 Welcome to Tickmail Weekly Market Outlook for week commencing the 13th of July with me, Patrick Manley. FX markets head into this new week with an open mind about the economic recovery we're witnessing. The tone has been mildly positive, however, with equity, credit and commodity markets heavily bid. The strong rally in Chinese equities and the US dollar Huam level breaking seven, this has also added additional support to the risk on tone, a mood that could be supported further if Thursday's release of Chinese second quarter GDP does not disappoint. The tone would also be held by above consensus prints in the US for June industrial production and June retail sales. The week will also see the June US NFIB and CPI data. The higher frequency soft US data on retail sales and unemployment is not quite as encouraging as the headline figures suggest. With this in mind, the market will closely watch out for any guidance provided by US banks as earnings season kicks into high gear on Tuesday. Any significant higher provisioning for souring loans or lowering in guidance could stand to insert some more equity volatility into the equation. One final point to consider is that the 15th of July marks the new US federal tax deadline, having been extended from the 15th of April back in March. This may see some tightening in US dollar cash and repo markets and slightly firmer short end US dollar rates, providing what I consider to be a temporary bullish factor for the US dollar. So if we move to the charts now and we saw a turnaround in terms of the dollar into the back end of last week, if we can hold this 96-20 area, I'm now looking for a move up to the 98 zone where we've got the descending trend line resistance coming in, certainly be looking for bearish reversal patterns in this area to target and move back down to test the range support at 95-71 and in extension the 94-60s. However, if we take out Thursday's low at the 96-20, then I'd look for a retest of range support down to 95-70. The highlight of the week in terms of the Eurozone will be the EU's leader's summit starting Friday and whether it concludes with an agreement on the €750 billion recovery fund. I'd take a cautiously optimistic view on this, thinking that concessions already agreed on the joint funding of the programme should lead to an eventual deal. As always, these discussions can be noisy, expect a lot of side briefings going on which could add to volatility during the week. Less volatility should emerge from the European Central Bank meeting and press conference on Thursday where I anticipate a period of reflection is likely to continue. In terms of the data calendar, we'll see Eurozone at main industrial production and the July-German ZEW index. From a technical perspective, the euro-dollar we saw reversal on Thursday and some additional selling on Friday. Whilst we hold this 13-60 range resistance, I'm now anticipating a move down to test the equality objective at the 1-11-30. Only a close back through 1-13-70 would negate this downside-corrected move and then I'd be looking for 1-14-20 on route to an ultimate 1-15 test. Sterling, UK Chancellor Rishi Sunak's fiscal support announcement did have a one-off positive impact on Sterling with Sterling in fact reacting ahead of the event to the leaked details rather than the actual announcement. With this now fully priced in the upside for Sterling should be fairly limited from here. Don't expect any progress in the Brexit talks next week or over the summer as a whole. Meaning that positive catalysts for Sterling upside should be rather scarce. It would really probably be a euro rally rather than Sterling strength that would push the Sterling higher from here. On the data front, a headline CPI on Wednesday should stay at around half a percent and it's likely to stay around that level for the duration of the summer. The unemployment rate released on Thursday may take marginally higher but its rise has so far been limited given the furlough scheme. We look for a rise in unemployment in the coming months following already announced job cuts as more firms announce layoffs. None of these data points should have a meaningful impact on Sterling given that they're backward looking nature. From a technical perspective, Sterling has come into range resistance now at this 1-26-70 as this contains the upside. I'm now looking for a move down to test range support and equality objective at 1-21-40. However, if we did take out last week's highs at 1-26-70 then look for an immediate test of stops above 1-28. In Japan, Wednesday's Bank of Japan policy meeting will be the local highlight of the week. Don't expect any changes to their elaborate QE and yield curve control policy. Moves by the BOJ to support the corporate bond market do seem to be paying dividends. Where corporate bond issuance by Japanese companies did surge in June. There also seems little need to alter the yield curve control measures where the recent 10-30 JGB curve steepening trend has started to reverse. From a technical perspective, as the dollar yen holds below this 1-08-20 area I'm looking for a test of the equality objective down towards 1-04-50. If we do take out 1-08-10 on a closing basis then I'd look for a test of range resistance up to 1-09-80. Finally, the Aussie dollar. It's been a bit of a lag in the G10 space despite the risk on mood coming from China with good Chinese sentiment normally disproportionately benefitting the Aussie dollar and the Kiwi dollar compared to other pro-ciprocal currencies. As a severe COVID-19 wave in Australia has forced Victoria into a lockdown. As we learned in the past few months, there is a lag between the start of a lockdown and when we actually start to see cases slowing. The Aussie may continue to feel the pressure into the week ahead. From data perspective, it's going to be the Labour report, which will be closely watched. Investors are likely expecting a rebound in the employment figures to the plus 100K region. The impact on the Aussie, however, may be limited by the notion that fresh lockdown measures are already neutralising any improvements seen in June. From a technical perspective with the Australian dollar, as we hold below the 70 level, I'm looking now for an equality objective test down towards 67-30. However, if we do take out 70 on a closing basis, then we can look for 70-60 as the next upside objective ahead of range resistance at 72-80. And that concludes the weekly market outlook for week commencing the 13th of July.