Daily Market Outlook by Kate Curtis from Trader's Way

katetrades

TradersWay.com representative
Messages
36
Forex Major Currencies Outlook (Oct 29th – Nov 2nd)

USD

New home sales for September came in at 553K vs 625K expected. This is a much weaker reading than anticipated and comes as combination of slowly rising wages, higher rates and affordability.

FED’s Mester stated that fundamentals of the US economy are strong and that there are no signs of a pending US recession. Inflation expectations have been very stable and recent US inflation readings have been categorized as pretty good. She sees the labor market as strong which in turn could bring prices up. Forecast for the FED funds rate is 3% in the long run. In her view GDP will top 3% this year and unemployment will be below 3.5% by the end of 2019. She is considered a hawk member and her comments are in line with that.

FED’s Beige Book for the month of October 2018 states that economic activity expanded with growth modest to moderate. Consumer prices rose at a modest to moderate pace while consumer spending rose at a modest pace. Wage growth was viewed mostly as modest to moderate. Manufacturers raised prices due to raw materials tariffs.

First reading of the US GDP 3Q QoQ annualized came in at 3.5% vs 3.3% estimate. Personal Consumption which contributes up to 70% of GDP came in at 4.0% vs 3.3% as expected. That is the best reading since 2014. Consumption contributed +2.69%, Investment contributed +2.03% and Government spending contributed +0.56%. On the other hand Net Exports were -1.78% which is the largest drag on GDP in the last 33 years. Trade war and strengthening USD has led to increase in import and decrease in export for the United States.

This week will be data heavy for USD. We will have data concerning PCE, FED’s preferred inflation metric, data regarding personal income and spending, manufacturing PMI and on Friday NFP and employment data along with Trade Balance data. NFP is expected to come in at 164k vs 134k previously. Headline data will provoke a knee-jerk reaction but strong emphasis should be paid on Participation Rate and Average Hourly Earnings.

Important events for USD:

Monday:
  • ---- Core PCE Price Index m/m
  • ---- Core PCE Price Index y/y
  • ---- PCE Price Index m/m
  • ---- PCE Price Index y/y
  • ---- Personal Spending m/m
  • ---- Personal Income m/m
Wednesday:
  • ---- ADP Nonfarm Employment Change
  • ---- Employment Wages q/q
Thursday:
  • ---- Markit Manufacturing PMI
  • ---- ISM Manufacturing PMI
Friday:
  • ---- Nonfarm Payrolls
  • ---- Unemployment Rate
  • ---- Participation Rate
  • ---- Average Hourly Earnings m/m
  • ---- Average Hourly Earnings y/y
  • ---- Trade Balance
EUR

Moody’s cut Italy’s credit rating on Friday 19th down to Baa3, that is a one level downgrade and still one level above junk level, but gave it a stable outlook meaning that the chance for another downgrade is low in the near future. S&P will give it’s assessment of Italy’s credit rating on Friday 26th. Current rating is BBB with a stable outlook.

EU has declined the Italian budget proposal with a 2.4% budget deficit as expected. EU Dombrovskis stated that there will be 3 weeks of intensive dialogue with Italy concerning the new budget; the ball is in Italy's court. The1 Italian Government keeps reiterating that there is no “Plan B” for the budget.

PMI readings last week were very disappointing. Germany's release came in at 52.3 vs 53.4 as expected. The manufacturing print fell down to a 28-month low while services came in at 53.6 vs 55.5 as expected and failed to offset the negativity by also falling down as the first batch of Q4 data comes in. France's prints came in mixed but the industrial print also slumped to a 25-month low coming in at 51.2 vs 52.4 as expected.

ECB’s Draghi stated in his speech that incoming data have been weaker than anticipated, that significant stimulus is still needed in order to raise inflation close to but below 2% over the medium-term and that net asset purchases will continue until the end of the year.

ECB published results of its survey of professional forecasters 2018 growth seen at 2.0%, down from 2.2%; 2019 growth at 1.8%, down from 1.9%; 2020 growth at 1.6%, unchanged.

Inflation is seen averaging 1.7% in 2018, 2019, 2020 which is unchanged. Core inflation seen at 1.1% for 2018, down from 1.2%; Core inflation seen at 1.4% for 2019, down from 1.5% and Core inflation seen at 1.7% for 2020 which is unchanged. These downgrades are in line with recent data from EU and reflect current market sentiment towards the EU economy. Those projections however are not enough to move ECB from its path.

This week we will have data regarding GDP, sentiment, confidence and Business Climate and inflation in the Eurozone as well as Manufacturing PMI for EU as a whole.

Important events for EUR:

Tuesday:
  • ---- GDP q/q
  • ---- GDP y/y
  • ---- Business Climate Indicator
  • ---- Industrial Confidence Indicator
  • ---- Services Sentiment Indicator
  • ---- Economic Sentiment Indicator
  • ---- Consumer Confidence Index
Wednesday:
  • ---- Core CPI y/y
  • ---- CPI y/y
  • ---- Unemployment Rate
Friday:
  • ---- Markit Manufacturing PMI
GBP

UK PM Theresa May has survived a meeting of the 1922 Committee and she remains a Prime Minister for now. There was no confidence vote but reports continue to point to over 40 votes of no confidence waiting in the wings - 48 are required to trigger a leadership contest. The domestic political situation is still not safe for PM May and a leadership challenge/vote of no confidence could occur at any time. If a no confidence vote is called, all serving Conservative MPs will be able to cast a vote for/against PM May. For Theresa May to be ousted, a simple majority of 159MPs would be needed. It is important to note that after a no vote is triggered it cannot be triggered again for another year, so PM May’s opponents are carefully looking to strike at the right moment and not miss the chance.

Time is slowly ticking away for the Brexit deal. But the UK and EU still have another chance for a deal, at an EU summit on the 13th and 14th of December. This could be a fall-back option to reach an agreement.

This week’s headline will be the BoE Interest Rate Decision followed by Meeting Minutes from MPC and lastly a speech given by BoE Governor Carney.

Important events for GBP:

Monday:
  • ---- Annual Budget
Thursday:
  • ---- Markit/CIPS Manufacturing PMI
  • ---- BoE Inflation Report
  • ---- BoE MPC Meeting Minutes
  • ---- BoE Interest Rate Decision
  • ---- BoE MPC Vote Cut
  • ---- BoE MPC Vote Hike
  • ---- BoE MPC Vote Unchanged
  • ---- BoE Governor Carney Speech

AUD

After last weekend’s election in Wentworth prime minister Scott Morrison lost majority in the parliament and now has a minority government. Hung parliaments can work however they present a great deal of uncertainty, and if it is one thing markets don’t like that is uncertainty. The drops in value of AUD have been welcomed by the Deputy Governor Guy Debelle. Further falls in AUD will be welcomed by the RBA and they are not going to respond to drops by any push to increase interest rates. The falling house prices and the high levels of household debt means that the Australian consumer is under pressure.

Fitch has confirmed Australia’s credit rating at AAA and gave it a stable outlook. They expect that GDP will be +3.3% for the year 2018 and then +2.8% and +2.7% for years 2019 and 2020 respectively.

This week we will have a plethora of data from Australia. We will receive data on the housing market, inflation data (including weighted median CPI and trimmed mean CPI), trade balance, consumption and data regarding prices of domestically produced goods.

Important events for AUD:

Tuesday:
  • ---- Building Approvals m/m
  • ---- Private House Approvals m/m
  • ---- RBA Assistant Governor Bullock Speech
Wednesday:
  • ---- CPI q/q
  • ---- CPI y/y
  • ---- RBA Weighted Median CPI q/q
  • ---- RBA Weighted Median CPI y/y
  • ---- RBA Trimmed Mean CPI q/q
  • ---- RBA Trimmed Mean CPI y/y
  • ---- RBA Private Sector Credit m/m
  • ---- CNY Manufacturing PMI
  • ---- CNY Non-Manufacturing PMI

Thursday:
  • ---- Exports m/m
  • ---- Imports m/m
  • ---- Trade Balance

Friday:
  • ---- Retail Sales m/m
  • ---- Retail Sales q/q
  • ---- PPI q/q
  • ---- PPI y/y
NZD

Trade balance for New Zealand in the month of September came in at -$1560m vs -$1365m as expected. Exports have risen to $4.33B vs $4.20B as expected but imports have also risen to $5.89B vs $5.60B as expected. Growing trade deficit is not a good sign, but rising exports give some relief.

This week we have a rather light calendar coming from New Zealand. There will be data on the housing market as well as Business Confidence and Activity Outlook.

Important events for NZD:

Tuesday:
  • ---- Building Consents m/m

Wednesday:
  • ---- ANZ Business Confidence
  • ---- ANZ Activity Outlook

CAD

Bank of Canada has rates interest rate by 25bp to 1.75% as expected. From the rate statement it could be assumed that they see the need for rates to turn to a neutral stance. They expect GDP to be 2.1% for years 2018 and 2019 before slowing to 1.9% for the year 2020. They have also stated that economy is near capacity and that future pace of rates depends on how well economy adjusts. Inflation has slipped to 2.2% in September but it is due to Summer spikes, it is expected that inflation remains at 2% during 2019 and all through 2020. Higher rates are needed in order for the inflation target to be achieved. BOC has acknowledged the impact that US-China trade war has on global growth and commodity prices however they stated that the global economic outlook remains solid and that global financial conditions remain accommodative.

BOC has removed the reference to “gradually” pace rate hikes, which is seen by the market as a sign the pace of rate hikes will pick up. The percentage of a back-to-back hike in December is up to 23% compared to 17% only a day ago. The odds of a hike in January are up to 70% from 67% previously.

This week there will be a lot of data coming in from Canada which can confirm hawkish stance from BOC. We will start the week with speech from Governer Poloz, then data comes out regarding GDP m/m followed by Industrial Product Price Index and Raw Material Price Index. There will be data regarding manufacturing PMI and at the end of the week we have data regarding employment and trade balance.

Important events for CAD:

Tuesday:
  • ---- BOC Govenror Poloz Speach
Wednesday:
  • ---- GDP m/m
  • ---- IPPI m/m
  • ---- IPPI y/y
  • ---- RMPI m/m
  • ---- RMPI y/y
  • ---- EIA Crude Oil Stocks Change
Thursday:
  • ---- Markit Manufacturing PMI
Friday:
  • ---- Employment Change
  • ---- Unemployment Rate
  • ---- Participation Rate
  • ---- Imports
  • ---- Exports
  • ---- Trade Balance
JPY

In his speech on Friday October 19th BOJ governor Kuroda stated that exports are on the rising trend, inflation will gradually increase toward the target of 2%, necessity of maintaining the easing programme as well as that rise in consumer prices as a trend remains on a weak note. Tokyo CPI data came in at +1.5% y/y as expected and Tokyo Core CPI came in at +1.0% as expected.

BOJ has stated their financial systems is maintaining stability as a whole. Banks have sufficient capital and capacity for absorbing loses. BOJ statements suggest that they can continue with their current easing policies.

Preliminary Nikkei Manufacturing PMI data came in at 53.1 vs 52.5 prior. This is the highest value since April. Also, this represents the 26th consecutive months where the reading is above 50. Manufacturing sector continues to give a nice boost to Japanese economy.

This week we will get information about consumption in Japan via Retail Sales as well as data about labor market via Unemployment Rate and Jobs to Applicants Ratio.

Important events for JPY:

Monday:
  • ---- Retail Sales m/m
  • ---- Retail Sales y/y
Tuesday:
  • ---- Unemployment Rate
  • ---- Jobs to Applicants Ratio
Wednesday:
  • ---- Industrial Production m/m
  • ---- Industrial Production y/y
  • ---- BoJ Monetary Policy Statement
  • ---- BoJ Outlook Report
  • ---- BoJ Interest Rate Decision
  • ---- BoJ Press Conference
  • ---- Consumer Confidence Index
Thursday:
  • ---- Nikkei Manufacturing PMI
  • ---- 10-Year JGB Auction
CHF

Switzerland’s September M3 money supply came in at +2.3% vs +2.5% y/y prior. This data is considered low tier and does not have a huge impact on CHF, however it represents a general gauge of broad money in Switzerland’s economy.

