Despite a deluge of key macro data today, price action in major currencies and equity markets has been rather tame. The Dollar is broadly unchanged from yesterday and European and US equity markets are only down marginally.
The Australian Dollar showed little reaction this morning to stronger than expected domestic employment data for June or to the upside surprise in Chinese GDP growth in Q2 (a record 11.5% qoq, following a record -9.8% qoq in Q1).
Similarly Sterling was left unfazed by the avalanche of labour market figures for June. GBP/USD dipped to 1.252 around lunchtime but is back to where it started the session (1.26). UK labour market data have become harder to interpret with the advent of numerous government measures (e.g. furlough, easier access to state benefits) but the collapse in hours worked and number of employees (i.e. on UK payrolls) points to clear underlying
weaknesses.
In the same vein the Euro is only fractionally stronger after today’s ECB policy meeting which ultimately threw up no surprises. The ECB left its policy rates and QE program unchanged, in line with expectations, and gave little away.
Finally, US macro data – the Philly Fed manufacturing index (July) and retail sales (June) – again surprised on the upside, as they have often done in the past month. But markets today didn’t seem to have the appetite to really move the Dollar either way.
