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China Trade Data Disappointed, CPI Next Print E-mail
ONG Focus | Insights | Written by Oil N' Gold | Tue Aug 08 17 00:30 ET

Energy prices softened further ahead of the release of the OPEC/non-OPEC meeting statement. Disappointing Chinese trade data might have also pressured prices. Currently trading at 49.22, the front-month WTI crude oil contract has dropped -0.34% in Asian session today, following a -0.38% drop on the prior day. The Brent contract has been down -0.44% today, after a -0.1% drop on Monday. Commodity currencies under our coverage were generally lower against US dollar but NZDUSD, at its two-week low, was the weakest. RBNZ is the laggard in terms of raising interest rates. The RBNZ quarterly survey showed annual inflation forecast dropped to average 1.77% over the coming year, from 1.92% projected in May. Two-year inflation expectations also edged lower to 2.09% from 2.17% previously. These outcomes are expected maintained a dovish tone at the upcoming RBNZ meeting.

China's trade surplus widened to US$46.74B in July. Exports rose +7.2% and imports were up +11%, compared with +17.2% and +11.3%, respectively, in June. Note that China's trade surplus with the US narrowed mildly to U$$25.2B from US$25.4B in June. This was probably due to the recent strength of renminbi against US dollar. The renminbi fixing rose +1.2% and +0.7% against US dollar in June and July, respectively. This probably affected China's exports to the US. Wednesday comes inflation data. Headline CPI probably stayed unchanged at +1.5% in July, while PPI climbed +0.1 percentage point higher to 5.6%.

On the dataflow elsewhere, Swiss headline CPI contracted -0.3% m/m in July, in line with expectations but worse than June's -0.1% drop. From a year ago, CPI improved mildly to +0.3% from +0.2% in June. SNB's FX reserve widened to 714B franc in July, form 694B franc a month ago. Most of the increase was driven by valuation effect. Both the FX reserve and sight deposit data in July suggested SNB had not intervened aggressively. Therefore, the recent weakness in Swiss franc against the euro and US dollar more likely driven by policy divergence: ECB is on the path to normalization while SNB maintains the pledge to combat deflation.

Later today, Switzerland would release its job data for July with the unemployment rate probably staying unchanged at 3.2% , In the Eurozone, Germany's trade surplus might have widened to 22.3B euro in June from 20.3B euro a month ago. In the US, JOLTS' job openings might have slipped to 5.66M in June form 5.67M in the prior month.


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