USD data held firm in a general risk averse tone overnight

Equities and fixed income held a general risk averse tone overnight, with the S&P500 down >2%-to the lowest level since February-and bonds broadly bid up. In the commodity and FX spaces though, the mood was not the same, with key commodity prices bouncing from recent lows, and a mixed picture in G10 FX. 

EUR is the top performer, likely with the help of a combination of unwinds in EUR FX hedges and EUR funding shorts. ECB Governing Council member Nowotny said that the CNY devaluation should not be 'dramatized', but also that it could hurt the world economy. He also noted Euro area inflation was much below target and that there is no sign the Bank will end QE early. This afternoon we watch for August PMI data from the region, where the market is expecting little change from July's readings.

USD has extended lower against most despite some solid data releases from the US, with a decent Philly Fed survey (headline 8.3 vs est. 6.5) calming concerns after the weak empire earlier in the week, and existing home sales adding to the run of robust housing signals recently. Home sales hit another cycle high of 5.59mn in July (est. 5.43mn).

Elsewhere, Greek PM Tsipras announced he is calling for an election, which will reportedly be as soon as Sept. 20th. European strategists note that a caretaker government in the meantime means the bailout should not be threatened by this announcement.