This week we will have data on inflation and consumption from Switzerland along with a survey of Consumer Climate and composite economic outlook for the next six months in the form of the KOF Economic Barometer. SNB Chairman Jordan will also give a speech on the impact of protectionism on monetary policy.

Important events for CHF:

Tuesday:
  • ---- KOF Economic Barometer
Wednesday:
  • ---- SNB Chairman Jordan Speech
Thursday:
  • ---- Consumer Climate
  • ---- CPI m/m
  • ---- CPI y/y
Friday:
  • ---- Retail Sales y/y
 

katetrades

TradersWay.com representative
Messages
36
USD

PCE Core for September came in at +2% y/y as expected. Core PCE came in at +0.2% m/m vs +0.1% as expected. Personal income came in a bit softer at +0.2% vs +0.4% expected. Inflation continues along FED’s preferred path, but sluggish personal income growth gives reason for concern.

ADP Employment data for the month of October came in at 227k vs 189k. That is yet another strong month for US employment signalling a very strong labor market. Additionally, the US Q3 employment cost index came in at +0.8% vs +0.7% as expected. Wages rose 3.1% y/y which is the biggest jump in the last 10 years. FED will be very happy with this wage related data and can view them as a clear sign to proceed with their rate hike policies.

NFP figures came in at 250k vs 200k as expected. Unemployment stayed at 3.7% as expected while both participation rate and average hourly earnings y/y beat the expectations. Participation rate came in at 62.9% while the average hourly earnings y/y came in at 3.1%. Additional strong labor reports coming in from the US will keep FED on rate hiking path. The implied odds of a rate hike in December rose to 80% from 74%.

Trade balance data came in at -$54.0B vas -53.6B as expected. The trade deficit is getting bigger and is slowly approaching a 10 year-high. US-China Sept goods trade deficit $40.24B vs $38.57B previous month which is a record high. Small positives from this report are that Exports rose 1.5% and that overall trading volume has increased.

This week the most important event is the Mid-Term Elections on November 6th. It is expected that Democrats will take the House and Republicans will retain the Senate. This scenario is priced in by the market. If the Democrats lose the House, the dollar will rally on the assumption that president Trump will become even more aggressive, with another tax cut and more deregulation. We will have Rate Decision, rate hike is expected in December, however the FOMC Statement may provide us with more information on monetary policy. On Friday we will have PPI data.

Important events for USD:

Monday:
  • ---- Markit Services PMI
  • ---- Markit Composite PMI
  • ---- ISM Non-Manufacturing PMI
  • ---- ISM Non-Manufacturing Employment
Tuesday:
  • ---- Mid-Term Elections
Thursday:
  • ---- Fed Interest Rate Decision
  • ---- FOMC Statement
Friday:
  • ---- PPI m/m
  • ---- PPI y/y
  • ---- Core PPI m/m
  • ---- Core PPI y/y
EUR

Last Friday S&P kept Italy’s rating at BBB but they lowered the outlook from stable to negative. Affirmation of this rating helped Italian bonds rally on Monday which in turn is helping to lift sentiment in equities in the region as well. The 5y-5y inflation swap is one of the key gauges used by markets on long-term Eurozone inflation expectations; it is ECB president Dragghi’s preferred inflation measure and has fallen to 1.6575%, the lowest it has been in almost a year thus adding more worries for the EUR.

Flash GDP for Q3 in the Eurozone came in at +0.2% m/m vs +0.4% m/m as expected and +1.7% y/y vs +1.8% y/y as expected. Economic, Industrial and Services confidence as well as Business Climate indicator came in weaker than expected. Eurozone economic growth has slowed to its weakest since Q4 of 2014.

Unemployment in the Eurozone came in at 8.1% as expected which further shows tightening of the labor market. Eurozone CPI came in at +2.2% y/y vs +2.1% y/y as expected and Core CPI came in at +1.1% y/y vs 1.0% y/y as expected. Inflation came a bit better than expected but still below the targeted level of 2%.

This week there will be meetings in the Eurozone that may shine light on how the leaders view the weaker-than-expected data from the Eurozone. Also, we will see additional data in terms of services, changes in prices of manufactured goods (PPI) and consumption (Retail Sales).

Important events for EUR:

Monday:
  • ---- Eurogroup Meeting
Tuesday:
  • ---- Economic and Financial Affairs Council Meeting
  • ---- Markit Services PMI
  • ---- Markit Composite PMI
  • ---- PPI m/m
  • ---- PPI y/y
Wednesday:
  • ---- Retail Sales m/m
  • ---- Retail Sales y/y
GBP

Fitch has affirmed UK’s credit rating at AA with a negative outlook because of the uncertainty around the Brexit process. Manufacturing PMI for the month of October came in at 51.1 vs 53.0 as expected with prior reading revised to 53.6. This reading is weakest since July 2016. New orders and employment fell for the first time after the Brexit vote.

BOE left the bank rate unchanged at 0.75% and all 9 members of the MPC voted for no change in the rate as expected. The tone of the statement was hawkish as they foresee CPI at 2.1% over 1 and 2 -year horizon and at 2.0% over 3-year horizon.

Secretary of state for exiting the European Union Dominic Raab implied that he expects a Brexit deal to be done by November 21st. There is a talk that a deal on financial services has been struck between EU and UK. The report said that UK Financial services companies will have continued access to European markets after the Brexit. Financial services represent an important part of UK’s economy. This has given GBP a very nice boost. BOE Governor Carney stated that “no deal, no transition” is unlikely, but we must prepare.

This week we will expect more news on the Brexit process and confirmation whether a deal on financial services has been struck. Additionally, we will have data on housing, industrial and manufacturing production as well as trade balance and value of company’s expenditure in the private sector. On Friday we will receive information about GDP.

Important events for GBP:

Monday:
  • ---- Markit/CIPS Services PMI
Wednesday:
  • ---- Halifax HPI m/m
  • ---- Halifax HPI y/y
Friday:
  • ---- Industrial Production m/m
  • ---- Industrial Production y/y
  • ---- Manufacturing Production m/m
  • ---- Manufacturing Production y/y
  • ---- Trade Balance
  • ---- Trade Balance Non-EU
  • ---- Business Investment q/q
  • ---- Business Investment y/y
  • ---- GDP q/q
  • ---- GDP y/y
AUD

CPI data for Q3 came in at 0.4% q/q vs 0.5% q/q as expected and 1.9% y/y as expected. Trimmed mean CPI came in at 0.4% q/q and 1.9% as expected. A bit softer reading of CPI weighed down on AUD in the markets and it will give a headache to RBA whose core mandate is to maintain a trimmed mean inflation between 2 and 3%. The main problem for inflation in AUD is the housing market which again came in weaker than expected in September. Building approvals came in at 3.3% m/m vs 3.8% m/m expected and -14.0% y/y vs -9.0% y/y.

Trade Balance for month of September came in at A$3017M vs A$1700M as expected. Exports rose 1% and imports fell 1% compared to the last month. Export prices rose 3.7% vs 2.2% as expected while import prices rose to 1.9% vs 1.0% as expected.

PPI q.q for Q3 came in at 0.8% vs 0.3% in Q2. This is a very healthy rise compared to the previous quarter and it helped AUD in its big leap against the USD at the end of the previous week along with positive talks between Presidents Xi and Trump on US – China trade war.

This week’s events are headlined by the RBA Interest Rate Decision. Rates should stay on hold, however RBA Rate Statement and RBA Monetary Policy Statement can provide us with more information on RBA’s views regarding recent AUD strength and whether there is a need for them to act. There will also be data on the Home Loans in Australia as well as data regarding Trade Balance, inflation and changes in prices of manufactured goods from China.

Important events for AUD:

Tuesday:
  • ---- RBA Interest Rate Decision
  • ---- RBA Rate Statement
Thursday:
  • ---- Trade Balance (China)
  • ---- Imports (China)
  • ---- Exports (China)
Friday:
  • ---- RBA Monetary Policy Statement
  • ---- Home Loans m/m
  • ---- CPI m/m (China)
  • ---- CPI y/y (China)
  • ---- PPI y/y (China)
NZD

This week we have not had many data coming from New Zealand but NZD strengthened significantly against the USD on the back of AUD’s rise. The ANZ business confidence for the month of October came in at -37.1 versus -38.3 last month while the activity outlook came in at 7.4 vs 7.8 from last month.

Headlining this week will be the RBNZ Interest Rate Decision followed by Rate Statement, Monetary Policy Statement and Press Conference. RBNZ released its statement in August stating that it was going to keep rates lower for longer. However, since then the data has been pretty good so the Statement and Press Conference will show whether they are prepared to reverse their dovish stance. Additionally, there will be data on Commodity Price Index, GDT auction and employment.

Important events for NZD:

Monday:
  • ---- ANZ Commodity Price Index m/m
Tuesday:
  • ---- GDT Price Index
  • ---- Unemployment Rate
  • ---- Participation Rate
  • ---- Employment Change q/q
Wednesday:
  • ---- RBNZ Interest Rate Decision
  • ---- RBNZ Rate Statement
  • ---- RBNZ Monetary Policy Statement
  • ---- RBNZ Press Conference
CAD

BOC governor Poloz has reiterated the need for rates to rise to neutral. Canada’s economy is operating at near capacity according to him and policy remains stimulative. Senior Deputy Governor Wilkins said that policy will be data-dependent and that income growth will strengthen to the 3 - 4 % range. Incomes will grow along with interest rates according to her and she sees this period as best for raising rates. Hawkish statements by both Governor Poloz and Deputy Wilkins.

Canadian GDP came in at 0.1% m/m vs 0.0% m/m as expected. Year over year GDP data came in at 2.5% vs 2.4% as expected. Mining, quarrying and oil and gas extraction sectors led the way with +0.9% while Manufacturing dropped down -0.6%.

Employment change in Canada for the month of October came in at 11.2k vs 15.0k as expected. The unemployment rate fell to 5.8% vs 5.9% as expected. Participation came in at 65.2% vs 65.4% prior month. A big miss was in hourly earnings for permanent employees - it came in at 1.9% y/y vs 2.3% y/y as expected. This soft report overall will have negative impact on CAD. Trade balance for the month of September came in at -$0.42B vs +$0.20B as expected. Not high impact data but it adds to the worries about CAD.

This week we will have a speech from Governor Poloz as well as housing data.

Important events for CAD:

Monday:
  • ---- BoC Governor Poloz Speach
Tuesday:
  • ---- Building Permits m/m
Wednesday:
  • ---- Ivey PMI
  • ---- EIA Crude Oil Stocks Change
Thursday:
  • ---- CHMC Housing Starts
  • ---- New Housing Price Index m/m
JPY

Unemployment rate for the month of September came in at 2.3% vs 2.4% as expected. This is the lowest unemployment rate since October, 1992. Job to applicant ratio came in at 1.64 vs 1.63 as expected. Industrial production for the month of September came in at -1.1%m/m vs -0.3% m/m expected and -2.9% y/y vs -2.1% as expected.

The Bank of Japan keeps monetary policy remains steady as expected and maintains a short term interest rate target at -0.1%. Median core CPI forecast for 2018/19 at 0.9% vs 1.1% in July; median core CPI forecast for 2019/20 at 1.4% vs 1.5% in July; median core CPI forecast for 2000/21 at 1.5% vs 1.6% in July; median real GDP forecast for 2018/19 at 1.4% vs 1.5% in July; median real GDP forecast for 2019/20 at 0.8% as in July; median real GDP forecast for 2020/21 at 0.8% as in July. Downgrades on Core CPI show that inflation target of 2% is still out of reach for the Japanese economy. BOJ Governor Kuroda stated that impact of US – China trade has not had a big impact on Japanese economy thus far.

This week we will have Monetary Policy Meeting Minutes as well as a speech from governor Kuroda for more information regarding monetary policy. We will also have information about household spending as well as Current Account.

