Sterling falls, yen rises, U.S. equities slip, despite JOLTS reaching a record high, European equities close up, gold whipsaws

Aug 9 • Morning Roll Call • 150 Views • No Comments

The trading day began on Tuesday with disappointing Chinese data that failed to move the markets. Quite a comparison from previous years, when any signs that the engine of global growth was cooling, would send shockwaves through international markets. Exports from China (YoY) fell to 7.2% growth in July, from 11.3% in June, whilst Chinese imports fell to 11% YoY growth, from the 17.2% reading recorded in June. China’s July trading balance came in at $46.74b, rising from $42.65b in June. From Japan the Eco Watchers surveys (both current and outlook), missed the forecast. Yen rose versus its peers during Tuesday’s sessions; USD/JPY ended the day down circa 0.7% at 110.46, EUR/JPY down circa 1%, at 129.81 and GBP/JPY also down circa 1% on the day, at 143.50.

European news began with Swiss unemployment figures coming in as forecast at 3%, Germany continued, for the second day in series, with hard data coming in significantly below expectations; exports fell by -2.8% in June, as imports fell by -4.5%, however, this shock failed to move the DAX, but may have impacted on the value of euro, which sold off versus the majority of its peers. The German data failed to spook analysts, the consensus opinion is the one off data blips printed for the German economy over the past two days are simply outliers, overall the YoY comparisons still suggest economic growth from Europe’s largest economy. The DAX ended the day up 0.28%, CAC up 0.21%, FTSE up 0.14%, STOXX 50 up 0.28%. EUR/USD collapsed through S3 late in the European session to then recover to 1.1746, ending the day down circa 0.7%.

Versus its main peers the euro fell, only versus GPB did the single bloc currency stabilise, with EUR/GBP closing the day at circa 90.42, close to the daily pivot point level, but still at the highest level versus sterling witnessed since October 2016, when sterling dramatically collapsed. Sterling, which has fallen more than 2% over the last three sessions, dropped below $1.30 for the first time since July 21st, GBP/USD closing the day out at circa 1.2999, down circa 0.5%, after falling through S3 at one stage during the trading sessions.

From the USA the JOLTS (job openings) data came in at a record level. The Labor Department reported on Tuesday that job openings, a measure of the labour force demand, increased by 461,000 to a seasonally adjusted 6.2 million, representing the highest level since the series started in December 2000. The news caused the dollar to rally, as investors took the reading as evidence that the USA economy is moving in the right direction, given the confidence of employers to take on more staff at record rates.

Despite the encouraging job openings data the main USA equities sold off late in the New York session; DJIA closing down 0.15% and the SPX down 0.24% with the NASDAQ down 0.21%. Gold whipsawed on Tuesday, the precious metal rallied in the London session, breaking R3 to reach a session high of $1265 per ounce, to then slump to a session low and S3 of $1251 per session before closing out at $1259, up circa 0.3% on the day. WTI oil ended the day resting at the daily pivot point and close to the 200 daily SMA at circa $49.07, at one stage throughout the day threatening to break up through the $50.00 a barrel handle.

Significant economic calendar events for August 9th, all times quoted are London (GMT) time

06:00, currency impacted JPY. Machine Tool Orders (YoY) (JUL P). Orders are forecast to stay consistent at the June level of 31.1% growth.

11:00, currency impacted USD. MBA Mortgage Applications (AUG 04). The expectation is for applications to improve, above the -2.8% figure printed in July.

12:15, currency impacted CAD. Housing Starts (JUL). The prediction is for housing starts to have fallen to 205.0k, from the 213.2k reading registered in June.

12:30, currency impacted CAD. Building Permits (MoM) (JUN). The forecast is for a negative reading of -1.9%, from the 8.9% annual growth registered in May.

14:30, currency impacted USD DOE U.S. Crude Oil Inventories (AUG 04). Inventories are forecast to fall by -2100k, from the -1527k recorded in the previous week.

21:00, currency impacted NZD. Reserve Bank of New Zealand Rate Decision (AUG 10). The RBNZ is forecast to keep the rate at 1.75%.

22:00, currency impacted NZD RBNZ’s. Wheeler news conference on policy statement. Investors will pay close attention to the narrative, for clues as to any future monetary policy changes.

23:01, currency impacted GBP. RICS House Price Balance (JUL). The expectation is for a rise in the surveyor confidence reading to 9%, from the 7% recorded in June.

23:50, currency impacted JPY. Machine Orders (YoY) (JUN). The forecast is for a fall to -1.1%, from the 0.6% reading registered in May.

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