Final PMI readings across the world will dominate throughout the week, RBA rate decision and highlight will be NFP on Friday.
USD
New home sales in May missed expectations coming in at 626k vs 684k as expected, down from the April number of 673k. Consumer confidence dropped significantly in the month of June coming in at 121.5 vs 131 as expected. Prior number was revised down to 131.3 but it does not improve the picture by much. Both present situation and expectations categories missed expectations and came much weaker than the numbers in the previous month even with downward revisions. Jobs hard-to-get category showed a huge jump which is worrying since labour market is a bright spot in the US economy. FED chairman Powell hinted that there will be only one cut and emphasised the strength of US economy.
Durable goods orders for the month of May came in at -1.3% m/m vs -0.2% m/m as expected. Headline number looks abysmal butt core number, capital goods orders non-defence ex air, shows a much better number coming in at 0.4% m/m vs 0.1% m/m as expected. Advanced goods trade balance came in at -$74.5bn vs -$71.8bn as expected. Exports were down -2.5% y/y while imports were up 2.6% y/y presumably because importers look to boost their inventories before another batch of tariffs. Core PCE came in at 1.6% y/y vs 1.5% y/y as expected. Personal income came in at 0.5% m/m vs 0.3% m/m as expected while personal spending came in at 0.4% m/m vs 0.5% m/m as expected with previous month being revised up to 0.6% m/m. Since spending constitutes almost 70% of US GDP these numbers are very encouraging. Rise in personal income is also a welcoming sign for future inflation and additional spending.
This week we will have final PMI data for the month of June, trade balance data and big event on Friday will be NFP. NFP number is expected to bounce back to 176k and with all the talks about rate cuts FED will base their future decisions on this data. Average hourly earnings data will also be taken into the account by FED.
Important news for USD:
Monday:
Markit Manufacturing PMI
ISM Manufacturing PMI
Wednesday:
Markit Services PMI
Markit Composite PMI
ISM Non-manufacturing PMI
Trade Balance
Exports
Imports
ADP Nonfarm Employment Change
Factory Orders
Friday:
Nonfarm Payrolls
Unemployment Rate
Average Hourly Earnings
EUR
German Ifo Business climate index came in at 97.4 as expected continuing a drop from 97.9 the previous month. Expectations category also showed a decline painting a grim picture of the German economy. Current assessment of the economic situation improved a bit. Global slowdown is hitting export and manufacturing oriented German economy very hard. The US-China trade dispute is the main cause of uncertainty while Brexit and the Iran conflict are not playing a dominant role at the moment according to the Ifo economist.
Final consumer confidence for the month of June came in at -7.2 as the preliminary reading showed. However, all other indicators, business climate indicator, economic, industrial and services confidence, dropped. Economic confidence fell lowest since August of 2016. Preliminary CPI for the same month came in at 1.2% y/y as expected but core CPI came in at 1.1% y/y which is stronger than 1% y/y as expected and 0.8% y/y the previous month. The rise in core inflation will be welcomed by ECB as they very closely monitor it, however they need to see that this is a trend and not just one-month thing.
This week we will have final PMI data for the month of June, employment data and consumption data.
Important news for EUR:
Monday:
Markit Manufacturing PMI (EU, Germany, France)
Unemployment Rate
Wednesday:
Markit Services PMI (EU, Germany, France)
Markit Composite PMI (EU, Germany, France)
Thursday:
Retail Sales
GBP
Final Q1 GDP data came in at 0.5% q/q and 1.8% y/y as the preliminary reading showed. Total business investment dipped a bit to 0.4% q/q from 0.5% q/q preliminary and -1.5% y/y vs -1.4% y/y preliminary. Strength of Q1 GDP reading was achieved due to stockpiling ahead of Brexit which will not be transferred to Q2 strength as recent economic data showed.
This week we will have PMI data for the month of June.
Important news for GBP:
Monday:
Markit Manufacturing PMI
Tuesday:
Markit Construction PMI
Wednesday:
Markit Services PMI
AUD
RBA Governor Lowe said that it is legitimate to ask how effective monetary easing would be globally and added that the exchange rate effect of cutting rates is offset if everyone cuts.
