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Australia Jobless Rate Steady At 5.2% In May

The unemployment rate in Australia came in at a seasonally adjusted 5.2 percent in May, the Australian Bureau of Statistics said on Thursday - unchanged from the April reading but missing forecasts for 5.1 percent.

The Australian economy added 42,300 jobs last month - blowing past expectations for an increase of 16,000 following the increase of 28,400 in the previous month.

The participation rate was 66.0 percent, surpassing forecasts for 65.8 percent and up from the upwardly 65.9 percent a month earlier (originally 65.8 percent).

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New Zealand Manufacturing Growth Near Stagnation

New Zealand manufacturing sector was close to stagnation in May, the latest BNZ survey showed Friday.

The BNZ-BusinessNZ Performance of Manufacturing Index fell 2.5 points to 50.2 in May. This was the lowest score since December 2012.

The production sub-index declined to 46.4 in May from 50.1 a month ago. This was the lowest since April 2012. A score below 50 indicates contraction in the sector.

As a growth risk indicator it may not be flashing bright red just yet, but it is moving in that direction in taking on a darker shade of amber, Doug Steel, a senior economist at BNZ Research said.

The PMI sends a warning signal for near term growth via its mix of falling production, near flat new orders, and rising inventory, Steel added. Next week's first quarter GDP should be reasonable, but beyond this downside risks are accumulating.

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BCC Trims UK Growth Outlook

The British Chambers of Commerce downgraded its growth outlook for next year as unwinding of historically-high inventory levels amid weak business investment weigh on economic activity.

In the latest economic forecast, released Monday, the growth projection for 2020 was lowered to 1 percent from 1.3 percent and that for 2021 to 1.2 percent from 1.4 percent.

However, the growth outlook for 2019 was lifted marginally to 1.3 percent from 1.2 percent, citing the exceptionally rapid stock-building ahead of the original Brexit deadline in March.

Gross domestic product was forecast to remain flat in the second quarter of 2019 after expanding 0.5 percent in the first quarter.

Over the near-term, the lobby expect that the ongoing Brexit impasse, together with the high upfront cost of doing business in the UK and the running down of excess stock to suffocate investment activity.

Business investment was expected to decline 1.3 percent this year versus prior forecast of 1 percent drop. Further, the lobby projected 0.4 percent growth next year, before improving to 1.1 percent in 2021.

Further, trade was set to make a negative contribution as exchange rate volatility, Brexit uncertainty and a subdued global economy, weaken trading conditions for British exporters.

Export growth was seen at 1.6 percent this year and next and 1.7 percent in 2021, compared to import growth of 4.3 percent in 2019, 1.8 percent in 2020 and 2.2 percent in 2021.

Nonetheless, consumer spending was forecast to remain resilient on low unemployment and earnings growth to stay above inflation. Household consumption growth outlook was lifted to 1.4 percent for 2019 and to 1.4 percent in 2020.

The forecast was based on the assumption that the UK avoids a messy and disorderly Brexit.

"Businesses are putting resources into contingency plans, such as stockpiling, rather than investing in ventures that would positively contribute to long-term economic growth," Adam Marshall, Director General of the BCC, said. "This is simply not sustainable."

Business communities expect the next Prime Minister to quickly find a sensible and pragmatic way forward to avoid a messy and disorderly Brexit, Marshall added.


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New Zealand Consumer Confidence Drops In Q

New Zealand's consumer sentiment weakened slightly in the second quarter as households remained downbeat about the economic backdrop, survey data from Westpac showed Tuesday.

The Westpac McDermott Miller consumer confidence index dropped 0.3 points to 103.5 in June.

Among sub-components, the indicator for present situation fell to 106.6 from 107.6 a quarter ago. Meanwhile, the expected conditions index rose marginally to 101.4 from 101.3.

The index measuring current financial situation improved to -4.7 in the second quarter from -8.3. Likewise, the expected financial situation indicator climbed to -3.2 from -6.5.

The 1-year ahead economic outlook rose slightly to -4.6 from -5.1. At the same time, the 5-year economic outlook dropped to 11.9 from 15.4 in the previous quarter.

The 'good time to buy' index declined to 17.9 in the second quarter from 23.4 in the preceding period.

