Weekly Market Recap (14-18 August)

<p><strong><u>Monday</u></strong>:</p><p>New Zealand
Services PMI for July plunges into contraction to the lowest level since
January 2022:</p><ul><li>47.8
vs. 50.1 prior (revised from 49.6).</li></ul><figure data-media-><img src="https://images.forexlive.com/images/New%20Zealand%20Services%20PMI_id_ba6dbc28-7111-46ce-82a7-3edbfc23bc20_original.jpg" alt="New Zealand Services PMI" width="500" height="428" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/New%20Zealand%20Services%20PMI_id_ba6dbc28-7111-46ce-82a7-3edbfc23bc20_original.jpg" /><figcaption><div>New Zealand Services PMI</div></figcaption></figure><p><strong><u>Tuesday</u></strong>:</p><p>Japan Preliminary
Q2 GDP beat expectations, but the deflator has also jumped substantially:</p><ul><li>GDP
Q/Q 1.5% vs. 0.8% expected and 0.7% prior.</li><li>GDP
Y/Y 6.0% vs. 3.1% expected and 2.7% prior.</li><li><strong>Deflator
Y/Y 3.4% vs. 2.0% expected and 2.0% prior</strong>. </li></ul><p>The deflator
reading is the highest since 1981. </p><figure data-media-><img src="https://images.forexlive.com/images/Japan%20Preliminary%20Q2%20GDP_id_3ddd46d8-84d8-417a-afaf-b62729b0fc23_size900.jpg" alt="Japan Preliminary Q2 GDP" width="847" height="405" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Japan%20Preliminary%20Q2%20GDP_id_3ddd46d8-84d8-417a-afaf-b62729b0fc23_size900.jpg" /><figcaption><div>Japan Preliminary Q2 GDP</div></figcaption></figure><p>The <strong>PBoC
surprised with rate cuts</strong> as China is in strong need of expansionary
policies:</p><ul><li>MLF
rate cut by 15 bps to 2.5% vs. 2.65% prior.</li><li>RRR
cut by 10 bps to 1.8% vs. 1.9% prior.</li><li>SLF
rate cut by 10 bps to 2.65% vs. 2.75% prior.</li></ul><p>We can expect the
LPR rate cuts to follow next week.</p><figure data-media-><img src="https://images.forexlive.com/images/PBoC_id_52641f29-ddfd-4e96-9fec-5d129b2d0303_size900.jpg" alt="PBoC" width="900" height="675" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/PBoC_id_52641f29-ddfd-4e96-9fec-5d129b2d0303_size900.jpg" /><figcaption><div>PBoC</div></figcaption></figure><p>Australian Wages
data for Q2 missed expectations:</p><ul><li>Wage
Price Index Y/Y 3.6% vs. 3.7% expected and 3.7% prior.</li><li>Wage
Price Index Q/Q 0.8% vs. 1.0% expected and 0.8% prior. </li></ul><figure data-media-><img src="https://images.forexlive.com/images/Australia%20Wage%20Price%20Index%20YoY_id_44c76a45-2a82-4e9d-92e0-0a3dc26a7a62_size900.jpg" alt="Australia Wage Price Index YoY" width="850" height="401" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Australia%20Wage%20Price%20Index%20YoY_id_44c76a45-2a82-4e9d-92e0-0a3dc26a7a62_size900.jpg" /><figcaption><div>Australia Wage Price Index YoY</div></figcaption></figure><p>The RBA released
the minutes of the August 2023 policy meeting where the central bank kept the
cash rate unchanged:</p><ul type="disc"><li>Board considered
raising rates by 25bp or holding steady.</li><li>Board agreed on case
for holding rates steady was the stronger one.</li><li><strong>Board saw a "credible
path" back to the inflation target with cash rates at current 4.1%.</strong></li><li>Board agreed it was
possible some further tightening might be needed.</li><li><strong>Need for further
hike would depend on data, evolving assessment of risks.</strong></li><li>Inflation heading in
the right direction, though service inflation too high.</li><li>Consumption had
slowed significantly even as the full effect of past tightening yet to be
