Articles

This data point tends not to be much of an AUD mover upon release.

Westpac-Melbourne Institute Leading Index

• for June 2024
• indicates the likely pace of economic activity relative to trend three to nine months into the future
• rose from -0.28% in May to -0.13% in June

WPAC assessment:

• Lower commodity prices partially offset by stabilising hours worked.
• Economic activity improving but to remain below trend in to early 2025

This article was written by Eamonn Sheridan at www.forexlive.com.

Singapore Non-oil Domestic Exports (NODX)

-0.4% m/m

• expected +4.1% m/m, prior -0.1%

-8.7% y/y

• expected -1.2% y/y, prior -0.1%

Bad misses for this data

This article was written by Eamonn Sheridan at www.forexlive.com.

Reuters Tankan survey for June 2024

Manufacturers sentiment index +11 in July vs +6 in June

• first gain in four months
• manufacturers expect the index to fall back to plus 9 over the next three months

Service-sector +27, down from June’s +31

Reuters report some comments from the survey:

• “Domestic price hikes have weakened consumption and a
  slowing Chinese economy has caused China-bound materials from
  the Middle East to make inroads into the Japanese market at low
  prices”
• “The double punches of weak domestic demand and cheap import
  materials from overseas are curbing our sales volume.”
• “Input prices have
  risen and remain elevated due to the weak yen as we struggle to
  transfer costs to our customers.”

***

Reuters Tankan is a monthly survey that seeks to track the Bank of Japan’s tankan quarterly survey

• respondents spoke on the condition of anonymity
• Reuters Tankan indexes are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. A positive reading means optimists outnumber pessimists.

This article was written by Eamonn Sheridan at www.forexlive.com.

New Zealand inflation data for the April to June quarter of 2020, lower than expected:

The Reserve Bank of New Zealand will be a little happier with this data, but inflation in NZ is still above target. The target range for consumer inflation is between 1 and 3%.

Domestic inflation continues to stay stubbornly high:

• non-tradables +0.9% q/q and +5.4% y/y (prior 5.8%)
• Non-tradeable inflation measures final goods and services that do not face foreign competition and is an indicator of domestic demand and supply conditions. However, the inputs of these goods and services can be influenced by foreign competition.

Tradeable inflation 0.3% y/y (prior 1.6%

• Tradeable inflation measures final goods and services that are influenced by foreign markets.

This article was written by Eamonn Sheridan at www.forexlive.com.

Useful points made by Senior Fellow at Council on Foreign Relations (CFR) Brad Setser.

I’d only add that China has already begun to let the yuan drop. We had the heads up on this from HSBC, and they were spot on:

• HSBC expect the USD/CNY reference rate to drift higher (yuan weaker)

(USD/CNY chart below)

This article was written by Eamonn Sheridan at www.forexlive.com.

A snippet from Société Générale on US equites, looking favourably at the broadening rally:

• equal-weighted S&P 500 had its biggest one-day outperformance versus its market cap-weighted counterpart since Nov 2020 last week

SocGen says this is a boost of confidence for stocks, comparing narrow with broader breadth:

• narrow breadth often occurs in a bear market or when a few concentrated stocks drive the market into a ‘bubble.’
• we now think improving breadth should be the way for the S&P 500, rather than a recession or concentrated positioning, as our cycle indicators continue to rise over the last five quarters and the profit cycle is broadening beyond Nasdaq-100 stocks

This article was written by Eamonn Sheridan at www.forexlive.com.

• Prior month of 0.1% revised +0.3%
• Retail sales came in at $704.3B va $704.5B last month.

Details:

• Retail sales 0.0% vs -0.3% estimate
• Retail sales YoY +2.3%
• Ex Autos 0.4% vs 0.0% estimate
• Prior ex autos -0.1% revised to 0.1%
• Control group 0.9% vs 0.2% estimate
• Prior month control group 0.4%
• Ex autos and gas 0.8% vs 0.3% last month. Prior month revised from 0.1%
• Non store retailers were up 8.9% from last year while food services and drink places were up 4.4% from a year ago

Some other details MoM and YoY changes:

• Furniture is 0.6% MoM and -4.0% year on year
• building materials and garden equipment is 1.4% MOM and -0.9% year on year
• gasoline stations -3.0% MoM and -0.4% year on year
• clothing +0.6% MoM and +4.3% year on year
• nonstore retailers +1.9% MoM and +8.9% year on year
• food services and trading places +0.3% MoM and +4.4% year on year
• Autos -2.0% MoM and -2.2% year on year

Stronger from most angles vs expectations. In addition, the revisions for the retail sales were better as well. Dow up 160 points. S&P is up 14.28 points and NASDAQ is up 57 points. The 2-year yield is trading near highs at 4.463% up 1.0 basis points. THe 10 year is at 4.208%, -2.1 basis points.