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Japan May Trade Deficit Y967.1 Billion

Japan posted a merchandise trade deficit of 967.1 billion yen in May, the Ministry of Finance said on Wednesday - up 67.5 percent on year.

That exceeded expectations for a shortfall of 1,207.0 billion yen following the 110.9 billion yen deficit in April.

Exports were down 7.8 percent on year to 5.835 trillion yen, also beating forecasts for a drop of 8.4 percent following the 2.4 percent decline in the previous month.

Exports to Asia were down 12.1 percent on year to 3.120 trillion yen, while exports to China alone fell 9.7 percent to 1.148 trillion yen.

Exports to the United States rose an annual 3.3 percent, while exports to the European Union sank 7.1 percent to 647.475 billion yen.

Imports sank an annual 1.5 percent to 6.802 trillion yen versus expectations for an increase of 1.0 percent after soaring 6.5 percent a month earlier.

Imports from Asia fell 3.3 percent on year to 3.100 trillion yen, while imports from China alone eased 0.9 percent to 1.540 trillion yen.

Imports from the United States dipped an annual 1.6 percent to 792.795 billion yen, while imports from the European Union climbed 8.7 percent to 898.979 billion yen.

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European Economics Preview: Germany Ifo Business Confidence Data Due

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Business sentiment data from Germany is due on Monday, headlining a light day for the European economic news.

At 1.00 am ET, Statistics Finland releases producer prices for May. Prices had increased 0.1 percent on month in April.

At 3.00 am ET, the Czech business confidence survey data is due for June. The business sentiment index had fallen to 12.7 in May from 15.1 in April.

At 4.00 am ET, Germany's Ifo business sentiment survey results are due. Economists forecast the business confidence index to fall to 97.5 in June from 97.9 in May.

The ifo current conditions index is seen at 100.8 versus 100.6 in May. Meanwhile, the expectations index is forecast to fall to 95.1 in June from 95.3 in May.

In the meantime, retail sales data from Poland is due. Sales are forecast to expand 8.5 percent annually, following a 13.6 percent rise in April.

At 5.00 am ET, Statistics Iceland is scheduled to issue monthly wage data for May.

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Japan Producer Prices Rise 0.8% On Year In May

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Business sentiment data from Germany is due on Monday, headlining a light day for the European economic news.

Producer prices in Japan were up 0.8 percent on year in May, the Bank of Japan said on Tuesday.

That was shy of expectations for an increase of 1.0 percent and down from the upwardly revised 1.0 percent gain in April (originally 0.9 percent).

On a monthly basis, producer prices dipped 0.3 percent after easing 0.1 percent in the previous month.

Individually, prices were down for communications, transportation, advertising and maintenance, while prices were up for real estate. Finance was roughly flat.

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European Economics Preview: Germany GfK Consumer Sentiment Data Due

Consumer confidence from Germany is due on Wednesday, headlining a light day for the European economic news.

At 2.00 am ET, Germany's GfK consumer confidence survey results are due. The forward-looking consumer confidence index is seen falling slightly to 10.0 in July from 10.1 in June.

In the meantime, Norway labor force survey data is due. The jobless rate is seen unchanged at 3.5 percent in April.

At 2.45 am ET, France's statistical office Insee publishes consumer confidence survey data. The index is expected to rise marginally to 100 in June from 99 in May.

At 4.00 am ET, unemployment data is due from Poland. The jobless rate is expected to fall to 5.4 percent in May from 5.6 percent in April.

At 5.00 am ET, Statistics Iceland releases consumer price inflation data for June.

At 5.15 am ET, Bank of England Governor Mark Carney, policymakers Jon Cunliffe, Silvana Tenreyro and Michael Saunders are set to answer questions at the Treasury Select Committee.

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Japan Retail Sales Rise 0.3% In May

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Retail sales in Japan were up a seasonally adjusted 0.3 percent on month in May, the Ministry of Economy, Trade and Industry said on Thursday - shy of expectations for a gain of 0.6 percent following the downwardly revised 0.1 percent drop in April (originally flat).

On a yearly basis, retail sales were up 1.2 percent - in line with expectations and up from the downwardly revised 0.4 percent increase in the previous month (originally 0.5 percent).

Large retailer sales were down 0.5 percent on year, missing forecasts for a gain of 0.2 percent following the 1.8 percent drop a month earlier.

