HotForex Forex News

21:27 EUR/GBP climbs to highest in 8-months after ECB, eyes 0.9000

The euro rose sharply across the board dung Mario Draghi press conference. On American hours consolidated those gains. EUR/GBP move toward 0.9000, reaching 8-month highs. 

EUR/GBP: best day in months 

The pair remained above 0.8830 earlier today and it started to move to the upside before the ECB decision. It climbed above 0.8900 and gained more strength. It broke above July highs and peaked at 0.8978. 

It is at 0.8960, up more than a hundred pips, having the best performance in months. The euro is about to post the highest close since November 1, 2016. 

The rally took place despite better-than-expected UK retail sales data. A report showed a gain of 0.6% in June versus an increase of 0.4% of market consensus. The pound did not benefit from the data. 

UK retail sales rebound sharply in June, a Big beat on expectations

Later came the ECB. The central bank left QE and interests rates unchanged, as expected. Draghi’s press conference strengthened the expectations for a tapering of the purchase program before the end of the year. The introductory statement contained no surprises. Later, he said that the discussions about QE would take place in autumn.

ECB: QE path not defined yet but slower purchases are coming - Danske Bank

Eyes on 0.9000

EUR/GBP is moving with a clear upside bias and today it rose toward a relevant psychological level: the 0.9000 handle. The last time it traded above was two months after the Brexit referendum. 

The bullish outlook is likely to remain intact as long as price hold above 0.8750. To the upside, above 0.9000, the next strong resistance is seen at 0.9030 followed by 0.9070 (Oct 13 high). 


21:26 ECB: a call for a September tapering announcement- Nomura

Analysts at Nomura explained that against their expectations, the ECB maintained its guidance on the asset purchase programme (APP) by stating that “it stands ready to increase the size of the programme in terms of size and/or duration”. 

Key Quotes:

"On balance, we remain comfortable with our view for now that the ECB will announce a tapering plan at the next meeting on 7 September. No clear message from the ECB and President Draghi on the tapering announcement in September may slow the momentum of EUR appreciation, after recording a new high today. However, Mr Draghi’s benign view on the recent EUR appreciation should limit room for retracement, in our view. The latest flow picture also shows an improving medium-term flow picture and thus, we keep our structural bullish view on EUR. 

AUD has touched a multi-year high, and market participants are seemingly willing it to break higher. From a fundamental perspective, we remain of the view that the rally in the AUD/USD is on shaky foundations, and the market looks to be pricing in too much positivity on the AUD side and across broader risk markets. Rather than lean against the current move in spot, which is susceptible to a further near-term squeeze higher, we think optionality is preferable. We enter an AUD/USD 2m 0.7670/0.7530 put spread. 

Finally this week, the BOJ left its policy unchanged as widely expected. The Bank again pushed back the expected timing for reaching its inflation goal to around FY2019, while lowering its inflation forecast broadly from FY2017 to FY2019. The less optimistic inflation forecast should not lead to immediate policy action, but the BOJ needs to keep its current policy framework unchanged for longer as inflation momentum disappoints. BOJ policy normalisation is still a way off, while foreign central banks are embarking on normalisation. Immediate JPY reactions were muted. 

However, into September when the Fed and ECB are expected to communicate the adjustment of their balance sheets, the BOJ’s unaltered dovish stance should gradually support cross yens. Even if foreign yields rise as central banks turn less dovish, the Bank’s commitment to its yield curve control will stay unchanged for now, widening rate differentials."


21:21 Indicators signaling USD/HUF is oversold

While intraday moving averages point at a continued USD/HUF depreciation, the latest momentum readings raise the odds of a minor throwback.

USD/HUF appears primed for a pullback, at least towards overhead resistance established by the 50-period simple moving average. Consistent declines locked RSI below the 50% mark for most of the last 3 weeks.

More noticeable was the recent sell off which led the oscillator plunge below its 25% level. This showed that market participants are keen on selling. In the context of a prolonged down trend, the 4-hour RSI looks now very heavy on the sell side so it could be prone to a squeeze back higher. However, the risks are but still skewed to the downside.

21:17 EUR/USD overextended but making higher highs

EUR/USD has been building up a bearish case of late, and traders may be looking to take some profit off the table.

On a 4-hour chart, the 50-period is well distanced above the 200-period SMA and the Relative Strength Index has been, on average, above the 50% mark over the last three weeks.

The recent attack on highs, coupled with the acceleration of the rally has caused this indicator to enter the overbought zone above 75%. This is a less frequent event in this time frame and is often associated with 5th waves. EUR/USD spot would have to gravitate towards the 50 SMA at a minimum to alleviate immediate upside pressures.

21:13 GBP/USD Bulls are losing momentum

GBP/USD sellers stood their ground and buyers retreated in recent sessions as MACD (26, 12, 9) has fallen off below its median line.

On a 4hr chart, this technical condition may be taken by many trend-following traders as a trigger to liquidate long positions.

The fact that the MACD hasn't been under zero for at least one week of trading, reinforces the argument that room for further GBP/USD depreciation is there.

21:09 EUR/USD exhibits a potential 52-week high

The EUR/USD has been nibbling at the 52-week high today, having pierced that performance metric on an intraday basis.

21:05 EUR/USD: risk of correction lower is high - Danske Bank

Analysts from Danske Bank see downside risk in the EUR/USD pair in the short-term while they see it higher in the long run, targeting 1.18 in a year. 

Key Quotes: 

“The euro generally gained during Draghi’s press conference and EUR/USD still trades in overbought territory, in our view. Hence, we see risks skewed on the downside in the near term. In particular, we note that EUR/USD price actions contrast with European fixed income markets, where, for example, 2Y EUR swap interest rates fell back after the press conference, while EUR/USD remained higher.”

“Our short-term financial models cannot fully explain the move higher in EUR/USD (given lower interest rates). Moreover, positioning and other short-term technical measures such as the RSI also indicate that the risk of correction lower in EUR/USD is high.”

“However, we maintain the view that any dips in EUR/USD are likely to prove short-lived and, strategically, we still like to buy the cross on dips. Longer term, we still see the cross higher, targeting 1.18 in 12M.”


21:05 AUD/USD exhibits a potential 52-week high

The AUD/USD has been nibbling at the 52-week high today, having pierced that performance metric on an intraday basis.

21:03 AUD/JPY exhibits a potential 52-week high

The AUD/JPY has been nibbling at the 52-week high today, having pierced that performance metric on an intraday basis.

20:51 EUR/JPY: can the cross gather further demand on 130 handle despite hourly extended wick?

Currently, EUR/JPY is trading at 129.98, up 0.82% on the day, having posted a daily high at 130.30 and low at 128.78.

ECB: QE path not defined yet but slower purchases are coming - Danske Bank

Following the slightly hawkish ECB that gave the euro a bid, yields may need to await the next ECB meeting to gain another boost higher whilst US yields appear to be consolidating lower, noted analysts at Westpac, adding, "further widening of spreads would give succour to EUR strength.

Mueller expands probe to Trump business transactions - Bloomberg

EUR/JPY has since hit a wall on the 130 handle with an extended wick on the 2pm GMT London hourly stick, often a sign of upside exhaustion. However, in EUR/USD, the underlying bull structure remains with a break of the 2016 1.1616 high and 1.1700  remains compelling should 1.1580 hold. But, for EUR/JPY to make further advances on the session, USD/JPY will need to gather demand in a continuation of the hourly minor correction and the political uncertainty in the US is not doing any favours for the bulls on Wall Street today. 

EUR/JPY levels

Analysts at Commerzbank explained that the market has failed on its initial attempt on the 200-week ma at 130.68 and is easing back from here. "Dips lower should find that the previous May high offers initial support at 125.80, together with the 126.61 uptrend. Initial support is 127.35 the end of June low. Above 130.71/76 targets 134.32/61.8% of the move down from 2014. Where are we wrong near term? The uptrend guards 122.56/40, the 18th May low and the recent low."


20:30 USD/CAD finds support around mid-1.25s as oil rally falters

After dropping to its lowest level in more than 14 months at 1.2545 in the early trading hours of the NA session, the USD/CAD pair reversed course and started to retrace its losses. At the moment, the pair is trading at 1.2580, still losing 0.2% on the day.

The pair's sharp fall in the day was caused by a broad-based greenback sell-off that dragged the US Dollar Index below the 94 mark for the first time in more than a year. A Bloomberg story that claimed US President Donald Trump's business interactions with Russia were going to be included in the election probe kept the investors away from the USD, which was already under pressure amid rising demand for European currencies following Mario Draghi's, the President of the ECB, remarks earlier in the session. As of writing, the DXY is at 94.05, down 0.62% on the day.

On the other hand, the barrel of West Texas Intermediate, which rose to a fresh six week high at $47.75 on the back of another large crude inventory draw in the U.S., lost its momentum in the last hours and is now trading at $47, losing 0.63% on the day. Although this latest drop seems to be a profit-taking move as it was not caused by a fundamental development, it was enough to cap the gains of the commodity-sensitive loonie.

  • IEA’s Atkinson: Oil stocks to fall in H2 and support price

Tomorrow's economic docket will feature retail sales, which is expected to retreat to 0.2% in May from 0.8% in June, and CPI data from Canada. Better-than-expected readings could help the CAD catch some fresh bids before the markets close for the week.

Technical outlook

The pair could encounter the initial support at 1.2500 (psychological level) ahead of 1.2460 (May 3, 2016, low) and 1.2365 (Jun. 2, 2015, low). On the upside, resistances could be seen at  1.2705 (10-DMA), 1.2770 (Jul. 13 high) and 1.2860 (20-DMA). The RSI indicator on the daily graph remains below the 30 mark for the fifth consecutive day, signaling an overdue correction.

 

 


20:25 ECB: QE path not defined yet but slower purchases are coming - Danske Bank

Analysts from Danske Bank, maintain their view that the European Central Bank will continue its QE purchases but at a reduced pace of €40bn per month in the first half of 2018. Now they believe this will be announced at the October meeting. 

Key Quotes: 

“The ECB kept unchanged policy rates, its QE programme, its forward guidance and QE easing bias. Hence, the ECB is still signalling its readiness to increase the size and/or duration of the QE purchases. The unchanged QE easing bias was perceived as dovish, as 47% of economists in a Bloomberg survey had expected the ECB to remove the reference to its readiness to increasing the size of the QE programme.”

“According to President Mario Draghi, the Governing Council was unanimous in setting no precise date for when to discuss changes to the QE programme but argued ‘our discussion should take place in the autumn’. Additionally, Draghi said the ECB has not tasked its staff to look into QE options after December 2017. This suggeststhe ECB is not ready to make an announcement at the September meeting on how QE purchases will continue next year. We maintain our view that the ECB will continue its QE purchases but at a reduced pace of EUR40bn per month in H1 18 and now believe this will be announced at the October meeting (previously September).”

“It will be very interesting to see whether Draghi’s main focus will be on his belief in the Phillips curve (i.e. the economic recovery will eventually lift wage inflation) at Jackson Hole when he is together with other global central bank governors. Given today’s communication, this seems less likely, as he argued the ECB is waiting for more information (including the updated projections in September) but this could change ahead of Jackson Hole.”


19:53 AUD/USD intermarket: bulls regather with 0.8000 on their radars

Currently, AUD/USD is trading at 0.7964, up 0.15% on the day, having posted a daily high at 0.7990 and low at 0.7897.

AUD/USD is back on the offensive again after bears capped the positive job report attempts at the 0.80 handle. The dollar is trailing with a miss in the manufacturing sector and further enquiries into Trump's business affairs:

"According to a recent report by Bloomberg, Special Counsel Robert Mueller, who is investigating the ties between the Donald Trump campaign and Russia in last year’s election, is expanding the probe to look into a broad range of transactions involving Trump’s businesses as well as those of his associates," explained Eren Sengezer, editor at FXStreet. 

Elsewhere, stocks don't like the news and the yen is strong, holding up risk. WTI is also lower although metals are green across the board and supportive of the Aussie. AUD/USD remains on track on the upside while US yields are back below water, down -1.33% at 2.2395% in the benchmark 10-year.

Fundamentally, the labour conditions were also supportive of the Aussie with a robust report and should keep the Aussie bid until next week's CPI data, so long as Guy Debelle,  the Assistant Governor (Financial Markets) at the Reserve Bank of Australia, doesn't throw a spanner in the bull's works. 

Aussie labour conditions:

  • Total employment: 14.0k from 38.0k (revised from 42k)
  • Unemployment rate: 5.6% from 5.6% (revised 5.5%)
  • Participation rate: 65 from 64.9 (unrevised 64.9).

"A further sign of the overall strength of this report was the 0.5% lift in hours worked following the 1.7%mth jump in May. The annual pace for total hours worked lifted to 3.3%yr which is the fastest pace seen since Dec 2015," explained analysts at Westpac.

Australia: Great news continues for employment - TDS

AUD/USD levels

AUD/USD has eroded the top of its converging range and surged higher and analysts at Commerzbank noted that the commodity currency eroded its initial key resistance at the 0.7836/50 2016 high and Fibo. "The market is poised to encounter the 0.8018 200 week ma and then the .8162/66 May 2015 peak and 50 % retracement," the analysts argued, adding, " ... very near term, there is a 13 count on the daily chart and a TD perfected set up and we would prefer to buy the dips."
 


19:51 British Chambers of Commerce: Govt. needs to avoid abrupt departure from bloc

 Britain's Chambers of Commerce (BCC), an employers group, in a discussion with Prime Minister Theresa May on Thursday said that the government needs to engage in sustained and structured discussions with business over Brexit and avoid an abrupt departure from the bloc.

Key quotes (via Reuters):

  • BCC: After meeting with PM May, we need a sustained and structured discussion with business on the dozens of practical, real-world questions due to Brexit,
  • BCC: Starting discussions on transition Brexit arrangements as soon as possible would go a long way to boost business confidence
  • BCC Pres. Francis Martin: The prospect of multiple, costly, adjustments to trading conditions is a concern for many

19:36 GBP/USD fails to recover losses on EUR/GBP upsurge

The GBP/USD pair, which fell to a fresh weekly low at 1.2932 during the first half of the NA session, tried to take advantage of the greenback weakness but lost its momentum before moving into the positive territory. At the moment, the pair was trading at 1.2975, losing 0.4% on the day.

Although the US Dollar Index plummeted to its lowest level in more than a year below the 94 mark on recent developments that ignited the political concerns in the U.S., the GBP/USD pair couldn't gather enough momentum to surpass the 1.30 handle. A recent report by Bloomberg claimed that Special Counsel Robert Mueller, who was warned by US President Donald Trump not to go beyond Russia in the probe, is looking to expand his investigation to include Trump's business transactions in Russia. 

  • US Dollar breaks below 94.00, fresh 2017 lows

On the other hand, ECB President Draghi's hawkish statements today, which strengthened the expectations for a QE tapering towards the end of the year, allowed the shared currency to rise sharply against its rivals, pushing the EUR/GBP pair to its highest level in more than 8 months at 0.8970 and hurting the overall market interest for the cable. 

  • ECB's Draghi flags QE tapering talks in autumn

Tomorrow's economic calendar won't be offering any significant data, leaving the pair at the mercy of its inverse correlation with the EUR/GBP pair in the short-term. 

Technical outlook

With today's retreat, the pair is headed for its first daily close below the 1.30 mark in a week, suggesting that the bearish momentum could become sustainable. 1.2930 (Fib. 23.6% retracement of 21 - 30 June rise) could be seen as the initial support ahead of 1.2865 (50-DMA) and 1.2800 (100-DMA). On the upside, resistances align at 1.3000 (psychological level), 1.3050 (Jul. 19 high) and 1.3125 (Jul. 18 high).

  • GBP/USD bearish near term – Scotiabank

19:06 USD/JPY hits 3-week lows as yields drop further

USD/JPY failed earlier to hold above 112.00 and recently turned sharply to the downside after the ECB meeting and particularity following a Bloomberg report regarding an investigation on Trump’s businesses. 

Mueller expands probe to Trump business transactions - Bloomberg

The pair fell from 112.10 to 111.47, reaching the lowest level since June 26. The bearish pressure intensified amid a decline in US yields. The 10-year dropped to 2.243%, also the lowest in three weeks. In Wall Street, the Dow Jones that opened higher was falling 0.20%. 

The reversal in the trend in Wall Street and in the bond market took place after news about expanding Russia probe to Trump’s business transactions. The Dollar Index fell from a three day low near 95.00, to 93.85, a fresh 1-year low. Recent price action ended abruptly a recovery that was in place in the DXY and also in the USD/JPY pair. 

USD/JPY Levels to watch 

To the downside, support levels might be located at 111.40 (Jun 16 high), 110.90 (Jun 22 low) and 110.60 (Jun 16 low). On the upside, resistance is now seen at 111.85, 112.00/05 (20-hour moving average) and 112.40 (daily high). 


19:03 EUR/CHF powerful rally threated

From an hourly perspective, the EUR/CHF has reached its highest momentum reading of the last 20 days of trading.

Recent EUR/CHF longs are speculative and likely vulnerable. Unless they are fed with comforting releases, a torrent of selling could very well ensue in the form of profit taking and/or forced liquidation.

With the fresh printed hourly MACD showing less acceleration, the prospect for a base building or correction in the near future looks to be quite realistic.

18:39 Eurozone: ECB forcing a calm summer - ING

"With the QE easing bias staying in place, no inflationary pressures and no changes in the official language, the ECB seems in no rush to taper. First tapering discussion in September; at the earliest," Carsten Brzeski Chief Economist at ING, explains.

Key quotes:

"It seems as if the one and only goal of today’s ECB meeting was to calm financial markets and recent tapering speculations, which some even labelled a light version of taper tantrum. There were no changes to interest rates and even more important there were also no changes to the easing bias on QE or any other key phrases of the official communication. In fact, the introductory statement was almost a verbatim copy of the one from the last meeting in June."

"In short, the ECB still sees an improving momentum of the Eurozone recovery, but without inflationary pressures or wage increases. Risks to the economic outlook are still balanced and the outlook for inflation still has not received any risk assessment."

"As regards the recent taper discussion, ECB president Mario Draghi tried to talk it down. In its official communication, the ECB sounded already as dovish as possible by keeping one of the key sentences, on the QE easing bias, in place by repeating that “the Governing Council stands ready to increase the programme in terms of size and/or duration”. Also, Draghi reiterated his last four key words of “confidence”, “persistence”, “patience” and “prudence”. Even more important, Draghi said that the Governing Council had been unanimous in the decision not to change the forward guidance and also in the decision not to set a precise data in the future to discuss possible changes to the ECB’s monetary policy stance. However, Draghi said that the Governing Council will discuss the future of QE in Fall. Sounds exciting but is also obvious given that QE would expire in December if the ECB does not decide differently. In this context, it was interesting that the ECB did not re-use the phrase from the Sintra speech referring to an adjustment of the parameters of QE to keep a constant monetary stance when the economy continues to recover. In our view, this phrase could still be the best justification of any future tapering but apparently it is – yet – too complicated for some market participants."

"Looking ahead, we feel confirmed in our current base case scenario that the ECB will task its working committees to investigate several options for tapering in September, before deciding on “lower for longer” starting in January 2018 at the October or December meeting. Still, today’s press conference also showed how difficult the ECB’s life currently is. Fine-tuning its monetary policy in a world without inflation but with a cyclical recovery is not an easy one. Those were the days when the ECB did not have to talk about confidence, persistence, patience, prudence, not transitory, core inflation and wages as lynchpin. Back in the good old day, the ECB only had a single-needed compass…"

"With today’s press conference, ECB president Draghi clearly wanted to put the Sintra dogs back on the leash. It was an attempt to force a calm summer in financial markets by stopping and even rewinding latest taper speculations. Tapering will come but path towards the tapering announcement will be extremely gradual, as the ECB does not want to distort markets. Draghi today tried to give the ECB, financial markets and ECB watchers some quiet summer weeks to reflect and digest."
 


18:35 Gold leaps to 20-day high on USD sell-off

The ounce troy of the precious metal ran through fresh bids in the NA session and gained more than $7 in a matter of minutes, pushing the XAU/USD pair to its highest level since June 30 at $1247.30. As of writing, the pair is trading at $1246, up 0.4% on the day.

The pair's upsurge was fueled by a broad-based USD sell-off that was triggered by a Bloomberg report that suggested Special Counsel Robert Mueller, who is in charge of the investigation of ties between the Donald Trump campaign and Russia in last year’s election, was expanding the probe to include US President Donald Trump's and some of his associates' business transactions. Following the report, the US Dollar Index slumped to its lowest level in 13 months at 93.89 and was last seen at 94.03, losing 0.65% on the day.

  • Mueller expands probe to Trump business transactions - Bloomberg

Furthermore, the risk appetite seems to have lost its effect on the markets, ramping up the demand for safe havens such as the precious metal. After setting intraday record highs during the opening hours of the session, major equity indexes in the U.S. reversed course with the Dow Jones Industrial Average and S&P 500 indexes both losing around 0.2%.

With a relatively light economic docket on Friday, market sentiment and the DXY's fluctuations could continue to drive the pair's price action. 

Technical outlook

With today's rise, the RSI indicator on the daily graph for the pair started to move towards the 70 mark, suggesting that the bullish momentum is building up. The initial resistance for the pair could be seen at $1250 (50-DMA) ahead of $1259 (Jun. 23 high) and $1266 (Jun. 15 high). On the downside, supports align at $1230 (20-DMA), $1226 (200-DMA) and $1215 (Jul. 14 low). 

 


18:11 USD/CHF tumbles to 1-year lows on Trumps businesses investigation

USD/CHF reversed from 2-day highs at 0.9620 during Draghi’s press conference and recently tumbled, hitting levels under 0.9500 after Bloomberg reported that the special council Muelle is examining the dealings of Trump, Kushner and Manafort. The US dollar dropped sharply across the board and gold soared after that report. 

The pair was already moving to the downside following ECB events but accelerated after the report. 

Mueller expands probe to Trump business transactions - Bloomberg

USD/CHF testing 0.9500

The pair bottomed at 0.9492, the lowest since May 3, 2016. Then bounced back above 0.9500. It is trading at 0.9515/20, still under pressure and near the 2016 low (0.9443). 

The area where the pair is now is relevant from a technical perspective. It is a strong support and a significant close below, would signal a continuation of the slide. The next two long-term supports could be seen at 0.9200/20 and 0.9000. 

EUR/CHF back at July highs 

Despite rising again the US dollar, the Swiss franc is down against the euro. EUR/CHF reached 1.1075, the highest level in a year and currently trades at 1.1065/70, having the best day in months. 


