature to expect a major reversal. To put it another way, a break of 1.2195 would indicate that GBP has moved into a consolidation phase and it is likely to trade sideways to slightly higher for a couple of weeks”.

In its latest client note published on Tuesday, Upasana Chachra, Economist at Morgan Stanley India, made a downward revision to the FY 2020 Indian GDP

In its latest client note published on Tuesday, Upasana Chachra, Economist at Morgan Stanley India, made a downward revision to the FY 2020 Indian GDP growth forecasts by 20bps amid policy handicap and ongoing trade tensions. Key Quotes: “Delays in policy transmission are affecting the domestic demand outlook, and continued trade tensions are weakening the external demand outlook. FY20 GDP growth target reduced to 6.3% from 6.5% and for FY21 to 6.8% from 7.2%. As such, continued weakness in incoming growth data and delay in policy measures to fix the risk aversion in the financial sector are bringing downside to the domestic demand outlook in the near term. We believe fiscal policy has limited wriggle room, especially in the near term, to provide a boost. We cite the elevated level of augmented deficit.” India GDP growth seen at 5.7% in Q1 - Nomura USD/INR technical analysis: MACD portrays buyer exhaustion near short-term key supports

Karen Jones, analyst at Commerzbank, suggests that GBP/USD’s rally has started to erode the 20 day ma at 1.2157 after last week the market based at 1.

Karen Jones, analyst at Commerzbank, suggests that GBP/USD’s rally has started to erode the 20 day ma at 1.2157 after last week the market based at 1.2015 and is correcting higher near term. Key Quotes “The market remains under pinned by the January 2017 low at 1.1988 (we have a 13 count on the daily chart and TD support is 1.1988). We would allow for a rebound to the down channel at 1.2325. Below 1.1988 lies the 1.1491 3rd October low (according to CQG). It stays negative while contained by its 3 month downtrend at 1.2325 today.” “Only above the downtrend this would introduce scope to the 55 day ma at 1.2434 and the June high at 1.2784.” “Only a rise above the June high at 1.2784 would indicate that a bottom is being formed (not favoured).”

Prakash Sakpal, economist at ING, points out that Thailand’s external trade swung back to growth in July after several months of contraction this year

Prakash Sakpal, economist at ING, points out that Thailand’s external trade swung back to growth in July after several months of contraction this year as exports rose by 4.3% year-on-year and imports by 1.7%,  against consensus estimates of a 2% and 6% contraction respectively. Key Quotes “Positive swing in exports from 2.9% YoY fall in June rather tells us more about what happened a year ago – a low base effect from a big month-on-month (MoM) fall in July 2018, while key drivers of automobiles and electronics with a combined weight of about 30% continued to hold down the headline export growth. Electronics were down by 5% MoM and autos and parts by 2.5%.” “But even bigger positive swing in import growth, to +1.7% YoY from -9.7% in June, lift hopes of some recovery in domestic demand. Growth of all key import segments – fuel, raw materials, capital goods, and consumer goods – improved, though this was also associated with a sharp narrowing of the trade surplus to $110 million in July from $3.2 billion in the previous month.” “Data puts year-to-July export growth at -1.9% and import growth not far apart from that at -1.8%, down sharply from +11.1% and +9.5% in the same period of 2018. But the $4.1 billion of cumulative trade surplus through July was little changed from a year ago to sustain positive sentiment toward the Thai baht (THB).” “Just as with trade growth, we see a favourable base year effect preventing further slippage in GDP growth in the rest of the year from a 5-year low of 2.3% YoY in 2Q19.” “While we expect the BoT to cut rates again this year, at least by 25bp, if not more, hopes also remain pinned on fiscal stimulus.”

The AUD/USD pair edged up during the Asian session on Wednesday, albeit continued with its struggle to capitalize on the uptick and move back above th

Rising US bond yields helped limit the USD downtick and capped gains.Bullish trades seemed reluctant amid persistent US-China trade concerns.The focus shifts to Wednesday’s important release of the FOMC minutes.The AUD/USD pair edged up during the Asian session on Wednesday, albeit continued with its struggle to capitalize on the uptick and move back above the 0.6800 round figure mark.
 
The pair extended its sideways consolidative price action and remained well within a broader trading range held over the past one week or so, with a combination of diverging forces failing to provide any meaningful impetus and leading to a subdued trading action on Wednesday.Traders look to subdued USD demand/US-China tradeThe US Dollar held on the defensive as investors preferred to wait on the sidelines ahead of Wednesday's important release of the latest FOMC meeting minutes, which will be followed by the Fed Chair Jerome Powell's speech at the Jackson Hole Symposium on Friday.
 
However, a goodish pickup in the US Treasury bond yields - supported by the prevalent risk-on mood - helped limit the USD downside and turned out to be one of the key factors that kept a lid on any meaningful up-move amid persistent US-China trade concerns.
 
In the latest US-China trade-related development, the US President Donald Trump said that he is still not ready to make a trade deal with China and held investors from placing any aggressive bets around the China-proxy Australian Dollar.
 
Moving ahead, Wednesday's key focus will be on the FOMC meeting minutes, which will be closely scrutinized for clues over the Fed's intention to cut interest rates further in September and might play a key role in determining the pair's near-term direction.Technical levels to watch 

According to TD Securities analysts, there will be plenty of focus on Italian politics today. Key Quotes “There was originally supposed to be a confid

According to TD Securities analysts, there will be plenty of focus on Italian politics today. Key Quotes “There was originally supposed to be a confidence vote, but following the resignation of PM Conte all eyes turn to President Mattarella. The President will decide whether to try to patch back together the M5S-League relationship, try to put together a new M5S-PD government, or call snap elections.”

In an interview with German television, German Finance Minister Olaf Scholz noted that there is no sign of a looming Eurozone crisis, in the wake of t

In an interview with German television, German Finance Minister Olaf Scholz noted that there is no sign of a looming Eurozone crisis, in the wake of the Italian political turmoil. Key Quotes (via Reuters): No, there is no sign of that. The agreement had been reached with Italy on developing the European stability criteria even with the current government in Rome. And it looks as if a new government, perhaps with a different composition, will emerge.

Germany's European Affairs Minister Michael Roth took out to Twitter last minutes, commenting on the Irish backstop issue. He tweeted: “Peace in North

Germany's European Affairs Minister Michael Roth took out to Twitter last minutes, commenting on the Irish backstop issue. He tweeted: “Peace in Northern Ireland and integrity of the EU single market are non-negotiable for the EU; we can talk about future relationship.” His comments come ahead of the UK PM Johnson’s meeting with the German Chancellor Merkel. Merkel said on Tuesday that the EU will remain united in its approach to Brexit and added that they will think about practical solutions to the Irish backstop problem. Her comments triggered a 90-pips rally in the GBP/USD pair before the spot quickly reverted to the familiar trading range on the 1.21 handle. The pair, currently, trades -0.30% to flirt with daily lows near 1.2140 region.

Open interest in JPY futures markets increased by around 3.3K contracts on Tuesday, reversing at the same time three consecutive drops, according to a

Open interest in JPY futures markets increased by around 3.3K contracts on Tuesday, reversing at the same time three consecutive drops, according to advanced data from CME Group. Volume, too, rose by around 9.5K contracts after two pullbacks in a row.USD/JPY looks neutral/bearishThe erratic performance in USD/JPY is supported by unclear activity in open interest and volume. That said, further rangebound is thus expected in the near term although bouts of weakness due to trade jitters should not be discarded for the time being.

The United States' representative for North Korea Stephen Biegun said on Wednesday that his team is ready to resume negotiations on denuclearization w

The United States' representative for North Korea Stephen Biegun said on Wednesday that his team is ready to resume negotiations on denuclearization with North Korea, as cited by South Korean news agency – Yonhap. Following a meeting with his South Korean counterpart, Lee Do-hoon, Biegun noted: "We are prepared to engage as soon as we hear from our counterparts in North Korea."  "I am fully committed to this important mission. We will get this done," he added. Any positive development on the US-N. Korea front is likely to render positive for the risk sentiment. As of now, the Treasury yields and US equity futures are extending their gains while USD/JPY holds steady near 106.50 levels.  

Karen Jones, analyst at Commerzbank, suggests that USD/CHF pair has been seeing an upside correction near term, the market saw a key day reversal on T

Karen Jones, analyst at Commerzbank, suggests that USD/CHF pair has been seeing an upside correction near term, the market saw a key day reversal on Tuesday last week from .9659. Key Quotes “A sustained break below the .9716/.9692 key support was not seen (location of the 25th June low, the January low and Fibo support) and we would allow for recovery to the 55 day ma at .9848. However we do note that the intraday Elliott wave counts are conflicting and it is possible that the correction is already over.” “Key resistance remains the 200 day ma at .9959, and we continue to look for this to cap the topside. Below .9659 (last weeks low) targets the .9543 September 2018 low. Longer term we target .9211/.9188, the 2018 low.” “Above the 200 day moving average lies the mid-June high at 1.0014 and 1.0123/78.6% retracement.”

FX Strategists at UOB Group keep the bearish view on spot unchanged and expect a visit to 2019 lows in the next weeks. Key Quotes 24-hour view: “We hi

FX Strategists at UOB Group keep the bearish view on spot unchanged and expect a visit to 2019 lows in the next weeks.Key Quotes24-hour view: “We highlighted yesterday EUR “could dip below last week’s 1.1065 low but a sustained decline below this level is unlikely”. EUR subsequently touched 1.1064 before rebounding quickly. Downward pressure eased with the recovery and the current movement is viewed as part of a consolidation phase. In other words, EUR is expected to trade sideways, likely between 1.1075 and 1.1125”. Next 1-3 weeks: “EUR dipped briefly yesterday but rebounded after testing Monday’s (19 Aug) low of 1.1065 (overnight low of 1.1064). The price action offers no fresh clues and for now, we continue to hold the view that there is scope for EUR to retest the early August low of 1.1025. As indicated on Monday (19 Aug, spot at 1.1095), it is unclear at this stage whether there is enough momentum to break the crucial 1.1000 level (even though after the lackluster price action over the past two days, the prospect for a break of this level is not high). That said, EUR is expected to stay under pressure unless it can move above 1.1160 (no change in ‘key resistance’ level)”.

