Volatility in FX and stock markets remains high with Asian stocks seeing a small rebound overnight and European indices expected to open strongly this morning. The recent whipsaw action in markets is likely to continue and volumes are going to be thinner than usual with many markets closed or finishing early due to US Labor Day. Whilst Cable has suffered two weeks of big loses, the dollar has still failed to gain meaningful enough momentum to suggest that investors are expecting a rate hike from the FOMC is just over a week’s time. The dollar index is still well below its recent multi-year highs and US Treasuries remain subdued.
Today is quiet on the economic data front but we could see some movement in the yen overnight with the release of Japanese GDP data where a contraction of -0.4% expected for Q2. Then as the week progresses we build up to Thursday’s BOE meeting, one month on from “Super Thursday” where we get the decision and release of voting intensions at the same time.