Headlines:
- Not 'material' enough
- Dollar extends drop in European morning trade
- European stocks hold solid gains, US futures higher as well
- BOE's Saunders: In my view, tightening cycle may still have some way to go
- BOE's Saunders: Not correct to say neutral rate is 1%, it is higher
- Italian politics add to headache for the ECB
- Yellen: US relationship with China not 'totally negative'
- SNB total sight deposits w.e. 15 July CHF 745.4 bn vs CHF 745.0 bn prior
Markets:
- GBP leads, USD lags on the day
- European equities higher; S&P 500 futures up 1.1%
- US 10-year yields up 2 bps to 2.950%
- Gold up 0.4% to $1,713.93
- WTI crude up 1.9% to $99.40
- Bitcoin up 6.3% to $22,262
With little else on the agenda, markets are carrying over the mood from Friday as stocks rallied while the dollar slumped across the board. The theme at the end of last week was that US retail sales was not 'material' enough to vindicate a 100 bps rate hike by the Fed next week and that is leading to the moves that we are seeing.
The dollar dropped as the session began and stayed softer throughout. EUR/USD moved up from 1.0100 to 1.0175 while GBP/USD rallied strongly from 1.1890 to 1.1990 - its highest in a week.
USD/JPY also briefly dropped below 138.00 before sticking around 138.10-20 levels at the moment. Meanwhile, commodity currencies also advanced against the greenback amid the better risk mood. USD/CAD dropped back below 1.3000 to 1.2965 while AUD/USD pushed up from 0.6800 to 0.6840 on the session.
Elsewhere, European indices are posting solid gains of over 1% while US futures also ticked higher during the session with S&P 500 futures now up by 42 points, or 1.1%.
The session also saw oil bounce back strongly with WTI crude briefly hitting $100 again and is up nearly 2% on the day at $99.40. Bitcoin also enjoyed a solid rally back above $22,000 but gains remain capped by resistance around $22,500 for now.
