Quarterly national accounts from the UK and foreign trade from Germany are due on Friday, headlining a busy day for the European economic news.
At 1.45 am ET, the Swiss jobless data is due from the State Secretariat for Economic Affairs. The unemployment rate is forecast to remain unchanged at 2.3 percent in July.
At 2.00 am ET, Destatis is scheduled to issue Germany's foreign trade data. Exports are forecast to drop 0.1 percent on month in June, in contrast to a 1.1 percent rise in May.
In the meantime, consumer and producer prices are due from Norway. Consumer price inflation is expected to ease marginally to 1.8 percent in July from 1.9 percent in June.
At 2.45 am ET, France's Insee publishes manufacturing output figures for June. Economists expect manufacturing output to fall 1.3 percent on month in June, after rising 1.6 percent in May.
At 4.30 am ET, the Office for National Statistics releases UK GDP, industrial production and foreign trade data. The economy is forecast to remain flat on quarter in the second quarter, after expanding 0.5 percent in the preceding period.
Australia NAB Business Conditions Weaken; Sentiment Improves
Australia's business conditions weakened in July reflecting the decrease across most industries, while confidence edged higher, survey data from the National Australia Bank showed Tuesday.
The business conditions index fell 2 points to +2 in July driven by a decline in the employment sub-indicator.
Meanwhile, the business confidence index rose to +4 from +2 a month ago, driven by an improvement across industries. Sentiment remained highest in mining.
The NAB said the business sector has lost significant momentum since early 2018 and forward looking indicators do not point to an improvement in the near term. The lift in confidence following the election appears to have faded with little impact on actual conditions.
According to NAB, both the cut to interest rates and boost to tax ******s is yet to feed into the business sector and that the weakness in the second quarter has persisted into the third quarter.
"With a significant loss of momentum in activity, and inflation indicators remaining weak, the survey points to the need to the need for further stimulus in the economy," Alan Oster, NAB Group chief economist, said.
"Indeed, we expect a further easing in interest rates from the RBA and think that some greater fiscal support will be needed from the government to kickstart growth," Oster added.
China's industrial production and retail sales grew at weaker pace in July, data from the National Bureau of Statistics showed Wednesday.
Industrial output growth eased to 4.8 percent in July from 6.3 percent in June. Output was forecast to expand 6 percent.
Likewise, growth in retail sales slowed to 7.6 percent from 9.8 percent a month ago. This was the weakest growth in three months. The expected pace of growth was 8.6 percent.
During January to July period, fixed asset investment logged an annual growth of 5.7 percent compared to 5.8 percent increase in January to June. The rate was forecast to remain unchanged at 5.8 percent.
Australia Unemployment Rate Unchanged At 5.2% In July
The unemployment rate in Australia came in at a seasonally adjusted 5,2 percent in July, the Australian Bureau of Statistics said on Thursday - unchanged from the previous month and in line with expectations.
The Australian economy added 41,100 jobs last month, far surpassing expectations for a gain of 14,000 jobs following the increase of 500 jobs in June.
The participation rate was 66.1 percent, exceeding estimates for 66.0 - which would have been unchanged from the previous month.
Malaysia's economic growth accelerated in the second quarter on domestic demand, data from the Bank Negara Malaysia showed Friday.
Gross domestic product grew 4.9 percent year-on-year, faster than the 4.5 percent expansion seen in the first quarter. The rate was forecast to improve to 4.7 percent.
On a quarterly basis, GDP expanded 1 percent versus 1.1 percent increase in the preceding period. Data showed that domestic demand advanced underpinned by household spending and higher private investment.
The current account surplus of the balance of payment remained sizeable at MYR 14.3 billion or 3.9 percent of GNI in the second quarter.
In the second quarter, headline inflation increased 0.6 percent mainly reflecting the lapse in the impact of the GST zerorisation, data showed.
Last week, the EUR/USD pair was a step away from updating its annual low and found a local trough at 1.1065.
A decrease in the consumer sentiment index from the University of Michigan to its lowest level over the past seven months somewhat cooled the outburst of the "bears" in EUR/USD. However, this did not force them to abandon their plans.
The weakness of the European economy, the focus of the European Central Bank (ECB) on easing monetary policy, as well as increasing political risks in the region make the euro currency vulnerable. You should not be surprised then at the increase in the chances of its decline by the end of this month to $1.1. A week ago, the derivatives market estimated the likelihood of such a scenario to be realized at more than 16%, while now these chances are 49%.
