Daily Market Outlook by Kate Curtis from Trader's Way

katetrades

Master Trader
Feb 11, 2013
2,390
7
84
Dominica
www.tradersway.com
Forex Major Currencies Outlook (June 22 – June 26)

This week we will have RBNZ meeting, PCE and personal spending data from US as well as preliminary June PMI data from EU, GBP and Japan.

USD

Retail sales in May rebounded more than double than expected coming in at 17.7% m/m vs 8.6% m/m as expected. In addition to the strong headline reading previous month’s number was revised higher giving more strength to the report. Clothing stores along with furniture stores were the biggest contributors. This should ease the negative impact of lockdown on Q2 GDP, however the reading is down -6.1% compared to May 2019. Initial jobless claims for the week ending June 13 came in at 1508k vs 1290k as expected. This is the 13th week of claims above 1 million. Continuing claims are hovering around 20.5 million.

The Secondary Market Corporate Credit Facility (SMCCF), worth $750bn, was announced in March. With this program Fed will buy debt in markets, even directly from companies, rather than via ETFs as was done previously. The new program will involve purchases of corporate bonds issued by investment-grade US. Companies as well as corporate bonds issued by companies that were investment-grade rated as of March 22, 2020.

This week we will have housing data, final Q1 GDP reading, durable goods data as well as PCE inflation and personal spending data.

Important news for USD:

Monday:
  • Existing Home Sales
Tuesday:
  • New Home Sales
Thursday:
  • GDP
  • Durable Goods Orders
Friday:
  • PCE
  • Personal Spending
EUR

German ZEW survey of the current situation came in at -83.1 vs -93.5 the previous month for a small move in the right direction. Expectations category for both Germany and EU came in stronger than previous month (64.4 and 58.6 respectively) indicating optimism regarding possible economic recovery in second part of the year. Final May inflation data showed headline number at 0.1% y/y and core number at 0.9% y/y, both same as preliminary reported.

This week we will have preliminary June PMI readings.

Important news for EUR:

Tuesday:
  • Markit Manufacturing PMI (EU, Germany, France)
  • Markit Services PMI (EU, Germany, France)
  • Markit Composite PMI (EU, Germany, France)
GBP

Jobless claims for May came in at 528.9k with claimant count rate jumping to 7.8% from 5.8% the previous month. In period from March to May they surged astonishing 125.9%. The ILO unemployment rate, which is measured as the number of unemployed workers divided by the total civilian labour force, stayed the same in April at 3.9%. Around 9,1 million people were furloughed. A huge drop was seen in wages with average weekly earnings dropping to 1% 3m/y from 2.3% 3m/y the previous month. Slower wage growth indicates lower consumption which in turn will put downward pressure on inflation. Inflation in May came in at 0.5% y/y as expected with core sliding to 1.2% y/y vs 1.3% y/y as expected. Retail sales came in at 12% m/m vs 6.3% m/m as expected and up from -18% m/m the previous month. Core retail sales (ex autos, fuel) also bounced back more than exepected coming in at 10.2% m/m from -15% m/m the previous month. Although the monthly figures show a great rebound, yearly figures show that consumption is still very much subdued compared to the previous year.

BOE has left the rate unchanged at 0.10% and they have expanded their asset purchase program by £100bn. MPC have voted 8-1 in favour to increase QE program target with BOE chief economist Andy Haldane the only one to dissent. MPC members expect total stock of asset purchases to be hit around the turn of the year. They have stated their readiness to increase the amount of purchases if necessary. There was no mention of negative rates or yield curve control.

Prime Minister Johnson had an hour-long videoconference call with European Commission President Ursula von der Leyen and other EU officials with both sides agreeing to work toward a deal. According to the document from German government they expect negotiations to intensify only after September.

This week we will have preliminary June PMI readings.

Important news for GBP:

Tuesday:
  • Markit Manufacturing PMI
  • Markit Services PMI
  • Markit Composite PMI
AUD

Employment change in May came in at -227.7k vs -78.8k as expected, almost a threefold miss. The unemployment rate jumped to 7.1% from 6.4% the previous month while participation rate fell to 62.9% from 63.5% the previous month. Full-time employment change was -89.1 k while part-time employment change came in at -138.6k. This is a very weak report compounded with negative revisions to the previous numbers as well as the fact that drop in the participation rate smoothed the jump in the unemployment rate and still it jumped almost full percentage point. Preliminary retail sales report showed a bounce to 16.3% m/m from – 17.7% m/m the previous month. Prime Minister Morrison announced a new spending program of AUD1.5bn, 2/3 of which will be spent on infrastructure. Additionally, Australia will raise minimum wage by 1.75% to stimulate aggregate demand and ease negative effects of the virus on the labour market.

Industrial production in May in China came in at 4.4% y/y vs 5% y/y as expected but up from 3.9% y/y the previous month. Retail sales came in at -2.8% y/y vs -2.3% y/y as expected for a fourth consecutive month of decline in consumption. Previous month’s reading was at -7.5% y/y so both consumption and industrial production are improving albeit at slower than expected rate.

NZD

RBNZ Governor Orr stated in an interview his satisfaction with impact of QE, pointing to flatter yield curve. Next steps could include increase in QE, increase in number of instruments included in QE as well as negative interest rates indicating that RBNZ still has many tools to support the economy. Q1 GDP came in at -1.6% q/q vs -1% q/q as expected. Since Q2 GDP will be negative. due to the effects of the lockdown, this signals a recession in New Zealand (two consecutive quarters of negative GDP growth). GDT price index came in at 1.9% for the third consecutive auction of rising dairy prices.

This week we will have RBNZ rate decision, no change is expected, they should stand the pat and let the already taken measures produce results as well as trade balance data.

Important news for NZD:

Wednesday:
  • RBNZ Interest Rate Decision
  • RBNZ Rate Statement

Thursday:
  • Trade Balance
CAD

Headline inflation for May came in at -0.4% y/y vs 0% y/y as expected. Food and shelter category contributed positively to the reading but reading was overturned by drops in clothing, transportation and recreation, education and reading categories. Core measures came as expected: median at 1.9% y/y, common at 1.4% y/y and trimmed at 1.7% y/y, all of them weaker than the previous month. Retail sales in April were horrific, coming in at -26.4% m/m vs 15.1% m/m as expected with the ex-auto category coming in at -22% vs -12% as expected. April was the worst month with full lockdown throughout. Early retail sales estimates for May from Statistics Canada see them rebounding by 19.1% m/m.

JPY

BOJ kept the short-term interest rate at -0.10% as widely expected. The state of Japan’s economy has been characterized as severe with exports, outputs and consumption falling sharply while the pace of increase in capex is clearly slowing. They will increase their pandemic combat program to around JPY110 trillion from JPY75 trillion previously. Governor Kuroda reiterated that BOJ sees the situation in the economy as extremely severe, added that they will take additional steps if needed and sees a recovery in second part of the year. Additionally, he added that the BOJ will not be able to raise interest rates before Fed hikes its rate. Since Powell stated last week that they are “not even thinking about thinking about raising rates” we will see a prolonged period of negative interest rates from Japan.

Trade balance for May came in at -JPY833.4bn vs -JPY1030bn as expected. Exports have plunged -28.3% y/y for the 18th consecutive month drop while imports fell -26.8% y/y for the 13th consecutive month drop. Exports to US have fallen amazing -50.6% y/y while exports to EU dropped -33.8% y/y. Exports to China, Japan’s biggest trade partner, were down -1.9% y/y. National inflation in May came in at 0.1% y/y, same as the previous month, vs 0.2% y/y as expected. Ex-fresh food category remained in the negative at -0.2% y/y while ex-fresh food, energy measure came in at 0.4% y/y vs 0.2% y/y the previous month. The battle with deflation intensifies and so far it looks that BOJ is on the loosing side.

