China manufacturing slows but Japan bounces back

Events in Afghanistan over the weekend haven’t had the market impact we might have expected. Usually, in times of turmoil, the US Dollar strengthens, driven by nervous investors seeking the safety of US treasuries. That hasn’t happened. You could debate the reasons for that until the cows come home but the fact is that GBPUSD is above $1.38; pretty much where it was on Friday and the EURUSD rate is almost exactly where it was on Friday, just below $1.18.

Overnight news included a slowdown in the pace of Chinese industrial production and investment in fixed assets. That is kind of inevitable when we are comparing 2020 to 2021. There were spikes and troughs for obvious reasons last year and some semblance of normality is returning this year.

Interestingly though, Japanese industrial production was back up to 6.5% growth in June after a 6.5% contraction in May. This dataset is like a bucking bronco, so perhaps that is not as significant as it looks. The GBPJPY exchange rate is up to JPY 151.50 this morning. And guess what? that’s exactly where it was on Friday after a dip overnight.

CAD volatility expected on manufacturing and wholesale data

The rest of the day looks like a fairly typical quiet Monday as far as data is concerned. Zilch to look at this morning but this afternoon brings the US Empire State manufacturing sentiment index and a pair of datasets from Canada. Manufacturing sales and wholesale sales should be interesting because the forecasts are very mixed. So there is room for some Canadian Dollar reaction at 13:30 GMT. The GBPCAD exchange rate is the highest it has been since 10th August. From the current CAD 1.7380, this pair will find resistance at CAD 1.74 but could also make it through to CAD 1.7435, as it did earlier in the month without stopping.

UK hiring expected highest in 8 years

In other news, in a survey by the Chartered Institute of Personnel and Development (CIPD), they found that UK employers are planning to add staff at the fastest rate in 8 years. Only 13% of those surveyed had any plans for redundancies. I am sure Rishi Sunak is heaving a huge sigh of relief. He needs the tax income.

Have a fab week.

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