Daily Market Outlook, August 20th, 2021

Overnight Headlines

  • Harris Trip To Asia Will Show Commitment To Free, Open Indo-Pacific
  • Powell To Speak On 'Economic Outlook' Next Week At Jackson Hole
  • US Q2 Growth Likely To Be Revised Higher After Slew Of Strong Data
  • German Finance Ministry: Economy On Track For Stronger Growth
  • China Leaves Lending Benchmark Loan Prime Rate Unchanged Again
  • Japan's Consumer Price Falls Narrow On Global Commodity Inflation
  • Sydney, New Zealand Extend Lockdowns As Covid Spread Worsens
  • RBNZ Governor Orr: October Meeting Live Even If Outbreak Persists
  • China Fixes Yuan At 4-Month Low, Basket Index Advances Further
  • Dollar Holds Firm As Risk Aversion Hammers Canadian Dollar, Aussie
  • Asian Equity Markets Mostly Lower; Nikkei Slides To 7-Month Low

G10 FX Options Expiries for 10AM New York Cut

(Hedging effect can often draw spot toward strikes pre expiry if nearby)

  • EUR/USD 1.1675 (638M), 1.1700-10 (1.1BLN), 1.1715-25 (567M)
  • 1.1750 (373M), 1.1800 (756M), 1.1825 (282M)
  • USD/JPY 108.65-75 (1.3BLN), 109.00 (370M), 109.70-72 (330M)
  • 110.00 (322M), 110.13 (310M), 110.20 (260M)
  • USD/CHF 0.9150 (500M)
  • USD/CAD 1.2750-55 (400M), 1.2700-10 (640M), 1.2590-00 (893M)
  • 1.2575-85 (630M), 1.2555 (441M), 1.2450 (575M)

Technical & Trade Views

EURUSD Bias: Bearish below 1.1850 Bullish above

  • EUR/USD 1.1675-87 EBS in Asia after falling to 1.1666 overnight
  • Pair lowest since November '20, and could trade lower still
  • Stops eyed on break below 1.1650-65, next support @1.1600 Nov '20 lows
  • Some option expiries in area - 1.1675 E588 mln, 1.1700-25 E1.7 bln
  • Safe havens in demand especially USD but also JPY and CHF, EUR weak vs all
  • EUR/JPY 128.05-34 EBS after push to 127.94 yesterday, trend looks down
  • EUR/CHF 1.0717-24 EBS in Asia after push down to 1.0697 yesterday

GBPUSD Bias: Bearish below 1.3830 Bullish above.

  • Touch softer in a 1.3619-1.3641 range with plenty of morning interest
  • UK house prices to climb on cheap cash, quest for space...
  • Charts; momentum studies fall, 5, 10 & 21 daily moving averages slide
  • 21 day Bollinger bands expand - strong trending bearish setup
  • 1.3661 falling lower 21 day Bollinger band suggests oversold short term
  • Fall targets a test of 1.3572 July trend base, with 1.3452 2021 base below
  • 1.3783/90 10 day moving average and 200 DMA are pivotal resistance
  • UK retail sales lead data - polls - headline m/m +0.4%, ex fuel m/m +0.2%

USDJPY Bias: Bullish above 109 Bearish below

  • USD/JPY range-bound with both USD and JPY preferred havens on sour risk mood
  • Asia 109.63-88 EBS, bids eyed from ahead of 109.50, offers tipped 110.00+
  • Pair holding near middle of 109.62-86 hourly Ichi cloud, cloud to taper
  • In area of ascending 55-DMA currently at 109.77
  • Nearby option expiries today - 109.70-85 total $606 mln, 110.00-40 $1.3 bln
  • US yields steady in Asia, just above recent lows, Treasury 10s @1.238%
  • Asia risk mood sour, Nikkei -0.8% @27,069, E-Minis -0.1% @4397
  • Crosses heavy - EUR/JPY 128.05-34 EBS, GBP/JPY 149.27-88, AUD/JPY 78.09-62
  • CAD/JPY very heavy, 85.74 to 85.21, talk 82 CAD puts bought

AUDUSD Bias: Bearish below 0.7320 Bullish above

  • AUD/USD opened -0.29% at 0.7234 after risk assets sold off in NY
  • It fell below 0.7230 support when stops were triggered when USD moved higher
  • It was 0.7225 when Aus jobs came in better than expected and touched 0.7236
  • The gains were short-lived as risk assets came under pressure
  • Dalian iron ore fell over 7.0% on global growth concerns
  • AUD/USD fell to 0.7198 and is around 0.7200 into the afternoon
  • AUD/USD likely to remain under pressure as negatives mount
  • There isn't any decent support until the 38.2 of the 2020/2021 move @ 0.7053
  • Only a move back above 10-day MA at 0.7315 would ease pressure