Cautious and directionless best describes this morning Asia session. With minimal action, we’re going to shut it down until this evenings US Retail sales data
A very cautious start for risk assets this morning with trader positioning gingerly knowing that the rest of the week is potholed by Fed speakers and critical US data releases all of which has predictably left Asia equity markets struggling for direction this morning.
And despite all the hoopla from NFP, CPI and Powell speech, July FOMC Fed Fund futures are pretty much unchanged from pre-NFP levels. Indeed, the more things change, the more they stay the same.
Currently, the market is pricing a 29bp or 58% probability of 50bp cut. And while currency markets have been boring for lack of a better description, but hopefully we should expect more volatility in FX as the market likely moves away from the ~50% probability when we move closer to FOMC. Even better if we move to 50% probability mind you. !!
Tonight’s US June retail sales and industrial production data are in focus. Consensus sees retail sales and industrial production slowing to 0.2% and 0.1% m/m, respectively (previously 0.5% and 0.4%) and predictably the markets will leave no stone unturned going over the reports with a fine-tooth come to assess how the Fed will factor in the results.