Important events for JPY:

Monday:
  • ---- BoJ Monetary Policy Meeting Minutes
  • ---- BoJ Governor Kuroda Speach
  • ---- Nikkei Services PMI
Tuesday:
  • ---- Household Spending y/y
  • ---- Household Spending m/m
Thursday:
  • ---- Current Account
  • ---- Adjusted Current Account
CHF

KOF leading indicator, which measures overall economic activity in the Swiss economy, came in at 100.1 vs 101.0 expected. The Swiss Franc continues to trade at levels which SNB sees as very comfortable at the moment.

CPI data came in at 0.2% m/m vs 0.1% as expected and 1.1% y/y as expected with prior reading showing 1.0% y/y. Core CPI came in at 0.4% vs 0.5% as expected with prior reading showing 0.4%. This is a slight improvement to headline CPI reading compared to the previous month but the core measurement remained steady. Manufacturing PMI data came in at 57.4 vs 58.7 as expected with the prior reading showing 59.7. This is lowest reading since July 2017 and shows a slow down in factory activity. Retail sales for the month of September came in at -2.7% y/y vs -0.1% y/y as expected.

This week’s data from Switzerland will concern employment.

Important events for CHF:

Thursday:
  • ---- Unemployment rate
 

katetrades

TradersWay.com representative
Messages
36
USD

Democrats have taken the control of the House of the Representatives for the first time since 2010. Republicans have retained the control of Senate as was expected. A divided Congress will present a hindrance for president Trump and his legislative actions. There may be strong opposition from Democrats in the House regarding further fiscal stimulus and tax reforms.

FED has kept interest rate at 2 – 2.25% as expected. The FOMC statement had a hawkish tone. Strength of labour market was emphasized as well as the strongest wage growth in the past decade. Based on their tone, the market is expecting a rate hike at December’s meeting of 25bp with about 80% being priced in. The only change in the FOMC statement is that Business Investment is now described as moderate, which as a downgrade from the stable as was stated in September’s meeting.

This week we will get data regarding inflation (CPI) and real earnings m/m, on Thursday we will have data regarding consumption in USA (Retail Sales), data from Philadelphia Fed regarding Manufacturing and Employment and data on Business Inventories, while on Friday we will have data regarding Industrial production.

Important events for USD:

Tuesday:

  • ---- Federal Budget Balance
Wednesday:
  • ---- CPI m/m
  • ---- CPI y/y
  • ---- Core CPI m/m
  • ---- Core CPI y/y
  • ---- Real Earnings m/m
Thursday:
  • ---- Retail Sales m/m
  • ---- Core Retail Sales m/m
  • ---- Retail Control m/m
  • ---- Philadelphia Fed Manufacturing Index
  • ---- Philadelphia Fed Employment
  • ---- Business Inventories m/m
Friday:
  • ---- Fed Industrial Production m/m
EUR

Italy will have to send a new budget draft by November 13th. EU’s Moscovici stated that he expects a strong, precise answer from Italy on budget by November 13th. He stated that further steps will depend on Italy’s response and reiterated that EU’s fiscal rules must be respected. He also added that sanctions can be applied if there is no compromise. Italy insists that maximum deficit will be 2.4% while EU sees it at 2.9%.

Final services PMI for the month of October came in at 53.7 vs 53.3 preliminarily and Composite PMI came in at 53.1 vs 52.7 preliminarily. Spain led the way and was followed by Germany. Data from France was a bit weaker and Italy’s PMI came below 50, indicating contraction. This is a mildly bullish data that can signal ECB that they are on the right track with their policies.

This week we will have information about the economic sentiment in the EU, GDP flash release for Q3, data on Industrial Production and Trade balance and finally on Friday inflation data will be out.

Important events for EUR:

Tuesday:

  • ---- ZEW Economic Sentiment Indicator
Wednesday:
  • ---- Industrial Production m/m
  • ---- Industrial Production y/y
  • ---- GDP q/q
  • ---- GDP y/y
Thursday:
  • ---- Trade Balance
Friday:
  • ---- CPI m/m
  • ---- CPI y/y
  • ---- Core CPI m/m
  • ---- Core CPI y/y
GBP

The Brexit saga continues to dominate news coming from the UK. After Cabinet’s meeting on Tuesday PM May’s spokesman expressed his confidence that the deal will be reached and that Britain will aim to reach a deal as soon as possible but not at any cost. BBC has obtained a document in which it states that on November 19 the withdrawal agreement and future framework will be put to parliament by way of a statement from Raab.

Preliminary GDP data for Q3 came in at 0.6% q/q as expected compared to 0.4% q/q for the Q2, 1.5% y/y as expected and 0.0% m/m vs 0.6% m/m as expected. Total business investment came in at -1.9% y/y vs -0.1% y/y as expected. Private investment continues to be a drag on the UK economy. Private consumption came in at 0.5% as expected while Government consumption rose to 0.6% q/q. Exports have missed expectations but imports also fell so the overall effect of trade on GDP is positive.

This week there is a lot on calendar from GBP. Aside from the Brexit news which should be closely followed we will have data on employment and wages, PPI, inflation and consumption in the UK.

Important events for GBP:

Tuesday:

  • ---- Average Weekly Earnings, Regular Pay y/y
  • ---- Average Weekly Earnings, Total Pay y/y
  • ---- Unemployment Rate
  • ---- Claimant Count Change
Wednesday:
  • ---- PPI Input m/m
  • ---- PPI Input y/y
  • ---- PPI Output m/m
  • ---- PPI Output y/y
  • ---- CPI m/m
  • ---- CPI y/y
  • ---- Core CPI y/y
  • ---- RPI m/m
  • ---- RPI y/y
  • ---- HPI y/y
Thursday:
  • ---- Retail Sales m/m
  • ---- Retail Sales y/y
  • ---- Core Retail Sales m/m
  • ---- Core Retail Sales y/y
AUD

Services PMI for China came in at 50.8 vs 53.1 prior. Composite PMI for China came in at 50.5 vs 52.1 prior. These numbers still show expansion in the Chinese economy (value over 50 represents expansion) however Services PMI hits its lowest level since September 2017 while Composite PMI fell to lowest level since June of 2016. This can have negative impact on the AUD and Australian economy in general.

RBA has kept the interest rate at 1.5% as expected. In the statement following the interest decision - low rates support the economy. Further progress on unemployment and inflation will be gradual. It is expected that unemployment will fall to 4.75% in 2020 and central scenario for inflation is 2.25 percent in 2019, bit higher in 2020. GDP will average 3.5% in 2018 and 2019 before slowing down in 2020. The outlook for the labour market remains positive and wage growth will pick up over time. Board members of RBA stated in the Statement on Monetary Policy that they do not see a strong case for a near-term change in the cash rate. They forecast inflation at 1.75% in December of 2018, at 2% in June 2019 and at 2.25% from December 2019 to December 2020.

This week we will get data regarding wages and employment from Australia. Since employment and inflation represent the core of RBA mandate these data will be closely monitored.

Important events for AUD:

Wednesday:

  • ---- Wage Price Index q/q
  • ---- Wage Price Index y/y
Thursday:
  • ---- Employment Change
  • ---- Participation Rate
  • ---- Unemployment Rate
  • ---- RBA Deputy Governor Debelle Speech
NZD

Export commodity index prices published by ANZ showed a drop of 2.4% m/m and 5.6% y/y. This is the 5th month in a row of falling export prices. The latest New Zealand dairy auction showed prices down -2.0% with an average selling price of $2851 per tonne. This marks the 11th month in a row of falling or flat dairy prices.

The employment report for Q3 has smashed all expectations. The unemployment rate came in at 3.9% vs 4.4% as expected. Employment change came in at 1.1% q/q vs 0.5% q/q as expected and 2.8% y/y vs 2.0% y/y as expected. Participation rate rose to 71.1% vs 70.9% as expected. Average hourly earnings came in at 1.4% vs 0.8% as expected. A very strong report overall with all major categories beating expectations.

RBNZ decided to leave the OCR at 1.75% as expected. They now see the rate hike in Q2 of 2020 vs Q3 2020 as before. They see average OCR in Q2 of 2020 at 1.8% and up to 2.41% in December 2021. Employment is around maximum sustainable level. CPI inflation remains below targeted level of 2% so further supportive monetary policy is needed. GDP is expected to rise in 2019 and Governor Orr said that he would consider a rate cut in the event GDP falls below expectations. Emphasis is now switched over to GDP data.

This week we will have light economic calendar for NZD. Food Price Index will be only notable event.

Important events for NZD:

Monday:

  • ---- Food Price Index m/m
CAD

Governor Poloz stated that BOC has a positive outlook and believes that they are normalising at the right pace. He voiced his concerns regarding trade risks which he considers significant.

Ivey PMI data for the month of October came in at 61.8 vs 50.4 the previous month. Ivey PMI captures business conditions in Canada and after the drop in the previous month this is a quite nice comeback. Employment moved up to 54.3 from 51.6 last month, Inventories climbed to 60.9 from 51.8 last month and Prices rose to 72.6 vs 68.8 last month.

Keystone XL pipeline (Canada to Texas oil pipeline) has been blocked by Federal Court. This pipeline is crucial for Canadian Oil exports. In addition to that oil prices are falling and are closing on the year’s lows devaluing CAD further. Considering the light economic calendar for the next week from Canada this can weigh down heavily on the CAD.

This week we will have information from OPEC regarding oil as well as manufacturing sales from Canada.

Important events for CAD:

Tuesday:

  • ---- OPEC Monthly Market Oil Report
Friday:
  • ---- Manufacturing Sales m/m
JPY

In his speech on Monday BOJ Governor Kuroda stated that the easing program will continue until a targeted inflation of 2% is reached. He added that BOJ is aware that continued easing policy affects the financial system stability and financial intermediation.

Overall household spending came in at -1.6% y/y vs +1.5% as expected. This is a big miss especially considering that the prior reading was +2.8%. A drop in household spending will have negative impact on inflation in Japan making it harder to reach the target of 2%. The time horizon needed for reaching inflationary goal is widening.

This week we will have data for Q3 Preliminary GDP as well as data for industrial production.

Important events for JPY:

Wednesday:

  • ---- GDP q/q
  • ---- GDP y/y
  • ---- GDP Price Index y/y
  • ---- Industrial Production m/m
  • ---- Industrial Production y/y
CHF

SNB Governor Jordan reiterated his stance that FX market is still fragile and that they are prepared to intervene if the need arises. SNB looks like it is happy with current CHF valuation and will look toward normalising their monetary policy after the ECB does. SNB’s Maechler stated that it is too early for tightening. He also evaluated economic developments as favourable but inflation pressures remain low.

This week we will have data regarding producer price index.

Important events for CHF

Tuesday:

  • ---- PPI m/m
  • ---- PPI y/y
 

katetrades

TradersWay.com representative
Messages
36
Forex Major Currencies Outlook (Nov 19 – Nov 23)

USD

CPI data for the month of October came in at 2.5% y/y as expected with the prior reading showing 2.3% y/y. CPI ex-food and energy came in a bit weaker at 2.1% y/y vs 2.2% y/y as expected. On the monthly level, CPI came in at 0.3% m/m as expected with the prior reading showing 0.1% CPI ex- food and energy came in at 0.2% m/m as expected. Figures came in as expected with a steady rise from the previous reading. Supportive data for the greenback.

FED Chairman Powell continued to boost the greenback with his comments. He reiterated that the US economy remains strong and that the FED will continue to hike rates. The central bank’s goal is to extend the recovery, expand the economy and to keep inflation and unemployment low. He identified three general risks: slowing growth from abroad, fading fiscal simulus and lagged effect of past rate hikes on the economy.
This week we will get housing data from the US as well as data on Durable Goods Orders, which will be the first input for Q4 GDP and Markit PMIs. Thanksgiving is on Thursday so liquidity in the markets will be lower.

Important events for USD:

Tuesday:

  • ---- Housing Starts
  • ---- Building Permits
Wednesday:
  • ---- Durable Goods Orders m/m
  • ---- Core Durable Goods Orders m/m
  • ---- Durable Goods Orders excl. Defense m/m
  • ---- Existing Home Sales Existing Home Sales m/m
  • ---- Michigan Consumer Sentiment
  • ---- Michigan Consumer Expectations
Friday:
  • ---- Markit Manufacturing PMI
  • ---- Markit Services PMI Markit Composite PMI
EUR

Early on Monday morning during the London Session EURUSD has fallen bellow 1.13 mark for the first time since June 2017. 1.13 is an important technical level and the break of it was caused by uncertainty regarding the Italy’s budget. However, the break came during very thin liquidity in the markets as banks in the US were closed due to Veteran’s Day. The EU will publish an opinion on Italy’s revised budget on November 21 thus prolonging the uncertainty. ECB's Draghi said that high debt countries shouldn't increase debt further and that all countries should respect the rules of the European Union thus sending strong message to Italy.

