EM CEEMEA CREDIT: Bank Muscat: FV on $ 5Y deal

• RES 4: 177.08 2.000 proj of the Feb 28 - Mar 18 - Apr 7 price swing 
• RES 3: 175.43 High Jul 11 ‘24 and a key medium-term resistance
• RES 2: 174.86 1.764 proj of the Feb 28 - Mar 18 - Apr 7 price swing
• RES 1: 173.02/97 High Aug 13 / High Jul 28 and the bull trigger 
• PRICE: 172.37 @ 07:07 BST Aug 25
• SUP 1: 170.46 50-day EMA
• SUP 2: 169.73/45 Low Jul 31 / 23.6% of the Feb 28 - Jul 28 bull leg
• SUP 3: 168.46 Low Jul 1  
• SUP 4: 167.46 Low Jun 23   

The trend needle in EURJPY continues to point north and the cross is trading closer to its recent highs. Key support to watch lies at the 50-day EMA at 170.46. A clear break of the average is required to highlight a stronger short-term bearish threat. Moving average studies are in a bull-mode position reinforcing the primary uptrend. Clearance of the Jul 28 high of 173.97, would confirm a continuation of the bull cycle.

• RES 4: 151.62 61.8% retracement of the Jan 10 - Apr 22 bear leg
• RES 3: 150.92 High Aug 1 and a key resistance 
• RES 2: 149.81 76.4% retracement of the Aug 1 - 14 bear leg 
• RES 1: 148.78/149.12 High Aug 22 / 61.8% of the Aug 1 - 14 bear leg  
• PRICE: 147.26 @ 07:01 BST Aug 25
• SUP 1: 147.26/146.21 20-day EMA / Low Aug 14
• SUP 2: 145.86 Low Jul 24
• SUP 3: 145.40 50% retracement of the Apr - Aug upleg
• SUP 4: 144.80 Trendline drawn from the Apr 22 low 

USDJPY traded sharply lower Friday highlighting a potential bearish threat. The bear trigger has been defined at 146.21, the Aug 14 low. Clearance of this level would reinstate a downtrend and pave the way for an extension towards 145.40, a Fibonacci retracement. For bulls, a resumption of gains would instead open 149.12, 61.8% of the Aug 1 - 14 bear leg. Key resistance is far off at 150.92, the Aug 1 high. 

Lagarde's prepared remarks at Jackson Hole had no real near-term implications for monetary policy (see summary below or full speech here).

• "First, a delayed wage response to inflation that supported higher employment; second, a reduction in hours worked, driven by labour hoarding and changing preferences; and third, an expansion in labour supply that kept pace with rising demand."
• "ECB analysis confirms that this delayed real wage response acted as a shock absorber. By widening the gap between productivity and labour costs, it eased unit labour cost pressures and supported firms’ profitability, while also making labour relatively more attractive than capital. Both dynamics encouraged firms to expand hiring... A key factor was firms’ ability to pass on higher input costs, which boosted profit margins and led to a steeper fall in sectoral real wages."
• Lagarde notes that for the reduction in hours worked "while part of this shift is cyclical, it also has a structural component." She cites labour hoarding (particularly during the pandemic) and partly due to a shift in workers preferences with overtime reducing.
• Demographics (more women and older workers in the workforce) and more foreign labour largely explain the expansion in labour supply. However, with an aging population "Europe’s capacity to expand its labour supply is already constrained."
• Lagarde notes that demographic changes are likely to see the working age population continue to shrink even if migration is on the higher side of estimates, that "labour hoarding could persist as a feature of the employment landscape" and that "these same forces could weigh on labour productivity".
• "If lower job turnover continues to slow labour reallocation, it is likely to reduce the efficiency of job matching... In such a scenario, Europe might escape the unemployment hysteresis that plagued past cycles, but at the cost of a decline in productivity... However, this is of course not the only possible path. This view focuses solely on labour market dynamics and overlooks the potential for automation and artificial intelligence to boost productivity and investment, which may well also be spurred by a shrinking population."