17:59 Mueller expands probe to Trump business transactions - Bloomberg

According to a recent report by Bloomberg, Special Counsel Robert Mueller, who is investigating the ties between the Donald Trump campaign and Russia in last year’s election, is expanding the probe to look into a broad range of transactions involving Trump’s businesses as well as those of his associates.

Key quotes:

  • Special counsel examines dealings of Kushner, Manafort, Trump
  • Trump has warned Mueller against going beyond Russia in probe
  • Agents are also interested in dealings with the Bank of Cyprus, where Wilbur Ross served as vice chairman before he became commerce secretary

17:50 EUR/USD skyrockets to highest level since August 2015 above 1.16

After easing to 1.1480 following the ECB's decision to keep its monetary policy unchanged, the EUR/USD pair caught a fresh buying wave as the ECB President Draghi adopted a hawkish tone during the press conference and reached its highest level in nearly 23 months at 1.1660. As of writing, the pair is trading at 1.1653, up 1.21% on the day.

Draghi reiterated that the underlying inflation was yet to show a convincing sign of a pickup, but he also argued that factors holding back the inflation would last for some time though they were not permanent. Although his introductory statement didn't include any major surprises, he finally suggested a timetable for discussing the QE tapering, which markets took as a sign towards a possible policy change at the end of the year. According to Draghi, policymakers would start discussing potential changes to the QE program in the autumn. 

  • ECB's Draghi flags QE tapering talks in autumn

On the other hand, the US Dollar Index came under a renewed selling pressure on reviving political turmoil in the U.S. According to a recent Bloomberg story, "the U.S. special counsel investigating possible ties between the Donald Trump campaign and Russia in last year’s election is examining a broad range of transactions involving Trump’s businesses as well as those of his associates, according to a person familiar with the probe." At the moment, the DXY is testing the 94 handle for the first time since June of 2016.

Technical outlook

1.1713 (Aug. 24, 2015, high) is the next target for the pair and in case this level is broken, the pair could aim for 1.1790 (Jan. 15, 2015, high) and 1.1870 (Jan. 11, 2015, high). On the downside, supports could be seen at 1.1616 (former resistance), 1.1500 (psychological level) and 1.1440 (20-DMA). 

 


17:48 US Dollar breaks below 94.00, fresh 2017 lows

The selling pressure around the greenback is now picking up extra pace, dragging the US Dollar Index (DXY) to fresh lows in the sub-94.00 area.

US Dollar weaker on Trump’s headline

The buck tumbled further after special counsel Robert Mueller said on Thursday he will expand probe into Trump’s business transactions, quickly dragging the index to test fresh lows near 93.90, levels last traded over a year ago.

USD has broken below Tuesday’s previous YTD lows in the vicinity of 94.20 soon after the headlines hit the wires, forcing at the same time yields of the US-10 year reference to pierce 2.25%.

DXY was already weak following the hawkish remarks from ECB’s Mario Draghi at his press conference earlier today, fully fading initial gains to the 94.70/75 band.

US Dollar relevant levels

The index is losing 0.66% at 94.02 and a break below 93.41 (low Jun.8 2016) would open the door to 93.03 (low Jun.23 2016) and then 91.88 (2016 low May 3). On the upside, the next hurdle emerges at 94.74 (high Jul.20) seconded by 95.01 (10-day sma) and finally 96.64 (21-day sma).


17:33 United States EIA Natural Gas Storage change came in at 28B, below expectations (32B) in July 14


17:13 EUR/SEK momentum is supportive for attempt higher

On the 4hr EUR/SEK chart, the MACD has moved above zero making the near-term structure supportive for an attempt higher.

Such a momentum indication, unseen for at least for 30 periods, indicates that key price breaks are on the horizon. There is a real threat of EUR/SEK rate moving now considerably higher as buyers may get aggressive in the short term.

17:11 Flash estimate of the consumer confidence decreased slightly in the euro area

"In July 2017, the DG ECFIN flash estimate of the consumer confidence indicator remained broadly flat in the EU (-0.1 points to -2.3) and decreased slightly in the euro area (-0.4 points to -1.7) compared to June," announced the European Commission on Thursday.


17:10 S&P, Nasdaq hit yet another intraday record highs

US stocks traded with mild positive bias during the early hour of trading on Thursday, with both the S&P and Nasdaq hitting fresh intraday record highs immediately after the opening bell.

Rising oil prices supported energy shares, while persistent signs of underlying strength in the US labor market, as depicted by a sharp drop in weekly jobless claims, contributed towards the prevalent buoyant investors' sentiment. 

The gain, however, remained muted as investors continue to monitor the incoming earnings report in order to justify current high valuations and record setting rally since last November. 

At the time of writing, the Dow Jones Industrial Average was flat-lined near yesterday's closing level around 21,640, while the broader S&P 500 Index added 2-points to 2,476. Meanwhile, tech-heavy Nasdaq Composite Index climbed over 4-points and inched closer to the 6,400 mark.
 


17:09 EUR/USD posts 52 week high

EUR/USD has posted a fresh 52-week high.

EUR/USD is trading at it highest level in 52 weeks, having pierced the psychological barrier on an intraday basis.

17:07 US: Conference Board Leading Economic Index increased 0.3% in May to 127

"The Conference Board Leading Economic Index for the U.S. increased 0.3 percent in May to 127.0, following a 0.2 percent increase in April, and a 0.4 percent increase in March," announced the Conference Board on Thursday. 

Key quotes from Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board:

  • The U.S. LEI continued on its upward trend in May, suggesting the economy is likely to remain on, or perhaps even moderately above, its long-term trend of about 2 percent growth for the remainder of the year
  • The improvement was widespread among the majority of the leading indicators except for housing permits, which declined again. And, the average workweek in manufacturing has recently shown no sign of improvement

17:06 AUD/USD exhibits a potential 52-week high

The AUD/USD has been nibbling at the 52-week high today, having pierced that performance metric on an intraday basis.

17:05 WTI eyes $48.00 as rally stays unabated

The price of the barrel of the American benchmark for the sweet light crude oil is extending its march north during the second half of the week, now testing highs in the $47.70/80 band.

WTI in fresh 6-week tops

Prices for the WTI keeps the weekly up trend well and sound so far on Thursday following a now renewed and strong selling interest around the greenback.

In fact, USD faded the initial up tick following the unexpected hawkish bias from Draghi at his press conference earlier in the day. Recall that the ECB left the monetary conditions in the euro bloc unchanged for yet another month.

WTI is also deriving support from the recent larger-than-expected decrease in US crude oil supplies, as reported yesterday by the DoE.

However, concerns over the supply glut remains alive, as the EIA reported another increase in US oil production, all amidst increasing jitters over the ability of the OPEC output cut deal to re-balance de markets.

Focus will now shift to the US oil rig count by driller Baker Hughes to be published tomorrow and the meeting between key OPEC producers and Russian on July 24.

WTI levels to consider

At the moment the barrel of WTI is gaining 0.54% at $47.53 and a break above $48.16 (100-day sma) would aim for $48.20 (61.8% Fibo of the May-June decline) and finally $49.52 (200-day sma). On the other hand, the next support is located at $45.85 (38.2% Fibo of the May-June decline) seconded by $45.81 (low Jul.18) and finally $45.50 (21-day sma).


17:02 AUD/JPY posts 52 week high

AUD/JPY has posted a fresh 52-week high.

AUD/JPY is trading at it highest level in 52 weeks, having pierced the psychological barrier on an intraday basis.

17:02 European Monetary Union Consumer Confidence came in at -1.7, below expectations (-1.1) in July


16:56 ECB s Draghi flags QE tapering talks in autumn

In his speech following the monetary policy decisions, Mario Draghi, President of the ECB, said that policymakers would start discussing potential changes to the QE program in the autumn. Although Draghi made it clear that today's decision to keep the guidance unchanged was unanimous and he didn't ask the staff to start making preparations, markets took today's remarks as a sign towards a possible tightening move later this year. Draghi further added that the Sintra speech and July decisions were not very different and they would first and foremost look at inflation data in autumn decisions.


16:53 NZD/USD bullish above 0.7405 UOB

FX Strategists at UOB Group argued that the pair should shift to a bullish outlook on a close above 0.7405.

Key Quotes

“The whipsaw in NZD yesterday was clearly unexpected. The sharp drop to a low of 0.7261 and the subsequent rapid swing higher that edged above last week’s 0.7369 high has resulted in a mixed outlook (high has been 0.7373)”.

“The strong daily closing lends a positive note to this pair but we are not convinced that any further up-move can be sustained”.

“We prefer to stay neutral for now and wait for a NY closing above 0.7405 before turning bullish. The odds for such a move are not high at this stage but would continue to increase as long as this pair can continue to hold above 0.7300 in the next few days”.


16:46 GBP/USD bearish near term Scotiabank

Chief FX Strategist at Scotiabank Shaun Osborne argued Cable could slip back to the mid/low-1.2800s in the near term.

Key Quotes

“The UK reported stronger than expected retail sales date for last month, rising 0.9% against expectations of a 0.5% advance. The numbers represented something of a rebound after the weak May report (-1.5%), however, and were driven by summer clothing sales. Our UK economist does not think the data move the needle significantly for the UK economy overall and, therefore, we do not think the BoE rate hawks will see the data as especially supportive of their decision. Sterling rose briefly on the data but failed to hold 1.30+ levels and spent the remainder of the London trading session on the defensive. Deutsche Bank’s CEO said the bank is preparing for a “hard Brexit” and will move the “vast majority” of assets and some jobs to Frankfurt”.

“After trading positively last week, the pound is more defensive now. Cable has traded heavily since the start of the week following a firm rejection of the 1.31 area on Monday (outside day reversal); the GBP risks perhaps retesting the low/mid 1.28s (mid-Jul low at 1.2816) before stabilizing”.


16:44 USD/CHF surrenders majority of early strong gains

A fresh wave of greenback selling interest emerged during early NA session, with the USD/CHF pair retreating over 50-pips from session tops to currently trade around 0.9565-60 region.

The US Dollar surrendered all of its early gains closer to the 95.00 handle and the reversal was primarily driven by a sharp uptick in the shared currency following hawkish remarks by the ECB President Mario Draghi. The spillover effect contributed towards stalling the pair's ongoing recovery move from one-year lows.

   •  US Dollar plummets to lows near 94.50

Meanwhile, the market seems to have largely ignored a larger-than-expected drop in the weekly jobless claims data from the US, which to some extent seems to have been negated by disappointing Philly Fed manufacturing index.

It would now be interesting to see if the pair is able to defend an immediate support near mid-0.9500s amid prevalent risk-on environment, which tends to dent the Swiss Franc's safe-haven appeal.

Reemergence of selling pressure on any meaningful recovery attempts clearly seems to suggest that the pair's near-term downward trajectory could still be far from over. 

   •  USD/CHF: Strong downside potential - Natixis

Technical levels to watch

Weakness below mid-0.9500s could get extended towards yearly lows support near 0.9530-25 region before the pair eventually drops to the key 0.95 psychological mark. On the flip side, sustained recovery back above the 0.9600 handle might now trigger a short-covering rally towards 0.9655 intermediate resistance ahead of the next major hurdle near 0.9675-80 region.
 


16:28 Philly Fed: Manufacturing activity grew at a slower pace in July

"Manufacturing activity in the region continues to grow but at a slower pace, according to results from the July Manufacturing Business Outlook Survey," said the Federal Reserve Bank of Philadelphia on Thursday.

Key quotes:

  • The survey’s six-month indicators remained positive this month, with firms generally expecting growth to continue
  • The diffusion indexes for general activity, new orders, shipments, employment, and work hours remained positive but fell from their readings in June
  • More than one-third of the manufacturers expect to add to their payrolls over the next six months

16:21 Draghi Speech: Need to be patient, not change the objective

Mario Draghi, President of the ECB, is responding to questions from the press, with key headlines, via Reuters, found below:

  • Need to be patient, not change the objective
  • Even discussing changing cpi target would be destabilizing
  • Decision on QE will not be triggered by ‘one data point’

Key notes:

EUR/JPY surges to 130.00 mark on not so dovish Draghi

Having refresh session lows near 128.78 level post-ECB announcement, the EUR/JPY cross caught some strong bids and has now jumped to fresh session tops.

EUR/USD gets some oxygen from Draghi, around 1.1560

The single currency is rebounding from daily lows near 1.1480 vs. the greenback, with EUR/USD now in the 1.1560 area as Draghi’s press conference is under way.

ECB's press conference

Following the ECB´s economic policy decision, the ECB President gives a press conference regarding monetary policy. His comments may influence the volatility of EUR and determine a short-term positive or negative trend. His hawkish view is considered as positive, or bullish for the EUR, whereas his dovish view is considered as negative, or bearish.


16:14 Draghi Speech: Will first and foremost look at inflation in autumn decisions

Mario Draghi, President of the ECB, is responding to questions from the press, with key headlines, via Reuters, found below:

  • Will first and foremost look at inflation in autumn decisions
  • Did not ask staff to prepare options
  • No discussion on action in September
  • Why banks picked 2 pct target for CPI are still valid

Key notes:

EUR/JPY surges to 130.00 mark on not so dovish Draghi

Having refresh session lows near 128.78 level post-ECB announcement, the EUR/JPY cross caught some strong bids and has now jumped to fresh session tops.

EUR/USD gets some oxygen from Draghi, around 1.1560

The single currency is rebounding from daily lows near 1.1480 vs. the greenback, with EUR/USD now in the 1.1560 area as Draghi’s press conference is under way.

ECB's press conference

Following the ECB´s economic policy decision, the ECB President gives a press conference regarding monetary policy. His comments may influence the volatility of EUR and determine a short-term positive or negative trend. His hawkish view is considered as positive, or bullish for the EUR, whereas his dovish view is considered as negative, or bearish.


16:11 US Dollar plummets to lows near 94.50

Gauged by the US Dollar Index (DXY), the buck has lost its initial optimism and has now returned to the red territory in the mid-94.00s.

US Dollar gains capped near 95.00

After advancing to the vicinity of the key level around 95.00 the figure, the greenback has given away those gains and retreated to the 94.50 region following unexpected hawkish remarks by President M.Draghi at his press conference following the decision by the ECB to keep its status quo unchanged today.

USD picked up extra downside pressure after Draghi suggested the Council could debate any QE-related theme in Autum, while he also noted that the repricing of the European currency has received some attention.

On the US data front, the Philly Fed manufacturing index disappointed expectations at 19.5 in July, down from June’s 27.6. Further US data saw initial claims coming in at 233K WoW, taking the 4-week average to 243.75K from 246.00K.

US Dollar relevant levels

The index is losing 0.07% at 94.57 and a break below 94.27 (2017 low Jul.18) would open the door to 94.20 (low Aug.26 2016) and then 94.05 (low Aug.18 2016). On the upside, the next hurdle emerges at 95.16 (10-day sma) seconded by 95.67 (21-day sma) and finally 96.25 (high Jul.5). On the flip side,


16:03 Russia Central Bank Reserves $: $412.6B vs $410.9B


16:03 EUR/JPY surges to 130.00 mark on not so dovish Draghi

Having refresh daily lows near 128.78 level post-ECB announcement, the EUR/JPY cross caught some strong bids and has now jumped to fresh session tops.

The cross surged over 100-pips to the key 130.00 psychological mark after the ECB President Mario Draghi, during his opening statement at the post-meeting press conference, was noted saying that the incoming data confirms strengthening of the Euro-zone economy and has been broadening. 

   •  Draghi Speech: Monetary policy has continued to secure very favourable financing conditions needed

Markets, however, seemed unaffected by Draghi's cautious remarks that measures of underlying inflation have yet to show convincing signs of a pickup and that the vote for no changes to forward guidance was unanimous. 

   •  Draghi Speech: Unanimous in choosing no change to guidance

Looking at the broader picture, the cross has broken through the six-day old trading range and hence, a follow through short-covering, leading to an extension of the pair's strong up-move, now seems a distinct possibility.

Technical levels to watch

Sustained momentum beyond the 130.00 handle now seems to lift the cross towards 130.30-35 intermediate resistance en-route yearly tops hurdle near 130.75-80 region.

On the flip side, any pull-back now seems to find immediate support near 129.50-45 region, below which the cross could turn vulnerable to head back towards retesting sub-129.00 level.
 


16:00 Draghi Speech: Factors holding back inflation will last for some time, not permanent

Mario Draghi, President of the ECB, is responding to questions from the press, with key headlines, via Reuters, found below:

  • Sintra speech and July decisions are not very different
  • Factors holding back inflation will last for some time, not permanent
  • Confident that programme can continue smoothly
  • Up to Greek government to decide to tap markets in bond issue
  • There has been serious progress in place in Greece
  • Issuance should be part of overall strategy, which includes completion review

Key notes:

EUR/GBP at daily tops near 0.8900 as ECB presser gets underway

The EUR/GBP cross once again met with some fresh supply near the 0.8900 handle and retreated around 30-pips post-ECB announcement. As the ECB presser got underway, the cross quickly spiked back to session tops, albeit remained marginally below the 0.8900 handle. 

EUR/USD gets some oxygen from Draghi, around 1.1560

The single currency is rebounding from daily lows near 1.1480 vs. the greenback, with EUR/USD now in the 1.1560 area as Draghi’s press conference is under way.

ECB's press conference

Following the ECB´s economic policy decision, the ECB President gives a press conference regarding monetary policy. His comments may influence the volatility of EUR and determine a short-term positive or negative trend. His hawkish view is considered as positive, or bullish for the EUR, whereas his dovish view is considered as negative, or bearish.


15:54 EUR/USD gets some oxygen from Draghi, around 1.1560

The single currency is rebounding from daily lows near 1.1480 vs. the greenback, with EUR/USD now in the 1.1560 area as Draghi’s press conference is under way.

EUR/USD bid above 1.1500

The bullish tone has returned to the European currency today following the press conference by President Draghi after the European Central Bank left unchanged its monetary policy, broadly in line with market expectations.

EUR stays bid after Draghi said inflation pressures, including wages, remain subdued, while headline inflation is expected to be volatile in coming months. Draghi also added that downside risks to the outlook are due mainly to global factors.

Draghi said the decision to keep the monetary policy was unanimous today, although the Council is expected to debate on the subject in the European autumn.

EUR/USD levels to watch

At the moment, the pair is up 0.64% at 1.1563 and a breakout of 1.1585 (high Jul.18) would target 1.1616 (2016 high May 3) en route to 1.1713 (monthly high Aug.24). On the flip side, the immediate support lies at 1.1462 (10-day sma) followed by 1.1391 (21-day sma) and finally 1.1369 (low Jul.13).

 


15:53 Draghi Speech: Won t comment on market reactions

Mario Draghi, President of the ECB, is responding to questions from the press, with key headlines, via Reuters, found below:

  • Won't comment on market reactions
  • Inflation not where it should be
  • After a long time, experiencing robust recovery and only have to wait for prices and wages to move to objective
  • Last thing ECB wants is unwarranted tightening of financial conditions
  • Has given enough evidence that it has the necessary flexibility

Key notes:

No rush to taper as ECB keeps QE easing bias - ING

According to the latest monetary policy decision, the ECB is staying on the dovish side and does not seem to be in a hurry to move towards tapering, notes Carsten Brzeski, Chief Economist at ING.

EUR/GBP at daily tops near 0.8900 as ECB presser gets underway

The EUR/GBP cross once again met with some fresh supply near the 0.8900 handle and retreated around 30-pips post-ECB announcement. As the ECB presser got underway, the cross quickly spiked back to session tops, albeit remained marginally below the 0.8900 handle. 

ECB's press conference

Following the ECB´s economic policy decision, the ECB President gives a press conference regarding monetary policy. His comments may influence the volatility of EUR and determine a short-term positive or negative trend. His hawkish view is considered as positive, or bullish for the EUR, whereas his dovish view is considered as negative, or bearish.


15:49 Draghi Speech: Unanimous in choosing no change to guidance

Mario Draghi, President of the ECB, is responding to questions from the press, with key headlines, via Reuters, found below:

  • Unanimous in choosing no change to guidance
  • Were unanimous in setting no precise date for when to discuss QE changes
  • Discussions should take place in autumn
  • Financing conditions remain broadly supportive
  • L-T yields still low
  • Euro repricing received some attention

Key notes:

No rush to taper as ECB keeps QE easing bias - ING

According to the latest monetary policy decision, the ECB is staying on the dovish side and does not seem to be in a hurry to move towards tapering, notes Carsten Brzeski, Chief Economist at ING.

EUR/GBP at daily tops near 0.8900 as ECB presser gets underway

The EUR/GBP cross once again met with some fresh supply near the 0.8900 handle and retreated around 30-pips post-ECB announcement. As the ECB presser got underway, the cross quickly spiked back to session tops, albeit remained marginally below the 0.8900 handle. 

ECB's press conference

Following the ECB´s economic policy decision, the ECB President gives a press conference regarding monetary policy. His comments may influence the volatility of EUR and determine a short-term positive or negative trend. His hawkish view is considered as positive, or bullish for the EUR, whereas his dovish view is considered as negative, or bearish.


15:46 Australia: Labour market data show hours worked are picking up fast - HSBC

Paul Bloxham, Chief Economist at HSBC, notes that the Australia’s labour market headline figures were largely in line with the market expectation as the employment rose by 14k jobs in June (market had 15k) and the unemployment rate was 5.6% (in line with the market).

Key Quotes

“The surprise was the full-time/part-time split, which was much more positive than expected, with the survey showing strong full-time job creation. As a result, the hours worked numbers rose by a strong 3.3% y-o-y (up from -0.5% y-o-y just four months ago). It is now clear that the official labour force survey is now telling us that spare capacity is quickly being absorbed, much as the other measure of the labour market, such as job advertisements and the business surveys, have been telling us for some time.”

“We see this, along with the lift in corporate profits and the minimum wage, as likely to support a pick-up in wages growth in H2 2017. We expect the RBA to lift its cash rate in Q1 2018.”


15:42 Draghi Speech: Downside risks relate to global factors

Mario Draghi, President of the ECB, continues to make comments on monetary policy, with key headlines, via Reuters, found below:

  • Cyclical momentum raises chances of stronger upswing
  • Downside risks relate to global factors
  • Headline inflation likely to remain at current levels in coming months
  • Underlying inflation yet to show convincing sign of pick up
  • Underlying inflation to rise only gradually

 

Key notes:

No rush to taper as ECB keeps QE easing bias - ING

According to the latest monetary policy decision, the ECB is staying on the dovish side and does not seem to be in a hurry to move towards tapering, notes Carsten Brzeski, Chief Economist at ING.Read more

EUR/GBP at daily tops near 0.8900 as ECB presser gets underway

The EUR/GBP cross once again met with some fresh supply near the 0.8900 handle and retreated around 30-pips post-ECB announcement. As the ECB presser got underway, the cross quickly spiked back to session tops, albeit remained marginally below the 0.8900 handle. Read more

ECB's press conference

Following the ECB´s economic policy decision, the ECB President gives a press conference regarding monetary policy. His comments may influence the volatility of EUR and determine a short-term positive or negative trend. His hawkish view is considered as positive, or bullish for the EUR, whereas his dovish view is considered as negative, or bearish.


