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Thursday, July 18, 2019

- US dollar extended overnight losses vs. main competitors in Asia as Treasury yields slid further on trade woes, earnings results and aggressive Fed

US dollar index, US rates extended Wednesday’s poor US-led slide. Japan may take S. Korea wartime labor dispute to the International Court of Justice.Silver extended 4-day winning streak.- US dollar extended overnight losses vs. main competitors in Asia as Treasury yields slid further on trade woes, earnings results and aggressive Fed rate cut bets. - Aussie outperformed on upbeat Australian headline jobs data, USD/JPY slipped in tandem with Asian equities amid risk-aversion. Kiwi continued to trade firmer so far this week. - US-China trade stand-off weighed alongside escalating South Korea-Japan trade dispute. - UK: The Cable consolidated the recovery below 1.2450 amid Hard Brexit fears, ahead of key UK Retail Sales, House of Commons vote on an amendment that limits PM from dissolving the Parliament until October 31. - Oil prices steadied after the drop on US crude stocks surge, Gold clung to overnight gains near 1425 levels, Silver rallied to five-month highs above 16.10. - Cryptocurrencies stalled recent recovery. Bitcoin stayed below 10k.

Despite witnessing an increase in monthly Swiss trade balance data, USD/CHF remains modestly flat at 0.9850 ahead of the European open on Thursday.

USD/CHF traders show less reaction to the Swiss trade balance that rose to a seven-month high.Active risk-off mood and the greenback weakness also favor the pair sellers.Despite witnessing an increase in monthly Swiss trade balance data, USD/CHF remains modestly flat at 0.9850 ahead of the European open on Thursday. As per the Federal Customs Administration office of Switzerland, June month Trade Balance came in as 4,096 million versus 3,210 million forecast and 3,398 million prior (revised). It was further mentioned that exports weakened from 21,485 million to 0,454 million whereas imports also fell to 16,359 million from 18,074 million. The quote failed to extend the previous recovery on Wednesday mainly due to sluggish prints of the US housing market numbers and worries concerning the US economic slowdown because of the US-China trade problems, as revealed by the Federal Reserve’s Beige Book. Given the fact that the Swiss Franc (CHF) is often used for risk safety, trade tussles between the US and China, coupled with geopolitical tension surrounding the US and some of the key Middle East members, are positive to Switzerland’s currency. The same catalyst has also been playing its role since late-Wednesday and might keep the spotlight for a bit more time. On the economic calendar, the US Initial Jobless Claims for the week ended on July 12, Philadelphia Fed Manufacturing Survey data fr the current month and Fedspeak will be observed for fresh direction. While Jobless Claims may rise to 216K from 209K, the manufacturing gauge could improve to 5.0 from 0.3 previous. Technical Analysis 3-week old support-line joins 21-day simple moving average (SMA) to highlight 0.9843/50 area for sellers, a break of which can fetch prices to mid-month low near 0.9815 and then to 0.9800 round-figure. On the contrary, pair’s rise beyond a downward-sloping trend-line since June 19, at 0.9923 can please buyers with current month high of 0.9952 and June month tops surrounding 1.0016.

Reuters quotes the comments from the European Central Bank (ECB) Governing Council member Villeroy, with the key headlines found below. Key Quotes: Th

Reuters quotes the comments from the European Central Bank (ECB) Governing Council member Villeroy, with the key headlines found below. Key Quotes: The global economic slowdown is undeniable. Central banks are doing their job amid the slowdown. Low rates can push credit up too much.

Switzerland Imports (MoM) declined to 16359M in June from previous 18074M

Switzerland Exports (MoM) down to 20454M in June from previous 21485M

The European Union (EU) Chief Brexit negotiator Michael Barnier is on the wires now, via Reuters, warning that the UK will have to "face the consequen

The European Union (EU) Chief Brexit negotiator Michael Barnier is on the wires now, via Reuters, warning that the UK will have to "face the consequences" in a no-deal Brexit scenario. Further Comments: EU "has never been impressed" by threats of the UK leaving without a deal. It is not useful that Tory leadership contest to use threats of a no-deal Brexit.

Switzerland Trade Balance registered at 4096M above expectations (3210M) in June

Open interest in JPY futures markets rose for the second consecutive session on Wednesday although by just 694 contracts according to preliminary figu

Open interest in JPY futures markets rose for the second consecutive session on Wednesday although by just 694 contracts according to preliminary figures from CME Group. Volume, instead, remains choppy and decreased by nearly 11.5K contracts.USD/JPY room for a test of 107.50USD/JPY has resumed the downside after failing in the 108.30 region earlier in the week. Rising open interest amidst higher JPY signals further declines ahead, although the erratic move in volume could also prompt some consolidation.

Kristoffer Kjær Lomholt, senior analyst at Danske Bank, suggests that while posting a small rebound this morning oil has traded heavy over the last se

Kristoffer Kjær Lomholt, senior analyst at Danske Bank, suggests that while posting a small rebound this morning oil has traded heavy over the last sessions with Brent crude now back below USD64/bbl.Key Quotes“Yesterday, inventory data from the US Energy Information Administration (EIA) showed an unexpected large build in inventories of gasoline and distillate fuels of 9.25 m/bbl. As we are in the middle of the driving season, the inventory figures have contributed to the bearish oil momentum initiated Tuesday when Secretary of State Mike Pompeo raised the possibility of easing Iran sanctions.”

Karen Jones, analyst at Commerzbank, suggests that EUR/USD pair is again showing signs of recovery just above the March and mid-June lows at 1.1181/76

Karen Jones, analyst at Commerzbank, suggests that EUR/USD pair is again showing signs of recovery just above the March and mid-June lows at 1.1181/76 and while these hold the downside, an upside bias will prevail.Key Quotes“We should then see a recovery towards the 200 day moving average and early June high at 1.1319/48. This guards the more important 1.1394/1.1412 55 week ma and recent high. Above the 1.1412 June high we look for resumption of the up move and a test of the 1.1570 2019 high. Slightly longer term we target 1.1815/54, the highs from June and September 2018.” “We regard the April and May lows at 1.1110/06 as a turning point and continue to view the market as based longer term and target 1.1990 (measurement higher from the wedge).”

Analysts at TD Securities note that the Australia’s unemployment rate for June remained unchanged at 5.2%, in line with market expectations. Key Quote

Analysts at TD Securities note that the Australia’s unemployment rate for June remained unchanged at 5.2%, in line with market expectations.Key Quotes“Full time employment in June rose 21.1k while part time employment fell by 20.6k. A positive surprise was the drop in underutilization, which fell to 13.4% in June from 13.7% in May. The labor force participation rate held steady at 66%. Todays outcome should leave the RBA comfortable to sit it out on the sidelines not needing to sweat a poor outcome.”

GBP/USD is expected to keep the negative view in the near term, allowing a potential test of 1.2340, suggested FX Strategists at UOB Group. Key Quotes

GBP/USD is expected to keep the negative view in the near term, allowing a potential test of 1.2340, suggested FX Strategists at UOB Group.Key Quotes24-hour view: “Expectation for GBP to “weaken further to 1.2365” did not materialize as it staged a relatively robust and rapid rebound after touching 1.2382. Downward momentum has more or less dissipated and GBP is deemed to have moved into a consolidation phase for now. For today, GBP is expected to trade sideways, likely within a 1.2400/1.2460 range”. Next 1-3 weeks: “We indicated yesterday (16 Jul, spot at 1.2515) that “a dip below 1.2470 is not ruled but GBP has to register a NY closing below 1.2440 in order to indicate that it is ready to move below the year-to-date low near 1.2410”. However, the rapid pace of how the price action evolved was unexpected as GBP plunged to a 27-month low of 1.2396 (before closing -0.89% lower at 1.2405, the largest 1-day decline in almost 4 months). The sharp decline indicates that the ‘sideway-trading phase’ that started last Friday (12 Jul, spot at 1.2525) has ended earlier than expected. From here, GBP is deemed to have move into a ‘negative phase’ and could move to 1.2340. On the upside, only a break of the 1.2490 ‘key resistance’ would indicate that the current downward pressure has eased. On a shorter-term note, 1.2460 is already a strong resistance level”.

CME Group’s advanced figures for GBP futures markets noted open interest rose for the third session in a row on Wednesday while volume dropped by almo

CME Group’s advanced figures for GBP futures markets noted open interest rose for the third session in a row on Wednesday while volume dropped by almost 19.7K contracts.GBP/USD remains under pressureCable’s bullish attempt on Wednesday was on the back of a moderate increase in open interest, which could allow for a near term squeeze higher. However, shrinking volume and persistent Brexit concerns could remove legs from the move and motivate spot to refocus on the downside.

In opinion of FX Strategists at UOB Group, AUD/USD could extend the upside above the 0.7050/70 band. Key Quotes 24-hour view: “AUD traded between 0.69

In opinion of FX Strategists at UOB Group, AUD/USD could extend the upside above the 0.7050/70 band.Key Quotes24-hour view: “AUD traded between 0.6996 and 0.7025 yesterday, narrower than our expected sideway trading range of 0.6995/0.7040. Momentum indicators are still mostly ‘neutral’ and we continue to expect AUD to trade sideways for now, likely between 0.7000 and 0.7040”. Next 1-3 weeks: “There is no change to our view from Tuesday (16 Jul, spot at 0.7040). As highlighted, while upward momentum has improved, we have doubts about the sustainability of the advance in AUD. The concern is primarily due to the major resistance zone of 0.7050/70. The 0.7050 level was tested a few times in the past couple of months and held (see annotations in chart below). The 0.7070 level is the minor peak in April as well as a declining trend-line resistance (not visible in the chart below). The price action in AUD over the past couple of days appears to suggest that AUD is ‘hesitating’ below this major resistance zone. That said, the risk for an upside break is still intact as long as 0.6980 is not taken out (no change in level from Tuesday). Looking ahead, if AUD were to move and stay above 0.7070, it would suggest last month’s 0.6832 low could be a significant bottom and AUD could move beyond the next major resistance at 0.7110 in the coming weeks”.