Germany ZEW survey of current situation came in at 58.2 vs 65.0 as expected a big drop in the current condition sentiment. ZEW data says that industrial production, retail sales and foreign trade all point toward a weak development of the German economy in Q3. They also mention that survey participants do not see any improvement of that in the coming six months. A bleak picture for the EUR and Eurozone.

Preliminary GDP data for Germany in Q3, leading economy in the EU, came in at -0.2% q/q vs -0.1% q/q as expected. The German economy is going into contraction for one quarter is a case for concern for EUR. German economic minister Halt said that problems in the German economy are only temporary and attributed GDP results to the car industry’s emission problem. Bundesbank came in with their views on future risks and assessed them as skewed to the downside. Second reading of the EU Q3 GDP came in at 0.2% m/m as expected. Final CPI for the month of October came in at 0.2% m/m as expected, 2.2% y/y as expected with Core CPI coming in at 1.1% as expected. All figures came in as expected and in line with preliminary readings.

This week we will see a decisions of European Commission regarding Italian Budget. We will also have an overview of financial markets and economic developments in the form of ECB Monetary Policy Meeting Accounts, and on Friday we get second reading from Germany regarding Q3 GDP as well as Markit PMIs.

Important events for EUR:

Monday:

  • ---- Eurogroup meeting
  • ---- Current Account
Wednesday:
  • ---- European Commission decision on Italy
Thursday:
  • ---- ECB Monetary Policy Meeting Accounts
Thursday:
  • ---- ECB Monetary Policy Meeting Accounts
Friday:
  • ---- GDP q/q (Germany)
  • ---- GDP y/y (Germany)
  • ---- Markit Manufacturing PMI
  • ---- Markit Services PMI
  • ---- Markit Composite PMI
GBP

Talks about Brexit within the UK Government are getting out of hand. Supporters of a hard Brexit reject any compromise that PM May could offer. Pro-Remain politicians start to voice their opinions especially after UK Transport Minister and pro-Remain politician Jo Johnson resigned last Friday. BOE Board member Broadbent stated that Brexit deal is still the most likely outcome and that fair amount of uncertainty would disappear with a Brexit deal. A new Brexit Summit will be held in Brussels on November 25 and 26. On Thursday UK Brexit Secretary Dominic Raab resigned stating that he cannot support indefinite backstop arrangement as the main reason. This has sent pound sinking almost 300 pips in the first couple of hours after the announcement. Due to the resignation markets have now priced out a rate hike by BOE.

Average Earnings came in at 3.0% as expected vs 2.7% prior. This is a strongest reading since Q3 2015. Average Earnings excluding Bonus came in at 3.2% vs 3.1% as expected. This is the strongest rise since Q4 2008. Unemployment ticked up to 4.1% vs 4.0% as expected and employment change was a bit softer than expected, but overall this is a very good report from the UK showing strength of UK economy.

CPI for month of October came in at 0.1% m/m vs 0.2% m/m as expected. Core CPI came in at 1.9% y/y as expected a slight tick down on the monthly level but the core CPI remains steady at 1.9% which is a good sign.

AUD

Wage price index data for Q3 came in at 0.6% q/q as expected and 2.3% y/y as expected with the prior reading showing 2.1%. This is the best y/y reading in the last 3 years. Wage growth is slowly picking up, RBA would like it to be faster to increase spending and thus economic growth.

Labour market continued strong with data concerning Employment Change coming in at 32.8k vs 20k as expected. Unemployment rate came in at 5.0% while it was expected for it to tick up to 5.1%. Full Time Employment Change came in at 42.3k which is a very healthy number. Participation rate also rose to 65.6%. Another stark labour report coming in from Australia showing that RBA is fulfilling one half of its mandate.

This week we will have RBA Meeting Minutes from previous meeting and markets will be on the look for any change in the language by RBA. Later on, there will be a speech by Governor Lowe so we can gain more insight on how RBA evaluates new employment and wage data and how it will influence their policies for the future.

Important events for AUD:

Tuesday:

  • ---- RBA Meeting Minutes
  • ---- RBA Governor Lowe Speach
NZD

Business NZ Manufacturing PMI for the month of October came in at 53.5 vs 51.7 prior month. Reading shows improvement in sentiment among manufacturers with rise in 4 out of 5 sub-indexes. NZD is still nicely positioned and underpinned with strong employment data from the previous week. GDP figures are the main concern now since Governor Orr said that he would consider a rate cut in the event GDP falls below expectations, therefore other data may have subdued effect on NZD.

This week we will have GDT auction and data regarding consumption.

Important events for NZD:

Tuesday:

  • ---- GDT Price Index
Sunday:
  • ---- Retail Sales q/q
  • ---- Core Retail Sales q/q
  • ---- Retail Sales y/y
CAD

Saudi Arabia decided to cut the production of oil by 500k bpd from December which stopped oil’s month-long free fall. During the OPEC’s meeting that was held over the weekend it was reckoned that oil supply in 2019 could be cut by 1.4m bpd. December 6th meeting in Vienna will be crucial for oil and CAD as well.

This week we will have speeches by Deputy Governors Wlilkins and Lane, CAD has been hit hard last week with falling oil prices and issues with USMCA agreement. Inflation and consumption data will be published on Friday.

Important events for CAD:

Tuesday:

  • ---- BoC Senior Deputy Governor Wilkins Speech
  • ---- BoC Deputy Governor Lane Speech
Wednesday:
  • ---- Wholesale Trade m/m
Friday:
  • ---- CPI m/m
  • ---- CPI y/y
  • ---- Core CPI m/m
  • ---- Core CPI y/y
  • ---- Retail Sales m/m
  • ---- Core Retail Sales m/m
JPY

Preliminary GDP data for Q3 in Japan came in at -0.3% q/q as expected. GDP business spending y/y for Q3 came in at -0.2% q./q vs 0.2% q/q as expected. Data doesn’t paint a bright picture for the economy of Japan. Economy minister Motegi attributed bad data to natural disasters (devastating floods and earthquakes) and falling exports and stated that Japan’s is recovering moderately.

This week we will have data on Trade Balance from Japan as well as inflation on national level. Monetary Policy Statement will be published on Tuesday with more guidance on BOJ’s thinking.

Important events for JPY:

Monday:

  • ---- Trade Balance
  • ---- Imports y/y
  • ---- Exports y/y
Tuesday:
  • ---- BOJ Monetary Policy Statement
Thursday:
  • ---- CPI y/y
  • ---- Core CPI y/y
  • ---- CPI excl. Food and Energy
CHF

PPI data came in at 0.2% m/m vs 0.1 m/m as expected with prior reading showing -0.2% and 2.3% y/y vs 2.2% as expected and prior reading of 2.6%. Slightly better data on monthly data and yearly data is lagging behind prior indicating that inflationary pressures are beginning to run into obstacles. SNB remains confident with current monetary policy and will continue normalisation only after ECB. So far, they seem satisfied with EURCHF ranging from 1.12 to 1.14.

This week we will have data on Trade Balance from Switzerland as well as industrial production.

Important events for CHF:

Tuesday:

  • ---- Trade Balance Imports y/y Exports y/y
Thursday:
  • ---- Industrial Production y/y
 

katetrades

TradersWay.com representative
Messages
36
Forex Major Currencies Outlook (Nov 26 – Nov 30)

USD

Previous Friday FED members Clarida, Harker and Kaplan emphasized the slowdown in global growth and stated that there is no rush for FED to raise rates. December’s hike is not affected by their statements but odds for three rate hikes in 2019 are now lower. Atlanta FED lowered its forecast for Q4 GDP to 2.5% from 2.8% citing falling inventory investment and real residential investment. The report issued stated that FED has hinted that they could pause the rate hike cycle in the Spring of 2019.

US Durable Goods Orders came in at -4.4% vs -2.6% as expected. That is the largest drop in 15 months. Durable Goods ex Transportation came in at 0.1% vs 0.4% as expected and Capital goods orders non-defense ex-air came in at 0.0% vs 0.2% as expected. Every category came in lower than expected for a poor reading which will certainly catch FED’s attention.

This week we will have housing data, second reading of the Q3 GDP, inflation (PCE, FED’s preferred), FOMC minutes and G20 Summit on November 30 – December 1.

Important events for USD:

Tuesday:
  • ---- HPI m/m
  • ---- HPI y/y
  • ---- Consumer Confidence Index
Wednesday:
  • ---- GDP q/q
  • ---- Goods Trade Balance
  • ---- New Home Sales
  • ---- New Home Sales m/m
  • ---- FED Chair Powell Speech
Thursday:
  • ---- Core PCE Price Index m/m
  • ---- Core PCE Price Index y/y
  • ---- PCE Price Index m/m
  • ---- PCE Price Index y/y
  • ---- Personal Spending m/m
  • ---- Personal Income m/m
  • ---- Initial Jobless Claims
  • ---- Pending Home Sales m/m
  • ---- Pending Home Sales y/y
  • ---- FOMC Minutes
EUR

The EU commission has rejected Italian budget as was expected. The EU sees Italy's budget as a serious non-compliance risk. EDP (Excessive Deficit Procedure) against Italy is warranted. Policymakers acknowledged that data was weaker than expected but data remains in line with expansion and gradually rising inflationary pressures. A remark was made that the number of arguments pointed towards risks to growth tilting to the downside. ECB still views the rate hike as “through the summer of 2019” but markets have slowly priced it out from the Q4 next year. Preliminary Manufacturing PMI on Friday came in at 51.5 vs 52.0 signalling additional slowdown in the EU zone. This is a 32-month low and these PMI readings account to GDP growth of 0.3% in Q4 according to Chris Williamson, the IHS/Markit chief business economist.

This week we will have data on business conditions, inflation and unemployment in EU and Germany, as well as data regarding consumption in Germany.

Important events for EUR:

Monday:
  • ---- IFO Business Climate (Germany)
Thursday:
  • ---- Unemployment Rate (Germany)
  • ---- CPI m/m (Germany)
  • ---- CPI y/y (Germany)
  • ---- Services Sentiment Indicator
  • ---- Economic Sentiment Indicator
  • ---- Consumer Confidence Index
Friday:
  • ---- Retail Sales m/m (Germany)
  • ---- Retail Sales y/y (Germany)
  • ---- Unemployment Rate
  • ---- CPI y/y
  • ---- Core CPI y/y
GBP

The Brexit saga continues and PM May will not get a chance to renegotiate the terms of the deal with EU over the coming weekend. She will meet with Juncker only after the EU meeting. The focus has now moved to Gibraltar, the lonely outpost of Britain on the Iberian Peninsula. On Thursday, Bloomberg obtained a document showing that further Brexit agreements have been made. The EU has admitted the UK’s independent trade policy and both sides are committed to getting rid of backstop on the Irish border. This news sent GBPUSD about 150 pips up and over 1.29. Move up was pushed also by the thin liquidity in the markets due to the Thanksgiving holiday. Issues of fisheries, environmental standards and Gibraltar are still to be resolved before the Summit on Sunday. Spain threatened to place a veto on the Brexit agreement if the two sides cannot reach an agreement. They have asked the UK to provide a solution for the large number of Spanish workers who cross the border daily.

BOE's Saunders stated that Q4 economic growth will likely slow after a strong Q3 gain. There is a chance that Q1 2019 growth will also slow. Brexit is having a great impact on business considering that business investments are not picking up in the UK due to the uncertainties surrounding the British economy.

This week there is a light economic calendar for the GBP, however all eyes are set on EU Leaders Summit that will be held on Sunday 25th. The main topic will be Brexit deal and outcome of the Summit will have large impact on future GBP movements.

