Weekly Market Review - July 8-12

This week, the European currency has recovered some of the losses against the US dollar, adding 0.2%. The American currency has been the worst performer, losing 0.36% against the yen, and 0.20% against the British pound. Markets are waiting to see the interest rate decision from the Federal Reserve, which will meet at the end of this month.

In the cryptocurrency market, Bitcoin has gained over 4% since Monday, but it still cannot restart its rally. On Friday, Japanese exchange Bitpoint announced that it was hacked, losing $32 million worth of cryptocurrency.

Here are the most important economic updates that have moved the markets since July 8:

Macroeconomic News

British Economy Beat Expectations

The UK’s GDP increased by more than anticipated in May, driven by car production. The Office for National Statistics said that the economy expanded by 0.3% in May after slowing by 0.4% in the previous month. Analysts surveyed by Reuters expected a slight increase of 0.1%. The British economy was helped by carmakers, which recovered production after an annual summer maintenance shutdown that was moved to April to minimise the Brexit effect.

US Budget Deficit at $8B vs Expected $6.35B

The US government recorded $8 billion budget deficit last month, more than the expected deficit of $6.35 billion. On Thursday, the US Treasury Department released budget data, according to which the federal spending for the month was $342 billion, down 12% compared to June 2018. Receipts increased by 6% to $334 billion. Year-to-date, the deficit was $747 billion, up from $607 billion in the same period of 2018.

US Jobless Claims Lowest in 3 Months

The number of US citizens who applied for unemployment benefits from the first time fell last week by 13,000 to a seasonally adjusted 209,000. Thus, the indicator touched the lowest level in three months, according to Labor Department data released on Thursday. Economists expected an increase to 223,000. The reading for the prior week was revised up by 1,000 more applications compared to initial reports. The four-week moving average, which is regarded as a more accurate measure, declined last week by 3,250 to 219,250.

China to See Annual Decline in Auto Sales

China might record a decline in car sales for this year against previous estimates of a flat reading in the indicator. The China Association of Automobile Manufacturers (CAAM) said that the auto sector slowed in June for the 12th month in a row. The association was forced to cut forecasts based on several downward revisions by market experts. Sales in June declined by 9.6% to 2.06 million cars. Last year, the indicator fell 2.8% for the first time in about two decades.

French Industrial Production Surges

France’s industrial production jumped 2.1% in May, which is the biggest monthly increase since November 2016. The performance was driven by aircraft production and energy output. Also, the INSEE statistics office revised the growth in industrial production for April, announcing a reading of 0.5% compared to 0.4%. Energy and utilities production increased by 4.6% while transport production rose 3.3%. Airbus had a significant share in the positive performance of the latter. Excluding energy, manufacturing production rose 1.6% in May, after losing 0.1% in the previous month.

China’s Inflation Grows in Line With Forecasts

China’s consumer price index (CPI) last month expanded in line with analysts’ expectations. Also, the producer price index (PPI) didn’t move from June 2018. On Wednesday, the National Bureau of Statistics said that inflation rose 2.7% in June in annual terms and was unchanged from the growth in May. Elsewhere, the PPI remained flat year-on-year and contracted after a 0.6% growth in May. The readings didn’t bring any surprises that might affect the Q2 GDP data, which will be published on Sunday.

Upcoming News to Watch

This Sunday, China will release its GDP data for the second quarter, both in annual and quarterly terms. The second-largest economy in the world was probably affected by the trade war with the US and will see its economic growth decelerating.

On Tuesday, the US will publish several important economic indicators, such as retail sales, core retail sales, export prices, import prices, industrial production, manufacturing production, and business inventories.

The UK will release inflation data on Wednesday. Besides, it will also report on its house price index and producer price index.

On Monday, the Japanese markets will be closed for the Marine Day.

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