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New Zealand Consumer Sentiment Strengthens In June

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New Zealand consumer confidence strengthened in June after falling a month ago, survey data from ANZ-Roy Morgan showed on Friday.

The consumer confidence index rose to 122.6 in June from 119.3 in May. The score rose to a bit above its historical average.

The current conditions index rose 2 points to 128, and the future conditions index gained 4 points to 119.

Consumers' perceptions of their current financial situation lifted 5 points to a net 15 percent assessing financially better off than a year ago. A net 29 percent of consumers expect to be better off financially this time next year, which was up 6 points. However, the proportion of households who think it's a good time to buy a major household item fell 3 points to 40 percent.

Perceptions regarding the next year's economic outlook lifted 5 points to 12 percent and the five-year outlook rose 2 points to +16 percent. Inflation expectations among consumers advanced to 4.0 percent in June from 3.6 percent in May.

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Japan Monetary Base Jumps 4.0% In June

The monetary base in Japan was up 4.0 percent on year in June, the Bank of Japan said on Tuesday - coming in at 512.991 trillion yen.

That follows the 3.6 percent increase in May.

Banknotes in circulation were up an annual 3.1 percent, while coins in circulation advanced 2.3 percent. Current account balances climbed 4.2 percent, including a 3.8 percent increase in reserve balances.

The adjusted monetary base jumped an annual 7.2 percent to 510.159 trillion yen.

For the second quarter of 2019, the monetary base was up 3.6 percent on year.

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China's Private Sector Expands Marginally In June

China's private sector expanded marginally in June despite contraction in manufacturing, survey data from IHS Markit showed Wednesday.

The Caixin composite output index fell to 50.6 in June from 51.5 in May. However, a score above 50 indicates expansion. The reading signaled the weakest growth since last October.

The services Purchasing Managers' Index dropped more-than-expected to 52.0 in June from 52.7 in the previous month. The expected reading was 52.6.

"The conflict between China and the U.S. impacted business confidence rather heavily," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group said. "Although its impact on exports hasn't been fully reflected in the short-run, the longerterm situation doesn't look optimistic. Future government policies to stabilize economic growth are likely to focus on new types of infrastructure, consumption and high-quality manufacturing."

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The pressure of easy politics is too heavy; Swedish krona as an exception

More and more currencies fall under the pressure of the "dovish" tone of the world central banks, although the Swedish krona stands out against this background, having strengthened to a 2.5 month high against the euro after the local central bank announced that it plans to tighten the policy by early 2020. However, the focus remains on another currency - the pound - which fell on Tuesday along with the yields of British government bonds. The yield on 10-year securities fell below the main discount rate of the Bank of England for the first time since the 2008 crisis, after the markets interpreted the comments of the Bank of England CEO Mark Carney as dovish. The sterling lost 0.2%, updating its two-week low.

"The two main driving forces today are the yen, which is considered a safe haven, and it has returned to growth, and the pound, which continues to decline," said Colin Asher, senior economist at Mizuho. The yen rose by 0.23% against the dollar and is trading at 107.6 yen, as investors are more skeptical about the possibility of an early end to the trade war, especially given the comments of US President Donald Trump that any transaction should be in favor of the US. Currencies will continue to contain signs that more and more central banks are adjusting to easing monetary policy in order to combat a slowdown in economic growth. The dovish tone of central banks reduces profitability across the board.

The latest figures show that weakness in the manufacturing sector is beginning to spread to the service sector, it is alarming, and it gives the green light to central banks to soften policies. And so far only the Swedish central bank has adhered to a policy of tightening policy by the end of this year or the beginning of next year amid steady inflation and good economic prospects. The Swedish krona has updated a 2.5-month high against the euro and is growing against the dollar.

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Philippines Inflation Lowest Since 2017

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Philippines inflation reached its lowest level in nearly two years in June, the Philippine Statistics Authority showed Friday.

Consumer price inflation eased to 2.7 percent from 3.2 percent in May. In the same period last year, the rate was 5.2 percent. Inflation was forecast to slow moderately to 2.8 percent.

The June inflation was the weakest since September 2017.

Excluding selected food and energy items, core inflation came in at 3.3 percent in June versus 3.5 percent a month ago.

