The brand-new week is preparing the ground to take off with the Chinese activity data. Rising geopolitical tensions and escalating Trade tensions between the US and China have grabbed trader’s attention to the Chinese data (Mon).

  • Chinese economic activity estimates
  • CPI for NZ, UK, and EA
  • GBP grab’s the attention again

Read: USDCNH technical overview

  • China 2Q GDP, June Industrial production, Retail sales and fixed asset investments are the critical data risk events due in today’s Asian session. We are more focusing on USDCNH, AUDUSD, and AUDJPY in the FX and the commodities, block we are interested on the Copper’s price action.

China’s 2Q GDP: We expect the 2Q GDP to grow from 6.8% from 6.7%. As trade war looms, the 2QGDP is scheduled to be moderated from the Q1.
“The synchronised slowdown in domestic and external demand is likely to put pressure on economic growth in the second half,” said Lian Ping, chief economist at Bank of Communications.
Week ahead:

  • In Australia, Minutes of July 2018 Monetary Policy Meeting of the Reserve Bank Board (17 July 2018, 11.30 am AEST) and June labor force (Wed) is the principal risk event scheduled.

Read Mixed May Australia employment data. May unemployment rate tumbled

  • In the NZ, 2Q inflation is the catalyst to the kiwi dollar. We expect the inflation reading is likely to remain below the RBNZ’s mid-point target 2.0%. We also hope the recent NZD depreciation could support the import prices. On a QoQ basis, we expect a small uptick from 0.5% to 0.6% and from 1.1% to 1.2% in YoY basis.

1Q Review: The annual inflation rate of 1.1 percent in the year ended March 2018 fell from 1.6 percent in the year ended December 2017. In the March 2018 quarter compared with the December 2017 quarter, the CPI rose 0.5 percent.

  • In the UK, the official labor market (Tue), inflation data (Wed) and retail sales readings (Thu) could guide the August 2nd BOE policy meeting. Recent better than expected PMI survey data (Services PMI) push the August BOE rate hike probability.
    According to IHS Markit, “If labour market data show rising wage pressures and inflation numbers indicate sustained upward price pressures, the odds of an August rate hike will shorten”.

Feb-April labor market summary:
The unemployment rate was 4.2%, down from 4.6% for a year earlier and the joint lowest since 1975
Latest estimates show that average weekly earnings for employees increased by 2.8% excluding bonuses, and by 2.5% including bonuses, compared with a year earlier .

 

  • In the EA, EA Trade data (Mon) and the final EA inflation reading (Wed) are the catalysts for the single currency.
    Turning to the US, Retail sales. IP, Building permits, Weekly unemployment claims and the critical economic events we are watching closely. We are also watching closely to the Fed chair Powell’s speech on the Semiannual Monetary Policy Report before the House Financial Services Committee, in Washington DC.

Charts of the week: AUDJPY and GBPCHF

  • AUDJPY: The level to watch is 84.55

  • GBPCHF: The level to watch is 1.3270

Read: The Economic data succinct review

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