Global Headlines
•EU zone inflation remained low at 0.2% y/y, weaker than consensus.
•By EU country France was stable at 0.%, Germany fell from 0.4 to 0.3%, Spain deflation moderated from -0.7 to -0.3%.
•BoE held cash rates at 0.25%, confirming a continuation of bond buying program going on to signal potential for further rate cuts.
•BoE noted Brexit impact on growth less severe than thought, but still concerned about fallout effect.
•SNB keeps rates low to curb strong outlook on CHF
•US retail sales weaker than anticipated coming in at -0.3% vs expectations of +0.1%.
•US jobless claims rise 260K vs last week 259k
•US PPI y/y comes in at 0. All US data returns point to a steady FED next week
Fx Market in Details
•USD rose in early part of EU session on back of weaker EU inflation data and dovish signalling from Boe.
•USD strength did not last long as weaker US data weighed upon the USD as chances of a September rate rise diminished.
•All in all EUR, JPY and GBP pretty much trade sideways in lead up to next week’s FED and BoJ monetary meetings.
•CHF rallies despite SNB leaving cash rates on hold in negative territory
•AUD & CAD benefit from weaker USD and rebound in commodity prices
RATES
•After weak EU inflation and weak US retail data bond yields rise in Germany, US and UK.
•Absolute gains are limited as markets await stronger signals from the BoJ and FED. As the global bond markets reaction to any key policy changes will set the tone for markets in the lead up to year end.
•Over the past two weeks sentiment on bond markets has waned. Investors remain focused on the threat of the BoJ reducing their long end bond purchases as well as the recent comments from ECB that they are in no rush to add to monetary stimulus
COMMODITIES
•Copper prices continued to recover, linked essentially to brighter outlook in China
•Gold prices dipped as calm markets dampen “safe haven: concerns
•Brent and WTI recover losses from previous day.
Regards All.