Markets eye jobs amid growth jitters

Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist

Global growth concerns persist

The theme of slowing economic momentum extended beyond the US. In the euro area, the final composite PMI for June came in at 50.9, marking the first decline this year after a series of increases. This aligns with a broader pattern of weaker global data prints, raising concerns about potential further downside surprises.

Central banks navigate uncertain terrain

Fed minutes revealed most officials view current policy as restrictive, but seek greater confidence on inflation before considering rate cuts. Some noted rates might need to rise if inflation remains elevated.

Focus shifts to employment data and industrial production

Markets will turn their attention to a series of important economic releases on July 5th, with a particular focus on US employment data and European industrial production figures.

Key events to watch on July 5th (SGT times)

14:00 SGT – German Industrial Production (May)

20:30 SGT – US Employment Report (June)

20:30 SGT – Canada Labor Force Survey (June)

The US employment report will be closely watched for signs of labor market strength and potential implications for Fed policy. European industrial production data could provide insights into the region’s economic health amidst ongoing concerns about global growth momentum.

Keep an eye on EUR as US strength overshadows tepid Eurozone retail data

We anticipate a 0.1% month-over-month decline in retail sales.

Motivated more by US exceptionalism than by recent political developments, we are still slightly bearish on EUR.

Thai Baht under pressure from political uncertainty

The Bank of Thailand’s (BOT) target range will once again be exceeded due to declining raw food price inflation (driven by vegetable prices and probably reflecting waning concerns over drought conditions), which helped to offset rising fuel price inflation. Our forecast is for headline CPI inflation to drop to 0.8% y-o-y in June from 1.5% in May. We anticipate that core inflation, excluding the price of raw food and energy, will stay at 0.4% for the fifth consecutive month, in keeping with slowing wage growth and the sluggish economic recovery.

The Move Forward Party and PM Srettha’s court proceedings are expected to have their conclusions by July, therefore political commotion is expected to last long into that month. We are still slightly bearish on THB.

AUD/USD advanced to top end of the range

Table: seven-day rolling currency trends and trading ranges  

Key global risk events

Calendar: 1 – 6 July