Time | Country | Event | Period | Previous value | Forecast |
---|---|---|---|---|---|
01:30 | Australia | RBA Meeting's Minutes | |||
06:00 | Switzerland | Trade Balance | July | 3.3 | |
06:00 | Germany | Producer Price Index (YoY) | July | 1.2% | 1.1% |
06:00 | Germany | Producer Price Index (MoM) | July | -0.4% | 0.1% |
09:00 | Eurozone | Construction Output, y/y | June | 2% | |
10:00 | United Kingdom | CBI industrial order books balance | August | -34 | -25 |
12:30 | Canada | Manufacturing Shipments (MoM) | June | 1.6% | -1.7% |
22:00 | U.S. | FOMC Member Quarles Speaks |
Time | Country | Event | Period | Previous value | Forecast |
---|---|---|---|---|---|
01:30 | Australia | RBA Meeting's Minutes | |||
06:00 | Switzerland | Trade Balance | July | 3.3 | |
06:00 | Germany | Producer Price Index (YoY) | July | 1.2% | 1.1% |
06:00 | Germany | Producer Price Index (MoM) | July | -0.4% | 0.1% |
09:00 | Eurozone | Construction Output, y/y | June | 2% | |
10:00 | United Kingdom | CBI industrial order books balance | August | -34 | -25 |
12:30 | Canada | Manufacturing Shipments (MoM) | June | 1.6% | -1.7% |
22:00 | U.S. | FOMC Member Quarles Speaks |
Deutsche Bank's analysts see Germany in a technical recession, as they expect another ¼% GDP drop in Q3.
Analysts at TD Securities sees Canada’s manufacturing activity to contract by 1.9% in June owing to a pullback in transportation equipment and lower prices for industrial goods.
Analysts at Nordea Markets suggest that CAD is maybe not among the absolute worst performers after a curve inversion, but they still see a more than decent dovish re-pricing scope for the bank of Canada (BoC).
Analysts at Royal Bank of Canada (RBC) note that the two-step-forward, one-step-back escalation in U.S.-China trade tensions had a one-step-back last week with the Trump administration announcing the 3½-month delay of about 60% of a promised 10% tariff hike on imports from China planned for September 1st.
Analysts at Standard Chartered note that, according to the statement from the People’s Bank of China (PBoC) dated 16 August, the loan prime rate (LPR) will replace the conventional benchmark loan rate (BLR) as the main reference rate for new bank loans, effective immediately.
“The following major changes have been made as part of the LPR reform:
LPR reform will have the following major effects on banks and markets, in our view:
Deutsche Bank's analysts note that today's key event will be the speech of the Fed’s Rosengren as well as the meeting of the French President Macron and Russian President Putin.
Analysts at TD Securities note that Eurozone’s final reading of HICP for July was revised down to 1.0% y/y from 1.1% y/y.
Following the recent price action in USD/CHF, another test of the mid-0.9800s looks likely, suggested Karen Jones, Team Head FICC Technical Analysis at Commerzbank.
“USD/CHF saw a key day reversal on Tuesday last week from .9659 and we are seeing a correction higher. A sustained break below the .9716/.9692 key support presently was not seen (location of the 25th June low, the January low and Fibo support) and we would allow for recovery to the 55 day ma at .9853. Key resistance remains the 200 day ma at .9961, our overall bearish bias is entrenched below here. Below .9659 (last weeks low) targets the .9543 September 2018 low. Longer term we target .9211/.9188, the 2018 low”
British working-age households are growing more cautious about making major purchases amid concerns about Brexit and a possible recession, a monthly consumer survey showed.
The headline index from the survey, the seasonally adjusted IHS Markit Household Finance Index (HFI) – which measures households’ overall perceptions of financial wellbeing – recorded 43.7 in August, a decrease from July’s 44.3, therefore signalling a stronger degree of pessimism towards current finances by UK households. The headline index registered the lowest reading in three months and was back below the average seen in 2018 (44.2).
The dip in current household sentiment also filtered through to financial wellbeing expectations. Having been in positive territory during June and July, UK households signalled a negative outlook towards their financial health for the year ahead in August.
Households’ views on next move in Bank of England base rate
A decisive shift in UK household interest rate expectations was recorded on the likelihood that the next move will be a cut. The proportion of UK households which foresee the next action by the Bank of England being an interest rate decline rose to nearly 23%, from approximately 16% in July, its highest since October 2016. Nonetheless, the majority (68%) of UK households expect the Bank of England will raise interest rates within the next two years. This was down from around 74% in July.
According to the report from Eurostat, the euro area annual inflation rate was 1.0% in July 2019, down from 1.3% in June. Inflation was expected to slow to 1.1%. A year earlier, the rate was 2.2%.
European Union annual inflation was 1.4% in July 2019, down from 1.6% in June. A year earlier, the rate was 2.2%..
The lowest annual rates were registered in Portugal (-0.7%), Cyprus (0.1%) and Italy (0.3%). The highest annual rates were recorded in Romania (4.1%), Hungary (3.3%), Latvia and Slovakia (both 3.0%). Compared with June, annual inflation fell in fifteen Member States, remained stable in two and rose in eleven.
In July, the highest contribution to the annual euro area inflation rate came from services (+0.53 percentage points, pp), followed by food, alcohol & tobacco (+0.37 pp), non-energy industrial goods (+0.08 pp) and energy (+0.05 pp).
The latest survey of the US economists conducted by the National Association for Business Economics (NABE) revealed on Monday, 34% of economists believe a slowing economy will tip into recession in 2021. That's up from 25% in a survey taken in February. Only 2% of those polled expect a recession to begin this year, while 38% predict that it will occur in 2020.
The economists have previously expressed concern that Trump's tariffs and higher budget deficits could eventually dampen the economy.
The economists surveyed by the NABE were skeptical about prospects for success of the latest round of U.S.-China trade negotiations. Only 5% predicted that a comprehensive trade deal would result, 64% suggested a superficial agreement was possible, and nearly one quarter expected nothing to be agreed upon by the two countries.
The 226 respondents, who work mainly for corporations and trade associations, were surveyed between July 14 and Aug. 1. That was before the White House announced 10% tariffs on the additional $300 billion of Chinese imports. As a whole, the business economists' recent responses have represented a rebuke of the Trump administration's overall approach to the economy.
According to the report from European Central Bank, the current account of the euro area recorded a surplus of €18 billion in June 2019, a decrease of €12 billion from the previous month. Surpluses were recorded for goods (€25 billion), primary income (€4 billion) and services (€3 billion). These were partly offset by a deficit for secondary income (€14 billion).
In the 12 months to June 2019, the current account recorded a surplus of €318 billion (2.7% of euro area GDP), compared with a surplus of €391 billion (3.4% of euro area GDP) in the 12-month period to June 2018. This decline was driven by smaller surpluses for goods (down from €318 billion to €290 billion), services (down from €117 billion to €96 billion) and primary income (down from €94 billion to €91 billion), as well as by a larger deficit for secondary income (up from €138 billion to €159 billion).
In the financial account, euro area residents made net acquisitions of foreign portfolio investment securities totalling €58 billion in the 12-month period to June 2019 (decreasing from €484 billion in the 12-month period to June 2018). Non-residents’ net purchases of euro area portfolio investment securities amounted to €42 billion (down from €249 billion).
Distortions in the Treasury yield curve mean it’s not necessarily signaling the risk of recession, according to JPMorgan Chase & Co. -- but the money-market curve still is.
A surge in the stockpile of negative-yielding debt across the world has warped the pricing of U.S. duration and credit risk as foreign investors are forced into Treasuries and U.S. corporate bonds, JPMorgan strategists including Nikolaos Panigirtzoglou wrote in a note. That means the U.S. sovereign and credit-spread yield curves are losing their information content, making the less-affected money-market curve a better place to look for an economic signal, they said.
“U.S. recession risks are elevated in our mind by the inversion at the front end of U.S. money market curves which are less distorted by foreign flows,” the strategists wrote. Treasury inversions are “less of a reflection of U.S. recession risks and more of a reflection of the desperation for yield by foreign investors flocking into U.S. dollar-denominated bonds as bond yields turned more negative in Europe and Japan.”
Karen Jones, Team Head FICC Technical Analysis at Commerzbank, suggested the European cross could slip back to the 0.9020/15 band.
“EUR/GBP is at last starting to correct lower – the market has temporarily topped at 0.9327 and the market has already sold off to 0.9088, the 31st July low. We look for losses to the 55 day ma at 0.9017 and there is scope for the 50% retracement at 0.8896. Intraday rallies are likely to hold below 0.9225. Above 0.9327 targets 0.9403, the 2016 high and eventually 0.9803. Only below the July low at .8891 will alleviate upside pressure”.
Analysts at Westpac offer a sneak peek at what to expect from New Zealand’s Retail Sales data due to be reported later this week.
“NZ Q2 real retail sales Aug 22, Last: +0.7%, WBC f/c: -0.3%, Mkt: +0.2%. Retail spending rose by 0.7% in the March quarter. That followed solid gains over 2018. Increases in spending were seen in many categories. Mid-2019 has seen only muted gains in monthly gauges of spending. That’s consistent with the falls in consumer confidence and ongoing weakness in the housing market. Petrol prices also pushed higher over the quarter, constraining spending in other areas. We’re expecting that the June quarter report will show that nominal spending growth was subdued over Q2, with volumes down slightly. Price growth is expected to remain limited (other than petrol).”
