European Outlook: Asian stock markets headed south, with Hong Kong once again underperforming, after disappointing Chinese trade data and as the FED minutes said the case for a rate hike has strengthened. Together with curbs on property in China, the Hang Seng continues to underperform, while a stronger Yen is weighing on Japanese bourses. A Reuters source story meanwhile confirmed that a decision on the ECB’s QE changes and a possible extension is unlikely to be taken before December, although the council may already discuss some technical tweaks next week. U.S. and U.K. stock futures are also I negative territory and oil prices are down with the front end WTI future below USD 50 per barrel. With Sterling heading south again and the EUR moving higher against most currencies, the FTSE 100 may once again outperform the DAX, but yields are generally trending higher on both sides of the Channel. Released overnight U.K. RICS house price data came in better than expected.
FOMC minutes: Several members wanted to raise rates “relatively soon,” though we already knew that with the three dissenters. But, “a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labor market and inflation.”Obviously the Committee chose the latter and in a “close call,” decided to delay action. Nothing jumps out from the minutes to solidify expectations on a hike later this year. Interestingly, the FOMC worried about “eroding its credibility, especially given that recent economic data had largely corroborated the Committee’s economic outlook.” . While it’s still the case that economic data reports matter, this latter comment regarding worries over credibility, will keep the markets guessing about a December hike.
German Sep HICP inflation: Confirmed at 0.6% y/y, the national HICP rate at 0.7% y/y. The breakdown showed that the uptick over the month was mainly due to less negative base effects from energy prices, with prices for petrol falling -3.5% y/y in September, after still dropping -9.1% y/y in August. The rate excluding energy rose to 1.0% from 0.7% and excluding energy and petrol the rate rose to 1.2% y/y from 1.1% y/y in August. A confirmation then that inflation is trending higher, as oil prices stabilise and the most recent uptick in oil prices means the adjustment could happen quicker than anticipated. Further ammunition then for the ECB’s hawk, which are reluctant to extent the already generous stimulus further when the current QE program ends in March next year. Against that background a tapering, with somewhat reduced monthly purchase levels could be a typical European compromise.
FX Update: A big miss in Chinese exports drove a risk-off play in forex markets in the Asia session. AUDJPY, which is a risk appetite proxy, shed nearly 1%, while USDJPY, which had earlier clocked a 10-week high at 104.63, tipped back sharply to a low of 103.55, subsequently settling around 103.80. Aside from the 10% y/y dive in Chinese exports, softer oil prices and the latest FOMC minutes highlighting of hawkish arguments at the Fed were also in the mix of risk appetite spoilers. The yen gained in accordance with its historical inverse correlation with global stock market direction. The MSCI Asia-Pacific ex-Japan index lost over 1% as it fell into three-week low territory. USDJPY needs to hold 103.28, yesterday’s low to retain bullish trend credentials. A breach would signal a greater risk of a mean reversion move. The 20- and 50-day moving averages are presently at 102.09 and 101/89, respectively.
Main Macro Events Today
US Initial Job Claims – Initial claims data for the week of October 8 are out today and should reveal a slight headline increase to 253k from 249k last week and 254k in the week of September 24. More broadly, claims are expected to average 256k in October from 254k in September and 262k in August. US Import & Export Prices – September trade price data is expected to show import prices unchanged with export prices down 0.2% on the month. This follows respective August figures which had import prices down 0.2% and export prices down 0.8%. The drop in oil prices over last winter and spring depressed headlines in this release but as prices rebounded over summer so too did headline import prices. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets are mixed, with Japanese markets and Hang Seng managing to move higher after yesterday’s dip, but investors continue to eye China nervously as weak trade data yesterday was followed by higher than expected inflation data on Friday. Oil prices moved higher and the front end WTI future is trading at USD 50.84 per barrel, which helped to underpin equity markets as the focus turns to Yellen’s speech at the Boston Fed conference. U.S. stock futures are little changed, while the FTSE 100 future is moving higher with Sterling weakness helping the index to outperform other European markets, while adding to Gilt underperformance as concerns about the inflation impact picks up. The EUR is down against all other currencies aside from GBP, which may also help to put a floor under stock markets despite tapering talk. The European calendar has final September inflation numbers from Spain and Italy as well as Eurozone trade data and Swiss PPI inflation.
China CPI & PPI Exceed Expectations: China Sep. CPI: 1.9% y/y (expected 1.6%) and PPI +0.1% (expected -0.3%). It’s the first time PPI has come in higher since January of 2012. Higher coal and steel prices a key factor in the positive result, and these could well be a signal of a diminishing of over-capacity problems.
US Data Reports: Revealed firmness in September trade prices and lean initial claims through the first two weeks of October that beat estimates, leaving upside risk for Q4 GDP and October payrolls that we peg at 2.5% and 170k respectively. For trade prices, we saw the expected 1.2% September oil import price bounce, but with a firm 0.3% export price rise. For claims, we saw a flat figure at the downwardly-revised 246k (was 249k) level from the first week of October that left a two-week stretch for claims at a new 42-year low. Claims are entering October well below already-lean September levels.
Fedspeak: Moderate Harker – the economy is doing “pretty well” and we have a strong labor market, he said, though the share of the population that wants to work makes it harder for the Fed to guide the economy. Harker also denied that the Fed is affected by the election cycle or influenced by politics. He also said a hike sooner than later would be his preference, though raising rates too quickly could have an impact on exports (USD index probed 98.0 7-month highs yesterday). He reiterates that he expects one rate hike by the end of 2016 and “at least two” next year. Kashkari – not forecasting a boom and not forecasting a recession for the US economy, but does expect more sluggish growth.
Main Macro Events Today US Retail Sales – September retail sales data is out today and should reveal a 0.6% headline with a 0.5% ex-autos increase. This would follow respective August figures which had the headline down 0.3% on the month with the ex-autos figure down 0.1% for that month. The release faces upside risk from firm chain store sales, stronger gasoline prices and an increase in auto sales. US PPI – September PPI should reveal a 0.2% headline with a 0.1% increase for the core. This follows August figures which had the headline unchanged and the core up 0.1%. Oil prices managed to climb in September which could lend some upside risk to the release. US Michigan Consumer Sentiment – The first release on Michigan Sentiment is out today too and should reveal a 92.0 headline from 91.2 in September and 89.8 in August. After some weakness in August the various measures of consumer confidence posted a rebound in September although they are still tracking below the highs seen last spring. Yellen and Carney – Both the Fed Chair and the BOE Governor have speaking engagements scheduled for today. With Sterling under continued scrutiny and Fed members becoming increasingly hawkish; their respective speeches are to be followed closely. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
United States: The economic calendar is a relatively light one this week, but does include an important inflation update, a rash of housing data and the Philly Fed survey. The Empire State index is forecast to rebound to 1.0 in October (Monday), while industrial production may recover 0.1% in September, capacity utilization seen rising to 75.6% from 75.5%. CPI is projected to jump 0.3% headline (Tuesday), with a 0.2% core rise vs 0.3%. The NAHB housing market index is expected to dip to 63 in October. The MBA mortgage application survey is due (Wednesday) and we’ll see how well it absorbs the rebound in mortgage rates, while housing starts are seen rebounding 2.4% to a 1,170k pace in October. EIA energy inventories will also be monitored for any “tell” on the near-term direction of energy prices. The Philly Fed index may sink to 6.3 in October from 12.8 (Thursday), while initial jobless claims may bounce 4k to 250k. Leading indicators are expected to rise 0.2% in September vs -0.2%, while existing home sales may bounce 1.3% to 5.40 mln. The calendar is empty Friday.
Fedspeak: the big guns continue to appear this week after Yellen’s dovish long-term guidance last week, starting with Fed Vice Chairman Fischer (Monday) who has been leaning more hawkishly near-term of late. SF Fed dove Williams speaks on (Wednesday), followed by Dallas Fed moderate Kaplan in a Q&A session. NY Fed dove Dudley discusses the economic history of New York from 19:45 ET. All three have mulled the likelihood of a hike before year-end and seem inclined to follow through, barring any extraordinary events beforehand. Dudley makes another appearance on the financial industry (Thursday). Governor Tarullo speaks (Friday), followed by Williams again.
Earnings will be important this week with many heavyweights slated to announce results. Including BoA, Netflix, IBM, (Monday) Goldman Sachs, Yahoo, Intel (Tuesday), Morgan Stanley, eBay (Wednesday) , Verizon, American Airlines, PayPal (Thursday) and GE and McDonald’s (Friday).
Canada: The Bank of Canada takes center stage this week, with the announcement and Monetary Policy Report (MPR) on tap for Wednesday. There is also manufacturing report (Tuesday) and CPI (Friday) is seen rising 0.2% m/m in September and 1.4% y/y growth pace in September from the 1.1% rate of gain in August.
Europe: The focus this week will be on the ECB meeting (Thursday). The data calendar, s pretty empty. Final Eurozone HICP inflation for September is likely to be confirmed at 0.4% y/y. German September PPI inflation is also likely to see rates moving up. Preliminary October Eurozone consumer confidence is expected to improve to -8.0 from -8.2 in September.
UK: The plunge in the pound, which has been likened to an emerging world currency in a research piece from Citi last week, looks likely to continue to drive underperformance in UK sovereign debt given the risk of higher inflation. BoE Governor Carney appeared to make a verbal currency market intervention on Friday, saying that the central bank is “not indifferent” to forex levels. The helped give the pound a prop, though the impact was limited. September inflation data (Tuesday), headline CPI to tick up to a new cycle high of 0.9%. Core CPI is also seen rising to a new cycle peak, of 1.4% y/y, from 1.3%. Such a rise in CPI will be consistent with BoE projections. Monthly labour statistics are also up (Wednesday), where the rear-view unemployment measure for August is expected unchanged at 4.9%, which is the cycle low. Average weekly earnings in the three-months to August are expected rise 2.3% in the with-bonus figure, which would still be well above inflation.
China: Q3 GDP (Wednesday) is forecast to hold steady at the 6.7% y/y pace from Q2. Growth has been moderating for the last several quarters, and is down from 7.2% in Q4 2014. September industrial production (Wednesday) is expected to slip slightly to 6.2% y/y from 6.3% previously. September retail sales (Wednesday) are penciled in at a 10.6% y/y clip, unchanged from August. September fixed investment is also due Wednesday, expected unchanged at an 8.1% y/y rate. September loan growth and new yuan loans are tentatively due Monday, and are expected to post a 13.1% y/y clip from 13.0%, and CNY 1,050.0 bln from CNY 948.7 bln, respectively.
Japan: The August all-industry index (Wednesday) is seen edging up 0.2% m/m from up 0.3% previously. This would be a third monthly gain. Revised industrial production has been reported and has missed expectations.
Australia: Calendar has September employment (Thursday), expected to improve 15.0k after the 3.9k drop in August. The unemployment rate is seen rising to 5.7% in September from 5.6% in August. The Reserve Bank of Australia’s minutes to the October meeting are due (Tuesday). Governor Lowe speaks (Tuesday) at Citi’s 8th Annual Australian & New Zealand Investment Conference in Sydney.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets mostly moved higher, as the Dollar strengthened in the wake of the last U.S. presidential debate. The weaker Yen helped to underpin Japanese markets and the most recent rise in oil prices is also helping to underpin investor demand. The front end WTI future has come off highs but is holding comfortably above USD 51 per barrel. In Europe the focus is on the ECB meeting and even if policy is likely to remain on hold today, Draghi will hope to keep his options sufficiently open to avoid a temper tantrum as markets focus on further stimulus beyond the current QE program, which ends in March next year. The European calendar also has U.K. retail sales, BoP and current account data from the Eurozone and Swiss trade data at the start of the session.
BOC Rate Decision: Governor Poloz said they actively discussed adding more monetary stimulus before deciding to leave the policy rate unchanged. He said the Governing Council “actively discussed the possibility of adding more monetary stimulus at this time, in order to return to the economy to full capacity.” Yet, they “identified a number of uncertainties in the current framework that are serving to widen the zone of balance within our risk-management framework.” Those uncertainties include “the macroeconomic effects of the new mortgage rates, the likely path of our exports; the impact of the federal government’s fiscal measures…and the effects on business confidence of the U.S. election.” The revelation that they “actively discussed” the possibility of adding more stimulus is not exactly a surprise. Given where the domestic and global economy currently sit, expectations are that this will continued to be discussed but with the same result (no change in rates) to be the same.
Poor Australian Labour Data: The number of jobs fell last month by 9,800, expectations were for an increase of 15,200, also the previous month was revised down to a fall of 8,600 from a fall of 3,900. Fulltime employment for September showed a dramatic fall of 53,000 and August was revised down to 10,500 from 11,500. AUD/USD dropped from around 0.7725 to under 0.7700, spent a few minutes chopping in a small range before slipping further and its under 0.7665 currently. Just as doubts were raised after big employment gains in the past, doubts were raised on big employment losses on today’s figures, the -53K for full time jobs in the month result in particular was greeted with questions.
Fedspeak: Dallas Fed moderate (and non-voter) Kaplan sees inflation firming while GDP growth for 2016 will likely average 1.75%, sufficient to drive down unemployment and take some slack out of the labor force. He sees political uncertainty likely affecting capital spending, but once the election is out of the way focus needs to shift to entitlement reform and infrastructure spending. Kaplan also notes that the Fed needs to be “humble” about the limits of monetary policy. Fed’sPotter says the Fed should be prepared to sell MBS, in comments at a Minneapolis Fed conference. Potter is head of the Fed’s Markets Group, so he has a lot of authority behind his words. Though “current FOMC guidance states that the sale of agency MBS is not anticipated…it is prudent for the Desk to be prepared for a wide variety of scenarios, including sales or the need to purchase additional agency MBS.” The large size and structure of the agency MBS market makes it a “desirable choice for conduction operations of the magnitude necessary t have a meaningful impact on financial and macroeconomic conditions.” However, the Fed’s experience with selling MBS is much more limited than purchasing agency paper, he noted. The Fed’s portfolio and possible manipulations of such has been in the news lately, especially after a “twist” operation was broached by Boston Fed’s Rosengren last week.
Main Macro Events Today
ECB Rate Announcement & Press Conference – Even if the ECB more likely to postpone any major decisions until December Draghi will be facing a difficult balancing act at today’s press conference, especially since a Reuters reported suggested that the planned tweaks to the asset purchase program designed to address looming supply shortages could already be discussed this week. At the same time, the question is whether the ECB will extend the QE program beyond March next year, when the current schedule of EUR 80 bln purchases per month is set to end. With growth indicators suggesting ongoing economic expansion and inflation starting to move higher, the ECB clearly is reluctant to add even more stimulus to an already very expansionary policy but the doves at the council will press for a follow up program with the end result likely a gradual phasing out of asset purchases. It will depend on Draghi’s delivery whether this will spook markets as the dreaded “tapering” or whether he can sell it as the further expansion of monetary policy it actually is. For now Draghi will be keeping all his options open and try to deliver a statement that keeps markets guessing and hoping and thus avoids a temper tantrum. US Philly Fed Index – October Philly Fed should reveal a headline dip to 6.3 after the September bounce to 12.8 from 2.0 in August. The Empire State Index for October is already out and declined to -6.8 from -2.0 in September. Broadly, expectations are for producer sentiment to trend sideways in October with the ISM-adjusted average of all measures holding at 50 from August and September. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
The BoJ: Announced a policy framework overhaul, which it called “QQE with yield curve control.” It left the 0.1% negative rate charged on excess reserves unchanged, while detailing a reworked QQE program. The central bank abandoned its base money target and replaced it with “yield curve control,” whereby the BoJ will target 10-year JGB yields at current levels around 0%. The second part of the new policy framework is “inflation-overshooting commitment,” where the BoJ is committing to expanding the money base until CPI exceeds the y/y target of 2% and stays above target. The BoJ said the scale of the QQE program remained on hold, and that overall asset purchases would remain “more or less in line with the current pace,” although the maturity target has been abolished. The timeframe for achieving the 2% inflation target has been set, quite simply, as “the earliest possible time.” Aside from detailing the new framework, the BoJ also provided an assessment of the failure to have pushed CPI to 2%, blaming “exogenous factors,”including the fall in oil prices, sluggish global demand and financial market volatility. On the economy, the BoJ said recovery “is likely to remain slow.” The yen dove nearly 1% as markets digested the new framework see below.
FX Update: USDJPY is registering a near 1% gain as the London interbank take to their desks. After initially dipping as the BoJ refrain from extending its NIRP policy, the pair rallied as the yen fell across-the-board as markets digested an overhaul in the BoJ’s policy framework. It left the 0.1% negative rate charged on excess reserves unchanged, while detailing a reworked QQE program. The central bank abandoned its base money target and replaced it with “yield curve control,” whereby the BoJ will target 10-year JGB yields at current levels around 0%. The second part of the new policy framework is “inflation-overshooting commitment,” where the BoJ is committing to expanding the money base until CPI exceeds the y/y target of 2% and stays above target. USD-JPY clocked an eight-day high at 102.78. EUR-JPY and other yen crosses also vaulted higher. Whether the new framework will general sustained yen weakness remains to be seen. Spill over dollar strength following the BoJ’s announcement drove EUR-USD to a three-week low at 1.1123.
BoC’s Poloz said it is unclear if the bank will cut its forecast in October, responding to a question in his recently started Q&A with the press. He noted that the export gain in July provides some reassurance, but also said weakness in export data is unexplained. Keeping his constructive tone intact, he said he expects a large recovery in the level of non-commodity exports. As for the downward shift in inflation risks, he explained that the output gap and exports are behind the downward tilt. But the output gap is the biggest factor in lower inflation outlook he said. Responding to a question on housing, he said a slowdown in one housing market is rarely contagious. As for the renewal of the 2% inflation targeting mandate that is due in upcoming weeks, he said it is the Finance Department’s decision to make. It is a pretty high bar for changing the target, but it is not impossible, the Governor said. And repeating his previous view, he said the adjustment to the oil shock will take several years.
European Outlook: Japanese stocks jumped higher leading broad gains on other European markets after the Bank of Japan decided not to cut interest rates further. The reaction shows that markets and especially banks were weary of a further deepening of negative rates, which banks and insurers in particular are struggling to cope with. The Bank said it is shifting to a greater focus on the shape of the yield curve saying that it will increase bond purchases “more of less in line with the current pace” of 80 trillion yen per year. It also kept the door open to another rate cut. The Yen was under pressure after the decision, which underpinned the outperformance of Japanese stock markets. U.S. and U.K. futures are also higher ahead of the Fed decision, which is likely to see policy unchanged leaving the focus on the forward guidance. Oil prices are also higher, although the front end WTI future is down from earlier highs of over USD 45 per barrel at currently USD 44.89. European markets will look ahead to the Fed decision, but the local calendar also has U.K. public finance data. ECB’s Praet meanwhile stressed again this morning that the central bank will maintain a high degree of monetary accommodation.
Main Macro Events Today
FOMC Outlook – The two day FOMC meeting started yesterday with the announcement and press conference scheduled for 18:00 and 18:30 GMT respectively later today. There is little chance of a rate hike this week. The lack of any indication from the FOMC that another tightening is on the way is one of the main factors suggesting policy will be left on hold for now. Additionally, recent data reports haven’t gone the Fed’s way, with weakness in employment, retail sales, and manufacturing, along with still low/moderate inflation trends. RBNZ – Expectations are for no change in the base rate from its current 2.00% level, still by far the the highest in the G10 countries.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
FX News Today European Outlook: Asian stock markets are mostly down, with Japan a notable outperforming (closing up and indices holding on to modest gains as the Yen continued to decline against the Dollar. U.S. and U.K. stock futures are also heading south as oil prices are down and the front end WTI future is trading below USD 50 per barrel, which has been hitting energy producers. Investors continue to watch earnings reports. ECB’s Draghi once again defended the ECB’s policy in a speech in Germany yesterday evening, while once again calling for support from the fiscal side. Nothing new there that would change the policy outlook.
German GfK consumer confidence: Dropped to 9.7 in November, from 10.0 in October. There is no breakdown for the November projections but the fall back was unexpected and disappointing, especially after the stronger than expected Ifo and PMI readings this week. The breakdown for October showed a marked improvement in business cycle expectations, which jumped to 13.0 from 6.8, the highest reading since June, which suggests that the Brexit shock was short lived. Despite this income expectations declined sharply as did the willingness to buy, although the willingness to save also slumped amid the low interest rate environment. Mixed messages then and at least in Germany it seems Draghi’s policy of easy money is not lifting consumption.
Australian CPI: The Australian dollar rallied following an above-forecast headline in Australian Q3 CPI, which rose 0.7% q/q, above the median expectation for a 0.5% rise. Most expect this should keep the RBA, which had cited concerns about disinflation as prime reasons for cutting rates in May and August this year, from any temptation to cut rates at its policy meeting next week. Core inflation painted a more benign picture, remaining unchanged at 1.5% y/y. AUDUSD lifted to a one-week high at 0.7708, which was a gain of just over 1%, before settling around 0.7690.
US Data reports: Revealed a larger than expected consumer confidence drop to 98.6 in October from a 103.5 (was 104.1) September figure that now sits marginally below the 103.8 cycle-high in January of 2015, alongside a Richmond Fed rise to -4.0 from -8.0 in September and a 3-year low of -11.0 August. We also saw big gains in two August home price indicators of 0.4% for Case-Shiller and 0.7% for the FHFA. The ISM-adjusted Richmond Fed rose to 51.5 from 50.8 in September and a 43-month low of 49.7 in August, as we’re seeing a renewed uptrend in producer sentiment with the bounce in oil prices and a recovery in mining and factory output as the big six-quarter inventory headwind reverses course. Confidence faces a headwind from the November elections, though we have an ongoing lift from low gasoline prices, stock market and home price gains, and an expected GDP bounce after a three-quarter string of lean 1% growth rates through Q2.
Main Macro Events Today
US Flash Services PMI – Expectations are for a slight uptick to 52.4 from a positively revised 52.3 last time. US New Home Sales – New home sales are expected to decrease 1.5% to a 600k unit pace in September from 609k in August. Forecast risk: upward, given the higher NAHB for the month. Market risk: downward, as a run of weak data could impact the path of further rate hikes. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets headed broadly lower, as investors remain focused on the earnings season, with Canon Inc. the biggest drag on the index. U.K. and U.S. stock futures are also down, following on from losses yesterday. Oil prices are up from lows, but the front end WTI (USOil) futures remains firmly below USD 50 per barrel, as U.S. East and Gulf coast stockpiles rose and the country’s production picked up. In Europe Deutsche Bank reports earnings today and the calendar has U.K. Q3 GDP growth data, which is expected to show a sharp deceleration in the quarterly growth rate to 0.3%. The Eurozone has M3 money supply growth and Italian consumer and business confidence data. Elsewhere Norges Bank is expected to keep the deposit rate unchanged at 0.50%. Core European bond futures declined in tandem with stock markets yesterday, as the focus remains on the U.S. rate outlook and the U.S. Presidential Election.
US Earnings – the busiest day : Earnings will remain the focal point again today with several more heavy hitters on tap. The calendar features Alphabet, Amazon, Twitter, Amgen, Baidu, Dow Chemical, Dr Pepper Snapple, Ford Motor, Aetna, Blackstone, Bristol-Myers Squibb, Brunswick,ConocoPhillips, Celgene, Raytheon, Expedia, Choice Hotels, Colgate-Palmolive, VW, Deckers, Hanesbrands, HealthSouth, LinkedIn, MGM Resorts, Nokia, Samsung Electronics, SolarCity, and Stanley Black & Decker.
US Data reports: Revealed big upside September surprises in the advance indicator report for the trade deficit and inventories alongside a 3.1% September new home sales rise that unfortunately followed big downward revisions over the prior three months that trimmed the summer sales spike. The trade and inventory surprises lifted Q3 GDP growth estimates sharply to 3.3% from 2.5%, though there were reductions in Q4 GDP growth to 2.0% from 2.5% as the expected Q4 inventory bounce was “pulled forward” into September. Expectations are now for a September drop in the goods and services trade gap to $36.5 bln from $40.7 bln in August. Also a 0.2% September business inventory increase that incorporates yesterday’s gains of 0.2% for wholesalers and 0.3% for retailers, alongside an assumed 0.1% factory inventory rise.
Germany’s Schaeuble: U.K. can’t have Brexit “A La Carte”. Nothing really new there, with the German finance minister repeating again that single market membership requires the acceptance of the EU’s four freedoms. He also said that the EU can’t show much flexibility, which confirms again that boths sides are heading for a hard Brexit scenario and Schaeuble’s hope that the economic damage for the EU and the U.K should be kept to a minimum, may be hard to achieve.
Main Macro Events Today
UK Prelim GDP – The first post Brexit quarterly reading. So far cable has pivoted around 1.2200, since the flash crash on October 7th. Announcement watched eagerly in Downing Street and at the BOE. Expectations are for a q/q figure of 0.3%. Last time 0.5% and the subsequently revised up to 0.7%. US Core Durable Goods – September figure is seen as edging up 0.2%, after August’s revised 0.1% increase. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
FBI’s Comey dropped a bombshell on the markets late Friday as he announced the agency would be reviving the Clinton email probe after learning, via a separate investigation, of the existence of apparently “pertinent” messages on a PC owned by Anthony Weiner (estranged husband of Clinton advisor Huma Abedin). In his letter, Comey reportedly told key members of Congress that his agency should take “appropriate investigative steps.” Wall Street dropped on the news, though a bounce in Biotech and Pharma shares (on the hot seat under Clinton) helped the Dow recover toward unchanged levels. The Mexican peso, the de facto election barometer, was the main casualty of the news, plunging 1.4% before closing 0.9% lower. Concurrently, bond yields closed modestly lower on short covering and risk aversion. This heightened uncertainty will make for an extraordinary run up to the November 8 election.
United States: The FOMC (Tuesday, Wednesday) will be a point of interest for the markets this week, but not quite the center of attention it usually is. The pick-up in Advance Q3 GDP to 2.9% helped clear the way for a hike in December, and implied futures were suggesting about a 75-80% probability — the November 1, 2 FOMC was never really in the running due to the election. Other data this week will have more relevance for how the markets set up for the December policy decision. Remember, the onus is on the data to keep the Fed sidelined at year end. Personal income (Monday) and PCE. Chicago PMI and Dallas Fed index (Tuesday) and construction spending. MBA mortgage applications are on tap (Wednesday), along with the ADP employment survey set to increase 160k in October. Q3 productivity (Thursday) along with. Initial jobless claims, ISM services and factory goods orders. The employment report will highlight on Friday, with October nonfarm payrolls expected to increase by 174k vs 156k in September, with a 160k private payroll gain. The unemployment rate is expected to tick back down to 4.9% from 5.0% in September. The workweek is expected to hold at 34.4 for a second month. Hourly earnings are expected to be up 0.2% which would leave a 2.5% y/y rise. Hours-worked should be 0.1% for the month following a 0.4% increase last month.
The Q3 earnings announcements continue this week. So far, most of the S&P companies which have announced have beaten estimates. This week includes Electronic Arts, Pfizer, Alibaba, Allergan, Facebook, Fitbit, Time Warner, Kraft Heinz, Adidas, Liberty Global, Starbucks and BMW.
Canada: A heavy slate of economic data this week: The industrial product price index (Monday), GDP (Tuesday), Employment (Friday) is projected to fall 15.0k in October, but after the stunning 67.2k surge in September. The unemployment rate is seen steady at 7.0%. The trade deficit also (Friday) is expected to narrow to -C$1.8 bln in September from -C$1.9 bln in August, as Canada’s trade position continues to gradually improve. The October RBC manufacturing PMI (Tuesday) and October Ivey PMI (Friday) are also due.
Europe: Preliminary Eurozone Q3 GDP numbers and October inflation data will be in focus this week, which together with the final readings for October PMI surveys, will add to the data mix that could prove decisive for the ECB December decision on future QE purchases. Preliminary Eurozone HICP inflation (Monday) meanwhile is seen accelerating to 0.5% y/y.The data calendar also has unemployment numbers from Germany for October, (Wednesday). Eurozone September unemployment (Thursday) is seen steady at 10.2%. German retail sales and French production data are also on the slate.
