The euro still hovered near its weakest in nine months

Good Morning,

- The euro still hovered near its weakest in nine months as Germany reported on Thursday that economy shrank in the second quarter, fueling expectations of more European Central Bank stimulus.

- Global equity markets edged higher on Thursday and Asia kept the positive tone on Friday after Putin sounded a conciliatory note over the crisis in Ukraine.

- The second official UK’s GDP estimate is expected to show the UK economy kept its pace during the second quarter. But the second estimate this time will exclude GDP income data due to changes to UK National Accounts. The UK economy has been getting onto a stronger footing, with economists' expectations suggesting gross domestic product (GDP) growth should keep its momentum in the second quarter by rising 0.8%, which would be unchanged from the previous quarter. The UK's Office for National Statistics (ONS) is releasing the second GDP estimate today morning.

- JP Morgan on EUR/USD: No real change in the FX markets as temporary USD setbacks remain to be short-lived, which illustrates the healthiness of the up-trend as such, notes JP Morgan. "The USD remains strong across the board and would even provide additional buy-signals via breaks below 1.3295 (pivot) in EUR/USD" JPM argues. " JPM thinks that below 1.3474/1.3503 the market however remains in negative territory with its focus on tests and breaks below former lows at 1.3295 and 1.3104 and on weekly Ichimoku-support for the lagging line at 1.3003. "A break above 1.3503 would on the other hand open the way for a recovery to 1.3701 (pivot) and possibly to 1.3837 (int. 76.4 %)," JPM argues.

- The 10-year German bund yield dipped below 1.0% briefly on Thursday for the first time, encouraged by the unexpected contraction in Germany's Q2 GDP. Ideas that the area's stagnation in Q2 coupled with still no signs that inflation has bottomed, fans speculation of new initiatives by the ECB, which will likely include asset purchases support European bonds.

- US yields have not found any traction either. The 10-year yield is straddling the 2.40% level, pulled down by disappointing retail sales data and the unexpected rise in weekly initial jobless claims to six-week highs. The projection that the US economy had ratcheted up to somewhat higher growth level after the sharp contraction in Q1 is being rethought.

- U.S. Jobless claims rose more than forecast last week, interrupting a steady decline to pre-recession lows. Jobless claims climbed by 21,000 to 311,000 in the period ended Aug. 9, the highest in six weeks, a Labor Department report showed on Thursday. The median forecast of 48 economists surveyed by Bloomberg called for 295,000.

- US Import Prices have first drop since April, price of imported cars plunges most since 1992, data showed yesterday.

- Putin on Thursday: We'll do all we can to stop conflict in Ukraine. Putin told Russian ministers and members of parliament in Crimea that Russia would stand up for itself but not at the cost of confrontation with the outside world, easing off months of tough rhetoric over Ukraine.

- The Bank of Japan may cut its growth forecast for this fiscal year for a fourth time, as exports fail to bolster an economy weakened by April’s sales-tax increase, according to people familiar with the central bank’s discussions. The expansion for the 12 months through March 2015 is likely to be lower than the 1 percent median forecast of BOJ board members. Growth is likely to be 0.4 percent, according to the median estimate in a survey of 24 economists by Bloomberg.

- BNP Paribas: Getting ready to re-buy USD/JPY.

- Watch today: UK rate rumors, US PPI and US industry.

Have a nice Weekend!