POLAND: Border With Belarus Closed Amid Angst Surrounding Zapad-2025 War Games
- Belarus and Russia begin their biennial Zapad war games that will take place until September 16. The 2021 edition of the drill involved around 200,000 troops and was used as part of preparations for the subsequent invasion of Ukraine. This year's edition (Zapad-2025) has been significantly downscaled and moved to training grounds deeper within Belarus, which Minsk has been trying to portray as a goodwill gesture. Adding to this conciliatory rhetoric, Belarus released 52 political prisoners (including some Poles) and gave Warsaw advance warning about incoming Russian drones, some of which were subsequently intercepted by Polish and allied fighter jets. However, the drone incursion (see our analysis of the incident here) significantly raised tensions around the eastern border, prompting NATO to beef up security measures around its eastern flank.
- Polish PM Donald Tusk warned that the Zapad drill targets the strategically important chokehold of Suwałki Gap, hence the decision to shut all border crossings with Belarus until further notice. It had earlier been suggested that measures of the kind are used to leverage China's sway over Poland's eastern neighbours, as the rail terminal in Małaszewicze processes up to 90% of rail-borne Chinese exports flowing into Europe through the New Silk Road's Northern Corridor. Note that Chinese Foreign Minister Wang Yi is due to visit Poland and hold talks with his local counterpart Radosław Sikorski on September 15. Rail operator PKP Cargo told WNP that the border closure is expected to be temporary and only have a short-term impact on the flow of cargo, but a longer-term extension could result in the re-direction of trade flows to the trans-Caspian Middle Corridor.
- Sikorski pushed back against US President Donald Trump's dismissive remark that the Russian drone incursion could have been a mistake, and told Fox News that 'we were supposed to have sanctions and instead we got Alaska. Since then, [Russian] attacks have intensified. So I hope President Trump does what he said he might do.'
- Money.pl reported that the Cabinet approved a list of priorities for the remainder of its term, which does not include the promised increase in annual tax-free allowance. The list includes a 'dronisation' of the army and military training for up to 100,000 people a year from 2027.
- In an interview with WNP, Development Funds and Regional Policy Minister Katarzyna Pełczyńska-Nałęcz said that Poland should try to grow its way out of debt and called for the introduction of a windfall tax for the banking sector.
- The NBP will release July balance-of-payments data at 13:00BST/14:00CEST.
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USDCAD TECHS: Shallow Bounce Off Lows
- RES 4: 1.4111 High Apr 10
- RES 3: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg
- RES 2: 1.3920 High May 21
- RES 1: 1.3879 High Aug 1
- PRICE: 1.3759 @ 08:13 BST Aug 13
- SUP 1: 1.3557 Low Jul 03
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
USDCAD remains subdued, despite the shallow bounce Friday feeding through to further gains on Monday. The reversal off highs on Tuesday affirms this theme. The pair remains notably lower on the week on the back of last Friday’s USD weakness. Initial firm support has been breached at the 1.3737 20-day EMA, a break below which would resume the correction off the early August high at 1.3879. On the recent run higher, price traded through the 50-day EMA at 1.3746, which aided the rally. This week’s price action, however, has cancelled that bullish threat and returned focus lower. The 100-dma becomes a key pivot point at 1.3814 last.
AUDUSD TECHS: Edging Higher Despite RBA Cuts
- RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6688 High Nov 7 ‘24
- RES 2: 0.6677 0.764 proj of the Jun 23 - Jul 11 - 17 price swing
- RES 1: 0.6549/6625 High Aug 13 / 24 and the bull trigger
- PRICE: 0.6548 @ 08:10 BST Aug 13
- SUP 1: 0.6419 Low Aug 1
- SUP 2: 0.6373 Low Jun 23 and a bear trigger
- SUP 3: 0.6354 38.2% retracement of the Apr 9 - Jul 24 upleg
- SUP 4: 0.6323 Low Apr 16
AUDUSD rallied well off the week’s lowest levels last week on broad USD weakness - erasing any signs of a bearish breakout on the show through the 20- and 50-day EMAs. While support at 0.6455 the Jul 17 low, has been cleared, the recovery in prices keeps key resistance in focus at 0.6625 the Jul 24 high. It also represents the bull trigger. Any return lower would signal a bearish threat into 0.6373, the Jun 23 low.
EURJPY TECHS: Trend Structure Remains Bullish
- 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: 173.97 High Jul 28 and the bull trigger
- PRICE: 172.81 @ 08:09 BST Aug 12
- SUP 1: 169.83 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
A bullish trend condition in EURJPY remains intact and for now the recent move down is considered corrective. Key support to watch lies at the 50-day EMA at 169.83. A clear break of the EMA is required to highlight a stronger short-term bearish threat. Moving average studies remain in a bull-mode position highlighting an uptrend. A break of the Jul 28 high of 173.97, would resume the bull cycle.