According to Danske Bank analysts, the main data release today is the FOMC minutes from the July meeting, which we get tonight. Key Quotes “A lot has

According to Danske Bank analysts, the main data release today is the FOMC minutes from the July meeting, which we get tonight. Key Quotes “A lot has happened since the last meeting so the minutes may seem hawkish in the current context.” “Today, PM Boris Johnson is meeting with German chancellor Angela Merkel to, among other things, discuss Brexit. In his letter Monday, Johnson made it clear that the backstop needs to be removed for the withdrawal deal to pass the House of Commons but the EU has repeatedly rejected this, as it sees it as a necessary insurance policy to avoid a hard border. The swift refusal yesterday led to a depreciation of GBP.”

CME Group’s flash data for GBP futures markets saw open interest shrinking by jus 203 contracts on Tuesday. On the other hand, volume increased by nea

CME Group’s flash data for GBP futures markets saw open interest shrinking by jus 203 contracts on Tuesday. On the other hand, volume increased by nearly 54.9K contracts following two straight drops.GBP/USD remains capped by 1.2200Cable is now extending the choppy trade amidst unclear direction in open interest and volume, leaving the scenario for further rangebound unchanged in the near term. That said, the 1.2200 neighbourhood keeps capping the upside, while a test of 1.20 (and below) remains well on the cards.

FX option expiries for Aug 21 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts 1.1161 599m 1.1250 1.1bn - GBP/USD: G

FX option expiries for Aug 21 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts  1.1161 599m  1.1250 1.1bn - GBP/USD: GBP amounts 1.2275 253m  - USD/JPY: USD amounts  105.50 575m  105.70 477m  105.80 566m  106.00 900m  106.75 775m  107.00 357m -  AUD/USD: AUD amounts  0.6715 551m  - NZD/USD: NZD amounts  0.6400 294m

Norway Labour Force Survey above forecasts (3.4%) in June: Actual (3.6%)

GBP/USD pulls back from the 21-day simple moving average (SMA) as it drops to 1.2150 heading into the UK open on Wednesday.

GBP/USD loses upside momentum while reversing from 21-day SMA.1.2100 becomes an immediate support to watch.GBP/USD pulls back from the 21-day simple moving average (SMA) as it drops to 1.2150 heading into the UK open on Wednesday. Buyers stay away unless the pair clear immediate upside barrier, namely 21-day SMA level of 1.2175. Even so, 23.6% Fibonacci retracement of June-August south-run, around 1.2200, and an eight-week-old descending trend-line at 1.2290 will challenge the upswing. If at all bulls cross 1.2290 resistance, 50% Fibonacci retracement of 1.2400 will be on their radars. Alternatively, multiple extremes marked since early-month highlight 1.2100 as a near-term key support, a break of which can fetch prices to 1.2060 and then to the monthly low of 1.2015. Traders will also be mindful of the year 2016 low surrounding 1.1800 if prices extend downpour below 2017 bottom of 1.1987. GBP/USD daily chartTrend: Bearish  

Here is what you need to know on Wednesday, August 21st: - US President Donald Trump has said that he is still not ready to make a trade deal with Chi

Here is what you need to know on Wednesday, August 21st:
- US President Donald Trump has said that he is still not ready to make a trade deal with China, cooling some optimism. Trump also said that a recession is unlikely and repeated his calls for the Federal Reserve to cut interest rates. Markets have calmed after dropping earlier. 
- The Fed releases its FOMC Meeting Minutes from the late July meeting in which it cut interest rates but stressed it is only a "mid-cycle adjustment" and not the beginning of a loosening cycle. Investors will seek hints about the next meeting in September. Fed Chair Jerome Powell speaks in Jackson Hole on Friday. Mary Daly of the San Francisco Fed has expressed optimism about the US economy and said a recession is not imminent. 
- The pound is holding onto its gains after German Chancellor Angela Merkel said that "practical solutions" must be found around the thorny issue of the Irish backstop. Hopes for a compromise.
- Germany will auction a 30-year bond with a 0% coupon today – testing market appetite for low yields.
- Italy: President Sergio Mattarella begins consultations to form a new government after prime minister Giuseppe Conte resigned. One option is a government between the 5-Star Movement, currently in government and the opposition Democratic Party. Another option is a general election that the other current coalition partner, La Lega, want.
- The Canadian dollar has gained some strength ahead of the inflation report and as oil prices remain stable.
- Cryptocurrencies have been declining, with Bitcoin nearing $10,000 once again.

Lee Sue Ann, Economist at UOB Group, gave her views on the recent political events in Italy, including the resignation of PM M.Conte on Tuesday. Key Q

Lee Sue Ann, Economist at UOB Group, gave her views on the recent political events in Italy, including the resignation of PM M.Conte on Tuesday.Key Quotes“Italy’s Prime Minister (PM) Giuseppe Conte resigned on Tuesday (20 August) evening. Conte told the Senate that the surprise move for the no-confidence vote against the coalition was forcing him to “interrupt” what he contended was a productive government. He also accused Deputy PM Matteo Salvini of showing “grave contempt for Parliament” and putting Italy at risk for a “dizzying spiral of political and financial instability” in the months ahead by creating an unnecessary crisis”.So, what’s next?“First, Mattarella can hold consultations to see whether any parties can form a majority. The Five Star Movement (M5S) and the Democratic Party (PD) could form a new government. However, since the two parties fall short of a majority in the Senate, they would require other left-wing parties to join in as well, making the coalition even less stable than it would be given their bad history”. “Second, Mattarella can call for a fresh election and decide whether a technocratic and caretaker government should be put in place. These would likely see Salvini’s far-right Lega Nord (Lega) party and other right-wing parties forming a governing coalition, which could be up and running by mid-November”. “Third, Mattarella could appoint an "institutional" government. In the event that negotiations for a German-style government contract between M5S and PD fail, Mattarella may ask the same majority to support an “institutional” government, which would be appointed by him”.Finally…“The next couple of weeks and, possibly, months will thus be crucial as far as Italy’s political situation is concerned. We expect to see some negative risk sentiment, mainly because the new government will have insufficient time to deal with the key 2020 budget proposal. On top of that, Italy has a sizeable structural deficit and heavily front-loaded debt maturity profile”.

Comments are hitting the wires from the former Italian Prime Minister Renzi, via Reuters, as he says that he could be prepared to work with 5-Star Mov

Comments are hitting the wires from the former Italian Prime Minister Renzi, via Reuters, as he says that he could be prepared to work with 5-Star Movement if he felt it could lead to a government with constructive attitude towards Europe.

According to preliminary figures for EUR futures markets from CME Group, investors trimmed their open interest positions by around 4.1K contracts on T

According to preliminary figures for EUR futures markets from CME Group, investors trimmed their open interest positions by around 4.1K contracts on Tuesday, recording the second drop in a row. Volume, instead, reversed two consecutive pullbacks and rose by nearly 18K contracts.EUR/USD still points to a test of 1.1026Tuesday’s positive price action in EUR/USD was on the back of shrinking open interest, noting lack of sustainability of occasional bullish attempts and the presence of short covering sponsoring them. However, the up move in volume could support a squeeze higher in the very near term, although far from being a change in sentiment.

Reuters cites Japanese government officials with knowledge of the negotiations, as saying that hopes for a US-Japan trade deal in September are fading

Reuters cites Japanese government officials with knowledge of the negotiations, as saying that hopes for a US-Japan trade deal in September are fading as both sides fail to make concessions on agriculture and automobiles. It’s worth noting that Japanese Economy Minister Motegi and US Trade Representative (TR) Robert Lighthizer will hold two-day talks in Washington from Wednesday, which will be their second meeting this month. Key Headlines: Progress towards reaching a deal has been slow. It will be a very tough negotiation. If there is to be an ‘agreement’ we need to have something we can formally announce, which is tough. It will be difficult to agree on a deal in September unless Washington makes more concessions. A fallout on the upcoming US-Japan trade talks could temper the improved risk sentiment, with the safe-haven Yen likely to regain control on the 106 handle. However, the main focus remains on the FOMC July meeting’s minutes due later in the NA session.

Following its U-turn from the 21-day simple moving average (DMA), USD/CHF confronts 23.6% Fibonacci retracement of April-August declines.

USD/CHF pulls back to 23.6% Fibonacci retracement.21-DMA limits near-term upside.Following its U-turn from the 21-day simple moving average (DMA), USD/CHF confronts 23.6% Fibonacci retracement of April-August declines as it takes the bids to 0.9793 ahead of the European session on Wednesday. While 14-bar relative strength index (RSI) shows normal condition, pair’s sustained run-up beyond 0.9800 enables it to challenge the short-term key DMA level of 0.9811. It should, however, be noted that the pair’s successful rise above 0.9811 can extend the rise to 38.2% Fibonacci retracement level around 0.9880. During the pullback, 0.9770 and 0.9740/37 can offer intermediate halts ahead of highlighting 0.9690 horizontal support comprising lows marked in June and also tested during early-month. USD/CHF daily chartTrend: Bearish  

According to Karen Jones, analyst at Commerzbank, EUR/USD pair remains on the defensive as the intraday Elliott wave counts suggests that intraday bou

According to Karen Jones, analyst at Commerzbank, EUR/USD pair remains on the defensive as the intraday Elliott wave counts suggests that intraday bounces should struggle circa 1.1150. Key Quotes “It came under increasing downside pressure last week and attention has reverted to the 1.1027 recent low and the base of its down channel at 1.0955. Below here lies the 78.6% retracement at 1.0814/78.6% retracement.” “Nearby resistance is the 200 day ma at 1.1287, but key resistance is 1.1343/65, the 2018-2019 down channel and the 55 week ma. A weekly close above this latter level is needed for us to adopt an outright bullish stance.” “The market will need to regain the 55 week ma and channel at 1.1343/65 to generate upside interest.”

