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Sterling fell on Monday as the dollar rebounded and investors shifted their focus to impending talks that may decide whether Britain gets a trade deal with the European Union before it quits the bloc.

The dollar edged higher on Monday as confirmation was awaited that there will be talks this week between China and the United States, which markets hope will lead to an easing of their trade disputes.

Instead of consolidating and trading sideways, as expected last Friday (17 Aug, spot at 1.1375), EUR extended its rebound and hit a high of 1.1445. The ‘stop-loss’ for our bullish view at 1.1460 appears to be vulnerable and a break of this level would indicate that the bearish phase that started early last week has ended.

Global trade worries have not disappeared, they are just on hiatus, as market participants prefer to regroup and strategize in this unorthodox U.S trade and foreign policy environment.

The index is down for the second session in a row at the end of the week, re-visiting lows in the 96.30/20 band although managing well to close the fourth week with gains, including a new YTD peaks in the 97.00 neighbourhood (August 15).

According to Japan’s Ministry of Finance trade statistics, nominal exports in July 2018 were up 3.9% y-y, below the consensus (Bloomberg survey median) forecast for a rise of 6.3%, and nominal imports were up 14.6%, in line with the consensus forecast for a rise of 14.2%, notes the research team at Nomura.

Gold found little traction even as the leading dollar index also churned in the red.The dollar, up modestly for the week but surging more than 3% in just the last three months, remains the key driver for the precious metals. A firmer buck, which makes buying gold more expensive to investors using another currency, remains near a roughly 14-month peak.

Instead of extending its decline (as expected yesterday), USD rebounded strongly from a low of 110.45. The underlying tone has improved with the recovery but any further USD strength is not expected to break above the major 111.50 resistance (minor resistance is at 111.30). Support is at 110.65 followed by 110.40.

We expected EUR to “trade sideways to slightly higher” yesterday but the registered range of 1.1333/1.1409 was much higher than our anticipated consolidation range of 1.1315/1.1375. Nevertheless, we continue to view the current price action as part of a broader consolidation phase and expect EUR to trade sideways from here.

Reuters reports a story carried by the New York Times on Friday, citing that the US will seek to pressure China to lift the Yuan in trade talks likely to be held later this month.

China will hold a fresh round of trade talks with the United States in Washington later this month, Beijing said on Thursday, offering a glimmer of hope for progress in resolving a conflict that has set world financial markets on edge.

The global rating agency, Fitch Ratings' in an update released this Wednesday said that Brexit uncertainty makes the smooth transition less likely and slow progress in negotiations with the EU aren't helping that either.

An unexpected fall in the Aussie unemployment rate helped the pair to break out of a short-term descending trend-channel formation on the 1-hourly chart. The pair now seems to have entered a consolidation phase and trying to establish a firm near-term firm base above the 100-hour SMA amid a weaker tone surrounding the USD.

Many emerging market currencies also rose, clawing back some of Wednesday’s losses thanks to easing fears over the knock-on effects from a slide in the Turkish lira.

We have held the same view since Monday (13 Aug, spot at 1.1400) that there is “room for further weakness” in EUR and the price action since then coincides with our expectation. EUR dipped to an overnight low of 1.1297 and as highlighted yesterday (15 Aug), the next ‘target’ at 1.1285 is likely within reach this week.

The dollar climbed to its highest level in over 13 months against a basket of currencies on Wednesday as investors stepped up their safe-haven holdings of the greenback due to worries about slowing Chinese growth and Europe’s exposure to Turkey.

Spot is now resuming the downside following another knee jerk in the EM FX space, where the Turkish Lira is giving away part of its daily gains after the Turkish court ruled out another appeal for the release of US pastor A.Brunson and the US sanctions kick in.

The pair has been trending higher alongside an ascending trend-channel formation on the 30-min chart, albeit descending trend-line now seems to hinder the positive momentum. Technical indicators on the mentioned chart have also started losing traction and hence, weakness below the trend-channel support would negate prospects of any further up-move.

The GBP/USD pair reversed a knee-jerk dip to fresh session lows at 1.2698 following the release of the UK CPI report and regained the 1.27 handle, as markets digested the upbeat annualized CPI reading.

AUD extended its recent weakness as it hit a ‘fresh’ low of 0.7224, just a few pips above the strong 0.7220 support. Despite the decline, we do not detect a significant improvement in downward momentum.

In line with expectation, EUR extended its decline as it hit a ‘fresh’ low of 1.1328 yesterday. As highlighted on Monday (13 Aug, spot at 1.1400), there is “room for further weakness in the coming days” and the next level to focus on is at 1.1285 followed by 1.1185.

Total household debt increased by $82 billion (0.6%) to $13.29 trillion in the second quarter of 2018," The Federal Reserve Bank of Ne York announced in its report titled 'Quarterly Report on Household Debt and Credit.

British foreign secretary Jeremy Hunt recently crossed the news wires saying that the risk of a no-deal Brexit had been increasing, as reported by Reuters. There is absolutely no guarantee that we will get a deal. We need to see a change in the attitude of the EU commission. Everyone needs to prepare for the possibility of a chaotic no-deal Brexit.

The catalyst for the break lower was the RBNZ’s dovish MPS, where it shifted its OCR forecast lower by as much as 29bp. The RBNZ is now not fully projecting a hike until Q1 2021. A lower growth outlook clearly has the RBNZ concerned.

Gold seesawed between tepid gains/minor losses through the mid-European session and was seen consolidating overnight slump to the lowest level since late-Jan. 2017. Despite a rout across global financial markets, triggered by crashing Turkish Lira, the precious metal came under some intense selling pressure on Monday and finally broke below the $1200 psychological round figure mark.

According to the latest UK employment details, released this Tuesday by the Office for National Statistics (ONS), the unemployment rate unexpectedly dropped to 4.0% during the past 3 months to July. Against the backdrop of a slight improvement in global risk appetite, which was seen weighing on the Japanese Yen's safe-haven appeal, the data provided a minor lift to the cross.

Analysts at Rabobank suggest that this morning’s data revealed that Germany again bucked the trend in Europe as the German economy did not meaningfully slow down, after having settled at a slightly slower growth rate than the extraordinary pace in 2017.

Analysts at National Bank Financial suggest that in Canada, a lot of attention will be on July’s consumer price index and the headline CPI may have increased 0.1% m/m (not seasonally adjusted), supported by an above-average rise in gasoline prices. This would allow the annual inflation rate to increase one tick to 2.6%. The annual rate of CPI-common, for its part, should remain unchanged at 1.9%. In June, manufacturing shipments may have posted another decent advance based on a healthy increase in exports of factory goods during the month

Sterling slid to its lowest level since June 2017 on Friday as a stronger dollar and continued concerns that Britain could leave the European Union without a trade deal pushed investors to sell pounds. The British currency dropped 0.8 percent to as low as $1.2723, roughly in line with the dollar’s large rise against a basket of major currencies.

We expected “a dip below 0.7348” last Friday but AUDplunged instead and hit a low of 0.7280 (before extending its decline early this morning to 0.7251). The rapid decline appears to be running ahead of itself and while a dip below 0.7250 would not be surprising, we do not expect a sustained decline below this level (next support is at 0.7220).

Expectation for sideway trading last Friday was wrong as USD dropped to hit a low of 110.48 (before extending its decline this morning to a low of 110.33). Despite the decline, downward momentum is patchy at best and we do not expect further USD weakness from here.

The commodity remains confined within a broader trading range, held over the past week or so, and hangs near YTD lows set early this month. The near-term range play constitutes towards the formation of a rectangular chart pattern on the 1-hourly chart, indicating consolidation phase before the next leg of directional move.

While we have the same view that EUR is expected to “retest the major 1.1500/10 support zone” since 03 Aug (spot at 1.1585), the ‘freefall’ upon the break of this major level last Friday (10 Aug) was not exactly expected.

The US dollar appreciated versus most major pairs on Friday. The Japanese yen outperformed the greenback as a safe haven, but all other major currencies suffered heavy losses during the week.

Analysts at Rabobank point out that this morning saw the publication of Japan’s first preliminary estimate of Q2 GDP and the growth surged by 0.5% q/q, and as a result returned into positive territory for this year after the small 0.1% decline in the first quarter.

Sterling steadied near 11-month lows on Thursday after a decline this week that was fueled by investor fears Britain will leave the European Union without an agreement on its future relationship with the bloc.

While traders believe the risk of a similar sudden devaluation in the yuan is unlikely for now, both Washington and Beijing appear to be digging in for a protracted trade battle that will keep pressure on the currency and the Chinese economy.

The near-term range-bound price action constituted towards the formation of a rectangular chart pattern on the 1-hourly chart, suggesting a brief pause in the trend. The pattern, however, is not complete until a decisive breakout in either direction has occurred and hence, it would be prudent to wait before positioning for a firm near-term direction.

