Overnight
# European bourses appeared to get a touch of nerves ahead of Thursday’s ECB meet with the EuoStoxx600 falling 0.97%. Losses were milder stateside with the S&P500 falling 0.43%. The U.S session was notable for the ranges being the narrowest in 2 months.
# Comments from the German finance ministry dampening prospects for the ESM to be given a banking license saw the spread between peripheral bonds and core bonds widen. German yields fell on the nerves whilst Spanish yields rose, widening that spread by 20 basis points. (My understanding is if the European Stability Mechanism (ESM) is given a banking license then that bailout fund can get more clout by leveraging the funds at its disposal just as a commercial bank would).
# Spain’s budget deficit increased in June from 36.3b to 43.1b.
# Eurozone unemployment rate confirmed at a nasty 11.2% in June.
# Despite the underwhelming European data releases the EUR clawed back ground against all comers, lifting from 1.2280 to 1.2330 against the USD and retreating from record highs of 0.6613 back to 0.6570 against the NZD. A much awaited report from the Swiss National Bank (SNB) detailing their FX diversification program failed to live up to expectations showing that their move from EUR to the likes of AUD and SEK was in amounts far less than anticipated.
# U.S. data releases were generally OK with the Case-Shiller home-price index showing U.S. home prices rose in May for the second straight month whilst the Chicago purchasing manager’s index, a barometer of manufacturing health, beat expectations and rose in July.
# Despite the frenzied expectation of more monetary policy easing from both sides of the Atlantic Gold put in a disappointing performance falling from a high of US$1627 to $1611
Ahead
# China manufacturing PMI
# HSBC China HSBC Manufacturing PMI – Final
# EU & UK PMI Manufacturing
# US ISM Manufacturing
# Fonterra NZ dairy price auction
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