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Asia witnessed a recovery in risk appetite across the financial markets, as Lira looked to stabilize amid easing tensions between Turkey and Washington. Amongst the G10 currencies, the Kiwi dollar benefited the most amid risk-recovery, despite downbeat Chinese economic releases. The Aussie traded modestly flat near 0.7270 levels on the back of a dip in the Australian business confidence, as published by the NAB. The Yen was on the back foot around 110.80 levels on profit-taking after yesterday’s sharp rally. The EUR/USD pair struggled to extend its corrective upside above the 1.14 handle while the pound also remained better offered near 1.2760 amid Brexit jitters and ahead of the key US labor market report.

Among other related markets, the Asian equities rebounded, led by the rally in the Japanese stocks. However, the Chinese stocks bucked the trend and slipped amid China slowdown fears. Both crude benchmarks edged slightly higher while gold prices regained $ 1200 levels.

Main topics in Asia

UK Brexiteers to challenge PM May, produce blueprint for hard Brexit – The Times

According to the UK Times, hard-line Conservative Brexiteers are set to publish their own version of a hard exit scenario for the UK and making a challenge against Prime Minister Theresa May’s current hopes for salvaging a trade pact with the European Union.

Trump signs defense bill which includes China measures – Reuters

As reported by Reuters, US  President Donald Trump  has signed off on an updated defense spending bill which includes watered-down measures on China.

Australia NAB business confidence rises to 7 in July, beats estimates

Australia’s  business confidence index arrived at +7 index points, beating the estimate of 6, according to  National Australia Bank (NAB) business survey 2018.  

US is said to warn Turkey again on Pastor Andrew Brunson – Bloomberg

Bloomberg reports the latest headlines on the US-Turkey political issue, citing that the US is said to warn Turkey again on Pastor Andrew Brunson.

China July data dump disappoints: Retail sales drop to 8.8%, industrial output dip to 6.0%

China’s  July retail sales YoY, the number came in at 8.8% vs 9.0% exp and 9.0% last, with industrial output YoY at 6.0% and 6.3%  exp and 6% last.  

New Zealand FinMin Robertson: New Zealand’s economy has strong fundamentals

New Zealand Finance Minister Robertson was on the wires now, via Reuters, speaking about the NZ economy in parliament.

Gold Review: Yellow metal closed below $1,200 for the first time since March 14, 2017 Gold  closed below $1,200 on Monday for the first time March 14, 2017, despite risk aversion in the financial markets.

Key Focus ahead

Today’s EUR macro calendar remains a busy one, starting off with the German preliminary GDP and final CPI data due at 0600 GMT. The German growth figures are likely to accelerate both on quarterly and annualized basis. In the European session, traders look forward to the UK labor market report due at 0830 GMT, with earnings figures the main focus. The UK earnings (ex-bonus) are expected to steady at 2.7% 3 months y/y in June while including bonuses also the wages are expected to remain unchanged at 2.5% 3 months y/y.

At 0900 GMT, the Eurozone flash GDP report will be published alongside the industrial figures and German ZEW business surveys that will wrap up an eventful EU session.

In contrast, the NA session remains data-light, with the only import prices data eyed from the US among other minority reports. Meanwhile, the American Petroleum Institute (API) will release its weekly US crude stockpiles data at 2030 GMT.

When is the German Prelim GDP and how could it affect the EUR/USD?

The preliminary reading of Germany’s Gross Domestic Product (GDP) is slated for release on Tuesday at 06:00 GMT. Market forecasts are calling for a slight expansion in the headline quarter-on-quarter figure, from last quarter’s 0.3% to the current period’s 0.4%.

GBP/USD stuck just beneath 1.28 ahead of the UK’s earnings figures

On the data docket, Tuesday sees the UK’s Unemployment Rate at 08:30 GMT, alongside wage figures with Average Earnings excluding bonuses expected to hold steady at 2.7%.

How to trade UK wages with GBP/USD

The UK jobs report and specifically core wage  data always move the British Pound. The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.

USD/TRY Technical Analysis: ascending triangle breakdown seen in 1H chart

The ascending triangle breakdown, as seen in the USD/TRY hourly chart, adds credence to the bearish RSI divergence and indicates scope for a deeper pullback to rising 50-hour moving average (MA), currently located at 6.5377.