felt.</li><li>The labour market
had been resilient, but early signs it might be at a turning point.</li><li><strong>Board saw
"plausible scenarios" where inflation took longer than
acceptable to return to target</strong>.</li><li><strong>Controlling
persistent inflation would require more rate rises than otherwise</strong>.</li><li>Staff inflation
forecast had assumed one more hike, rates notably lower than in other
countries.</li><li>Rise in housing
prices could mean financial conditions not as tight as assumed.</li></ul><p>It looks like the RBA
prefers to keep the cash rate steady unless we see big surprises in the data
that forces the central bank to go higher. </p><figure data-media-><img src="https://images.forexlive.com/images/RBA_id_d218a916-141c-45e8-8b4d-6a739b533c70_size900.jpeg" alt="RBA" width="900" height="600" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/RBA_id_d218a916-141c-45e8-8b4d-6a739b533c70_size900.jpeg" /><figcaption><div>RBA</div></figcaption></figure><p>We got another set
of weak data from China as Industrial Production and Retail Sales missed
expectations: </p><ul><li>Industrial
Production Y/Y 3.7% vs. 4.5% expected and 4.4% prior.</li><li>Retail
Sales Y/Y 2.5% vs. 4.8% expected and 3.1% prior. </li></ul><figure data-media-><img src="https://images.forexlive.com/images/China%20Industrial%20Production%20YoY_id_894e54fb-041f-41a7-9aa8-fe9eda8a036f_size900.jpg" alt="China Industrial Production YoY" width="847" height="397" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/China%20Industrial%20Production%20YoY_id_894e54fb-041f-41a7-9aa8-fe9eda8a036f_size900.jpg" /><figcaption><div>China Industrial Production YoY</div></figcaption></figure><p>The UK July Jobs
Report showed another jump in wage growth with the unemployment rate rising
again:</p><ul><li><strong>Unemployment
Rate 4.2% vs. 4.0% expected and 4.0% prior</strong>. </li><li>Employment
Change -66K vs. 75K expected and 102K prior.</li><li>Average
Weekly Earnings 8.2% vs. 7.3% and 7.2% prior (revised from 6.9%).</li><li><strong>Average
Weekly Earnings Ex-Bonus 7.8% vs. 7.4% expected and 7.5% prior (revised from
7.3%</strong>. </li></ul><figure data-media-><img src="https://images.forexlive.com/images/UK%20Average%20Earnings%20ex-Bonus_id_b4f95b9c-bbee-4d02-926c-4f92aad6ba55_size900.jpg" alt="UK Average Earnings ex-Bonus" width="846" height="400" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/UK%20Average%20Earnings%20ex-Bonus_id_b4f95b9c-bbee-4d02-926c-4f92aad6ba55_size900.jpg" /><figcaption><div>UK Average Earnings ex-Bonus</div></figcaption></figure><p>The US July Retail
Sales beat expectations across the board:</p><ul><li>Retail
Sales M/M 0.7% vs. 0.4% expected and 0.3% prior (revised from 0.2%).</li><li>Retail
Sales Y/Y 3.17% vs. 1.5% expected and 1.6% prior (revised from 1.49%).</li><li><strong>Retail Sales Control Group 1.0% vs. 0.5% expected and
0.5% prior (revised from 0.6%).</strong></li></ul><figure data-media-><img src="https://images.forexlive.com/images/US%20Retail%20Sales%20YoY_id_2331edf3-5817-4bbe-9dba-76965513909f_size900.jpg" alt="US Retail Sales YoY" width="855" height="401" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20Retail%20Sales%20YoY_id_2331edf3-5817-4bbe-9dba-76965513909f_size900.jpg" /><figcaption><div>US Retail Sales YoY</div></figcaption></figure><p>The Canadian CPI
report beat expectations across the board with the Core measures remaining
elevated which is something that the BoC doesn’t want to see:</p>

