Oil prices continued to slip
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The key event on the calendar will be the Norges Bank meeting. We think Norges Bank is unlikely to react to distorted summer data and global risks. Hence, we do not expect any new signals today and st ill pencil in a September rate hike (see next page).
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Brexit negotiations between the UK and EU resume in Brussels. Brexit day draws closer, but while the EU is signalling that it wants September to be a decisive month in the divorce negotiations, the UK's Theresa May prefers a lat e-autumn deadline.
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We will also get UK retail sales for July, which markets tend to keep an eye on, despite it being quite volat ile and a poor predictor of private consumpt ion as measured in GDP.
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US housing starts and building permits for June are due out and we will look out for a rebound in July from the drop in June, given the volat ile nature of the numbers and elevated business sent iment .
Selected market news
The MSCI Emerging Markets Index tumbled, falling into bear territory due to a combination of currency t urmoil, commodity price declines and disappointing result s from one of China's technology giants Tencent. US equity markets fared little better despite a st rong July retails sales print and solid manufacturing product ion data. The S&P 500 fell for the fifth time in a row and US Treasury yields extended declines. Oil prices continued to slip, approaching USD70/bbl , after the EIA reported a surprise US stockpile build.
USD/TRY continued its decline after local retail accounts took advantage of the respite and sold USD, while thin liquidity has also been adding momentum to the Turkish lira. However, the geopolitical stand-off with the US remains unresolved and the picture became even murkier after Turkey increased tariffs on several US imports, including passenger cars, rice and coal. Qatar is reported to have pledged some USD15bn worth of direct investment to the count ry to help avert a financial crisis.
China's Vice Commerce Minister will lead a delegat ion to the US in late August , in a sign that t rade talks might cont inue. However, we still do not see much scope for a deal between the two countries this side of the mid-term elections in November.
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