It was a swing and a miss on U.S. CPI Friday, following Thursday’s below forecast PPI report. Headline retail sales also undershot estimates, though upward revisions to February and March improved the complexion of that report. Meanwhile, consumer sentiment continued to beat expectations to extend the gap between “soft” and “hard” data. The data resulted in modest lessening in the risk of a Fed tightening next month, though the probability is still over 70%. Yet, the chances for another hike in September were trimmed to about 40% from around 50-50 previously.
United States: Despite the weakness in some of the recent U.S. reports, data are still consistent with a rebound in Q2 GDP after a sluggish 0.7% clip for Q1, and upcoming reports on manufacturing, production, and housing should burnish that relatively bullish outlook. Specifically, the economic calendar is a fairly limited this week with a smattering of housing, production, Philly Fed, claims and LEI data on tap. The Empire State index is forecast to rebound (Monday) to 9.0 in May from 5.2 in April. Housing starts should increase to a 1,260k pace in April from 1,215 in March (Tuesday), though risk is downward as construction employment slips in May. Industrial production is expected to rise 0.4% (Tuesday) in April from 0.5% in March, while capacity utilization may increase to 76.3% from 76.1%. MBA mortgage applications (Wednesday) will have to account for the swings in yields between the uptick in PPI and slump in CPI the week prior, while EIA energy inventories are on tap as well. Data rounds out (Thursday) with a rash release, including the Philly Fed index seen slipping to 20.0 for May from 22.0. Initial jobless claims may rebound 5k to 241k for the May 13 week and leading indicators are forecast to rise 0.2% in April vs 0.4% in March.
Canada: In Canada, the end of the week brings March retail sales (Friday) and April CPI (Friday). The lead up to those key releases is rather less exciting, with a choppy calendar that has March manufacturing (Wednesday) and April existing home sales (Monday). Total CPI expected to rise 0.5% in April, driven by the run-up in gasoline prices, after the 0.2% gain (m/m, nsa) in March. The CPI is expected to accelerate to a 1.8% growth rate in April on an annual comparable basis from the 1.6% y/y pace in March. Retail sales are expected to bounce 1.0% m/m in March after the 0.6% drop in February. The ex-autos aggregate is seen improving 0.7% on the heels of the 0.1% dip in February. Manufacturing shipments are projected to recover 1.0% m/m in March after the 0.2% decline in February. The international transactions in securities for March will be released Thursday. The Bank of Canada is silent this week. Next week sees the rate announcement (May 24), which is expected to result in no change to the current 0.50% rate setting or the cautiously constructive outlook on growth and inflation that backs our projection for no change in rates through year-end.
Europe: Political risk has receded with Macron’s election victory, and while this is unlikely to be the last challenge to the unity of the Eurozone or the EU, it paves the way for Draghi to move to a neutral stance on rates at the June meeting. ECB speak from Draghi (Thursday), Constancio, Praet and others will likely confirm this, but also stress once again that the Eurozone still needs substantial monetary support and the current QE schedule will be implemented as planned. The data highlight this week is German ZEW Investor Confidence (Tuesday), which is seen increasing to 21.0 from 19.5 reflecting reduced political uncertainty, improving growth and rising stock markets. Other data are mainly backward-looking. Eurozone Q1 GDP (Tuesday) is expected to be confirmed at 0.5% q/q and 1.7% y/y, in line with the preliminary number. March trade data (also Tuesday), will add background information amid the lack of a full breakdown. Meanwhile final April EMU HICP (Wednesday) should confirm the headline rate at 1.9% y/y and core at 1.2% y/y. The data calendar also includes Eurozone current account and balance of payment numbers for March, as well as German producer price inflation for April. Supply comes from Germany, which will issue 30 year Bunds on Wednesday. Spain and France follow with bond auctions on Thursday.
UK: The calendar is highlighted by April inflation data (Tuesday), labor market figures covering March and April (Wednesday), and the official retail sales report for April (Thursday). CPI expected to spike to a new cycle high of 2.6% y/y from the 2.3% print seen in the month prior. The 15%-odd y/y decline in sterling and the approximate 10% gain in the y/y oil price comparison underpins this forecast. The BoE last week in its quarterly inflation report said that CPI should come back down to its 2.0% target over the next year, and highlighted the disinflationary effects of recent currency gains. As for the labour data, the March ILO unemployment rate anticipated to remain unchanged at 4.7%. In-line data shouldn’t have too much impact on sterling.
Japan: Japan’s docket kicks off on Monday with April PPI, which expected to rise to 1.6% y/y from 1.4% previously. The March tertiary industry index (Tuesday) should fall 0.1% m/m versus the 0.2% increase in February. Revised March industrial production is also due Tuesday. March machine orders (Wednesday) are penciled in at up 5.0% m/m versus the 1.5% rise seen previously. Preliminary Q1 GDP (Thursday) should rise 1.6% q/q as compared to the 1.2% increase in Q4.
New Zealand: New Zealand’s calendar has both Q1 PPI input and Q1 PPI output will be released on Tuesday. There is nothing from the Reserve Bank of New Zealand this week. Last week saw the Bank hold rates steady at 1.75%, as expected, but leave a dovish tone in place amid the “numerous uncertainties” that remain. A somewhat more balanced outlook was anticipated from the Bank.
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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Andria Pichidi 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: Global stock markets continue to eye record highs, S&P 500,, Nasdaq, DAX, FTSE 100, Korea’s Kospi and Tawain’s Tatex as well as the MSCI World Index all reached record highs this week and Japan’s Topix is also higher on the day and eyeing the 20000 mark. The DAX, which managed to close above 12800 could open slightly down, while FTSE 100 futures are moving higher, while U.S. futures are moving sideways. The move higher is slowed by bouts of profit taking, but France’s election result and confidence that central banks will continue to keep an eye on markets and step in if necessary seems to be underpinning global stock market confidence for now. Against that background core yields are moving higher and for now at least improved sentiment is keeping Eurozone spreads narrow, even if the ECB is heading for a change in the forward guidance. German ZEW investor confidence today is expected to have improved again and the calendar also includes inflation data from the U.K. as well as the second reading of Eurozone Q1 GDP and.
FX Update: The euro has continued to drift upward, with EURUSD logging a nine-day high at 1.0987 just ahead of the London interbank open and EURJPY clocking a fresh one-year peak just shy of the 125.00 level. A combo of a risk-on backdrop and a sizable reduction in existential political risks in the Eurozone, post French election, now that last week’s “on-the-fact” profit taking phase has come and gone, have been both weighing on the yen and underpinning the euro. Last week’s sub-forecast U.S inflation data has also been in the mix, denting appetite for long dollar positions. EURGBP is trading in three-week high terrain, while Cable has nestled slightly above 1.2900. with the market looking to be lacking the impetus for a challenge of last week’s seven-month peak at 1.2990. USDCAD has remained heavy following the strong rally in oil prices yesterday. The pair is presently in the low 1.36s, just above yesterday’s 18-day low at 1.3601.
U.S. reports: The Empire State headline fell to a 7-month low of -1.0 from 5.2 in April, 16.4 in March, and a 29-month high of 18.7 in February. The ISM-adjusted Empire State fell to a 4-month low of 52.2 from a 6-year high of 55.2 in both March and April, and 54.5 in February. The May headline drop reflected declines in every component, after big April drops for orders and the workweek, as the sentiment indexes continue to give back some of their early-2017 premium, as also underway with consumer confidence and small business optimism. Strength has been contained to the goods sector given restraint in payrolls, retail sales and GDP as the economy faces a weak global economy, a strong dollar, and a pattern of seasonal Q1 weakness.
France’s Macron picks centre-right Prime Minister. The newly inaugurated French President Macron picked Republican Party’s Edouard Philippe as his Prime Minister in a move that looks like an attempt to broaden his base ahead of the legislative elections in June. Philippe has been the mayor of Le Havre since 2010 and the two will need a majority or at least enough seats in parliament to form a coalition to push through his reform agenda. The economy is looking in better shape than a long time, but the reform backlog means unemployment remains high and France is also struggling to cope with a deficit that continues to exceed the 3% limit.
Main Macro Events Today
German ZEW – Improvement in German ZEW Investor confidence is expected today to 21.0 in May from 19.5 in April – reflecting reduced political uncertainty, improving growth and rising stock markets. Forward looking indicators continue to underpin expectations for a broadening and strengthening of the recovery. UK Inflation Data – CPI expected to spike to a new cycle high of 2.6% y/y from the 2.3% print seen in the month prior. The 15%-odd y/y decline in sterling and the approximate 10% gain in the y/y oil price comparison underpins this forecast. EU GDP – Eurozone Q1 GDP is expected to be confirmed at 0.5% q/q and 1.7% y/y, in line with the preliminary number. US Housing Starts & industrial production – Housing starts should increase to a 1,260k pace in April from 1,215 in March, though risk is downward as construction employment slips in May. Industrial production is expected to rise 0.4% in April. 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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Andria Pichidi 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 south after a mixed closed on Wall Street. “Trump anxiety” is blamed for falling risk appetite, while a stronger Yen weighed on Japanese exporters. Chinese stocks trading in Hong Kong as railway and construction companies were under pressure following an infrastructure summit. U.K. and U.S. stock futures are also under pressure, pointing to a correction in the FTSE 100, which outperformed yesterday with a 0.91% gain and a close above 7500. The DAX moved sideways at high levels amid bouts of profit taking but managed to close above 12800. Gilt futures recovered losses as safe haven demand picked up again and Bund futures, which closed marginally in the red moved higher in after hour trade, which against the pressure on stock markets points to early gains and a dip in yields. The European calendar has U.K. labour market data and the final reading of Eurozone inflation numbers for April.
FX Update: The dollar is trading softer against most currencies, particularly the yen with USDJPY dropping quite sharply, from levels above 113.50 yesterday to a 12-day low today in Tokyo at 112.34. The narrow USD index has fallen for fourth consecutive session, making its lowest levels since last November’s presidential election. EURUSD rose to a fresh six-month high of 1.1116. Concerns about the about the pro-Trump growth agenda have weighed on the dollar. First the Senate Majority Leader McConnell appeared to downplay aspects of the plans for revenue-neutral tax cuts, Dodd-Frank rollback, among other things, and later news erupted about an alleged existence of a potentially Trump-damaging memo written by ex-FBI director Comey. This rattled Wall Street and led to a mostly negative session across equity bourses in Asia, which in turn let to yen outperformance as market participants sought safe havens.
U.S. reports: revealed a robust industrial production report that left good news for the day on net, though we saw disappointing housing starts data with annual revisions that lowered the recent trajectory. For factories, we saw a 1.0% April industrial production surge with gains spread across the manufacturing, mining and utility components, and we expect a robust 6% headline growth clip in Q2 led by mining and utilities. For housing, we saw April drops of 2.6% for starts, 2.5% for permits, and 8.6% for completions.
UK April CPI came in perkier than expected in rising to a new cycle high of 2.7% y/y, the highest rate since 2013 and up from 2.3% y/y in March. The core CPI reading came at 2.4% y/y from 1.8% in the previous month. PPI input prices unwound some, dipping to 16.6% y/y from 17.4% y/y in March, itself downwardly revised from 17.9%. Cable has U-turned sharply lower, to a low so far of 1.2865, following a short-lived rally to 1.2958 seen at the prompt of a perkier than expected UK CPI. German ZEW investor confidence rose to 20.6, slightly below expectations, but still up from 19.5 in the previous month. Eurozone Q1 GDP growth was confirmed at 0.5% q/q, in line with the preliminary number and unchanged from Q4 last year. The outcome of the French Presidential election continues to underpin an improved assessment of global political risks, while a fresh rise in German ZEW investor confidence underpinned hopes of stronger growth ahead, even as Eurozone Q1 GDP numbers show a still uneven recovery. The fact that the ECB has signaled a very gradual move towards policy normalization meanwhile is helping to keep Eurozone spreads in. In the U.K. April inflation data came in higher than expected, but still fitted the BoE’s inflation outlook.
Main Macro Events Today
U.K. Labour Data – March ILO unemployment rate anticipated to remain unchanged at 4.7%. In-line data shouldn’t have too much impact on sterling. The Claimant Count Change expected to fall 7.5K from 25.5K last month. EMU Final April HICP – The final April EMU HICP should confirm the headline rate at 1.9% y/y and core at 1.2% y/y. The pronounced up and down over the March/April period was impacted by the later timing of Easter. EIA Inventories – EIA Crude Oil Stock Change is on tap as well and an improvement is expected at -2.283M from -5.247M last week. 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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Andria Pichidi 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 global sell off in equities continued overnight in Asia. Concern over the problems of the Trump administration has been hitting markets hard and Nikkei and ASX lost more than 1%, after a sharp sell off on Wall Street yesterday. Stronger than expected GDP numbers out of Japan failed to lift sentiment. European markets also closed firmly in the red yesterday, with Eurozone peripherals underperforming as risk aversion spiked higher. The FTSE 100 managed to outperform, but also closed with a 0.25% loss and U.K. futures are heading south, even as U.S. futures are managing to move higher. The good news for Draghi and Co is that Eurozone spreads didn’t widen today and that at least so far the spike in risk aversion hasn’t hit peripherals, but increased volatility, will add to the arguments of the doves at the ECB, who want to tread very carefully as the ECB inches towards exit steps. Today’s calendar has French unemployment, U.K. retail sales and the ECB minutes of the last policy meeting.
FX Update: The dollar steadied after posting fresh lows as the “Trump trade” unwind continued after the New York close. The main equity indices in Asia fell, taking their cue from Wall Street amid concerns that the Trump growth agenda is in jeopardy. USDJPY losses extended for a second day. A three-week low was made at 110.52 in early Asia-Pacific dealings, with the pair subsequently managing to settle back above 111.00. EURJPY reversed recent gains as the yen outperformed, dropping quite sharply to a low of 123.42, putting in some distance from the two-year high the cross saw on Tuesday. The drop-in EURJPY reflects yen outperformance as the Japanese safe haven premium rises, while EURUSD logged a fresh six-month peak amid dollar outperformance. The high was at 1.1171, with the pair subsequently settling in the lower 1.11s.
UK unemployment dipped to a new 12-year low of 4.6%, which was unexpected as the median forecast had been for an unchanged 4.7% reading for official March data. Average incomes were less encouraging, but now below inflation, which in the latest numbers for April rose to 2.7%. The BoE said in its quarterly inflation report last week that it expected wage growth to turn positive again, though on the proviso that the Brexit process goes smoothly.
Eurozone April HICP inflation confirmed at 1.9% y/y as expected. The annual rate bounced back in April, after falling to just 1.5% y/y in March, from 2.0% y/y in February. The zigzag course over the March/April period was mainly due to the Easter effect. This also impacted core inflation, which rose to 1.2% y/y from 0.7% y/y in the previous month. Inflation is trending higher as growth strengthens, but less than April numbers suggest as wage growth remains moderate, despite the improving situation on the labour market. Wage moderation in Germany in particular seems puzzling given that the German jobless rate is at record lows and with that in mind the ECB is unlikely to do much more than remove the easing bias in June. Indeed, a stronger EUR and lower oil prices could in fact bring a downward revision to inflation projections with the updated forecasts next month.
Main Macro Events Today
U.K. Retail Sales – Retail sales are seen bouncing 1.0 % after dropping -1.8% in March, while the ex-Fuel figure should rise 1.0% after the disappointing -1.5% previously. ECB Monetary Meeting Accounts – ECB Monetary Policy Meeting Accounts have be scheduled for 11:30 GMT today, while President Draghi is due to speak at the University of Tel Aviv at 17:00 GMT. US Unemployment Claims – Initial jobless claims may rebound 4k to 240k for the May 13 week and leading indicators are forecast to rise 0.2% in April vs 0.4% in March. 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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Andria Pichidi 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: Equity markets started to improve and Wall Street managed to close in positive territory, as “Trump anxiety” eased somewhat. Markets were still mixed in Asia overnight, with Hang Seng and Nikkei posting slight gains, while CSI and ASX are slightly in the red. FTSE 100 and U.S. stock futures are moving higher though and it seems European markets may manage to claw back some of the losses seen over the last couple of days as investors put aside the turmoil in the Trump administration. Bund futures already started to come off highs during the PM and after hour session yesterday and with risk aversion unwinding Eurozone peripherals could outperform today and Eurozone spreads come in. ECB officials will be keeping a close eye on spreads and the impact of political uncertainty as comments from ECB officials show differing opinions on the speed with which the ECB should communicate the exit steps expected for next year. Data releases include German PPI numbers at the start of the session as well as Eurozone current account and BoP data and the U.K. CBI industrial trends survey for May, followed by EMU consumer confidence in the afternoon.
US Data: Revealed a surprisingly tight 232k claims reading for the May BLS survey week and a hefty May Philly Fed surge to 38.8 that nearly reached the 33-year high of 43.3 seen in February, alongside a 0.3% leading indicators rise that left an eighth consecutive gain, and an uptick in the Bloomberg consumer comfort index to a lofty 50.2. The employment components of the Philly Fed survey diverged around high levels, leaving upside risk from both this survey and the claims data for our 195k May nonfarm payroll estimate. The solid path for the monthly indicators into Q2, alongside room for an inventory updraft into the second half of 2017 after the big Q1 setback bodes well for GDP, where we expect a growth bounce to 3.2% after a Q1 boost to 0.8% from 0.7%, alongside a robust 6% Q2 clip for industrial production after a 1.8% Q1 pace.
Treasury Secretary Mnuchin believes 3% GDP or better is achievable, in his first testimony before the Senate Banking Committee. The acceleration in growth is possible “if we make historic reforms to both taxes and regulation.” The top U.S. priorities he noted are tax overhaul, housing finance and regulatory reforms, and combating terrorist financing.” And he added we are “committed to rethinking our foreign agreements and trading practices to ensure they are both free and fair to American businesses and workers” (remember earlier today USTR Ross notified Congress that the administration is triggering Nafta negotiations). On taxes, Mnuchin repeated that the objective of tax reform is for a cut for middle income earners. Meanwhile, House Leader Ryan attempted to get back on message about tax and regulatory reform, while expressing support for an independent special counsel to “follow where the facts lead” on the Russian probe. Later a video emerged that seemed to back up the White House’s assertion over Comey and let the president off the hook. Cable lost over 100 pips as the USD recovered.
