Global growth and concerns about rising interest rates pushed the New Zealand dollar to the bottom of the forex heap this week.
Meanwhile, strong US data inspired the Fed’s hawkish bets and pushed the US dollar higher across the board.
Did you miss the major forex headlines? Here’s what you need to know about the FX landscape last week:
US dollar pairs
Overlaying the US dollar against major currencies Planned by TV
Anti-risk global growth concerns and pro-risk “peak Fed” speculation following last week’s sluggish US CPI read kept the US dollar in tight ranges in the first half of the week.
The dollar started to rise more steadily across the board as the US and other major economies printed economic reports strong enough to support longer periods of interest rate hikes if not even more rate hikes from major central banks.
The US dollar made highs against the Japanese yen and higher-yielding bets like the New Zealand dollar, Australian dollar and British pound saw weak gains/small losses against the Swiss franc and Canadian dollar.
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New York Manufacturing Index For July: 1.1 (-6.0 expected; 6.6 prior); The personnel index rose to 4.7 from -3.6 previously; The prices paid index decreased to 16.7 from 22.0 previously
retail For June: 0.2% m/m (0.3% m/m expected; 0.5% m/m prior); Core retail sales were in line with expectations at 0.2% m/m (0.3% m/m)
NAHB Housing Market Index It was raised in July to 56 for 55; “A shortage of resale inventory means that potential homebuyers who haven’t been priced off the market continue to search for new construction in greater numbers.”
Unemployment claims rates For the week ending July 15: 228K (242K forecast; 237K prior); The less volatile four-week moving average also fell 9.25K to 237.5K.
Philadelphia Fed Manufacturing Index For July: -13.5 vs. -13.7 in June
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Industrial production In June: -0.4% yoy (0.5% yoy forecast; -0.2% yoy)
Building permits In June: 1.44 million (expected 1.46 million; previous revised upwards to 1.5 million); Home starts were down -8.0% month over month, but was better than expected and still at pre-pandemic levels.
Existing Home Sales For June: -3.3% m/m (-1.2% m/m expected; -0.2% m/m prior); This decline is mainly due to the very low stock of pre-owned homes
euro pairs
Overlay the euro against major currencies Planned by TV
There wasn’t much catalyst to cause a repricing of the ECB’s rate hike expectations, so the euro acted as a cross currency outside of the small rallies related to the eurozone data.
ECB Governing Council member Claes Nott helped the euro some on Tuesday when he hinted that a September rate hike is not a done deal.
The shared currency saw the most gains against the New Zealand dollar, Japanese yen, British pound and Australian dollar, but lost against the Swiss franc, US dollar and Canadian dollar.
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Member of the Governing Council of the European Central Bank glass knot He said monetary tightening after next week’s meeting is not guaranteed – suggesting officials may soon halt their unprecedented campaign to raise interest rates.
annual inflation in the eurozone fell to 5.5% yoy in June 2023 as expected; Core inflation rose to 5.5% yoy (5.4% yoy expected; 5.3% yoy ex)
Producer prices in Germany It rose 0.1% yoy in June – the lowest level since November 2020 – vs. 0.0% expected, and 1.0% yoy in May
Consumer Confidence Index for the Eurozone For July 2023, it improved by 1 point to -15.1, continuing its slow recovery since 2022 lows around -30.
Sterling pairs
Overlay GBP against major currencies Planned by TV
The British Pound was trading in narrow ranges and keeping pace with risk sentiment when UK CPI numbers showed a sharp slowdown in June.
Less hawkish BoE talks lowered UK bond yields and reduced demand for the British pound in the second half of the week.
It appears that the British Pound is about to end the week lower against the major currencies with the exception of the New Zealand Dollar and the Yen.
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The drop in fuel prices has led to the withdrawal of the UK consumer prices From 8.7% yoy to 7.9% yoy in June. Core CPI also fell from 7.1% yoy to 6.9% yoy.
Factory gate prices From 2.7% year-on-year in May to 0.1% in June, the lowest rate since December 2020
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Retail sales for the month of June: 0.7% m/m (0.1% m/m expected/previous)
Swiss Franc pairs
Overlay the Swiss Franc against major currencies Planned by TV
The lack of market moving Swiss data means that the CHF is mostly taking its cues from the general risk sentiment and cross currency flows.
The Swiss franc’s safe-haven appeal helped it gain against “riskier” bets such as the New Zealand dollar, the British pound, the Australian dollar, the euro and even the Canadian dollar in the first half of the week.
However, the Swiss Franc lost some of its gains during the week, after strong data from the US made the US dollar more attractive as a safe haven against higher-yielding currencies.
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trade surplus Tightening from CHF 4.4 billion to CHF 3.3 billion in June as exports fell 1.7% m/m while imports grew 3.7%
AUD pairs
Overlay the Australian dollar against major currencies Planned by TV
Chinese and global growth concerns sent the Australian dollar into bearish trends early in the week.
Fortunately for the Aussie bulls, somewhat upbeat RBA meeting minutes and surprisingly strong Australian employment data for June enabled it to recoup some of its losses for the week.
Until the US dropped its strong initial jobless claims report, that was the case.