This week we will have preliminary June PMI readings as well as inflation data from Tokyo area.

Important news for JPY:

Tuesday:
  • Markit Manufacturing PMI
  • Markit Services PMI
  • Markit Composite PMI
Friday:
  • Tokyo CPI

CHF

Total sight deposits for the week ending June 12 came in at CHF679.5bn vs CHF680.1bn the previous week. Second week in a row of declining deposits as SNB eases their action in the markets ahead of the meeting. SNB left the policy rate unchanged at -0.75% as widely expected. They have lowered inflation expectations to -0.7% for 2020 and see inflation going back to positive only in 2022 (0.2%). Estimations are for -6% GDP contraction in 2020. SNB chief Jordan stated that Swissy is still highly valued and confirmed that they made substantial currency interventions since March. We have written about it and followed it through the rise in total sight deposits.
 

katetrades

Master Trader
Feb 11, 2013
2,390
7
84
Dominica
www.tradersway.com
Forex Major Currencies Outlook (June 29 – July 3)

NFP, PMI data from China as well as preliminary June inflation from EU will headline the week. Please note that due to the Independence Day holiday US markets will be closed on Friday, causing lower liquidity and increased volatility, thus NFP data will be published on Thursday.

USD

Final Q1 GDP reading came in at -5%, same as the second reading. In comparison to the second reading personal consumption and investments declined but they were supplemented by the rise in government spending. Bounce back was seen in durable goods orders which came in at 15.9% m/m vs -18.1% m/m the previous month. Initial jobless claims continued to fall down but slower than expected and for the week ending June 20 they came in at 1480k vs 1320k as expected bringing the total number of claims since March 21 to over 47 million. Continuing claims for the week ending June 13, the week in which NFP is calculated, came in at 19 522k vs 20 000k as expected. Personal spending data came in at 8.2%, up from -12.6% the previous month while personal income fell to -4.2% from upwardly revised 10.8% the previous month. Once economy reopened spending rebounded propped by government stimulus cheques.

White House trade adviser Peter Navarro stated that President Trump decided to terminate the China trade deal saying it was over. The statement led to huge risk off sentiment in the market and Navarro retracted it later on saying that his comment “was taken out of context” which lead to the return of risk sentiment in the markets. President Trump tweeted that the deal is fully intact in order to clear things up and appease the markets. After stress test for banks was conducted the Fed has capped dividend payouts at Q2 levels and banned share buybacks in Q3.

This week we will have ISM manufacturing PMI, FOMC minutes, trade balance data and this week on Thursday NFP numbers. Expectations are very wide with headline number ranging from -1.2 million to 3 million with the unemployment rate expectations ranging from 15.1%. to over 20%.

Important news for USD:

Wednesday:
  • ISM Manufacturing PMI
  • FOMC Minutes
Thursday:
  • Nonfarm Payrolls
  • Unemployment Rate
  • Trade Balance
EUR

Preliminary PMI numbers for June all showed improvements compared to May. Manufacturing came in at 46.9 up from 39.4 the previous month, services came in at 47.3 up from 30.5 the previous month and composite came in at 47.5. French and German readings attributed to positive numbers. French readings even went above 50 level indicating expansion; however, it is only due to the reading being compared to previous month. Markit noted that output and demand are still falling in EU but at the slower pace. "The job market remains a particular area of concern, especially if demand fails to pick up sharply in coming months. We therefore continue to expect GDP to slump by over 8% in 2020 and, while the recovery may start in the third quarter, momentum could soon fade meaning it will likely take up to three years before the Eurozone regains its pre-pandemic level of GDP."

Ifo business climate rose to 86.2 from 79.5 the previous month while expectations category jumped to 91.4 from 80.1 the previous month. Ifo economist Wohlrabe stated that the economy is on the upward path now with expectations for German Q3 GDP growth of around 7%. ECB introduced new repo facility, EUREP for central banks outside of the euro area in order to provide more euro liquidity. Central banks will be able to borrow funds and use euro-denominated debt as a collateral. This program will run through June of 2021.

This week we will have sentiment data, preliminary inflation data for June as well as final June PMI data.

Important news for EUR:

Monday:
  • Economic Sentiment Indicator
  • Consumer Confidence
Tuesday:
  • CPI
Wednesday:
  • Markit Manufacturing PMI (EU, Germany, France)
Friday:
  • Markit Services PMI (EU, Germany, France)
  • Markit Composite PMI (EU, Germany, France)
GBP

Preliminary manufacturing PMI for June returned to expansion territory with 50.1 while services improved to 47 and lifted the composite to 47.6. The return of manufacturing above 50 level coincides with the reopening of plants. Markit states that economy is likely to return to growth in Q3 and add "Uncertainty over recovery prospects and job prospects also mean demand for many goods, especially non-essential big-ticket items, is likely to remain weak for many months, with Brexit uncertainty also continuing to cast a shadow over the economy."

Prime Minister Johnson announced relaxation of lockdown measures. Tourism and hospitality can resume on July 4 and social distancing rules will be relaxed as well. New social distancing requirement will be for 1 meter instead of 2 meters previously. The decision is positive for pound and it sent GBP pairs up at the beginning of the week.

This week we will have final Q1 GDP data as well as final June PMI data.

Important news for GBP:

Tuesday:
  • GDP
Wednesday:
  • Markit Manufacturing PMI
Friday:

  • Markit Services PMI
  • Markit Composite PMI
AUD

RBA Governor Lowe stated that they are not concerned with current level of AUD but they would like to see it lower at some point. He stated that it is hard to argue that AUD is overvalued and reiterated that rates will stay at current level for years in order to support economic recovery.

This week we will have trade balance and consumption data from Australia as well as official and Caixin PMI data from China.

Important news for AUD:

Tuesday:
  • Manufacturing PMI (China)
  • Non-Manufacturing PMI (China)
  • Composite PMI (China)
Wednesday:
  • Caixin Manufacturing PMI (China)
Friday:
  • Trade Balance
  • Retail Sales
  • Caixin Services PMI (China)
  • Caixin Composite PMI (China)
NZD

RBNZ has left the official cash rate unchanged at 0.25% as widely expected. They have also left their QE program unchanged at NZD60bn adding that they will review the program regularly. The appreciation of the Kiwi puts additional pressure on export earnings and tilt the balance of economic risks to the downside. The meeting was a non-event although it had a dovish tone with RBNZ leaving the option of increasing QE open. Trade balance in May came in at NZD1253m vs NZD1290m as expected.

CAD

In his first public speech as the Governor of BOC Tiff Macklem stated that they will continue purchasing at least CAD5bn a week in federal bonds until the economy is on the right path to recovery. He also added that the bank prefers asset purchase programs over negative interest rates. Fitch rating agency has downgraded Canada’s credit rating from AAA to AA+ with a stable outlook due to the emergency spending which raised debt to GDP ratio to go over 100% level (115%).

This week we will have GDP for April and trade balance data.

Important news for CAD:

Tuesday:
  • GDP
Thursday:
  • Trade Balance
JPY

Preliminary manufacturing PMI number for June continued to decline and came in at 37.8 vs 38.4 the previous month while services staged a comeback to 42.3 from 26.5 the previous month, pushing the composite reading to 37.9. Manufacturing falling with services and composite below 50 indicates a rough path ahead for the economy. Headline Tokyo area inflation data for June came in at 0.3% y/y, ex-fresh food category came in at 0.2% y/y while ex-fresh food, energy came in at 0.4% y/y. All of the readings came as expected.