Analysts at TD Securities note that the Italian PM Conte resigned last night, after a blistering attack on League leader Salvini in a speech to the Se

Analysts at TD Securities note that the Italian PM Conte resigned last night, after a blistering attack on League leader Salvini in a speech to the Senate. Key Quotes “What happens now is up to President Mattarella. 5Star is reportedly in talks with PD in an attempt to form an alternative government and avoid elections, although the math is still not in their favour to obtain a majority in both the lower and upper houses.” “The President will likely give some time for those parties to attempt to come to an agreement, or could even try to put together a less political, caretaker government in order to pass key budget legislation. So at this point, it's still unclear whether Italy will be heading into snap elections this autumn, or whether a new grouping could come to an agreement to govern and delay elections for some time.”

Wednesday’s Asian trading witnessed a sudden shift in the risk sentiment, as the demand for risk appetite returned, as reflected by the uptick in the

Wednesday’s Asian trading witnessed a sudden shift in the risk sentiment, as the demand for risk appetite returned, as reflected by the uptick in the US equity futures, Treasury yields and oil prices. However, the Asian stocks traded on a cautious footing ahead of the key Federal Reserve (Fed) events risks ahead. Across the fx space, the AUD/USD pair broke higher to once again take out the 0.68 handle, but looming US-China trade anxiety combined with falling iron-ore prices capped the upside. The Kiwi traded on the back foot, but managed to hold the 0.64 handle, despite a drop in New Zealand’s Credit Card Spending. The USD/JPY pair staged a comeback and briefly regained the 106.50 level. However, the further upside lack follow-through amid looming trade and ahead of Fed minutes. Meanwhile, the safe-haven gold kept its range around the 1500 levels, less preferred in a risk-friendly market environment. Among the European currencies, both the EUR/USD pair and Cable traded cautiously amid growing Italian and UK political uncertainty.   Main Topics in Asia US Sec. of State Pompeo: China trade war could end by 2020 election – CNBC RBNZ Hawkesby: 50bps cut reduces chance of unconventional policy Gold technical analysis: Bulls cheer pullback from 10-day EMA PBOC sets Yuan reference rate at 7.0433 Japan to upgrade its estimate of North Korea’s nuclear weapons capability - Yomiuri Irish Govt refuses to engage with UK about no-deal Brexit preparations – Irish Times President Trump's team braces for a potential ‘moderate and short’ recession - Politico UK house prices to fall in six months after no-deal Brexit - Reuters poll WTI remains firm on API inventory data, rising geopolitical tension RBA’s Lowe: Escalating US-China trade war is “very worrying” Asian shares drop ahead of Fed minutes Key Focus Ahead There is nothing of relevance in the European calendar ahead, except for the second-tier UK Public Sector Net Borrowing data for July, dropping in at 0830 GMT. Therefore, the political risks around Italian coalition breakdown and Brexit will offer fresh incentives to the EUR, GBP traders. Also, the focus will remain on the UK PM Johnson’s meeting with the German Chancellor Merkel later today for some clarity on the Brexit issue. The NA docket is busier one, with the Canadian inflation figures lined up for release at 1230 GMT, soon followed by the US Existing Home Sales data and the Energy Information Administration (EIA) Crude Stock data, due at 1400 GMT and 1430 GMT respectively. However, the main event risk for today remains the Federal Open Market Committee’s (FOMC) July meeting’s minutes. The minutes could offer fresh hints on the Fed’s rate cut expectations, in the face of growing US recession fears. Meanwhile, fresh US-China trade updates, US President Trump’s comments and Brexit-related noise will also continue to play out ahead of the 3-day Fed’s Jackson Hole Symposium, starting this Thursday. EUR/USD: Focus on Italian yields and Fed minutes EUR/USD eked out gains on Tuesday despite the political uncertainty in Italy. Tuesday's gains could be short-lived if the prospects of snap Italian elections rise. Dovish Fed minutes needed to push EUR/USD higher to 1.1150. GBP/USD: Cautious ahead of UK PM Johnson’s EU visit, Fed minutes GBP/USD fails to carry the previous pullback as traders remain sidelined ahead of key events. Headlines from Germany helped trigger the earlier rise. All eyes on UK PM Johnson’s EU visit and FOMC minutes. Italy's Gov't Collapses, Prime Minister Resigns: What's it Mean? What's Next? If there is another election and Salvini wins, a Eurosceptic, anti-EU, anti-immigration politician will become the leader of the third largest country in the Eurozone. Canadian CPI to drop sharply in July – Scotiabank The Scotiabank analysts offer a sneak peek into what to expect from Wednesday’s Canadian Consumer Price Index (CPI) report slated for release at 1230 GMT. FOMC Minutes July 30-31 Meeting Preview: The Fed vs the markets July meeting cut the fed funds rate 0.25%, in the first reduction since December 2008. The Fed cited overseas threats to US economic growth not the expansion itself as the prime reason. Markets expect a second cut at the September 18th FOMC.  

After a brief test to sub-98.00 levels during early trade, the US Dollar Index (DXY) has now reclaimed some shine and moves to the area of daily highs

DXY rebounds from lows and visits the 98.30 region.Yields of the US 10-year note probe the 1.58% area.FOMC minutes next of relevance ahead of Jackson Hole.After a brief test to sub-98.00 levels during early trade, the US Dollar Index (DXY) has now reclaimed some shine and moves to the area of daily highs near 98.30.US Dollar Index focused on FOMC, PowellThe index is resuming the upside after Tuesday’s negative price action despite recording fresh three-week highs around 98.50. The resurgence of trade concerns combined with the marked drop in yields of the key US 10-year benchmark have weighing on investors’ sentiment yesterday and forced the buck to give away part of the recent advance. On another front, San Francisco Fed M.Daly (2021 voter, dovish) talked down the likeliness of a recession in the US economy, saying that the uncertainty on the US-China trade front and concerns over global growth has been collaborating with tis view. In the US data space, Existing Home Sales is due later today ahead of the EIA report on US crude oil inventories and the more relevant FOMC minutes, all ahead of the speech by Chief J.Powell and the Jackson Hole Symposium on Friday.What to look for around USDThe main focus this week will be on the Jackson Hole Symposium as well as on any hint on the Fed’s plan for the next months. In the meantime, trade concerns, while still unabated and in combination with the inversion of the yield curve, carry the potential to spark further ‘insurance cuts’ by the Federal Reserve and thus undermine the constructive prospects of the buck in the next months. Opposed to this view emerges the Greenback’s safe have appeal, the status of ‘global reserve currency’, so far solid US fundamentals vs. overseas economies and the less dovish stance from the Federal Reserve (as per the latest FOMC event).US Dollar Index relevant levelsAt the moment, the pair is gaining 0.09% at 98.24 and faces the next up barrier at 98.45 (high Aug.20) followed by 98.93 (2019 high Aug.1) and the 99.89 (monthly high May 2017). On the other hand, a break below 97.91 (21-day SMA) would aim for 97.21 (low Aug.6) and then 96.98 (200-day SMA).

Although fewer catalysts suggest receding trade/political tension, not to forget firm bearish bets for the Fed, Gold prices fail to extend the latest recovery.

Gold buyers await FOMC minutes for fresh longs after Tuesday’s recovery.Fed officials have been upbeat off late.Trade war, geopolitics keep offering background music to the momentum.Although fewer catalysts suggest receding trade/political tension, not to forget firm bearish bets for the Fed, Gold prices fail to extend the latest recovery as investors remain cautious ahead of the key events. The bullion takes the rounds to $1,503 by the press time before Wednesday’s Europe session. The US Secretary of State Mike Pompeo sounded upbeat for the future trade relationship between the US and China in spite of the US President’s repeated pessimistic calls for the same. However, the White House chief of staff Mick Mulvaney acknowledges US facing a recession On the other hand, Federal Reserve Bank of San Francisco’s President Mary C. Daly followed the footsteps of Federal Reserve Bank of Boston’s President Eric Rosengren while turning down the fears of the US recession. Elsewhere, the US Special Representative for North Korea showed readiness for a trade talk with the hermit kingdom whereas Japanese Foreign Minister Taro Kono supported cooperation with China and South Korea. Furthermore, the news platter also shows that the US remains a stark opponent of Iran supporters and a blast was registered in Iraq. The US 10-year treasury yield, generally considered as a gauge of risk sentiment, recovers to 1.576% by the press time. Given the mixed global developments, investors will seek fresh clues from the July month’s Fed meeting, to be conveyed via Federal Open Market Committee (FOMC) minutes, for the US central bank’s future policy moves. Technical Analysis A sustained break below 10-day exponential moving average (EMA) level of $1,500 becomes necessary for prices to revisit 23.6% Fibonacci retracement of April-August upside, at $1,471, in absence of which Friday’s high around $1528 and the monthly top surrounding $1535 can keep buyers happy.

Not only failure to hold on to the strength after flashing the yearly high, bearish signal by MACD also favors the USD/INR pair’s pullback.

