It is deadline for Greece as markets (again) eagerly await the news that their negotiators have presented a real proposal to creditors. Chinese shares have recovered overnight following another disastrous sell-off on Wednesday and relative calm has set in before the North American session opens. Here in the US, traders are hopeful there will not be another “accidental” glitch at the New York Stock Exchange and everyone’s attention can be centered upon the bigger issues that continue to be Greece and China. Yesterday, the minutes from the latest Federal Reserve meeting were released and struck a more dovish tone. The US dollar lost a bit of ground in the hours that followed as Fed voters remain cautious about the prospect of higher rates while keeping a keen eye on outside conflicts affecting sentiment Stateside. Other safe haven currencies – namely the franc and yen – are lower and peripheral European yields fell as a bit of positivity spread on this Thursday Deadline Day.
Overnight, data was sparse save for German trade balance and another non-event Bank of England policy meeting. Britain’s central bank once again held the headline rate firm at 0.50% and QE levels remain at 375 billion pounds, while Germany’s trade surplus dipped in June, down to €19.5b from €21.8b in May. Markets largely ignored the news and maintain fixated on headlines. Asian trading did provide some relief to the downtrodden Aussie dollar, rising on the encouraging news their economy added 7,300 new jobs in June versus expectations of a 5,000 reduction. Unemployment in Australia remained at 6.0% while the participation rate ticked up to 64.8%. The Aussie has seen heavy selling of late, taking a big hit over the last month as it is heavily correlated to China. If Chinese shares can gain a bit of momentum off of today’s gains, we could see that filter through the Aussie dollar.
Turning to North America, it is Thursday which means another round of weekly jobless claims. This week, markets are anticipating another strong number of only 275k following last week’s 281k print. The number of new Americans filing first time unemployment claims has held below 300k for quite some time, further amplifying the strong(ish) labor market here in the States. While layoffs are down, hiring will need to really pick up into Q3 if the FOMC will seriously consider rate hikes in 2015. As previously stated, yesterday’s minutes leaned toward the dovish side and that was before the most recent breakdown in Greece and the dangerous slide in Chinese equities. Between now and September 17th, when the next Fed meeting followed by a press conference is scheduled, we will get a look at two more non-farm payroll reports and several readings on inflation, consumer spending and housing.
Canadian markets have followed the Loonie down the rabbit hole this week, along with gold, oil and other commodity prices. Today, markets get a fresh look at the May New Housing Price Index and unless it really surprises or disappoints, outside events will guide the Great White North into the weekend. The USDCAD rate has been doing its best this week to break up through its 2015, but continues to run into strong selling pressure. The US dollar should continue to find good buying pressure as safe haven currencies curry favor amid the Chinese equity sell-off, which continue to take worry and attention off of Greece. Top tier data returns tomorrow with June unemployment at 830am. Markets are expecting a correction of -10k following May’s strong +58.9k print, while the unemployment rate is forecast to tick back up to 6.9%.
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