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Bob Mason
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Earlier in the Day:

It’s was a busy start to the day on the economic calendar this morning.  The Kiwi Dollar and the Japanese Yen were in action, with stats from China also in focus.

Away from the economic calendar, updates on the U.S stimulus package and COVID-19 continued to be an area of focus.


For the Kiwi Dollar

In the 2nd quarter, employment fell by 0.40%, quarter-on-quarter, partially reversing a 0.7% rise from the 1st quarter. Economists had forecast a 2.0% fall. The unemployment rate fell from 4.2% to 4.0% in the quarter. Economists had forecast an unemployment rate of 5.8%.

According to NZ Stats,

  • The underutilization rate rose from 10.4 to 12.0%, the largest on record, with hours worked falling by a record 10.3%.
  • As a result of the COVID-19 lockdown, fewer people who did not have a job were actively seeking work. People who were not actively seeking work were not counted as unemployed, leading to a decline in the unemployment rate.

The Kiwi Dollar moved from $0.66226 to $0.66378 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.33% to $0.6644.

For the Japanese Yen

July’s finalized services PMI was revised up from 45.2 to 45.4. In June, the PMI had stood at 45.0.

According to the July survey,

  • 26% of respondents reported a drop in business activity, while 21% signaled an expansion.
  • Those reporting growth attributed the growth to a pickup in domestic demand.
  • In July, there was a modest fall in new work, with the rate of decline the slowest in the last 6-months. New orders from abroad saw a steep decline in the month, however.
  • While backlogs declined further, employment numbers saw a modest decline, stemming from the non-replacement of retired employees.
  • Business optimism turned positive in July, with confidence at its highest since February.

The Japanese Yen moved from ¥105.693 to ¥105.746 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.10% to ¥105.61 against the U.S Dollar.

Out of China

In July, the services PMI came in at 54.1, which was down from June’s 58.4. Economists had forecast a PMI of 56.0.

According to the July Survey,

  • While down from June’s decade high, levels of incoming new work saw another marked increase. This was largely domestic demand, however, as COVID-19 weighed on foreign demand.
  • Backlogs increased for the 2nd consecutive month, while staffing levels fell in July, marking a 6th consecutive monthly decline.
  • Optimism improved, in spite of the pullback in the PMI. Sentiment towards the next 12-months was the highest in over 5-years.

The Aussie Dollar moved from $0.71804 to $0.71766 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.36% to $0.7186.


The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats include July’s service sector PMIs for Italy and Spain and Eurozone retail sales figures for June.

Finalized service sector PMIs are also due out of France, Germany, and the Eurozone.

We would expect Italy, Spain, and the Eurozone’s PMIs to have the greatest impact on the day.

With the ECB seeing consumption as key to economic recovery, the numbers will need to impress.

At the time of writing, the EUR was up by 0.09% to $1.1814.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. July’s finalized services and composite PMIs are due out later this morning.

Look out for any revisions to the services PMI, with the parts of the UK having struggled with the COVID-19 pandemic late in the month.

Away from the economic calendar, any updates on Brexit will also need monitoring.

At the time of writing, the Pound was up by 0.12% to $1.3087.

Across the Pond

It’s a busy day ahead for the U.S Dollar. July’s ADP nonfarm employment change and ISM Non-Manufacturing PMI will have the greatest impact on the day.

We saw the Dollar get a boost from a pickup in manufacturing sector activity. Service sector activity accounts for around 70% of the U.S economy, so expect a more significant impact.

With the markets sensitive to labor market conditions, the ADP figures will also influence.

The Markit survey’s finalized services PMI and trade data will likely have a muted impact on the day.

Away from the economic calendar, the U.S COVID-19 stimulus package and any chatter from the U.S administration will also provide direction.

At the time of writing, the Dollar Spot Index was down by 0.28% to 93.120.

For the Loonie

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

The lack of stats will leave the Loonie in the hands the crude oil inventory numbers and market risk sentiment.

At the time of writing, the Loonie was up by 0.20% to C$1.3292 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

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