Fedspeak: Cleveland Fed hawk Mester expects further Fed hikes will be necessary if the economy evolves as expected, while delaying hikes too long would risk a recession. She’s also comfortable with altering the Fed’s balance sheet policy later this year and once that plan is decided the Fed should stick to it and use rates to respond to the economy. This is totally in character and in keeping with the hawkish non-voter’s track record and prior remarks.
Main Macro Events Today CAD Retail Sales – Canadian retail Sales are expected to gain 0.5% in March retail after the 0.6% pull-back in February. The ex-autos sales aggregate is seen improving 0.3% in March following the 0.1% dip in February. Gasoline prices dipped 1.1% m/m in March after the 4.9% plunge in February, according to the CPI. Canada CPI Inflation is expected to expand 0.6% in April versus March after the 0.2% m/m gain in March. Gasoline prices were stronger, shooting 7% higher in April compared to March (average monthly basis). Total CPI is seen accelerating to a 1.8% y/y pace in April from the 1.6% pace in March. The trimmed mean CPI slowed to a 1.4% y/y pace in March from a revised 1.5% rate (was 1.6%) in February. The CPI common grew at a 1.3% y/y rate in March, matching the 1.3% clip in February. The CPI median grew 1.7% y/y following the revised 1.8% (was 1.9%) rate in February. 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 Senior 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.
It was a little over eight years ago when then Fed chief Bernanke said he saw signs of “green shoots” of recovery from the Great Recession and financial crisis of 2007-2008. But they didn’t really blossom as annual GDP growth has averaged only 2.1% in the U.S., and even less in OECD countries. Despite the fears that the political tumult since Brexit would be a major headwind to growth, recent data reveal an increasingly upbeat outlook, where the rise in optimism finally could be bearing fruit
United States: Trading in the U.S. was choppy last week as political uncertainties dominated. This week, the markets will be closely following President Trump’s first overseas trip as leader of the free world as he visits Saudi Arabia, Israel, Italy (for a G7 summit), the Vatican, and Belgium (for a NATO summit). Despite political uncertainties, we have some US data out this week. The data calendar is light and none of the releases will be really crucial to the outlook. The week’s highlights are home sales and home prices, durable goods, consumer sentiment, and the second look at Q1 GDP. New home sales (Tuesday) are expected to drop 4.2% in April to a 595k unit pace. Sales have been up all year so far. April existing home sales (Wednesday) are projected to fall 0.5% to a 5.680 mln clip. Durable orders (Friday) are seen dropping 1.0%, erasing the 0.9% March increase, and ending a string of three straight monthly gains. The final reading on May consumer confidence from the University of Michigan survey (Friday) is seen unchanged at 97.7. Q1 GDP (Friday) is expected to be revised down to a 0.5% rate of growth from the 0.7% Advance report. Other data this week includes April Chicago Fed national activity index for April (Monday), the Richmond Fed index (Tuesday), the flash May Markit PMI (Wednesday), the FHFA home price index (Wednesday), the KC Fed manufacturing index (Thursday), the advance economic indicators (Thursday), jobless claims (Thursday), and the flash May Markit services index.
Canada: Canada’s markets are closed Monday for the Victoria Day holiday. The Bank of Canada’s rate announcement (Wednesday) is the main event this week. No change in the 0.50% rate setting expected, alongside a maintenance of a cautiously constructive outlook on growth and inflation that is consistent with no change in rates until next year. Wholesale shipments (Tuesday) are projected to improve 1.0% in March after the 0.2% dip in February. Average weekly earnings for March and the May CFIB small and medium business sentiment survey are both due Thursday. BoC Deputy Governor Sylvain Leduc speaks on Thursday, with the remarks published on the BoC’s website at 11:45 ET
Europe: That there are diverging opinions on the ECB’s Governing Council is nothing new. But so far at least the Executive Board has been united in its defense of the central bank’s still very accommodative policy and the insurance policy that the implicit easing bias still provides. However, with confidence indicators showing a more robust economy, labor markets improving, and political risks receding, it seems the discussion about how much gradualism will be needed for the ECB’s path to exit steps has reached the Executive Board. Praet and Coeure as well as ECB President Draghi are all scheduled to speak during the week and it will be interesting to see whether the two “opponents” will continue their public voicing of opinion and if Draghi will take sides ahead of the June meeting. What is clear is that the discussion is ongoing and political events and market volatility will likely be equally important in the end as confidence data and against that background this week’s round of German Ifo and PMI readings (both Tuesday) will be watched carefully. The manufacturing PMI seen at 56.6 slightly down from the 56.7 in the previous month and the services PMI at 56.5 down from 56.4 in April. The German Ifo Business Climate, meanwhile is expected to nudge slightly higher to 113.1 from 112.9, with both expectations and current conditions indicators likely to improve.
UK: Incoming data for April and May have been consistent with growth rebounding from a weak patch in Q1, highlighting that Brexit uncertainties haven’t been taking the economic toll feared. The calendar this week brings government borrowing for April (Tuesday), the May edition of the CBI distributive sales survey (also Tuesday), and the second estimate of the Q1 GDP report. The headline realized sales reading of the CBI survey expected to dip to 32 from 44 in the previous month. The GDP data expected to come in unrevised at 0.3% q/q and 2.1% y/y.
Japan: In Japan, the March all-industry index (Tuesday) is forecast at -0.7% m/m, reversing the 0.7% rise in February. CPI figures (Thursday) should show national prices at a 0.2% y/y rate overall in April, unchanged from March, while core prices should be steady at 0.2% y/y versus February. May Tokyo CPI is expected to drop to a -0.1% y/y clip overall, and -0.1% y/y core, both unchanged compared to April. April services PPI (Thursday) are estimated rising at a 0.8% y/y pace, unchanged from March.
Australia: Australia’s calendar is thin this week, with Q1 construction work done (Wednesday) one of the few economic report due. Reserve Bank of Australia Deputy Governor Debelle has a busy week. He presents a speech titled ” How I Learned to Stop Worrying and Love the Basis” at the BIS Symposium: CIP – RIP? on Tuesday. Debelle delivers opening remarks and participates in a panel at the Launch of the FX Global Code in London (Thursday). The RBA’s Head of Payments Policy participates in a panel at the Australian Retail Banking Summit (Friday).
New Zealand: New Zealand’s calendar has the April trade report (Wednesday), expected to reveal a narrowing in the surplus to NZ$250 mln from NZ$332 mln in March. Reserve Bank of New Zealand Governor Wheeler speaks in Hamilton (Wednesday) but the event is not public.
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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Andria Pichidi 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 narrowly mixed, with the Nikkei down -0.16%, while the Hang Seng managed a 0.24% gain. U.S. stock futures are heading south, while the FTSE 100 futures is managing marginal gains as Sterling slumps following last nights terror attack in Manchester. Greek officials sounded optimist on the progress of the bailout review after yesterday’s Eurogroup meeting and markets are preparing for a very full data round in Europe today, which includes detailed German GDP numbers at the start of the session as well as German Ifo, preliminary PMIs and the U.K. CBI retailing survey. Against that background, U.K. bond and stock markets are likely to continue to outperform, while Eurozone spreads could remain mixed, as markets assess political risks and data ahead of the June ECB meeting.
German Q1 GDP was confirmed at 0.6% q/q and 1.7% y/y (wda) – as expected. The breakdown, which was released for the first time, showed broadly balanced growth, with private consumption and government spending expanding below average, but investment picking up strongly. In particular equipment investment, which had continued to contract over the past quarters finally rebounded and surged 1.2% q/q. Construction investment meanwhile rose 2.3% q/q. and investment overall contributed 0.3% points to the quarterly growth rate, private consumption 0.2% points and net exports, which detracted from growth in the second half of last year, contributed 0.4% points, while stock changes detracted -0.4% points. The strong contribution from net exports will add to the ongoing criticism of Germany’s export surplus, but with private consumption also picking up and investment expanding strongly, this is a relatively broadly balanced recovery.
EU Commission calls on Germany to accelerate public investment and create conditions for wage growth to pick up. At the same time the country should use fiscal policy to support demand. Given that the German economy is already close or above capacity and that monetary policy remains very expansionary an equally expansionary fiscal policy is a controversial recommendation, but it reflects the prevailing sense that budget surpluses should be used for spending and investment rather than debt reduction, despite the fact that debt levels across the whole of the Eurozone remain high. German wage growth meanwhile remains above the Eurozone average, but admittedly looks rather low considering that the labour market is very tight. German Finance Minstry sees shrinking current account surplus. The ministry said in its latest monthly report that the German current account surplus is set to fall further next year, to a still very high 7% of GDP from an expected 7.5% this year and versus 8.6% in 2015. The report stressed that on a national basis the ground is prepared for a sinking surplus, and that the high surplus is mainly due to market forces.
Main Macro Events Today
German IFO – German Ifo business confidence is expected to nudge slightly higher to 113.1 from 112.9, with both expectations and current conditions indicators likely to improve. Eurozone PMI – Eurozone PMI readings expected to move sideways in May at high levels, with the manufacturing PMI seen at 56.6, slightly down from the 56.7 in the previous month and the services PMI at 56.5, down from 56.4 in April. UK Public Sector Net Borrowing – The headline realized sales reading of the CBI survey expected to dip to 32 from 44 in the previous month. Meanwhile the GDP data expected to come in unrevised at 0.3% q/q and 2.1% y/y. US New Home Sales – New home sales are expected to drop 4.2% in April to a 595k unit pace after climbing 5.8% in March to 621k. 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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Andria Pichidi 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: After modest gains on Wall Street yesterday, Asian markets were hit by the Moody’s ratings downgrade for China, which was cut to A1 from A3 and left investors wrong footed and CSI 300 and Hang Seng in negative territory. The ASX is little changed, while Japanese bourses managed to outperform, benefiting from a weaker Yen. U.K. and U.S. futures are heading south, although Eurozone markets already outperformed yesterday amid strong data releases, while the U.K. in particular was hit by a bout of risk aversion following the Manchester terror attack. With pressure on the ECB to lay the ground for tightening measures rising, Bunds are likely to continue to underperform. Today’s local calendar is relatively quiet, with German consumer confidence and the second reading of Spanish GDP, which will leave the focus on the Fed minutes.
U.S. reports: revealed big headline drops for April new home sales and the May Richmond Fed index. Yet, the 11.4% April new home sales plunge to a 569k rate followed annual revisions that lifted the sales data through this year’s mild winter, with a whopping 55k in upward revisions for Q1 alone that left a stronger than expected sales path for 2017. U.S. May Markit manufacturing and services PMIs were 52.5 and 54.0, respectively, for the preliminary reads versus April’s 52.8 and 53.1. The composite hence rose to 53.9 from 53.2 previously. These are all higher than the year ago prints of 50.7 for manufacturing, 51.3 for services, and 50.9 for the composite. Most of the key components in manufacturing dipped to the lowest levels since September, though the services components mostly gained, with input prices rising to the highest level since June 2015. The Richmond Fed plunge to 1.0 in May from 20.0 in April and a 7-year high of 22.0 in March left a larger than expected drop into May however, and the ISM-adjusted measure fell sharply to 51.7 from 57.5 in April and a 7-year high of 59.2 in March.
Strong data puts pressure on ECB. A strong round of May confidence data, which showed the German economy in particular firing at all cylinders, makes the ECB’s very expansionary monetary policy and the implicit easing bias increasingly look out of place. Yesterday, German Ifo surges to highest level since at least 1991, while comments over the past week showed that even at the Executive Board there are now voices calling for a signal to markets that exit steps are underway, so that Praet, who favours a very cautious and extremely gradual move out of the easy policy, will face pressure to move not just to a neutral stance, but to introduce a tightening bias, which would pave the way for an announcement on tapering in September. If the central bank starts to cut back monthly purchase volumes by EUR 10 bln a month starting from early next year, rate hikes could come earlier than many expect, even if the ECB sticks with the current sequence of tweaking rates only after QE has ended.
Main Macro Events Today
ECB – ECB’s President Draghi is due to speak at the First Conference on Financial Stability organized by Bank of Spain, in Madrid, at 12:45 GMT. BoC Rate Decision – The Bank of Canada’s rate announcement is due today, where no change in the 0.50% rate setting and a continuation of the cautious optimism seen in April is projected for today’s announcement. The data since April’s announcement have revealed recovering growth alongside inflation that is still running below the BoC’s target. FOMC Minutes – The FOMC minutes are due today, while Kaplan will speak at the CD Howe Institute Annual Dinner, in Toronto. 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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Andria Pichidi 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 broadly higher, with Chinese equities in particular shrugging off yesterday’s ratings downgrade and the CSI 300 rising more than 1%. A jump in oil prices ahead of a key producers meeting underpinned sentiment. The Fed minutes yesterday were relatively dovish, but still said that recent economic and inflation weakness is expected to pass. U.K. and U.S. stock futures are moving higher and it seems risk appetite has returned to stock markets. Bund futures still climbed in after hour trade yesterday, but this could fade with improving risk appetite. Today’s calendar has second GDP readings for Q1 from Spain and the U.K. as well as U.K. BBA loans for house purchase.
US reports: 2.3% U.S. April existing home sales drop to a 5.57 mln rate from a 5.70 (was 5.71) mln cycle-high slightly undershot estimates, following a February drop to a 5.47 mln clip from a 5.69 mln prior cycle-high in January, as the winter existing home sales boost from mild weather as also seen with yesterday’s new home sales report. A 3.5% April median price rise to $244,800 left a tiny gap to the $247,600 all-time high last June, while inventories rose 7.2% in April to a still-lean 1.93 mln. Existing home sales are on track for a 5% rise in 2017, following a 3.9% increase in 2016 and a 6.5% rise in 2015, but a 2.9% 2014 post “taper-tantrum” drop.
Bank of Canada: left policy unchanged, as widely expected, though there were some changes in the statement that generated some market volatility. The BoC altered the key final line to say the current degree of monetary stimulus is appropriate “at present” versus April’s “still appropriate.” The Bank of Canada maintained its cautiously constructive outlook for growth and inflation, as expected. An ongoing improvement in domestic and global growth suggests further satisfaction with the evolution of the recovery. A change in verbiage on the current degree of monetary stimulus to “appropriate at present” from “still appropriate” prompted a fresh reading of the tea leaves, but did not change the outlook for monetary policy.
FOMC minutes indicated a hike could be seen “soon.” However, there was a caveat that it “Members generally judged it would be prudent” to wait to ensure the Q1 slowing was temporary before tightening further. The minutes also included a staff outline of a plan on the balance sheet which would showed gradually increasing run-off caps every three months which would eventually hit fully phased in levels which would then be held at that level until the size of the balance sheet was normalized. Nearly all policymakers supported this plan. The minutes indicated that the Q1 slowing was likely “transitory” and participants generally agreed that the medium term outlook on the economy was little changed — but again there was that caveat noted above. A June hike is widely expected, and another in September, but the outlook over the rate path in 2H is a little more uncertain considering the potential for balance sheet roll off to begin later in 2017.
Main Macro Events Today
UK Prelim. GDP Q1 – The second estimate of the Q1 GDP report is out today and it is anticipated to come in unrevised at 0.3% q/q and 2.1% y/y. OPEC – OPEC meets today and is expected to extend its agreement to curtail output. US Unemployment Claims – Initial claims data for the week of May 20 are out today and an increase is expected in the headline to 238k from 232k last week and 236k in the week prior to that. Claims are poised to average a stronger 236k in May, down from 243k in April and 251k in Marc. Fedspeak – Fed’s Brainard will participate in a panel discussion on the global economy at 14:00 GMT, in Washington DC. 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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Andria Pichidi 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 south as oil prices fell amid disappointment over the OPEC’s decision to prolong supply cuts for nine months, with investors hoping for more than an extension of current measures. The front end WTI future is trading at just USD 48.62 per barrel and lower than expected oil prices, coupled with a strong EUR also mean the ECB could well cut back its inflation forecast at the June meeting. More ammunition then for the likes of Constancio, who yesterday evening once again stressed that inflation is not yet on a sustainable path towards desired levels. UK100 futures are little changed, after managing to post a marginal gain yesterday against losses on Eurozone bourses. Today’s calendar remains quiet, with only Italian confidence data and after public holidays in many Eurozone countries yesterday many have taking today off for a long weekend, so that trading conditions may well be quieter again than normal.
US reports: revealed an array of downside disappointments in the April advance indicators report for the trade deficit, and wholesale and retail inventories, though we also saw another round of super-tight initial claims figures that capped the damage. Inventory revisions in the March data trimmed our Q1 GDP estimate for today’s report to 0.8% from 0.9%, versus a 0.7% advance figure. The tight 234k claims figure for the third week of May suggests upside risk for May nonfarm payroll estimate.
ECB’s Constancio: Overall risks remain tilted to the downside, stressing once again that “monetary stimulus remains important to ensure a sustainable adjustment of the inflation process towards levels consistent with the ECB price stability objective”. The central bank’s Vice President clearly pushed back against calls to start signaling exit steps and stressed that “a sustainable adjustment” of inflation has not yet occurred, even as inflation is starting to adjust towards desired level. At the same time, he suggested that negative rates could become part of the “conventional toolkit of central banks for fighting recessions”
UK Q1 GDP data was unexpectedly revised lower in the second estimate. This compares to the 0.7% q/q growth seen in Q4, and also shows the UK economy to be underperforming the Eurozone’s growth rate of 0.5%. The data shows the UK economy has started the year on a weaker than expected footing, and while April PMI survey data tentatively portended a rebound in early Q2, the backdrop of negative household income growth and a May CBI retail sector survey showing a sharp slowing in consumer activity suggests that the UK is set for a relatively rocky path this year. The BoE has been anticipating weakness, having trimmed its 2017 GDP forecast to 1.9% from 2.0% in its quarterly inflation report in early May.
