In rather quiet week ahead of us ISM Non-Manufacturing PMI, RBA rate decision and employment data from Canada will be on the docket.

USD 

ISM manufacturing PMI came in at 52.6 vs 49.8 as expected and up from 43.1 the previous month for a highest reading of the year. Production and new orders indexes posted highest readings in a year while employment index substantially rose. Although the readings are very positive, they still show only that the economy reopened and not any substantial economic rebound. FOMC minutes showed that officials agreed for more analysis of yield curve control and urged more explicit forward guidance. 

NFP report beat expectations by coming at 4800k. The unemployment rate was also better than expected and it dropped to 11.1%. Participation rate climbed to 61.5% so we have a double positive, the unemployment rate dropping and participation rate rising. Leisure and hospitality was the biggest contributor with 2.088mn, retail was up 740k, while 903k was in trade and transport and 568k in education and healthcare. On the other front, the initial jobless claims came in at 1427k vs 1350k as expected. Continuing jobless claims are still near 20 million. 

This week we will have ISM Non-Manufacturing PMI which may garner more movements in the market than usual as investors will be accessing the health of services sector.

Important news for USD:

Monday:

ISM Non-Manufacturing PMI

EUR

Economic sentiment in June came in at 75.7 vs 80 as expected but up from 67.5 the previous month. Weaker than expected improvements are seen on industrial and services confidence readings indicating that optimism regarding recovery is subdued. Consumer confidence improved only to the -14.7 level. Preliminary CPI in June rose to 0.3% y/y from 0.1% y/y the previous month while core CPI dropped to 0.8% y/y as expected. Final manufacturing PMI improved to 47.4 from 39.4 the previous month on the back of strong readings from German and France. Final services reading was also better than preliminary reported coming in at 48.3 pushing composite to 48.5 from 47.5 as preliminary reported. Markit has noted that: “An improvement in business sentiment meanwhile adds to hopes that GDP growth will resume in the third quarter.”

This week we will have consumption data for May which are expected to show a rebound from the previous month.

Important news for EUR:

Monday:

Retail Sales

GBP

Final Q1 reading came in at -2.2% q/q vs -2% q/q as preliminary reported with all of the categories being revised down. Private consumption was at -2.9% vs -1.7% q/q preliminary while government spending showed the biggest decline coming in at -4.1% q/q vs -2.6% q/q as preliminary reported. With economy fully impacted by lockdown in Q2 there will be a horrific Q2 GDP reading pushing UK into a recession. Final manufacturing PMI came in at 50.1 same as preliminary reported while services came in at 47.1 vs 47 as preliminary reported pushing composite reading toward 47.7 from 47.6 as preliminary reported.

June 30 was the last day that UK could have asked for an extension of Brexit period. They have decided not the extend it and now if there is no deal by the end of the year UK’s relationship with EU will be on WTO rules. Negotiations pace will pick up as we get closer to the year-end but for now all of the attention is on UK’s fiscal measures to support the economy.

AUD

Trade balance data for May came in at AUD8.025bn vs AUD9bn as expected but with previous reading being revised down to AUD7.83bn. Exports came in at -4% m/m while imports fell even more at -6% m/m. Retail sales staged a rebound coming in at 16.9% m/m from -17.7% m/m the previous month.

Official PMI data from China for June came in better than expected. Manufacturing was at 50.9, non-manufacturing at 54.4, which is the best reading in seven months and composite was at 54.2. Factories and companies have returned to work and output is growing. On the downside there are signs that both external and internal demand are shrinking. Caixin manufacturing PMI came in at 51.2 for the highest reading of the year. Output component is in expansion for the fourth consecutive month with new orders being higher on the month. Caixin services skyrocketed to 58.4, the highest in over a decade, pushing the composite to 55.7. From the services report it can be seen that both domestic and international demand recovered and businesses were highly confident regarding the economic outlook.

This week we will have rate decision from Australia and inflation data from China. RBA is expected to leave the rate unchanged and give forward guidance on additional asset purchases and yield curve control.

Important news for AUD:

Tuesday:

RBA Interest Rate Decistion

RBA Rate Statement

Thursday:

CPI (China)

NZD

Final business confidence reading for June came in at -34.4 vs -33 as preliminary reported, but a jump from -41.8 the previous month. RBNZ is closely watching business confidence reading and with readings moving in the right direction they can be more confident that they are taking proper policy moves.

CAD

GDP in April set a new record by coming in at -11.6% m/m. Manufacturing and construction sector as well as retail trade and transport and warehousing have seen drops bigger than -20% m/m. Accommodation and food services sector saw a drop of -42.4% m/m. When looked at chained GDP a decade of growth in Canadian GDP was wiped out by the preceding two months. Trade balance in May came in at CAD0.6bn vs -CAD4.27bn the previous month. Exports rose 6.7% m/m on the back of motor vehicles and parts as well as increase in oil prices. Imports fell -3.9% m/m with basic and industrial chemical, plastic and rubber products (-14.4%) being the biggest contributor. Exports to the United States were up 8.9% m/m increasing trade balance surplus with US to CAD2.8bn.

This week we will have employment data expected to show another positive reading.

Important news for CAD:

Friday:

Employment Change

Unemployment Rate

JPY

Retail sales in May staged a rebound of 2.1% m/m but 3% m/m was expected. The unemployment rate rose to 2.9% from 2.6% the previous month, which is the highest rate in over 3 years, while preliminary industrial production data fell to -8.4% m/m and -25.9% y/y, both worse than expected. Final manufacturing PMI for June came in at 40.1 up from 37.8 as preliminary reported while services came in at 45 propping up composite to 40.8. Improvements from the previous month’s horrors but still way below the expansionary 50 level.

This week we will have spending, earnings and machinery orders data.

Important news for JPY:

Tuesday:

Household Spending

Labour Cash Earnings

Thursday:

Core Machinery Orders

CHF

Total sight deposits for the week ending June 26 came in at CHF683bn vs CHF680.1bn the previous week. SNB is intervening to fight Swissy’s strength and push EURCHF toward 1.07 level. SNB has reduced the lower limit of its special liquidity-shortage financing facility rate in order to assist banks to obtain short-term liquid funds. The rate will be reduced to at least 0% and the change will come into effect from July 1. Retail sales in May staged a V-shape recovery coming in at 6.6% y/y vs -18.8% y/y previously. Inflation data continued to plunge into deflationary territory with headline CPI coming at -1.3% y/y while core CPI came in at -0.8% y/y.

This week we will have employment data.

Important news for CHF:

Wednesday:

Unemployment Rate

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