The dollar ended mixed on Monday in thin, summer trading; slightly firmer against the majors and a little softer against the commodity currencies, following on from yesterday’s better than expected Chinese data, despite the Q2 GDP, which continued to slow, with the GDP coming in at 6.2%. Donald Trump kept the pressure up yesterday on the trade front, by saying that slowing economic growth in China is evidence that the US tariffs are having “a major effect” and warned that his administration could pile on more pressure as bilateral trade talks progress.
Stocks ended Monday pretty much flat, as did Gold, while WTI fell by 1.5% after Cyclone Barry turned out to be less destructive than was expected ahead of the weekend trade and gave up some of the gains prompted by those expectations on Friday.
Helping to underpin the US markets on Monday was the NY Empire State manufacturing index for July, which came in at +4.3, compared to -8.6 in June, as activity in New York posted its biggest increase in more than two years, providing further evidence that the YS economy is still operating with some decent momentum despite the concerns over a global economic slowdown on the back of the US/China trade tensions.
Looking ahead, Tuesday will begin the NZ Q2 CPI(exp 0.3%qq, 1.7%yy%) and the RBA Minutes, coming ahead of the UK Unemployment (exp 3.8%, +22.5K) and the German/EU ZEW Economic Sentiment Survey, which will be followed by the US Retail Sales (exp 0.2%mm; Control Group exp 0.3%mm), Capacity Utilisation (exp 78.1%), Industrial Production (exp 0.2%mm), NAHB Housing Market Index (exp 64) and Business Inventories(exp 0.4%), all for June. The US data takes on even greater importance than usual in light of the dovish outlook from the Fed last week and the FOMC Meeting to be held on July 30/31. A 25% rate cut is fully priced in, while a 50 point cut is seen as a 20% chance.
Economic data highlights will include:
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
Market moves, in brief:
FX: DXY 96.94 (+0.22%)
Bonds: US10Y; 2.090% (-1.95%), German 10Y; -0.253% (-0.92%), UK 10Y; 0.795% (-4.49%), Australian 10Y; 1.464% (+0.65%), NZ 10Y; 1.66% (2.02 %), China 10Y; 3.207% (+1.46%)
Stock Indices: DJI; +0.10%, S+P; +0.02%, NASDAQ; +0.17%, EUStoxx50; +0.13%, FTSE100; +0.34%, Shanghai Composite; +0.40%,
Metals: Gold $1414 oz (-0.10%), Silver $15.40 oz (+1.06%), Copper $2.711 lb (+0.63%), Iron Ore $121.18 per tonne (NYMEX) (+0.77%),
Oil: WTI $59.28 pb (-1.63%)
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