Market movers today
Today is set to be another quiet day in terms of data releases.
The Reserve Bank of New Zealand (RBNZ) will announce its Official Cash Rate (OCR) decision today. We expect the rate to remain at 1.75%, in accordance with consensus.
In the US, preliminary unit labour cost figures and crude Oil inventories data are released.
Danish foreign trade data is out today. Imports and exports rose strongly in May and there was some reversal in June but the underlying out look is good, as growth continues to be strong in Europe and it is hoped that business investments are rising in Denmark.
Selected market news
The Washington-Pyongyang confrontation continued yesterday with US president Trump threating the North Korean regime with ‘fire and fury’ amid reports the latter is continuing its missile programme unabatedly amid the recently agreed UN sanctions with North Korea’s Kim Jung Unasking his military to examine how to do a strike on the US Guam base. The continued rise in tensions drove gains in safe haven assets with USD/JPY breaking below 110 and EUR/CHF below 1.1350. As a result of souring risk sentiment and yenstrength , equities were generally lower in the Asian session with the Nikkei down more than 1.5%. Slightly weaker than- expected Chinese price indices showing growth in producer prices at 5.5% y/y in July (vs 5.6 expected) and consumer prices at 1.4% y/y (vs 1.5% expected) were less of a driver amid growing geopolitical concerns.
Yesterday afternoon EUR/USD saw a notable drop below the 1.18 level following the strong JOLTS job figures out of the US which added another second-tier data contribution to reversing the US economic surprise index. The US CPI data out on Friday will be instrumental for whether there is a repricing of the Fed in a more hawkish direction ahead of the September meeting: we look for core CPI to be unchanged at 1.7% which should keep the Fed on a ‘cautious path’.
In South Africa, president Zuma survived the no-confidence vote which was cast in the national assembly last night. The rand fell by about 1.6% against the USD in the immediate aftermath of the results, but has since regained some ground. In our view, ZAR may stay under a bit of pressure in the coming months, but the currency has shown itself to be relatively resilient to adverse political developments before as investors eye possible leadership change at the ANC conference in December, a modest economic recovery and the sharp improvement in the external balance over the past year.
