David Long

August Market Overview

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More than $5 trillion has been wiped off the value of global shares in August.

Clifford Bennett : “This is a diabolical market, the worst I have seen in a lifetime”.

An Inconvenient truth for the bears”


Global Growth Story
Clifford Bennett, 24 August 2015


$Us Dollar: The month started volatile following ISM Manufacturing and Non-Manufacturing PMI  below expectations which followed by ADP Non Farm Employment Change and Non Farm Employment Change well above, and both Unemployment claims and Unemployment Rate slightly below expectations. Mixed messages from Fed, Fisher stated rate hike unlikely until inflation returns to 2%. Preliminary Unit labor Cost Q/Q came above expectations, Core retail Sales and retail Sales

showed no change, Unemployment Claims slightly increased, PPI m/m improved and Prel UoM consumer Sentiment decreased. In the third week Building permits and CPI and Core CPI m/m decreased, Unemployment claims increased and Existing Home Sales and Philly Fed Manufacturing Index came above expectations. FOMC minutes gave no clear signal, being overtaken by market events. Last quarter of the month saw CB Consumer confidence and Core Durable Goods orders above expectations, much improved Preliminary GDP Q/Q, reduced unemployment claims and improved goods trade balance. Fed Called September Rate Hike into question. Jackson Hole Symposium ended the month with FED, ECB and BOE officials all saying they see inflation rising.

CNY: China Manufacturing PMI fell to two year low in July, Trade Balance and Industrial production y/y came much below expectations, with slightly improved CPI y/y. Second half of the month saw Caixin Flush Manufacturing PMI shrink to 6.5 year low. Yuan devaluation caught everyone by surprise and sent the markets into turmoil.

EurUsd: German ZEW Economic Sentiment came well below expectations, preliminary GDP q/q came below, Greek parliament approved the third bailout, French Flash Manufacturing PMI came below and German above expectations. The month ended with German Ifo Business Climate above expectations with the rise of business confidence. Eur rallied 700 points in 4 days which followed by 560 Pip retracement to 61.8 Fib.

Following 5 week closure Athens stock exchange opened on 3 August



GBPUsd : The month started with improved Manufacturing PMI, Slowed Construction PMI and Services PMI below Expectations. Manufacturing Production came as expected and interest rate remained unchanged. Average Earnings Index 3m/y and Claimant Count Change and Retail Sales came below while CPI y/y improved. Second Estimate GDP q/q came steady at 0.7%. The month ended on the hawkish note from the BOE Governor. Pound descended 480 pips in the last week of the month.



UsdJpy: The BOJ left monetary Policy Unchanged as forecast and the second half of the month saw Preliminary GDP q/q slightly above expectations.

Market volatility saw spectacular 830 pips rise in JPY with 580 pips in one day, following by UsdJpy retracement to 61.8 Fib level.



AudUsd: The month started with Retail Sales, Trade Balance and Employment Change in positive territory and interest rate remained unchanged. Unemployment Rate increased to 6.3%, NAB Business Confidence was low, Private Capital Expenditure Q/Q came well below expectations. The Question ‘How do we generate more growth’ remains.

Ausie continued it’s descent coming back to long term support trendline since Oct 2001 and 61.8 all time Fib level. Strong boolish divergence MACD. Consolidation in the last few days.



UsdCad: Trade balance, Building permits m/m and Employment Change were better than expected, Unemployment Rate remained steady at 6.8%, mid Aug saw disappointing Manufacturing Sales, followed by unchanged Core CPI m/m and improved Core Retail Sales m/m.

Cad broke through 1.3 resistance level. Once 1.33 is broken the next target could be 1.4



NzdUsd: Kiwi started with slightly improved GDT Price Index, reduced Employment Change q/q and Unemployment Rate 5.9% as expected. Mid-month saw disappointing Retail Sales q/q and improved GDT Price Index. Inflation Expectations q/q came unchanged, and Trade Balance saw some improvement. The month ended with a six year low in ANZ Business Confidence.

Following several weeks of sideways consolidation (and strong boolish MACD divergence) NZD dropped 440 pips in one day. It appears to continue it’s downward move.



Week ahead in the News

USD: ADP Non Farm Employment Change, Non Farm Employment Change, Trade Balance, Unemployment Claims, Unemployment Rate,

Care to be taken with the running positions around Non Farm .

Eur Min Bid rate;  GBP: Manufacturing, Construction and Services PMI,  Aud: Cash Rate, GDP Q/Q, Retail Sales, Trade Balance; Cad GDP m/m, Trade Balance, Employment Change, Unemployment Rate, Avey PMI; Nzd GDT Price Index.

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