Daily Brief

Daily Brief

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Summer slowdown in sight

Slower and quieter

The weekend's sporting excitement was not matched by activity in the foreign exchange market at the end of last week. From Thursday morning to today's open, the pound is on average unchanged against the other majors and has sportingly given up a cent to the NZ dollar.  

Economic data on Thursday and Friday were unexceptional and the various central bank speakers told investors little that they had not already guessed. Thursday's consumer price index data from the States were roughly in line with expectations, with headline inflation down from 1.8% to 1.6% and core inflation, excluding food and energy, up from 2.0% to 2.1%.  

The figures from China on Friday morning showed trade declining on both sides of the equation, with imports and exports falling in June. US tariffs had a dampening effect on exports while demand for imports was tempered by slowing domestic growth. That weakening growth was quantified by statistics this morning for the second quarter, which showed China's economy expanding at the slowest pace in at least 27 years. 

Guidance all round

The Federal Reserve's Jerome Powell and the Bank of England's Mark Carney and Gertjan Vlieghe all offered their visions of the future, with a greater or lesser degree of precision. Mr Powell focused on Fed policy, Mr Carney on financial stability and Mr Vlieghe on Brexit uncertainty. 

When Jay Powell made his second visit to Capitol Hill in as many days, he did little more than clarify his belief that "many of my colleagues on the FOMC have come to the view that a somewhat more accommodative monetary policy may be appropriate".

Mark Carney, in his introduction to the Financial Stability Report, insisted optimistically that "The [banking] system would continue to serve UK households and businesses even if a worst-case disorderly Brexit occurred at the same time as a global slowdown triggered by a trade war". Gertjan Vlieghe considered a post-apocalyptic world in which Bank Rate would fall "towards the effective lower bound of close to 0% in the event of a no deal scenario".

Slim pickings

Today's ecostat agenda would fit easily onto a postage stamp, whatever one of those is. The next significant events do not come until tonight, with NZ inflation and the minutes of the Reserve Bank of Australia monetary policy meeting.

Alongside the Chinese GDP data this morning, there were figures for house prices (up by 10.3% in the year to June), retail sales (up by 9.8%) and industrial production (6.3% higher year-on-year). Rightmove's index of UK house prices saw them fall 0.2% in July, the first monthly drop this year.  

Yet to come today are Swiss producer and import prices, the New York Fed's Empire State manufacturing survey and New Zealand inflation for the second quarter. Analysts expect NZ consumer prices to have risen 0.3% between March and June, putting the headline rate of inflation at 1.7%, up from 1.5% three months ago.

GBP: Governor says banks strong and stable

GBP: Governor says banks strong and stable

NZD: Among the leaders

NZD: Among the leaders

USD: Inflation data mixed

USD: Inflation data mixed

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