FOREX News Today

European Outlook: Asian stock markets are mostly slightly higher, with Hong Kong stocks reversing declines after Chinese data which showed better than expected new loan growth in the second quarter and a slightly better overall growth number. U.S. and U.K. stock futures are lower, however, and Bund and Gilt futures will have a chance to claw back some of yesterday’s losses. The BoE’s decision to leave rates steady for now may have been somewhat of a disappointment, but the MPC all but announced further easing for August, so there is room for a correction in yields. The European calendar has the final reading of Eurozone HICP inflation for June, which is expected to be confirmed at 0.1% y/y. The headline rate is finally out of negative territory again, but still far below the ECB’s target and still leaving the central bank sufficient room to act again if necessary.

Strong Chinese Data: China’s GDP grew 6.7% y/y in Q2, slightly better than expected, matching the 6.7% pace in Q1. Separately, retail sales grew at a 10.6% y/y pace in June from the 10.0% clip in May. Industrial production improved to a 6.2% y/y pace in June from 6.0%. Overall, China’s growth rate stabilized in Q2, contrary to fears the economy would see a pronounced slowdown.  All three key data points were ahead of expectations and has dampened expectations that further stimulus will be required. The Shanghai Composite Index fell 0.1%, USDJPY spiked over 106, and AUDUSD moved up to 0.7675 before declining to 0.7630.

US Data Reports: All beat estimates with a firm round of June PPI gains and another tight initial claims reading through the July 4th holiday, hence confirming both the resilience in U.S. inflation and the tight labor market conditions signaled by the last round of payroll data with a likely July boost from this year’s diminished auto retooling effect. For PPI, we saw a 0.5% June headline rise with a 0.8% surge on the old SA basis, with a firm 0.4% core price rise. For claims, we expect a 6k drop in next week’s July BLS survey week reading back to the 248k cycle-low, following two consecutive tight readings of 254k that leave a lean 254k average thus far on the month.

Fedspeak: Esther George (Kansas City) current level of rates is too low and faster wage growth suggests the labor market is returning to normal, said the hawkish voter. That said, she will be looking at the impact of Brexit, which will be around for a while, along with the flight to quality when assessing any impact on the U.S. economy, seen likely to be modest. This should not come as a surprise, given her past dissents against accommodative policy. Atlanta Fed’s Dennis Lockhart endorsed a “cautious and patient” approach as appropriate given the uncertainty around Brexit and low inflation. Though “not a Lehman moment,” Brexit could weigh on business investment and create an income headwind for years to come, though he sees little immediate impact on the U.S. Lockhart still forecasts 2% U.S. growth and “very brisk” consumer spending. He sees the Fed meeting its policy objectives on inflation and employment in 2017, while already near full employment. Overall this is in line with his centrist reputation, as caution is balanced by optimism. No rush to hike, then, but perhaps he would be on board by year-end.

Main Macro Events Today        

• US Retail Sales – June retail sales data is out on Friday and is expected to show that retail sales remained unchanged (median 0.1%) on the month while sales ex-autos rose 0.3% (median 0.4%). Figures for May had headline retail sales up 0.5% with ex-autos up 0.4%. There is downside risk to the release from weaker vehicle sales for the month and continued sluggish growth in chain store sales.

• US CPI – June CPI is out today and we expect to see a 0.3% headline (median 0.3%) with the core up 0.2% (median 0.2%). This follows May figures that had the headline up 0.2% and the core up 0.2% as well. The June PPI was up 0.5% on the month while export prices rose by 0.8% and import prices by 0.2%.

• BOE Carney Speech – Speaking in Toronto about climate change and the financial markets.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FOREX News Today

European Outlook: Asian stock markets are mixed, with Japanese bourses continuing to benefit from stimulus hopes, while mainland China saw profit taking amid concerns that the market is overbought. Hang Seng and ASX 200 posted modest gains and U.S. and European stock futures are also moving higher. Oil prices are higher on the day, but the front end WTI future is holding below USD 46 per barrel. The focus in Europe will be on the BoE today, which is expected to cut rates by 25 bp today along with dovish guidance, as the bank is eying the fallout from the Brexit vote. The U.K. RICS house price balance, dropped to 10 from 19 highlighting that house prices will be one are that will feel the sting. The European calendar is pretty empty otherwise.

US Data Reports: Fed Beige Book reiterated the economy grew at a “modest” pace over the last six weeks (ending July 1), in line with expectations. The report, prepared by the St Louis Fed, had a slightly more upbeat tone versus recent Beige Books and was generally positive across broad areas of the economy. Consumer spending was generally positive, as was reported in June. However, there are some signs of softening. Labor market conditions remained stable, with employment growth modestly while wage pressures remained modest to moderate. Manufacturing was mixed but generally improved. Real estate continued to strengthen. The natural resources and energy sectors continued weak, however, damping the overall outlook. Price pressures remained slight. Though a tad more optimistic than recent reports, it won’t bring the FOMC off the sidelines at the July 26, 27 policy meeting.

Fedspeak: Kaplan is optimistic on the economy, expecting growth of about 2% after the disappointing 1.1% pace from Q1. Consumer spending should be solid this year, he added. Much of the recent erosion in the labor market he attributes to demographics, with part of it cyclical too. The participation rate is likely to decline further to below 61%, which creates headwinds for GDP, and suggested the only way to bounce back is through immigration. He looks for demand and supply in the oil market to get back into balance in Q1 2017, with prices continuing to firm. He added that the FOMC is very sensitive to the strength of the dollar. Kaplan becomes an FOMC next year.

