FX Majors range bound through Europe

The lack of volatility in Europe will likely spill into the NY trading session with no data to go by. We do not expect this to change ahead of Fed Beige Book Wednesday at 18:00 GMT.

MAJOR HEADLINES – PREVIOUS SESSION

News

• The UK's Rightmove reported a slowdown in house price. In the month through mid-July Rightmove reported prices were up 10.3% yoy following June's 13.2% yoy. Rightmove said its latest data was evidence that the 'mini-boom' was coming to an end. The MPC places greater weight on the Halifax and Nationwide house price indices. Nationwide house price index will be published later this week.
• CNY: A China state-run bank and a Singapore investment holding company taking stake in a UK bank. This is interesting as it means it's not the new Chinese state investment company that's taking the stake. If so, the funding is not coming out of the country's FX reserves. The Chinese bank investing is led directly by the state council, established in 1994. It mostly invests in infrastructure and implements national development goals. It's separate from PBoC/SAFE. So it'll be interesting where the funding will come from. The state council can ask for a transfer from the new CIC (USD only) into he Chinese bank (EUR/GBP), but this defeats the purpose of CIC.
• Hungarian central bank left rates unchaged in the accompyning statement, it was said that significant uncertainties over interpretation of labour market data. Says the danger of inflationary expectations diverging from CPI goal has decreased. Hungary central bank sees room for further rate cuts.

Technicals

• USDJPY was able to stay above 120.65 key support in the European session and then the bidding began. We remain neutral to the upside, but will loook to sell the break of 120.65 which would be a break of the lows from May 17th at 120.67 and 38% retracement (from 115.16-124.16), which technically lead to accelerated downside and a test of 119.65 and possibly 118.50 further out.
• EURUSD giving little to go by here early in the week, but we remain with a bullish bias as long as 1.3730-40 support remain intact. So a buy on dips is our preferred scenario for a test of 1.3850 and possibly 1.3900 by the end of this week.

FX ORDERBOOK

Note: the support/resistance levels used in the matrix’s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.