15:41 EUR/GBP at daily tops near 0.8900 as ECB presser gets underway

The EUR/GBP cross once again met with some fresh supply near the 0.8900 handle and retreated around 30-pips post-ECB announcement. As the ECB presser got underway, the cross quickly spiked back to session tops, albeit remained marginally below the 0.8900 handle. 

The shared currency weakened across the board after the European Central Bank (ECB) left its benchmark interest rates unchanged and said that QE tapering won't start until December. Meanwhile, the governing council reiterated its readiness to increase the bond purchase program in terms of size and/or duration, if needed, and foresee rates at the current level for extended period of time. Market players seemed disappointed as the ECB delivered little new to encourage bulls and an apparent shift from recent hawkish rhetoric to a dovish stance. 

   •  Draghi Speech: Monetary policy has continued to secure very favourable financing conditions needed

   •  Draghi Speech: Headline inflation dampened by energy prices

The cross, however, has managed to hold in positive territory for the third trading session in the previous four amid heavily offered tone surrounding the British Pound. Traders shrugged off today's upbeat UK retail sales data, while uncertainty surrounding the ongoing Brexit negotiations once again starting to take a toll on the Sterling. 

Technical levels to watch

On a sustained move beyond the 0.8900 handle, the cross is likely to aim towards testing recent daily closing highs resistance near 0.8925 level before eventually darting towards yearly tops resistance near mid-0.8900s.

Alternatively, sustained weakness below 0.8860 level could drag the cross back towards session lows support near 0.8835-30 region en-route the 0.8800 handle.


15:40 Draghi Speech: Headline inflation dampened by energy prices

Mario Draghi, President of the ECB, continues to make comments on monetary policy, with key headlines, via Reuters, found below:

  • Headline inflation dampened by energy prices
  • Very substantial degree of accommodation still needed
  • Global recorvery supporting euro zone exports
  • Global recovery should lend support to trade
  • Sluggish reforms dampen growth prospects

Key notes:

No rush to taper as ECB keeps QE easing bias - ING

According to the latest monetary policy decision, the ECB is staying on the dovish side and does not seem to be in a hurry to move towards tapering, notes Carsten Brzeski, Chief Economist at ING.Read more

EUR/JPY muted around 129.00 handle post ECB announcement

The EUR/JPY cross surrendered all of its early tepid gains and dropped to the lower end of daily trading range post-ECB decision. Read more

ECB's press conference

Following the ECB´s economic policy decision, the ECB President gives a press conference regarding monetary policy. His comments may influence the volatility of EUR and determine a short-term positive or negative trend. His hawkish view is considered as positive, or bullish for the EUR, whereas his dovish view is considered as negative, or bearish.


15:38 Draghi Speech: Monetary policy has continued to secure very favourable financing conditions needed

Mario Draghi, President of the ECB, is giving his remarks on the monetary policy decisions, with key headlines, via Reuters, found below:

  • Monetary policy has continued to secure very favourable financing conditions needed
  • Economic expansion continues to expand in euro zone economy
  • Risks to growth outlook broadly balanced
  • Growth yet to translate into stronger inflation dynamics
  • Measures of underlying inflation subdued
     

Key notes:

No rush to taper as ECB keeps QE easing bias - ING

According to the latest monetary policy decision, the ECB is staying on the dovish side and does not seem to be in a hurry to move towards tapering, notes Carsten Brzeski, Chief Economist at ING.Read more

EUR/JPY muted around 129.00 handle post ECB announcement

The EUR/JPY cross surrendered all of its early tepid gains and dropped to the lower end of daily trading range post-ECB decision. Read more

ECB's press conference

Following the ECB´s economic policy decision, the ECB President gives a press conference regarding monetary policy. His comments may influence the volatility of EUR and determine a short-term positive or negative trend. His hawkish view is considered as positive, or bullish for the EUR, whereas his dovish view is considered as negative, or bearish.


15:33 US: Weekly initial claims was 233,000, a decrease of 15,000 from the previous week

"In the week ending July 15, the advance figure for seasonally adjusted initial claims was 233,000, a decrease of 15,000 from the previous week's revised level," announced the US Department of Labor on Thursday.

Key highlghts:

  • The 4-week moving average was 243,750, a decrease of 2,250 from the previous week's revised average.
  • The previous week's average was revised up by 250 from 245,750 to 246,000. 
  • The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending July 8, unchanged from the previous week's unrevised rate.
  • The advance number for seasonally adjusted insured unemployment during the week ending July 8 was 1,977,000, an increase of 28,000 from the previous week's revised level.
  • The 4-week moving average was 1,959,000, an increase of 8,750 from the previous week's revised average.

15:31 United States Initial Jobless Claims came in at 233K, below expectations (245K) in July 14


15:31 United States Philadelphia Fed Manufacturing Survey registered at 19.5, below expectations (24) in July


15:30 United States Continuing Jobless Claims registered at 1.977M above expectations (1.95M) in July 7


15:23 USD/JPY downside pressure to 111.00 UOB

FX Strategists at UOB Group stick to the neutral stance on spot, adding that a test of 111.00 still remains on the cards.

Key Quotes

“USD traded within a range of 111.53/112.22 yesterday, reasonably close to our expected 111.55/112.30 sideway trading range. From here, the weak underlying tone suggests that the immediate bias on the downside but at this stage, a sustained move below 111.35 is not expected (next support at 111.00). Resistance is at 112.15 but only a move back above 112.50 would indicate that the downward pressure has eased”.

“There is not much to add as USD hit a low of 111.53 yesterday before recovering quickly. As indicated yesterday, the immediate pressure is on the downside but at this stage, we do not envisage a sustained move below 111.00. Overall, this pair is expected to stay under pressure unless it can move and stay above 112.50”.


15:12 Gold on the defensive near $1,235/oz

The ounce troy of the precious metal is trading on the negative territory on Thursday, currently hovering over the $1,235 area.

Gold weaker on USD-pick up

The continuation of the bid tone around the greenback has prompted the rally in the yellow metal to find tough resistance just below $1,245 and to revert four consecutive sessions of gains.

The US Dollar Index is posting more than decent gains so far today following the decision of the ECB to leave unchanged its monetary conditions, at the same time removing some tailwinds from the safe have metal’s recent upside.

Bullion has been gathering traction in past sessions on the back of a weaker buck and dwindling expectations of further tightening by the Federal Reserve later in the year. This view has been supported as well by dovish comments from FOMC’s Brainard and Evans, who advocated for a more gradual path in rate hikes, in order to help inflation to hit the 2% target.

Gold key levels

As of writing Gold is losing 0.45% at $1,236.42 facing the immediate support at $1,232.56 (21-day sma) seconded by $1,229.64 (200-day sma) and finally $1,204.00 (low Jul.10). On the upside, a breakout of $1,244.10 (high Jul.18) would expose $1,247.46 (55-day sma) and then $1,251.40 (50% Fibo of June-July drop).


15:12 USD/CAD trims tepid recovery gains, but holds above 1.26 mark

The USD/CAD pair trimmed some of its tepid recovery gains and retreated around 20-25-pips from session tops near the 1.2640 region.

The prevalent bullish sentiment around oil markets, with WTI crude oil holding with gains near monthly highs around mid-$47.00s, underpinned the commodity-linked currency - Loonie and was seen weighing on the major.

Despite the pullback, the pair has held with modest gains near 1.2615 level and was being supported by a strong greenback recovery move. In fact, the key US Dollar Index is now placed at session tops just below the key 95.00 psychological mark and has helped the pair to hold above the 1.2600 handle, at least for the time being. 

With diverging factors failing to provide any firm directional impetus, the pair seems more likely to enter a consolidation phase amid near-term oversold conditions. 

Up next would be the second-tier US economic data, which is unlikely to be a major game changer but would still be looked upon for some short-term trading opportunities.

Technical levels to watch

Bears would be eyeing for a decisive break through the 1.2600-1.2580 region, below which the pair is likely to extend the near-term bearish trajectory towards 1.2535-30 intermediate support en-route the key 1.25 psychological mark.

On the flip side, sustained recovery above 1.2650 level might trigger a short-covering rally towards the 1.2700 handle. The recovery momentum could further get extended towards 1.2760-65 strong horizontal hurdle.
 


15:09 UK: Strong retail sales data - BBH

Analysts at BBH explain that the UK reported stronger than expected retail sales data, which excluding auto fuel rose 0.9%, nearly twice the median forecast from the Bloomberg survey.  

Key Quotes

“This follows a revised 1.5% decline in May (from -1.6%).  Last month was the hottest June in more than 30 years, and this spurred strong demand for summer clothing.  The underlying concern that higher prices and slowing wage growth will sap the purchasing power of households has not been alleviated by today's report.  Next week, the UK reports the first estimate for Q2 GDP.  After slowing to 0.2% in Q1 from 0.7% in Q4 16, many expect the UK economy to have grown 0.3% in Q2.”  

 


15:05 No rush to taper as ECB keeps QE easing bias - ING

According to the latest monetary policy decision, the ECB is staying on the dovish side and does not seem to be in a hurry to move towards tapering, notes Carsten Brzeski, Chief Economist at ING.

Key Quotes

“Given the experience of earlier meetings, the message of the 1.45pm CET release is the main message the ECB would like to give market participants to start their summer vacation with.”

“Not only did the ECB keep interest rates unchanged, but it also kept the language on QE unchanged. The key sentence to watch out for was and still is “the Governing Council stands ready to increase the programme in terms of size and/or duration”. In our view, this is a clear sign that the ECB does not want to pour more oil on the small taper tantrum fire seen in financial markets over the last few weeks.”

“We will hang on until the press conference, starting at 2.30pm CET, to look out for further hints about the ECB’s upcoming tapering plans during the Q&A session.”


15:01 Brazil Mid-month Inflation below forecasts (-0.09%) in July: Actual (-0.18%)


14:51 EUR/JPY muted around 129.00 handle post ECB announcement

The EUR/JPY cross surrendered all of its early tepid gains and dropped to the lower end of daily trading range post-ECB decision.

The cross dipped below the 129.00 handle after the European Central Bank left its key benchmark interest rates unchanged, with refinance rate, deposit facility and marginal lending facility held at 0.0%, -0.4% and 0.25% respectively. 

The central bank reiterated its readiness to increase the bond purchase program in terms of size and/or duration, if needed, while the Governing Council sees rates at current level for an extended period of time.

Bulls seemed unimpressed as the statement lacked any clues over the central bank's intension to reduce its ongoing bond purchase program and hence, focus would remain on the post meeting press conference, where comments from the ECB President Mario Draghi would now determine the next leg of directional move for the shared currency. 

Technical levels to watch

Sustained weakness below 128.55-50 area has the potential to drag the cross below the 128.00 handle towards its next support near 127.40 level. Alternatively, strong follow through buying interest beyond 129.55-60 region now seems to pave way for continuation of the pair’s near-term bullish trajectory even beyond the key 130.00 psychological mark towards its next major hurdle near the 131.00 handle.


14:50 US: Jobless claims, Philly Fed survey, and leading economic indicators in focus - BBH

The US data today includes weekly jobless claims, the July Philly Fed survey, and leading economic indicators which are likely to garner maximum investors’ attention, according to analysts at BBH.  

Key Quotes

“Although there has been some increased speculation that the US is recession-bound, evidence is unlikely to be seen in today's report.  Weekly jobless claims have edged higher recently, with the four-week moving average rising to its highest level in three months, though 246k is still consistent with a robust labor market.  Note that claims data is for the week that the survey for the national figures was conducted.”

“Leading economic indicators are also not suggesting anything like a recession.  The LEI has averaged 0.4 this year and 0.2 last year.  The June report is expected to match this year's average.  If an economic downturn were approaching, one would expect weekly initial jobless claims to rise sharply and for the LEI to turn down.”


14:48 EUR/USD around 1.1480 post-ECB decision

The single currency met some selling pressure after the European Central Bank left its monetary policy intact at today’s meeting, with EUR/USD around the 1.1480 area at the time of writing.

EUR/USD now focused on Draghi

Spot remained near daily lows in sub-1.1500 levels after the ECB’s Governing Council left its monetary policy stance unchanged at today’s meeting, matching the broad consensus.

The European Central Bank left the interest rate on the main refinancing operations at 0.00%, the interest rate on the marginal lending facility at 0.25% and the deposit facility at 0 -0.40%.

In line with prior surveys, the ECB keeps the monetary conditions unchanged, although the focus of attention will now shift to the usual press conference by President M.Draghi. Market participants have been somewhat anticipating a potential modification of the central bank’s guidance in past weeks, although the most suitable candidate appears to be the month of September.

In the data space, the European Commission will publish its consumer sentiment gauge, while initial claims and the Philly Fed manufacturing index will be in the limelight across the pond.

EUR/USD levels to watch

At the moment, the pair is losing 0.23% at 1.1488 facing the immediate support at 1.1462 (10-day sma) followed by 1.1391 (21-day sma) and finally 1.1369 (low Jul.13). On the upside, a breakout of 1.1585 (high Jul.18) would target 1.1616 (2016 high May 3) en route to 1.1713 (monthly high Aug.24).


14:47 European Monetary Union ECB Deposit Rate Decision meets forecasts (-0.4%)


14:46 BoJ stood pat and shaved its inflation forecasts - BBH

Analysts at BBH explain that as widely anticipated, the Bank of Japan stood pat and shaved its inflation forecasts while this fiscal year's inflation forecast was cut to 1.1% from 1.4%.  

Key Quotes

“It pushed out for another year, now around FY19, when the 2.0% core inflation (excluding fresh food) is approached.  This signals a BOJ that remains committed to its unorthodox stance.  Despite coming under pressure from some in the Diet, the BOJ is not talking about exit or tapering.”

“The BOJ also tweaked its growth forecasts.  The economy is expected to expand by 1.8% this fiscal year compared with 1.6%, while FY18 GDP is forecast at 1.4% up from 1.3%.  FY19 GDP is expected to slow to 0.7% (unchanged forecast) as it includes the expected sales tax increase.”

“Separately, Japan reported that its trade balance swung back into surplus in June after a deficit in May.  Exports rose 9.7% year-over-year while imports rose 15.5%.  Both were stronger than expected, though the resulting trade surplus was a little smaller than forecast.  Stronger foreign demand is helping spur domestic activity, especially machine orders, industrial production, and capex.  Japan's exports to China, its largest trading partner are up 19.5% year-over-year.  Exports to the EU are up 9.6%, while exports to the US have risen 7.1%.”

 


14:46 European Monetary Union ECB Interest Rate Decision in line with forecasts (0%)


14:46 ECB: Monetary policy decisions - Full text

"At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases."

"Regarding non-standard monetary policy measures, the Governing Council confirms that the net asset purchases, at the current monthly pace of €60 billion, are intended to run until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. The net purchases are made alongside reinvestments of the principal payments from maturing securities purchased under the asset purchase programme. If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the programme in terms of size and/or duration."


14:43 ECB: July to bring no changes in actual policy - Rabobank

Analysts at Rabobank expect July to bring no changes in actual ECB policy; nor does it seem likely that the ECB will formally change their guidance at this juncture.

Key Quotes

“In order to prepare for an official decision on the future of the asset purchase programme in autumn the Council will likely use next week’s meeting to further shape the narrative.”

“We remain convinced that the ECB will taper purchases, though we do not see inflation meet any of the ECB’s self-imposed criteria.”

“Mr. Draghi will have to address this issue by further disconnecting the future of the asset purchases from the inflation outlook, probably by tying it more to the growth outlook.”


14:41 Australia: Strong employment numbers - BBH

Australia reported strong employment data and as a result after making new highs near $0.8000, AUD has reversed to toy with yesterday's low.  

Key Quotes

A convincing break of that area (~$0.7910), especially on a closing basis, could be the kind of technical reversal that momentum traders take note.”

“Australia created 62k new full-time positions while losing 48k part-time positions.  It is the fourth strong full-time job creation over the last five months.  Consider that in H1, Australia created on average nearly 28k full-time jobs a month.  Last year, the monthly average was a loss of nearly 2k full-time jobs.  Hours worked rose 4.6% at an annualized rate in Q2.”

“The employment data bodes well for consumption, production, and exports.  The central bank is likely to recognize the diminished downside risks while the substantial slack discourages a rate hike.  Wage pressures are modest and next week's Q2 CPI is expected to show steady or slower inflation.”


14:37 ECB Preview: Further grounds for normalisation - Nomura

Analysts at Nomura are not expecting the ECB to announce any major changes to its policy parameters at the Governing Council meeting today, however, they are expecting the easing bias on the asset purchase programme (APP) to be dropped via the removal of the phrase concerning the Bank’s readiness to increase its size and/or duration from the forward guidance.

Key Quotes

“It should pave the way for a more formal announcement about the tapering of the APP at the following meeting on 7 September.”

“We believe there is now overwhelming evidence to suggest the euro area and broader world economy are normalising from a post-crisis repair phase. This is clearly why central banks – including the ECB – are readying markets for a (further) normalisation of monetary policy in the coming months. But when thinking how this process may impact markets, it is critical to distinguish between a prospective ‘normalisation’ of monetary policy that’s taking place as other drivers of economic activity are improving from a scenario where monetary policy is being ‘tightened’ because economies are overheating. The former should help prolong an economic cycle by generating greater alignment between the supply and demand for capital and by fending off financial imbalances.”

“Rates: We remain overall positioned for higher rates. The notion of a perceived global tightening taking place has taken hold in markets and is acting heavily on the price action. Unless the ECB is dovish at the July meeting, which is not our expectation, we see little scope for a sharp retracement. We maintain an outright short on Bunds, which we entered into at 33.5bp. In the near term we continue to target 65bp, and in the longer term 90bp. We maintain 10yr US-EUR tighteners in swap space via 6m receivers. We have taken profit on a number of our ECB normalisation trades – recently closing our 4y1y-1y1y Eonia steepener to book a 32bp profit. Given this, we are naturally less exposed to any near-term disappointment.” 

“FX: We see a risk of a slowdown in EUR appreciation. Even though we expect the ECB to change its forward guidance further, the change would not be a big positive surprise for the market. In contrast, no change in the forward guidance or negative comments on the recent market re-pricing from President Draghi could weaken EUR quickly.”


14:33 ECB: Markets looking for asset purchases alteration cues Lloyds Bank

Hann-Ju Ho, Research Analyst at Lloyds Bank, suggests that the focus today will turn to the ECB, with the policy announcement at 12:45BST and the press conference at 13:30BST as markets will be looking to see if the ECB’s easing bias for asset purchases will be altered.

Key Quotes

“The brighter economic outlook in the Eurozone has already resulted in an upward revision to the ECB’s assessment for growth to “broadly balanced”, while its explicit reference to potentially lower interest rates was removed.”

“At today’s meeting, markets will be looking to see if the ECB’s easing bias for asset purchases will be altered. Currently, it states that “we stand ready to increase our asset purchase programme in terms of size and/or duration”. We think the reference to the “size” may be removed. In any case, President Draghi at the ECB press conference is likely to be mindful of the potential market impact of any changes to its communication. As such, he is likely to emphasise that any policy adjustments should be “prudent”, to ensure inflation reaches the ECB’s target of close to, but below, 2% on a sustained basis. We do not expect the ECB to announce any changes to its asset purchase programme until after the summer.”

“The euro has fallen back from recent highs, ahead of the ECB policy announcement. Markets will be watching closely whether the reference to potentially increasing asset purchases in the ECB’s press release will be changed. In any event, we expect President Draghi will want to avoid a marked market reaction and will emphasise the need to continue policy stimulus for now.”


14:30 UK Brexit Sec Davis: encouraged by progress in Brexit talks

UK Brexit secretary, David Davis was on news wires last hour, via Reuters, saying that Britain recognizes international responsibilities & rights regarding net flow of Brexit payment.

Additional headlines:

   •  Encouraged by progress in Brexit talks
   •  UK would not accept punishment deal, dut does not expect one

In the first substantive rounds of Brexit talks on Thursday, the UK’s Brexit Minister David Davis is meeting with the EU Chief Brexit negotiator Barnier in Brussels.


14:27 ECB: Expect no fireworks BMO CM

In view of Jennifer Lee, Senior Economist at BMO Capital Markets, there will be no changes to monetary policy (refi rate at 0.0%, deposit facility at -0.4%, marginal lending facility at 0.25%) from today’s ECB meeting.

Key Quotes

“The usual line, “the Governing Council expected the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases” will likely be in the press statement. And given that the ECB (and practically all central banks) has yet to see a “sustained adjustment in the path of inflation consistent with its inflation aim”, expect confirmation that net asset purchases will continue to run until the end of December 2017.” 

“However, what President Draghi says during the press conference, which begins at 8:30 am ET, will be more interesting. This will be a great opportunity to pick up on the more upbeat tones that have gradually taken hold over the past year. Let’s review. In December 2016, QE was extended by nine months, but the monthly buying was reduced starting in April. In January 2017, the underlying message was that it was “too soon… too early” to discuss tapering. In March, the message was mixed (optimistic on growth, not so much on inflation), and there was no longer an urgency to take more action. That’s when the market seized on the optimism and started thinking taper. And that’s when a communications refresher was likely sent around the central bank, and officials played down the tapering idea in public. In April, the recovery was described as being “increasingly solid”; and, in June, not only was the guidance on rates removed, but deflation risks had “largely vanished”.”

“So the July meeting will be an ideal stepping stone to prepare markets for change. But there is one more event before the September 7th meeting. Mr. Draghi is reportedly giving a speech at the Kansas City Fed’s Jackson Hole confab next month. This will be his first such talk at this event since 2014, when he gave telling quotes such as “We stand ready to adjust our policy stance further” and that they could use “unconventional instruments to safeguard firm anchoring of inflation expectations” (although the 2nd quote was a repeat from the ECB meeting earlier that month). Then, at the next meeting in September 2014… BOOM!... they cut rates again, and announced plans to buy more securities.”

“Why did I just take this stroll down memory lane? We expect the ECB to adjust their QE program before the end of this year, quite likely as soon as the September 7th meeting, given that there will be fresh staff forecasts released at that time. A trim to the monthly purchases, from €60 bln to, say, €40 bln, is a possibility. And with two great opportunities to prepare the markets for that move—July meeting and August gathering of central bankers—markets will have plenty of time to adjust.”


14:24 Mario Draghis speech Live Coverage - ECB Press Conference Today

The European Central Bank will hold its monetary policy meeting later today, with the interest rate decision scheduled at 1145GMT and the subsequent speech by President Mario Draghi at 1230GMT.

