The Bloomberg spot USD index has made some net gains overnight, up 0.15%, more from continued a choppy Pound and somewhat lower levels for the Yen and the CHF.  The AUD has continued to trade in its recent range, right on 0.79, having tested the 0.7870/75 area late in the Asia session yesterday.  Bulk commodity prices were little changed overnight, base metals were stronger (Cu +1.87%, Ni +0.73%), oil fell on near term threats to refinery demand from an approaching Cyclone Harvey.  Gold eased.  The Euro has been relatively steady.

EUR/GBP continues to garner trend support as the clock keeps ticking on Brexit.  Figures released by the UK Office of National Statistics overnight showed that net migration into the UK had fallen by a quarter over the past year with the numbers arriving from the EU down 51K and EU citizens leaving the UK up 35K.  A new portmanteau term has been coined to capture how EU citizens are voting with their feet as Brexit looms, this one Brexodus.

Also, the second estimate of UK GDP growth for Q2 was left unrevised at 0.3%/1.7% but amid the expenditure detail of the report confirming the slowdown in both personal consumption and business investment.  The CBI Retail report for August fell back to post-Brexit poll lows, the Confederation reporting a slump in sales volumes from 22, back down to -10.

In the US, it’s been a combination of limited economic news, market positioning ahead of Jackson Hole tonight, and further West Wing-Congress news and sound bites.  There’s also Cyclone Harvey approaching the Gulf Coast, potentially disrupting oil production and business activity.  Oil prices fell on threats to closing refineries with gasoline margins higher.  Already workers have left some oil platforms .

Jobless claims were again very low in the week to 19 August (August payrolls survey week) at 234K, still within shooting distance of this year’s lows and pointing to still low unemployment.  Existing Home Sales fell 1.3% in July, a modest miss against expectations of a 0.5% rise.  The Kansas City Fed Manufacturing index for August was though stronger at 16, up from 10 and toward the highs of this year.

The war of words between the West Wing and key Republicans has gone back up another notch.  POTUS tweeted why the GOP had not attached raising the debt ceiling to a recently passed Veterans’ Bill?  It sounds like he has a point on that one.  (Conservative Republicans want expenditure cuts enclosed with raising the debt ceiling).  Senate majority leader McConnell has been endeavouring to smooth over the relationship referring to work on tax reform and infrastructure, but even he copped another twitter serve for not repealing Obamacare.  POTUS also is still seething over a lack of funding for the wall, something that he made reference to with gusto at this week’s Phoenix rally.  Added into the mix, Moody’s has warned over any prospective debt repayment as having negative ratings implications.  Early October might be the “x-date” when funds dry up and with debt obligations coming up in mid-October.

Finally, in the lead up to Jackson Hole, the USD has been steadier with US Treasury yields a little higher.  For those with interest to follow the Jackson Hole news over the next 48-72 hours, the Kansas City Fed will be releasing the full Jackson Hole program of speakers at 10am AEDT (6pm US MT here).

Coming up

It’s a pretty full suite of data and speakers today, tonight and over the weekend with Jackson Hole the main focal point.  Yellen speaks tonight on Financial Stability at 10am NYT (8am Mountain Daylight (Wyoming) Time) with Draghi speaking five hours later.

Before then, there are some important economy reports out of Japan this morning (CPI), then the second cut of German GDP tonight for the June quarter.  While the market is not expecting any revision from the initial 0.6%/2.1% print, it’s the expenditure, trade breakdown that might see some interest, the market looking for faster growth in domestic demand offset by faster imports, the mirror opposite of last night’s UK report.

Further confirmation of the recovery’s momentum will be gleaned from Germany’s August Ifo Business Survey, the market again looking for a modest easing in the survey.  It has been looking for a pullback for quite some months now and proved to be too bearish.  We also note that Wednesday night’s preliminary Manufacturing PMI for August that was within a whisker of the June high, reversing the pullback in July.  Germany’s services PMI was also higher in August and an upside surprise in the Ifo would not be unexpected in that light.

In the US, and 90 mins before the Yellen address hits the wires, there is the July Durable goods orders report for July.  The market is looking for a 6% pullback in headline orders, payback after the boost from aircraft orders last month.  Core orders are expected to rise 0.4% after being flat in June, the accompanying shipments feedstock into the Atlanta Fed’s GDPNow estimate currently at 3.8%.

Overnight

On global stock markets, the S&P 500 was -0.21%. Bond markets saw US 10-years +2.61bp to 2.19%. In commodities, Brent crude oil -0.72% to $52.19, gold-0.2% to $1,287, iron ore -0.8% to $77.16, steam coal -0.1% to $98.40, met. coal +0.5% to $196.00. AUD is at 0.7897 and the range since yesterday 5pm Sydney time is 0.7882 to 0.7916.

For full analysis, download the report:

• Markets Today: 25 August 2107 (PDF, 112kb)

For further FX, Interest rate and Commodities information visit nab.com.au/nabfinancialmarkets

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