UK: The BoE’s Monetary Policy Committee meets for the first time since September (announcing Thursday), and the central bank will at the same time release the latest Quarterly Inflation Report with updated growth and inflation projections. While last week brought some good news, including the solid Q3 GDP report and news that Nissan will remain committed to its manufacturing operations in Brexit-bound Britain, the outlook remains clouded by uncertainty. S&P affirmed its AA credit rating for the UK late on Friday, although the agency maintained its negative outlook and warned that Brexit “presents a significant risk to the UK’s track record of strong economic performance, and to its large financial sector in particular.” The UK data calendar is also busy this week. Monthly BoE lending data (Monday) should see lending stabilize. The October PMI surveys highlight. The manufacturing PMI release (Tuesday), the construction PMI (Wednesday) and the services PMI (Thursday). Outcomes in-line with expectations would affirm that the economy is continuing to expand in early Q4.
China: The only reports are the services and manufacturing PMI measures (both Tuesday).
Japan: The BoJ meeting (Monday, Tuesday) will be anxiously awaited amid policy uncertainties. While Governor Kuroda and Company are not expected to reveal any changes to the QE program, the markets will be watching for any shift to the Bank’s timeline for hitting its inflation goal of 2%. Data wise September preliminary industrial production, Retail sales , housing starts, construction orders and auto sales are all published (Monday). The Nikkei/Markit October manufacturing PMI (Tuesday) is forecast at 48.0 from 48.2 previously. October consumer confidence (Wednesday) is forecast at 42.5 from 43.0 previously, while October services PMI is due Friday. The markets are closed for a holiday Thursday.
Australia: The calendar is highlighted Reserve Bank of Australia’s meeting (Tuesday), expected to result in no change to the current 1.50% setting for the policy rate. Building approvals (Wednesday), the trade deficit (Thursday), Retail sales (Friday) and finally the October Melbourne Institute inflation index (Monday) is also scheduled for release.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
FBI’s Comey dropped a bombshell on the markets late Friday as he announced the agency would be reviving the Clinton email probe after learning, via a separate investigation, of the existence of apparently “pertinent” messages on a PC owned by Anthony Weiner (estranged husband of Clinton advisor Huma Abedin). In his letter, Comey reportedly told key members of Congress that his agency should take “appropriate investigative steps.” Wall Street dropped on the news, though a bounce in Biotech and Pharma shares (on the hot seat under Clinton) helped the Dow recover toward unchanged levels. The Mexican peso, the de facto election barometer, was the main casualty of the news, plunging 1.4% before closing 0.9% lower. Concurrently, bond yields closed modestly lower on short covering and risk aversion. This heightened uncertainty will make for an extraordinary run up to the November 8 election.
United States: The FOMC (Tuesday, Wednesday) will be a point of interest for the markets this week, but not quite the center of attention it usually is. The pick-up in Advance Q3 GDP to 2.9% helped clear the way for a hike in December, and implied futures were suggesting about a 75-80% probability — the November 1, 2 FOMC was never really in the running due to the election. Other data this week will have more relevance for how the markets set up for the December policy decision. Remember, the onus is on the data to keep the Fed sidelined at year end. Personal income (Monday) and PCE. Chicago PMI and Dallas Fed index (Tuesday) and construction spending. MBA mortgage applications are on tap (Wednesday), along with the ADP employment survey set to increase 160k in October. Q3 productivity (Thursday) along with. Initial jobless claims, ISM services and factory goods orders. The employment report will highlight on Friday, with October nonfarm payrolls expected to increase by 174k vs 156k in September, with a 160k private payroll gain. The unemployment rate is expected to tick back down to 4.9% from 5.0% in September. The workweek is expected to hold at 34.4 for a second month. Hourly earnings are expected to be up 0.2% which would leave a 2.5% y/y rise. Hours-worked should be 0.1% for the month following a 0.4% increase last month.
The Q3 earnings announcements continue this week. So far, most of the S&P companies which have announced have beaten estimates. This week includes Electronic Arts, Pfizer, Alibaba, Allergan, Facebook, Fitbit, Time Warner, Kraft Heinz, Adidas, Liberty Global, Starbucks and BMW.
Canada: A heavy slate of economic data this week: The industrial product price index (Monday), GDP (Tuesday), Employment (Friday) is projected to fall 15.0k in October, but after the stunning 67.2k surge in September. The unemployment rate is seen steady at 7.0%. The trade deficit also (Friday) is expected to narrow to -C$1.8 bln in September from -C$1.9 bln in August, as Canada’s trade position continues to gradually improve. The October RBC manufacturing PMI (Tuesday) and October Ivey PMI (Friday) are also due.
Europe: Preliminary Eurozone Q3 GDP numbers and October inflation data will be in focus this week, which together with the final readings for October PMI surveys, will add to the data mix that could prove decisive for the ECB December decision on future QE purchases. Preliminary Eurozone HICP inflation (Monday) meanwhile is seen accelerating to 0.5% y/y.The data calendar also has unemployment numbers from Germany for October, (Wednesday). Eurozone September unemployment (Thursday) is seen steady at 10.2%. German retail sales and French production data are also on the slate.
UK: The BoE’s Monetary Policy Committee meets for the first time since September (announcing Thursday), and the central bank will at the same time release the latest Quarterly Inflation Report with updated growth and inflation projections. While last week brought some good news, including the solid Q3 GDP report and news that Nissan will remain committed to its manufacturing operations in Brexit-bound Britain, the outlook remains clouded by uncertainty. S&P affirmed its AA credit rating for the UK late on Friday, although the agency maintained its negative outlook and warned that Brexit “presents a significant risk to the UK’s track record of strong economic performance, and to its large financial sector in particular.” The UK data calendar is also busy this week. Monthly BoE lending data (Monday) should see lending stabilize. The October PMI surveys highlight. The manufacturing PMI release (Tuesday), the construction PMI (Wednesday) and the services PMI (Thursday). Outcomes in-line with expectations would affirm that the economy is continuing to expand in early Q4.
China: The only reports are the services and manufacturing PMI measures (both Tuesday).
Japan: The BoJ meeting (Monday, Tuesday) will be anxiously awaited amid policy uncertainties. While Governor Kuroda and Company are not expected to reveal any changes to the QE program, the markets will be watching for any shift to the Bank’s timeline for hitting its inflation goal of 2%. Data wise September preliminary industrial production, Retail sales , housing starts, construction orders and auto sales are all published (Monday). The Nikkei/Markit October manufacturing PMI (Tuesday) is forecast at 48.0 from 48.2 previously. October consumer confidence (Wednesday) is forecast at 42.5 from 43.0 previously, while October services PMI is due Friday. The markets are closed for a holiday Thursday.
Australia: The calendar is highlighted Reserve Bank of Australia’s meeting (Tuesday), expected to result in no change to the current 1.50% setting for the policy rate. Building approvals (Wednesday), the trade deficit (Thursday), Retail sales (Friday) and finally the October Melbourne Institute inflation index (Monday) is also scheduled for release.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets are mixed, with Japanese markets fluctuating and closed with slight gains after the BoJ left rates unchanged, but lowered the inflation outlook. The Hang Seng is outperforming and mainland Chinese markets are also underpinned, after the official manufacturing PMI improved. The ASX underperformed as AUD strengthened and U.S. and U.K. stock futures are moving higher. Oil prices are up from lows, but the front end WTI future is just above USD 47 per barrel and clearly down from recent highs, amid the lack of an OPEC output deal. In Europe trade is likely to be quieter than usual, with a public holiday in some European countries, including parts of Germany. This will delay the release of final EMU manufacturing PMI numbers until tomorrow, while Switzerland and the U.K. will publish manufacturing PMI data today.
The BoJ left policy unchanged following the conclusion of its latest policy meeting, as had been widely expected. This left the interest rate at -0.1% and QQE unchanged at Y80 tln per year. The central bank also pushed back, once again, the time when it expects inflation to reach the 2% target, now projecting this to happen “around fiscal 2018.” Previously the BoJ had forecast inflation returning to target by the end of fiscal 2017, which ends in March 2018. The ellusive target was first introduced in 2013. Headline core CPI fell to -0.5% y/y in October, while the so-called “core-core” CPI figure was flat y/y, a three-year low and highlighting sluggish consumer demand. The central bank also trimmed its inflation forecasts today, now seeing core CPI at 1.5% in 2017 versus 1.7% previously. On the economy, the BoJ said that the economy would continue to expand moderately, but noted that households haven’t been spending increased income and that the risks to the outlook were skewed to the downside.
FX Update: The Aussie dollar was the standout performing, rallying on the RBA’s decision to leave policy unchanged. AUD-USD and AUD-JPY are registering the biggest movement out of the currencies we track, showing respective gains of 0.7% and 0.8% into the London interbank open. Australia’s weak core inflation data had fed some speculation that the RBA might have opted to make a third rate cut of the year. But the antipodean central bank stood pat and Governor Lowe’s statement was upbeat in outlook, noting that “over the next year, the economy is forecast to grow at close to its potential rate before gradually strengthening” with inflation “expected to pick up gradually over the next two years.” AUDUSD clocked a six-day high at 0.7688 while AUDJPY broke into three-month high terrain. Stronger than expected October manufacturing PMI surveys out of China, with the Caixin version reaching its best level since August 2011, also lifted the Aussie. Elsewhere, currencies generally saw narrow ranges. Cable consolidated gains seen into the London close yesterday, holding around 1.2220-30. EURUSD continued to narrowly orbit the 1.0950 level. USDJPY popped moderately higher after the expected decision by the BoJ to leave policy unchanged with the central bank lowering CPI forecasts and yet again pushing back the time it expects the 2% target to be reached.
US Data reports: Mixed. We saw a moderate 0.3% September personal income gain, but with a solid 0.5% consumption rise, alongside divergent October swings for the Chicago PMI and the Dallas Fed that left both measures below prior estimates. We saw a Chicago PMI drop to a 5-month low of 50.6 from 54.2, and a rise for the Dallas Fed to a still-negative -1.5 in October from -3.7. We saw an ISM-adjusted Dallas Fed drop to 49.6 from 51.2 in October and 50.7 in September.
Carney to stay and extra 12 months: BoE’s Carney will stay on another year, taking his term beyond the expected Article 50 process in order to help secure an orderly transition. This followed a meeting yesterday with PM May, the UK Finance Minister Hammond says he’s “very pleased” to hear that Carney intends to stay until the end of June 2019.
Main Macro Events Today
US manufacturing ISM – The October ISM should reveal a headline increase to 51.7 from 51.5 in September and 49.4 in August. Already released measures of sentiment for October have revealed headline declines. More broadly we expect sentiment to improve in October with the ISM-adjusted average of all measures climbing to 51 after two months at 50 as inventory headwinds dissipate and the mining sector rebounds. Canada GDP – Expectations are for a 0.2% rise in September GDP. The modest gain would follow the back to back surges in August (+0.5%) and July (+0.6%), as the economy, or more specifically oil sands production in the Fort McMurray region, rebounded from the wildfires that shuttered production in May (when GDP fell 0.6%). The energy sector saw continued growth in September, as export volumes grew and higher volumes boosted manufacturing production. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: A jump in oil prices following yesterday’s OPEC deal on output cuts and a stronger than expected manufacturing PMI reading out of China underpinned broad gains on Asian stock markets overnight. The front end WTI future cleared the USD 50 per barrel mark, but while the oil price induced rally already helped European markets to post gains Wednesday, it seems to be running out of steam with U.S. stock futures down on the day in tandem with U.K. stock futures. Concerns about a new wave of global protectionism seems to be adding to concerns. The rise in oil prices should keep upward pressure on yields, although if equities head south again, we could see futures regaining some of yesterday’s losses. Italian markets will remain in focus as the referendum on constitutional reforms draws nearer. The European calendar has the final reading for the Eurozone manufacturing PMI, as well as Eurozone unemployment numbers and the U.K. manufacturing PMI for November.
US Reports Yesterday: Very solid personal income, ADP, and Chicago PMI figures that further document accelerating activity. For income, we saw a firm 0.6% October rise, with a lean 0.3% consumption increase but with the expected 0.1% “real” gain thanks to a lean 0.2% PCE chain price rise. We saw skewing of Q3 income and consumption strength toward September that lifted the entry to Q4, beyond the expected upward income revisions in Q2 and Q3, and Q3 consumption boosts. We lifted our consumption estimates, though we still peg Q4 GDP growth at 1.8%. A 216k November ADP rise beat our 180k estimate for private payrolls with a 190k total payroll increase, though we saw a big 28k downward October ADP revision to 119k from 147k that left a downside gap to the 142k private payroll increase in that month. We saw a November Chicago PMI surge to a 22-month high of 57.6 to leave a robust level as producer sentiment extends its uptrend. We expect a 190k rise in November payrolls tomorrow.
Canada’s Growth Ticks Up: Canada’s 3.5% GDP rebound in Q3 was accompanied by the anticipated bounce back in energy production, but was joined by acceleration in the pace of consumption spending, a surge in investment on non-residential structures and a positive contribution from inventories. A 0.3% gain in September GDP left a strong hand-off to Q4. The reports also imparted a mildly positive tilt to the outlook for 2016 and 2017 growth, adding to the case for no change from the Bank of Canada at the December announcement.
Fedspeak: Cleveland Fed hawk Mester said the “devil will be in the details” in terms of fiscal, trade and immigration policies of the next administration with respect to inflation and employment, but raising rates would be a prudent step for the Fed as postponing hikes for too long would raise risks of recession and financial instability. She feels the Fed meanwhile “is not behind the curve.” Mester has been a hawkish dissenter against policy status quo and has been arguing for pre-emptive rate hikes for a while, so this won’t come as a surprise. Fed Governor Powell; communications should downplay the timing of rate moves, he said in prepared remarks at an “Understanding Fedspeak” event. Focusing on the potential timing of changes can lead to confusion. Rather, communications should emphasize the uncertainty over forecasts. On the dot plot, he noted that while changes in the plot might reveal changes in views on the policy path, it’s not a useful predictor of near term rate action. In conclusion, he said policymakers communicate a lot more these days; some of the comments are designed to express the consensus, while some is designed to show the diversity of views.
Main Macro Events Today
US ISM Manufacturing PMI – The October ISM is expected to rise to 52.5 from 51.9 in October. Forecast risk: upward, given strong components in early month sentiment. Market risk: downward, as weakening in data could impact rate hike timelines. The ISM has shown a recent high of 59.9 in February ’11 and a low of 33.1 in December of 2008. Canada 3Q GDP – Real Q3 GDP is expected to rebound 3.4% in the report due today after the 1.6% drop in Q2. A bounce-back in real net exports is seen driving the pick-up. Consumption growth is seen slowing, while M&E investment should manage another small gain. Inventories are the usual wildcard, projected to modestly subtract from GDP. Meanwhile, September GDP by industry is seen up 0.1% m/m, leaving a tepid hand-off to Q4. Moreover, the Q3 surge will be driven by a return to production and activity in the Forth McMurray region after the wildfire temporarily halted production in Q2.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
United States: The November services data, along with trade and sentiment data will headline a thin economic slate. The nonmanufacturing ISM (Monday) is projected to rise to 55.5 after falling 2.3 points to 54.8 in October. The Markit services PMI is also slated (Monday). The October international trade report (Tuesday) is seen posting a wider $42.4 bln deficit. The December preliminary consumer sentiment release (Friday) should show an increase to 94.5 after popping up to 93.8 in November, further reflecting Trump enthusiasm. Productivity growth (Tuesday) is forecast to be unchanged at a 3.1% pace, while unit labor costs hold at 0.3%. The October JOLTS data (Wednesday) would typically be important, as it’s a Yellen favorite, but with the Fed a done deal next week, it will be overlooked. The quarterly QSS release (Thursday) will be of some importance for the GDP outlook as it’s an update on the service sector. Other data this week includes the Fed’s November Labor Market Conditions Index (LMCI) (Monday), October factory orders (Tuesday), October consumer credit (Wednesday), initial jobless claims (Thursday), and October wholesale trade. Fedspeak will be compressed to Monday this week heading into the Fed’s blackout window for the December 14 FOMC decision. On Saturday, NY Fed dove Dudleyconfined his remarks to regulation. He will be back up again on Monday discussing the macroeconomic outlook. Chicago Fed dove Evans will speak on the current economic outlook and policy. St. Louis Fed hawk-dove Bullard will discuss the economy and policy as well.
Canada: the Bank of Canada’s policy announcement (Wednesday) is the focus. No change in the current 0.50% rate setting is expected but a tempering of the easing bias is possible. Projections are also for no change in rates through next year. Data is headlined by the October trade report (Tuesday), with the deficit expected to narrow to -C$2.0 bln from -C$4.1 bln. The Ivey PMI (Tuesday) is projected to be nearly steady at 60.0 in November from 59.7 in October. Housing starts (Thursday) are seen slipping to 190.0k in November from 192.9k in October. Building permit values (Thursday) are anticipated to decline 1.0% in October after tumbling 7.0% in September. Capacity utilization (Thursday) is projected to rebound to 81.5% in Q3 as the economy recovered, following the plunge to 80.0% in Q2 that was driven by the Alberta-wildfire-related pull-back in GDP. Capacity utilization was 81.4% in Q1. The October new housing price index (Thursday) is expected to rise 0.2% m/m in October after the matching 0.2% increase in September
Europe: The ECB is the focus this week. The Bank not only has to deal with the immediate fallout from the Italian referendum, but most importantly, it will be deciding on the future of the QE program, which currently runs out in March. News sources suggested that many on the Committee favor another 6-month extension at current levels. The calendar will play a secondary role, although German manufacturing order numbers (Tuesday) will be interesting and are likely to be watched closely by central bankers. Similarly, industrial production for October (Wednesday) is expected to rebound 0.9% m/m after falling -1.8% m/m in September. Data broadly in line with expectations would confirm what confidence indicators already suggested, that growth is likely to pick up again in the last quarter of the year. The same holds for Eurozone October retail sales (Monday), which are seen at 0.8% m/m.
The November Services PMI (Monday) is likely to be confirmed at 55.0. And, against these up-to-date numbers, the third release of Eurozone Q3 GDP (Tuesday) will be rather backward looking. The data calendar also has German trade numbers (Friday) and French production data Friday).
UK: Sterling closed out last week on strong footing with an average 0.6% advance versus the G3 currencies on the day and an average gain of 1.6% on the week. The calendar includes an expected ruling by the Supreme Court on Thursday on the government’s challenge to the issue of whether it has to put the decision to trigger Article 50 of the Lisbon Treaty before parliament. Data include the November services PMI (Monday), which is expected to ebb to a headline reading of 54.2) after October’s 54.5. Like the manufacturing and construction PMIs have already shown, the November PMI should reveal a spike in cost pressures as the consequence of sterling’s weakness post-Brexit vote start to bite. Production data for October is also up (Wednesday), where we see scope for a rebound in the industrial output figure, to +0.2% m/m after September’s 0.4% m/m contraction. Trade data and various house price indicators are also out, none of which is expected to move markets.
China: The November trade surplus (Thursday) is expected to narrow to $45.0 bln from $49.1 bln in October. Friday brings November CPI and PPI, where the former is seen warming to 2.3% y/y from 2.1%, and the latter expected at 2.5% y/y from 1.2%.
Japan: The October current account surplus (Thursday) is seen narrowing to JPY 1,600.0 bln from 1,821.0 bln in September. November bank loan data are also due Thursday. The Q4 MoF business outlook survey (Friday) is expected to fall to 2.0 from 2.9 in November.
Australia: Reserve Bank of Australia meeting (Tuesday) is the highlight. No change to the current 1.50% rate setting is the expected outcome. The bank cut rates in May and August to counter a firming AUD. The slate of economic data is highlighted by Q3 GDP (Wednesday), projected to expand 0.4% (q/q, sa) after the 0.5% gain in Q2. The current account deficit (Tuesday) is seen at -A$14.5 bln after the -A$15.5 bln shortfall in Q2. The trade deficit (Thursday) is anticipated at -A$1.0 bln in October from -A$1.2 bln in September. Housing finance (Friday) is seen falling 1.0% in October after the 1.6% run-up in September. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets managed to move mostly higher, after gains in Europe and on Wall Street yesterday. The Italian MIB closed with slight losses Monday, but it seems investors quickly got over the widely expected rejection of Italy’s constitutional reform and Renzi’s resignation. Italy may once again have to look for a new government, but that is hardly anything new in a country where it is extremely rare for a government to last full term Italy is hardly heading for an exit from the EU, even if EMU membership is under scrutiny in some quarters, but the problems of Italy’s banks will likely come back to the forefront and keep pressure on Italian markets, which actually managed to outperform in the last week ahead of the referendum. Still, U.S. and European stock futures are heading south this morning, and oil prices are down. The European calendar has German factory orders at the start of the session, which are expected to rebound from the contraction in September. There is also the final and detailed reading of Eurozone Q3 GDP and Swiss inflation data. Already released overnight, U.K. BRC like for like retail sales came in weaker than expected.
RBA Rates left unchanged: Cash rates remain on hold at 1.5% as expected. “Rising AUD could complicate economic transition” Steady policy consistent with growth and inflation targets, global economy growing at a slower rate but Chinese economy has “Steadied”. Large supply of apartments to hit housing market (where prices are rising “briskly”) in the next few years. Global inflation more balanced than for “some time”. Labour market conditions have improved and commodity prices have risen. However, outlook for inflation remains “low for some time”. AUD unchanged following announcement and statement. RBA next meet February 8.
US Reports Yesterday: The U.S. ISM-NMI bounce to a 1-year high of 57.2 from 54.8 in October, but a similar 57.1 in September, left the measure much closer to the 10-year high of 59.6 in July of 2015 than the 6-year low of 51.4 in August. The ISM-adjusted ISM-NMI bounced less sharply, to 56.1 from 54.2 in October, versus an 8-month high of 56.3 in June, a 10-year high of 59.0 in July of 2015, and a 6-year low of 50.7 in August. The ISM-adjusted average of the major producer sentiment surveys surged to a 16-month high of 53 from 51 in October and 50 in August and September. We saw a 49 expansion-low in January and February, and previously in October of 2012. The employment gauge surged to a 1-year high of 58.2 from 53.1.
FedSpeak: St. Louis Fed hawk-dove Bullard: new tax, fiscal and regulatory policies in Washington could make the U.S. a higher-speed economy if they improve productivity. But any such policy changes should not be viewed as needed stimulus since the economy is not in recession. The impact on current low-growth, low interest rate regime depends on proper execution and focus on productivity improvements. Absent such changes, he’s still sticking with his one-rate-hike-only call to reach neutral policy, which is appropriate since inflation and unemployment are close to target. But this appears to give him an exit strategy if the fiscal outlook changes significantly. Dudley of NY Fed on CNBC: it’s premature to take on board market views of fiscal expansion, he said, but if fiscal policy got more expansive, the Fed would probably remove accommodation more quickly. But it depends on the specifics of any fiscal stimulus, which is as yet unknown. He’s essentially echoing his earlier speech on the economic outlook and he’s generally pleased that there has been an uptick in wages and inflation, which was the goal. Dudley notes that there will be lags in implementing any fiscal legislation, however, and any Fed policy adjustments as a result will be out over the horizon. Overall, he sees “downside risks to the economy reduced.” Dodd-Frank is not perfect, so changes are appropriate, but essential ingredients on capital requirements, etc. should remain. He also sees the rising dollar as consistent with expectations about growth. He is making a bid for automatic fiscal stabilizers again as well. Evans: we’re on cusp of period of rising rates, said the dovish Chicago Fed president, and he expects inflation to move “more solidly” toward the Fed’s 2% target. He said the state of demand in the U.S. is really quite good, growth should continue and with unemployment at 4.6% you don’t need explicit infrastructure stimulus. Evans echoed Dudley, saying we need to have patience to assess what the new administration’s policies will be, though policies under discussion could reinforce the U.S. growth trajectory. This is more optimistic on the growth front for Evans, therefore slightly more hawkish by implication.
Main Macro Events Today
EUR Gross Domestic Product – Year on Year Eurozone area GDP is out later this morning and it is expected to remain unchanged at 1.6% with Month on month GDP also unchanged at 0.3%. US Factory Orders – October factory goods data is out later today and should reveal a 2.6 increase for the headline with shipments up 0.3% and inventories up 0.2%. This follows respective September figures which had orders up 0.7%, sales up 0.9% and inventories up 0.1%. Data in line with forecasts would leave the I/S ratio unchanged from September’s 1.34. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
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Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
Global equities continue to charge ahead as the Trump reflation rally brings glad tidings and cheer to investors heading into the holidays. This week’s calendar is highlighted by the long-awaited December FOMC meeting, the last of 2016, and a rate hike should not be a surprise given the rhetorical smoke signals of late and the underpinnings of growth, jobs and even nascent signs of inflation recovering. With the ECB meeting now out of the way, focus in Europe will turn to policy decisions in the UK and Switzerland, where unchanged policy settings are forecast. For Japan the calendar ramps up with PPI, machine orders, Tankan and industrial production, while in China, FDI, production, retail and fixed investment data are due.
United States: The FOMC decision is the key data release of the week. U.S. import prices are projected to sink 0.4% in November vs +0.5% (Tuesday), while export prices are also seen -0.4% vs +0.2%. MBA mortgage market indices (Wednesday) may continue to feel the strain of rising mortgage rates. Retail sales are forecast to rise 0.6% in November vs 0.8%, or 0.7% ex-auto, as rising gasoline prices boost gas station sales. Headline PPI may remain muted at 0.1% in November or 0.2% core. Industrial production is set to dip 0.1% in November, while capacity use may slip slightly to 75.2%. October business inventories are expected to sink 0.2%. CPI kicks off a busy (Thursday), with a headline forecast of 0.3% in November, while the core reading is seen 0.2% higher for a 2.1% y/y gain. The Philly Fed index may rise to 9.0 in December from 7.6, while the Empire State index is forecast to jump to 4.0 in December from 1.5. Also on tap is the Q3 current account deficit, projected to narrow to -$112.1 bln from -$119.9 bln. Initial jobless claims may slip 8k to 250k for the week ending December 10 and the NAHB housing market index is expected to hold steady at 63 in December. The week wraps up with housing starts (Friday) seen retreating 6.3% to a 1,240k unit pace in November after the 25.5% surge to 1,323k in October.
The markets are fully priced for a rate hike Wednesday. So, key for price action will be what’s inferred for the 2017 trajectory in the policy statement, and more importantly in the forecasts. FOMC forecast revisions to be released Wednesday after the FOMC meeting should reveal boosts in the PCE chain price forecasts for 2016, downward 2016 jobless rate revisions, and a narrowing in 2016 GDP.
Canada: Highlights are on Thursday, when the October manufacturing survey and the Bank of Canada’s Financial System Review (FSR) are released. Manufacturing is expected to improve 0.5% in October after the 0.3% gain in September. The FSR, which is published twice a year, will be followed by a press conference with Governor Poloz and Senior Deputy Governor Wilkins. The Q3 national balance sheet and financial flow accounts report is due Wednesday, which will provide a key measure of household leverage. Housing data is also due, with the Teranet/National HPI for November scheduled for Wednesday and the November existing homes sales report is due out Thursday.
Europe: With the ECB announcement out of the way and effectively setting policy parameters for the whole of 2017, by extending the QE program through to December next year, data releases won’t change the overall outlook. The data calendar has the German December ZEW reading, which we expect to have picked up again following Draghi’s early Christmas present and expectations are for a rise in the future expectations index to 14.3 from 13.8 in the previous month. The rest of the calendar focuses on final November inflation data with the German reading expected to be confirmed at 0.7% y/y, the French also at 0.7% y/y, the Spanish at 0.5% y/y, the Italian at 0.1% y/y and the overall Eurozone number at 0.6% y/y. Inflation is ticking higher, but not sufficiently apparently for the ECB. Eurozone production data for October meanwhile could correct again after weaker than expected German and French data and the Eurozone trade surplus is expected to ease slightly. Events include an EU leaders summit, with Brexit strategy discussions likely to be high on the agenda, but unlikely to be discussed much publicly, as the official line remains the same as before the U.K.’s referendum.
China: November industrial production (Tuesday) is expected little changed at 6.0% y/y from 6.1% in October, while November retail sales (Tuesday) are forecast to rise 10.2% y/y from 10.0% previously. November fixed investment (Tuesday) is predicted at 8.2% y/y from 8.3%.
Japan: Quiet week for data. The BoJ’s December Tankan index (Wednesday) should see the large manufacturer’s component improve to 8 from 6 and the large non-manufacturers component at 20 from 18. Revised October industrial production is also due Wednesday.
