ECONOMIC DATA OF THE DAY

Time	CY	Indicator	Forecast	Previous
16:30	HKD	CPI Composite YoY	2.30%	2.40%

(Source: FabTrader)

SPEECHES

• 21:45: EUR: – ECB publishes weekly QE data

OVERNIGHT NEWS

• FED SPEECH: 
• San Francisco Federal Reserve Bank President John Williams said a return to rate hikes “makes sense:
• In the context of a strong domestic economy with good momentum, it makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later.
• if we wait until we see the whites of inflation’s eyes, we don’t just risk having to slam on the monetary policy brakes, we risk having to throw the economy into reverse to undo the damage of overshooting the mark. And that creates its own risks of a hard landing or even a recession.
• The broader national economy is in good shape: We’re at full employment and inflation is well within sight of, and on track to reach, our target. Under these conditions, it makes sense for the Fed to gradually move interest rates toward more normal levels
• On Sunday Fed Vice Chairman Stanley Fischer said the central bank is close to meeting its targets for full employment and 2%.  He said this year's pace of job growth, while slower than that seen last year, was "more than enough" for the labour market to continue to improve. "The behaviour of employment has been remarkably resilient," he said, adding that inflation outside of food and energy prices was "within hailing distance" of 2%, the Fed's target rate.
• JAPAN: 
• BOJ Governor Haruhiko Kuroda said there’s a "sufficient chance" of more easing at its policy meeting next month. The comments in a Sankei interview appear to move beyond his usual insistence that the Japanese central bank won’t hesitate to add stimulus if needed. There's "technically" room for deeper negative rates, he said, while ruling out helicopter money.
• INDIA: 
• Urjit Patel has been named the next RBI governor. He is the current deputy governor and was an integral part of the monetary policy and liquidity management. This would give continuity to the current RBI policies. However, he has been an inflation hawk and market was expecting a more dovish name to take over from Rajan. 

FOREIGN EXCHANGE (INDICATIVE RATES)

Currency	Last	% Change	Overnight Range
DXY	94.74	0.37%	94.217 – 94.628
EURUSD	1.1297	-0.29%	1.1303 – 1.1349
USDJPY	100.62	0.34%	100.03 - 100.91
AUDUSD	0.7603	-0.72%	0.7593 – 0.7678
GBPUSD	1.3061	-0.69%	1.3024 - 1.3163

(Source: FabTrader)

COMMODITIES (INDICATIVE RATES)

Currency	Price USD	% Change	Overnight Range
Gold	1337.10	0.97%	1335.09 - 1351.24
Silver	19.00	3.58%	18.732 - 19.7164
Oil (BRENT)	50.45	0.53%	50.32 - 51.22
Oil (WTI)	48.26	0.15%	47.93 - 48.75

(Source: Bloomberg and Saxo)

COMMODITIES

Precious Metals: Gold traded below 1340 and the overhead selling above 1350 remains crucial for the safe heaven currency. Gold is down 1% month to date however 10 years historical performance of gold indicate that August is usually one of the best performing month of precious metal when only in August 2008, gold's performance was negative. Major stops in Silver down more than 3% breaking the support at 19.40 and the 50d MA

Oil: Brent held above the $50 level last week and WTI closed marginally higher. The well-timed OPEC talk had forces Oil bears into record reversal. Hedge funds had trimmed their short positions in WTI by almost 57,000 futures and options during the week ended Aug.16, the most in data going back to 2006. The sharp decline of the O/I in the expiring Sep contract echoed about the possible short squeeze as well.

FOREX NEWS

• USD rallied following the 2 bullish Fed Speeches over the week-end. DXY was up 0.37%. 
• The move of higher was quiet broad with a special note for JPY following BOJ governor comments (see above) and GBP where PM Theresa May is still leaning toward the first part of 2017 as the best moment to trigger the start of formal talks over the EU exit
• GBP is following the USD Selling and is now trading again at the resistance band 1.3050/1.3070. It will be interesting to see the Retail Sale numbers today and if there was any negative effect from the Brexit. There is no significant resistance above that before 1.3380.
• In Emerging Markets, The main mover is USDKRW which bounced hard from the 1090 level to cover the gap realised on August first and breaking above 1120.

