Japan’s data was generally positive, though the inflation data doesn’t show any definitive evidence just yet that Abenomics is beginning to move the needle on inflation – which will clearly take at least another three months before we can decide whether a trend is developing anyway. Some of the other data was encouraging however, such as the Manufacturing PMI and the Retail Trade Data, and the Housing Starts number was the strongest in years. The Nikkei jumped higher and the JPY weakened again overnight (see my brief post on the technical areas of interest for the moment in USDJPY.)
Other notes:
EURCHF is trying to get something going after yesterday’s rally from the lower range that saw the pair testing the 200-day moving average. Would suspect the direction there will follow the direction of the major JPY crosses.
EURGBP tried to get something going again yesterday, but we’re still buried in the longer term range and need to push the envelope beyond 0.8600 to the upside and below 0.8470 to the downside. If the tail risks for Europe continue to come in, the upside could be the side of least resistance, but we’ll know one way or another after next week’s BoE (first with Carney at the helm) and ECB meetings.
It’s surprising to see AUDUSD in a relatively quiet range despite the massive drop in gold prices in recent days, as gold touched below . One supposes that the strong comeback in carry trades in recent days is acting as a kind of counterbalance, though I don’t see the weak Aussie story fading anytime soon.
Looking ahead
Remember that today is end of month and end of quarter.
Look out for the Norwegian Retail Sales and employment data up shortly. NOK is looking for short term direction after the shock developments at last week’s Norges Bank meeting, when Olsen performed an about face and indicated an easing bias. Looking at EURNOK, if the rally is going to hold, I would look for support ahead of 7.800 for another go above 8.00, while USDNOK is more interesting, with the 6.00 area an obvious one for support to come in, though the pair could slip to 5.95 without threatening a full reversal. Looking ahead, wondering if 6.20 will soon fall for a try higher still.
Chart: USDNOK
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Most importantly, look out for the appearance of the Fed’s Jeremy Stein later today, as he is the point man charged with determining the degree to which Fed policy risks financial stability. We may get new input on the degree to which the Fed weighs these factors as opposed to the standard dual mandate of inflation/employment. The market may be especially sensitive to anything he has to say as it has come roaring back so sharply from recent lows.
Next week should bring plenty of fireworks, with all of the standard first week of the month economic data and both BoE and ECB meetings set for Thursday.
Economic Data Highlights
- UK Jun. GfK Consumer Confidence out at -21 as expected and vs. -22 in May
- Japan Jun. Markit/JMMA Manufacturing PMI out at 52.3 vs. 51.5 in May
- Japan May Overall Household Spending out at -1.6% YoY vs. +1.3% expected and vs. +1.5% in Apr.
- Japan May Jobless Rate out at 4.1% vs. 4.0% expected and vs. 4.1% in Apr.
- Japan May National CPI out at -0.3% YoY vs. -0.4% expected and -0.7% in Apr.
- Japan May National CPI out at Ex Food and Energy out at -0.4% YoY vs. -0.3% expected and vs. -0.6% in Apr.
- Japan Jun. Tokyo CPI out at 0.0% YoY vs. +0.1% expected and vs. -0.2% in May
- Japan Jun. Tokyo CPI ex Food and Energy out at -0.4% YoY vs. -0.3% expected and -0.3% in May
- Japan May Preliminary Industrial Production out at +2.0% MoM and -1.0% YoY vs. +0.2%/-2.4% expected, respectively and vs. -3.4% YoY in Apr.
- Japan May Retail Trade out at +1.5% MoM and +0.8% YoY vs. +0.7%/0.0% expected, respectively and v. -0.2% YoY in Apr.
- German May Retail Sales out at +0.8% MoM and +0.4% YoY vs. +0.4%/+0.2% expected, respectively and vs. +2.7% YoY in Apr.
- Switzerland Jun. KOF Swiss Leading Indicator out at 1.16 vs. 1.19 expected and 1.09 in May
- Sweden May Retail Sales out at +0.8% MoM and +3.1% YoY vs. +0.3%/+2.5% expected, respectively and vs. +2.0% YoY in Apr.
- Norway Jun. Unemployment Rate (0800)
- Norway May Retail Sales (0800)
- Germany Jun. Preliminary CPI (1200)
- US Fed’s Stein to Speak on Monetary Policy in New York (1200)
- Canada Apr. GDP (1230)
- US Jun. NAPM Milwaukee (1300)
- US Fed’s Lacker to Speak (1315)
- US Jun. Chicago PMI (1345)
- US Jun. Final University of Michigan Confidence (1355)
- US Fed’s Williams to Speak (1930)
- Australia Jun. AiG Performance of Manufacturing Index (Sun 2330)
- Japan Q2 Tankan Surveys (Sun 2350)
- China Jun. Manufacturing PMI (Mon 0100)
- Chain Jun. HSBC Manufacturing PMI (Mon 0145)