Australia: The calendar features November employment (Thursday), expected to rise 15.0k after the 10.9k gain in October. The unemployment rate is at 5.6% in November, matching the 5.6% reading seen in October. The Q3 house price index is due Tuesday. There is no Reserve Bank of Australia speaker this week. The minutes to the December meeting (December 20) are the next event of note from the bank.
[B]Always trade with strict risk management. Your capital is the single most important aspect of your trading business.[/B]
[B]Please note that times displayed based on local time zone and are from time of writing this report.[/B]
[B]Disclaimer:[/B] This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets were narrowly mixed, with Japan outperforming (closed up 0.5% at 19,250) as the Yen fell ahead of the FOMC announcement. The ASX closed down, and Chinese bourses managed to claw back some of yesterday’s losses, but the Hang Seng is also slightly in the red and funding concerns remain. A pick up in China retail sales and industrial production may indicate that there is still momentum in the economy, but pressure on Hong Kong’s money markets continues to build as funding costs rise to the highest level since 2009 as the Fed readies for a rate hike. And the squeeze has started to spill over into markets. U.S. and U.K. stock futures are moving higher though, and the FTSE 100 could claw back some of yesterday’s losses at the open. Oil prices have fallen back from yesterday’s highs and the front end WTI future is trading at USD 52.63, which could help bond futures to win back some lost ground and help yields to come off highs. The European calendar has German ZEW investor confidence and a host of December inflation data, with the final release from Germany at the start of the session, followed by inflation numbers from Sweden, the U.K. Spain and finally Portugal.
China data beats: Chinese Retail Sales were particularly strong and came in at 10.8% y/y well ahead of expectations at 10.2%. Industrial Production also beat expectations at 6.2% y/y (6.1%) expected. Both sets of figures suggest a much smoother end to 2016 for the Chinese economy than the first six months. Private investment remains weak, and government stimulus continues to support the economy. The housing market (a main driver of the economy this year and many view as overheating) is showing signs of cooling and therefore slowing potential growth next year.
German final Nov HICP was confirmed at 0.7% y/y, as expected, with the national rate confirmed at 0.8% y/y. both unchanged from the previous month. The uptrend in annual price declines for energy products was halted in November and prevented a further rise in the headline rate. Prices for household energy dropped -2.9% y/y, versus a decline of -2.3% y/y in the previous month, as declines in prices for gas and heating oil accelerated again. Petrol prices dropped -2.2% y/y, after rising 0.4% y/y in November and excluding household energy and petrol, the annual rate would have risen to 1.2% y/y from 1.1% y/y in the previous month. Clearly there are no signs of deflation risks and with rates excluding energy also far below the ECB’s upper limit for price stability, the numbers do seem to back the ECB’s argument that further stimulus is needed, despite gradually improving economic conditions.
FX Update: The dollar majors have been treading a narrow path. USDJPY has in the lower 115.0safter yesterday clocking a 10-month peak at 116.12, and EURUSD has settled in the low-to-mid 1.06s. Stronger than expected industrial production and retail sales data out of China had limited market impact, and directional ambition was largely absent during Tokyo trading today in forex markets. Wall Street closed mixed, off record highs, and the tone in Asia was generally negative until a PM-session bounce. The oil price rally has also come to pause, and market participants the world over are winding down into tomorrow’s Fed announcement and updated economic projections. A 25 bp rate hike at tomorrow’s announcement is all but certain, while there are no expectations for any major changes to the guidance of gradual tightening.
Main Macro Events Today
German ZEW Preview – It is expected to improve on ECB stimulus. A slight rise in German ZEW investor confidence to 14.3 from 13.8 in November after the ECB extended its stimulus package and confirmed that it will remain in the market at the very least until the end of next year and likely into 2018. Some disappointment over the scaled back monthly purchase volumes and the fact that Draghi didn’t opt for the more controversial measures, such as a foray into stock markets, or purchases of bank bonds, together with concerns about the rise of protectionist forces on the world stage may have limited the pick up in confidence, but the strong orders numbers may also go some way to underpin sentiment. As the ECB has effectively set out the policy parameters for next year already data releases at the moment will have less impact than usually, however.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets were trading mixed with all eyes on the Fed and the FOMC announcement today. The Hang Seng managed slight gains helped by gains in China’s two largest energy companies amid reports of a fuel price increase and a pipeline sale. Ther Nikkei 225 close flat at 19,253. U.S. stock futures are also narrowly mixed and the FTSE 100 future is down with investors holding back, which could see European markets give up some of yesterday’s broad gains. Oil prices have fallen back again and the front end WTI future is trading around USD 52.40per barrel and Gold is up around USD 1162 . The focus on the U.S., where a 25 bp hike is widely expected, will overshadow the European calendar today, which includes U.K. labour market numbers, Eurozone production data as well as final November inflation data from France and Italy.
The U.S. trade price report revealed only modest November price drop-backs in the face of a soaring dollar, with relative price firmness for exports versus imports as seen throughout 2016 that beat estimates and prompted a downward revision in our November trade deficit forecast to $42.0 bln from $42.5 bln. We saw November trade price drops of 0.3% for imports and just 0.1% for exports, with a 4.7% oil import price decline and a 0.6% food export price rise. Import prices have received a big lift since February from the rebound in oil prices, and ex-oil trade prices received a lift through mid-year from a drop in the dollar between January and April. Yet, the dollar has reversed course since the Brexit and U.S. elections, leaving downward pressure on prices beyond oil price gains that accompany ongoing headwinds from the global growth slowdown, petro-sector dislocation, and the inventory overhang that has reversed course in Q3-Q4.
Reuters Report: Brexit could hit trade relations between Britain and the U.S, with nearly 40 percent of American firms considering moving their British office to the EU and two-thirds saying the vote is impacting investment choices, according to a survey.Food and beverage, life sciences and financial services firms were most likely to consider relocating whilst aerospace firms were the least likely, the survey by law firm Gowling WLG said.Nearly all the 533 companies surveyed said they would require some third-party support to deal with the transition as Britain leaves the European Union, potentially risking part of the close transatlantic relationship between the two nations. “The strong UK-U.S. trade relationship that has been carefully nurtured over the past fifty years is in serious jeopardy,” said Bernardine Adkins, the firm’s Head of EU, Trade and Competition. Cable trades up this morning at 1.2675 forom overnight lows of 1.2640.
FX Update: Narrow ranges have been the order of the day so far in currency markets as markets hunker down into the Fed’s policy announcement and guidance, which will come with updated economic forecasts from the central bank. EUR-USD drifted about 25 pips, back to around 1.0650, but has remained below yesterday’s six-day peak at 1.0667. USD-JPY dipped under 115.0, moderately lower. Japan’s Q4 Tankan business conditions survey saw the large manufacturers headline lift to 10 from 8 in the last quarter, as expected but nonetheless disappointing as improvement was concentrated only in the petroleum and coal sector. The figure for large service companies was unchanged at 18, slightly below the median forecast. AUD-USD managed to recover modest intraday losses seen after the Westpac Australian consumer confidence gauge fell to a nine-month low in the December survey, which has generally been taken as a bad sign ahead of the Christmas holiday period. The Aussie buck lifted back above 0.7500, leaving a low at 0.7481.
Main Macro Events Today
FOMC – The Forecast revisions along with the FOMC statement, should reveal boosts in the PCE Chain price forecasts for 2016, downward 2016 jobless rate revisions , and a narrowing in 2016 GDP 1.8%. For the following year’s growth and inflation prospects are likely to be tweaked upwards. Expectations remain for median forecasts that the FOMC will look for two tightening’s per year with a slightly steeper pace. U.S. Retail Sales – November retail sales data is out today and should reveal a 0.4% headline increase with the ex-autos component up 0.5%. This follows respective October figures of 0.8% for both the headlines and ex-autos figure. The balance of risk is firmly to the upside as chain store sales, gasoline prices and construction employment all bode well for November data. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets mostly headed south, after the FED did the expected and hiked rates by 25 bp. Japanese markets outperform and the Nikkei closed with a slight gain as the Yen dropped while in Hong Kong property shares came under fresh pressure amid rising mortgage costs and punitive taxes. U.K. stock futures are also down, after broad losses on Wall Street yesterday, but U.S. futures are already picking up again. European bond futures, which rose going into the Fed decision, are likely to be knocked back and the Bund futures already headed sharply south in after hour trade yesterday. Oil prices dropped and the front end WTI future is trading around USD 51 per barrel. Gold collapsed to under USD 1144 following the “3 next year” comments. In Europe the data calendar is pretty empty and policy announcements from BoE, SNB and Norges Bank are not expected to hold major surprises, with all central banks seen on hold. The BoE is likely to reaffirm its neutral stance, while the SNB will repeat again that it remains ready to intervene on forex markets if needed, as the Franc remains overvalued. EU leaders start gathering for the last summit of 2016 today with upcoming Brexit talks likely high on the agenda.
FOMC Delivered on First and Last Hike of 2016: The Fed finally delivered on its threat to boost the Fed funds target range to 0.50-0.75%, narrowly slipping in the second hike of the lost decade with two weeks left to go before year-end. While entirely discounted by the markets given well-placed and consistent smoke signals from the Fed, it also stretched its “dot plot” forecasts to include three more hikes in 2017. The statement noted the “decline” in the jobless rate and a “considerable” uptick in inflation compensation as well.
Australia employment surged 39.1k in November, much stronger than expected, after a revised 15.2k gain in October (was +9.8k). It was the largest one month gain this year. The unemployment rate rose to 5.7% from 5.6%. Full time jobs jumped 39.3k after a 41.5k gain. Part time employment was nearly flat (-0.2k) following the 30.5k drop in October. The participation rate picked-up to 64.6% from 64.4%. This is a strong report that underpins expectations for no change from the RBA for an extended period.
The U.S. Data Yesterday: Revealed a surprisingly weak round of Q4 retail sales figures that trimmed Q4 GDP estimates to 1.3% from 1.8%, following an assumed Q3 boost to 3.4% from 3.2%. We also saw a weaker than expected November industrial production report thanks to a huge weather-induced utility decline over the past three months alongside an unexpected November vehicle assembly rate drop. The October business inventory figures tracked assumptions, though these figures combined with the weak November sales and factory data suggest that the inventory reversal is proving slow to materialize. The November PPI figures bucked the day’s pattern of weak reports, with 0.4% headline and core-price gains that reflected strength in service prices alongside the expected pause in the energy price climb.
[B]Main Macro Events Today[/B]
BOE Preview – The BoE’s Monetary Policy Committee met for the final time in 2016 and an unanimous decisions to leave the repo rate at 0.25% and the QE total at GBP 435 bln, is widely anticipated. The minutes are expected to reaffirm the neutral stance that was established last month.
SNB Preview – The SNB’s quarterly policy review is not expected to bring any surprises, with the bank widely expected to keep rates and general policy parameters unchanged. The central bank is almost sure to stress once again that it remains willing and ready to intervene in currency markets to keep the franc from running higher. A foray further into negative interest rate policy also remains in the arsenal, but is unlikely to be applied just yet. This will leave the focus not just on updated growth and inflation projections, but also comments on the domestic side effects of the SNB’s policy and developments on mortgage and property markets as Switzerland enjoys the quiet holiday period, before the political thunderstorms in Europe next year, when Brexit talks are set to start and France, Germany, the Netherlands face key elections, that have the potential to undermine the stability of the EU and EMU.
[B]Always trade with strict risk management. Your capital is the single most important aspect of your trading business.[/B]
[B]Please note that times displayed based on local time zone and are from time of writing this report.[/B]
[B]Disclaimer:[/B] This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets moved mostly higher overnight, although while Chinese markets picked up stocks are still heading for a solid weekly drop. ASX and Nifty are down on the day, as the Dollar gave up some of its recent gains. U.S. and U.K. stock futures meanwhile are moving higher. European yields have popped sharply higher since the Fed decision and yesterday’s BoE move, which confirmed the bank’s neutral stance, failed to stop the long Gilt yield to add a further 10 bp. Eurozone spreads are coming in meanwhile and peripheral markets continue to outperform as the ECB continues its bond buying spree. Today’s European calendar has French business confidence, as well as Eurozone trade and final December CPI numbers and the U.K. CBI industrial trends survey. Gold touched $1122 before recovering to $1133, WTI traded under $50 and currently trades at $51. USDJPY is north of 118.00, EURUSD is struggling to hold 1.0450 and Cable bounced from 1.2400 to 1.2430.
BoE, SNB and Norges Bank Stay Put Amid Political Challenges In 2017: No surprises from European central banks yesterday, with BoE, SNB and finally Norges Bank all keeping rates on hold and indicating a pretty stable policy path ahead. However, while all acknowledge ongoing improvement in the global economy, they also stress heightened uncertainty, with future policies in the U.S., and Brexit negotiations adding to remaining concerns about the stability of the Chinese economy.
The U.S. Data Yesterday: Revealed big gains in the capital expenditure plans components that bode well for a possible ongoing climb in sentiment and investment activity into early-2017. The Philly Fed capital expenditure plans measure surged to a cycle-high 33.8 from 19.1 in November and a 5-month high of 21.2 in October, versus a 31.2 prior cycle-high in March of 2011 and a -18.2 cycle-low in December of 2008. The Empire State’s capital expenditure plans index surged to 21.7 from 12.7 in November and 13.2 in October, versus a one-year high of 22.1 in April, a 38.2 cycle-high in May of 2010, and a -19.1 cycle-low in March of 2009. We’ve also seen big gains in small business confidence, an NAHB December surge to an 11-year high of 70, and lean inventories into Q4 that all leave room for a production bounce into the new year.
BoC Poloz highlighted Canada’s differences with the U.S., in response to a question asking if a BoC hike was imminent. Not surprisingly, he did not answer directly, saying that (rate hike imminent) was the report’s (“your”) conclusion. He reminded that the BoC’s forecast is for CPI to get back to target by mid 2018. Unlike the U.S., “we have considerable amount of excess capacity” he said. “If we don’t get rid of it, inflation will stay below for long time. For that reason, our rates our low to fill in that gap. All I can say for now is that our projection is it will take until 2018 to return to full capacity. That is different than the U.S.,” Poloz explained.
Main Macro Events Today
EUR CPI – Final headline figure is expected at 0.6% and Core at 0.8% – Both unchanged and still struggling to show any meaningful increase. Mr Draghi’s headache continues. The seasonally adjusted Trade balance is also due at the same time and is expected to have ticked up to 25.2billion Euro from 24.9 bln. (Exports worth more than Imports with such a weak Euro this is a minimum for future Euro zone growth). US Housing Starts – November housing starts data is out today and should post a 1,240k headline, down from the October surge to 1,323k that set a high back to 2007. Permits are expected at 1,230k from 1,260k in October and completions should be 1,065k from 1,055k in October. The NAHB was steady at 63 in November before Thursday’s October surge to 70.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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The recent decisions by the FOMC to tighten policy and the ECB to extend stimulus reflect the widening divergences of monetary policy. And the uncertainties over the macroeconomic outcomes from government and central bank actions, along with geopolitical tensions, will keep the markets choppy ahead. So buckle up for a bumpy ride into the new year.
United States: The rally on Wall Street took a breather on Friday, especially after news China seized a Navy drone motivated profit taking. The declines were slim, however, with the Dow at 19,843 and looking down the barrel of the psychological 20,000. Traditionally, the final two weeks of the year are very positive for equity markets. Hopes for increased fiscal stimulus and reduced regulations have underpinned a surge in the feel good factor, which have boosted confidence and manufacturing figures for the month. The calendar is back ended and compressed into the end of the week. Thursday’s slate is heavy; Personal income and consumption for November should show respective gains of 0.3% and 0.2%. The PCE chain price index is expected to rise 0.2%, with the core rate up 0.1%. November durable goods orders will also be of interest, though the volatility in the data limit its overall usefulness. The third version of Q3 GDP should show a small upward revision to 3.3% (median 3.3%) from the prior 3.2% pace, and up from 2.9% in the Advance report. The price index should hold at 1.4% (median 1.4%). November existing home sales (Wednesday) and new home sales (Friday) will also be of interest. Existing home sales are expected to edge up 0.4% to a 5.62 mln. New home sales should rebound 2.1% to 575k (median 575k) after October tumbled 1.9% to 563k. The final reading on consumer confidence (Friday) should hold near the 98.0 print (median 98.2) after surging 4.2 to that level in the preliminary reading amid optimism following the Trump election. Initial jobless claims (Thursday) for the week ended December 17, expected to rise 11k to 265k, This week’s survey is important as it coincides with the BLS survey week. Also on tap is the preliminary December Markit services PMI (Monday). It dipped 0.2 points in November to 54.6, though it was the 9th consecutive month of expansion. There is the October FHFA home price index (Thursday). Then it’s the KC Fed manufacturing survey (Thursday).
Canada: GDP for October (Friday) is expected to improve 0.1% after the 0.3% gain in September. October wholesale trade (Tuesday) is seen rebounding 0.7% m/m in October after the 1.2% drop in September. Retail sales (Thursday) are projected to expand 0.5% in October after the 0.6% improvement in September. CPI (Wednesday) is anticipated to slip 0.2% in November after the 0.2% gain in October.
Europe: The ECB effectively confirmed its policy parameters for the whole of 2017 last week. It will be political events, including the start of official Brexit talks, as well as elections in Germany, the Netherlands and France, that will dominate next year. This week’s focus is on the Ifo Business Climate index where expectations are for another marked improvement to 110.8 from 110.4 after the strong orders number and the better than expected manufacturing PMI. There is also likely to be a modest improvement in the flash reading for Eurozone consumer confidence to -6.0 from -6.1, with German GfK consumer confidence to 9.9 from 9.8. Last but not least is the final release of French Q3 GDP, expected to confirm the quarterly growth rate at 0.2%.
UK: As 2016 draws to a close, the fundamental picture of the UK is looking pretty good, contrary to widespread fears following the June 23 vote to leave the EU. The BoE reaffirmed its neutral policy bias, but warned of a more “fragile” global outlook, highlighting the troubled Italian banking sector and rising debt in China, signaling that the policy rate could “move in either direction” in 2017. Brexit-related uncertainty remains a blot on the landscape. An FT article on Friday reported that Japanese banks have warned the government that they will start downsizing London operations within six months unless there is clarity on the UK’s future relationship with the EU. The UK calendar features the CBI distributive sales survey for December (Tuesday), November government borrowing figures (Wednesday), December consumer confidence (Thursday), and the third estimate of the Q3 GDP, which is expected to remain unrevised at 0.5% q/q and 2.3% y/y.
China: No data releases this week.
Japan: The BoJ starts its two-day meeting on Monday, and will announce its policy intentions on Tuesday. No changes in policy are expected, with short term rates kept steady a -0.10%, and bond purchases continuing at a JPY 80 tln rate. The October all-industry index (Wednesday) is penciled in at up 0.1% m/m from up 0.2% previously, which was the first positive reading since July.
Australia: The calendar is empty of top tier data this week. The only event of note is the Reserve Bank of Australia’s minutes to the November meeting (Tuesday).
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets are mixed, with Japan and ASX moving higher as the BoJ left policy unchanged, and the Yen retreated. Hang Seng and mainland China markets remain under pressure with oil producers and banks leading the way. U.S. stock futures are up and FTSE 100 futures are little changed, as events in Ankara and Berlin add to political uncertainty in Europe. With elections in France, the Netherlands and Germany next year especially the suspected terror attack at a German Christmas market in Berlin is likely to further boost populist movements. A fresh bout of risk aversion could see Bund futures extending gains, after the March contract managed to break the downtrend yesterday and closed at 163.15, while extending gains in after hour trade. The next target is the 163.79, the high from November 28. It will likely overshadow today’s data calendar, which includes German producer price inflation at the start of the session, followed by Eurozone current account and BoP data as well as Swiss trade and the U.K. CBI distributive trade survey.
BoJ Rates & QQE Unchanged Outlook upgrade: The Bank of Japan December meeting concluded today, with the bank upgrading its outlook for the economy but leaving policy unchanged: The short-term interest rate target unchanged at -0.1%, The 10-year JGB yield target is left at around zero %, Buying of JGBs is still targeted at an annual pace of 80tln yen. The “inflation-overshooting commitment,” also first announced in September and where the BoJ is committing to expanding the money base until CPI exceeds the y/y target of 2% and stays above target, was also reaffirmed. The central bank noted that the economy “continued its moderate recovery trend,” highlighting a pick up in exports. Overall, no surprises from the BoJ. The general view now is that the central bank is in a wait-and-see stance while it monitors a long-awaited reflation expected to be driven by a weaker yen and higher oil prices. The yen has declined by 6.2% m/m versus the dollar, while Brent crude prices are up 12.2% m/m (and by 50.9% y/y). The BoJ also last week announced a ramp-up in purchases of debt maturing in 10 to 25 years as part of its yield curve control operations.
The U.S. Data Yesterday: U.S. Markit flash services PMI fell 1.2 points to 53.4 in December after dipping 0.2 points to 54.6 in November. It was 54.3 a year ago, and is the lowest since September. The employment sub-index rose to 53.4 from 52.1 previously and is the highest since March. Prices charged also increased. The composite index also declined 1.2 points to 53.7 from 54.9, and is also the lowest since September. But new orders fell to 54.4 from 55.5, while input prices also increased. These are some of the few indicators that haven’t bounced further on the Trump-effect, though the indexes were already at relative highs in October.
Yellen: She didn’t offer anything new or any fresh policy insight in her commencement speech at the University of Baltimore. She repeated that the labor market is strong, indeed the best in nearly a decade and that job creation is continuing at a steady pace, with layoffs low. She does see indications of a pick up in wages, especially for younger workers, while productivity growth remains disappointing. While economic gains are raising most living standards, she did acknowledge there challenges remain, including the fact that the recovery has been so slow.
Main Macro Events Today
German Producer Price Index (PPI) – Expected to fall to 0.1% from 0.7% last time (MoM) whilst YoY figure expected to improve to -0.2% from -0.4% in October. NZD GDT – Twice monthly Global Diary Trade auction announce later today along with New Zealand trdae balance and the monthly Visitor arrivals. The GDT improve last time to 3.5%, expectations are for a similar demand this time, NZ trade balance is expected to improve to -500million NZD from – 846milliom NZD as export prices have improved. Visitor arrivals expected to increase to 2.5% from 2.2% last month. The NZD has been under pressure over the last few trading sessions. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets moved mostly higher overnight after gains on Wall Street and in quiet trade. Japan was a notable exception and the Nikkei closing with a -0.26% loss as the Yen bounced back and strengthened across the board. The DAX tested the highs for the year today and U.S. indices also saw record levels, despite attacks in Ankara and Germany adding to global risks. Stock futures are looking a bit more cautious this morning, with U.S. futures narrowly mixed and the FTSE 100 future in negative territory. Oil prices are higher on the day and the front end WTI future is trading at USD 53.56 per barrel and Gold trades at USD 1135 per troy ounce. Markets are settling into the holiday period and lower trading volumes could exaggerate moves but core yields moved higher again yesterday as stocks remained underpinned and if stock markets get more cautious could see bond futures recovering some losses. The European data calendar has U.K. public finance data and preliminary Eurozone consumer confidence data. US VIX: U.S. VIX equity volatility sank 1% to the 11.60 area compared to its very tight 11.50-11.74 session range. The VIX has yet to take out its lows of the year of 11.02 set on August 9, 2016, after a couple of near misses in December. Perhaps a break through/close 20k in the Dow and 2.3k in the S&P 500 will be the awaited trigger, but stocks are veering away from fresh highs again now and the VIX is rebounding toward unchanged. A break below 11.02 would put sights on life lows of 8.20 market on July 4, 1994. Look like a cat and mouse game between funds and algorithms to ride the momentum trade into year-end. Fedspeak: SF Fed’s Williams said risks are shifting away from weakness, in a New York Times interview. Though Williams has been a long-standing dove, he has been increasingly mindful of the improved labor market, the general rise in growth, as well as the pick-up in inflation, which has shifted his stance slightly toward the center. Indeed, he admitted that while there are “a lot of uncertainty over what policies are going to be enacted” by the Trump administration, his views on “risks to the outlook have shifted a little.” Previously his stance had been “balanced and if anything a little bit to the soft side.” The potential for fiscal stimulus and other changes should shift risks to the outlook “a little bit to the right…but it’s not a big effect.” The decision to hike rates last week “stands on its own” and was “wholly” based on data. His underlying view is broadly consistent with the central tendency of the Committee, looking for moderate growth and inflation moving toward 2%. Of interest, he noted there’s a negative feedback loop when all major banks are at the zero bound. The 2017 Oil-Led U.S. Factory Rebound is Already Underway: The U.S. factory sector is poised for a recovery into 2017 that is already taking shape, with an election lift alongside an emerging reversal of the massive GDP inventory hit that accompanied the 20-month downswing in oil prices through last February. The mining sector is lifting industrial production beyond a temporary weather-led plunge in utility output, producer sentiment is rising with spikes in planned capital spending, stock prices and consumer confidence are soaring, and inventory to sales (I/S) ratios are falling as prices and demand rebound.
Main Macro Events Today U.S. Existing Home Sales – November existing home sales data is out today and should reveal a 0.4% increase to a 5.620 mln (median 5.540 mln) pace from 5.600 mln in October and 5.490 mln in September. NAHB sentiment in November was steady from October at 63 before bouncing to 70 in December. NZD GDP – Year on Year GDP in New Zealand is expected to tick up to 3.7% form 3.6% last time with Quarter 3, Quarter on Quarter growth unchanged at 0.9%. The current account GDP ratio is also expected to increase but only marginally to -3.0% from -2.9%. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets headed mostly south overnight, following on from losses in Wall Street where the Dow is struggling to conquer the much watched 20000 mark. Japan failed to benefit from a weaker Yen and developers remained under pressure in Hong Kong and while the ASX managed to extend the year end rally to new highs, U.S. and FTSE 100 futures are also down. Oil prices are little changed, after the front end WTI future dropped below USD 53 yesterday and GOLD declined to 1130 gain overnight. While DAX and FTSE 100 remain in lofty heights, investors seem hesitant to push indices further up as markets start to settle into holiday mode and trading volumes start to thin. Yields meanwhile fell back again yesterday and while the Bund future underperformed its U.K. counterpart, it seems to have successfully broken the downtrend that was in place since late September, with the next target the area around 163.79, the high from November 28. Released overnight, U.K. Dec retail sales moved higher to -7 from -8 in Nov.
The US has a raft of data later (see below for highlights) including 3Q GDP (final revision) Durable Goods, both these key data releases at 13:30 GMT. Also today there is Spending, Income and Consumption data as well as Initial Jobless claims for the week. Canada also releases CPI and Retail Sales.
German Import Price Inflation: Jumped to 0.3% y/y from -0.6% y/y in the previous month, much higher than expected and driven mainly by a sharp turnaround in energy and basic goods prices as well as a renewed rise in prices for agriculture, forestry and fishing. Energy price inflation jumped to 0.9% y/y from -2.2% y/y in the previous month and basic goods prices were also up 0.9% y/y, after still falling -0.8% y/y in November. As predicted inflation rates are rebounding quickly as negative base effects from energy prices are falling out of the equation and with the weakening of the EUR against the dollar adding to upward pressures. Deflation is not longer an issue and in Germany the risk of overshooting headline inflation is rising as the labour market remains very tight.
Fed policy Outlook: The dot-plot suggests 3 rate hikes next year. And that’s a good first approximation with most in the markets projecting that trajectory too. But, the risk might be to fewer, especially as the Fed only hiked once this year, versus the 4 in the dot-plot. Fed policy action is unlikely to begin as soon and probably not until late Q2 at the earliest. Our forecasts show growth slowing to the mid 1.0% region next quarter, and it’s unlikely any significant Trump effect will be seen until the second half of 2017. Meanwhile, although inflation has picked up in recent months, thanks in large part to the rebound in oil, the bounce in energy prices may not be sustained if U.S. production kicks in again. Also, the dollar is likely to remain firm amid diverging central bank actions, which could cap the upside. The composition of the 2017 voting Committee may limit the number size of rate hikes as well. Evans, Kashkari, Harker, and Kaplan who are coming on board, are less hawkish than the current group including Bullard, George, Mester, and Rosenberg.
