Market Drivers for August 11 2014

Dollar picks up mild bid at start of week

Markets quiet with no fresh eco or geopolitical news

Nikkei 2.38% Europe 1.07%

Oil $97/bbl

Gold $1308/oz.

Europe and Asia:

JPY Tertiary Industry Report -0.1% vs. 0.2%

North America:

CAD Housing Starts 08:15

After a tumultuous week marked by geopolitical swings and surprising economic data, FX markets opened for trade in a much calmer mood as tensions between Russia and Ukraine as well as conflicts in the Middle East appear to have eased somewhat over the weekend. With threat of on Russian invasion of Ukraine appearing to have diminished, risk aversion flows ceased and USD/JPY has once again recovered the 102.00 figure.

Otherwise dealing has been exceedingly quiet on the first trading day of the week with no fresh economic data or political news to move the markets. The dollar caught a mild bid at the start of European trade with EUR/USD once again slipping below the 1.3400 mark and Aussie trading back towards 9250 support.

This week in general could prove to be a snoozer in the currency market as we find ourselves at the peak of summer doldrums with most of the key players enjoying the beaches of Costa del Sol or Hamptons rather than staring at their monitors. The eco calendar is nearly barren this week with only US Retail Sales as a major report of note in the G-7 universe.

The markets are not looking for any dramatic changes expecting consumer demand to match last month’s 0.4% rise, but any upside surprise could provide further fuel for the dollar which remains well bid as US economy is poised to show relative outperformance in H2 of this year.

The sentiment towards the euro meanwhile remains highly negative and the pair could not even hold its shot covering rally from Friday as it slipped below the 1.3400 at the start of European dealing. The pair appears to have found some support at the 1.3350 level having held that barrier for much of last week, but it remains in a sell the rally mode as growth in the region is threatened by the ongoing conflict with Russia which is likely to have a particularly negative impact on German growth going forward. This week’s ZEW survey is likely to highlight the current fears of investors and could push the pair lower if it misses the already lower expectations.

For now however, the markets may simply tread water carving out narrow ranges for the rest of the day as activity appears to be minimal and newsflow has come to grinding halt.

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