China posted encouraging economic calendar data on Thursday morning; their manufacturing PMI came in at 51.7, marginally beating the forecast of a drop to 51.3, from the 51.4 reading posted for July. Whilst only moderately above the 50 figure, which divides contraction from expansion, the figure delivered optimism that the Chinese economy has not discovered its reverse gear in 2017. This economic news, combined with the USA’s 3% GDP growth figure posted on Wednesday, produced an air of calm for market investors, who still have both macro economic and geo political concerns, at the forefront of their collective minds. One note of caution was delivered with China’s PMIs; non manufacturing came in at 53.4 for August, a fall from the 54.5 reading registered in July. Continuing with Asian data, Japan posted mixed results; vehicle production fell to 1.4% YoY in July, from the 6.9% June reading, housing starts fell by -2.3% YoY, construction orders rose by 14.9% in July, versus the 2.3% reading published for June.
European news once again centred on the Brexit negotiations and the recriminations from the E.U. by way of criticism, that the U.K. is failing to prepare for the complex withdrawal process. In economic news Germany’s retail sales fell by -1.2% in the month of July, dragging the YoY figure down to 2.7% annual growth. Unemployment in Germany held steady at the forecast of 5.7%, whilst Eurozone unemployment also remained steady and on forecast, at 9.1%. The CPI estimate for the Eurozone came in at 1.5%, which would represent a rise from 1.4% (if the estimate is matched by the final figure) and be inching closer to Mario Draghi and the ECB’s target of 2% inflation.
Overall European markets experienced positive trading sessions on Thursday, following on from Wednesday’s gains, the sharp losses incurred earlier in the week, were mostly eradicated. STOXX 50 closed up 0.52%, FTSE up 0.89%, DAX up 0.44% and CAC up 0.58%. EUR/USD rose from breaching S1 in the European session to close the day out at circa 1.1900, up approx. 0.2% on the day, with the euro enjoying similar gains versus the majority of its peers. GBP/USD ended the day up 0.2% at circa 1.2932, similar to the euro, the pound v dollar pair breached S1 before recovering.
Canada beat the monthly and annualised forecast estimates by delivering growth figures of 4.5% in Q2 and 0.3% growth in the month of June. As a consequence the Canadian dollar rose versus its main peers; USD/CAD slumping through S1 to 1.2499, down circa 0.5% on the day. The Canadian currency enjoyed a positive day versus all of its peers, AUD/CAD, NZD/CAD, EUR/CAD breaching S3. Looking at USA economic data, personal spending fell in July to 0.3% growth, whilst the weekly jobless claims beat forecast by coming in at 236k, with continuous claims falling to 1942k. However, the Challenger job cuts data, which lists the major jobs cuts announced by corporate firms, rose by 19.4% during the past month, which left analysts judging if this shock figure, the first rise since March, will set the tone for the NFP jobs data, to be published on September 1st. USD/JPY closed down circa 0.2% at approx. 109.93, with the dollar index closing the day down approx 0.1%. The DJIA ended the day up 0.28%, SPX up 0.53% and the NASDAQ up 0.90%. Gold regained its allure, up circa 1% on the day as it breached R3, closing out at $1322 per ounce. WTI oil rose sharply; breaching R3 and up approx. 2.9% on the day at $47.41.
Significant economic calendar events for September 1st, all times quoted are London (GMT) time
01:45 currency impacted CNY Caixin China PMI Mfg (AUG). The forecast is for a fall to 51, from the 51.1 registered in July.
05:00, currency impacted JPY. Consumer Confidence Index (AUG). The prediction is for a fall to 43.5, from 43.8.
07:15, currency impacted CHF Retail Sales (Real) (YoY) (JUL). The expectation is for a similar figure, to the 1.5% posted in June.
08:00, currency impacted EUR. Italian Gross Domestic Product s.a. and w.d.a. (YoY) (2Q F). The anticipation is for no change in the current annualised growth figure of 1.5%.
08:00, currency impacted EUR Markit Eurozone Manufacturing PMI (AUG F). A reading of 57.4, identical to July’s is forecast.
08:30, GBP Markit UK PMI Manufacturing SA (AUG). A moderate fall from 55.1 to 55 is expected.
12:30, currency impacted USD Change in Non-farm Payrolls (AUG). The prediction is for a figure of 180k, versus the 209k recorded in July.
12:30, currency impacted USD Unemployment Rate (AUG). Unemployment is expected to remain at its 16 year low of 4.3%.
13:30, currency impacted CAD Markit Canada Manufacturing PMI (AUG). A figure close to July’s 55.5 is anticipated.
14:00, currency impacted USD ISM Manufacturing (AUG). A rise to 56.5, from the 56.3 recorded in July, is expected.