US VIX equity volatility finally broke below year lows of 11.02 to mark a trend low of 10.93 earlier compared to the 11.49-10.93 session range before rebounding to 11.27. Investors are starting to turn blue from holding their breath while awaiting the break of 20k in the Dow, which may itself be stymieing the advance as the markets get a case of acrophobia into year-end after the dramatic late-2016 rally. VIX focus is now on 8.20 life lows (July 4, 1994) for those who believe that 2017 will be smooth sailing and risk free.
Main Macro Events Today
U.S. GDP – The third release on Q3 GDP is out today and expectations are for the headline to be revised up to 3.3% for the quarter. Expectations for construction spending to be revised up by $6 bln, wholesale inventories by $3 bln and consumption by $2 bln while net exports undergo a slight, $1 bln, downward revision. US Durable Goods – November durable goods data is out today and should reveal a -4.2%) decline in orders with shipments down 0.5% and inventories up 0.1% for the month. This compares to respective October figures of 4.6% for orders, -0.1% for shipments and flat for inventories. Data in line with forecasts would leave the I/S ratio at 1.65 from 1.64 in both October and September. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Stock markets which already headed mostly south yesterday continued to decline in Asia overnight, with as oil prices remain below USD 53 per barrel and concerns about China are weighing on sentiment in thinning holiday trade, and with markets in Tokyo closed. Hong Kong stocks are hit by capital outflows. Deutsche Bank agreed to pay USD 7.2 bln and Credit Suisse USD 5.3 bln in U.S. mortgage probes, while the Italian government is ahead with its pan to provide USD 20 bln for troubled banks, with Monte Paschi planning to ask the government for a “precautionary” capital increase. U.S. stock futures are mostly slightly higher, as is the FTSE 100 future, but with DAX and FTSE 100 still at lofty heights, investors seem cautious to push out indices further ahead of the holidays. The calendar in Europe includes final Q3 GDP readings from France and the U.K. and the Swiss KoF leading indicator.
German Jan GfK consumer confidence: Rose to 9.9 from 9.8 in the previous month, the third consecutive rise and while the reading remains below the levels seen at the peak last year, the renewed improvement supports hopes for robust consumption trends going into 2017. However, the breakdown, which is only available until December, showed a rise in business as well as income expectations, but despite this the willingness to spend actually fell back to a reading of 48.0 from 51.2 in the previous month. At the same time the willingness to save also dropped further into negative territory though and price expectations fell also further into negative territory.
Yesterday’s U.S. reports: Revealed a significant upside Q3 GDP surprise with a headline boost to 3.5% from 3.2%, and firmness in “real” consumption in the November personal income report that lifted Q4 GDP growth estimate to 1.5% from 1.3%. Yet, we also saw weak equipment and inventory data in the durable goods report that restrained growth outlook, beyond the expected big 4.6% November headline orders drop attributable to a 13.2% transportation plunge. A 21k initial claims surge to 275k in the BLS survey week was disappointing, though the spike is likely due to holiday volatility, and the trend in claims remains encouraging. Finally, we saw a flat leading indicators figure for November that modestly beat estimates, while the Bloomberg consumer comfort index rose yet again, to a 20-month high of 46.7.
Eurozone 2017 – Political Risks Take Centre Stage: The Eurozone recovery is continuing at a moderate pace, inflation is picking up from very low levels, unemployment levels are coming down. The ECB’s very accommodative policy stance has not only helped Eurozone spreads to come in, but also continues to underpin lending and robust consumption and there are tentative signs that even investment is picking up again. But as Draghi confirmed the central bank’s policy of ongoing monetary accommodation through to the end of next year, it is the political arena that will take centre stage for 2017.
“ECB sources” say it will wait until after German elections in September before its next policy move, according to Reuters headlines. Hardly ground breaking news, considering that the ECB effectively clarified its policy stance through to end 2017 at the last meeting and the German election data is not yet known, but has to take place before October 22. It says that “no option is off the table” if the economy worsens, which is of course just another way to repeat Draghi’s message from the press conference that QE purchases can be stepped up if necessary. However, the report says the ECB aims to buy as few bonds as possible below the depo rate from January, which is sort of contradictory, but the thinned markets can make of it what they will.
Main Macro Events Today
Canada GDP – GDP to expand 0.1% m/m in October after the 0.3% gain in September. Total retail sales volumes grew 0.6% in October. A 0.9% m/m bounce in wholesale shipment volumes contrasted with the 1.7% plunge in manufacturing. But housing starts fell 12.1% to a 192.3k pace in October, consistent with a negative contribution from construction production. The outlook for mining, oil and gas production is mixed. Energy export values grew 5.5%, but prices did climb in October, suggesting that volumes may be disappointing. The manufacturing report revealed a 1.7% pull-back in petro and coal production. The 0.1% gain that we expect in October GDP combined with the 0.1% growth rates in November and December equate to a 1.9% growth rate in Q4 (q/q, saar). That would overshoot the BoC’s 1.5% estimate after the 3.5% Q3 GDP gain eclipsed the Bank’s 3.2% estimate. Growth is running slightly better than expected in the second half of 2016, consistent with a modestly more upbeat outlook in the January MPR that maintains no-change-for-an-expended-period as the baseline for BoC policy.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: US stocks had a quiet day with the Dow (USA30) closing short of 20,000 again at 19,945, Gold and Oil both traded higher (USD 1,144 – above its 10 DMA for the first time since November 10 and USD 53.84 – up some 1.6% on the day) respectively. The UK and Canada were closed yesterday for Boxing day. In Asia markets also saw low volumes. Japan Industrial production missed estimates rising 1.5% when expectations were for 1.7% during November. However, this was the best result for 5 months and there were also signs of life in the Retails Sales figures. Japan retail sales (November): -0.3% m/m (expected -0.5%, and for the y/y, up 1.7% expected +0.8% y/y, prior -0.2%. This is the first gain since February for retail sales.
FX Update: USD fell back again overnight. Canada, Australia, New Zealand and Hong Kong are all back from the extended Christmas holiday, but trading volumes are likely to remain thin for the rest of the week. AUD and NZD have been the main outperformers overnight. The EUR also continued to perk up against most currencies after Weidmann and Knot mulled tapering options yesterday, and EURUSD is currently at 1.0474, which but still has a way to go before revising last week’s peak at 1.0499. The Yen continues slide, after halting a four day advance yesterday, but USDJPY continued to ply a narrow range in the mid 117s, consolidating after logging a trend high at 118.66 last week. AUDUSD is above 0.72 now. Oil prices are higher and stock markets in Asia fluctuated in a very narrow range, with many centres closed.
Yesterday’s U.S. reports: Revealed another monthly consumer confidence surge that has taken the index back to levels last seen before the September 2001 terrorist attack when we saw a largely sustained downswing, alongside big December gains in the Richmond Fed and Dallas Fed indexes to 8.0 and 15.5, respectively, with broad-based gains beyond notable weakness in the employment indexes. It was the present situations index that exhibited the bulk of the post-911 hit to consumer confidence but it is expectations that have led the post-election bounce, alongside a gradual climb for the present situations index through this business cycle back toward the restrained highs of the prior cycle in 2007. Consumers and businesses are getting increasingly giddy about prospects for 2017, though production, inventory and sales data are thus far proving slow to respond.
The Rest of the Week Ahead: Various cross-currents may prevail in the last abbreviated trading week of 2016, though fundamentals should be the least dominant factor, and year-end portfolio adjustments the most relevant. Stocks remain on a sugar high in wake of the Trump election, but could take a breather, while bonds will wrestle with both index extensions and supply. While Trump’s Twitter feed over the interregnum before the inauguration may cause some isolated volatility, stocks look to finish 2016 inside some of the tightest ranges in over a year.
Main Macro Events Today US Pending Home Sales – November Pending Homes Sales likely to increase 0.5% from 0.1% in October – the Year on Year figure is expected to continue to show US housing remains in strong demand. The impact of rising interest rates will play out next year but for now expect at least a 1.8% year on year figure. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets were mostly down, led by a slump in Japan, as the Yen rose across the board. The weakness in Asia followed a decline on Wall Street yesterday set off by disappointing U.S. data that sent the USD into retreat. Oil prices also dropped and the front end WTI future is trading below USD 53 per barrel again despite approaching production cuts. The ASX still managed to post slight gains and some Chinese indices clawed back some of their recent losses while trading volumes perked up a bit. U.S. and U.K. stock futures are still down, however, setting the European market up for further weakness, although the DAX is still poised to end the year with a solid gain, as the ECB continues to lend a helping hand. With the ECB still on an asset buying spree, Eurozone yields remain under pressure and especially the short end continues to drop to new lows after Draghi removed the deposit rate floor for bond purchases. UK Nationwide house price index Dec mm +0.8% vs +0.2% expectations and year on year increase up to 4.5% from 3.8% expected.
FX Update: Overnight the Yen rose strongly – USDJPY fell from yesterday’s high at 117.80 to currently trade at 116.23, GBYJPY collapsed to under 143.00 and EURJPY is trading at 121.65 down from yesterday’s high of 123.26. The USD has also retreated against the EUR (back to 1.0450 from yesterday’s multi week lows at 1.0370) and GBP (1.2250).
Yesterday’s U.S. reports: US pending home sales fell 2.5% to 107.3 in November after rising 0.1% to 110.0 in October. Sales have been on a choppy, saw-toothed course for more than a year. Regionally, sales declined in the West (-6.7%), the Midwest (-2.5%) and the South (-1.2%), but rose slightly in the Northeast (0.6%). On an annual basis, however, sales accelerated to a 1.4% y/y clip versus 0.2% y/y previously.
Germany: Italy must stick to new rules in bank aid. Like Bundesbank president Weidmann earlier in the week, the German Finance Ministry today stressed that a precautionary recapitalisation of banks, as planned by Italy, can only take place in exceptional circumstance and within the framework of the Eurozone’s strict rules. The latter also includes investor bail-ins and the ministry stressed again that the bank must still be solvent and that public funds must not be used to cover foreseeable losses. The ECB reportedly already said that in the case of Monte Paschi the bank remains solvent, but reports from earlier in the week also suggest that the ECB is pushing for a higher investor bail-in as the government had planned. Italy’s banking sector, which is struggling to cope with the high level of non-performing loans, will clearly be the acid test for the Eurozone’s new regulatory framework for future bank bailouts.
Main Macro Events Today
US Initial Claims – Claims data for the week of December 24 is out today and should reveal a 275k (median 265k) headline, steady from last week and up from 254k the week before that. Claims have been striking a firm path since summer and are poised to average 259k in December from 252k in November and 258k in October. EIA Crude Inventories – Expectations are for a drawdown of up to 1.5 million barrels, following a build of 2.256 million last week. Overnight the private inventory survey has shown the biggest build in 6 weeks. Conflicting data is not that uncommon between the two agencies. The official EIA data is published at 16:00 GMT.
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Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: The Bund contract has broken the downtrend that had been in place since the end of September and is ending the year on a new uptrend after Draghi managed to inject new life with his QE extension. At the same time 2-year yields are testing new lows as the ECB drops the deposit rate floor for asset purchases. Gilt yields are also heading south again, although the 10-year yield recovered a lot of ground since the BoE removed its easing bias in November. Stock markets are set to end the year with solid gains on both sides of the channel. Today will be an early close for many centres. The calendar is relatively quiet, although Spanish HICP inflation is likely to attract some attention as this is the first of the big Eurozone countries to release preliminary December numbers and expectations are for a sharp acceleration in the headline rate, which will set the stage for the release of Eurozone numbers next week.
Overnight Update: WTI crude rallied to $54.19 from $54.05 following the EIA inventory data which showed a 600k bbl rise in crude stocks. The street had been expecting a 1.5 mln bbl decrease, though API data released on Wednesday revealed a 4.2 mln bbl increase in U.S. stocks. Gold rallied to and continues its good week on thin trading, overnight it reached $1163. The major mover was EUR bids at the close when EURUSD rallied to over 1.0650 for a three week high on very low liquidity and profit taking. .
Yesterday’s U.S. reports: revealed big but divergent surprises in the November advance indicators report that left a likely new 20-month high for the goods and services trade deficit in November of $45.8 bln, alongside surprisingly big November wholesale and retail inventory gains that translate to a big 0.7% November business inventory increase. The initial claims figures revealed a 10K drop to 265k in the fourth week of December that trimmed the 21k surge to 275k in the BLS survey week, which we still see as consistent with a tight claims trend despite holiday volatility that likely prompted the mid-month pop. Q4 GDP estimates remain at 1.5%, and expectations are for a 185k December nonfarm payroll rise.
Germany 2017- Election Jitters and Brexit Risks: The German economic recovery continues, largely driven by domestic demand and consumption. Inflation is set to continue to top the Eurozone average and the challenges for the next years will include trying to cope with a monetary policy that is too expansionary for the Eurozone’s largest economy. At the same time like for the rest of the Eurozone political risks, including the start of official Brexit talks and of course the general election in autumn will take centre stage next year amid the refugee crisis and rising support for the populist AfD.
President Obama: sanctioned Russia over email hacks by expelling 35 Russian intelligence operatives and closing two compounds. This followed and FBI/DHS report that revealed evidence of some of the electronic infrastructure and outlined the methods used to steal information. The Russians responded by stating the Obama admiration was trying to “completely ruin Russian-American relations.” This will put the new Trump administration on awkward footing and will be yet one more geopolitical risk that could destabilize the markets.
Main Macro Events Today
Spanish HICP – Last month it came in at 0.7% and as the first of the large euro area economies to report expectations are for a rise to 0.9%. Chicago PMI- Here expectations are for a dip to 56.5 from the surge of 7 points in November. The October 50.6 was the weakest since May. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
United States: The U.S. data slate is heavy and the reports should be consistent with modest Q4 growth as the overall economy has yet to be impacted by Trump. Kicking off the year will be the December ISM manufacturing index (Tuesday). Also on tap (Tuesday) is the final December Markit PMI reading and November construction spending. Construction spending is expected to rise 0.6% after November’s 0.5% gain. Vehicle sales for December (Wednesday) are expected to inch up slightly with autos at a 5.2 mln pace. The ADP private payrolls survey (Thursday) is expected at a 175k pace, down from 216k in November. The ISM non-manufacturing index (Thursday) is projected sliding to 56.5 from 57.2 in November. The final Markit services reading is also due (Thursday). The December nonfarm payroll report (Friday) will highlight and complete the data for the first week of the new year. Expectations are for a 185k increase, after November’s 178k rise, with the unemployment rate edging up to 4.7% from 4.6%. The workweek is projected steady at 34.4 hours. Average hourly earnings are expected to rebound to 0.2% after dipping 0.1% in November. The FOMC minutes to the December 13, 14 policy meeting are on tap (Wednesday). Though the report would usually be highly anticipated by the markets, its importance has been diminished by the dot-plot showing estimates for three quarter point hikes in 2017, and by the fact that the usually dovish Chair Yellen seemed fully supportive of the more hawkish stance.
Canada: December employment report, trade deficit both highlight the week on Friday. Other highlights include the industrial product price index (Thursday). The Ivey PMI is also due (Friday), while the RBC’s manufacturing index for December (Tuesday) is the first report out of the gate for the new year. There is nothing from the Bank of Canada this week.
Europe: Final PMI readings are not expected to bring any real surprises and are expected to confirm manufacturing confidence for the Eurozone (Monday) remains healthy with the index at 54.9. ESI economic sentiment indicator (Friday) is expected to rise to 106.9 versus 106.5 in November. Also due are German manufacturing orders (Friday) and German jobless rate (Tuesday)
UK: 2017 will be a challenging year for the UK, both economically and politically. Creeping price pressures, caused by the weaker pound, which most economists expect will erode real household income, and Brexit-related uncertainty, which has already been suppressing business investment, are expected to manifest in slowing growth momentum. The U.K. calendar this week features the December PMI surveys and the BoE lending data for November.
China: The Caixin/Markit manufacturing PMI (Tuesday) is forecast at 50.7 from 50.9 December services PMI (Thursday) is seen improving to 53.5 from 53.1
Japan: Will be shut through to Tuesday for a bank holiday. The December Nikkei/Markit manufacturing PMI (Wednesday) is expected to dip to 51.8 from the previous 51.9 reading. December auto sales and the Markit services PMI are also due (Thursday).
Australia: The November deficit (Friday) is expected to narrow to -A$0.3 bln from -A$1.5 bln in October. There is nothing from the Reserve Bank of Australia.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
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Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets outside of Japan moved higher after a stronger than expected China Caixin manufacturing PMI. Eurozone stock markets already started the year with modest gains yesterday in very quiet trade, as most of the world remained closed for New Year celebrations. Japanese markets remained closed today, but elsewhere markets are back and it seems stocks are beginning the year in a good mood and optimistic on the growth outlook. Yesterday’s final Eurozone manufacturing PMI readings were also positive and today’s Swiss and U.K. numbers are also expected to confirm that output continues to expand at a solid pace. This should leave the German jobless rate at record lows, while French and German inflation data is set to accelerate sharply on base effects and with risks to forecasts on the upside after the very high Spanish number from last Friday. After the ECB continued ongoing QE purchases for the whole of this year, this doesn’t change the immediate policy outlook, but could temporarily dent the uptrend in Bund futures, that was sparked by Draghi’s affirmation of more asset purchases. The short end meanwhile will remain supported by the abolition of the deposit rate limit.
Overnight Update: China – Caixin Manufacturing PMI for December: 51.9 (expected 50.9, prior 50.9). The figure is close to a 4 year high for the Caixin/Markit Manufacturing Purchasing Managers’ index (PMI). The figure has been above 50 for six consecutive months and Output, at 53.7, rose at the fastest pace since January 2011. There was evidence of strong domestic demand although export orders remained “sluggish”. AUDUSD rose to session highs of 0.7230 on the positive news.
Eurozone manufacturing PMI confirmed at 51.9, as expected. The renewed uptick from 53.7 in November means the year ended on a high note and the numbers confirm that the recovery continues and for once on a relatively broad base. with Italy actually surprising on the upside this morning, which shows that the referendum result did little to dent optimism.
ECB Coeure:. The Executive Board member said in an interview with Germany’s Boersenzeitung that personally he doesn’t “exclude upside risks to inflation in 2017 if the reflationary impact of the new U.S. policies dominates“. Coere said “there are signs of an acceleration in headline inflation, above all because of the increase in oil and commodity prices”, adding that the ECB is “still waiting for signs that core inflation is on the rise and will clearly exceed 1%”. He admitted that the ECB’s assessment of the balance of risks, including for inflation, is shifting”, while stressing that the planned cut in monthly purchase volumes this year is “an adjustment not an exit”, and that a phasing out of purchases hasn’t even been discussed yet. Coeure said that a discussion will be needed about normalisation of monetary policy but it needs to be initiated carefully”. And indeed, after the ECB confirmed that asset purchases will remain in place until the end of the year this is not a discussion that will be needed any time soon.
Main Macro Events Today
German HICP – German HICP is seen rising to 1.1% y/y from 0.7% y/y. The better than expected Spanish number last Friday suggests a risk on the upside also for the overall Eurozone HICP rate (due Wednesday), which is expected to rise to 1.0% y/y from 0.6%. This is still far below the ECB’s definition of price stability, but the data will confirms that there is no real risk of a deflationary spiral, although after the ECB already confirmed its policy parameters for 2017 that won’t change the immediate policy outlook. It will add further ammunition though to the growing number of central bankers warning that real tapering can’t be delayed for too long, without undermining financial stability throughout the Eurozone. US ISM Manufacturing PMI – December ISM is out today and should post a headline increase to 53.5 from 53.2 in November and 51.9 in October. Producer sentiment is continuing to benefit from diminished inventory headwinds and the rebound in oil prices. This should allow sentiment to end the year on a firm footing with the ISM-adjusted average of all measures holding at 53, steady from November and up from 51 in October.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets are mostly higher, led by Japan, where the Nikkei closed with a 2.5% gain after an upward revision to the manufacturing PMI reading and underpinned by catch up trades, after yesterday’s holiday. The Hang Seng underperformed and showed a -0.27% loss in late trade, with energy stocks under pressure after the front end WTI future fell back below USD 53 per barrel. See details below. U.S. and U.K. stock futures, however, are moving higher, after broad gains on most markets yesterday and as a strong round of world PMI releases underpins growth optimism and risk appetite. At the same time inflation may be moving higher which is pushing up yields, although even if Eurozone HICP inflation is expected to jump higher and clear the 1.0% mark today, we don’t see the ECB reversing its decision to extend QE purchases through to the end of the year. Today’s European calendar also has Spanish inflation data, the final reading of the Eurozone Services PMI and from the U.K. BoE money supply growth and lending data.
US Data Yesterday: The U.S. ISM rise to a 2-year high of 54.7 from the prior high of 53.2 that was also seen last June left the ISM further above the 7-month low of 49.4 in August, and last December’s 48.0 expansion-low. The mix of available sentiment surveys should allow the ISM-adjusted average to sustain the November surge to a 16-month high of 53 from 51 in October and 50 in August and September. We saw a 49 expansion-low in January and February, and previously in October of 2012. We’re seeing a factory sector rebound that is lifting most producer sentiment and consumer confidence measures in the face of rising oil prices, a reversal in the inventory headwind, and hopes for deregulation and fiscal stimulus in 2017. The economy still faces lingering headwinds from a sluggish world economy, a strong dollar, and still-high oil inventories. U.S. construction spending popped 0.9% higher in November after a 0.6% October gain (revised up from 0.5%), though September was bumped lower to -0.2% from unchanged. The headline reading is better than expected. Spending is up 4.1% y/y. Strength was broad-based.
European Data Yesterday: German HICP jumped to 1.7% y/y, the highest rate since 2013, and starting to eye the 2% limit for price stability. That the headline rate would jump higher at the end of the year on base effects was widely expected, but the number did still come in far above the median forecast and the preliminary breakdown confirmed that most of it was due to energy price increases, which turned to 2.5% y/y in December, from -2.7% y/y in November. German jobless numbers dropped -17k in December, much more than anticipated and with the November decline also revised to -6k from -5k, which confirms that the improvement on the labour market continued at the end of 2016. The jobless rate remained at a record low of 6.0%, with much of the remaining gap due to structural issues and a mismatch of skills on the demand and supply side. The December UK manufacturing PMI smashed forecasts in rising to 56.1 from 53.6 in November, which was revised up from 53.4. The median forecast had been for a 53.4 outcome, while the 56.1 reading is the best since June 2014, indicating brisk expansion in the sector.
US Stocks and Oil swing wildly: Another swing and a miss on Dow 20k has sent stocks scrambling lower, accompanied by a reversal in the dollar, which has reversed lower as well. WTI crude has also doubled back in the melee, falling 2% $52.60 after climbing over 2.5% to clear $55.0 after its probe over $55 earlier (swing of nearly 5%) amid concerns about Libya upping production. Ford announced plans to cancel a $1.6 bln factory in Mexico, perhaps as collateral damage from the Trump tweet storm with U.S. execs, though Ford is up 2.5% (-5.5% 1-year return). GM was criticized by Trump for manufacturing its Cruze model in Mexico, which the company downplayed. The Dow stalled out at 19,938.5, eased below 19,800 before rallying into the close to end the day at 19,881.
Main Macro Events Today
Eurozone HICP – The much higher than expected German and Spanish inflation numbers forecasts for the overall Eurozone reading have been increased significantly to 1.3%, from 0.6% y/y in the previous month. Yields jumped higher on the report yesterday, but while the numbers add to the argument of the critics of Draghi’s expansionary policy, it is unlikely to see the ECB changing its mind on the QE expansion, as the uptick in inflation was already factored into central bank forecasts. It will however bring the question of when the ECB will start “real tapering” that is start a program of cutting back purchases with the intention of phasing them out, back to the agenda. FOMC Minutes – Though the report would usually be highly anticipated by the markets, its importance has been diminished by the dot-plot showing estimates for three quarter point hikes in 2017, and by the fact that the usually dovish Chair Yellen seemed fully supportive of the more hawkish stance. There’s little the minutes can show that we don’t already think we know. Surprises are unlikely but still potentially high influential.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
European Outlook: Asian stock markets moved mostly higher with Japanese markets underperforming as the Dollar weakened in the wake of yesterday’s Fed minutes, and a strengthening Yen weighed on Nikkei and Topix. U.S. stock futures are also down, but U.K. futures are moving higher after a pretty lacklustre session in Europe yesterday. Re-inflation and stronger than expected growth numbers have been a difficult mix for markets this week, and even though the ECB has already re-affirmed its commitment to maintain QE purchases through to the end of the year, concerns that the central bank will be running into supply constraints are resurfacing. The calendar today has U.K. Services PMI, Swiss CPI and Eurozone PPI.
FOMC Minutes: FOMC minutes showed a gradual approach was appropriate for now. But upside risks were weighed. About half of the Committee included fiscal policy in their forecasts, although “many” stressed the “considerable uncertainty” over the timing, size, and composition of any fiscal stimulus, not to mention the mix of tax, spending, and regulatory changes. “Many” judged a faster pace of hikes might be necessary. As to downside risks, it was noted that trade barriers, dollar appreciation, and weaker than expected fiscal policy measures could limit growth. The minutes reflected more of an uncertain tone than an overly hawkish one.
Overnight Data: China December Caixin Services PMI: 53.4 (prior 53.1) & Composite 53.5 (priors 52.9) services PIM at 17 month high and the composite is at near 4 year highs. Both manufacturers and services providers see steeper increases in activity, Overall employment declines slightly, due to ongoing job shedding across the manufacturing sector, Input price inflation remains sharp, but companies raise their selling prices at softer pace. AUDUSD ticked up on the news and continued selling pressure on USD at 14 day highs at 07320.
US Data Yesterday: U.S. vehicle sales are topping expectations in December thanks to a combination of deep incentives and heavy demand for trucks, likely putting overall sales on pace to post record gains in 2016. This equates with a pace of 18.2 mln units (SA), matching the highest level in 7-years. Among the larger gains were by GM at 10% vs 4.4% forecast; Nissan 9.7% vs -2.8% expected and VW at 20.3% vs 5.6%. Fiat Chrysler was the worst performer at -10.0%, but even they beat -14.0% estimated. Analysts had been forecasting a pace of 17.4-17.5 mln units, near last year’s record 17.5 mln. Though consumer confidence is on the rise heading into 2017, inventories are up amid a slow new-model rollout and incentives have been as large as $4k/vehicle in December. Trucks accounted for 64% of year-end volume, pushing the average price up to a record $35,309 for a gain of 1.5% y/y. Rising loan and lease rates are also a potential speed bump.
Main Macro Events Today
US Non-Manufacturing ISM – December service sector producer sentiment is out today and should reveal a headline decline to 56.8 from 57.2 in November. Overall, producer sentiment in December remained strong with most measures posting increases. The ISM-adjusted average of all measures looks poised to hold at 53 for a second month, up from 51 in October and 50 as recently as September and August. US Initial Jobless Claims – Initial claims data for the week of December 31 is also out today and should show an improved headline of 260k (median 262k) from 265k the week prior and 275k in the week before that. More broadly, claims are poised to average a still firm 262k in December, up from 252k in November and 258k in October.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell Market Analyst HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
Comments
MACRO EVENTS & NEWS OF 13th OCTOBER 2016.
FX News Today
European Outlook: Asian stock markets headed south, with Hong Kong once again underperforming, after disappointing Chinese trade data and as the FED minutes said the case for a rate hike has strengthened. Together with curbs on property in China, the Hang Seng continues to underperform, while a stronger Yen is weighing on Japanese bourses. A Reuters source story meanwhile confirmed that a decision on the ECB’s QE changes and a possible extension is unlikely to be taken before December, although the council may already discuss some technical tweaks next week. U.S. and U.K. stock futures are also I negative territory and oil prices are down with the front end WTI future below USD 50 per barrel. With Sterling heading south again and the EUR moving higher against most currencies, the FTSE 100 may once again outperform the DAX, but yields are generally trending higher on both sides of the Channel. Released overnight U.K. RICS house price data came in better than expected.
FOMC minutes: Several members wanted to raise rates “relatively soon,” though we already knew that with the three dissenters. But, “a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labor market and inflation.”Obviously the Committee chose the latter and in a “close call,” decided to delay action. Nothing jumps out from the minutes to solidify expectations on a hike later this year. Interestingly, the FOMC worried about “eroding its credibility, especially given that recent economic data had largely corroborated the Committee’s economic outlook.” . While it’s still the case that economic data reports matter, this latter comment regarding worries over credibility, will keep the markets guessing about a December hike.