Important events for GBP:

Wednesday:
  • ---- BOE Financial Stability Report
  • ---- BOE Governor Carney Speech
AUD

The RBA November Meeting Minutes revealed that the next move in the interest rates will be more likely up but that there is no strong case for a near term move. Employment figures are stronger than expected and they expect that unemployment will fall to 4.75% during mid-2020. Lower AUD has helped domestic economic growth. Further growth will be supported by accommodative monetary policy. It was assessed that trade protectionism represents a significant risk for the global economy.

This week we will have data regarding business confidence, credit in private sector as well as in housing and manufacturing and non-manufactoring PMIs from China.

Important events for AUD:

Thursday:
  • ---- ANZ Business Confidence
Friday:
  • ---- RBA Housing Credit m/m
  • ---- RBA Private Sector Credit m/m
  • ---- Manufacturing PMI (China)
  • ---- Non-Manufacturing PMI (China)
NZD

The New Zealand GDT Price Index came in at -3.5%. Dairy prices, the main export of New Zealand, have fallen for the 13th consecutive auctions. They are now down 25.8% since May. NZD has been cruising up lately on the risk on sentiment and strong employment and CPI data, however data like this can severely undermine Kiwi.

This week we will have data regarding trade balance and housing as well as financial stability report.

Important events for NZD:

Monday:
  • ---- Trade Balance
  • ---- Exports
  • ---- Imports
Tuesday:
  • ---- RBNZ Financial Stability Report
Thursday:
  • ---- Building Consents m/m
CAD

The Canadian dollar has been battered following the decline in oil prices. Talks about OPEC cutting production has not brought results and underpinned CAD. US president Trump is all for lower oil prices and in his recent tweets he thanked Saudi Arabia and called for even lower oil prices. He sees the drop in oil prices as a big tax cut for US and the rest of the World. Saudi energy minister Khalid Al-Falih says there is no slowdown in production and that they're pumping more in November than October. Oil is continuing to drop, this is a seventh week in a row of falling oil prices and now we are heading toward the $50 level.

CPI came in at 0.3 m/m vs 0.1 m/m as expected and 2.4% y/y vs 2.2% y/y as expected. All three Core CPIs, BOC pays close attention to them, came in as expected, Core common at 1.9%, Core median at 2.0% and Core trim at 2.1%. September Retail Sales came in at 0.2% m/m vs 0% m/m as expected. Retail Sales ex-Autos came in at 0.1% vs 0.3% as exp. Better headline numbers and stable core inflation numbers will signal BOC that is on the good path but due to the not so strong retail sales ex autos and falling oil prices, they will be in no hurry to raise interest rates.

This week we will have data regarding Current Account as well as monthly and quarterly GDP, Raw Material and Industrial Product price indexes.

Important events for CAD:

Thursday:
  • ---- Current Account
Friday:
  • ---- GDP m/m
  • ---- GDP q/q
  • ---- IPPI m/m
  • ---- IPPI y/y
  • ---- RMPI m/m
  • ---- RMPI y/y
JPY

Trade balance for JPY came in at -Y449.3bn vs -Y70bn as expected. Exports came in at 8.2% vs 8.9% as expected and imports came in at 19.9% vs 14.1% as expected. Huge miss on trade balance, exports rose slower than expected and imports rose more than expected. Dangers of an escalating trade war do not help to paint a bright picture for Japanese trade balance in the future.

BOJ Kuroda stated that they are determined to keep the current easing policy. Easing policy has, according to him, helped Japan’s economy to recover and will eventually bring inflation to the goal. According to him there is no need to ease the policy even further but current stimulus programme must be patiently maintained.

National CPI for the month of October came in at 1.4% y/y as expected vs 1.2% the prior month. CPI excluding fresh food and energy, this is the reading that BOJ watches and wants to push toward 2% target, came in at 0.4% y/y as expected. Although the headline number showed the improvement compared to the previous month the main BOJ inflation measure is far away from the 2% mark and it will take a long time for it to get up there.

This week we will have data on consumption, inflation in Tokyo area, employment and industrial production.

Important events for JPY:

Thursday:
  • ---- Retail Sales m/m
  • ---- Retail Sales y/y
Friday:
  • ---- Tokyo CPI y/y
  • ---- Tokyo CPI excl. Food and Energy y/y
  • ---- Tokyo Core CPI y/y
  • ---- Unemployment Rate
  • ---- Jobs to Applicants Ratio
  • ---- Industrial Production m/m
  • ---- Industrial Production y/y
CHF

SNB Maechler came out over the weekend with comments on Switzerland’s economic situation. According to him negative interest rates are indispensable for Swiss economy in the current context as they reduce CHF attractiveness.

Trade balance data came in at CHF 6.57b vs CHF 2.43b the prior month. Exports rose sharply 6.3 m/m vs -0.8% m/m the prior month. Imports fell to -3.6% m/m vs -0.4% m/m the prior month. Overall a nice trade surplus for the Switzerland.

This week we will have data on employment, quarterly and yearly GDP as well as on economic expectations.

Important events fro CHF:

Monday:
  • ---- Employment Level
Thursday:
  • ---- GDP q/q
  • ---- GDP y/y
Friday:
  • ---- KOF Economic Barometer
 

katetrades

TradersWay.com representative
Messages
36
Forex Major Currencies Outlook (Dec 3 – Dec 7)

USD

FED’s Clarida came out on Tuesday with a hawkish statement reiterating that gradual rate hikes are appropriate as data shows the way to neutral stance. He added that it is important to see capital expenditures rebound after soft numbers in Q3. He also characterized US economic fundamentals as “robust”, GDP growth as “strong” and the labour market as “healthy”. Inflationary expectations are the main focus now and he expects inflation to remain anchored.

Second reading of Q3 GDP came in at 3.5% as expected. Personal Consumption came in at 3.6% vs 3.9% as expected. Core PCE came in at 1.5% vs 1.6% as expected. Wholesale inventories for the month of October rose 0.7% vs 0.4% as expected. Rise in inventories is troubling as it could be a result of massive imports and stockpiling done before the implementation of US tariffs.

Advanced Goods Trade Balance data came in at -$77.25bn vs -$77bn as expected with -$76.3bn the prior month. This is the highest trade deficit. Especially worrying is the fact that exports fell -0.6% in the month of October signalling decreased demand for US products abroad. Additionally, the strong dollar has made US goods somewhat less appealing for foreign countries.

FED Chairman Powell stated that rates are “just below” neutral range. Back in October he said that we are “a long way from neutral at this point”. His message was interpreted as overly dovish by the market and USD lost more than 100 pips against major currencies in first 2 hours after the statement. This seemed like an overreaction. The FED’s own estimates set the neutral rate in a range of 2.5-3.5 percent, with most policymakers’ bets clustered at the midline of this band at 3 percent. That is about 75-100bps away from the current 2-2.25 percent target FED Funds rate range which leaves room for additional rate hikes in 2019.

Core PCE inflation for the month of October came in at 1.8% y/y vs 1.9% y/y as expected, on the monthly level it came in at 0.1% m/m vs 0.2% as expected. Both personal spending and personal income beat expectations with the former coming in at 0.6% vs 0.4 as expected and the latter coming in at 0.5% vs 0.4% as expected. FED has turned its stance to data dependent so the core PCE is worrisome but rise in personal spending and income are encouraging.

This week we will have PMI data, FED Beige Book, Trade Balance and employment data on Friday. Data coming from the US will be closely monitored from now on since the FED has emphasized data dependence in its rhetoric. NFP will as always be a huge event with the headline number moving the markets, however much more important for FED will be data on Average Hourly Earnings.

Important events for USD:

Monday:

  • -- Markit Manufacturing PMI
  • -- ISM Manufacturing PMI
Wednesday:
  • -- Markit Services PMI
  • -- Markit Composite PMI
  • -- ADP Nonfarm Employment Change
  • -- Unit Labor Cost q/q
  • -- ISM Non-Manufacturing PMI
  • -- FED Beige Book
Thursday:
  • -- Trade Balance
Friday:
  • -- Nonfarm Payrolls
  • -- Unemployment Rate
  • -- Participation Rate
  • -- Average Hourly Earnings m/m
  • -- Average Hourly Earnings y/y
EUR

The ECB President Draghi stated that incoming data has been somewhat weaker than expected but that the slowdown may be temporary. According to Draghi, significant monetary policy stimulus is still needed and the ECB continues to anticipate the net asset purchase program to end. He remains confident that underlying inflation will gradually rise in the period ahead. Draghi added that World Trade Growth momentum has slowed “considerably” and that it is expected for headline inflation to fall in line with the decline of oil prices.

Recent news and developments suggest that President Trump could impose 25% tariffs on import duty on car imports from all countries except Canada and Mexico after the G20 Summit which could have a huge negative impact on German auto industry.

Preliminary CPI core reading for the month of November softened to 1% vs 1.1% as expected with headline CPI coming in at 2% as expected. Unemployment ticked up to 8.1% vs 8% the previous month. It is still at the very low levels signalling a strong and tight labour market.

This week we will have data on PMI from Germany as well as from EU, consumption, employments and 3rd estimate of Q3 GDP.

Important events for EUR:

Monday:

  • -- Markit Manufacturing PMI (Germany)
  • -- Markit Manufacturing PMI
Tuesday:
  • -- PPI m/m
  • -- PPI y/y
Wednesday:
  • -- Markit Services PMI (Germany)
  • -- Markit Composite PMI (Germany)
  • -- Markit Services PMI
  • -- Markit Composite PMI
  • -- Retail Sales m/m
  • -- Retail Sales y/y
Friday:
  • -- Industrial Production m/m
  • -- Industrial Production y/y
  • -- Employment Change q/q
  • -- Employment Change y/y
  • -- GDP q/q
  • -- DP y/y
GBP

The EU-Brexit deal was adopted very quickly by the EU. BOE and the UK Treasury came out with pessimistic forecasts for the British economy post-Brexit. According to them worries have not been fully priced in by the GBPUSD and GBP crosses. Brexiteers immediately attacked the forecasts stating that they are merely a part of “Project Fear” designed by the anti-Brexit camp to weaken Brexit sentiment. The Brexit vote will take place on December 11 and markets will get more nervous as we close in on that date.

This week we will get PMI data as well as more headlines regarding the Brexit process as we get closer to voting in the Parliament.

Important events for GBP:

Monday:

  • -- Markit Manufacturing PMI
Wednesday:
  • -- Markit Services PMI
AUD

Data regarding construction work completed in Q3 came in at -2.8% q/q vs 0.9% as expected. Numbers are much weaker than expected and this sharp fall will negatively impact GDP growth. Capex data for Q3 came in weaker than expected at -0.5% q/q vs 1% as expected. The weaknesses are seen in building and structures but equipment spending surprised to the upside.

This week we will have RBA Interest Rate Decision, expected to stay unchanged, followed by Rate Statement for further direction on monetary policy. Additionally we will have data regarding housing, current account, consumption, trade balance and GDP data for Q3.

Important events for AUD:

Monday:

  • -- Building approvals m/m
  • -- Business inventories q/q
  • -- Caixin Manufacturing PMI (China)
Tuesday:
  • -- Current Account
  • -- RBA Interest Rate Decision
  • -- RBA Rate Statement
Wednesday:
  • -- GDP q/q
  • -- GDP y/y
  • -- Caixin Services PMI (China)
Thursday:
  • -- Retail Sales m/m
  • -- Trade Balance
NZD

Retail sales for Q3 came in unchanged at 0% q/q vs 1.0% q/q as expected. This is a big miss and can have an impact on the GDP which RBNZ is closely monitoring to decide the next move in regards to interest rates. Sharp falling oil prices can be attributed to Q3 retail sales number but we will have to wait and see how RBNZ will interpret this number. Trade balance for month of October came in at -1295m NZD vs -850m NZD as expected. Exports were higher coming in at 4.88bn NZD and imports were higher as well coming in at 6.15bn NZD, highest ever imports in a month. Large import number is attributed to crude imports at high prices. Trade balance deficit grew to -5.79bn NZD which is the largest deficit in a decade.

Financial Stability Report announced that mortgage lending restrictions will be loosened from January 1st. Risks to financial stability have eased on the domestic side, however global risks have risen.

