Chinese economic data released over the weekend were lackluster once again and this has become a trend which is only gaining momentum to drive negative sentiment among traders. Nonetheless, the stock market in mainland has shown strong resistance to this data as the Shanghai composite is up nearly over 5% and this is mainly on the back of the hopes that the People Bank of China will soon enough trigger another easing monetary policy bazooka. The stock market in the rest of Asia was very much lackluster and tracked offshore losses due to commodity rout.
The U.S. NFP released on Friday could not be more in line with the expectations. The average earning data confirmed that the wage growth increased according to the Fed expectation by printing the number of 2.1%. July payrolls number came in very close to our guess which we tweeted only a few minutes before the data was released. Our estimate was 210K and the actual reading came in at 215K. The previous month reading was revised higher by 14K while there was no change in the unemployment rate which stayed stable at 5.3%.
In terms of economic data, there is very little in the way for the Fed from now till next month, which could dissuade their thinking process to delay the rate hike. Having said that, the Fed claims that they remain very much data dependent in their decision and if that is true, we have very little evidence of inflation picking up so far and with the commodity rout becoming even worse, it is difficult to think of a situation why inflation will go higher.
Back in Europe, it is all about the Greek optimism that a deal will be finalised between the two parties- creditors and Greek officials. EU officials are very upbeat and pleased that Greek officials are working with them and substantial work has been carried out on reforms and austerity. The deadline of the 20th of August remains the main focus when Greece has to pay another bill of 3.2 billion euro to the ECB.
Disclosure & Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.
by Naeem Aslam