A poor performer is the auto (and gasoline stations) which did not do well last month. Motor vehicle and parts dealers fell -2.0% MoM

This article was written by Greg Michalowski at www.forexlive.com.

• Dow and S&P close at records
• I know it is just the Dow 30, but it is on pace for best % move since June 2023
• Crude oil futures settles at $80.76
• Fed’s Kugler: Will be appropriate to ease later this year if conditions evolve favorably
• There hasn’t been a better week to own the Russell 2000 in 24 years
• SocGen: The historical USD response to Fed easing cycles
• President Macron accepts French governments resignation
• Atlanta Fed GDPNow Q2 growth estimate rises to 2.5% versus 2.2% last
• European indices close lower on the day
• Gold trades to a new all-time high and backs off a bit. $2450.10 is close risk for buyers
• WSJ: Spot Ether ETF likely to start trading next week
• New Zealand global daily trade price index rises 0.4%
• Canadian CPI cements a Bank of Canada rate cut next week – CIBC
• US May business inventories 0.5% versus 0.4% expected
• US NAHB housing market index 42 vs 43 expected
• Kickstart the FX trading day for July 16 w/a technical look at the EURUSD, USDJPY & GBPUSD
• IMF leaves 2024 global growth forecast unchanged, bumps 2025 GDP
• US June import prices 0.0% vs -0.1% expected
• US June retail sales 0.0% versus -0.3% expected
• Canada June CPI 2.7% versus 2.8% expected
• Canada June housing starts 241.7K vs 255.0K expected
• US retail sales and Canadian CPI coming up next
• The EUR is the strongest and the AUD is the weakest as the NA session begins
• Forexlive European FX news wrap 16 July – German ZEW declines for the first time this year

US retail sales were better than expectations with revisions to the prior month. Ex Autos the MoM gain was 0.4% vs 0.0% estimate. The ex auto and gas was even better at 0.8% (with prior month revision to 0.3% from 0.1% estimate. Other data in the US today showed NAHB housing index was steady but not impressive. Inventories rose by 0.5% vs 0.4% estimate.

In Canada the CPI cemented the BOC rate cut next week. However, despite the stronger retail sales and and the lower CPI in Canada, you might expect the USDCAD moved higher?

It didn’t.

The USDCAD price is only down around 8 pips from the close yesterday, but it was up around 30 pips at session highs The price is trading between its 200 bar MA on the 4-hour chart above at 1.36828, and the 100 bar MA on the 4-hour chart below at 1.36583. Overall the pair’s price is still above other MAs including the 100/200 hour MA, 100 day MA, and 100 bar MA on the 4-hour chart between 1.3636 and 1.3658. Keep those levels in mind in the new trading day.

The Bank of Canada rate decision is next Wednesday.

Fed’s Kugler commented that it will be appropriate to ease monetary policy later this year if economic conditions evolve favorably. She noted that the upside risks to inflation and downside risks to jobs have become more balanced. If the labor market cools too much, cutting rates sooner rather than later may be necessary. However, she balanced that comment by saying it might be appropriate to hold rates steady a bit longer if incoming data do not show sufficient progress toward the 2% inflation target.In other words, she does not know.

Finally, despite a few bumps at the start of the year, inflation has continued to trend down, and ongoing labor market rebalancing suggests that inflation will move towards the 2% target.

In the US stock market, the Dow and the S&P closed at record levels with the Dow’s gains, its best since June 2023. The Russell 2000 had a gain of 3.5% or more for the 2nd time in 4 trading days as the market plays catch-up to the Nasdaq and S&P. The Magificent 7 wasn’t that magnificent with Meta, Nvidia, Alphabet and Microsoft all declining today . The final numbers showed:

• Dow Industrial Average average soared 742.74 points or 1.85% at 40,954.49. That is the 2nd consecutive record close.
• S&P index rose 36.40.64 percent at 5667.21. That was another record close
• NASDAQ index rose 36.77 points or 0.20% at 18509.34. The all-time high was reached last Wedsnesday at 18647.45
• Russell 2000 rose 76.65 points or 3.50% at 2263.67. It is the 2nd day in the last 4 with gains of 3.5% or more.

