Current Sentiment

Current Sentiment:
Yesterday’s NY session saw the swings continue. Bargain hunting pushed the Dow back over 16000, with the S&P and Nasdaq having similarly strong showings. It is still too early to really know if risk appetite is growing in the market, or if we are simply seeing a corrective pullback after steep losses since the beginning of the week. US durable goods orders remained surprisingly strong in July, rising for a second straight month pointing to domestic led strength for the economy. However, the strength is not helping to rebuild sentiment for a September rate hike as the Fed’s Dudley commented that a hike next month is “less compelling”.

We continued to see the EURUSD pressured through the session partly due to USD strength, but also after the ECB’s Praet suggested that the ECB might expand or extend its QE program as recent developments point to increased chances that the ECB will miss its inflation target. “Recent developments in the world economy and in commodity markets have increased the downside risk of achieving the sustainable inflation path towards 2%” and “There should be no ambiguity on the willingness and ability of the governing council to act if needed.” The EURUSD traded lower to test the 1.1300 handle where it has currently found some support.

During Asia, the second quarter seasonally adjusted total new capital expenditure estimate declined a greater than anticipated 4.0%. On the year, expenditures were down 10.5%. There was very little reaction at all from the AUD.

Coming up for today’s session we have a very light calendar in early London with no real market moving data on tap. After the NY open we will see the Preliminary GDP numbers from the US along with weekly Jobless Claims, and Pending Home Sales. This is also day 1 of the Jackson Hole Symposium so we will continue to monitor the news and feeds for any potential market moving comments.

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