AUDUSD (0.744): The Australian Dollar managed to strengthen for the week, despite falling close to -0.9%. Economic data for the week saw a mixed but an overall positive numbers. While the RBA left interest rates unchanged and could likely keep its policy unchanged for the coming months, labour market activity picked up for the month of June. Unemployment rate fell to 6% from an upward revised 5.9% in May. There were some downward revisions to the job numbers the month earlier but with June employment change beating estimates, the Aussie saw a modest rally before turning flat for the most part. In the housing sector, home loans for the month fell by -6.1% in what seems to be the combined efforts between the RBA and the Australian regulators to hone foreign investor activity in the housing markets. AUDUSD posted weekly lows of 0.7372 before rallying but the currency remains below last week’s lows of 0.7511.
- MI Inflation gauge m/m 0.1% vs. 0.3% previously
- ANZ Job advertisements m/m 1.3% vs. 0.1% previously
- AIG Construction index 46.4 vs. 47.8
- RBA Cash rate, unchanged at 2%
- Employment change 7.3k vs. -2.1k, previous month revised down to 40k from 42k
- Unemployment rate 6% vs. 6.1%, previous month revised to 5.9% vs. 6%
- Home loans m/m -6.1% vs. -3.3%
EURUSD (1.119): The Euro, single currency was broadly stronger this week despite the headwinds from Greece. EURUSD posted weekly highs above 1.12 after initially dipping to lows near 1.0915 earlier in the week. Post-referendum, talks continue to progress and it looks likely that Greece could agree to its creditors demands rather than risk facing an exit from the Eurozone. It comes down to the weekend event yet again as Greece parliament has to ratify the bailout terms.
On the economic front, the Eurozone Sentix investor confidence grew to 18.5 despite the political uncertainty from Greece. However, the Euro did not react much to the economic data which was broadly mixed..
- German factory orders m/m -0.2% vs. 0%, previous month revised to 2.2% from 1.4%
- Retail PMI 50.4 vs. 51.4 previously
- Sentix investor confidence 18.5 vs. 15.6
- German industrial production m/m 0.0% vs. 0.1%
- German trade balance 22.8bn vs. 20.6bn
- German WPI m/m -0.2% vs. 0.5% previously
- French industrial production m/m 0.4% vs. 0.5%, previous month revised to -0.8% from -0.9%
- Italy industrial production m/m 0.9% vs. 0.3%
NZDUSD (0.672): The Kiwi finally managed to make some gains with the currency rallying 0.64% for the week, lifting off lows near 0.662. The currency however remains well below the previous week’s high. There were no economic releases from New Zealand this week leaving the currency to trade off the US Dollar’s volatility.
USDJPY (122.4): The Yen saw a choppy week as the currency initially strengthened on safe-haven flows. USDJPY declined to weekly lows near 120.58 before reversing its losses as news emerged of a possible resolution to the Greek crisis. USDJPY rallied back to the weekly open near 122.46 at the time of writing.
Economic data from Japan included core machinery orders, which rose 0.6%, beating estimates of -4.8%, but preliminary machinery tools orders rose by a soft 6.6%, down from 15% previously. Producer price index continues to remain soft falling -2.4% for the month.
- Leading indicators 106.2% vs. 106.2%
- Current account 1.64tn vs. 1.39tn
- Bank lending y/y 2.5% vs. 2.6% previously
- Core machinery orders m/m 0.6% vs. -4.8%
- Prelim machine tool orders y/y 6.6% vs. 15% previously
- PPI y/y -2.4% vs. -2.2%
- Consumer confidence 41.7 vs. 41.9
USDCAD (1.268): The Canadian dollar saw a mixed week as Ivey PMI printed a soft number, rising to 55.9 and missing estimates. Building permits fell -14.5% while housing starts managed to rise 203k for the month. The Canadian dollar was clearly under pressure as Oil prices fell this week. Canada’s unemployment data for the month of June saw a strong print with employment change showing a less than expected dip of -6.4k against estimates of -9k. The unemployment rate also held steady at 6.8%. The Loonie however failed to hold its gains to the Greenback as USDCAD gained 1% for the week, at the time of writing.
- Ivey PMI 55.9 vs. 56.2
- Canada trade balance -3.3bn vs. -2.6bn
- Building permits m/m -14.5% vs. -5.2%, previous month revised to 12.1% from 11.6%
- Housing starts 203k vs. 191k, previous month revised to 197k from 202k
- Employment change -6.4k vs. -9k
- Unemployment rate 6.8% vs. 6.9%
GBPUSD (1.552): GBPUSD fell sharply this week as the bearish momentum kicked in. The Cable fell to fresh 3 week lows below 1.5368 before the currency managed to stabilize and recover some of the losses. For the week, GBPUSD was down -0.39% at the time of writing. Manufacturing production fell -0.6% but industrial production was modest at 0.4%. The Bank of England left its monetary policy unchanged at 0.5%.
- Manufacturing production m/m -0.6% vs. 0.1%
- Industrial production 0.4% vs. -0.2%, previous month revised down to 0.3% from 0.4%
- NIESR GDP estimate 0.7% vs. 0.6% previously
- BRC Shop Price index y/y -1.3% vs. -1.9% previously
- Halifax HPI m/m 1.7% vs. 0.2%
- BoE official bank rate unchanged at 0.5%
- UK Trade balance -8bn vs. -9.7bn
- Construction output m/m -1.3% vs. 0.7%, previous month revised to -0.5% from -0.8%
USDCHF (0.934): The Swiss Franc strengthened this week as the USDCHF lost close to 0.6% for the week. After the currency tested weekly highs above 0.9506 the Greenback fell strongly and was seen trading at 0.935 at the time of writing. Economic data from Switzerland included the CPI which increased 0.1% while unemployment rate was steady at 3.3%.
- CPI m/m 0.1% vs. 0.1%
- Unemployment rate 3.3% vs. 3.3%
- Foreign currency reserves 516.2bn vs. 517.7bn previously
US Dollar Index (95.69): The US Dollar Index was initially well bid into the week but soon lost ground as the index post highs to 97.3 before falling. For the week, the US Dollar Index lost -0.7% falling to lows of 95.7. The FOMC meeting minutes released this week did not offer much clues and the market reaction was mostly muted albeit inclined to the dovish side. Greece crisis and questions on global economic recovery is making investors question whether the Fed would be able to hike rates this year.
In terms of economic data, there were no significant releases this week. Service PMI was soft, meeting estimates at 54.8, while ISM non-manufacturing PMI was soft at 56, below estimates of 56.5.
The markets are awaiting Fed Chair, Janet Yellen’s speech due later this evening in regards to any clues about possible Fed rate hikes.
- Final services PMI 54.8 vs. 54.8
- ISM non-manufacturing PMI 56 vs. 56.5
- US Trade balance -41.9bn vs. -42.5bn
- JOLTS job openings 5.36mn vs. 5.33mn
- IBD/TIPP Economic optimism 48.1 vs. 48.9
- FOMC meeting minutes released
- Consumer credit m/m 16.1bn vs. 18.5bn
- Unemployment claims 297k vs. 274k
- Janet Yellen speech
