Chinese Economic Insight Today
AUD
The Aussie Dollar kicks off the week mixed against major currency pairs, with a mixed performance from commodities in Friday’s session. Gold and Silver gained +1.2% and +2.0% respectively, while Iron Ore and Natural Gas each fell -0.6% and -1.2%. The ASX ended the week down -0.3%, dragged by communications and tech. Asian equities closed mixed with the Nikkei +0.2%, Shenzhen +0.4% and Hang Seng -0.9%. Today will bring China’s economic data for May, with Industrial Production y/y expected to increase +6.2% and Retal Sales expected at +3.0%, helped by holiday tourism but dragged down by sluggish durable goods sales. Overall, the data should show a mixed picture, with upticks in exports and manufacturing counteracted by growth and consumption drags. Notably, tomorrow afternoon will bring the Reserve Bank of Australia’s key interest rate decision and Press Conference. A rate hike was considered at the previous meeting, but ultimately, policymakers judged the risks to the inflation forecasts to be balanced. Tomorrow’s Statement will likely strike a similar tone, with the Cash Rate mostly expected to be held at 4.35%. Markets currently price in a 32.5% change on a 25bps cut.
USD
AUDUSD tested below the 0.66 handle on Friday evening, briefly reaching 0.6592 lows on Friday evening ahead of this morning’s open at 0.6612. This comes despite weaker US economic data on Friday, with Prelim UoM Consumer Sentiment notably falling to 65.6 (prev. 72.1). Although down compared to May, June’s reading represents a +2.2% increase year-on-year. Subdued results on Wall St. saw the NASDAQ close +0.1%, the S&P 500 flat and the Dow Jones down -0.2%. Tonight, we’ll see the Empire State Manufacturing Index. Tomorrow will bring important Retail Sales data from the US. Given last week was somewhat confusing for Fed watchers (a soft CPI report was following by a hawkish Fed meeting), tomorrow’s Retail Sales figures will likely draw attention.
EUR
Political uncertainty in France has driven further Euro weakness, with the AUDEUR re-testing 6-month highs of 0.6191 on Friday evening before retracing only a little to this morning’s open at 0.6180. The DAX ended Friday’s session -1.4%, with the CAC dropping -2.7% to a new four-month low in the wake of the French snap election. We’ve got an empty data calendar today. Tomorrow, we’ll see Eurozone Final CPI y/y and Final Core CPI y/y. The main event with week will be Friday’s Flash Manufacturing and Services PMIs for France, Germany and the Eurozone as a whole.
GBP
AUDGBP touched 0.5190 lows on Friday evening before pushing a little higher above the 0.52 handle to open this morning at 0.5212. UK equities ended Friday slightly lower with the FTSE -0.2%. A quiet data calendar today and tomorrow ahead of a jam-packed back end to the week. We have a range of hard-hitting UK data on the way, including CPI y/y on Wednesday as well as the Bank of England interest rate decision and Press Conference on Thursday. Markets are currently pricing in less than 5% odds of an interest rate cut from the central bank, with the overwhelming consensus being the key interest rate will be held at 5.25%. Much of that is due to the recent stubborn services inflation data for the UK, although this Wednesday’s CPI release will shine further light on the topic.
NZD
AUDNZD opens flat at 1.0775 after trading sideways over the past few days. This morning’s BusinessNZ Services printed at 43.0 (prev. 46.6), showing further contraction n the NZ services sector. Tomorrow will bring Westpac Consumer Sentiment data. The main Kiwi event this week will be their GDP q/q figure, set to be released on Thursday morning.