<ul><li>CPI
Y/Y 3.3% vs. 3.0% expected and 2.8% prior.</li><li>CPI
M/M 0.6% vs. 0.3% expected and 0.1% prior.</li><li>Core
CPI Y/Y 3.2% vs. 2.8% expected and 3.2% prior.</li><li>Core
M/M 0.5% vs. 0.4% expected and -0.1% prior.</li><li><strong>Common CPI Y/Y 4.8% vs. 4.7% expected and 5.1% prior.</strong></li><li><strong>Trimmed CPI Y/Y 3.6% vs. 3.4% expected and 3.7% prior.</strong></li><li><strong>Median CPI Y/Y 3.7% vs. 3.7% expected and 3.7% prior
(revised from 3.9%).</strong></li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/Canada%20Core%20Inflation%20Metrics_id_3dc57e33-583f-4c11-bf2c-7c8c17f773ec_size900.jpg" alt="Canada Core Inflation Metrics" width="1427" height="610" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Canada%20Core%20Inflation%20Metrics_id_3dc57e33-583f-4c11-bf2c-7c8c17f773ec_size900.jpg" /><figcaption><div>Canada Core Inflation Metrics</div></figcaption></figure>

<p>The US NAHB
Housing Market Index missed expectations for the first time since December 2022
as higher yields are starting to bite again:</p>

<ul><li>NAHB
Index 50 vs. 56 expected and 56 prior. </li></ul><figure data-media-><img src="https://images.forexlive.com/images/US%20NAHB%20Housing%20Market%20Index_id_c88fec62-e437-4d7c-a7e5-6563312ff35f_size900.jpg" alt="US NAHB Housing Market Index" width="832" height="397" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20NAHB%20Housing%20Market%20Index_id_c88fec62-e437-4d7c-a7e5-6563312ff35f_size900.jpg" /><figcaption><div>US NAHB Housing Market Index</div></figcaption></figure><p>Fed’s Kashkari
(hawk – voter) acknowledged progress on inflation but remains wary of the risks
about letting go too early:</p>

<ul type="disc"><li>I feel good about progress
on inflation but it's still too high.</li><li>We have been
surprised by the economy's resilience.</li><li><strong>Question is whether
we have done enough or need to do more.</strong></li><li>On average the
banking system is stable and well capitalized.</li><li>The March banking
event was a wake-up call for banks.</li><li>Housing market
resilient has been one of the biggest surprises.</li><li>We underbuilt in
housing and there's a structural deficit.</li><li>The last couple
inflation readings have been positive.</li><li><strong>I want to see
convincing evidence that inflation is on its way to 2%.</strong></li><li><strong>We need to avoid
1970s style outcome where we stop hiking too soon.</strong></li><li>We're a long way
from cutting rates because core is still close to 4%.</li><li><strong>At some point next
year, the Fed may need to lower rates.</strong></li><li>Economy keeps exceeding expectations.</li><li>I'm not seeing any
signs of a crisis in China, it's something we're watching.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/Fed%27s%20Kashkari_id_4a8f00c9-cf9d-4d39-8918-06598204568e_size900.jpg" alt="Fed's Kashkari" width="1920" height="1272" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Fed%27s%20Kashkari_id_4a8f00c9-cf9d-4d39-8918-06598204568e_size900.jpg" /><figcaption><div>Fed's Kashkari</div></figcaption></figure>

<p><strong><u>Wednesday</u></strong>:</p>

<p>The RBNZ left its
cash rate unchanged at 5.5% as expected:</p>

<ul type="disc"><li>The current level of
interest rates is constraining spending and hence inflation pressure, as anticipated
and required.</li><li><strong>Committee agreed
that the OCR needs to stay at restrictive levels for the foreseeable
future</strong>.</li><li>New Zealand economy
is evolving broadly as anticipated.</li><li>Headline inflation
and inflation expectations have declined, but measures of core inflation
remain too high.</li><li>In the near term,
there is a risk that activity and inflation measures do not slow as much
as expected.</li><li><strong>Committee is
confident that with interest rates remaining at a restrictive level for
some time, consumer price inflation will return to within its target range
of 1 to 3% per annum</strong>.</li></ul>

<p>RBNZ forecasts:</p>

<ul type="disc"><li>Official cash rate
at 5.54% in December 2023 (vs. prior at 5.5%).</li><li>Official cash rate
at 5.57% in September 2024 (vs. prior at 5.43%).</li><li>TWI NZD at around
71.0% in September 2024 (vs. prior at 71.5%).</li><li>Annual CPI 2.7% by
September 2024 (vs. prior at 2.7%).</li><li>Official cash rate
at 5.5% in December 2024 (vs. prior at 5.3%).</li><li>Official cash rate
at 3.38% in September 2026.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/RBNZ_id_228b085b-1987-4549-b312-c816563669da_size900.jpg" alt="RBNZ" width="1920" height="1280" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/RBNZ_id_228b085b-1987-4549-b312-c816563669da_size900.jpg" /><figcaption><div>RBNZ</div></figcaption></figure><p>Moving on to the RBNZ
Governor Orr’s Press Conference:</p>