This week we will have consumption, employment and industrial production data as well as final June PMI data.

Important news for JPY:

Monday:
  • Retail Sales
Tuesday:
  • Unemployment Rate
  • Industrial Production
Wednesday:
  • Markit Manufacturing PMI
Friday:
  • Markit Services PMI
  • Markit Composite PMI
CHF

SNB total sight deposits for the week ending June 19 came in at CHF680.1bn vs CHF679.5bn the previous week. Swissy was on the decline during first half of the week, therefore there was no need for SNB to react at first, however Swissy started gaining strength in the second part of the week which lead to rise in total sight deposits.

This week we will have consumption and inflation data.

Important news for CHF:

Tuesday:
  • Retail Sales
Thursday:
  • CPI
 

katetrades

Master Trader
Feb 11, 2013
2,390
7
84
Dominica
www.tradersway.com
Forex Major Currencies Outlook (July 6 – July 10)

In rather quiet week ahead of us ISM Non-Manufacturing PMI, RBA rate decision and employment data from Canada will be on the docket.

USD

ISM manufacturing PMI came in at 52.6 vs 49.8 as expected and up from 43.1 the previous month for a highest reading of the year. Production and new orders indexes posted highest readings in a year while employment index substantially rose. Although the readings are very positive, they still show only that the economy reopened and not any substantial economic rebound. FOMC minutes showed that officials agreed for more analysis of yield curve control and urged more explicit forward guidance.

NFP report beat expectations by coming at 4800k. The unemployment rate was also better than expected and it dropped to 11.1%. Participation rate climbed to 61.5% so we have a double positive, the unemployment rate dropping and participation rate rising. Leisure and hospitality was the biggest contributor with 2.088mn, retail was up 740k, while 903k was in trade and transport and 568k in education and healthcare. On the other front, the initial jobless claims came in at 1427k vs 1350k as expected. Continuing jobless claims are still near 20 million.

This week we will have ISM Non-Manufacturing PMI which may garner more movements in the market than usual as investors will be accessing the health of services sector.

Important news for USD:

Monday:
  • ISM Non-Manufacturing PMI
EUR

Economic sentiment in June came in at 75.7 vs 80 as expected but up from 67.5 the previous month. Weaker than expected improvements are seen on industrial and services confidence readings indicating that optimism regarding recovery is subdued. Consumer confidence improved only to the -14.7 level. Preliminary CPI in June rose to 0.3% y/y from 0.1% y/y the previous month while core CPI dropped to 0.8% y/y as expected. Final manufacturing PMI improved to 47.4 from 39.4 the previous month on the back of strong readings from German and France. Final services reading was also better than preliminary reported coming in at 48.3 pushing composite to 48.5 from 47.5 as preliminary reported. Markit has noted that: "An improvement in business sentiment meanwhile adds to hopes that GDP growth will resume in the third quarter.”

This week we will have consumption data for May which are expected to show a rebound from the previous month.

Important news for EUR:

Monday:
  • Retail Sales
GBP

Final Q1 reading came in at -2.2% q/q vs -2% q/q as preliminary reported with all of the categories being revised down. Private consumption was at -2.9% vs -1.7% q/q preliminary while government spending showed the biggest decline coming in at -4.1% q/q vs -2.6% q/q as preliminary reported. With economy fully impacted by lockdown in Q2 there will be a horrific Q2 GDP reading pushing UK into a recession. Final manufacturing PMI came in at 50.1 same as preliminary reported while services came in at 47.1 vs 47 as preliminary reported pushing composite reading toward 47.7 from 47.6 as preliminary reported.

June 30 was the last day that UK could have asked for an extension of Brexit period. They have decided not the extend it and now if there is no deal by the end of the year UK’s relationship with EU will be on WTO rules. Negotiations pace will pick up as we get closer to the year-end but for now all of the attention is on UK’s fiscal measures to support the economy.

AUD

Trade balance data for May came in at AUD8.025bn vs AUD9bn as expected but with previous reading being revised down to AUD7.83bn. Exports came in at -4% m/m while imports fell even more at -6% m/m. Retail sales staged a rebound coming in at 16.9% m/m from -17.7% m/m the previous month.

Official PMI data from China for June came in better than expected. Manufacturing was at 50.9, non-manufacturing at 54.4, which is the best reading in seven months and composite was at 54.2. Factories and companies have returned to work and output is growing. On the downside there are signs that both external and internal demand are shrinking. Caixin manufacturing PMI came in at 51.2 for the highest reading of the year. Output component is in expansion for the fourth consecutive month with new orders being higher on the month. Caixin services skyrocketed to 58.4, the highest in over a decade, pushing the composite to 55.7. From the services report it can be seen that both domestic and international demand recovered and businesses were highly confident regarding the economic outlook.

This week we will have rate decision from Australia and inflation data from China. RBA is expected to leave the rate unchanged and give forward guidance on additional asset purchases and yield curve control.

Important news for AUD:

Tuesday:
  • RBA Interest Rate Decision
  • RBA Rate Statement
Thursday:
  • CPI (China)
NZD

Final business confidence reading for June came in at -34.4 vs -33 as preliminary reported, but a jump from -41.8 the previous month. RBNZ is closely watching business confidence reading and with readings moving in the right direction they can be more confident that they are taking proper policy moves.

CAD

GDP in April set a new record by coming in at -11.6% m/m. Manufacturing and construction sector as well as retail trade and transport and warehousing have seen drops bigger than -20% m/m. Accommodation and food services sector saw a drop of -42.4% m/m. When looked at chained GDP a decade of growth in Canadian GDP was wiped out by the preceding two months. Trade balance in May came in at CAD0.6bn vs -CAD4.27bn the previous month. Exports rose 6.7% m/m on the back of motor vehicles and parts as well as increase in oil prices. Imports fell -3.9% m/m with basic and industrial chemical, plastic and rubber products (-14.4%) being the biggest contributor. Exports to the United States were up 8.9% m/m increasing trade balance surplus with US to CAD2.8bn.

This week we will have employment data expected to show another positive reading.

Important news for CAD:

Friday:
  • Employment Change
  • Unemployment Rate
JPY

Retail sales in May staged a rebound of 2.1% m/m but 3% m/m was expected. The unemployment rate rose to 2.9% from 2.6% the previous month, which is the highest rate in over 3 years, while preliminary industrial production data fell to -8.4% m/m and -25.9% y/y, both worse than expected. Final manufacturing PMI for June came in at 40.1 up from 37.8 as preliminary reported while services came in at 45 propping up composite to 40.8. Improvements from the previous month’s horrors but still way below the expansionary 50 level.

This week we will have spending, earnings and machinery orders data.

Important news for JPY:

Tuesday:
  • Household Spending
  • Labor Cash Earnings
Thursday:
  • Core Machinery Orders
CHF

Total sight deposits for the week ending June 26 came in at CHF683bn vs CHF680.1bn the previous week. SNB is intervening to fight Swissy’s strength and push EURCHF toward 1.07 level. SNB has reduced the lower limit of its special liquidity-shortage financing facility rate in order to assist banks to obtain short-term liquid funds. The rate will be reduced to at least 0% and the change will come into effect from July 1. Retail sales in May staged a V-shape recovery coming in at 6.6% y/y vs -18.8% y/y previously. Inflation data continued to plunge into deflationary territory with headline CPI coming at -1.3% y/y while core CPI came in at -0.8% y/y.

This week we will have employment data.

