Expectations the Fed will cut in September firm after softer US jobs and services data; Australia’s retail sales and building approvals are surprisingly strong; China’s services growth weakens, while price pressures fall in Japan.
In our bonus deep dive interview, ANZ Head of FX Research Mahjabeen Zaman analyses how the pound might react under different British election result scenarios.
5 things to know:
US Treasury yields are down and rate cut bets are up following weaker than expected US jobs and services data overnight. The S&P 500 hit a fresh all time high. ANZ Economist Bansi Madhavani says odds of a September rate cut rose to 81% from 73% yesterday.
Australian retail sales rose 0.6% in May, double market expectations. That led to market talk of an RBA hike, but ANZ Economist Maddy Dunk says there were seasonal factors at play, meaning the RBA will have a close eye on the June retail sales print, Q2 inflation and the next labour market report.
Australian building approvals were also strong in May - up 5.5% and well above market expectations because of a bump in apartment approvals. ANZ Senior Economist Blair Chapman says the outlook now depends on the RBA.
China’s Caixin/S&P services PMI fell nearly 3-points in May to 51.2, the lowest expansion in eight months. ANZ Senior China Strategist Zhaopeng Xing says the weakness contrasts with stronger manufacturing activity.
Japan’s final June composite PMI was a contractionary 49.7, also down nearly three points from May. ANZ FX Analyst Felix Ryan says the services PMI price gauges fell too, while import prices were well below 2022 and 2023 levels.
Cheers
Bernard
PS: Catch you tomorrow with the latest from the UK general election.
