The US dollar starts week on the back foot against the basket of its major counterparts, after broader bulls stalled and the greenback ended last week in red. However, losses were so far limited on renewed talks the Federal Reserve might be serious about interest rate hike as early as next week.

The Euro trades around Asian high at 1.1249, while Sterling hits session highs at 1.3280 zone after being congested within narrow range in Asia.
Dollar/yen holds above session low at 102.28 in late Asian session trading, with Japanese yen being supported by risk aversion.

Australian dollar remains under strong pressure against is US counterpart in early Monday’s trading, holding just above session low at 0.7518, on extension of Friday’s sharp fall. The Aussie eyes key near-term support at 0.7488, loss of which might spark fresh weakness.

Asian stocks were the top losers of the session, suffering their sharpest fall since June, driven by rising bond yields and fresh speculations of US rate hike.
MSCI index of Asia-Pacific shares excluding Japan pulled back from its recent fresh 13-month high and fell 2.4% for the session.
Shanghai, Hong Kong and Australian shares followed with fall of more than 2%, along with Japanese Nikkei index that also dropped by 2%, on fresh demand for safe-haven yen.

European stocks extended negative sentiment from Asia and opened on Monday with gap-lower.
DAX hit fresh over one-month low at 10374 and FTSE posted new low at 6672 on Monday, the level last traded on 04 August.

Spot Gold bounced from session low at $1324, as weaker global stocks helped to regain safe-haven support against comments that the Fed will raise interest rates as early as this month. Renewed rate hike talks were supported by hawkish comments from Fed officials last week that came despite weak recent US economic data.
However, technical outlook for the yellow metal remains weak, following three consecutive days in red and today’s probe below strong technical support at $1327.
Highlights of the week

Global investors see this week as the week before the Federal Reserve’s policy meeting. The focus will probably remain on the horizon and the Fed’s September 21 meeting.

UK

The week ahead of us will be another big week for the UK. There is plenty of economic data due for the month of August. July showed strong bounce from the Brexit vote in June. Can August keep the party going? There’s a Bank of England policy meeting too. And they are not as predictable as they used to be.

In July, UK consumer prices saw their largest rise since November 2014, amid warnings that the country’s vote to leave the EU could stoke inflation.
Consumer price inflation dropped 0.1% on the month, according to official data, but saw a 0.6% rise compared to the same period last year. This was above analyst expectations for a 0.5% rise.
The impact of the pound’s post-referendum is clearly being felt, with petrol and food prices, which are more sensitive to currency movements, showing some of the strongest inflation rates.
However, it’s worth pointing out that the CPI increase is far away from 2% level at which the Bank of England supposedly targets it. The pound has also risen a little through August and into September.
The count of those claiming unemployment benefits unexpectedly fell in July, suggesting that the British labour market held up well after the Brexit vote.
The claimant count fell by 8,600 in July to 764,000 according to the Office for National Statistics.
This was the first fall in five months. Analysts had expected the count to increase by around 9,500.
Other survey measures of business in the wake of June’s referendum result have suggested a softening of the labour market and the Bank of England has forecast the official unemployment rate to rise to 5.5% next year due to the vote.
The next set of official figures will be released on Wednesday.
The Bank of England cut interest rates to a new record low, improving other stimulus measures in the wake of the Brexit vote. Given the resilience of the UK economy since, Governor Mark Carney has been obliged to defend the Bank’s actions in Parliament, by lawmakers who doubted that they were necessary.
Carney’s response was that the Bank had provided the UK with a crucial shock absorber against the uncertainty surrounding the country’s exit from the EU.
However, economists expect the Bank to leave its monetary settings alone this week.
UK retail sales for August are also published on Thursday.

EUROPE

ZEW survey of the Eurozone’s economic sentiment for September will be released on Tuesday, while EU industrial production data is due on Wednesday, with trade balance and consumer price inflation data to be released on Thursday.

USA

US data due next week are expected to put more light on the health of the world’s largest economy. Markets are expecting to see will the figures be enough to further support expectations on the timing of a US rate hike by the Federal Reserve, which are expected as early as this month on recent hawkish comments from Fed officials.
The stand out data in the coming week are the NFIB Business Optimism Index for August, due on Tuesday, followed by Retail Sales for August on Thursday, Consumer Price Inflation and the University of Michigan Consumer Sentiment on Friday.
.

Important levels
EURUSD

The Euro extends bounce from Friday’s low at 1.1197 and maintains positive near-term tone, despite Friday’s close in red. Bullishly aligned technicals underpin the price for further upside attempts. High of last Friday marks initial barrier at 1.1284, ahead of key resistance at 1.1325, 08 Sep spike high, where bulls lost power.
Session low at 1.1227 marks initial support, reinforced by daily Tenkan-sen line, guarding downside breakpoint at 1.1197 (Friday’s low / Fibonacci 61.8% of 1.1122/1.1325 upleg.
USDJPY

The pair starts the week at the back foot after Friday’s failure to sustain break above pivotal Tenkan-sen resistance at 102.74, as extended rallies stalled at 103.04.
Near-term action is entrenched between daily Kijun-sen (101.92) and daily Tenkan-sen line, with break of either side needed to define fresh near-term direction, as technical studies show mixed readings.

AUDUSD

The Aussie remains under pressure and extends weakness of past three days that ended in red. Prevailing bearish tone of technical studies and today’s penetration through thick daily cloud top at 0.7540, keeps focus at key near-term support at 0.7488 (31 Aug trough).
Full retracement of 0.7488/0.7730 upleg would trigger fresh bearish extension towards next supports at 0.7450 and 0.7419.
Initial resistance lay at 0.7540/47 (cloud top / session high), followed by 0.7577 (10SMA) and pivots at 0.7600/23 (daily Tenkan-sen and Kijun-sen lines)., Market Analysis