Important news for CHF:

Wednesday:
  • Unemployment Rate
 

katetrades

Master Trader
Feb 11, 2013
2,390
7
84
Dominica
www.tradersway.com
Forex Major Currencies Outlook (July 13 – July 17)

ECB, BOJ and BOC meetings combined with consumption data from US and China, as well as Chinese Q2 GDP and EU summit on Friday will highlight this eventful week.

USD

ISM non-manufacturing index in June rebounded to an exquisite 57.1 from 45.4 the previous month. Business activity index came in at 66 which is the highest reading in almost a decade. New orders rose to 61.6 level. High 50s and low 60s indicate a recovery that may be more than just a simple reopening. On the down side, the employment index rose only to 43.1 level from 31.8 the previous month. Weekly jobless claims for the week ending July 3 came in at 1314k vs 1375k as expected. This is the first lower-than-expected reading in several weeks and continuing claims dropped to 18 million. The price of gold has breached the $1800 level for the first time since 2011 reaching a high of $1818.

This week we will have inflation, consumption and housing data.

Important news for USD:

Tuesday:
  • CPI
Thursday:
  • Retail Sales
Friday:
  • Housing Starts
  • Building Permits
EUR

Retail sales in May rebounded 17.8% m/m from -12.1% m/m the previous month. The reading adds more to the view that April was the bottom and that economies are in the process of recovery after reopening. Compared to previous year retail sales are down -5.1% y/y. European Commission forecasts a deeper plunge in GDP than reported in spring. GDP for 2020 is now seen dropping -8.7% from -7.7% previously. Q2 GDP most likely fell by -13.5%.

This week we will have industrial production and final June inflation data. EU’s ‘special summit’ in Brussels will be held on July 17 and member states are set to discuss coronavirus recovery plans. ECB will leave both the interest rate and the PEPP program unchanged.

Important news for EUR:

Tuesday:
  • Industrial Production
  • ZEW Economic Sentiment Index (EU and Germany)
Thursday:
  • ECB Interest Rate Decision
  • ECB Monetary Policy Press Conference
Friday:
  • CPI
  • EU Summit
GBP

Reports are circulating that BOE Governor Andrew Bailey has sent a letter to commercial banks preparing them for negative interest rates. The government has announced a £30bn stimulus package which amounts to almost 1.5% of GDP. Chancellor of Exchequer Rishi Sunak stated that their job is to protect and create jobs. They will pay £1000 bonus per employee that returns from furlough through to January. With almost 9 million people on furlough the program will amount to almost £9bn. The scheme will be designed so it pays firms to hire young people. VAT on hospitality and tourism will be cut from 20% to 5% for the next 6 months and in August there will be discount on for eating out from Monday to Wednesday.

This week we will have May GDP data, as well as inflation and employment data.

Important news for GBP:

Tuesday:
  • GDP
  • Manufacturing Production
  • Industrial Production
Wednesday:
  • CPI
Thursday:
  • Claimant Count Change
  • Unemployment Rate
AUD

RBA has kept the official cash rate at 0.25% as widely expected. Statement showed that they will continue maintaining an accommodative approach for as long as necessary and there will be no increases in the cash rate until progress in employment and inflation is made. Economic conditions have recently stabilized but the economy is still going through a “very difficult period”. The bank is prepared to scale up bond purchases if needed. The meeting was non-eventful with a reiteration of the statement from previous month and no mention of AUD strength as AUDUSD is getting closer to 0.70 level.

CPI from China in June came in at 2.5% y/y on the back of rising food prices. PPI came in at -3% y/y still indicating deflationary pressures producers face which in turn will hurt industrial profits, however at least the reading is moving in the right direction after four months of increasing declines. Previous month’s reading was at -3.7% y/y.

This week we will have employment data from Australia as well as Q2 GDP, trade balance, consumption and industrial production data from China.

Important news for AUD:

Tuesday:
  • Trade Balance (China)
Thursday:
  • Employment Change
  • Unemployment Rate
  • GDP (China)
  • Retail Sales (China)
  • Industrial Production (China)
NZD

GDT price auction came in at huge 8.3% with whole milk powder rising 14%. This is a fourth consecutive auction of rising prices and the high reading pushed kiwi up in the markets which led NZDUSD to test the 0.66 level. Electronic card spending in June, an indicator for retail sales, came in at 16.3% m/m vs 15% m/m as expected.

This week we will have Q2 inflation data.

Important news for NZD:

Wednesday:
  • CPI
CAD

Employment change in June came in at 952.9k vs 700k as expected and up from 289.6k in May. The unemployment rate dropped to 12.3%, although 12.1% was expected while the participation rate jumped to 63.8% from 61.4% the previous month. Participation rate is improving toward pre-pandemic levels, indicating that people are returning to work after the lockdown has been lifted. Full-time employment came in at 488.1k while part-time employment came in at 464.8k. Statistics Canada estimates that 3.1 million workers are now affected by lockdown from the peak of 5.5 million.

This week we will have BOC meeting where no change in the rate is expected.

Important news for CAD:

Wednesday:
  • BOC Interest Rate Decision
  • BOC Rate Statement
JPY

Wage data in May continued to deteriorate showing earnings at -2.1% y/y which in turn lead to household consumption plunging to -16.2% y/y. Household consumption has not risen since the sales tax hike in October of 2019. Declining wages and declining consumption add more downward pressure to Japan’s already deflationary climate. Core machinery orders, seen as a good proxy for capex in the coming months, came in at 1.7% m/m vs -5% m/m as expected and -16.3% y/y vs -16.8% y/y as expected. The rise in new orders was driven by the service sector. The reading is a rather volatile one but with current situation in the economy every positive reading is welcomed.

This week we will have BOJ meeting where no change in the rate is expected.

Important news for JPY:

Wednesday:
  • BOJ Interest Rate Decision
  • BOJ Monetary Policy Statement
CHF

Total sight deposits for the week ending July 3 came in at CHF687bn vs CHF683bn the previous week. SNB deemed that EURCHF is getting to close to the 1.06 level and decided to intervene in order to prevent Swissy’s appreciation. The unemployment rate in June declined to 3.3% after rising every month since February. This may indicate that Switzerland, from the labour market standpoint, is weathering the virus induced crisis quite well.
 

katetrades

Master Trader
Feb 11, 2013
2,390
7
84
Dominica
www.tradersway.com
Forex Major Currencies Outlook (July 20 – July 24)

Preliminary July PMI data from Europe, UK and Japan as well as consumption data from UK and Canada will be eyed in an otherwise uneventful week.

USD

June CPI improved to 0.6% y/y as expected from 0.1% y/y in May on the back of rising gasoline and food prices. Energy prices rose 5.1% for the largest single-month increase in more than a decade. Core CPI remained at the 1.2% y/y level. Real average weekly earnings dropped to 4.6% y/y while real average hourly earnings dropped to 4.3% y/y. The numbers are still high due to government support packages that will run out on July 31.

Retail sales came in at 7.5% m/m vs 5% m/m as expected. Core retail sales came in at 5.6% m/m vs 3.6% m/m as expected while ex autos category came in at 7.3% m/m. There were beatings all around sending positive signals but there are still caveats. The structure of yearly changes shows double digit drops for food services and drinking places, clothing stores as well as electronics & appliances stores. Those are traditional brick and mortar businesses that were hit particularly hard by the virus and subsequent lockdown measures. An additional caveat is that weekly employment checks of $600 are still handed giving people more purchasing power. The big question is how consumption will react after the CARES act is terminated on July 31.

This week we will have housing and jobless claims data.

