Articles

It’s a big week on the economic calendar, including the BOJ, Fed and BOE decisions. That kicks off with the Bank of Japan on Wednesday in Tokyo but first we get a decent slate of US economic data, starting at 9 am ET with:

• CaseShiller US housing prices
• Monthly house price data from the FHFA

There are signs of weakening in the US housing market, particularly in the south and that should start to show up in the sale data.

At 10 am ET, it’s another two-pack of data with:

• JOLTS
• Consumer confidence

Both of these have been pointing to an economic slowdown but it’s not clear how quickly the slowdown is coming of if it’s accelerating. Consumer confidence data has been variable but yesterday McDonald’s highlighted a meaningful slowdown in spending.

After the close, we get earnings from Microsoft, Starbucks and AMD. Check out Greg’s preview:

This article was written by Adam Button at www.forexlive.com.

• US futures keep the calm so far on the day
• Euro stays little changed after flurry of data
• Eurozone July final consumer confidence -13.0 vs -13.0 prelim
• Eurozone Q2 preliminary GDP 0.3% vs. 0.2% Q/Q expected
• Italy Q2 preliminary GDP 0.2% vs 0.2% Q/Q expected
• Germany Q2 preliminary GDP -0.1% vs. 0.1% Q/Q expected
• Bavaria July CPI +2.5% vs +2.7% y/y prior
• What are the main events for today?
• European equities mostly a touch higher to start the day
• Switzerland July KOF leading indicator index 101.0 vs 102.4 expected
• Spain July preliminary CPI +2.8% vs +3.0% y/y expected
• Spain Q2 preliminary GDP 0.8% vs 0.5% Q/Q expected
• USD/JPY claws its way back up above the 155.00 mark
• Earnings maketh the market
• Eurostoxx futures +0.2% in early European trading
• China’s Politburo holds meeting to set out economic priorities for H2 2024
• France Q2 preliminary GDP +0.3% vs +0.2% q/q expected
• USD/JPY creeps a little higher on the day
• FX keeps the calm ahead of busy calendar day in Europe

The
European session was relatively calm. The Eurozone Flash Q2 GDP showed a pickup in the
second quarter, which is something we already knew from the PMIs, while the
German economy continues to be the “sick man of Europe” as GDP disappointed
showing a contraction.

We also got
some CPI readings from Spain and Germany which showed further easing in
inflation with the focus now switching to the Eurozone Flash CPI being released
tomorrow. The market is seeing 50 bps of easing by year-end with a 63%
probability of a rate cut in September.

The notable
mover has been the JPY as it continues to drift lower heading into the BoJ
decision tomorrow. We got a breakout of a key trendline in USD/JPY today which
might have increased the bullish momentum but overall, it seems like there’s
some general squaring of positions into the risk event.

Looking
elsewhere, we are basically flat across all the other markets. The US Dollar,
equities, bonds and gold are slightly positive, while crude oil and bitcoin are
slightly negative on the day.

The focus will now switch to the US data with Job Openings and Consumer Confidence being released at 14:00 GMT/10:00 ET.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

They were down roughly 0.3% earlier in Asia trading but have kept largely steady in European morning trade thus far. Both Nasdaq futures and Dow futures are also up 0.1%, reflecting a more tentative mood overall I would say. There will be a couple of modest earnings releases coming up but all eyes will be on Microsoft after the close: Earnings maketh the market

Besides that, investors will have to continue the waiting game ahead of the BOJ and Fed meetings tomorrow. Don’t forget that it is also NFP week, so the relevant figures from the US are also on the radar this week.

This article was written by Justin Low at www.forexlive.com.

The tight range speaks to the lack of appetite among most dollar pairs so far today. The only exception once again is really USD/JPY, with the pair up 0.5% to 154.70 but off earlier highs as the 155.00 mark holds. As an aside, there are large expiries there in play so do be wary of that. Going back to EUR/USD, there’s little to work with despite the flurry of data in European morning trade.

The Q2 GDP data across the euro area reaffirms more resilience in the last quarter. But there are already early signs that the economy is beginning to stutter again as we get into Q3. Meanwhile, the Spanish and German state CPI readings aren’t really offering anything new to the picture thus far.

The disinflation process is still taking hold but at a very gradual pace. In fact, the bumps along the way are still very much persisting. In Germany, it looks like headline annual inflation might tick a little higher in July. But we’ll see on the core reading later, as that will be the bigger focus.