<ul type="disc"><li><strong>rise in OCR track is
not forward guidance, not a strong signal out the Bank's next move</strong>.</li><li>wary about too much
on rates.</li><li>encouraged to see
inflation fall.</li><li>inflation is still
too high.</li><li>the risk in the next
few months is that activity could be stronger than expected.</li><li><strong>ready to work
through noisy data in the near term</strong>.</li><li>there was not much
talk of a rate cut, it was easy to reach consensus on the on-hold decision.
</li><li><strong>we are very
comfortable with where the cash rate is</strong>.</li><li>still on a path to a
soft landing.</li></ul>

<p>The RBNZ seems to be done
with its tightening cycle and only big surprises that point to a trend are
likely to force them to do more. Note also that Governor Orr in an interview
with Bloomberg Television on Thursday admitted that a <strong>recession is the “bare
minimum” to tame inflation</strong>.</p>

<br><figure data-media-><img src="https://images.forexlive.com/images/RBNZ%20Governor%20Orr_id_5deb9f8d-fe5c-4f94-b3c0-dd7de8fd4910_size900.jpg" alt="RBNZ Governor Orr" width="1240" height="697" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/RBNZ%20Governor%20Orr_id_5deb9f8d-fe5c-4f94-b3c0-dd7de8fd4910_size900.jpg" /><figcaption><div>RBNZ Governor Orr</div></figcaption></figure>

<p>The UK July CPI comes in
line with expectations, but the Core measures beat the forecasts:</p>

<ul><li>CPI Y/Y 6.8% vs. 6.8%
expected and 7.9% prior.</li><li>CPI M/M -0.4% vs. -0.5%
expected and 0.1% prior.</li><li>Core CPI Y/Y 6.9% vs.
6.8% expected and 6.9% prior. </li><li>Core CPI M/M 0.3% vs.
0.2% expected and 0.2% prior. </li></ul>

<p>This doesn’t change
things for the BoE too much as the hike in September is already priced in, but looking forward it doesn't look good.</p><figure data-media-><img src="https://images.forexlive.com/images/UK%20Core%20Inflation%20YoY_id_ab11687c-c128-46a0-bb85-1e4dd9aa356b_size900.jpg" alt="UK Core Inflation YoY" width="838" height="396" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/UK%20Core%20Inflation%20YoY_id_ab11687c-c128-46a0-bb85-1e4dd9aa356b_size900.jpg" /><figcaption><div>UK Core Inflation YoY</div></figcaption></figure><p>The US Housing Starts
beat expectations with another downward revision to the prior data and Building
Permits missed forecasts:</p>

<ul><li>Housing Starts 1452M vs.
1448M expected and 1398M prior (revised from 1434M).</li><li>Starts 3.4% vs. -11.7%
prior.</li><li>Building Permits 1442M
vs. 1463M expected and 1441M prior.</li><li>Permits 0.1% vs. -3.7%
prior.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/US%20Housing%20Starts%20and%20Building%20Permits_id_e5cb8c59-be28-4a5e-afd9-6099c58c136f_size900.jpg" alt="US Housing Starts and Building Permits" width="845" height="403" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20Housing%20Starts%20and%20Building%20Permits_id_e5cb8c59-be28-4a5e-afd9-6099c58c136f_size900.jpg" /><figcaption><div>US Housing Starts and Building Permits</div></figcaption></figure><p>The US Industrial
Production contracted again on a Y/Y basis, the first time since February 2021:</p>