German Sep HICP inflation: Confirmed at 0.6% y/y, the national HICP rate at 0.7% y/y. The breakdown showed that the uptick over the month was mainly due to less negative base effects from energy prices, with prices for petrol falling -3.5% y/y in September, after still dropping -9.1% y/y in August. The rate excluding energy rose to 1.0% from 0.7% and excluding energy and petrol the rate rose to 1.2% y/y from 1.1% y/y in August. A confirmation then that inflation is trending higher, as oil prices stabilise and the most recent uptick in oil prices means the adjustment could happen quicker than anticipated. Further ammunition then for the ECB’s hawk, which are reluctant to extent the already generous stimulus further when the current QE program ends in March next year. Against that background a tapering, with somewhat reduced monthly purchase levels could be a typical European compromise.
FX Update: A big miss in Chinese exports drove a risk-off play in forex markets in the Asia session. AUDJPY, which is a risk appetite proxy, shed nearly 1%, while USDJPY, which had earlier clocked a 10-week high at 104.63, tipped back sharply to a low of 103.55, subsequently settling around 103.80. Aside from the 10% y/y dive in Chinese exports, softer oil prices and the latest FOMC minutes highlighting of hawkish arguments at the Fed were also in the mix of risk appetite spoilers. The yen gained in accordance with its historical inverse correlation with global stock market direction. The MSCI Asia-Pacific ex-Japan index lost over 1% as it fell into three-week low territory. USDJPY needs to hold 103.28, yesterday’s low to retain bullish trend credentials. A breach would signal a greater risk of a mean reversion move. The 20- and 50-day moving averages are presently at 102.09 and 101/89, respectively.
Main Macro Events Today
US Initial Job Claims – Initial claims data for the week of October 8 are out today and should reveal a slight headline increase to 253k from 249k last week and 254k in the week of September 24. More broadly, claims are expected to average 256k in October from 254k in September and 262k in August.
US Import & Export Prices – September trade price data is expected to show import prices unchanged with export prices down 0.2% on the month. This follows respective August figures which had import prices down 0.2% and export prices down 0.8%. The drop in oil prices over last winter and spring depressed headlines in this release but as prices rebounded over summer so too did headline import prices.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 14th OCTOBER 2016.
FX News Today
European Outlook: Asian stock markets are mixed, with Japanese markets and Hang Seng managing to move higher after yesterday’s dip, but investors continue to eye China nervously as weak trade data yesterday was followed by higher than expected inflation data on Friday. Oil prices moved higher and the front end WTI future is trading at USD 50.84 per barrel, which helped to underpin equity markets as the focus turns to Yellen’s speech at the Boston Fed conference. U.S. stock futures are little changed, while the FTSE 100 future is moving higher with Sterling weakness helping the index to outperform other European markets, while adding to Gilt underperformance as concerns about the inflation impact picks up. The EUR is down against all other currencies aside from GBP, which may also help to put a floor under stock markets despite tapering talk. The European calendar has final September inflation numbers from Spain and Italy as well as Eurozone trade data and Swiss PPI inflation.
China CPI & PPI Exceed Expectations: China Sep. CPI: 1.9% y/y (expected 1.6%) and PPI +0.1% (expected -0.3%). It’s the first time PPI has come in higher since January of 2012. Higher coal and steel prices a key factor in the positive result, and these could well be a signal of a diminishing of over-capacity problems.
US Data Reports: Revealed firmness in September trade prices and lean initial claims through the first two weeks of October that beat estimates, leaving upside risk for Q4 GDP and October payrolls that we peg at 2.5% and 170k respectively. For trade prices, we saw the expected 1.2% September oil import price bounce, but with a firm 0.3% export price rise. For claims, we saw a flat figure at the downwardly-revised 246k (was 249k) level from the first week of October that left a two-week stretch for claims at a new 42-year low. Claims are entering October well below already-lean September levels.
Fedspeak: Moderate Harker – the economy is doing “pretty well” and we have a strong labor market, he said, though the share of the population that wants to work makes it harder for the Fed to guide the economy. Harker also denied that the Fed is affected by the election cycle or influenced by politics. He also said a hike sooner than later would be his preference, though raising rates too quickly could have an impact on exports (USD index probed 98.0 7-month highs yesterday). He reiterates that he expects one rate hike by the end of 2016 and “at least two” next year. Kashkari – not forecasting a boom and not forecasting a recession for the US economy, but does expect more sluggish growth.
Main Macro Events Today
US Retail Sales – September retail sales data is out today and should reveal a 0.6% headline with a 0.5% ex-autos increase. This would follow respective August figures which had the headline down 0.3% on the month with the ex-autos figure down 0.1% for that month. The release faces upside risk from firm chain store sales, stronger gasoline prices and an increase in auto sales.
US PPI – September PPI should reveal a 0.2% headline with a 0.1% increase for the core. This follows August figures which had the headline unchanged and the core up 0.1%. Oil prices managed to climb in September which could lend some upside risk to the release.
US Michigan Consumer Sentiment – The first release on Michigan Sentiment is out today too and should reveal a 92.0 headline from 91.2 in September and 89.8 in August. After some weakness in August the various measures of consumer confidence posted a rebound in September although they are still tracking below the highs seen last spring.
Yellen and Carney – Both the Fed Chair and the BOE Governor have speaking engagements scheduled for today. With Sterling under continued scrutiny and Fed members becoming increasingly hawkish; their respective speeches are to be followed closely.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 17th OCTOBER 2016.
Main Macro Events This Week
United States: The economic calendar is a relatively light one this week, but does include an important inflation update, a rash of housing data and the Philly Fed survey. The Empire State index is forecast to rebound to 1.0 in October (Monday), while industrial production may recover 0.1% in September, capacity utilization seen rising to 75.6% from 75.5%. CPI is projected to jump 0.3% headline (Tuesday), with a 0.2% core rise vs 0.3%. The NAHB housing market index is expected to dip to 63 in October. The MBA mortgage application survey is due (Wednesday) and we’ll see how well it absorbs the rebound in mortgage rates, while housing starts are seen rebounding 2.4% to a 1,170k pace in October. EIA energy inventories will also be monitored for any “tell” on the near-term direction of energy prices. The Philly Fed index may sink to 6.3 in October from 12.8 (Thursday), while initial jobless claims may bounce 4k to 250k. Leading indicators are expected to rise 0.2% in September vs -0.2%, while existing home sales may bounce 1.3% to 5.40 mln. The calendar is empty Friday.
Fedspeak: the big guns continue to appear this week after Yellen’s dovish long-term guidance last week, starting with Fed Vice Chairman Fischer (Monday) who has been leaning more hawkishly near-term of late. SF Fed dove Williams speaks on (Wednesday), followed by Dallas Fed moderate Kaplan in a Q&A session. NY Fed dove Dudley discusses the economic history of New York from 19:45 ET. All three have mulled the likelihood of a hike before year-end and seem inclined to follow through, barring any extraordinary events beforehand. Dudley makes another appearance on the financial industry (Thursday). Governor Tarullo speaks (Friday), followed by Williams again.
Earnings will be important this week with many heavyweights slated to announce results. Including BoA, Netflix, IBM, (Monday) Goldman Sachs, Yahoo, Intel (Tuesday), Morgan Stanley, eBay (Wednesday) , Verizon, American Airlines, PayPal (Thursday) and GE and McDonald’s (Friday).
Canada: The Bank of Canada takes center stage this week, with the announcement and Monetary Policy Report (MPR) on tap for Wednesday. There is also manufacturing report (Tuesday) and CPI (Friday) is seen rising 0.2% m/m in September and 1.4% y/y growth pace in September from the 1.1% rate of gain in August.
Europe: The focus this week will be on the ECB meeting (Thursday). The data calendar, s pretty empty. Final Eurozone HICP inflation for September is likely to be confirmed at 0.4% y/y. German September PPI inflation is also likely to see rates moving up. Preliminary October Eurozone consumer confidence is expected to improve to -8.0 from -8.2 in September.
UK: The plunge in the pound, which has been likened to an emerging world currency in a research piece from Citi last week, looks likely to continue to drive underperformance in UK sovereign debt given the risk of higher inflation. BoE Governor Carney appeared to make a verbal currency market intervention on Friday, saying that the central bank is “not indifferent” to forex levels. The helped give the pound a prop, though the impact was limited. September inflation data (Tuesday), headline CPI to tick up to a new cycle high of 0.9%. Core CPI is also seen rising to a new cycle peak, of 1.4% y/y, from 1.3%. Such a rise in CPI will be consistent with BoE projections. Monthly labour statistics are also up (Wednesday), where the rear-view unemployment measure for August is expected unchanged at 4.9%, which is the cycle low. Average weekly earnings in the three-months to August are expected rise 2.3% in the with-bonus figure, which would still be well above inflation.
China: Q3 GDP (Wednesday) is forecast to hold steady at the 6.7% y/y pace from Q2. Growth has been moderating for the last several quarters, and is down from 7.2% in Q4 2014. September industrial production (Wednesday) is expected to slip slightly to 6.2% y/y from 6.3% previously. September retail sales (Wednesday) are penciled in at a 10.6% y/y clip, unchanged from August. September fixed investment is also due Wednesday, expected unchanged at an 8.1% y/y rate. September loan growth and new yuan loans are tentatively due Monday, and are expected to post a 13.1% y/y clip from 13.0%, and CNY 1,050.0 bln from CNY 948.7 bln, respectively.
Japan: The August all-industry index (Wednesday) is seen edging up 0.2% m/m from up 0.3% previously. This would be a third monthly gain. Revised industrial production has been reported and has missed expectations.
Australia: Calendar has September employment (Thursday), expected to improve 15.0k after the 3.9k drop in August. The unemployment rate is seen rising to 5.7% in September from 5.6% in August. The Reserve Bank of Australia’s minutes to the October meeting are due (Tuesday). Governor Lowe speaks (Tuesday) at Citi’s 8th Annual Australian & New Zealand Investment Conference in Sydney.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 20th OCTOBER 2016.
FX News Today
European Outlook: Asian stock markets mostly moved higher, as the Dollar strengthened in the wake of the last U.S. presidential debate. The weaker Yen helped to underpin Japanese markets and the most recent rise in oil prices is also helping to underpin investor demand. The front end WTI future has come off highs but is holding comfortably above USD 51 per barrel. In Europe the focus is on the ECB meeting and even if policy is likely to remain on hold today, Draghi will hope to keep his options sufficiently open to avoid a temper tantrum as markets focus on further stimulus beyond the current QE program, which ends in March next year. The European calendar also has U.K. retail sales, BoP and current account data from the Eurozone and Swiss trade data at the start of the session.
BOC Rate Decision: Governor Poloz said they actively discussed adding more monetary stimulus before deciding to leave the policy rate unchanged. He said the Governing Council “actively discussed the possibility of adding more monetary stimulus at this time, in order to return to the economy to full capacity.” Yet, they “identified a number of uncertainties in the current framework that are serving to widen the zone of balance within our risk-management framework.” Those uncertainties include “the macroeconomic effects of the new mortgage rates, the likely path of our exports; the impact of the federal government’s fiscal measures…and the effects on business confidence of the U.S. election.” The revelation that they “actively discussed” the possibility of adding more stimulus is not exactly a surprise. Given where the domestic and global economy currently sit, expectations are that this will continued to be discussed but with the same result (no change in rates) to be the same.
Poor Australian Labour Data: The number of jobs fell last month by 9,800, expectations were for an increase of 15,200, also the previous month was revised down to a fall of 8,600 from a fall of 3,900. Fulltime employment for September showed a dramatic fall of 53,000 and August was revised down to 10,500 from 11,500. AUD/USD dropped from around 0.7725 to under 0.7700, spent a few minutes chopping in a small range before slipping further and its under 0.7665 currently. Just as doubts were raised after big employment gains in the past, doubts were raised on big employment losses on today’s figures, the -53K for full time jobs in the month result in particular was greeted with questions.
Fedspeak: Dallas Fed moderate (and non-voter) Kaplan sees inflation firming while GDP growth for 2016 will likely average 1.75%, sufficient to drive down unemployment and take some slack out of the labor force. He sees political uncertainty likely affecting capital spending, but once the election is out of the way focus needs to shift to entitlement reform and infrastructure spending. Kaplan also notes that the Fed needs to be “humble” about the limits of monetary policy. Fed’sPotter says the Fed should be prepared to sell MBS, in comments at a Minneapolis Fed conference. Potter is head of the Fed’s Markets Group, so he has a lot of authority behind his words. Though “current FOMC guidance states that the sale of agency MBS is not anticipated…it is prudent for the Desk to be prepared for a wide variety of scenarios, including sales or the need to purchase additional agency MBS.” The large size and structure of the agency MBS market makes it a “desirable choice for conduction operations of the magnitude necessary t have a meaningful impact on financial and macroeconomic conditions.” However, the Fed’s experience with selling MBS is much more limited than purchasing agency paper, he noted. The Fed’s portfolio and possible manipulations of such has been in the news lately, especially after a “twist” operation was broached by Boston Fed’s Rosengren last week.
Main Macro Events Today
ECB Rate Announcement & Press Conference – Even if the ECB more likely to postpone any major decisions until December Draghi will be facing a difficult balancing act at today’s press conference, especially since a Reuters reported suggested that the planned tweaks to the asset purchase program designed to address looming supply shortages could already be discussed this week. At the same time, the question is whether the ECB will extend the QE program beyond March next year, when the current schedule of EUR 80 bln purchases per month is set to end. With growth indicators suggesting ongoing economic expansion and inflation starting to move higher, the ECB clearly is reluctant to add even more stimulus to an already very expansionary policy but the doves at the council will press for a follow up program with the end result likely a gradual phasing out of asset purchases. It will depend on Draghi’s delivery whether this will spook markets as the dreaded “tapering” or whether he can sell it as the further expansion of monetary policy it actually is. For now Draghi will be keeping all his options open and try to deliver a statement that keeps markets guessing and hoping and thus avoids a temper tantrum.
US Philly Fed Index – October Philly Fed should reveal a headline dip to 6.3 after the September bounce to 12.8 from 2.0 in August. The Empire State Index for October is already out and declined to -6.8 from -2.0 in September. Broadly, expectations are for producer sentiment to trend sideways in October with the ISM-adjusted average of all measures holding at 50 from August and September.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 20st September 2016.
FX News Today
The BoJ: Announced a policy framework overhaul, which it called “QQE with yield curve control.” It left the 0.1% negative rate charged on excess reserves unchanged, while detailing a reworked QQE program. The central bank abandoned its base money target and replaced it with “yield curve control,” whereby the BoJ will target 10-year JGB yields at current levels around 0%. The second part of the new policy framework is “inflation-overshooting commitment,” where the BoJ is committing to expanding the money base until CPI exceeds the y/y target of 2% and stays above target. The BoJ said the scale of the QQE program remained on hold, and that overall asset purchases would remain “more or less in line with the current pace,” although the maturity target has been abolished. The timeframe for achieving the 2% inflation target has been set, quite simply, as “the earliest possible time.” Aside from detailing the new framework, the BoJ also provided an assessment of the failure to have pushed CPI to 2%, blaming “exogenous factors,”including the fall in oil prices, sluggish global demand and financial market volatility. On the economy, the BoJ said recovery “is likely to remain slow.” The yen dove nearly 1% as markets digested the new framework see below.
FX Update: USDJPY is registering a near 1% gain as the London interbank take to their desks. After initially dipping as the BoJ refrain from extending its NIRP policy, the pair rallied as the yen fell across-the-board as markets digested an overhaul in the BoJ’s policy framework. It left the 0.1% negative rate charged on excess reserves unchanged, while detailing a reworked QQE program. The central bank abandoned its base money target and replaced it with “yield curve control,” whereby the BoJ will target 10-year JGB yields at current levels around 0%. The second part of the new policy framework is “inflation-overshooting commitment,” where the BoJ is committing to expanding the money base until CPI exceeds the y/y target of 2% and stays above target. USD-JPY clocked an eight-day high at 102.78. EUR-JPY and other yen crosses also vaulted higher. Whether the new framework will general sustained yen weakness remains to be seen. Spill over dollar strength following the BoJ’s announcement drove EUR-USD to a three-week low at 1.1123.
BoC’s Poloz said it is unclear if the bank will cut its forecast in October, responding to a question in his recently started Q&A with the press. He noted that the export gain in July provides some reassurance, but also said weakness in export data is unexplained. Keeping his constructive tone intact, he said he expects a large recovery in the level of non-commodity exports. As for the downward shift in inflation risks, he explained that the output gap and exports are behind the downward tilt. But the output gap is the biggest factor in lower inflation outlook he said. Responding to a question on housing, he said a slowdown in one housing market is rarely contagious. As for the renewal of the 2% inflation targeting mandate that is due in upcoming weeks, he said it is the Finance Department’s decision to make. It is a pretty high bar for changing the target, but it is not impossible, the Governor said. And repeating his previous view, he said the adjustment to the oil shock will take several years.
European Outlook: Japanese stocks jumped higher leading broad gains on other European markets after the Bank of Japan decided not to cut interest rates further. The reaction shows that markets and especially banks were weary of a further deepening of negative rates, which banks and insurers in particular are struggling to cope with. The Bank said it is shifting to a greater focus on the shape of the yield curve saying that it will increase bond purchases “more of less in line with the current pace” of 80 trillion yen per year. It also kept the door open to another rate cut. The Yen was under pressure after the decision, which underpinned the outperformance of Japanese stock markets. U.S. and U.K. futures are also higher ahead of the Fed decision, which is likely to see policy unchanged leaving the focus on the forward guidance. Oil prices are also higher, although the front end WTI future is down from earlier highs of over USD 45 per barrel at currently USD 44.89. European markets will look ahead to the Fed decision, but the local calendar also has U.K. public finance data. ECB’s Praet meanwhile stressed again this morning that the central bank will maintain a high degree of monetary accommodation.
Main Macro Events Today
FOMC Outlook – The two day FOMC meeting started yesterday with the announcement and press conference scheduled for 18:00 and 18:30 GMT respectively later today. There is little chance of a rate hike this week. The lack of any indication from the FOMC that another tightening is on the way is one of the main factors suggesting policy will be left on hold for now. Additionally, recent data reports haven’t gone the Fed’s way, with weakness in employment, retail sales, and manufacturing, along with still low/moderate inflation trends.
RBNZ – Expectations are for no change in the base rate from its current 2.00% level, still by far the the highest in the G10 countries.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 26th OCTOBER 2016.
FX News Today
European Outlook: Asian stock markets are mostly down, with Japan a notable outperforming (closing up and indices holding on to modest gains as the Yen continued to decline against the Dollar. U.S. and U.K. stock futures are also heading south as oil prices are down and the front end WTI future is trading below USD 50 per barrel, which has been hitting energy producers. Investors continue to watch earnings reports. ECB’s Draghi once again defended the ECB’s policy in a speech in Germany yesterday evening, while once again calling for support from the fiscal side. Nothing new there that would change the policy outlook.
German GfK consumer confidence: Dropped to 9.7 in November, from 10.0 in October. There is no breakdown for the November projections but the fall back was unexpected and disappointing, especially after the stronger than expected Ifo and PMI readings this week. The breakdown for October showed a marked improvement in business cycle expectations, which jumped to 13.0 from 6.8, the highest reading since June, which suggests that the Brexit shock was short lived. Despite this income expectations declined sharply as did the willingness to buy, although the willingness to save also slumped amid the low interest rate environment. Mixed messages then and at least in Germany it seems Draghi’s policy of easy money is not lifting consumption.
Australian CPI: The Australian dollar rallied following an above-forecast headline in Australian Q3 CPI, which rose 0.7% q/q, above the median expectation for a 0.5% rise. Most expect this should keep the RBA, which had cited concerns about disinflation as prime reasons for cutting rates in May and August this year, from any temptation to cut rates at its policy meeting next week. Core inflation painted a more benign picture, remaining unchanged at 1.5% y/y. AUDUSD lifted to a one-week high at 0.7708, which was a gain of just over 1%, before settling around 0.7690.
US Data reports: Revealed a larger than expected consumer confidence drop to 98.6 in October from a 103.5 (was 104.1) September figure that now sits marginally below the 103.8 cycle-high in January of 2015, alongside a Richmond Fed rise to -4.0 from -8.0 in September and a 3-year low of -11.0 August. We also saw big gains in two August home price indicators of 0.4% for Case-Shiller and 0.7% for the FHFA. The ISM-adjusted Richmond Fed rose to 51.5 from 50.8 in September and a 43-month low of 49.7 in August, as we’re seeing a renewed uptrend in producer sentiment with the bounce in oil prices and a recovery in mining and factory output as the big six-quarter inventory headwind reverses course. Confidence faces a headwind from the November elections, though we have an ongoing lift from low gasoline prices, stock market and home price gains, and an expected GDP bounce after a three-quarter string of lean 1% growth rates through Q2.
Main Macro Events Today
US Flash Services PMI – Expectations are for a slight uptick to 52.4 from a positively revised 52.3 last time.
US New Home Sales – New home sales are expected to decrease 1.5% to a 600k unit pace in September from 609k in August. Forecast risk: upward, given the higher NAHB for the month. Market risk: downward, as a run of weak data could impact the path of further rate hikes.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 27th OCTOBER 2016.
https://goo.gl/t6CDA0
FX News Today
European Outlook: Asian stock markets headed broadly lower, as investors remain focused on the earnings season, with Canon Inc. the biggest drag on the index. U.K. and U.S. stock futures are also down, following on from losses yesterday. Oil prices are up from lows, but the front end WTI (USOil) futures remains firmly below USD 50 per barrel, as U.S. East and Gulf coast stockpiles rose and the country’s production picked up. In Europe Deutsche Bank reports earnings today and the calendar has U.K. Q3 GDP growth data, which is expected to show a sharp deceleration in the quarterly growth rate to 0.3%. The Eurozone has M3 money supply growth and Italian consumer and business confidence data. Elsewhere Norges Bank is expected to keep the deposit rate unchanged at 0.50%. Core European bond futures declined in tandem with stock markets yesterday, as the focus remains on the U.S. rate outlook and the U.S. Presidential Election.
US Earnings – the busiest day : Earnings will remain the focal point again today with several more heavy hitters on tap. The calendar features Alphabet, Amazon, Twitter, Amgen, Baidu, Dow Chemical, Dr Pepper Snapple, Ford Motor, Aetna, Blackstone, Bristol-Myers Squibb, Brunswick,ConocoPhillips, Celgene, Raytheon, Expedia, Choice Hotels, Colgate-Palmolive, VW, Deckers, Hanesbrands, HealthSouth, LinkedIn, MGM Resorts, Nokia, Samsung Electronics, SolarCity, and Stanley Black & Decker.
US Data reports: Revealed big upside September surprises in the advance indicator report for the trade deficit and inventories alongside a 3.1% September new home sales rise that unfortunately followed big downward revisions over the prior three months that trimmed the summer sales spike. The trade and inventory surprises lifted Q3 GDP growth estimates sharply to 3.3% from 2.5%, though there were reductions in Q4 GDP growth to 2.0% from 2.5% as the expected Q4 inventory bounce was “pulled forward” into September. Expectations are now for a September drop in the goods and services trade gap to $36.5 bln from $40.7 bln in August. Also a 0.2% September business inventory increase that incorporates yesterday’s gains of 0.2% for wholesalers and 0.3% for retailers, alongside an assumed 0.1% factory inventory rise.
Germany’s Schaeuble: U.K. can’t have Brexit “A La Carte”. Nothing really new there, with the German finance minister repeating again that single market membership requires the acceptance of the EU’s four freedoms. He also said that the EU can’t show much flexibility, which confirms again that boths sides are heading for a hard Brexit scenario and Schaeuble’s hope that the economic damage for the EU and the U.K should be kept to a minimum, may be hard to achieve.
Main Macro Events Today
UK Prelim GDP – The first post Brexit quarterly reading. So far cable has pivoted around 1.2200, since the flash crash on October 7th. Announcement watched eagerly in Downing Street and at the BOE. Expectations are for a q/q figure of 0.3%. Last time 0.5% and the subsequently revised up to 0.7%.
US Core Durable Goods – September figure is seen as edging up 0.2%, after August’s revised 0.1% increase.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 31st OCTOBER 2016.
FX News Today
FBI’s Comey dropped a bombshell on the markets late Friday as he announced the agency would be reviving the Clinton email probe after learning, via a separate investigation, of the existence of apparently “pertinent” messages on a PC owned by Anthony Weiner (estranged husband of Clinton advisor Huma Abedin). In his letter, Comey reportedly told key members of Congress that his agency should take “appropriate investigative steps.” Wall Street dropped on the news, though a bounce in Biotech and Pharma shares (on the hot seat under Clinton) helped the Dow recover toward unchanged levels. The Mexican peso, the de facto election barometer, was the main casualty of the news, plunging 1.4% before closing 0.9% lower. Concurrently, bond yields closed modestly lower on short covering and risk aversion. This heightened uncertainty will make for an extraordinary run up to the November 8 election.
United States: The FOMC (Tuesday, Wednesday) will be a point of interest for the markets this week, but not quite the center of attention it usually is. The pick-up in Advance Q3 GDP to 2.9% helped clear the way for a hike in December, and implied futures were suggesting about a 75-80% probability — the November 1, 2 FOMC was never really in the running due to the election. Other data this week will have more relevance for how the markets set up for the December policy decision. Remember, the onus is on the data to keep the Fed sidelined at year end. Personal income (Monday) and PCE. Chicago PMI and Dallas Fed index (Tuesday) and construction spending. MBA mortgage applications are on tap (Wednesday), along with the ADP employment survey set to increase 160k in October. Q3 productivity (Thursday) along with. Initial jobless claims, ISM services and factory goods orders. The employment report will highlight on Friday, with October nonfarm payrolls expected to increase by 174k vs 156k in September, with a 160k private payroll gain. The unemployment rate is expected to tick back down to 4.9% from 5.0% in September. The workweek is expected to hold at 34.4 for a second month. Hourly earnings are expected to be up 0.2% which would leave a 2.5% y/y rise. Hours-worked should be 0.1% for the month following a 0.4% increase last month.
The Q3 earnings announcements continue this week. So far, most of the S&P companies which have announced have beaten estimates. This week includes Electronic Arts, Pfizer, Alibaba, Allergan, Facebook, Fitbit, Time Warner, Kraft Heinz, Adidas, Liberty Global, Starbucks and BMW.
Canada: A heavy slate of economic data this week: The industrial product price index (Monday), GDP (Tuesday), Employment (Friday) is projected to fall 15.0k in October, but after the stunning 67.2k surge in September. The unemployment rate is seen steady at 7.0%. The trade deficit also (Friday) is expected to narrow to -C$1.8 bln in September from -C$1.9 bln in August, as Canada’s trade position continues to gradually improve. The October RBC manufacturing PMI (Tuesday) and October Ivey PMI (Friday) are also due.
Europe: Preliminary Eurozone Q3 GDP numbers and October inflation data will be in focus this week, which together with the final readings for October PMI surveys, will add to the data mix that could prove decisive for the ECB December decision on future QE purchases. Preliminary Eurozone HICP inflation (Monday) meanwhile is seen accelerating to 0.5% y/y.The data calendar also has unemployment numbers from Germany for October, (Wednesday). Eurozone September unemployment (Thursday) is seen steady at 10.2%. German retail sales and French production data are also on the slate.
UK: The BoE’s Monetary Policy Committee meets for the first time since September (announcing Thursday), and the central bank will at the same time release the latest Quarterly Inflation Report with updated growth and inflation projections. While last week brought some good news, including the solid Q3 GDP report and news that Nissan will remain committed to its manufacturing operations in Brexit-bound Britain, the outlook remains clouded by uncertainty. S&P affirmed its AA credit rating for the UK late on Friday, although the agency maintained its negative outlook and warned that Brexit “presents a significant risk to the UK’s track record of strong economic performance, and to its large financial sector in particular.” The UK data calendar is also busy this week. Monthly BoE lending data (Monday) should see lending stabilize. The October PMI surveys highlight. The manufacturing PMI release (Tuesday), the construction PMI (Wednesday) and the services PMI (Thursday). Outcomes in-line with expectations would affirm that the economy is continuing to expand in early Q4.
China: The only reports are the services and manufacturing PMI measures (both Tuesday).
