As befits the middle of August, the next five days are light on scheduled business news, so political news is still likely to drive many market movements.
Add to that the summer’s low liquidity levels (that’s in reference to financial flows, not sunshine — in London at least, it’s has been a bit wet this morning), and you have a recipe for volatility.
Craig Erlam, from trading platform Oanda, sees potential for a correction in the price of gold, which has rallied in recent weeks as investors scramble to avoid risky assets:
Gold remains above $1,500 this morning and is only a little off its highs even as the dollar has recovered and risk appetite improved. While gold bulls are clearly very reluctant to let the momentum slip, the yellow metal didn’t rally too strongly during the mid-week freak out although perhaps that’s a sign that risk appetite is not the biggest driver right now.
Deutsche Bank analysts have looked forward to Thursday’s euro PMI figures. They write:
A reminder that the data for Europe in July confirmed a reversal of the improvement seen in June with the composite reading for the Euro Area dropping back to 51.5. The consensus expects a further modest deterioration to 51.2 with the manufacturing reading expected to fall further into contractionary territory at 46.2.
RBC Europe’s Elsa Lignos sees this as a crucial week for Prime Minister Boris Johnson’s Brexit stance, as he prepares to visit Germany and France to meet Emmanuel Macron and Angela Merkel, saying (via Bloomberg):
If Johnson is going to perform any kind of U-turn on his negotiating stance, this week would be the one to lay the ground, though it seems unlikely.
SpreadEx’s Connor Campbell has looked at comments made by Donald Trump and his advisors on the US economy over the weekend:
Investors appeared to take to heart Trump’s claim that the US is ‘doing tremendously well’, alongside his reassurances that Washington and China are continuing to talk trade-wise.
Perhaps more important, however, were the comments of US trade advisor Peter Navarro. He insisted that the ‘Fed will be lowering rates’ — the central bank is in focus this week with July’s meeting minutes on Wednesday and the Jackson Hole Symposium on Thursday — before predicting that the ECB ‘will be engaging in monetary stimulus’ and China will be ‘engaging in fiscal stimulus’.