USD/INR refrains from carrying the previous upside amid bearish MACD signal.4H 50MA, eight-day long rising trend-line become important supports for now.Not only failure to hold on to the strength after flashing the yearly high, bearish signal by MACD also favors the USD/INR pair’s pullback as it trades near 71.5750 ahead of Wednesday’s European session. However, 50-bar moving average on the four-hour chart (4H 50MA) and an upward sloping trend-line since August 09, at 71.34 and 71.27 respectively, limit the pair’s immediate declines. Should prices slip beneath 71.27, a fresh downward trajectory towards 50% Fibonacci retracement of July-end to Tuesday’s top, at 70.32 and then to 70.00 round-figure can well be anticipated. Meanwhile, 71.85 and 72.00 can entertain buyers ahead of pushing them towards December 2018 high around 72.82. USD/INR 4-hour chartTrend: Pullback expected  

According to ANZ analysts, global markets traded on little news flow as investors await guidance from central bankers into the end of the week. Key Qu

According to ANZ analysts, global markets traded on little news flow as investors await guidance from central bankers into the end of the week. Key Quotes “The FOMC minutes for July, due tomorrow, will provide details leading to the first Fed rate cut in a decade. ECB minutes are due the next day. But the big event is the annual Jackson Hole symposium, which will focus on “Challenges for Monetary Policy”.” “Powell will speak on Friday and his remarks will be closely monitored for hints that more policy easing is in store, against the backdrop of ongoing trade tension. The next Fed meeting on 18 September is more than fully priced for a 25bp rate cut.” “Looking ahead, markets are pricing in sizable rate cuts over the next year; 75bp of cuts by early next year and 100bp of cuts by mid-2020.”

Rabobank analysts note that today we get UK public finances and Canadian CPI, and the later will be of more interest and is seen at 0.2% m/m, 1.7% y/y

Rabobank analysts note that today we get UK public finances and Canadian CPI, and the later will be of more interest and is seen at 0.2% m/m, 1.7% y/y, with core median at 2.1% y/y, core common at 1.8% y/y and core trim at 2.0% y/y. Key Quotes “In the US there are also existing home sales, which are expected up 2.3% to reverse last month’s fall of 1.7%.” “We will also get the latest set of FOMC minutes. These can be as repetitive as Bond movies too, promising much and delivering little, and with the best bit being the moving dots (which can end up in serious blood for some). What will we see in terms of justification for the recent rate cut? What will be mentioned over the prospect for more?”  

Netherlands, The Consumer Confidence Adj declined to 0 in August from previous 2

Netherlands, The Consumer Spending Volume down to 1.7% in June from previous 2.4%

Bill Evans, analyst at Westpac, notes that the Australia’s six month annualised growth rate in the Westpac– Melbourne Institute Leading Index, rose fr

Bill Evans, analyst at Westpac, notes that the Australia’s six month annualised growth rate in the Westpac– Melbourne Institute Leading Index, rose from –0.09% in June to +0.05% in July. Key Quotes “This is first above trend read since November last year. Further confirmation of this around trend reading would be consistent with the economy growing around trend for the last three or four months of 2019 and well into the first half of 2020.” “The Reserve Bank recently lowered its growth forecast for 2019 from 2.75% to 2.5%. With growth momentum in the first half of the year around 2% annualised the RBA is expecting momentum in the second half to lift to 3% annualised – above the trend pace of 2.75%.” “Westpac accepts that an improving housing market, tax cuts and lower rates are likely to boost momentum in the second half to around 2.5% annualised – somewhat below trend.” “The Leading Index growth rate has improved over the last six months from –0.71% in February to +0.05% in July.” “The Reserve Bank Board next meets on September 3. The Board is expected to keep rates on hold.” “Westpac still expects the next rate cut at the October Board meeting. The Bank’s recent forecast revisions assumed market pricing of one rate cut before year’s end and another in the first half of 2020. Despite these assumptions the Bank was forced to lower its inflation and wages growth forecasts while raising the expected path for the unemployment rate.”  

Despite German Chancellor’s comments renewing hopes of a soft Brexit, GBP/USD remains on a back foot as traders await key events.

GBP/USD fails to carry the previous pullback as traders remain sidelined ahead of key events.Headlines from Germany helped trigger an earlier rise.Despite German Chancellor’s comments renewing hopes of a soft Brexit, GBP/USD remains on a back foot as traders await details of the UK PM’s EU visit, followed by the FOMC minutes, for fresh impulse. With this, the Cable takes the rounds to 1.2160 ahead of Wednesday’s London open. In her latest media appearance, German Chancellor Angela Merkel refrained to turn down the UK PM’s objection on the Irish border while considering it as the political declaration on future ties, not of the Withdrawal Agreement. Traders took it as a positive sign from the EU’s largest economy ahead of British Prime Minister (PM) Boris Johnson’s visit. However, Reuters reported that all 27 EU states, staying together after Brexit, are jointly supporting the region’s stand on the Irish backstop. As per the letter quoted in the news report, “The EU regrets that the new United Kingdom government wants to replace a legally operative solution with a commitment to try to find a solution – yet to be found – by the end of the transition period.” This turns down the PM Johnson’s upbeat expectations from the two-day long EU visit starting from today. Though, he has a positive point at home wherein the latest survey from YouGov signal public support for Boris Johnson while turning down Jeremy Corbyn as the PM and a delay in the Brexit. Other than headlines from Germany and France, Federal Open Market Committee (FOMC) minutes will also be the key for the pair traders as traders will keep a tab on hints for the latest rate cut. On the economic calendar, July month Existing Home Sales from the US, expected 5.39M versus 5.27M, will entertain traders. While no breakthrough is expected from the UK PM’s EU visit, any surprise can propel the Cable’s latest upswing. On the other hand, hawkish FOMC minutes will pave the way for an upbeat tone of Fed officials at the Friday’s Jackson Hole Symposium speech, which in turn will keep supporting the US Dollar (USD) strength. Technical Analysis Not only 1.2210 but July-end high of 1.2250 will also question buyers targeting a run beyond 1.2300 mark. As a result, 1.2100 and the monthly low around 1.2015 will remain on the sellers’ radar.

EUR/USD rose 0.19% on Tuesday, ending the five-day losing streak. Tuesday's gains, however, could be erased if the Italian yields rise due to politica

EUR/USD eked out gains on Tuesday despite the political uncertainty in Italy.Tuesday's gains could be short-lived if the prospects of snap Italian elections rise.Dovish Fed minutes needed to push EUR/USD higher to 1.1150.EUR/USD rose 0.19% on Tuesday, ending the five-day losing streak. Tuesday's gains, however, could be erased if the Italian yields rise due to political uncertainty and the Federal Reserve minutes validate Chairman Powell's reluctance to cut rates aggressively. Italy's government collapsed on Tuesday, pushing the key European nation into a renewed period of crisis and uncertainty. Even so, the 10-year Italian government bond yield fell by more than five basis points. The bond markets' response indicates the investors believe the political crisis would be resolved soon potentially paving the way for a new coalition government. Italian President Sergio Mattarella will begin two days of talks with parties today to seek a way out of a political crisis. Italian yields will likely rise in the EUR-negative manner if talks begin on a negative note, forcing markets to price in snap elections. Focus on Fed minutes The U.S. Federal Reserve will release the minutes from the July Federal Open Market Committee (FOMC) meeting at 18:00 GMT today. The Fed cut rates by 25 basis points as expected on July 31, but Chairman Powell refrained from signaling more easing. The US Dollar will likely pick up a bid if the minutes validate Powell's reluctance in starting a rate-cutting cycle. EUR/USD could rise to 1.1150 if the minutes reflect the market’s concerns about global slowdown having a negative impact on the US economy. That would boost the odds of a Septembe rate cut. As of writing, EUR/USD is trading at 1.1095, having hit a high of 1.1105 earlier today. Meanwhile, the 10-year Italian government bond yield is at 1.36%. FOMC Minutes July 30-31 Meeting Preview: The Fed vs the markets EUR/USD technical analysis: Ends five-day losing streak, but bias remains bearishTechnical levels 

The US-based Fitch Ratings published its latest report on the impact of the Chinese economic slowdown on the banks in the Asian developed markets, inc

The US-based Fitch Ratings published its latest report on the impact of the Chinese economic slowdown on the banks in the Asian developed markets, including Hong Kong. Key Findings: China slowdown would hit banks in Asian developed markets most. Outside of mainland China, Hong Kong banks have the most direct exposure to a Chinese slowdown. Cuts assessment of the operating environment for Hong Kong’s banks to 'A'/Stable from 'A+'/Negative in 2018.

AUD/JPY is reporting gains at press time, despite the losses in the Asian equities. As of writing, the currency pair is trading at 72.22, representing

AUD/JPY is flashing green despite the risk-off tone in the Asian stocks.The uptick in the S&P 500 futures seems to have put a bid under the pair.The Westpac-Melbourne Institute Leading Index has turned positive for first since November 2018.AUD/JPY is reporting gains at press time, despite the losses in the Asian equities. As of writing, the currency pair is trading at 72.22, representing 0.31% gains on the day. The pair hit a high of 72.30 a few minutes before press time. At that level, the pair was up 30 pips from the low of 72.00 seen in the early Asian trading hours. Asian stocks drop Major Asian equity indices like Japan's Nikkei and Australia's S&P/ASX 200 are currently reporting losses and the shares in China are flat lined. The demand for risk assets weakened in the North American trading hours on Tuesday after President Trump refused to back down from the trade war with China. Even so, the anti-risk JPY weakened in Asia and remains on the defensive at press time. The resulting gains in the AUD/JPY pair could be associated with the 0.27% rise seen in the S&P 500 futures. Also, the upbeat Aussie data released in Asia may have put a bid under the AUD. The Westpac-Melbourne Institute Leading Index, which indicates the likely pace of future economic activity, ticked higher to 0.10% in July from the previous month's print of -0.08%. July's figure is the first positive reading since November 2018. Looking forward, the pair may extend gains if the European equities put on a good show, although that looks unlikely due to heightened political uncertainty in Italy and German recession fears.Pivot levels 

Despite repeated bounces off 0.6400, NZD/USD remains below near-term key resistances as it takes the rounds to 0.6415 during early Wednesday.

