The US$ uptrend continued on Friday after the Preliminary Q2 GDP report came in better than expected and ensured that it ended the week with strong upward momentum against all counterparts, with the DXY ending the week just below 98.00 having touched an intraday high of 98.09. Friday’s data showed that the US GDP grew at 2.1% annualised in Q2, weaker than the 3.1% seen in Q1, but stronger than the expected 1.8%. The result did nothing to alter the view that the Fed lower rates on July 31 by 0.25% with precarious global growth and the US /China trade issues at the forefront of their thinking.
Elsewhere in the FX space, the Kiwi and the Aud$ both ended Friday on a weak note, with the Aus in particular trading heavily, finishing at a 5 week low, because of the increasing expectation for further cuts from the RBNZ and the RBA. Meanwhile, Sterling ended mixed on the crosses but at levels last seen in April 2017 against the US$ after a late selloff as PM, Boris Johnson, locked horns with the EU over how Brexit will be delivered by October 31 as promised, with the “no-deal” divorce now seeming a real possibility.
In the other markets, Stocks ended on a firm note, underpinned by the firm data and also by robust earnings reports from Alphabet and Starbucks, which helped to push the S&P 500 and Nasdaq to record highs on Friday. The metals were steady, while WTI settled up by 0.3%, at $56.20 per barrel.
Looking ahead, we have a big week coming up, with a lot going on although Monday is going to be a quiet day for the calendar apart from the ongoing US corporate reporting season, which will continue through the week. Elsewhere, Tuesday will feature the BOJ Meeting – at which no change is expected to policy and the interest will lie in the forward outlook/statement – and the German Inflation figures for June. Wednesday is going to be hectic, starting in Asia with the China NBS Mfg/Non Mfg PMIs, the Australian Private Sector Credit and the Q2 CPI, ahead of the EU Q2 GDP and German Retail Sales for July. Then, later on Wednesday, the main event of the week will be the FOMC Meeting at which a 25 bp cut is now widely expected. Thursday will be busy with the global manufacturing PMIs and the BOE Meeting, at which a 9-0 vote is widely expected to keep rates on hold. Finally, Friday will kick off with the BOJ Minutes and the Australian Retail Sales and PPI. The EU Retail Sales, PPI will then be released, ahead of the US Jobs data and the NFP and Average Hourly Earnings. Have a good week.
Economic data highlights will include:
Mon: Japan Retail Trade, UK Net Lending to Individuals, US Dallas Fed Mfg Business Climate
Tue: NZ Building Permits, BOJ Meeting/Interest Rate Decision/Statement/Outlook, EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, German CPI/HICP, US Personal Consumption/Expenditure – Price Index, Case Shiller House Price Index, Consumer Confidence, Pending Home Sales, API Weekly Crude Oil Stock Inventory
Wed: China NBS Mfg/Non Mfg PMIs, NZ Activity Outlook, Business Confidence, Australian Private Sector Credit, CPI, Japan Housing Starts, Consumer Confidence, Construction Orders, German Retail Sales, EU Q2 GDP, US ADP Jobs data, FOMC Meeting/Interest Rate Decision/Press Conference, Chicago Purchasing Managers Index, EIA Crude Oil Stocks Weekly Change
Thur: AIG Australian Performance of Mfg/ Index, CBA Mfg PMI, New Home Sales, Import/Export Index, Japan Nikkei Mfg PMI, Caixin China Manufacturing PMI, EU Mfg PMIs, BOE Meeting/Statement/Minutes/Vote Count/APP Facility, Mark Carney Speech, US Manufacturing PMI, ISM Mfg PMI/Prices Paid, Total Vehicle Sales, Construction Spending
Fri: BOJ Minutes, Australian Retail Sales, PPI, EU Retail Sales, PPI, US Jobs/NFP/Average Hourly Earnings data
Market moves, in brief:
FX: DXY 97.91 (+0.12%)
Bonds: US10Y; 2.075% (-0.43%), German 10Y; -0.377% (-4.23%), UK 10Y; 0.688% (-1.43%), Australian 10Y; 1.242% (0.08%), NZ 10Y; 1.515% (-1.62 %), China 10Y; 3.174% (-0.12%)
Stock Indices: DJI; +0.19%, S+P; +0.74%, NASDAQ; +1.11%, EUStoxx50; 0.41%, FTSE100; +0.80%, Shanghai Composite; +0.24%,
Metals: Gold $1419 oz (+0.29%), Silver $16.39 oz (-0.11%), Copper $2.685 lb (-0.68%), Iron Ore $120.11 per tonne (NYMEX) (0.00%),
Oil: WTI $56.16 pb (+0.45%)
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