Fed guessing game moves up a gear as Yellen takes stage

Will they or won't they? The debate over whether the U.S. Federal Reserve is readying an interest rate hike will get its umpteenth airing over the coming week, with all eyes on Chair Janet Yellen to provide some clarity.

Amid conflicting signals from the Fed in recent days, central bankers from around the world will gather from Aug. 25 for an annual meeting in the mountains of Jackson Hole, Wyoming, with Yellen due to speak the following day.

A recent batch of strong U.S. employment readings have yielded upbeat views from some Fed policymakers suggesting rates could rise as soon as September, though mixed messages from the bank's latest meeting have clouded the outlook.

Minutes from the July 26-27 policy meeting showed rate setters were split over the necessity of tightening policy soon, with some arguing that more economic data was needed, including on the pace of hiring, before envisaging a hike.

Yellen is likely to cement expectations for a slow pace of rate increases.

"Yellen could provide her current assessment of the outlook for job growth, inflation and economic growth, and indicate whether caution is still appropriate or whether a rate hike might be on the horizon," economists at HSBC said in a note.

The Fed raised interest rates in December for the first time in almost a decade, but has since kept them on hold amid signs of faltering growth in the world economy and subdued U.S. inflation.

Uncertainty over its position now has knocked the U.S. dollar, leaving it close to eight-week lows against the euro.

New York Fed President William Dudley, a close ally of Yellen's, was among those sounding a more confident note in recent days on a possible near-term rate hike, citing broad progress in the U.S. economy.

A smattering of surveys and data in the coming week will add to that picture, with readings due on Tuesday on how new home sales progressed in July in the United States, followed by data on existing home sales and June house prices on Wednesday.

Further details on U.S. factory performance, via Markit's preliminary Purchasing Managers' Index (PMI) on Tuesday, will provide more clues as to whether the sector is any closer to overcoming headwinds including low oil prices. 
Read More at www.reuters.com

USDJPY

USDJPY generally continued to stagnate around the major 100.00 psychological support level this past week. This could be as a result of the absence of any clear information for a significant directional move. As the dollar has come under pressure recently, the Japanese yen side of the currency pair has remained strong, fluctuating near long-term highs against its major currency rivals. Within the past month, USDJPY has dropped precipitously from its July high just above 107.00 resistance down to this key 100.00 level, which sits just above the late-June post-Brexit low around 99.00. A strong potential catalyst for a decisive USDJPY breakdown below 100.00 should occur if the prospects of a near-term Fed rate hike and further Bank of Japan easing actions both continue to be increasingly doubted by the markets. In this event, any strong breakdown below 100.00 should subsequently begin to target key downside support objectives at 97.00 and 95.00.


EURUSD

The past week has seen EURUSD rise sharply as the dollar weakened on lowered expectations of a near-term Fed rate hike. On Friday, however, the currency pair pulled back from key resistance imposed by the underside of a major bullish trend channel. This channel has defined the currency pair’s uptrend from the 1.0500-area lows of last December up to its sharp breakdown after the Brexit results were announced. For nearly the past month, EURUSD has been climbing from its post-Brexit lows. This climb has boosted the currency pair from those support lows around the 1.0950 level up to a 1.1365 high on Thursday. That represented a new intermediate high that had not been seen since the UK’s EU referendum was held in late June. Having reached the underside of the noted uptrend channel, EURUSD has hit key resistance. Any continued turn back down from this resistance could once again target the 1.1100 support level to the downside. In the opposite event of any further surge that places the currency pair back into the uptrend channel, major further resistance immediately to the upside resides around the key 1.1450 level.