Markets Await Chinese GDP Data Today
AUD
The Aussie Dollar trades sideways once more against the Majors in choppy market conditions. Major news yesterday that China may be considering ending its coal ban with Australia gave the AUD some life, however this was short lived. The big local data piece was the Employment Report which had the Unemployment Rate falling to a record low of 3.5% and comfortably beating estimates of 3.8% and falling from a previous 3.9%. There were also an additional 88.4K new jobs to the market. The caveat to this was underemployment rate increased to 6.1%. In response to the solid report, domestic 3-year bond yields jumped 19bps to 3.05%, and the market priced odds of a 75bp hike in August at 0.6%. Chinese property market drama has developed into revolt on mortgage payments as citizens over 22 cities are refusing to pay on unfinished homes, sending Iron ore crashing below $100 a ton. Asian Equities finished the session largely higher with the Hang Seng underperforming down 0.2% and the CSI300 flat. Asian equities finished up with the ASX up 0.4%. Commodities were slightly in the green with gold gaining 0.3%, followed by Iron Ore closing up 0.5% despite Chinese turmoil. Looking ahead the big news on our region's macroeconomic calendar will be China's GDP print set for release at noon, expecting 1.2% , followed by Retail Sales, Industrial Production and their own unemployment figures.
USD
The Aussie trades sideways against the Greenback amid volatile conditions currently sitting at 0.6746 at time of writing. To the data overnight, and US PPI for June printed at 1.1% MoM and 11.3% YoY, higher than expectations of 0.8% and 10.7% respectively, which falls in line with the record CPI figures we had seen earlier. Core measures however were generally lower than expected. The weaker core PPI saw the USD weaken with majors including our Aussie, yet recovering some losses shortly after with the USD still proving resilient in a market permeated by fear. Following this, jobless claims data was mixed with initial claims rising slightly to 244k against expectations of 235k while continuing claims fell to 1.331m against expectations of 1.380m. FOMC Member Waller stated he is open to larger rate hikes this month, with FOMC Member Waller echoing this sentiment saying he supports a 75 basis point hike at the July 26-27 meeting, but will be watching data and keeping an open mind about what the Fed should do to control inflation which is running at its fastest pace since 1981. In US Equities Wall St was slightly in the red at close with the Dow Jones losing 0.4%, the S&P 500 down 0.3% and the NASDAQ closing flat. Looking ahead for the day, today we will see the release of a slew of US data beginning with Retail Sales and Core Retail Sales m/m expected at 0.9% and 0.7% respectively. This will be followed by Empire State Manufacturing Index, FOMC’s Member Bullard will hit the wires speaking about the economic outlook and monetary policy at a virtual event hosted by the European Economics and Financial Centre at 11pm. Closing the week Prelim UoM Consumer Sentiment expected at 49.0 will close the week for major US data.
EUR
High volatility persisted overnight against the EUR, AUD currently trading at 0.6738 at time of writing. Inovernight data, the European Economic Forecast discussed the soaring energy crisis and economic effect of the war in Ukraine stating this feeds global inflationary pressures, eroding the purchasing power of households and triggering a faster monetary policy response than previously assumed. Furthermore, the deceleration of growth in the US is adding to the negative economic impact of China’s strict zero-COVID policy. In geo-political news, the Italian government won a confidence vote despite the 5 Star Movement withdrawing support though Draghis’ government was still considered to be under pressure with the PM set to meet the Italian president, later headlines hit the wires that Italian PM Draghi had submitted his resignation as the national unity coalition that backed his government no longer existed and the conditions for him to carry on where no longer in place. EURUSD briefly dipped below parity on news of Draghi's offer of resignation but later recovered on news that his offer had been rejected by the Italian President. Amidst the turbulence European Equities were understandably red across the board with the CAC losing 1.4% followed by the DAX fairing worst, down 1.9%. No more data from the EZ for the rest of the week as Thursday's upcoming ECB interest rate decision looms large.
GBP
The AUDGBP pair showing minor gains, trading at 0.5705 at time of writing in what has been choppy conditions. Volatility not the result of UK-centric influences, with little to nothing on the macroeconomic calendar for the region closing the week. In UK Equities the FTSE was down heavily losing -1.6%, most likely as a result of some of the EZ uncertainty (see above). Looking ahead the major data out of the UK will be their own Inflation figures set for release next week Wednesday, with eyes firmly focused on how this will effect the UK ever present fears of looming recession.
NZD
The Aussie is also trading sideways against its little cousin across the ditch currently at 1.1015 at time of writing pealing off from highs of yesterday’s 1.1068 post Aussie Unemployment print. Data this morning showed Business NZ Manufacturing Index printed at 49.7 against previous of 52.9, later the RBNZ Statement of Intent which has been sitting tentatively throughout all of this week. The next important data piece from NZ comes on Monday morning in the form of NZs own CPI q/q.