Risk On Tuesday

A risk on Asian session following on from yesterday's strong gains on Wall Street.At 06.45BST ASX +0.35%Nikkei +1.4%KOSPI +1.5%Guess what? Equities look like they're heading higher again today;

 European Opening Calls:#FTSE 6121 +0.27%#DAX 13151 +0.65%#CAC 5033 +0.49%#AEX 564 +0.52%#MIB 20196 +0.41%#IBEX 7138 +0.41%#OMX 1797 +0.47%#STOXX 3347 +0.46%#IGOpeningCall

All tradeable prices.— IGSquawk (@IGSquawk) August 25, 2020 

In the news overnight,

 Top U.S., Chinese officials optimistic on Phase 1 trade deal after phone call https://t.co/hCeEXaG4ej 

“Both sides see progress and are committed to taking the steps necessary to ensure the success of the agreement,” USTR said.— Microdesiac (@Microdesiac) August 25, 2020 

Nothing really to write home about. Progress, but still lagging behind targets.  

On the calendar (BST)

None of the current data really helps develop a longer term view, so any reactions to these data points are usually short-lived.

At 7AM, we have the final reading for Germany's Q2 GDP. Contain your excitement.   Expectations are for a 10.1% fall vs Q1 (in line with the flash figures already released last month). It really shouldn't matter, but worth paying attention to.    We also see the lfo survey results.Here's a preview from Livesquawk Disappointment on this could dampen the "European Out-performance" spirits, possibly put a cap on European equities, especially after a Monster Monday return.

 European Closing Prices:#FTSE 6104.73 +1.71%#DAX 13066.54 +2.36%#CAC 5007.89 +2.28%#AEX 560.99 +1.74%#MIB 20113.36 +2.12%#IBEX 7109.1 +1.82%#OMX 1788.397 +2.01%#STOXX 3332.81 +2.24%— IGSquawk (@IGSquawk) August 24, 2020 

At 11AM, a little more colour on the UK retail picture with the August CBI reading. Last month's reading came in at 4, and consensus is for an improvement to 8. Trading Economics are forecasting this to rise to 11. It isn't a well-known data point so I double-checked how it's calculated.

The Confederation of British Industry (CBI) Distributive Trades Survey (DTS) measures the health of the retail sector. The reading is compiled from a survey of about 150 retail and wholesale companies. It includes measures of sales activity across the distributive trades. It is a leading indicator of consumer spending. The figure is the difference between the percentage of retailers reporting an increase in sales and those reporting a decrease.

It's a sentiment game, and a decent beat could see a pop in GBP. Higher frequency indicators are certainly pointing towards a positive outcome.  

 🇬🇧 UK FOOTFALL ACROSS ALL RETAIL DESTINATIONS ROSE BY 4.1% LAST WEEK FROM WEEK BEFORE, A SIGNIFICANT ACCELERATION - SPRINGBOARD SAYS— PiQ (@PriapusIQ) August 24, 2020 

For the U.S. session, we have U.S. redbook (in person, offline) retail sales for the past week to start things off. Housing data up next, with the Case-Shiller index for June, and New home Sales for July. August consumer confidence will be closely watched, but shouldn't be drastically market-moving. We close out the session with a couple of Central Bankers sharing their words of wisdom. Fed's Daly will moderate a panel on "Under the Magnifying Glass: Inequity and COVID-19" at the Rotary Club of Oakland. BoC's Schembri will give a speech titled: Understanding the gap: the difference between perceived and measured inflation.I'm very excited for that one.

We close out Tuesday's calendar with a survey of business confidence in S.Korea, and NZ trade data for July.