MORNING ROLL CALL

U.S. equity markets retreat as poor jobs data spooks market, euro and sterling rise, gold and oil end the day flat

Various USA employment and unemployment data came in below expectations on Thursday, firstly; the ADP private jobs report came in, revealing that (according to their records), only 158k jobs had been created in June, far short of the 230k registered in May. Unemployment claims for last week came in above the forecast at 248k, whilst the continuing claims also rose to 1956k, the challenger jobs cuts recorded a -19.3% change. The trade balance deficit missed forecast, whilst mortgage applications rose by 1.4% last week. The Markit PMI for services in the USA came in ahead of forecast at 54.2, and the ISM non manufacturing PMI also beat forecast, at 57.4.

The various disappointing employment/unemployment data pricked the (already fragile) confidence in the U.S. equity markets; the DJIA closed down 0.66%, SPX down 0.72% and the NASDAQ down 0.78%. WTI oil was up circa 0.3%, just above the critical ‘psyche’ level and handle of $45 per barrel. Gold ended the day close to flat, up 0.2% and resting on the daily pivot point line, at $1224 per ounce. The Dollar Spot Index weakened by circa 0.3 percent, USD/JPY ended the day flat on the daily pivot point, at circa 113.22.

Canada posted some fascinating data, in terms of the building permits growth (month on month) for June. The reading came in at 8.9%, beating the expectation of 1% by some considerable distance. The international merchandise trade for Canada fell by $1.09b in May.

Germany’s factory orders rose by 3.7% YoY, but missed the forecast. CPI in Switzerland came in negative for the month of June, down -0.1% and is now only registering 0.2% YoY. The construction PMI for Germany fell to 55.1 for June, the retail PMI for both Germany and the Eurozone came in as forecast. Both France and Italy saw a significant rise in their latest retail PMIs. EUR/USD advanced by circa 0.8,%, finishing the day just short of R3 at approx. $1.1418, the euro enjoyed gains versus the majority of its peers during the day’s trading sessions. European equities continued their recent sell off; STOXX 50 closing down 0.47%, DAX down 0.58%, CAC down 0.53% and the UK’s FTSE down 0.41%.

Sterling made positive gains versus the majority of its peers as the dollar continued to lose its appeal; GBP/USD rose by circa 0.3% to $1.2968. With the exception of GBP/CHF, sterling made similar gains versus most of its peers. Curiously the statements from the E.U.’s official Mr. Barnier, setting out the fact that the U.K. will enjoy no preferential trade agreement once the country fully exits in March 2019, appeared to encourage strength in sterling, as did expectations of an imminent base rate rise. Perhaps London City analysts are beginning to bet that hard Brexit will be replaced by no Brexit.

Economic calendar events for July 7th, all times quoted are London GMT time

06:00, currency impacted EUR. German Industrial Production n.s.a. and w.d.a. (YoY) (MAY). A figure of 4.0% growth is expected, a significant rise from 2.9% in April.

08:30, currency impacted GBP. Industrial Production (YoY) (MAY). An improvement to 0.2%, from the shock reading of -0.8% registered in April, is anticipated.

08:30, currency impacted GBP Manufacturing Production (YoY) (MAY). A reading of 0.9% is predicted, up from the flat reading of 0.0%, recorded in April.

08:30, currency impacted GBP. Construction Output SA (YoY) (MAY). After a shock negative reading in April, 1.1% is the forecast, up from -0.6% registered in April.

08:30, currency impacted GBP. Visible Trade Balance (Pounds) (MAY), this deficit is predicted to worsen, albeit only marginally to – £10,850, from -£10,383 registered in April.

12:30, currency impacted USD. Change in Non-farm Payrolls (JUN). A significant jobs improvement to 178km, from the 138k recorded in May, is predicted.

12:30, currency impacted CAD. Unemployment Rate (JUN). Canada’s unemployment rate is expected to remain unchanged at 6.6%.

12:30, currency impacted USD. Unemployment Rate (JUN). The overall unemployment rate in the USA is expected to remain static at 4.3%.

12:30, currency impacted USD. Average Hourly Earnings (YoY) (JUN). Earnings are forecast to rise marginally to 2.6%, from 2.5% in May.

12:30, currency impacted USD. Labor Force Participation Rate (JUN). The labour force data is often monitored, in May only 62.7% of the valuable workforce in the USA was in work.

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