• Prior +6.3%
• New yuan loans ¥900 billion
• Prior ¥260 billion

China’s bank lending tumbled in July to its lowest in almost 15 years but it seen rebounding back a little in August, though estimates were expecting it to climb back up to around ¥1.0 trillion. Looking at the year-to-date figure, China’s new yuan loans is totaling up ¥14.43 trillion so far. Overall, I would argue that it still points to credit demand still being rather lackluster and the PBOC possibly has to do more as such to drive a resurgence in that area i.e. more rate cuts.

This article was written by Justin Low at www.forexlive.com.

• USD/JPY stays pressured as lower yields weigh
• ECB’s Muller: Temporary acceleration in inflation is likely
• ECB’s Holzmann: There could be room for another rate cut in December
• ECB’s Villeroy: We should continue to reduce gradually and as appropriate
• ECB’s Rehn says will continue to base policy decisions on assessment of inflation outlook
• ECB’s Vasle: We are not committed to any predetermined rate path
• ECB’s Nagel: Core inflation is going in the right direction
• US reportedly finalises steep tariffs on China, with many to begin on 27 September
• China approves the plan to raise the retirement age for the first time since 1978
• Boeing US factory workers vote to go on strike, reject pay deal
• France August final CPI +1.8% vs +1.9% y/y prelim
• Eurozone July industrial production -0.3% vs -0.5% m/m expected

Markes:

• JPY leads, AUD lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields down 3.4 bps to 3.645%
• Gold up 0.4% to $2,567.88
• WTI crude up 1.1% to $69.75
• Bitcoin up 0.1% to $58,225

There weren’t any major headlines on the session but there were some decent market moves to be had. In particular, bond yields are staying pressured and that is weighing on USD/JPY again.

10-year yields in the US fell as low as 3.62% and that pulled USD/JPY to a low of 140.36 during the session. Yields are now at 3.64% but still down by over 3 bps, helping to see USD/JPY nudge back a little to 140.70 – still down 0.8% on the day though.

All of this comes after the action from yesterday, as traders step up bets for a 50 bps rate cut by the Fed for next week. In part, that can be attributed to Fed watcher Tsimiraos tossing said idea into the mix.

Looking at the dollar, it is holding more mixed on the session as it trades lower against the Swiss franc and euro but higher against the aussie and kiwi.

ECB policymakers did come out in droves to speak their views after the decision yesterday, but all were mainly echoing what Lagarde already mentioned.

In other markets, equities continue to put on a more positive front with US futures also sitting a little higher again on the day. As for gold, the run higher continues with the precious metal keeping with the technical breakout to fresh record highs yesterday. It is now trading up by another 0.4% to $2,567.

This article was written by Justin Low at www.forexlive.com.

• Monetary policy is now on a good trajectory
• Inflation is much less worrisome than when ECB first started cutting rates in June
• „I am not per se against lowering rates, I only object when the timing does not look right“
• Headline inflation expected to rise temporarily in the coming months due to base effects
• October might not be the right time given limited amount of additional data

The full piece can be found here (may be gated). Anyway, this is as much of an endorsement as you’ll get to yesterday’s decision coming from an ECB hawk. It also reaffirms expectations of another pause by the ECB next month before going again in December.

This article was written by Justin Low at www.forexlive.com.

Crude oil is finally
finding some footing this week as the dip-buyers might be looking forward to
the Fed’s easing cycle. As a reminder, the positioning in crude oil is at a
record 13 years low and the sentiment is very bearish.

These factors can generally
offer great contrarian opportunities. The main reason which could drive oil
prices higher is the imminent Fed’s easing into a resilient economy. Lower
rates generally lead to an increase in the manufacturing activity and therefore
increased demand for crude oil.

Moreover, the recent debate
between Trump and Harris might have also decreased the risk premium of higher
supply as Harris chances of winning the election according to betting markets
increased. This is just a marginal thing, but it could give the buyers a bit
more confidence.

Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that crude oil recently broke through the 67.68 low and extended the drop
into the 65.31 level before reversing. The target should now be the resistance
around the 71.67 level.

That’s where we can expect
the sellers to step in with a defined risk above the resistance to position for
a drop into the 64 support zone. The buyers, on the other hand, will want to
see the price breaking higher to increase the bullish bets into the major trendline.

Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price recently broke above the minor downward trendline that was defining the bearish momentum.
The buyers started to pile in more aggressively and with the break above the
most recent lower high at 69.05 level, the short-term trend should have
switched to an uptrend.

Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the recent price action and the break above the 69.05 level
yesterday. We got a bit of a consolidation around the level, but the bullish
momentum seems to be increasing.

We now have a minor upward
trendline defining the bullish momentum and we can expect the buyers to keep
leaning on it. The sellers, on the other hand, will want to see the price
breaking below the trendline and the 69 handle to position for a drop back into
the lows. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we conclude the week with the University of Michigan Consumer Sentiment
report which is expected to print at 68.0 vs. 67.9 last month.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

This will include steep tariff hikes on Chinese EVs, solar cells, semiconductors, and steel among other strategic goods. More specifically, it will be a 100% duty on Chinese EVs, 50% on solar cells, and 25% on steel, aluminum and key minerals. All of which will be going into effect on 27 September.

As for a 50% duty on Chinese semiconductors, that will be due to start in 2025.

Besides that, there will also be increases in tariffs on Chinese medical face masks and surgical gloves to 50% next year and then to 100% in 2026. That compares with the initial plan for an immediate 25% tariff. But the ones mentioned above are the heavy hitters.

Well, it looks like this is Biden’s parting gift before he steps down. And the ball is now over to China’s court is seeing how they will respond before potentially dealing with more of this if Trump does get elected come November.

This article was written by Justin Low at www.forexlive.com.