Daily Analysis - 18/08/2016
The meeting minutes from the July 26 - 27 FOMC meeting released yesterday showed that Fed members were divided on whether to raise interest rates. Only two officials argued for a rate hike while the remainder were concerned about the near term economic risks. The minutes showed that Fed members were actually relieved about the circumstances surrounding the Brexit, looking at it as an excuse to wait for more additional data before deciding to hike rates.
Data released by Statistics New Zealand on Wednesday showed that the unemployment rate fell to 5.10% in the second quarter of 2016. This was better than forecasts of 5.30%. Participation rate improved from 69.0% in the first quarter to 69.70% in the second quarter. The overall upbeat employment report was however questionable as Statistics New Zealand took into account the self-employed category as well, which was previously ignored in the Household Labor Force survey.
The number of people seeking unemployment benefits in the UK fell in July, indicating that the UK's labor market remained strong despite the fallout from the Brexit vote. Data from the Office for National statistics showed on Wednesday that total jobless claimants fell by 8.6k in July to 763k. The unemployment rate in the UK remained unchanged at 4.90% for July, which is an 8-year low. Average weekly earnings, with and without bonuses managed to post near expectations as well.
Oil and gasoline inventories fell 2.5 million barrels for the week ending August 12, data from the US Energy Information Administration showed on Wednesday afternoon. The drawdown in the inventory was better for price than analyst expectations, which were a buildup of inventory by 0.3 million barrels. Despite the drawdown, total oil inventories remain at historical highs at 521.1 million barrels, according to the EIA.
Following yesterday's stronger than expected labor market data, the retail sales numbers from the UK will be in focus today. The reporting period for retail sales is for July which marks one whole month after the UK's Brexit vote. Estimates point to a slowdown, while for Euro inflation the data is expected to show that on a month over month basis, Eurozone consumer prices fell 0.40%, down from 0.20% increase in June.
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