What mattered last week and a preview of the week ahead

What mattered last week: A volatile week for global stock markets as China allowed its currency the Yuan to fall through the key 7.00 level in response to President Trumps latest tariff increase. The U.S. responded by labelling China a currency manipulator, before a series of lower than expected CNY fixes calmed nerves and allowed stocks to bounce into the end of the week.

 

What mattered last week:

  • A volatile week for global stock markets as China allowed its currency the Yuan to fall through the key 7.00 level in response to President Trumps latest tariff increase.
  • The U.S. responded by labelling China a currency manipulator, before a series of lower than expected CNY fixes calmed nerves and allowed stocks to bounce into the end of the week.
  • The RBNZ cut rates by a larger than expected 50bp which resulted in both the NZDUSD and AUDUSD cross rate tumbling to fresh lows.
  • The RBA left interest rates on hold, with an easing bias which implies further rate cuts are likely in coming months.
  • Gold driven by safe-haven demand rallied over 4% for the week closing above U.S. $1500. The same dynamic sent the stock of negative-yielding debt to an all-time high of U.S. $13.2 trillion.
  • The price of iron ore fell 10% last week weighing on ASX heavyweight mining stocks BHP and Rio Tinto, which closed the week down -3.8% and -7.5% respectively.

For the week ahead, the key events are:

Australia: Nab business confidence (Tuesday), Westpac consumer confidence and Q2 wage price index (Wednesday), labour force (Thursday).

  • Labour force (Thursday): The market is looking for a 15k rise in July and the unemployment rate to edge up to 5.3%. Underemployment is expected to remain high at 8.2%.

Australian June half earnings report continue this week with reports from companies including JB HiFi, Computershare, Telstra, CSL and Cochlear.

New Zealand: Business NZ PMI.

China: Retail sales, industrial production, fixed-asset investment, new yuan loans and total social financing (Wednesday), house price index (Thursday).

Japan: PPI (Tuesday), capacity utilisation (Thursday).

U.S.: CPI (Tuesday), retail sales, industrial production, capacity utilisation (Thursday), housing starts and building permits (Friday).

  • Retail sales (Thursday): Headline retail sales are expected to gain by 0.3% in July. Buoyed by firmer gasoline prices the ex-autos number should rise by 0.4%. The control measure of retail sales (ex-autos, gasoline, building materials) is expected to rise by 0.3%.

There are no Fed speakers scheduled this week.

Canada: Nothing of note.

Euro Area: EA and German ZEW economic sentiment index (Tuesday), EA and German Q2 GDP (Wednesday), EA balance of trade (Friday).

  • German Q2 GDP (Wednesday): The expectation is that the German economy shrunk by 0.1% in Q2 as the global slowdown impacted the countries large manufacturing sector.

UK: Labour market report (Tuesday), inflation (Wednesday), retail sales (Friday).

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