GBP extended its decline and hit a fresh multi-month low of 1.2819 yesterday (09 Aug). While severely oversold, there is no sign that the current weakness is about to stabilize just yet and from here, further decline towards the next major support at 1.2775 would not be surprising. For today, we do not expect a sustained break below this level (next support is at 1.2735).

The New Zealand Dollar came under some intense selling pressure on Thursday in reaction to RBNZ's more accommodative policy stance, now forecasts the first hike in the third quarter of 2020 - a full year later than previously projected.

Investors trimmed bearish bets on most emerging Asian currencies over the last two weeks, as renewed trade war concerns were cushioned by regional central bank efforts to shore up their currencies, a Reuters poll showed.

EUR/JPY still targets the June 8 low at 128.11 which will be in focus once the July 4 and current August lows at 128.51/49 have given way. Below the 128.11 level the late June low can be spotted at 127.15.

The precious metal has struggled to register any meaningful recovery and remains within striking distance of YTD lows, set last Friday. A combination of diverging forces failed to provide any meaningful impetus and led to the recent subdued trading action within a broader trading range, held over the past one week or so.

According to CME Group’s preliminary figures for EUR futures markets, traders scaled back their open interest positions by 618 contracts on Wednesday from Tuesday’s final 507,186 contracts. Volume followed suit, increasing by almost 5.9K contracts.

The pair's recent rise over the past one week or so once again stalled near a short-term descending trend-line hurdle, also coinciding with 55-day SMA. The pair remains within an eight-week-old broader trading range and diverging technical indicators on the daily/4-hourly chart also fail to support any firm directional bias.

Sterling extended losses on Thursday, falling 0.3 percent against the dollar to approach a one-year low as markets grow nervous Britain will leave the European Union without an agreement on its future relationship with the bloc.

After an Asian session uptick to an intraday high level of 1.2960, the pair came under some intense selling pressure and resumed with its well-established bearish trend. Against the backdrop of Brexit uncertainties, a goodish pickup in the US Dollar demand was seen as one of the key factors exerting some additional downward pressure on the major.

Major state-owned Chinese banks were seen selling dollars on Friday afternoon in an apparent attempt to put a floor under a tumbling yuan, as the worsening trade dispute between the United States and China drove the currency to a fresh 14-month low.

The commodity struggled to build on Friday's goodish rebound from 17-month lows and was being capped by a combination of negative factors. The July US monthly jobs report reinforced market expectations that the Fed will stick to its gradual monetary policy tightening cycle and kept a lid on any meaningful up-move for the non-yielding yellow metal.

CME Group’s flash figures for GBP futures markets noted open interest rose by more than 7K contracts on Tuesday from Monday’s final 212,691 contracts. In the same direction, volume rose by almost 6.4K contracts.

The euro rose above $1.16 on Wednesday as the dollar’s recent rally ran out of steam, and traders said solid data out of China had calmed investor nerves about recent Sino-U.S. trade tensions, hurting demand for the dollar.

EUR/USD: Neutral (since 05 Jun 18, 1.1700): A retest of 1.1500/10 support zone seems likely. No change in view. A break of 1.1640 would indicate that the recent downward pressure has eased.There is not much to add as EUR hit a low of 1.1527 yesterday before staging a mild recovery.

The pound stayed fragile on Tuesday after falling to an 11-month low against the dollar overnight on worries over a ‘hard’ Brexit from the European Union, while simmering U.S.-China trade tensions provided support to the greenback.

There is not much to add as EUR hit a low of 1.1527 yesterday before staging a mild recovery. As highlighted last Friday (03 Aug, spot at 1.1585), while we maintain a neutral stance, the risk has shifted to the downside and the major 1.1500/10 support zone is likely to be retested (note that EUR touched 1.1506 in May and 1.1507 in June). While the prospect for

USD/JPY is in its fourth day of consolidation after the currency pair broke to the upside on July 31. USD/JPY is struggling to find a clear direction, however, bulls have a slight advantage as they have the long-term trend on their side. Bulls objective is to reconquer the 111.82-112.00 area to target 113.18, the 2018 high. Bears want a bear breakout below the 111.02-111.16 area in order to initially retake the swing low at 110.58.

U.S. government bond yields for longer-dated debt fell on Monday as investors wrestled with the threat of intensifying trade clashes between the U.S. and China and the ripple effects those fresh animosities could have on global markets.

