China Stats Disappoint ahead of German GDP and UK Inflation Figures

Earlier in the Day:

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

Economic data through the session included August consumer sentiment and 2^nd quarter wage growth figures out of Australia. Later in the morning, July fixed asset investment, industrial production and unemployment numbers also provided direction.

Outside of the numbers, the markets responded to Trump’s tariff delay to 15^th December on certain goods from China.

For the Aussie Dollar

The Westpac Consumer Sentiment Index rose by 3.6% to 100.0 in August, following on from a 4.1% slide in July. According to the Westpac report,

• The upswing was attributed to a calming of the nerves, with the RBA standing pat on monetary policy following 2 consecutive rate cuts.
• Looking at the numbers:
  • The sub-index for family finances vs a year ago rose by 0.9%, with finances for next 12-months up by 0.7%.
  • Economic conditions next 12-months jumped by 9.6%, with economic conditions next 5-years up by 4.5%. Both sub-indexes remained well below levels from a year ago, however.
  • The time to buy a major household item sub-index rose by a more modest 2.8% and was the only sub-index to be up year-on-year.
  • On the labor market front, the Unemployment Expectations Index eased by 0.8%, whilst up by 3.1% year-on-year.
  • The Time to buy a dwelling index rose by 3%, making it a 16.7% gain over the year, supported by a 5.1% rise in the House Price Expectations Index.

The Aussie Dollar moved from $0.67939 to $0.67951 upon release of the figures, which preceded the wage growth numbers and stats out of China.

Wages grew by 0.6% in the 2^nd quarter, which was up from the 1^st quarter and forecasted 0.5% rise. According to the ABS,

• Private sector wage growth stood at 0.5%, while public sector wage growth jumped by 0.8% in the 2^nd
• Year-on-year, wages grew by 2.3%.

The Aussie Dollar moved from $0.67990 to $0.67943 upon release of the figures, which preceded the stats out of China.

Out of China

Fixed asset investments rose by 5.7% in July, year-on-year, falling short of a forecast and June 5.8% rise. Of greater significance, however, were industrial production figures. Year-on-year, industrial production increased by 4.8%, down from 6.3% in June. Economists had forecast a 6.0% rise. Year-to-date, production was up by 5.8% to July, year-on-year, also falling short of a forecasted and June 6% rise.

The Aussie Dollar moved from $0.67912 to $67881 upon release of the figures. At the time of writing, the Aussie Dollar was down 0.18% to $0.6787.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.43% to ¥106.28 against the U.S Dollar, While the Kiwi Dollar was down by 0.02% to $0.6453.

In the Asian equity markets, the U.S administration tariff delay provided support through the early part of the day. In spite of continued unrest, the Hang Seng and CSI300 led the way early, rising by 1.08% and 1.17% respectively. The Nikkei wasn’t far behind, up by 0.84% at the time of writing. The ASX200 saw a more modest 0.12% gain. Economic data out of China pinned back the majors early in the session.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Germany’s 1^st estimate GDP numbers for the 2^nd quarter are due out in the early part of the day.

A larger than forecasted contraction would have a material impact on the EUR. Barring a material deviation from 1^st estimate numbers, the Eurozone GDP figures will unlikely influence.

While we would expect finalized July inflation figures out of France to also have a muted impact, the Eurozone’s June industrial production numbers will provide direction.

Outside of the numbers, geopolitical risk will continue to have an impact on the EUR.

At the time of writing, the EUR was up by 0.04% to $1.1175.

For the Pound

It’s another busy day ahead on the data front. July inflation figures are due out of the UK later this morning.

As the UK economy heads towards a technical recession, any softer inflationary pressures would further raise the prospects of a BoE move.

At the time of writing, the Pound was down by 0.07% to $1.2052.

Across the Pond

It’s also a relatively quiet day for the Greenback. Key stats due out of the U.S later today include import and export price index numbers for July.

We would expect the numbers to have a relatively muted impact on the Greenback, as the markets respond further to chatter from the Oval Office.

At the time of writing, the Dollar Spot Index was down by 0.02% to 97.788.

For the Loonie

It’s another quiet ahead on the economic calendar, with no material stats due out to provide the Loonie with direction.

The weekly EIA crude oil inventory numbers and stats out of China from earlier in the day will be the key drivers.

The Loonie was up down 0.03% at C$1.3227, against the U.S Dollar, at the time of writing.