Where media focuses, markets tend to follow
- Political events rather than economic data are likely to be the bigger influence for financial markets today. The Turkish lira lost some of its initial gains post-coup. The government has indicated that it is unlikely to intervene in the foreign exchange markets.
- The Republican Party convention in the US is attracting media attention, although there is no policy signal as such (nor any real read to the November vote). Markets are still influenced by the media focus, however – Trump's speech on Thursday is the next big event.
- UK inflation data is due, and may show some domestic inflation pressures prior to the UK referendum. However it is what happens next that matters. Most import prices are not that currency sensitive, but food and fuel are. The loss of casual migrant labour may also add to inflation in the future.
- The German ZEW business sentiment index is for July and should encompass a reaction to the UK referendum. However with uncertainty about the timing of exit, uncertainty about the terms of exit, and uncertainty about the implications for Europe, caution in interpretation is needed.