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Bob Mason
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Earlier in the Day:

Economic data was on the heavier side through the Asian session this morning. Key stats included manufacturing numbers out of Australia and China and Japan’s Tankan figures for the 2nd quarter.

While the numbers provided direction, positive news from the G20 Summit on Saturday drove appetite for the U.S Dollar riskier assets at the start of the week.

From the weekend, China’s NBS private sector PMI numbers were on the disappointing side. The NBS Manufacturing PMI held steady at 49.4 in June, falling short of a forecasted 49.5. While coming in ahead of a forecasted 54.1, the non-manufacturing PMI eased from 54.3 to 54.2.

For the Aussie Dollar

The AIG Manufacturing Index fell from 52.7 to 49.4 in June. According to the AIG survey, the contraction was the first since August 2016.

  • The employment sub-index fell by 5.5 points to 50.1, with the new orders sub-index falling by 2.5 points to 49.8.
  • Finished stocks slid by 6.8 points, with supplier deliveries falling by 6.5 points.
  • In spite of the contraction in the sector, production rose by 0.7 points to 51.9, with the exports sub-index rising by 2.8 points to 53.1.
  • While the employment sub-index took a hit, the average wages sub-index rose by 4.2 points to 59.7.
  • Manufacturers that struggled the most included manufacturers of machinery & equipment, of metal products and of textiles, clothing, footwear, paper, and printing.
  • The metal products PMI fell by 1.7 points to 40.8. Textiles, clothing, footwear, paper & printing saw the largest fall, with the PMI falling by 3.2 points to 44.1.
  • The Machinery & equipment PMI rose by 0.6 points to 47.2.

The Aussie Dollar moved from $0.70014 to $0.70028 upon release of the figures that preceded China’s Caixin Manufacturing PMI.

For the Japanese Yen

The Tankan surveys delivered mixed results for the quarter.

The All Big Industry CAPEX Index rose by 7.4% in the 2nd quarter, falling short of a forecasted 8.9%. CAPEX rose by 1.2% in the 1st quarter.

The Tankan Big Manufacturing Outlook Index slipped from 8 to 7 in the 2nd quarter, which was better than a forecasted fall to 6.

For the manufacturing sector, the Tankan Large Manufacturers Index fell from 12 to 7 in the 2nd quarter, which worse than a forecasted 9.

For the non-manufacturing sector, the Tankan Large Non-Manufacturers Index rose from 21 to 23 in the 2nd quarter. Forecasts were for a fall to 20.

The Japanese Yen moved from ¥108.351 to ¥108.30 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.34% to ¥108.22 against the U.S Dollar.

Out of China

The Caixin Manufacturing PMI fell from 50.2 to 49.4 in June. According to the Markit Survey,

  • Output fell in June, bringing an end to 4-consecutive months of expansion.
  • Manufacturers continued to reduce headcounts in June, with firms deciding not to replace voluntary leavers.
  • Outstanding business increased as a result of capacity pressures stemming from falling headcount.
  • Quantities of purchases declined due to a lack of new work and lower production needs. New work intakes declined for the first time since January.
  • Sentiment towards the 12-month outlook was neutral. In spite of the balanced outlook, there were concerns over the U.S – China trade war.

The Aussie Dollar moved from $0.70014 to $0.70028 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.23% to $0.7004.


At the time of writing, the Kiwi Dollar was down by 0.16% to $0.6707.


The Day Ahead:

For the EUR

It’s a busy day ahead on the economic data front.

Key stats include Spain and Italy manufacturing PMI numbers for June and Germany and Eurozone unemployment numbers. Finalized manufacturing PMI numbers out of France, Germany and the Eurozone will unlikely have an impact barring revisions from prelim figures.

Outside of the numbers, the outcome of the G20 Summit will also influence and there is the issue of Iran to also consider.

An end to the U.S – China trade war could lead to the FED holding rates unchanged, which would be Dollar positive. The rise in the chances of a U.S – Iran military entanglement would also be considered EUR negative.

At the time of writing, the EUR was down by 0.18% to $1.1353.

For the Pound

The UK manufacturing PMI is due out later this morning. The BoE’s talk of the need for an aggressive rate path to curb inflation has abated. Soft numbers today could support those expecting the BoE to cut rates towards the year-end.

With Brexit still up in the air and the leadership race grabbing the headlines, uncertainty will likely continue to pin the Pound back from a return to $1.30 levels near-term.

At the time of writing, the Pound was up by 0.02% to $1.2698.

Across the Pond

It’s a relatively busy day on the economic calendar.

Key stats due out of the U.S include the finalized Markit Manufacturing PMI for June and the ISM’s manufacturing PMI.

We will expect the markets to focus on the ISM figure this afternoon.

Outside of the stats, expect the Dollar to find support from the outcome of the G20 Summit and rising tension in the Middle East.

At the time of writing, the Dollar Spot Index was up by 0.21% to 96.334.

For the Loonie

There are no material stats due out of Canada, with the Canadian markets closed for Canada Day.

While volumes will be on the lighter side, the latest comments from Iran suggest that they are unlikely to back down. An upswing in oil prices should limit the downside for the Loonie.

The Loonie was down by 0.04% to C$1.3100, against the U.S Dollar, at the time of writing.

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