According to flash data for EUR futures markets from CME Group, investors added just 249 contracts to their open interest positions on Wednesday. Volu

According to flash data for EUR futures markets from CME Group, investors added just 249 contracts to their open interest positions on Wednesday. Volume, instead, extended the choppy performance and shrunk by nearly 32.7K contracts.EUR/USD stays capped by 1.1280/90, 21-day SMAThe bounce off lows in EUR/USD was accompanied by a small up tick in open interest and a drop in volume, hinting at the likeliness that a serious recovery could lack of conviction. In the meantime, the 1.1280/90 band, where coincide recent peaks and the 21-day SMA, keeps limiting the upside for the time being.

With the key short-term moving averages and Fibonacci retracement levels limiting the downside, GBP/USD takes the rounds to 1.2438 on early Thursday.

21 and 50 hourly moving averages (HMAs), coupled with 23.6% Fibonacci retracement, limit the GBP/USD pair’s near-term declines.Buyers wait for a sustained run-up beyond 1.2462.With the key short-term moving averages and Fibonacci retracement levels limiting the downside, GBP/USD takes the rounds to 1.2438 heading into the UK open on Thursday. While strong supports limit the quote’s declines, buyers await a successful rise beyond 38.2% Fibonacci retracement of 2-week old trade moves, at 1.2462, in order to register fresh upside towards 50% and 61.8% Fibonacci retracement levels, 1.2488 and 1.2512 respectively. It should also be noted that the pair’s rise past-1.2512 might not refrain from questioning mid-month high around 1.2580. In a case prices slip beneath 1.2432/28 support-confluence, 1.2400 and recent low surrounding 1.2380 may entertain sellers targeting 1.2300 round-figure. GBP/USD hourly chartTrend: Sideways  

Italian Deputy Prime Minister Matteo Salvini and leader of League Party was on the wires last minutes, via Reuters, saying that the government will ca

Italian Deputy Prime Minister Matteo Salvini and leader of League Party was on the wires last minutes, via Reuters, saying that the government will carry on but there is still time for elections after the summer. It's a choice for Five-Star Movement for government to carry on, Salvini added.

FX Strategists at UOB Group have ruled out a test of 1.1100 in EUR/USD for the time being. Key Quotes 24-hour view: “Yesterday, we were of the view th

FX Strategists at UOB Group have ruled out a test of 1.1100 in EUR/USD for the time being.Key Quotes24-hour view: “Yesterday, we were of the view the “weakness in EUR is expected to extend lower but major 1.1180 support is unlikely to yield so easily”. While EUR subsequently dipped below 1.1200 (low of 1.1198), it recovered quickly to end the day little changed at 1.1223. Downward pressure has eased with the recovery and the current movement is viewed as part of a consolidation phase. In other words, EUR is expected to trade sideways for today, likely between 1.1200 and 1.1245”. Next 1-3 weeks: “After trading in a relatively subdued manner for a few days, EUR staged a surprisingly sudden and sharp decline and tested the bottom of our expected 1.1200/1.1310 sideway trading range (first indicated last Thursday,11 Jul, spot at 1.1255). From here, a move below 1.1200 and the mid-June low near 1.1180 would not be surprising. However, downward momentum is not as strong as we prefer and EUR is unlikely to ‘accelerate’ lower. Overall, EUR is expected to trade with a ‘downside bias’ for now but is unlikely to challenge the year-to-date low near 1.1100 (there is another support at 1.1155). On the upside, only a move above the strong 1.1260 resistance would indicate that the current downward pressure has eased”.

Danske Bank analysts suggest that the data calendar brings no tier 1 releases in today's session and the primary market focus will remain on the unfol

Danske Bank analysts suggest that the data calendar brings no tier 1 releases in today's session and the primary market focus will remain on the unfolding earnings season amid US President Trump's recent reminder that the truce in the US-China trade war may quickly be called off.Key Quotes“On paper, the most prominent events today are Fed's Williams and Bostic speaking this evening and afternoon, respectively. However, given the recent communication from FOMC board members including Fed Chair Powell we doubt these speeches will have much market impact.” “In the US, we get the weekly jobless claims figures that as always will receive attention given the importance of the labour market to the Fed. After a rebound in April, initial jobless claims have since been fluctuating around 220,000. After last week's drop to 209,000, we expect a modest rebound to a level just below these 220,000. If right, this would suggest that the labour market - albeit a lagging indicator - remains healthy.”  

The greenback, in terms of the US Dollar Index (DXY), keeps correcting lower from weekly tops near 97.50. US Dollar Index focused on trade, data After

DXY comes under renewed selling pressure and approaches 97.00.Yields of the US 10-year note plummet below 2.05%.US Philly Fed index, Claims next on the docket.The greenback, in terms of the US Dollar Index (DXY), keeps correcting lower from weekly tops near 97.50.US Dollar Index focused on trade, dataAfter climbing and failing to the mid-97.00s earlier in the week, the index came under renewed and quite strong selling pressure and is now challenging the key support at 97.00 the figure. The leg lower in the buck came in tandem with the moderate drop in yields of the US 10-year reference to sub-2.05% levels after climbing as high as the vicinity of 2.15% in past sessions. The decline in yields follows US-China trade concerns after President Trump said on Tuesday that both countries are still facing a ‘long way to go’ in negotiations, while below-expectations housing data releases also weighed on the performance of yields. Later today, the Philly Fed index is due seconded by the usual weekly report on the labour market. In addition, Atlanta Fed R.Bostic (2021 voter, centrist) speaks to Clarksville Chamber (Tennessee) and NY Fed J.Williams (permanent voter, centrist) will speak on Monetary Policy.What to look for around USDDXY has recovered some composure after once again testing the vicinity of the 200-day SMA in the 96.70 region on Friday, all in response to the dovish message from Chief Powell and the FOMC minutes. Speculations among investors have already priced in a 25 bps rate cut hits month, although a bigger rate cut is not utterly ruled out just yet. Trade tensions and global growth concerns continue to cloud the US outlook while the lack of upside traction in inflation remains worrisome. Confronting this scenario, the greenback still looks underpinned by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals when compared to its G10 peers and the shift to a more accommodative stance from the rest of the central banks.US Dollar Index relevant levelsAt the moment, the pair is losing 0.08% at 97.11 and a break below 96.80 (200-day SMA) would aim for 96.46 (low Jun.7) and then 96.04 (50% Fibo of the 2017-2018 drop). On the flip side, the initial hurdle aligns at 97.59 (high Jul.9) followed by 97.80 (monthly high Jun.3) and finally 98.37 (2019 high May 23).

With the early-day trade/political jitters following pessimism spread through Wall Street close, Asian shares remain on a back foot.

Worries concerning trade/politics follow Wall Street losses to weaken the Asian shares.Lack of data highlights qualitative catalysts for fresh impulse.With the early-day trade/political jitters following pessimism spread through Wall Street close, Asian shares remain on a back foot before the European traders arrive on Thursday. Not only sluggish housing market data from the US but weak results from trade-related CSX Corporation and the Federal Reserve’s Beige Book also stoked fears emanating from the US-China trade standoff. As a result, all the three major US indices registered a negative daily closing wherein the S&P 500 was a frontrunner with -0.65% loss. Not only US-China trade stalemate but an unexpected rate cut by the Bank of Korea, citing fears of trade tussle with Japan, also favored the market’s risk-off mood. The macro risk gauge, 10-year treasury yield of the US, dropped 8 basis points (bps) on Wednesday while losing close to 2 bps at the time of writing. Following the momentum, the MSCI’s index of Asia-Pacific shares ex-Japan eases close to 0.3% by the press time whereas Japan’s Nikkei is -1.81% in red while writing. Further, South Korea’s Kospi Composite is down -0.38% while China’s Hang Seng trims nearly 0.5%. Moving on, Australia’s ASX200 is losing -0.38% on the back of sluggish employment data whereas India’s BSE Sensex also drops around 0.2%. Looking forward, UK Retail Sales and political drama at the House of Commons, coupled with the trade/political news concerning the US, could offer fresh impulse to traders.

Catherine Birch, senior economist at ANZ, notes that the Australian employment increased by just 500 workers in June, as the 21.1k gain in full-time e

Catherine Birch, senior economist at ANZ, notes that the Australian employment increased by just 500 workers in June, as the 21.1k gain in full-time employment more than offset the 20.6k fall in part-time employment.Key Quotes“After spiking at 2.9% y/y on the back of the inflated May result (due to the election), growth fell back to 2.4% y/y.” “The unemployment rate was unchanged at 5.2% despite zero monthly employment growth and the participation rate fixing at the historic peak of 66.0%.” “In a positive sign, the underemployment rate fell 0.4ppt back to 8.2%, on the back of the rebound in full-time employment, recovering most of the 0.5ppt rise over the past three months. This brought the total labour market underutilisation rate down to 13.4%. Still too high for the RBA’s comfort.” “The ANZ Labour Market Indicator suggests that employment growth will slow further and that the unemployment rate will stick around the 5.2-5.3% mark for the remainder of 2019. Without signs of progress on unemployment, we expect to see further easing by the RBA before year-end.”

