UK Nationwide Housing Prices & Global Manufacturing PMI

This morning at 7:00 AM, Nationwide Housing Prices for June will be published. Previous month’s figure is 0.4 percent with a consensus of 0 percent and forecast expecting a cooling housing market at 0.2 percent this month.

The final reading for June’s S&P Global Manufacturing PMI is scheduled for release at 9:00 AM. The prior reading came in at 51.2; the consensus and estimate are 51.4—a slight uptick in the manufacturing sector.

Key German Indicators:

Germany HCOB Manufacturing PMI for June is due for release at 8:55 AM. The previous reading was 45.4, against a consensus and estimate of 43.4, which indicates further contractions in manufacturing activity.

Preliminary Inflation Rate of Germany for June will be out at 1:00 PM. The previous price increase was 0.1% last month. Somehow, the consensus and forecast are 0.2%, indicative of a modest increase in inflation.

US Data and ECB Speech:

The US will release the ISM Manufacturing PMI for June at 3:00 PM. The previous figure was 48.7, while the consensus is 49, and the forecast is 50-its improvement but still below the threshold for expansion.

It will be the turn of ECB President Christine Lagarde at 8:00 PM. Her words will be watched closely for their implications on future monetary policy.

Key FX Movements:

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EUR/USD: The EUR is trading at about 1.0756 against the Dollar. The level remains steady, as investors are awaiting data releases from the Eurozone’s economy and the legislative elections in France. During the past week, the EUR/USD has traded between 1.0761 and 1.0780.(TradingView, DailyFX).

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GBP/USD: Sterling trades versus the USD at 1.2665. The GBP deepened to show some resilience, recovering a bit from the decline seen last week after the Bank of England’s dovish stance. Traders look ahead to UK economic data releases for further direction.(Yahoo Finance, YCharts).

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USD/JPY: The Japanese Yen price trades around 161.034 against the USD. The USD/JPY pair remains very volatile, even after Japan’s Ministry of Finance had managed to put in some work towards keeping the currency stable. Market participants are looking for further guidance from the Bank of Japan, especially after the latest economic data pointed to weaker-than-anticipated CPI. (XE, TradingView).

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AUD/USD: The Australian dollar is trading at 0.6667 ultimately. Higher-than-anticipated CPI data is backing the AUD, which will raise the possibilities of another rate increase from the Reserve Bank of Australia. Anxiety about the slackening economic pace in China continues to burden the AUD. (FXStreet, Yahoo Finance).

Other News

As we enter the second half of 2024, financial markets are navigating a landscape marked by diverging economic data, evolving interest rate expectations, and significant policy changes. Let’s break down the latest developments that are shaping the market today.

Economic Growth and Inflation

Recent data indicate mixed signals regarding economic growth. The Atlanta Fed’s GDP nowcast suggests a 2.2% growth rate for the fourth quarter, contrasting with a consensus forecast of 1.1%. This discrepancy highlights the uncertainty in the economic outlook as growth is expected to slow down further into 2024. High interest rates continue to impact sectors such as commercial real estate, where credit growth is slowing and project initiation is lagging behind​ (Morningstar)​​ (Schwab Brokerage)​.

Inflation, on the other hand, appears to be moderating. The Consumer Price Index (CPI) showed a year-over-year increase of 3.1% as of November, a significant drop from the peak of 8.9% in June 2022. However, the decline is not linear, and core inflation remains a concern, particularly with fluctuating energy prices​ (Schwab Brokerage)​.

Labour Market Dynamics

The labour market is experiencing a gradual slowdown in job growth. Nonfarm payroll employment has grown by 1.3% over the last three months, down from 1.7% in the previous quarter. The average hours worked per employee has decreased by 0.6% year-over-year, indicating potential upcoming layoffs as companies adjust to slower economic growth. Unemployment is projected to rise modestly to around 4.2% by the end of 2024​ (Morningstar)​.

Interest Rates and Central Bank Policies

The Federal Reserve’s stance on interest rates remains cautious. Despite moderating inflation, mixed economic data make it challenging to predict the timing of rate cuts. Expectations are for one to two rate cuts by the Fed this year, though other central banks might move sooner. Continued market volatility is anticipated as investors react to these developments​ (Schwab Brokerage)​.

Global Political and Economic Events

On the global stage, notable events include Germany, Spain, France, and Belgium gearing up for significant bond auctions this week. In France, political uncertainty looms with the first round of parliamentary elections showing Marine Le Pen’s National Rally leading but unlikely to secure a majority, setting the stage for a potentially hung parliament​ (Bonds & Currency News | Market News)​.

Policy Changes and Market Impact

Effective today, several policy changes are coming into force:

• Minimum Wage Increase: Australia’s minimum wage rises to $24.10 per hour, boosting household incomes.
• Superannuation Contributions: The super guarantee rate increases to 11.5%, enhancing retirement savings.
• Parental Leave Expansion: Paid parental leave extends to 22 weeks, with future increments planned.
• Electricity Rebates: New rebates are being applied, reducing energy costs for households across various states​ (Yahoo Finance)​.

These changes are expected to influence consumer spending and savings patterns, contributing to the broader economic narrative.