Last Friday all eyes were on the advanced GDP reading from the US, where the results have shown that the United States economy had accelerated in the 2nd quarter, where the seasonally-adjusted annual rate of 4.1% in the period April-June was almost double the expansion we have seen in the first quarter of the year, which was 2.2%. In addition, President Trump has predicted ahead of the news release, that the US economy will be seen as in ‘terrific’ shape, which obviously did come true.  

US-China trade war is affecting the yuan.
On Friday Reuters had reported on the policy debate of China, as how to best cope with the slowing growth, where analysts have commended the Chinese authorities to boost fiscal stimulus during the rising risk of the trade conflict with the United States. Namely, what was requested is to adjust the fiscal policy and implement loosening of financial regulations, as it is viewed that the monetary policy would not be able to cope with the corporate funding challenges on its own, therefore adjustment of fiscal and regulatory polices is required.

Amongst the important macro-economic news releases yesterday, the first results came from Australia and had pleasantly surprised the economists, beating their expectations by surging more than triple in June, where 50,900 positions were added compared to the expected 16,7000. This was the highest monthly gain since November last year. The unemployment rate remained at 5.4% as expected, assumed because more people went seeking for a job. It is not expected that the Reserve Bank of Australia will increase the interest rates in the near future due to the labor supply still expanding to meet the demand.

The EUR/USD is trading just north of the 1.1700 major technical level ahead of a Tuesday that will see market focus shift to upcoming US events with a thin calendar slated for the European session. There were some relevant macroeconomic news coming from both shores of the Atlantic, although they had little saying on price action. In the EU, the goods trade balance surplus shrunk in May to €16.5B amid a fall in exports combined with an increase in imports. The US released June retail sales, which were up by 0.5% as expected, while the control group reading remained pat.

Euro rises as US Dollar eases on the day of Trump-Putin meeting. The risk sentiment eased on Monday with the Euro trading slightly higher on Monday against the US Dollar at around 1.1700 before the high profile Trump-Putin summit in Helsinki. After hitting its best level since early July, the US Dollar witnessed some profit-taking on Friday following a setback from import prices and consumer confidence data.

On Friday, the most anticipated macro-economic news release were the non-farm employment change and the unemployment rate. The NFP rose by 213k in the previous month, while the consensus estimate was creation of 195k jobs. The jobless rate came with an unexpected result where it rose to 4.0% from 3.8%, thus missed the expectation that it would remain at the same level, while wage inflation grew 2.7% on an annualized basis in June.

Last week ended with the publication of disappointing NFP jobs numbers from the USA; coming in at 148k, versus expectations of circa 190k. A peculiar number suggesting that retailers, working on ever tightening margins, laid off employees earlier than expected during the Xmas season. The unemployment rate remained unchanged at 4.1%, whilst the underemployment rate, which some analysts cite as the more relevant and true reflection of the USA unemployment situation, crept up to 8.1%. Another metric which rose, which appears to be dismissed as irrelevant despite it being classed as “hard data”, was the balance of trade deficit; coming in at -$50.5 per month for November, projecting a circa -$600b yearly deficit.

Jobs data published on Thursday for the USA painted an optimistic backdrop to the encouraging manufacturing figures published on Wednesday, weekly jobless claims were down, as are continuous claims. The ADP numbers, the precursor to the NFP number, came in above the forecast of 190k, at 250k. Challenger job cuts came in at a stunning level, at -3.6% and circa 36k for December, it’s the lowest print since 1990. Traders (and the machines) also had time to analyse the latest minutes from the FOMC/Fed monetary policy meeting held in December.