FINANCIAL MARKET REVIEW FOR AUG 01, 2018
Economic data released through the Asian session included July manufacturing sector data out of Australia and China, with 2nd quarter employment figures out of New Zealand. For the Aussie Dollar, the AIG Manufacturing Index slid from June’s 57.4 to 52.0 in July. Of the 7 sub-indexes, 3 expanded, 3 were stable and 1 contracted in July, the sales sub-index falling by 15.7 points to 45.5, its lowest level since early 2016. The new orders sub-index fell by 6.5 points to 51.1, with the employment sub-index falling by 7.8 points to 50.3. The exports sub-index slipped by 3 points to 49.9. On inflation, the input price sub-index eased by 2.2 points to 68.1, with input prices on the higher side as a result of high energy costs and a continued rise in cost of raw materials. The average wages sub-index rose by 1.8 points to 60.6, the rise attributed to the introduction of a 3.5% rise in minimum wage, effective 1st The Aussie Dollar moved from $0.74528 to $0.74275 upon release of the figures, the markets showing little response to the numbers ahead of the manufacturing data out of China. For the Kiwi Dollar, the unemployment rate stood at 4.5% in the 2nd quarter, rising above a 1st quarter and forecasted 4.4%. The underutilisation rate rose from 11.9% to 12.0%, while employment increased by 0.5% in the quarter, rising above a forecasted 0.4%, whilst easing from a 1st quarter 0.6% rise. The labour force participation rate rose by 0.1 percentage points to 70.9%. On the wage front, the Labour Cost Index increased by 0.6%, quarter-on-quarter, which was in line with forecasts, whilst picking up from a 1st quarter 0.3% rise, the increase attributed to the minimum wage increase of NZ$0.75 to NZ$16.5 made effective on 1st April 2018. The Kiwi Dollar moved from $0.68193 to $0.68039 upon release of the figures, before rising to $0.6805 at the time of writing, down 0.19% for the morning For the Japanese Yen, while there were no material stats released through the morning, the finalized July manufacturing PMI came in at 52.3, which was ahead of a prelim and forecasted 51.6, while down from June’s 53.0. The Japanese Yen moved from ¥111.827 to ¥111.835 against the Dollar, before rising to ¥111.75 at the time of writing, down 0.10% for the session. Out of China, the July Caixin China General Manufacturing PMI came in at 50.8, falling short of a forecasted 50.9 and June 51.0. New export orders fell at the steepest pace in 25-months, with companies continuing to reduce staffing levels, the reduced capacity leading to an increase in backlogs.
vinsonfinancial.com | (+357) 250-288-6163 | general@vinsonfinancials.com
FINANCIAL MARKET REVIEW FOR AUG 01, 2018
The rate of input cost inflation eased, while output charges saw a slight pickup. Optimism towards the year ahead remained tentative, with concerns over market conditions, strict environmental policies and the potential effects of the U.S – China trade war weighing. The softer figure gives further justification of a need for the Chinese government to deliver on fiscal policies and for the PBoC to ease back, with the ongoing trade war contributing to the downside in economic activity. The Aussie Dollar moved from $0.74138 to $0.74185 upon release of the figures, before rising to $0.7419 at the time of writing, down 0.07% for the session. In the equity markets, it was a mixed start to the day, the ASX200 down 0.13%, while the Hang Seng, CSI300 and Nikkei made were on the rise, in spite of some weaker manufacturing sector numbers, the Nikkei finding support from a pullback in the Yen following the BoJ’s policy stance on Tuesday, with the trio also getting support from the overnight gains in the U.S. For the EUR, economic data out of the Eurozone is limited to July manufacturing PMI numbers out of Spain and Italy and finalized manufacturing PMI figures for France, Germany and the Eurozone. Forecasts for Spain and Italy are pointing to slower manufacturing activity going into the 3rd quarter, though we will expect the markets to focus on the numbers out of Germany, with any revisions likely to be of greater significance. At the time of writing, the EUR was down 0.01% at $1.1690, with today’s stats to provide direction, though the numbers will need to be upbeat to shake off the disappointing 2nd quarter GDP numbers released on Tuesday. For the Pound, it’s the day before Super Thursday, with July’s manufacturing PMI scheduled for release, forecasts pointing to slightly slower growth in the sector, though not by any margin that could throw the BoE off course from its heavily anticipated rate hike. While focus will be on the PMI figure, July house price figures are also forecasted to be released in the early part of the morning. At the time of writing, the Pound was down 0.05% to $1.3118, with pressure likely to build further should the PMI numbers disappoint. Across the Pond, it’s another busy day for the Dollar, with July’s ADP nonfarm employment change figures, the market’s preferred ISM manufacturing PMI and the finalized July Markit manufacturing PMI scheduled for release ahead of the FOMC interest rate decision and release of the all-important rate statement. While we can expect the nonfarm and ISM manufacturing PMI to provide some direction, Dollar sensitivity to any weak stats amidst the ongoing trade war heightened, focus will be on the rate statement. Softer than expected June core inflation figures on Tuesday, which followed the softer 2nd quarter numbers released on Friday, may have eased the need to be particularly hawkish and commit to a further 2 rate hikes for the year. It will ultimately boil down to whether there’s a green light for a September move, economic conditions favouring a move, with the FED likely to be eager to build an interest rate buffer ahead of any economic slowdown. At the time of writing, the Dollar Spot Index was up 0.01% to 94.56, with today’s stats and sentiment towards the FED’s tone later today to provide direction.
vinsonfinancial.com | (+357) 250-288-6163 | general@vinsonfinancials.com
FINANCIAL MARKET REVIEW FOR AUG 01, 2018
For the Loonie, there are no material stats scheduled for release following the better than expected May GDP numbers released on Tuesday, leaving NAFTA chatter and market risk appetite to provide direction through the day. At the time of writing, the Loonie was down 0.02% to C$1.3009 against the U.S Dollar.
vinsonfinancial.com |Â (+357) 250-288-6163 | general@vinsonfinancials.com