NZD/USD holds beyond 0.6400 ever since it reversed from it before two weeks.10-DMA and May/June low limit near-term upside.Despite repeated bounces off 0.6400, NZD/USD remains below near-term key resistances as it takes the rounds to 0.6415 during early Wednesday. With this, the pair keeps being titled towards 0.6400 whereas a break of which can drag it back to monthly low at 0.6378. If prices slip beneath 0.6378, the year 2016 low near 0.6348 could lure sellers. On the upside, 10-day simple moving average (DMA) near 0.6440 and an area comprising lows marked in May and June, surrounding 0.6480/90 becomes key resistances to observe. In a case where buyers manage to conquer 0.6490, 38.2% Fibonacci retracement of its July- August declines at 0.6536 will come back on the chart. NZD/USD daily chartTrend: Bearish  

The Nomura analysts, Sonal Varma and Aurodeep Nandi, said in their latest client note, the Indian economy is likely to slow down further to 5.7% in Ap

The Nomura analysts, Sonal Varma and Aurodeep Nandi, said in their latest client note, the Indian economy is likely to slow down further to 5.7% in April-June from a five-year low of 5.8% in January-March. Key Quotes: “High-frequency indicators continue to show familiar pain points - a deep contraction in consumption, weak investment, a slowing external sector and an under-performing services sector. We believe that the nature of the easing will change hereon from cutting policy rates to ensuring greater transmission via ensuring adequate liquidity. The Reserve Bank of India (RBI) to cut the key rate by 15bps in October. “

EUR/JPY is currently trading at 118.20, representing 0.25% gains on the day. The currency pair looks set to test 119.00 in the next 24 hours or so, as

EUR/JPY's daily chart indicators are signaling a bullish reversal.The price chart shows signs of seller exhaustion below 118.00.EUR/JPY is currently trading at 118.20, representing 0.25% gains on the day. The currency pair looks set to test 119.00 in the next 24 hours or so, as the daily chart is flashing early signs of bullish reversal. To start with, the 14-day relative strength index is reporting a bullish divergence. Further, the moving average convergence divergence histogram is about to cross above zero, confirming a bullish reversal. Also, there are strong signs of seller exhaustion on the price chart. For instance, the sellers have repeatedly failed to keep the pair below 117.80 over the last nine days. Daily chartTrend: BullishPivot levels 

Asian stocks are on the defensive on renewed recession fears ahead of the minutes of the July Federal Open Market Committee (FOMC). MSCI’s broadest in

Asian stocks are reporting losses on recession fears.Risk assets will likely pick up a bid if the Fed minutes sound dovish.Asian stocks are on the defensive on renewed recession fears ahead of the minutes of the July Federal Open Market Committee (FOMC). MSCI’s broadest index of Asia-Pacific shares outside Japan is down 0.2%, having scored gains for the third straight day on Tuesday, according to Reuters. At press time, Japan’s Nikkei is down 0.40% and Hong Kong's Hang Seng is shedding 0.13%. The Shanghai Composite is trading largely unchanged on the day, while the shares in South Korea are reporting moderate gains. Australia's S&P/ASX 200 is currently reporting a 1% drop. On Tuesday, the Dow Jones Industrial Average and the Nasdaq fell 0.7% each while the S&P 500 lost 0.8%. Trump said on Tuesday he would confront China over trade even if it causes short-term harm to the U.S. economy because Beijing has cheated Washington for decades. Further, reports hit the wires earlier today that Trump's administration is preparing for a small election year recession. Focus on Fed minutes The probability of a rate cut in September would increase if the Federal Reserve (Fed) minutes, scheduled for release at 18:00 GMT, reflect the market’s rising global concerns. The equities will likely pick up a bid if the Fed minutes sound dovish. The central bank cut rates by 25 basis points on July 31, but Chairman Powell refrained from signaling additional easing. However, in the last three weeks, the risk in the global markets has increased substantially due to escalation of the US-China trade war, slide in China's Yuan and German recession fears.  

The Scotiabank analysts offer a sneak peek into what to expect from Wednesday’s Canadian Consumer Price Index (CPI) report slated for release at 1230

The Scotiabank analysts offer a sneak peek into what to expect from Wednesday’s Canadian Consumer Price Index (CPI) report slated for release at 1230 GMT. Key Quotes: “A sharp drop in inflation for the month of July is likely … Headline CPI is likely to decelerate by a half percentage point to 1.5% y/y.  A shift in year-ago base effects combined with little by way of typical seasonal influences and a small rise in gasoline prices are expected to push overall seasonally unadjusted prices up by just 0.1% m/m. The bigger issue may be what happens to 'core' inflation, measured as the average of the BoC's three central tendency measures. It has been floating around the 2% target mid-point of the 1-3% policy range.” 

The Sydney Morning Herald (SMH) quoted sources, who attended a private business event on Tuesday, citing the key comments delivered by the Reserve Ban

The Sydney Morning Herald (SMH) quoted sources, who attended a private business event on Tuesday, citing the key comments delivered by the Reserve Bank of Australia (RBA) Governor Philip Lowe in the meeting. Key Quotes: US-China trade war was hurting global investment, wages and economic growth. I do not have a clear idea of what strategy the U.S. has. [Some people in the US] say that it is time for Team West to muscle up against China and that is very worrying.

USD/JPY is better bid at press time, possibly due to an uptick in the futures on the S&P 500 index and Treasury yields. The pair is currently trading

USD/JPY has picked up a bid, possibly tracking the rise in the US yields and the S&P 500 future.A break above 106.86 is needed to confirm an inverse head-and-shoulders breakout.USD/JPY is better bid at press time, possibly due to an uptick in the futures on the S&P 500 index and Treasury yields. The pair is currently trading at 106.47, up more than 20 pips from the low of 106.22 seen in the early Asian trading hours. The S&P 500 futures are currently reporting 0.24% gains. The index fell 0.79 percent on Tuesday, snapping a three-day winning streak. Meanwhile, the US 10-year Treasury yield is trading at 1.574%, representing a two basis point gain on the day. Looking forward, the pair may extend gains if the S&P 500 futures remain in the green, weakening demand for the anti-risk JPY. The technical outlook, however, will turn bullish if the pair rises above 106.86, confirming an inverse head-and-shoulders breakout on the 4-hour chart. The breakout, if confirmed, would open the doors for 108.67. The daily chart is reporting a bullish divergence of the relative strength index, so the pair could confirm breakout with a move above 106.86. 4-hour chartTrend: Bullish above 106.86Pivot points 

Jeffrey Gundlach, Wall Street's bond king and Founder and Chief Executive Officer of DoubleLine, expressed his take on the recent US yield curve inver

Jeffrey Gundlach, Wall Street's bond king and Founder and Chief Executive Officer of DoubleLine, expressed his take on the recent US yield curve inversion late-Tuesday. Key Quotes (via Reuters): The Fed has lost control of interest rates, citing as evidence the fed funds rate trading higher than any part of the UST yield curve. "What else do you need to call it an inversion?"  "Everyone is parsing all of these little arbitrary things. But we've got an inversion."

With the escalating tension concerning Iran and a surprise draw in API stockpiles, WTI takes the bids to $56.15 during early Wednesday.

WTI refrains from respecting the previous inaction as it again heads to challenge 50-DMA.API data showed inventory draw, the US keeps being harsh on Iran.EIA data will be followed for fresh impulse.With the escalating tension concerning Iran and a surprise draw in API stockpiles, WTI takes the bids to $56.15 during early Wednesday. In its Crude Oil Stocks report for the week ended on August 16, the American Petroleum Institute (API) says that a surprise 3.5 million barrels of decline was witnessed versus previous addition of 3.7 million barrels. The US Secretary of State Mike Pompeo recently said that the US will take every action consistent with its sanctions to prevent Iranian tanker from delivering Oil to Syria. Elsewhere, Australia’s Prime Minister Scott Morrison said, as per the Australian, that Australia will join the international mission to protect shipping through the Strait of Hormuz, contributing a navy frigate, a maritime patrol aircraft, and planning and operations personnel. Additionally, talks of explosions in Iraq and Iran’s readiness to counter the US keep pleasing the energy buyers whereas trade uncertainty keeps an upside in check. Looking forward, Crude Oil Stocks Change report from the Energy Information Administration (EIA) for the week ended on August 16 will become the official announcement of the US oil inventories and hence will be closely observed. If the inventory levels match or slip below -1.885M forecast, energy prices can rise further. Technical Analysis FXStreet Analyst Ross J. Burland spots price run-up towards 50-day moving average (DMA) as a bullish signal: The price of oil is resting up in the high end of the 55 handle in WTI while the price finally got above the 20 daily moving average and then pierced the 50-DMA into the 56 handle overnight.  Bulls are back in control and there is room for an advance to the 58 handle to meet trend line resistance from here while on the downside, bears can target a drop to the 52 handle and the 61.8% Fibo at 51.70 on the wide.

According to a Reuters poll of housing experts, a majority of the respondents believe that the house prices in both the UK and London are likely to ta

According to a Reuters poll of housing experts, a majority of the respondents believe that the house prices in both the UK and London are likely to take a hit, in the event of a no-deal Brexit outcome. Key Findings: “Roughly 85% of respondents said both UK and London house prices would fall in the six months if the UK leaves the EU without a Brexit deal, with average prices slipping about 3% nationally and as much as 10% in London. But if Britain departs the EU with a transition deal - the scheduled leave date is Oct. 31 - house prices are due a mild 1.5% lift over the following two quarters. They would rise 1.4% in the capital. Results from the Aug. 13-20 survey show an otherwise tepid outlook for national price rises in coming years. The survey also indicates in the near-term at least that housing, the bedrock of British household wealth, is not likely to give a lift to the economy, which contracted for the first time in 6-1/2 years in the second quarter. Average UK house prices are forecast to rise 1.0% this year, 1.8% next and 2.7% in 2021, little changed from 1.2%, 2.0% and 2.5% in a survey taken in May.”