The US Dollar remained supported by Friday's monthly jobs report, which reinforced expectations that the Fed will stick to its gradual monetary policy tightening cycle, and was seen as one of the key factors prompting some fresh selling at the start of a new trading week.

German factory orders reported the steepest monthly drop in nearly a year and a half, arriving at -4.0% in June versus -0.5% expected. Meanwhile, the Eurozone Sentix investor confidence gauge came in at 14.7 in August versus 13.4 expected.

As highlighted last Friday (03 Aug, spot at 1.1585), while we maintain a neutral stance, the risk has shifted to the downside and the major 1.1500/10 support zone is likely to be retested (note that EUR touched 1.1506 in May and 1.1507 in June).

Market events to watch this week

The US dollar fell on Friday after the U.S. non farm payrolls (NFP) came in below expectations with only a gain of 157,000 but otherwise the unemployment rate dropped to 3.9 percent and wage growth remained unchanged at 0.3 percent.

After a bull run to the 1.1610 area, or daily highs, sellers quickly stepped in and dragged spot back to sub-1.1600 levels, although some decent contention seems to have emerged around 1.1560 for the time being.

The cross is falling further south of the key support level at 129.00 the figure, where coincide recent lows (July 27) and the top of the daily cloud. EUR/JPY is adding to recent weakness sparked after breaking below the former key support line around 130.00 the figure .

PBoC news-led modest USD retracement triggers the initial leg of recovery move from the $1200 neighborhood, or 13-month lows, amid near-term oversold conditions. Disappointing headline NFP print, coupled with trade-related headlines provided an additional boost and lifted the commodity through an important confluence hurdle.

The index quickly gave away the initial advance to the 95.40 and returned to the 95.00 area following headlines from the PBoC, which decided to adjust the reserve requirement on FX forward trading to 20%, as per news released by Bloomberg.

Sterling fell below $1.30 to an 11-day low on Friday after Bank of England Governor Mark Carney said there was an “uncomfortably high” risk of Britain leaving the European Union without a deal.

The relatively large decline over the past couple of days came as a surprise. While we continue to maintain a neutral stance, the risk has shifted to the downside and the major 1.1500/10 support zone is likely to be retested (note that EUR touched 1.1506 in May and 1.1507 in June).

The Fed's upbeat outlook for the domestic economy, reaffirming expectations for at least two more rate hikes by the end of this year, capped the early attempted recovery move for the non-yielding yellow metal. Adding to this, a fresh wave of US Dollar upsurge prompted some fresh selling around the dollar-denominated commodity since the early European session.

The U.K. central bank upped its benchmark rate by 25 basis points to 0.75% in an unexpectedly unanimous vote. While market participants had foreseen the rate increase, they assumed some dissent among the members of the Monetary Policy Committee.

The US Dollar Index (DXY), which gauges the buck vs. a basket of its main competitors, is extending the upside to the vicinity of the critical 95.00 milestone on Thursday.

The euro struggled on Wednesday as fears of an escalation in the trade dispute between the United States and China boosted the dollar and a survey showing subdued euro zone manufacturing growth in July kept investors cautious.

At 54.0, the latest UK manufacturing PMI is the lowest in three months and is a far cry from the levels seen towards the end of 2017, explains James Smith, Developed Markets Economist at ING.

here is not much to add as EUR touched a high of 1.1745 yesterday before easing off. As highlighted yesterday, the recent mild downward pressure has eased and EUR is expected to trade sideways for now, likely within a broad 1.1620/1.1790 range. From a longer-term perspective, EUR...

The index advances to the mid-94.00s or fresh daily tops.DXY finds support in session lows in the 94.20/15 band. Consumer Confidence surprised to the upside in July. DXY meet extra buying pressure after US Consumer Confidence measured by the Conference Board came in above expectations at 127.4 (vs. 126.5 exp. and 127.1 prev.) for the current month.

EUR touched a high of 1.1719 yesterday, just one pip below the ‘key resistance’ at 1.1720. While the ‘key resistance’ is still intact, the relatively strong daily closing in NY (closed at 1.1704, +0.41%) is enough to indicate that the recent mild downward pressure has eased.

Major currencies stuck to familiar ranges on Monday as investors shied away from taking out big positions ahead of a flurry of crucial economic data and central bank monetary policy meetings this week.

The pound rose on Monday but its modest gains reflected concern among investors about the currency’s prospects ahead of a widely anticipated Bank of England interest rake hike this week.

