Today's economic calendar is a relatively quiet one, with the European and American sessions offering a mix of data releases and central bank speakers. However, the key focus is on the US-Iran stalemate and the potential reopening of the Strait of Hormuz, which could have significant implications for global markets.
European Session
The European session was dominated by the UK GDP report, which beat expectations for June. This stronger performance from the services sector is a positive sign for the UK economy, but it's unlikely to change the Bank of England's (BoE) stance on interest rates. The central bank is in no rush to raise rates unless there's a clear resurgence in inflation.
The lack of significant economic data in the European session means that the market reaction to the UK GDP report is likely to be muted. The final Spain's CPI and Eurozone industrial production data are expected to have little impact on the European Central Bank (ECB) and the market.
American Session
The American session is packed with economic data, including the US PPI and Jobless Claims data. The PPI Y/Y is expected to come in at 4.9%, down from the previous 5.5%, while the M/M measure is seen at 0.2%, up from -0.3%. The Core PPI Y/Y is expected to be 4.1%, down from 4.7%, and the M/M figure is seen at 0.3%, up from 0.2%.
At this point, the data is more useful for the PCE calculation than for influencing the September rate hike probabilities, which have fallen to 35% after yesterday's US CPI report. The US Initial Claims are expected to come in at 202K, up from 199K, while Continuing Claims are seen at 1794K, down from 1801K.
The data is unlikely to be market-moving given the Federal Reserve's (Fed) focus on inflation. However, the US-Iran stalemate and the potential reopening of the Strait of Hormuz remain the key risks to watch.
Central Bank Speakers
The Fed's Hammack, a hawkish voter, and Barkin, a neutral non-voter, are scheduled to speak at 12:15 GMT/08:15 ET and 12:40 GMT/08:40 ET, respectively. Their comments could provide some insight into the Fed's thinking on inflation and interest rates, but the market is likely to be more focused on the US-Iran situation.
Personal Perspective
In my opinion, the US-Iran stalemate and the potential reopening of the Strait of Hormuz are the key risks to watch today. The potential for a military conflict or a significant disruption to oil supplies could have a major impact on global markets. The economic data releases are likely to be overshadowed by these geopolitical risks.
What makes this situation particularly fascinating is the potential for a 'black swan' event. A sudden escalation in tensions or a surprise agreement could have a major impact on markets. From my perspective, it's important to keep an eye on these risks and be prepared for the unexpected.