Market consensus remains pretty divided regarding today’s tone from the Council in spite of rising speculations on a potential shift in the central bank’s guidance. However, many investors are leaning towards the September meeting for any significant announcement from the ECB, which could be anticipated by Draghi at the Jackson Hole Symposium next month.

Key notes

ECB meeting: Warming up for tapering or not?

Things are a bit more complicated than what they seem ahead of the ECB's monetary policy meeting this Thursday.

ECB preview: Investors buy insurance against long EUR spot positions

EUR/USD spot clocked a high of 1.1583 on Tuesday before falling back to 1.1514 on Wednesday. The pullback looks like a chart driven move… courtesy of the overbought RSI.

ECB's press conference

Following the ECB´s economic policy decision, the ECB President gives a press conference regarding monetary policy. His comments may influence the volatility of EUR and determine a short-term positive or negative trend. His hawkish view is considered as positive, or bullish for the EUR, whereas his dovish view is considered as negative, or bearish.


14:23 ECB: Focus on Draghi today BBH

The focus of markets today is on the ECB meeting, and specifically Draghi's press conference, according to analysts at BBH. 

Key Quotes

“The ECB President is expected to continue preparing the market for what is likely to be an announcement at the September meeting, which will also feature new staff forecasts.  The September meeting is seen as the likely venue for announcing an extension of asset purchases, albeit at a slower pace, into next year.”

“However, premature tightening of financial conditions is not warranted either.  Draghi may lean against it by reiterating that the risks of deflation have ebbed primarily because of the extraordinary monetary stance.  Prices have not yet entered a self-sustaining, durable path to the target.  Draghi's tone may be just as important as the content of his remarks today.  Our reading of sentiment suggests a bias to buy euros on pullbacks.”


14:20 ECB: No major announcement likely - Westpac

The market has continued to speculate over a near-term change in the stance of policy by the ECB in recent months, but analysts at Westpac suggest the reality is that no announcement is likely until at least September.

Key Quotes

“Optimism in the region is unquestionably strong and this has supported robust gains in the Euro. The reality is that no announcement is likely until at least September, when the ECB's next set of forecasts will be released. The actual stance of policy wont change until the beginning of next year. During 2018, the pace of asset purchases will be curtailed, but only slowly.’

“In terms of the key themes, the focus for post-meeting communications will be on: underutilisation of labour and associated weak wages growth; consequent expectations for core inflation; and the balance of activity growth between consumption and investment.”

 

 


14:16 AUD/USD flirting with lows near 0.7900 handle

Having faced rejection just ahead of the key 0.80 psychological mark, the AUD/USD pair retreated around 90-pips from fresh multi-month tops and is currently placed at session lows.

The pair rallied hard and touched a fresh two-year high in reaction to mostly in-line Australian jobs report. The up-move, however, turned out to be short-lived and the pair turned sharply lower, reversing all of its strong gains recorded in the previous session. 

A goodish greenback recovery, with the key US Dollar Index inching back closer towards reclaiming the key 95.00 handle seems to have prompted traders to take some profits off the table, especially after the pair's recent upsurge of 400-pips over the past two weeks. 

   •  AUD/USD room for a test of 0.8018 – Commerzbank

Traders even shrugged off a mildly positive sentiment around commodity space, with long unwinding trade turning out to be a key driver of the pair's sharp retracement from the highest level since May 2015.

Next on tap would be the US economic docket, which would be looked upon to grab some short-term trading opportunities ahead of RBA speaks during Asian session on Friday.

Technical levels to watch

A follow through weakness below the 0.7900 handle might continue dragging the pair further towards 0.7830-25 horizontal zone with some intermediate support near 0.7870-65 region.

On the upside, 0.7940-50 region now becomes immediate strong resistance, above which the pair is likely to make a fresh attempt towards reclaiming the 0.80 handle.
 


14:00 GBP/USD further gains appear unlikely UOB

The likeliness of extra gains in Cable appear diminished for the time being, noted FX Strategists at UOB Group.

Key Quotes

“Momentum has deteriorated further and the odds for further GBP strength have diminished”.

“That said, only a break below 1.3000 would indicate that GBP has moved into a neutral phase. In the meanwhile, those who are long from 1.3075 may like to lighten their position if there is a bounce to 1.3075/80. Looking further ahead, GBP has to ‘punch’ above 1.3095 to improve the odds for a move to 1.3150, 1.3200”.


13:59 AUD/USD room for a test of 0.8018 Commerzbank

The upside momentum around the Aussie Dollar could push AUD/USD to the 0.8820 area, suggested Karen Jones, Head of FICC Technical Analysis at Commerzbank.

Key Quotes

AUD/USD has eroded the top of its converging range and surged higher. AUD/USD eroded its initial key resistance at the .7836/50 the 2016 high and Fibo. The market is poised to encounter the .8018 200 week ma and then the .8162/66 May 2015 peak and 50 % retracement. Very near term there is a 13 count on the daily chart and a TD perfected set up and we would prefer to buy the dips”.

“The market has broken higher from a large triangle formation that targets eventually .8715 (one year + target)”.

“The chart is now positive above .7573 July 7 th low. This guards the Bottom of the range at 0.7362”.


13:55 ECB Preview: 11 Major Banks expectations from July meet

Today we have an all-important ECB meeting and as the clock ticks by, here are the expectations as forecasted by the economists and researchers of 11 major banks from the upcoming July meet.

Most of the banks not expecting the ECB to announce any major changes to its policy parameters, while they are divided in their views about the bank dropping its easing bias on the asset purchase programme (APP). However, the comments that comes through in President Draghi’s press conference will be very closely examined.

Nomura

We are not expecting the ECB to announce any major changes to its policy parameters at the next Governing Council meeting on 20 July. We are, however, expecting the easing bias on the asset purchase programme (APP) to be dropped via the removal of the phrase concerning the Bank’s readiness to increase its size and/or duration from the forward guidance. That, in turn, should pave the way for a more formal announcement about the tapering of the APP at the following meeting on 7 September.  We believe there is now overwhelming evidence to suggest the euro area and broader world economy are normalising from a post-crisis repair phase. This is clearly why central banks – including the ECB – are readying markets for a (further) normalisation of monetary policy in the coming months. But when thinking how this process may impact markets, it is critical to distinguish between a prospective ‘normalisation’ of monetary policy that’s taking place as other drivers of economic activity are improving from a scenario where monetary policy is being ‘tightened’ because economies are overheating. The former should help prolong an economic cycle by generating greater alignment between the supply and demand for capital and by fending off financial imbalances.

Rabobank

We expect July to bring no changes in actual ECB policy; nor does it seem likely that the ECB will formally change their guidance at this juncture. In order to prepare for an official decision on the future of the asset purchase programme in autumn the Council will likely use this week’s meeting to further shape the narrative. We remain convinced that the ECB will taper purchases, though we do not see inflation meet any of the ECB’s self-imposed criteria. Mr. Draghi will have to address this issue by further disconnecting the future of the asset purchases from the inflation outlook, probably by tying it more to the growth outlook. 

Danske bank

All eyes will be on the ECB meeting, where we expect it to remove its readiness to increase QE in size (but to keep the flexibility in terms of duration) and to have discussed tapering after President Mario Draghi rejected such discussions at the latest meeting in June. In our view, a tapering discussion will be in line with the latest communication from Draghi, that in a situation where the economy continues to recover, monetary policy tightening could be needed in order to keep the policy stance 'broadly unchanged'. We still believe the ECB will continue QE but at a reduced pace of EUR40bn per month in H1 18. 

ING

We expect this week’s ECB meeting to be a double balancing act for Mario Draghi and his colleagues. The ECB wants to prepare financial markets for tapering, without creating a taper tantrum, while at the same time finding economic arguments supportive of tapering despite low inflationary pressure. More generally speaking, the ECB will continue facing very little homemade inflationary pressures. Given the latest bond market developments, the ECB’s macro assessment will not be the main item of this week’s meeting. A possible unwinding of QE – tapering – is at the top of the mind of all market participants and ECB watchers. We believe that given the cyclical upswing, the disappearance of deflationary risks, opposition against QE from some ECB members and the bond supply scarcity issue, the ECB wants to move towards tapering. However, the ECB ideally would like to prepare markets without distorting them.

Lloyds Bank

The brighter economic outlook in the Eurozone has already resulted in an upward revision to the ECB’s assessment for growth to “broadly balanced”, while its explicit reference to potentially lower interest rates was removed.  At today’s meeting, markets will be looking to see if the ECB’s easing bias for asset purchases will be altered. Currently, it states that “we stand ready to increase our asset purchase programme in terms of size and/or duration”. We think the reference to the “size” may be removed. In any case, President Draghi at the ECB press conference is likely to be mindful of the potential market impact of any changes to its communication. As such, he is likely to emphasise that any policy adjustments should be “prudent”, to ensure inflation reaches the ECB’s target of close to, but below, 2% on a sustained basis. We do not expect the ECB to announce any changes to its asset purchase programme until after the summer.

BNPP

Our economics team expects ECB meeting to be a holding operation, with the central bank likely to offer little new information on its plans or expectations to begin tapering asset purchases from January of next year. To the extent possible, we expect President Draghi to lean dovish in his comments. The sharp appreciation of the EUR and rise in bund yields over the past month is likely a concern for the ECB and the central bank will likely be keen to avoid exacerbating the resulting tightening of financial conditions. While we except the ECB President to avoid language which could add to EUR appreciation pressure, he may struggle to find a formula which substantially reverses EUR strength. After all, the market is only expecting a reduction of the pace of asset purchases to begin in January, and President Draghi is unlikely to discourage this anticipation beyond perhaps noting that the ECB is sensitive to the impact of exchange rates and financial conditions in formulating policy.

BMO CM

No changes to monetary policy (refi rate at 0.0%, deposit facility at -0.4%, marginal lending facility at 0.25%) are expected. The usual line, “the Governing Council expected the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases” will likely be in the press statement. And given that the ECB (and practically all central banks) has yet to see a “sustained adjustment in the path of inflation consistent with its inflation aim”, expect confirmation that net asset purchases will continue to run until the end of December 2017. However, what President Draghi says during the press conference, which begins at 8:30 am ET, will be more interesting. This will be a great opportunity to pick up on the more upbeat tones that have gradually taken hold over the past year.

TDS

We expect a relatively straightforward meeting with no announced policy changes. However, we do expect a tweak in the language, indicating that QE would now only be adjusted in duration, not size. The Eurozone economy has performed well this year. While core inflation remains depressed, the strength in real activity should boost the Governing Council’s confidence that they can taper QE next year. However, we don’t expect Draghi to acknowledge any detailed tapering discussions at next week’s press conference.

BBH

The ECB will not change policy.  It is unlikely to announce any change in its asset purchases.  However, it is likely to continue to evolve its assessment and extend its removal of downside risks by dropping the possibility that it could accelerate its asset purchases if necessary.  This has long stopped being pertinent.  Nevertheless, in the name of good housekeeping, and for the sake of preparing the investors for tapering, the wording can be adjusted.  We expect that presented with new staff forecasts in September, the ECB will use that meeting to announce that it will continue to expand its balance sheet by buying mostly sovereign bonds next year, but at a reduced pace.  We suspect a six-month extension will be sought (instead of nine as the length of the current extension) and a pace of 30-40 bln euros a month.  There is some risk that it stops buying ABS securities altogether.  It does not appear to have been a particularly successful endeavor.  

HSBC

In our view, the ECB is rightly preparing markets and governments for the end of QE. But with no signs of underlying inflationary pressures, and political risks ahead, we have not changed our view that tapering will not end until Q4 next year. And with the ECB maintaining its guidance that rates will be on hold until net purchases have ended, we do not anticipate any policy rate rises this year or next. There won’t be a new forecast in July. But the story hasn’t changed much from June. Survey data, although they have softened a little, continue to point to healthy growth in Q2. But as Mario Draghi has long argued, the good news on growth is not translating into higher inflation. In June, inflation fell to 1.3% y-o-y, although core and services inflation ticked up slightly. The oil price is c7% below the cut-off point for the June forecast, and the euro has appreciated another c1.3%. So if anything, there is a risk of another downside revision to the ECB inflation forecast in September.

Westpac

The market has continued to speculate over a near-term change in the stance of policy by the ECB in recent months. Optimsim in the region is unquestionably strong and this has supported robust gains in the Euro. The reality is that no announcement is likely until at least September, when the ECB's next set of forecasts will be released. The actual stance of policy wont change until the beginning of next year. During 2018, the pace of asset purchases will be curtailed, but only slowly. In terms of the key themes, the focus for post-meeting communications will be on: underutilisation of labour and associated weak wages growth; consequent expectations for core inflation; and the balance of activity growth between consumption and investment.

Click here to read special preview of the ECB Interest Rate Decision from our Chief Analyst Valeria Bednarik titled “ECB Meeting: warming up for tapering or not?


13:40 GBP/JPY tumbles to lows, eyeing monthly lows near 145.25 area

The GBP/JPY cross faded upbeat UK retail sales-led bullish spike beyond the 146.00 handle and turned lower for the fourth consecutive session. 

Barring an initial sharp reaction to the UK data, showing a stronger-than-expected rebound in consumer spending, the cross resumed with its corrective slide from closer to multi-month highs near the 147.60 region touched at the beginning of this week. 

   •  UK: Warm weather gives retail sales a temporary boost - ING

Renewed concerns of a possible 'hard Brexit' scenario, following comments from the UK Trade Minister Liam Fox that the UK can survive with no Brexit deal, could have been the only factor weighing on the British Pound. 

Meanwhile, the market seems to have largely ignored an offered tone surrounding the Japanese Yen, led by dovish BOJ decision to maintain status quo and prevalent risk-on environment, with broad based GBP weakness acting as an exclusive driver of the pair's sharp retracement back below mid-145.00s.

   •  BOJ: Risks to economy, prices are skewed to downside

The cross has now retreated over 80-pips from session tops and it would now be interesting to see bears maintain their upper hand or the cross once again catches some fresh bids at monthly lows support near 145.30-25 region. 

Technical levels to watch

A follow through selling pressure below the mentioned lows support is likely to accelerate the fall below the key 145.00 psychological mark towards its next support near 144.60-55 region. On the flip side, any recovery back above 145.75 horizontal level could lift the cross back towards 146.25-30 supply zone.
 


13:09 GBP/USD extending scope of projections

GBP/USD has just crossed below the 200 SMA on an hourly chart.

For traders inclined to nibble on short trades, the cooling GBP/USD price now eyes the 800 SMA, which corresponds to the reading of the 200 SMA on 4H charts. The last such price-indicator cross has occurred at least over a week ago on this time frame, accentuating its significance.

13:08 US: Philly Fed index amongst market movers today Danske Bank

In the US, the Philly Fed index for July will be in focus after Empire manufacturing dropped in July.

Key Quotes

“If the Philly Fed has also weakened, it will be another signal of some payback in ISM manufacturing after it rose sharply by close to three index points from May to June.”


13:06 EUR/USD exhibits a potential 52-week high

The EUR/USD has been nibbling at the 52-week high today, having pierced that performance metric on an intraday basis.

13:04 US: Philadelphia Fed and jobless claims in focus - TDS

Analysts at TDS suggest that the Philadelphia Fed Manufacturing Index and initial jobless claims will serve as the US data highlight amid a quiet day for economic releases.

Key Quotes

“The market expects the index to retreat further from the early 2017 highs with a decline to 23.7 in July from 27.6. The market consensus for initial jobless claims, the only other release of the day, is for a modest decline to 245k for the week of July 15.”


13:04 AUD/USD exhibits a potential 52-week high

The AUD/USD has been nibbling at the 52-week high today, having pierced that performance metric on an intraday basis.

13:02 Germany warns citizens to be more careful in traveling to Turkey RTRS

Reuters reporting a statement out from the German Foreign Ministry that cites:

Warns German citizens to be more careful

Turkey not always informing Govt of arrests of German citizens in timely fashion

Consular access not always guaranteed

The ministry said in a revised travel guidance, “People who are traveling to Turkey for private or business reasons are urged to exercise increased caution, and should register with German consulates and the embassy, even for shorter visits."

                                        


12:59 UK: Warm weather gives retail sales a temporary boost - ING

UK consumers got ready for summer in June, but the respite for retailers is likely to prove temporary as falling real wages continue to bite, according to James Smith, Economist at ING.

Key Quotes

“The second warmest June on record, combined with the earlier timing of Eid celebrations this year, led to a reasonable rebound in UK retail sales in June. The key measure to watch, which excludes auto fuel, rose by 0.9% on the month. The recovery was fairly broad-based, with a pick-up in sales of clothing and household goods, corroborating findings by the British Retail Consortium that there was increased interest in summer collections.”

“But it’s also worth noting that the retail sales data has been extremely volatile for some time now. The increasingly rapid changes in the way consumers shop is making life difficult for statisticians. The rise of events such as Black Friday, and most recently Amazon Prime Day, mean that households are spending their money in very different ways and frequencies, making seasonal adjustment more difficult.”

“All of this aside, today’s rebound in sales does not change the fact that the household squeeze is intensifying as real wages continue to fall. Recent data from payments firm Visa suggested that spending in the second quarter was the most sluggish since 2013. That’s also evident from the annual rate of retail sales growth, which at 3%, is considerably lower than the near-8% increases recorded towards the end of last year.”

“That’s a key reason why we don’t anticipate a Bank of England rate hike this year.”


12:51 GBP/USD reverses sharply to test 1.2960, ignores upbeat UK data

The GBP/USD pair failed to sustain the bounce above 1.30 handle, despite a Big beat seen in the UK retail sales data, knocking-off the rate sharply towards the mid-point of 1.29 handle.

GBP/USD eyes on EUR/GBP for fresh impetus

The GBP/USD pair retraced sharply from 1.3017 levels reached immediately after the UK retail sales data for June staged a solid rebound across the time horizon. UK retail sales rebound sharply in June, a Big beat on expectations

The spot witnessed good two-way trading so far this Thursday, with the bears now fighting back control amid renewed fears over the Brexit deal, after the UK Trade Minister Liam Fox said earlier that Britain can survive with no Brexit deal.

Moreover, Brexit jitters continue to haunt the GBP markets as the UK’s Brexit Minister Davis meets the EU Chief Brexit negotiator Barnier in Brussels later on Thursday, in order to wrap up the first substantive rounds of Brexit talks.

The reversal can be also attributed partly to notable US dollar demand across the board, as Treasury yields attempt a tepid bounce amid risk-on rally witnessed in the global equities. Next of note for the major remains the ECB monetary policy decision, which could have a cross-driven rub-off effect on the pound.

GBP/USD levels to consider             

Valeria Bednarik, Chief Analyst at FXStreet noted, “The current price zone is a strong static support, which means the pair could consolidate around it before taking next step. A downward acceleration should result in a test of 1.2920 first, while further slides could see the pair reaching 1.2870. Above 1.3010, the risk turns back towards the upside, with scope then to retest 1.3060.”


12:34 WTI upside capped above $47.00

Crude oil prices are struggling for direction in the upper end of the recent range, with the barrel of West Texas Intermediate hovering over the $47.20 region for the time being.

WTI still in 6-week tops

The rally in crude oil prices seems to have found some tough resistance in the low-$47.00s so far, coincident with tops seen earlier in the month and the 50% Fibo retracement of the May-June drop ($47.03).

Prices for the WTI stay supported following a larger-than-expected draw in US supplies as per the latest report by the EIA on Wednesday. US crude oil inventories dropped by more than 4.7 million barrels during the week ended on July 14, while another draw in gasoline inventories also supported the upbeat sentiment.

Risks to the ongoing constructive view in crude oil prices are expected to come from unabated concerns over the supply glut and the effectiveness of the OPEC deal to balance the oil markets.

Looking ahead, traders will look to the US oil rig count report by Baker Hughes on Friday and the meeting between key OPEC producers and Russia in St. Petersburg on July 24.

WTI levels to consider

At the moment the barrel of WTI is losing 0.04% at $47.28 facing the next support at $45.85 (38.2% Fibo of the May-June decline) seconded by $45.81 (low Jul.18) and finally $45.50 (21-day sma). On the other hand, a break above $48.16 (100-day sma) would aim for $48.20 (61.8% Fibo of the May-June decline) and finally $49.52 (200-day sma).


12:30 UK TradeMin Fox to call for a new round of global trade liberalization at WTO

According to an advance draft text seen by Reuters, the UK Trade Minister Liam Fox is likely to call for a fresh round of global trade liberalization during his speech at the World Trade Organization (WTO) in Geneva on Thursday.

The drafts states that Britain wants to see a "positive outcome" on the digital economy at the WTO's two-yearly ministerial conference in Buenos Aires in December.


12:12 Spain 10-y Obligaciones Auction: 1.649% vs 1.395%


12:11 Spain 5-y Bond Auction declined to 0.314% from previous 0.337%


12:11 Spain 3-y Bond Auction rose from previous 0.021%to 0.026%


12:06 USD/JPY: BOJ rescues the JPY bulls, eyes on 112.50

The Japanese yen continues to get hammered by its American counterpart in the European session, as dovish BOJ policy outcome combined as well as Governor Kuroda’s remarks during the press conference, continue to undermine the sentiment around the Yen.

The BOJ left its monetary policy settings unadjusted, although scaled back its CPI target for the sixth time, hinting that the ultra-easy monetary policy era is here to stay for some time.

Moreover, the safe-haven Yen also got sold-off into persisting risk-on trades, after the European indices joined the rally in global equities. Wall Street indices trade at new record highs, while the Asian markets hit near-decade highs today.

Also, resurgent demand for the greenback across the board amid increased nervousness ahead of the ECB policy decision and approval of the US fiscal 2018 budget plan, offers fresh impetus to USD/JPY.

Data-wise, we have the US jobless claims and Philly Fed manufacturing index, which could provide near-term trading opportunities for the spot.

USD/JPY Technical levels                 

To the topside, a daily close above 5-DMA at 112.27 would shift risk in favor of a re-test of 112.83/92 levels (20 & 10-DMA), beyond which 113.50 would be back on sight. A break below 111.78 (daily low) would open doors for 111.56/45 (multi-week lows/ 100-DMA). A break lower would yield a test of 111.00 (psychological levels). 


11:58 EUR/USD: options markets signal protection to the downside

CME Group’s flash data for the 6EU7 contract with expiration date on August 4 showed OTM (‘out of the money’) Puts increasing by 1,443 contracts, mainly in the 1.1400 strike price and seconded by 1.1450 and on a lesser degree 1.1500. On the opposite side, ITM (‘in the money’) Puts decreased by 386 contracts, largely in the 1.1600 strike price.

In addition, OTM Calls rose by 94 contracts, with the bulk of activity in the 1.1650 strike price, while ITM Calls decreased by 122 contracts.

