15 July: Traders preparing for a Fed rate cut. China GDP, Retail Sales in focus Monday. Powell speaking tomorrow.

By | July 15, 2019

US stocks closed at yet new all-time highs on Friday, while dollar fell as traders prepared for a Fed rate cut at the upcoming meeting on July 30/31 despite a better-than-expected outcome in the June PPI inflation reading, at +0.1%mm vs the expected 0.0%. Various Fed speakers through the week have alluded to their own thoughts on the need to cut rates but it was the turn of the Chicago President, Charles Evans, on Friday, who said that “a couple of rate cuts” are needed to boost inflation and ensured that the dollar ended on a soft note and that stocks found the encouragement to move higher, with the indices ending up by around 0.6%/0.9%. This also underpinned commodities, which saw the metals move up by 0.75%, along with the commodity bloc currencies, which had a solid session as risk sentiment improved a little. . Elsewhere the US$ was under particular pressure against the Jpy as US yields headed lower, while Cable also managed to squeeze higher despite the Bank of England warning that a no-deal Brexit could trigger a material shock to the UK economy.

WTI was little changed as a forecast for a global crude surplus offset worries about US output declines due to  tropical storm Barry, which was approaching the US at the end of Friday trade.

In earlier data on Friday, the Euro largely ignored the EU industrial production figure, which rose by 0.9% mm in May, well above expectation of 0.2% mm.

There is a fair bit on the calendar this week with something on most days to provide some interest. Monday kicks off with the NZ Visitor Arrivals (exp +3.0%) and a busy download from China including the Q2 GDP (exp 1.5%qq, 6.2%yy) and the June Retail Sales (exp 8.3%), Industrial Production (exp 5.2%), House Price Index and Fixed Asset Investment (exp 5.5%), although it then thins out with nothing to come from the EU and just the New York State Empire Mfg Index from the US (exp 0.5%).

As for the rest of the week, Tuesday will begin the NZ Q2 CPI and the RBA Minutes, coming ahead of the UK Unemployment and the German/EU ZEW Economic Sentiment Survey, which will be followed by the US Retail Sales for June, which will be important in light of the dovish outlook from the Fed last week. Wednesday will see the UK and EU CPI for June, along with the US housing data, while Thursday will have the Australian Unemployment, UK Retail Sales and the US Philadelphia Fed Mfg Survey. Friday will wind the week up with the German PPI and the Michigan Consumer Sentiment Index as well as various Fed speakers, who will appear throughout the week, giving their contradictory views as we head towards the FOMC Meeting on July 30/31. Have a good week.

Economic data highlights will include:

Mon: NZ Visitor Arrivals, China Retail Sales, House Price Index, Q2 GDP, NBS Press Conference, US New York State Empire Mfg Index,

Tue: NZ Q2 CPI, RBA Minutes, UK Unemployment, EU Trade Balance, German/EU ZEW Economic Sentiment Survey, US Retail Sales, Capacity Utilisation, Industrial Production, Business Inventories, NAHB Housing Market Index, API Weekly Crude Oil Stock Inventory, Global Dairy Trade Index, Fed Speakers; Powell/Bostic/Evans

Wed: Australian WBC Leading Index, UK CPI, PPI, RPI, EU CPI, US Building Permits, Housing Starts, EIA Crude Oil Stocks Weekly Change, Beige Book

Thur: Japan Merchandise Trade Balance, Australian Unemployment, UK Retail Sales, US Philadelphia Fed Mfg Survey, Jobless Claims

Fri: NZ Credit Card Spending, Japan National CPI, German PPI, EU Current Account, UK Public Sector Net Borrowing Requirements, US Michigan Consumer Sentiment Index, Baker Hughes Oil Rig Count, Speech; Fed’s Bullard

Market moves, in brief:

FX: DXY 96.72 (-0.35%)

Bonds: US10Y; 2.129% (-0.70%), German 10Y; -0.250% (+5.41%), UK 10Y; 0.832% (-0.53%), Australian 10Y; 1.454% (+8.06%), NZ 10Y; 1.627% (+5.55 %), China 10Y; 3.161% (-1.71%)

Stock Indices: DJI; +0.90%, S+P; +0.46%, NASDAQ; +0.59%, EUStoxx50; +0.03%, FTSE100; -0.05%, Shanghai Composite; +0.44%,

Metals: Gold $1415 oz (+0.86%), Silver $15.23 oz (+0.74%), Copper $2.694 lb (+0.24%), Iron Ore $120.25 per tonne (NYMEX) (-0.06%),

Oil: WTI $60.24 pb (0.00%)

EURUSD: 1.1270
Res  1.1285  1.1300  1.1320
Sup  1.1255  1.1235  1.1215
USDJPY: 107.89
Res  108.15  108.45  108.75
Sup  107.80  107.55  107.25
GBPUSD: 1.2576
Res  1.2590  1.2615  1.2640
Sup  1.2555  1.2530  1.2505
USDCHF: 0.9840
Res  0.9870  0.9900  0.9935
Sup  0.9835  0.9815  0.9785
AUDUSD: 0.7019
Res  0.7030  0.7045  0.7060
Sup  0.7000  0.6985  0.6965
NZDUSD: 0.6695
Res  0.6700  0.6720  0.6740
Sup  0.6680  0.6660  0.6640
S&P.fs: 3014.53
Res  3020.00  3030.00  3040.00
Sup  3005.00  2995.00  2985.00
DJ30.fs: 27311.00
Res  27400.00  27650.00  27885.00
Sup  27100.00  26920.00  26685.00
SPI200.fs: 6604
Res  6620  6630  6640
Sup  6600  6590  6580
XAUUSD: 1415.26
Res  1420.00  1425.00  1430.00
Sup  1410.00  1405.00  1400.00
XAGUSD: 15.22
Res  15.30  15.40  15.55
Sup  15.15  15.05  14.90
WTI.fs: 60.33
Res  60.90  61.35  61.80
Sup  59.75  59.25  58.70