This week we will have dairy auction and it will be interesting to see if it will bring the stop to the falling dairy prices.

Important events for NZD:

Tuesday:

  • -- GDT Price Index
CAD

S&P affirmed Canada’s AAA rating with a stable outlook. Rating is unchanged since 2002. The priced-in probability of a rate hike in January fell to the lowest in a month, although trades still see the odds of an increase at 68.5 percent.

Current account balance for Q3 came in at -10.34bn CAD vs. -12.00bn CAD as expected with -16.67bn CAD for the Q2. Biggest drop was made in goods and services account which dropped to -8bn CAD from -12.7bn CAD in the previous quarter. Net goods trade deficit fell to -1.72 bn CAD vs – 5.67bn CAD the previous quarter. Oil fell below $50 for the first time since October 2017.

First reading of GDP for Q3 shows that it came in at 2% as expected.

This week we will have PMI data and trade balance data. BOC is expected to leave the interest rate as it is and keep the hawkish tone, maybe even add some optimism due to the signing of USMCA deal at the G20 Summit. OPEC meeting in Vienna on Thursday will be of huge importance for Oil, Canada’s leading export and therefore for the CAD. Employment data on Friday will also be of high importance for CAD.

Important events for CAD:

Monday:

  • -- Markit Manufacturing PMI
Wednesday:
  • -- BOC Interest Rate Decision
  • -- BOC Rate Statement
  • -- EIA Crude Oil Stocks Change
Thursday:
  • -- OPEC Meeting
  • -- Trade Balance
  • -- Ivey PMI
  • -- BOC Governor Poloz Speach
Friday:
  • -- Employment Change
  • -- Unemployment Rate
  • -- Participation Rate
JPY

The preliminary Nikkei Manufacturing PMI for the month of November came in at 51.8 vs 52.9 the prior month. This is lowest result in two years with new orders falling into contraction which is a worrying development and dampens hopes of a rebound.

Retail sales for the month of October came in at 1.2% m/m vs 0.4% m/m as expected and 3.5% y/y vs 2.7% y/y as expected. Figures beat the expectations and it may finally give some much-needed boost to the Japanese inflation.

Unemployment ticked up a bit to 2.4% vs 2.3% as expected. Job to application ratio ticked down to 1.62 vs 1.64 the previous month. Unemployment is still at extremely low levels so all attention was on the inflation figures. Tokyo CPI came in at 0.8% vs 1.1% with prior reading showing 1.5%. Fallout in the headline figure can be attributed to falling oil prices. CPI excluding fresh food and energy (this is the data BOJ uses when evaluating inflation) came in at 0.6% as expected. Still a long way from the targeted 2%.

This week we will have PMI data as well as data on household spending.

Important events for JPY:

Monday:

  • -- Nikkei Manufacturing PMI
Wednesday:
  • -- Nikkei Services PMI
Friday:
  • -- Household Spending m/m
  • -- Household Spending y/y
CHF

Swiss GDP for Q3 came in at -0.2% q/q vs 0.4% as expected and 2.4% y/y vs 2.9% as expected. Contraction for the Swiss economy is an unpleasant surprise. Exports and imports both fell heavily in the Q3 with exports falling 4.2% q/q.

This week we will have data on consumption and inflation.

Important events for CHF:

Monday:

  • -- Retail Sales m/m
  • -- Retail Sales y/y
Tuesday:
  • -- CPI m/m
  • -- CPI y/y
 

katetrades

TradersWay.com representative
Messages
36
Forex Major Currencies Outlook (Dec 10 – Dec 14)

USD

The November Manufacturing PMI came in at 55.3 vs 55.4 as expected but ISM Manufacturing PMI came in at 59.3 vs 57.5 as expected for a huge beat. Within ISM PMI employment came in at 58.4 vs 56.8 as expected, new orders came in at 62.1 vs 57.4 the previous month and new export orders came in at 52.2 as expected.

Inversion of the yield curve has occurred and traditionally it is the sign of a recession to come, however time needed for recession to hit after inversion can range between 6 months to over 2 years. The yield on 5-year bonds was below 2-year bonds for the first time in more than a decade. This is most likely due to the increase in the US government debt, which forces yields up as the supply of bonds increases, more than offsetting the decrease due to the move in safer assets.

FED’s Williams has continued in his hawkish manner and avoided cautious approach taken by his FED colleagues. He stated that US economy is strong, with a healthy labour market. He expects the US economy to continue to grow at the strong rate of 2.5% and expects price inflation to move a bit above 2%. In his statement he implied that the time to raise rates is now and that further gradual rate hikes will be appropriate. Dollar bulls loved his words.

US trade balance continues to plunge coming in at -$55.5bn vs -$55.0bn as expected. Exports fell -0.1% while imports rose 0.2%. Goods deficit came in at $78.11B and US-China October deficit came in at $43.1B vs $40.24B the prior month. Strong US dollar weigh in negatively on trade balance. Services surplus of $22.62B is the only positive in this report.

Headline NFP number came in at 155k vs 198k as expected. Unemployment and the participation rate have stayed the same as expected with former coming in at 3.7% and latter coming in at 62.9%. Average hourly earnings came in a bit softer with 0.2% m/m vs 0.3% m/m as expected and stayed the same at 3.1% y/y.

This week we will have data on inflation (CPI), consumption, business inventories and Markit PMIs. Speech of FED chair Powell will be closely monitored for additional information on monetary policy.

Important news for USD:

Tuesday:

  • -- PPI
Wednesday:
  • -- CPI
  • -- Real Earnings
  • -- Federal Budget Balance
  • -- FED Chair Powell Testifies
Thursday:
  • -- Initial Jobless Claims
Friday:
  • -- Retail Sales
  • -- Markit Manufacturing PMI
  • -- Markit Services PMI
  • -- Markit Composite PMI
  • -- Business Inventories
EUR

Italy’s Prime Minister Conte plans to negotiate with the EU on lowering Italy’s budget deficit to 1.9%. It is expected that a new revised budget proposal will be sent to the EU next Wednesday, day before the EU Leaders Summit.

The November Manufacturing PMI for the EU came in at 51.8 vs 51.5 preliminary. Germany, France and Spain data came better than expected while Italy showed contraction for the second straight month. Services PMI for the EU came in at 53.4 vs 53.1 preliminary. With prior reading being 53.7 there is a continued slide to the downside dragged by German numbers although there were positives from France, Spain and Italy.

This week ECB Monetary Policy Press Conference will be the main event as it is expected that ECB will end QE programme. Recent softer data coming from EU may change their mind so this event will be closely monitored. There are potential high market implications. The interest rate is expected to stay the same. We will have data on trade balance, industrial production and Markit PMIs.

Important news for EUR:

Monday:

  • -- Trade Balance
  • -- Exports
  • -- Imports
Tuesday:
  • -- ZEW Economic Statement Indicator (Germany)
  • -- ZEW Economic Statement Indicator
Wednesday:
  • -- Industrial Production
Thursday:
  • -- EU Leaders Summit
  • -- CPI (Germany)
  • -- ECB Interest Rate Decision
  • -- ECB Monetary Policy Press Conference
Friday:
  • -- Markit Manufacturing PMI
  • -- Markit Services PMI
  • -- Markit Composite PMI
GBP

The November Manufacturing PMI came in at 53.1 vs 51.7 as expected with the prior reading showing 51.1. This is a good recovery after the October numbers as new orders grow once again. Services PMI came in at 50.4 vs 52.5 expected with prior reading being 52.2. Big miss on the data, business expectations fell to the second-lowest reading since the financial crisis. Uncertainty around the Brexit is weighing heavily on the UK economy.

The European Court of Justice declared that the UK may revoke Article 50 of the Treaty of European Union unilaterally and possibly decide to remain in European Union if parliament fails to pass the Brexit agreement on December 11 if it so desires.

This week, the Brexit Parliament Vote will take the main stage and will be a big GBP mover. It is not expected that the current Brexit deal will pass. From an economic perspective we will get information about trade balance, industrial and manufacturing production as well as data on wages and employment.

Important news for GBP:

Monday:

  • -- Industrial Production
  • -- Manufacturing Production
  • -- Trade Balance
Tuesday:
  • -- Brexit Parliament Vote
  • -- Average Hourly Earnings
  • -- Unemployment Rate
AUD

At the G20 meeting presidents Trump and Xi agreed to place a hold on new tariffs for 90 days which raised risk appetite in the markets and propelled AUD higher against other major currencies.

RBA decided to leave cash rate at current level of 1.5% as widely expected. They reiterated that low rates are supporting the economy. They expect GDP growth to average around 3.5% for the next two years. The central scenario is for inflation to be 2.25% in the 2019 but higher in 2020 and they expect further decrease in the unemployment. Growth in household income remains low and debt levels are still high.

GDP data for Q3 came in at 0.3% q/q vs 0.6% q/q as expected and 2.8% y/y vs 3.3% y/y as expected. Huge miss on the numbers that sent AUD down. Consumption was the main drag as it fell from 0.9% q/q the previous quarter to just 0.3% q/q in Q3. Business investment was disappointing, gains in spending was created by decline in the savings for a lowest savings ratio (2.4%) since Q4 of 2007. Public demand and net exports were key growth engines. RBA’s Debelle said that they will keep a close watch on incoming data and if consumption continues to dampen in combination with rising household debt/low savings ratio they will be forced to consider cutting rates instead of
hiking them as planned.

Trade balance for the month of October came in at 2.361 bn AUD vs 3 bn as expected. Miss on the estimates with exports rising 1% m/m and imports rising 3% m/m. Retail Sales rose 0.3% m/m vs 0.2% m/m as expected.

This week there will be no big data coming from Australia, but data on Chinese consumption will be monitored.

Important news for AUD:

Friday:

  • -- Retail Sales (China)
NZD

GDT auction data has come at 2.2%. This is the first positive reading after 13 consecutive auctions with falling or unchanged prices. Fonterra has cut their milk price payment forecast to NZD 6.00-6.30/kg with prior forecast being NZD 6.25-6.50/kg. Since dairy is NZ’s largest export this will have impact on trade balance and value of NZD in general. NZD has benefited greatly this week from the risk on sentiment after G20 meeting between presidents Trump and Xi so this positive data can add more fuel to the kiwi rally.

There will be a light calendar this week for NZD with data on consumption.

Important news for NZD:

Monday:

  • -- Electronic Card Retail Sales
Wednesday:
  • -- Food Price Index
CAD

Canada’s province of Alberta has decided to cut its oil production by 8.7% in order to ease the supply glut. Production will be cut on January 1st 2019 and it is expected that cuts will last until Spring of 2019, that is the estimated time needed to ship current oil storages to the market. Price of oil quickly rose which in turn gave a nice boost to CAD.

The November Manufacturing PMI came in at 54.9 vs 53.9 the prior month. New orders index rose to 53.7 vs 52.2 the prior month and employment climber to 57.1 vs 55.3 the prior month. All strong numbers blowing the wind in the sails of Canadian economy.

BOC has kept overnight rate at 1.75%. In the following statement it was said that there is more room for non-inflationary growth and the incoming data shows the slowing of economy going into Q4. There were concerns stated regarding sharply falling oil prices and falling business investment. The bright point in the statement was repeating of the fact that rates will need to rise. Governor Poloz stated in his speech that rate levels are appropriate for the “time being”. Pace of rate hikes will be data dependent and he reiterated that neutral range is “in the neighbourhood” of 2.50 – 3.50%. There was a 65% chance of a hike priced in for January however after the meeting markets see the probability of only 23%.

Canadian employment report was very strong. Employment change came in at 94.1k vs 10k as expected. Full time employment came in at 89.9k. Unemployment fell to 5.6% vs 5.8% as expected. Drop in wage growth is a bit concerning but overall this report should change BOC’s rhetoric of slowing growth.

The OPEC agreement brings 1.2mbpd of which OPEC countries will bring 800kbpd while Russia will participate with 400kbpd. Iran was exempted from the cuts. This agreement sent oil price up and in combination with strong employment report CAD finished the week stronger.

This week will be a slow one with data on housing and oil supply.