The Put/Call ratio ticked higher to 1.02.

EUR/USD stays bullish, with focus on 1.15 and the ECB

EUR/USD continues its march south, as hinted yesterday by the increase of more than 900 contracts in ITM Puts at the 1.1600 strike price.

In view of the recent activity in the options markets, traders continued to seek protection from an occasional drop in spot following today’s ECB event, which is eventually a bullish sign.


11:49 EUR/USD hovering around 1.15 handle, awaits ECB for fresh impetus

The EUR/USD pair remained under some selling pressure for the second consecutive session and extended its profit-taking slide 14-month tops touched on Tuesday. 

The pair has now moved on the brink of decisively breaking below the key 1.1500 psychological mark as traders continue to trim bullish bets and brace for today's key event risk - ECB monetary policy decision

Although the European central bank is widely expected to maintain status quo, investors would keenly scrutinize ECB President Mario Draghi's comments for clues over prospects of reducing its ongoing €60 billion per month bond purchase program. Draghi's comments would drive sentiment around the shared currency and act as the next big fundamental trigger driving the pair in the near-term term. 

Meanwhile, the US Dollar was also seen building on its slow recovery from 10-month lows and further collaborated to the offered tone surrounding the major. Against the backdrop of fading expectations for the US President Donald Trump's pro-growth agenda-led economic growth, the greenback rebound seems more likely to be short-lived. 

Hence, dip buying interest might continue to limit any immediate sharp downside for the major, unless Draghi delivers any dovish surprise for the markets. Today's second-tier US economic data is more likely to be overshadowed by the key central bank announcement. 

   •  ECB: Can Draghi scare the EUR bulls? - BNPP

Technical levels to watch

Below the 1.15 handle, the fall could get extend towards 1.1480-70 strong support, below which the pair would turn vulnerable to extend the corrective slide towards the 1.1400 round figure mark. On the upside, the 1.1550-55 region seems to act as an immediate hurdle, which if cleared decisively should lift the pair beyond the 1.1600 handle towards its next resistance near 1.1615-20 region.

   •  EUR/USD scope for a visit to 1.1615 – UOB


11:43 GBP/USD clinched 1.30 post-UK retail sales

The Sterling trimmed part of its initial losses vs. the greenback following the upbeat results from UK’s retail sales, taking GBP/USD back to levels above the 1.3000 handle.

GBP/USD bounces off lows on upbeat data

Cable met some fresh buyers after UK’s retail sales expanded more than expected in June 0.6% MoM vs. a forecasted gain of 0.4% and up from May’s 1.1% monthly contraction.

Further data saw sales stripping the fuel component also surpassed expectations, up 0.9% inter-month, reverting May’s 1.5% drop.

In the meantime, spot is recovering part of the ground lost to the proximity of the 1.2970 region following comments from UK’s Trade Secretary Liam Fox. The pair’s outlook, however, is seen unchanged while above the short term support line, today at 1.2900.

GBP/USD levels to consider

As of writing the pair is losing 0.29% at 1.2999 facing the next support at 1.2973 (low Jul.20) followed by 1.2967 (10-day sma) and finally 1.2920 (21-day sma). On the other hand, a breakout of 1.3053 (high Jul.19) would open the door to 1.3115 (high Jul.14) and then 1.3127 (2017 high Jul.18).


11:38 Hong Kong SAR Consumer Price Index declined to 1.9% in June from previous 2%


11:36 Gold Deep out-of-the-money calls see big jump in Open Interest

Gold rally from the low of $1204 (July 10 low) appears to have come to a halt at $1244.54 (July 18 high) as prices have deflated to $1237 levels today. Prices did dip to a low of $1235.81 yesterday, before ending the day at $1240.85. 

The options data published by the CME show the open interest in the OTM calls jumped by 744 contracts. At first glance, one may consider it as a sign of investors betting on a continuation of the rally in gold. However, the details reveal the max additions are in the deep out-of-the-money - $1300 call option, indicating call writing (selling). 

Meanwhile, the OTM Put - $1220 shows an addition of 269 contracts to open interest. Thus, it is safer to conclude that the investors do not expect the rally from the low of $1204 to continue and are actually positioned for a drop to sub-$1220 levels. 

 


11:35 UK retail sales rebound sharply in June, a Big beat on expectations

The office for National Statistics (ONS) published the UK’s retail trade report for the month of June, which showed that the UK consumer spending rebounded sharply, coming in much stronger-than market expectations across the time horizon.

The UK’s retail volumes came in at 0.6% in June m/m, while the annualized retail spending jumped to print 2.9% reading. Markets had estimated a 0.4% expansion on a monthly basis; while a 2.5% reading was expected on yearly basis.

Retail sales excluding volatile items such as fuel also bettered market expectations, arriving at 0.9% m/m and 3.0% y/y.

Commenting on today’s official retail figures, Kate Davies, ONS Senior Statistician noted:

“Today’s retail sales figures show overall growth. A particularly warm June seems to have prompted strong sales in clothing, which has compensated for a decline in food and fuel sales for the month.”

"Looking at the quarterly data, the underlying trend as suggested by the three-month on three-month movement is one of growth, following a fall in quarter 1, suggesting a relatively flat first half of 2017."


11:31 United Kingdom Retail Sales (MoM) came in at 0.6%, above forecasts (0.4%) in June


11:30 United Kingdom Retail Sales ex-Fuel (YoY) came in at 3%, above forecasts (2.5%) in June


11:30 United Kingdom Retail Sales ex-Fuel (MoM) registered at 0.9% above expectations (0.5%) in June


11:30 United Kingdom Retail Sales (YoY) above expectations (2.5%) in June: Actual (2.9%)


11:11 USD/CAD extends tepid recovery move beyond 1.26 handle

The USD/CAD pair gained some traction on Thursday and is currently placed at session tops near 1.2625 region, reversing previous session's slide back to 14-month lows.

The pair on Wednesday dropped back to its lowest level since the first week of May 2016 despite upbeat US housing market data, which to some extent was negated by better-than-expected Canadian manufacturing sales data. 

A strong rally in crude oil prices, led by the weekly EIA report that showed a larger than expected drawdown in the US oil inventories, boosted the commodity-linked currency - Loonie and weighed on the major.

With oil prices entering a bullish consolidation phase, a modest pick-up in the US Dollar demand was seen driving the pair higher on Thursday. It, however, remains to be seen if the pair once again fizzles out at higher levels or is able to sustain/build on the tepid recovery gains amid near-term oversold conditions. 

   •  US Dollar extends the recovery above 94.70

Today's US economic docket features the release of weekly jobless claims, Philly Fed manufacturing index and CB's leading index. In absence of any macro data from Canada, the USD price dynamics is likely to act as an exclusive driver of the pair's movement on Thursday.

Technical levels to watch

Immediate resistance is pegged near 1.2640-50 region, above which a bout of short-covering could lift the pair back towards the 1.2700 handle. A follow through buying interest has the potential to continue lifting the pair further towards its next major hurdle near 1.2760-65 area. 

On the flip side, sustained weakness below the 1.2600 handle, leading to a subsequent break below 1.2580 level, would confirm a fresh bearish breakout and turn the pair vulnerable to extend the ongoing downfall towards the key 1.25 psychological mark with some intermediate support near 1.2530-25 region.
 


11:03 ECB: Can Draghi scare the EUR bulls? - BNPP

BNP Paribas economics team expects today’s ECB meeting to be a holding operation, with the central bank likely to offer little new information on its plans or expectations to begin tapering asset purchases from January of next year.

Key Quotes

“To the extent possible, we expect President Draghi to lean dovish in his comments. The sharp appreciation of the EUR and rise in bund yields over the past month is likely a concern for the ECB and the central bank will likely be keen to avoid exacerbating the resulting tightening of financial conditions.”

“While we except the ECB President to avoid language which could add ot EUR appreication pressure, he may struggle to find a formula which substantially reverses EUR strength. After all, the market is only expecting a reduction of the pace of asset purchases to begin in January, and President Draghi is unlikely to discourage this anticipation beyond perhaps noting that the ECB is sensitive to the impact of exchange rates and financial conditions in formulating policy. Draghi was already dovish at the April and June meeitngs with only limited impact on the currency. Still, our positioning framework suggests long EUR positioning is now very stretched, while our momentum framework shows sharp retreats in EUR relative equity and relative rates momentum recently; if FX momentum also begins to falter, EUR positions  could begin to unwind. In this context, even a modestly dovish ECB message could do some damage to EURUSD.”


11:02 European Monetary Union Current Account s.a came in at 30.1B, above forecasts (23.3B) in May


11:01 European Monetary Union Current Account n.s.a fell from previous 21.5B to 18.3B in May


10:52 EUR/USD scope for a visit to 1.1615 UOB

FX Strategists at UOB Group have shifted their view to bullish on the pair, opening the door for a test of 1.1615 in the near term.

Key Quotes

“We just shifted to a bullish stance yesterday and there is no change to the view. However, the ‘deceleration’ (EUR registered an ‘inside day’ and closed lower yesterday) after the strong break above 1.1500 is not comforting for EUR bulls”.

“As highlighted, the rally is overextended and this pair has to continue to move higher quickly as a prolonged consolidation at these lofty levels would lead to a rapid loss in momentum. For now, those looking to enter long may like to wait for deeper pullback to 1.1490. Target and top-loss remain unchanged at 1.1615 and 1.1445 for now”.


10:51 ECB preview: Another minor hawkish twist Danske Bank

In line with other global central banks, ECB communication has turned hawkish recently with Mario Draghi arguing that in a situation where the economy continues to recover and analysts at Danske Bank believes that a monetary policy tightening could be needed in order to keep the policy stance ‘broadly unchanged’.

Key Quotes

“In our view, these comments were intended to prepare the market for a reduction in QE purchases from next year, which is likely to be announced at the meeting in September. We still expect the ECB to continue its QE purchases but at a reduced pace of EUR40bn per month in H1 18, keeping the end-date dependent on the inflation outlook. That said, we believe it is most likely the ECB will taper towards zero in H2 18.”

“Added to this, the minutes from the June meeting revealed that the ECB discussed whether to revisit the QE easing bias where it signals its readiness to increase the size and/or duration of QE. We expect the ECB to discuss this easing bias at the upcoming meeting but believe it will deliver only a minor twist and remove its readiness to increase the size of QE while maintaining the flexibility in terms of duration. Together with this, the ECB could add that the duration part of QE will be reconsidered at the meeting in September, when the ECB has updated inflation projections.”

“Despite the hawkish comments mentioned above, the ECB has also expressed concern about an unwarranted tightening of financial conditions. Related to this, Draghi’s communication has been that the ECB needs to be persistent in monetary policy in order to be assured about the return of inflation to the objective while any adjustments to the monetary policy stance have to be made gradually.”

“Finally, we expect the ECB to have discussed tapering at the upcoming meeting after Draghi rejected such discussions at the latest meeting in June. In our view, such a discussion will be in line with the latest communication that monetary tightening could be needed in order to keep the policy stance ‘ broadly unchanged’.”

“In fixed income markets, tapering is primarily an issue for Italy as well as the outright level for yields. However, there is plenty of cash in the system and the ECB will have a large reinvestment need in coming years. Hence, any significant widening of the BTPS-Bund spread is not expected to be persistent given the strong domestic investor base in BTPS.”

“The July ECB meeting will, if anything, likely add to upside risks for EUR/USD. When Draghi started the exit talk at the Sintra conference he in our view opened the lid for the cross, i.e. this was the catalyst for starting to correct its long-standing undervaluation. We still see EUR/USD in a range around 1.13 near term but risks remain on the upside longer term.”


10:50 GBP/USD stance is now neutral to negative Commerzbank

According to Karen Jones, Head of FICC Technical Analysis at Commerzbank, Cable’s outlook now stays neutral to negative.

Key Quotes

“Tuesdays price action constituted a key day reversal (only just) and we note that the new high was accompanied by a divergence of the daily and weekly RSI. We are starting to think that we have seen a false break higher and would allow for a dip back to the 1.2900 near term uptrend. It will need to close below here in order to negate upside pressure and retarget 1.2775/50. Above 1.3126 will target the 1.3446/60 September 2016 high. Key support remains 1.2775/50”.

“The market should now find decent support circa 1.2775/50. Below 1.2750 there is scope for an extension to its 200 day ma and uptrend at 1.2585/1.2611”.


10:48 GBP/USD breaks below 1.30 handle ahead of UK retail sales

The GBP/USD pair finally broke out of the 50-pips broader trading range and tumbled below the key 1.30 psychological mark to fresh weekly lows.

The pair's sharp fall of over 40-pips to 1.2985 region lacked any obvious triggers but could be attributed to comments from the UK Trade Secretary Liam Fox, while speaking to BBC Radio, that we can survive with no Brexit deal. In absence of any fresh updates coming out of the ongoing Brexit negotiations, Liam's comments seemed to have triggered some pre-emptive 'hard Brexit' move. 

The selling pressure seems to have abated for the time being as traders now look forwards to the release of UK monthly retail sales data, expected to post a modest growth of 0.4% as compared to a larger than expected drop of 1.2% in May.

   •  When are UK retail sales and how could they affect GBP/USD?

Technical levels to watch

Weaker retail sales data could extend the pair’s corrective slide towards 20-day SMA support near 1.2930 region en-route the 1.2900 handle. On the flip side, any up-move might continue to confront fresh supply near mid-1.3000s, above which the pair could aim back towards reclaiming the 1.3100 handle.
 


10:39 GBP futures: strong support lies at 1.30

Advanced figures for GBP futures markets provided by CME Group saw open interest decreasing by around 500 contracts on Wednesday from Tuesday’s final reading at 200,812 contracts. This is the third consecutive contraction in open interest so far, while volume dropped by more than 48K contracts.

Cable shows resiliency above 1.30

The recent decline in Cable from fresh tops beyond 1.3100 the figure has been in tandem with diminishing open interest and volume, removing sustainability behind the down move and allowing dip-buyers to gear up for fresh entries.

Risks to this view come from the UK political side, with uncertainty around Brexit and the future of PM T.May still far from abated.


10:37 UK TradeMin Fox: We can survive with no Brexit deal BBC Radio

The UK Trade Minister Liam Fox is out on the wires now, speaking to BBC Radio on the Brexit deal.

Key Points via Livesquawk:

We can survive with no Brexit deal

UK PM Theresa May to likely be in power for remainder of term


10:30 When are UK retail sales and how could they affect GBP/USD?

UK retail sales Overview

The retail sales data is expected to rebound sharply to 0.4% m/m in June, while on annualized basis, retail sales are expected to jump to 2.5%. In May, retail sales were seen at -1.2% over the month. The report will be published later this session at 0830GMT.

Deviation impact on GBP/USD

 Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 70 pips in deviations up to 3.5 to -1.5, although in some cases, if notable enough, a deviation can fuel movements of upto 100 pips.

How could affect GBP/USD?

A positive surprise in the retail sales report could rescue the GBP bulls, taking the rate back above 1.3000 levels. While a worse-than expected print would knock-off the pair back towards the mid-point of 1.29 handle.

In terms of technicals, “On the downside, the session low of 1.3010 and the 18 July low of 1.3004 will provide the initial support, but a break of 1.3000 could have us quickly back 1.2980, below which could then head to the 14 July’s low of 1.2933 although this seems unlikely today.”

“On the topside, back above 1.3100 would see good sellers once again at 1.3115/25, but above which there is little to stop Cable heading on towards 1.3200 and then to 1.3280. Above there would be increasingly bullish, possibly opening up the major Fibo pivot at 1.3420 (50% pivot of 1.5017/1.1821) although this currently remains over the horizon,” Jim Langlands at FX Charts noted.

Key notes

UK: Retail sales to post flat reading of 0.4% for June - TDS

GBP/USD Forecast: holding above 1.30 important pivot ahead of UK retail sales

About UK retail sales

The retail Sales released by the National Statistics measures the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. Generally speaking, a high reading is seen as positive, or bullish for the GBP, while a low reading is seen as negative or bearish.


10:15 NZD/USD weaker below mid-0.7400s, showing signs of topping out

The NZD/USD pair traded with mild negative bias through early European session on Thursday and extended previous session's retracement from fresh 10-month tops. 

The pair stalled its recent appreciating move and in absence of any fresh development, today's slide could be solely attributed to some profit taking. A mildly positive tone around the US Treasury bond yields was seen lending some support to the US Dollar and weighing on higher-yielding currencies - like the Kiwi.

Meanwhile, the recent price action, since last Friday, has been indicating lack of any strong follow through buying interest. With fresh supply re-emerging on every up-move towards 0.7375-80 region, today's minor retracement could be the first signs of bullish exhaustion. A follow through weakness back below the 0.7300 would reinforce the expectations that the pair might have topped out in the near-term.

Today's second-tier US economic data - weekly jobless claims, Philly Fed Manufacturing Index and CB's Leading Index, would now be looked upon for some short-term trading opportunities. 

Technical levels to watch

Immediate support is pegged near 0.7315-10 region, below which the pair is likely to extend the corrective slide towards 0.7260-55 intermediate zone en-route 0.7220-15 strong support. 

On the flip side, the 0.7365-75 region remains an immediate strong hurdle, which if conquered could trigger a fresh bout of short-covering and lift the pair beyond the 0.7400 handle towards its next barrier near mid-0.7400s.
 


10:08 ECB: Expect a relatively straightforward meeting - TDS

The ECB’s Governing Council meets today to set policy and analysts at TDS expect a relatively straightforward meeting with no announced policy changes.

Key Quotes

“We do expect a tweak in the language, indicating that QE would now only be adjusted in duration, not size.”

“The Eurozone economy has performed well this year. While core inflation remains depressed, the strength in real activity should boost the Governing Council’s confidence that they can taper QE next year. However, we don’t expect Draghi to acknowledge any detailed tapering discussions at next week’s press conference.”

“We expect the EUR to remain firm but contained within the 1.13/1.16 range ahead of the ECB. We had been looking for more near-term downside risks to EURUSD, but we are less convinced now. We retain our strategic bullish stance on the EUR and would look to buy dips that arise from ECB-driven volatility.”

“We are not fading the current move higher in European rates. Technicals have broken, the shift in ECB messaging is enough to support a higher trading range, and Eurozone data surprises seem to be on the upswing.”


10:05 BOJs Kuroda: Regrettable to push back timing of reaching 2% price target

With the BOJ press conference underway, additional headlines hitting the wires from BOJ Governor Kuroda are as under:

Other countries have also delayed reaching target

Oil price falls and other factors responsible for delay

No need to ease policy further now

Doesn't think another comprehensive assessment needed now

Regrettable to push back timing of reaching 2% price target


10:02 Denmark Consumer Confidence climbed from previous 7.1 to 10.5 in July


10:02 Turkey Consumer Confidence rose from previous 70to 71.3 in July


10:01 Hungary Gross Wages (YoY) declined to 12.9% in May from previous 14.6%


09:59 RTRS poll: Major central banks to shift away from ultra-easy monetary policy, despite weak inflation

Results of the latest Reuters polls of more than 500 economists showed on Thursday, major global central banks are expected to shift gear towards hawkish narrative, despite softening inflation.

Key Highlights:

“The latest Reuters polls also underscore ongoing optimism about the world economy's momentum, with analysts particularly upbeat on Europe, as well as the economies of India and China which together have nearly 40 percent of the world's population.”

“Reuters polls reveal no change to growth forecasts or at best a slight upgrade for 26 of the 45 economies compared with previous months. Global growth forecasts, collected separately, have been rising gradually since late last year, with the latest pegging 2017 at 3.5 percent followed by 3.6 percent in 2018.”


09:52 BOJs Kuroda: Current policy is more effective due to falling real rates

More comments flowing in from the BOJ Chief Kuroda, as he speaks at the press conference.

Key Points:

Companies more cautious on raising prices but don't expect this to continue forever

Haven’t reached the 2% inflation target

BOJ will continue to promote powerful monetary easing to achieve 2% price target

Japan is no longer in a state of sustained price declines

Momentum toward 2% price target is firmly in place

Yield curve control is sustainable policy framework allowing BOJ to flexibly respond to economy and prices

Expect impact of QE to strengthen in future

Real rates will fall as inflation picks up pace

Current policy is more effective due to falling real rates

Meanwhile, USD/JPY drops back to test 112 handle on BOJ Governor Kuroda’s comments.


09:50 Bund: Pullback below the support around 160.38-160.50 is unlikely - Natixis

Given that the daily stochastic remains upbeat, that daily volatility has stabilised and that the weekly stochastic is nearing oversold territory, a pullback below the support around 160.38-160.50 (ascending support trendline) is unlikely, according to Micaella Feldstein, Research Analyst at Natixis.  

Key Quotes

“Watch out rather for rebounds towards 161.80-161.88 (daily parabolic). A breakout above these levels would undermine the downward bias in the daily chart, pointing to a more pronounced rebound towards 162.36-162.45 (daily Bollinger moving average) before 162.93-163 (50-week moving average) and 163.39 (monthly Bollinger moving average).  Supports are located around 160.38-160.50, at 160, at 159.51 and at 159.14.”


09:44 Euro area consumer confidence expected to improve Danske Bank

The euro area preliminary consumer confidence for July is due for release today and is expected to have continued to improve, according to analysts at Danske Bank.

Key Quotes

“Last month it rose to the highest level since 2001, signalling continued growth in consumer spending. In the UK, the June retail sales figures will be scrutinised for any impact of negative real wage growth.”


09:40 BOJs Kuroda: Will adjust monetary policy as needed to maintain price momentum

The Bank of Japan (BOJ) Governor Kuroda is on the wires now, addressing the press conference after the BOJ monetary policy decision announced earlier on the day.

Main Headlines:

Risks to prices and economy tilted to the downside

Will adjust monetary policy as needed to maintain price momentum

Board members Kiuchi, Sato made proposal based on the view that inflation won't hit 2% in 3-year forecast

FY2019 GDP will slow slightly due to capex and sales tax


09:39 EUR/USD: Cannot rule out pullbacks - Natixis

As the daily stochastic struggles to recover, Micaella Feldstein, Research Analyst at Natixis suggests that they cannot rule out a new pullback to 1.1364-1.1382 even to 1.13-1.1320 (daily Bollinger moving average).

Key Quotes

“These dips won’t affect the underlying bullish trend: the upside parallels that have emerged on the daily chart indeed shows strong upside potential, supporting our view for another test of 1.1492-1.1508 (declining trendline).”

“The break of the latter would pave the way to 1.1554-1.1573 (weekly Bollinger upper band) and to 1.1604 (monthly Bollinger upper band). The supports stand at 1.1407-1.1422, at 1.1364-1.1382, at 1.3338-1.1347, at 1.13-1.1320 and at 1.12241.1248.”


