31 August 2011 at 5:24 GMT
Thursday's Asian session marked a move into the busier data half of the week, starting with Japan’s industrial production for July, which suggests the production side of the economy may be running out of steam, rising a mere 0.6% m/m against expectations of a 1.4% increase and a strong 3.8% in June. New Zealand’s business activity also lost ground in August with the activity outlook sliding 0.4 points and business confidence a heavier 13.2 points.
From Australia we saw median city house prices falling 0.9% m/m following 0.8% the previous month while private sector credit was in line with forecasts.
Despite an increased flow of data, currency markets were kept range-bound with sentiment trapped between the better close on Wall St and a mixed performance from Asian bourses.
The Asian session concludes with Japan’s construction orders and housing starts and then we have German retail sales to kick off the European session followed by Sweden’s current account balance, German unemployment, Norway’s retail sales and Euro-zone CPI and unemployment.
We start the run in to Friday’s US employment report with US Challenger job cuts and the private ADP report while Canada also reports June’s GDP data and the Teranet/National Bank house price index. The day concludes with Chicago PMI, US factory orders and the NAPM Milwaukee index. Fed’s Lockhart is also speaking on the economy.
In the European and US sessions Tuesday, Euro-zone banking and debt issues combined to prevent the EURUSD from rallying through its one-month high with weak Euro-zone data points, a lukewarm Italian bond issue and comments from Bank of Italy regarding weak growth prospects giving additional impetus to the downward momentum. All Euro-zone confidence indicators were below forecast with economic confidence at an 18-month low and consumer confidence at 14-month lows. The poor data was not just confined to the Euro-zone however, with UK CBI services report for the third quarter showing extremely weak tendencies.
On the US front, August consumer confidence slumped to its lowest since April 2009 (not surprising when you consider Wall St’s performance) and has only been below this level twice in recent history – once in 1974 and the other during the Great Recession. S&P CaseShiller house prices continued to suggest the US housing market is going nowhere fast with another print around the -4.5% mark.
Noted Fed dove Evans repeated that he favoured the central bank’s aggressive accommodative stance for an extended period, saying it was difficult to consider the labour market as being anything but in recession while Kocherlakota, who dissented at the last Fed meeting, suggested he may consider dropping his opposition to the August decision to keep rates low for an extended period, but fell short of swinging away from the hawkish camp.
The late release of the August FOMC minutes gave risk a lift as it appeared there was deep discussion on additional quantitative easing measures, with a few members feeling that “recent economic developments justified a more substantial move”. This undoubtedly makes the September 20-21 meeting ever more crucial. After the minutes, Wall St rallied into the black at the close with the DJIA finishing up 0.18%, the S&P up 0.23% and the Nasdaq +0.55%.
Economic Data Highlights
- US Jun. S&P/CaseShiller House Prices out at -4.52% y/y vs. -4.6% expected and revised -4.59% prior
- US Aug. Consumer Confidence out at 44.5 vs. 52.0 expected and revised 59.2 prior
- UK Aug. GfK Consumer Confidence out at -31 vs. -33 expected and -30 prior
- JP Aug. Markit/JMMA Manufacturing PMI out at 51.9 vs. 52.1 prior
- JP Jul. Industrial Production out at +0.6% m/m, -2.8% y/y vs. 1.4%/-1.9% expected and 3.8%/-1.7% prior resp.
- AU Jul. Rismark House Prices out at -0.9% m/m vs. revised -0.8% prior
- NZ Aug. NBNZ Activity Outlook out at 43.3 vs. 43.7 prior
- NZ Aug. NBNZ Business Confidence out at 34.4 vs. 47.6 prior
- AU Jul. Private Sector Credit out at +0.2% m/m, +2.7% y/y, both as expected, vs. -0.1%/2.7% prior resp.
Upcoming Economic Calendar Highlights
(All Times GMT)
- JP Construction Orders (0500)
- JP Housing Starts (0500)
- GE Retail Sales (0600)
- Sweden Current Acct. Balance (0730)
- GE Unemployment Rate/Change (0755)
- Norway retail Sales (0800)
- EU Euro-zone CPI (0900)
- EU Euro-zone Unemployment Rate (0900)
- US MBA Mortgage Applications (1100)
- US Challenger Job Cuts (1130)
- US ADP Employment Change (1215)
- CA GDP (Jun) (1230)
- CA Teranet/National Bank House Prices (1300)
- US Chicago PMI (1345)
- US Factory Orders (1400)
- US NAPM – Milwaukee (1400)
- US Fed’s Lockhart to speak (1630)