U.S. consumers, China's data, and RBNZ

8 August, 2016

U.S. consumers, China's data, and RBNZ

Friday incredibly impressive U.S. jobs report sent U.S. dollar and equities higher, with S&P 500 and Nasdaq ending the week at new record highs. The 255,000 jobs added in July and 292,000 in June, made markets look beyond the weak release in May of 24,000 jobs only. Unemployment rate held steady at 4.9%, this was largely due to the increase in labor participation rate, which suggests that Americans are getting encouraged to enter the workforce. Wage growth was another bright spot, rising 0.3% in July from a month earlier and 2.6% on annualized basis. The inspiring data will likely provide Fed hawks valid reasons to hike rates sooner than later, but markets seem not yet convinced that a rate hike will occur in 2016.

U.S. consumers, are they spending enough?  

U.S. retail sales figures are the only tier-one economic data release on the U.S. calendar. Unfortunately, traders have to wait until Friday for the data to be out. Should the improved labor market translate into more spending is the key question now. Economists are looking for a 0.4% increase in retail sales in July, after a 0.6% rise in June, and core retails sales which excludes automobiles, gasoline, food services and building materials is also expected to slow by 0.1% to 0.5%. However, given the strength of the labor market I expect to see a slight surprise to the upside.

China’s data to take center stage

There’s a lot of data coming out from China the week ahead that will shed the light again on the health of the second largest economy. Trade data will be released on Monday, with both imports and exports expected to continue declining but at slower pace. The argument for stimulus need will emerge again with the release of consumer prices on Tuesday. Annualized CPI is expected to slow to 1.8% in July from 1.9% a month earlier and producer prices expected to remain in negative territory for the 53rdconsecutive month. Friday is also a big day for China with retails sales, fixed-assets investments, and industrial production all expected to slow.

Another central bank to ease monetary policy

Reserve Bank of New Zealand is set to follow steps taken by Bank of England and Reserve Bank of Australia to be the third major central bank to cut rates. The announcement of new restrictions to lending limits on residential properties last month raised the prospects for a 0.25% rate cut when the bank meets on Thursday. However, a rate cut alone is not enough to send the Kiwi lower for two reasons. First, the news is already priced in the currency and second, a 2% interest rate will remain the highest within the universe of major central banks. So unless the central bank indicates further easing measures in the foreseeable future, expect the NZD to remain firm. 


Source link  
Markets ignoring political risks

Markets were unmoved by yesterday’s political risk events. Donald Trump's job approval rating took a hit...

The Fed continues to diverge, but is in no hurry

The greenback is falling while everything else is in green today after the Federal Reserve delivered on its promise to hike rates by 25 basis points. While this move was widely expected, many market participants...

Are you ready for some action?

Do not let the quiet session on Monday and early Tuesday fool you, volatility may be just around the corner...


Gold bears continue to dominate

Gold continues to be right in the cross hairs of the bears in the market, as US economic data continues to show a large amount of hope and as Trumps...

Oil gets hammered

Oil markets have shown they are more than capable of large movements but today's movement is the largest we've seen since July and showed...

Oil bears take a swipe

Oil has hit the headlines today after the most recent Crude Oil Inventory figures showed a surplus yet again of 1.50M barrels (3.08M exp), but more important expectations have changed in the US that there will be further use of oil resources as the winter so far has been quite mild...


USD bulls thrive in global markets

US markets continue to be a massive driver for the global economy, as economic optimism continued to pick up pace in the US sending equity markets and the USD higher...

Global risk appetite remains strong

The Australian economy continues to be a roller coaster for any Aussie bulls, but one thing is certain the markets are not paying too much attention at present with the AUDUSD being one of the stand out performers in 2017 so far.

Robust U.S. data fails to lift the greenback, what's wrong?

The strong growth in U.S. retail sales and the surge in consumer prices were expected to continue pushing the U.S. dollar higher on Thursday, but what happened was exactly the opposite, leaving many traders questioning the greenback’s uptrend...

  


Share: