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Bob Mason
Economic Uncertainty

Earlier in the Day:

It was busier Asian session on the economic calendar this morning.

Economic data through the session included 2nd quarter employment numbers out of New Zealand and inflation expectation numbers. Out of Japan, June household spending figures provided direction, while trade data provided the Aussie Dollar with direction.

Outside of the numbers, the RBA delivered its August interest rate decision and rate statement. Geopolitical risk also continued to provide direction. The U.S administration’s labeling of China as a currency manipulator in the early hours hit the markets early on. A pick up in the Chinese Yuan eased market tensions through the session, however.

For the Kiwi Dollar

Employment increased by 0.8% in the 2nd quarter, quarter-on-quarter, which came in ahead of a forecasted 0.3% rise. In the 1st quarter, employment had fallen by 0.2%.

According to NZ Stats,

  • The unemployment rate fell to an 11-year low 3.9% in the June 2019 quarter, down from 4.2% in the 1st. Economists had forecast an increase to 4.3%.
  • A total of 109,000 were unemployed in the 2nd quarter, down by 7,000.

The Kiwi Dollar moved from $0.65272 to $0.65737 upon release of the figures that preceded inflation expectation numbers later in the day.

Quarterly inflation expectations for 2-years out came in at 1.86% in the 3rd quarter. Inflation expectations in the 2nd quarter had stood at 2.01% back in early May.

According to the RBNZ’s survey of expectations,

  • Inflation expectations for 1-year out fell from 1.97% in the 2nd quarter to 1.71% in the 3rd

The Kiwi Dollar moved from $0.65575 to $0.65508 upon release of the figures.  At the time of writing, the Kiwi Dollar was up by 0.05% to $0.6531.

For the Japanese Yen

Household spending slid by 2.8% in June, month-on-month, which was better than a forecasted 3% fall. In May, spending had increased by 5.5%. Year-on-year, household spending rose by 2.7%, coming in ahead of a forecasted 1.3% rise. Spending had risen by 4.0%, year-on-year, in May.

According to the Statistic Bureau,

  • Spending on culture and recreation surged by 11% year-on-year.
  • There were also marked increases in spending on medical care (+8.8%), furniture and household utensils (+6.1%).
  • Spending on transportation (+4.1%) and fuel, light & water charges (+3.7%) also provided support.
  • Weighing on the headline figure were falls in spending on hosing (-4.0%) and education (-6.1%).
  • Spending on food (+1.0%) and clothing & footwear (+2.6%) failed to impress.

The Japanese Yen moved from ¥105.616 to ¥105.572 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.65% to ¥106.64 against the U.S Dollar

For the Aussie Dollar

The trade surplus widened from a revised A$6.173bn to A$8.036bn in June, which was better than a forecasted A$6.050bn. According to the ABS,

  • The exports of goods & services rose by 1% (A$576m) to A$42,378m.
    • The exports of non-rural goods rose by 3% (A$758m). Weighing on exports was a fall in the exports of rural goods (-4%) and non-monetary gold (-2%).
    • Services credits increased by A$26m.
  • The imports of goods & services fell by 4% (A$1,287m) to A$34,342.
    • Capital goods imports fell by 9% (A$600m), with consumption of goods imports falling by 5% (A$450m).
    • The imports of intermediate and other merchandise goods fell by 3% (A$366m).
    • Non-monetary gold imports rose by 28% (A$132m), while service debits fell by A$2m.

The Aussie Dollar moved from $0.67816 to $0.67841 upon release of the figures that preceded the RBA policy decision and rate statement.


In line with market expectations, the RBA held rates unchanged at 1.00%. Salient points from the RBA rate statement included:

  • Economic growth in Australia was lower than expected in the 1st half of the year.
  • Household consumption weighed as a result of a protracted period of low-income growth and falling house prices.
  • Growth is expected to strengthen gradually from here, with the economy forecasted to grow by 2.5% in 2019 and 2.75% in 2020.
  • A low-interest-rate environment, recent tax cuts, infrastructure spending, stabilization in the housing markets and improved resource sector outlook are positives.
  • Outlook for consumption continues to create some uncertainty.
  • Wage growth remains subdued, with little upward pressure at present.
  • Inflation is broadly in line with expectations, with inflationary pressures subdued. The RBA expects inflation to be a little under 2% over 2020 and a little above 2% over 2021.
  • Conditions in the housing market remain soft, though there are signs of improvement in Sydney and Melbourne in particular.
  • The Board will continue to monitor developments in the labor market and ease monetary policy further if required.

The Aussie Dollar moved from $0.67774 to $0.67820 upon release of the rate statement. At the time of writing, the Aussie Dollar was up by 0.31% to $0.66777.


The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Key stats due out of the Eurozone are limited to Germany’s June factory orders.

With Germany’s manufacturing sector in the doldrums, today’s numbers will need to impress to give the EUR a boost.

At the time of writing, the EUR was up by 0.03% to $1.1206.

For the Pound

It’s a quiet day ahead on the data front, with no material stats due out of the UK to provide the Pound with direction.

In the early hours of this morning, retail sales figures failed to provide support. The BRC Retail Sales Monitor rose by just 0.1% in July, falling well short of a forecasted 0.7% rise. Sales had fallen by 1.6% in June.

In response to the early stats, the Pound slipped from $1.21534 to 1.21498, reversing gains from the start of the day.

The lack of stats in the day ahead will leave the Pound firmly in the hands of Brexit and chatter from number 10.

At the time of writing, the Pound was up by 0.13% to $1.2159.

Across the Pond

It’s a quiet day for the Greenback, with key stats due out of the U.S limited to June’s JOLTs job openings. While the headline figure will influence, expect quit rates to also have an impact on the day.

Outside of the numbers, chatter from the Oval Office will continue to be key.

At the time of writing, the Dollar Spot Index was up by 0.03% to 97.55, recovering from a morning low 97.208.

For the Loonie

There are no material stats due out in the day ahead. With the economic calendar bare for a 2nd consecutive day, market risk appetite will remain the key driver on the day.

Negative sentiment towards trade and the global economic outlook would weigh on crude oil prices on the day.

The Loonie was up by 0.08% at C$1.3193, against the U.S Dollar, at the time of writing.

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