From Marc to Market:
Overview: The greenback is firm as the week winds down. Next week could be one of the most eventful of the year, with FOMC meeting, US and eurozone Q2 GDP, US PCE deflator and jobs data, and the August 1 "reciprocal tariff" extension deadline. The recovery in US rates has seen the dollar rise toward JPY148 from below JPY146 yesterday despite rising expectations that the Bank of Japan can raise rates again later this year. The UK's string of poor economic news continued today with a smaller than expected recovery in June retail sales (0.9%) after a 2.8% drop in May. After falling almost 0.55% yesterday, sterling is off another 0.35% today. Emerging market currencies are mostly weaker. The PBOC set the dollar's reference rate higher for the first time in four sessions.
Stocks and bonds are mostly heavier today. After Japan's Topix set a record high yesterday, it came off around 0.85% in a sea of red in the region. Among the large markets, only South Korea's Kospi eked out a gain. Europe's Stoxx 600, which rose for the past two sessions, is seeing its gains pared today (~-0.3%). US index futures are little changed. European benchmark 10-year yields are 4-6 bp higher. Yields are mostly 13-15 bp higher this week. Poor data has lent support to the UK Gilts and that 10-year yield is up about six basis points this week. The 10-year US Treasury yield is a couple basis points higher, near 4.42%, which is up about four basis points on the week. Gold was sold to a new low for the week (~$3343.25). It peaked this week on Wednesday near $3439 to record the high for the month. September WTI reached a high for the week around $66.75 earlier today but has come back off and is near session lows a little above $66.00. The US oil rig count has fallen for 15 consecutive weeks (to 422), and Baker Hughes estimate is due later today.
USD: The sixth consecutive decline in weekly jobless claims and the stronger-than-expected July composite PMI (54.6 vs. 52.9 in June), where growth in services offset the first sub-50 reading in manufacturing this year lifted the dollar on the back of firmer US interest rates....
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