Food prices advanced at a slower pace of 2.6 percent annually and education cost declined 4.5 percent. Meanwhile, higher rate were registered in the indices of health, recreation and culture, by 3.7 percent and 3.2 percent, respectively.

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China's Forex Reserves Increase In June

China's foreign exchange reserves increased marginally in June, data from the People's Bank of China showed on Monday.

Foreign exchange reserves rose by $18.2 billion to $3.119 trillion at the end of June from $3.101 trillion at the end of May. The forex reserves stayed slightly above the expected level of $3.110 trillion.

The increase was driven by currency conversion rates and higher international financial asset prices in June, the State Administration of Foreign Exchange said after the central bank released data.

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Japan M2 Money Stock Rises 2.3% On Year In June

The M2 money stock in Japan was up 2.3 percent on year in June, the Bank of Japan said on Tuesday - coming in at 1,029.6 trillion yen.

That was shy of expectations for a gain of 2.6 percent, which would have been unchanged from the May reading following a downward revision from 2.7 percent.

The M3 money stock was up an annual 2.0 percent to 1,362.4 trillion yen - again missing forecasts for 2.3 percent, which also would have been unchanged from the previous month.

The L money stock gained an annual 1.7 percent to 1,807.7 trillion yen, slowing from 1.8 percent a month earlier.

For the second quarter of 2019, M2 was up 2.5 percent on year, M3 rose 2.1 percent and L was up 1.8 percent.

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China CPI Steady At 2.7% On Year In June

Consumer prices in China were up 2.7 percent on year in June, the National Bureau of Statistics said on Wednesday - in line with expectations and unchanged from the May reading.

On a monthly basis, consumer prices were down 0.1 percent following the flat reading a month earlier.

The bureau also said that producer prices were flat on year in June. That was shy of expectations for an increase of 0.2 percent and down from 0.6 percent in the previous month.

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The market is waiting for gold at $1500

Gold is now trading near a six-year peak of $1,439 a week ago. A return to $1,400 is unlikely to be a problem, investors are most interested in whether quotes will manage to get to their favorite level of $1,500 and move on. This, in particular, will depend on what the Fed's main figures will say this week. It all starts with Jerome Powell's two-day speech.

Market participants have reduced their appetite for the pace of rate hikes in the United States after the release of strong data on employment, but still believe in a symbolic easing policy. In Powell's words, they will scrupulously look for hints of the prospects for lower rates this month.

The publication of the minutes of the June Fed meeting is significant for gold traders. This document will help them better understand why the officials then decided to postpone the rate cut.

In June, officials removed the word "patience" from their statement, and Powell recently used the phrase "prevention is better than treatment". This suggests that the US central bank is leaning toward preventive policy easing in order to avoid a possible slowdown in the economy.

Judging by the past meetings, the US regulator is known for its discretion. Therefore, it may not postpone the rate cut by 25 bp, which the market relies on so much to follow the situation in the country's economy. It is worth noting that there are traders expecting a decline of 50 bp, but such units.

This week, there will be a whole group of Fed officials and the most interesting one for investors will be the President of the Federal Reserve Bank of St. Louis, James Bullard. At the June meeting, he was the only one who did not agree with the decision to leave interest rates unchanged. Bullard compared with other members of the Fed committee holds the most dovish stance.

Analyst opinions on gold

Gold will reach $1,500 and move higher, according to Bank of America Merrill Lynch. However, strategists are worried about short-term risks. "The market overestimated the likelihood that the US central bank will lower rates," and if policy easing is postponed, for example, "due to the constructive results of the G20 summit," this will cause a drop in precious metal prices.

The same opinion is shared by UBS. However, they are waiting, gold will end the current year below $1,400, the next one will be close to $1,450, and only then will investors see the coveted mark of $ 1,500.

The National Australia Bank raised its forecast for the price of the yellow metal in 2019 to $1,400 per ounce. Earlier it was about $ 1,380 per ounce.

"We are still expecting two reductions in the US Federal Reserve rates - in July and September. This will support the precious metal," analysts wrote.

Gold is expected to become more attractive in the event of a further decrease in the yield of G7 countries. The demand for precious metals will grow from both long-term investors and short-term speculators. The world's central banks will also show an increased interest in gold.