AUD/USD has been testing the bear's commitments in this phase of consolidation on a number of macro fundamentals which have given rise to a second thr

Bears tested on upside fundamental turning pint. Technically, still seesawing around a flat 20 SMA and below bearish 100 SMA.AUD/USD has been testing the bear's commitments in this phase of consolidation on a number of macro fundamentals which have given rise to a second through for long Aussie, and no doubt making the increase in speculative and mone manager shorts positioning nervous. A case for the upside The factors to consider are, most importantly, that the RBA minutes signalled a more patient whereby markets have started to factor out a rate cut as soon as September. Also, trade tension escalation has abated ahead of this weekend’s G-7 Summit, or, markets have simply chosen to ignore Trump's shooting from the hit as he just isn't consistent in his words nor actions. Then, when looking to sentiment in general, banks have moved to an easing bias and there are now talks of fiscal stimulus as well as the likelihood of Central Bank support. Domestically, Australian housing and labour data has been firmer than markets expected and should there be an upside squeeze, then the shorter positions are likely to contribute to a series of stops being triggered through the 0.6830s AUD/USD levels However, from a technical perspective, Valeria Bednarik, the Chief analyst at FXStreet explained that the AUD/USD pair is technically neutral-to-bearish according to the 4 hours chart: "...Still seesawing around a flat 20 SMA and below bearish 100 SMA. Technical indicators in the mentioned chart lack directional strength around their midlines. The pair has been ranging pretty much since the month started, with sellers re-surging on attempts to surpass the 0.6800 level. A couple of relevant highs  are located in the 0.6820 area, where, in the daily chart, the pair has a firmly bearish 20 DMA."  

The White House officials are increasingly worried that a global economic slowdown will trigger a election year recession in the US and are weighing a

The White House officials are increasingly worried that a global economic slowdown will trigger a election year recession in the US and are weighing a broader package of measures, including a cut of an additional percentage point or two to the corporate tax rate and a potential payroll tax cut.  The administration is also considering indexing the capital gains rate to inflation.  "If the U.S. were to face a recession, it would be moderate and short," Mick Mulvaney, acting White House chief of staff, told roughly 50 donors at a fundraising luncheon this week in Jackson, Wyoming, 

GBP/USD is flirting with the inverse head-and-shoulders neckline resistance of 1.2165 at press time. An inverse head-and-shoulders is a bullish revers

GBP/USD has created an inverse head-and-shoulders pattern on the 4-hour chart.A convincing move above 1.2165 would confirm a bearish-to-bullish trend change.GBP/USD is flirting with the inverse head-and-shoulders neckline resistance of 1.2165 at press time. An inverse head-and-shoulders is a bullish reversal pattern and its success rate is high when it appears after a notable sell-off. That seems to be the case here. The pair fell from 1.3381 to 1.2014 in the five months to Aug. 12 before creating the inverse head-and-shoulders pattern. A convincing break above 1.2165 would confirm a bearish-to-bullish trend change and open the doors to 1.2316 (target as per the measured move method). 4-hour chartTrend: Bullish above 1.2165Pivot points 

The Irish Times quotes "three people briefed on the contents of recent exchanges", as saying that the Irish Government has refused to engage in discus

The Irish Times quotes "three people briefed on the contents of recent exchanges", as saying that the Irish Government has refused to engage in discussions with the UK about no-deal Brexit preparations, including on how to avoid checks on the Border. Key Quotes: “New UK government wants to talk to Dublin about managing a no-deal exit But Irish Ministers and officials have declined Government and EU leaders are sticking to the position there will be no discussions with the UK on how to manage a no-deal on the Border until after the UK has left the EU. No-deal preparations are a unilateral EU matter.”

Reuters reports the latest story carried by the Japanese news outlet, Yomiuri, citing that Japan will upgrade its estimate of North Korea’s nuclear we

Reuters reports the latest story carried by the Japanese news outlet, Yomiuri, citing that Japan will upgrade its estimate of North Korea’s nuclear weapons capability in an upcoming annual defense report. Additional Headlines: Government planning to approve the report at a Cabinet meeting in mid-September. The report will maintain the assessment that North Korea's military activities pose a "serious and imminent threat". A sense pf calm prevails across Asia this Wednesday, with the Asian equities in the red and Treasury yields on the back foot ahead of the FOMC minutes release later today. The above headlines will likely add to the prevalent risk-averse market mood.

USD/CNH trades near short-term key resistances as it takes the rounds to 7.07 during Wednesday’s Asian session.

USD/CNH struggles around near-term descending trend-line, 23.6% Fibonacci retracement.A two-week-old symmetrical triangle limits the pair’s moves.USD/CNH trades near short-term key resistances as it takes the rounds to 7.07 during Wednesday’s Asian session. With the two-week-old descending trend-line and 23.6% Fibonacci retracement of late-July to early-August rise limiting the pair’s immediate upside around 7.0757/40, prices are likely to witness a pullback towards multiple supports around 7.0570 numbers. However, 38.2% Fibonacci retracement level of 7.0360 and 7.0240 might question sellers afterward, if not then 7.0037/15 area including triangle support and 50% Fibonacci retracement will lure bears. If at all buyers manage to conquer 7.040/57 resistance-confluence, last week's high surrounding 7.1127 and monthly top near 7.14 will be bulls’ favorites. USD/CNH 4-hour chartTrend: Pullback expected  

The People's Bank of China (PBOC) has set the Yuan reference rate at 7.0433 vs Tuesday's fix at 7.0454.

The People's Bank of China (PBOC) has set the Yuan reference rate at 7.0433 vs Tuesday's fix at 7.0454.

EUR/USD gained 0.19% on Wednesday, snapping a five-day losing streak, however, the outlook remains bearish as the pair is trading well below the forme

EUR/USD remains below key support-turned-resistance of 1.1162.A flag breakdown on the 4-hour chart, if confirmed, would open the doors to levels below 1.10.EUR/USD gained 0.19% on Wednesday, snapping a five-day losing streak, however, the outlook remains bearish as the pair is trading well below the former support-turned-resistance of 1.1162 (Aug. 12 low). Further, the pair seems to have created a bear flag pattern on the 4-hour chart. A bear flag is a pause that usually ends up accelerating the preceding sell-off. A break below 1.1065 would confirm a flag breakdown and create room for a drop to 1.09 (target as per the measured move method). As of writing, the pair is trading at 1.1093. A 4-hour close above 1.1104 would invalidate the flag pattern. That said, a break above 1.1162 to invalidate the bearish put forward by the range breakdown on Aug. 14. 4-hour chart Trend: BearishPivot points 

NZD/JPY has been attracting bears overnight, seeking a break below 68 the figure, but bulls have stepped in again. The Bird has been under tremendous

NZD/JPY bears in control on the broader picture, but bulls holding the fort for now. Central bank themes could be the next catalyst for the commodity complex. NZD/JPY has been attracting bears overnight, seeking a break below 68 the figure, but bulls have stepped in again. The Bird has been under tremendous pressure since April yet there seems no let-up in the downside bias and now that the cross had closed below the 2016 lows and the March 2012 highs, the downside still remains compelling.  There is not much going on out there for the NZD nor with respect to the Yen. However, overnight, GlobalDairyTrade auction results were stronger than expected, with the GDT Price Index falling just 0.2% (against expectations of a 1% fall). "Milk fats and skim milk prices declined, but particularly positive for our dairy producers was the lift in whole milk powder prices (+2.1%) to an average price of US$3100/t. This bodes well for a $7+ milk price for the 2019-20 season. Our forecast is currently $7.10/kgMS while Fonterra’s forecast is $6.25 - $7.25," analysts at ANZ Bank noted.  Central Banks come back to the fore Meanwhile, the market's focus for the rest of the week will be with the Federal Reserve, sparking a theme for central banks in general. The macro picture is likely to reemerge as a driver so long as geopolitical headlines remain subdued - Canadia CPI and EZ PMIs will play their part in the central bank theme as well, but the Federal Open Market Committee minutes and Jackson Hole will be specifically enlightening and could be the next driver to make or break the (Dollar) commodity complex in upcoming sessions for which the Kiwi trades as a proxy, albeit not quite as close as the Aussie. NZD/JPY levels  

Having failed to hold monthly high drags the USD/CAD again to 200-day simple moving average (SMA) as it trades near 1.3315 during early Wednesday.

USD/CAD seesaws near 200-day SMA amid WTI recovery.Trade/political headlines can offer intermediate moves ahead of Canadian inflation data, FOMC.Having failed to hold monthly high drags the USD/CAD again to 200-day simple moving average (SMA) as it trades near 1.3315 during early Wednesday. The pair seems to have take clues from the recent recovery of oil prices after the American Petroleum Institute’s (API) stockpile data registered surprise draw. Also adding strength to the energy prices were comments the US Secretary of State Mike Pompeo that signals escalation of geopolitical tension concerning Iran. On the different page, the US-China trade deal uncertainty looms as the US President reiterates lack of readiness to do a deal while Secretary Pompeo expects no trade war by 2020. Furthermore, the Federal Reserve officials continue to advocate for the absence of the US recession. Investors will now keep a tab on Canada’s Consumer Price Index (CPI) data for July ahead of the key Federal Open Market Committee (FOMC) minutes. The headline Canadian CPI is expected to soften to 1.7% from 2.0% on a YoY basis which in turn increases the odds for the Bank of Canada’s Core CPI to drop from 2.0%. Moving on, the FOMC minutes will be closely observed for catalysts that drove the US central bank towards a rate cut. Technical Analysis A daily closing below 200-day SMA level of 1.3310, also breaking 1.3300 round-figure, can fetch the quote to 1.3251/50 support-zone including August 19 low and August 12 high. On the flip side, a sustained run-up beyond 1.3350 becomes necessary for prices to aim for 1.3380 and June 18 high around 1.3430.