Main Macro Events Today
US Durable Goods – Durable orders are seen dropping to -1.4%, erasing the 1.7% in March, and ending a string of three straight monthly gains. UoM Consumer Sentiment – The final reading on May consumer confidence from the University of Michigan survey is seen at 97.5 from, 97.7. US Prelim. GDP – Q1 GDP is expected to be revised up to a 0.9% rate of growth from the 0.7% Advance report. 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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Andria Pichidi 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.
Despite a lot of zigs and zags in global equities in recent weeks, the markets are solidly in the green for May, as well as over the last six months. Supporting the gains have been real improvement in most key economies, and hopes for accelerating growth over 2H. Curiously, most longer dated sovereign bonds have rallied too, supported in part by ongoing central bank accommodation and now safe haven and month-end flows.
United States: The U.S. calendar reboots on Tuesday after the long Memorial Day weekend with a variety of data on tap and all roads leading to the May payrolls report, which could have a profound impact on the Fed’s immediate outlook for another “gradual” rate hike in June that has been largely (80%) priced in. April nonfarm payrolls (Friday) are expected to increase by 182k, with a 98k private payroll gain, which would keep the policy trajectory on track. The unemployment rate is expected to hold steady from 4.4% last month and the workweek is expected to hold at 34.4 for a third month. Initial claims should average 243k in April from 251k in March. Ahead of the payrolls release April personal income (Tuesday) is forecast to rise 0.4%, while spending is seen up 0.6% and core PCE prices are set to rise just 0.2%. MBA mortgage market report (Wednesday) will be accompanied by May Chicago PMI, seen slipping to 57.5 from 58.3, along with April NAR pending home sales steady at 111.4. Data really gets crammed (Thursday) after the holiday break, as the ADP employment survey is set to rise 190k in May from 177k. Also on tap (Thursday) are no less than productivity, initial jobless claims, construction spending, ISM, auto sales and EIA energy inventories. The week rounds out with the full trade report (Friday) after the payrolls report.
Canada: Canada’s economic calendar is packed with data this week. The Q1 GDP and March GDP reports (both Wednesday) highlight, while April trade (Friday) will also be on considerable interest. The trade balance (Friday) is seen improving to a C$0.1 bln surplus from the -C$0.1 bln deficit in March. Labor productivity (Friday) is expected to expand 1.1% in Q1 (q/q, sa) after the 0.4% gain in Q4. The IPPI (Tuesday) is projected to surge 1.0% m/m in April following the 0.8% rise in March. The current account deficit (Tuesday) is anticipated to worsen to -C$11.5 bln in Q1 from -C$10.7 bln in Q4. The May Markit manufacturing PMI is due Thursday. Dealer reported vehicle sales are anticipated Thursday or Friday. There is nothing from the Bank of Canada this week, with the next event the release of the Financial System Review on June 8th.
Europe: The battles for direction at the ECB seem to be in full swing even ahead of the June 8 council meeting and after Coeure suggested that gradualism is falling out of favor even at the Executive Board. The heavy weights Draghi and Praet hit back last week, stressing that inflation is still not on a sustainable path toward the target. So, this month’s solid round of confidence data, which will be rounded off by the ESI sentiment indicator on Tuesday, may confirm that the recovery continues to strengthen and broaden. A slight improvement in the ESI is expected, which would leave the May round of confidence data again confirming that growth continues to strengthen. PMIs also suggest that the companies are taking on more staff and with German Ifo readings jumping higher this month, the German jobless number expected to decline a further -15K, in May which would leave the jobless rate at the record low of 5.8%. The April Eurozone unemployment rate meanwhile is seen falling to 9.4%. Eurozone inflation numbers are expected to fall back in May, after the Easter fueled jump in April. A German headline rate (Tuesday) of 1.7% y/y down from 2.0% y/y in the previous month, while overall Eurozone HICP (Wednesday) is seen falling to 1.5% y/y from 1.9% y/y, arguably below the ECB’s definition of price stability as below but close to 2%. Data releases also include Eurozone M3, German retail sales and French consumer confidence, Italian HICP, as well as German import price inflation and French and Eurozone PPI readings.
UK: London markets are closed today for a UK public holiday. The calendar thereafter brings April lending data from the BoE (Wednesday) and the first two of the three PMI surveys for May, with manufacturing (Thursday) and construction (Friday), which are due ahead of the services report (due out the following Monday). The lending data has us expecting a GBP 1.5 bln tally for net consumer credit, which would be near underlying trend.
Japan: In Japan, things kick off on Tuesday with April unemployment, where the jobless rate is seen steady at 2.8%. The job offers/seekers ratio likely held steady at 1.45. April personal income and PCE are due Tuesday. April retail sales (Tuesday) should be flat versus -0.8% y/y for large retailers, and slow modestly to a 2.0% y/y clip from up 2.1% overall. April industrial production (Wednesday) is penciled in accelerating to a 3.0% y/y rate from 1.9% previously. April housing starts and construction orders are also due Wednesday, with the former seen dropping to a 1.0% y/y pace of contraction from the previous 0.2% rate. The May Nikkei/Markit manufacturing PMI (Thursday) is expected steady at 52.7. April auto sales are due Thursday.
Australia: Australia’s calendar features private capital expenditures (Thursday), expected to rebound 1.0% in Q1 (q/q, sa) after the 2.1% tumble in Q4. Retail sales (Thursday) are seen recovering 0.1% m/m in April after the 0.1% dip in March. Building approvals (Tuesday) are projected to bounce 5.0% m/m in April after the 13.4% plunge in March. The Reserve Bank of Australia is silent this week. The next event is the Reserve Bank Board Meeting on June 6.
New Zealand: New Zealand’s calendar has April building permits (Tuesday) and the Q1 terms of trade (Thursday). But the main event this week is the release of the Reserve Bank of New Zealand’s Financial Stability Report.
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.
Andria Pichidi 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 stocks didn’t manage to make much headway. Hong Kong was on holiday and Chinese markets remained shut for a second day. Japan’s indices moved sideways swinging between gains and losses and the ASX is currently up a modest 0.33%. A stronger Yen weighed on Japanese markets and comments from ECB President Draghi yesterday that the Eurozone economy still needs substantial monetary support may have been designed to dampen tapering speculation, but also seem to have rekindled growth concerns especially as talk of early elections in Italy sparked a fresh wave of risk aversion and political concerns. Italian bond and stock markets underperformed, EMU spreads widened and the EUR remains under pressure as U.K. and U.S. return from their holidays and the data calendar heats up. Ahead of the June council meeting today’s Eurozone ESI confidence reading and the preliminary German HICP number will be watched very carefully. The busy calendar also has French consumption and final Q1 GDP, as well as Spanish inflation and Swedish GDP.
Draghi: Economy still needs extraordinary ECB support. Draghi said the ECB “remains firmly convinced that an extraordinary amount of monetary policy support, including through our forward guidance, is still necessary”. Speaking at his hearing before the European Parliament, Draghi said domestic cost pressures, notably from wages, are still insufficient to support a durable and self-sustaining convergence of inflation toward our medium-term objective”. More indications then that the ECB heavy weights are pushing back against a too drastic change of the forward guidance at the June policy meeting.
ECB’s Weidmann: Exit Debate legitimate given price outlook. The Bundesbank President said late yesterday that “in light of subdued price pressures, an expansionary monetary policy continues to be appropriate in principle”, but added that “given the continued economic recovery and a – by all forecasts predicted – inflation rate of just below 2 percent in the year 2019, it is indeed legitimate to ask when the ECB council should consider a monetary policy normalization”. Weidmann admitted that inflation will slow in the second half of the year as base effects from energy prices fall out of the equation and that despite stronger growth “price stability beyond traditionally very volatile energy costs are still quite muted”.
Main Macro Events Today
Eurozone ESI – Eurozone Economic Confidence is expected to rise slightly to 110.1 in May from 109.6. Preliminary consumer confidence came in better than expected, while EMU PMIs moved sideways at very high levels, and against that background a slight improvement in the ESI is expected, which would leave the May round of confidence data again confirming that growth continues to strengthen. German May HICP – Eurozone inflation numbers are expected to fall back in May, after the Easter fueled jump in April. The German headline rate expected at 1.6% y/y down from 2.0% y/y in the previous month. US Data – April personal income is forecast to rise 0.4%, while spending is seen up 0.6% and core PCE prices are set to rise just 0.2%. S&P Case-Shiller home prices are expected to rise 0.5% in March and May consumer confidence is projected to hold at an elevated 120.1 vs 120.30 in April. Canada Current Account – The current account deficit, is expected to widen to -C$11.5 bln in Q1 from -C$10.7 bln in Q4. 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.
Andria Pichidi 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 narrowly mixed. Chinese stocks initially moved higher after returning from holiday and following better than expected PMI readings, which showed steady expansion in the manufacturing sector and improvement in non-manufacturing. But Hang Seng and CSI 300 are now marginally in the red and the Nikkei is down -0.27%, while the ASX is clinging on to a marginal gain. Not much enthusiasm amid investors then in Asia, although FTSE 100 and U.S. futures are moving higher. Sterling remains under pressure as the election gets nearer and May’s lead in the polls declines, but that is supporting the FTSE 100, which is dominated by large multinationals. Better than expected consumer confidence data overnight, also adds support. And so far the weaker Pound hasn’t hurt Gilts, which outperformed again yesterday. In the Eurozone, yesterday’s source story suggesting that the ECB will up its growth assessment in June helped to counterbalance Draghi’s dovish comments from Monday, which had rekindled concerns about the health of the economy, and that helped Bund futures to come back from lows and spreads to come in and today’s expected decline in the Eurozone HICP reading to just 1.4% will add further support. The data calendar also has French and Italian inflation numbers, as well as German retail sales and labour market data.
FX Update: Sterling took a 0.5% clobber on a UK election poll form YouGov suggesting that the support for the Tory party had fallen again, to the point that the governing party would loose its majority at the June-8 election and leave Britain with a hung parliament (with the Tories at 310 seats, down from the 330 seats it presently has and below the 326 level needed for a majority, and versus 257 seats for Labour). The poll does contrast other surveys pointing to the Conservatives wining, though will likely see sterling continue to underperform into the election. Cable logged a 1.2787 low, bringing last week’s near six-week low at 1.2774 back into scope. Elsewhere, the narrow USD index is showing a modest gain on the day after falling yesterday following a mixed-bag of U.S. data. EURUSD lifted above 1.1100 during the Asia session before settling in the upper 1.10s, up on yesterday’s 13-day low at 1.1066. USDJPY popped back above 111.0 during Tokyo trade, extending the rebound from yesterday’s 13-day low at 110.66. Japanese industrial production rose 4% m/m in the preliminary estimate for April, up form the 1.9% m/m decline in March but below the Reuters median forecast for a 4.3% growth outcome.
U.S. reports: revealed a firm April round of personal income figures with a strong trajectory of consumption into Q2, though the report also incorporated big downward Q2-Q3 income revisions seen in Friday’s GDP report. We saw a May consumer confidence drop to a still-robust 117.9 from 119.4 in April and a 16-year high of 124.9 in March, leaving confidence above prior readings of 116.1 in February and 111.6 in January. The Dallas Fed index rose 17.2 from 16.8 in April, versus an 11-year high of 24.5 in February, while the ISM-adjusted Dallas Fed rose more sharply to a 2-year high of 55.4 from 53.8 in April, with a 6-year high of 15.7 for the workweek.
Main Macro Events Today
Eurozone HICP – The Eurozone number is expected to fall to 1.5% y/y from 1.9% y/y in April. If this is confirmed this would be once again firmly below the ECB’s 2% limit for price stability and thus give Draghi and Praet, who remain cautious with regard to any changes in the forward guidance something to argue with at the June meeting. Growth may be stabilising and strengthening, but the inflation trajectory still looks subdued, especially as oil price forecasts on which the March ECB staff projections were based, turned out to be too high. Canada Q1 GDP – Q1 GDP expected to accelerate to a 3.9% pace (q/q, saar) from the 2.6% growth rate in Q4. The expected gain would be close to the BoC’s estimate of 3.8% but well short of the 4.5% pace implied by the monthly GDP series. US Chicago PMI and Pending Homes – May Chicago PMI, seen slipping to 57.0 from 58.3, along with April NAR pending home sales at 0.3% rise from -0.8%. Fedspeak & Fed’s Beige Book – Dallas Fed hawk Kaplan (voter) will speak on international economics at 12 GMT. Additionally, the Beige Book for the June 13-14 FOMC will be released and should retain the modest-to-moderate mantra with reference to growth, with all 12 Districts likely repeating gains 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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Andria Pichidi 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 on the first day of June, led by Japanese stocks, which rallied amid a weaker Yen. Chinese stocks underperformed after China’s private manufacturing PMI disappointed, which revived concerns about the health of the Chinese economy. Yesterday’s official PMIs came in better than expected and investors are waiting for more data out of Europe and the U.S. to get a clearer picture of the outlook for the world economy. The CSI is marginally lower, but the Hang Seng is up 0.45%. U.S. and FTSE 100 futures are also posting gains. Most European markets closed in the red yesterday, after a mixed session, that saw the FTSE 100 reaching new record highs, before falling back again. The DAX managed to claw on to a 0.13% gain at the close, but mixed messages from ECB officials are unsettling investors and Eurozone spreads blew out again in late trade, as peripheral yields backed up. Gilt yields also jumped higher as Sterling remains under pressure ahead of the June 8 election. Already released Swiss GDP numbers came in weaker than expected at just 0.3% q/q and 1.1% y/y. The rest of the calendar focuses on manufacturing PMI readings.
US reports: U.S. Chicago PMI presented an increase to 59.4 in May from April’s 58.3. The number was originally reported as an unexpectedly large decline to 55.2 which was a real turn around and puts the index at its highest level since November 2014. U.S. pending home sales index dropped 1.3% to 109.8 in April following the 0.9% decline to 111.3 in March after jumping 5.5% in February to 112.3
BoC Outlook: Steady policy remains the base-case scenario, as the 3.7% gain in real Q1 GDP was a nearly perfect match to the BoC’s 3.8% estimate. However, despite the positive data, yesterday WTI crude fell to four-session lows of $48.30/bbl into the N.Y. open, with oversupply concerns remaining in place. Libya production has been the weight on oil today, which is not constrained by the OPEC/NOPEC output cut deal, and has recently upped its production to nearly 800k bpd, up from about 550k bpd in April, according to OPEC data. Increased Libya output, plus ever-increasing U.S. shale production, has offset a good bit of OPEC production cuts, weighing on oil prices.
Eurozone unemployment falls more than expected to 9.3% in April, while March was revised down to 9.4% from 9.5% reported initially. The number comes at the heel of a record low German jobless rate for May and ties in with PMI reports suggesting that companies continue to take on more staff. So the economy continues and growth is strengthen and clearly boosting the outlook for the labour market, but jobless rates remain very uneven across countries, youth unemployment remains far too high and most importantly for the ECB, wage growth on a Eurozone aggregate level remains quite low.
Main Macro Events Today
EU Manufacturing PMI – EMU manufacturing PMI expected to be unchanged, while in UK, a moderate correction in the PMI headlines is expected, forecasting 56.5 in the manufacturing survey following April’s 57.3 reading, and a 52.5 outcome in the construction PMI after 53.1 in the month prior. The manufacturing sector has been holding up solidly since the Brexit vote last June. US Manufacturing PMI – The May ISM should post a rise to 54.7 from 54.8 in April and 57.2 in March. Despite some divergent headline swings in the early month reports the component data was firm which should pose some upside risk to the release. Cad. Manufacturing PMI – The May Markit manufacturing PMI is due today. US ADP, Jobless Claims & Oil Invent. – Claims data for the week of May 27 should reveal a 239k headline following 234k last week and 233k in the week prior. ADP employment survey is set to rise 185k in May from 177k. Oil inventories for last week expected to fall to -2.7M from the -4.4M barrels 2 weeks ago. 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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Andria Pichidi 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, with Japan outperforming. The Nikkei 225 breached the 20000 mark for the first time since December 2015, amid a weaker yen and positive economic data including U.S. auto sales yesterday, which showed positive reports for Japan’s car makers. The background of positive corporate profits is attracting investors and helped to underpin the rebound since the low on April 14. Hang Seng and ASX 200 are moved higher after Europe and Wall Street closed with gains on Thursday, but the CSI underperformed and declined as the offshore Chinese yuan hit its highest level since October yesterday. Looking ahead U.S. and U.K. futures are extending gains this morning with investors looking to U.S. employment data, amid a pretty quiet calendar in Europe, which includes the U.K. Construction PMI as well as Eurozone Producer Prices. With risk appetite coming back and stock markets continuing to trend higher, core yields are likely to extend their move higher.
White House: President Trump will pull the U.S. out of the Paris climate accord. The administration was saying the agreement was a “bad deal” for all Americans as it front loaded costs. President Trump is keeping his campaign promise with this decision. Oil prices slumped to the $48.30 area from about $49.20 earlier. Also, Wall Street remained firm near the day’s highs with the Dow hovering in the 21,110 regions.
US reports: revealed firm May ISM and ADP readings of 54.9 and 253k respectively, with an ISM jobs index rise to 53.5 from 52.0, that added upside risk to our 195k May payroll estimate. The Initial claims bounce to 248k that still left a lean 238k May average. There were some disappointing April construction spending figures as the sector gave back some of its winter weather-boost, and though the Q1 figures were revised higher on net, most of the boost was in the home improvement component that doesn’t directly enter GDP. We more importantly saw downward nonresidential construction revisions that weakened the path for that sector. Early May vehicle sales data are showing a tiny uptick to a 16.9 mln clip from rates of 16.8 mln in April and 16.5 mln in March, leaving a likely 0.1% May retail sales drop with a 0.2% ex-auto auto decline, thanks to an estimated 7% May slide in gasoline prices and likely restraint in sales of building materials.
ECB Focus Remains on Inflation Not Growth. Despite the confusion over Draghi’s dovish comments at the start of the week, central bankers seem to agree that the recovery is looking increasingly strong and balanced. But while the ECB is likely to up its assessment on the growth outlook at next week’s meeting, headline inflation fell back to just 1.4% this month and updated set of inflation projections could likely to be scaled back, as oil prices are lower than anticipated in March and the EUR stronger.
