Nonfarm Payroll and Wage Growth Put the USD in Focus

Earlier in the Day:

Economic data scheduled for release through the Asian session this morning was limited to retail sales figures out of Australia and July service sector PMI numbers out of China.

For the Aussie Dollar, June retail sales rose by 0.4%, coming in ahead of a forecasted 0.3% rise, following May’s 0.4% increase.

• The increase was attributed to a 0.4% rise in food retailing, while clothing, footwear and personal accessories saw a 1.7% rise in sales, down from May’s 2.3% increase.
• Dragging on sales was a 1.2% fall in department store sales, according to figures released by the ABS.

The Aussie Dollar moved from $0.73646 to $0.73605 upon release of the figures, before rising to $0.7366 at the time of writing, up 0.08% for the session.

Out of China, the July Service PMI provided more disappointment, with the PMI falling from 53.9 to 52.8.

According to the Markit survey, service sector output rose at the slowest rate in 4-months, with growth in new business seeing a material slowdown to the slowest growth in over two-and-a-half years.

Business confidence also deteriorated through the month, confidence sitting at an all-time low.

Elsewhere, the Japanese Yen showed limited response to the June monetary policy meeting minutes released earlier in the session, with the decision to stand pat on policy in Tuesday’s meeting overshadowing any chatter from the end of July meeting.

The Japanese Yen moved from ¥111.676 to ¥111.665 against the Dollar upon release of the minutes, before rising to ¥111.64 at the time of writing, up just 0.02% for the session.

For the Kiwi Dollar, focus shifts to next week’s RBNZ monetary policy meeting, with recent economic data suggesting the need for continued monetary policy accommodation and possibly more loosening.

At the time of writing, the Kiwi Dollar was down 0.34% to $0.673.

In the equity markets, there was more bleeding, with the CSI300 and Hang Seng down 1.08% and 0.26% respectively, while the Nikkei bucked the trend with an early 0.14% rise.

For the ASX200, early gains were given up, with upbeat retail sales figures failing to support as economic indicators out of China continued to point to a further slowdown in the 3^rd quarter.

The Day Ahead:

For the EUR, it’s a relatively busy day ahead, with key stats through the morning including finalized service sector PMI numbers out of the Eurozone, France and Germany and fresh service sector PMI numbers out of Italy and Spain, with June retail sales figures out of the Eurozone also due out and likely to influence.

While the stats are on the heavier side, focus will likely be on retail sales figures, barring material deviation from prelim service sector PMI numbers out of the Eurozone, Germany’s retail sales figures suggesting a bounce back in consumption at the end of the 2^nd quarter.

At the time of writing, the EUR was up 0.03% to $1.1589, with today’s stats and the Oval Office providing direction through the day.

For the Pound, economic data through the session is limited to July’s service sector PMI. Following Super Thursday, there’s unlikely to be much to support a bounce back to $1.31 levels ahead of a resumption of Brexit negotiations in mid-August, with any weak numbers likely to weigh heavily on the Pound.

At the time of writing, the Pound was down 0.01% to $1.3016, with today’s service sector PMI and further market reaction to Thursday’s BoE press conference the key drivers through the day.

Across the Pond, it’s the Greenback’s turn to steal the spotlight with July’s wage growth and nonfarm payroll figures the key stats for the day. Other stats through the day include June trade figures and July service sector PMI numbers, the Dollar likely to be more sensitive to the market’s preferred ISM numbers and wage growth figures.

While forecasts are for marginally slower growth in the services sector, anything in line with or better than forecast should be Dollar positive, though much will depend upon the sub-indexes, with new business and labour market conditions relevant.

At the time of writing, the Dollar Spot Index was down 0.02% to 95.153, with today’s stats and the Oval Office to provide direction through the day.

For the Loonie, June trade figures are scheduled for release that will provide the Loonie with direction, a forecasted narrowing to the trade deficit a positive, though much will continue to depend on market sentiment towards NAFTA and whether the Canadian government can be rid of recent tariffs on steel and aluminium and make progress with the U.S administration on NAFTA.

At the time of writing, the Loonie was up 0.09% to C$1.3011 against the U.S Dollar.