DJIA reaches another record high, dollar inches up, euro advances, New Zealand dollar falls, due to inflation expectations

Aug 8 • Morning Roll Call • 183 Views • No Comments

The most prominent action in Forex markets during Monday’s trading sessions, came courtesy of the New Zealand dollar as a consequence of the two year inflation forecast (for the third quarter), missing the forecast; coming in at 2.07%, versus last quarter’s reading of 2.17%. The kiwi fell versus the majority of its peers; NZD/USD fell through S2 and by circa 0.6%, to end the day at circa 0.7356. A similar daily pattern of losses was experienced by the kiwi versus the: Aussie, yen, sterling and euro. Other significant, early Monday morning news concerned Japan’s leading index, beating expectations coming in at 106.3, and the coincident index coming in at 117.2, right on forecast, the effect on yen was minimal, USD/JPY closing the day out at circa 110.71, up circa 0.2% on the day.

Moving onto European economic calendar news, German industrial production figures (monthly and annually), fell unexpectedly; the MoM figure fell by -1.1% and annual growth fell to 2.4% YoY, from the previous month’s reading of 4.8%. Analysts were quick to point at two issues; the previous month’s reading of 4.8% was unusually high and the Germans are currently enjoying holiday season. Swiss CPI came in as expected; monthly -0.3% and yearly 0.3%. The August Sentix investor confidence index for the Eurozone came in just ahead of forecast, at 27.7. From the U.K. we received the latest house price inflation data from The Halifax Bank; a reduction from 2.6% to 2.1% annual growth, was recorded.

Overall the European markets experienced mixed results; Germany’s DAX sold off, partly as a consequence of the disappointing production data, the index closing down 0.33%. France’s CAC closed up 0.09%, FTSE 100 up 0.27%, STOXX down 0.05%. EUR/USD ended the day up circa 0.2% and resting on the daily pivot point, at 1.1790. The euro also made modest gains versus: sterling, kiwi, Aussie and the Loonie. Sterling also advanced versus the kiwi, however, cable (GBP/USD) lost circa 0.3% on the day, closing out at approx. 1.3026. USD/CHF closed up circa 0.2%, at 0.9733.

The key economic calendar news published from the USA came in the form of consumer credit, which unexpectedly and dramatically fell to $12.368b in June, from $18.285 in May and missing (by some margin), the expectation for a fall to $15.750b. This curious drop, recorded late on in the trading session, failed to register on analysts’ or investors’ radar, but as a medium impact, hard data metric, it could indicate that consumers are lacking confidence in their ability to pay back new loans, due to insecure employment. Or alternatively, banks may be finally tightening credit conditions and availability, on the basis that delinquency rates are now elevating. The tech heavy NASDAQ index rose sharply on Monday, up 0.45%, DJIA up 0.06% and SPX up 0.10%. WTI oil fell through S1 to a daily low of $48.62 a barrel, before recovering to $49.44 a barrel later towards the end of the New York session, ending close to flat on the day. Gold ended the day at approx. $1257 an ounce, down circa 0.2%.

Key economic calendar events for August 8th, all times quoted are London (GMT) time

05:45, currency impacted CHF. Unemployment Rate (JUL). Swiss unemployment is forecast to remain unchanged, at 3.0%.

06:00, currency impacted EUR. German Trade Balance (euros) (JUN). The prediction is for an increase to €23.0b, from the €22.0b registered in May.

06:00, currency impacted EUR. German Exports s.a. (MoM) (JUN). The expectation is for a fall to 0.2% growth, from the 1.5% reading recorded in May.

06:00, currency impacted EUR. German Imports s.a. (MoM) (JUN). Imports are forecast to fall to 0.2%, from the 1.3% increase recorded in May.

10:00, currency impacted USD. NFIB Small Business Optimism (JUL). The anticipation is for the reading to slip marginally to 103.5, from the figure of 103.6 printed in June.

12:15, currency impacted CAD. Housing Starts (JUL). The forecast is for housing starts to fall to 205.0k, from the 213.2k units started in June.

14:00, currency impacted USD. JOLTS Job Openings (JUN). The prediction is for 5700 job openings to have been created in June, from the 5666 created in May.

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