Kieran Salsone

US Dollar index plummets off the back of weak data

Australia: 

Producer prices (excluding exports) rose 0.3% in Q2, declining slightly from 0.5% in Q1. In the year to Q2, the PPI increased 1.1%, previously 0.7% in Q1.

Private sector credit grew by 0.4% in June, stepping back from the 0.5% monthly growth in May.

The annual pace of growth slowed to 5.9% in June, a touch lower than outcomes seen in the past five months. 

Credit for investor housing grew at an annual pace of 10.7%. Credit for owner-occupier housing grew 0.4% in June to be up 5.5% over the year. Business credit was up 4.3% for the year.

Share Markets: 

The US stockmarket gained early in the session on reduced expectations of a September rate hike from the Fed, however it lost ground later in the session to finish weaker.

The Dow fell 0.3%, the S&P 500 slipped 0.2% and the Nasdaq was unchanged.

Interest Rates:

US government bond yields fell after weak US wages inflation data weighed on expectations for a September rate hike from the Fed.

Australian government bond yields followed US yields lower on Friday night.

Foreign Exchange:

The US dollar index plunged immediately following the release of soft US wages inflation data but almost completely retraced during the remainder of the session.

The Euro bounced on the data, from 1.0964 just prior to 1.1114, but later slipped back to 1.0965. USD/JPY fell from 124.27 to 123.52, later retracing about half the loss.

The Aussie dollar AUD bounced from 0.7235 just before the US wages data, to 0.736, before slipping back to 0.7291 and closing little changed on the day.

AUD/USD is trading around 0.7310 at the time of writing. The New Zealand dollar similarly bounced, with NZD/USD rising from 0.6537 to 0.6674 before slipping to 0.6585.

Commodities:

Commodity prices were weaker. The oil price fell on speculation of increased global supply. The Iranian oil minister indicated that Iran could boost production significantly once sanctions end, later this year.

China: 

The official manufacturing PMI slipped to a five-month low of 50.0 in July, from 50.2 in June. A reading above 50 signals expansion in manufacturing activity. The non-manufacturing PMI edged up to 53.9 in July, from 53.8 in June.

Europe:

Eurozone core CPI was 1.0% in the year to July, above the previous month's 0.8% and the highest rate in more than a year. However the unemployment rate inched higher from 11.0% to 11.1%.

Japan:

The jobless rate edged up to 3.4% in June from 3.3% in May.

National CPI rose 0.4% in the year to June, falling from 0.5% annual growth in consumer prices in May.

The Bank of Japan, whose target rate is 2%, expects CPI to remain close to zero until around September. Beyond then, last year's oil price falls will no longer have a downward influence on consumer price growth.

Core CPI (excl. fresh food) rose marginally in the year to June, increasing 0.1%.

Housing starts jumped 16.3% in the year to June, defying the median forecast of 2.9%. Construction orders rebounded strongly in June, surging 15.4% in the year to June after declining 7.4% in May.

New Zealand:

According to the ANZ business survey, business confidence plunged to a six-year low in July. The survey showed that 15.3% of businesses are pessimistic about the general economy. In June only 2.3% of businesses were pessimistic. 

United Kingdom:

The GfK consumer confidence index dropped to 4 in July, as concerns about Greece and the global economy took their toll on morale.

Expectations had been for a fall to 5 from 7 in June, which was the strongest outcome since January 2000.

United States:

US wage inflation rose only 0.2% in Q2. This was a record low for the employment cost index, disappointing the consensus at 0.6% and weaker than Q1's 0.7%. Markets read this as slightly reducing the chances the Fed will hike in September.

The Chicago business barometer was stronger than expected at 54.7 in July, up from 49.4 in June. 

Consumer confidence (from the University of Michigan) disappointed at 93.1 in July, down slightly from 93.3 in June.



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