Having reversed from the short-term resistance-line, USD/INR aims to visit adjacent trend-line support as it trades near 68.79 on early Thursday.

1-week-long support-line can please short-term USD/INR sellers.A downward sloping trend-line since mid-May also challenges the pair’s upside.Having reversed from the short-term resistance-line, USD/INR aims to visit adjacent trend-line support as it trades near 68.79 heading into the European open on Thursday. The one-week-old trend-line support, at 68.64, seems the closest rest, a break of which can drag the quote further down towards 68.40 and then to latest lows surrounding 68.25. On the contrary, pair’s run-up beyond 4-week old resistance-line, at 69.04, can please buyers with 38.2% Fibonacci retracement of mid-May to early-month downpour at 69.30. However, a bit broader trend-line from mid-May at 69.40, could hinder the pair’s following upside. USD/INR 4-hour chartTrend: Bearish  

Analysts at TD Securities note that the anecdotal evidence from the Beige Book suggests that the US economic activity "continued to expand at a modest

Analysts at TD Securities note that the anecdotal evidence from the Beige Book suggests that the US economic activity "continued to expand at a modest pace" from the end of May through early July, similar to the prior period.Key Quotes“According to the report, manufacturing production was flat (with some districts noting a moderate improvement), while employment advanced modestly (slightly weaker than before). Remarks about trade worries were widespread in the report, which is in line with the Fed's concern regarding trade uncertainty and its possible negative impact on investment.”

ANZ analysts note that the Bank of Korea (BoK) cut its policy rate by 25bp to 1.50% today, surprising the consensus. Key Quotes “In our view, the BoK’

ANZ analysts note that the Bank of Korea (BoK) cut its policy rate by 25bp to 1.50% today, surprising the consensus.Key Quotes“In our view, the BoK’s decision to cut sooner rather than later signals that growth concerns are at the forefront and leaves the door open for further easing in the coming months.” “With downside growth risks on the rise, not least due to souring bilateral ties with Japan, we think another 25bp rate cut is in the pipeline in the coming months.”

Netherlands, The Unemployment Rate s.a (3M) up to 3.4% in June from previous 3.3%

With the latest news reports favoring the odds for soft Brexit, the GBP/USD pair recovers to 1.2440 ahead of the London open on Thursday.

British lawmakers, including some Tories, challenged the PM hopeful Boris Johnson’s readiness to prorogue the Parliament.Voting at the UK’s House of Commons and monthly Retail Sales will be the key to watch.With the latest news reports favoring the odds for soft Brexit, the GBP/USD pair recovers to 1.2440 ahead of the London open on Thursday. While voting at the House of Commons will be the key, British Retail Sales numbers could also entertain momentum traders amid lack of big data/events from the US. On Wednesday, the UK’s House of Lords passed an amendment that limits the Prime Minister (PM) from dissolving the Parliament until October 31, the Brexit day. The amendment will now reach the House of Commons for a vote to become a law that will pave the way for soft Brexit expectations as the frontrunner to the PM’s race, Boris Johnson, keeps repeating his pledge to leave the bloc on by October 31. Not only Mr. Johnson’s readiness to dissolve the parliament, if needed, to deliver on-time Brexit, but fears of economic setbacks indicated by the Morgan Stanley and expected to be pointed by the UK’s Office for Budget Responsibility’s (OBR) five-year forecast also questioned the market optimism. On the other hand, the US Dollar (USD) witnessed overall pullback mainly on early-day news reports concerning the House of Representatives limiting Saudi arms deal and Turkey’s likely resentment over the removal from the F-35 program. Further, the US-China trade tussle also weakened the greenback during Asian session. While likely successful passage of the House of Lords’ amendment and improvement in the June month British Retail Sales, to 2.6% from 2.3% (YoY) and -0.3% versus -0.5% (MoM), could please the pair buyers, sellers could keep cheering OBR report. Technical Analysis A sustained break beyond July 10 low, near 1.2445, becomes necessary for buyers to target Monday’s low close to 1.2510 and the weekly top adjacent to 1.2580, failing to which can recall 1.2380 and 1.2340 on the chart.

EUR/USD is flashing green ahead of London open with the US treasury yields felling the pull of gravity amid rising fears of FX intervention by the wor

EUR/USD is on the rise as US yields continue to lose ground.Chances of aggressive Fed easing rise.Fears of US FX intervention to weigh over USD.EUR/USD is flashing green ahead of London open with the US treasury yields felling the pull of gravity amid rising fears of FX intervention by the world's biggest economy. As of writing, the yield on the benchmark US 10-year treasury yield is trading at 2.03%, the lowest level since July 9, having dropped by six basis points on Wednesday. The yield came under pressure as chances of the US Federal Reserve cutting rates by 50 basis points on July 31 rose back to 35%. The probability had dropped to near 25% following Tuesday's upbeat US retail sales data. The rising odds of aggressive easing by the Fed will likely keep the US Dollar on the defensive today. Also, President Trump's recent Dollar-related tweets have triggered speculation that the US may intervene in the FX markets to keep the Greenback from rising. President Donald Trump on Wednesday repeated his call for the US to match efforts by China and Europe to manipulate currencies and pump money into their economies, according to Reuters. As a result, the Dollar bulls will likely remain on the sidelines, allowing EUR/USD to rise back to the 21-day moving average, currently at 1.1286. Note that the 21-month MA proved a tough nut to crack earlier this week. Hence, a daily close above that level could entice buyers, possibly leading to a retest of the June high of 1.1412. The Eurozone data docket it thin, meaning the pair will continue to track US yields in Europe. The US Dollar may recover the lost ground in the North American session if the weekly jobless claims and regional manufacturing indices paint a positive picture of the US economy, forcing markets to again scale back expectations of aggressive easing by the US Fed later this month. As of writing, EUR/USD is changing hands at 1.1242, representing 0.13% gains on the day. The pair hit a low of 1.1199 on Wednesday.Technical Levels 

According to the leading US investment banking giant, Morgan Stanley, the nervousness in financial markets over the “hardline” approach adopted by bot

According to the leading US investment banking giant, Morgan Stanley, the nervousness in financial markets over the “hardline” approach adopted by both UK PM Hopefuls Boris Johnson and Jeremy Hunt risks knocking-off the pound from its current level of $1.24 vs. the greenback to the lowest level since it almost reached parity in the mid-1980s. Key Quotes (The Guardian): "The pound has come under intense selling pressure since Prime Minister May withdrew from her party leadership position, leaving markets with increased concern that the UK may be heading towards a harder Brexit."  "Should this scenario materialize, pound-dollar could fall into the $1.00-$1.10 range." "Markets have adjusted these probabilities sharply lower."  "Should the new PM adopt a moderate negotiation stance, we expect the pound-dollar to trade within its current range with $1.20 as the lower end of the range. Should the new PM strike a deal with the EU and bring it through parliament, the pound may rally. The stance of the Labor party will be important for the pound's valuation too. Should the Labor leadership move closer to a pro-EU approach, the pound may reach $1.35."

Having failed to cross the 50-DMA during last-week, USD/JPY chart portrays gradual declines to key Fibonacci retracement support on early Thursday.

107.56/53 can validate the USD/JPY pair’s further declines after breaking 61.8% Fibonacci retracement level.50-DMA and 50% Fibonacci retracement confluence limit immediate upside.Having failed to cross the 50-day moving average (50-DMA) during last-week, USD/JPY chart portrays gradual declines to key Fibonacci retracement level while flashing 107.73 as a quote during early Thursday. Given the downward sloping 14-day relative strength index (RSI) from nearly overbought conditions, prices are likely to carry weakness forward. However, 107.56/53 horizontal-line comprising current month low and June 24 high can question sellers. Should prices slip below 107.53, June month low surrounding 106.78 and a four-month-old descending trend-line at 106.00 can act as buffers during the pair’s downpour to January bottom of 104.75. Meanwhile, 108.40 can entertain short-term buyers ahead of challenging them with the 50% Fibonacci retracement of January – April upside and 50-DMA around 108.58/61. It should also be noted that the quote’s rally past-108.61 could trigger fresh run-up towards crossing 109.00 round-figure. USD/JPY daily chartTrend: Bearish  

Silver is solidly bid for fifth striaght day and is currently trading at $16.11, the highest level since Feb. 20. The 14-day relative strength index (

Silver is extending four-day winning streak. Silver is nearing key 50-hour MA hurdle of $16.186. Silver is solidly bid for fifth striaght day and is currently trading at $16.11, the highest level since Feb. 20.  The 14-day relative strength index (RSI) is now hovering at 73.66, the highest level since January, meaning the precious metal is most overbought in six months.  As a result, the bulls may take a breather around the 50-month moving average, currently at $16.186.  It is worth noting that the Silver bulls have repeatedly struggled to force a convincing monthly close above the 50-month MA since July 2016.  Hence, a monthly close above that average is needed to confirm a long-term bullish breakout.  Daily chart Monthly chartTrend: BullishPivot levels 

Japanese news outlet, Kyodo News, carries headlines on Thursday, citing diplomatic sources that White House Security Advisor Bolton is said to be maki

Japanese news outlet, Kyodo News, carries headlines on Thursday, citing diplomatic sources that White House Security Advisor Bolton is said to be making plans to travel to Japan next week. Markets are speculating that the agenda of the meeting is likely to be a US plan for a military coalition to safeguard commercial shipping in the Middle East. The sources said: “If a coalition is discussed, Japanese officials are expected to say there are no plans at the moment to send the country's Self-Defense Forces to the region.” Note that US-Japan are working towards reaching a trade deal by September over agricultural products and autos.

