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Investors hope yuan devaluation will stop

American stocks retreated on Thursday, while the dollar slipped. This makes a Fed rate hike in September more likely. Yesterday macroeconomic data were generally positive. Retail sales increased 0.6% in July probably due to good labor market performance: unemployment has contracted 5.3% - the lowest record 2008. The average jobless number over four weeks has marked a minimum since 2000. Due to good statistics in recent weeks several investment banks increased the GDP forecast in the second quarter from 2.3% to 3% year-over-year, while Goldman Sachs even raised it to 3.5%. We would like to remind you that the official data will be released August, 27. Corporate reports, published on Thursday, appeared to be relatively neutral. The Cisco network equipment producer reported better-than expected earnings and income, its shares gained 2.9%. The Khol sales network earnings did not meet forecasts, so its shares slumped 8.8%. The American stocks turnover was 13% below the monthly average, making 6.2bln shares. Today at 14:30 CET July Producer Price indices will be released in the USA. The indicators will contain statistics from different economy sectors. At 15:15 CET Industrial Production Index will be published; at 16:00 CET University of Michigan will issue Consumer Confidence Index in August. The tentative outlook is positive. At 19:00 CET the Baker and Hughes will announce as usual operating oil rigs number in the US.

European indices have been expanding today after 3-day fall. Forex currency market quotes have been showing little changes. The reason is that there are factors supporting the dollar (yuan devaluation stopped) and factors that underpin the euro (the Greek parliament adopted the new austerity measures). Today at 11:00 CET second-quarter GDP is released in eurozone, the forecast is highly positive.

Nikkei has been traded in a narrow range today due to the lack of important macroeconomic data. Investors assess the impact the devaluated yuan may have on the Japanese economy. The yen has been traded flat as well.

The yuan devaluation may put pressure on commodity markets, since the measure is aimed to supporting the Chinese export, while import is contracting.

Gold futures and Dollar Index have been moving in opposite directions. This week gold showed the longest growth period since May, which lasted for 5 days. Meanwhile, the gold premium in Hong Kong remains the same it was the previous week - $1-$1.2 per ounce. It indicates that the demand in Asia is not that large. World Gold Council stated that the yuan devaluation would not affect the demand in China: this year it would total 1 thousand tons. The Shanghai Gold Exchange premium sticks to the last-week level of $4 per ounce, however, in India it showed a slight decrease to $1.1-$2.

Grain futures plummeted after US Department of Agriculture (USDA) unexpectedly raised crops forecast August, 12. The weekly drop in soy bean prices may be the sharpest since mid-January. USDA expects soy crops to amount to 3916bln bushels in the season 2015/2016 while cropping capacity will reach 46.9 bushels per acre.

National Weather Service raised the odds El Nino will develop next spring from 80% to 85%. However, today some farmers believe that it will bring rains to drought-ridden regions, increasing crops.

Coffee futures have been steadily growing. Coffee reserves in Brazil have contracted to the minimum since 1999 (4.66mln bags, 60 kilos each). Coffee crops are expected to grow this year to 47.28mln bags as compared to 46.78mln the previous year. Meanwhile, coffee production may decline to 15.23mln bags from 17.44mln.

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