Main Macro Events Today        

• BOE Rate Announcement Our view matches the strong consensus view for the Old Lady to cut the repo rate by 25bp, which would take it to a record low of 0.25%. This would be the first change in the repo rate since March 2009 and would more than likely be accompanied by dovish guidance, leaving the door open to further cuts and to a restart of the QE programme. The BoE will continue to make cash available for liquidity injections into the banking system.

•  US Initial Jobless Claims Initial claims data for the week of July 9 is out today and should reveal a headline increase to 265k (median 265k) after a big dip to 254k in the week of July 2nd. Overall, we expect claims to average 262k in July from 265k in June with nonfarm payrolls adding 180k in July after a 287k bounce in June.

• U.S. PPI June PPI is also out today and should reveal a 0.3% (median 0.3%) headline increase with the core up 0.1% (median 0.1%) for the month. This follows stronger figures in May which had the headline up 0.4% with the core up 0.3%. June trade price data has already been released and had import prices up 0.2% for the month with export prices up 0.8%.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FOREX News Today

European Outlook: The global stock market recovery continued in Asia overnight, (Nikkei 225 closed up +0.84% at 16,231) but U.S. and U.K. stock futures are heading south, suggesting that it is starting to run out of steam. Oil prices are off highs, but the front end WTI future is holding above USD 46 per barrel, Eased uncertainty about the U.K. as the domestic situation seems more settled and preparations for exit talks can start sooner than previously expected, coupled with hopes of further global stimulus is helping to underpin sentiment, but as GDP bounces back Gilt futures and FTSE 100 have been underperforming, even as the more domestically oriented FTSE 250 is doing better. The European data calendar as final June inflation data from France, Spain and Italy, which should hold any surprises. Eurozone production data for May meanwhile is set to show a sizeable contraction, thus confirming again that overall growth slowed down in the second quarter of the year. Events include the BoE’s credit condition survey, as the MPC starts its two day meeting, with tomorrow’s announcement expected to bring a 25 bp rate cut.

US Data Reports: U.S. JOLTS report showed job openings dropped 345k in May to 5,500k, after rising 175k to 5,845k in April (revised from 5,788k). That left the rate at 3.7% from 3.9%. Hirings also declined 49k to 5,036k, a third consecutive monthly drop (hirings have fallen in four of the five months this year). The rate was steady at 3.5%. Quitters also dipped 14k to 2,895k after the 39k decline in April to 2,909k (revised from 2,912k) and the 7k slip in March. The rate was unchanged at 2.0%. The data are old, especially in light of the recent gyrations in employment. The data seem consistent with some of the weakening trend in the job market this year, though it’s not clear if that is more a function of the economy being near full employment, or an indication of a slowing in the overall economy. Note that Yellen is a fan of the quit rate, and looks for increases in that statistic to suggest a strengthening labor market. So the declines there in recent months may be another reason for her increasingly cautious outlook.

Discount Rate Hike preferred: Six Fed banks favored a discount rate hike by 25 basis points the Fed’s discount rate minutes revealed, with the vote taking place just ahead of the last meeting where rates were held steady following the May jobs miss and Brexit anticipation. A quartet of four had already requested a hike previously, including the KC, Richmond, Cleveland and SF Feds, and they were joined by Boston and St. Louis. The rationale: “expected strengthening in economic activity and their expectations for inflation to gradually move toward the 2% objective.” This shouldn’t come as a surprise to the bond market, which is already on a bearish tear anyway.

Fedspeak: Bullard: QE gives the Fed some “ammunition” in the event of another downturn, while his new view on rates is closer to what the market is pricing, with low probability of a rate increase. On productivity, he said the poor education system was not to blame in the 1990s, nor today, which could be at its root a demographic shift as older experienced workers retire. The labor force participation rate is continuing to fall for this reason as well. He said that yield curve flattening is not a sign of slowing growth but more likely a flight to safety after the Brexit vote, said the St. Louis Fed president. Talk of further U.S. stimulus is wrong and Fed calls for a better growth (fiscal) policy have been falling on deaf ears. He forecasts continued slowing in job growth in coming months as a normal development, while the ultimate impact of Brexit on the U.S. may be close to nil. Bullard continues to align himself more closely with swings in market sentiment.

Main Macro Events Today        

• US Import & Export Prices  June trade price data is out today and should show import prices up 0.6% (median 0.5%) on the month while export prices grow by 0.3%. This compares to May figures which had import prices up 1.4% and export prices up 1.1%. After a long run of negative figures over the winter the rebound in oil prices is now helping to lift headlines.

• BOC Outlook  We expect no change in the policy rate, with the current 0.50% setting seen as unaltered in today’s announcement. Recent economic data suggest the Bank could inject more caution in its cautiously optimistic outlook. But lofty June housing starts were a timely reminder that the Bank did highlight housing in the May announcement. A repeat of that announcement’s emphasis on strong regional divergences in housing performance would contrast with a more cautious outlook on growth and inflation. Meanwhile, the robust U.S. jobs report for June suggests growth south of the border is chugging along, supportive of the Bank’s scenario for improving domestic growth in the second half.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.