<ul><li>Industrial
Production Y/Y -0.2% vs. -0.4% prior.</li><li>Industrial
Production M/M 1.0% vs. 0.3% expected and -0.8% prior (revised from -0.5%).</li><li>Capacity Utilization
79.3% vs. 79.1% expected and 78.6% prior (revised from 78.9%).</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/US%20Industrial%20Production_id_aa146d94-6c02-4b9b-88b9-5bbba2e1ed7c_size900.jpg" alt="US Industrial Production" width="855" height="400" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20Industrial%20Production_id_aa146d94-6c02-4b9b-88b9-5bbba2e1ed7c_size900.jpg" /><figcaption><div>US Industrial Production</div></figcaption></figure>

<p>The Federal Reserve released the Minutes of the July
FOMC Meeting:</p>

<ul type="disc"><li>Uncertainty of U.S.
economic outlook remains elevated; <strong>future Federal Reserve policy
decisions to be driven by the totality of data from the July 25-26 meeting</strong>.</li><li><strong>Most participants
said inflation risks could require further interest rate hikes</strong>.</li><li>A number of
participants warned of risks of accidentally tightening policy too much.</li><li>A couple of
participants favoured holding interest rates steady at the July meeting.</li><li>A number of
participants saw economic risks becoming more balanced.</li><li><strong>Most participants
saw continued 'significant' upside inflation risks</strong>.</li><li>Participants said
inflation was 'unacceptably high,' and more evidence is needed to be
confident that price pressures are ebbing.</li><li>Participants said a
gradual slowdown in economic activity appeared to be happening.</li><li><strong>Participants still
saw below-trend growth and a softer labour market as necessary for
restoring economic balance</strong>.</li><li>Amid uncertainty
about monetary policy lags, participants said rate hikes are working as
intended.</li><li>The banking system
is 'sound and resilient,' but tighter credit conditions are likely to
weigh on the economy.</li><li>Staff no longer see
the economy entering a mild recession this year and now predict
below-trend growth in 2024 and 2025.</li><li>Participants said
the labour market is still 'very tight,' although signs are emerging that
labour demand is in better balance.</li><li><strong>A number of
participants noted that balance sheet runoff need not end when the
Committee eventually begins to reduce the target range for the federal
funds rate</strong>.</li></ul>

<p>Looking at the
Participant's views on current conditions and economic outlook and organizing
by conviction showed:</p>

<p><strong>1. Unanimous Views:</strong></p>

<ul type="disc"><li>Economic activity
has been expanding at a moderate pace.</li><li>The U.S. banking
system is sound and resilient.</li><li>The extent of the
effects of tighter credit conditions on economic activity, hiring, and
inflation remains uncertain.</li><li><strong>All participants agreed
on the continuation of reducing the Federal Reserve's securities holdings</strong>.</li></ul>

<p><strong>2. Majority/Many Participants:</strong></p>

<ul type="disc"><li>Real GDP growth
showed resilience and momentum.</li><li>A gradual slowdown
in economic activity is in progress due to monetary policy tightening.</li><li>Monetary policy
tightening is working as intended.</li><li>Inflation remains
above the Committee's 2% objective.</li><li>Almost all
participants judged it appropriate to raise the target range for the
federal funds rate at the meeting.</li><li><strong>Most participants
saw significant upside risks to inflation</strong>.</li></ul>

<p><strong>3. Some Participants:</strong></p>

<ul type="disc"><li>Observed that recent
increases in home prices suggest the housing sector's response to monetary
policy may have peaked.</li><li>Commented on
conditions that could lead to higher or lower economic activity in the
business sector.</li><li><strong>Noted that
significant disinflationary pressures had yet to become apparent in core
services excluding housing</strong>.</li><li>Emphasized the need
for banks to be ready to use Federal Reserve liquidity facilities.</li><li>Commented on the
continued downside risks to economic activity and upside risks to the
unemployment rate.</li></ul>

<p><strong>4. A Few/Several Participants:</strong></p>

<ul type="disc"><li>Commented on the
vulnerabilities of the CRE market and the ongoing weakness of
manufacturing output.</li><li>Observed that growth
in payrolls had slowed but continued to exceed values consistent with an
unchanged unemployment rate.</li><li><strong>Commented that
significant disinflationary pressures were not yet apparent in core
services excluding housing</strong>.</li><li>Noted the
susceptibility of some nonbank financial institutions to runs or instability.</li><li>A couple of
participants favoured leaving the target range for the federal funds rate
unchanged or could have supported such a proposal.</li></ul>

