Bad Aussie Jobs Data and a Focus on Central Bank Meetings

August 7, 2014

The Australian dollar fell 0.9% overnight and to a 2-month low of USD 0.9259 after unexpected news that Australia’s jobless rate jumped 0.4 percentage points in July to a 12-year high of 6.4%.  Employment had been forecast to rise over 10K but instead slipped by 0.3K due to a 14.8K slide in part-time workers.  The labor participation rate edged up 0.1 percentage point to 64.8%.

The Bank of Japan Board met Thursday for the first day of a two-day monthly policy meeting.  While monetary settings are not likely to change, there’s talk of rising diversity among Board members and a good chance that assessments of exports and industrial output will be downgraded.

The Bank of England’s monthly policy decision will be announced at 11:00 GMT today.  No change is expected in QE or the 0.5% Bank Rate just yet, but markets anticipate an initial rate increase by yearend.

The ECB announcement at 11:45 GMT will be followed by President Draghi’s monthly press conference beginning at 12:30 GMT.  Euroland data have worsened since the July meeting.  Germany reported a shocking 3.2% plunge in industrial orders in June.  The Ezone CPI inflation rate edged lower in July to a 4-year low of 0.4%.  Italy’s back in recession.  The regional retail purchasing managers index slumped 2.4 points to a 14-month low of 47.6 in July, reflecting uneasiness about Russian reprehensible behavior over the Ukraine situation.  Needless to say, the Governing Council of the ECB has much to ponder.

Aside from the Aussie dollar’s slide, overnight changes in the U.S. currency have been minimal and limited to gains of 0.2% relative to the yen and loonie and 0.1% against the Swiss franc, kiwi, and sterling.  Sterling touched an 8-week low at one point of $1.6834.  EUR/USD is steady, and so was the yuan.  Monthly Chinese data releases begin Friday with the trade numbers.

Share prices in the Pacific Rim fell by 1.5% in China, 0.8% in Hong Kong, 0.2% in Singapore and South Korea and 0.1% in Australia.  Japan’s Nikkei rose 0.5%, and India’s market was 0.2% firmer.  In European markets, stocks traded down 0.4% in Spain and France, 0.3% in Britain and by 0.2% in Germany.

The 10-year German bund yield is two basis points lower.  So is the futures indication on the 10-year Treasury of 2.45%.  The 10-year Japanese JGB firmed a basis points to 0.52%, while the British gilt yield was steady.

Gold and oil prices are down by 0.2% at $1,305.10 per ounce and 0.3% at $96.68 per barrel.

Following a 1.7% dive in May, German industrial production rebounded just 0.3% in June.  Capital goods output fell 0.9% in the latest month, and overall industrial production recorded a 0.5% year-over-year decline.

Japanese international reserves fell by $7.894 billion in July to $1.276 trillion.  Reserves had been essentially unchanged in June.  Stock and bond transactions last week generated a JPY 681 billion net capital outflow following a 645 billion yen inflow in the previous week.

Home price inflation in New Zealand eased 0.4 percentage points in July to a 13-month low of 7.6%.

Australia’s construction purchasing managers index increased 0.8 points to an 8-month high of 52.6 in July.  This was the second straight month to show an expansionary trend following readings below 50 in each of the first five months of 2014.

Several countries reported trade figures.  The French deficit widened to EUR 5.4 billion in June from EUR 5.1 billion in May. Finland posted a 55 million euro deficit after a surplus of 320 million euro in May.  Hungary’s surplus widened 200 million euros to EUR 610 million in June, and Taiwan’s surplus advanced by 38%.

Consumer confidence in Thailand improved 3.1 points to a reading of 78.2 in July.  But Swiss consumer sentiment unexpectedly weakened two points to minus 1 in the same month.

Dutch CPI inflation remained at 0.9% last month and at a mere 0.3% on an EU-hamonized basis.  Greek unemployment ticked down 0.1 percentage point to 27.2% in May.  Norwegian industrial production rebounded 5.7% in June from a 5.9% drop in May.

Some North American data releases today include U.S. consumer credit and weekly jobless insurance claims, Canadian building permits and IVEY-PMI, and Mexican producer and consumer prices.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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