In the US debt market, the yield curve got more negative with yields moving lower across the curves with the longer end seeing the largest declines:

• 2-year yield 4.421%, -3.2 basis points
• 5-year yield 4.075%, -5.6 basis points
• 10 year yield 4.159% -6.9 baseboards
• 30-year yield 4.373%, -8.1 basis points

Spot gold moved to an all-time record level and record close:

• Spot gold rose $47.36 or 1.96% at $2468.90.The high-price was just above this level at $2469.74.

Spot silver rose $0.61 or 2.0% at $31.27

Bitcoin traded his eyes and $65,222. It is currently trading at $64,823 which is just above its 100-day will be average is $64,511. Staying above that level would be more bullish going forward.

Crude oil is trading down -$1.13 at $80.76. Concerns about China growth, and less regulation in the US with a Trump/Vance win is helping to weaken the price.The private crude oil inventory data showed a drawdown of oil inventories. The expectation for the EIA data is for a small change:

Finally, the strongest to the weakest of the major currencies shows the CHF is the strongest while the NZDUSD is the weakest.

The USD is mixed to higher.

This article was written by Greg Michalowski at www.forexlive.com.

Via Oil Markets Editor
@OPIS

—

Expectations I had seen centred on:

• Headline crude +1 mn barrels
• Distillates -0.5 mn bbls
• Gasoline -1.7 mn

—

This data point is from a privately-conducted survey by the American Petroleum Institute (API).

• It’s a survey of oil storage facilities and companies
• The official report is due Wednesday morning US time.

The two reports are quite different.The official government data comes from the US Energy Information Administration (EIA)

• Its based on data from the Department of Energy and other government agencies
• Whereas information on total crude oil storage levels and variations from the previous week’s levels are both provided by the API report, the EIA report also provides statistics on inputs and outputs from refineries, as well as other significant indicators of the status of the oil market, and storage levels for various grades of crude oil, such as light, medium, and heavy.
• the EIA report is held to be more accurate and comprehensive than the survey from the API

This article was written by Eamonn Sheridan at www.forexlive.com.

The major stock indices all closed higher but it was the Dow and the Russell 2000 which did the best. The Nasdaq lagged.

Looking at the closing levels:

• Dow Industrial Average average soared 742.74 points or 1.85% at 40,954.49. That is the 2nd consecutive record close.
• S&P index rose 36.40.64 percent at 5667.21. That was another record close
• NASDAQ index rose 36.77 points or 0.20% at 18509.34. The all-time high was reached last Wedsnesday at 18647.45
• Russell 2000 rose 76.65 points or 3.50% at 2263.67. It is the 2nd day in the last 4 with gains of 3.5% or more.

Some big winners (and Dow stocks)

• UnitedHealth, +6.48%
• Caterpillar +4.28%
• Boeing +3.89%
• Home Depot +2.96%
• Dow + 2.7%

How about the Magnificent 7? Only Amazon, Apple, and Tesla had positive results for the day.

• Meta Platforms -1.28%.
• Amazon +0.16%
• Nvidia -1.62%
• Alphabet -1.40%
• Apple +0.18%
• Microsoft -0.98%
• Tesla +1.55%

So how are the indices doing year-to-date with the shift in leaders over the last few days:

• Dow Industrial Average average, +8.66%.
• S&P index +18.81%
• NASDAQ +23.3%
• Russell 2000 +11.67%. The Russell 2000 is up 5.37% for the week after rising 5.99% last week as it plays catch-up. .

This article was written by Greg Michalowski at www.forexlive.com.

A lower y/y inflation reading is expected from NZ. The Reserve Bank of New Zealand will welcome this. The NZ economy is in dire straits. Plummetting PMIs the latest indications of this:

• New Zealand services PMI for June 2024: 40.2 (prior 43.0)
• New Zealand June Manufacturing PMI 41.1 (prior 47.2)

There are some indications we are getting closer to RBNZ rate cuts:

• The prospect of an RBNZ rate cut in 2024 is rising

Inflation data will either support the case for RBNZ rate cuts, or not … we await the figures.

*

Also ahead today, although not on the pic below, are Singapore Non-oil Domestic Exports (NODX) data from Singapore.

• expected +4.1% m/m, prior -0.1%
• expected -1.2% y/y, prior -0.1%

• This snapshot from the ForexLive economic data calendar, access it here.
• The times in the left-most column are GMT.
• The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.

This article was written by Eamonn Sheridan at www.forexlive.com.

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

This article was written by Eamonn Sheridan at www.forexlive.com.