Forex Signals US Session Brief, August 13 – Mixed Economic Data Today Keeping Markets Confused
Skerdian Meta • 3 min read
The economic data has been getting weaker across the globe, especially in recent months. Today we had quite a few important economic reports being released and they showed increased weakness, but we also saw some decent numbers today. It started with the UK employment and earnings report. The unemployment rate ticked higher but it still is at a decent level, while earnings jumped higher once again by three points in June, after the jump we saw in May. So, the data from Britain today was quite positive.
But we can’t say so for the Eurozone. The ZEW economic sentiment from Germany and the Eurozone has ben negative for a few months and today it dived further in the negative territory. Both numbers from the Eurozone and Germany showed that the sentiment has fallen to the lowest level since 2011, which means that both economies might fall into recession now. The German GDP report is expected to show a contraction for Q2 tomorrow, but Q3 doesn’t look too good so far either, so a recession is well in the cards. The inflation report from the US was impressive as well as both, headline and core CPI increased by 0.3% last month, but earnings posted a big slowdown too, so traders were left scratching their heads after that.
The European Session
- UK Employment Report – The employment report released this morning showed that the unemployment rate ticked higher though to 3.9% from 3.8% previously. Employment change came above expectations as well at 115k against 60k expected, while July jobless claims change came at 28.0k against 42k expected. The previous number stood at 38.0k but was revised lower to 31.4k. So, this report is more positive than negative.
- UK Earnings Report – The earnings report was even better than the employment report. Earnings increased to 3.7% 3MoY as expected in June, up from 3.4% in May, while May was revised higher to +3.5% from 3.4% previously. Average weekly earnings (excluding bonuses) was also impressive. coming at 3.9% from 3.8% 3m/y expected, up from 3.6% previously. These are some really solid figures for earnings.
- The economic sentiment turned negative a few months back. Earlier today, the economic sentiment for Germany and the Eurozone were released and the sentiment deteriorated further. Here are the figures:
- German ZEW economic sentiment Current -13.5 against -6.3 expected
- Previous -1.1
- German ZEW economic sentiment Expectations -44.1 vs -28.0 expected
- Prior -24.5
- Eurozone ZEW economic sentiment Expectations -43.6
- Prior -20.3
- China Swears Not to Have Touched the Yuan – A PBOC official made some comments on the yuan, via Reuters. He said that the Chinese Yuan is at an appropriate level at present. Yuan moves do not necessarily lead to disorderly movements in capital flows. We are shocked that US has labelled China as a ‘currency manipulator’.
The US Session
- US Inflation Report – US inflation report was released a while ago and it looked like it leaned on the positive side again, after the positive report last month. Headline CPI increased by 0.3% as expected in July. But, the core CPI beat expectations of 0.2% and instead it increased by 0.3% last month. US YoY CPI ticked higher to 1.8% against 1.7% expected, up from 1.6% in June. Core YoY CPI excluding food and energy also ticked higher to 2.2% vs +2.1% expected.
- US Earnings Report – The inflation figures were pretty great, although, the earnings are not as great. Real average hourly earnings moved lower to 1.3% YoY from 1.5% prior. Real average weekly earnings declined to just 0.8% YoY from 1.2% previously.
- Trump Tweeting on Tariffs – Donald Trump released another tweet on trade and tariffs a while ago. “Through massive devaluation of their currency and pumping vast sums of money into their system, the tens of billions of dollars that the U.S. is receiving is a gift from China. Prices not up, no inflation. Farmers getting more than China would be spending. Fake News won’t report!”
Trades in Sight
- The trend is bearish
- The pullback higher seems to be over now
- MAs are providing resistance
The trend remains bearish despite the latest jump
NZD/USD has been bearish for three weeks and the downtrend has picked up pace as time goes by. Moving averages have been doing a great job as resistance during this time, pushing the price lower. Although, we are seeing a jump now after rumours that China and the US might have another meeting/call soon to push ahead with trade negotiations. The price has climbed higher but it is finding resistance at the 50 and 100 SMAs right now, which seems like a good place to go short with the flow.
The economic data was sort of mixed today and markets were trading in tight ranges. But, the synchronized comments from the US and China just now for more talks in the coming weeks and a delay in the latest tariffs from the US. This is positive news and it has improved the sentiment instantly in financial markets.