Main Macro Events Today
U.S. NFP, Trade Deficit, Unemployment Rate – The April trade data is out today and we expect to see a 7.5% expansion in the deficit to -$46.1 bln from -$43.7 bln in March and -$43.8 bln in February. Also, May employment data is should post a 185k headline from 211k in April and 79k in March. The unemployment rate should hold steady at 4.4% for a second month, down from 4.5% in March. Canada Productivity – The trade balance is seen improving to a C$0.1 bln surplus from the -C$0.1 bln deficit in March. Exports are seen rising 1.0% in April after the 3.8% surge in March. Imports are expected to rise just 0.5% m/m in April after the 1.7% gain in March. Labor productivity is expected to expand 0.2% in Q1 (q/q, sa) after the 0.4% gain in Q4. UK PMI Construction – The construction PMI expected to fall at 52.7 from 53.1 last month. 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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Andria Pichidi 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 May U.S. nonfarm payroll report and its modest 138k rise in jobs, along with the 66k downward revision to March and April, and the 147k gain in private payrolls, disappointed expectations for much stronger increase, especially on the heels of the robust 253k surge from the ADP survey. Nevertheless, the Dow rallied 0.3% to climb to a fresh record high of 21,206. This week’s calendar is slim and the few reports won’t impact market outlooks or views of the FOMC. The ISM nonmanufacturing index for May (Monday) will highlight the week. It’s forecast dipping to 56.5 after rising 2.3 points to 57.5 in April (which was the highest since October 2015). Revised Q1 productivity (Monday) is expected to improve to a 0.1% pace of growth from the initial 0.6% contraction rate. Labor costs are seen revised to a slower 2.3% pace from 3.0%. April factory orders (Monday) are expected to be unchanged from the revised 0.9% gain previously. The Fed’s LMCI is also due (Monday). April JOLTS (Tuesday), a favorite of Chair Yellen, will nevertheless be overlooked as the report is two months in arrears, and Friday’s jobs report told us all we need to know for now. Other data this week includes April consumer credit (Wednesday), weekly jobless claims (Thursday) and April wholesale trade (Friday).
Canada: The employment report (Friday) is the main event this week. We expect a 20.0k gain in new jobs during May following the 3.2k rise in April, as the solidly expanding Canadian economy continues to create jobs. The unemployment rate is seen rising to 6.6% in May from 6.5% in April, as the participation rate rebounds following the tumble to 65.6 in April from 65.9 in March. The capacity utilization rate (Friday) is seen jumping to 83.7% in Q1 from 82.2% in Q4, as Canada’s rapid 3.7% Q1 real GDP growth rate brought previously unused capacity back into play. May housing starts (Thursday) are expected to moderate to a 200.0k pace from 213.1k in April, as activity further unwinds from the lofty 252.3k rate in March.
Europe: The week starts with a holiday in Germany (Monday), which will leave European markets somewhat quieter than usual, though trading could thin ahead of the ECB meeting and U.K. election (both Thursday), and after the weekend terror incidents in London on Saturday. After the sharp deceleration in headline inflation in May, which backed the ECB’s steady stance, this week’s final composite PMI and Q1 GDP will give the hawks something to argue with. The services PMI reading (Monday) is expected to be confirmed at 56.8 and the composite at 56.2, both suggesting ongoing robust expansion with Markit also reporting a pick-up in job creation and rising underlying price pressures. At the same time final Q1 GDP data for the Eurozone is likely to bring an upward revision to the quarterly growth rate to 0.6% q/q (median same) from 0.5% q/q, after strong revisions to French and especially Italian and Greek numbers. Other real rate in the form of German production (Thursday) and orders (Wednesday) numbers should be mixed, with the Easter effect still having some impact.
UK: It’s general election week, with the country heading to the polls on Thursday. The incumbent Conservative looks likely to win, though by a much smaller majority that was looking to be the case just a couple of weeks ago. The weekend terror attacks could sway voters more conservatively, however. A U.K. poll from Ipsos Mori (Friday) showed the Conservatives’ margin falling to just 5 percentage points over the Labor Party. Respective support stood at 45% and 40%, with Labor up 6%. The narrowing of the Conservative Party’s lead over the last couple of weeks has been nothing short of dramatic, with many pundits blaming a poor campaign performance by PM May (who refused, amid widespread condemnation, to take part in a TV debate last week, and then made a gaffe on health care proposals). The Conservative’s lead had been 20 points at the time that prime minister called the election in April. The FT’s poll of polls still has the Conservatives with 44% support versus 35% for Labor. The currency will be the vulnerable link in sterling markets to a weak Conservative victory outcome, or a hung parliament. The calendar features the May services PMI survey (Monday), which will be a big focus following above-forecast outcomes in the PMI surveys for the construction and manufacturing sectors, and with the big services sector (which accounts for nearly 80% of GDP in the UK) having driven Q1 GDP to just 0.2% q/q growth after 0.7% q/q growth in the previous quarter.
China: The May trade report (Thursday) is expected to reveal a $45.0 bln surplus versus $38.1 bln in April. May CPI and PPI (Friday), are penciled in at 1.4% y/y from 1.2%, and 5.5% y/y from 6.4%, respectively. Japan revised Q1 GDP (Thursday) is likely to be revised slightly higher given the stronger than expected capex. April current account and May bank lending are also on tap (Thursday)
Japan: Revised Q1 GDP (Thursday) is likely to be revised slightly higher given the stronger than expected capex. April current account and May bank lending are also on tap (Thursday), with the latter having held at 3.0% y/y over the past couple of months. The April tertiary index (Friday) has been little changed to weaker over the past twelve months.
Australia: The Reserve Bank of Australia’s meeting (Tuesday), expected to reveal no change in the current 1.50% rate setting. The economic data docket is busy this week. Q1 GDP (Wednesday) is seen rising just 0.2% (q/q, sa) after the 1.1% gain in Q4. The current account deficit (Tuesday) is seen narrowing to -A$1.0 bln in Q1 from -A$3.9 bln in Q4. The trade surplus (Thursday) is projected to narrow to A$2.0 bln in April from A$3.1 bln in March Housing finance (Friday) is anticipated to rise 0.5% m/m in April after the 0.5% dip in March.
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 Senior 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 posting losses. Japanese stocks dropped as the Yen surged to the highest level in more than a month, but it was Australia’s ASX that posted the sharpest losses, as the RBA left rates on hold as expected and highlighted that “slow growth in real wages” is weighing on consumption. Hang Seng and CSI 300 managed to move higher, underpinned by developers. U.S. and U.K. stock futures, however, are also heading south. After a long run, higher equity markets are turning cautious amid lingering concerns over the global growth outlook and ahead of key monetary policy decisions in Europe and the U.S. as well as the U.K. election on Thursday, with the latter looking tighter than expected. Oil extended declines as traders shrugged off the impact of Qatar’s isolation. The front end WTI future is currently trading at USD 47.12 per barrel.
US reports: revealed a firm round of May ISM-NMI figures, while March U.S. factory goods data fell slightly short of assumptions in April after small upward March revisions across factory orders, shipments and inventories to leave a neutral report. The April data for factory orders, shipments, and inventories were a tad light, and though the expected Q1 productivity boost to a flat figure from a 0.6% decline, there was also a huge downwards Q4 revisions in hourly compensation and unit labor costs that were a bit bigger than expected after the last income report. For the ISM-NMI, the headline slipped to a still-firm 56.9 in May from 57.5, while the ISM-adjusted ISM-NMI fell slightly to 56.3 from an 18-month high of 56.5.
Eurozone May composite PMI confirmed at 56.8, as expected, with the services reading revised up slightly to 56.3 from 56.2 reported initially. The services PMI still fell back slightly in April, but the composite held steady not just versus the preliminary number but also April. Readings suggest a consolidation of overall growth at high levels, with growth continuing to run at the fastest pace in six years and supported by strong growth of incoming new business, which will add to the arguments of the hawks at the ECB on Thursday. Germany and France were the main driver, with German growth underpinned by a robust manufacturing sector and French growth driven by the services sector. Both countries also reported stronger rates of overall job creation, which is encouraging, and suggests companies continue to invest in the recovery.
UK Election: Conservatives lead at 11 points according to the latest survey by ICM, with support for the Conservative Party’s at 45% versus 34% for the Labour Party. The survey was conducted between Friday and Sunday, with some of the response coming after the terrorist attack on Saturday night in London. The outcome is down 12 point lead that the previous ICM poll showed, though is well up on the poll by Survation that showed the Conservatives with only a 6 point advantage over Labour, and is more consistent with the FT’s poll tracker, which shows the Conservatives at 44% versus Labour’s 36%.
Main Macro Events Today
US JOLTS – April JOLTS, a favorite of Chair Yellen, will nevertheless be overlooked as the report is two months in arrears. April JOLTS, expected at 5.650M from 5.743M reported for March. Canadian Ivey PMI – The Ivey PMI is expected to improve to a seasonally adjusted 62.0 in May from 62.4 in April. NZD GDT – New Zealand’s Q1 manufacturing report may be of some interest today, which expected to present a 0.3% rise from 0.8% presented last time. 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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Andria Pichidi 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 posting modest gains. Japanese indices managed to recover losses as the Yen dipped. Mainland Chinese markets outperformed and rallied led by consumer shares. After underperforming recently amid government efforts to boost deleveraging, it seems there is some value buying in the CSI 300, which is up 1.22%, while the Hang Seng is up a mere 0.01% and ASX and Nikkei around 0.20%. U.K. and U.S. futures are also higher and the move back into stocks could see yields coming up from yesterday’s lows. However, investors are likely to remain cautious and take a wait and see stance ahead of tomorrow’s ECB meeting, U.K. election and Comey testimony in the U.S. Today’s calendar will start U.K. house price data and Italian retail sales as well as the OECD’s economic outlook for the Eurozone.
FX Update: The dollar found its feet against most currencies, firming up modestly from recent lows. USDJPY settled around 109.50 in Tokyo after logging a six-week high at 109.22 yesterday, which was the culmination of a three-session tumble from the upper 111.0s. EURUSD ebbed to around 1.1260-65. AUDUSD was an exception to the dollar-finding-a-footing story, as the Aussie buck rallied on the release of the Australian Q1 GDP report, which came in with 0.3% q/q growth, well off the 1.1% q/q growth seen in the previous quarter and matching economists’ median expectation, although there had been some market fears of a negative print (following weak retail sales and capex data over the quarter). The Australian economy hasn’t seen a recession in 103 quarters now (just one quarter shy of 26 years), which apparently matches the Netherland’s growth run (according to Reuters). AUDUSD gained 0.5% in making a 0.7543 peak, which is the loftiest level seen since May 2.
German April manufacturing orders clumped -2.1% m/m, more than anticipated and driven mainly by a -3.4% m/m drop in export orders. After two very strong months, the correction, still saw the annual rate jumping to 3.3% y/y from 2.4% y/y. So again something for both the doves and the hawks at the ECB to argue with, especially as confidence data for May already suggest a rebound ahead.
US Reports: U.S. JOLTS 259k up to 6,044k in April, a new record high, after rising 103k to 5,785k in March. The job opening rate rose to 4.0% from 3.8%. Openings are up 401k from a year ago. However, hirings dropped 253k to 5,051k following a 55k gain to 5,304k. The rate slid to 3.5% from 3.6%. That could be a function of a lack of skilled labor. Meanwhile, separations declined 225k to 4,973k after bouncing 190k to 5,198k previously. The rate dropped to 3.4% from 3.6%. Also, quitters declined 111kk to 3,027k after rebounding 102k to 3,138k. The rate also dipped to 2.1% from 2.2% (revised from 2.1%). The mix of data support notions of a strong labor market.
Main Macro Events Today
UK House Prices – May’s Halifax bank of Scotland will be released today the change in house prices, which is expected to be unchanged quarterly and monthly as well. US Consumer Credit – April consumer credit is expected to increase $17.0 bln after an $16.4 bln gain in March. Increases in non-revolving credit are leading the largest series of gains since 2001. Market risk is minimal, as consumer credit data is typically ignored by the market. Oil Inventories – Oil inventories from US will be out today as well and expected to reduce to -3.4M from -6.4M last week. Canadian Building Permits – Building permits values are projected to rebound 2.4% m/m in April after the 5.8% drop in March. Japanese GDP – Japan revised Q1 GDP is likely to be revised slightly higher at 0.6% from 0.5% given the stronger than expected capex. April current account and May bank lending are also on tap, with the latter having held at 3.0% y/y over the past couple of months. 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.
Andria Pichidi 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 slightly higher, with Japanese markets underperforming and marginally in the red, as the Yen strengthened and GDP data missed expectations by a wide margin. U.K. and U.S. futures are also up after Comey’s written statement ahead of today’s testimony helped to underpin U.S. markets Wednesday. In Europe markets await the ECB meeting and the U.K. general election, although first results are not expected until after market close. Bund futures were initially boosted yesterday by reports that the ECB will cut its inflation forecast today, but quickly started to head south again and while Draghi and Praet may be eager to keep any changes to the forward guidance to a minimum today, this won’t change the fact that the ECB is heading for tapering next year. In the U.K. the outcome of the election will have an impact for Brexit talks and while latest polls still give PM May the lead, her majority may not be as large, as she hoped when she called the election and the outside risk of a hung parliament would hurt U.K. markets.
FX Update: Super Thursday is here and caution is in the air in forex markets. The dollar majors and most of the main cross rates have been plying narrow ranges into the London interbank open. EURUSD has settled in the mid 1.12s, up from the low seen at 1.1204 yesterday in the wake of the Bloomberg report citing officials suggesting that the ECB will lower inflation forecasts. We still anticipant that the central bank will at its meeting today neuter the easing bias. USDJPY has ebbed back to the mid 109.0s during the Asian session today after briefly taking a look above 110.00. Aside from the ECB meeting, we have the UK election (were there is an outside risk of there being a hung parliament), and the testimony of ex-FBI director Comey (where markets will be alert for any devil in the detail following the unexpected publication of the written testimony yesterday, which didn’t really tell us anything new). We recommend fading any gains in USDJPY.
German April industrial production rose 0.8% m/m, more than expected and with March revised up to -0.1% m/m from -0.4% m/m reported initially. Production was mainly boosted by energy, which rebounded 5.7% m/m, after a slump of -4.3% in March, as a late spell of cold weather hit the country in April. Similarly, to orders data yesterday, the annual rate actually improved marginally and now stands at 2.8% y/y, up from 2.2% y/y in the previous month. Manufacturing was up 0.4% m/m and 2.1% y/y and together with robust survey numbers the data still sees the recovery intact and Germany heading for solid growth in Q2.
Main Macro Events Today
UK Elections – UK Elections are due today, although first results are not expected until after market close.The outcome of the election will have an impact for Brexit talks and while latest polls still give PM May the lead, her majority may not be as large, as she hoped when she called the election and the outside risk of a hung parliament would hurt U.K. markets. ECB Preview – The ECB is widely expected to leave interest rates unchanged and confirm the QE schedule for the rest of the year. The key question is if and how far the ECB will tweak its forward guidance and whether the easing bias will finally be scrapped. Leaked ECB reports yesterday confirmed what it is expected, that the updated set of forecasts tomorrow, will bring downward revisions to the inflation forecast, which means Draghi and Praet will have good arguments when they urge for caution to changes in the central bank’s communication and forward guidance. EU GDP – The final Q1 GDP data for the Eurozone is likely to stay unchanged at 0.5% US Jobless Claims – Initial claims data should decline to 240k from 248k last week and 235k in the week prior. Canadian Housing Stats & Gov. Poloz Speech – May housing starts are expected to moderate to a 200.0k pace from 213.1k in April, as activity further unwinds from the lofty 252.3k rate in March. The April new home price index is also due today, while BOC Governor Poloz is due to speak today, in Ottawa. 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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Andria Pichidi 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: Of yesterday’s key events it was the U.K. election that brought the biggest bombshell, with the U.K. heading for a hung parliament according to the latest projections. The Pound slumped, but FTSE 100 futures are moving higher, after a largely positive session in Asia, and modest gains on Wall Street yesterday. The Hang Seng was underperforming as U.K. linked shares dipped, but Hong Kong’s index is still heading for a weekly gain amid fears of overheating. Eurozone markets got a boost yesterday from the ECB’s dovish tone, which should put a rest to tapering talk at least for now. Reports that there won’t be an early election in Italy helped Italian bonds and stock markets to outperform. However, political uncertainty in the U.K. will also hang over Brexit talks and EU officials will likely rather want clarity about the U.K.’s negotiating positions as talks are set to start this month. JP Morgan previously argued that a hung parliament could ultimately support the pound if it leads to a coalition that takes a softer approach to Brexit, for now though the slump in the Pound should weigh on Gilts, while Bund futures continued to rise in after hour trade yesterday and should remain underpinned by the ECB’s cautious approach to exit steps. Today’s data calendar started with German trade early in the session, and French production, while later on we will see U.K. production and trade numbers.
UK election delivered an unexpected hung parliament outcome, based on projections with 600 of the 650 seats having been declared The Conservative Party is set to come in short of the 326-majority threshold with 316 seats, while Labour is set to come in with 265 (gaining 33), the LibDems with 13 (up five), and the SNP (Scottish National Party) with 34 seats (down 22). The pound lost 2% following exit polls last yesterday which accurately portended this outcome. A period of political deal making now lies ahead in the UK, which may be complicated by an uncertain fate of the prime minister, May, who has lost a lot of political capital after calling the snap election back in April and has seen a 20-point poll lead evaporate. The most obvious alliance would be a Tory-LibDem coalition, as was seen following the 2010 election, which would likely result in a net softer stance on Brexit. Uncertainty now looms., and the June 19 start date for EU exit negotiations looks to be in jeopardy. One takeaway forms the election is that a second Scottish independence referendum now looks a lot less likely, with the SNP having lost 22 seats.