09:38 EUR futures: correction lower only temporary ahead of ECB

According to CME Group’s preliminary data for EUR futures markets on Wednesday, volume dropped by more than 93K contracts while open interest scaled back almost 1K contracts from Tuesday’s final 447,597 contracts.

Caution ahead of ECB

The ongoing leg lower in EUR/USD appears only temporary, as volume decreased significantly and dwindling open interest have been also accompanying the down move. All in all, market participants remain reluctant to break below 1.15, while at the same time there are not many motives to resume the upside for the time being.


09:35 ECB to remove its readiness to increase QE in size Danske Bank

The main event today is the meeting at the ECB with an announcement on the policy rate and quantitative easing (QE) due at 13:45 CET followed by President Mario Draghi's press conference, due to start at 14:30 CET, according to analysts at Danske Bank.

Key Quotes

“We expect the ECB to remove its readiness to increase QE in size (but to keep the flexibility in terms of duration) and to discuss tapering. In our view, a tapering discussion would be in line with the latest communication from Draghi, that in a situation where the economy continues to recover, monetary policy tightening could be needed in order to keep the policy stance 'broadly unchanged'. However, the risk is that Draghi will express some dovishness due to the latest EUR appreciation and surge in bond yields.”


09:27 USD/JPY extends post-BOJ recovery further beyond 112.00 handle

The USD/JPY pair extended its recovery move from sub-112.00 level and has now jumped to fresh session tops, recovering over 40-pips from lows touched ahead of the BOJ announcement. 

The pair caught some fresh bids near important moving averages (50, 100 & 200-day SMAs) confluence support around the 111.75 region and benefitted from the Bank of Japan's decision to maintain status quo. 

The central bank also pushed back the timing for achieving its 2% inflation target, reinforcing expectations that it is unlikely to change its accommodative stance and trim massive stimulus program anytime soon. The dovish policy statement added to lower-than-expected Japanese trade surplus data and was seen weighing on the domestic currency.

   •  BoJ: No surprises offered - TDS

Adding to this, a modest US Dollar recovery, and the prevalent risk-on environment further collaborated to the pair's up-move to session tops near 112.15-20 region.

   •  US Dollar extends the recovery above 94.70

The up-move, however, lacked any strong follow through buying interest as investors now look forward to the post meeting BOJ press conference, which could trigger a fresh bout of volatility around JPY crosses. 

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: "The previous two daily candles carry long lower shadows… suggesting dip demand. This, coupled with a bullish price RSI divergence suggests the spot is likely to cut through the falling channel hurdle of 112.14 and test 112.50-112.60 levels."

"However, the US-Japan 10-year yield spread is stagnant at 2.19. Furthermore, the 5-DMA is still sloping downwards. Thus, fresh offers could come-in around 112.50 levels. On the downside, only a daily close below 112.78 (200-DMA) would open doors for a sell-off to 110.93 levels" he added.
 


09:27 Switzerland Imports (MoM) fell from previous 16164M to 15926M in June


09:26 Switzerland Exports (MoM): 18738M (June) vs previous 19564M


09:16 FX option expiries for July 20 NY cut

FX option expiries for July 20 NY cut at 10:00 Easter Time, via DTCC, can be found below.

- EUR/USD: $1.1250(E1.39bn), $1.1300(E550mn), $1.1400(E747mn), $1.1500(E832mn), 

  $1.1530(E398mn) 

- GBP/USD: $1.2710-20(Gbp690mn), $1.3000(Gbp360mn), $1.3100(Gbp402mn) 

- USD/JPY: Y110.00($834mn), Y111.40-45($745mn), Y111.50-55($703mn),  Y111.65($320mn), Y112.00($395mn), Y112.65($310mn), Y113.00($591mn),  Y114.00($655mn) 

- AUD/USD: $0.7800(A$247mn), $0.7840-45(A$405mn) *USD/CAD: C$1.2950 ($1.19bn) 

- EUR/GBP: Gbp0.8786(E880mn), Gbp0.8800-08(E2.08bn), Gbp0.8850(E995mn) 

- EUR/JPY: Y127.00(E708mn), Y129.00(E751mn), Y129.50(E471mn) 

 


09:12 ECB seen cautious today UOB

FX Strategists at UOB Group assessed the prospects of today’s ECB meeting.

Key Quotes

“The ECB is likely to offer little shock and awe, but in lieu of new staff forecasts, Draghi’s presser will carry additional weight as market participants try to read between the lines”.

“We think Draghi will continue with his gradual drift in rhetoric towards the eventual end to QE and negative interest rates. However, he is likely to proceed with caution”.

“We expect QE tapering to be discussed at this meeting, and the Governing Council may well hold the first in-depth discussion about the further course of monetary policy in the coming year. It would be interesting to see if the ECB will drop the option to further raise the monthly bond purchasing volume. Dropping that promise from the post-meeting statement would be a small move toward announcing a phase-out of the stimulus”.

“But no concrete decisions are to be expected, with Draghi likely to underline the need for caution in withdrawing the stimulus, even whilst pointing out the Eurozone’s strengthening recovery”.

“It does look like we could head into the press conference with EUR/USD remaining over 1.15 but shy of the recent high. But with expectations for ECB stimulus removal priced in to some extent, we caution that potential disappointment may force position unwind, and EUR may be subjected to corrective moves lower”.


09:10 EUR/USD remains bid albeit with caution Commerzbank

Karen Jones, Head of FICC Technical Analysis at Commerzbank, noted the stance on EUR/USD remains positive and cautious at the same time.

Key Quotes

“No change, the market remains bid and although we are very cautious due to the second 13 count, and a second TD resistance at 1.1587, further gains look likely. We note that the new high has been accompanied by a divergence of the daily RSI and would allow for a retracement very near term. Nearby support is provided by the short term uptrend at 1.1361 and the high from mid June at 1.1296, and while above here, there is scope for 1.1616, the May 2016 high and then 1.1713/36 the August 2015 high and long term Fibo”.

“Failure at 1.1296 will trigger losses to the more important 1.1110 end of May low”.


09:09 AUD/USD exhibits a potential 52-week high

The AUD/USD has been nibbling at the 52-week high today, having pierced that performance metric on an intraday basis.

09:08 USD/JPY: Risk reversals see a slight improvement

The 1-month 25-delta risk reversal picked up slightly to -1.325 on Wednesday from Tuesday’s print of -1.35. 

That goes well with the rebound in the USD/JPY spot from the 200-DMA support 111.78, although the bigger picture still remains in favor of the Yen, given the risk reversal is still way below the recent high of -0.8. 

Watch out - A sustained move in the 25 delta risk reversal above -1 would signal the investors are once again betting on the upside in the USD/JPY. 

Source: Reuters


09:07 AUD/JPY exhibits a potential 52-week high

The AUD/JPY has been nibbling at the 52-week high today, having pierced that performance metric on an intraday basis.

09:03 Switzerland Trade Balance registered at 2810M, below expectations (2890M) in June


09:02 EUR/USD posts 52 week high

EUR/USD has posted a fresh 52-week high.

EUR/USD is trading at it highest level in 52 weeks, having pierced the psychological barrier on an intraday basis.

09:02 Germany Producer Price Index (YoY) came in at 2.4%, above forecasts (2.3%) in June


09:01 Germany Producer Price Index (MoM) came in at 0%, above expectations (-0.1%) in June


09:00 Fitch: China s regulation pledge could signal shift away from high growth targets

The US-based ratings agency, Fitch Ratings, published a latest report on China, stating that China's efforts to contain financial risks could shift the policy focus from achieving high economic growth targets, though policymakers are likely to remain cautious about the looming risks.

Key Points:

"This could signal rising potential for a more decisive shift in policy focus away from hitting high growth targets, but there is still uncertainty over whether the drive to address risks will continue to take priority if the economy slows."

Tightening is likely to become more targeted as authorities try to limit the impact on economic growth.

China will be wary of triggering a liquidity crunch through regulatory tightening, making an abrupt clampdown on shadow banking activities unlikely.

 


08:57 US Dollar extends the recovery above 94.70

The greenback, in terms of the US Dollar Index (DXY), keeps the rebound alive on Thursday, now flirting with session tops in the 94.70/75 band.

US Dollar focus on data, ECB

The index is navigating its second consecutive day with gains after three sessions with losses, including a test of fresh lows in the vicinity of 94.20, levels last seen in August 2016.

The buck has regained some attention in response to a now calmer US political scenario following the ‘Trumpcare’ fiasco, while increasing cautiousness among investors ahead of the key ECB gathering due later today is also lending support to USD.

All eyes on the ECB then, as another hawkish message from President Draghi could impact on the greenback and force DXY to re-visit the area of recent lows near 94.20. Market consensus, however, seems to favour a more significant message at the September meeting and expects Draghi to hint at some modification of the central bank’s monetary stance at the Jackson Hole Symposium in August.

On the US data front, the usual weekly report on the labour market is due followed by the Philly Fed manufacturing index.

US Dollar relevant levels

The index is up 0.08% at 94.72 facing the next hurdle at 95.16 (10-day sma) seconded by 95.67 (21-day sma) and finally 96.25 (high Jul.5). On the flip side, a break below 94.27 (2017 low Jul.18) would open the door to 94.20 (low Aug.26 2016) and then 94.05 (low Aug.18 2016).


08:56 AUD/USD stalls recent impressive rally just ahead of 0.80 handle

The AUD/USD pair faded Australian jobs data-led knee-jerk bullish spike closer to the key 0.80 psychological mark and seems to have stalled it's recent impressive rally to fresh 26-month highs.

The pair failed to build on early up-move, led by mostly in-line Australian jobs data, and retreated from higher levels as traders seemed inclined to take some profits off the table, amid extremely overbought conditions and especially after the recent upsurge of 400-pips over the past two weeks. 

   •  Australia: Great news continues for employment - TDS

In absence of any big positive surprise from today's employment details, a modest pickup in the US Dollar demand further collaborated to the pair's minor pull-back from the highest level since May 2015. Moreover, the current positive bias surrounding the US Treasury bond yields could also be one of the factors weighing on higher-yielding currencies - like the Aussie. 

However, a mildly positive trading sentiment around based metals continued lending support to commodity-linked currencies and limited further downside, at least for the time being. 

Traders now look forward to today's second-tier US economic releases - weekly jobless claims, Philly Fed manufacturing index and CB's leading index for some fresh impetus. 

Technical levels to watch

Currently trading around 0.7930 region, immediate support is seen near 0.7910-0.7900 area, which if broken could trigger a near-term corrective slide towards 0.7930 horizontal level with some intermediate support near 0.7865 area.

On the upside, the mid-0.7900s region now seems to act as immediate resistance, above which the pair is likely to make a fresh attempt towards reclaiming the 0.80 handle before extending its near-term upward trajectory.
 


08:47 South Africa: SARB to keep its policy rate on hold at 7.0% - TDS

In line with the consensus, analysts at TDS expect the SARB to keep its policy rate on hold at 7.0% today.

Key Quotes

“The South African economy remains weak, inflation performance in recent months has been good, and the rand, in spite of being buffeted by a fair bit of political noise, is more or less unchanged since the May MPC meeting. So we think there is a reasonable case for the SARB cutting its policy rate. However, the MPC has been taking a cautious approach to monetary policy, wary, amongst other things, of the possibility of a sharp rand sell-off due to negative political developments and/or a ratings downgrade.”

“The press statement of the May meeting said that “a reduction in rates would be possible should inflation continue to surprise on the downside and the forecast over the policy horizon be sustainably within the target range”.  We think that the MPC will want to wait further in order to become more confident that the longer-term inflation outlook is firmly anchored within the 3-6% target range. However, we expect the language in the press statement to adopt a more dovish tone, perhaps pointing to the possibility that rates could be cut at the September meeting.”


08:46 EUR/NOK: Short-term technical outlook have turned bearish - Natixis

The failure against the 9.6080-9.6170 area (daily Bollinger upper band) has triggered a sharp pullback for EUR/NOK cross and the ST technical outlooks have turned bearish with the emergence of a downside bubble on the daily chart.

Key Quotes

“Caution will be in order in the next few days as a break below the support at 9.3440 (weekly Bollinger moving average) suggests a more important bearish consolidation move towards 9.2480-9.2650 (monthly Bollinger moving average) ahead of 9.2020 (9-month moving average), the support at 9.1740 (50-week moving average) and even 9.0790. The resistances stand at 9.4380, at 9.4980, at 9.60809.6170 and at 9.6830."


08:41 UK: Retail sales to post flat reading of 0.4% for June - TDS

In view of analysts at TDS, the UK consumer likely held back on spending growth in June as political uncertainty and Brexit headlines continued to dominate the news cycle at the same time that real income growth became firmly entrenched in negative territory.

Key Quotes

“Nevertheless, with weather warmer than usual in the month, we look for downside risk to consensus, with a flat m/m reading (market: 0.4% m/m). With only one month of growth in the quarter, this still leaves Q2 retail sales gaining 1.2% q/q after a 1.6% decline in Q1.”


08:40 USD/CHF: Strong downside potential - Natixis

The sell signals on the daily indicators and the downside parallels on the weekly chart underline strong downside potential for the USD/CHF cross, according to Micaella Feldstein, Research Analyst at Natixis.

Key Quotes

“Against this backdrop, rallies should be short lived and we see a deeper decline to 0.9523 (quarterly Bollinger moving average) ahead of 0.94540.9470 (monthly Bollinger lower band).”

“We’ll be vigilant as a break below these last supports would signal a strong deterioration in the MT technical patter, unleashing added downside potential to 0.9267-0.9280 (quarterly parabolic). The resistances are at 0.9593-0.96, at 0.9640, at 0.97 and at 0.9736-0.9750.”


08:40 EUR/USD flat near daily lows, around 1.1510 ahead of ECB

The single currency is exchanging gains with losses on Thursday, taking EUR/USD to the lower end of the range near 1.1510.

EUR/USD attention to ECB

Spot is trading on a soft note for the second session in a row today, as market participants remain cautious ahead of the key ECB meeting due later in the day.

Expectations of some kind of announcement by the central bank regarding its QE programme have been sustaining the upbeat sentiment among traders as of late. In addition, investors seem to be leaning towards a somewhat hawkish message from the Council today, all supportive of the current upbeat momentum in EUR.

On the USD-side, the buck continues a mild recovery following Tuesday’s fresh multi-month lows in the 94.20 region when tracked by the US Dollar Index, currently navigating the 94.70 area ahead of the opening bell in Euroland.

In the data space, the European Commission will publish its consumer sentiment gauge, while initial claims and the Philly Fed manufacturing index will be in the limelight across the pond.

EUR/USD levels to watch

At the moment, the pair is losing 0.03% at 1.1511 facing the immediate support at 1.1462 (10-day sma) followed by 1.1391 (21-day sma) and finally 1.1369 (low Jul.13). On the upside, a breakout of 1.1585 (high Jul.18) would target 1.1616 (2016 high May 3) en route to 1.1713 (monthly high Aug.24).


08:39 GBP/USD stuck in 15-pips tight range ahead of UK retail sales

The GBP/USD pair extends its side-trend below 1.3050 levels for the second-day today, as markets remain in a wait-and-see mode ahead of the key UK retail sales data, which will be reported at 0830GMT

GBP/USD: 1.3100 or 1.2950 on UK retail sales?

The spot continues to move back and forth in a narrow range, fluctuating between gains and losses, as markets refrain from placing any directional bets on Cable ahead of the UK data and another round of Brexit talks.

Brexit minister David Davis will visit Brussels today and meet the EU Chief Brexit negotiator Barnier. They will assess the past four days of talks and outline what progress has been made so far. 

Moreover, stalled recovery in the US dollar from multi-month lows against its main competitors, helped limit the downside in the GBP/USD pair. The USD bulls tread water, as they digest the latest headlines on the US fiscal budget plan.

Apart from the UK retail sales release, the major could also get influenced by the cross-driven moves, especially on the ECB policy decision, which could have a significant impact on the EUR/GBP cross.

GBP/USD levels to consider             

Haresh Menghani, Analyst at FXStreet noted, “A convincing break below 1.30 handle now seems to accelerate the fall towards 1.2930-20 region, comprising of 20-day SMA and 38.2% Fibonacci retracement level, below which the pair is likely to extend the corrective move even below the 1.2900 handle towards testing 50% Fibonacci retracement level support near mid-1.2800s. Alternatively, a sustained move back above 1.3050-60 region should assist the pair back towards reclaiming the 1.3100 handle, which if conquered should pave way for resumption of the prior appreciating move.”


08:36 Australia: Great news continues for employment - TDS

Australia’s June employment increased by +14k, not the blockbuster that TDS were expecting, but the report was solid as fulltime employment expanded by another +62k, such that every net job created so far this year was full-time (35+ hrs/wk), explains the research team at TDS.

Key Quotes

“The unemployment rate ticked higher to 5.6% as the participation rate rose to 65%, as TD expected.”

“Governor Lowe speaks next Wednesday on “The Labour Market and Monetary Policy” and we expect him to remark that spare capacity in the labour market is being rapidly absorbed. As we wrote yesterday, wages growth is poised to reach 2½%/yr by Sept qtr this year.”

“In the meantime, all eyes on RBA Dep Gov Debelle’s Adelaide lunchtime speech tomorrow. He could not have anticipated this bullish shift in market sentiment heading into this speech. As Debelle is the BIS FX specialist, plus the audience will be filled with (wine) exporters, he will be asked about the exchange rate. While he is likely to just repeat the Bank’s party line that “an appreciating currency is unhelpful” we expect that phrase to be widely interpreted as jawboning. Subsequently, we may have seen the highs for the AUD for now given the rapid unexpected appreciation so far this month.”


08:03 BoJ: No surprises offered - TDS

Analysts at TDS explain that no surprises were offered from the BoJ as it maintained its 10year JGB yield target at 0% and policy balance rate at –0.1%.

Key Quotes

“The central bank downgraded its inflation forecast for FY 2017 to 1.1% and delayed the 2% inflation target to around FY 2019. On growth, it raised its GDP forecast for the FY 2018 from 1.6% to 1.8%. Overall, these forecast changes were largely expected, and the central bank shows itself becoming more constructive towards the outlook, especially on growth although inflation remains tepid.”


08:02 Asia stocks hit near-decade highs ahead of ECB

The stocks on the Asian bourses extended its recent bullish momentum and traded at the highest levels seen since December 2007.

The Asian indices tracked the upbeat tone seen in their Wall Street counterparts overnight, after the US stocks surged to new records on stronger corporate earnings.

Additionally, with the BOJ maintaining the dovish tone at its monetary policy review meeting, the Japanese corporates cheer an extended period of cheap money, in turn boosting the local stock markets. Focus now shifts towards the ECB policy outcome for further momentum on the region’s equities.

The Japanese Nikkei 225 index rises +0.57% to 20,135, Australia’s ASX 200 jumps +0.54% to 5,765, while the Shanghai Composite edged up 0.20% to 3,235 levels. Meanwhile, the MSCI World index inched up in its 10th straight session of gains on Thursday and set a record high for the sixth consecutive day.


07:54 AUD on a tear - ANZ

Analysts at ANZ suggest that whether you put it down to the more upbeat RBA minutes, the 30-odd% recovery in iron ore prices, the fact that Chinese activity has been surprising on the upside, or the generally weaker USD backdrop, the AUD has been on a tear of late, and is attempting to push back above 0.80 US cents for the first time since 2015.

Key Quotes

“NZD/AUD has subsequently fallen to its lowest levels since May, helped along of course by New Zealand’s surprisingly soft Q2 CPI report. Given the pace of the move, it appears the market has been caught out by this turn of events – we have too – as many economic indicators (GDP growth, unemployment, fiscal position, business cycle position, external debt etc) continue to sit in New Zealand’s favour. But as is often the case with this cross, any hints of a change can see abrupt moves.”


07:48 Australia: Headline CPI likely to surge 0.6% in June quarter - Westpac

Westpac’s forecast for the headline CPI is 0.6%qtr lifting the annual pace to 2.4%yr from 2.3%yr, according to Justin Smirk, Senior Economist at Westpac.

Key Quotes

June is seasonally a softer quarter with the ABS seasonal factors boosting our seasonally adjusted estimate to 0.8%qtr.”

“Key factors in Q2 are rising fruit, housing and health costs being partially offset by falling auto fuel.”

“Core inflation is forecast to print 0.5%qtr (0.54% at two decimal places) holding the annual rate flat at 1.8%yr. The trimmed mean is forecast to rise 0.51% while the weighted median forecast is 0.57%. The two quarter annualised pace of core inflation will lift slightly to 1.9%yr from 1.8%yr still holding below the bottom of the RBA’s target band; the two quarter pace has been below the band since June 2015.”

“Traded prices are forecast to rise 0.9%qtr/–1.2%yr and the surge in fruit prices post cyclone Debbie flow through. Clothing & footwear are expected to have a modest seasonal bounce while holiday travel faces seasonal discounting and audio visual & computing continue their deflationary trend.”

“Non-traded prices are forecast to rise 0.5% in Q2 due to the seasonal boost from medical & dental services & sound gains in housing costs via rising dwelling purchases prices.”

“There is a lot of interest in the impact of rising electricity prices in the September quarter CPI. For some guidance we have a preliminary estimate for the Q3 CPI. Incorporating a 16%qtr rise in electricity prices we are forecasting a 0.7%qtr rise in headline inflation but a modest 0.3%qtr rise in core inflation.”


07:46 Forex Today: Aussie pops & drops on jobs, Yen dips on BOJ, UK retail sales, ECB - Key

Forex today witnessed an eventful Asian session this Thursday, which kicked-off with the Japanese trade figures, followed the by Australian jobs and business confidence data, which had a limited positive impact on the Aussie. AUD/USD popped to fresh 2-year highs at 0.7987 on the Aus data releases, although quickly faded the upward spike to now trade in negative territory around 0.7940 levels. Its OZ neighbor, also, turned lower amid cautious market sentiment.

Meanwhile, the BOJ steady policy announcement was widely expected, but the Yen weakened against its American counterpart after the BOJ scaled back CPI expectations for the sixth time. Cable and EUR/USD traded modestly flat awaiting fresh fundamental catalysts from the session ahead.

Main topics in Asia

Australian June employment report: Solid reading, full time jobs soar

Australian June employment report came solid, with the employment change at 14k vs 15k exp and 42k prior, with full time job creation at 62k vs 52k last, while part time jobs came at -48k vs -10.1k last.

NAB - Exuberance in the business sector contradicts household sector slowdown

National Australia Bank's (NAB) business confidence remained steady at 7 q/q in Q2. 

US House budget committee approves fiscal 2018 budget plan that could be path to tax overhaul

As per Reuters report, House Republicans took the first step yesterday towards a plan to overhaul the US tax code.

