SECURITY: Trump Hints At Increased Military Support For Ukraine 2/2
Aug-21 14:05
Bullet continued: In a follow up on Truth Social, Trump posted photos of himself with Putin, split-screened with a separate photo of former US President Richard Nixon - during his tenure as VP - and Soviet leader Nikita Khrushchev, appearing to draw parallels with a former US president standing up to a Russian leader. The photo seems to dispel any possibility Trump's initial message could have been directed at Zelenskyy.
- Notably, Trump's statement comes after reports Russia struck an American business in the west of Ukraine with cruise missiles overnight. "The American business was located in the city of Mukachevo in Zakarpattia and had 600 workers inside. The attack sparked a large fire and injured 15 people," per the Telegraph.
- Senator Lindsay Graham (R-SC), the author of a pending Russia sanctions package, argued this week that Trump’s decision to hit India with an additional 25% tariff for its trade in Russian oil was the reason Putin agreed to the Alaska summit.
- With the threat of sanctions still live, the Trump administration may consider the additional threat of military support necessary, in light of Russia’s obfuscation of the peace process.
- Separately, Reuters reports in the past few moments that US and European defence chiefs “developed military options to support negotiations to bring a lasting peace to Europe.”
- A US official said these “options will be presented to each nation’s respective national security advisors for appropriate consideration in ongoing diplomatic efforts.” The US official appears to be commenting on the outcome of a meeting of NATO defence chiefs yesterday.
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FOREX: USDJPY Gravitates Lower Post Election, Trade Deal Optimism Noted
Jul-22 14:00
- A partial recovery overnight for USDJPY was swiftly shrugged off and the pair has resumed a steady downtrend since the European open on Tuesday. Price action echoes that seen on Monday in the aftermath of the upper house election in Japan, as PM Iishiba affirmed he would remain in office despite his party losing its majority.
- The extension lower for core yields has assisted this dynamic of yen outperformance, as both the trans-Atlantic tariff tiff and Bessent’s more optimistic tone for Powell’s future provide a supportive tone for treasuries. Furthermore, Bessent’s mention of Japan talks going “very well” and that the election may be the impetus to getting a deal done will have also provided tailwinds for the yen. His comments follow Japan’s chief trade negotiator meeting with the US Commerce Secretary on Monday ahead of the looming August 01 deadline.
- USDJPY has traded through initial support at 146.92 (Jul 16 low), printing session lows of 146.51 at typing. Short-term pivot support to monitor next is 145.85, the 50-day EMA.
- Some analysts had cited the substantial rally in USDJPY as overshooting the shift in fundamentals, and the subsequent cleaner positioning could be exacerbating this week’s swift reversal lower. Below the 50-day EMA, attention will be on 144.23, the July 7 low.
EQUITIES: Stocks Drop on Little News; Currency, Bond Markets More Resilient
Jul-22 13:58
- Equities have reversed hard since the cash equity open, with the e-mini S&P sliding to a new daily low on heavy volumes - no headlines here of note to drive the move, and the move looks generally equity-led, with bond and currency markets generally holding firm. Volumes really picked up on the break of overnight lows - helping trigger the ~15 point drop that's already started to partially reverse.
USDJPY TECHS: Correction Extends
Jul-22 13:55
- RES 4: 151.21 High Mar 28
- RES 3: 150.49 High Apr 2
- RES 2: 149.38 50.0% retracement of the Jan 10 - Apr 22 bear leg
- RES 1: 149.18 High Jul 16
- PRICE: 146.51 @ 14:54 BST Jul 22
- SUP 1: 146.63/60 20-day EMA / intraday low
- SUP 2: 145.85 50-day EMA
- SUP 3: 144.23 Low Jul 7
- SUP 4: 142.68 Low Jul 1 and a key support
A bull cycle in USDJPY remains in place despite the latest pullback - a correction. Recent strength has resulted in a breach of resistance at 148.03, the Jun 23 high, and a move through key resistance at 148.65, the May 12 high. The break strengthens the bullish theme and opens 149.38, a Fibonacci retracement. On the downside, short-term pivot support to monitor is 145.85, the 50-day EMA.
