The ECB’s policy meeting has come and gone without any policy action, though none was expected.  At 1.1025, the EUR sits where it was late yesterday in the wake of some intra-session ECB meeting volatility.  In his press conference, ECB President Draghi noted the post-Brexit uncertainty with general policy guidance, stressing a willingness and ability to act if needed.  This was in response to a question, so can hardly be any surprise.  He noted that markets had proved to be resilient in the wake of the referendum.

As for the Eurozone economy, he noted that data pointed to ongoing growth in Q2.  (The first estimate of Eurozone Q2 GDP (and for the UK and the US) is due next week.)  He pointed out slightly improved bank loan dynamics with some signs of increased loan demand, the current phase of ECB TLTRO II contributing to better conditions.  Inflation is expected to remain low before starting to pick up in 2017 as base effects drop out.

Sterling jagged lower by around ¾ cent after weaker than expected retail sales for June, but it’s since clawed back much of that lost ground to be trading at 1.3221 this morning.  We note that sales in June followed an equally strong May and came with an extremely wet June, keeping shoppers away from the High Street.

US data was more than OK with weekly jobless claims remaining low at 253K, the Philly Fed Survey for July pulling back from +4.9 to -2.7, while Existing Home Sales in June popped up by 1.1% (cf -0.9% expected).  The Leading Index rose 0.3%, a little ahead of expectations.  There’s nothing to get too excited about or concerned with those.

As the US reporting season rolls on, US equities have closed lower amid somewhat less encouraging earnings reports, Southwest Airlines shares lower, weighing on airline stocks amid signs of fare weakness, and despite a pull-back in oil prices overnight.  Treasury yields retreated, though more at the front end with gold up $11/oz.  Again, it was all pretty measured.

The JPY strengthened yesterday in the wake of a BBC interview with BoJ’s Kuroda downplaying the prospect of “helicopter money”.  It did retrace some of those gains late in Asia when it was revealed it was recorded in June but USD/JPY has moved again lower overnight, likely USD-softness inspired for the session, now sitting at 105.86.

The AUD still sits just below 0.75 with the USD a touch softer.  Base metals were mixed (Ally weaker), the VIX was back up to 12.74 while iron ore rose $1.42/t to $57.17.

Coming up

It’s a very quiet local calendar today with the MNI Business Indicator China at 11:45, followed at midday by the Nikkei Japan Manufacturing PMI for July; in June, the PMI was 48.1. Also on the calendar is the kick-off the Finance and Central Bank Deputies G20 meeting in China, with a formal agenda planned between Chinese Premier Li Keqiang, the IMF’s Lagarde, and the BOE’s Carney, with a press conference from around 11:25.

Tonight, the focus will be well and truly on Europe with the release of the preliminary July Manufacturing and Service PMIs for Germany, France, and the Eurozone, along with a special preliminary Manufacturing PMI for the UK, surveyed in the wake of the Brexit, all being released early in the European session.  In the North American session, there will be focus on the Canadian dollar with the release of key retail sales and CPI reports, along with the Markit version of the US Manufacturing PMI for July is expected to tick up 51.5 from 51.3.

No doubt there will be more sound bites over the weekend coming from the G20 economic/finance meetings.

Overnight

On global stock markets, the S&P 500 was -0.36%. Bond markets saw US 10-years -2.58bp to 1.55%. In commodities, Brent crude oil -2.35% to $46.06, gold+0.9% to $1,332, iron ore +2.5% to $57.17. AUD is at 0.7493 and the range since yesterday 5pm Sydney time is 0.7481 to 0.7512.

Good luck.

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•  Markets Today:  22 July 2016 (PDF, 132kb)

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