The US$ is stronger against all its counterparts with the Euro leading the way lower after the ECB left monetary policy unchanged as widely expected. Mario Draghi delivered a balanced but rather uninspiring press conference and the gains of the previous session following the Trump/Juncker meeting quickly evaporated. Draghi signaled no change in the ECB timetable to move away from ultra low rates or end its bond purchase program. In other currencies, Sterling fell on the EU’s rejection of key elements of Britain’s new trade proposals after it leaves the EU, while the commodity bloc currencies were also down, with commodities all under pressure due to the stronger dollar. Elsewhere, stocks were mixed, with DJI up by 0.4%, the S+P flat, and the NASDAQ down by 1% because of the 20% plummet by Facebook. Oil was up 0.4%.
Friday will be all about the Q2 US GDP figure, where the annualised median expectation is for a big number – 4.2% annualised – care of the recent tax cuts that are now flowing through the economy. Anything above this should see a bid tone return t the dollar and possible sending stocks higher as well, as confidence in the economy continues to grow. Elsewhere, ahead of that, the Tokyo July CPI figure will be released (exp +0.7% Ex Food/Energy), while from Australia comes the Q2 PPI (exp 0.6%qq). There is very little to come from Europe and all eyes will be on the US GDP figure. The Fed’s Bullard will also be speaking, while the July Michigan Consumer Sentiment Index will also be released. Have a good weekend.
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