The USD/JPY pair snapped a three-day winning streak on Tuesday with a bearish engulfing candle, as the US treasury yields fell. Notably, the US two-ye

USD/JPY snapped a three-day winning run on Tuesday as both Treasury yields and the US stocks decline.Dollar rally due to hawkish Fed minutes may be short-lived.A close above 106.69 is needed to revive the bullish setup,The USD/JPY pair snapped a three-day winning streak on Tuesday with a bearish engulfing candle, as the US treasury yields fell. Notably, the US two-year Treasury yields dropped from 1.52% to 1.49% on Tuesday and the benchmark 10-year yield from 1.59% to 1.55%. The dip in yields likely weakened the bid tone around the US Dollar. Further, the S&P 500 index also declined by 0.79%, ending a three-day winning run and strengthening the bid tone around the anti-risk JPY. Focus on Fed minutes The U.S. Federal Reserve will be releasing the minutes from the July Federal Open Market Committee (FOMC) meeting at 18:00 GMT today. The Fed reduced rates by 25 basis points as expected in July, but Chairman Powell refrained from signaling additional easing. The American Dollar may rise across the board if the minutes show the board members are reluctant to cut rates aggressively. Markets, however, are unlikely to price out prospects of more easing before the year end even if the minutes sound hawkish. This is due to the fact that the central bank is under unprecedented political pressure to cut rates. So, the US Dollar rally, if any, on hawkish minutes could be short-lived. As of now, the pair is trading at 106.37, having hit a low of 106.16 in the overnight trade. The minor recovery could be associated with the 0.17% gains in the S&P 500 futures. The US 10-year yield, however, remains flat lined around 1.56%. The pair may rise further ahead of the Fed minutes if the equities regain poise.Technical analysisUSD/JPY created a bearish engulfing candle on Tuesday, aborting the immediate bullish view. A bearish reversal would be confirmed if the pair closes today below 106.16 (Tuesday's low). On the other hand, a daily close above the bearish engulfing candle's high of 106.69 is needed for bull revival.Pivot points 

USD/IDR takes another turn from a six-day-old resistance-line as it declines to 14,260 during Wednesday’s Asian session.

USD/IDR trails a week-long descending trend-line.14,160/50 and 200-DMA become crucial downside supports.USD/IDR takes another turn from a six-day-old resistance-line as it declines to 14,260 during Wednesday’s Asian session. The quote can take a halt near 50% Fibonacci retracement of July-August upside, at 14,233, ahead of visiting the key 14,160/50 support-zone including 13-day long horizontal-line and 61.8% Fibonacci retracement. In a case prices slip below 14,150, 200-day simple moving average (DMA) at 14,118 can question sellers targeting 14,000 round-figure. Meanwhile, pair’s successful run-up beyond 14,340 resistance-line can trigger fresh rally towards 23.6% Fibonacci retracement level of 14,418 whereas 14,443 and 14,583 could entertain buyers afterward. USD/IDR 4-hour chartTrend: Pullback expected  

Australia Westpac Leading Index (MoM): 0.1% (July) vs -0.08%

Forex today was mixed, with a firm S&P, lower yields, lower Dollar but a higher euro despite Italian risks. We might have expected a bigger impact on

US Secretary of State Pompeo was again playing the hawk.President Trump tweeted, again, that he wasn’t ready to do a deal with China.US 2-year Treasury yields dropped from 1.52% to 1.49%.Forex today was mixed, with a firm S&P, lower yields, lower Dollar but a higher euro despite Italian risks. We might have expected a bigger impact on the FX space following the resignation fo Italy's prime minister, however, the euro retained a bid and the Dollar fell over from the 98.50s to a low of 98.12 despite President Trump confirming media reports that he was considering fiscal stimulus. US 2-year Treasury yields dropped from 1.52% to 1.49% then back to 1.51%, the 10-year yield from 1.59% to 1.55%. A flight to bonds is keeping yields on the backfoot which, at times, is denting the Dollar's progress. Indeed, the market's consensus is still for a rate cut as soon as September.  In other news, there were some upbeat notions in the Brexit saga with Merkle seeking to find some way to resolve the backstop, looking for practical solutions: "Britain needs to decide which way it goes, we have made our offer to work closely," Merkel noted saying that it is a question of the political declaration on future ties, not of the Withdrawal Agreement. This followed yesterday's news that UK PM Johnson had written a letter to EU stating that he wished to renegotiate the Irish “backstop” that he sees as unworkable. However, the Irish responded that it was not for negotiation and then EC’s Tusk responded in a similar fashion. Regardless, GBP/USD rallied on Merkle's statements.  US Secretary of State Pompeo was again playing the hawk over China in an interview with CNBC saying that Huawei Technologies Co. and other Chinese companies are a national security threat and to top it off, President Trump tweeted, again, that he wasn’t ready to do a deal with China - yet markets are taking it in their stride, immune to Trump shooting from the hip.  Currency action Analysts at Westpac summed up the currency action as follows: "EUR/USD rose from 1.1070 to 1.1105 - "Italy’s PM Conte, in the face of Salvini’s revolt and call for a no-confidence vote, announced in Parliament that he would resign to President Mattarella. It is not at all clear what happens next but Italian bond markets took an optimistic view, the 10-year bond yield falling 6bp while other Eurozone bonds rallied 3-4bp." USD/JPY followed US Treasury yields down from 106.60 to 106.20. AUD/USD ranged between 0.6770 and 0.6795. NZD ranged between 0.6405 and 0.6430. AUD/NZD initially nudged up to a two-month high of 1.0583 before retracing to 1.0552. The GDT dairy auction resulted in little change in prices overall (-0.2%), with whole milk powder up 2.1%, skim down 0.3%, and butter down 3.4%." Key notes from Wall Street:Wall Street ends in the red, DJIA testing back below the 26000s 

Following a ‘Doji’ formation on Tuesday’s daily chart, GBP/JPY remains modest as it makes the rounds to 129.24 during the Asian session on Wednesday.

GBP/JPY struggles due to mixed clues concerning Brexit, US-China trade deal.Geopolitical tension surrounding Iran also adds to the risk aversion.UK PM’s EU visit will be in the spotlight.Following a ‘Doji’ formation on Tuesday’s daily chart, GBP/JPY remains modest as it makes the rounds to 129.24 during the Asian session on Wednesday. The US President Donald Trump recently reiterated his lack of readiness to do a trade deal with China while the US Secretary of State Mike Pompeo sounded positive while expecting an end of the trade war by 2020. On a different page, Mr. Pompeo keeps firming the US angst against Iran while saying that the US will take every action consistent with its sanctions to prevent Iranian tanker from delivering Oil to Syria. In a case of Brexit related headlines, Germany seems to seek a solution of the present Brexit deadlock and the same stops the British Pound (GBP) from declining further ahead of the UK Prime Minister Boris Johnson’s key visit to the EU. With this, the market’s risk tone remains heavy and the treasury yields lose prior run-up. Other than British PM’s two-day EU visit, markets will also observe trade/geopolitical headlines for fresh impulse. Technical Analysis Yesterday’s ‘Doji’ candle signals the reversal of the quote’s earlier recovery, which in turn highlights 128.30 and 127.50 supports whereas 21-day exponential moving average (EMA) level of 130.18 acts as near-term key resistance ahead of watching over August 02 high of 130.42 and July-end low surrounding 131.60/80.

Following its successful bounce off 10-day exponential moving average (EMA), Gold takes the bids to $1507 during the early Asian session on Wednesday.

Gold regains its stand above $1,500 after successfully bouncing off 10-day EMA.Friday’s high becomes the key for now.Following its successful bounce off 10-day exponential moving average (EMA), Gold takes the bids to $1507 during the early Asian session on Wednesday. The yellow metal now heads to Friday’s high around $1528 ahead of questioning the monthly top surrounding $1535. It should, however, be noted that 14-bar relative strength index (RSI) and 12-bar moving average convergence and divergence (MACD) are less favorable to the bullion’s further upside. If at all bulls ignore technical indicators, $1,550/55 area can offer an intermediate halt to further north-run towards April 2013 high near $1,600. Alternatively, a downside break below10-day EMA level of $1,500 will drag the quote to 23.6% Fibonacci retracement of April-August upside, at $1,471. Gold daily chartTrend: Bullish  

While optimism surrounding soft Brexit helped the GBP/USD pair to rise on the previous day, the Cable retraces to 1.2165 amid initial Wednesday morning.

GBP/USD buyers catch a breath awaiting fresh Brexit clues.The UK PM’s visit to Germany will be closely observed.Traders will also focus on the FOMC minutes for fresh impulse.While optimism surrounding soft Brexit helped the GBP/USD pair to rise on the previous day, the Cable retraces to 1.2165 amid initial Wednesday morning in Asia. German Chancellor Angela Merkel’s diplomatic statements ahead of the UK Prime Minister (PM) Boris Johnson’s visit pleased the Cable buyers on Tuesday. The Chancellor remained firm on the EU’s Brexit deal but also said that Irish backstop is a question of the political declaration on future ties, not of the Withdrawal Agreement. Elsewhere, the Sky News conveys that the British PM Johnson, on the other hand, said that he will enter talks with EU leaders “with a lot of oomph” as differences between the UK and EU’s position over the Withdrawal Agreement remain. The UK PM will begin his two-day travel to Germany and France respectively today. This will be the first EU visit of Mr. Johnson as the PM and hence will be closely observed considering his Brexit bias and popularity. Other than the Brexit headlines, markets will also keep a tab on the Federal Open Market Committee (FOMC) minutes. The statement could be particularly observed for hints concerning the catalysts that led the US central bank to the crucial rate cut. Additionally, mixed news concerning the Fed’s future outlook and trade talk developments with China also fail to offer much of the market momentum. Technical Analysis Buyers need to overcome July-end high of 1.2250 in order to aim for mid-July bottom surrounding 1.2382, if not then 1.2100 and the monthly low around 1.2015 can keep gaining sellers’ attention.