ECB drops easing bias on rates, while leaving current policy rates and QE schedule unchanged. Draghi finally admitted that deflation risks have disappeared and removed the easing bias on rates, the doves are keeping a joker up their sleeves and maintain that QE can still be extended in duration or size. So not quite a neutral stance yet, despite the improvements noted for the growth outlook. In US on the other hand, the major event yesterday was Comey’s Testimony, which turned US Markets negative with both stocks and bonds. Comey started his testimony saying that defamation of him and the FBI by Trump publicly were outright “lies, plain and simple.”Trump lawyer Kasowitz released a press statement following Comey testimony, saying the testimony confirms Trump never sought to impede the Russia investigation, while Trump never directed or suggested Comey stop investigating anyone, including Flynn. Further, Trump never told Comey “I need loyalty” in form or substance. He also attacked Comey for admitting leaking “privileged communications” with Trump. Markets remain of two minds, wanting a relief rally on stocks, but cautious ahead of UK election returns.
Main Macro Events Today
UK PM May Speech – UK Prime Minister Teresa May expected to give a speech today in London, about the UK general Elections. UK Production & trade Balance – April’s production data are out today, with Manufacturing Production anticipated to rise for April at 0.9% versus the -0.6% last month. Industrial data expected to rise as well at 0.8 % from -0.5 %. Goods trade Balance should increase slightly to -12B from -13.4B. Canadian Labour Data – May Employment Change for Canada should post a 11K headline, from 3.2K in April and down from 19.4K in March. The unemployment rate expected at 6.6% up from 6.5% in April.
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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Andria Pichidi 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 FOMC decision and projections will be front and center this week. The ebb of inflation pressures and cooling of policy expectations will be food for thought for the FOMC. But, that shouldn’t deter the Committee from hiking rates by 25 bps Wednesday to 1.00-1.25%. However, with the slowing in U.S. inflation dynamics, the downward revision in the ECB’s inflation outlook, alongside the drop in energy prices, the political morass and latent tech volatility will give Fed doves more ammo to argue for a less aggressive normalization path, especially amid the likely delays in tax reform and other fiscal measures.
United States: The U.S. economic calendar may be overshadowed by the FOMC meeting, but there will be several relevant data releases that could give the markets and Fed pause by impacting views of the future, especially CPI and retail sales. Headline CPI (Wednesday) may slump 0.1% from 0.2%. Retail sales (Wednesday) are forecast to drop 0.1% in May or flat ex-auto, still struggling to regain lost momentum. Headline May PPI (Tuesday) is seen sinking 0.2% from 0.5%; core may rise 0.2% vs 0.4% or 2.0% y/y. Business inventories are also on tap (Wednesday), projected to sink 0.2% in April. The Treasury budget gap (Monday) is expected to hit -$87 bln for May, a 66% deterioration from -$52.5 bln a year ago. After the FOMC decision on Wednesday there will be a rash of data (Thursday) after the fact. Philly Fed index is seen falling to 22.0 in June from 38.8; Empire State may rebound to 6.0 in Jun from -1.0; import prices are seen flat in May, export prices may rise 0.2%; initial jobless claims are expected to dip 6k to 239k for the June 10 week; industrial production is forecast to be flat in May, while capacity use holds steady at 76.7%. NAHB housing market index may slip to 69 in June from 70.
Canada: The Canadian calendar is relatively thin after the busy start to the month. The manufacturing report (Thursday) is the main data feature this week, with shipment values expected to rise 0.7% m/m in April after the 1.0% gain in March. Another installment of housing data is due, with May existing home sales (Thursday) and the Teranet/National Bank HPI (Wednesday) scheduled for release. The April international securities transactions report will be available on Friday. Bank of Canada Senior Deputy Governor Wilkins delivers a speech titled “Canadian Economic Update: Strength in Diversity.” Monday’s speech is scheduled for release at 13:20 ET.
Europe: This week’s set of data releases, focuses mainly on final inflation data for May, which are unlikely to bring major surprises. The most important number will be German ZEW investor confidence (Tuesday) for June. A modest rise expected in the headline reading to 21.0 from 20.6 in the previous month, backed by the ECB’s cautious approach to exit steps and the improved overall economic outlook, which has been underpinning stock markets. Inflation data should confirm the German HICP rate at 1.4%, the French at 0.9% and the overall Eurozone number (Friday) at 1.4% y/y. The ECB already cut back its inflation projections at the July meeting as oil price developments mean the trajectory is lower than previously thought and while growth is improving and employment picking up, this has at least so far not led to a broad rise in wages. So the central bank can afford to take a relaxed stance on exit steps, even as growth forecasts are being revised up. Other data releases include Eurozone production and trade data for April. Germany will sell 10-year Bunds on Wednesday.
Japan: In Japan, the MoF June business outlook survey (Tuesday) is expected at 0.6 from 1.1 previously. Wednesday brings revised April industrial production. The BoJ will announce its policy intentions on Friday, with the two-day meeting unlikely to result in any changes, though reports last week indicated the Bank may upgrade its economic outlook, while lowering its inflation forecasts.
China: In China, May industrial production (Wednesday) is expected to slip to a 6.3% y/y pace from 6.5% in April, while May retail sales (Wednesday) should tick up to 10.8% y/y from 10.7%. May fixed investment (Wednesday) is estimated up 8.7% y/y from 8.9%. India May CPI (Monday) is expected to dip to 2.3% y/y from 3.0%, while April industrial production (Monday) should remain steady at 2.7% y/y. The May trade deficit (Wednesday) is set to narrow to $12.0 bln from $13.2 bln, as May WPI (Wednesday) is forecast to fall to 2.9% y/y from 3.9%
Australia: Australia’s calendar has May employment (Thursday), projected to expand 15.0k after the 37.4k gain in April. The unemployment rate is expected at 5.7%, identical to the 5.7% in April. There are two speeches by Reserve Bank of Australia Deputy Governor Debelle this week: The first speech is on Monday to the Global FX Code of Conduct Launch in Hong Kong (by video.) The second speech is on Thursday, at the Thomson Reuters Industry event in Sydney.
New Zealand: New Zealand’s calendar is highlighted by Q1 GDP (Thursday), expected to improve 0.9% after the 0.4% gain in Q4 (q/q, sa). The current account (Wednesday) is seen improving to a NZ$1.3 bln surplus from the -NZ$2.3 bln deficit in Q4. The Reserve Bank of New Zealand meets on June 22.
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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Andria Pichidi 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, although Nikkei and CSI remained marginally in the red, while Hang Seng and especially ASX moved higher, led by Commonwealth Bank of Australia. The tech rout that hit markets yesterday has started to calm down as the Nasdaq 100 managed to pare losses going into yesterday’s close. Investors remained largely defensive though in Japan ahead of the Fed meeting, but U.S and FTSE 100 futures are moving up. Oil prices are also higher on the day and the front end Nymex future is trading at USD 46.33 per barrel. Today’s calendar has inflation readings from Spain, Sweden and the U.K., with the latter seen falling back slightly to 2.6% y/y (med 2.7%) from 2.7% in April. German ZEW investor confidence meanwhile is expected to rise to 21.0 (med 21.5) from 20.6 in May. Meanwhile there are reports that Labour and Conservative MPs are “plotting” to force PM May to take a soft Brexit stance, while the Prime Minister continues to reshuffle her team and politics.
U.S. reports: Budget deficit widened to $88 bln in May just wide of median $87.0 bln, a large deterioration from the $53 bln deficit in May of last year. This estimate roughly aligns with the CBO Monthly Budget Review released June 7 as a change in the corporate tax deadline appeared to pull those dollars into April.
UK: Moody warned yesterday that UK’s minority government poses a “credit negative” risk. The prime minister’s Conservative Party is forming a government with Northern Ireland’s DUP, with the combined seat total standing at a weak 328 out of 650 parliamentary seats. Things have settled yet, just one week ahead of the start of EU exit negotiations, as there is pressure on the prime minister to resign following a disastrous election campaign. A snap poll of 700 member of the UK’s Institute of Directors found a “dramatic drop” in confidence following the hung parliament outcome of the election last Thursday.
Main Macro Events Today
UK CPI – Data is highlighted by May inflation figures today, where CPI expected to stay unchanged after logging a 2.7% cycle high in April. This would fit the BoE view. The central bank has clearly signaled that it is looking through the current phase of above-target inflation, anticipating a return to 2.0% target next year. German ZEW – After slightly mixed survey data in May, German ZEW investor confidence for June expected to rise in the headline reading to 21.5 from 20.6 in the previous month, backed by the ECB’s cautious approach to exit steps and the improved overall economic outlook, although with the ECB meeting as well as the U.K. election last Thursday much could depend on when the answers got in and uncertainty about Brexit prospects, global political events and the prospect of further rate hikes in the U.S. will likely weigh on sentiment. US PPI – Headline May PPI is seen sinking 0.0% from 0.5%; core may rise 0.2% vs 0.4% or 2.0% y/y. 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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Andria Pichidi 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 mixed, with Chinese stocks under pressure as financial and developers headed south. The CSI 300 lost more than 1% and the Hang Seng is down 0.2%, while Nikkei and ASX are moving higher. Financials also weighed on Japan’s stock markets, while defensive stocks gained ahead of the FOMC announcement, leaving the Nikkei up a modest 0.2%, while the ASX 200 gained 0.8%. FTSE 100 futures are up, as Sterling is under pressure again, while U.S. futures are down ahead. All eyes are on the Fed which is expected to hike rates by 25 bp, but may not give details on balance sheet normalization yet. There is speculation that China’s central bank may follow, which is adding to pressure on Chinese markets. China industrial production and retail sales growth were unchanged from the previous month. The European calendar has U.K. labour market data and EMU production numbers.
FX Update: The dollar majors have been settled in narrow ranges into the Fed’s policy announcement and statement. EURUSD has been orbiting 1.1200 and USDJPY has continued to oscillate around the 110.00 level. Sterling has steadied after rebounding some of the ground lost since last week’s UK election, with markets buoyed by prospects for a softer Brexit stance, though concerns about the viability of the new, fragile minority government, along with the prime minister’s future, remain. As for the Fed, a 25bp hike is widely expected while there is a degree of uncertainty about what tone the central bank’s guidance will take. The Fed expected to stick with its tightening bias but may signal a lowered pace of policy normalization, which will be accompanied with reduced growth forecasts. Overall, much of this will have been discounted by markets, though we see some risk for dollar gains on the view that the Fed leaves the door open for another 25bo rate hike before year-end.
U.S. reports: Flat May U.S. PPI headline with a 0.3% core price increase beat estimates with a largely expected 3.0% drop for the goods component. There were no revisions to April’s 0.5% headline jump and the 0.7% surge in the ex-food and energy component. On an annual basis, PPI slowed to 2.4% y/y compared to 2.5% y/y for April. But the core rate rose to 2.1% y/y versus 1.9% y/y. Goods prices declined 0.5% on the month, versus the prior 0.5% rise, with energy tumbling 3.0% and food costs dipping 0.2%. Services prices rose 0.3% following the 0.4% April gain, with trade prices climbing 1.1% and transportation/warehousing costs falling 0.5%. The PPI report isn’t usually a market mover, however U.S. equities have recovered somewhat to start the session in the wake of the 0.3% core PPI rise, following a shallow recovery in global stocks after two days of U.S. tech sector liquidation.
Final May German HICP inflation was confirmed at 1.4% y/y, as expected and down from 2.0% y/y in April. The Easter effect was largely to blame for the sharp swings over the past months, with holiday related prices spiking in April only to fall back again after the end of the Easter holidays. Energy prices increases also fell back again in May and added to the drop in the annual rate, as gas prices declined -3.4% y/y and prices for heading rose 11.7% y/y, down from 30.1% y/y in the previous month. The German economy may be steaming ahead and the labour market looking increasingly tight, but so far at least that has not led to a substantial uptick in wages, which is what is also keeping the ECB on hold, despite stronger growth numbers.
Main Macro Events Today
US CPI – May CPI data should reveal a -0.1% headline with the core rate up 0.2%. This follows April figures which had the headline up 0.2% and the core up 0.1%. If data in line with forecast would leave the headline y/y rate slowing to 1.9% from 2.2% in April and the core y/y rate ticking down to 1.8% from 1.9% in the month prior. US Retail Sales – May retail sales data is out today and should post a 0.1% headline decline a flat ex-autos figure. This follow the April report which revealed a 0.4% headline and a 0.3% core pace. The report faces downside risks from the weak auto sales data and an anticipated decline in gasoline prices which could weigh on gas station sales. FOMC Meeting – The Fed began its 2-day meeting, with widespread expectations for a 25 bp increase in the rate band to 1.0% to 1.25%. What will be crucial for the markets is the tone of the statement and what policymakers suggest about the path of normalization. The Committee is likely to leave its dot forecast of three tightenings this year unchanged, as the tight labor market should offset the slowing in Q1 growth and the softening in inflation. While the risks to the economy should remain balanced, it will be interesting if the tone is a little more dovish given the slowing in Q1 and other more recent 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.
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Andria Pichidi 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 south, after the Fed hiked rates and tweaked reinvestments. Financials and exporters were under pressure, while defensive stocks held up. There is speculation that the BoJ could make some inference to exit strategies at its upcoming meeting, which could boost the Yen and hurt exporters. Still, the -0.35% drop in the Nikkei is modest, compared to the sell offs in Hang Seng and ASX 200, which both lost more than 1%. Investors trying to place funds into superannuation accounts in a bid to avoid regulatory changes coming into effect on July 1 were said to have underpinned yesterday’s rally in the ASX, but with AUD on the rise, stocks are under pressure. U.K. and U.S. stock futures are also down. The Fed may have been less dovish than some expected, while U.S. data release yesterday were disappointing and sparked fresh concerns about the health of the global economy. With the Fed turns out of the way, the focus turns to BoE and SNB meetings today, with both central banks expected to keep policy steady. The data calendar has final May HICP from France and Italy, as well as U.K. retail sales and EMU trade data.
FOMC hiked the funds rate band by 25 bps, as widely expected, to a 1.00% to 1.25% band. In a surprise, however, the Fed outlined details on balance sheet normalization, stating it intends to start the unwinding process this year if the economy evolved as anticipated, Yellen said that the Fed could implement the balance sheet unwind “fairly soon,” if the economy continues to perform as expected. The Fed also outlined it’s initial cap sizes. The dot plot was also little changed from March, and suggests yet one more tightening this year. The statement noted the economy continues to expand moderately, and while job gains have moderated, they have been solid nevertheless. Household spending has picked up, and business investment has continued to expand. The Fed noted the recent decline in inflation, but said it’s expected to stabilize around the 2% objective over the medium term. Risks are roughly balanced but the Committee will monitor inflation closely. The dove Kashkari dissented in favor of an unchanged stance. The tone of the statement, and the fact that the Committee still plans to start balance sheet normalization this year, is a tad less dovish than the market had priced in after the CPI and retail sales data.
U.S. reports: revealed a weak round of May retail sales and CPI data. The US May CPI drop by 0.1% while U.S. retail sales underperformed with a 0.3% May headline and ex-auto drop, following tiny revisions that were upward in April but downward in March. We also saw a 0.2% April business inventory drop, though this decline was expected. For retail sales, we saw 0.3% May headline and ex-auto drops after small prior tweaks that should allow an uptick in the savings rate to 5.4%, as consumers remain reluctant to spend despite heightened confidence. For CPI, a 0.1% May headline drop with a 0.1% core price rise rounded up from respective figures of -0.144% and 0.063%, with weakness in apparel and medical care alongside the expected 2.7% energy price drop.
Main Macro Events Today
UK Retail Sales & BoE MPC’s Policy meeting – The Old Lady of Threadneedle Street is widely expected to leave policy settings unchanged. The tone of the minutes will interest, and given the tricky political backdrop will likely show a stepped-up degree of dovishness while remaining in the bounds of an overall neutral policy stance. We will see also today retail sales contracting by -0.8% m/m in official May data, after a stellar 2.3% m/m gain in April. CAD Manufacturing Shipments – Shipments expected to expand 0.7% m/m in April after the 1.0% gain in March. Manufacturing employment was nearly flat in April (-0.6k) after a 24.4k rise in March, while the latest jobs report revealed a 25.3k bounce in May. US Data – May trade price data is out today and should show import prices unchanged while export prices rise by 0.1% on the month. WTI prices decline by 5.1% in May which should weigh on import prices. Philly Fed index is seen falling to 24.0 in June from 38.8. Initial jobless claims are expected to dip 3k to 242k for the June 10 week; industrial production is forecast to be flat in May, while capacity use holds steady at 76.7%. NAHB housing market index may slip to 69 in June from 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.
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Andria Pichidi 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: After BoE and Fed spooked markets, the BoJ’s decision to keep policy on hold and maintained its promised for ongoing stimulus. Banks and financial were underpinned and the Nikkei is currently up 0.67% on the day, the Hang Seng gained 0.33% and the ASX 0.11%, while the CSI remained slightly in the red. U.K. and US stock futures are also moving higher and Bund futures started to stabilize in after hour trade yesterday, suggesting that bond and stock markets are starting to settle after the sell off yesterday. Today’s European calendar is quiet, with only final Eurozone HICP numbers, leaving markets to ponder the implications of this month’s round of central bank announcements.
U.S. reports: revealed surprisingly robust June figures for Empire State and Philly Fed, alongside an 8k initial claims drop to a lean 237k, while industrial production revealed the expected May growth pause from factory and vehicle sector setbacks despite robust mining and utility sector growth, with May trade price weakness that accompanied downside surprises in the May CPI report. For producer sentiment, the figures are refusing to meaningfully unwind the big Q1 surge, as the Empire State index popped to a 3-year high of 19.8 while the ISM-adjusted measure rose to a 6-year high of 56.2, alongside a June Philly Fed dropped to a still-robust 27.6 alongside a June repeat of the solid 59.2 ISM-adjusted figure from May. The GDP data remain poised for a Q2-Q3 bounce despite the downdraft recent retail sales and inflation reports.
BoE Spooks Markets, SNB Firmly on Hold: The BoE left rates unchanged, but still managed to shock markets. After reacting to last year’s Brexit referendum with further easing, it seemed reasonable to assume that the BoE would take a cautious approach in the wake of the “election” chaos especially after recent data releases disappointed and showed still weak wage growth. In the event though, it seems the “hung parliament” hasn’t dented the “smooth Brexit” assumption that was the base of the May inflation report and the number of those opting for rate hikes rose to 3 from just one at the previous MPC meeting. SNB keeps policy on hold, as expected. The central bank confirmed its expansionary policy, with interest on sight deposits unchanged at -0.75% and the mid point Libor target also at -0.75%. At the same time the central bank confirmed its commitment to “remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration”. The CHF remains “significantly overvalued”, according to the central bank. And while the SNB acknowledged that the global economy strengthened further and the new baseline scenario “anticipates that economic developments will remain favorable”.