Given the failures to rise much above 200-day EMA, amid overbought RSI, NZD/USD takes the rounds to 0.6740 during early Thursday.

RSI close to overbought conditions, failure to extend run-up after key resistance break show buyers’ exhaustion.Pair’s rise beyond 0.6763/65 enables it to target 13-week high.Given the failures to rise much above 200-day EMA, NZD/USD takes the rounds to 0.6740 during early Thursday. Not only its recent pullback even after clearing key resistance (now support), close to overbought conditions of 14-day relative strength index (RSI) also questions that pair’s strength. As a result, the 0.6763/65 confluence comprising 61.8% Fibonacci retracement of March-May declines and upper-line of 1.5-month-old “rising wedge” technical formation, could keep limiting the pair’s advances. In doing so, pair’s pullbacks to 200-day exponential moving average (EMA) level of 0.6715 and then to 0.6700 round-figure can be expected. However, 100-day EMA at 0.6667 and pattern support at 0.6650 could confine pair’s downside below 0.6700, if not then the bearish formation gets confirmed, which in turn open the gates for the pair’s south-run to May month bottom near 0.6480. On the upside, a successful break of 0.6765 enables buyers to target mid-April tops adjacent to 0.6785 and then expect a rise towards 0.6800 round-figure. During the quote’s additional rise past-0.6800, 0.6840 and 0.6870 can offer intermediate stops to the rally aiming at March high around 0.6940. NZD/USD daily chartTrend: Pullback expected  

The Asian Development Bank (ADB) said on Thursday developing Asia is on track to meet the lender's economic targets for this year and next year, despi

The Asian Development Bank (ADB) said on Thursday developing Asia is on track to meet the lender's economic targets for this year and next year, despite Sino-US trade tensions and the resulting slowdown in the global economy. ADP still expects the Developing Asia, a group of 45 countries in the Asia-Pacific region, to grow 5.7% in 2019 and 5.6% in 2020. While the lender maintained its 6.3% and 6.1% growth projections for China for 2019 and 2020, it cut India’s growth forecast to 7.0% in 2019 and 7.2% in 2020, from 7.2% and 7.3%, respectively, seen in April.

Bank of Korea's Chief Lee sees South Korea's economy expanding 2.2% in 2019 as opposed to the previous forecast of 2.5% growth. The central bank cut r

Bank of Korea's Chief Lee sees South Korea's economy expanding 2.2% in 2019 as opposed to the previous forecast of 2.5% growth.  The central bank cut rates today for the first time since 2016. Many believe the rate cut has come earlier than expected due to growing worry about trade row with Japan.  Earlier this month, Japan imposed stricter controls on its exports to South Korea of materials necessary to produce memory chips and display panels that influence the manufacturing of smartphones, TVs and other tech products.Key quotes (Source: Reuters) Sees 2019 inflation at 0.7% vs 1.1% seen previously. 2019-2020 potential growth rate seen at 2.5-2.6%. Thursday's rate decision was not unanimous. Board member lee il-houng was dissenter to thursday's rate decision. Japan's export curbs was one factor to economic assessment. Expanded effects from japan's export curbs won't be small. Premature to say how much japan's export curbs will impact local economy. Has some policy room left. No comment on how future interest rate policy will influence won. Effect of rate cut could be limited compared to past cases. Will continue to pay attention to financial stability.
 

China's forex regulator, the State Administration of Foreign Exchange (SAFE), was out on the wires last minutes, noting that the Chinese forex market

China's forex regulator, the State Administration of Foreign Exchange (SAFE), was out on the wires last minutes, noting that the Chinese forex market supply and demand are basically balanced in H1. Additional Quotes: Expects surplus in China's current account in Q2. Expects cross-border capital flows to remain basically stable in H2. Expects small current account surplus in 2019.

Brent oil closed 1.21% lower at $63.58 on Wednesday, confirming a downside break of an ascending channel on the daily chart. The bullish channel break

Brent's daily chart shows a rising channel breakdown.MACD about to turn bearish, RSI below 50.Deeper losses toward $62.10 likely.Brent oil closed 1.21% lower at $63.58 on Wednesday, confirming a downside break of an ascending channel on the daily chart. The bullish channel breakdown is backed by a below-50 reading on the 14-day relative strength index (RSI) and the bearish crossover of the 5- and 10-day moving averages. Further, the moving average convergence divergence (MACD) histogram is about to cross below zero. That would further confirm a bearish reversal. As a result, Brent risks falling to support at $62.10 (July 3 low) in the short-term. As of now, a barrel of Brent is changing hands at $63.86 per barrel. Note that a positive divergence of the relative strength index is seen on the 4-hour chart. So, prices may rise to levels above $64.00 before resuming the drop toward $62.10. Daily chartTrend: BearishPivot points 

A majority of the economists polled by Reuters opine that the Bank of Japan’s (BOJ) next move would be to expand stimulus, up from about half last mon

A majority of the economists polled by Reuters opine that the Bank of Japan’s (BOJ) next move would be to expand stimulus, up from about half last month and 38% just two months ago.  This comes as the US Federal Reserve (Fed) is set to cut rates later this month. Key Findings: “Almost two-thirds of those who predicted easing expect it within the year and some as early as this month. Thirty of 40 economists predicted the BOJ's next move would be to loosen policy further, while 10 said the bank would tighten, the July 3-16 poll found. Seven of the economists who forecast more easing said the central bank would ease this month, six predicted September, five selected October and two said December. 25 economists expected the BOJ to tweak its forward guidance. The BOJ pledges to keep very low-interest rates "at least through around the spring of 2020" and economists predicted the central bank would extend this period. Eight economists said the BOJ would increase its buying of exchange-traded funds (ETFs) and Japanese real estate investment trusts (J-REITs). Three predicted the bank would deepen its negative interest rates only, while two forecasts that it could cut both its negative interest rates and the 10-year bond yield target.  The poll also found Japan's economy would expand 0.5% in the fiscal year to March 2020 The nation's core consumer price index, which includes oil products but not fresh foods, will rise 0.7% this fiscal year and 0.6% the following year.”

Australian business confidence rose sharply to 6 index points in the second quarter from the previous quarter's print of 0, according to National Bank

Australian business confidence rose sharply to 6 index points in the second quarter from the previous quarter's print of 0, according to National Bank of Australia's (NAB) quarterly business survey.  It is worth noting that the survey was conducted after elections. Hence, the rise in confidence could be associated with outcome of the Federal election and also with the firming expectations of rate cuts.  While the confidence ticked higher, the business conditions index decreased 3 points to +1 in the second quarter, extending the downtrend since early 2018 and is now just below average.Key quotes from NAB Group Chief Economist Alan Oster"For now, the survey suggests ongoing employment growth but given the recent trends in the forward-looking measures, we will continue to watch closely. Our worry is that the slowdown in activity may translate into a more substantial weakening in labour demand." "Declining capacity utilisation and weak surveyed price measures suggest that inflation outcomes are likely to be meek for some time. The impact of labour demand on wage growth will remain an important dynamic in this sense – with slack already evident in the labour market, any weakening in labour demand could well see further action from the RBA on rates to bolster the economy. ”
 

Reuters reports the overnight comments from the Japanese Finance Minister Taro Aso, with the key headlines found below. Trade frictions are a big down

Reuters reports the overnight comments from the Japanese Finance Minister Taro Aso, with the key headlines found below. Trade frictions are a big downside risk to the global economy. G20 sees a pick up in the global economy towards next year. Protectionism will not benefit any country.

The Japanese public broadcaster, NHK, reports that “Japan is considering taking a dispute with South Korea over its compensation of wartime forced lab

The Japanese public broadcaster, NHK, reports that “Japan is considering taking a dispute with South Korea over its compensation of wartime forced laborers to the International Court of Justice as the deadline for seeking third-country arbitration passes on Thursday”, as cited by Reuters. Key Highlights: “With no mutually palatable agreement, Tokyo has pushed for third party arbitration, which Seoul has rejected. Thursday is the deadline for making those arrangements. Once the deadline passes, Japan would continue to push Seoul for proposals to end the dispute while preparing for countermeasures - including considering going to the International Court of Justice.”

The Bank of Korea (BOK) cut interest rates to 1.5% from 1.75% on Thursday in a bid to support the economy absorb external shocks from the Sino-US trad

The Bank of Korea (BOK) cut interest rates to 1.5% from 1.75% on Thursday in a bid to support the economy absorb external shocks from the Sino-US trade tension.  This is the first rate cut since 2016 and marks the shift in direction from the rate hike initiated in November 2018.  Most Asian central banks have pressed the easing button in the last few months. Further, major central banks like the US Federal Reserve and the European Central Bank are also expected to bow down to market pressure to cut rates. 
 