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What does Powell bring to the dollar?

It seems that the head of the Fed finally convinced the market of a rate cut in the near future. Under the influence of the regulator's dovish mood, the dollar index fell from three-week highs, which it held in recent days. The "minutes" of the Fed were ignored by the market, although it followed that not all central bank officials were ready for policy easing.

Traders preferred to listen to the words of Jerome Powell, who, in their opinion, gave a clear signal for aggressive policy easing. The head of the Federal Reserve Bank of St. Louis, James Bullard, also played a role here, stating that a quarter-percent reduction in rates is necessary to keep the US economy from slowing down due to a trade war and amid steadily low inflation.

However, today the United States published a report according to which consumer prices in the country unexpectedly rose in June by 0.1%. Economists were counting zero dynamics of the indicator.

Powell is set to hold another speech on Thursday. It is unlikely that he will add something fundamentally new to what he said yesterday regarding the prospects for policy easing, but anything can happen. If, for example, he more accurately speaks about an immediate rate cut by 0.50%, then the dollar can repeat yesterday's scenario.

The EUR/USD pair will get every chance to go towards the 1.1400 mark. Under other circumstances, there is a risk that quotes would reverse dowards.

The trigger to pull down the main pair could be the publication of the minutes from the ECB's June meeting. However, this did not happen, the euro did not pay attention to the fact that members of the ECB almost unanimously recognized the need to prepare for easing monetary policy in the region.

It seems that Forex is entering a new phase of currency wars. Traders perceive that the US central bank's reduction in rates is a preventive measure modeled on 1995 and 1998, when the regulator acted on the lead and saved the country from recession. The central bank also weakened the policy in 2001 and 2007, when the negative had already begun to show its first sprouts, but in fact everything turned into a recession. The desire to prevent a possible recession is commendable, but not only Fed officials are thinking about it. The European regulator is also ready to cut rates and revive the quantitative easing program. It is worth saying that, perhaps, there are more reasons for the ECB than the Fed. Take, for example, the worsening estimates of GDP and inflation for 2020 and statements by German politicians that the EU needs to seriously tune in to a trade war with the US.

The euro and the dollar are weak and their condition is supported by central banks. Thus, the EUR/USD pair will continue to stay within the consolidation range of 1.12-1.14 indicated at the beginning of July.

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The ECB and the Fed are going to cut rates, while the Bank of England is not yet ready for this, and this could support the pound

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The single European currency fails to demonstrate a steady upward trend, despite expectations that the US Federal Reserve System (FRS) will cut interest rates for the first time in ten years.

Derivatives market expects the US central bank to lower the rate in July and September. This is a negative point for the dollar. Why then the euro can not benefit from this?

The fact is that the ECB also does not exclude the possibility of easing monetary policy to stimulate the European economy and inflation in the region.

UBS analysts believe that the regulator will lower the deposit rate twice before the end of this year.

"Most likely, this will happen in September and December, and each time the step size will be 10 basis points. In addition, the ECB may resort to QE, if the outlook for the economy and inflation in the eurozone worsens, downside risks associated with trade policy and geopolitical uncertainty materialize, or the Fed has a weaker monetary policy than expected. We think that at the meeting next week, the ECB will make adjustments to its statements of intent to prepare the markets for the coming changes," they noted.

Thus, it turns into a "vicious circle": both the American and European central banks want to cut rates and lower the rate of their currency. Who will lose: euro or dollar? It is possible that this week will be a draw and the next winner will be the greenback.

Meanwhile, the Bank of England, it seems, is not yet ready to lower interest rates. Moreover, some members of the BoE Monetary Policy Committee are considering the possibility of raising rates in the fall, if after Brexit there is a high increase in consumer prices.

According to a number of analysts, since the ECB and the Fed are setting investors to lower rates, the pound can show good growth in quotes.

"The pound is already trading at crisis levels and will resist further decline. High inflation expectations and inflation, which is close to the Bank of England target, should for the time being keep the central bank from deciding to soften the policy," say Nomura analysts.

"Great Britain's exit from the EU without a deal is a risk, and it will certainly lead to the formation of new lows in sterling, but this will happen only in a few months, and we don't expect the market to lay a high premium for a hard Brexit until Parliament returns to work in September after the summer break," they added.

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