MAJOR HEADLINES – PREVIOUS SESSION

• GE PPI MoM/YoY (Jul) out at 2.0%/8.9% vs. 0.7%/7.5% expected.
• SW Total Number of Employees YoY (2Q) out at 2.0% as prior.
• SW Industry Capacity (2Q) out at 90.4% vs. 91.4% prior.
• GE ZEW Econ. Sentiment (Aug) out at -55.5 vs. -62.0 expected.
• GE ZEW Curr. Situation (Aug) out at -9.2 vs. 10.0 expected.
• EC ZEW Econ. Sentiment (Aug) out at -55.7% vs. -65.0 expected.
• CA Wholesale Sales MoM (Jun) out at 2.0% vs. 0.7% expected.
• US PPI MoM/YoY (Jul) out at 1.2%/9.8% vs. 0.6%/9.3% expected.
• US PPI Ex Food & Energy (Jul) out at 0.7%/3.5% vs. 0.2%/3.2% expected.
• US Housing Starts (Jul) out at 965K vs. 960K expected.
• US Building Permits (Jul) out at 937K vs. 970K expected.
• US ABC Consumer out at -49 vs. -50 expected.
• JN All Industry Activity Index MoM (Jun) out at -0.9% as expected.
• AU Westpac Leading Index MoM (Jun) out at 0.1% vs. 0.0% prior.
• AU DEWR Skilled Vacancies MoM (Aug) out at -1.7% vs. -0.5% prior.

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THEMES TO WATCH – UPCOMING SESSION

Key Risk Events (All times in GMT)

• US Aug 15th MBA Mortgage Applications (11:00)
• Canadian July Leading Indicators (12:30)
• Canadian June Retail Sales & Retail Sales Less Autos
• DOE/API Energy Storage figures (14:30)

 

Market Comments

While much of the markets were geared towards a dovish BoE minutes from the August rate decision seeking a signal for near-term rate cuts by the bank, the actual minutes were more mixed, giving no clear support to sterling-bears. With a 7-1-1 decision mirroring the previous round of outcome and growing growth concerns, any rate hikes, however, can be safely ruled out at this stage.

Whether any actual cuts are in the pipeline will now not only hinge on the inflationary pressures, but also the growth outlook, as the language of the minutes lead to a understanding that even slower growth, which barely registered a positive reading for the second quarter of the year, would grant the central bank additional room for further easing of its monetary policy.

Cable has broken below a bullish-flag formation with the sellers eying the 1.8540 level. Any significant move on the upside will necessitate a clear break of this channel around the 1.8670 level.

While some of heaviest USD-buying seems to take a rest despite strong PPI July release yesterday, the new trend of dollar-strength has clearly asserted itself. In EURUSD, a break above today’s highs at 1.4806 and then 1.4825 (August 15th) is needed for a decisive turn. Below the 1.47-figure, the way is opened up for a test of yesterday lows at 1.4630, which currently acts as a key support level against another wave of euro-selling.

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Note: the support/resistance levels used in the matrix’s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.

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