Sleepy Overnight Session Interrupted By Chinese Market Turmoil
In currencies, FX markets have felt the effect of slow summer conditions, with volatility not helped by the lack of tier one data due today. Much anticipation will be on the ECB later in the week, as central bank speech is light amid the pending decision as well as the Fed blackout period.
After the excitement of China’s data dump this morning there isn’t a
huge amount left over the course of the day with final June CPI report
for the Euro area and the July empire manufacturing print in the US the
only data of note
US Event Calendar
- 8:30am: Empire Manufacturing, est. 15, prior 19.8
DB's Jim Reid concludes the overnight wrap
In my household there are two important dates this summer. One the birth of the twins and secondly the premier of the new series of Game of Thrones which occurred last night. It aired at 2am in the UK (and perhaps 3am in Europe) so I'll be very impressed if anyone outside of the US readers of this note (aired last night) have seen it yet. No spoilers please as we'll be watching tonight but I'd love to hear from anyone in Europe that got up in the middle of the night to watch it. Had the premier been a couple of months later then I'm sure being awake in the middle of the night wouldn't have been a problem!
So as the battle for the seven Kingdoms intensifies, another slightly less epic battle is playing out around financial markets at the moment and that’s the one between inflation and central bankers. Friday's 4th successive US CPI miss relative to expectations was a frustration to many but the potential Fed dovishness it might imply helped herald a fresh record high in the S&P 500 (+0.47%), the Dow (+0.39%) and saw the Nasdaq (+0.61%) close within a whisker of its alltime high. So the recovery is complete in US equity markets after Draghi's Sinatra speech and the earlier tech sell-off. Although European markets had their best week for just over two months they still remain 2-3% off their highs perhaps held back by a more hawkish ECB and a stronger currency of late. The inflation vs. central bank battle continues in earnest this week with Europe and UK seeing inflation data today and tomorrow followed by the ECB meeting and press conference on Thursday.