Important news for USD:

Wednesday:
  • Existing Home Sales
Thursday:
  • Initial Jobless Claims
Friday:
  • New Home Sales
EUR

Industrial production in May came in at 12.4% m/m vs 15% m/m as expected while previous month’s reading was revised down to -18.2% m/m. Lower than expected rebound will be predominant in June as well and a potential recovery will be shown only in Q3 numbers. ZEW survey of the current situation in Germany came in at -80.9 an improvement from -83.1 the previous month but far cry from the expected reading of -65. German expectations reading dropped to 59.3 after 3 months of rising. Slower than expected recovery combined with declining expectations, not a good recipe for the economy.

ECB has left rates unchanged as widely expected and reiterated their willingness to adjust all of their instruments. Interest rates will remain at present or lower levels until the inflation outlook robustly converges to a level sufficiently close to below 2%. PEPP program is kept at €1.350bn and will run at least through end of June 2021. ECB president Lagarde stated that incoming data are signalling resumption of economic activity. Signs are pointing of bottoming in April but outlook remains highly uncertain. Inflation is dampened by energy prices and they expect for it to pick up in early 2021. Lagarde added that the ECB “slowed down a little bit” the pace of PEPP purchases due because markets have stabilized. If the tapering continues there will be enough funds to last through the end of June 2021 without the need for increase in the program.

This week we will have preliminary July PMI data.

Important news for EUR:

Friday:
  • Markit Manufacturing PMI (EU, Germany, France)
  • Markit Services PMI (EU, Germany, France)
  • Markit Composite PMI (EU, Germany, France)
GBP

Monthly GDP for May came in at 1.8% m/m vs 5.5% m/m indicating a very slow recovery from the abysmal -20.3% m/m reading in April. GDP has fallen -19.1% in the previous 3-month period. During May there were still lockdown measures in place, so it stifled the rebound. Industrial and construction output came below expectations while manufacturing production showed better than expected improvement. Yields on 2-year UK gilts slipped below Japanese 2-year yields indicating growing pessimism among bond traders with respect to UK growth prospects.

Jobless claims in June rebounded and came in at -28.1k vs upwardly revised 566.4k the previous month. Claimant count rate slipped to 7.3% from downwardly revised 7.4% the previous month. The unemployment rate for May remained at 3.9% with employment change for the same month coming in at -126k, more than double the expected of -275k. Earnings numbers present a problem with average weekly earnings dropping into negative at -0.3% 3m/y. The Overall employment picture is tainted by the government’s furlough program and cannot be easily interpreted. Inflation in June picked up to 0.6% y/y from 0.5% y/y in May while core CPI came in at 1.4% y/y vs 1.2% y/y in May. BOE Governor Bailey informed MPs that interest rates will remain depressed for at least two more years.

This week we will have consumption and preliminary July PMI data.

Important news for GBP:

Friday:
  • Retail Sales
  • Markit Manufacturing PMI
  • Markit Services PMI
  • Markit Composite PMI
AUD

Employment change in June came in at 210.8k vs 100k as expected, more than doubling expectations for a hefty beat. The unemployment rate rose to 7.4% from 7.1% the previous month on the back of participation rate rising to 64% from 62.9% in May. Full-time employment change came in at -38.1k while part time employment change came in at 249k. The headline number looks impressive but great concern is that all of those jobs and more were part-time.

Trade balance data from China showed a decrease in the surplus to CNY328.94bn due to imports (6.2%) rising faster than the exports (4.3%). In dollar terms trade balance came in at $46.42bn with imports coming in at 2.7% while exports rose by only 0.5%. The rise in imports indicates that Chinese domestic demand is picking up with energy imports rising the most.

Q2 GDP came in at 11.5% q/q vs 9.6% q/q as expected and 3.2% y/y. This is a complete turnaround from -9.8% q/q in virus stricken Q1. Industrial production in June improved to 4.8% y/y as expected while retail sales again missed the expectations coming in at -1.8% y/y. Chinese monetary policy will continue supporting both production and consumption but with consumption still not having a positive month it is very concerning for the goods exporting countries and the world as a whole. On the positive side 10 out of 16 sectors that go into retail sales calculation expanded.

This week we will have minutes from the latest RBA meeting as well as speech by Governor Lowe.

Important news for AUD:

Tuesday:
  • RBA Meeting Minutes
  • RBA Governor Lowe Speech
NZD

Inflation data for Q2 came in at -0.5% q/q vs -0.6% q/q as expected and down from 0.8% q/q in Q1. When calculated y/y it came 1.5% vs 1.3% as expected and down from 2.5% in the previous quarter. Kiwi was not impacted by the data in the market and NZDUSD continued to hover around 0.66 level on positive risk sentiment.

CAD

BOC has left the rate unchanged at 0.25% with a commitment to keep rates at that level until inflation target is hit. BOC will continue CAD5bn per week in QE “until the recovery is well underway”. Economic decline has been characterised as "considerably less severe than the worst scenarios presented in the April MPR". Governor Macklem stated that rates will be on hold for at least 2 years.

This week we will have consumption and inflation data.

Important news for CAD:

Tuesday:
  • Retail Sales
Wednesday:
  • CPI
JPY

BOJ refrained from changing their monetary policy at their July meeting. Interest rate was kept at -0.10%. Board members reiterated their willingness to take additional easing measures, with eye on impact of pandemic on economy. They expect the economy to improve gradually in H2 but the pace of recovery will be moderate. Governor Kuroda stated at the press conference that economic activity has gradually resumed but that economy remains in an extremely severe situation.

This week we will have trade balance, inflation and preliminary July PMI data.

Important news for JPY:

Monday:
  • Trade Balance
Tuesday:
  • CPI
Wednesday:
  • Markit Manufacturing PMI
  • Markit Services PMI
  • Markit Composite PMI
CHF

Total sight deposits for the week ending July 10 came in at CHF688.6bn vs CHF687bn the previous week. There was a slight increase in the deposits just enough for SNB to nudge Swissy in desired direction, away from the 1.05 level on EURCHF.
 

katetrades

Master Trader
Feb 11, 2013
2,390
7
84
Dominica
www.tradersway.com
Forex Major Currencies Outlook (July 27 – July 31)

FOMC meeting followed by preliminary Q2 GDP readings, historic lows expected, from US and EU as well as official China PMI data will be highlights of the week.

USD

Existing home sales came in at 4.72m in June for a record breaking 20.7% m/m rise from 3.91m in May. Record-low mortgage rates led to return of buyers into the market. Single-family sales rose by 20% while condominium sales surged by 29%. Prices were little affected by the pandemic. Initial jobless claims for the week ending July 18 came in at 1416k vs 1300k as expected. Previous week showed claims of 1307k so this is the first rise after 15 consecutive weeks of falling claims. The reading brings total amount of reported claims since late March to 52.7 million. Continuing claims have continued their decline to 16197k. The $600 a week help for the unemployed will expire on July 31. Gold went over $1890 level, the highest it got since September of 2011 and is getting closer to the all-time high level of $1920.

This week we will have preliminary Q2 GDP reading as well as PCE inflation and personal spending data. FOMC meeting is not expected to produce rate changes or changes in their QE program, but as always, the tone will be heavily scrutinized.

Important news for USD:

Wednesday:
  • Fed Interest Rate Decision
  • FOMC Press Conference
Thursday:
  • GDP
Friday:
  • PCE
  • Personal Spending
EUR

After four long days of talks European leaders agreed to a package of €750 billion in grants and loans. Agreed division of funds shows €390bn in grants and €360bn in loans. With this move, the debt burden is shared among the members which could strengthen to Union and propel EUR higher. Additionally, the European leaders agreed upon the seven-year budget spanning from 2021 to 2027.