Japan: The BoJ meeting (Monday, Tuesday) will be anxiously awaited amid policy uncertainties. While Governor Kuroda and Company are not expected to reveal any changes to the QE program, the markets will be watching for any shift to the Bank’s timeline for hitting its inflation goal of 2%. Data wise September preliminary industrial production, Retail sales , housing starts, construction orders and auto sales are all published (Monday). The Nikkei/Markit October manufacturing PMI (Tuesday) is forecast at 48.0 from 48.2 previously. October consumer confidence (Wednesday) is forecast at 42.5 from 43.0 previously, while October services PMI is due Friday. The markets are closed for a holiday Thursday.
Australia: The calendar is highlighted Reserve Bank of Australia’s meeting (Tuesday), expected to result in no change to the current 1.50% setting for the policy rate. Building approvals (Wednesday), the trade deficit (Thursday), Retail sales (Friday) and finally the October Melbourne Institute inflation index (Monday) is also scheduled for release.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 31st OCTOBER 2016.
FX News Today
FBI’s Comey dropped a bombshell on the markets late Friday as he announced the agency would be reviving the Clinton email probe after learning, via a separate investigation, of the existence of apparently “pertinent” messages on a PC owned by Anthony Weiner (estranged husband of Clinton advisor Huma Abedin). In his letter, Comey reportedly told key members of Congress that his agency should take “appropriate investigative steps.” Wall Street dropped on the news, though a bounce in Biotech and Pharma shares (on the hot seat under Clinton) helped the Dow recover toward unchanged levels. The Mexican peso, the de facto election barometer, was the main casualty of the news, plunging 1.4% before closing 0.9% lower. Concurrently, bond yields closed modestly lower on short covering and risk aversion. This heightened uncertainty will make for an extraordinary run up to the November 8 election.
United States: The FOMC (Tuesday, Wednesday) will be a point of interest for the markets this week, but not quite the center of attention it usually is. The pick-up in Advance Q3 GDP to 2.9% helped clear the way for a hike in December, and implied futures were suggesting about a 75-80% probability — the November 1, 2 FOMC was never really in the running due to the election. Other data this week will have more relevance for how the markets set up for the December policy decision. Remember, the onus is on the data to keep the Fed sidelined at year end. Personal income (Monday) and PCE. Chicago PMI and Dallas Fed index (Tuesday) and construction spending. MBA mortgage applications are on tap (Wednesday), along with the ADP employment survey set to increase 160k in October. Q3 productivity (Thursday) along with. Initial jobless claims, ISM services and factory goods orders. The employment report will highlight on Friday, with October nonfarm payrolls expected to increase by 174k vs 156k in September, with a 160k private payroll gain. The unemployment rate is expected to tick back down to 4.9% from 5.0% in September. The workweek is expected to hold at 34.4 for a second month. Hourly earnings are expected to be up 0.2% which would leave a 2.5% y/y rise. Hours-worked should be 0.1% for the month following a 0.4% increase last month.
The Q3 earnings announcements continue this week. So far, most of the S&P companies which have announced have beaten estimates. This week includes Electronic Arts, Pfizer, Alibaba, Allergan, Facebook, Fitbit, Time Warner, Kraft Heinz, Adidas, Liberty Global, Starbucks and BMW.
Canada: A heavy slate of economic data this week: The industrial product price index (Monday), GDP (Tuesday), Employment (Friday) is projected to fall 15.0k in October, but after the stunning 67.2k surge in September. The unemployment rate is seen steady at 7.0%. The trade deficit also (Friday) is expected to narrow to -C$1.8 bln in September from -C$1.9 bln in August, as Canada’s trade position continues to gradually improve. The October RBC manufacturing PMI (Tuesday) and October Ivey PMI (Friday) are also due.
Europe: Preliminary Eurozone Q3 GDP numbers and October inflation data will be in focus this week, which together with the final readings for October PMI surveys, will add to the data mix that could prove decisive for the ECB December decision on future QE purchases. Preliminary Eurozone HICP inflation (Monday) meanwhile is seen accelerating to 0.5% y/y.The data calendar also has unemployment numbers from Germany for October, (Wednesday). Eurozone September unemployment (Thursday) is seen steady at 10.2%. German retail sales and French production data are also on the slate.
UK: The BoE’s Monetary Policy Committee meets for the first time since September (announcing Thursday), and the central bank will at the same time release the latest Quarterly Inflation Report with updated growth and inflation projections. While last week brought some good news, including the solid Q3 GDP report and news that Nissan will remain committed to its manufacturing operations in Brexit-bound Britain, the outlook remains clouded by uncertainty. S&P affirmed its AA credit rating for the UK late on Friday, although the agency maintained its negative outlook and warned that Brexit “presents a significant risk to the UK’s track record of strong economic performance, and to its large financial sector in particular.” The UK data calendar is also busy this week. Monthly BoE lending data (Monday) should see lending stabilize. The October PMI surveys highlight. The manufacturing PMI release (Tuesday), the construction PMI (Wednesday) and the services PMI (Thursday). Outcomes in-line with expectations would affirm that the economy is continuing to expand in early Q4.
China: The only reports are the services and manufacturing PMI measures (both Tuesday).
Japan: The BoJ meeting (Monday, Tuesday) will be anxiously awaited amid policy uncertainties. While Governor Kuroda and Company are not expected to reveal any changes to the QE program, the markets will be watching for any shift to the Bank’s timeline for hitting its inflation goal of 2%. Data wise September preliminary industrial production, Retail sales , housing starts, construction orders and auto sales are all published (Monday). The Nikkei/Markit October manufacturing PMI (Tuesday) is forecast at 48.0 from 48.2 previously. October consumer confidence (Wednesday) is forecast at 42.5 from 43.0 previously, while October services PMI is due Friday. The markets are closed for a holiday Thursday.
Australia: The calendar is highlighted Reserve Bank of Australia’s meeting (Tuesday), expected to result in no change to the current 1.50% setting for the policy rate. Building approvals (Wednesday), the trade deficit (Thursday), Retail sales (Friday) and finally the October Melbourne Institute inflation index (Monday) is also scheduled for release.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 1st November 2016.
FX News Today
European Outlook: Asian stock markets are mixed, with Japanese markets fluctuating and closed with slight gains after the BoJ left rates unchanged, but lowered the inflation outlook. The Hang Seng is outperforming and mainland Chinese markets are also underpinned, after the official manufacturing PMI improved. The ASX underperformed as AUD strengthened and U.S. and U.K. stock futures are moving higher. Oil prices are up from lows, but the front end WTI future is just above USD 47 per barrel and clearly down from recent highs, amid the lack of an OPEC output deal. In Europe trade is likely to be quieter than usual, with a public holiday in some European countries, including parts of Germany. This will delay the release of final EMU manufacturing PMI numbers until tomorrow, while Switzerland and the U.K. will publish manufacturing PMI data today.
The BoJ left policy unchanged following the conclusion of its latest policy meeting, as had been widely expected. This left the interest rate at -0.1% and QQE unchanged at Y80 tln per year. The central bank also pushed back, once again, the time when it expects inflation to reach the 2% target, now projecting this to happen “around fiscal 2018.” Previously the BoJ had forecast inflation returning to target by the end of fiscal 2017, which ends in March 2018. The ellusive target was first introduced in 2013. Headline core CPI fell to -0.5% y/y in October, while the so-called “core-core” CPI figure was flat y/y, a three-year low and highlighting sluggish consumer demand. The central bank also trimmed its inflation forecasts today, now seeing core CPI at 1.5% in 2017 versus 1.7% previously. On the economy, the BoJ said that the economy would continue to expand moderately, but noted that households haven’t been spending increased income and that the risks to the outlook were skewed to the downside.
FX Update: The Aussie dollar was the standout performing, rallying on the RBA’s decision to leave policy unchanged. AUD-USD and AUD-JPY are registering the biggest movement out of the currencies we track, showing respective gains of 0.7% and 0.8% into the London interbank open. Australia’s weak core inflation data had fed some speculation that the RBA might have opted to make a third rate cut of the year. But the antipodean central bank stood pat and Governor Lowe’s statement was upbeat in outlook, noting that “over the next year, the economy is forecast to grow at close to its potential rate before gradually strengthening” with inflation “expected to pick up gradually over the next two years.” AUDUSD clocked a six-day high at 0.7688 while AUDJPY broke into three-month high terrain. Stronger than expected October manufacturing PMI surveys out of China, with the Caixin version reaching its best level since August 2011, also lifted the Aussie. Elsewhere, currencies generally saw narrow ranges. Cable consolidated gains seen into the London close yesterday, holding around 1.2220-30. EURUSD continued to narrowly orbit the 1.0950 level. USDJPY popped moderately higher after the expected decision by the BoJ to leave policy unchanged with the central bank lowering CPI forecasts and yet again pushing back the time it expects the 2% target to be reached.
US Data reports: Mixed. We saw a moderate 0.3% September personal income gain, but with a solid 0.5% consumption rise, alongside divergent October swings for the Chicago PMI and the Dallas Fed that left both measures below prior estimates. We saw a Chicago PMI drop to a 5-month low of 50.6 from 54.2, and a rise for the Dallas Fed to a still-negative -1.5 in October from -3.7. We saw an ISM-adjusted Dallas Fed drop to 49.6 from 51.2 in October and 50.7 in September.
Carney to stay and extra 12 months: BoE’s Carney will stay on another year, taking his term beyond the expected Article 50 process in order to help secure an orderly transition. This followed a meeting yesterday with PM May, the UK Finance Minister Hammond says he’s “very pleased” to hear that Carney intends to stay until the end of June 2019.
Main Macro Events Today
US manufacturing ISM – The October ISM should reveal a headline increase to 51.7 from 51.5 in September and 49.4 in August. Already released measures of sentiment for October have revealed headline declines. More broadly we expect sentiment to improve in October with the ISM-adjusted average of all measures climbing to 51 after two months at 50 as inventory headwinds dissipate and the mining sector rebounds.
Canada GDP – Expectations are for a 0.2% rise in September GDP. The modest gain would follow the back to back surges in August (+0.5%) and July (+0.6%), as the economy, or more specifically oil sands production in the Fort McMurray region, rebounded from the wildfires that shuttered production in May (when GDP fell 0.6%). The energy sector saw continued growth in September, as export volumes grew and higher volumes boosted manufacturing production.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 1st December 2016.
FX News Today
European Outlook: A jump in oil prices following yesterday’s OPEC deal on output cuts and a stronger than expected manufacturing PMI reading out of China underpinned broad gains on Asian stock markets overnight. The front end WTI future cleared the USD 50 per barrel mark, but while the oil price induced rally already helped European markets to post gains Wednesday, it seems to be running out of steam with U.S. stock futures down on the day in tandem with U.K. stock futures. Concerns about a new wave of global protectionism seems to be adding to concerns. The rise in oil prices should keep upward pressure on yields, although if equities head south again, we could see futures regaining some of yesterday’s losses. Italian markets will remain in focus as the referendum on constitutional reforms draws nearer. The European calendar has the final reading for the Eurozone manufacturing PMI, as well as Eurozone unemployment numbers and the U.K. manufacturing PMI for November.
US Reports Yesterday: Very solid personal income, ADP, and Chicago PMI figures that further document accelerating activity. For income, we saw a firm 0.6% October rise, with a lean 0.3% consumption increase but with the expected 0.1% “real” gain thanks to a lean 0.2% PCE chain price rise. We saw skewing of Q3 income and consumption strength toward September that lifted the entry to Q4, beyond the expected upward income revisions in Q2 and Q3, and Q3 consumption boosts. We lifted our consumption estimates, though we still peg Q4 GDP growth at 1.8%. A 216k November ADP rise beat our 180k estimate for private payrolls with a 190k total payroll increase, though we saw a big 28k downward October ADP revision to 119k from 147k that left a downside gap to the 142k private payroll increase in that month. We saw a November Chicago PMI surge to a 22-month high of 57.6 to leave a robust level as producer sentiment extends its uptrend. We expect a 190k rise in November payrolls tomorrow.
Canada’s Growth Ticks Up: Canada’s 3.5% GDP rebound in Q3 was accompanied by the anticipated bounce back in energy production, but was joined by acceleration in the pace of consumption spending, a surge in investment on non-residential structures and a positive contribution from inventories. A 0.3% gain in September GDP left a strong hand-off to Q4. The reports also imparted a mildly positive tilt to the outlook for 2016 and 2017 growth, adding to the case for no change from the Bank of Canada at the December announcement.
Fedspeak: Cleveland Fed hawk Mester said the “devil will be in the details” in terms of fiscal, trade and immigration policies of the next administration with respect to inflation and employment, but raising rates would be a prudent step for the Fed as postponing hikes for too long would raise risks of recession and financial instability. She feels the Fed meanwhile “is not behind the curve.” Mester has been a hawkish dissenter against policy status quo and has been arguing for pre-emptive rate hikes for a while, so this won’t come as a surprise. Fed Governor Powell; communications should downplay the timing of rate moves, he said in prepared remarks at an “Understanding Fedspeak” event. Focusing on the potential timing of changes can lead to confusion. Rather, communications should emphasize the uncertainty over forecasts. On the dot plot, he noted that while changes in the plot might reveal changes in views on the policy path, it’s not a useful predictor of near term rate action. In conclusion, he said policymakers communicate a lot more these days; some of the comments are designed to express the consensus, while some is designed to show the diversity of views.
Main Macro Events Today
US ISM Manufacturing PMI – The October ISM is expected to rise to 52.5 from 51.9 in October. Forecast risk: upward, given strong components in early month sentiment. Market risk: downward, as weakening in data could impact rate hike timelines. The ISM has shown a recent high of 59.9 in February ’11 and a low of 33.1 in December of 2008.
Canada 3Q GDP – Real Q3 GDP is expected to rebound 3.4% in the report due today after the 1.6% drop in Q2. A bounce-back in real net exports is seen driving the pick-up. Consumption growth is seen slowing, while M&E investment should manage another small gain. Inventories are the usual wildcard, projected to modestly subtract from GDP. Meanwhile, September GDP by industry is seen up 0.1% m/m, leaving a tepid hand-off to Q4. Moreover, the Q3 surge will be driven by a return to production and activity in the Forth McMurray region after the wildfire temporarily halted production in Q2.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
THE ECONOMIC WEEK AHEAD.
Main Macro Events This Week
United States: The November services data, along with trade and sentiment data will headline a thin economic slate. The nonmanufacturing ISM (Monday) is projected to rise to 55.5 after falling 2.3 points to 54.8 in October. The Markit services PMI is also slated (Monday). The October international trade report (Tuesday) is seen posting a wider $42.4 bln deficit. The December preliminary consumer sentiment release (Friday) should show an increase to 94.5 after popping up to 93.8 in November, further reflecting Trump enthusiasm. Productivity growth (Tuesday) is forecast to be unchanged at a 3.1% pace, while unit labor costs hold at 0.3%. The October JOLTS data (Wednesday) would typically be important, as it’s a Yellen favorite, but with the Fed a done deal next week, it will be overlooked. The quarterly QSS release (Thursday) will be of some importance for the GDP outlook as it’s an update on the service sector. Other data this week includes the Fed’s November Labor Market Conditions Index (LMCI) (Monday), October factory orders (Tuesday), October consumer credit (Wednesday), initial jobless claims (Thursday), and October wholesale trade. Fedspeak will be compressed to Monday this week heading into the Fed’s blackout window for the December 14 FOMC decision. On Saturday, NY Fed dove Dudleyconfined his remarks to regulation. He will be back up again on Monday discussing the macroeconomic outlook. Chicago Fed dove Evans will speak on the current economic outlook and policy. St. Louis Fed hawk-dove Bullard will discuss the economy and policy as well.
Canada: the Bank of Canada’s policy announcement (Wednesday) is the focus. No change in the current 0.50% rate setting is expected but a tempering of the easing bias is possible. Projections are also for no change in rates through next year. Data is headlined by the October trade report (Tuesday), with the deficit expected to narrow to -C$2.0 bln from -C$4.1 bln. The Ivey PMI (Tuesday) is projected to be nearly steady at 60.0 in November from 59.7 in October. Housing starts (Thursday) are seen slipping to 190.0k in November from 192.9k in October. Building permit values (Thursday) are anticipated to decline 1.0% in October after tumbling 7.0% in September. Capacity utilization (Thursday) is projected to rebound to 81.5% in Q3 as the economy recovered, following the plunge to 80.0% in Q2 that was driven by the Alberta-wildfire-related pull-back in GDP. Capacity utilization was 81.4% in Q1. The October new housing price index (Thursday) is expected to rise 0.2% m/m in October after the matching 0.2% increase in September
Europe: The ECB is the focus this week. The Bank not only has to deal with the immediate fallout from the Italian referendum, but most importantly, it will be deciding on the future of the QE program, which currently runs out in March. News sources suggested that many on the Committee favor another 6-month extension at current levels. The calendar will play a secondary role, although German manufacturing order numbers (Tuesday) will be interesting and are likely to be watched closely by central bankers. Similarly, industrial production for October (Wednesday) is expected to rebound 0.9% m/m after falling -1.8% m/m in September. Data broadly in line with expectations would confirm what confidence indicators already suggested, that growth is likely to pick up again in the last quarter of the year. The same holds for Eurozone October retail sales (Monday), which are seen at 0.8% m/m.
The November Services PMI (Monday) is likely to be confirmed at 55.0. And, against these up-to-date numbers, the third release of Eurozone Q3 GDP (Tuesday) will be rather backward looking. The data calendar also has German trade numbers (Friday) and French production data Friday).
UK: Sterling closed out last week on strong footing with an average 0.6% advance versus the G3 currencies on the day and an average gain of 1.6% on the week. The calendar includes an expected ruling by the Supreme Court on Thursday on the government’s challenge to the issue of whether it has to put the decision to trigger Article 50 of the Lisbon Treaty before parliament. Data include the November services PMI (Monday), which is expected to ebb to a headline reading of 54.2) after October’s 54.5. Like the manufacturing and construction PMIs have already shown, the November PMI should reveal a spike in cost pressures as the consequence of sterling’s weakness post-Brexit vote start to bite. Production data for October is also up (Wednesday), where we see scope for a rebound in the industrial output figure, to +0.2% m/m after September’s 0.4% m/m contraction. Trade data and various house price indicators are also out, none of which is expected to move markets.
China: The November trade surplus (Thursday) is expected to narrow to $45.0 bln from $49.1 bln in October. Friday brings November CPI and PPI, where the former is seen warming to 2.3% y/y from 2.1%, and the latter expected at 2.5% y/y from 1.2%.
Japan: The October current account surplus (Thursday) is seen narrowing to JPY 1,600.0 bln from 1,821.0 bln in September. November bank loan data are also due Thursday. The Q4 MoF business outlook survey (Friday) is expected to fall to 2.0 from 2.9 in November.
Australia: Reserve Bank of Australia meeting (Tuesday) is the highlight. No change to the current 1.50% rate setting is the expected outcome. The bank cut rates in May and August to counter a firming AUD. The slate of economic data is highlighted by Q3 GDP (Wednesday), projected to expand 0.4% (q/q, sa) after the 0.5% gain in Q2. The current account deficit (Tuesday) is seen at -A$14.5 bln after the -A$15.5 bln shortfall in Q2. The trade deficit (Thursday) is anticipated at -A$1.0 bln in October from -A$1.2 bln in September. Housing finance (Friday) is seen falling 1.0% in October after the 1.6% run-up in September.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 6th December 2016.
FX News Today
European Outlook: Asian stock markets managed to move mostly higher, after gains in Europe and on Wall Street yesterday. The Italian MIB closed with slight losses Monday, but it seems investors quickly got over the widely expected rejection of Italy’s constitutional reform and Renzi’s resignation. Italy may once again have to look for a new government, but that is hardly anything new in a country where it is extremely rare for a government to last full term Italy is hardly heading for an exit from the EU, even if EMU membership is under scrutiny in some quarters, but the problems of Italy’s banks will likely come back to the forefront and keep pressure on Italian markets, which actually managed to outperform in the last week ahead of the referendum. Still, U.S. and European stock futures are heading south this morning, and oil prices are down. The European calendar has German factory orders at the start of the session, which are expected to rebound from the contraction in September. There is also the final and detailed reading of Eurozone Q3 GDP and Swiss inflation data. Already released overnight, U.K. BRC like for like retail sales came in weaker than expected.
RBA Rates left unchanged: Cash rates remain on hold at 1.5% as expected. “Rising AUD could complicate economic transition” Steady policy consistent with growth and inflation targets, global economy growing at a slower rate but Chinese economy has “Steadied”. Large supply of apartments to hit housing market (where prices are rising “briskly”) in the next few years. Global inflation more balanced than for “some time”. Labour market conditions have improved and commodity prices have risen. However, outlook for inflation remains “low for some time”. AUD unchanged following announcement and statement. RBA next meet February 8.
US Reports Yesterday: The U.S. ISM-NMI bounce to a 1-year high of 57.2 from 54.8 in October, but a similar 57.1 in September, left the measure much closer to the 10-year high of 59.6 in July of 2015 than the 6-year low of 51.4 in August. The ISM-adjusted ISM-NMI bounced less sharply, to 56.1 from 54.2 in October, versus an 8-month high of 56.3 in June, a 10-year high of 59.0 in July of 2015, and a 6-year low of 50.7 in August. The ISM-adjusted average of the major producer sentiment surveys surged to a 16-month high of 53 from 51 in October and 50 in August and September. We saw a 49 expansion-low in January and February, and previously in October of 2012. The employment gauge surged to a 1-year high of 58.2 from 53.1.
FedSpeak: St. Louis Fed hawk-dove Bullard: new tax, fiscal and regulatory policies in Washington could make the U.S. a higher-speed economy if they improve productivity. But any such policy changes should not be viewed as needed stimulus since the economy is not in recession. The impact on current low-growth, low interest rate regime depends on proper execution and focus on productivity improvements. Absent such changes, he’s still sticking with his one-rate-hike-only call to reach neutral policy, which is appropriate since inflation and unemployment are close to target. But this appears to give him an exit strategy if the fiscal outlook changes significantly. Dudley of NY Fed on CNBC: it’s premature to take on board market views of fiscal expansion, he said, but if fiscal policy got more expansive, the Fed would probably remove accommodation more quickly. But it depends on the specifics of any fiscal stimulus, which is as yet unknown. He’s essentially echoing his earlier speech on the economic outlook and he’s generally pleased that there has been an uptick in wages and inflation, which was the goal. Dudley notes that there will be lags in implementing any fiscal legislation, however, and any Fed policy adjustments as a result will be out over the horizon. Overall, he sees “downside risks to the economy reduced.” Dodd-Frank is not perfect, so changes are appropriate, but essential ingredients on capital requirements, etc. should remain. He also sees the rising dollar as consistent with expectations about growth. He is making a bid for automatic fiscal stabilizers again as well. Evans: we’re on cusp of period of rising rates, said the dovish Chicago Fed president, and he expects inflation to move “more solidly” toward the Fed’s 2% target. He said the state of demand in the U.S. is really quite good, growth should continue and with unemployment at 4.6% you don’t need explicit infrastructure stimulus. Evans echoed Dudley, saying we need to have patience to assess what the new administration’s policies will be, though policies under discussion could reinforce the U.S. growth trajectory. This is more optimistic on the growth front for Evans, therefore slightly more hawkish by implication.
Main Macro Events Today
EUR Gross Domestic Product – Year on Year Eurozone area GDP is out later this morning and it is expected to remain unchanged at 1.6% with Month on month GDP also unchanged at 0.3%.
US Factory Orders – October factory goods data is out later today and should reveal a 2.6 increase for the headline with shipments up 0.3% and inventories up 0.2%. This follows respective September figures which had orders up 0.7%, sales up 0.9% and inventories up 0.1%. Data in line with forecasts would leave the I/S ratio unchanged from September’s 1.34.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
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Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 12th December 2016.[/B]
Global equities continue to charge ahead as the Trump reflation rally brings glad tidings and cheer to investors heading into the holidays. This week’s calendar is highlighted by the long-awaited December FOMC meeting, the last of 2016, and a rate hike should not be a surprise given the rhetorical smoke signals of late and the underpinnings of growth, jobs and even nascent signs of inflation recovering. With the ECB meeting now out of the way, focus in Europe will turn to policy decisions in the UK and Switzerland, where unchanged policy settings are forecast. For Japan the calendar ramps up with PPI, machine orders, Tankan and industrial production, while in China, FDI, production, retail and fixed investment data are due.
United States: The FOMC decision is the key data release of the week. U.S. import prices are projected to sink 0.4% in November vs +0.5% (Tuesday), while export prices are also seen -0.4% vs +0.2%. MBA mortgage market indices (Wednesday) may continue to feel the strain of rising mortgage rates. Retail sales are forecast to rise 0.6% in November vs 0.8%, or 0.7% ex-auto, as rising gasoline prices boost gas station sales. Headline PPI may remain muted at 0.1% in November or 0.2% core. Industrial production is set to dip 0.1% in November, while capacity use may slip slightly to 75.2%. October business inventories are expected to sink 0.2%. CPI kicks off a busy (Thursday), with a headline forecast of 0.3% in November, while the core reading is seen 0.2% higher for a 2.1% y/y gain. The Philly Fed index may rise to 9.0 in December from 7.6, while the Empire State index is forecast to jump to 4.0 in December from 1.5. Also on tap is the Q3 current account deficit, projected to narrow to -$112.1 bln from -$119.9 bln. Initial jobless claims may slip 8k to 250k for the week ending December 10 and the NAHB housing market index is expected to hold steady at 63 in December. The week wraps up with housing starts (Friday) seen retreating 6.3% to a 1,240k unit pace in November after the 25.5% surge to 1,323k in October.
The markets are fully priced for a rate hike Wednesday. So, key for price action will be what’s inferred for the 2017 trajectory in the policy statement, and more importantly in the forecasts. FOMC forecast revisions to be released Wednesday after the FOMC meeting should reveal boosts in the PCE chain price forecasts for 2016, downward 2016 jobless rate revisions, and a narrowing in 2016 GDP.
Canada: Highlights are on Thursday, when the October manufacturing survey and the Bank of Canada’s Financial System Review (FSR) are released. Manufacturing is expected to improve 0.5% in October after the 0.3% gain in September. The FSR, which is published twice a year, will be followed by a press conference with Governor Poloz and Senior Deputy Governor Wilkins. The Q3 national balance sheet and financial flow accounts report is due Wednesday, which will provide a key measure of household leverage. Housing data is also due, with the Teranet/National HPI for November scheduled for Wednesday and the November existing homes sales report is due out Thursday.
Europe: With the ECB announcement out of the way and effectively setting policy parameters for the whole of 2017, by extending the QE program through to December next year, data releases won’t change the overall outlook. The data calendar has the German December ZEW reading, which we expect to have picked up again following Draghi’s early Christmas present and expectations are for a rise in the future expectations index to 14.3 from 13.8 in the previous month. The rest of the calendar focuses on final November inflation data with the German reading expected to be confirmed at 0.7% y/y, the French also at 0.7% y/y, the Spanish at 0.5% y/y, the Italian at 0.1% y/y and the overall Eurozone number at 0.6% y/y. Inflation is ticking higher, but not sufficiently apparently for the ECB. Eurozone production data for October meanwhile could correct again after weaker than expected German and French data and the Eurozone trade surplus is expected to ease slightly. Events include an EU leaders summit, with Brexit strategy discussions likely to be high on the agenda, but unlikely to be discussed much publicly, as the official line remains the same as before the U.K.’s referendum.
China: November industrial production (Tuesday) is expected little changed at 6.0% y/y from 6.1% in October, while November retail sales (Tuesday) are forecast to rise 10.2% y/y from 10.0% previously. November fixed investment (Tuesday) is predicted at 8.2% y/y from 8.3%.
Japan: Quiet week for data. The BoJ’s December Tankan index (Wednesday) should see the large manufacturer’s component improve to 8 from 6 and the large non-manufacturers component at 20 from 18. Revised October industrial production is also due Wednesday.
Australia: The calendar features November employment (Thursday), expected to rise 15.0k after the 10.9k gain in October. The unemployment rate is at 5.6% in November, matching the 5.6% reading seen in October. The Q3 house price index is due Tuesday. There is no Reserve Bank of Australia speaker this week. The minutes to the December meeting (December 20) are the next event of note from the bank.
