Markets look to jobs despite growth jitters

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

Global growth concerns persist

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

Central banks navigate uncertain terrain

Fed minutes showed that most officials see current policy as restrictive but are seeking more confidence in inflation before considering rate cuts. Some noted that rates may have to rise if inflation remains high.

Focus shifts to employment data and industrial production

On July 5, markets will turn their attention to a series of key economic releases, with a particular focus on the US employment figures and European industrial production numbers.

Important Events to Watch for on July 5 (SGT Times)

14:00 SGT – German Industrial Production (May)

20:30 SGT – US Employment Report (June)

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

The U.S. jobs report will be closely watched for signs of labor market strength and possible implications for Fed policy. Data on European industrial production could provide insight into the region’s economic health amid ongoing concerns about global growth momentum.

Watch the EUR as US strength overshadows tepid Eurozone retail data

We expect retail sales to decline by 0.1% month-on-month.

Motivated more by US exceptionalism than by recent political developments, we are still slightly pessimistic about the EUR.

Thai Baht under pressure amid political uncertainty

The Bank of Thailand (BOT) target will be exceeded again as falling unprocessed food price inflation (driven by vegetable prices and likely reflecting easing concerns about drought conditions) helped offset rising fuel price inflation. We forecast headline CPI inflation to fall to 0.8% yoy in June from 1.5% in May. We expect core inflation, excluding unprocessed food and energy, to remain at 0.4% for the fifth consecutive month, in line with slowing wage growth and sluggish economic recovery.

The Move Forward Party and PM Srettha’s trial are expected to be concluded by July, so the political commotion is expected to continue well into that month. We are still slightly pessimistic about THB.

AUD/USD rose to range high

Table: 7-Day Rolling Currency Trends and Trading Ranges

Major global risk events

Calendar: July 1 – 6