Weekly Wrap Up ( 3- 7 July )

7 Jul 2017 06:03 PM

The first week of each month is usually full of important economic data, and the markets are particularly eyeing the US labor market data on which the US Federal Reserve relies heavily on determining the course of tightening monetary policy.

The week began with the RBA’s interest rate decision, which kept it unchanged at 1.50% at historic lows and remained neutral in the statement, disappointing markets that wanted to see a more hawkish statement, pushing the Australian dollar lower from weekly highs against the US dollar, to its lowest level since June 28 at 0.7571.

In terms of Australian economic data, the trade balance recorded a trade surplus exceeding expectations of 2.47 A$ billion in May, with exports up 9% and imports up 1%. Also, retail sales recorded their highest reading in eight-month of 0.6% in May.

At the end of the first half of 2017, UK manufacturing, service and construction activities slowed down in June to put further pressure on the British economy and the Sterling pound, which fell through the week against the dollar from its highest level to its lowest level since June 28 at 1.2865.

In the US, the ISM Manufacturing Index posted its highest level in two and a half years at 57.8 points in June, and the non-manufacturing sector index registered its third-largest reading since the beginning of the year at 57.4 points in June.

In the FOMC Minutes and the Monetary Policy Report that published this week, the Fed confirmed the continued improvement in the labor market. Fed members expressed their confidence in rising inflation, the Fed will continue to tighten policy gradually, and it is on track to cut its budget to match monetary tightening.

 Canada's labor market data continued to improve and beat market expectations, adding 45.3K jobs in June, and unemployment fell to its lowest level since 2009 to 6.5%.

Non-farm payrolls rose by 222K jobs in June, extending jobs for 81 consecutive months, exceeding expectations of only 175,000 jobs, unemployment slightly rising to 4.4%, while wage rates continued to slow on a monthly basis Rising by 0.2% and 2.5% year-on-year.

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