Macro Roundup (Jul 31)

SHANGHAI, Jul 31 (SMM) – This is a roundup of global macroeconomic news last night and what is expected today.

Last night

The US dollar traded rangebound on Tuesday as investors awaited the latest interest rate decision from the Federal Reserve. The US dollar index inched up 0.01% to 98.066.

Expectations that the US central bank on Wednesday will cut interest rates for the first time since the financial crisis grew after data showed soft US consumer spending and inflation in June.

LME base metals closed lower across the board on Tuesday, with the biggest loss of 2.7% in lead. Copper dropped 1.3%, zinc fell 0.7%, tin and aluminium declined 0.6% and nickel lost 0.3%.

SHFE base metals, except for aluminium and nickel, traded lower overnight. Copper shed 0.9%, lead slipped 0.7%, zinc decreased by 0.4% and tin edged down close to 0.1%.

The US Commerce Department said on Tuesday consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.3% last month, in line with expectations but marking the smallest gain in four months, as an increase in services and outlays on other goods offset a decline in purchases of motor vehicles.

Consumer prices as measured by the personal consumption expenditures (PCE) price index edged up 0.1% in June as food and energy prices fell.

Excluding the volatile food and energy components, the PCE price index rose 0.2% last month, increasing by the same margin for a third straight month. That lifted the annual increase in the so-called core PCE price index to 1.6% from 1.5% in May. The core PCE index is the Fed’s preferred inflation measure and has undershot the Fed’s 2% target this year.

US consumer confidence rebounded to an eight-month high as Americans’ views of the economy, employment and the outlook brightened amid tight labor markets and an expected Fed rate cut.

The Conference Board’s consumer sentiment index increased to 135.7 in July from an upwardly revised 124.3 in June, according to data Tuesday that topped all forecasts in a Bloomberg survey calling for 125.

In Germany, consumer morale worsened for the third month in a row, according to a study published by Germany's largest market research institute GfK on Tuesday.

The GfK consumer sentiment indicator for Germany slipped to 9.7 heading into August, from 9.8 in July and in line with market expectations.

"It is apparent that the global economic slowdown, trade conflict and Brexit discussions are having an ever increasing impact on consumer confidence," commented the research institute.

Oil prices rose after the American Petroleum Institute (API) reported a much larger-than-expected decline in crude oil inventory.

In the week ended July 25, US crude inventories declined 6.024 million barrels, compared to analyst expectations of a draw of 1.818 million barrels. This came after a sharp decline of 10.96 million barrels in the previous week.

Day ahead

The interest rate decision from the Fed would be key to watch today.

China will release its manufacturing purchasing managers’ index (PMI) for July, while the Germany will publish retail sales for June, and unemployment rate for July.

The Eurozone will release gross domestic product (GDP) for the second quarter, unemployment rate for June and consumer price index (CPI) for July.

The US will publish ADP payroll report, Chicago PMI for July and weekly crude inventory data from the Energy Information Administration (EIA).