This week’s economic data succinct review and summary of the important events you need to know before you go to the weekend:

Succinct review:

Asia-Pacific:
In response to the escalating trade concerns, the Yuan and the base metal prices had declined over recent weeks.

Indicators of Chinese economic activity had been mixed in May. Growth in retail sales had fallen sharply, while growth in some categories of industrial output had continued to strengthen.

• Amid escalating trade concerns China 2Q GDP growth was 6.7%, in line with the market expectations. The year-on-year growth was 6.8 percent for the first quarter, and 6.7 percent for the second quarter, staying within the range between 6.7 percent and 6.9 percent for 12 quarters consecutively, National Bureau of Statistics of China reported.

• In the first half year, the investment in fixed assets a year-on-year growth of 6.0 percent, while the industrial output in June slowest to 6.0%.

• In the June 2018 quarter compared with the March 2018 quarter, NZ CPI rose 0.4 percent and annual change from the June 2017 quarter to the June 2018 quarter, the CPI increased 1.5 percent.

• In the minutes RBA said, “Some of the downside risks to the global growth outlook had increased over the prior month.” Also said, “household debt has increased by more than household income over the preceding three decades in many countries, but particularly so in Australia.”
• Australia unemployment rate was steadily remained unchanged at 5.4% in June, according to the Australian Bureau of Statistics. The economy created 50,900 in June on a seasonally adjusted basis beats the expectation of 16,500. Since June 2017, full-time employment increased by 158,200 persons, while part-time employment increased by 180,800 persons

Europe:
• The euro area recorded a €16.5 bn surplus in trade in goods
• Euro area annual inflation rate was 2.0% in June 2018, up from 1.9% in May 2018
• UK unemployment rate for people for the latest time period, March to May 2018, was 4.2%, the joint lowest since 1975
• UK Consumer Prices Index 12-month rate was 2.4% in June 2018, unchanged from May 2018
• In June UK retail sales fell back slightly -0.5% followed two months of strong growth in April and May 2018.

U.S:
• US June retail sales increased 0.4%
• Empire State Manufacturing index edged down by over two points to 22.6 still a high level, suggesting a continuation of robust growth
• Industrial production rose 0.6 percent in June after declining 0.5 percent in May
• The residential starts annual rate fell to 12.3% to 1.17m. Building permits in June fell 2.2% to 1.27m
• The July Beige book expressed “Economic activity continued to expand” across the Federal Reserve Districts with 10 of the 12. In the first paragraph itself, the Beige book raised concern about tariffs, especially in the Manufacturing sector. “Manufacturers in all Districts expressed concern about tariffs and in many Districts reported higher prices and supply disruptions that they attributed to the new trade policies.” The book also expressed “All Districts reported that labor markets were tight.” With the recent dollar strength, Consumer spending was up in all districts.
Regarding prices “The extent of pass-through from input to consumer prices remained slight to moderate.”
• In the week ending July 14, the initial claims was 207,000, a decrease of 8,000 from the previous week’s revised level. This is the lowest level for initial claims since December 6, 1969, when it was 202,000, the Labor Department said.

News:

In an interview with CNBC to air on Friday at 6 a.m. ET on “Squawk Box” Trump says he’s ‘not thrilled’ about interest rate hikes and stated that the Chinese yuan is “dropping like a rock”. The US President also said “Because we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time I’m letting them do what they feel is best.”

The financial market reacted negatively to the Trump’s remarks with the dollar index, and the USDJPY wobbled at resistance levels.

Week ahead:
We are focusing on EA PMIs, Aussie CPI, German IFO Business Climate, ECB policy meeting and Advance US GDP.

Forex summary:

Rising geopolitical tensions and Trade tensions have escalated the market volatility again this week. The Chinese Yuan (KTM: USDCNH) hits 12-month low pushed the cross to 6.8077 in today’s Asian session. The commodity currencies AUD and NZD remain in a tight range against the greenback.

The dollar index (KTM: USDX) and USDJPY seem hard to move above the resistance zone appear between 95.00-95.50 and 113.00-113.30 respectively. Besides, Gold held the 50.0% fib reaction (1046.30$-1375.00$ rally)elsewhere Copper re-tested and held the breakout trendline.


The cable completed the A-B-C corrective structure in Thursday’s session. Ahead of the August BOE’s policy meeting, we remain cautiously neutral. Range expected to be between 1.2800-1.3370. The major EURUSD is expected to remain in the tight range between 1.1500-1.1850.

Read: Gold forecast

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