ECB leaves policy unchanged

Daily Analysis - 09/09/2016

ECB remains in a wait and watch mode, leaving rates and QE unchanged

At the European Central Bank’s monetary policy meeting yesterday, ECB President Draghi signaled no changes to interest rates or to the central bank’s current QE purchases. The ECB’s staff economic projections were also broadly unchanged from the previous estimates released in June. While HICP is expected to rise 0.20% by end of 2016, GDP is expected to average 1.30%. While the euro initially surged on the inaction from the ECB, the single currency failed to keep its gains towards the close.

China exports decline, imports rise

Exports from China declined 2.80% on a year over year basis in August, data from the National Bureau of Statistics showed on Thursday. It was slightly better than the forecast of 4.00% decline in exports and better than the 4.40% decline seen in July. Imports on the other hand grew at a pace of 1.50%, after falling 12.50% in July. Imports increased for the first time since 2014 and beat estimates forecasting a 5.40% decline. China's trade surplus as a result came in at 52.05 billion in August, compared to 52.31 billion in July and slightly lower than the forecasts of 58.8 billion.

Japan Q2 GDP revised higher to 0.20%

Second quarter GDP in Japan was revised to 0.20% on a seasonally adjusted basis, data from the Cabinet office showed on Thursday. It was slightly higher than previous forecasts which showed a flat GDP growth during the period. As a result of the upward revision in the GDP on a quarterly basis, Japan's annual GDP growth rate was revised to 0.70%, higher than the forecasts of 0.20%. The quarterly GDP growth of 0.20% was slower than the first quarter's 0.50% increase. Japan's nominal GDP moved higher to show 0.30% expansion on the quarter, compared to forecasts of 0.20% and was slower than the first quarter nominal GDP which was at 0.60%. Private consumption was unchanged at 0.20% on the quarter and down from 0.70% previously.

Australia trade deficit improves

On a seasonally adjusted basis, Australia's merchandize trade deficit was seen at 2.41 billion in July, according to official data from the Australian Bureau of Statistics. The trade deficit beat forecasts for a shortfall of 2.70 billion following the 3.195 billion trade deficit in June. July's trade deficit was a 26% improvement compared to the previous month. Exports increased 3.0% to rise to a seasonally adjusted 26.425 billion. Non-monetary gold saw a 62% increase while rural goods increased by 1%. Consumption goods were lower by 6.0% while intermediate and other merchandize rose 3.0%. The trade deficit data follows the quarterly GDP report released the day before which showed a 0.50% increase in economy.

Canada jobs expected to recover

Statistics Canada will be releasing the monthly jobs report for August today at 1230 GMT. Expectations call for no change to the unemployment rate which rose to 6.90% in July. On the employment change, the economy is expected to add 16k jobs during the month. This comes after July saw the biggest job loss in Canada's economy since 2011. Over 31.2k jobs were shed during July with most of the declines come from full time workers. A recovery is expected in August although part time jobs are likely to continue to outperform full time jobs.

Upcoming Events

Time
Currency
Event
Forecast
Previous

08:30 GMT
GBP
Construction Output m/m
-1.0%
-0.90%

12:30 GMT
CAD
Employment change
16k
-31.2k

12:30 GMT
CAD
Unemployment rate
6.90%
6.90%

14:00 GMT
USD
Wholesale sales m/m
0.10%
0.30%

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