ECONOMIC DATA OF THE DAY

Time	CY	Indicator	Forecast	Previous
10:00	CHF	Industrial Production YoY	6.20%	6.20%
10:00	CHF	Retails Sales YoY	10.50%	10.60%
20:30	USD	Retails Sales Advance MoM	0.40%	0.60%

(Source: FabTrader)

OVERNIGHT NEWS

• US: 
• U.S import prices unexpectedly rose during July. Import prices crept up 0.1% MoM (Exp. -0.4%) from an upwardly revised increase of 0.6% in June (Prev: +0.2%). YoY prices dropped 3.7% (Exp. -4.3%). The monthly increase was due to higher prices for non-petroleum imports, including industrial supplies and food. The price of imports ex-petroleum increased 0.5%, the largest monthly increase since April 2011. Non-petroleum industrial supplies increased 2.1% while foods, feeds and beverages prices rose 3.3%. The price of petroleum imports slid 3.6%.
• Initial claims for unemployment benefits declined 1,000 to a seasonally adjusted 266,000 (Mkt est: 265k) in the week ended Aug. 6.  The four-week moving average firmed 3,000 to a seasonally adjusted 262,750. Continuing unemployment claims rose 14,000 to 2,155,000 (Mkt est: 2.133mln). 
• FED SPEECH: 
• San Francisco Federal Reserve President John Williams said the central bank should raise interest rates again this year. "As the economy gets closer to its goals, we can again pull our foot off the gas a bit and hopefully execute a nice, soft landing over the next couple of years," Williams said. Asked if the Fed's gradual rate increases should include any rate hikes this year, Williams said, "In my view, it does." 
• OPEC: 
• Saudi Arabia energy Minister Khalid Al Falih claims that his country is ready to work with OPEC and non-cartl members to help the market find a balance
• CHINA: 
• The PBOC pledged a greater market role in setting the yuan's exchange rate, while keeping the currency basically stable. China will also push ahead with capital-account convertibility, the central bank said in its annual renminbi internationalization report, without setting time targets. Additional promises include easier approval of Panda bonds.
• China’s net capital outflows accelerated to $39 billion in July, the most in six months, the Institute for International Finance said. Exchange-rate fluctuations last month boosted forex reserves by $4.5 billion, mainly due to an appreciation in the yen and euro against the U.S. dollar.

FOREIGN EXCHANGE (INDICATIVE RATES)

Currency	Last	% Change	Overnight Range
DXY	95.92	0.34%	95.585 – 95.973
EURUSD	1.1139	-0.34%	1.1136 – 1.1182
USDJPY	101.81	0.72%	101.17 - 102.06
AUDUSD	0.7694	-0.19%	0.7692 – 0.7724
GBPUSD	1.2951	-0.50%	1.2936 - 1.3025

(Source: FabTrader)

Commodities (INDICATIVE RATES)

Currency	Price USD	% Change	Overnight Range
Gold	1339.16	0.65%	1340.21 - 1353.45
Silver	20.02	1.05%	19.8937 - 20.3219
Oil (BRENT)	46.04	5.00%	43.46 - 49.22
Oil (WTI)	43.74	4.87%	41.1 - 43.86

(Source: Bloomberg and Saxo)

COMMODITIES

Precious Metals: World Gold Council reported a significant rise in global gold demand in Q2, up by 15% year-on-year to 1,050 tons, driven solely by very strong investment demand, which soared by 141% to 448 tons. As higher gold prices had a dampening effect on the other demand components, its forecasts for the year has been reduced as a whole by 100 to 750-850 tons for India and by 50 to 850-950 tons for China.

Oil: Oil futures rallied to their highest in nearly three weeks as comments from Saudi Arabia’s energy minister raised the possibility that major producers will take action to stabilize the market at September's OPEC meeting. Bullish engulfing candlesticks sighted on both WTI and Brent charts.

FOREX NEWS

• USD continued the move higher during the NY session which started in Asia following the rally in equities and oil and yields higher. DXY was up 0.34%
• USDJPY is holding well above the 100 level  so far which is the main support. The pair benefited from the overnight rally in Rates. The short term resistance resides at 102.50.
• NZDUSD completely erased the rally following the RBNZ cut yesterday and the series of stops following the market disappointment. AUDNZD is now trading in a volatile fashion at the top of the range close to the 100d MA.
• GBPUSD is attempting to confirm the break below the 1.3000 which it failed to do in July. If we manage to close below that level tonight, there is room to move much lower
• In Emerging Markets, very quiet overnight session with the Asia currencies more or less at the same level we left them at Asia close and some profit taking in the short USDBRL positions ahead of the week-end

Central Banks’ Waning Appetite Seen in Currencies, JPMorgan Says

Foreign-exchange traders are becoming convinced that monetary stimulus programs around the world have reached their limits in efforts to spark economic growth, according to JPMorgan Chase & Co.

The kiwi surged to its highest level since May 2015 after the Reserve Bank of New Zealand reduced borrowing costs Wednesday. The yen has strengthened against U.S. dollar since the Bank of Japan’s July 29 decision to expand monetary easing.

The traditional monetary-policy playbook calls for steps to weaken foreign-exchange values in order to spur domestic inflation and make a nation’s exports more competitive in global markets. Unprecedented stimulus policies from Europe to Asia this year have only sent currencies higher, frustrating efforts to spur economies.

"Unless the central bank gives some indication that the easing cycle could be extended or protracted over many months, markets tend to trade the end-of-cycle phenomenon," John Normand, London-based head of foreign exchange, commodities and international rates research at JPMorgan, said in an interview with Bloomberg Television. "There’s no more downside to interest rates after this last cut and therefore the currency bounces." JPMorgan is the world’s second largest currency trader, according to Euromoney magazine.

The kiwi jumped as much as 1.9 percent to the highest since May 2015. It strengthened against most of its major peers and was little changed at 72.09 U.S. cents as of 5 p.m. in New York. It . The yen fell 0.7 percent to 101.96 per dollar.

After saying in his policy statement that a decline in the kiwi “is needed,” RBNZ Chief Graeme Wheeler conceded in a news conference in Wellington that the central bank had “very limited influence” over the exchange rate. He also said that in a “normal” situation, the central bank would probably be raising rates to cool the rampant housing market.

Central banks are acting within different constraints and "haven’t been able to deliver as much as the market was expecting,” said Andres Jaime, a foreign exchange and rates strategist at Barclays Capital Inc. in New York. “What’s different are the constraints they are facing. The BOJ is facing different constraints than the RBNZ."

While the RBNZ policy makers may not be cutting rates as deeply as markets expect to keep housing prices under control, the European Central Bank and the BOJ are reaching the limits of the policies they have used so far.

 

"Given the tools that they are using right now, which is negative rates and quantitative easing, those tools are reaching their limits,” Jaime said.
Read More at www.bloomberg.com