All Eyes on GDP Revision and Bernanke
UK GDP confirmed at 0.2%. Finnish-Greek collateral issue continues to be unclear. Market turns to US Q2 GDP revision and Ben Bernanke's speech at Jackson Hole symposium. Ashraf's Premium trades are in progress.
UK Q2 GDP remained unrevised on quarterly and annual basis at 0.2% q/q and 0.7% y/y respectively. Despite the data & market fixation on Bernanke, GBPUSD broke below 1.63, extending losses towards 1.6260s.
The Finnish collateral issue is likely to continue to weigh in on markets as the situation is unclear. The Finance minister Urpilainens office has informed that the collateral deal with Greece is no longer valid, most likely due to political pressure from Germany, while a senior Finnish government source said that collateral continues to be an absolute precondition for a participation in the second Greek bailout. Negotiations are therefore likely to continue in search of another solution.
Other news include information that France, Spain, Italy and Belgium extended their bans on short selling financial stocks until the end of September and that rating agency S&P sees downside risks in some Asian countries. S&P however notes that debt wise, Asia continues to be more stable than Europe or USA.
The US session kicks off at 8:30 am ET with preliminary Q2 GDP expected slightly lower at 1.1% from previous 1.3% which would be a third consecutive quarterly slowdown. Over the past year analyst continued to lower their growth projections as it is becoming clear that V shaped recovery was only a wishful thinking. A significant problem with lower long term growth is that measures such as GDP to debt ratio were projected with higher growth in mind so each tick lower have a considerable negative impact.
Revised University of Michigan Consumer Sentiment index due at 9:55 am is expected at 56.2 but it is unlikely to cause volatility as traders will eagerly wait for Ben Bernankes speech at Jackson Hole symposium that should start only five minutes later at 10:00 am. New round of QE is not likely but Ben Bernanke will attempt to convince markets that the Fed has additional tools that could be used should deteriorating economic conditions warrant it.
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