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- Digesting FOMC minutes, Japan/Singapore Trade, Oz labour data, awaiting
UK Retail Sales, US Production, Claims and Philly Fed, along with ECB
'minutes' and Fed speak

- UK Retail Sales: see eking out marginal rise after June jump, modest
downside risks relative to consensus

- ECB: focus on discussion on inflation outlook; sources indications that
Draghi will not offer hints on taper timing may render this to be no
more than a passing interest

- US Industrial Production: resources and utilities to pace headline gain,
manufacturing seen rising more modestly, auto output the wild card

..........................................................................

********************
** EVENTS PREVIEW **
********************

While today's schedule of data and events has plenty of potential points of interest, surprises will probably needed to jolt markets out of their resumed summer reverie. There are the overnight Japan and Singapore Trade (both solid and in line with forecasts) and Australian labour data (disappointing due to fall in Full-time Employment) to digest, ahead of UK Retail Sales, final Eurozone CPI and in the US: Industrial Production, Initial Claims and the Philly Fed survey. The 'account' of the July ECB meeting tops the events agenda, with more Fed speak from Kaplan and Kashkari, who have both spoken in the past 10 days, and are therefore unlikely to offer any fresh insights. The July FOMC minutes noted that ""Many participants ... saw some likelihood that inflation might remain below 2 percent for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside". But only "some participants" thought it appropriate to keep rates on hold until it is clear that the current downtick is indeed 'transitory; this was definitely very unsurprising given the recent run of Fed speak. In the EM space official rates are expected to be kept on hold in Egypt and Chile. Last but not least there is a high level meeting between the US and Japan to discuss missile defence security in the context of North Korea tensions. There will also be a good deal of focus on the metals sector, as the seemingly relentless rise in Copper, Aluminium and Zinc amongst others continues (see charts).

** U.K. - July Retail Sales **
- After an ostensibly 'stellar' June (ex-auto fuel 0.9% m/m 3.0%), July's report is expected to come down with a bump, with the combination of a marginal 0.1% m/m gain and adverse base effects likely to see the headline y/y rate tumble to 1.4% from June's 2.9%. In terms of the inputs from CPI (given Retail Sales is a volume not a value measure), and the BRC report, the risks would appear to be modestly to the downside of expectations, with the BRC's non-food sales measure slowing very sharply to -0.4% y/y from June's 1.2%, even though the BRC noted particular strength in Food Sales providing a notable offset.

** Eurozone - July council meeting minutes **
- Following on from yesterday's 'sources' story indicating that counter to the previously hyped market view that Draghi will not be offering any signals on when and how the ECB will taper its QE programme at Jackson Hole next week, today brings the 'account' of their July meeting. The primary point of interest will be the discussion around the inflation outlook, with even the most seasoned of hawks such as Hansson and Lautenschlaeger noting recently that inflation is still far from being on a sustainable uptrend to its target of just below 2.0%. Given fairly clear signs that the ECB council is rather unsure of how it should proceed, and the fact that there will be a set of fresh set of forecasts at its September meeting, there may be rather little for markets to 'grab hold of', which in turn may leave the EUR vulnerable to a further correction.

** U.S.A. - July Industrial Production **
- The consensus looks for a 0.3% m/m gain (vs. June 0.4%) in headline production, paced by continued strength in the resource sector and a solid contribution from utilities due to above average temperatures, while Manufacturing Output is seen posting another 0.2% m/m gain. In terms of the latter, survey data continues to suggest a rather stronger level of activity than the median forecast implies, and there remains a question about auto sector output, which would appear to be running rather too hot relative to a slower pace of sales.

from Marc Ostwald
 
Just been instructed, her in doors is in need of some retail therapy, Ikea here we go!

Back later with a lighter wallet.
 
No sign of hawkish tones plus concern over recent fx appreciation sends euro lower.

EURUSD 1.1662 lows EURGBP 0.9063 EURJPY 128.55

Regarding exchange rates, while it was remarked that the appreciation of the euro to date could be seen in part as reflecting changes in relative fundamentals in the euro area vis-à-vis the rest of the world, concerns were expressed about the risk of the exchange rate overshooting in the future. On euro area bond markets, it was observed that while a general repricing had occurred across jurisdictions, spreads had remained contained, suggesting that the euro area had become more resilient, including the more vulnerable economies. In global bond markets, the recent flattening of the US yield curve had contributed to an easing of global financial conditions.
medium to longer-term inflation expectations, meanwhile, had remained stable over the previous few weeks, despite a fall in oil prices. This implied that the changes in nominal bond yields largely reflected changes in real yields, which could also be seen as consistent with improved growth and, ultimately, inflation prospects.
The economic upturn had gathered some further momentum. Risks to the growth outlook were broadly balanced, with some upside risks to the short-term outlook. Downside risks mainly related to global factors.

At the same time, euro area HICP inflation was still subdued. Measures of underlying inflation had remained low and were yet to demonstrate convincing signs of a pick-up, as domestic cost pressures, including wage growth, remained muted.

Overall, financial conditions remained supportive of the economic expansion, although the repricing in some financial market segments, in particular in foreign exchange markets and the bond markets, had led to some deterioration since the previous meeting
 
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