Mon: EUR – German IFO surveys, NZD – Trade Balance
Tue: USD – Services and Composite PMIs and Consumer Confidence
Wed: CNY – Industrial Profits, AUD – CPI, GBP – GDP, USD – Durable Good, Crude Oil Inventories and FOMC Rate Decision
Thu: EUR – German Unemployment Rate and CPI, USD – Advance Goods Trade Balance
Fri: JPY – BOJ Rate Decision, EUR – EZ CPI and GDP, CAD – GDP, USD – PCE and UoM Confidence
Overview
USD A quiet data week saw muted USD flows though USD gained over the week amidst the broadly risk-off tone with commodities under pressure. Recent data keeps the US rate-path mildly supported with the possibility of a rate hike still looming. Focus now shifts to next week’s FOMC meeting with traders keenly waiting clues in the Fed’s language as to the likely rate-path over the months ahead
EUR The ECB kept rates on hold as expected but were less forthcoming regarding the likelihood of further easing than some players were anticipating. The ECN downplayed Brexit risks and although downside risks were noted, growth and inflation were both forecast to pick up in the medium term.
GBP GBP In May, UK unemployment rate fell below 5.0% for the first time since 2005. Jobless rate dropped to 4.9% before Brexit as 176k jobs were added to the labour market in the three months through May. Average Weekly Earnings over the period remained steady at 2.2% whilst CPI in June printed above expectations at 0.5% vs 0.4% on the headline reading and 1.4% vs 1.3% on Core. PMI data on Friday confirmed economic fears with all three data sets printing below 50 for the July period marking the fastest economic contraction since 2009.
JPY The International Monetary Fund downplayed the need for Japan to weaken its currency to boost economic growth and inflation, saying the yen’s moves have been orderly and that government intervention isn’t advised. In comments made on radio this week BOJ Governor Kuroda ruled out the prospect of “helicopter money” saying there was both no need and no possibility. Traders now await the BOJ meeting next week to learn the details of the stimulus package ordered by PM Abe.
AUD The RBA July meeting minutes left room for easing in the central bank’s next meeting in August. Staff will provide update on inflation, labour market and housing market activity outlook in the Statement of Monetary Policy, allowing the Board to “make any adjustment to the stance of policy that may be appropriate”. With inflation expected to remain quite low for some time and Australian dollar stronger than preferred level, RBA may ease again next month to spur growth. Focus now shifts to the Q2 inflation reading next week.
CAD The Canadian dollar was under pressure this week weighed upon by the decline in oil prices which were hit by a resurgence of oversupply fears. The US Energy Department registered a ninth straight week of drawdown in crude stocks though inventories remain near record levels. Canadian CPI on Friday printed above expectations.