BOJ keeps policy steady, upgrades economic outlook

The Bank of Japan (BOJ) concluded its 2-day policy review meeting, leaving left the monetary policy settings unadjusted, holding rates at -10bps, while maintaining 10yr JGB yield target at 0.00%.

BOJ: Risks to economy, prices are skewed to downside

The Bank of Japan (BOJ) pushed back the timing for hitting 2% inflation target and now sees inflation reaching the price target around fiscal 2019, the policy statement showed on Thursday.

Key Focus ahead

Next on tap for the markets, in terms of the economic events, remain the BOJ post-policy decision press conference due to be addressed by Governor Kuroda, while the German PPI data will be also on the cards pre-European open. In Europe, the Eurozone current account and UK retail sales figures will be published. However, the main risk event for today remains the ECB policy decision and Draghi’s presser.

Moving on, the US docket offers the usual weekly jobless claims, followed by Philly Fed manufacturing index and consumer confidence numbers from the Euroland.

GBP/USD holds above 38.2% Fib ahead of the UK retail sales release

GBP/USD did fail at the resistance offered by the trend line sloping downwards from Aug 2015 high and May 2016 high, but the subsequent losses have been capped around 1.3006 - 38.2% Fib R of 1.2812-1.3126. 

EUR/USD: Bulls defending 1.15 handle ahead of ECB

The EUR/USD pair extends its defensive mode into Asia, although holds above 1.15 handle, as investors gear up for the ECB monetary policy decision for the next direction.

ECB Preview: ECB this week to toughen their language marginally - BAML

Bank of America Merrill Lynch (BAML) analysts offers a sneak peek into Thursday’s ECB monetary policy decision and its impact on the common currency.

ECB: to keep its asset purchases open-ended? - BBH

Analysts at Brown Brothers Harriman explained that a press report, citing an unspecified official, suggested that the ECB wants to keep its asset purchases open-ended.  

 


07:33 Japan All Industry Activity Index (MoM) came in at -0.9% below forecasts (-0.8%) in May


07:32 Netherlands, The Unemployment Rate s.a (3M) fell from previous 5.1% to 4.9% in June


07:31 Netherlands, The Consumer Spending Volume down to 2.2% in May from previous 2.7%


07:31 Netherlands, The Consumer Confidence Adj: 25 (July) vs 23


07:28 Australia: Business sector continues to look upbeat - NAB

The Australian business sector continues to look upbeat, both with respect to current business activity – also evident in the NAB Monthly Business Survey – and importantly, the near-term outlook, notes the analysis team at NAB.

Key Quotes

“While movements in leading indicators were somewhat mixed this quarter, overall they point to a continuation of the recent strength, which is feeding into solid employment and investment intentions. Non-mining business investment remains crucial to the outlook, so it is encouraging to see that the index for capex plans over the next 12 months is holding up at solid levels.”

“Similarly, firms are saying that their hiring intentions for the very near-term are higher than last quarter, while intentions for the next year are holding up near multi-year highs. The strength we have seen in business conditions has been relatively broad based across industries, and we are seeing some of the previous underperformers lift. That said, there are mixed signals from the retail sector which warrant close monitoring given the importance of consumption to economic growth. In that respect, it is reassuring to see some tentative signs of a lift in wage pressures in the Survey.”


07:22 Australia: Solid update with robust gains in full-time employment - Westpac

It was a solid update from the Australian June Labour Force survey as the 14k gain was on market expectations and only modestly less than our 20k forecast, explains Justin Smirk, Research Analyst at Westpac.

Key Quotes

“This gain holds the annual pace a 2% which is consistent with our broad indicator of labour demand – Westpac’s Jobs Index. We should note that the Jobs Index is pointing to employment growth accelerating through to mid Q4. We are not looking for a slowdown in employment growth until year end or early 2018.”

“In June, total employment rose 14.0k for a 101.2k total gain over the last three months or an average of 33.7k per month. The annual pace of employment growth has lifted from 0.9%yr in February to 2.0%yr in May and it held that pace in June. In the year to Feb there was a 106.9k gain in employment; in the year to June this has lifted to 240.2k. The Australian labour market went through a soft patch in 2016 that was particularly pronounced through August to November when the average gain in employment per month was a paltry 2.2k. We have clearly bounced out of this soft patch and now holding a firmer trend.”

“There was the usual volatility in full-time/part-time employment but over the past few months the results are more indicative of a robust labour market. Full-time employment rose 62.0k following on from a solid 53.4k gain in May. In the year full-time employment gained 175.4k for a 2.1%yr pace which sees the pace of full-time employment growth now exceeding the pace of growth in the working age population. Part-time employment fell 48.0k following a –15.4k in May. In the year to June, part-time employment has lifted 64.8k and at 1.7%yr pace it is the first time since March 2015 that the annual pace of part-time employment growth has been slower than that for full-time employment.”

“A further sign of the overall strength of this report was the 0.5% lift in hours worked following the 1.7%mth jump in May. The annual pace for total hours worked lifted to 3.3%yr which is the fastest pace seen since December 2015.”

“The reported gain in employment was also associated with a 0.1ppt lift in participation to 65.0 which saw a 27.1k gain in the labour force thus holding the unemployment flat at 5.6% (at two decimal places the unemployment rate was 5.65% from 5.56% in May so it was a smidgin off being rounded up to 5.7%). We believe we have seen the low point for unemployment in this cycle and expect it to hold around 5.6% until it starts to drift higher from end 2017.”

“Last month we reported a promising decline in youth unemployment; in June youth unemployment rose to 13.1% from 12.7%, back close to where it was in March.”

“By state, there were solid gains in NSW (+3.6k), Vic (+3.7k), SA (4.6k) and WA (6.9k). The only mainland state to report a decline was Qld (–1.0k). This saw a flat unemployment rate in NSW (4.8%) a fall in Vic (5.9% from 6.0%) and SA (6.6% from 6.9%) while the unemployment rate lifted in Qld (6.5% from 6.1%) and WA (5.6% from 5.5%).”

“All up this was positive update on the labour market following the robust trend sent by the leading indicators. While we still expect the monthly numbers to be quite volatile, the Jobs is pointing to total employment growth could hit 2¼% by year’s end. This estimate is now looking far more plausible.”

 


07:16 ADB: Asia growth outlook brightens on strong exports RTRS

In its update of the Asian Development Outlook on Thursday, the Asian Development Bank (ADB) raised its 2017 and 2018 growth forecasts for the region, Reuters reports.

Key Highlights via Reuters:

“Developing Asia - made up of 45 countries in the Asia-Pacific region - is expected to grow 5.9 percent and 5.8 percent this year and next

They are a step up from April forecasts of 5.7 percent for both years.

The update of the Development Outlook raised China's 2017 and 2018 growth forecasts to 6.7 percent and 6.4 percent, respectively, from 6.5 percent and 6.2 percent, driven by strong consumption and improving shipments.

It cut this year's inflation projection to 2.6 percent from 3.0 percent, and next year's forecast to 3.0 percent from 3.2 percent.”

 


06:56 China, US agreed to work on reducing US trade deficit with China - RTRS

Reuters reporting comments from the Chinese embassy in Washington on trade talks with the US.

Key Headlines:

US and China acknowledged 'significant' progress on 100-day action plan for trade

China, US discussed 1-yr action plan on economic cooperation

China, US agreed to work on reducing US trade deficit with China

Both sides agreed to increase trade and services, create more equitable investment environment


06:39 EUR/JPY keeps gains above 129.00 on BOJ, focus shifts to ECB

The offered tone behind the Japanese yen weakened a bit on the release of the BOJ policy decision and quarterly economic report, now pushing EUR/JPY further beyond 129 handle.

EUR/JPY: Will it regain 129.80 on ECB?

The EUR/JPY pair now rises +0.16% to trade near daily tops of 129.15 levels, having found fresh buyers at 128.80. The cross remains on the front foot so far this session, with the upside gaining traction on renewed JPY weakness after the BOJ scaled back CPI expectations for the next three years, leaving the monetary policy settings unchanged, while also signaling that it will continue to maintain its accommodative monetary policy stance.

On the EUR-side of the equation, the EUR/USD pair trades near daily lows just ahead of 1.15 handle, offering little impetus to the cross, as investors remain on the edge ahead of the much-awaited ECB monetary policy decision, with a hawkish bias widely expected.

In the meantime, the pair may also take fresh cues from the BOJ Governor Kuroda’s post-policy press conference due around 0630 GMT.

EUR/JPY: Technical Levels                               

Higher side: 129.39/50 (10-DMA/ psychological levels), 130 (round figure), 130.72/81 (multi-month tops)

Lower side: 128.58 (Jul 19 low), 127.99 (classic S2/ Fib S3), 126.44 (Jun 28 low)

 


06:28 USD/JPY peeps above 112.00, BOJ pushes back timing for hitting 2% CPI target

The Dollar-Yen pair clocked a session high of 112.12 after the Bank of Japan (BOJ) held key rates unchanged and boosted the economic outlook. 

The central bank also revised its inflation forecasts lower as expected and pushed back the timing for hitting the 2% inflation target. The bank now sees inflation reaching 2% around the fiscal year 2019. 

Core CPI forecast revised lower

Core CPI is seen at 1.5% in 2018/19 as opposed to 1.7% projected in April. The 2019/20 forecast has been revised lower to 1.8% from 1.9%. In its quarterly report, the bank says “the recent moves in CPI have been relatively weak and the central bank will make policy adjustments as appropriate with view to maintaining momentum towards achieving the price target”. 

The commentary on inflation could be the one capping gains in the USD/JPY pair.

USD/JPY Technical Levels

A break above 112.23 (5-DMA) would open up upside towards 112.73 (July 4 low) and 112.93 (June 29 high). On the downside, breach of support at 112.00 would expose 111.78 (200-DMA) and 111.65 (50% Fib R of 108.80-114.49). 

 


06:18 BOJ: Risks to economy, prices are skewed to downside

The Bank of Japan (BOJ) pushed back the timing for hitting 2% inflation target and now sees inflation reaching the price target around fiscal 2019, the policy statement showed on Thursday.

Key Points from BOJ’s Quarterly report:

Recent moves in CPI have been relatively weak

Rise in medium to long term inflation expectations has been lagging behind somewhat

Inflation expectations projected to rise as firms gradually raise wages, prices

CPI  likely to continue uptrend, increase toward 2 pct

Projected rate of increase in CPI is lower mainly for the first half of 3 year projection period

Risks to economy, prices are skewed to downside

Momentum toward hitting price target is maintained but not yet sufficiently firm

BOJ to make policy adjustments as appropriate with view to maintaining momentum toward achieving price target

 


06:13 Japan BoJ Interest Rate Decision meets expectations (-0.1%)


06:12 BOJ keeps policy steady, upgrades economic outlook

The Bank of Japan (BOJ) concluded its 2-day policy review meeting, leaving left the monetary policy settings unadjusted, holding rates at -10bps, while maintaining 10yr JGB yield target at 0.00%.

The central bank, however, upgraded the Japanese economic outlook in its quarterly outlook report.


06:10 EUR/USD: Bulls defending 1.15 handle ahead of ECB

The EUR/USD pair extends its defensive mode into Asia, although holds above 1.15 handle, as investors gear up for the ECB monetary policy decision for the next direction.

EUR/USD: ECB to disappoint the hawks?

The spot remains better bid so far this Thursday, having stalled its corrective-slide at 1.1510 from multi-month tops of 1.1583. The sentiment around the EUR/USD pair remains buoyed amid a broadly subdued US dollar, as Treasury yields remain on the back foot, with investors digesting the latest headlines surrounding the US politics.

US House budget committee approves fiscal 2018 budget plan that could be path to tax overhaul

 Further upside, however, appears to lack momentum, as markets remain cautious over the ECB’s next policy move, which is widely expected to be announced today. Goldman Sachs’ analysts noted: “We leave our forecast of ECB policy unchanged. This includes that we expect no change in policy rates or asset purchases for the reminder of 2017. We expect the ECB to taper its asset purchases gradually during 2018. We do not expect a rate hike until 2019.” 

Here's Why the ECB (Draghi) Could Disappoint

Ahead of the ECB policy decision, the BOJ policy outcome will provide fresh trading impetus to the USD/JPY pair, which could have a major impact on the USD dynamics and eventually on EUR/USD.

EUR/USD Technical Set-up  

According to Valeria Bednarik, Chief Analyst at FXStreet, “Technical indicators in the mentioned chart have corrected extreme overbought readings before losing downward strength within positive territory. The bearish potential will increase on a downward acceleration below 1.1490, while the key resistance comes at 1.1615, May 2016 high, with gains beyond the level favoring another 100 pips' gain. Support levels: 1.1490 1.1460 1.1420 Resistance levels 1.1550 1.1580 1.1615.”


06:09 GBP/USD holds above 38.2% Fib ahead of the UK retail sales release

GBP/USD did fail at the resistance offered by the trend line sloping downwards from Aug 2015 high and May 2016 high, but the subsequent losses have been capped around 1.3006 - 38.2% Fib R of 1.2812-1.3126. 

Focus on UK retail sales

The UK consumer spending as represented by the retail sales is seen rising 0.4% in June as opposed to a 1.2% drop seen in May. Retail sales ex fuel is seen rising 0.5% compared to 1.65 drop registered in May. 

June had ‘perfect conditions for retailers’ - BRC

The British Retail Consortium (BRC) data released earlier this month showed a 1.2% rise in retail sales in June. The BRC said June had the "perfect conditions" for retailers. Non-food category registered a pickup in sales.

Going by the BRC numbers, one may expect the official retail sales figure to print on the higher side of the estimates. However, Visa’s consumer spending index shows consumer spending declined almost to a four year low in the second quarter of 2017, largely due to a drop in the spending on non-essential items.

GBP/USD could retake 1.31 handle if the retail sales figure beats estimates and shows a pickup in the retail sales - non-essential category. Sales of essentials - food items are seen rising owing to higher inflation. 

GBP/USD Outlook

The spot was last seen trading around 1.3030 levels. 

FXStreet Chief Analyst Valeria Bednarik writes, “From a technical point of view, the Intraday picture is neutral-to-bearish, as the pair developed below its 20 SMA, whilst the Momentum indicator remains horizontal, right below its mid-line, whilst the RSI indicator heads marginally lower within neutral territory.”

Kathy Lien from BK Asset Management sees GBP/USD falling below 1.30 levels if the retail sales miss estimates. She writes, “Ever since Governor Mark Carney suggested that rates could rise, the market started to doubt his hawkishness.  Softer data validated the market's scepticism and if retail sales also miss, GBP/USD will find itself well below 1.30. This retail sales report will determine how GBP trades for the rest of the week and the move that transpires will have continuation.”

 


06:03 AUD/USD sellers alleviate upside pressure

AUD/USD traders could soon see a period of short-term weakness on an intraday basis, allowing for some severe overbought studies to unwind.

The 50 SMA is above the 200 SMA on the hourly chart, at a distance superior to the daily ATR. This indicates an up-trending condition.

Longer-term traders following the 4H stochastic above 50%, don’t necessarily need to liquidate their long positions, but the 1-hour stochastic is increasingly hinting that it could be necessary soon.

The oscillator has build a plateau above the 70% level for more than eight hours and has just abandoned overbought territory with the recent hourly close. This is a warning of a potentially important short-term top.

05:42 US House budget committee approves fiscal 2018 budget plan that could be path to tax overhaul

As per Reuters report, House Republicans took the first step yesterday towards a plan to overhaul the US tax code. The committee was expected to approve the measure, which amounts to a blueprint for the fiscal 2018 spending plan. 


05:28 AUD/JPY turns negative as the Aussie bond yields surrender gains

The AUD/JPY cross now trades negative on the day around 88.90, tracking the failure on the part of the Aussie bond yields to maintain post-jobs data gains. 

The 10-year Aussie yield backed-off from the session high of 2.279% and was last seen trading around 2.754%. On similar lines, the 2-year yield clocked a high of 1.968% before falling back to 1.928%. 

Overbought conditions weighing over Aussie pairs

The jobs report, especially the full time component, underscored the labor market tightening. Still, the AUD pairs are now trading in the red. This could be due to overbought technical conditions. For example - the 14-day RSI on the AUD/JPY and AUD/USD cross extremely overbought. 

AUD/JPY Technical Levels

On the 1-hour chart, the 50-MA, 100-MA & 200-MA are still sloping upwards suggesting dips could be short lived. The 1-hour 50-MA is seen offering support at 89.02, which, if breached would expose 88.50 (5-DMA) and 88.28 (Support on 4-hour chart). 

On the higher side, an end of the day close above 89.07 (161.8% Fib extension of the June 6 low - June 20 high - June 22 low) would open up upside towards 90.02 (Apr 2011 high). 

 


05:20 China SAFE: Expectations on CNY depreciation drop in H1

Headlines out from China’s FX regulator, the State Administration of Foreign Exchange (SAFE), on the recent Yuan depreciation.

Key Headlines:

H1 FX sale ratio falls significantly

H1 companies’ forex purchase ratio rises

Expectations on CNY depreciation drop in H1

Cross-border capital flows stabilising in H1, forex market supply and demand basically stable


05:15 Canadas house prices are an important risk that warrants monitoring Goldman Sachs

Economists at Goldman Sachs are out with their latest review on the Canadian housing markets, trying to explain "Is Canada's housing market in 2017 comparable to the US's in 2007?"

Key Points:

“The sharp rise in Canada's home prices has invited comparisons to the US housing market in the run-up to the Global Financial Crisis. 

In addition, most Canadian mortgages have 25-year amortization schedules but 5-year terms, and thus many borrowers may be forced in the coming years to refinance their loans at higher mortgage rates.

Given the potential risks that a housing downturn could pose to the Canadian economy, we address here the question "Is Canada's housing market in 2017 comparable to the US's in 2007?"

We think the comparison of Canada to the US in 2007 overlooks important institutional differences between the two markets, including differences in prevailing lending standards.

That said, Canada appears to have one of the more stretched housing markets within the DM.

Our bust model indicates a 30% probability of a real house price decline of 5% or greater over the next two years, suggesting that Canadian house prices are an important risk that warrants monitoring by global investors.”

 

 


05:09 AUD/USD fades a spike to 0.7990, solid Aus jobs ignored?

The AUD/USD pair rallied hard and posted fresh two-year tops at 0.7987 in a knee-jerk reaction to solid Australian jobs report, although failed to sustain at higher levels and reverted to the familiar range near 0.7360 region.

AUD/USD drops back to test 0.7950

The Aussie erased most gains and now trades near the mid-point of 0.79 handle, after having ran into fresh offers last minutes, despite stronger-than expected Aus full time employment numbers, as investors assess Australia’s mixed NAB business confidence data, The NAB business  confidence gauge highlighted that the exuberance in the business sector contradicts household sector slowdown.

Meanwhile, the US dollar trades broadly subdued, having limited impact on the Aussie pair, while renewed weakness in oil also adds to the latest move lower in the commodity. Moreover, increased nervousness ahead of the key BOJ and ECB monetary policy decisions also undermine the sentiment behind the higher-yielding currency AUD.

AUD/USD Levels to watch   

At 0.7954, the pair finds the immediate resistance at 0.7987 (2-yr highs) above which gains could be extended to the next hurdle located 0.8000 (round figure) and 0.8050 (psychological levels). On the flip side, the immediate support is located at 0.7900 (round figure). Selling pressure is likely to intensify below the last, dragging the Aussie to 0.7881 (classic S3) and below that 0.7839 (Jul 14 top).

 


05:09 EUR/USD posts 52 week high

EUR/USD has posted a fresh 52-week high.

EUR/USD is trading at it highest level in 52 weeks, having pierced the psychological barrier on an intraday basis.

05:05 AUD/USD exhibits a potential 52-week high

The AUD/USD has been nibbling at the 52-week high today, having pierced that performance metric on an intraday basis.

05:03 AUD/JPY posts 52 week high

AUD/JPY has posted a fresh 52-week high.

AUD/JPY is trading at it highest level in 52 weeks, having pierced the psychological barrier on an intraday basis.

04:59 NAB - Exuberance in the business sector contradicts household sector slowdown

National Australia Bank's (NAB) business confidence jumped to 7 q/q in Q2. The conditions index jumped 4 points, to +13 index points, which is well above the long-run average and its highest level since early 2008.

According to NAB Group Chief Economist Alan Oster, “There is no denying that the business sector is showing an exuberance that is clearly disconnected from what we are seeing in the household sector. It is still unclear how that disparity is likely to play out, and our recently released NAB Cashless Retail indicator suggests some near-term softness in spending, but some of the other trends we are seeing in the Survey in terms of hiring intentions and even wages might give us some cause for optimism”.

Key points

The Survey indicates that quarterly labour costs growth has lifted from 0.3% q/q in late 2015, to 0.6% in Q2 2017

While movements in leading indicators were somewhat mixed this quarter, overall they point to a continuation of the recent strength, which is feeding into solid employment and investment intentions

The Survey is generally suggesting a slow build of inflationary pressures

Firms are still very upbeat about the short-term outlook, which hopefully means that we will see a continuation of the current strength in business conditions

We are seeing some of the previous underperformers lift, which is good news in terms of where we are in the economic cycle


04:50 Japan Cabinet Office: Japanese economy remains in a moderate recovery

The Japanese Cabinet Office published their latest monthly economic report for July, highlighting the following:

Japanese economy remains in a "moderate recovery"

Consumption "picking up moderately"

Capital investment (business capex) "picking up"

Producer prices eased (compared to June's report saying they were rising moderately)

The Cabinet Office say the outlook for these has not changed.

Global economy recovering moderately


04:45 Aussie bond yields spike on upbeat jobs data, AUD/USD eyes 0.80 handle

A big jump in the Aussie full time employment numbers pushed the 10-year bond yield higher by 5 basis points to 2.794%. The overbought AUD/USD clocked a high of 0.7988 and looks set to test the major psychological hurdle of 0.80 for the first time since May 2015. 

Employment increased 26,400

The Australian June employment report came solid, with the employment change at 14k vs 15k exp. The jobless rate ticked higher to 5.6% as expected. The full time employment came-in at 62K in June vs 52.1K in May. 

The strong numbers also boosted the 2-year yield, which now trades 4 basis points higher on the day. However, the near 90 degree rally in the AUD/USD and the resulting overbought RSI is slowing the ascent towards 0.80 handle. 

AUD/USD Technical Levels

On the higher side, breach of the major psychological level of 0.80 would expose the downward sloping weekly 200-MA of 0.8015. The next major hurdle is seen at 0.8164 (May 2015 high). On the downside, breach of the session low of 0.7946 would expose 0.7894 (5-DMA) and 0.7860 (1-hour 100-MA).  

