US investors have continued to turn a deaf ear to the ongoing political intrigue unfolding in Washington DC, however that could well change if the comings and goings turn into something that could prompt the possible impeachment of the President.

For now the direction of travel continues to remain positive with the Dow in touching distance of the 22k level, and closing once more at a new record high, while we also got another decent earnings report from Apple after the bell.

The company beat expectations on profits and revenues, while also reassuring that there would be no delay on the iPhone 8 which is due to be released this year, and where there was some concern due to supplier problems. The App store also continued to deliver more revenue, with sales rising 22% in the quarter to $7.3bn.

The latest US economic data would also appear to suggest that the Federal Reserve is unlikely to raise rates again this year, after another core PCE number that showed that inflationary pressure remains benign, coming in at 1.5% in June. US personal incomes also fell back from 0.3% in May to 0% in June pushing the US dollar to new 14 month low on its trade weighted index.

In European markets equities had a decent start to the month despite the stronger euro, helped in some part by some decent manufacturing PMI numbers for July, which showed that the economic expansion seen in Q2 of 0.6%, appears to be holding up as we head into Q3. This good start looks set to continue today with a positive open after last night’s Dow record and Apple’s decent numbers.

In the UK the latest manufacturing PMI for July got Q3 off to a decent start as the headline number improved to 55.1 from 54.2 in May. The improvement came from across the board as all the internals pointed to a decent month, with export orders growing sharply, to their best levels in seven years, while jobs growth also improved at its best rate in three years, while price pressures dropped to their lowest in a year.

Recent PMI data has contrasted sharply with the latest ONS data for the sector raising questions as to whether the current way of calculating GDP is fit for purpose. It does appear that the independent surveys appear to point to a much better picture than government data which always seems to get revised.

Today’s construction PMI data is expected to reinforce the positive picture despite some concerns in the sector about labour shortages, which might prompt a slight decline from the 54.8 number we saw in June. A slight slowdown to 54.3 is expected but nonetheless the sector would still appear to be in good shape.

With US payrolls due out at the end of this week we’ll get our usual insight into the US labour market later today with the latest ADP payrolls report. Last month the June report showed a sharp drop to 158k from the 230k number seen in May, raising the prospect that the US labour market start to be showing signs of tightening.

This proved to be premature given that the official June payrolls report jumped sharply to 222k from a weak May number of 152k, as the data continued to give conflicting signals about how well the US labour markets is doing, and more importantly why wage growth remains stubbornly weak.

Today’s ADP number for July is expected to rise to 187k, remaining in that sweet spot of neither being too hot or too cold.

On the oil price front we also have the latest inventory data and having come off four successive weeks of draws in excess of 4m barrels, the oil price fell back sharply yesterday having been bid up aggressively in the past week or so on the back of Saudi Arabia’s aggressive pledge to cut exports.

While another draw of around 4m barrels is expected the recent rebound in the oil price to levels above $50 was starting to look a bit frothy, particularly since US rig counts still continue to rise.

EURUSD – has pushed above the 200 week MA at 1.1795, and now needs to close the week above here to argue for a move towards the 1.2000 level. Support remains back at the 1.1610 level, and below that at the 1.1480 area. Only a break below the 1.1480 area opens up a pullback towards the 1.1300 area.

GBPUSD – the pound continues to push higher towards the 1.3310 level edging above 1.3200 and a new 10 month high. Still has support just above the 1.3000 level, with minor support also at 1.3140. Only a drop below 1.3000 opens up a retest of the 1.2900 level.

EURGBP – currently holding above the 0.8870 area and while we do so a move back to the 0.9000 level remains a possibility, with a break above targeting the 0.9300 area. A break below 0.8870 would delay this and open up a move back to the 0.8780 area.

USDJPY – finding support just above the 109.80 area, but the onus remains for a move towards 108.20. We need to see a move back above the 110.80 area to stabilise and push back towards 111.30, as well as the 112.30 area.

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