The odd part of today may be in the oil price drop rather than the USD stall, with energy signally less global demand along with more geopolitical noise (Trump threatens to use the SPR). Watching $67.76 for key support – the June 25 highs, writes Bob Savage Monday.
Monday starts slow.
The China economic data showed moderation in the growth for 2Q and outlook for 3Q. China downplays the “Made in China 2025” policy to build common cause with the EU on trade in its summit today. Both pushed for U.S. involvement in retooling the WTO.
The Trump/Putin summit has seen the U.S. president try to lower expectations – he just wants to talk – but the agenda seems obvious: Iran, Syria, Ukraine, arms control and meddling in US elections.
Trump caused early discomfort with his labeling the EU a “foe” in the CBS interview.
UK PM Theresa May is pushing for a vote on Brexit today with threats from hardliners, 48 hard Brexiteers is enough to trigger a leadership challenge in the Tory Party.
All that geopolitical noise and nothing major happened. Shares in Asia are lower thanks to weaker China GDP mostly linked to weaker investment growth and deleveraging as the PBOC keeps liquidity tight.
The European markets focus on earnings – Deutsche Bank (DB) released early and beat – but that isn’t enough with trade fears and stronger euro (EUR).
The U.S. dollar (USD) is lower today and that is the signal for moderation of the bearish story as EM and EUR bounce a touch, but this could merely be the slow Monday moderation of trend that we always expect in the summer.
As for the reality of the rest of the week, it’s about Jerome Powell and the U.S. data – today’s retail sales, later the industrial production and housing starts.
Growth is the key driver of the day and that matters the most in moments of quiet moderation.
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