Currencies and equities mixed
* Japan Q2 GDP weaker than expected
* Focus on US survey data for August
What to watch for this week
USD: A glimpse at August. The first data for August will arrive this week with the release of Empire and Philly Fed manufacturing surveys and the preliminary Michigan consumer sentiment report. Consensus is looking for a stable Empire reading after July’s big bounce, and for Philadelphia to continue its improvement from the June lows. Meanwhile, we expect another solid monthly gain in
industrial production for July, in part due to record hot temperatures, while retail sales should bounce after three weak months. Overall, the data are likely to be supportive for further recovery in risk sentiment. At the same time, the flip side of the better numbers will be rising ambiguity about prospects for a new QE program in September, particularly if weekly jobless claims extend last week’s improvement. We remain cautious on risk-sensitive currencies in this context.
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Credit Suisse