MNI China Daily Summary: Thursday, August 1

MNI: BOE VOTES 5-4 FOR 25 BPS RATE CUT AT AUG MEETING

MNI BRIEF: BOJ To Focus On Continued Positive Wage Setting

MNI BRIEF: CNB Cuts 2W Repo Rate By 25Bps To 4.5%

MNI BRIEF: Japan Q2 GDP To Rise 0.5% Q/Q; 2.2% Annualised

MNI BRIEF: China Retains Ample Policy Space In H2 – NDRC

MNI: US Q2 PREL UNIT LABOR COSTS +0.9% VS Q1 +3.8%; Y/Y +0.5%

MNI: US JOBLESS CLAIMS +14K TO 249K IN JUL 27 WK

VDMA Factory Orders Remain Weak in June

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

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US Dollar Index Closing At Lowest Level For 11 Weeks

FOREX
  • A weak US employment report prompted a strong selloff in the US dollar, with the DXY weakening by around 0.5% following the data.
  • Despite a reversal in US treasuries, the dollar was unable to fully retrace and then extended its weakness throughout the session into the close. The weakness was felt evenly against G10 counterparts and EM currencies alike, with the only notable underperformer the Canadian Dollar where a similarly poor domestic jobs report was to blame.
  • Fresh recent highs for GBPUSD at 1.40. Worth highlighting the cluster off daily highs just above the 1.40 mark, dating back to mid-February. The pair has consistently failed to close above this psychological level and looks likely to be in play next week. Clearing resistance at 1.4009 would reinstate a technically bullish theme.
    • The strength has been underpinned by what Prime Minister Johnson is celebrating as "very encouraging" early results in a crucial set of British elections – following the ruling Tory party winning the high-profile town of Hartlepool.
    • Labour party head Keir Starmer has described the election results as `bitterly disappointing'.
    • Additionally, reports circulated that two-thirds of U.K. adults have had first covid-19 vaccine dose.
  • Notable longer term dynamics in USDCAD that has been in a clear downtrend since the reversal off 1.4668 on Mar 19, 2020. The rejection at 1.4668 meant that the major resistance at 1.4690, the Jan 2016 high remained intact. The USD remains in a clear downtrend. However, the pair is approaching a major support at 1.2062 that will potentially either reinforce the current medium-term bear leg if breached or lead to a reversal if the support manages to contain CAD strength.
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