• Sterling holds post-CPI gains for now
• UK July CPI +6.8% vs +6.8% y/y expected
• China says will strengthen policy coordination in order to meet growth target
• How does the Fed pricing look now?
• S&P 500 set to be put to the test later today
• Eurozone Q2 GDP second estimate +0.3% vs +0.3% q/q prelim
• Eurozone June industrial production +0.5% vs -0.1% m/m expected
• US MBA mortgage applications w.e. 11 August -0.8% vs -3.1% prior

Markets:

• GBP leads, CHF lags on the day
• European equities mixed; S&P 500 futures flat
• US 10-year yields down 3.4 bps to 4.187%
• Gold up 0.1% to $1,903.77
• WTI crude up 0.3% to $81.24
• Bitcoin down 0.2% to $29,118

It was a bit of a mixed session as markets continue to digest the concerns surrounding China but for the most part, broader sentiment is ignoring it somewhat.

Equities were a little higher earlier on but surrendered the light gains to be little changed and more tentative on the day now. The worry here is that the selling in August might look set to continue, with yesterday’s drop being another lesson.

We did have UK inflation data, which saw the headline number fall as expected but the core reading remains relatively stubborn. With markets already fully pricing in a 25 bps move by the BOE next month, the pound saw little gains on the day as the dollar is also keeping more mixed.

GBP/USD did move up from around 1.2700 to 1.2760 before keeping at around 1.2740 now. In general, the dollar isn’t doing a whole lot as it holds a minor advance against the yen and franc but is just marginally lower against the euro and aussie.

In the bond market, we are seeing yields come off the boil and undoing the move up from yesterday. But it is still early days and unless there are broader concerns regarding China, yields still have some scope to turn around as we have seen in Wall Street previously. That said, we’ll see what the session ahead brings.

This article was written by Justin Low at www.forexlive.com.