Thursday 18th August: European Open Briefing

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Thursday 18th August: European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei down 1.00 %, Shanghai Composite gained 0.40 %, Hang Seng rose 1.60 %, ASX 200 down 0.30 %
  • Commodities: Gold at $1358 (+0.30 %), Silver at $19.83 (+0.70 %), WTI Oil at $46.80 (-0.35 %), Brent Oil at $49.70 (-0.30 %)
  • Rates: US 10 year yield at 1.54, UK 10 year yield at 0.57, German 10 year yield at -0.06

News & Data:

  • Australia Employment Jul: 26.2K (est 11.0K, prev 7.9K, rev 10.8K)
  • Australia Unemployment Rate Jul) 5.7% (est 5.8%, prev 5.8%)
  • Australia Full Time Employment Jul: -45.4K (prev 38.4K, rev 44K)
  • Australia Participation Rate Jul: 64.9% (est 64.9%, prev 64.9%)
  • China House Prices (YoY) Jul: 7.9% (prev 7.3%)
  • Japan Trade Balance (JPY) Jul: 513.5bln (est 283.7bln, prev 692.8bln)
  • Japan Exports (YoY) Jul: -14.0% (est -14.0%, prev -7.4%) Japan Imports (YoY) Jul: -24.7% (est -20.6%, prev -18.8%)
  • NZ ANZ Roy Morgan Consumer Confidence Aug: 117.7 (prev 118.2)
  • PBOC Fixes Yuan Reference Rate at 6.6273 (prev 6.6056)
  • Japan MOF Asakawa: Will monitor FX markets closely; will act if excessive moves – RTRS
  • BOJ Review Can Only Conclude More Easing Needed, Says Abe Adviser – WSJ

FOMC Minutes:

  • Fed Minutes: Fed officials split in July on whether rate hike needed soon
  • A couple officials backed a rate hike in July
  • Some FOMC members saw a rate hike warranted soon
  • Some members wanted to wait for more inflation confidence, voters agreed for more data to gauge the economy
  • Fed officials saw low inflation risk from continued job gains
  • Fed officials saw ample time to react if inflation rises
  • Some Fed voters saw Brexit medium to long-term risk abroad

Markets Update:

The US Dollar fell overnight after the FOMC minutes showed a divided FOMC, with officials split whether the central bank should hike rates soon. USD/JPY declined from 100.70 post-FOMC to a low of 99.65 in Asia. The pair bounced after the Tokyo open and verbal intervention from Japanese officials helped to push it back above 100 again. The short-term outlook remains negative however, and it will take intervention from the BoJ to prevent further losses.

EUR/USD broke above 1.13 in Asia, while GBP/USD rallied to 1.3090. It has retraced from there as offers proved to be thick, but support is now seen at 1.3030 and 1.2980.

The Australian Dollar rallied after better than expected AUS employment data. The economy added 26k jobs and the unemployment fell from 5.8 % to 5.7 %. AUD/USD rallied from 0.7655 to 0.7720 and NZD/USD followed it higher as well, reaching a high of 0.7310.

Upcoming Events:

  • 09:00 BST – Euro Zone Current Account
  • 09:30 BST – UK Retail Sales
  • 10:00 BST – Euro Zone CPI
  • 12:30 BST – ECB Meeting Minutes
  • 13:30 BST – US Initial Jobless Claims
  • 13:30 BST – US Philadelphia Fed Manufacturing Index
  • 15:00 BST – US CB Leading Index
  • 15:05 BST – FOMC Member Dudley speaks
  • 21:00 BST – FOMC Member Williams speaks

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