Risk sentiments improved further on easing geo political tensions. Asian equities are generally higher as US stocks extended this week's rebound overnight. Reactions in the yen was muted though as treasuries yields dropped in spite of strength in equities. Russian President Putin pledged that his government would do what they can "so this conflict comes to end as soon as possible and the bloodshed in Ukraine comes to an end". In the Middle East, Israel and Hamas agreed to extend their ceasefire for a further 3 days. In Iraq, Nouri al-Maliki has agreed to step down as PM and back Haider al-Abadi to form a new government. These developments calmed investors although peace would merely last temporarily.
The Sterling remains the weakest major currency this month. Q2 GDP revision from UK will be closely watched today and is expected to show 0.8% qoq growth, unrevised. Index of services is expected to rise 1% 3mo3m in June. In other occasions, we'd talked about the bearish outlook in GBP/AUD, where price actions from 1.7735 are viewed as a consolidation pattern and the fall from 1.9185 is anticipated to resume sooner or later. Indeed, the break of near term channel support is taken as the first sign of fall resumption. Near term outlook is mildly bearish for 1.7821. Break there will affirm the bearish case and should send GBP/AUD through 1.7735 to 38.2% retracement of 1.4380 to 1.9185 at 1.7349.
In US session, a bunch of economic data will be released. From US, empire state manufacturing index is expected to drop to 2 in August. PPI is expected to slow to 1.8% yoy in July with core PPI slowed to 1.6% yoy. TIC capital flow might rise to USD 27.3b in June. Industrial production is expected to grow 0.3% in July. U of Michigan consumer sentiment is expected to rise to 8.3 in August.