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“A chronic lack of demand, impaired corporate and bank balance sheets and weak productivity continue to hold back employment and investment [in Europe]” according to the IMF. Their annual health-check of Europe made for fairly uninspiring reading, with little in the way of positivity and quite a lot around the limitations of a subdued economy. They argue an average growth rate of around 1% is not going to do anything to tackle the vast unemployment problems across Europe and that the short term is being buoyed by a weaker euro and lower oil prices, and not by the response to significant policy changes – because there haven’t been any.

Contrary to this report, the German IFO survey reported yesterday that things in Europe are pretty good. The index beat expectations, which pushed the euro higher than it has been for a couple of weeks against the Dollar and Sterling. We’re more inclined to go with the IMF’s line of thought that the IFO’s, as their base in Munich (i.e. the richest city in the wealthiest European nation) could be seen as a bit of an ivory tower from which they view the surrounding landscape.

The Athens stock exchange remains closed until further notice, as the ECB has fears that it will be used for capital flight once re-opened and they will be forced to prop it up via the banks and their ELA facility. There has been disagreement so far on the mechanisms that can be put in place to prevent a rush for the exit upon re-opening. Suggestions are of a €20bn capital flight if the market re-opens in an unrestricted capacity.

In the UK; David Cameron has rejected the possibility of another Scottish referendum before 2020. Alex Salmond has said “it’s not the inevitability, but the timing” of another referendum, despite last September’s vote being billed as a once in a generation opportunity. Nicola Sturgeon is yet to clearly lay out her views, but there will be frustration in Whitehall if she pushes for another referendum following an 11 point ‘win’ for the Better Together campaign.

From the U.S. we saw better than expected durable goods orders yesterday. The number beat expectations by a decent margin, though didn’t yield the positive results we’d have expected for the Greenback. The rationale is probably to wait and see what the Fed have to say at their policy meeting tomorrow evening before making any trades with conviction.

Australia may be about to solve the problem of missing its future growth expectations without being forced to cut interest rates even further. Instead of trying to boost growth through policy changes, it’s reported the Central Bank could simply lower their expectations for growth. If they were to accept that growth is likely to remain below 3% for the long term they could do away with having to cut rates even further. The Aussie hit further lows overnight against most of its peers, but with this possible change of approach by the RBA, we could see some interesting moves come the interest rate decision next week. 

Overnight, China has seen more stock market losses, despite further promises of market support and liquidity intervention measures from the central bank. The Shanghai Comp is now almost 30% lower than its June highs and the PBoC seem to be running out of dry powder.

Today’s a big one for Sterling with second quarter GDP numbers out at 09.30. Consensus is for 0.7% growth and any deviation either side is going to make for a volatile market. Later in the day we get U.S. consumer confidence and also service sector performance.