This week we will have PMI data from China, trade balance data and consumption data. The main event will be RBA interest rate decision and markets are pricing around 80% probability for a rate cut.
Important news for AUD:
Monday:
Caixin Manufacturing PMI (China)
Tuesday:
RBA Interest Rate Decision
RBA Rate Statement
Wednesday:
Trade Balance
Exports
Imports
Caixin Services PMI (China)
Caixin Composite PMI (China)
Thursday:
Retail Sales
NZD
Trade balance data for the month of May show a trade surplus of $264m vs $250m as expected. Exports beat expectations and prior month data coming in at $5.81bn which is an all-time high. The leading contributor to the rise was exports of milk powder, butter, and cheese. Imports, as well, beat expectations and prior month data coming in at $5.54bn. Majority of imports were crude oil imports.
RBNZ has left the official cash rate at 1.5% as expected. They have acknowledged weaker global economic growth and risk of prolonged subdued domestic growth. Given the downside risks around the employment and inflation outlook, a lower OCR may be needed over time. RBNZ took a dovish stance opening more room for the rate cuts as soon as August. OIS markets are now pricing about 80% chance of a rate cut in August. ANZ business confidence for the month of June dropped down to -38.1 from -32 the previous month. The economy is facing credit and cost headwinds while the global outlook is deteriorating. Such a drop in the data adds more certainty to future rate cuts, possibly even two cuts this year.
This week we will have bi-weekly GDT auction and housing data.
Important news for NZD:
Tuesday:
GDT Price Index
Building Permits
CAD
Wholesale sales for the month of April came in at 1.7% m/m vs 0.2% m/m as expected. This is the fifth consecutive monthly increase. Wholesale sales climbed in five of seven major categories representing 86% of total receipts. GDP for the month of April came in at 0.3% m/m vs 0.2% m/m as expected. Better than expected resulted was achieved due to rise in oil and gas. Along with wholesale trade GDP added another strong data point from Canadian economy. BOC cannot follow suit of other central banks and start with dovish rhetoric after incoming strong data similar to this signalling recovery in Q2 of 2019.
This week we will have OPEC meeting where there will be talks about cutting production in order to prop up the oil price. Additionally, we will have trade balance data and employment data on Friday which will be released at the same time as NFP so they might cause increased volatility.
Important news for CAD:
Monday:
OPEC Meeting
Tuesday:
OPEC Meeting
Wednesday:
Trade Balance
Exports
Imports
Friday:
Employment Change
Unemployment Rate
JPY
Retail sales for the month of May came in at 0.3% m/m vs 0.6% m/m as expected but a beat of -0.1% m/m the previous month and 1.2% y/y as expected with 0.5% the previous month. Slow moves in the right direction but nothing suggests that these movements are sustainable. The unemployment rate stayed the same at 2.4% as expected. CPI for the Tokyo area came in same as previous month at 1.1% y/y vs 1% y/y as expected. Excluding food and energy category came in at 0.8% y/y vs 0.7% y/y as expected. Small improvement in the core reading toward the 2% target but still far away from it. Industrial production showed a great beat in May coming in at 2.3% m/m vs 0.7% m/m as expected and -1.8% y/y vs -2.9% y/y as expected.
This week we will have final PMI data for the month of June, Tankan data, data on consumer confidence as well as data on household spending.
Important news for JPY:
Monday:
Nikkei Manufacturing PMI
Tankan Manufactures Index
Consumer Confidence
Wednesday:
Nikkei Services PMI
Friday:
Household Spending
CHF
Due to geopolitical risks and general risk-off mode in the markets CHF has appreciated as a safe haven currency. SNB does not think that too strong CHF is good for the economy so they might intervene in the markets which in turn keeps market participants wary of adding more to their CHF positions.
This week we will have consumption and inflation data.
Important news for CHF:
Monday:
Retail Sales
Thursday:
CPI
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