The sharp decline of -0.74% yesterday (largest 1-day drop in a month) was not expected. Our previous expectation for EUR to trade at a higher 1.1640/1.1850 consolidation range is not valid anymore. While downward pressure has increased, it is too early to expect the start of a bearish phase.

The US dollar is mixed on Friday against major pairs. The US economy grew at a 4.1 percent pace on the second quarter according to the first estimate. The number came in right on the forecast which had no positive effect for the USD, but it did validate the U.S. Federal Reserve decision to keep a tighter monetary policy with two more rate hikes in the horizon this year.

Despite Thursday's disappointing US macro data, the USD staged a solid rebound on the back of a goodish pickup in the US Treasury bond yields and prompted some aggressive selling around the major.

Theresa May should accept a no-deal Brexit over requesting more time to negotiate a deal. Suggests voters are growing impatient with how long it has taken to agree Brexit. May would suffer a major Conservative rebellion if she sought to extend talks.

The dollar rose on Friday to its highest level in five days as investors waited to see if U.S. economic growth figures do anything to interrupt its months of strength. U.S. President Donald Trump has expressed displeasure over the dollar’s strength, ignoring a custom that U.S. leaders avoid openly interfering in financial markets.

The sharp decline of -0.74% yesterday (largest 1-day drop in a month) was not expected. Our previous expectation for EUR to trade at a higher 1.1640/1.1850 consolidation range is not valid anymore.

The USD/CAD pair broke above its daily range in the early trading hours of the American session on the back of a stronger greenback. At the moment, the pair was trading at 1.3080, adding 35 pips, or 0.26%, on the day.

Critical will be the responses of both EU and regional Tory delegates to the selling of the latest Brexit (exit) proposals and May’s visions of UK relationships with EU post-Brexit. If the responses are positive, May’s leadership will strengthen as will the potential for productive negotiations.

Gold for August delivery on Comex GCQ8, -0.15% fell $3.70, or 0.3%, at $1,227.90 an ounce. Prices had settled at $1,224 as recently as Thursday, the lowest for a most-active contract in about a year. September silver SIU8, +0.10%fell 3 cents, or 0.2%, to $15.560 an ounce.

U.S. government bond rates early Thursday advanced as fixed-income investors awaited the latest policy update from the European Central Bank, which could affect Treasurys. Bond investors also awaited a string of economic reports, including on the labor market and international trade.

After an initial uptick to $1235 area, gold met with some fresh supply and has now eroded a part of gains recorded in the previous session.

The pound struggled to gain ground against the dollar and the euro on Thursday due to mounting uncertainty over Brexit even as investors strengthened bets on a Bank of England interest rate hike next week.

The euro edged higher on Wednesday ahead of a meeting between U.S. President Donald Trump and European Commission President Jean-Claude Juncker but gains were limited with investors cautious about a trade rift between the two powers.

The US Dollar Index, which stayed relatively quiet and closed flat on Tuesday, hung out near mid-94s for the majority of the day and came under a modest selling pressure ahead of the low-tier macroeconomic data releases from the United States.

Analysts at TD Securities note that the German IFO Business Climate index ticked lower to 101.7 in July, splitting the difference between this month's softer ZEW and better-than-expected PMIs.

The retreat from weekly tops can be mainly attributed to a bout of risk-aversion that gripped the European markets, with markets turning cautious heading into the crucial trade talks arranged between the US President Trump and European Commission President Juncker later on Wednesday.

AUD/USD recently sold off to, tested and bounced off the .7310/15 recent lows. The strong rebound from here implies a reluctance to break down further currently and we are going to have to neutralise our view for now

The euro edged higher on Wednesday ahead of a meeting between U.S. President Donald Trump and European Commission President Jean-Claude Juncker but gains were limited with investors cautious about a trade rift between the two powers.

After dropping to a 2-day low at $1218, the XAU/USD pair took advantage of the broad-based USD weakness and gained traction to turn positive on the day. However, an improved market sentiment in the early NA session capped the pair's upside and it was last seen trading at $1229, where it was up $4.5, or 0.4%, on the day.

British Prime Minister Theresa May recently crossed the wires saying that she would take control of Brexit negotiations and relegate the government's Brexit department, as reported by Bloomberg.

The euro headed towards a two-week high on Tuesday after surveys showed eurozone business growth remained robust, although fears of a trade war with the United States kept the single currency trapped in narrow ranges.

While the expectation was not wrong, the subsequent sharp and rapid rebound from a low of 110.74 came as a surprise. At this stage, the bounce is viewed as part of a correction even though there is scope for a test of the strong 111.80 resistance.