The new week begins with relative calm on Wall Street. There are no major macroeconomic data releases on the calendar, nor are there any earnings reports from major companies.
However, the market continues to be moved by Friday's series of US data, which once again lowered expectations for Fed interest rate hikes. While investors reacted with uncertainty at the end of last week to the drop in retail sales and the emerging weakness of the US consumer, the observed euphoria in Asia suggests a return of the bull market.
Key Releases from the Asian Session and Morning
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Japan (GDP): Preliminary Q2 GDP data disappointed proponents of faster rate hikes by the Bank of Japan. Annualized GDP grew by just 1.1% (consensus: 2.1%, previous: 1.9%), while quarterly seasonally adjusted GDP came in at 0.3% QoQ (versus the projected 0.5% QoQ). The main culprit was weakness in the domestic consumer.
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Japan (Industrial Production): A bright spot from the Land of the Rising Sun came from June industrial production data, which significantly beat market expectations. The seasonally adjusted figure rose 1.9% MoM (consensus: 1.3% MoM), while rebounding to 4.9% YoY on an annual basis (forecast: 4.2% YoY, previous: -2.1% YoY).
USDJPY moves away from the psychological 160 barrier again. Source: xStation5
Macroeconomic Calendar
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11:30 AM Eurozone – Speech by ECB Executive Board member Philip Lane
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2:30 PM US – NY Empire State Index for August (Consensus: 10.8 | Previous: 15.6)
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4:00 PM US – NAHB Housing Market Index for August (Consensus: 33 | Previous: 34)
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10:00 PM US – Monthly Net Capital Inflows for June (Previous: $132.2B)
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10:00 PM US – Long-term Capital Inflows for June (Consensus: $151.4B | Previous: $232.7B)
Key Corporate Earnings Releases
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BHP Group
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Fabrinet
3 Markets to Watch Today
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USDJPY (FX): Lower-than-expected Q2 economic growth data in Japan (annualized GDP at 1.1% vs. 2.1% forecast) takes some pressure off the Bank of Japan for rapid tightening, although broad US dollar weakness keeps the currency pair trading below 160.
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S&P 500 / US500 (Stock Index): The US index futures contract is trading just 0.3% below the all-time high set last week. The first regional test of US economic conditions will be the NY Empire State reading at 2:30 PM (forecasted drop to 10.8 points). A result significantly deviating from forecasts will set the risk tone for the New York open.
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EURUSD (FX): The major currency pair is breaking out of its two-week consolidation to two-month highs. In the absence of hard European economic data, investors will look for impulses in central bankers' speeches and afternoon US housing market indicators (NAHB).
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