Important news for CAD:

Monday:

  • -- Building Permits
Wednesday:
  • -- EIA Crude Oil Stocks Change
JPY

Nikkei Manufacturing PMI for the month of November came in at 52.2 vs 51.8 the prior month with preliminary reading showing 52.9. As stated by Markit: New orders rose at joint-weakest rate in just over 2 years, production growth moderates and business confidence drops for sixth month. Household spending date came in at -0.3% y/y vs 1% as expected. A big miss on data that will be a drag on the inflation.

This week we will get final GDP data for Q3, data on trade and industrial production as well as number of Indexes showing the health of Japan’s economy.

Important news for JPY:

Monday:

  • -- GDP
  • -- Current Account
  • -- Goods Trade Balance
Thursday:
  • -- BoJ Corporate Goods Price Index
Friday:
  • -- BoJ Tankan Large Manufacturing Index
  • -- BoJ Tankan Large Non-Manufacturing Index
  • -- Industrial Production
CHF

The retail sales for the month of October came in at 0.8% vs -0.6% as expected with prior reading showing -2.5%. November Manufacturing PMI came in at 57.7 vs 56.4 as expected. Finally, some positive data from Swiss economy after a slew of negative data.

CPI for the month of November came in at -0.3% m/m vs -0.1 m/m as expected with core CPI coming in at 0.2% m/m vs 0.4% m/m as expected. Drop in the headline number can be attributed to falling oil prices, however drop in the core number is concerning. Perhaps SNB will be forced to intervene sooner than ECB if this downtrend persists.

This week we will have SNB interest rate decision, it is expected to stay unchanged, but the tone in the follow up monetary policy assessment might change due to change in inflationary data.

Important news for CHF:

Monday:

  • -- Unemployment rate
Thursday:
  • -- SNB Interest Rate Decision
  • -- SNB Monetary Policy Assessment
 

katetrades

TradersWay.com representative
Messages
36
Forex Major Currencies Outlook (Dec 17 – Dec 21)

USD

CPI data for the month of November came in at 2.2% y/y as expected. Monthly figure came in unchanged as expected. The budget deficit for the month of November came in at $204.9bn vs $100.5bn the previous month.

Retail Sales came in at 0.2% m/m vs 0.1% m/m as expected but the really strong reading is in control group where monthly figure came in at 0.9% m/m vs 0.4% m/m as expected. Ex-autos component came in at 0.2% m/m as expected. Possible reasons for the beat are the Black Friday and Cyber Monday deals. Nevertheless FED will be happy with these numbers. Industrial production came in at 0.6% m/m vs 0.3% m/m as expected with prior reading being 0.1% m/m but revised to -0.2% m/m so that most of the gains were covered by revision. All three PMI numbers came in weaker than expected signalling diminished confidence in the US economy.

This week central stage will be taken by the FED Interest Rate Decision. The chance for 25bp rate hike is currently at 69.1% and it is widely believed that we will see a hike. The following press conference as well as dot-plot will provide valuable information regarding future rate hike plans. We will also have information on housing, current account, final reading of Q3 GDP, PCE as well as durable goods.

Important news for USD:

Tuesday:

  • -- Housing Starts
  • -- Building Permits
Wednesday:
  • -- Current Account
  • -- Existing Home Sales
  • -- FED Interest Rate Decision
  • -- FOMC Statement
  • -- FOMC Economic Projections
  • -- FOMC Press Conference
Friday:
  • -- GDP
  • -- Durable Goods Orders
  • -- PCE
  • -- Core PCE
EUR

ZEW Survey of current situation in Germany came in at 45.3 vs 55.8 as expected with prior reading showing 58.2. Evaluation of current situation is abysmal. Trade war, Brexit and Auto-Tariffs on German cars weigh in heavily on current economic situation. Expectations came in a bit better at -17.5 vs -25.0 as expected for Germany and -21 vs -22 as expected for Eurozone.

The saga of Italy’s budget continues as EU stays firm in its stance that Italy should reduce budget deficit of 2.4% to avoid economic sanctions. Italian press stated that Italy has managed to cut its budget deficit by 4b EUR which is around half of the amount that EU is asking for. Due to the power of “Yellow vest” (“Gilets Jaunes”) protests in France, President Macron has agreed to raise the minimal wage, to revoke a gasoline tax hike and urged companies to pay a year-end bonus without tax with removal of taxes on overtime work. These moves will put pressures on France’s budget which could lead to ballooning of budget deficit to 3.5%. Italy will ask that the deficit/GDP rules be the same for France as well as for Italy. Meanwhile the Italian government debt has grown to 2.334 trillion EUR in October

The ECB left key rates unchanged and ended QE programme as widely expected. ECB’s Draghi acknowledged that inflation is coming weaker than expected as a result of softer external demand. Inflation is projected at 1.6% for 2019, 1.7% for 2020 and 1.8% for 2021. It was also stated that monetary policy is very accommodative, business investment continues to grow and consumption continues to grow driven by increases in disposable income. Statement that balance of risks to the growth outlook is “moving to the downside” is the key change and has shifted EUR downwards.

Preliminary PMI numbers for France all came worse than expected and they were all below 50 signalling contraction. Some of those numbers were influences by Gilets Jaunes protests but since the numbers are very worrisome it weighs heavily on EUR. German PMI numbers also came worse than expected but they were all above 50. Outlook remains gloomy and risk of recession for Germany has increased. Composite PMI for Eurozone fell to 51.3 vs 52.7 the previous month for the lowest level in 49 months.

Industrial production for the month of October came in at 0.2% m/m vs 0.1 m/m as expected with the prior reading being revised to -0.6% m/m. Revision lower dampen the mood of the data but better than expected reading that will prop up Q4 GDP.

This week we will have data on inflation, trade balance and current account as well as more evaluations on business climate and expectations and final reading of France’s Q3 GDP.

Important news for EUR:

Monday:

  • -- CPI
  • -- Core CPI
  • -- Trade Balance
Tuesday:
  • -- Ifo Business Climate (Germany)
  • -- Ifo Business Expectations (Germany)
Thursday:
  • -- Current Account
Friday:
  • -- GDP (France)
GBP

PM May has pulled out the Brexit vote from the Parliament because the proposal was very unlikely to pass and now plans to meet with EU officials to renegotiate parts of the deal, however EU’s Tusk emphasized that he would “not be renegotiating the deal”. The new date for a vote deal is still not announced but UK PM spokesman said that it will be before January 21 2019. UK Parliament is in recess from December 20 to January 7 and date that UK is scheduled to leave EU is March 29 so they are working with a tight schedule. The no confidence vote was held and PM May won with 200-117. The fact that 117 PMs voted against her means that current Brexit deal will not pass the Parliament vote and that changes are needed.

Average earnings data beat expectations coming in at 3.3% 3m/y vs 3% 3m/y as expected. The Unemployment rate stayed at 4.1% which is almost a four-decade low. Healthy beating on the earnings showing that British households will have funds to make a positive impact on consumption and therefore on inflation. Due to the overwhelming Brexit worries, this data will not have impact on GBP as it should but it is important to keep it in mind.

This week will be the final week that Parliament will be operating in current year so the last chance to put Brexit deal up for a vote. We will get data on inflation, consumption, current account as well as final reading of Q3 GDP. Additionally, we will have BOE interest rate decision, but no change is expected as all eyes are on Brexit.

Important news for GBP:

Wednesday:

  • -- CPI
  • -- Core CPI
Thursday:
  • -- BOE Interest Rate Decision
  • -- BOE MPC Meeting Minutes
  • -- Retail Sales
Friday:
  • -- Business Investment
  • -- Current Account
  • -- GDP
AUD

RBA’s Kent stated in his speech that progress is made on lowering unemployment and rising inflation, but it is gradual. Wage growth in Australia begins to pick up and he reiterated that the next rate move will be most likely up but he didn’t rule out a cut if its needed. Preliminary Markit PMIs came in lower than expected across the board (manufacturing, services and composite) showing signs of softer demand. China’s retail sales numbers came in weaker than expected to put additional pressure on Australian economy.

This week we will see meeting minutes for more information about last RBA meeting as well as employment data.

Important news for AUD:

Tuesday:

  • -- RBA Meeting Minutes
Thursday:
  • -- Employment Change
  • -- Unemployment Rate
NZD

Card spending data for the month of November, which accounts for about 70% of retail sales in New Zealand, came in at -0.4% m/m vs 0.3% m/m as expected. Weak data but it can be attributed to seasonality as December is where the real spending is due to the holidays. Fiscal update sees surplus in the coming years lower and also GDP projections have been lowered.

This week we will have data on GDT auction, current account and trade balance. The Q3 GDP reading will take the centre stage as Governor Orr previously said that he would consider a rate cut in the event GDP falls below expectations. The government has revised their GDP forecast a bit lower to a still healthy 2.9%.

Important news for NZD:

Tuesday:

  • -- GDT Price Index
  • -- Current Account
Wednesday:
  • -- Trade Balance
  • -- Exports
  • -- Imports
  • -- GDP
CAD

Housing starts in Canada for the month of November came in at 215.9k vs 198k as expected. Canadian housing starts to pick up. Building permits data for October came in at -0.2% vs -0.3% as expected. Better than expected, but still a troublesome reading.

This week we will have data on inflation, manufacturing and retail sales as well as GDP numbers and the BOC Business Outlook Survey.

Important news for CAD:

Tuesday:

  • -- Manufacturing Sales
Wednesday:
  • -- CPI
  • -- Core CPI
Thursday:
  • -- Wholesale Trade
Friday:
  • -- Retail Sales
  • -- GDP
  • -- BOC Business Outlook Survey
JPY

Final Q3 GDP data came in at -0.6% q/q vs preliminary reading of -0.3% q/q. The GDP Deflator (this is an inflation indicator) for Q3 came in at -0.3% y/y vs -0.1% y/y as expected. GDP Business Spending fell to -2.8% y/y for the biggest fall since Q3 of 2009. These are some abysmal numbers for the Japanese economy, regardless of the natural disasters that have struck Japan and slowing exports due to US – China trade war. Current account balance has declined in October, coming in at 1.3 trillion yen ($ 11.6 billion). The trade deficit has widened to 321.7 billion yen ($ -2.8 billion), the most in 5 months. According to the latest quarterly Tankan survey Capex plans were stronger, as large businesses anticipate a 14.3% increase up from 13.4%.

This week we will have the Interest Rate Decision with no expectations of changing the rate but the monetary policy statement and press conference which will be held later on will provide us with more information about BOJ planned actions especially after abysmal Q3 GDP numbers. We will also have data on trade balance as well as national inflation data.

Important news for JPY:

Wednesday:

  • -- Trade Balance
  • -- Export
  • -- Import
Thursday:
  • -- BOJ Interest Rate Decision
  • -- BOJ Monetary Policy Statement
  • -- BOJ Press Conference
Friday:
  • -- CPI
  • -- CPI excluding Food and Energy
CHF

The Unemployment rate for the month of November came in at 2.5% as expected. The seasonally adjusted number came in at 2.4% for the lowest reading since May 2002. Labour market conditions are tightening, however SNB would like to see more wage growth so it can push inflation up.

SNB has left sight deposit interest rate unchanged at -0.75% as expected. SNB reiterated that they will remain active in FX market if necessary and characterized conditions in it as fragile. They still see CHF as highly valued and they lowered their projections for inflation to 0.5% in 2019 and 1% in 2020.

This week we will have data on trade balance as well as quarterly bulletin containing data on Swiss economy as a whole.

Important news for CHF:

Wednesday:

  • -- SNB Quarterly Bulletin
Thursday:
  • -- Trade Balance
  • -- Export
  • -- Import
 
Last edited:

katetrades

TradersWay.com representative
Messages
36
Forex Major Currencies Outlook (Dec 24 – Dec 28)

Please note that due to Christmas holidays liquidity in the markets will be thin which can potentially lead to increased volatility in the markets.

USD

Housing starts came in at 1256k vs 1228k as expected and building permits data came in at 1328k vs 1260k as expected. Housing starts have moved up and down during the year, the gains are concentrated mostly in multifamily homes and fact that permits rose 5% is a very encouraging sign. Existing home sales for the month of November came in at 5.32m vs 5.2m as expected.

