- Recession semantics is the story to end the week
- It's all in the bond market
- Eurozone Q2 preliminary GDP +0.7% vs +0.2% q/q expected
- Germany Q2 preliminary GDP 0.0% vs +0.1% q/q expected
- France Q2 preliminary GDP +0.5% vs +0.2% q/q expected
- Spain Q2 preliminary GDP +1.1% vs +0.4% q/q expected
- Italy Q2 preliminary GDP +1.0% vs +0.3% q/q expected
- Eurozone July preliminary CPI +8.9% vs +8.6% y/y expected
- France July preliminary CPI +6.1% vs +6.0% y/y expected
- Spain July preliminary CPI +10.8% vs +10.6% y/y expected
- Fed's Bostic: US is a ways from a recession
- JPY leads, CAD lags on the day
- European equities higher; S&P 500 futures up 0.6%
- US 10-year yields up 1.5 bps to 2.695%
- Gold up 0.3% to $1,760.53
- WTI crude up 2.4% to $98.76
- Bitcoin down 1.4% to $23,666
There was a slew of data in Europe today but the key takeaway is that Q2 economic output - at least from first glance - appears to be more resilient than anticipated. However, inflation continues to run rampant to start Q3 with yet another record reading in July. That reaffirms the more dire outlook for the region but the data hardly had any impact on the euro today.
Instead, the market remains focused on the debate on whether the US is in a recession. Lawmakers and policymakers are denying that but the dollar is still keeping sluggish overall, but recovering some ground after early losses during the session.
USD/JPY remains a notable mover with the pair slumping to 132.50 early in the day as bond yields fell. But as the latter picked back up, we are seeing the pair move up to 133.40 levels now - still down 0.6% though.
EUR/USD moved up from 1.0200 to 1.0255 before easing back towards 1.0200-10 now with large expiries seen nearby. The push and pull in the dollar was the main reason driving the market action today.
Meanwhile, GBP/USD pushed up to a high of 1.2245 before falling back down to be down 0.2% at 1.2140-50 at the moment, keeping below key resistance just above 1.2200.
Elsewhere, USD/CAD eased to a low of 1.2790 to start the session but has pushed back up to 1.2845 now as the dollar recovers some poise. AUD/USD also pushed up to a high of 0.7030 before falling back to 0.6970 at the moment - down 0.3% on the day.
In the equities space, things are still looking fairly optimistic as investors feed off the narrative that punters are dialing back on Fed aggressiveness considering that there are more convincing signs of an economic slowdown.