Read full technical analysis report here
- Asian shares got off on the back foot on Friday, on track for a weekly loss, following Wall Street lower as caution reigned ahead of U.S. employment data that may help determine whether the Federal Reserve could raise interest rates as early as next month. The key focus for investors will came later in the global day, when economists expect the U.S. employment report to show that 223,000 jobs were created in July. On Thursday, U.S. jobless claims rose from the previous week, though the positive trend was intact. Though the pace of hiring has slowed from last year, it remains double the rate needed to keep up with population growth. The Labor Department will release its closely watched employment report on Friday at 1230 GMT. The Fed last month upgraded its assessment of the labor market, describing it as continuing to “improve, with solid job gains and declining unemployment.” There is, however, a lot of uncertainty surrounding July’s payrolls forecast after data vendor ADP this week reported a sharp slowdown in private sector hiring last month, even though a gauge of services sector employment from the Institute of Supply Management hit a 10-year high. The unemployment rate is forecast to hold steady at a seven-year low of 5.3 percent, near the 5.0 percent to 5.2 percent range most Fed officials think is consistent with a steady but low level of inflation. But an expected rebound in the labor force participation rate, or in the share of working-age Americans who are employed or at least looking for a job, from a more than 37-1/2 year low could push it up.
- Average hourly earnings are expected to have increased 0.2 percent last month after being flat in June, putting them about 2.2 percent above their year-ago level, but leaving them well below the 3.5 percent growth rate economists associate with full employment. Still, the rise in wages would support views that a sharp slowdown in compensation growth in the second quarter and in consumer spending in June were temporary. Wage growth has been disappointingly slow in recent months, but falling unemployment and decisions by several state and local governments to raise minimum wages have fueled expectations of a pickup.
- Australia’s central bank softened its economic outlook for 2016 to reflect slower population growth and said the effects of this year’s double interest rate cuts were still working through, suggesting it remained in a wait-and-see mode. In its 72-page quarterly report, the Reserve bank of Australia (RBA) said there is a “reasonable chance” for the local dollar to fall further once the Federal Reserve started to tighten monetary policy this year. However, it omitted a previous prediction that a further drop in the currency was both likely and necessary. The RBA cut its cash rate in February and May by a quarter point each to a record low 2.0 percent, but appears reluctant to cut further for fear of overstimulating the housing market.
- The Bank of Japan maintained its massive stimulus programme and upbeat economic assessment on Friday, reflecting its conviction that inflation will accelerate toward 2 percent price growth without additional monetary easing. This optimism was despite growing signs the world’s third largest economy contracted in the April-June quarter on soft exports and weak household spending. As widely expected, the BOJ reiterated its pledge to increase base money, or cash and deposits at the central bank, at an annual pace of 80 trillion yen ($641 billion) through purchases of government bonds and risky assets.