EM ASIA CREDIT: Xiaomi: Auto sales rebound

The BBDXY has had a range of 1200.08 - 1202.14 in the Asia-Pac session, it is currently trading around 1200, -0.05%. The USD remained broadly heavy on Friday night albeit still above its pivotal support. A sustained break below 1197/1195 is needed to regain the momentum lower and retest the year's lows. The USD is holding just above this support but continues to trade with a heavy tone. “Dollar to Drop More as Fed Independence Threats Deepen. The dollar is bearing the brunt of investor skepticism and is already adjusting to political and structural headwinds regardless of what the Fed does next.” - BBG

• EUR/USD -  Asian range 1.1687 - 1.1714, Asia is currently trading 1.1710. The pair is trading sideways for the moment. First support is back towards 1.1550, a break back above 1.1850 needed to regain upward momentum.
• GBP/USD - Asian range 1.3497 - 1.3529, Asia is currently dealing around 1.3520. The pair is consolidating around the 1.3500 area. Back in the middle of its recent 1.3350-1.3650 range, the USD’s fate will have a direct impact on which side is tested.
• USD/CNH - Asian range 7.1212-7.1296, the USD/CNY fix printed 7.1072, Asia is currently dealing around 7.1270. Sellers should be around on bounces while price holds below the 7.2200/2500 area and the PBOC manages the fix lower. Above 7.2500 and we could see a test of the USD Shorts.
• Cross asset : SPX -0.10%, Gold $3475, US TYZ5  112-13, BBDXY 1200, Crude Oil $63.73
• Data/Events : Italy HCOB Manf. PMI/Unemployment, EZ HCOB Manf. PMI/Unemployment, Germany HCOB Manf. PMI, France HCOB Manf. PMI, Spain HCOB Manf. PMI

Fig 1: BBDXY Spot 2H Chart

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

The NZD/USD had a range of 0.5890 - 0.5914 in the Asia-Pac session, going into the London open trading around 0.5905, +0.20%. The USD can’t catch a break and continues to trade heavy helping the NZD grind higher. The NZD has bounced off its support toward 0.5800, sellers should continue to be around looking to fade the move back towards the 0.5950 area initially. Should the USD break lower and gain momentum this would complicate this trade and then it would be prudent to rotate the NZD shorts into the crosses.

• Bloomberg - “New Zealand Opens Luxury Home Market to Golden-Visa Holders: New Zealand will loosen its ban on foreigners buying houses, opening the door for wealthy investors to purchase luxury properties as part of a push to revive its sluggish economy.”
• “The coalition government on Monday said it will allow holders of so-called golden visas to buy houses worth at least NZ$5 million ($3 million).”
• "NZ'S LUXON: I'VE GOT EVERY CONFIDENCE IN RBNZ, WAS RIGHT DECISION FOR RBNZ CHAIR QUIGLEY TO GO" - BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data:  none. Upcoming Close Strikes : 0.5700(NZD500m Sept 2), 0.5700(NZD384m Sept 3) - BBG
• CFTC Data of last week shows Asset Managers added slightly to their new short position in the NZD -4743(Last -3198), the Leveraged community have almost completely exited their short -225(Last -4004).
• AUD/NZD range for the session has been 1.1072 - 1.1110, currently trading 1.1080. Momentum higher looks to have stalled above 1.1100 for now, look for demand to return on a dip back towards the 1.1000 area.

Fig 1: NZD CFTC Data

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

Gold prices are 0.9% higher at $3478.0/oz after a peak of $3486.11 which followed a low of $3437.11. It is above resistance at $3451.3 opening up the bull trigger at $3500.1. The US dollar is only slightly lower but generally risk appetite is a bit weaker ahead of a number of risk events this week.

• There could be a decision on whether Fed Governor Cook can continue in her role as early as Tuesday and August payrolls print on Friday, which could shift market pricing for a September 17 rate cut in either direction. Currently over an 85% chance is priced into the market.
• Following a US appeals court decision on Friday that this year’s tariffs are illegal, uncertainty over their future remains high. They remain in place though until a final ruling is made.
• Silver is up sharply by 1.9% to $40.48, breaking above round number resistance at $40.00 reinforcing the uptrend. It reached a high of $40.539 earlier.
• Equities are mixed with the Hang Seng up 1.8%, S&P e-mini flat and Nikkei down 1.7% and KOSPI -1.1%. Oil prices are lower with WTI -0.4% to $63.74/bbl. Copper is 0.1% higher.
• The US is closed for a holiday. Later ECB President Lagarde speaks and ECB’s Schnabel and Cipollone appear. European August manufacturing PMIs and euro area July unemployment are released.