It has been a very active day’s trade on Thursday following the release of the Q2 US GDP and on the back of a very busy corporate reporting session.
US GDP contracted -32.9% annualised in Q2, slightly less than expectation of -35.0%, but still the sharpest annualised decline in quarterly records dating back to 1947. At the same time, the US initial jobless claims rose by 12k to 1,434k in the week ending July 25, slightly below expectation of 1450k but, on the bright side, the second straight week of increase in the data. However the continuing claims unexpectedly rose by 867k to 17018k in the week ending July 18.
The big tech companies have been reporting their Q2 results, and all of Facebook, Amazon, Google and Apple outpaced expectations, so despite the terrible economic news, the stock markets are higher in after hours trading allowing the indices to recover from an early dip, with the Nasdaq in particular once again approaching its all-time high.
In the FX markets, the dollar index is heading towards a bearish monthly close, below the 61.8% of its 2017/2020 rise and monthly cloud top. The 76.4% Fibo, uptrend line from 2011 and cloud base is now the next target at around 91.50. The Euro has led the charge higher, bouncing from its early London low at 1.1730 to trade up to a new 2-year high, pushing beyond the 61.8% Fibo of the 2018-2020, 1.2556-1.0636 slide and probing the downtrend line from the July 2008 peak of 1.6037. 1.2000 now seems to be in sight and even 1.2100 is not out of court, this being (76.4% of 1.6036/1.0635). The other currencies were not far behind and the Jpy, Gbp, Chf and Nzd all made major technical breaches of previous long term support/resistance levels and se to have fuerth gains ahead of them agains the dollar.
The metals had a rest on Thursday in taking a breath following the gyrations seen early in the week, while WTI spiked lower on the release of the GDP data, trading down to 38.70, before an equally sharp rally to currently sit at 40.30.
In other economic releases on Thursday, the German Q2 GDP contracted -10.1% qq, worse than expectation of -9.0% qq, making it the largest decline since the beginning of quarterly GDP calculations for Germany in 1970, and more than double the size of the contraction seen during the GFC in Q1 2009 (-4.7% qq). Also released, German unemployment fell by -18k in July, versus expectation of a 45k rise, while unemployment was unchanged at 6.4%.
Elsewhere, the Eurozone Economic Sentiment Indicator registered a sharp increase of 6.5 in July to 82.3, up from June’s 75.8. Consumer confidence (-14.5 to -15.0) and construction (-11.6 to -12.6) both dropped slightly, while the Employment Expectations Indicator rose for the third month a row (by 4.0 to 87.0). The Eurozone Business Climate rose from -2.25 to -1.80 and the Eurozone unemployment rate rose to 7.8% in June, up from 7.7%, above expectation of 7.7%.
Looking ahead, it is the final day of the month so there will be plenty of book squaring going on. The calendar winds up with a busy Asian session, which will include the NZ Consumer Confidence, a fair bit of secondary Japanese data, the Australian Private Sector Credit (exp +0.2%mm – June) and Q2 PPI (exp 0.3%qq, 1.3%yy) and the China Mfg/Non Mfg PMIs (exp 51.2/48.6). Europe will follow all that with the German Retail Sales (exp +11%mm -June, +1.4%yy) and the EU Preliminary CPI and GDP for Q2 (CPI exp 0.2%mm – July, Core 0.7%yy; GDP exp -12%qq, -14.5%yy). Finally the US session will report the Personal Consumption/Expenditure Index (exp Income +0.2%mm, Spending +5.5%mm), Chicago Purchasing Managers Index (exp 43.9) and the Michigan Consumer Sentiment Index (exp 73) . Have a good day.
Economic data highlights will include:
Fri: NZ Consumer Confidence, Japan Unemployment, Construction Orders, Housing Starts, Consumer Confidence, Industrial Production, China Mfg/Non-Mfg PMIs, Australian Private Sector Credit, PPI, German Retail Sales, Import/Export Index, EU Preliminary Q2 GDP, CPI, US Personal Consumption/Expenditure Index, Chicago Purchasing Managers Index, Michigan Consumer Sentiment Index, Baker Hughes Oil Rig Count
Market moves, in brief:
FX: DXY 93.00 (-0.28%)
Bonds: US10Y; 0.546% (–5.60%), German 10Y; -0.545% (-9.52%), UK 10Y; 0.084% (-29.91%), Australian 10Y; 0.866% (-2.50%), NZ 10Y; 0.811% (-2.84 %), China 10Y; 2.92% (-1.18%)
Stock Indices: DJI; -0.85%, S+P; -0.38%, NASDAQ; +0.43%, EUStoxx50; -2.79%, FTSE100; -2.31%, Shanghai Composite; -0.23%, ASX200SPI: -0.63%
Metals: Gold $1956 oz (-0.75%), Silver $23.48 oz (-3.28%), Copper $2.919 lb (0.00%), Iron Ore $106.68 per tonne (NYMEX) (-0.96%),
Oil: WTI $40.32 pb (-2.4%)
|INDICES / COMMODITIES|
The only technical view is to stay short of the US$. A full outlook, with video, will be updated over the weekend.
|1 Hour||Up||Turning Lower||Up||Turning Lower||Neutral – Turning Higher?||Up|
|4 Hour||Bearish Divergence||Turning Higher?||Up||Turning Lower?||Neutral – Turning Higher?||Turning Neutral|
|1 Day||Up||Down||Turning Higher||Down||Turning Neutral||Turning Neutral|
|1 Week||Turning Higher||Neutral – Turning Lower?||Neutral – Turning Higher?||Turning Lower||Up||Turning Higher|
|1 Hour||Down||Neutral – Turning Higher?||Turning Lower?||Neutral – Turning Higher?||Possible Basing Formation||Possible Basing Formation|
|4 Hour||Bullish Divergence||Neutral||Turning Neutral||Down||Down||Neutral – Turning Lower?|
|1 Day||Down||Turning Neutral||Turning Neutral||Up||Possible Topping Formation||Neutral – Turning Lower?|
|1 Week||Turning Lower||Turning Higher||Up||Up||Up||Up|
|1 Hour||Turning Higher?||Bullish Divergence||Possible Topping Formation||Neutral – Turning Higher?||Possible Basing Formation||Down|
|4 Hour||Turning Neutral||Turning Lower||Up||Turning Neutral||Neutral – Turning Higher?||Turning Lower|
|1 Day||Turning Neutral||Turning Neutral||Turning Higher?||Turning Neutral||Turning Neutral||Neutral – Turning Higher?|
|1 Week||Neutral – Turning Higher?||Neutral – Turning Higher?||Turning Lower||Turning Higher?||Turning Lower?||Turning Neutral|
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