Markets raise data on weak Chinese services, weak euro ahead of investor confidence

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The Dollar and Yen regain ground in a mixed Asian session today. Inventories in Japan and Hong Kong are down slightly by China and Singapore are stable. The much weaker-than-expected service data from China elicited little reaction. The Swiss franc retreats against other major currencies but the losses are limited. Commodity currencies are easing somewhat. With the US on vacation, the focus will be on Eurozone Sentix investor confidence.

Technically, we would see that the euro is a bit vulnerable in crossovers. With a rebound from 1.0863 likely ended at 1.0985, EUR / CHF would come back to retest 1.0863. Such a development could cause the euro to fall, in particular against currencies linked to commodities. Eyes will be on the low of 1.4580 in EUR / CAD first and then the support of 1.5699 in EUR / AUD. The breakout of these levels will add to the short-term decline of the euro.

In Asia, as of this writing, the Nikkei is down -0.60%. Hong Kong’s HSI is down -0.22%. China Shanghai SSE is up 0.25%. Singapore Strait Times is up 0.22%. The Japanese 10-year JGB yield is down from -0.0086 to 0.038.

China Caixin services PMI fell to 50.3 and composite PMI to 50.6

China Caixin PMI Services fell to 50.3 in June from 55.1, well below expectations of 55.7. There was the smallest increase in activity and job creation in 14 months. Numbers fell as pressure on capacity eased. Inflation rates for input costs and production charges have slowed considerably. The Composite PMI fell to 50.6 from 53.8, the worst in 14 months.

Wang Zhe, Senior Economist at Caixin Insight Group, said, “Overall, activity in the manufacturing and service sectors has continued to expand. However, impacted by the resurgence of the virus in parts of China, the service sector was weaker than the manufacturing sector, both in terms of market supply and demand or employment.

Retail sales in Australia grew 0.4% mo in May, impacted by Victorian foreclosure

Retail sales in Australia increased 0.4% month-on-month and 7.7% year-on-year in May. This is an upward revision of the preliminary result from a 0.1% month-on-month increase.

Ben James, Director of Quarterly Economic Surveys, said: “The main themes of the retail draft remain relevant to the final draft. Retail turnover in May was affected by the Victorian lockdown from May 28, as well as states recovering from restrictions in April. “

AiG construction in Australia fell to 55.5 amid capacity constraints

Australia AiG Performance of Construction fell -2.8 pts to 55.5 in June. Current activity fell from -0.9 to 54.8. Employment fell from -6.1 to 58.3. New orders increased from 0.9 to 56.1. Supplier deliveries fell from -8.5 to 50.9. Input prices increased from 2.5 to 98.3. Selling prices increased from 7.0 to 85.2. Average wages increased from 5.4 to 70.4.

Ai Group Policy Officer Peter Burn said: “Australia’s construction sector continued to grow strongly in June, but the pace of expansion is slowing as it faces capacity constraints and constraints. rising input prices.

Also released, building permits fell -7.1% m / m in May, compared to an expectation of -5.0% m / o.

RBA rate decision at high point of week, with FOMC minutes

The RBA rate decision is a highlight of the week. There are a lot of questions to answer and they are somewhat interrelated. First, the RBA would announce whether and how it will continue with the current AUD 100 billion bond purchase program after it expires in September. Second, RBA will tell us if it will extend the maturity of the purchase of the April 2024 bond to the November 2024 bond. Third, the RBA should indicate if it still expects the interest to be at. current level until at least 2024. There are many parameters to play with for future monetary policy.

Another highlight will be the FOMC minutes. The latest economic projections surprised the markets by showing that the median projections predicted a rate hike twice in 2023. There were also 7 participants who noted a rise or more in 2022. In-depth discussions would be scrutinized to see if more turn. warmonger within the committee. Another target is the ECB minutes, but they are less likely to surprise.

Regarding economic data, the focus will be on German ZEW Economic Sentiment, US ISM Services; China CPI and PPI, UK GDP and employment in Canada. Here are some highlights of the week:

  • Monday: AiG construction in Australia, MI inflation gauge, retail sales, construction approvals; Caixin’s PMI services in China; Eurozone PMI services final, Sentix investor confidence; UK PMI Definitive Services; BoC Business Outlook Survey.
  • Tuesday: average monetary gains in Japan, household spending; RBA rate decision; factory orders in Germany; Construction PMI in the United Kingdom; Germany ZEW economic sentiment, retail sales; US ISM Services.
  • Wednesday: Australian AiG services; Germany industrial production; France’s trade balance; Swiss reserves in foreign currencies; Canada Ivey PMI; OFM minutes.
  • Thursday: bank loans in Japan, current account, sentiment of the ecological observer; Swiss unemployment rate; German trade balance; ECB meeting accounts; Unemployment claims in the United States.
  • Friday: China CPI, PPI; British GDP, trade balance, production; France industrial production; Canadian employment.

EUR / AUD Daily Outlook

Daily Pivots: (S1) 1.5723; (P) 1.5800; (R1) 1.5842; After…

The intraday bias of EUR / AUD remains neutral for the time being. On the downside, the breakout of 1.5699 support will suggest rejection by a 38.2% retracement of 1.6827 to 1.5250 to 1.5852. Intraday bias will be brought down to 1.5418 support first. The breakout should confirm the completion of the consolidation pattern from 1.5250. On the upside, the breakout of 1.5877 will extend the short term rebound to 1.6033, key support has turned to resistance.

Overall, price actions from 1.9799 turn into a deep correction, towards a long term uptrend from 1.1602 (2012 low). A deeper drop would be seen at 61.8% retracement from 1.1602 to 1.9799 to 1.4733. The medium term outlook will remain bearish as long as 1.6033 support has turned to resistance even with a strong rebound. However, a firm breakout of 1.6033 will support that this decline is over and focus on structural resistance at 1.6827 for confirmation.

Update of economic indicators

GMT Ccy Events Real Provide Previous amended
10:30 p.m. EUR AiG June Construction Performance Index 55.5 58.3
01:30 EUR Retail sales M / M May 0.40% 0.10% 0.10%
01:30 EUR Building permit M / M May -7.10% -5.00% -8.60% -5.70%
01:45 CNY Caixin Services PMI June 50.3 55.7 55.1
07:45 EUR Italy Services PMI June 56 53.1
07:50 EUR France Services PMI F June 57.4 57.4
07:55 EUR Germany Services PMI F June 58.1 58.1
08:00 EUR Eurozone services PMI F June 58 58
8:30 a.m. EUR Sentix investor confidence in the euro zone in July 30.2 28.1
8:30 a.m. GBP Services PMI F June 61.7 61.7
2:30 p.m. GOUJAT BoC Business Outlook Survey

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