Summary:

• Preliminary inflation readings from Spain and Germany could steer market’s expectations ahead of the ECB’s meeting
• US ADP and a second release of GDP growth for Q2 on the agenda
• DOE’s report on oil inventories and a possible belated effect coming from the hurricane Harvey

Two past days were quite light in terms of an amount of important macroeconomic releases. Nonetheless, things are going to change today when several noteworthy readings are put into the calendar. As a result, the EURUSD and oil-related currencies could be the most volatile ones.

Inflation from Spain (8:00 am BST) and Germany (1:00 pm BST): There is no doubt that Draghi disappointed during his last speech in Jackson Hole. Even as he did not allude to the euro on its own, leading to the much stronger currency, he did not point to any technicalities regarding a date when the balance sheet would begin winding down. Inflation numbers could by far change his mind as they are coming in just ahead of the ECB’s meeting in September. In this respect, today’s data are especially worth looking at. What’s more, given still the elevated positioning on the euro in conjunction with heightened market’s expectations there is a large possibility to see a pullback on the common currency. The consensuses suggest 1.8% yoy for Spain and Germany as well.

US ADP (1:15 pm BST) and a second release of GDP (1:30 pm BST): The US dollar has been unable to recoup its losses of late even as two key central bankers in Jackson Hole (Draghi and Yellen) have turned out to be a big non-event. Otherwise, we had a massive decline in the US 10Y yield yesterday which dragged the greenback down. However, the USD is trying to get back some of its appeal in the morning and taking into account that odds for another rate hike are depressed, there is increasingly probable that some corrective moves to the upside will take place going forward. The ADP report is expected to come in at 185k while GDP should show a 2.7% qoq increase (in an annualized basis).

3:30 pm BST – US crude stocks by DoE: Even though the hurricane Harvey has already settled in in the US, an impact on the oil market could not be seen in today’s data yet. It may come from the fact that the Texas Gulf coast refineries had predominantly halted their activities when the week was already ended and data collection finished. Thus, the DoE’s report could not reflect a possible decline in demand for oil from refineries as petroleum refining could have slowed down. What’s more, yesterday’s metrics from the API reported a decrease in oil stocks by more than 5mb while gasoline stocks picked up which would be in line with a belated effect on US oil stocks. The consensus indicates a drop by 2mb.

The USDCAD has failed to break its low in the vicinity of 1.2410 and has drawn two bullish candlesticks. Thus, a resumption of an increase is definitely on the cards. Source: xStation5