ECONOMIC DATA OF THE DAY

Time	CY	Indicator	Forecast	Previous
16:30	HK	Retail Sales Value YoY	-6.50%	-8.90%
20:30	US	Personal Spending	0.30%	0.40%
20:30	US	Personal Income	0.40%	0.20%

(Source: FabTrader)

SPEECHES

• No Speech

OVERNIGHT NEWS

• FED SPEECH: 
• Fed Chairwoman Janet Yellen suggested that a case for a rate hike increased but it will still be data dependant:
• In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months,
• While economic growth has not been rapid, it has been sufficient to generate further improvement in the labor market,
• The Fed expects moderate growth in real gross domestic product, additional strengthening in the labor market, and inflation rising to 2% over the next few years. Based on this economic outlook, the Fed continues to anticipate gradual increases in the federal funds rate will be appropriate over time.
• Our decisions always depend on the degree to which incoming data continues to confirm the Fed’s outlook.
• The main market mover came from the interview of Vice Chairman Stanley Fischer on CNBC when he was asked: “should we be on the edge of our seats for a rate hike as soon as next month and should we be on the edge of our seats for more than one rate hike this year? He replied: “I think what the Chair said today was consistent with answering yes to both of your questions.” 
• US: 
• The GDP number for Q2 came in at 1.1% down from 1.2% in Q1. Household spending grew at a 4.4 percent pace, revised from an initial estimate of 4.2% as expected and added 2.94% to GDP growth. The biggest downward revisions compared with initial estimate were in state and local government spending, inventories, net exports. Gross domestic income climbed 0.2% and Corporate pretax earnings fell 4.9% from a year earlier; they were down 1.2% from the prior quarter
• Wholesale Inventories stagnated this month down from an increase of the downward revised 0.2% the previous month
• The university of Michigan consumer sentiment dropped to its lowest level since April at 89.8 (Exp. 90.8)
• JAPAN: 
• BOJ Governor Haruhiko Kuroda won’t hesitate to boost monetary stimulus if needed, he reiterated at Jackson Hole. “There is no doubt that there is ample space for additional easing in each of the three dimensions,” he said. “The bank will carefully consider how to make the best use of the policy scheme in order to achieve the price stability target."

FOREIGN EXCHANGE (INDICATIVE RATES)

Currency	Last	% Change	Overnight Range
DXY	95.55	0.87%	94.246 – 95.594
EURUSD	1.1194	-0.81%	1.1176 – 1.1341
USDJPY	102.01	1.40%	100.06 - 102.14
AUDUSD	0.7534	-0.91%	0.7546 – 0.7692
GBPUSD	1.3118	-0.47%	1.3108 - 1.3279

(Source: FabTrader)

COMMODITIES (INDICATIVE RATES)

Currency	Price USD	% Change	Overnight Range
Gold	1319.82	0.18%	1318.47 - 1342.36
Silver	18.55	0.13%	18.5326 - 19.0775
Oil (BRENT)	49.57	0.20%	49.12 - 50.76
Oil (WTI)	47.22	0.63%	46.94 - 48.46

(Source: Bloomberg and Saxo)

COMMODITIES

Precious Metals: Precious metals were volatile on Friday as it whip-sawed on the Jackson Hole symposium. During then, gold traded back and forth on the 1320 and 1340 key levels before closing at the low. With possibility of 2 Fed hikes this year, gold may face overhead selling pressure and would prefer to buy on dip going towards this Friday Non-Farm Payroll should it disappoints.

Oil: Iron ore retreated more than 3% as week steel prices weighed on the market. Westpac Banking Corp forecasts a rough 2017 for the iron ore prices to fall below last year’s low of $38.30 a tonne. 

FOREX NEWS

• USD Rallied aggressively following the comments of both Yellen and Fischer. The main reaction came after Fischer comments that the Fed could consider two rates hikes this year. 
• USDJPY bounced from the strong support of 100 but should find some selling interest ahead of the resistance at the 50d MA (102.76). However, USDJPY got an extra boost higher following the news that Japan’s GPIF (world’s biggest pension fund) said on Friday that the domestic stocks only accounted for just 21% of the portfolio which is below their target of 25. 
• There is not 1 single currency to single out in the G10 space as it was a broad move for the USD but there is a lot of room for the USD to go higher depending on the data and the most watched one next week which is the NFP.
• In Emerging Markets, very strong buying interest for the USD across the board. USDCNH spot is trading at 6.7000 targeting the highs of the year and the curve is starting to widen. USDKRW had also a big boost higher in the NY time zone higher 1%, as well as USDBRL. It will be interesting to see if Foreign Investors continue to buy EM bonds with the likelihood of a rate hike in the US increasing

World’s Biggest Pension Fund Loses $52 Billion in Stock Rout

The world’s biggest pension fund posted a $52 billion loss last quarter as stocks tumbled and the yen surged, wiping out all investment gains since it overhauled its strategy by boosting shares and cutting bonds.

Japan’s Government Pension Investment Fund lost 3.9 percent, or 5.2 trillion yen ($52 billion), in the three months ended June 30, reducing assets to 129.7 trillion yen, it said in Tokyo on Friday. That erases a 4.1 trillion yen investing return for the previous six quarters starting October 2014, the month it decided to put half its assets into equities.

The quarterly decline follows a 5.3 trillion yen loss in the fiscal year through March, the worst annual performance since the global financial crisis. After benefiting from a surge in Japanese equities and a weaker yen earlier in Prime Minister Shinzo Abe’s term, GPIF has posted losses as domestic stocks tumble and gains in the currency reduce the value of overseas assets. Still, for Sumitomo Mitsui Trust Bank Ltd., that’s no reason to veer from the current approach.

“Since its investments are tied to market moves, it’s natural that this would happen and there’s no point looking at it with a short-term view,” said Ayako Sera, a Tokyo-based market strategist at the bank. “GPIF is so big that its losses look huge even though the fluctuations in its investments just mirror the market.”
Read More at bloomberg.com

USDJPY

The Japanese yen posted weekly gains for a fourth straight week, as the pair closed slightly above the 100 level as safe-haven flows continued to buoy the yen, which shrugged off a weak Japanese Preliminary GDP reading of 0.0%, short of expectations. However, on Friday, the USD rebounded based on indication that the Fed is almost set for the next rate hike. This is also dependent on the Employment Report to be released this Friday. Still, in the US, the Fed’s minutes showed that only a small minority favors a rate hike, while the vast majority wants to continue to wait, notably because of low inflation levels. The upside objectives are 106.22 and then 107.50. Any break below the 100.00 psychological level will see 97.00 and 95.00 as the next targets.


GBPUSD

The GBPUSD has been trending higher for the past two weeks as macro pointers in the UK improved and the dollar took a back seat amid weakness in US data. The 1.30 level has been a key psychological level and the Cable has been oscillating around it for a while. The low that was hit on Brexit Friday June 24 was at around 1.3225. Now that price has reached this level after an extensive rally, there is a risk for at least a short-term pullback. Indeed, the area above this 1.3265 level and below 1.3290 is a key short-term resistance zone. If the Cable were to eventually break through it then we could expect to see a more pronounced rally. But if the Cable snaps back from that level, then we can forget about those bullish levels for a while. In the bearish scenario, the first levels of support that need to break down are around 1.3100 and then 1.3030. The potential break below these levels are likely to triggered further momentum-based selling pressure.