FXTRADING Economic Data Summary (Asia-Pacific | 07/24)

ECB Keeps Interest Rates Unchanged

The European Central Bank left its monetary policy unchanged at its latest policy meeting, in line with market expectations. Although interest rates were left unchanged this time, policymakers remained cautious about the inflation outlook. The ECB noted that energy prices continue to fluctuate significantly and remain above levels seen before the escalation of tensions in the Middle East. It also stated that the impact of higher energy costs on overall inflation has yet to fully materialize, meaning further observation is still needed.

From a policy perspective, the ECB reiterated that future decisions will remain data-dependent and that it will not pre-commit to any future interest rate path. The Governing Council will closely monitor whether higher energy prices feed through into wages, service prices, and core inflation. If second-round inflationary pressures intensify, policy adjustments remain an option. However, for now, the ECB is more inclined to wait for additional data to confirm the inflation trend. FXTRADING Analysis: Keeping interest rates unchanged does not mean the ECB is becoming less concerned about inflation risks. Energy prices remain a key variable for future policy, and the ECB is likely to maintain a cautious stance until inflationary pressures have clearly eased.

Canadian Retail Sales Grow Steadily

Canada's retail sales rose 1.0% month-on-month in May, with total sales reaching CAD 73.7 billion. All nine major retail sectors recorded growth. Sales at gasoline stations and fuel vendors increased by 3.1%, while motor vehicle and parts dealers posted a 0.7% gain. Excluding autos and fuel, core retail sales still increased by 0.9%, indicating that consumer spending growth became more broad-based rather than being driven solely by energy prices.

From a structural perspective, higher gasoline station sales were mainly the result of rising fuel prices, while actual fuel volumes declined by 2.7%. Overall retail sales volumes increased by 0.3%, suggesting that underlying demand for goods remained on a moderate upward trend. Preliminary data from Statistics Canada indicate that retail sales are expected to rise another 0.4% in June, pointing to continued stability in household spending toward the end of the second quarter. FXTRADING Analysis: The continued improvement in retail sales suggests that Canadian consumer spending remains resilient. As long as the labor market stays stable, consumption is likely to continue supporting Canada's economic growth.

U.S. Initial Jobless Claims Decline

U.S. initial jobless claims for the week ended July 18 fell to 187,000, down 22,000 from the previous week and well below the market expectation of 212,000. The previous week's figure was revised slightly higher from 208,000 to 209,000, while the four-week moving average also declined to 207,500, indicating that layoffs remain at relatively low levels.

Meanwhile, continuing jobless claims for the week ended July 11 fell to 1.796 million, down 2,000 from the previous week, while the insured unemployment rate remained unchanged at 1.2%. Both continuing claims and their four-week moving average moved lower, suggesting that unemployed workers continue to find new jobs relatively quickly and that the overall labor market remains resilient. FXTRADING Analysis: The U.S. labor market remains solid, with no clear signs of cooling in the near term. This should continue to support consumer spending while giving the Federal Reserve more time to assess inflation developments before deciding on its next policy move.

Australia's Employment Remains Strong

Australia added 76,300 jobs in June, far exceeding market expectations of 15,000 and accelerating from the 40,300 increase recorded in May. The labor force participation rate rose from 66.7% to 67.0%, reaching a record high, while the unemployment rate remained unchanged at 4.4%. The additional labor supply was largely absorbed by the job market, highlighting the continued strength of overall employment conditions.

Employment growth was mainly driven by an increase of 47,000 part-time positions, while full-time employment remained broadly unchanged. Meanwhile, the number of unemployed people increased by 12,700, the underemployment rate rose from 6.3% to 6.5%, and total hours worked increased by 0.2%, led by a 1.2% rise in part-time hours. FXTRADING Analysis: Strong employment growth further reflects the resilience of the Australian economy, while the increase in labor supply has helped ease short-term wage pressures. Going forward, whether the Reserve Bank of Australia adjusts policy will continue to depend primarily on whether inflation continues to moderate.

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