Asian Markets Higher, Focus On BOE This Week

Published 07/11/2016, 05:03 AM
Updated 03/09/2019, 08:30 AM
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Asian markets open sharply higher, following the strong US close on Friday. At the time of writing, Nikkei is trading up 500 pts or 3.3%, HK HSI is up 350 pts or 1.7%. Dollar and Swiss Franc are both mildly higher in the currency markets. Both US stocks and Dollar are supported by employment data from US released last week. A major focus today is developments in US equities where DJIA and S&P 500 are approaching historical highs at 18351.36 and 2134.71 respectively. On the data front, China CPI slowed to 1.9% yoy in June while PPI rose to -2.6% yoy. Japan machine orders dropped -1.4% mom in May. Australia home loans dropped -1.0% in May.

Looking ahead, BoE rate decision will be the main event of the week. Governor Mark Carney has already indicated that there will be further policy easing this "summer". There are expectations that the central bank will cut interest rate this week, for the first time since 2009 to stabilize the economy. Nonetheless, there are are also talks that BoE would opt for easing in August meeting instead. BoC will also meet this week and is expected to keep interest rate unchanged at 0.50%. Fed will release Beige Book economic report.

It will also be a important week for Australian dollar. There are speculations that RBA will cut interest rate again in August but the decision will very much depends on the set of Q2 data. June employment data to be released on Thursday will be closely watched. Meanwhile, there will also be a bunch of data from China throughout the week with focus on trade balance on Wednesday and GDP on Friday.

Here are some highlights for the week ahead:

  • Tuesday: Australia NAB business confidence; Japan tertiary industry index; German CPI final; US wholesale inventories
  • Wednesday: China trade balance; Eurozone industrial production; US import prices; BoC rate decision; Fed's Beige Book report
  • Thursday: New Zealand business NZ manufacturing index; Australia employment; Swiss PPI; BoE rate decision; US PPI, jobless claims
  • Friday: China GDP, industrial production, retail sales, fixed asset investment; Eurozone CPI final, trade balance; US CPI, retail sales, Empire state manufacturing index, industrial production, business inventories, U of Michigan sentiments.

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