Obviously, the policy of American protectionism has a more devastating effect on China and the eurozone than on the United States. This is evidenced by the fact that an industry from the eurozone had plummet into an abyss, and the fall of 0.1% of German GDP in the second quarter. Bloomberg analysts predict a further decline in German purchasing managers' indices in August, which increases the risks of a technical recession in the largest currency bloc economy. The divergence of economic growth between the EU and the US is well traced in the dynamics of such an indicator as the index of economic surprises. This fact does not allow the bulls to sleep peacefully for the euro.
If last year investors still had hope that the eurozone would get on its feet and begin to accelerate, then this year it seems that they will be disappointed. The United States still looks like an island of stability in the ocean of world recession.
The "bearish" factor for the euro is also the deterioration of the political landscape in the EU. In Italy, a split in the ruling coalition allowed the country's deputy prime minister, Matteo Salvini, to initiate a motion of no confidence in the head of government, Giuseppe Conte. Early Parliamentary elections loomed on the horizon, and the flight of investors from the Italian debt market was reflected in the increase in the differential yield of local and German government bonds.
On the contrary, the greenback is doing well. Of course, the USD index rally complicates the life of US exporters and helps reduce corporate profits, but this is an objective process. When rates on government bonds in the United States are higher than in other countries, and the US economy looks better, the dollar, it would seem, is doomed to strengthen.
However, there is a fly in the ointment - US President Donald Trump's dissatisfaction with the Fed's actions and, as a result, a possible reduction in the rate of federal funds by the end of this year from 2.25% to 1.75%. However, it is unlikely that the Chairman of the Federal Reserve, Jerome Powell in Jackson Hole, will want to signal a cut in interest rates by 50 basis points at once in September. As for the minutes of the July meeting, it can show the arguments of dissenters who opposed for the FOMC members to ease monetary policy. It is assumed that this will support the EUR/USD bears. In such conditions, the continuation of the fall of the main currency pair seems quite logical.
Gold at the crossroads: there are plenty of reasons for a correction, but no less in favor of growth
Gold froze at a crossroads. Apparently, speculators who push prices higher, and consumers who want to buy cheaper metals, decided to take a break.
Since the beginning of this year, gold has risen by almost 19% in price, breaking the psychologically important mark of $1,500 per ounce. The last time this level was observed was in April 2013.
The main reason for the growth of quotes was the fear of investors about the global recession, which forces them to shift capital to safe haven assets. It is assumed that if the concerns of market participants begin to be confirmed, the rally of precious metals will continue.
"Rising prices to a six-year high is primarily due to bonds, and it is extremely important for investors to monitor changes in their yield in order to understand what will be the dynamics," said Oax Hansen of Saxo Bank.
The decrease in bond yields in the world has already led to the fact that sovereign bonds with a total volume of almost $16 trillion give a negative percentage.
The jump in the cost of precious metals was also caused by expectations that the Fed, the ECB and other central banks would stimulate economic growth in various ways. The easing of monetary policy tends to lower interest rates and increase the investment attractiveness of gold.
A sharp rise in prices carries the risks of an equally sharp decline, analysts warn.
"The aggregate gold volume in ETFs is steadily growing and has reached 77.4 million ounces, which is the highest for six years. Previous similar bursts of speculative demand caused a serious correction of quotations," O. Hansen said.
In addition, fears of a global recession may also be exaggerated: now markets are most likely driven by emotions. Recent macroeconomic data for the United States were positive and the reduction of interest rates by the world central bank is aimed at maintaining economic growth.
Reducing tensions in Washington and Beijing's trade relations could also serve as a reason for a short, albeit sharp, price correction.
Another negative point for gold may be the expected decline in demand for jewelry in India due to an increase in import duties in the country from 10% to 12.5%, as well as a change in ETF positions, which will respond to the sale of precious metals in response to a restoration of risk appetite .
In case the Fed comes with a surprise - not to continue to lower the interest rate - a correction in gold prices is also possible.
"We expect the Fed to disappoint the market without lowering interest rates in the coming months, and profit taking will ultimately trigger the end of the gold rally. In the event of a pullback, the $1,350 mark per ounce is likely to become a new level of support," representatives of the Fitch rating agency said.
However, there are plenty of factors in favor of the growth of quotes.
According to Deutsche Bank analysts, the main drivers of gold price growth will be real interest rates, stock risk premium, US dollar, as well as purchases of precious metals by central banks.
According to the forecast of Deutsche Bank, the price of gold will be $1,575 per ounce in the next year and a half, and under certain conditions it can reach $1,700.
"Gold is an extremely profitable investment amid the easing of monetary policy by the leading central banks of the world," said Mark Mebius, founder of the Mobius Capital Partners investment fund.
"The long-term prospect of gold – up, up and only up, because the money supply in the world will grow, grow and grow again. Therefore, I believe that gold should be bought at any price," he said.
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