Dollar stays mixed for the week as markets await non-farm payroll report from US. NFP is expected to show 175k growth in July with unemployment rate unchanged at 4.9%. Average hourly earnings are expected to grow 0.2% mom. Looking at other employment data, ADP private payroll grew 179k versus June's 176k. Employment component of ISM manufacturing dropped into contraction territory at 49.4, down from 50.4. Employment component of ISM non-manufacturing dropped to 51.4, down from 52.7. The four week moving average of initial jobless claims dropped 5k to 260k while continuing claims rose from 2.12m to 2.14m. Conference board consumer confidence dropped 0.1 pts to 97.3. Overall, other job data suggests that NFP would be a solid but unspectacular one.
Australian dollar is firm and set to close the week generally higher, except versus Yen, in spite of RBA's rate cut earlier in the week. RBA sounded upbeat in the monetary policy statement released today, saying that "while the prospects for growth in economic activity are positive, there is room for even stronger growth." Though, RBA also warned on the risk of oversupply in the housing sector. And, "if the housing market were to weaken substantially, consumption could be lower than expected due to lower growth in household wealth." And, "consumer price inflation could also be affected, as housing costs comprise a significant share of the CPI basket." RBA also expected inflation to remain below 2% over most of the forecast period and open the door for further rate cuts.
Yesterday, BOE voted unanimously to cut the Bank rate by -25 bps to 0.25% in August. The members generally expect more reduction later this year. Falling to the upper end of our forecast, it also expanded the asset purchase program by 70B pound to 445B pound, of which 60B pound is for the purchases of government bonds over 6 months and 10B pound for sterling non-financial investment-grade corporate bonds purchases over 18 months. The members were split on QE measures with 6-3 vote (Kristin Forbes, Ian McCafferty and Martin Weale dissented) in favor of increasing the government bonds purchases and 8-1 vote (Kristin Forbes dissented) in favor of corporate bond purchases. Policymakers also added a 100B pound loan program for banks. The staff trimmed the GDP growth forecasts for 2017 but upgrade the inflation outlook, expecting it to breach the 2% target by the end of next year. More in BOE Cut Rate, Expanded QE, Trimmed Growth Forecasts.
Elsewhere, Japan cash earnings rose 1.3% yoy in June. Swiss will release foreign currency reserves while Germany will release factory orders in European session. US will release non-farm payroll and trade balance. Canada will release employment, trade balance and Ivey PMI.