A larger than expected draw in crude oil inventory had no bearing on the price of oil today which has held onto the 56 handle despite yesterday's doji

A larger than expected draw in crude oil inventory had no bearing on the price of oil today which has held onto the 56 handle despite yesterday's doji. There will be scope for a recovery to the 58 handle to meet trend line resistance should bulls extend beyond the downside resistance that stems from the 15th July wick high. This will place bulls back above the 50-Day moving average as well. On the downside, bears can target a drop to the 52 handle and the 61.8% Fibo at 51.70 on the wide.     

EUR/JPY has corrected to the downside following the 119.60 reversal and rallies are sold at the descending resistance line from the same top to the 19

EUR/JPY has corrected to the downside following the 119.60 reversal and rallies are sold at the descending resistance line from the same top to the 19th and 20th August highs. Support is located in the 117.50s. Through the said top, we have 120.06 as the 25th July low ahead of the 55-day ma and the 3-month downtrend at 120.88/98.   

Even after breaking one-week-old symmetrical triangle formation, AUD/JPY clings to 23.6% Fibonacci retracement of late-July to early-August downpour.

AUD/JPY struggles around 23.6% Fibonacci retracement even after breaking a week-long symmetrical triangle to the downside.Bearish MACD, sustained trading below 4H 100MA favor sellers.Even after breaking one-week-old symmetrical triangle formation, AUD/JPY clings to 23.6% Fibonacci retracement of late-July to early-August downpour as it trades near 72.00 amid initial Asian session on Wednesday. Not only a downside break of the triangle, bearish signal by 12-bar moving average convergence and divergence (MACD) indicator also favor sellers targeting August 11 low close to 71.40. In a case prices slip beneath that monthly bottom near 70.70 and 70.00 round-figure will be on bears’ list. On the upside, a downward sloping trend-line at 72.30 and 100-bar moving average on the four-hour chart (4H 100MA) at 72.42 can limit near-term advances. AUD/JPY 4-hour chartTrend: Bearish  

With the mixed comments from the US policymakers confusing Aussie traders amid a lack of data at home, AUD/USD remains little changed.

AUD/USD keeps inside the two-week-old trading range.Risk sentiment again turned sour with fresh doubts on US-China trade deal.Fed policymakers, the US Secretary of State try to calm the bears.With the mixed comments from the US policymakers confusing Aussie traders amid a lack of data at home, AUD/USD remains little changed while trading near 0.6780 during early Wednesday morning in Asia. While the US President Donald Trump said that he isn’t ready to do a trade deal with China even after adding “maybe”, the Secretary of State Mike Pompeo sounded a bit upbeat concerning the US-China trade talks and said he expects to overcome trade war by 2020 election. Adding the uncertainty was an upbeat statement from the Federal Reserve Bank of San Francisco’s President Mary C. Daly who praised the US employment statistics while turning the expectations of a recession down. The market again turned risk-off during the previous day amid a light economic calendar and political uncertainty at Italy. As a result, the US treasury yields lost a major chunk of their earlier recoveries. It should also be noted that minutes statement of the Reserve Bank of Australia’s (RBA) latest monetary policy meeting reiterated the readiness to alter monetary policy, if needed which the market showed little reaction to. Moving on, Australia’s Westpac Leading Index and the US Existing Home Sales can entertain traders ahead of the key Federal Open Market Committee (FOMC) minutes. The private sentiment gauge from Australia slipped -0.08% MoM previously while the US housing market indicator bears an upbeat forecast of 5.39M versus 5.27M prior. The FOMC minutes is the key as giving details of the first in a decade rate cut by the US central bank. As per the TD Securities, “We expect the July FOMC meeting minutes to attempt to clarify the path forward after Chair Powell remained non-committal on guidance for future rate movements at his July press conference. Powell painted the Fed's action as a "mid-cycle adjustment" and not necessarily one cut or the "beginning of a long series of cuts." The minutes should support our view that soft global growth, trade uncertainty, and persistent below-target inflation should keep the Fed on a dovish footing.” Technical Analysis A two-week-old descending trend-line limits the pair’s immediate upside at 0.6800 whereas 0.6750/45 offers strong downside support. Hence, any major momentum is ruled out unless the quote successfully breaks the range. In doing so, June month low near 0.6830 and monthly bottom surrounding 0.6677 should be given high importance.

RBNZ's Christian Hawkesby is crossing the wires and has said that the 50bps cut reduces the chance of an unconventional policy. Key comments: Monetary

RBNZ's Christian Hawkesby is crossing the wires and has said that the 50bps cut reduces the chance of an unconventional policy.  Key comments: Monetary policy still effective More to come... About RBNZ's Christian Hawkesby Christian is Assistant Governor/General Manager of Economics, Financial Markets and Banking. He is responsible for the full cycle of monetary policy formulation, implementation and maintenance of liquidity in financial markets, provision and circulation of currency, and the operation of interbank payment and settlement systems. FX implications Should give some lvel confidence back to the NZD.    

United States API Weekly Crude Oil Stock fell from previous 3.7M to 3.5M in August 16

CNBC quoted the US Secretary of State Mike Pompeo while addressing a group of 40 business executives and free trade economists at a private lunch in New York.

While addressing a group of 40 business executives and free trade economists at a private lunch in New York, the US Secretary of State Mike Pompeo told that he believes the trade war with China could come to an end by the 2020 presidential election, the CNBC relies on its sources for running the news report. The news report further quotes Mr. Pompeo as saying “I haven’t been at the center of these actual negotiations. I’ve seen them make real progress.” On a different note, Mr. Secretary was also reported to have said that the US will take every action consistent with its sanctions to prevent Iranian tanker from delivering Oil to Syria. FX implications Given the mixed clues concerning the US-China trade deal from the US lawmakers, investors will keep a tab on commodity-linked currencies while favoring safe-havens like the Japanese Yen (JPY) and Gold. For Oil, trade war keeps weighing on commodities despite the latest draw in the Ameican Petroleum Institute’s (API) inventory draw.

Following recent comments from the US President and the Fed’s Daly, NZD/USD refrains from extending the previous recovery.

NZD/USD fails to carry the previous recovery amid trade tussle, comments from Fed’s Daly and lack of major clues.New Zealand GDT Price Index grew less than prior, WMP rose.Traders remain on sidelines ahead of the key FOMC minutes, Jackson Hole Symposium.Following recent comments from the US President and the Fed’s Daly, NZD/USD refrains from extending the previous recovery as it takes the rounds to 0.6415 at the start of Wednesday’s Asian trading session. The US President Donald Trump reiterated his previous statement of not ready to do a deal with China while adding that someone had to 'take China on' whether it was good or bad for the US in the near-term. Elsewhere, President of the Federal Reserve Bank of San Francisco Mary C. Daly said that she doesn’t think the US is headed for recession while also praising employment status of the world’s largest economy. On the other hand, New Zealand’s Global Dairy Trade (GDT) Price Index declines lesser than -2.6% prior to -0.2% with the whole milk powder (WMP) up 2.1% to US$3100/t. While New Zealand’s July month Credit Card Spending becomes the only second-tier reading to be aware of, investors are eagerly waiting for the Fed’s July month’s meeting minutes to get the near-term market directions. Markets will be particularly interested in details that led the US central bank towards its first rate cut in more than a decade. Following the FOMC, the start of the annual Jackson Hole Symposium will also be the key as global central bankers will appear for their speech on “Challenges for Monetary Policy”. Technical Analysis Prices keep flirting with 0.6400 that holds the key to 0.6377 and the year 2016 bottom close to 0.6348. Alternatively, an eight-day-old descending trend-line around 0.6425 can keep limiting near-term upside, a break of which can trigger fresh recovery towards 0.6470/75 whereas 0.6500 can please buyers then after.

US stocks ended lower while geopolitical and macroeconomics keep the bulls at bay. The Federal Reserve's Jackson Hole Symposium later in the week and

DJIA, dropped 173 points, or 0.7%, to close near 25,962.The S&P 500 fell 0.8% to finish around 2,901.The Nasdaq Composite ended lower by 0.7% at 7,949. US stocks ended lower while geopolitical and macroeconomics keep the bulls at bay. The Federal Reserve's Jackson Hole Symposium later in the week and the FOMC minutes on Wednesday are now a key focus and profits are being swept off the top of these upside corrections - President Donald Trump lambasted the Federal Reserve for failing to slash interest rates.  At the same time, Italy's political situation has come back tot he fore with Prime Minister Giuseppe Conte's resignation following a spat with Matteo Salvini, leader of the League party weighing on risk appetite. The Dow Jones Industrial Average, DJIA, dropped 173 points, or 0.7%, to close near 25,962 while the S&P 500 fell 0.8% to finish around 2,901. The Nasdaq Composite ended lower by 0.7% at 7,949.  Market themes:  Analysts at ANZ Bank note that the US 2-year, 10-year yield curve inverted last week for the first time since 2007, but a swift steepening yesterday may give some investors hope that the US can escape recession. "But if bond traders are telling us that a recession is around the corner, they haven’t been talking to their equity trading colleagues – US equities are only down 3.7% from their all-time highs." DJI levels The DJIA is en route to close the start of the week's opening gap and is back below the 26000s. Bears can target the 50% mean reversion level of the late Dec 2018 swing lows and mid-July swing market highs down in the 24500s.  
 
 
DXY (US Dollar Index) is ending Tuesday just above the 98.10 support level.The levels to beat for bears are at 98.10 and 97.95.  DXY daily chart   DXY (US Dollar Index) trading in a bull trend above its main daily simple moving averages (DSMAs). DXY lost momentum this Tuesday.      DXY 4-hour chart   DXY is retracing below the 98.38 level. A break below 98.11 can lead to further losses towards 97.95 and 97.85 support levels.      DXY 30-minute chart   The Greenback is trading above an upward sloping 200 SMA, suggesting bullish momentum in the short term. However, if the market is unable to surpass the 98.38 resistance, DXY is likely to decline.    Additional key levels  

South Korea Producer Price Index Growth (YoY): -0.3% (July) vs previous 0.1%

South Korea Producer Price Index Growth (MoM): 0% (July) vs -0.3%

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