[B]Always trade with strict risk management. Your capital is the single most important aspect of your trading business.[/B]
[B]Please note that times displayed based on local time zone and are from time of writing this report.[/B]
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[URL=https://analysis.hotforex.com/][B]Click HERE to READ more Market news.[/B][/URL]
[B]
Stuart Cowell
Market Analyst
HotForex
[/B]
[B]Disclaimer:[/B] This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 13th December 2016.
FX News Today
European Outlook: Asian stock markets were narrowly mixed, with Japan outperforming (closed up 0.5% at 19,250) as the Yen fell ahead of the FOMC announcement. The ASX closed down, and Chinese bourses managed to claw back some of yesterday’s losses, but the Hang Seng is also slightly in the red and funding concerns remain. A pick up in China retail sales and industrial production may indicate that there is still momentum in the economy, but pressure on Hong Kong’s money markets continues to build as funding costs rise to the highest level since 2009 as the Fed readies for a rate hike. And the squeeze has started to spill over into markets. U.S. and U.K. stock futures are moving higher though, and the FTSE 100 could claw back some of yesterday’s losses at the open. Oil prices have fallen back from yesterday’s highs and the front end WTI future is trading at USD 52.63, which could help bond futures to win back some lost ground and help yields to come off highs. The European calendar has German ZEW investor confidence and a host of December inflation data, with the final release from Germany at the start of the session, followed by inflation numbers from Sweden, the U.K. Spain and finally Portugal.
China data beats: Chinese Retail Sales were particularly strong and came in at 10.8% y/y well ahead of expectations at 10.2%. Industrial Production also beat expectations at 6.2% y/y (6.1%) expected. Both sets of figures suggest a much smoother end to 2016 for the Chinese economy than the first six months. Private investment remains weak, and government stimulus continues to support the economy. The housing market (a main driver of the economy this year and many view as overheating) is showing signs of cooling and therefore slowing potential growth next year.
German final Nov HICP was confirmed at 0.7% y/y, as expected, with the national rate confirmed at 0.8% y/y. both unchanged from the previous month. The uptrend in annual price declines for energy products was halted in November and prevented a further rise in the headline rate. Prices for household energy dropped -2.9% y/y, versus a decline of -2.3% y/y in the previous month, as declines in prices for gas and heating oil accelerated again. Petrol prices dropped -2.2% y/y, after rising 0.4% y/y in November and excluding household energy and petrol, the annual rate would have risen to 1.2% y/y from 1.1% y/y in the previous month. Clearly there are no signs of deflation risks and with rates excluding energy also far below the ECB’s upper limit for price stability, the numbers do seem to back the ECB’s argument that further stimulus is needed, despite gradually improving economic conditions.
FX Update: The dollar majors have been treading a narrow path. USDJPY has in the lower 115.0safter yesterday clocking a 10-month peak at 116.12, and EURUSD has settled in the low-to-mid 1.06s. Stronger than expected industrial production and retail sales data out of China had limited market impact, and directional ambition was largely absent during Tokyo trading today in forex markets. Wall Street closed mixed, off record highs, and the tone in Asia was generally negative until a PM-session bounce. The oil price rally has also come to pause, and market participants the world over are winding down into tomorrow’s Fed announcement and updated economic projections. A 25 bp rate hike at tomorrow’s announcement is all but certain, while there are no expectations for any major changes to the guidance of gradual tightening.
Main Macro Events Today
German ZEW Preview – It is expected to improve on ECB stimulus. A slight rise in German ZEW investor confidence to 14.3 from 13.8 in November after the ECB extended its stimulus package and confirmed that it will remain in the market at the very least until the end of next year and likely into 2018. Some disappointment over the scaled back monthly purchase volumes and the fact that Draghi didn’t opt for the more controversial measures, such as a foray into stock markets, or purchases of bank bonds, together with concerns about the rise of protectionist forces on the world stage may have limited the pick up in confidence, but the strong orders numbers may also go some way to underpin sentiment. As the ECB has effectively set out the policy parameters for next year already data releases at the moment will have less impact than usually, however.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
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Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 14th December 2016.
FX News Today
European Outlook: Asian stock markets were trading mixed with all eyes on the Fed and the FOMC announcement today. The Hang Seng managed slight gains helped by gains in China’s two largest energy companies amid reports of a fuel price increase and a pipeline sale. Ther Nikkei 225 close flat at 19,253. U.S. stock futures are also narrowly mixed and the FTSE 100 future is down with investors holding back, which could see European markets give up some of yesterday’s broad gains. Oil prices have fallen back again and the front end WTI future is trading around USD 52.40per barrel and Gold is up around USD 1162 . The focus on the U.S., where a 25 bp hike is widely expected, will overshadow the European calendar today, which includes U.K. labour market numbers, Eurozone production data as well as final November inflation data from France and Italy.
The U.S. trade price report revealed only modest November price drop-backs in the face of a soaring dollar, with relative price firmness for exports versus imports as seen throughout 2016 that beat estimates and prompted a downward revision in our November trade deficit forecast to $42.0 bln from $42.5 bln. We saw November trade price drops of 0.3% for imports and just 0.1% for exports, with a 4.7% oil import price decline and a 0.6% food export price rise. Import prices have received a big lift since February from the rebound in oil prices, and ex-oil trade prices received a lift through mid-year from a drop in the dollar between January and April. Yet, the dollar has reversed course since the Brexit and U.S. elections, leaving downward pressure on prices beyond oil price gains that accompany ongoing headwinds from the global growth slowdown, petro-sector dislocation, and the inventory overhang that has reversed course in Q3-Q4.
Reuters Report: Brexit could hit trade relations between Britain and the U.S, with nearly 40 percent of American firms considering moving their British office to the EU and two-thirds saying the vote is impacting investment choices, according to a survey.Food and beverage, life sciences and financial services firms were most likely to consider relocating whilst aerospace firms were the least likely, the survey by law firm Gowling WLG said.Nearly all the 533 companies surveyed said they would require some third-party support to deal with the transition as Britain leaves the European Union, potentially risking part of the close transatlantic relationship between the two nations. “The strong UK-U.S. trade relationship that has been carefully nurtured over the past fifty years is in serious jeopardy,” said Bernardine Adkins, the firm’s Head of EU, Trade and Competition. Cable trades up this morning at 1.2675 forom overnight lows of 1.2640.
FX Update: Narrow ranges have been the order of the day so far in currency markets as markets hunker down into the Fed’s policy announcement and guidance, which will come with updated economic forecasts from the central bank. EUR-USD drifted about 25 pips, back to around 1.0650, but has remained below yesterday’s six-day peak at 1.0667. USD-JPY dipped under 115.0, moderately lower. Japan’s Q4 Tankan business conditions survey saw the large manufacturers headline lift to 10 from 8 in the last quarter, as expected but nonetheless disappointing as improvement was concentrated only in the petroleum and coal sector. The figure for large service companies was unchanged at 18, slightly below the median forecast. AUD-USD managed to recover modest intraday losses seen after the Westpac Australian consumer confidence gauge fell to a nine-month low in the December survey, which has generally been taken as a bad sign ahead of the Christmas holiday period. The Aussie buck lifted back above 0.7500, leaving a low at 0.7481.
Main Macro Events Today
FOMC – The Forecast revisions along with the FOMC statement, should reveal boosts in the PCE Chain price forecasts for 2016, downward 2016 jobless rate revisions , and a narrowing in 2016 GDP 1.8%. For the following year’s growth and inflation prospects are likely to be tweaked upwards. Expectations remain for median forecasts that the FOMC will look for two tightening’s per year with a slightly steeper pace.
U.S. Retail Sales – November retail sales data is out today and should reveal a 0.4% headline increase with the ex-autos component up 0.5%. This follows respective October figures of 0.8% for both the headlines and ex-autos figure. The balance of risk is firmly to the upside as chain store sales, gasoline prices and construction employment all bode well for November data.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 15th December 2016.[/B]
[B]FX News Today[/B]
European Outlook: Asian stock markets mostly headed south, after the FED did the expected and hiked rates by 25 bp. Japanese markets outperform and the Nikkei closed with a slight gain as the Yen dropped while in Hong Kong property shares came under fresh pressure amid rising mortgage costs and punitive taxes. U.K. stock futures are also down, after broad losses on Wall Street yesterday, but U.S. futures are already picking up again. European bond futures, which rose going into the Fed decision, are likely to be knocked back and the Bund futures already headed sharply south in after hour trade yesterday. Oil prices dropped and the front end WTI future is trading around USD 51 per barrel. Gold collapsed to under USD 1144 following the “3 next year” comments. In Europe the data calendar is pretty empty and policy announcements from BoE, SNB and Norges Bank are not expected to hold major surprises, with all central banks seen on hold. The BoE is likely to reaffirm its neutral stance, while the SNB will repeat again that it remains ready to intervene on forex markets if needed, as the Franc remains overvalued. EU leaders start gathering for the last summit of 2016 today with upcoming Brexit talks likely high on the agenda.
FOMC Delivered on First and Last Hike of 2016: The Fed finally delivered on its threat to boost the Fed funds target range to 0.50-0.75%, narrowly slipping in the second hike of the lost decade with two weeks left to go before year-end. While entirely discounted by the markets given well-placed and consistent smoke signals from the Fed, it also stretched its “dot plot” forecasts to include three more hikes in 2017. The statement noted the “decline” in the jobless rate and a “considerable” uptick in inflation compensation as well.
Australia employment surged 39.1k in November, much stronger than expected, after a revised 15.2k gain in October (was +9.8k). It was the largest one month gain this year. The unemployment rate rose to 5.7% from 5.6%. Full time jobs jumped 39.3k after a 41.5k gain. Part time employment was nearly flat (-0.2k) following the 30.5k drop in October. The participation rate picked-up to 64.6% from 64.4%. This is a strong report that underpins expectations for no change from the RBA for an extended period.
The U.S. Data Yesterday: Revealed a surprisingly weak round of Q4 retail sales figures that trimmed Q4 GDP estimates to 1.3% from 1.8%, following an assumed Q3 boost to 3.4% from 3.2%. We also saw a weaker than expected November industrial production report thanks to a huge weather-induced utility decline over the past three months alongside an unexpected November vehicle assembly rate drop. The October business inventory figures tracked assumptions, though these figures combined with the weak November sales and factory data suggest that the inventory reversal is proving slow to materialize. The November PPI figures bucked the day’s pattern of weak reports, with 0.4% headline and core-price gains that reflected strength in service prices alongside the expected pause in the energy price climb.
[B]Main Macro Events Today[/B]
BOE Preview – The BoE’s Monetary Policy Committee met for the final time in 2016 and an unanimous decisions to leave the repo rate at 0.25% and the QE total at GBP 435 bln, is widely anticipated. The minutes are expected to reaffirm the neutral stance that was established last month.
SNB Preview – The SNB’s quarterly policy review is not expected to bring any surprises, with the bank widely expected to keep rates and general policy parameters unchanged. The central bank is almost sure to stress once again that it remains willing and ready to intervene in currency markets to keep the franc from running higher. A foray further into negative interest rate policy also remains in the arsenal, but is unlikely to be applied just yet. This will leave the focus not just on updated growth and inflation projections, but also comments on the domestic side effects of the SNB’s policy and developments on mortgage and property markets as Switzerland enjoys the quiet holiday period, before the political thunderstorms in Europe next year, when Brexit talks are set to start and France, Germany, the Netherlands face key elections, that have the potential to undermine the stability of the EU and EMU.
[B]Always trade with strict risk management. Your capital is the single most important aspect of your trading business.[/B]
[B]Please note that times displayed based on local time zone and are from time of writing this report.[/B]
Click [URL=https://analysis.hotforex.com/wp-content/uploads/2016/12/2016-12-15_09-20-39.jpg][B]HERE[/B][/URL] to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click [URL=https://www.hotforex.com/en/trading-tools/trading-webinars.html][B]HERE[/B][/URL] to register for FREE!
[URL=https://analysis.hotforex.com/][B]Click HERE to READ more Market news.[/B][/URL]
[B]
Stuart Cowell
Market Analyst
HotForex
[/B]
[B]Disclaimer:[/B] This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 16th December 2016.
FX News Today
European Outlook: Asian stock markets moved mostly higher overnight, although while Chinese markets picked up stocks are still heading for a solid weekly drop. ASX and Nifty are down on the day, as the Dollar gave up some of its recent gains. U.S. and U.K. stock futures meanwhile are moving higher. European yields have popped sharply higher since the Fed decision and yesterday’s BoE move, which confirmed the bank’s neutral stance, failed to stop the long Gilt yield to add a further 10 bp. Eurozone spreads are coming in meanwhile and peripheral markets continue to outperform as the ECB continues its bond buying spree. Today’s European calendar has French business confidence, as well as Eurozone trade and final December CPI numbers and the U.K. CBI industrial trends survey. Gold touched $1122 before recovering to $1133, WTI traded under $50 and currently trades at $51. USDJPY is north of 118.00, EURUSD is struggling to hold 1.0450 and Cable bounced from 1.2400 to 1.2430.
BoE, SNB and Norges Bank Stay Put Amid Political Challenges In 2017: No surprises from European central banks yesterday, with BoE, SNB and finally Norges Bank all keeping rates on hold and indicating a pretty stable policy path ahead. However, while all acknowledge ongoing improvement in the global economy, they also stress heightened uncertainty, with future policies in the U.S., and Brexit negotiations adding to remaining concerns about the stability of the Chinese economy.
The U.S. Data Yesterday: Revealed big gains in the capital expenditure plans components that bode well for a possible ongoing climb in sentiment and investment activity into early-2017. The Philly Fed capital expenditure plans measure surged to a cycle-high 33.8 from 19.1 in November and a 5-month high of 21.2 in October, versus a 31.2 prior cycle-high in March of 2011 and a -18.2 cycle-low in December of 2008. The Empire State’s capital expenditure plans index surged to 21.7 from 12.7 in November and 13.2 in October, versus a one-year high of 22.1 in April, a 38.2 cycle-high in May of 2010, and a -19.1 cycle-low in March of 2009. We’ve also seen big gains in small business confidence, an NAHB December surge to an 11-year high of 70, and lean inventories into Q4 that all leave room for a production bounce into the new year.
BoC Poloz highlighted Canada’s differences with the U.S., in response to a question asking if a BoC hike was imminent. Not surprisingly, he did not answer directly, saying that (rate hike imminent) was the report’s (“your”) conclusion. He reminded that the BoC’s forecast is for CPI to get back to target by mid 2018. Unlike the U.S., “we have considerable amount of excess capacity” he said. “If we don’t get rid of it, inflation will stay below for long time. For that reason, our rates our low to fill in that gap. All I can say for now is that our projection is it will take until 2018 to return to full capacity. That is different than the U.S.,” Poloz explained.
Main Macro Events Today
EUR CPI – Final headline figure is expected at 0.6% and Core at 0.8% – Both unchanged and still struggling to show any meaningful increase. Mr Draghi’s headache continues. The seasonally adjusted Trade balance is also due at the same time and is expected to have ticked up to 25.2billion Euro from 24.9 bln. (Exports worth more than Imports with such a weak Euro this is a minimum for future Euro zone growth).
US Housing Starts – November housing starts data is out today and should post a 1,240k headline, down from the October surge to 1,323k that set a high back to 2007. Permits are expected at 1,230k from 1,260k in October and completions should be 1,065k from 1,055k in October. The NAHB was steady at 63 in November before Thursday’s October surge to 70.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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MACRO EVENTS & NEWS OF 19th December 2016.
FX News Today
The recent decisions by the FOMC to tighten policy and the ECB to extend stimulus reflect the widening divergences of monetary policy. And the uncertainties over the macroeconomic outcomes from government and central bank actions, along with geopolitical tensions, will keep the markets choppy ahead. So buckle up for a bumpy ride into the new year.
United States: The rally on Wall Street took a breather on Friday, especially after news China seized a Navy drone motivated profit taking. The declines were slim, however, with the Dow at 19,843 and looking down the barrel of the psychological 20,000. Traditionally, the final two weeks of the year are very positive for equity markets. Hopes for increased fiscal stimulus and reduced regulations have underpinned a surge in the feel good factor, which have boosted confidence and manufacturing figures for the month. The calendar is back ended and compressed into the end of the week. Thursday’s slate is heavy; Personal income and consumption for November should show respective gains of 0.3% and 0.2%. The PCE chain price index is expected to rise 0.2%, with the core rate up 0.1%. November durable goods orders will also be of interest, though the volatility in the data limit its overall usefulness. The third version of Q3 GDP should show a small upward revision to 3.3% (median 3.3%) from the prior 3.2% pace, and up from 2.9% in the Advance report. The price index should hold at 1.4% (median 1.4%). November existing home sales (Wednesday) and new home sales (Friday) will also be of interest. Existing home sales are expected to edge up 0.4% to a 5.62 mln. New home sales should rebound 2.1% to 575k (median 575k) after October tumbled 1.9% to 563k. The final reading on consumer confidence (Friday) should hold near the 98.0 print (median 98.2) after surging 4.2 to that level in the preliminary reading amid optimism following the Trump election. Initial jobless claims (Thursday) for the week ended December 17, expected to rise 11k to 265k, This week’s survey is important as it coincides with the BLS survey week. Also on tap is the preliminary December Markit services PMI (Monday). It dipped 0.2 points in November to 54.6, though it was the 9th consecutive month of expansion. There is the October FHFA home price index (Thursday). Then it’s the KC Fed manufacturing survey (Thursday).
Canada: GDP for October (Friday) is expected to improve 0.1% after the 0.3% gain in September. October wholesale trade (Tuesday) is seen rebounding 0.7% m/m in October after the 1.2% drop in September. Retail sales (Thursday) are projected to expand 0.5% in October after the 0.6% improvement in September. CPI (Wednesday) is anticipated to slip 0.2% in November after the 0.2% gain in October.
Europe: The ECB effectively confirmed its policy parameters for the whole of 2017 last week. It will be political events, including the start of official Brexit talks, as well as elections in Germany, the Netherlands and France, that will dominate next year. This week’s focus is on the Ifo Business Climate index where expectations are for another marked improvement to 110.8 from 110.4 after the strong orders number and the better than expected manufacturing PMI. There is also likely to be a modest improvement in the flash reading for Eurozone consumer confidence to -6.0 from -6.1, with German GfK consumer confidence to 9.9 from 9.8. Last but not least is the final release of French Q3 GDP, expected to confirm the quarterly growth rate at 0.2%.
UK: As 2016 draws to a close, the fundamental picture of the UK is looking pretty good, contrary to widespread fears following the June 23 vote to leave the EU. The BoE reaffirmed its neutral policy bias, but warned of a more “fragile” global outlook, highlighting the troubled Italian banking sector and rising debt in China, signaling that the policy rate could “move in either direction” in 2017. Brexit-related uncertainty remains a blot on the landscape. An FT article on Friday reported that Japanese banks have warned the government that they will start downsizing London operations within six months unless there is clarity on the UK’s future relationship with the EU. The UK calendar features the CBI distributive sales survey for December (Tuesday), November government borrowing figures (Wednesday), December consumer confidence (Thursday), and the third estimate of the Q3 GDP, which is expected to remain unrevised at 0.5% q/q and 2.3% y/y.
China: No data releases this week.
Japan: The BoJ starts its two-day meeting on Monday, and will announce its policy intentions on Tuesday. No changes in policy are expected, with short term rates kept steady a -0.10%, and bond purchases continuing at a JPY 80 tln rate. The October all-industry index (Wednesday) is penciled in at up 0.1% m/m from up 0.2% previously, which was the first positive reading since July.
Australia: The calendar is empty of top tier data this week. The only event of note is the Reserve Bank of Australia’s minutes to the November meeting (Tuesday).
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 16th December 2016.
FX News Today
European Outlook: Asian stock markets are mixed, with Japan and ASX moving higher as the BoJ left policy unchanged, and the Yen retreated. Hang Seng and mainland China markets remain under pressure with oil producers and banks leading the way. U.S. stock futures are up and FTSE 100 futures are little changed, as events in Ankara and Berlin add to political uncertainty in Europe. With elections in France, the Netherlands and Germany next year especially the suspected terror attack at a German Christmas market in Berlin is likely to further boost populist movements. A fresh bout of risk aversion could see Bund futures extending gains, after the March contract managed to break the downtrend yesterday and closed at 163.15, while extending gains in after hour trade. The next target is the 163.79, the high from November 28. It will likely overshadow today’s data calendar, which includes German producer price inflation at the start of the session, followed by Eurozone current account and BoP data as well as Swiss trade and the U.K. CBI distributive trade survey.
BoJ Rates & QQE Unchanged Outlook upgrade: The Bank of Japan December meeting concluded today, with the bank upgrading its outlook for the economy but leaving policy unchanged: The short-term interest rate target unchanged at -0.1%, The 10-year JGB yield target is left at around zero %, Buying of JGBs is still targeted at an annual pace of 80tln yen. The “inflation-overshooting commitment,” also first announced in September and where the BoJ is committing to expanding the money base until CPI exceeds the y/y target of 2% and stays above target, was also reaffirmed. The central bank noted that the economy “continued its moderate recovery trend,” highlighting a pick up in exports. Overall, no surprises from the BoJ. The general view now is that the central bank is in a wait-and-see stance while it monitors a long-awaited reflation expected to be driven by a weaker yen and higher oil prices. The yen has declined by 6.2% m/m versus the dollar, while Brent crude prices are up 12.2% m/m (and by 50.9% y/y). The BoJ also last week announced a ramp-up in purchases of debt maturing in 10 to 25 years as part of its yield curve control operations.
The U.S. Data Yesterday: U.S. Markit flash services PMI fell 1.2 points to 53.4 in December after dipping 0.2 points to 54.6 in November. It was 54.3 a year ago, and is the lowest since September. The employment sub-index rose to 53.4 from 52.1 previously and is the highest since March. Prices charged also increased. The composite index also declined 1.2 points to 53.7 from 54.9, and is also the lowest since September. But new orders fell to 54.4 from 55.5, while input prices also increased. These are some of the few indicators that haven’t bounced further on the Trump-effect, though the indexes were already at relative highs in October.
Yellen: She didn’t offer anything new or any fresh policy insight in her commencement speech at the University of Baltimore. She repeated that the labor market is strong, indeed the best in nearly a decade and that job creation is continuing at a steady pace, with layoffs low. She does see indications of a pick up in wages, especially for younger workers, while productivity growth remains disappointing. While economic gains are raising most living standards, she did acknowledge there challenges remain, including the fact that the recovery has been so slow.
Main Macro Events Today
German Producer Price Index (PPI) – Expected to fall to 0.1% from 0.7% last time (MoM) whilst YoY figure expected to improve to -0.2% from -0.4% in October.
NZD GDT – Twice monthly Global Diary Trade auction announce later today along with New Zealand trdae balance and the monthly Visitor arrivals. The GDT improve last time to 3.5%, expectations are for a similar demand this time, NZ trade balance is expected to improve to -500million NZD from – 846milliom NZD as export prices have improved. Visitor arrivals expected to increase to 2.5% from 2.2% last month. The NZD has been under pressure over the last few trading sessions.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 21st December 2016.
FX News Today
European Outlook: Asian stock markets moved mostly higher overnight after gains on Wall Street and in quiet trade. Japan was a notable exception and the Nikkei closing with a -0.26% loss as the Yen bounced back and strengthened across the board. The DAX tested the highs for the year today and U.S. indices also saw record levels, despite attacks in Ankara and Germany adding to global risks. Stock futures are looking a bit more cautious this morning, with U.S. futures narrowly mixed and the FTSE 100 future in negative territory. Oil prices are higher on the day and the front end WTI future is trading at USD 53.56 per barrel and Gold trades at USD 1135 per troy ounce. Markets are settling into the holiday period and lower trading volumes could exaggerate moves but core yields moved higher again yesterday as stocks remained underpinned and if stock markets get more cautious could see bond futures recovering some losses. The European data calendar has U.K. public finance data and preliminary Eurozone consumer confidence data.
US VIX: U.S. VIX equity volatility sank 1% to the 11.60 area compared to its very tight 11.50-11.74 session range. The VIX has yet to take out its lows of the year of 11.02 set on August 9, 2016, after a couple of near misses in December. Perhaps a break through/close 20k in the Dow and 2.3k in the S&P 500 will be the awaited trigger, but stocks are veering away from fresh highs again now and the VIX is rebounding toward unchanged. A break below 11.02 would put sights on life lows of 8.20 market on July 4, 1994. Look like a cat and mouse game between funds and algorithms to ride the momentum trade into year-end.
Fedspeak: SF Fed’s Williams said risks are shifting away from weakness, in a New York Times interview. Though Williams has been a long-standing dove, he has been increasingly mindful of the improved labor market, the general rise in growth, as well as the pick-up in inflation, which has shifted his stance slightly toward the center. Indeed, he admitted that while there are “a lot of uncertainty over what policies are going to be enacted” by the Trump administration, his views on “risks to the outlook have shifted a little.” Previously his stance had been “balanced and if anything a little bit to the soft side.” The potential for fiscal stimulus and other changes should shift risks to the outlook “a little bit to the right…but it’s not a big effect.” The decision to hike rates last week “stands on its own” and was “wholly” based on data. His underlying view is broadly consistent with the central tendency of the Committee, looking for moderate growth and inflation moving toward 2%. Of interest, he noted there’s a negative feedback loop when all major banks are at the zero bound.
The 2017 Oil-Led U.S. Factory Rebound is Already Underway: The U.S. factory sector is poised for a recovery into 2017 that is already taking shape, with an election lift alongside an emerging reversal of the massive GDP inventory hit that accompanied the 20-month downswing in oil prices through last February. The mining sector is lifting industrial production beyond a temporary weather-led plunge in utility output, producer sentiment is rising with spikes in planned capital spending, stock prices and consumer confidence are soaring, and inventory to sales (I/S) ratios are falling as prices and demand rebound.
Main Macro Events Today
U.S. Existing Home Sales – November existing home sales data is out today and should reveal a 0.4% increase to a 5.620 mln (median 5.540 mln) pace from 5.600 mln in October and 5.490 mln in September. NAHB sentiment in November was steady from October at 63 before bouncing to 70 in December.
NZD GDP – Year on Year GDP in New Zealand is expected to tick up to 3.7% form 3.6% last time with Quarter 3, Quarter on Quarter growth unchanged at 0.9%. The current account GDP ratio is also expected to increase but only marginally to -3.0% from -2.9%.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 22nd December 2016.
FX News Today
European Outlook: Asian stock markets headed mostly south overnight, following on from losses in Wall Street where the Dow is struggling to conquer the much watched 20000 mark. Japan failed to benefit from a weaker Yen and developers remained under pressure in Hong Kong and while the ASX managed to extend the year end rally to new highs, U.S. and FTSE 100 futures are also down. Oil prices are little changed, after the front end WTI future dropped below USD 53 yesterday and GOLD declined to 1130 gain overnight. While DAX and FTSE 100 remain in lofty heights, investors seem hesitant to push indices further up as markets start to settle into holiday mode and trading volumes start to thin. Yields meanwhile fell back again yesterday and while the Bund future underperformed its U.K. counterpart, it seems to have successfully broken the downtrend that was in place since late September, with the next target the area around 163.79, the high from November 28. Released overnight, U.K. Dec retail sales moved higher to -7 from -8 in Nov.
The US has a raft of data later (see below for highlights) including 3Q GDP (final revision) Durable Goods, both these key data releases at 13:30 GMT. Also today there is Spending, Income and Consumption data as well as Initial Jobless claims for the week. Canada also releases CPI and Retail Sales.
German Import Price Inflation: Jumped to 0.3% y/y from -0.6% y/y in the previous month, much higher than expected and driven mainly by a sharp turnaround in energy and basic goods prices as well as a renewed rise in prices for agriculture, forestry and fishing. Energy price inflation jumped to 0.9% y/y from -2.2% y/y in the previous month and basic goods prices were also up 0.9% y/y, after still falling -0.8% y/y in November. As predicted inflation rates are rebounding quickly as negative base effects from energy prices are falling out of the equation and with the weakening of the EUR against the dollar adding to upward pressures. Deflation is not longer an issue and in Germany the risk of overshooting headline inflation is rising as the labour market remains very tight.