Despite witnessing a drop in seasonally adjusted Employment Change, the AUD/JPY pair takes the bids to 75.64 during early Thursday.

Buyers concentrated more on the Fulltime Employment increase than a decline in Employment Change figures to propel AUD/JPY.Risk catalysts, like politics/trade, will be in the spotlight for now.Despite witnessing a drop in seasonally adjusted Employment Change, the AUD/JPY pair takes the bids to 75.64 during early Thursday. The Australian Bureau of Statistics released June month employment data wherein the Unemployment Rate and Participation Rate remained unchanged at 5.2% and 66% respectively while the Employment Change slipped beneath 10.0K forecast to 0.5K. However, the increase in Fulltime Employment to 21.1K from 2.4K prior gained Aussie bulls’ attention. Risk-off sentiment remains present in the market off-late amid political news headlines. Among them, the Wall Street Journal news that the US House of Representatives blocked the country’s arms sales to Saudi Arabia and the Reuters’ report revealing Turkey’s resentment due to the US removal from F-35 program grabbed major attention. Adding to the pessimism was dimming odds for the US-China trade deal. As a result, the key risk barometer, the US 10-year treasury yield carries previous weakness forward with nearly 2 basis points of declines to 2.042% by the press time. Having witnessed initial reaction to the monthly employment data from Australian, economic calendar remains mostly empty during the Asian session, which in turn highlights the importance of trade/political news for fresh impulse. Technical Analysis The pair continues to move between the 21 and 50-day exponential moving averages (EMAs), 75.56 and 75.90 respectively. The current month high around 76.30, followed by 100-day EMA level of 76.80 can limit the pair’s upside break whereas multiple highs during late-June around 74.80 can please sellers past-75.56.

The bid tone around the Australian Dollar strengthened, pushing the AUD/USD to a session high of 0.7027 after the data released by the Australian Bure

AUD is better bid on upbeat Aussie labor market report. Headline figure missed estimates, but full-time jobs ticked higher. The bid tone around the Australian Dollar strengthened, pushing the AUD/USD to a session high of 0.7027 after the data released by the Australian Bureau of Statistics showed the fulltime jobs growth picked up pace in June.  The economy added 21.1K fulltime jobs last month, a significant rise from the preceding month's print of 2.4K additions. Meanwhile, part-time jobs fell by 20.6K, following a 39.8K rise in May. Further, the jobless rate remained unchanged at 5.2% as expected.  A rise in the fulltime jobs is helping the AUD digest the weaker-than-expected headline figure. The employment change came in at 0.5K, missing the estimate of 10.0K by a big margin and down significantly from May's print of 42.3K.  All-in-all. the labor data will ease pressure on the Reserve Bank of Australia to cut rates immediately in August. The central bank cut rates in May and June and is widely expected to deliver another rate cut in the final quarter of this year.  With full time jobs rising, the markets are unlikely to pull forward expectations of a third rate cut to next month. The AUD/USD, therefore, could extend the gains during the day ahead. As of writing, the pair is trading at 0.7020, representing a 0.16% rise on the day.  A daily close above the July 16 high of 0.7045 is needed to revive the bullish technical setup. Pivot points     

Australia Part-Time Employment down to -20.6K in June from previous 39.8K

The key June employment report from Australia has arrived. Last time around, the Employment Change for May was a big beat compared to market expectati

The key June employment report from Australia has arrived. Last time around, the Employment Change for May was a big beat compared to market expectations, 42.3K vs estimates of 16K. The Unemployment Rate at 5.2% vs estimates (est) of 5.1% and previous (prev) 5.2% was another disappointment for the RBA. June's data came as follows: Australian Unemployment rate June: 5.2% (est 5.2%; prev 5.2%).  Australian Employment change June: 0.5k  (est 10k  prev 42.3K). (Makes up for last months huge beat) Australian Full Time Employment Change June: 21.1k vs the prior -2.4K. (Bullish) Australian Part Time Employment Change June: -20.6k vs prior was +39.8k. (Bullish) Participation Rate June: 66%  vs (expected 66%, prior was 66%).   About the Unemployment Rate The Unemployment Rate release by the Australian Bureau of Statistics is the number of unemployed workers divided by the total civilian labor force. If the rate hikes, indicates a lack of expansion within the Australian labor market. As a result, a rise leads to weaken 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).

Australia Employment Change s.a. below expectations (10K) in June: Actual (0.5K)

Australia Unemployment Rate s.a. meets forecasts (5.2%) in June

Australia Participation Rate meets expectations (66%) in June

Australia Fulltime Employment climbed from previous 2.4K to 21.1K in June

Despite declining to the lowest levels since late-March, the AUD/NZD pair’s immediate drop is being confined by key support-line ahead of AU jobs report.

16-week old horizontal-line, oversold RSI question AUD/NZD sellers ahead of the key Australian employment data.Buyers may look for an upside break of 1.0426 to aim for 61.8% Fibonacci retracement.Despite declining to the lowest levels since late-March, the AUD/NZD pair’s immediate drop is being confined by key support-line as it trades near 1.0406 ahead of Australia’s employment data, up for publishing on early Thursday in Asia. Not only 3.5-month-old horizontal support around 1.0400 but oversold levels of 14-day relative strength index (RSI) also hinders the pair’s downpour, which in-turn signal brighter chances of the quote’s pullback to July 01 low of 1.0426. Though, pair’s rise past-1.0426 might find it difficult to cross 61.8% Fibonacci retracement of March – April upside around 1.0450, which if broken could accelerate the run-up towards mid-July top surrounding 1.0500. Alternatively, a sustained break of 1.0400 has multiple supports around 1.0365/60, a break of which can recall March month low around 1.0275 back to the back. AUD/NZD daily chartTrend: Pullback expected  

The People's Bank of China (PBOC) has set the Yuan reference rate at 6.8761 vs Wednesday's fix of 6.8827.

The People's Bank of China (PBOC) has set the Yuan reference rate at 6.8761 vs Wednesday's fix of 6.8827. 

Bears now look to the 52 handle in series of lower lows. Overnight, WTI took on fresh weekly lows below the prior 56.77. Oil continues to slide and f

 Bears now look to the 52 handle in series of lower lows.Overnight, WTI took on fresh weekly lows below the prior 56.77.Oil continues to slide and further away from the 20-day moving average and below the confluence of the 50 and 200 moving averages of the same period down at 57.90.  Overnight, WTI took on fresh weekly lows below the prior 56.77 and the series of bearish pin bars shows that there is strong supply on correction attempts. Bears now look to the 52 handle before the 14th Jan 50.41 lows. Further lower, the 26th November lows are located at 49.44 as a target.   

AUD/JPY is lacking a clear directional bias since July 1. The currency pair has been largely restricted to a trading range of 75.10-76.30, which could

AUD/JPY is stuck in 75.10-76.30 trading range.A big beat on Aussie jobs data will likely yield a range breakout.AUD/JPY is lacking a clear directional bias since July 1. The currency pair has been largely restricted to a trading range of 75.10-76.30, which could be breached following the release of the Aussie jobs data at 01:30 GMT today. The data is expected to show Australia's economy added just 10K jobs in June, far less than the 42.3K jobs additions in May.  The jobless rate is forecasted to remain unchanged at 5.2%. A weaker-than-expected jobs data could embolden the Reserve Bank of Australia to cut rates again, possibly in August. It is worth noting that the central bank has already reduced rates in May and June and the market seems priced in for a third rate cut before the year end. As now, the third rate cut is seen happening in the final quarter of this year. Markets may pull forward expectations of another rate cut to August from November, sending the AUD lower across the board if the labor market data disappoints expectations. AUD/JPY will likely fall below 75.10, confirming a downside break of its recent trading range. The Aussie, however, could rise well above 76.30, confirming a range breakout if both the headline and full-time jobs figure better estimate by a big margin. As of writing, the pair is trading at 75.52. Technical Levels 

South Korea BoK Interest Rate Decision registered at 1.5%, below expectations (1.75%) in July

Given the global political plays keep luring Japanese Yen (JPY) buyers amid Brexit pessimism at the UK, the GBP/JPY pair remains on a back foot.

Not only UK lawmakers’ attempt to block no-deal Brexit but the activity surrounding global politics also entertained Yen buyers.British Retail Sales, trade/political news will be in the spotlight.Given the global political plays keep luring Japanese Yen (JPY) buyers amid Brexit pessimism at the UK, the GBP/JPY pair remains on a back foot around 134.07 amid initial Asian session on Thursday. The UK lawmakers have already blocked the incoming Prime Minister (PM), Boris Johnson is most likely, from suspending the Parliament till early November in the House of Lords amid fears that the PM might supersede the members’ authority to avail a no-deal Brexit. Also, weighing on the expectations is The UK Times news report that expects the Office for Budget Responsibility’s (OBR) five-year report to forecast the nation’s recession in 2020 if no-deal Brexit takes place. On the contrary, the JPY initially benefited from upbeat sentiment surrounding the US-Japan trade deal while also taking advantage of the US political and trade woes. Investors may now watch over the UK Retail Sales figures for June together with the parliamentary voting on the House of Lords’ motion and OBR report. While the further downside is anticipated based on the UK political pessimism and expectations from the OBR report, likely improvement in the UK data to 2.6% from 2.3% (YoY) and -0.3% versus -0.5% (MoM) could challenge the bears. Technical Analysis Only a sustained break of 61.8% Fibonacci retracement of 2016 – 2018 upside, at 136.10, can cut the odds favoring the pair’s gradual declines towards the January month low close to 131.80. If prices rally beyond 136.10, current month high around 136.30 and early-June bottom surrounding 136.50/55 can lure buyers.

