- The Japanese Yen one of the main beneficiaries of the trade tensions that escalated further between the US and China yesterday as investors sought comfort in the traditional safe haven currency. The US Dollar on the other hand was one of the weakest performers.
- The Chinese Yuan slipped to an 11-year low against the Dollar, trading at more than 7 Yuan to the Dollar for the first time since the financial crisis in 2008. Unlike most major economies whose currencies trade freely, the Yuan is still fixed by the Chinese central bank which makes this move more controversial.
- And sure enough the move was strongly condemned by US President Trump as he slammed China for what he sees as currency manipulation on twitter. Trump said ‘China dropped the price of their currency to an almost historic low. It’s called ‘currency manipulation’ Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!’.
- The UK Services sector performed better than expected in July and provided a welcome piece of positive data as far as the UK economy is concerned. The PMI reading for July stood at 51.4, that was up from 50.2 in June and the highest reading in 9 months.
- Despite the positive services data Sterling failed to make any gains against the Euro, in fact the Pound dropped to fresh near 2 year lows of 1.0831 at one stage before closing at 1.0843 and down -0.41% on the day.
- Investor confidence in the Eurozone dropped to its lowest level since October 2014 according to August’s Sentix reading. The reading of -13.7 was far worse than the -6.9 expected and July’s reading of -5.8.
- US ISM Non-Manufacturing PMI 53.7 (55.5 Exp).
- The Reserve Bank of Australia kept interest rates on hold at 1.00% overnight as expected but has warned that further cuts could be necessary as it waits to assess how the impact of previous cuts on the economy. RBA Governor Lowe said that whilst the outlook remained reasonable, the growing uncertainty caused by ongoing global trade disputes was affecting investment and that risks still remain tilted to the downside.
- Extraordinary run of economic data released overnight and this morning with pretty much every print coming in better than expected which is incredibly rare, most notably New Zealand has seen it’s unemployment rate slashed by 0.3%:
- Australia Trade Balance 8.04Bn (6.05Bn Exp)
- New Zealand Employment Change q/q 0.8% (0.3% Exp)
- New Zealand Unemployment Rate 3.9% (4.3% Exp)
- Japan Average Cash Earnings y/y 0.4% (-0.8% Exp)
- Japan Household Spending y/y 2.7% (1.3% Exp)
- German Factory Orders m/m 2.5% (0.5% Exp)
- Following that barrage of Asia-Pacific data released overnight, the economic calendar is incredibly sparse for the rest of the day.
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