August, normally a quiet month for Britain's property market, has seen a surge in sales, possibly due to buyers seeking to conclude transactions before the country leaves the European Union on Oct. 31, property website Rightmove said.
Rightmove said sales in the August period, which cover the four weeks to Aug. 10, were 6.1% higher than a year earlier and their strongest for the month since 2015, bucking a generally sluggish trend since June 2016's referendum on leaving the European Union.
"While the end of October Brexit outcome remains uncertain, more buyers are now going for the certainty of doing a deal, with some having perhaps hesitated earlier in the year," Rightmove director Miles Shipside said.
Rightmove said asking prices on its website were down 1.0% on the previous month - a smaller fall than normal for August, when many buyers are away on holiday - while prices were 1.2% higher than a year earlier.
Sales rose fastest in northeast and eastern England, and the biggest fall in asking prices was in southeast England excluding London.
According to the analysts at Danske Bank, the likelihood of an imminent German fiscal stimulus is low for now, but the German government is under heavy pressure to roll out one in a bid to spur economic growth.
“In Germany, Finance Minister Ola Scholz hinted at a EUR50bn (~1.5% of German nominal GDP) fiscal spending package in case of recession, although it is not imminent. The German government is under heavy pressure by many to ease fiscal policy, as the German economy is struggling (contracted in Q2) and there is a lack of safe assets (bonds) in the market. Unfortunately, the fact that Scholz says a package is not imminent also highlights the time lag problem with fiscal policy: It takes time for politicians to recognize the need for fiscal easing and vote in favor of a specific package, and hence when it has an impact on real activity.”
A new benchmark interest rate Chinese banks will need to use to set lending rates will be linked to the central bank's medium-term liquidity facility, a People's Bank of China policy adviser told state media.
China's central bank unveiled a key interest rate reform on Saturday to help steer borrowing costs lower for companies and support a slowing economy that has been hurt by a trade war with the United States.
"Through the reform, it is clearly required that the banks' lending rates should be linked to the LPR (loan prime rate), and the LPR should be linked to the MLF (medium-term lending facility) interest rate, thus establishing a relatively smooth transmission mechanism. In the future, if the policy interest rate falls, the loan interest rate will also fall, which will help to reduce the financing cost of enterprises," Ma Jun said.
Under the PBOC's changes, banks must set rates on new loans using the new LPR as the benchmark for floating lending rates rather than the PBOC's benchmark bank lending rate.
Analysts believe the central bank could cut the one-year interest rate on the MLF, which stands at 3.3%, in order to guide borrowing costs lower.
Analysts say the new LPR rate will be lower than the current level, but they are divided over the scope of reductions on borrowing costs for firms.
EUR/USD
Resistance levels (open interest**, contracts)
$1.1226 (2657)
$1.1194 (2130)
$1.1168 (793)
Price at time of writing this review: $1.1091
Support levels (open interest**, contracts):
$1.1054 (4576)
$1.1022 (4098)
$1.1003 (934)
Comments:
- Overall open interest on the CALL options and PUT options with the expiration date September, 6 is 104461 contracts (according to data from August, 16) with the maximum number of contracts with strike price $1,1400 (8878);
GBP/USD
Resistance levels (open interest**, contracts)
$1.2274 (1183)
$1.2231 (893)
$1.2202 (322)
Price at time of writing this review: $1.2154
Support levels (open interest**, contracts):
$1.2095 (968)
$1.2069 (586)
$1.2038 (2078)
Comments:
- Overall open interest on the CALL options with the expiration date September, 6 is 30251 contracts, with the maximum number of contracts with strike price $1,2750 (4128);
- Overall open interest on the PUT options with the expiration date September, 6 is 23736 contracts, with the maximum number of contracts with strike price $1,2100 (2078);
- The ratio of PUT/CALL was 0.78 versus 0.78 from the previous trading day according to data from August, 16
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
Pare | Closed | Change, % |
---|---|---|
AUDUSD | 0.67805 | 0.11 |
EURJPY | 117.954 | 0.09 |
EURUSD | 1.10901 | -0.12 |
GBPJPY | 129.192 | 0.79 |
GBPUSD | 1.21473 | 0.56 |
NZDUSD | 0.64254 | -0.28 |
USDCAD | 1.32713 | -0.31 |
USDCHF | 0.97839 | 0.21 |
USDJPY | 106.354 | 0.24 |
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