USD/JPY is trading in Tokyo's opening hour at 107.88, between a range of 107.85 and 107.98, back blow 108 the figure and heavy. There is a mild risk-o

USD/JPY dropped from 108.20 to hold at 108 the figure overnight and was heavy into Asia. USD/JPY is back below converging moving averages on 4HR timeframe. USD/JPY is trading in Tokyo's opening hour at 107.88, between a range of 107.85 and 107.98, back blow 108 the figure and heavy. There is a mild risk-off tone stemming from a disappointing performance in global stocks and a mix of off-beat geopolitical noise and some soft economic data.  As for the U.S. data releases, which were broadly in line with market expectations, they evoked little reaction. However, US housing data came in on the softer side of market in June with housing starts falling 0.9% m/m (mkt: -0.7%, last: -0.4%) and building permits down 6.1% m/m (mkt: +0.1%, last: +0.7%).  The Federal Reserve's Beige Book stated that the economic activity continued to expand at a modest pace overall from mid-May through early July, with little change from the prior reporting period.  U.S. stocks continued to bleed out overnight as investors digested mixed earnings results along with geopolitics and U.S. data. The DJIA closed lower by116 points at 27,219, the S&P 500 index dropped 19 points to 2,984, while the Nasdaq fell 37 points to 8,185.  As for yields, US 2-year treasury yields fell from 1.86% to 1.83%, while 10-year yields fell from 2.11% to 2.05% and the markets priced 33bp of easing at the 31 July meeting (from 31bp yesterday). USD/JPY levelsValeria Bednarik, the Chief Analyst at FXStreet, explained that the USD/JPY pair was heading into the Asian opening with an increased bearish potential: "It broke below the 23.6% retracement of its latest daily slide, after meeting sellers around the 50% retracement of the same slump. In the 4 hours chart, the pair is back below converging moving averages, while technical indicators turned south, the Momentum struggling with its 100 level and the RSI currently at 43. The failed attempt to recover will likely discourage bulls, exposing the pair to a steeper decline."

The European Central Bank will cut deposit rates in September and will begin telegraphing the move from this month, according to economists in a Reute

The European Central Bank will cut deposit rates in September and will begin telegraphing the move from this month, according to economists in a Reuters poll who do not see sudden revival in Eurozone's economy.  The central is expected to cut its deposit rate by 10 basis points to an all-time low of -0.50% in September. Two-thirds of economists said the ECB would use the July meeting to change its forward guidance toward easing.  Key point (Source: Reuters) While a majority of economists do not expect the ECB to relaunch asset purchases — known as quantitative easing, or QE — this year, nearly 40% of the respondents expected it to do so, up from about 15% last month.  

Recent lower high formation and steady levels of 14-bar relative strength index (RSI) signals EUR/USD buyers’ exhaustion around key resistance.

200-HMA, late last-week low highlight 1.1238/40 as the key upside barrier for EUR/USD.Lower high, steady RSI can recall sub-1.1200 area on the chart.With the recent lower high formation and steady levels of 14-bar relative strength index (RSI) signaling the buyers’ exhaustion, the EUR/USD pair witnesses pullback to 1.1226 during early Thursday. Not only recently trading pattern and RSI but failure to rise past-key resistance area also indicate the pair’s weakness, which in turn highlights 1.1215 and 1.1200 as nearby supports ahead of pushing sellers towards monthly low near 1.1193. If bears dominate sentiment below 1.1193, June month bottom close to 1.1181 could quickly appear on their radar. On the flip side, a sustained break of 1.1238/40 area comprising 200-hour moving average (HMA) and late last week's low seems the key for buyers to watch as a break of which can trigger the pair’s fresh advances to 1.1250/55 and 1.1280 numbers to the north. Additionally, pair’s successful rise beyond 1.1280 enables it to confront 200-day moving average on daily chart that levitates around 1.1320 by the press time. EUR/USD hourly chartTrend: Pullback expected  

AUD/USD overnight ATM volatility (implied volatility) has increased from 4.85% to 8.5% ahead of the all-important Aussie jobs data. The data due at 01

AUD/USD overnight ATM volatility (implied volatility) has increased from 4.85% to 8.5% ahead of the all-important Aussie jobs data.  The data due at 01:30 GMT today is expected to show the jobless rate remained steady at 5.2% and the economy added 10K jobs in June, far less than the 42.3 jobs additions seen in May.  The spike in overnight volatility indicates the investors are expecting big moves in the Aussie dollar following the release of the monthly jobs data. After all, the Reserve Bank of Australia has pledged to adjust monetary policy to absorb the spare capacity in the labor market.  A weaker-than-expected data will likely put pressure on the RBA to cut rates next month. The central bank has cut rates in May and June and markets are anticipating another rate cut before the year-end.  ATM volatility

There were a number of geopolitical tensions rearing their ugly head again from across the globe including Brexit, and trade wars in the main. U.S. da

Forex today was traded in a risk-off environment where both the US Dollar and yields sunk and gold surged. U.S. stocks were under pressure on softer U.S. data and a mixed bunch of earnings.There were a number of geopolitical tensions rearing their ugly head again from across the globe including Brexit, and trade wars in the main. U.S. data releases, which were broadly in line with market expectations, evoked little reaction. However, US housing data came in on the softer side of market in June with housing starts falling 0.9% m/m (mkt: -0.7%, last: -0.4%) and building permits down 6.1% m/m (mkt: +0.1%, last: +0.7%).  Meanwhile, the Federal Reserve's Beige Book stated that the economic activity continued to expand at a modest pace overall from mid-May through early July, with little change from the prior reporting period.  In European trade, the focus was on the final June reading on the euro  Consumer Price Index(CPI) and UK CPI inflation. Euro area headline CPI was revised 0.1%pt higher to 1.3% y/y while Core Inflation was unchanged from its earlier print of 1.1% y/y, well below the ECB’s target rate of 2%.  "The ECB still has some work to do on getting inflation up. The data follows comments by ECB’s Coeure that the Governing Council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation continues to move towards the target in a sustained manner," analysts at ANZ Bank explained. As for the UK's, this was in line with market expectations and stable in June at 2.0% y/y and core inflation ticked up 0.1%pt from May to 1.8%. "While data suggest the BoE is under no immediate pressure, a softening in producer input price inflation from 1.4% y/y in May to -0.3% in June suggests risks to pipeline goods inflation are skewed to the downside," the analysts at ANZ Bank noted. As for Brexit and trade wars, the House of Lords moved to pass an amendment preventing the PM from ‘proroguing’ or suspending a sitting session of Parliament in the case of a no-deal Brexit which supported the upside in sterling. Meanwhile, Trump was saying that they had a long way to go with China on trade and said that they could impose tariffs on another $325 billion worth of Chinese imports if they wanted to. "China is supposed to be buying U.S. Farm products, we’ll see if they do," Trump said, which weighed on risk appetite and U.S. stocks, sending gold higher within its northerly trajectory that had kicked off in European trade, ending the New York session 1.2% higher.   Currency action: DXY was -0.2% on the day. GBP/USD briefly traded below 1.24 the figure to score the lowest level since 2017 at 1.2382. Cable then rebounded to 1.2450 on the Brexit headlines.  EUR/USD climbed from 1.1200 to 1.1233.  USD/JPY dropped from 108.20 to hold at 108 the figure.  AUD/USD rallied from 0.6996 to 0.7025.  NZD/USD outperformed, rising from 0.6700 to 0.6747 – a three-month high.  Key notes from Wall Street:Wall Street moves lower with the DJIA dropping over 100 pointsKey events ahead:"In Australia, we have the key June employment report which is expected to rise 9k and see the unemployment rate hold at 5.2%. Westpac is forecasting a 10k increase in employment but expects the unemployment rate to decline to 5.1% due to a pull-back in the participation rate. Q2 NAB business survey will provide further detail on the monthly read – conditions (+2) and confidence (+3) both below average in June," analysts at Westpac explained.

Early Thursday markets will see Australian employment data from the Australian Bureau of Statistics at 01:30 GMT that will be the key for AUD/USD traders.