Fed policy Outlook: The dot-plot suggests 3 rate hikes next year. And that’s a good first approximation with most in the markets projecting that trajectory too. But, the risk might be to fewer, especially as the Fed only hiked once this year, versus the 4 in the dot-plot. Fed policy action is unlikely to begin as soon and probably not until late Q2 at the earliest. Our forecasts show growth slowing to the mid 1.0% region next quarter, and it’s unlikely any significant Trump effect will be seen until the second half of 2017. Meanwhile, although inflation has picked up in recent months, thanks in large part to the rebound in oil, the bounce in energy prices may not be sustained if U.S. production kicks in again. Also, the dollar is likely to remain firm amid diverging central bank actions, which could cap the upside. The composition of the 2017 voting Committee may limit the number size of rate hikes as well. Evans, Kashkari, Harker, and Kaplan who are coming on board, are less hawkish than the current group including Bullard, George, Mester, and Rosenberg.
US VIX equity volatility finally broke below year lows of 11.02 to mark a trend low of 10.93 earlier compared to the 11.49-10.93 session range before rebounding to 11.27. Investors are starting to turn blue from holding their breath while awaiting the break of 20k in the Dow, which may itself be stymieing the advance as the markets get a case of acrophobia into year-end after the dramatic late-2016 rally. VIX focus is now on 8.20 life lows (July 4, 1994) for those who believe that 2017 will be smooth sailing and risk free.
Main Macro Events Today
U.S. GDP – The third release on Q3 GDP is out today and expectations are for the headline to be revised up to 3.3% for the quarter. Expectations for construction spending to be revised up by $6 bln, wholesale inventories by $3 bln and consumption by $2 bln while net exports undergo a slight, $1 bln, downward revision.
US Durable Goods – November durable goods data is out today and should reveal a -4.2%) decline in orders with shipments down 0.5% and inventories up 0.1% for the month. This compares to respective October figures of 4.6% for orders, -0.1% for shipments and flat for inventories. Data in line with forecasts would leave the I/S ratio at 1.65 from 1.64 in both October and September.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 23rd December 2016.
FX News Today
European Outlook: Stock markets which already headed mostly south yesterday continued to decline in Asia overnight, with as oil prices remain below USD 53 per barrel and concerns about China are weighing on sentiment in thinning holiday trade, and with markets in Tokyo closed. Hong Kong stocks are hit by capital outflows. Deutsche Bank agreed to pay USD 7.2 bln and Credit Suisse USD 5.3 bln in U.S. mortgage probes, while the Italian government is ahead with its pan to provide USD 20 bln for troubled banks, with Monte Paschi planning to ask the government for a “precautionary” capital increase. U.S. stock futures are mostly slightly higher, as is the FTSE 100 future, but with DAX and FTSE 100 still at lofty heights, investors seem cautious to push out indices further ahead of the holidays. The calendar in Europe includes final Q3 GDP readings from France and the U.K. and the Swiss KoF leading indicator.
German Jan GfK consumer confidence: Rose to 9.9 from 9.8 in the previous month, the third consecutive rise and while the reading remains below the levels seen at the peak last year, the renewed improvement supports hopes for robust consumption trends going into 2017. However, the breakdown, which is only available until December, showed a rise in business as well as income expectations, but despite this the willingness to spend actually fell back to a reading of 48.0 from 51.2 in the previous month. At the same time the willingness to save also dropped further into negative territory though and price expectations fell also further into negative territory.
Yesterday’s U.S. reports: Revealed a significant upside Q3 GDP surprise with a headline boost to 3.5% from 3.2%, and firmness in “real” consumption in the November personal income report that lifted Q4 GDP growth estimate to 1.5% from 1.3%. Yet, we also saw weak equipment and inventory data in the durable goods report that restrained growth outlook, beyond the expected big 4.6% November headline orders drop attributable to a 13.2% transportation plunge. A 21k initial claims surge to 275k in the BLS survey week was disappointing, though the spike is likely due to holiday volatility, and the trend in claims remains encouraging. Finally, we saw a flat leading indicators figure for November that modestly beat estimates, while the Bloomberg consumer comfort index rose yet again, to a 20-month high of 46.7.
Eurozone 2017 – Political Risks Take Centre Stage: The Eurozone recovery is continuing at a moderate pace, inflation is picking up from very low levels, unemployment levels are coming down. The ECB’s very accommodative policy stance has not only helped Eurozone spreads to come in, but also continues to underpin lending and robust consumption and there are tentative signs that even investment is picking up again. But as Draghi confirmed the central bank’s policy of ongoing monetary accommodation through to the end of next year, it is the political arena that will take centre stage for 2017.
“ECB sources” say it will wait until after German elections in September before its next policy move, according to Reuters headlines. Hardly ground breaking news, considering that the ECB effectively clarified its policy stance through to end 2017 at the last meeting and the German election data is not yet known, but has to take place before October 22. It says that “no option is off the table” if the economy worsens, which is of course just another way to repeat Draghi’s message from the press conference that QE purchases can be stepped up if necessary. However, the report says the ECB aims to buy as few bonds as possible below the depo rate from January, which is sort of contradictory, but the thinned markets can make of it what they will.
Main Macro Events Today
Canada GDP – GDP to expand 0.1% m/m in October after the 0.3% gain in September. Total retail sales volumes grew 0.6% in October. A 0.9% m/m bounce in wholesale shipment volumes contrasted with the 1.7% plunge in manufacturing. But housing starts fell 12.1% to a 192.3k pace in October, consistent with a negative contribution from construction production. The outlook for mining, oil and gas production is mixed. Energy export values grew 5.5%, but prices did climb in October, suggesting that volumes may be disappointing. The manufacturing report revealed a 1.7% pull-back in petro and coal production. The 0.1% gain that we expect in October GDP combined with the 0.1% growth rates in November and December equate to a 1.9% growth rate in Q4 (q/q, saar). That would overshoot the BoC’s 1.5% estimate after the 3.5% Q3 GDP gain eclipsed the Bank’s 3.2% estimate. Growth is running slightly better than expected in the second half of 2016, consistent with a modestly more upbeat outlook in the January MPR that maintains no-change-for-an-expended-period as the baseline for BoC policy.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 28th December 2016.
European Outlook: US stocks had a quiet day with the Dow (USA30) closing short of 20,000 again at 19,945, Gold and Oil both traded higher (USD 1,144 – above its 10 DMA for the first time since November 10 and USD 53.84 – up some 1.6% on the day) respectively. The UK and Canada were closed yesterday for Boxing day. In Asia markets also saw low volumes. Japan Industrial production missed estimates rising 1.5% when expectations were for 1.7% during November. However, this was the best result for 5 months and there were also signs of life in the Retails Sales figures. Japan retail sales (November): -0.3% m/m (expected -0.5%, and for the y/y, up 1.7% expected +0.8% y/y, prior -0.2%. This is the first gain since February for retail sales.
FX Update: USD fell back again overnight. Canada, Australia, New Zealand and Hong Kong are all back from the extended Christmas holiday, but trading volumes are likely to remain thin for the rest of the week. AUD and NZD have been the main outperformers overnight. The EUR also continued to perk up against most currencies after Weidmann and Knot mulled tapering options yesterday, and EURUSD is currently at 1.0474, which but still has a way to go before revising last week’s peak at 1.0499. The Yen continues slide, after halting a four day advance yesterday, but USDJPY continued to ply a narrow range in the mid 117s, consolidating after logging a trend high at 118.66 last week. AUDUSD is above 0.72 now. Oil prices are higher and stock markets in Asia fluctuated in a very narrow range, with many centres closed.
Yesterday’s U.S. reports: Revealed another monthly consumer confidence surge that has taken the index back to levels last seen before the September 2001 terrorist attack when we saw a largely sustained downswing, alongside big December gains in the Richmond Fed and Dallas Fed indexes to 8.0 and 15.5, respectively, with broad-based gains beyond notable weakness in the employment indexes. It was the present situations index that exhibited the bulk of the post-911 hit to consumer confidence but it is expectations that have led the post-election bounce, alongside a gradual climb for the present situations index through this business cycle back toward the restrained highs of the prior cycle in 2007. Consumers and businesses are getting increasingly giddy about prospects for 2017, though production, inventory and sales data are thus far proving slow to respond.
The Rest of the Week Ahead: Various cross-currents may prevail in the last abbreviated trading week of 2016, though fundamentals should be the least dominant factor, and year-end portfolio adjustments the most relevant. Stocks remain on a sugar high in wake of the Trump election, but could take a breather, while bonds will wrestle with both index extensions and supply. While Trump’s Twitter feed over the interregnum before the inauguration may cause some isolated volatility, stocks look to finish 2016 inside some of the tightest ranges in over a year.
Main Macro Events Today
US Pending Home Sales – November Pending Homes Sales likely to increase 0.5% from 0.1% in October – the Year on Year figure is expected to continue to show US housing remains in strong demand. The impact of rising interest rates will play out next year but for now expect at least a 1.8% year on year figure.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 29th December 2016.
FX News Today
European Outlook: Asian stock markets were mostly down, led by a slump in Japan, as the Yen rose across the board. The weakness in Asia followed a decline on Wall Street yesterday set off by disappointing U.S. data that sent the USD into retreat. Oil prices also dropped and the front end WTI future is trading below USD 53 per barrel again despite approaching production cuts. The ASX still managed to post slight gains and some Chinese indices clawed back some of their recent losses while trading volumes perked up a bit. U.S. and U.K. stock futures are still down, however, setting the European market up for further weakness, although the DAX is still poised to end the year with a solid gain, as the ECB continues to lend a helping hand. With the ECB still on an asset buying spree, Eurozone yields remain under pressure and especially the short end continues to drop to new lows after Draghi removed the deposit rate floor for bond purchases. UK Nationwide house price index Dec mm +0.8% vs +0.2% expectations and year on year increase up to 4.5% from 3.8% expected.
FX Update: Overnight the Yen rose strongly – USDJPY fell from yesterday’s high at 117.80 to currently trade at 116.23, GBYJPY collapsed to under 143.00 and EURJPY is trading at 121.65 down from yesterday’s high of 123.26. The USD has also retreated against the EUR (back to 1.0450 from yesterday’s multi week lows at 1.0370) and GBP (1.2250).
Yesterday’s U.S. reports: US pending home sales fell 2.5% to 107.3 in November after rising 0.1% to 110.0 in October. Sales have been on a choppy, saw-toothed course for more than a year. Regionally, sales declined in the West (-6.7%), the Midwest (-2.5%) and the South (-1.2%), but rose slightly in the Northeast (0.6%). On an annual basis, however, sales accelerated to a 1.4% y/y clip versus 0.2% y/y previously.
Germany: Italy must stick to new rules in bank aid. Like Bundesbank president Weidmann earlier in the week, the German Finance Ministry today stressed that a precautionary recapitalisation of banks, as planned by Italy, can only take place in exceptional circumstance and within the framework of the Eurozone’s strict rules. The latter also includes investor bail-ins and the ministry stressed again that the bank must still be solvent and that public funds must not be used to cover foreseeable losses. The ECB reportedly already said that in the case of Monte Paschi the bank remains solvent, but reports from earlier in the week also suggest that the ECB is pushing for a higher investor bail-in as the government had planned. Italy’s banking sector, which is struggling to cope with the high level of non-performing loans, will clearly be the acid test for the Eurozone’s new regulatory framework for future bank bailouts.
Main Macro Events Today
US Initial Claims – Claims data for the week of December 24 is out today and should reveal a 275k (median 265k) headline, steady from last week and up from 254k the week before that. Claims have been striking a firm path since summer and are poised to average 259k in December from 252k in November and 258k in October.
EIA Crude Inventories – Expectations are for a drawdown of up to 1.5 million barrels, following a build of 2.256 million last week. Overnight the private inventory survey has shown the biggest build in 6 weeks. Conflicting data is not that uncommon between the two agencies. The official EIA data is published at 16:00 GMT.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 30th December 2016.
FX News Today
European Outlook: The Bund contract has broken the downtrend that had been in place since the end of September and is ending the year on a new uptrend after Draghi managed to inject new life with his QE extension. At the same time 2-year yields are testing new lows as the ECB drops the deposit rate floor for asset purchases. Gilt yields are also heading south again, although the 10-year yield recovered a lot of ground since the BoE removed its easing bias in November. Stock markets are set to end the year with solid gains on both sides of the channel. Today will be an early close for many centres. The calendar is relatively quiet, although Spanish HICP inflation is likely to attract some attention as this is the first of the big Eurozone countries to release preliminary December numbers and expectations are for a sharp acceleration in the headline rate, which will set the stage for the release of Eurozone numbers next week.
Overnight Update: WTI crude rallied to $54.19 from $54.05 following the EIA inventory data which showed a 600k bbl rise in crude stocks. The street had been expecting a 1.5 mln bbl decrease, though API data released on Wednesday revealed a 4.2 mln bbl increase in U.S. stocks. Gold rallied to and continues its good week on thin trading, overnight it reached $1163. The major mover was EUR bids at the close when EURUSD rallied to over 1.0650 for a three week high on very low liquidity and profit taking. .
Yesterday’s U.S. reports: revealed big but divergent surprises in the November advance indicators report that left a likely new 20-month high for the goods and services trade deficit in November of $45.8 bln, alongside surprisingly big November wholesale and retail inventory gains that translate to a big 0.7% November business inventory increase. The initial claims figures revealed a 10K drop to 265k in the fourth week of December that trimmed the 21k surge to 275k in the BLS survey week, which we still see as consistent with a tight claims trend despite holiday volatility that likely prompted the mid-month pop. Q4 GDP estimates remain at 1.5%, and expectations are for a 185k December nonfarm payroll rise.
Germany 2017- Election Jitters and Brexit Risks: The German economic recovery continues, largely driven by domestic demand and consumption. Inflation is set to continue to top the Eurozone average and the challenges for the next years will include trying to cope with a monetary policy that is too expansionary for the Eurozone’s largest economy. At the same time like for the rest of the Eurozone political risks, including the start of official Brexit talks and of course the general election in autumn will take centre stage next year amid the refugee crisis and rising support for the populist AfD.
President Obama: sanctioned Russia over email hacks by expelling 35 Russian intelligence operatives and closing two compounds. This followed and FBI/DHS report that revealed evidence of some of the electronic infrastructure and outlined the methods used to steal information. The Russians responded by stating the Obama admiration was trying to “completely ruin Russian-American relations.” This will put the new Trump administration on awkward footing and will be yet one more geopolitical risk that could destabilize the markets.
Main Macro Events Today
Spanish HICP – Last month it came in at 0.7% and as the first of the large euro area economies to report expectations are for a rise to 0.9%.
Chicago PMI- Here expectations are for a dip to 56.5 from the surge of 7 points in November. The October 50.6 was the weakest since May.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 2nd January 2017.
FX News Today
United States: The U.S. data slate is heavy and the reports should be consistent with modest Q4 growth as the overall economy has yet to be impacted by Trump. Kicking off the year will be the December ISM manufacturing index (Tuesday). Also on tap (Tuesday) is the final December Markit PMI reading and November construction spending. Construction spending is expected to rise 0.6% after November’s 0.5% gain. Vehicle sales for December (Wednesday) are expected to inch up slightly with autos at a 5.2 mln pace. The ADP private payrolls survey (Thursday) is expected at a 175k pace, down from 216k in November. The ISM non-manufacturing index (Thursday) is projected sliding to 56.5 from 57.2 in November. The final Markit services reading is also due (Thursday). The December nonfarm payroll report (Friday) will highlight and complete the data for the first week of the new year. Expectations are for a 185k increase, after November’s 178k rise, with the unemployment rate edging up to 4.7% from 4.6%. The workweek is projected steady at 34.4 hours. Average hourly earnings are expected to rebound to 0.2% after dipping 0.1% in November. The FOMC minutes to the December 13, 14 policy meeting are on tap (Wednesday). Though the report would usually be highly anticipated by the markets, its importance has been diminished by the dot-plot showing estimates for three quarter point hikes in 2017, and by the fact that the usually dovish Chair Yellen seemed fully supportive of the more hawkish stance.
Canada: December employment report, trade deficit both highlight the week on Friday. Other highlights include the industrial product price index (Thursday). The Ivey PMI is also due (Friday), while the RBC’s manufacturing index for December (Tuesday) is the first report out of the gate for the new year. There is nothing from the Bank of Canada this week.
Europe: Final PMI readings are not expected to bring any real surprises and are expected to confirm manufacturing confidence for the Eurozone (Monday) remains healthy with the index at 54.9. ESI economic sentiment indicator (Friday) is expected to rise to 106.9 versus 106.5 in November. Also due are German manufacturing orders (Friday) and German jobless rate (Tuesday)
UK: 2017 will be a challenging year for the UK, both economically and politically. Creeping price pressures, caused by the weaker pound, which most economists expect will erode real household income, and Brexit-related uncertainty, which has already been suppressing business investment, are expected to manifest in slowing growth momentum. The U.K. calendar this week features the December PMI surveys and the BoE lending data for November.
China: The Caixin/Markit manufacturing PMI (Tuesday) is forecast at 50.7 from 50.9 December services PMI (Thursday) is seen improving to 53.5 from 53.1
Japan: Will be shut through to Tuesday for a bank holiday. The December Nikkei/Markit manufacturing PMI (Wednesday) is expected to dip to 51.8 from the previous 51.9 reading. December auto sales and the Markit services PMI are also due (Thursday).
Australia: The November deficit (Friday) is expected to narrow to -A$0.3 bln from -A$1.5 bln in October. There is nothing from the Reserve Bank of Australia.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 3rd January 2017.
FX News Today
European Outlook: Asian stock markets outside of Japan moved higher after a stronger than expected China Caixin manufacturing PMI. Eurozone stock markets already started the year with modest gains yesterday in very quiet trade, as most of the world remained closed for New Year celebrations. Japanese markets remained closed today, but elsewhere markets are back and it seems stocks are beginning the year in a good mood and optimistic on the growth outlook. Yesterday’s final Eurozone manufacturing PMI readings were also positive and today’s Swiss and U.K. numbers are also expected to confirm that output continues to expand at a solid pace. This should leave the German jobless rate at record lows, while French and German inflation data is set to accelerate sharply on base effects and with risks to forecasts on the upside after the very high Spanish number from last Friday. After the ECB continued ongoing QE purchases for the whole of this year, this doesn’t change the immediate policy outlook, but could temporarily dent the uptrend in Bund futures, that was sparked by Draghi’s affirmation of more asset purchases. The short end meanwhile will remain supported by the abolition of the deposit rate limit.
Overnight Update: China – Caixin Manufacturing PMI for December: 51.9 (expected 50.9, prior 50.9). The figure is close to a 4 year high for the Caixin/Markit Manufacturing Purchasing Managers’ index (PMI). The figure has been above 50 for six consecutive months and Output, at 53.7, rose at the fastest pace since January 2011. There was evidence of strong domestic demand although export orders remained “sluggish”. AUDUSD rose to session highs of 0.7230 on the positive news.
Eurozone manufacturing PMI confirmed at 51.9, as expected. The renewed uptick from 53.7 in November means the year ended on a high note and the numbers confirm that the recovery continues and for once on a relatively broad base. with Italy actually surprising on the upside this morning, which shows that the referendum result did little to dent optimism.
ECB Coeure:. The Executive Board member said in an interview with Germany’s Boersenzeitung that personally he doesn’t “exclude upside risks to inflation in 2017 if the reflationary impact of the new U.S. policies dominates“. Coere said “there are signs of an acceleration in headline inflation, above all because of the increase in oil and commodity prices”, adding that the ECB is “still waiting for signs that core inflation is on the rise and will clearly exceed 1%”. He admitted that the ECB’s assessment of the balance of risks, including for inflation, is shifting”, while stressing that the planned cut in monthly purchase volumes this year is “an adjustment not an exit”, and that a phasing out of purchases hasn’t even been discussed yet. Coeure said that a discussion will be needed about normalisation of monetary policy but it needs to be initiated carefully”. And indeed, after the ECB confirmed that asset purchases will remain in place until the end of the year this is not a discussion that will be needed any time soon.
Main Macro Events Today
German HICP – German HICP is seen rising to 1.1% y/y from 0.7% y/y. The better than expected Spanish number last Friday suggests a risk on the upside also for the overall Eurozone HICP rate (due Wednesday), which is expected to rise to 1.0% y/y from 0.6%. This is still far below the ECB’s definition of price stability, but the data will confirms that there is no real risk of a deflationary spiral, although after the ECB already confirmed its policy parameters for 2017 that won’t change the immediate policy outlook. It will add further ammunition though to the growing number of central bankers warning that real tapering can’t be delayed for too long, without undermining financial stability throughout the Eurozone.
US ISM Manufacturing PMI – December ISM is out today and should post a headline increase to 53.5 from 53.2 in November and 51.9 in October. Producer sentiment is continuing to benefit from diminished inventory headwinds and the rebound in oil prices. This should allow sentiment to end the year on a firm footing with the ISM-adjusted average of all measures holding at 53, steady from November and up from 51 in October.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 4th January 2017.
FX News Today
European Outlook: Asian stock markets are mostly higher, led by Japan, where the Nikkei closed with a 2.5% gain after an upward revision to the manufacturing PMI reading and underpinned by catch up trades, after yesterday’s holiday. The Hang Seng underperformed and showed a -0.27% loss in late trade, with energy stocks under pressure after the front end WTI future fell back below USD 53 per barrel. See details below. U.S. and U.K. stock futures, however, are moving higher, after broad gains on most markets yesterday and as a strong round of world PMI releases underpins growth optimism and risk appetite. At the same time inflation may be moving higher which is pushing up yields, although even if Eurozone HICP inflation is expected to jump higher and clear the 1.0% mark today, we don’t see the ECB reversing its decision to extend QE purchases through to the end of the year. Today’s European calendar also has Spanish inflation data, the final reading of the Eurozone Services PMI and from the U.K. BoE money supply growth and lending data.
US Data Yesterday: The U.S. ISM rise to a 2-year high of 54.7 from the prior high of 53.2 that was also seen last June left the ISM further above the 7-month low of 49.4 in August, and last December’s 48.0 expansion-low. The mix of available sentiment surveys should allow the ISM-adjusted average to sustain the November surge to a 16-month high of 53 from 51 in October and 50 in August and September. We saw a 49 expansion-low in January and February, and previously in October of 2012. We’re seeing a factory sector rebound that is lifting most producer sentiment and consumer confidence measures in the face of rising oil prices, a reversal in the inventory headwind, and hopes for deregulation and fiscal stimulus in 2017. The economy still faces lingering headwinds from a sluggish world economy, a strong dollar, and still-high oil inventories. U.S. construction spending popped 0.9% higher in November after a 0.6% October gain (revised up from 0.5%), though September was bumped lower to -0.2% from unchanged. The headline reading is better than expected. Spending is up 4.1% y/y. Strength was broad-based.
European Data Yesterday: German HICP jumped to 1.7% y/y, the highest rate since 2013, and starting to eye the 2% limit for price stability. That the headline rate would jump higher at the end of the year on base effects was widely expected, but the number did still come in far above the median forecast and the preliminary breakdown confirmed that most of it was due to energy price increases, which turned to 2.5% y/y in December, from -2.7% y/y in November. German jobless numbers dropped -17k in December, much more than anticipated and with the November decline also revised to -6k from -5k, which confirms that the improvement on the labour market continued at the end of 2016. The jobless rate remained at a record low of 6.0%, with much of the remaining gap due to structural issues and a mismatch of skills on the demand and supply side. The December UK manufacturing PMI smashed forecasts in rising to 56.1 from 53.6 in November, which was revised up from 53.4. The median forecast had been for a 53.4 outcome, while the 56.1 reading is the best since June 2014, indicating brisk expansion in the sector.
US Stocks and Oil swing wildly: Another swing and a miss on Dow 20k has sent stocks scrambling lower, accompanied by a reversal in the dollar, which has reversed lower as well. WTI crude has also doubled back in the melee, falling 2% $52.60 after climbing over 2.5% to clear $55.0 after its probe over $55 earlier (swing of nearly 5%) amid concerns about Libya upping production. Ford announced plans to cancel a $1.6 bln factory in Mexico, perhaps as collateral damage from the Trump tweet storm with U.S. execs, though Ford is up 2.5% (-5.5% 1-year return). GM was criticized by Trump for manufacturing its Cruze model in Mexico, which the company downplayed. The Dow stalled out at 19,938.5, eased below 19,800 before rallying into the close to end the day at 19,881.
Main Macro Events Today
Eurozone HICP – The much higher than expected German and Spanish inflation numbers forecasts for the overall Eurozone reading have been increased significantly to 1.3%, from 0.6% y/y in the previous month. Yields jumped higher on the report yesterday, but while the numbers add to the argument of the critics of Draghi’s expansionary policy, it is unlikely to see the ECB changing its mind on the QE expansion, as the uptick in inflation was already factored into central bank forecasts. It will however bring the question of when the ECB will start “real tapering” that is start a program of cutting back purchases with the intention of phasing them out, back to the agenda.
FOMC Minutes – Though the report would usually be highly anticipated by the markets, its importance has been diminished by the dot-plot showing estimates for three quarter point hikes in 2017, and by the fact that the usually dovish Chair Yellen seemed fully supportive of the more hawkish stance. There’s little the minutes can show that we don’t already think we know. Surprises are unlikely but still potentially high influential.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
MACRO EVENTS & NEWS OF 5th January 2017.
FX News Today
European Outlook: Asian stock markets moved mostly higher with Japanese markets underperforming as the Dollar weakened in the wake of yesterday’s Fed minutes, and a strengthening Yen weighed on Nikkei and Topix. U.S. stock futures are also down, but U.K. futures are moving higher after a pretty lacklustre session in Europe yesterday. Re-inflation and stronger than expected growth numbers have been a difficult mix for markets this week, and even though the ECB has already re-affirmed its commitment to maintain QE purchases through to the end of the year, concerns that the central bank will be running into supply constraints are resurfacing. The calendar today has U.K. Services PMI, Swiss CPI and Eurozone PPI.
FOMC Minutes: FOMC minutes showed a gradual approach was appropriate for now. But upside risks were weighed. About half of the Committee included fiscal policy in their forecasts, although “many” stressed the “considerable uncertainty” over the timing, size, and composition of any fiscal stimulus, not to mention the mix of tax, spending, and regulatory changes. “Many” judged a faster pace of hikes might be necessary. As to downside risks, it was noted that trade barriers, dollar appreciation, and weaker than expected fiscal policy measures could limit growth. The minutes reflected more of an uncertain tone than an overly hawkish one.
Overnight Data: China December Caixin Services PMI: 53.4 (prior 53.1) & Composite 53.5 (priors 52.9) services PIM at 17 month high and the composite is at near 4 year highs. Both manufacturers and services providers see steeper increases in activity, Overall employment declines slightly, due to ongoing job shedding across the manufacturing sector, Input price inflation remains sharp, but companies raise their selling prices at softer pace. AUDUSD ticked up on the news and continued selling pressure on USD at 14 day highs at 07320.
US Data Yesterday: U.S. vehicle sales are topping expectations in December thanks to a combination of deep incentives and heavy demand for trucks, likely putting overall sales on pace to post record gains in 2016. This equates with a pace of 18.2 mln units (SA), matching the highest level in 7-years. Among the larger gains were by GM at 10% vs 4.4% forecast; Nissan 9.7% vs -2.8% expected and VW at 20.3% vs 5.6%. Fiat Chrysler was the worst performer at -10.0%, but even they beat -14.0% estimated. Analysts had been forecasting a pace of 17.4-17.5 mln units, near last year’s record 17.5 mln. Though consumer confidence is on the rise heading into 2017, inventories are up amid a slow new-model rollout and incentives have been as large as $4k/vehicle in December. Trucks accounted for 64% of year-end volume, pushing the average price up to a record $35,309 for a gain of 1.5% y/y. Rising loan and lease rates are also a potential speed bump.
Main Macro Events Today
US Non-Manufacturing ISM – December service sector producer sentiment is out today and should reveal a headline decline to 56.8 from 57.2 in November. Overall, producer sentiment in December remained strong with most measures posting increases. The ISM-adjusted average of all measures looks poised to hold at 53 for a second month, up from 51 in October and 50 as recently as September and August.
US Initial Jobless Claims – Initial claims data for the week of December 31 is also out today and should show an improved headline of 260k (median 262k) from 265k the week prior and 275k in the week before that. More broadly, claims are poised to average a still firm 262k in December, up from 252k in November and 258k in October.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.