ARGENTINA: Argentina: ARS Under Pressure - Negative

Overnight Reverse Repo facility takeup at the New York Fed was basically unchanged Wednesday vs the prior session, at $57.2B (vs $57.5B).

• This marked a fresh 4-month low (Apr 16's tax date saw $54.8B takeup) but it's now the 8th session in the past 9 below $100B, for the first time since February.

The NFIB Small Business Optimism Index, “rose 1.7 points in July to 100.3, slightly above the 52-year average of 98. Contributing most to the rise in the Optimism Index were respondents reporting better business conditions and reporting that it is a good time to expand.”

• The report notes: “In contrast to the Optimism Index, the Uncertainty Index increased by eight points from June to 97. Twenty-one percent of small business owners reported labor quality as their single most important problem, up five points from June and ranking as the top problem.”
• NFIB Chief Economist Bill Dunkelberg said: “Optimism rose slightly in July with owners reporting more positive expectations on business conditions and expansion opportunities. While uncertainty is still high, the next six months will hopefully offer business owners more clarity, especially as owners see the results of Congress making the 20% Small Business Deduction permanent and the final shape of trade policy. Meanwhile, labor quality has become the top issue on Main Street again.”

Figure 1: Small Business Optimism Index 

Source: NFIB

• RES 4: 1.3681 High Jul 4
• RES 3: 1.3620 High Jul 10 
• RES 2: 1.3589 High Jul 24 
• RES 1: 1.3585 High Aug 13
• PRICE: 1.3584 @ 15:41 BST Aug 13
• SUP 1: 1.3144 38.2% retracement of the Jan 13 - Jul 1 bull cycle
• SUP 2: 1.3041 Low Apr 14
• SUP 3: 1.3000 Round number support 
• SUP 4: 1.2945 50.0% retracement of the Jan 13 - Jul 1 bull cycle   

Prices traded higher still Wednesday, further building on the gains posted after the break of the 50-day EMA on the August BoE rate decision. This firms the speed of the recovery off the 1.3142 pullback low and signals a greater probability of a bullish reversal. For now, S/T momentum is still pointed higher, with the Jul 24 high of 1.3589 the next notable upside level. While the bounce off the pullback low persists, the more medium-term trend remains bearish - but the risk of a return to recent lows has fallen.