Preliminary PMI data for July showed improvements across all readings putting them back into expansion territory. Manufacturing PMI came in at 51.1 on the back of strong German reading that returned to 50 level. Services PMI came in at 55.1 with German coming in at 56.7 and French at 57.8 indicating reactivation of services industry after the lockdown. Composite PMI came in at 54.8 with German at 55.5 and French at 57.6. Markit noted that the output grew at the fastest rate in more than over two years in July. However, the concern is that the recovery could falter after this initial revival.

This week we will have sentiment data as well as preliminary Q2 GDP reading and preliminary July inflation data.

Important news for EUR:

Thursday:
  • Economic Sentiment Indicator
  • Services Sentiment Indicator
Friday:
  • GDP
  • CPI
GBP

Retail sales in June rebounded 13.9% m/m vs 8.3% m/m as expected. Much better than expected and a positive reading given that consumption almost returned to the levels from previous year with yearly retail sales coming in at -1.6% y/y. Ex autos, fuel category shoot almost double over expectations coming in at 13.5% m/m vs 7.9% m/m as expected. Preliminary July PMI numbers smashed expectations with manufacturing coming in at 53.6 vs 52 as expected, services at 56.6 vs 51.5 as expected and composite at 57.1 vs 51.7 as expected. Markit noted that numbers present step in the right direction, but there is still a lot of work to be done before the sustainable recovery is in sight.

Relationship with China has deteriorated after the UK cancelled its extradition treaty with Hong Kong. China vowed to retaliate on this topic and also in response to Britain's decision to phase out Hauwei technology. One of the moves China took was to block broadcast of Premier League matches on its territory. EU chief negotiator Barnier stated that EU and UK are still far away in the negotiations regard post-Brexit trade relationship adding that there is an objective risk of no deal.

AUD

RBA minutes from July meeting showed resolution from board members to keep easy monetary policy for as long as needed. They also agreed that there is no need to adjust the package of already implemented measures. Board members stated that there is no case for intervention in the foreign exchange market, given its limited effectiveness when the exchange rate is broadly aligned with its fundamental determinants. This means that they are satisfied with current AUD level and will not fight to keep it from strengthening further. Governor Lowe stated that he would like to see lower AUD but will not going to intervene to lower it. He also stated that the board has reviewed alternative monetary policy options but ultimately decided on no change, however they are not ruled out in the future.

This week we will have Q2 inflation data from Australia as well as official July PMI data from China.

Important news for AUD:

Wednesday:
  • CPI
Friday:
  • Manufacturing PMI (China)
  • Non-Manufacturing PMI (China)
  • Composite PMI (China)
NZD

RBNZ stated that domestic financial markets have stabilized, therefore they have reduced liquidity interventions from daily to weekly. GDT price auction came in at -0.7%. The fall in prices is the first after four-consecutive positive auctions. NZDUSD has been shooting higher all week on the back of positive risk sentiment in the markets, reaching the 0.67 level. Trade balance showed a decline in surplus to NZD426m from NZD1286m previous month on the back of falling exports and rising imports. The data will give a small blow to Q2 GDP reading.

This week we will have ANZ business confidence, a closely followed metric by RBNZ.

Important news for NZD:

Thursday:
  • ANZ Business Confidence
CAD

Retail sales for May rebounded 18.7% m/m from -25% m/m in April, however expectations were for a rebound of 20% m/m. Ex autos category came in at 10.6% m/m vs 11.9% m/m as expected. Sales were up in 10 out of 11 sub sectors. Motor vehicle and parts dealers, general merchandise stores, as well as clothing and clothing accessories stores were the main contributors with food and beverage stores being the only negative sub sector.


Headline inflation for June came in at 0.7% y/y up from -0.4% y/y in May. Prices rose in 5 of the 8 major components with food and shelter prices contributing the most to the increase in the CPI. Prices for goods declined by less than the previous month. Common and trimmed core measures of CPI improved to 1.5% y/y and 1.8% y/y respectively while median CPI stayed the same at 1.9% y/y.

This week we will have May GDP data.

Important news for CAD:

Friday:
  • GDP
JPY

Trade balance in June came in at -JPY268.8bn vs -JPY11.9bn as expected. Exports have missed expectations and came in at -26.2% y/y, a 19th straight monthly drop, indicating a prolonged slowdown in global demand while imports came in at -14.4% y/y. Japanese exports account for around 15-18% of GDP. Exports to China, Japan’s biggest trading partner, came in at -0.2% y/y while exports of cars to China rose 18.8% y/y. Exports to the US came in at -46.6% y/y, an 11th straight monthly drop.

National inflation data for the month of June continued to show the same decade-long absence with the headline number coming in at 0.1% y/y. Excluding fresh food category came in flat, at least coming back from -0.2% y/y the previous month, while excluding fresh food, energy category came in at 0.4% y/y. Preliminary PMI data in July improved a bit compared to the previous month but still in the contraction territory. Manufacturing came in at 42.6, services at 45.2 while composite rose to 43.9 from 40.8 the previous month. Q3 data begins with a sluggish improvement.

This week we will have consumption, employment and preliminary June industrial production data.

Important news for JPY:

Thursday:
  • Retail Sales
Friday:
  • Unemployment Rate
  • Industrial Production
CHF

Total sight deposits for the week ending July 17 came in at CHF691.5bn vs CHF688.6bn the previous week indicating SNB activity in the forex market to fight off Swissy’s strength.

This week we will have consumption data.

Important news for CHF:

Friday:
  • Retail Sales
 

katetrades

Master Trader
Feb 11, 2013
2,390
7
84
Dominica
www.tradersway.com
Forex Major Currencies Outlook (Aug 3 – Aug 7)

BOE and RBA meetings along with NFP will highlight the upcoming week.

USD

Fed has left the interest rate unchanged at the 0-0.25% range as expected with a unanimous vote. The Path of the economic recovery will largely depend on the virus. They have added that economic activity and employment have picked up a bit in the recent months but are still below their levels from the beginning of the year. Chairman Powell added that Fed will do whatever they can for as long as it is needed. High-frequency data showed that the pace of the recovery has slowed. He reiterated that they are not even thinking about thinking about raising rates. There were no talks about yield curve control or additional stimulus measures. We can expect that members chose to wait for more data before possibly acting on it in September.

Advanced Q2 GDP reading showed a drop of an abysmal -32.9% q/q, better than the expected -34.5% q/q, but still easily the worst in history. Personal consumption plunged -34.6% q/q while business investment fell -27% q/q. Exports were down a historic -64.1% while imports were down a horrific -53.4%. Headline PCE rebounded to 0.8% y/y from 0.5% y/y the previous month, however a worrying sign is the drop in core PCE to 0.9% y/y from 1% y/y the previous month indicating softening price pressures. Personal spending came in at 5.6% m/m vs 5.2% m/m as expected. Spending is still positive but is dying down as the $600 weekly government cheques are about to expire.

Initial jobless claims for the week ending July 25 came in lower than expected at 1434k, but it is the second week of claims rising compared to the previous week. Continuing jobless claims for the week ending July 18, when NFP is calculated, jumped to 17108k from 16151k the previous week. Trends are reversing as parts of the country are again under lockdown due to Covid-19 outbreaks. Consumer confidence in July fell to 92.6, below expectations and the previous month’s reading of 98.3, due to an increase in Covid-19 cases. Gold has breached an all-time high level of $1920 in the early hours Asia-Pacific session on market opening and went above $1940 level. It rose all the way up to $1980 before dropping sharply to the $1905 level on Tuesday and then again testing the $1980 level a couple more times during the week.

