High Low High Low
EUR/USD 1.1087 1.1032 USD/ZAR 12.3017 12.2358
GBP/USD 1.5620 1.5598 GBP/ZAR 19.20 19.08
EUR/GBP 0.7105 0.7070 USD/RUB 57.09 54.84
USD/JPY 123.47 123.14 USD/ILS 3.8016 3.7686
GBP/CHF 1.4818 1.4743 S&P 500 2,081 2,076
GBP/AUD 2.0469 2.0386 Oil (Brent) 62.67 62.06

Given the crisis in Europe, it’s almost easy to forget that the macro world continues as usual elsewhere and big data has been published or is imminent. Data that could have a significant impact when the fog of Greece clears (assuming a resolution of one sort or another will occur in the days ahead). This week we have seen:


  1. A positive Tankan (the all capturing business sentiment survey conducted in Japan on a quarterly basis) survey was published yesterday. Large manufacturer’s sentiment improved which was contrary to expectations of a deceleration in Japan’s economic recovery. However it’s worth noting that small business sentiment was stagnant which is probably more pertinent for the domestic economy. All in all one has to take the positives from this report considering Q2 GDP is forecast at an annualised 1.4% versus 3.9% in Q1. Perhaps it will be a bit better after all. Japan as the 3rd largest economy in the world (or 4th if you view the Eurozone as a distinct economy in its own right) is still relevant.


  1. A positive ISM (Institute of Supply Managers) report was published yesterday in the United States, with a better than forecast overall number, with very solid outcomes for both new orders and employment as well. The US expansion continues unabated, and this will certainly be noted by policy makers as decision time approaches.


  1. Vehicle sales in the United States look more than solid, with the best first half in a decade. Yes the numbers from June were slightly down from the previous month, and some might represent that information in a negative light, but a deeper analysis can only lead astute observers to the conclusion that these are by far and away the best numbers since well before the Global Financial Crisis. Make of that what you will!


  1. Chinese stocks look like they are now in bear market territory. Declines from the early June peaks look to be slightly in excess of 20%, the oft used definition of a bear market. Regulators in China have relaxed collateral rules on margin loans, a clear sign that the authorities in China are concerned about the pace and persistence of the declines. I’m not surprised, it was well flagged that the Chinese State encouraged retail interest in Chinese stock markets, no doubt there are concerned about a backlash if consumers turn on the leadership and blame them for their poor investment decisions. This is relevant because the sums of money we’re talking about are significant even in a global context, and the margin that has been borrowed to participate in the buying frenzy is the hundreds of billions of dollars. This is proper money, and could easily have implications for global risk sentiment when we are talking about sums of that type of scale


All of this data might be less important than the big data event that occurs later on today. As tomorrow is an Independence day holiday in the United States (4th of July is on a Saturday this year, so Friday will be a holiday), the Non-farm payrolls report is published this afternoon.  Economists forecast another 230,000 additions to employment, and this implies a drop in the unemployment rate from 5.5% to 5.4%. Any positive surprise will be yet another indication of the strength of U.S economy, and more data for the Federal Reserve policymakers to digest. We will keep you informed, if it’s big, you’ll see some tweets.


I suppose I can’t write this blog without a comment on Greece. Officially, as we all know, Greece failed to meet its repayment to the IMF, and has been forced to impose capital controls. I am at a loss to explain the recent actions of the Greek Prime Minister. It is possible he is playing high stakes poker on a level more cunning and inspired than anything I’ve ever seen before, or it may be that even he doesn’t know what he is trying to achieve at this point. Just yesterday, it appeared that he was willing to agree to the terms of the earlier bailout. But then yesterday evening in a televised address to the Greek people he urged the electorate to vote no in the referendum, no means Grexit. He described Eurozone leaders as “extremist conservative forces”, and accused them of blackmailing Greece. Strong stuff, puzzling stuff.


Meanwhile, currency markets are having their moment in the sun. The euro is weakening, or perhaps, given broad performance of the US dollar, I should say that the dollar is strengthening. Some good chartists that I pay attention to me are expecting GBP/USD to drop down towards 1.52 in the near future. I daresay EUR/USD will do something similar, although it’s not clear to me that the euro will underperform the pound sterling. As has been the case in recent times, we maintain our view that another US dollar strengthening trend is the next big thing to happen. Indeed this move might be the start of it, I just can’t claim any great confidence yet. Not with all the fun and games in Greece.







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