FX Steadies Ahead of Data

At 2:00 AM UK August Nationwide House Prices (exp 0.5%, prev 0.1%)
At 4:00 AM Germany August Unemployment Rate (exp 8.9%, prev 9.0%)
Germany August Unemployment Change (-30.0k, prev –45.0k)
At 4:30 AM UK July Consumer Credit (exp 875 mln stg, prev 874 mln stg)
At 8:30 AM Canada July PPI m/m (exp –0.5%, prev –1.3%)
Canada Q2 Current Account Balance (exp C$8.5 bln, prev C$6.49 bln)
US Weekly Jobless Claims (exp 322.0k, prev 322.0k)
US Q2 GDP preliminary (exp 4.0%, prev 3.4%)
US Q2 PCE (exp 4.3%, prev 4.3%)
US Q2 core PCE (exp 1.4%, prev 1.4%)

Sharp swings in the currency market corresponded with the rebound in US equity bourses, with the yen bearing the brunt of the losses against the majors. The Japanese unit relinquished all of its previous session’s gains to stand unchanged from two trading days prior, hovering around 234 against the sterling and just beneath 159 versus the euro. Although the liquidity injections by global central banks have tempered the panic rampant in markets in recent weeks, the credit markets are still not out of the woods yet and we can expect periods of heightened volatility and risk aversion in the coming weeks.

The session ahead will see several key G7 data releases including UK August nationwide house prices, Germany August jobs report, UK July consumer credit, Canada Q2 current account balance, Canada July PPI, US weekly jobless claims and US Q2 GDP. The preliminary reading for second quarter growth in the US is expected to rise to 4.0%, versus 3.4% from the previous quarter, pointing towards robust economic activity that could sway the Fed to stand pat at its September meeting. Also to be closely watched will be the Q2 PCE, with the headline seen remaining unchanged at 4.3% and the core PCE reading steady at 1.4%.