Main Macro Events Today
EU Final HICP – Inflation data should confirm today the overall Eurozone number at 1.4% y/y. U.S. Michigan Consumer Sentiment – The first release on June Michigan Sentiment is out today and a slight increase is expected to 97.3 from 97.1 in May and 97.0 in April. US Housing Starts and Building Permits – May housing starts data is out today and a climb to a 1,215k is anticipated in May from 1,172k in April and 1,203k in March. Permits are seen at 1,250k from 1,228k in April and completions should improve to a 1,140k pace from 1,106k in April. Fedspeak – Dallas Fed moderate hawk Kaplan (voter) plans to take part in a panel discussion today at the Rotary Club from 12:45 ET. 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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Andria Pichidi 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 FOMC shocked the markets with a more hawkish than expected stance last week. So too did the BoE, while recent comments from the ECB and BoC also indicate they are starting to move toward the exit. Policymakers are still focusing on inflation and growth dynamics as their guides. But with the traditional Phillips Curve relationship seemingly broken, it could be a bumpy ride for central bankers and the markets as exit strategies are mapped out.
United States: This week’s Fedspeak will be especially interesting after the 180 degree shift from the FOMC where policymakers took a decidedly hawkish spin despite soft inflation and real sector data. The Fed showed surprising resolve in its actions as it looked past the recent data disappointments after the tepid 1.2% GDP growth clip in Q1. The contingent of speakers includes several FOMC voters. On the data front, housing numbers will be scrutinized after the larger than expected 5.5% drop in housing starts in May. Existing home sales for May (Wednesday) are forecast rising 0.9% to a 5.620 mln rate after tumbling 2.3% to 5.570 mln in April. New home sales (Friday) for April are projected rebounding to a 0.580 mln rate after plunging 11.4% to 0.569 mln in April. Other data this week includes the Q1 current account (Tuesday), with the deficit expected to fall to -$128.6 bln from Q4’s -$112.4 bln. There’s also the April FHFA home price index (Thursday), the Markit manufacturing PMI (Friday), the KC Fed manufacturing survey (Thursday), and weekly jobless claims.
Canada: Canada’s calendar has wholesale trade (Tuesday), with shipment values expected to expand 0.5% m/m in April after the 0.9% bounce in March. Retail sales (Thursday) are seen growing 0.4% m/m in April. Higher gasoline prices should support retail sales, but weaker vehicle sales will weigh. The CPI (Friday) is expected to slow to a 1.4 y/y pace in May from the 1.6% growth rate that was in place during March and April. CPI is projected to grow 0.1% m/m in May after the 0.4% gain in April, as a drop-in gasoline prices weighs. There is nothing on the BoC’s schedule this week. The CPI report could impact, although Wilkins appeared unworried by the weakness in the core CPI, blaming it on past activity. Hence, another round of soft core inflation would not challenge the widespread perception that rate hikes will come sooner than had previously been expected.
Europe: The start of official Brexit negotiations has finally arrived. Today Michael Barnier, the European Commission’s Chief Negotiator and David Davis, Secretary of State for Exiting the European Union, will launch Article 50 negotiations. EU 27 leaders will meet on June 22 to review the latest developments in the negotiations and in the margins of this meeting. The start of the talks may be dominated by political posturing, ultimately a hard approach from either side would only hurt the whole of Europe and an amicable deal will be in everybody’s interest. However the data calendar is pretty quiet. Preliminary Markit June PMI readings (Friday) will be the main highlights. Eurozone current account and BoP data are slated, along with preliminary consumer confidence for June. There’s also German PPI, and the final print on French Q1 GDP, expected to be confirmed at 0.4% q/q, as well as the national business confidence report. Supply comes from Germany, which issues 30-year Bunds on Thursday. The ECB’s latest economic bulletin meanwhile is likely to give merely a more detailed account of the ECB’s latest economic projections, which Draghi already presented at the last policy meeting.
UK: Data last week had shown a more acute negative growth figure, while recent sterling gains and weaker oil prices should help curb inflationary pressures, potentially offsetting hawkish arguments at the BoE. There is also the issue of a delicate political backdrop, with a much-weakened prime minister having to cobble together a deal with the DUP, a small party, in an attempt to make her minority government work. Brexit is yet another uncertainty, with negotiations due to begin on Monday. The UK calendar this week is fairly quiet. Monthly government borrowing data are due (Wednesday), while the June CBI industrial trend survey (Thursday)will highlight. A dip to a reading of +7 is expected in the total orders headline of the CBI survey, after +9 in the month prior.
Japan: The May trade report (Monday) is expected to reveal a surplus of JPY 100.0 bln, versus the JPY 481.1 bln previously. The April all-industry index (Wednesday) should rise 1.0% m/m from the prior 0.6% decline. Also, the BoJ releases the minutes to its April 26, 27 meeting (Wednesday), and Governor Kuroda will speak at the annual meeting of the National Association of Shinkin Banks. Deputy Governor Iwata will speak at a meeting of business leaders (Thursday).
Australia: Australia’s calendar is sparse this week. The Reserve Bank of Australia releases the minutes to the June meeting (Tuesday), where rates were held steady at 1.50%. The lack of change was expected, while the Bank maintained a note of optimism on the inflation and unemployment outlook. RBA Governor Lowe participates (Monday) in a discussion panel at the 2017 Crawford Australian Leadership Forum in Canberra. The Q1 Housing Price Index is due Tuesday, and will be of interest.
New Zealand: New Zealand’s calendar is highlighted by the Reserve Bank of New Zealand’s meeting (Thursday). No change is expected to the current 1.75% rate setting. It’s been at this level since the predicted easing on November 10.
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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 European Outlook: Asian stock markets are mixed, with Japan outperforming and the Nikkei up more than 1%, after the S&P 500 rose to a fresh record high and Fed’s Dudley said that U.S. expansion has “a long way to go”. Hang Seng and CSI were little changed in cautious trade ahead of the MSCI decision on the inclusion of Chinese shares in the index. The ASX meanwhile was weighed down by property shares. U.K. and U.S. stock futures are also moving higher, suggesting that yesterday’s rally will be extended today. The DAX is starting to eye the 12900 marks again and the FTSE 100 is firmly above 7500. With stock markets eying new highs core yields are likely to continue to nudge higher, while? Eurozone peripheral bond markets should continue to benefit from the improvement in sentiment. Yesterday’s first official meeting of Brexit negotiators brought a conciliatory tone, but little detail apart from a time table and the confirmation that there won’t be talks on a post-Brexit trade deal alongside the divorce agreements. The calendar today remains quiet, with only Eurozone current account and BoP data.
EU and U.K. agree timetable for Brexit talks, with initial negotiating groups tackling first Citizens’ rights, financial settlement and finally other separation issues. An additional dialogue on Ireland/Northern Ireland has been launched, but there was no mention of a post-Brexit trade deal which the U.K. initially wanted to negotiate alongside the divorce terms. Nothing further really happened yesterday at the first talks between chief negotiators Barnier and Davis and the next round of talks will start on July 17, with further rounds scheduled for the weeks starting August 28,September 18 and October 9. There reportedly wasn’t an offer from the U.K. yet on the rights for the EU citizens in the U.K.
Canada U.S. lumber dispute simmers, underpinning export uncertainty: a Bloomberg article from yesterday summarizes the viewpoints of the two sides in the dispute, with the U.S. upbeat for a quick resolution while Canada is cautious. The lumber dispute is among a variety of trade issues between the two nations, but is the most prominent and dates back to the Obama administration. Other industries remain at risk of increased tariffs, with Globeandmail.com reporting that the U.S. could add steel pipe makers to its target list of Canadian industries. The ongoing jockeying for tariff protections by various U.S. industries is a timely reminder of one of the key uncertainties facing Canada’s growth outlook. Wilkins, in her speech last week that shook up the BoC policy outlook, acknowledged the political uncertainty surrounding the Trump administration. That uncertainty shows few signs of diminishing, which we suspect will help keep the current monetary policy rate intact for a while longer.
Germany: The Producer Price inflation falls back to 2.8% y/y in April from 3.4% y/y in the previous month. This is a tad lower than anticipated, with the decline in oil prices from the highs earlier in the year one of the factors bringing both producer and import price inflation down again. The ECB has already cut back its inflation projections due to a revised oil price forecast. so the data doesn’t change the ECB outlook.
Main Macro Events Today
CAD Wholesale trade – Canada’s calendar has wholesale trade, with shipment values expected to expand 0.5% m/m in April after the 0.9% bounce in March. US Current Account – The Q1 current account deficit is expected to widen to -$124 bln. As a percentage of nominal GDP, the gap is expected to widen to -2.6% from -2.4%. SNB Jordan Speech – SNB Governing Board Chairman Thomas Jordan will be at the opening of Swiss International Finance Forum, in Bern, in which it will also be involved in a panel titled “Moving away from the expansive monetary policy: what are the effects on financial markets and the real economy?”. Fedspeak – VC Fischer and non-voter Rosengren will be at the podium at a conference on macro-prudential policy at the Riksbank. Also, the moderate hawkish voter Kaplan discusses monetary policy and the economy at a Commonwealth Club event. Governor Powell testifies on fostering economic growth before the Senate Banking Committee. 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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Andria Pichidi 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 losses on Wall Street and in Europe yesterday. MSCI finally decided to include 222 large Chinese companies in its 2018 Emerging Markets Index, and the CSI is outperforming with a 0.28% gain, while the Hang Seng is down -0.38% and the Nikkei -0.32%, with the latter weighed down by a stronger Yen. The ASX underperformed and lost more than 1% as oil prices remain under pressure. The DAX rallied to new record highs yesterday, before profit taking and a broad mover lower in global equity markets as commodity supply concerns amid rising oil production in Libya and Nigeria cast fresh doubt on the efficacy of the OPEC oil agreement while a 26% drop in Chinese steel exports added to concerns about the global growth outlook. U.K. and U.S. stock futures are also down and the fresh bout of risk aversion will keep a lid on bond yields. For the Eurozone, the good news though is that peripheral yield spreads over the German benchmark didn’t blow out yesterday. Today’s data calendar remains quiet, with only U.K. public finance data and a German 30-year Bund sale.
London clearing remains bone of contention. After the EU proposal that called for greater EU oversight of clearing houses based in foreign jurisdictions and included the option of enforced relocation, BoE’s Carney yesterday suggested improved cross-border oversight of clearinghouses that should be based on “deep cooperation” between jurisdictions, adding that a clearing deal would help to keep the financial system resilient. ECB’s Coeure meanwhile stressed that the EU’s clearing regime was “never designed to cope” with major clearing houses operating outside of the EU, adding that moving clearing to within the EU’s jurisdiction would be justified if they pose a major risk to stability, as so far, the regime provides “EU authorities with very limited tools for obtaining information and taking action in the event of a crisis”. The ECB has long tried to get London clearing under its own control and while London fought back with backing from a European court, the issue is back on top of the agenda as Brexit draws nearer.
Fedspeak: Yesterday Fed’s Rosengren said low rates pose financial stability issues, in his comments at the Riksbank macroprudential conference. The Boston Fed president (not a voter this year) turned decidedly hawkish about a year ago and has maintained that outlook ever since. He believes low rates put intermediaries and economies at risk, make fighting future recessions more difficult, and make it more likely central banks will have to resort to non-traditional policies. Additionally, Fed Evans was speaking yesterday as well. Chicago Fed dove Evans said inflation needs to rise and the target should not been seen as a cap but a symmetric target, though he’s voted for rate hikes given improvement in the economy. He’s still ambivalent about the timing of the next hike, which could take place later in the year, while the global environment appears to be holding back inflation, which could allow for a shallower path of rate increases. Otherwise the economy bounced back after the election, with “quite good” fundamentals, which give inflation a chance to get back to 2%. He sees 3% growth as achievable in the short-term, but sustaining it given labor and productivity constraints is another thing, while the U.S. is fast approaching its natural rate of unemployment.
Canada: growth maintains momentum but uncertainties lurk, suggesting that while the time frame for rate hikes has been moved ahead, the Bank can maintain the current setting through mid-year at least. Of course, the upbeat (“hawkish”) view of the economy last week moved ahead expectations for lift-off, and even put the announcement next month in play. And the economic data since Wilkins/Poloz have supported the Bank’s view that the run of encouraging broad-based growth will prove sustainable. But other events have highlighted the uncertainties around Canada’s outlook. Most prominently, the plunge in WTI crude oil to a seven month low and the evolution of U.S. trade policy. The key line from Wilkins was that they are “assessing whether all of the considerable monetary stimulus presently in place is still required.” An assessment of the mix of firm economic data but weak oil/commodity and uncertain U.S. trade policy will likely keep them grounded until later this year, if not January of next year. There will be another round of BoC-speak next week (Poloz panel, Patterson speech), which will be looked to for fresh guidance on the policy outlook.
Main Macro Events Today
US Existing Home Sales – May existing home sales data is out today and should post a 0.7% increase to a 5.610 mln pace for the month after dropping 2.3% to a 5.570 mln pace in April. The NAHB did tick higher in May with a rise to 69 from 68 in April but housing starts disappointed with a decline in the headline pace to 1.092 mln from 1.156 mln in April. UK Borrowing data – Monthly government borrowing data are due (today), for which a deduction to £7.3B is expected from £9.6 seen last month. Speeches – BoE chief Economist Andy Haldane is due to give a speech today in Yorkshire. RBNZ Meeting – New Zealand’s calendar is highlighted by the Reserve Bank of New Zealand’s meeting today. No change to the current 1.75% rate setting is expected. It’s been at this level since the predicted easing on November 10. 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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Andria Pichidi 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 stabilized in China’s CSI outperformed again helped by the inclusion of 222 mainland equities in the MSSCI index. The ASX, which tanked yesterday with oil also bounced back. The front end WTI future is little changed on the day at USD 42.53, U.K. and U.S. stock futures are also little changed The Reserve Bank of New Zealand held the policy rate unchanged, as expected. Bund and Gilt yields already moved higher yesterday, led by a jump in the 10-year Gilt above the 1% mark after hawkish comments from BoE’s Haldane, which sees a case for raising rates soon. Bunds outperformed, but the 10-year yield also nudged higher, while Eurozone spreads were mixed at the close with Portugal underperforming. Equity markets and oil prices remain in focus although the calendar is starting to pick up with French business confidence indicators as well as the U.K. CBI industrial trends survey and the ECB’s latest economic report. EU leaders will also start to gather for a 2-day Brexit summit, after chief negotiators from both sides met for the first time officially last Monday. The Eurozone also has preliminary consumer confidence data in the afternoon.
US Reports: A 1.1% U.S. May existing home sales bounce to a 5.62 mln rate trimmed the April drop to 5.56 mln from a 5.70 mln cycle-high in March to almost exactly track estimates, as sales gains moderate in Q2 after weather boosts in the prior two quarters. U.S. existing home sales came in on the perky side, but had little impact on forex markets. Existing home sales are on track for a 5% rise in 2017, following a 3.9% increase in 2016 and a 6.5% rise in 2015, but a 2.9% 2014 “taper-tantrum” drop. Additionally, U.S. MBA mortgage market index rose 0.6% in data released yesterday, in addition to a 1.0% drop in the purchase index and a 2.1% rise in the refinancing index for the week ended June 16. Yet the average 30-year fixed mortgage rate was unchanged at a low 4.13% last week after readily absorbing the Fed’s rate hike, projections and balance sheet reduction schedule announcements.
RBNZ: The Reserve Bank of New Zealand held the policy rate at 1.75%, as expected. Low for long remains in place, with Wheeler again saying, “Monetary Policy will remain accommodative for a considerable period.” And a dovish bias was retained, as the Governor concluded that “Numerous uncertainties remain, and policy may need to adjust accordingly.” This was the same as in May. In March he said “Numerous uncertainties remain, particularly in respect to the international outlook, and policy will need to adjust accordingly.” In other words, it looks like they won’t hesitate to add accommodation if downside risks to the economy manifest. The onus remains on the inflation and growth data, with additional undershoots setting the stage for further easing.
UK: The new UK government’s legislative goals have been announced in the Queen’s speech. Eight of the 24 outlined are Brexit related, which include bills to convert EU rules into UK law, and others concerning such issues as trade, immigration, agriculture and sanctions. A number of key manifesto pledges have been axed or delayed as a consequence of the Conservative Party having lost its majority at the elections earlier in the month. Chancellor Hammond on Monday said that the economy would be the priority in Brexit negotiations, which appears to be position shift away from prioritizing immigration. This could potentially be supportive of the pound, though issues about the fragility of the minority government (which is reportedly struggling in negotiations with Northern Ireland’s DUP) are likely to be the overriding concern for markets. BoE Chief Economist Haldane gave a speech as well yesterday in which he said he is ready to vote for a rate hike — notable as he voted to keep policy settings unchanged last week. His vote would bring the hawks in favour of hiking the repo rate by 25bp to four — which is half of the members on the Monetary Policy Committee.