So far, the odds of an ECB rate cut in September are at ~65% and that is little changed from the ~68% before the session began. The ECB would definitely like more progress on inflation developments but they’re being made to wait. It looks like the August reading will be the more crucial one in determining whether the platform is right to act in September.

As such, that’s not leaving the euro with much to act upon today. EUR/USD is still holding just above its 200-day moving average (blue line) at 1.0821 with the 100-day moving average (red line) not too far away at 1.0795. That alongside bids layered at 1.0800 and the 50.0 Fib retracement level of the swing higher in July at 1.0807 will act as a key supportive region for the pair now.

But a firm break below that could set off more protracted losses for EUR/USD. If so, sellers will at least be looking to aim towards the June lows near 1.0666-70.

Do be mindful that the dollar side of the equation is also one to watch this week. That considering we have the Fed and the US jobs report coming up. Besides that, the overall risk mood is also an important factor as well amid key earnings releases for equities.

This article was written by Justin Low at www.forexlive.com.

• Prior -14.0
• Economic confidence 95.8 vs 95.4 expected
• Prior 95.9
• Industrial confidence -10.5 vs -10.7 expected
• Prior -10.1; revised to -10.2
• Services confidence 4.8 vs 5.5 expected
• Prior 6.5; revised to 6.2

Of note, the employment expectations indicator dipped below its long-term average of 100 for the first time since April 2021. That suggests some softness to the labour market outlook moving forward.

This article was written by Justin Low at www.forexlive.com.

• Eurozone Flash Q2 GDP Y/Y 0.6% vs. 0.5% expected and 0.4% prior.
• Eurozone Flash Q2 GDP Q/Q 0.3% vs. 0.2% expected and 0.3% prior.

Among the Member States for which data are available for the second quarter of 2024, Ireland (+1.2%) recorded the highest increase compared to the previous quarter, followed by Lithuania (+0.9%) and Spain (+0.8%). The highest declines were recorded in Latvia (-1.1%), Sweden (-0.8%) and Hungary (-0.2%). The year on year growth rates were positive for eight countries and negative for three.

That’s a welcome pickup in the Eurozone economy in the second quarter which is something we have already seen via the PMIs. The rate cuts from the ECB in the next quarters might increase the confidence and boost growth.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Italy Flash Q2 GDP Y/Y 0.9% vs. 0.8% expected and 0.7% prior.
• Italy Flash Q2 GDP Q/Q 0.2% vs. 0.2% expected and 0.3% prior.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Germany Flash Q2 GDP Y/Y -0.1% vs. 0.0% expected and -0.2% prior.
• Germany Flash Q2 GDP Q/Q -0.1% vs. 0.1% expected and 0.2% prior.

The German economy contracted in the second quarter. This adds to many other negative economic releases for the largest European economy.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The other state readings released around the same time:

• Brandenburg CPI +2.6% vs +2.6% y/y prior
• Hesse CPI +1.8% vs +1.8% y/y prior
• Saxony CPI +3.1% vs +2.8% y/y prior
• North Rhine Westphalia CPI +2.3% vs +2.2% y/y prior
• Baden Wuerttemberg CPI +2.1% vs +1.9% y/y prior

It’s a bit of a mixed report but at the balance, it should point to the national reading coming in around 2.3% or even 2.4%. That is a touch higher than expectations but eyes will be on the core print.

This article was written by Justin Low at www.forexlive.com.

• Prior 102.7

The reading indicates a more cautious outlook to the Swiss economy in the next six months. And that has been a bit of a trend in recent months as well. If anything, it speaks to the more tentative take on economic conditions in the region as we approach the second half of the year.

This article was written by Justin Low at www.forexlive.com.

• Prior +3.4%
• HICP +2.9% vs +3.2% y/y expected
• Prior +3.6%

The readings are lower than estimated as Spanish headline inflation continues to swing around mostly in the past half-year. As for core annual inflation, it is seen easing further to 2.8% – down from 3.0% in June. That’s comfort for the ECB but still not quite at a level that they would like.

This article was written by Justin Low at www.forexlive.com.

• Spain Flash Q2 GDP Y/Y 2.9% vs. 2.5% expected and 2.5% prior.
• Spain Flash Q2 GDP Q/Q 0.8% vs. 0.5% expected and 0.8% prior.

Some nice pickup in the Spain’s economy while inflation continues to abate. GDP growth Y/Y in Spain averaged 2.03% from 1996 until 2024, so this is good news for the soft landing narrative and should reinforce further as the ECB delivers more rate cuts in the next quarters.

This article was written by Giuseppe Dellamotta at www.forexlive.com.