12 July: US$ stable, DJI at new highs follwing Powell’s testominy. China TB and US PPI in focus today.

By | July 12, 2019

The US$ has stabalised on Thursday, following on from Jerome Powell’s dovish outlook of the previous session, underpinned by a stronger than expected core CPI reading and solid jobs data. Powell reiterated his dovish outlook today although a rather more upbeat outlook was described by various regional Fed heads, including Atlanta Fed President, Bostic and Richmond President, Barkin who both seemed skeptical of the need to cut interest rates right now.  Ahead of the next FOMC meeting on July 30/31, the retail sales are due next week and Q2 GDP the following week and will be closely monitored.

In terms of the data on Thursday, the US headline CPI slowed to 1.6% yy in June, down from 1.8% yy and matched expectations. More optimistically, the Core CPI accelerated to 2.1% yy, up from 2.0% yy, beating expectation of 2.0% yy while the monthly core CPI rose by 0.3% mm.

The US initial jobless claims dropped -13k to 209k in the week ending July 6, below expectation of 221k.

In terms of markets, the currencies are pretty much stable, while stocks are mixed although it was notable that the DJI topped 27,000 for the first time. Th big move of the day was again in Gold, which traded a volatile range, with a high/low of 1427/1401, finishing near the lows of the session. WTI is unchanged, unable so far to overcome the 100 DMA at 60.60.

Looking ahead, the calendar for Friday has mostly secondary data, in what may be a quiet session. Asia begins with the NZ Business PMI (exp 53.1) and the China Trade Balance (exp Exports -2.0%, Imports -4.5%, $44.65 bio), both for June, while the Japan will have the May Industrial Production and Capacity Utilisation, but which will likely have little market impact. Europe will look to the German Wage Price Index for June (exp 0.2%, 1.3%yy) and the EU, May Industrial Production (exp +0.2%mm, -1.6%yy), while the US will have the June PPI (exp 0.0%mm, 1.6%yy, Ex F/E 0.2%/2.2%). Have a good w/e.

Economic data highlights will include:

Fri: NZ Business PMI, China Trade Balance, Japan Industrial Production, EU Industrial Production, US PPI

Market moves, in brief:

FX: DXY 97.08 (0.01%)

Bonds: US10Y; 2.143% (+3.99%), German 10Y; -0.265% (+13.48%), UK 10Y; 0.837% (+10.47%), Australian 10Y; 1.346% (-1.32%), NZ 10Y; 1.542% (-0.54 %), China 10Y; 3.216% (+0.12%)

Stock Indices: DJI; +0.85%, S+P; +0.23%, NASDAQ; -0.08%, EUStoxx50; -0.14%, FTSE100; -0.28%, Shanghai Composite; +0.08%,

Metals: Gold $1403 oz (-1.11%), Silver $15.11 oz (-0.84%), Copper $2.6387 lb (-0.24%), Iron Ore $120.30 per tonne (NYMEX) (-0.43%),

Oil: WTI $60.41 pb (+0.28%)

CURRENCIES
EURUSD: 1.1253
Res  1.1270  1.1285  1.1300
Sup  1.1235  1.1215  1.1195
USDJPY: 108.49
Res  108.70  109.00  109.30
Sup  108.20  108.00  107.85
GBPUSD: 1.2523
Res  1.2540  1.2570  1.2600
Sup  1.2500  1.2470  1.2440
USDCHF: 0.9903
Res  0.9920  0.9950  0.9980
Sup  0.9875  0.9845  0.9820
AUDUSD: 0.6974
Res  0.6985  0.7000  0.7015
Sup  0.6960  0.6945  0.6930
NZDUSD: 0.6663
Res  0.6680  0.6700  0.6725
Sup  0.6645  0.6625  0.6605
INDICES / COMMODITIES
S&P.fs: 3003.78
Res  3010.00  3020.00  3030.00
Sup  2995.00  2985.00  2975.00
DJ30.fs: 27082.00
Res  27200.00  27400.00  27600.00
Sup  26960.00  26835.00  26685.00
SPI200.fs: 6631
Res  6645  6655  6665
Sup  6625  6615  6605
XAUUSD: 1403.41
Res  1410.00  1415.00  1420.00
Sup  1400.00  1395.00  1390.00
XAGUSD: 15.11
Res  15.20  15.30  15.40
Sup  15.00  14.90  14.80
WTI.fs: 60.38
Res  60.55  60.95  62.00
Sup  59.75  59.00  58.10