Main Macro Events Today
US Initial Jobless Claims – Initial claims data for the week of June 17 should reveal a slight increase to 240k from 237k in the week prior and 245k in the week before that. Claims have been holding at very tight levels lately and the June average expected to be 236k, down from 241k in May and 243k in April. Canadian Retail Sales – Retail sales are seen growing 0.9% m/m in April, while the ex-autos sales aggregate gains 0.7%. Higher gasoline prices should support retail sales, but weaker vehicle sales will weigh. Fedspeak – Governor Powell testifies on fostering economic growth before the Senate Banking Committee. MPC Forbes Speech – BOE MPC voting member Kristin Forbes is due to give a speech today at the London Business School. 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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Andria Pichidi 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 narrowly mixed in tepid markets, as oil prices stalling below USD 43 per barrel. Fed speakers didn’t challenge the path to further rate hikes and markets are taking a wait and see stance. Mainland Chinese shares are fluctuating after outperforming yesterday, FTSE 100 futures are in the red, while U.S. futures are slightly higher. A very cautious end to a volatile week then, which should leave core bonds underpinned and yields remaining low. BoE’s Forbes may have added more force to her calls for a rate hike in a speech late yesterday saying she sees “some urgency” to tighten monetary policy, but this was her last speech as she is leaving the MPC. The EU summit with May on Brexit talks, saw the British PM making an offer for the rights of EU citizens, but the devil here lies as usual in the details and the future of citizens on both sides is far from secured. The issues were not discussed at the summit and it will be up to the negotiating team to hammer out a final deal. Today’s calendar brings preliminary June PMI readings, which we expect to move sideways at high levels. France has final Q1 GDP and Italy releases orders data for April.
US Reports: 3k U.S. initial claims uptick to 241k in the BLS survey week trimmed the prior 7k drop to 238k (was 237k) from 245k at the start of June and 255k in the final week of May. Claims have undershot the 2016 average of 263k in every week of 2017, and continue to oscillate around tight levels above the 44-year low of 227k in the President’s Day week. Claims are averaging 240k in June, versus a similarly tight 241k May average, and higher prior averages of 243k in April, 251k in March, and 241k in February. Today’s 241k BLS survey week reading was above May’s 233k figure but below prior survey-week readings of 243k in April, 261k in March, and 247k in February. U.S. FHFA home price index rose 0.7% in April to 248.2, after a 0.7% March gain to 246.6. That’s up 6.8% y/y. Seven of the 9 regions surveyed posted gains.
UK: Brexit Battle Finally Gets Underway One year after the Brexit referendum official talks finally got underway. There still isn’t any clarity on how the future relationship between the U.K. and the rest of the EU will look once the U.K. exits the block. But, a year on, both sides are in a very different situation, with the EU going into the discussions strengthened, while the U.K. government is looking increasingly fragile. Central banks on both sides cautiously look on as the direction and outcome of the talks will have major implications for rates going forward.UK hints at transition period for Brexit. Chancellor of the Exchequer Hammond yesterday suggested the prospect of a four-year transitional period, adding to signs that he is pushing for a softer Brexit stance. Hammond said in a radio interview that in his view a three to four-year transitional period might be necessary, after the U.K. officially exits the EU in 2019.
Canada: Canada’s retail sales yesterday improved 0.8% m/m in April after a downwardly revised 0.5% gain in March (was +0.7%), leaving a nearly as projected gain. But the ex-autos sales aggregate surged 1.5% m/m in April following a revised 0.1% dip in March (was -0.2%), which was well in excess of projections. Higher prices played a large role in lifting the value of total and ex-autos retail sales. Total retail sales volumes were up a modest 0.3% m/m in April after the 1.1% jump in March. While the ex-autos sale aggregate came in on the firm side of projections, the gain in total sales alongside the more modest rise in sales volumes was roughly as expected.
Main Macro Events Today
Eurozone & German PMI – A slight dip in the Eurozone manufacturing index is anticipated to 56.8 from 57.0, with a dip in the services reading to 56.2 from 56.3. Those would suggest ongoing robust activity but at a slightly slower growth pace. This scenario wouldn’t challenge the ECB’s main assumption of a recovery that is strengthening and broadening, and hence would have limited market impact. The German manufacturing index is anticipated to 59 from 59.5, with the services reading to 55.5 from 55.4. CAD CPI – CPI is expected to edge up 0.1% m/m in May after the 0.4% m/m gain in April. Gasoline prices dropped in in May, which drives projection for a slowing in the pace of month comparable CPI growth. The CPI is seen moderating to a 1.4% y/y pace in May from the 1.6% y/y growth rate in April. US PMI & New Home Sales – A slight increase in the US manufacturing index is anticipated to 53.0 from 52.7, with the services reading to 53.7 from 53.6. The New Home Sales number is also out today and an increase of 16.8% is anticipated from the -11.4% seen on April. 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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Andria Pichidi 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 15th May 2017.
FX News Today
It was a swing and a miss on U.S. CPI Friday, following Thursday’s below forecast PPI report. Headline retail sales also undershot estimates, though upward revisions to February and March improved the complexion of that report. Meanwhile, consumer sentiment continued to beat expectations to extend the gap between “soft” and “hard” data. The data resulted in modest lessening in the risk of a Fed tightening next month, though the probability is still over 70%. Yet, the chances for another hike in September were trimmed to about 40% from around 50-50 previously.
United States: Despite the weakness in some of the recent U.S. reports, data are still consistent with a rebound in Q2 GDP after a sluggish 0.7% clip for Q1, and upcoming reports on manufacturing, production, and housing should burnish that relatively bullish outlook. Specifically, the economic calendar is a fairly limited this week with a smattering of housing, production, Philly Fed, claims and LEI data on tap. The Empire State index is forecast to rebound (Monday) to 9.0 in May from 5.2 in April. Housing starts should increase to a 1,260k pace in April from 1,215 in March (Tuesday), though risk is downward as construction employment slips in May. Industrial production is expected to rise 0.4% (Tuesday) in April from 0.5% in March, while capacity utilization may increase to 76.3% from 76.1%. MBA mortgage applications (Wednesday) will have to account for the swings in yields between the uptick in PPI and slump in CPI the week prior, while EIA energy inventories are on tap as well. Data rounds out (Thursday) with a rash release, including the Philly Fed index seen slipping to 20.0 for May from 22.0. Initial jobless claims may rebound 5k to 241k for the May 13 week and leading indicators are forecast to rise 0.2% in April vs 0.4% in March.
Canada: In Canada, the end of the week brings March retail sales (Friday) and April CPI (Friday). The lead up to those key releases is rather less exciting, with a choppy calendar that has March manufacturing (Wednesday) and April existing home sales (Monday). Total CPI expected to rise 0.5% in April, driven by the run-up in gasoline prices, after the 0.2% gain (m/m, nsa) in March. The CPI is expected to accelerate to a 1.8% growth rate in April on an annual comparable basis from the 1.6% y/y pace in March. Retail sales are expected to bounce 1.0% m/m in March after the 0.6% drop in February. The ex-autos aggregate is seen improving 0.7% on the heels of the 0.1% dip in February. Manufacturing shipments are projected to recover 1.0% m/m in March after the 0.2% decline in February. The international transactions in securities for March will be released Thursday. The Bank of Canada is silent this week. Next week sees the rate announcement (May 24), which is expected to result in no change to the current 0.50% rate setting or the cautiously constructive outlook on growth and inflation that backs our projection for no change in rates through year-end.
Europe: Political risk has receded with Macron’s election victory, and while this is unlikely to be the last challenge to the unity of the Eurozone or the EU, it paves the way for Draghi to move to a neutral stance on rates at the June meeting. ECB speak from Draghi (Thursday), Constancio, Praet and others will likely confirm this, but also stress once again that the Eurozone still needs substantial monetary support and the current QE schedule will be implemented as planned. The data highlight this week is German ZEW Investor Confidence (Tuesday), which is seen increasing to 21.0 from 19.5 reflecting reduced political uncertainty, improving growth and rising stock markets. Other data are mainly backward-looking. Eurozone Q1 GDP (Tuesday) is expected to be confirmed at 0.5% q/q and 1.7% y/y, in line with the preliminary number. March trade data (also Tuesday), will add background information amid the lack of a full breakdown. Meanwhile final April EMU HICP (Wednesday) should confirm the headline rate at 1.9% y/y and core at 1.2% y/y. The data calendar also includes Eurozone current account and balance of payment numbers for March, as well as German producer price inflation for April. Supply comes from Germany, which will issue 30 year Bunds on Wednesday. Spain and France follow with bond auctions on Thursday.
UK: The calendar is highlighted by April inflation data (Tuesday), labor market figures covering March and April (Wednesday), and the official retail sales report for April (Thursday). CPI expected to spike to a new cycle high of 2.6% y/y from the 2.3% print seen in the month prior. The 15%-odd y/y decline in sterling and the approximate 10% gain in the y/y oil price comparison underpins this forecast. The BoE last week in its quarterly inflation report said that CPI should come back down to its 2.0% target over the next year, and highlighted the disinflationary effects of recent currency gains. As for the labour data, the March ILO unemployment rate anticipated to remain unchanged at 4.7%. In-line data shouldn’t have too much impact on sterling.
Japan: Japan’s docket kicks off on Monday with April PPI, which expected to rise to 1.6% y/y from 1.4% previously. The March tertiary industry index (Tuesday) should fall 0.1% m/m versus the 0.2% increase in February. Revised March industrial production is also due Tuesday. March machine orders (Wednesday) are penciled in at up 5.0% m/m versus the 1.5% rise seen previously. Preliminary Q1 GDP (Thursday) should rise 1.6% q/q as compared to the 1.2% increase in Q4.
New Zealand: New Zealand’s calendar has both Q1 PPI input and Q1 PPI output will be released on Tuesday. There is nothing from the Reserve Bank of New Zealand this week. Last week saw the Bank hold rates steady at 1.75%, as expected, but leave a dovish tone in place amid the “numerous uncertainties” that remain. A somewhat more balanced outlook was anticipated from the Bank.
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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Andria Pichidi
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 May 2017.
FX News Today
European Outlook: Global stock markets continue to eye record highs, S&P 500,, Nasdaq, DAX, FTSE 100, Korea’s Kospi and Tawain’s Tatex as well as the MSCI World Index all reached record highs this week and Japan’s Topix is also higher on the day and eyeing the 20000 mark. The DAX, which managed to close above 12800 could open slightly down, while FTSE 100 futures are moving higher, while U.S. futures are moving sideways. The move higher is slowed by bouts of profit taking, but France’s election result and confidence that central banks will continue to keep an eye on markets and step in if necessary seems to be underpinning global stock market confidence for now. Against that background core yields are moving higher and for now at least improved sentiment is keeping Eurozone spreads narrow, even if the ECB is heading for a change in the forward guidance. German ZEW investor confidence today is expected to have improved again and the calendar also includes inflation data from the U.K. as well as the second reading of Eurozone Q1 GDP and.
FX Update: The euro has continued to drift upward, with EURUSD logging a nine-day high at 1.0987 just ahead of the London interbank open and EURJPY clocking a fresh one-year peak just shy of the 125.00 level. A combo of a risk-on backdrop and a sizable reduction in existential political risks in the Eurozone, post French election, now that last week’s “on-the-fact” profit taking phase has come and gone, have been both weighing on the yen and underpinning the euro. Last week’s sub-forecast U.S inflation data has also been in the mix, denting appetite for long dollar positions. EURGBP is trading in three-week high terrain, while Cable has nestled slightly above 1.2900. with the market looking to be lacking the impetus for a challenge of last week’s seven-month peak at 1.2990. USDCAD has remained heavy following the strong rally in oil prices yesterday. The pair is presently in the low 1.36s, just above yesterday’s 18-day low at 1.3601.
U.S. reports: The Empire State headline fell to a 7-month low of -1.0 from 5.2 in April, 16.4 in March, and a 29-month high of 18.7 in February. The ISM-adjusted Empire State fell to a 4-month low of 52.2 from a 6-year high of 55.2 in both March and April, and 54.5 in February. The May headline drop reflected declines in every component, after big April drops for orders and the workweek, as the sentiment indexes continue to give back some of their early-2017 premium, as also underway with consumer confidence and small business optimism. Strength has been contained to the goods sector given restraint in payrolls, retail sales and GDP as the economy faces a weak global economy, a strong dollar, and a pattern of seasonal Q1 weakness.
France’s Macron picks centre-right Prime Minister. The newly inaugurated French President Macron picked Republican Party’s Edouard Philippe as his Prime Minister in a move that looks like an attempt to broaden his base ahead of the legislative elections in June. Philippe has been the mayor of Le Havre since 2010 and the two will need a majority or at least enough seats in parliament to form a coalition to push through his reform agenda. The economy is looking in better shape than a long time, but the reform backlog means unemployment remains high and France is also struggling to cope with a deficit that continues to exceed the 3% limit.
Main Macro Events Today
German ZEW – Improvement in German ZEW Investor confidence is expected today to 21.0 in May from 19.5 in April – reflecting reduced political uncertainty, improving growth and rising stock markets. Forward looking indicators continue to underpin expectations for a broadening and strengthening of the recovery.
UK Inflation Data – CPI expected to spike to a new cycle high of 2.6% y/y from the 2.3% print seen in the month prior. The 15%-odd y/y decline in sterling and the approximate 10% gain in the y/y oil price comparison underpins this forecast.
EU GDP – Eurozone Q1 GDP is expected to be confirmed at 0.5% q/q and 1.7% y/y, in line with the preliminary number.
US Housing Starts & industrial production – Housing starts should increase to a 1,260k pace in April from 1,215 in March, though risk is downward as construction employment slips in May. Industrial production is expected to rise 0.4% in April.
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.
Andria Pichidi
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 May 2017.
FX News Today
European Outlook: Asian stock markets headed south after a mixed closed on Wall Street. “Trump anxiety” is blamed for falling risk appetite, while a stronger Yen weighed on Japanese exporters. Chinese stocks trading in Hong Kong as railway and construction companies were under pressure following an infrastructure summit. U.K. and U.S. stock futures are also under pressure, pointing to a correction in the FTSE 100, which outperformed yesterday with a 0.91% gain and a close above 7500. The DAX moved sideways at high levels amid bouts of profit taking but managed to close above 12800. Gilt futures recovered losses as safe haven demand picked up again and Bund futures, which closed marginally in the red moved higher in after hour trade, which against the pressure on stock markets points to early gains and a dip in yields. The European calendar has U.K. labour market data and the final reading of Eurozone inflation numbers for April.
FX Update: The dollar is trading softer against most currencies, particularly the yen with USDJPY dropping quite sharply, from levels above 113.50 yesterday to a 12-day low today in Tokyo at 112.34. The narrow USD index has fallen for fourth consecutive session, making its lowest levels since last November’s presidential election. EURUSD rose to a fresh six-month high of 1.1116. Concerns about the about the pro-Trump growth agenda have weighed on the dollar. First the Senate Majority Leader McConnell appeared to downplay aspects of the plans for revenue-neutral tax cuts, Dodd-Frank rollback, among other things, and later news erupted about an alleged existence of a potentially Trump-damaging memo written by ex-FBI director Comey. This rattled Wall Street and led to a mostly negative session across equity bourses in Asia, which in turn let to yen outperformance as market participants sought safe havens.
U.S. reports: revealed a robust industrial production report that left good news for the day on net, though we saw disappointing housing starts data with annual revisions that lowered the recent trajectory. For factories, we saw a 1.0% April industrial production surge with gains spread across the manufacturing, mining and utility components, and we expect a robust 6% headline growth clip in Q2 led by mining and utilities. For housing, we saw April drops of 2.6% for starts, 2.5% for permits, and 8.6% for completions.
UK April CPI came in perkier than expected in rising to a new cycle high of 2.7% y/y, the highest rate since 2013 and up from 2.3% y/y in March. The core CPI reading came at 2.4% y/y from 1.8% in the previous month. PPI input prices unwound some, dipping to 16.6% y/y from 17.4% y/y in March, itself downwardly revised from 17.9%. Cable has U-turned sharply lower, to a low so far of 1.2865, following a short-lived rally to 1.2958 seen at the prompt of a perkier than expected UK CPI. German ZEW investor confidence rose to 20.6, slightly below expectations, but still up from 19.5 in the previous month. Eurozone Q1 GDP growth was confirmed at 0.5% q/q, in line with the preliminary number and unchanged from Q4 last year. The outcome of the French Presidential election continues to underpin an improved assessment of global political risks, while a fresh rise in German ZEW investor confidence underpinned hopes of stronger growth ahead, even as Eurozone Q1 GDP numbers show a still uneven recovery. The fact that the ECB has signaled a very gradual move towards policy normalization meanwhile is helping to keep Eurozone spreads in. In the U.K. April inflation data came in higher than expected, but still fitted the BoE’s inflation outlook.
Main Macro Events Today
U.K. Labour Data – March ILO unemployment rate anticipated to remain unchanged at 4.7%. In-line data shouldn’t have too much impact on sterling. The Claimant Count Change expected to fall 7.5K from 25.5K last month.
EMU Final April HICP – The final April EMU HICP should confirm the headline rate at 1.9% y/y and core at 1.2% y/y. The pronounced up and down over the March/April period was impacted by the later timing of Easter.
EIA Inventories – EIA Crude Oil Stock Change is on tap as well and an improvement is expected at -2.283M from -5.247M last week.
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.
Andria Pichidi
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 18th May 2017.
FX News Today
European Outlook: The global sell off in equities continued overnight in Asia. Concern over the problems of the Trump administration has been hitting markets hard and Nikkei and ASX lost more than 1%, after a sharp sell off on Wall Street yesterday. Stronger than expected GDP numbers out of Japan failed to lift sentiment. European markets also closed firmly in the red yesterday, with Eurozone peripherals underperforming as risk aversion spiked higher. The FTSE 100 managed to outperform, but also closed with a 0.25% loss and U.K. futures are heading south, even as U.S. futures are managing to move higher. The good news for Draghi and Co is that Eurozone spreads didn’t widen today and that at least so far the spike in risk aversion hasn’t hit peripherals, but increased volatility, will add to the arguments of the doves at the ECB, who want to tread very carefully as the ECB inches towards exit steps. Today’s calendar has French unemployment, U.K. retail sales and the ECB minutes of the last policy meeting.
FX Update: The dollar steadied after posting fresh lows as the “Trump trade” unwind continued after the New York close. The main equity indices in Asia fell, taking their cue from Wall Street amid concerns that the Trump growth agenda is in jeopardy. USDJPY losses extended for a second day. A three-week low was made at 110.52 in early Asia-Pacific dealings, with the pair subsequently managing to settle back above 111.00. EURJPY reversed recent gains as the yen outperformed, dropping quite sharply to a low of 123.42, putting in some distance from the two-year high the cross saw on Tuesday. The drop-in EURJPY reflects yen outperformance as the Japanese safe haven premium rises, while EURUSD logged a fresh six-month peak amid dollar outperformance. The high was at 1.1171, with the pair subsequently settling in the lower 1.11s.
