The major currencies were mixed, but it looks like the Kiwi was the top currency this week, likely on positive leaning risk sentiment and continued speculation of a rate hike coming after a positive New Zealand jobs report.
Notable News & Economic Updates:
- PBOC says it will keep high pressure on crypto trading
- Bitcoin slips below $40K amid concerns over U.S. Infrastructure Bill
- ASEAN manufacturing sector sinks further into downturn amid rising COVID-19 cases
- Supply chain constraints stymie growth of global
- manufacturing sector in July – J.P.Morgan Global Manufacturing PMI
- Oil falls on Tuesday in volatile session on concerns over COVID spread
- SEC Boss Gensler hints that he could seek to regulate DeFi
- Gold falls on Wednesday as US services data, comments from Fed’s Clarida weigh
- Oil prices fall on U.S. crude stock build, Delta variant spread
- Brazil hikes rates by most in 18 years, vows to go past ‘neutral’ to tame inflation
- BoE’s Bailey says key challenge is to get workers into jobs
- Ethereum’s hostly anticipated ‘London’ Hard Fork is now live
- Lowe: Australian economy bounced back faster than expected
- Oil steady, but set for big weekly loss on demand worries
- U.S. job growth seen strong as technical factors provide a boost
- Dow rises 100 points, closes at record high on Friday after jobs report shows strong economic recovery
Intermarket Weekly Recap
It was a mixed bag of emotions this week as traders tried to position on a slew of top tier themes and stories. It was a heavy week of central bank highlights, including the RBA’s insistence to continue with tapering, expectations of rate hike in New Zealand, and lots of commentary from Federal Reserve members on when we may see tapering in the U.S.
It all started with risk-off vibes on Delta variant concerns and disappointing PMI data, but by Wednesday, it looks like the market went with positive vibes after a very positive ISM Services PMI number showed that the economic recovery is still on track. This was likely the reason why we started to see equities rebound, along with U.S. Treasury yields as the 10-year yield bottomed out around 1.14% before starting its climb higher.
Not too long after that, Fed Member Clarida signaled that a taper may come as soon as the end of 2021, sparking a bullish reaction in the Greenback that lasted into the weekend, with the help of better-than-expected U.S. employment numbers on Friday to support tapering speculation.
Gold and oil were net losers as the U.S. dollar gained strength, while bitcoin and the rest of the crypto space was all over the place thanks to potential issues with proposed crypto regulations in the U.S. infrastructure bill and continued crypto adoption headlines (e.g., Uruguayan senator introduces bill to enable use of crypto for payments, JPMorgan has launched an in-house bitcoin fund for private bank clients, Google’s New Cryptocurrency Ad Policy Goes Into Effect)
In the currency space, the bulls favor the Kiwi this week as speculation of a rate hike coming from the Reserve Bank of New Zealand intensified after a very solid beat in the New Zealand employment report. While the euro and Swiss franc were the biggest losers, possibly on signals from business surveys that Europe’s recovery may be slowing relative to the rest of the major economies who continue to show accelerating strength.
USD Pairs
- Treasury Dept to invoke ‘extraordinary measures’ as Congress misses debt-ceiling deadline
- July PMI ticks up to record high, but supply delays and price pressures also hit new peaks
- U.S. manufacturing sector growth slowing-ISM
- Fed’s Waller: ‘Go early and go fast’ on taper
- A hawkish Bullard sees more volatile economic “regime” emerging in U.S.
- U.S. factory orders beat expectations in June; business spending on equipment solid
- Private companies added 330,000 jobs in July, according to ADP, far short of the 653,000 estimate
- Fed Vice Chair Clarida anticipates rate hikes starting in 2023, sees upside risks to inflation
- Softest rise in business activity since February – IHS Markit U.S. Services PMI
- Fed’s Daly sees bond program taper later this year or early 2022
- U.S. labor market recovery strengthening as unemployment rolls shrink
- Payrolls increase 943,000 in July as unemployment rate slides to 5.4%
GBP Pairs
- Resource and staff shortages constrain growth and drive up
- costs at U.K. manufacturers in July
- Britain’s COVID-19 cases down by 33% over past week
- U.K. service sector recovery slows again in July, while inflationary pressures hit new record high
- Bank of England keeps policy unchanged, warns of ‘more pronounced’ period of inflation
- Slowest rise in U.K. construction output since February
- BoE to keep very close eye on inflation’s impact on wages – Broadbent
- BoE’s Bailey says fixing pandemic bottlenecks could cool inflation
EUR Pairs
- Eurozone Manufacturing growth remained strong in July despite slight loss of momentum
- German retail sales jump, consumers shop less online
- Industrial producer prices up by 1.4% m/m in both the euro
- area and the EU in June
- Spanish unemployment decreased by -5.47% in July
- Eurozone grows at fastest rate since June 2006 – IHS Markit Eurozone Composite PMI
- Renewed fall in eurozone construction activity in July
- Growth of eurozone productivity hits ten-month high amid stronger expansion in service sector
- In Q2 2021, French payroll employment increased by 1.2% and returned to its end of 2019 level
- In June 2021 the seasonally adjusted Italian industrial production index increased by 1.0% m/m
CHF Pairs
- Swiss consumer price index grew 0.7% y/y in July
- Strong upswing in Swiss consumer sentiment over pre-crisis levels
CAD Pairs
- IHS Markit Canada Manufacturing PMI – Faster increases in output, new orders and jobs in July
- Canada’s merchandise trade balance returned to a surplus position, reaching $3.2B in June
- Canada’s jobs recovery continues in July amid reopenings
- Canada Ivey PMI for July falls to 56.4 vs. 71.9 previous
NZD Pairs
- Global dairy trade prices fall -1.0% in the latest auction
- New Zealand quarterly employment change up 1.0% vs. 0.7% forecast in Q2
- New Zealand jobless rate down from 4.6% to 4.0% vs. 4.4% forecast
- ANZ, Westpac, KiwiBank, ASB, BNZ project an RBNZ rate hike later this month
AUD Pairs
- Australian MI inflation gauge ticked higher from 0.4% to 0.5%
- Australian Manufacturing sector growth slows amid virus disruption and supply constraints
- Australia’s dwelling approvals fall further in June
- AU consumer confidences rebounds 1.1% after lockdowns lift
- RBA will trim bond buying even as Delta variant slams economy
- Australian retail sales fell by 1.8% as expected in June
- Australian service sector sinks into contraction amid virus wave
- Australia posts record trade surplus in Q2 2021
- AU’s NSW records 262 local COVID-19 cases and five deaths as Hunter region joins lockdown
- RBA head Lowe: Not targeting low AUD, just a result of policy
JPY Pairs
- Japanese final manufacturing PMI upgraded from 52.2 to 53.0
- Tokyo shows an inflation pulse for the first time in a year
- Japanese business activity falls at quicker pace in July
- Japan warns of unprecedented COVID spread as cases hit record in Olympic host city
- Tokyo logs record COVID cases over 5,000 amid medical collapse fears
