China’s Inflation Figure Unravel

Previously, the US nonfarm payrolls beat market expectations on the upside, with hiring accelerating in June as labor market supply constraints eased. 850k new jobs added,marking the highest reading in 10 months. Average hourly earnings rose 0.3% MoM and 3.6% YoY, reflecting strong demand for labor.

This week, Wednesday’s Federal Reserve meeting minutes may give investors an insight into policymakers behind the scenes discussions after a hawkish shift prompted market turbulence last month. The European Central Bank will also publish the minutes of its latest meeting, while China will release what will be closely watched inflation figures. And with markets going into the second half of the year investors are asking whether the stunning first half run can continue. Here is what you need to know to start your week.

Here are the key market moving factors for the week:

The US

• The dollar took a breather on Monday after recent gains ran into a speed bump when details of last week’s U.S. jobs report soothed jitters about the timing of U.S. interest rate hikes.
• While the headline June job creation figure beat forecasts, unemployment ticked higher, workforce participation didn’t budge and the pace of hourly earnings growth slowed – suggesting rate rises could be further away than markets have come to fear.
• Against the risk-sensitive Australian and New Zealand dollars the greenback slipped 0.7% and 0.9%, respectively in the wake of the data on Friday, and then steadied on Monday. [AUD/]
• The ISM index of service industry activity is set to be released on Tuesday and is expected to show continued strong growth after hitting a record high in May amid a reopening made possible by vaccinations against the coronavirus. The report could also underline ongoing labour constraints as hiring continues to lag, leading companies to offer higher wages to attract staff.

The UK

• The UK economy looks to be in rude health with economic growth picking up sharply over the last quarter. According to the latest Bank of England (BoE) report, the recovery in economic activity is ‘most pronounced’ in the consumer-facing services sector after Covid restrictions were loosened in April, with output in some sectors ‘around pre-Covid levels’.
• The BoE expects the UK economy to grow by 7.25% this year, supported by the successful vaccination program and continued unwinding of lockdown measures, while the Confederation of British Industry (CBI) is more bullish and expects UK GDP to grow by 8.2% this year and 6.1% next year.

Europe

• The ECB is to publish the minutes of its June policy meeting on Thursday. ECB-watchers will also be on alert for news of several meetings due to take place in the coming weeks as part of the banks review of its monetary policy strategy.
• The bank wants to revamp its inflation target – currently set out close to but not above 2% – and is aiming to get the review done by September.
• On Wednesday, eurozone powerhouse German is to publish industrial production figures and the European Commission is to release updated economic forecasts for the European Union.

AUSTRALIA

• Australian job advertisements extended their record-breaking run in June as demand for labour remained strong despite a round of coronavirus lockdowns across the country, a sign any drag on the economy will likely be fleeting.
• Other data out on Monday showed retail sales topped forecasts in May with a rise of 0.4%, while sales of new vehicles held firm in June, in a promising omen for consumption.
• Approvals to build new homes did drop 7.1% in May from the previous month, but that followed months of gains which still left approvals up 53% on a year earlier.
• Figures from Australia and New Zealand Banking Group showed job ads climbed 3.0% in June from May, when they jumped 6.8%. That was the 13th straight month of gains and showed 129% growth versus a year earlier when the labour market was recovering from a national pandemic lockdown.

JAPAN

• Japan will have more clarity on what a digital yen would look like late next year, a lawmaker overseeing the ruling party’s digital currency plan said, potentially sparking a turf war between traditional lenders and online platform operators.
• The Bank of Japan in April launched the first phase of its central bank digital currency (CBDC) experiment, joining counterparts aiming to match the rapid pace of private innovation.
• It hopes to move to the second phase next year to lay out some key functions of a digital yen, such as which entities will serve as intermediaries between the BOJ and deposit holders.
• “By around the end of next year, we’ll have a clearer view of what Japan’s CBDC would look like,” Hideki Murai, who heads the ruling Liberal Democratic Party’s panel on digital currencies, told Reuters in an interview on Friday.

CHINA

• China is to release data on both consumer price inflation and producer price inflation on Friday. Market watchers will be paying close attention to the cost of raw materials, which have soared due to higher commodity prices, and whether these increases are being passed onto the consumer.
• Prices are jumping in China and around the world, adding to fears that a wave of inflation could threaten the global economic recovery if it continues.

Market Overview:

Gold

• Gold prices traded modestly higher during Monday’s APAC session, as a weaker US Dollar and lower yields bolstered the appeal of the yellow metal. Prices continued to consolidate in a tight range between $1,750 – $1,795 waiting for fresh catalysts.

Oil

• Oil prices fell on Monday, with Brent dropping after four days of gains, as investors and traders awaited crucial talks by OPEC+ following disagreement within the group that could lead to major producers pumping up volumes to grab market share.
• Brent crude was down by 40 cents, or 0.5%, at $75.77 a barrel by 0131 GMT, after falling 1 cent last week, the first weekly decline in six. U.S. oil was down by 30 cents, or 0.4%, at $74.86 a barrel, having risen 1.5% last week, the sixth consecutive week of gains for the contract.

Below are the major market moving events for the week:

All times listed are EDT

Monday

Independence Day holiday in the United States, markets are closed

4:30: UK – Services PMI: expected to remain steady at 61.7.

Tuesday

00:30: Australia – RBA Interest Rate Decision: forecast to hold at 0.10%.

4:30: UK – Construction PMI: anticipated to edge lower to 63.5 from 64.2.

5:00: Germany – ZEW Economic Sentiment: likely to drop to 75.4 from 79.8.

10:00: US – ISM Non-Manufacturing PMI: seen to slip to 63.5 from 64.0.

Wednesday

10:00: US – JOLTs Job Openings: forecast to fall to 8.300M from 9.286M.

10:00: Canada – Ivey PMI: previous reading came in at 64.7 for May.

14:00: US – FOMC Meeting Minutes 

Thursday

7:30: Eurozone – ECB Monetary Policy Statement

8:30: US – Initial Jobless Claims: predicted to slip to 355K from 364K.

11:00: US – Crude Oil Inventories: last week showed a drawdown of -6.71M Bbl.

Friday

2:00: UK – GDP: seen to drop to 1.7% from 2.3%.

2:00: UK – Manufacturing Production: to plunge to 29.5% from 39.7%.

6:00: UK – BoE Gov Bailey Speaks

6:00: Eurozone – ECB President Lagarde Speaks

8:30: Canada – Employment Change: forecast to surge to 175.0K from -68.0K.

Tentative: US – Fed Monetary Policy Report

Based on the above factors and the events lined up for the week, the analyst at RvR Ventures suggests you to Trade responsibly; invest only as much as you can lose. All the profits and losses due to the above data are your own personal responsibility. Kindly practice money management & risk mitigation while trading.

Chat with us to know more: https://wa.me/971581958582

Register to open your account: http://bit.ly/OpenFxAccount

Join Our Telegram Channel: https://t.me/ForexFundManagers

Subscribe to Our YouTube Channel: https://youtu.be/AnTlQd-FQxc