SUMMER FOREX OVERVIEW

Macroeconomic environment US: trade deficit deteriorated from $ 67.9 bn in June to $72.2bn in July. Conference Board’s consumer confidence index improved from 127.9 in July to 133.4 in August. Eurozone; growth in M3 money supply slowed to 4% in July. Equities Europe an equity markets were stable on Tuesday. As regards the Eu rostoxx50, the utilities and telecom sectors underperformed, while the industrial sector outperformed. US equity market touched new heights yesterday, with the S&P 500 breaking above 2,900 points for the first time. Bond markets / Derivatives The upbeat macroeconomic data out of the US weighed slightly on European sovereigns. Peripherals struggled in particular in reaction to the poor data out of Italy and to very various verbal skirmishes with the country’s European partners. Swap spreads tightened on account of the activity in the primary market. Money markets / Central banks The Eurodollar monetary curve widened yesterday by 3bp on distant contracts while the Euribor curve remained unchanged. The 3-month basis swap remained unchanged at -10bp. FX The euro continued to appreciate against the US dollar, setting a 1-month high above 1.17 before to consolidate this morning . The Swiss franc performed against other G10 currencies, the currency playing its role as a safe haven, while the Turkish lira once again shed almost 2% against the euro and US dollar. Sterling was stable over yesterday’s session. Commodities Commodities were on the back foot on the whole, with Brent below $76/bbl and WTI near $68/bbl. Agricultural commodities recorded the biggest losses.