Macro Roundup (Sep 10)

SHANGHAI, Sep 10 (SMM) – This is a roundup of global macroeconomic news last weekend and what is expected today.

Last weekend

The US dollar rose last Friday against all major currencies following upbeat data strong US nonfarm payroll report was published. It closed 0.33% higher at 95.43. The market also accounted for an interest rate hike by the US Federal Reserve when the Federal Open Market Committee (FOMC) members meet on September 25-26.

Base metals closed mixed as LME zinc led the losses and fell over 1.4%. Nickel dipped some 1.1%, copper slid 0.48%, while tin jumped 1.1%, aluminium grew 0.81%, and lead rose 0.78%. SHFE nickel lost 0.31%, lead decreased 0.09%, copper fell 0.06%, while lead increased over 1%, aluminium and tin inched up.

The US economy created 201,000 new jobs in August, while the unemployment rate remained unchanged at an 18-year low of 3.9%, said the US Labor Department.

Traders focused on the wage component, which showed a monthly gain of 0.4% in average pay, topping expectations of an increase of 0.2%. Wage growth gained 2.9% year on year, compared with 2.7% in July and the fastest since June 2009.

The US economy is growing with much momentum and the Fed is likely to hike rates by 0.25 bps this month, noted TD Economics in a research report.

China's foreign exchange reserves fell by $8.23 billion in August as the US dollar appreciated. Total reserves now stand at $3.1097 trillion, the lowest level since October 2017.

Foreign exchange reserves fell by 0.26% in August after a two-month gaining streak in June and July, China's State Administration of Foreign Exchange (SAFE) said in a statement.

Global political and economic risks have grown this year, with many emerging markets taking the brunt of greater market volatility, said a SAFE official. However, China's foreign exchange reserves have remained stable due to the nation's continued stable growth and the increased flexibility of the yuan's exchange rate.

The eurozone grew at 0.4% in the second quarter, EU statistics agency Eurostat confirmed on Friday, as business and other investments rose sharply while net trade was negative.

On a yearly basis, the growth in the second quarter eased to 2.1% from the previous 2.2%.

Gross fixed capital formation rose by 1.2% during the second quarter, contributing 0.3 percentage points to GDP (gross domestic product) growth. Changes in inventories, household spending and government expenditure each contributed 0.1 percentage point.

However, while exports rose by 0.6%, imports also increased by 1.1% during the quarter, indicating that the net impact of foreign trade on GDP was 0.2 percentage points.

Among eurozone countries, growth was strongest in Malta, Estonia and Slovakia, at 1.9%, 1.4% and 1.1% respectively, and weakest in France, Greece and Italy, all at 0.2%.

Day ahead

The market should monitor key data such as China's consumer price index (CPI), producer price index (PPI), aggregate financing of the economy, and M2 money supply for August.