Its reasonably evident by Germany’s GDP contraction and the dreadful Eurozone IP data that the US-China tariff war is hurting Germany's export-skewed manufacturing sector, which is now bringing forward a real debate on fiscal stimulus in Germany.

But on a positive note, embarking on an aggressive fiscal program while having the markets paying you to do so, given negative-yielding bonds, it might not but such a bad thing at all.

But with the German economy in the tank, it has to be bad for Bunds and just as bad for the Euro as well.


Japanese Yen

There was no follow-through in Asia today after markets were sent on a wild ride post-USTR headlines. USDJPY has been stuck in the muck pretty much where we signed off yesterday, but with a bit bit more in the dollar tank on the stronger US CPI print, so we expect dips to remain in demand today.


 China Data

Both of China's July industrial production and retail sales have fallen off from the exceptional acceleration in June. IP rose 4.8% from a year earlier, versus a market expectation of 6%. Retail sales have cooled notably due to the inventory purge by auto dealers in June considering emission standard change.

 Overall, the July data released so far suggests that China's economy is contracting more than expected and will be exacerbated by worsening trade tensions and looming tariffs.

Indeed, a call to action for China policymakers but with the Pboc likely holding back from rolling out the big policy guns deferring to a more targeted approach , it's not helping commodity nor local equity market sentiment.



The weaker China data will continue to weigh on commodity markets, and predictably so oil prices have continued to slide in a lacklustre Asia session. But the thought of a Pboc policy response will likely keep the Oil market bears honest over the near term.



After the Gold shocker overnight, traders are not so eager to re-engage longs today. While e-market participants overwhelmingly prefer the long trade as its thought, the latest trade developments fall well short of a significant breakthrough, but the nascent signs of inflation and slight better risk mood have turned the market better seller in today’s Asia session. As such, it's likely worth waiting for a more significant upswing to develop rather than jumping in with price action in limbo around the critical $1500 level.

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