COP – COP strengthened in the face of a strong USD, boosted by higher oil futures as WTI breached $80 upwards. Although we touched 3,912.50 intraday low as we entered the session, spot moved back above 3,940 as we go to print. Our trader saw a slower day overall with mixed flows.
NY Open – Tweaky blinders
The BoJ played an absolute blinder by adjusting its YCC policy. While the band is unchanged, the 0.5% ceiling is now a reference point and the BoJ will offer daily purchases of 10y debt at 1%. However, JPY struggled to sustain knee-jerk gains through 138 as the policy tweaks also allows the current framework to stay for longer. Elsewhere, fixed income firmed as US 10s were unable to break 4% and EUR front end outperformed. While Spain CPI beat, other CPI prints are in line and ECB speakers stress uncertainty around September. Additionally, there were significant misses in Australian retail sales and Swedish Q2 GDP.
Data remains the dominant focus after US GDP. At 08:30 EDT, we get Q2 ECI, PCE deflator and personal income/spending. Citi Economics is mostly in line with consensus, though we think the all-important ECI could rise 1.0%QoQ. Germany nationwide CPI should come in line while we forecast 0.4%YoY for CAD GDP. Month end and positioning squaring will add to the noise. Local markets continue to follow broader risk/dollar dynamics, but be mindful of liquidity conditions. PEN markets are closed today while CLP awaits a rate cut after the close – Citi calls for 50bps cut vs consensus 75bps.