<p><strong>5. General Observations:</strong></p>

<ul type="disc"><li>Participants
discussed the uncertainty about the effects of monetary policy on the
economy.</li><li><strong>They stressed the
need for more data to be confident about the path of inflation</strong>.</li><li>Participants
emphasized the importance of clear communication about the Committee's
approach.</li><li>They discussed
risk-management considerations for future policy decisions.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/Federal%20Reserve_id_3ce3c652-04fb-4ad1-a591-4e1e84b784d1_size900.jpg" alt="Federal Reserve" width="900" height="600" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Federal%20Reserve_id_3ce3c652-04fb-4ad1-a591-4e1e84b784d1_size900.jpg" /><figcaption><div>Federal Reserve</div></figcaption></figure><p><strong><u>Thursday</u></strong>:</p>

<p>The Australian Jobs Report missed expectations with a
negative full-time employment reading and a jump in the unemployment rate:</p>

<ul><li>Employment Change
-14.6K vs. 15.0K expected and 32.6K prior.</li><li><strong>Full-time
Employment -24.2K vs. 39.3K prior.</strong></li><li>Part-time
Employment 9.6K vs. -6.7K prior.</li><li><strong>Unemployment Rate
3.7% vs. 3.5% expected and 3.5% prior.</strong></li><li>Participation Rate
66.7% vs. 66.8% expected and 66.8% prior. </li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/Australia%20Unemployment%20Rate_id_48338752-ec3a-45d2-a9f0-6caff5ab3105_size900.jpg" alt="Australia Unemployment Rate" width="840" height="400" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Australia%20Unemployment%20Rate_id_48338752-ec3a-45d2-a9f0-6caff5ab3105_size900.jpg" /><figcaption><div>Australia Unemployment Rate</div></figcaption></figure>

<p> The US Initial Claims beat expectations by very little margin while
Continuing Claims missed:</p>

<ul><li>Initial Claims
239K vs. 240K expected and 250K prior (revised from 248K).</li><li>Continuing Claims
1716K vs. 1700K expected and 1684K prior.</li></ul><figure data-media-><img src="https://images.forexlive.com/images/US%20Initial%20Claims_id_e10ea218-37e9-4c4a-b4d5-0fe8680f2c5e_size900.jpg" alt="US Initial Claims" width="846" height="408" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20Initial%20Claims_id_e10ea218-37e9-4c4a-b4d5-0fe8680f2c5e_size900.jpg" /><figcaption><div>US Initial Claims</div></figcaption></figure><p>The US Philly Fed Manufacturing Index jumped back into
the expansionary territory for the first time since August 2022:</p>

<ul type="disc"><li>Philly Fed index
+12.0 vs -10.0 expected and -13.5 prior.</li><li>Six-month index +3.9
vs. +29.1 last month.</li><li>Capital expenditures
index -4.5 vs. +8.6 last month.</li><li>Employment index -6 vs.
-1 last month.</li><li>Price paid index
+20.8 vs. +9.5 last month.</li><li>New orders index
+16.0 vs. -15.9 last month.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/US%20Philly%20Fed%20Manufacturing%20Index_id_51b0a513-b94e-4d54-be9b-f9c370104e6f_size900.jpg" alt="US Philly Fed Manufacturing Index" width="851" height="401" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20Philly%20Fed%20Manufacturing%20Index_id_51b0a513-b94e-4d54-be9b-f9c370104e6f_size900.jpg" /><figcaption><div>US Philly Fed Manufacturing Index</div></figcaption></figure>

<p>The US Leading Index declined
-0.4% vs. -0.4% expected and -0.7% prior. This is the 16^th
consecutive negative reading. </p>

<br><figure data-media-><img src="https://images.forexlive.com/images/US%20LEI%20Index_id_cf204f83-6604-417c-b17e-040a7b609ecd_size900.jpg" alt="US LEI Index" width="942" height="567" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20LEI%20Index_id_cf204f83-6604-417c-b17e-040a7b609ecd_size900.jpg" /><figcaption><div>US LEI Index</div></figcaption></figure>

<p>China’s second biggest
property developer Evergrande filed for Chapter 15 protection in a US
bankruptcy court. The health of Country Garden, China's largest privately run
developer, is also worrying investors after the company missed some interest
payments this month.</p>

