Global Markets: 

  • Asian stock markets: Nikkei up 0.50 %, Shanghai Composite lost 0.50 %, Hang Seng dropped 0.20 %, ASX declined 0.30 %
  • Commodities: Gold at $1278 (+0.20 %), Silver at $19.45 (+0.20 %), Crude Oil at $93.48 (-0.20 %)
  • Rates: US 20 year yield stands at 2.40 

News & Data: 

The most significant development over the weekend from the Jackson Hole Symposium was a further dovish tilt by ECB President Draghi. He said the ECB will acknowledge that inflation expectations had declined – a key pre-requisite for Large Scale Asset Purchases (LSAP). Draghi emphasised the need for policies to boost aggregate demand to address unemployment, suggesting the EU should coordinate higher fiscal spending. And he suggested the ECB would be prepared to conduct LSAP to support EU-administered infrastructure spending. The tone of Draghi’s address was reminiscent of Yellen’s dovish addresses on the labour market in the past and channelled the spirit of the three-arrows of Abenomics. This reinforces the view that EUR/USD will trend lower for the foreseeable future. 

CFTC Positioning: 

  • EUR net short 139,000 vs 126,000 previously
  • JPY net short 87,000 vs short 81,000 previously
  • GBP net long 13,000 vs long 19,000 previously
  • AUD net long 37,000 vs long 30,000 previously
  • CAD net long 7,000 vs long 18,000 previously
  • CHF net short 15,000 vs short 17,000 previously
  • NZD net long 12,000 vs long 13,000 previously

 The Week Ahead: 

Today, we have German IFO data, which is expected to decline again. Later in the day, the US will release  New Home Sales and Services PMI data. On Tuesday, we have New Zealand trade figures and US Durable Goods Orders & Consumer Confidence data. Wednesday should be quiet with no tier 1 econmic data. The following day, Australia will publish New Home Sales data. In the European session, we have Spanish GDP and German employment & inflation data. The US will then publish the GDP figures, as well as Initial Jobless Claims and Pending Home Sales data. Finally, we have German Retail Sales, Euro Zone CPI & unemployment rate and Canadian GDP for Friday. 

Upcoming Events: 

  • 08:00 GMT – German IFO Business Climate Index (107.0)
  • 08:00 GMT – German Business Expectations (102.0)
  • 08:00 GMT – German Current Assessment (112.0)
  • 14:00 GMT – US New Home Sales (430k)