GBP/JPY remains depressed amid mixed clues, inactive markets. Yields seek fresh clues to consolidate Friday’s rally ahead of US inflation. UK politics, Brexit woes exert downside pressure amid dormant session. Hopes that Japan’s cabinet reshuffle won’t affect BOJ monetary policy test bears.

Markets in the Asian domain are displayed a mixed performance as Chinese indices are performing well ahead of inflation data while Japanese markets have declined. Asian equities are not displaying any decisive signals as investors are expecting persistent cost pressures globally.

At the press time, Japan’s Nikkei225 surrendered 1%, China A50 added 0.30%, and Hang Seng jumped 1%. Indian markets are closed on account of Muharram.

Chinese equities are aiming higher despite higher consensus for the Inflation rate. China’s Consumer Price Index (CPI) is expected to elevate to 2.9% vs. 2.5% released earlier. The Chinese economy is still trying to establish its foot after the resurgence of Covid-19 hit growth forecasts. Now, a higher consensus for price pressures may impact the overall demand and compel the People’s Bank of China (PBOC) to sound neutral on Lending Prime Rate (LPR).

This week, the show stopper event will be the US inflation, which is seen...

USD/CAD licks its wound near daily low after Monday’s biggest fall in three weeks. RSI divergence, sustained trading below 200-SMA favor bears. Bulls need validation from seven-week-old horizontal area to retake control.

USD/JPY is likely to contain the immediate hurdle of 135.00 despite a subdued DXY. A spree of decline in the US inflation is desired to conclude policy tightening. BOJ policymakers are focusing on elevating Labor Cost to keep the inflation rate above 2%.

Gold price fades bounce off intraday low, pressured below seven-week-old resistance line. Cautious optimism fails to impress XAU/USD buyers amid hawkish Fed bets. US Q2 Nonfarm Productivity, Unit Labor Costs will decorate calendar ahead of CPI, risk catalysts could direct intraday moves.

Chainlink price eyes a retest of the range high at $9.32 and vows to complete its 33% ascent. Investors should note that completion of this rally could produce a bearish triple tap setup. A flip of the $9.32 hurdle on a daily time frame will invalidate the bearish thesis for LINK.

"After last week's rates rally, we see upside risks to USD/JPY on a tactical horizon, as our rates strategists think risks to real yields are still skewed to the upside, which should continue to exert more influence over the Yen than recession risks, and our models suggest USD/JPY could rise close to 140 again under our baseline scenario of 10y yields rising to 3.3% by the end of the year."

"Over the longer run, we still think there is a case for JPY appreciation resulting from a significant slowdown in the US that drives yields lower or a change in the Boys monetary policy, which is currently holding JPY at deeply undervalued levels on our models."

GBP/USD fades the previous day’s corrective pullback, recently bounces off daily low. Impending concerns over UK economic conditions amid political vacuum, Brexit-led red tape weighs on cable. US dollar struggles as yields fail to recover ahead of the US inflation. Second-tier US data, UK’s political and Brexit headlines will be crucial for near-term directions.

EUR/USD is displaying back and forth moves in a 1.0188-1.0194 range as investors await US CPI. Fed policymakers need a series of declines in inflation rates rather than a one-time slowdown. The German HICP is expected to remain unchanged at 8.5%.

The Chinese drills are preparation for an invasion of Taiwan.

Drills a gross violation of international law.

Taiwan has the right to maintain relationships with other countries.

Taiwan has the right to participate in the international community.

Chin is targeting Taiwan at present but its ambitions go beyond Taiwan.

Steel prices are eyeing more recovery in prices as demand rebounds. China’s decarbonization goals are likely to trim in the second half of CY2022. This week, China’s inflation data will be of utmost importance.

“The surprisingly strong jobs report, coupled with faster-than-expected wage growth, could "make a 75 basis-point hike in September very likely and raise the potential for further super-sized increases." 

"Our base case remains for a 75 basis-point hike in September, but we would not be too surprised by a 100 basis-point hike if core inflation comes in stronger than expected."

AUD/USD holds remains depressed at around 0.6980, fading the bounce off intraday low near 0.6970, amid mixed Aussie data and sluggish markets during Tuesday’s Asian session. The US dollar rebound and the cautious mood ahead of the US inflation data keep the pair sellers hopeful.

AUD/USD pares the biggest daily gains, holds lower ground near intraday low of late. Aussie NAB data came in firmer for July but August month Westpac Consumer Sentiment was softer. Risk-on mood fades amid hawkish Fed bets, pause in yields’ downside. Second-tier US employment data, risk catalysts will be important for fresh impulse.

AUD/JPY is correcting following the two-day rally. The following illustrates the prospects of a reversion into the 92.50 area based upon a reversion pattern that is taking shape on the daily candlesticks.

USD/CHF fades corrective pullback from one-week bottom marked the previous day. Sustained break of short-term ascending trend line, bearish MACD signals favor sellers. Bulls need validation from the 200-SMA to retake control.

USD/CAD renews intraday high to consolidate the biggest daily loss in three weeks. Geopolitical fears, US dollar retreat enabled oil’s rebound from multi-day low. Sluggish session, light calendar allows traders to pare recent moves. US CPI for July is the key, second-tier data, risk catalysts may entertain intraday traders.

China maintains strict control of the yuan’s rate on the mainland.

The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled.

Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day's closing level and quotations taken from the inter-bank dealer.

While NZD/USD recovered from Friday's collapse, it remains bound by key resistance and support on the daily chart and has not managed to break the seal of 0.63 the figure so far this week. The following illustrates the sideways range and prospects of breaks of key structure levels. 

Gold price is advancing towards $1,800 as the US CPI is seen lower at 8.7%. The inflation rate is required to display a series of downward shifts to claim exhaustion. Gold price as defended the 20-EMA while the 50-EMA has remained untouched in a corrective move.

USD/JPY remains depressed after rising to one-week high on Friday, mildly offered of late. Yields pare post-NFP gains as traders brace for Wednesday’s US CPI. Fears surrounding Russia, Taiwan join mixed Japan data to also cap the upside. Japan Machine Tool Orders, second-tier US employment data will decorate the calendar.

Pre-anxiety for Wednesday’s US CPI is supporting the DXY bulls. Softer oil prices have trimmed the consensus for the US Inflation rate. Higher US NFP has delighted the Fed for handling a higher inflation rate.

AUD/USD remains sidelined between 50-DMA and downward sloping resistance line from late April. Sustained break of four-month-old previous resistance joins firmer RSI to keep buyers hopeful. Successful trading beyond 200-DMA becomes necessary to reverse the downtrend from April.

The Securities Daily reported on an interview with In an interview with a reporter from Securities Daily, Wu Chaoming, deputy dean of the Financial and Information Research Institute

Wu Chaoming believes that while there is a low possibility of lowering the reserve ratio and interest rate in the future due to the influence of factors such as the Sino-US interest rate gap that will remain inverted for a long time, the pressure of domestic price stabilization and the lack of demand restricting the effect of monetary easing. 

"Considering that inflation pressure is likely to pick up in the third and fourth quarters, and other major economies may continue to maintain the basic policy stance of raising interest rates, the possibility of a comprehensive rate cut and RRR cut in the second half of the year is low, but the loan market quoted rate (LPR) remains unchanged.

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