Current account data for Q3 show deficit of -$124.8bn. Deficit has now grown to 2.4% of GDP, up from 2% in Q2. Increase in deficit was mainly caused by deficit in goods. Stronger USD, tariffs and slowing global demand are culprits for the data.

FED has raised interest rates by 25bp to the range of 2.25% - 2.50% as expected. New dot plot signals 2 rate hikes in 2019 instead of 3. Powell assessed risks as roughly balanced and said that FED is data dependent. He also stated that rates have now reached the bottom end of the neutral range and that there is no need for policy to be accommodative. GDP and inflation forecasts have been revised down. The fact that inflation is a bit below the target gives FED the room to be patient. FED will continue with unwinding of its balance sheet as planned which is not helpful for the stocks.

Durable goods for the month of November came in at 0.8% m/m vs 1.6% m/m as expected with prior reading being -4.3% m/m. Capital goods orders nondefense ex air came in at -0.6% m/m vs 0.2% m/m as expected, capital goods shipments nondefense ex air came in at -0.1% m/m vs 0.2% m/m as expected ex transportation category came in at -0.3% m/m vs 0.3% m/m as expected for a wide range of misses across the report.

This week we will have housing data, trade balance data and data on consumer confidence.

Important news for USD:

Thursday:

  • -- New Home Sales
  • -- Consumer Confidence Index
Friday:
  • -- Goods Trade Balance
  • -- Pending Home Sales
EUR

According to the president of the National Assembly. the lower house of the Parliament of France, France’s budget will be bigger than EU’s limit of 3% of GDP next year. It is expected that it will reach 3.4%. During the weekend agreement was reached between Italy’s coalition government leaders and PM regarding the budget and growth was slashed from 1.5% to 0.9% or 1% to make it more credible. Finally the revised budget was accepted by the EU with budget deficit of 2.04%. One less worry for the EUR going on.

Final Core CPI for EU for the month of November came in at 1% y/y as expected. Headline CPI figure dipped a bit and came in at 1.9% y/y vs 2% y/y as expected. October trade balance data came in at 12.5bn EUR vs 14bn EUR as expected.

This week we will have inflation data from Germany.

Important news for EUR:

Friday:

  • -- CPI (Germany)
GBP

UK PM Spokesman has stated that talks between UK and EU are still ongoing regarding the Brexit process. Reminder that UK Parliament is on recess from December 20 to January 7. Currently it is expected that debate on Brexit deal will begin on January 9.

UK November CPI data came in as expected on all fronts, 0.2 m/m, 2.3% y/y and core CPI 1.8%. Retail Sales for November came in at 1.4% m/m vs 0.3% m/m as expected. Retail Sales are now up on 3.6% y/y. Many factors can contribute to this nice beating of the estimates, Black Friday offers, raising wages in the UK and even stockpiling of goods due to Brexit uncertainty. This data will have a positive impact on Q4 GDP.

BOE has left bank rate unchanged at 0.75% as expected with vote of 0-0-9, meaning that all 9 voting members voted unanimously for no change. They now see inflation falling below 2% in January due to falling oil prices and project Q4 and Q1 2019 GDP at 0.2%. Brexit uncertainties have intensified since November and main challenge is to asses their implications. They also see downside risks to the global economy increasing. Dovish statement in the midst of all surrounding uncertainties.

AUD

Australian government has revised their economic outlook and now it predicts higher surplus for the fiscal 2020, lower GDP and wage growth forecast for the 2018-19.

The RBA meeting minutes showed that board members agree that next move in rates will be likely up than down but that there is no strong case for near-term change in policy. Currently markets price in rate hike for Q1 of 2020. Sluggish household incomes, high debt and falling home prices have been stated as primary downside risk factors. Falling unemployment and job growth present a positive for Australian economy.

Australian employment change data came in at 37k vs 20k as expected for a big beat. Participation rate came in at 65.7% vs 65.6% as expected for the highest value ever. Unemployment ticked up to 5.1%. Another strong report showing that labour market is tightening, All gains in the employment change came from rise in part time employment change which is a bit of a downer.

NZD

New Zealand services PMI for the month of November came in at 53.5 vs 55.4 the previous month. PMI numbers are down across the globe so this data follows the trend. Business confidence in New Zealand came in at -24.1 vs -37 the previous month. This is the highest reading in 8 months and shows improvements in employment and investment intentions. Troubling is that figure is still negative showing that majority of respondents reporting expect worsening of business conditions in the coming year.

GDT Price Index sees prices up 1.7%. After a run of 13 consecutive months this makes a second consecutive auction of rising prices after the previous being 2.2%. BoP current account for Q3 came in at -6.149bn NZD vs -5.935bn NZD as expected. Lower dairy prices and higher oil prices in the Q3 contributed to a widening deficit. November trade balance came in at -861m NZD, exports were down a bit at 4.94bn NZD vs 4.98bn NZD as expected and imports came in line with expectations.

Q3 GDP numbers came in at 0.3% q/q vs 0.6% q/q as expected and 2.6% y/y vs 2.8% as expected. Since RBNZ had projected Q3 at 0.7% q/q so the result is less than half of the projected target. Rate hike is out of the question due to the miss in GDP numbers, however it will be interesting to hear if this has changed RBNZ neutral policy or they think rate hike is appropriate.

CAD

BOC Poloz stated in an interview that he expects no recession in Canada in 2019 and that Canada’s economic fundamentals are quite solid. He also stated that rates need to be more neutral with economy near full capacity.

CPI data for the month of November came in at 1.7% y/y vs 1.8% y/y as expected with prior reading showing 2.4% y/y. Monthly figure came in at -0.4% m/m as expected. There was a drop in all three major categories, goods came in at -0.7% m/m, services came in at -0.1% m/m and energy came in at -4.8% m/m. Core measures were also down but all three of them (core, median and trimmed) came in at 1.9% y/y. Since the decline in inflation is caused by more than falling oil prices it will be hard for BOC to continue their hawkish rhetoric and it can rule out the idea of rate hike in January.

Canadian manufacturing sales came in at -0.1% m/m vs 0.4% m/m as expected with prior reading showing 0.2% m/m. Wholesale trade came in at 1% m/m vs 0.4% m/m as expected. Machinery and personal/household categories were particularly strong. ADP employment in the month of November came in at 39k vs 2k the previous month. Strong rebound after previous month with trade, transportation and utilities leading the way.

Retail sales for the month of October came in at 0.3% m/m vs 0.5% m/m as expected. The ex-autos component came in at 0% m/m vs 0.2% m/m as expected and contributed to the weaker than expected reading. GDP figure for the same month came in at 0.3% m/m vs 0.2 % m/m as expected showing growth in 15 our of 20 industrial sectors with construction activity down for the 5th consecutive month.

JPY

Trade balance data for the month of November came in at -737bn Y vs – 630bn Y as expected. Exports came in at 0.1% y/y vs 1.2% as expected and imports came in at 12.5% y/y vs 11.8% as expected. Lower exports and higher imports, trade tensions and slowing global demand contributed to bigger than expected trade deficit.

BOJ has left interest rate unchanged at -0.10% as expected. They will keep current rates low for extended period of time and will continue to buy JGBs (Japanese Government Bonds). Governor Kuroda stated that downside risks are centred overseas and reiterated that impact of US – China tariff war is rather limited on Japan.

National CPI number came in at 0.8% y/y as expected with prior reading being 1.4% y/y. Decline in headline number is mostly due to falling energy prices. CPI excluding fresh food and energy came in lower at 0.3% y/y vs 0.4% y/y as expected. Inflation is heading in the wrong direction, away from the target level of 2%.

This week we will have monetary policy minutes, CPI for Tokyo region, employment and consumption data as well as data on industrial output.

Important news for JPY:

Thursday:

  • -- BOJ Monetary Policy Minutes
Friday:
  • -- Tokyo CPI
  • -- Unemployment Rate
  • -- Jobs to Applications Ratio
  • -- Retail Sales
  • -- Industrial Production
CHF

Swiss government cut growth and inflation forecasts so the new numbers are GDP at 2.6% for 2018, 1.5% for 2019 and 1.7% for 2020. Inflation is now seen at 1% for 2018, 0.5% for 2019 and 0.7% for 2020. November trade balance numbers came in at 4.74bn CHF vs 3.75bn CHF as expected. Exports rose 1% m/m while imports fell -1.5% m/m. Steady growing exports are positive for Swiss economy.

TradersWay team wishes you Merry Christmas and Happy Holidays!
 

katetrades

TradersWay.com representative
Messages
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Forex Major Currencies Outlook (Dec 31 – Jan 4)

Please note that due to the New Year holidays, liquidity in the markets will be thin which can potentially lead to increased volatility and higher spreads, be sure to plan your trading accordingly.

USD

This week we will have the final PMI numbers for the month of December and on Friday the NFP data will be announced. After last month’s rise of 155k, this month is expected to come in at 178k. Unemployment is expected to remain the same. Once again, Average Hourly Earnings will be the data to watch and it is expected it will come out at 3.0% y/y vs 3.1% y/y the previous month.

Important news for USD:
Wednesday:

  • -- Markit Manufacturing PMI
Thursday:
  • -- ADP Nonfarm Employment Change
  • -- Initial Jobless Claims
  • -- ISM Manufacturing PMI
  • -- ISM Manufacturing Employment
Friday:
  • -- Nonfarm Payrolls
  • -- Unemployment Rate
  • -- Average Hourly Earnings
  • -- Market Services PMI
  • -- Market Composite PMI
EUR

ECB has published its Economic Bulletin in which they stated that they see ongoing expansion in the economy but with downward risks increasing. They acknowledged that global economic activity is expected to decelerate next year. Worries regarding growth in Euro Area appear to be mostly external which can give EUR a small boost. Italy vote on the budget in the Parliament is expected to be by December 29.

This week we will have final PMI numbers for the month of December as well as employment data from Germany and inflation numbers for the Euro Zone. It is expected that headline inflation figure will tick down to 1.8% y/y from 1.9% y/y the previous month while core number will rise to 1.2% y/y from 1.1% y/y the previous month.

Important news for EUR:
Wednesday:

  • -- Markit Manufacturing PMI (Germany, France, Italy)
  • -- Markit Manufacturing PMI
  • -- Market Services (Germany, France, Italy)
  • -- Market Composite (Germany, France, Italy)
  • -- Market Services PMI
  • -- Market Composite PMI
  • -- Unemployment Change (Germany)
  • -- Unemployment Rate (Germany)
  • -- CPI
JPY

BOJ Governer Kuroda stated that BOJ will continue with their easing policy while monitoring both its positive and side effects. The unemployment rate for the month of November came in at 2.5% vs 2.4% as expected with Job-To-Applicant ratio coming in at 1.63 as expected. Headline CPI for the month of December in the Tokyo are came in at 0.3% y/y vs 0.5% as expected. Drop in the headline number is attributed to the falling oil prices. CPI excluding Food and Energy, which is the measure closest to US CPI, came in at 0.6% y/y as expected. Good news is that it didn’t drop as the headline number, Bad news is that the number is nowhere near the 2% target. Retail sales for the month of November fell -1.0% m/m vs -0.4% m/m as expected. Yields on the 10-year JGB (Japanese Government Bonds) went into negative territory for the first time since September 2017.

This week we will have the final manufacturing PMI data for the month of December.

Important news for JPY:
Friday:

  • -- Nikkei Manufacturing PMI
Important news for GBP:
Wednesday:

  • -- Markit Manufacturing PMI
Thursday:
  • -- Markit Construction PMI
Friday:
  • -- Markit Services PMI
Important news for AUD:
Monday:

  • -- Manufacturing PMI (China)
  • -- Non-Manufacturing PMI (China)
Friday:
  • -- Caixin Services PMI (China)
Important news for NZD:
Wednesday:

  • -- GDT Price Index
Important news for CAD:
Wednesday:

  • -- Markit Manufacturing PMI
Friday:
  • -- Employment Change
  • -- Unemployment Rate
TradersWay team wishes you a Happy New Year and good luck with your trading in the coming year!
 
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