NEW ZEALAND: Q2 GDP Released This Week & Forecast To Contract 0.3% q/q

• USD slipped against all others Friday, with a poor set of retail sales and Uni of Michigan sentiment numbers meeting a higher-than-expected import price index to further stimulate concerns over a stagflarionary phase in the US economy. The USD Index trades either side of the 50-dma which, notably, has begun to flatten out  after maintaining a solid downtrend throughout 2025.
• JPY is the strongest currency in G10, extending the breakout and bearish  conclusion of the consolidation phase in USD/JPY. Recent weakness puts the  price through support drawn off the early August lows as well as 146.71, a  key retracement. Price action this week marks a full reversal of the  previously overbought condition, keeping the downside argument in focus.
• Anticipation ahead of the Putin-Trump meeting has reached fever pitch. Footage showing the Presidents shaking hands in Alaska has helped ease concerns over a hostile meeting, but it's the outcomes that will matter to markets - particularly as equities hold at alltime highs. Any signs of progress toward a ceasefire would be warmly received by risk sentiment - although both Trump and Putin cautioned against a optimistic outcome in comments to press.  
• We noted earlier in the week the pressure building on USD/HKD, with price action not matching the pattern of HKMA intervention. That move extended overnight, and  is still building at typing, putting spot down to new pullback lows of 7.8119 shortly after the European open. Overnight swap rates have surged further  still Friday (hitting 1.7% at typing), well ahead of the 0.3% prevailing rate  mid-week and should continue to support a recovery in HIBOR fixes ahead.  Today's 1m HIBOR fixed higher by 41bps, hitting 1.45% for the highest fix  since mid-May. It's these factors that should work against the HKD carry  trade (selling HKD, buying USD), evident in the further tightening of the HKD  forward discount today: down 975 points from as high as 1270 this month.
• Focus in the coming week shifts to Jackson Hole and Powell's comments on Friday. With the September meeting still in flux - any conviction toward tipping the board toward a rate cut at the next FOMC will be carefully watched, but it's a hawkish outturn that could be more consequential for markets, as OIS prices a near 90% chance of easing on September 17th. 

• MNI: US TSY TICS NET FLOWS IN JUN +$77.8B
• US TSY TICS NET L-T FLOWS IN JUN +$150.8B

• 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: 1.3800 @ 15:46 BST Aug 15
• 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 Tuesday. The reversal off mid-week highs affirms this theme. The pair remains notably lower on the week on the back of the recent phase of USD weakness. Initial firm support has been breached at the 1.3752 20-day EMA, a clean break below which would resume the correction off the early August high at 1.3879. This week’s price action has cancelled any bullish threat and returned focus lower. The 100-dma becomes a key pivot point at 1.3804 last.