- US Q2 2022 GDP (second reading) -0.6% vs -0.8% expected
- US initial jobless claims 243K vs 253K estimate
- Fed's Harker: We need to get to a restrictive stance, which we will do by year-end
- Fed's Bullard: My baseline is inflation to be more-persistent than many on Wall St think
- White House doesn't rule out agreeing to Iran nuclear deal
- ECB decision on ending reinvestments unlikely to be taken in Sept - report
- Belgian business sentiment -5.8 vs -2.8 prior
- Canada June average weekly earnings +3.5% y/y vs +2.54% prior
- Canada flash July manufacturing sales -0.9%
- US weekly natural gas inventories +60 bcf vs +58 bcf expected
- US treasury auctions off $37B or 7 year note at a high yield of 3.130%
Markets:
- Gold up $6 to $1756
- US 10-year yields down 7 bps to 3.12%
- S&P 500 up 50 points to 4190
- WTI crude oil down $1.64 to $93.23
- AUD leads, USD lags
Many were expecting a quiet day of trading in the countdown to Powell's speech at Jackson Hole and the light economic calendar validated that sentiment but it ended up being another lively day, though moreso outside of FX.
US equities rallies strongly as yields fell with the help of a strong auction. The dollar lagged but not badly as euro gains were restrained by another 4% rise in European natural gas prices and jump in forward power prices. That kept EUR/USD close to unchanged on the day but there was a strong bid into the London fix for the second day (and in cable as well).
Most of the damage in AUD and NZD was done before US trading as the pairs chopped sideways. The Canadian dollar lagged its commodity cousins as oil prices declined on continued Iran nuclear deal speculation.
Fed talk pushed a consistent narrative about holding rates higher for longer (no quick U-turn) and that's a likely preview of what Powell will bring at 10 am ET on Friday. I'd argue the market is worried about something more-hawkish than that so the dollar softening makes sense.