This week we will have ISM PMI and trade balance data as well as NFP data on Friday. Expectations are for an increase of jobs in the range of around 2.3m while the unemployment rate is seen at around 10.5%.

Important news for USD:

Monday:
  • ISM Manufacturing PMI
Wednesday:
  • ISM Non-Manufacturing PMI
  • Trade Balance
Friday:
  • Nonfarm Payrolls
  • Unemployment Rate
EUR

Ifo business climate index for the month of July came in at 90.5 vs 89.3 as expected and up from 86.2 the previous month. Expectations index came at 97, indicating belief about the Q3 rebound in the German economy. Ifo sticks with their forecast of 6.9% Q3 GDP. Sentiment data for the EU showed an improvement compared to June, but the pace of improvement is not impressive, indicating doubts about the strength of the Q3 rebound.

Preliminary Q2 GDP came in at -12.1% q/q as expected. German reading was worse than expected while French reading came in better than expected which put the EU reading on par with expectations. Inflation in July surprised to the upside, improving the mood of policymakers, with the headline number coming in at 0.4% y/y vs 0.3% y/y the previous month. Core inflation came in at 1.2% y/y vs 0.8% y/y the previous month. Headline German inflation fell into deflation territory for the first time since April 2016 coming in at -0.1% y/y as price pressures strongly declined.

This week we will have final July PMI numbers as well as consumption data.

Important news for EUR:

Monday:
  • Markit Manufacturing PMI (EU, Germany, France)
Wednesday:
  • Markit Services PMI (EU, Germany, France)
  • Markit Composite PMI (EU, Germany, France)
  • Retail Sales
GBP

Prime Minister Johnson stated that they will have to slow down the easing of lockdown measures. Reopening of leisure facilities will now be postponed for at least two weeks. He confirmed that this means a return to social distancing. The pound enjoyed a very strong week. It has gained across the markets with GBPUSD crossing over 1.31 level and breaking above W1 200SMA. It now constitutes eleven trading days of rising prices.

This week we will have final July PMI numbers as well as BOE interest rate decision. There will be no changes in the rate but talks about possible introduction of negative rates may occur.

Important news for GBP:

Monday:
  • Markit Manufacturing PMI
Wednesday:
  • Markit Services PMI
  • Markit Composite PMI
Thursday:
  • BOE Interest Rate Decision
  • BOE Governor Bailey Speech
AUD

Q2 CPI data came in at -1.9% q/q vs -2% q/q as expected. The headline number represents the biggest fall in more than 70 years and signals deflationary conditions in the economy. Core inflation came in at 1.2% y/y vs 1.4% y/y as expected.

Company profits in China for the month of June rose 11.5% y/y while dropping -12.8 y/y for the period from January to June of 2020. Both numbers show improvement compared to figures from May led by rising profits in state-owned enterprises. Official manufacturing PMI for July improved yet again to 51.1 for a fifth consecutive month of expansion. Non-manufacturing and composite PMIs saw slight drops coming in at 54.2 and 54.1 respectively, but they are still safely in the expansion territory.

This week we will have trade balance data as well as RBA interest rate decision and monetary policy statement. We expect RBA to keep the rates unchanged and let their monetary policy measures take effects, although talks regarding further monetary stimulus may emerge. Out of China we will have Caixin PMI and trade balance data.

Important news for AUD:

Monday:
  • Caixin Manufacturing PMI (China)
Tuesday:
  • RBA Interest Rate Decision
  • Retail Sales
  • Trade Balance
Wednesday:
  • Caixin Services PMI (China)
  • Caixin Composite PMI (China)
Friday:
  • RBA Monetary Policy Statement
  • Trade Balance (China)
NZD

Final ANZ business confidence in July came in at -31.8 vs -34.4 the previous month. Activity outlook came in at -8.9 vs -25.9 the previous month. ANZ' stated that the vigorous bounce out of lockdown appears to be topping out and that the retail sector has driven much of the rebound since June.

This week we will have Q2 employment data.

Important news for NZD:

Wednesday:
  • Employment Change
  • Unemployment Rate
CAD

GDP data in May came in at -13.8% y/y vs -17.1 y/y the previous month. On the monthly basis GDP rebounded 4.6% m/m vs -11.7% m/m which was a record low. Goods were up 8% m/m while services were up 3.4% m/m. Canadian dollar did not take advantage of the seriously weak USD this week and USDCAD pair finished the week basically unchanged from where it started.

This week we will have trade balance and employment data.

Important news for CAD:

Wednesday:
  • Trade Balance
Friday:
  • Employment Change
  • Unemployment Rate
JPY

Final Q1 Capex data came in at 0.1% q/q vs 4.3% q/q as preliminary reported. Company profits have plunged -28.4% y/y. Considering the great uncertainty in the world combined with falling company profits a drop in business investment was expected. Retail sales in June came in at 13.1% m/m vs 8% m/m as expected and -1.2% y/y vs -5.7% y/y as expected. Consumption picked up strongly with healthy beats. The unemployment rate positively surprised, ticking down to 2.8% vs 3.1% as expected. Preliminary industrial production came in at 2.7% m/m vs -8.9% m/m the previous month for the first positive reading in five months.

Fitch has confirmed Japan’s A rating but has lowered the outlook to negative from stable. They expect Japan's economy to contract by 5% for 2020, before rebounding to 3.2% in 2021. Japan has downgraded its GDP forecast for 2020, they now expect it to shrink by 4.5% before rebounding to 3.4% in 2021.

This week we will have final July PMI numbers and final Q1 GDP data as well as Tokyo area inflation, earnings and spending data.

Important news for JPY:

Monday:
  • GDP
  • Markit Manufacturing PMI
Tuesday:
  • CPI
Wednesday:
  • Markit Services PMI
  • Markit Composite PMI
Friday:
  • Household Spending
  • Labor Cash Earnings
CHF

SNB total sight deposits for the week ending July 24 came in at CHF692.6bn vs CHF691.5bn the previous week. Steady increase in the deposits as SNB keeps intervening in the forex market. Retail sales in June came in at 1.1% y/y vs 6.2% y/y the previous month. The food, beverages and tobacco category was the biggest contributor.

This week we will have inflation data.

Important news for CHF:

Monday:
  • CPI
 

katetrades

Master Trader
Feb 11, 2013
2,390
7
84
Dominica
www.tradersway.com
Forex Major Currencies Outlook (Aug 10 – Aug 14)

RBNZ meeting, consumption data from US, preliminary Q2 GDP from UK and second Q2 GDP estimate from EU will highlight the week.

USD

ISM manufacturing PMI in July surprised to the upside and came in at 54.2 vs 52.6 the previous month. New orders and production categories crossed into 60s while new export orders returned to expansion with 50.4. The only concern is slow rise in the employment category which came in at 44.3 but overall this is a strong report for the manufacturing activity in the US. ISM Non-manufacturing PMI smashed expectations coming in at 58.1 vs 55 as expected. It continued to rise after posting 57.1 the previous month. Business activity and new orders rose to 67.2 and 67.7 levels respectively. Troubling signs appeared in new export orders which slipped below 50 level and employment which fell from the last month’s reading indicating rise in lay-offs.

Trade balance in June came in at -$50.7bn, an improvement from -$54.8bn the previous month. Exports were up 9.4% m/m while imports rose by 4.7% m/m. Initial jobless claims continued their decline after the rise in previous two weeks and came in at 1186k vs 1435k the previous week. Continuing claims also dropped to 16107k from 16900k previously. Fitch revised US outlook to negative from stable but kept the AAA rating. They have noted growing US deficit as the main concern and reason for the cut. They have, however, noted that US enjoys “exceptional financing flexibility” and that "It is a truism that the US government cannot run out of money to service its debt."

