Yesterday, a number of US economic readings were released which helped us get a better view on the consumer demand growth in the country. The data once again confirmed the assumption that that consumption in the US remains weak and employment fails to boost it. For an example, good inventories have increased, indicating that the producers assume weak consumer demand in the future. Labor costs, one of the most important indicators of the inflationary pressures, fell from 5.4% to 0.6% in July. On the real estate market, we can notice weak growth in the mortgage applications (the MBA index), which despite the slight growth maintains down. The US currency reacted with a decrease in their figures, as the speculative support creates an impression of the Dollars stability before the release of July CPI. Today, it is worth paying attention to the producer’s price growth data and, to a lesser extent, the unemployment benefits. They are likely to become harbingers of tomorrow’s market changes of the US currency.
Oil reserves in the US declined more than expected, and the seasonal factor, worsening prospects for global demand compensate for the positive news, making investors relatively indifferent to the traditional market catalyst. On Thursday, prices added about 1 percent, but caution is trying to take a decisive course upward since the “flexibility” of the US shale industry price changes makes it difficult to forecast the growth of supply.
European and Asian indices are trading in red because of the escalation of the confrontation between the US and North Korea. The main beneficiaries of this situation are defensive assets, including the Yen, the Swiss franc, and Gold. On the wave of escaping from risks and disappointment in the US economy, the cost of an ounce of precious metal will probably continue to move towards the target at $1,300.
The Pound is relatively stable after lacklustre statistics on construction and production in the country. The fall in demand for real estate led to the fact that the pace of construction in June slowed to 0.9% with a forecast of 1.8%. The volumes of industrial and manufacturing industry have not changed in comparison with May. The data became an additional signal of the slowdown of the British economy, which will continue to put pressure on the Pound, focusing on correction to the level of 1.29.
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