Overview of the Australian jobs reportEarly Thursday markets will see Australian employment data from the Australian Bureau of Statistics at 11:30 Sydney/9:30 Singapore/HK and 01:30 GMT. Following the election driven boost to the headline employment data during last-month, investors will witness the normal reading that could help them better predict future policy moves by the Reserve Bank of Australia (RBA) considering its emphasis on the unemployment rate. Market consensus favors a decline to 10.0K from 42.3K of seasonally adjusted Employment Change whereas the Unemployment Rate is likely remaining unchanged at 5.2%. Also, the participation rate may hold its previous 66.00% mark intact. TD Securities emphasizes on last month's general election to be the key driver of likely boost to the employment scenario: We anticipate some give back in June from May's election driven boost to employment. We forecast +5k for headline Jun employment, the participation rate to remain at 66% and the unemployment rate to remain at 5.2%. The risk is for the unemployment rate to edge higher should more people be looking for work. Westpac also anticipates a pullback in the Employment Change as it says: In Australia, we have the key June employment report which is expected to rise 9k and see the unemployment rate hold at 5.2%. Westpac is forecasting a 10k increase in employment but expects the unemployment rate to decline to 5.1% due to a pull-back in the participation rate. Q2 NAB business survey will provide further detail on the monthly read – conditions (+2) and confidence (+3) both below average in Jun.How could the data affect AUD/USD?Despite RBA’s latest rate cuts, the central bank and its Governor continue to highlight unemployment rate as a key driver of next policy moves, which in turn increases the employment data’s impact on the AUD/USD pair. With the data likely to portray regular employment market condition after the election-driven boost, any disappointment will be taken seriously to provide further damages to the Aussie pair. Technically, 100-day exponential moving average (EMA) level of 0.7017 limits the pair’s immediate upside targeting 0.7045/50 resistance-area comprising May and current month high. On the contrary, 0.6980/85 area becomes key to sellers as it includes July 10 top, 21-day and 50-day EMAs. Should prices slip below 0.6980, 0.6930 can come back on the chart.Key NotesAUD/USD remains mildly bid ahead of Aussie employment data AUD/USD Analysis: flat around 0.7010 ahead of employment dataAbout the Employment ChangeThe Employment Change released by the Australian Bureau of Statistics is a measure of the change in the number of employed people in Australia. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. Therefore, a high reading is seen as positive (or bullish) for the AUD, while a low reading is seen as negative (or bearish).About the Unemployment RateThe Unemployment Rate release by the Australian Bureau of Statistics is the number of unemployed workers divided by the total civilian labor force. If the rate hikes, indicates a lack of expansion within the Australian labor market. As a result, a rise leads to weaken 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).

Japan Adjusted Merchandise Trade Balance registered at ¥-14.399B above expectations (¥-524.8B) in June

Japan Adjusted Merchandise Trade Balance came in at ¥-14.4B, above forecasts (¥-524.8B) in June

Japan Merchandise Trade Balance Total above expectations (¥420B) in June: Actual (¥589.5B)

Japan Imports (YoY) below forecasts (-0.4%) in June: Actual (-5.2%)

Japan Exports (YoY) below forecasts (-5.6%) in June: Actual (-6.7%)

Although growing market expectations of BI rate cut and oversold RSI triggered the USD/IDR pair's pullback, 10-day EMA presently challenges buyers.

Oversold RSI and expectations of the BI rate cut pulled the USD/IDR pair up.14,075/80, the eight-week-old descending trend-line and 100-day EMA also stand tall to question bulls.Although growing market expectations that the Bank Indonesia (BI) will announce a cut to its headline BI rate in today’s monetary policy meeting recently triggered the USD/IDR pair’s pullback amid oversold RSI, the quote is yet to clear 10-day EMA while making the rounds to 13,980 during early Thursday. Not only 10-day exponential moving average (EMA) surrounding 14,023/25, but multiple lows between late-June and July 09 surrounding 14,075/80 can also limit the pair’s immediate upside. In a case prices rally past-14,080, a downward sloping trend-line since late-May, at 14,172, followed by 100-day EMA level of 14,213, may gain bulls’ attention. Should sellers refrain from respecting oversold levels of 14-day relative strength index (RSI), multiple supports close to 13,950/40 and recent bottom around 13,890 can entertain them ahead of pushing towards February month low of 13,858. USD/IDR technical analysisTrend: Pullback expected  

Gold prices ended sharply higher on in New York while the U.S. dollar ended lower by 0.2% at 97.209 while the 10-year Treasury note fell which contrib

Gold prices consolidate the rally from overnight, trading at $1425 currently, below the $1,430 high. Technically, a symmetrical triangle is taking shape, with price progressing towards a breakout one way or the other.Gold prices ended sharply higher on in New York while the U.S. dollar ended lower by 0.2% at 97.209 while the 10-year Treasury note fell which contributed to the precious metals surge to a six-year high. US 2-year treasury yields fell from 1.86% to 1.83%, while 10-year yields fell from 2.11% to 2.05%.  Investors continue to price in a Federal Reserve cut for this month while the Federal Reserve’s Beige Book said that the US economy had grown at just a “modest” pace as indicated in the last survey. Markets increased their pricing to 33bp of easing at the 31 July meeting vs yesterday's 31bp. Most of the leg work was done in European trade and August gold trading on Comex added $12.10, or 0.9%, to settle at $1,423.30 an ounce, after losing 0.2% lower Tuesday.  Trade uncertainty continues to weigh and earnings reports sent mixed signals on the state of the US economy. US housing data also arrived soft for June with housing starts falling 0.9% m/m (mkt: -0.7%, last: -0.4%) and building permits down 6.1% m/m (mkt: +0.1%, last: +0.7%). Gold levels Technically, a symmetrical triangle is taking shape, but it is still early days and indicats a break out is in the making. A break of the resistance opens the 1440 objective. On the flip side, below 1420. bears will look for a run below the 1400 psychological level. The 23.6% Fibo of the latest swing lows and highs are located at 1398. Below here, we are looking down the barrel at $1,373/76 zone which meets the 19th June spike correction lows and the 38.2% Fibo of the same swing ranges. On the flipside, 1427, 1439 come in as key targets.   

Not only the UK PM race but the British politician’s move to block the no-deal Brexit also entertains GBP/USD traders on early Thursday.

Fears of no-deal Brexit continue exerting downside pressure on the GBP/USD pair.Trade woes, political plays keep the US Dollar (USD) in check.Not only the UK Prime Minister’s (PM) race but the British politician’s move to block the no-deal Brexit also entertains GBP/USD traders while the quote seesaws near 1.2430 during early Thursday morning. The Cable benefited from the greenback declines, mainly piled on due to sluggish data and trade worries, amid no change in the UK inflation numbers on Wednesday. However, traders remain cautious concerning the latest political wave in the UK that is trying to stop the no-deal Brexit. At the House of Lords, British lawmakers voted to turn down the incoming PM’s ability to suspend the Parliament unless Brexit while fearing the frontrunner Boris Johnson’s pledge to leave the EU on October 31. It was also reported by the BBC that some of the cabinet ministers are ready to resign in a move to support the House of Lord’s motion in the Parliament that will be up for voting on Thursday morning in the UK. Additionally, Mr. Johnson was assumed to have brokered a private deal with Nigel Farage’s Brexit party to form an electoral pact if he becomes the PM. However, Huffington Post confirmed that the PM hopeful denied any such pact. In addition to political drama, a five-year report by the UK’s Office for Budget Responsibility (OBR) and June month British Retail Sales will cater the Cable traders’ needs. On the other hand, the US weekly Initial Jobless Claims and Philadelphia Fed Manufacturing Survey might offer clues to the USD players. Technical Analysis Unless breaking July 10 low surrounding 1.2440/45, chances of the quote’s pullback to 1.2380 and then to 1.2340 can’t be denied. In a case prices rally past-1.2445, bulls may target Monday’s low close to 1.2510 and the weekly top adjacent to 1.2580.

Despite declining below the 200-hour moving average (HMA), the AUD/JPY pair bounced off 50% Fibonacci retracement of last one-week moves on early Thursday.

Failure to slip beneath 50% Fibonacci retracement, oversold RSI favors AUD/JPY pullback.The 2-day long descending trend-line acts as an additional resistance beyond 200-HMA.The Aussie employment data in the spotlight for fresh impulse.Despite declining below the 200-hour moving average (HMA), the AUD/JPY pair bounced off 50% Fibonacci retracement of last one-week moves as it takes near 75.65 during the early Asian session on Thursday. While sustained trading below key HMA pleases bears, oversold levels of 14-bar relative strength index (RSI) and failure to decline below 50% Fibonacci retracement favors the buyers targeting a break of 75.71 upside barrier comprising 200-HMA. Following a successful break of 75.71, bulls may have to cross the 2-day old resistance-line at 75.88 now in order to revisit the latest highs surrounding 76.15. Meanwhile, sellers will look for 61.8% Fibonacci retracement level near 75.54 during the pair’s extended declines below 75.66 including 50% Fibonacci retracement. It should also be noted that 75.35 and 75.17 can offer additional support to the quote if bears dominate past-75.54. Other than the technical details, traders will observe Australia’s June month employment data to forecast near-term pair moves. The Aussie Employment Change is expected to decline to 10K from 42.3K prior whereas Unemployment Rate may remain unchanged at 5.2%. AUD/JPY hourly chartTrend: Sideways  

Reuters is reporting that U.S. and Japanese officials are working hard to reach agreement on a bilateral trade agreement. U.S. and Japanese officials

 Reuters is reporting that U.S. and Japanese officials are working hard to reach agreement on a bilateral trade agreement. U.S. and Japanese officials are working hard to reach agreement on a bilateral trade agreement, a senior Japanese official told Reuters on Wednesday, adding he was looking forward to news on the deal in the near future. Three industry sources told Reuters on Tuesday that the United States and Japan were working on a small trade deal involving agriculture and autos that could be agreed by President Donald Trump and Prime Minister Shinzo Abe when they meet in New York in September. Asked about progress in the bilateral trade talks, Koji Tomita, Japan’s sherpa to the Group of 20 industrialized countries (G20), said, “When President Trump came to Japan at the end of May, he was talking about doing a deal as soon as possible. Our team is now working pretty hard, so we are looking forward to some news in the near future.” There is no material impact for the FX space here while progress is being made, however, it does give some positive gloss to the general 'trade-war' theme, which is risk sentiment positive. 