NFP reading came in at 1763k vs 1480k as expected. Not a big number as president Trump was announcing on twitter but it beat expectations. The unemployment rate declined almost a full percentage point to 10.2% from 11.1% the previous month while participation rate slightly declined to 61.4%. Gold has breached $2000 level for the first time in history going over $2070 during the week.

This week we will have inflation and consumption data.

Important news for USD:

Wednesday:
  • CPI
Friday:
  • Retail Sales
EUR

Final July manufacturing PMI came in at 51.8 vs 51.1 as preliminary reported on the back of improvements in both German and French readings. Markit notes: “Growth of new orders in fact outpaced production, hinting strongly that August should see further output gains.” Services PMI came in weaker than preliminary reported at 54.7 with composite rising to 54.9 on the back of improvement in manufacturing reading. Overall Markit noted that “the renewed expansion of the service sector bodes well for the economy to rebound in the third quarter after the unprecedented slump seen in the second quarter. Whether the recovery can be sustained will be determined first and foremost by virus case numbers.” Retail sales in June came in at 5.7% m/m and 1.3% y/y with previous month’s data being revised higher. Textiles, clothing and footwear were the biggest contributor to rise in consumption.

This week we will have ZEW survey as well as second estimate of Q2 GDP, recent improvements in German factory data should help revise the reading higher.

Important news for EUR:

Tuesday:
  • ZEW Economic Sentiment (EU and Germany)
Friday:
  • GDP
GBP

Final July manufacturing PMI slipped to 53.3 vs 53.6 as preliminary reported. Markit notes that job losses despite the reopening can hinder further readings. Services came in at 56.5 vs 56.6 as preliminary reported which pulled composited to 57 vs 57.1 as preliminary reported. Markit stated that “Higher levels of service sector output were almost exclusively linked to the reopening of the UK economy after lockdown measures and the subsequent return to work of employees and clients. However, these are still the very early stages of recovery.” Employment picture still remains worrisome.

BOE has left both interest rate and QE program unchanged at 0.10% and £745bn respectively, as widely expected. The vote was unanimous. Policymakers noted that higher frequency indicators imply that spending has recovered significantly and that their projections assume that direct impact of the virus will dissipate gradually. They now project 2020 GDP to fall by -9.5% vs -14% as previously projected. Regarding negative interest rates policy makers feel that other instruments, like asset purchases and forward guidance, should be tweaked first. Overall the statement had more of a positive tone which pushed GBP even higher.

This week we will have employment data and preliminary Q2 GDP reading.

Important news for GBP:

Tuesday:
  • Claimant Count Change
  • Unemployment Rate
Wednesday:
  • GDP
AUD

RBA left the cash rate unchanged at 0.25% as widely expected. They have reiterated their commitment to do what they can to support jobs and businesses. They will step in to resume bond purchases which will be done as necessary. They see their mid-March package working as expected. The outburst of virus in the state of Victoria had them lower the economic outlook. There was also no mention of AUD strength indicating that they are satisfied with its current levels. RBA statement showed that board members now see the economy recovering at a slower pace. Trade balance data in June came in at AUD8202bn vs AUD7341bn the previous month on the back of exports rising 3% while imports rose 1%. Retail sales for the same period improved 2.7% m/m.

Caixin manufacturing for July rose to 52.8 putting it deeper into expansion territory on the back of rising new orders. It is a highest reading since January of 2011, although overseas demand was subdued and employment remained week. Caixin services dropped to 54.3 from 58.4 the previous month for the big miss since 58 was the expected reading. It dragged composite down to 54.5 vs 55.7 the previous month. Although the reading is well above 50 level it indicating struggles that smaller companies, that are not state owned, face.

Chinese trade balance data for July say a rise in surplus to CNY442.23bn from 328.94bn the previous month. Exports were up 10.4% while imports were up 1.6%. In the USD terms trade balance came in at $62.33bn vs $46.42bn previous month on the back of exports rising 7.2% and imports falling -1.4%. Exports in both yuan and dollar terms beat expectations sending positive signals regarding overseas demand. Overall imports were low due to lower crude oil and agricultural products imports. Exports to US rose 12.5% while imports rose 3.6%.

This week we will have employment data from Australia as well as inflation, consumption and industrial production data from China.

Important news for AUD:

Monday:
  • CPI (China)
Thursday:
  • Employment Change
  • Unemployment Rate
Friday:
  • Retail Sales (China)
  • Industrial Production (China)
NZD

The unemployment rate for Q2 came in at 4% q/q vs 5.6% q/q as expected for a tremendous beat. The employment change came in at -0.4% q/q vs -2% q/q as expected for another big beat. Participation rate came in at 69.7% as expected but down from 70.4% the previous quarter to put a dent in the reading. The reading shows that New Zealand economy weathered crisis caused by virus outbreak much better than any other developed economy. GDT price index at first auction in August came in at -5.1%. This is the second consecutive auction of falling prices and it shows a much bigger decline than 0.7% previously. Whole milk powder prices were the main culprit falling -7.5%.

This week we will have RBNZ rate decision which is expected to stay unchanged so talks about further stimulus will be closely monitored.

Important news for NZD:

Wednesday:
  • RBNZ Interest Rate Decision
CAD

Trade balance data for June showed a widening of deficit to -CAD3.19bn vs -CAD0.9bn as expected. Exports rose by 17.1% m/m but were outpaced by imports which rose 21.8% m/m. Almost half of the imports and biggest contributor to exports were imports of motor vehicles and parts. Surplus in trade with US narrowed down to CAD1.1bn while deficit with other countries rose to -CAD4.3bn.

Employment report in July showed a change of 418.5k vs 380k as expected. The unemployment rate dropped to 10.9% from 12.3% the previous month and it was achieved along with participation rate rising to 64.3%. Full-time employment came in at 73.2 k while part-time employment came in at 345.3k. It is a bit concerning that great majority of new positions are part-time but other numbers show that labour market is heading in the right direction.

JPY

Final Q1 GDP reading came in unchanged at -0.6% q/q and -2.2% y/y while final manufacturing PMI for July improved to 45.2 from 42.6 as preliminary reported but still in the contraction territory with a dim outlook. Final services PMI improved to 45.4 which pushed composite PMI to 44.9. Slow recovery with all of the readings below 50 level which adds concern in regards to the rebound projected for Q3 GDP. Labour cash earnings in June continued their decline and came in at -1.7% y/y vs -3% as expected. Household consumption on a yearly basis is yet to post a positive reading and came in at -1.2% y/y vs -7.8% y/y. At least beatings of expectations are a positive.

July inflation from Tokyo area surprised everyone coming in at 0.6% y/y vs 0.3% as expected and as previous month. CPI excluding Fresh Food came in at 0.4% y/y vs 0.1% y/y as expected while excluding Fresh Food, Energy came in at 0.6% y/y vs 0.3% y/y as expected. All of the readings beat the expectations and moved the inflation in the desired direction. While it is still far away from 2% level every move up is warmly welcomed by BOJ officials.

CHF

July CPI rebounded to -0.9% y/y from -1.3% y/y the previous month with core coming at -0.4% y/y vs -0.8% y/y the previous month. This is a very welcomed rebound but it indicates just an easing of deflationary pressures in the month of July. Total sight deposits for the week ending of 31 July came in at CHF693.7bn vs CHF692.6bn the previous week showing that SNB still acts to prevent Swissy from getting too strong for their taste.

This week we will have employment data.

Important news for CHF:

Monday:
  • Unemployment Rate