<figure data-media-><img src="https://images.forexlive.com/images/Evergrande%20Group_id_cc4d53de-e494-40fc-a2fa-81de1e4980ff_size900.jpg" alt="Evergrande Group" width="1920" height="1141" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Evergrande%20Group_id_cc4d53de-e494-40fc-a2fa-81de1e4980ff_size900.jpg" /><figcaption><div>Evergrande Group</div></figcaption></figure><p><strong><u>Friday</u></strong>:</p>

<p>Japan July CPI data beat expectations with the
core-core reading rising back to the cycle high:</p>

<ul><li>Japan CPI Y/Y 3.3%
vs. 2.5% expected and 3.3% prior.</li><li>Japan CPI Y/Y
ex-Fresh Food 3.1% vs. 3.1% expected and 3.3% prior.</li><li><strong>Japan CPI Y/Y
ex-Food, Energy 4.3% vs. 4.2% prior</strong>. </li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/Japan%20Core-core%20CPI%20YoY_id_3b105025-de05-4ca3-99e5-45de584e62b4_size900.jpg" alt="Japan Core-core CPI YoY" width="832" height="397" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Japan%20Core-core%20CPI%20YoY_id_3b105025-de05-4ca3-99e5-45de584e62b4_size900.jpg" /><figcaption><div>Japan Core-core CPI YoY</div></figcaption></figure>

<p>The RBNZ Assistant Governor Silk said that the
slowdown in China is a risk for global growth:</p>

<ul type="disc"><li>Said that there were
"definitely reasons to be concerned" about the weakness in
China's economy:</li><ul type="circle"><li>consumer spending down</li><li>high
debt in the property sector</li><li>the
levers China had used previously to keep growth going were going to be
harder to pull.</li></ul><li>There are definitely
some challenges there (in China), for sure. </li><li>The pressures that
we're starting to see offshore around that global growth…that's the risk
that we see on the downside through the medium term.</li></ul>

<p>China is New Zealand’s
largest trading partner.</p><figure data-media-><img src="https://images.forexlive.com/images/RBNZ%20Assistant%20Governor%20Silk_id_aab70efc-669a-4fcd-90e3-52f8d81d7950_size900.jpg" alt="RBNZ Assistant Governor Silk" width="1920" height="1277" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/RBNZ%20Assistant%20Governor%20Silk_id_aab70efc-669a-4fcd-90e3-52f8d81d7950_size900.jpg" /><figcaption><div>RBNZ Assistant Governor Silk</div></figcaption></figure><p>The UK Retail Sales missed expectations across the
board with prior readings all revised lower:</p>

<ul><li>Retail Sales M/M
-1.2% vs. -0.5% expected and 0.6% prior (revised from 0.7%).</li><li>Retail Sales Y/Y -3.2% vs -2.1% expected and -1.6% prior (revised from
-1.0%).</li><li>Retail Sales ex autos, fuel M/M -1.4% vs -0.7% expected and 0.7% prior
(revised from 0.8%).</li><li>Retail sales ex autos, fuel Y/Y -3.4% vs -2.2% expected and -1.6% prior
(revised from -0.9%).</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/UK%20Core%20Retail%20Sales%20YoY_id_f65267ac-a588-4262-97c3-576f78bc61cf_original.jpg" alt="UK Core Retail Sales YoY" width="776" height="361" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/UK%20Core%20Retail%20Sales%20YoY_id_f65267ac-a588-4262-97c3-576f78bc61cf_original.jpg" /><figcaption><div>UK Core Retail Sales YoY</div></figcaption></figure>

<p><strong>The highlights for next week
will be:</strong></p>

<ul><li>Monday: PBoC LPR.</li><li>Wednesday: NZ
Retail Sales, AU/JP/EZ/GB/US PMIs, Canada Retail Sales.</li><li>Thursday: US
Jobless Claims. </li><li>Friday: Fed Chair
Powell speaks at the Jackson Hole Symposium (24-26 August).</li></ul>

<p>That’s all folks, have a great weekend!</p>

<br>

This article was written by Giuseppe Dellamotta at www.forexlive.com.