EU MID-SESSION UPDATE: EU markets digest last night’s FOMC minutes with the ECB next up on the slate to release their latest policy account

European equities trade modestly lower (Eurostoxx 50 -0.3%) with financials underperforming in the wake of yesterday’s FOMC minutes which received a somewhat dovish response given concerns at the Fed regarding inflation. To the upside, material names outperform in response to the gains seen overnight in the metals complex with Dalian iron ore prices up over 6% during Asia-Pac trade.

GBP was once again a key focus for FX markets amid further tier 1 data from the region, this time  with retail sales on the data slate. Upon the release, GBP/USD saw a spike higher after ¾ headline metrics exceeded expectations before prices were dragged lower to pre-announced levels with all 4 components revised lower. USD has regained some ground against its major counterparts following the losses seen last night in the wake of the FOMC minutes. USD has particularly out-muscled EUR with participants looking for further insight via the ECB minutes into the current train of thought at the central bank given yesterday’s source reports. Finally, AUD has regained some ground amid firmer metals prices, subsequently shrugging off the domestic jobs data overnight.

In fixed income markets, prices were originally supported by the softness seen in European equities and the fallout of yesterday’s FOMC minutes with the 10yr Bund approaching 164.00 to the upside. Looking ahead, investors will likely turn towards today’s ECB minutes release for any views on concerns surrounding scarcity of core paper and any potential biases the central bank could have in purchasing paper from across the continent.  

The metals complex traded higher overnight with gold prices extending on gains seen following the FOMC minutes. Elsewhere, Copper traded higher alongside broad strength across basic materials with Dalian iron ore prices up nearly 6%, while WTI traded quiet overnight and failed to make any significant recovery from yesterday’s post-DoE declines.

17 Aug 2017 - 09:57- Important- Source: RANsquawk

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