Talks of room for the Fed to keep rates high and possibly implement further rate hikes weighed on risky assets such as the Australian dollar, and the greenback lost ground against the euro, Swiss franc, US dollar and Canadian dollar.
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Chinese industrial production Up 4.4% YoY in June vs 2.5% expected, 3.5% in May
Fixed asset investment in China It rose 3.8% yoy versus 3.4% expected, and 4.0% in May
Minutes of the Reserve Bank of Australia meeting in July It showed that the Fed agreed that “further tightening may be needed” and hints to revisit the rate hike move at the August meeting.
the Conference Board’s leading economic indicator It grew 0.1% month over month in May after falling 0.3% in April
MI Leading Index It improved from -1.01% to -0.51% in June. Expectations of a prolonged RBA rate hike helped, while weak growth expectations eased.
Australia added a net 32.6 thousand jobs In June vs 15k expected and 76.6k prior. The unemployment rate fell from 3.6% to 3.5% as the participation rate fell 0.1% to 66.8%
The People’s Bank of China raised the benchmark on cross-border corporate financing under its macroprudential ratings (MPA) to 1.5 from 1.25, Allow companies to borrow more from abroad in proportion to their origins
The deputy director of the National Development and Reform Commission of China, Li Chunlin, participated in this Two new policies to support non-state-owned enterprises almost
Quarterly NAB Survey Showing business confidence increased by 1 point to -3 while business conditions fell by 8 points to +9 as business “moderated significantly” in the second quarter.
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China’s gross domestic product It grew 0.8% in the second quarter of 2023, slower than the 2.2% quarterly growth in the first quarter. Annual GDP came in at 6.3%, faster than the 4.5% rise in the first quarter, but slower than the expected 7.1% growth.
Retail sales in China It slowed from 12.7% to 3.1% year-on-year in June
CAD pairs
Overlaying the Canadian dollar against major currencies Planned by TV
Risk aversion? Who is he?
Thanks to net positive Canadian data and higher crude oil prices, the Canadian dollar ignored most of the risk-off sentiment and traded higher against its major peers.
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foreign investment In Canadian securities for the month of May: C$11.2 billion (forecast – C$2.5 billion; ex-C$12.7 billion); Canadian investors reduced their holdings of foreign securities by $2.8 billion in May, after acquiring $2.4 billion in April.
wholesale (Excluding petroleum, petroleum products and other hydrocarbons and excluding oilseeds and grains) rose 3.5% as expected (vs -1.4% previously) to C$83.6bn in May.
CPI for the month of June 2032: 2.8% annually (3.0% annually expected; 3.4% prior year); Led by energy costs falling to a 27-month low; Core CPI fell to 3.2% yoy (3.6% yoy forecast) vs. 3.7% yoy prior
Industrial producer price index For June: -0.6% m/m (0.1% m/m forecast; -0.6% m/m prior); Raw material price index was -1.5% m/m (-0.4% m/m expected; -5.0% m/m prior)
Housing begins In June: 281 thousand (200 thousand forecast / previous)
The new home price index For June: 0.1% m/m (-0.1% m/m expected; -0.1% m/m prior)
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May retail sales 2023: 0.2% m/m (0.5% m/m expected; 1.0% m/m previously); Core retail sales were 0.0% m/m (0.3% m/m expected; 1.2% m/m prior).
NZD Pairs
NZD overlay against major currencies Planned by TV
The New Zealand dollar is likely to be the biggest loser this week as profit-taking from previous weeks gains mixes with general risk aversion and other major central banks have more reasons to raise interest rates.
The New Zealand dollar saw a steady sell-off all week except when New Zealand printed a relatively high inflation update for the second quarter, Australia backed off a strong (hawkish) jobs report, and when China took steps to stimulate its economy.
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economic inflation Up by 1.1% QoQ in Q2 2023 vs. 1.2% in Q1, 0.9% is expected. The annual CPI fell from 6.7% to 6.0% in the second quarter thanks to lower gasoline prices and higher interest rates
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PMI Services fell to 50.1 in June (52.5 expected) from a previous revised 53.1; Employment Index fell to 49.1 from 52.3 previously; New orders fell to 51.3 versus 55.4 previously
Japanese yen pairs
Overlaying the Japanese Yen against major currencies Planned by TV
Like many other safe havens, risk aversion drove the yen higher in the first half of the week.
But BoJ members sticking to their hawkish bias (although the national core CPI rose slightly) made the currency less attractive against its major peers.
The Yen weakened amid risk appetite on Tuesday and slid in a slow and steady downtrend to end the week lower against all of the major currencies except the New Zealand dollar.
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Japan recorded its first annual trade surplus In 23 months, exports grew 1.5% year-on-year while imports fell 12.9% in June.
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Governor of the Bank of Japan, Kazuo Ueda He hinted at very loose policies, saying:Our general narrative of monetary policy remains unchangedIf the possibility of sustainable inflation of 2% is still a long way off
Japanese national core consumer price index: 3.3% yoy (3.2% yoy forecast/previous)
The Japanese government lowered its economic forecasts on Thursday from 1.5% for the fiscal year ending March 2024 to 1.3%; It raised the consumer price inflation forecast for 2023 to 2.6% from 1.7% previously
Sources familiar with the Bank of Japan said the BoJ is likely leaning toward keeping yield control steady next week