OUTLOOK: Price Signal Summary - Bull Cycle In Gold Remains In Play

Sterling has been relatively insulated from the light upside pressure in Gilt yields over the last ~60 minutes, with important technical parameters containing intraday ranges in several GBP/XXX crosses. This morning’s labour market report has set the tone for GBP today. The data was on balance stronger-than-expected, but there remain signs that overall conditions are still easing. 

• EURGBP is down 0.3% today, troughing at 0.8621 and importantly leaving the 50-day EMA at 0.8612 untested. A clear break of this average would strengthen a bear threat, and expose the June 30 low at 0.8540.
• Yesterday’s highs of 1.3477 have contained upside in GBPUSD today, with cable currently up 0.2%. Short-term momentum is nonetheless pointed higher, with the Jul 24 high of 1.3589 the next notable upside level. Focus remains sharply on this afternoon’s US CPI report. We see more sensitivity to a downside surprise in July CPI, particularly in core goods components seen sensitive to tariffs. If realised, this could provide fresh upside impetus for cable.
• In the crosses, the psychological 200.0 handle has once again provided strong resistance in GBPJPY. The current trend set-up remains bullish however, with the cross currently on course for a sixth consecutive positive session and moving average studies operating in a bull-mode setup. 

• Treasuries are near unchanged across the curve ahead of the July CPI report (MNI CPI Preview).
• Cash yields are 0-0.5bp lower on the day across the curve, with 2Y yields at 2.768% hovering around a 38.2% retrace of the slide from 3.95% to 3.655% on the July payrolls report from Aug 1.  
• TYU5 trades at 111-25 (-03+) on another thin session for overnight volumes nearing a cumulative 200k. The overnight low of 111-23 takes it a little further away from resistance at 112-15+ (Aug 5 high) whilst support isn’t seen until 110-19+ (Jul 24 low).
• Data: CPI Jul (0830ET), Real av earnings Jul (0830ET), Federal budget bal Jul (1400ET)
• Fedspeak: Barkin (1000ET), Schmid (1030ET) - see STIR bullet
• Bill issuance: US Tsy to sell $85B 6-W bills (1130ET)
• Politics: White House Press Secretary Leavitt Briefing (1300ET). A limited public schedule for President Trump but with post-CPI remarks watched after his extraordinary termination of BLS’s McEntarfer after this month’s weak payrolls report. 

• EUR/USD: $1.1500(E1.5bln), $1.1535-50(E1.2bln), $1.1650(E1.1bln)
• USD/JPY: Y147.30-50($1.6bln)
• AUD/USD: $0.6560-75(A$1.5bln)
• USD/CAD: C$1.3785($664mln)