EUR / USD, GBP / USD
On Monday, the main event was the hurricane Harvey in California. The destruction was less serious although several lines were blurred, many plants closed and houses were damaged. Yet, the preliminary amount of damage of 30 billion dollars is surprising. Stock indexes were eyeing the reports and trading around zero while oil lost more than 3% on a sharp decline in demand. Despite speeches from Yellen and Draghi on Friday, they did not give reasons for changing the benchmarks in the monetary policy of both the Fed and the ECB. The expected probability of a December Fed rate hike has initially decreased from 40% to 33%. Yields on 2-year government bonds fell from 1.342% to 1.321%, but it rose to 1.330% during the Asian session for today.
The commodity trade balance of the US estimated to result -65.1 billion dollars in July against the forecast of -64.5 billion dollars. The wholesale stocks increased by 0.4% in July against the expected value of 0.3%. However, the money supply in the euro area M3 (free circulation + deposits in banks) for July fell from 5.0% y / y to 4.5% y / y. This strongly indicates a decrease in inflationary trends, which in turn reduces the risks of ECB's monetary policy tightening.
Today, the forecasted second estimate of France's GDP for the 2nd quarter remains unchanged at 0.5%. On the other hand, the consumer spending in France for July is expected to increase by 0.7% against a decrease of 0.8% in June. In Germany, the consumer climate GfK for September is expected to stay the same at 10.8 points. In the UK, the house price index for August is projected with a zero change.
In the US, the S&P or the Case-Shiller house price index in the 20 largest cities is expected to decrease from 5.7% y / y to 5.6% y / y. The consumer confidence index from the Conference Board for the current month is forecasted to decrease from 121.1 to 120.9.
The second assessment of the U.S. GDP for Q2 will be released tomorrow. The forecast is 2.7% against 2.6% in the first assessment, and the market is waiting for it to turn around. Up to this time, the euro is likely to rise above 1.1990 and the British pound to climb higher than 1.2950.
USD / JPY
On Monday, the Japanese government published a monthly report on the economy. It noted a moderate recovery in accordance to the forecasted growth of public investment and consumption. Head of the Bank of Japan Haruhiko Kuroda in Jackson Hole said that the Central Bank bought 40% of the total planned volume of government bonds, and assured that the soft policy will continue. However, the market yesterday sold: oil -3.2%, Dow Jones -0.02%, EuroStoxx50 -0.41%, copper 0.0%, iron ore -1.6%, euro / dollar +54 points. Under such pressure, the daily decline of the yen by 12 points indicates the strength of the Japanese currency. Yet this morning, the North Korea launched another missile that flew across Japan fading far to the east of Hokkaido. At the moment, the yen fell by 90 points according to the news. Economic indicators were weak at the same time. Household expenses in July fell from 2.3% y / y to -0.2% y / y against the forecast of 0.7% y / y. The unemployment rate remained at the level of 2.8%. The Japanese Nikkei 225 index is losing 0.75% since yields on Japanese government bonds are declining.
The retail sales of Japan will be released tomorrow with the expected forecast of 1.0% y / y in July against 2.1% y / y in June. On Thursday, the industrial production is expected to decrease by 0.5% m / m. Although, it is doubtful to occur quickly by the end of the week since there will be factors that can expand the Japanese currency market. The market waits for a decrease in the range of 108.05 / 25.