 


04:42 AUD/NZD: Bulls back in control, re-takes 1.0850 on Aus jobs

Australia’s stronger-than expected full time employment figures combined with better business confidence data offered the much-needed impetus to the AUD bulls, sparking a fresh rebound in AUD/NZD in a bid to regain 1.0850 barrier.

Australian June employment report: Solid reading, full time jobs soar

The cross brought an end to its consolidative-mode at higher levels and broke further to the upside, following the release of solid Aus jobs report, with the prices now printing fresh two-month tops at 1.0840 levels.

However, it remains to be seen whether the AUD/NZD pair manages extend the upside above the mid-point of 1.08 handle, as the Kiwi remains better bid amid broad based US dollar softness and overnight rally in oil prices, which keeps the sentiment around the resource-lined NZD underpinned.

Technical Levels

On the lower side, breach of support at 1.0790 (daily pivot) could yield a pullback to 1.0743 (5-DMA) and to 1.0700 (zero figure). A break above 1.0877 (classic R2/ Fib R3) would expose 1.0900 (zero figure) and 1.0916 (May 2 low).


04:33 Australian June employment report: Solid reading, full time jobs soar

Australian June employment report came solid, with the employment change at 14k vs 15k exp and 42k prior, with full time job creation at 62k vs 52k last, while part time jobs came at -48k vs -10.1k last. The participation rate stood at 65%, while the unemployment rate was 5.6%vs 5.6% exp and 5.5% last

JUNE KEY POINTS

TREND ESTIMATES (MONTHLY CHANGE) 

  • Employment increased 26,400 to 12,160,100.
  • Unemployment decreased 3,700 to 726,800.
  • Unemployment rate decreased less than 0.1 pts to 5.6%.
  • Participation rate remained steady at 64.9%.
  • Monthly hours worked in all jobs increased 6.2 million hours (0.4%) to 1,691.5 million hours.

SEASONALLY ADJUSTED ESTIMATES (MONTHLY CHANGE) 

  • Employment increased 14,000 to 12,166,900. Full-time employment increased 62,000 to 8,356,000 and part-time employment decreased 48,000 to 3,810,800.
  • Unemployment increased 13,100 to 728,100. The number of unemployed persons looking for full-time work increased 9,200 to 500,600 and the number of unemployed persons only looking for part-time work increased 3,900 to 227,500.
  • Unemployment rate remained steady at 5.6%, following a revised May 2017 estimate.
  • Participation rate increased by 0.1 pts to 65%.
  • Monthly hours worked in all jobs increased 8.9 million hours (0.5%) to 1,703.5 million hours.

04:33 Australia National Australia Bank s Business Confidence (QoQ) climbed from previous 6 to 7 in 2Q


04:32 Australia Part-time employment fell from previous -10.1K to -48K in June


04:32 Australia Employment Change s.a. came in at 14K below forecasts (15K) in June


04:31 Australia Participation Rate above forecasts (64.9%) in June: Actual (65%)


04:31 Australia Fulltime employment rose from previous 52.1Kto 62K in June


04:31 Australia Unemployment Rate s.a. in line with forecasts (5.6%) in June


04:28 Australias PM Turnbull warns borrowers about rates going up - AFR

The Australian Financial Review (AFR) out with the latest headlines from the Australian PM Turnbull, as he spoke on the RBA’s monetary policy in an interview with Radio 3AW on Thursday.

Key Quotes:

"They are not saying they are going to do that tomorrow."

"But I think they are sending a signal, which is probably prudent, which is to say ... rates are more likely to go up than go down."


04:16 PBOC sets the Yuan reference rate at 6.7464

The People's Bank of China (PBOC) set the Yuan reference rate at 6.7464 vs. Wednesday's fix of 6.7451


04:09 AUD/JPY sits above weekly 200-MA ahead of Aussie jobs data

AUD/JPY jumped above 88.69 - weekly 200-MA earlier this week and peeped above 89.00 in the Asian session today. 

Stuck at 161.8% Fib extension

The cross is struggling to take out 89.07 (161.8% Fib extension of the June 6 low - June 20 high - June 22 low) despite the bullish crossover between the 50-DMA and the 100-DMA. 

Eyes Aussie jobs data 

The unemployment rate is seen rising to 5.6% in June from May’s figure of 5.5%. The economy is seen adding 15K jobs in June. Traders should also take note of the part time and the full time employment numbers. 

A better-than-expected number could boost speculation of RBA rate hike and push the AUD/JPY cross towards 90.00 levels. 

AUD/JPY Technical Levels

The pair clocked a high of 89.11 in Asia before trimming gains to trade around 88.95 levels. A break above 89.30 (May 2011 high) would expose 90.02 (Apr 2011 high). On the downside, a failure to hold above 88.72 (monthly 50-MA) could yield a pullback to 88.00 (zero levels).  

 


03:55 EUR/JPY awaits both BoJ and ECB, a bullish bias for 130.68 still?

Currently, EUR/JPY is trading at 128.89, down -0.03% on the day, having posted a daily high at 129.04 and low at 128.80.

Moves in EUR/JPY have been relatively modest considering the key events in the BoJ and ECB scheduled for today. There was some profit taking in EUR/USD on the 1.15 handle that subsequently pulled bids in the cross. The yen rallied in London before US traders knuckled down and took on the bears, lifting Wall Street with improved earnings and risk sentiment.

"Investors are looking for excuses to re-buy the common currency, which means that fundamentally, the upside is favoured," argued Valeri Bednarik, chief analyst at FXStreet. However, the outcome of tonight's BoJ and ECB will be the catalysts for any near term direction. 

EUR/JPY levels

"The market has failed on its initial attempt on the the 200-week ma at 130.68 and is easing back from here," noted analysts at Commerzbank. "Dips lower should find that the previous May high offers initial support at 125.80, together with the 126.61 uptrends. Initial support is 127.35 the end of June low. Above 130.71/76 targets 134.32/61.8% of the move down from 2014. Where are we wrong near term? The uptrend guards 122.56/40, the 18th May low and the recent low," explained the analysts at Commerzbank. 


03:44 Japan s exports rose for a seventh straight month in June

The official data released today showed the Japanese exports rose for a seventh straight month in June, led by shipments of cars and electronics, pointing to a sustained economic recovery. 

Exports grew 9.7% year-on-year in June, versus a 9.5% annual gain expected by economists in a Reuters poll. It followed a 14.9% year-on-year rise in the previous month. Imports rose 15.5% in the year to June, versus the median estimate of a 14.6% gain. That resulted in a trade surplus of JPY 439.9 billion. 

Key point

The trade surplus with the United States fell 4.9% to JPY 587.4 billion

Exports to China, Japan's biggest trading partner, increased 19.5% year-on-year in June


03:31 USD/CNY fix projections: 6.7518 - Nomura

Analysts at Nomura's projections for today's USD/CNY fix...

Key Quotes:

"Our model1 projects the fix to be 67 pips higher than the previous fix (6.7518 from 6.7451) and 38 pips lower than the previous official spot USD/CNY close of 6.7556. The basket implied change is 45 pips lower than the previous official spot USD/CNY close (6.7511 from 6.7556)."


03:30 USD/JPY - Death Cross confirmed ahead of the BOJ rate decision, is the sell-off over?

The daily chart of the Dollar-Yen pair carries a ‘Death Cross’ - bearish crossover between the 50-DMA and 200-DMA ahead of the Bank of Japan rate decision. The bearish crossover was last seen in January 2016 and was followed by a big sell-off in the pair. 

However, historical data shows - more often than not the crossover between the short-term and long-term moving average works well as a contrarian indicator… Jan 2016 being an exception, given the spot was coming off the highest level since 2002. 

Focus on BOJ

The central bank is widely expected to keep rates unchanged and retain QQE with yield curve control policy and thus ensure that the Japanese Yen remains a sitting duck amid rising global rate environment. The sell-off from the recent high of 114.49 would gather pace if the BOJ turns hawkish, although the odds of such an outcome are very low. 

James Chen from Forex.com writes, “If the BoJ delivers a dovish statement on Thursday, as is likely to be the case, resulting pressure on the yen could push USD/JPY back up. This could especially be the case if the recently well-oversold dollar stages an overdue relief rebound. In such an event, a move back above 112.00 could prompt the currency pair to begin targeting key upside resistance at 115.00 once again.”

USD/JPY Technicals

The previous two daily candles carry long lower shadow, suggesting dip demand. The dips to/below the 200-DMA have been short lived. 

“Technically risks remain to the downside” - FXStreet Chief Analyst Valeria Bednarik

“Technically, the risk remains towards the downside, given that in the 4 hour chart, the price is right below its 200 SMA and barely holding above the 50% retracement of its June/July advance at 111.60, the immediate support, whilst technical indicators lost directional strength, but remain well below their mid-lines.”

 


03:26 Earthquake in Northern Japan, felt in Tokyo

Japan's public broadcaster (NHK) notes that an earthquake has occurred in Northern Japan, which was also felt in Tokyo. 

Headlines

Earthquake at a 4 point scale out of 7

No tsunami alert issued, said to be no tsunami threat

Magnitude 5.6 quake says NHK, Pacific Tsunami Warning Center says magnitude 5.8, hit Honshu


03:26 When are the announcements from the BoJ and how could they affect USD/JPY?

The BoJ's two-day policy meeting concludes today and as usual, the announcements will fall between a potential window of 0200GMT to 0330GMT. If the policy is on hold, then the BoJ will likely make the announcements earlier within that window than later based on previous timings. There will also be the release of its latest economic outlook report at 03:00 GMT and the press conference from Bank of Japan Governor Kuroda after the announcements scheduled for 06:30 GMT. The markets are expecting a somewhat dovish announcement considering the strength of the yen and how far away the 2% inflation target remains.  

The Bank of Japan (BOJ) is expected to:

  • Retain ‘QQE with yield curve control’ policy
  • Keep rates unchanged - the interest rate on the excess reserves (IOER) at - 0.10% and the 10Y JGB yield target at zero percent
  • Retain the "JPY80 trillion" language to describe the pace of increase in the balances of its JGB holdings
  • To raise its growth forecasts on the back of strong export growth
  • Acknowledge the slight improvement in the domestic demand, consumer confidence
  • Revise inflation forecasts lower

How could the outcome affect USD/JPY?

Omkar Godbole, analyst and editor at FXStreetalready offered detailed analyses of the price of USD/JPY in respect to the meeting as follows:

  • The 200-DMA has nicely bottomed out and is now sloping upwards the way it did before the spot began the big rally in November 2012.
  • A nice rising bottom formation is in place on the weekly chart.
  • The bigger picture remains bullish unless we see a sustained break below 110.00 levels. On the higher side, a break above the recent high of 114.49 would signal the rally from the April low of 108.13 has resumed.
  • The spot could revisit and possibly break above 114.49 over the next week or so if the BOJ drops a dovish bomb tomorrow.
  • If all goes as expected, the Dollar-Yen pair may dip to 110.93 in line with the bearish short-term technical picture.

Key notes:

  • BOJ Preview: Yen to remain a sitting duck
  • USD/JPY analysis: technically bearish, but BOJ in the way
  • Will USD/JPY head higher after the BoJ policy decision?
  • USD/JPY: a dovish outcome expected from BOJ, a bearish bias for USD/JPY?

About the BoJ interest rate decision

BoJ Interest Rate Decision is announced by the Bank of Japan. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the JPY. Likewise, if the BoJ has a dovish view on the Japanese economy and keeps the ongoing interest rate, or cuts the interest rate it is negative, or bearish.


02:56 Japan Adjusted Merchandise Trade Balance came in at 81.4B below forecasts (127.5B) in June


02:55 Overnight markets: risk-on, will Tokyo follow the lead? - Westpac

Analysts at ANZ offered a snapshot of overnight action from the US shift.

Key Quotes:

Equities rose with better earnings, while rates were little changed and the US dollar was mixed to lower.

The S&P 500 was up 0.5% at the time of writing, with tech stocks leading gains. European bourses finished 0.6-0.8% higher ahead of the ECB meeting tonight, while EUR dropped around 0.3%, but is still above 1.15.

AUD and CAD continued to rise, with firmer commodity prices and firm Canadian activity data.

USD/JPY is trading at key technical levels ahead of the BoJ meeting after falling as low as 111.60 in the NY morning.

US treasuries are about 1bp higher across the curve while moves in Europe were similarly muted.

Oil fluctuated, but is up 1.3% after the EIA reported a drawdown in oil inventories in contrast to API’s reported gain yesterday. Gold dropped back down to $1240/oz."


02:52 Japan Merchandise Trade Balance Total came in at 439.9B below forecasts (484.7B) in June


02:51 Japan Exports (YoY) came in at 9.7%, above expectations (9.5%) in June


02:51 Japan Imports (YoY) above expectations (14.6%) in June: Actual (15.5%)


02:43 NZD/USD: little domestic impetus, but eyes on Aussie jobs and the 0.74 handle

Currently, NZD/USD is trading at 0.7364, up 0.11% on the day, having posted a daily high at 0.7368 and low at 0.7354.

NZD/USD has been less impressive overnight in a minor recovery of the late London sell-off, mostly on dollar weakness. The bird was held up with NZD/JPY offers and a bid in the antipodean cross above 1.0815. However, while the bird maintains itself above the psychological 0.7350 mark, further recovery gains towards 0.7400 this week are possible.

When will Australia's labour force data be released and how could it affect AUD/USD?

NZD/USD 1-3 month:  

Analysts at Westpac expect that the Fed’s tightening cycle plus US fiscal expansion should eventually reassert upside pressure on US interest rates and the US dollar, pushing NZD/USD to 0.6800 by year end. US factors should outweigh local factors which are mostly supportive.

NZD/USD levels

Support: 0.7350, 0.7280, (11th July high), 0.7205/06 June 22/21 lows; 0.7186 June 15 low; 0.7150 June 5 high; 0.7127 June 6 low. On the wide, on a break below 0.7080/00 opens 0.6970. Resistance: 0.7387 recent highs and 0.7393 Nov. 9 high ahead of the 0.7400 objectives. 


02:06 Eyes on Aussie CPI: Australian Q2 CPI preview - Westpac

Analysts at Westpac forecasts for the headline CPI is at 0.6%qtr lifting the annual pace to 2.4%yr from 2.3%yr.

Key Quotes:

"June is seasonally a softer quarter with the ABS seasonal factors boosting our seasonally adjusted estimate to 0.8%qtr.

Key factors in Q2 are rising fruit, housing and health costs being partially offset by falling auto fuel. 

Core inflation is forecast to print 0.5%qtr (0.54% at two decimal places) holding the annual rate flat at 1.8%yr.  The trimmed mean is forecast to rise 0.51% while the weighted median forecast is 0.57%. The two quarter annualised pace of core inflation will lift slightly to 1.9%yr from 1.8%yr still holding below the bottom of the RBA’s target band; the two-quarter pace has been below the band since June 2015.

Traded prices are forecast to rise 0.9%qtr/–1.2%yr and the surge in fruit prices post cyclone Debbie flow through. Clothing & footwear are expected to have a modest seasonal bounce while holiday travel faces seasonal discounting and audio visual & computing continue their deflationary trend."


01:37 ECB: to keep its asset purchases open-ended? - BBH

Analysts at Brown Brothers Harriman explained that a press report, citing an unspecified official, suggested that the ECB wants to keep its asset purchases open-ended.  

Key Quotes:

"If it is, this would be seen as dovish even though no one believes it will be exercised.  

It would be seen as a sign that the tapering and fuller exit may be more protracted than currently anticipated."   

"Barring an offset, we suspect the euro may be sold on such a development. However, given our reading of market sentiment, the real money flows that still seem to see European equities as better value than the US, and the diminished US interest rate premium, especially at the long-end of the curve, suggests the participants are inclined to buy the euro on pullbacks."


01:29 EUR/USD posts 52 week high

EUR/USD has posted a fresh 52-week high.

EUR/USD is trading at it highest level in 52 weeks, having pierced the psychological barrier on an intraday basis.

01:24 Is AUD/USD constructive or overshooting?

AUD/USD has become a runaway market, characterised by historic highs in the daily MACD (12, 26, 9).

Equally significant in AUD/USD’s bullish makeup is the distance between the MACD and its signal line, which has reached a width not seen in the last six months. Yesterday's higher reading though, is an early warning that momentum has started to wane.

01:20 USD/SEK closed hesitant to pick direction

The emergence of a Southern doji pattern on the USD/SEK daily chart suggests a certain degree of exhaustion in the market.

During a decline, this candlestick pattern usually changes the market's short-term trend from down to neutral. In this case, with the RSI below 30% on this time frame, the likelihood of a reversal from oversold territory increases.

Additionally, an ADX above 30 is indicative of a persistent trend at least. Technically oriented traders may use this signal to liquidate shorts, sell puts, and move down stops.

01:17 EUR/USD closed above major top

EUR/USD has closed above its previous 52-week high.

EUR/USD has closed at it highest level in 52 weeks, having pierced the psychological barrier on an intraday basis.

01:14 When will Australia s labour force data be released and how could it affect AUD/USD?

Aussie labour force overview

Today, we have Australia's labour force data that will be released at 01:30 GMT. 

Labour market conditions for the RBA are a key component towards making their interest rate decisions. In the last meeting, where the RBA left rates on hold at 1.50% at its July meeting. On labour market conditions, the Bank's statement removed last month’s observation that “growth in hours worked remains weak”. This aspect of the report today will be crucial for markets, as negative real wage growth in the economy would hinder the Aussie because the RBA’s growth outlook will likely be revised lower for August's meeting. 

Additionally, analysts at Nomura explained that the Australian economic data surprise index is currently at fairly elevated levels and historically this has not tended to last. "On this front, we would note that monthly employment growth in Australia has exceeded market expectations in six of the past seven months. Even though the forward-looking indicators point to further job gains over coming months, this type of positive run in the volatile Australian labour market series, particularly to the extent recently observed, seldom lasts without a pause," argued the analysts at Nomura. 

Analysts at ANZ expect a 20k lift in employment and for the unemployment rate to be stable at 5.5%, "that certainly doesn’t sound bad, especially with 140k jobs already created over the prior three months, but with market expectations ratcheting up too, we suspect there is a decent hurdle to generate upside AUD surprises."

How could Aussie jobs affect AUD/USD?

AUD/USD is ripe for a correction on a disappointment in today's data, already at weekly highs and running out of steam ahead of the data, capped at 0.7959 in the US session. 0.7901 is the 18th July low and 0.7750 would be a key support area thereafter. On a break of the 0.8000/30 region, however, 0.8160 on the wide is a key target area being the 2nd of May 2015 high and the mid level of the Dec 2014 congestion area between 0.8032 and 0.8295.

Key notes:

  • RBA: bullish but on hold for time being? - UOB
  • AUD on a tear, will it extend? - ANZ
  • AUD/USD intermarket: risk on, headed for the 0.80 multi-year high resistance?
  • AUD/USD analysis: bullish stance persists ahead of employment data

About the Australian unemployment rate

The Unemployment Rate released by the Australian Bureau of Statistics is the number of unemployed workers divided by the total civilian labour force. If the rate hikes, this indicates a lack of expansion within the Australian labour market. As a result, a rise leads to a weakening of the Australian economy. A decrease of the figure is seen as positive (or bullish) for the AUD, while an increase is seen as negative (or bearish). 


01:13 AUD/USD closed above major top

AUD/USD has closed above its previous 52-week high.

AUD/USD has closed at it highest level in 52 weeks, having pierced the psychological barrier on an intraday basis.

01:09 AUD/JPY achieves a 52-week high

The AUD/JPY pair closes above the key level represented by the 52-week high, confirming its strength.

01:05 AUD/USD posts 52 week high

AUD/USD has posted a fresh 52-week high.

AUD/USD is trading at it highest level in 52 weeks, having pierced the psychological barrier on an intraday basis.

01:04 AUD/JPY posts 52 week high

AUD/JPY has posted a fresh 52-week high.

AUD/JPY is trading at it highest level in 52 weeks, having pierced the psychological barrier on an intraday basis.

00:41 AUD on a tear, will it extend? - ANZ

Analysts at ANZ acknowledged that whether you put it down to the more upbeat RBA minutes, the 30-odd% recovery in iron ore prices, the fact that Chinese activity has been surprising on the upside, or the generally weaker USD backdrop, the AUD has been on a tear of late, and is attempting to push back above 0.80 US cents for the first time since 2015. 

Key Quotes:

"NZD/AUD has subsequently fallen to its lowest levels since May, helped along of course by New Zealand’s surprisingly soft Q2 CPI report. Given the pace of the move, it appears the market has been caught out by this turn of events – we have too – as many economic indicators (GDP growth, unemployment, fiscal position, business cycle position, external debt etc) continue to sit in New Zealand’s favour. But as is often the case with this cross, any hints of a change can see abrupt moves. 

Will it extend? 

We are not yet convinced, and the Australian labour market report today will provide a nice test. Our Australasian colleagues expect a 20k lift in employment and for the unemployment rate to be stable at 5.5%. That certainly doesn’t sound bad, especially with 140k jobs already created over the prior three months, but with market expectations ratcheting up too, we suspect there is a decent hurdle to generate upside AUD surprises."


00:29 US June housing starts: stronger than expected - Nomura

Analysts at Nomura offered a review of the key US data from the US shift.

Key Quotes:

"Housing starts: 

The June housing starts report suggests a decent improvement in single family residential construction, while multifamily construction may have remained weak. Total housing starts rose 8.3% m-o-m to 1215k in June, above expectations (Nomura: +2.6% to 1120k, Consensus: +6.2% to 1160k). The prior month was revised up to a 1122k annual pace, equivalent to a 2.8% m-o-m decline. The upside surprise in the June reading was attributable to a stronger-than-expected rebound in multi family housing starts, which jumped 13.3% after five consecutive months of decline. In addition, single family starts rose solidly by 6.3%, suggesting steady underlying demand. Note that m-o-m rates of housing starts data tend to be highly volatile. On a y-o-y basis, single family starts continued to increase steadily, but multifamily starts continued to slow. Despite strength in the last month of Q2, the pace of total housing starts averaged 1164k in Q2, 6.0% lower than Q2. We expect a modest improvement in housing starts in Q3, with steady growth in single family housing starts. Today’s report also indicated June construction permits jumped strongly by 7.4%, above expectations (Nomura: +1.0% to 1180k, Consensus: +2.8% to 1201k), pointing to more construction starts over the coming months. However, with a slowing trend in multi family housing starts, the pace of improvement in aggregate housing starts may not be so robust. 

GDP tracking update: 

Today’s data left our Q2 GDP tracking estimate unchanged at 2.5% q-o-q saar. June housing starts were stronger than expected and May data were revised upwards slightly, suggesting less drag from residential construction in Q2. However, after rounding, our Q2 real GDP growth tracking estimate is unchanged at 2.5%."


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