A bit of mixed data overnight was largely ignored as Russian & Ukrainian tensions seeped back into the headlines. European stocks dropped from summer highs and gold and other safe havens climbed as the U.S. said Russia has probably sent troops to fight in Ukraine. This report of Russian troops comes on the heels of a new hacking investigation by the FBI against banks including J.P. Morgan; likely authorized by the Russian government to combat western sanctions. The euro was the biggest loser against the dollar, only falling by a modest 0.20%.
While Asian stocks turned red following the breaking Russian news, it was quiet on the data calendar with only second tier Australian housing data released. The AUD and NZD are rising slowly this week but ranges remain tight for both currencies trading at 2014 lows. In Europe, we had an eclectic mix of Spanish and German releases headlined by German inflation, which just missed the mark for August at no rise over last month. Spain slipped deeper into deflationary territory as August inflation fell below at expectations at -0.5% mom. Spanish GDP continues to rise, hitting +1.2% for Q2, but that was unable to drum up any optimism as Russian headlines smacked risk appetite.
This morning, US data dominated with Q2 GDP revisions, weekly jobless claims and July Pending Home Sales. The second quarter growth figures surprised with an estimate of 4.2%, beating expectations centered around 4.0%. Weekly jobless claims came in slightly lower for the second week in a row which is further boosting the dollar before US stocks open for trading. US Pending Home Sales will be released at 10am and should they follow the most recent trend of strong housing data, it is expected the USD should continue to trend stronger for Thursday’s session.
It is likely the foreign exchange markets headline trade with no news until Friday. Canada sets the pace with Q2 GDP and July Produce Prices. The Loonie has surged this week on “tax inversion” news as Burger King looks to relocate to Canada with its acquisition of Tim Horton’s. This is the strongest level since the end of July for the Canadian dollar as it broke below the 200-day moving average. Resting on trend line support as North America begins trading today, it will be interesting to see where we close this week ahead of next week’s Bank of Canada meeting.
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