GOLD: September Fed Cut Expectations Supporting Bullion

• RES 3: 147.74 - High Jan 15 and bull trigger (cont)
• RES 2: 146.53 - High Aug 6 
• RES 1: 141.48/142.95 - High May 2 / High Apr 7
• PRICE: 138.04 @ 15:47 GMT Jul 14
• SUP 1: 137.92 - Low Jul 14
• SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg   
• SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg

JGBs hold above recent lows, however a bearish theme remains intact following the reversal posted off the mid-June highs. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, the first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal. 

The overnight range was 147.16 - 147.78, Asia is currently trading around 147.75. USD/JPY kept the pressure on JPY longs extending above 147.00.  The USD/JPY relentless march higher has been pretty telling, challenging a market positioned the wrong way. Price is now consolidating some of those recent gains, dips back towards 146.00 should now find support first up. CFTC Data shows leveraged funds have pared back their JPY longs almost back to flat, Asset managers have pared back some of their position but still continue to run a decent sized long JPY position.

• (Bloomberg) - “The BOJ’s next rate hike shouldn’t come until next year, when officials have more information on the state of the economy, according to Japan Securities Dealers Association Chairman Takashi Hibino.”
• “President Trump attacked the car trade imbalance between the US and Japan, saying “They sell us millions and millions of cars a year. We sell them no cars because they won’t accept our cars.” Prime Minister Shigeru Ishiba has said American cars are left-hand drive, large, and fuel inefficient, making them a tough sell in Japan.” - BBG
• USD/JPY has lost all downside momentum for now and is back in its wider 142.00 - 148.00 range. The Market is long JPY and should the USD manage to continue to correct higher the risk is a move back to the top end of the range to further challenge the conviction of the shorts.
• Options : Close significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 146.50($1.4b July 16).
• CFTC data shows Asset managers reduced their JPY longs slightly +89331, while leveraged funds have almost squared their newly built JPY longs +5224.
• Data/Event : Core Machine Orders, Industrial Production, Capacity Utilization

Fig 1 : USD/JPY Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

• Hong Kong to Sell HK$19.8 Billion 182-Day Bills
• Hong Kong to Sell HK$67.491 Billion 91-Day Bills
• Bank of Thailand to Sell THB60bn of 91-Days Bills
• Bank Indonesia to Sell 274D SVBI Bills
• Bank Indonesia to Sell 92D SVBI Bills
• Bank Indonesia to Sell 32D SVBI Bills
• Bank Indonesia to Sell 365D SVBI Bills
• Bank Indonesia to Sell 187D SVBI Bills
• MAS to Sell S$15.4 Billion 28-Day Bills on July 15
• MAS to Sell S$22.6 Billion 84-Day Bills on July 15
• Indonesia To Sell 2030 Bonds (FR0104)
• Indonesia To Sell 2035 Bonds (FR0103)
• Indonesia To Sell 2054 Bonds (FR0102)
• Indonesia To Sell 350D Bills (SPN12260702)
• Indonesia To Sell 2040 Bonds (FR0106)
• Indonesia To Sell 2045 Bonds (FR0107)
• Indonesia To Sell 2064 Bonds (FR0105)
• Indonesia To Sell 90D Bills (SPN03251015)