The Wall Street Journal reported that The House of Representatives approved the first of three resolutions Wednesday aimed at blocking lucrative arms

The Wall Street Journal reported that The House of Representatives approved the first of three resolutions Wednesday aimed at blocking lucrative arms sales to Saudi Arabia and the United Arab Emirates, joining the Senate in disapproval of the weapons deals and setting up a likely presidential veto. Fueled largely by bipartisan concern over Saudi Arabia’s protracted war in Yemen and the brutal killing of journalist Jamal Khashoggi by a Saudi hit team in Turkey last year, Congress moved to block the U.S. from fast-tracking sales of precision-guided missiles. There is no material impact on the FX space here, but it is worth noting amid mounting tensions with Iran if which risk currencies and oil come into focus.     

While trade woes and lack of data stopped AUD/USD from cheering the USD weakness on Wednesday, the Aussie pair remains cautious ahead of Australian jobs report.

AUD/USD couldn’t benefit much from the greenback weakness as risk-off sentiment amid US-China trade worries capped upside momentum.Markets also remain cautious ahead of the key Australian employment statistics.While trade woes and lack of data stopped AUD/USD from cheering the USD weakness on the previous day, the Aussie pair trades little positive near 0.7010 ahead of the monthly Australian employment data on early Thursday morning in Asia. The US Dollar (USD) had to bear the burden of weaker housing data and pessimism surrounding the US-China trade tussle, as cited by the Federal Reserve’s Beige Book. Although greenback weakness should ideally help the Antipodeans, the Australian Dollar (AUD) couldn’t rise much amid the overall risk-averse market sentiment as trade woes and sluggish equity market performance dragged the Aussie backward. The global measure of risk sentiment, the US 10-year treasury yield, lost nearly 8 basis points (bps) on Wednesday while making the rounds to 2.043%. Investors will now watch over the June month employment data in order to forecast near-term Aussie momentum. The jobs report gains major attention amid the Reserve Bank of Australia’s (RBA) recently the higher emphasis on the employment figures. The forecast suggests the seasonally adjusted employment change to flash 10.0K mark versus post-election jump of 42.3K. However, no change is expected in the 5.2% Unemployment Rate. Technical Analysis A successful break of 100-day exponential moving average (EMA) level of 0.7017 becomes necessary for buyers to target 0.7045/50 resistance-area comprising May and current month high. If failed, July 10 high around 0.6985/80, also comprising 21 and 50 EMAs, seem crucial to watch.

Bloomberg has reported that The House blocked a Democratic member’s bid to impeach President Donald Trump amid resistance from Speaker Nancy Pelosi an

Bloomberg has reported that The House blocked a Democratic member’s bid to impeach President Donald Trump amid resistance from Speaker Nancy Pelosi and other Democratic leaders. In a 332-95 vote Wednesday, the House refused to advance Texas Democrat Al Green’s impeachment resolution that cited the president’s tweets against four freshman House Democrats, all women of color, and other comments denounced as racist. All of those who voted to move forward with the measure were Democrats.

The UK Times came out with a news report ahead of the UK’s Office for Budget Responsibility’s five-year report citing first assessment of no-deal Brexit.

Ahead of the UK’s Office for Budget Responsibility’s five-year report citing first assessment of the economic impact of a no-deal Brexit, the UK Times came out with news that the British economy will slide into recession in case of a no-deal Brexit. The news report mentions that Thursday’s report could convey the economy will be 3% smaller while entering into recession during 2020 if there is a no-deal Brexit. FX implications Given the recent fears of no-deal Brexit, as highlighted by the UK Members’ of Parliaments’ readiness to stop the incoming Prime Minister from suspending the parliament ahead of the Brexit, such news report can weigh on the British Pound (GBP).

Having been removed from the US F-35 fighter jet program, Turkish Foreign Ministry spokesperson is on wires via Reuters.

Having been removed from the US F-35 fighter jet program, Turkish Foreign Ministry spokesperson is on wires via Reuters. The news report mentions that the nation considers the US removing it from the F-35 program isn’t based on a legitimate reason and does not suit ally spirit. The news report also cites the statement sent to the US that called to return from what it characterized as a mistake, saying it would harm strategic ties between two NATO allies. 

Earlier on Thursday, the BBC reporter, Nicholas Watt, tweeted that he learned of some UK cabinet ministering preparing to resign tomorrow.

Earlier on Thursday, the BBC reporter, Nicholas Watt, tweeted that he learned of some UK cabinet ministering preparing to resign tomorrow in order to vote in the parliament to favor the motion that limits the next Prime Minister from suspending the Parliament ahead of Brexit. Previously, the BBC reported that House of Lords has already passed a motion on the same line which will go to the Members of the Parliaments (MPs) on Thursday. Although no immediate market reaction was witnessed due to the news, the same highlights the fear of hard Brexit and can weigh on the British Pound (GBP).

The S&P 500 is retreating sharply below the 3,000.00 mark among stalling trade talks and mixed earnings. S&P500 4-hour chart Bears broke below the 2,9

The S&P500 broke below the 2,985.00 resistance.Support can be seen at 2,965 and the 2,950 level.
  S&P500 daily chart The S&P 500 is retreating sharply below the 3,000.00 mark among stalling trade talks and mixed earnings.
S&P500 4-hour chart Bears broke below the 2,985.00 resistance as the market is testing the 100 SMA. The correction down seem to have room to the downside towards 2,965.00 and 2,950.00. Looking up resistance is seen at 2,985.00 and 3,010.00
Additional key levels  

With the greenback bears re-entering the markets on sluggish housing data and trade woes, the NZD/USD pair carries its best G10 performer status forward.

Sluggish housing data, Beige Book highlighting trade woes drag the USD down, making the Kiwi the best G10 performer.At the mercy of offshore events, AU employment being the immediate catalyst, amid lack of data at home.With the greenback bears re-entering the markets on sluggish housing data and trade woes, the NZD/USD pair carries its best G10 performer status forward while making the rounds to 0.6730 at the start of Thursday’s Asian session. June month Building Permits and Housing Starts data from the US turn out to be disappointments after the upbeat performance of the earlier statistics, namely the NY Empire State Manufacturing Index and Retail Sales. Adding to the US Dollar (USD) woes was the Federal Reserve’s Beige Book that highlighted flat manufacturing production and trade worries weighing on the future economic behavior. The same matched the recently dovish Fedspeak and put the rate cut speculations again on the front. Given the USD weakness being positive for the commodity-linked currencies, risk-off sentiment played its role supporting the Kiwi more than the Aussie. The global risk barometer, the US 10-year treasury yields, dropped nearly 8 basis points to 2.043% at the end of Wednesday for the US markets. Looking forward, a lack of data/events at home puts the quote at the mercy of offshore events. Among them, Australia’s June month employment data will be the key as being the largest customer of New Zealand. Following that, the US weekly Initial Jobless Claims and Philadelphia Fed Manufacturing data will be in the spotlight. Technical Analysis Repeated failures to provide a daily closing beyond 0.6740 favor the pair’s pullback to 200-day exponential moving average (EMA) level of 0.6714 ahead of highlighting 0.6700 and 100-day EMA level of 0.6665. However, sustained trading beyond 0.6740 enables the prices to aim for mid-April tops surrounding 0.6785 and then rush to cross 0.6800 round-figure.

The DJIA closed lower by116 points at 27,219. The S&P 500 index dropped 19 points to 2,984 The Nasdaq fell 37 points to 8,185. U.S. benchmarks contin

 The DJIA closed lower by116 points at 27,219.The S&P 500 index dropped 19 points to 2,984The Nasdaq fell 37 points to 8,185. U.S. benchmarks continued to slide mid-week while investors digested mixed earnings results along with geopolitics and U.S. data. The DJIA closed lower by116 points at 27,219, the S&P 500 index dropped 19 points to 2,984, while the Nasdaq fell 37 points to 8,185.  Another round of bank results showed came with Bank of America reporting better-than-expected results after gains in its consumer banking division. The U.S.-China trade negotiations have stalled and the Wall Street Journal reported at the stock market close that the Trump administration determines how to address Beijing’s demands that it ease restrictions on Huawei Technologies Co. As for U.S. data,the Federal Reserve's Beige Book has stated that the economic activity continued to expand at a modest pace overall from mid-May through early July, with little change from the prior reporting period. Elsewhere, there was a focus on housing. "US housing data came in on the softer side of market in June with housing starts falling 0.9% m/m (mkt: -0.7%, last: -0.4%) and building permits down 6.1% m/m (mkt: +0.1%, last: +0.7%). Weakness in the relatively volatile multi-family figures underpinned the softer headline, with starts down 9.2% m/m and permits down 16.8%. The downward trend in permits over the first half of 2019 suggests limited upside to construction activity in coming months, but downward pressure on mortgage rates should help put a floor under the decline," analysts at ANZ explained. DJIA levels On a technical basis, the DJIA’s bulls have shied away again and on a bearish correction, the Fibo' targets with the confluence of stop territories come into play. The 23.6% retracement of the 3rd June low to 12th Ju27560ly recently printed high falls in at 26706 which meets April 23rd and 1st May double-top highs. The 38.2% retracement of the same range falls in at 26324 and meets 25th Feb and 11th June highs. The 50% meets the 3rd Dec spike high and mid-June lows. On the flipside, the 28500s remains as a key target. 
 

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