United States of America
USD is weakening against its main competitors: JPY, EUR, and GBP.
Investors are focused on yesterday’s US data on inflation and the trade conflict between the United States and China. CPI rose from 0.1% to 0.3% MoM and from 1.6% to 1.8% YoY. Core CPI, instead of the expected decline, remained at the same level of 0.3% MoM and rose from 2.1% to 2.2% YoY. According to most experts, the statistics will not be enough to force the Fed to refrain from a new rate cut in September. Most likely, there will be several more easing of monetary policy during the year. Also on Tuesday, the US trade mission announced the possibility of postponing the introduction of 10% duties on part of Chinese exports from September 1 to December 15 this year. The transfer will affect some of the consumer goods, including electronics, toys, clothes, and shoes. US President Donald Trump explained the postponement by the desire to prevent negative effects on consumers on the eve of the Christmas season. The postponing probably does not mean a softening of the US position in the trade dispute with the PRC but is caused by the desire not to annoy citizens before the upcoming presidential election.
EUR is moving horizontally against GBP, is strengthening against USD and weakening against JPY.
European investors are focused on economic statistics. According to preliminary data, Q2 2019 EU GDP year remained the same: 0.2% QoQ and 1.1% YoY. Things are worse in Germany: Q2 GDP fell by 0.1% and reached 0.0% YoY. Thus, the leading European economy is on the verge of a full-fledged recession due to lower production and global consumption. European industrial production also continued to decline. In June, its volume will decrease by 1.6% MoM and by 2.6% YoY.
GBP today is moving horizontally against EUR, weakening against JPY and strengthening against USD.
British investors are focused on the June data on inflation in the UK. CPI reached 0.0% MoM and exceeded the target level, rising to 2.1% YoY. Most of all, the increase in the indicator was facilitated by the increase in the cost of housing, clothes, and toys. Observers believe that by the end of the year, inflation in the country will continue due to an increase in salaries and a depreciation of GBP.
JPY is now strengthening against its main competitors – EUR, GBP, and USD.
JPY is trying to strengthen after the release of strong statistics on Japanese orders in mechanical engineering and poor data from Chinese industrial production. In June, the volume of basic orders for machinery and equipment in Japan grew by 13.9%, which is the best indicator since 2016 and reflect an expansion of investment in production. The main orders came from manufacturers of non-ferrous metallurgy and transport equipment. Also, the strengthening of JPY as a shelter asset is due to the poor data on the volume of July industrial production in China, which slowed down more than the market expected: from 6.3% to 4.8%.
Tomorrow, the market is waiting for the publication of data on the volume of industrial production in Japan. It is forecasted that the June indicator will decrease by 3.6%, which may put pressure on JPY.
AUD is weakening today against its main competitors – EUR, GBP, JPY, and USD.
AUD is under pressure from poor Chinese data. The growth of industrial production in China slowed to a 17-year low and amounted to 4.8%. Retail sales also slowed down, falling from 9.8% to 7.6%.
On Thursday, investors are waiting for the release of data from the Australian labor market. It is forecasted that the unemployment rate will remain at the previous level of 5.2%, and the employment rate will increase from 0.5K to 14K, which may support the rate.
Today, oil quotes are being corrected downwards.
Negative statistics on industrial production in China, which slowed down growth to 4.8%, and the EU one, decreased by 2.6%, contribute to lower prices. Also, quotes are under pressure by data from the API report, according to which oil reserves in the United States grew by 3.7 million barrels. In the evening, the market awaits a similar report from the EIA. It is predicted that US oil reserves will decline by another 2.775 million barrels. Realization of the forecast can support oil prices.