A relatively steady, tight-ranged overnight session led to a steady, tight-ranged Asian session for the EUR today.
We did have brief flurry in risk appetite (worth 15 points in EURUSD and 20 points in AUDUSD) as the markets reacted to a NYT article on the eve of Wednesday’s FOMC meeting suggesting that some Fed officials are urging a pre-emptive stimulus in order to “buy insurance” against adverse shocks that could lead to a self-reinforcing downward spiral, citing efforts by noted doves including vice-chairwoman Janet Yellen. While the shift in sentiment was marginal (no major reaction from equity markets), risk currencies did find support for the rest of the session.
On the data front, unemployment reports from a couple of centres were slightly better than expected: Japan’s eased off to 4.3 percent from 4.4 percent in June while Singapore’s Q2 unemployment rate slid to 2.0 percent from 2.1 percent. Japan’s rate marked the lowest level since September last year while Singapore’s rate has been in a 1.9-2.3 percent range since end-2009. Singapore’s improvement was perhaps the more striking when you consider the economy added 29,200 jobs even as growth shrank 1.1 percent in the same period.
The forerunner of the global PMI feast came from Japan this morning with the market/JMMA manufacturing PMI contracting at its fastest pace since April 2011. The index slid to 47.9 in July from 49.9 with the details showing weakness in the output and new export orders categories.
The UK is in technical recession, so it is hardly surprising that the latest UK consumer confidence reading remained in the dumps. The GfK index held at -29, unchanged from the previous month and as expected, but still slumbers close to the lows this year. While government actions appear to be having scant results in lifting the public mood, maybe the Olympics will give next month’s data a nudge higher.
We had a relatively calm and steady session overnight though the EUR did tend to trade with a softer bias. Eurozone confidence indicators were generally worse than expected (apart from, surprisingly, consumer confidence – though only marginally). EURUSD traded within a 70 point range for the session while commodity FX-ers were better bid on easing hopes from the Fed/ECB.
US data releases were confined to the Dallas Fed manufacturing index which was a disappointing -13.2 versus +2.0 expected and +5.8 prior. The dismal number no doubt added fuel to the QE hopes but was largely ignored on the day. The other data surprise was a Q2 Swedish GDP reading which smashed all market expectations, posting a +1.4 percent q/q increase compared to a mere +0.2 percent expected.
Data Highlights
US Jul. Dallas Fed Manufacturing Activity out at -13.2 vs. 2.0 expected and 5.8 prior
UK Jul. GfK Consumer Confidence out at -29, as expected and unchanged from prior
JP Jul. Markit/JMMA Manufacturing PMI out at 47.9 vs. 49.9 prior
JP Jun. Jobless Rate out at 4.3% vs. 4.4% expected and 4.4% prior
JP Jun. Overall Household Spending out at +1.6% y/y vs. 2.9% expected and 4.0% prior
NZ Jul. NBNZ Activity Outlook out at 24.0 vs. 20.8 prior
NZ Jul. NBNZ Business Confidence out at 15.1 vs. 12.6 prior
AU Jun. Private Sector Credit out at +0.3%m/m, +4.4% y/y vs. 0.4%/4.4% expected and 0.5%/4.0% prior resp.
AU Jun. Building Approvals out at -2.5%m/m, +10.2% y/y vs. -15.0%/-5.5% expected and revised 27.0%/9.1% prior resp.
SI Q2 Provisional Unemployment Rate out at 2.0% vs. 2.2% expected and 2.1% prior
NZ Jun. M3 Money Supply out at +5.7% y/y vs. 6.3% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
JP Construction Orders (0500)
JP Housing Starts (0500)
GE Retail Sales (0600)
Swiss UBS Consumption Indicator (0600)
GE Unemployment Data (0755)
EU Euro-zone CPI Estimate (0900)
EU Euro-zone Unemployment Rate (0900)
CA GDP – May (1230)
CA Inustrial Product/Raw Material Prices (1230)
US Personal Income/Spending (1230)
US S&P/CaseShiller House Prices (1300)
US Chicago PMI (1345)
US Consumer Confidence (1400)
Andrew Robinson,
SAXO BANK