UK unemployment dipped to a new 12-year low of 4.6%, which was unexpected as the median forecast had been for an unchanged 4.7% reading for official March data. Average incomes were less encouraging, but now below inflation, which in the latest numbers for April rose to 2.7%. The BoE said in its quarterly inflation report last week that it expected wage growth to turn positive again, though on the proviso that the Brexit process goes smoothly.
Eurozone April HICP inflation confirmed at 1.9% y/y as expected. The annual rate bounced back in April, after falling to just 1.5% y/y in March, from 2.0% y/y in February. The zigzag course over the March/April period was mainly due to the Easter effect. This also impacted core inflation, which rose to 1.2% y/y from 0.7% y/y in the previous month. Inflation is trending higher as growth strengthens, but less than April numbers suggest as wage growth remains moderate, despite the improving situation on the labour market. Wage moderation in Germany in particular seems puzzling given that the German jobless rate is at record lows and with that in mind the ECB is unlikely to do much more than remove the easing bias in June. Indeed, a stronger EUR and lower oil prices could in fact bring a downward revision to inflation projections with the updated forecasts next month.
Main Macro Events Today
U.K. Retail Sales – Retail sales are seen bouncing 1.0 % after dropping -1.8% in March, while the ex-Fuel figure should rise 1.0% after the disappointing -1.5% previously.
ECB Monetary Meeting Accounts – ECB Monetary Policy Meeting Accounts have be scheduled for 11:30 GMT today, while President Draghi is due to speak at the University of Tel Aviv at 17:00 GMT.
US Unemployment Claims – Initial jobless claims may rebound 4k to 240k for the May 13 week and leading indicators are forecast to rise 0.2% in April vs 0.4% in March.
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.
Andria Pichidi
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 19th May 2017.
FX News Today
European Outlook: Equity markets started to improve and Wall Street managed to close in positive territory, as “Trump anxiety” eased somewhat. Markets were still mixed in Asia overnight, with Hang Seng and Nikkei posting slight gains, while CSI and ASX are slightly in the red. FTSE 100 and U.S. stock futures are moving higher though and it seems European markets may manage to claw back some of the losses seen over the last couple of days as investors put aside the turmoil in the Trump administration. Bund futures already started to come off highs during the PM and after hour session yesterday and with risk aversion unwinding Eurozone peripherals could outperform today and Eurozone spreads come in. ECB officials will be keeping a close eye on spreads and the impact of political uncertainty as comments from ECB officials show differing opinions on the speed with which the ECB should communicate the exit steps expected for next year. Data releases include German PPI numbers at the start of the session as well as Eurozone current account and BoP data and the U.K. CBI industrial trends survey for May, followed by EMU consumer confidence in the afternoon.
US Data: Revealed a surprisingly tight 232k claims reading for the May BLS survey week and a hefty May Philly Fed surge to 38.8 that nearly reached the 33-year high of 43.3 seen in February, alongside a 0.3% leading indicators rise that left an eighth consecutive gain, and an uptick in the Bloomberg consumer comfort index to a lofty 50.2. The employment components of the Philly Fed survey diverged around high levels, leaving upside risk from both this survey and the claims data for our 195k May nonfarm payroll estimate. The solid path for the monthly indicators into Q2, alongside room for an inventory updraft into the second half of 2017 after the big Q1 setback bodes well for GDP, where we expect a growth bounce to 3.2% after a Q1 boost to 0.8% from 0.7%, alongside a robust 6% Q2 clip for industrial production after a 1.8% Q1 pace.
Treasury Secretary Mnuchin believes 3% GDP or better is achievable, in his first testimony before the Senate Banking Committee. The acceleration in growth is possible “if we make historic reforms to both taxes and regulation.” The top U.S. priorities he noted are tax overhaul, housing finance and regulatory reforms, and combating terrorist financing.” And he added we are “committed to rethinking our foreign agreements and trading practices to ensure they are both free and fair to American businesses and workers” (remember earlier today USTR Ross notified Congress that the administration is triggering Nafta negotiations). On taxes, Mnuchin repeated that the objective of tax reform is for a cut for middle income earners. Meanwhile, House Leader Ryan attempted to get back on message about tax and regulatory reform, while expressing support for an independent special counsel to “follow where the facts lead” on the Russian probe. Later a video emerged that seemed to back up the White House’s assertion over Comey and let the president off the hook. Cable lost over 100 pips as the USD recovered.
Fedspeak: Cleveland Fed hawk Mester expects further Fed hikes will be necessary if the economy evolves as expected, while delaying hikes too long would risk a recession. She’s also comfortable with altering the Fed’s balance sheet policy later this year and once that plan is decided the Fed should stick to it and use rates to respond to the economy. This is totally in character and in keeping with the hawkish non-voter’s track record and prior remarks.
Main Macro Events Today
CAD Retail Sales – Canadian retail Sales are expected to gain 0.5% in March retail after the 0.6% pull-back in February. The ex-autos sales aggregate is seen improving 0.3% in March following the 0.1% dip in February. Gasoline prices dipped 1.1% m/m in March after the 4.9% plunge in February, according to the CPI.
Canada CPI Inflation is expected to expand 0.6% in April versus March after the 0.2% m/m gain in March. Gasoline prices were stronger, shooting 7% higher in April compared to March (average monthly basis). Total CPI is seen accelerating to a 1.8% y/y pace in April from the 1.6% pace in March. The trimmed mean CPI slowed to a 1.4% y/y pace in March from a revised 1.5% rate (was 1.6%) in February. The CPI common grew at a 1.3% y/y rate in March, matching the 1.3% clip in February. The CPI median grew 1.7% y/y following the revised 1.8% (was 1.9%) rate in February.
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
Senior 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 22th May 2017.
FX News Today
It was a little over eight years ago when then Fed chief Bernanke said he saw signs of “green shoots” of recovery from the Great Recession and financial crisis of 2007-2008. But they didn’t really blossom as annual GDP growth has averaged only 2.1% in the U.S., and even less in OECD countries. Despite the fears that the political tumult since Brexit would be a major headwind to growth, recent data reveal an increasingly upbeat outlook, where the rise in optimism finally could be bearing fruit
United States: Trading in the U.S. was choppy last week as political uncertainties dominated. This week, the markets will be closely following President Trump’s first overseas trip as leader of the free world as he visits Saudi Arabia, Israel, Italy (for a G7 summit), the Vatican, and Belgium (for a NATO summit). Despite political uncertainties, we have some US data out this week. The data calendar is light and none of the releases will be really crucial to the outlook. The week’s highlights are home sales and home prices, durable goods, consumer sentiment, and the second look at Q1 GDP. New home sales (Tuesday) are expected to drop 4.2% in April to a 595k unit pace. Sales have been up all year so far. April existing home sales (Wednesday) are projected to fall 0.5% to a 5.680 mln clip. Durable orders (Friday) are seen dropping 1.0%, erasing the 0.9% March increase, and ending a string of three straight monthly gains. The final reading on May consumer confidence from the University of Michigan survey (Friday) is seen unchanged at 97.7. Q1 GDP (Friday) is expected to be revised down to a 0.5% rate of growth from the 0.7% Advance report. Other data this week includes April Chicago Fed national activity index for April (Monday), the Richmond Fed index (Tuesday), the flash May Markit PMI (Wednesday), the FHFA home price index (Wednesday), the KC Fed manufacturing index (Thursday), the advance economic indicators (Thursday), jobless claims (Thursday), and the flash May Markit services index.
Canada: Canada’s markets are closed Monday for the Victoria Day holiday. The Bank of Canada’s rate announcement (Wednesday) is the main event this week. No change in the 0.50% rate setting expected, alongside a maintenance of a cautiously constructive outlook on growth and inflation that is consistent with no change in rates until next year. Wholesale shipments (Tuesday) are projected to improve 1.0% in March after the 0.2% dip in February. Average weekly earnings for March and the May CFIB small and medium business sentiment survey are both due Thursday. BoC Deputy Governor Sylvain Leduc speaks on Thursday, with the remarks published on the BoC’s website at 11:45 ET
Europe: That there are diverging opinions on the ECB’s Governing Council is nothing new. But so far at least the Executive Board has been united in its defense of the central bank’s still very accommodative policy and the insurance policy that the implicit easing bias still provides. However, with confidence indicators showing a more robust economy, labor markets improving, and political risks receding, it seems the discussion about how much gradualism will be needed for the ECB’s path to exit steps has reached the Executive Board. Praet and Coeure as well as ECB President Draghi are all scheduled to speak during the week and it will be interesting to see whether the two “opponents” will continue their public voicing of opinion and if Draghi will take sides ahead of the June meeting. What is clear is that the discussion is ongoing and political events and market volatility will likely be equally important in the end as confidence data and against that background this week’s round of German Ifo and PMI readings (both Tuesday) will be watched carefully. The manufacturing PMI seen at 56.6 slightly down from the 56.7 in the previous month and the services PMI at 56.5 down from 56.4 in April. The German Ifo Business Climate, meanwhile is expected to nudge slightly higher to 113.1 from 112.9, with both expectations and current conditions indicators likely to improve.
UK: Incoming data for April and May have been consistent with growth rebounding from a weak patch in Q1, highlighting that Brexit uncertainties haven’t been taking the economic toll feared. The calendar this week brings government borrowing for April (Tuesday), the May edition of the CBI distributive sales survey (also Tuesday), and the second estimate of the Q1 GDP report. The headline realized sales reading of the CBI survey expected to dip to 32 from 44 in the previous month. The GDP data expected to come in unrevised at 0.3% q/q and 2.1% y/y.
Japan: In Japan, the March all-industry index (Tuesday) is forecast at -0.7% m/m, reversing the 0.7% rise in February. CPI figures (Thursday) should show national prices at a 0.2% y/y rate overall in April, unchanged from March, while core prices should be steady at 0.2% y/y versus February. May Tokyo CPI is expected to drop to a -0.1% y/y clip overall, and -0.1% y/y core, both unchanged compared to April. April services PPI (Thursday) are estimated rising at a 0.8% y/y pace, unchanged from March.
Australia: Australia’s calendar is thin this week, with Q1 construction work done (Wednesday) one of the few economic report due. Reserve Bank of Australia Deputy Governor Debelle has a busy week. He presents a speech titled ” How I Learned to Stop Worrying and Love the Basis” at the BIS Symposium: CIP – RIP? on Tuesday. Debelle delivers opening remarks and participates in a panel at the Launch of the FX Global Code in London (Thursday). The RBA’s Head of Payments Policy participates in a panel at the Australian Retail Banking Summit (Friday).
New Zealand: New Zealand’s calendar has the April trade report (Wednesday), expected to reveal a narrowing in the surplus to NZ$250 mln from NZ$332 mln in March. Reserve Bank of New Zealand Governor Wheeler speaks in Hamilton (Wednesday) but the event is not public.
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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Andria Pichidi
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 May 2017.
FX News Today
European Outlook: Asian stock markets are narrowly mixed, with the Nikkei down -0.16%, while the Hang Seng managed a 0.24% gain. U.S. stock futures are heading south, while the FTSE 100 futures is managing marginal gains as Sterling slumps following last nights terror attack in Manchester. Greek officials sounded optimist on the progress of the bailout review after yesterday’s Eurogroup meeting and markets are preparing for a very full data round in Europe today, which includes detailed German GDP numbers at the start of the session as well as German Ifo, preliminary PMIs and the U.K. CBI retailing survey. Against that background, U.K. bond and stock markets are likely to continue to outperform, while Eurozone spreads could remain mixed, as markets assess political risks and data ahead of the June ECB meeting.
German Q1 GDP was confirmed at 0.6% q/q and 1.7% y/y (wda) – as expected. The breakdown, which was released for the first time, showed broadly balanced growth, with private consumption and government spending expanding below average, but investment picking up strongly. In particular equipment investment, which had continued to contract over the past quarters finally rebounded and surged 1.2% q/q. Construction investment meanwhile rose 2.3% q/q. and investment overall contributed 0.3% points to the quarterly growth rate, private consumption 0.2% points and net exports, which detracted from growth in the second half of last year, contributed 0.4% points, while stock changes detracted -0.4% points. The strong contribution from net exports will add to the ongoing criticism of Germany’s export surplus, but with private consumption also picking up and investment expanding strongly, this is a relatively broadly balanced recovery.
EU Commission calls on Germany to accelerate public investment and create conditions for wage growth to pick up. At the same time the country should use fiscal policy to support demand. Given that the German economy is already close or above capacity and that monetary policy remains very expansionary an equally expansionary fiscal policy is a controversial recommendation, but it reflects the prevailing sense that budget surpluses should be used for spending and investment rather than debt reduction, despite the fact that debt levels across the whole of the Eurozone remain high. German wage growth meanwhile remains above the Eurozone average, but admittedly looks rather low considering that the labour market is very tight. German Finance Minstry sees shrinking current account surplus. The ministry said in its latest monthly report that the German current account surplus is set to fall further next year, to a still very high 7% of GDP from an expected 7.5% this year and versus 8.6% in 2015. The report stressed that on a national basis the ground is prepared for a sinking surplus, and that the high surplus is mainly due to market forces.
Main Macro Events Today
German IFO – German Ifo business confidence is expected to nudge slightly higher to 113.1 from 112.9, with both expectations and current conditions indicators likely to improve.
Eurozone PMI – Eurozone PMI readings expected to move sideways in May at high levels, with the manufacturing PMI seen at 56.6, slightly down from the 56.7 in the previous month and the services PMI at 56.5, down from 56.4 in April.
UK Public Sector Net Borrowing – The headline realized sales reading of the CBI survey expected to dip to 32 from 44 in the previous month. Meanwhile the GDP data expected to come in unrevised at 0.3% q/q and 2.1% y/y.
US New Home Sales – New home sales are expected to drop 4.2% in April to a 595k unit pace after climbing 5.8% in March to 621k.
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.
Andria Pichidi
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 24th May 2017.
FX News Today
European Outlook: After modest gains on Wall Street yesterday, Asian markets were hit by the Moody’s ratings downgrade for China, which was cut to A1 from A3 and left investors wrong footed and CSI 300 and Hang Seng in negative territory. The ASX is little changed, while Japanese bourses managed to outperform, benefiting from a weaker Yen. U.K. and U.S. futures are heading south, although Eurozone markets already outperformed yesterday amid strong data releases, while the U.K. in particular was hit by a bout of risk aversion following the Manchester terror attack. With pressure on the ECB to lay the ground for tightening measures rising, Bunds are likely to continue to underperform. Today’s local calendar is relatively quiet, with German consumer confidence and the second reading of Spanish GDP, which will leave the focus on the Fed minutes.
U.S. reports: revealed big headline drops for April new home sales and the May Richmond Fed index. Yet, the 11.4% April new home sales plunge to a 569k rate followed annual revisions that lifted the sales data through this year’s mild winter, with a whopping 55k in upward revisions for Q1 alone that left a stronger than expected sales path for 2017. U.S. May Markit manufacturing and services PMIs were 52.5 and 54.0, respectively, for the preliminary reads versus April’s 52.8 and 53.1. The composite hence rose to 53.9 from 53.2 previously. These are all higher than the year ago prints of 50.7 for manufacturing, 51.3 for services, and 50.9 for the composite. Most of the key components in manufacturing dipped to the lowest levels since September, though the services components mostly gained, with input prices rising to the highest level since June 2015. The Richmond Fed plunge to 1.0 in May from 20.0 in April and a 7-year high of 22.0 in March left a larger than expected drop into May however, and the ISM-adjusted measure fell sharply to 51.7 from 57.5 in April and a 7-year high of 59.2 in March.
Strong data puts pressure on ECB. A strong round of May confidence data, which showed the German economy in particular firing at all cylinders, makes the ECB’s very expansionary monetary policy and the implicit easing bias increasingly look out of place. Yesterday, German Ifo surges to highest level since at least 1991, while comments over the past week showed that even at the Executive Board there are now voices calling for a signal to markets that exit steps are underway, so that Praet, who favours a very cautious and extremely gradual move out of the easy policy, will face pressure to move not just to a neutral stance, but to introduce a tightening bias, which would pave the way for an announcement on tapering in September. If the central bank starts to cut back monthly purchase volumes by EUR 10 bln a month starting from early next year, rate hikes could come earlier than many expect, even if the ECB sticks with the current sequence of tweaking rates only after QE has ended.
Main Macro Events Today
ECB – ECB’s President Draghi is due to speak at the First Conference on Financial Stability organized by Bank of Spain, in Madrid, at 12:45 GMT.
BoC Rate Decision – The Bank of Canada’s rate announcement is due today, where no change in the 0.50% rate setting and a continuation of the cautious optimism seen in April is projected for today’s announcement. The data since April’s announcement have revealed recovering growth alongside inflation that is still running below the BoC’s target.
FOMC Minutes – The FOMC minutes are due today, while Kaplan will speak at the CD Howe Institute Annual Dinner, in Toronto.
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.
Andria Pichidi
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 25th May 2017.
FX News Today
European Outlook: Asian stock markets moved broadly higher, with Chinese equities in particular shrugging off yesterday’s ratings downgrade and the CSI 300 rising more than 1%. A jump in oil prices ahead of a key producers meeting underpinned sentiment. The Fed minutes yesterday were relatively dovish, but still said that recent economic and inflation weakness is expected to pass. U.K. and U.S. stock futures are moving higher and it seems risk appetite has returned to stock markets. Bund futures still climbed in after hour trade yesterday, but this could fade with improving risk appetite. Today’s calendar has second GDP readings for Q1 from Spain and the U.K. as well as U.K. BBA loans for house purchase.
US reports: 2.3% U.S. April existing home sales drop to a 5.57 mln rate from a 5.70 (was 5.71) mln cycle-high slightly undershot estimates, following a February drop to a 5.47 mln clip from a 5.69 mln prior cycle-high in January, as the winter existing home sales boost from mild weather as also seen with yesterday’s new home sales report. A 3.5% April median price rise to $244,800 left a tiny gap to the $247,600 all-time high last June, while inventories rose 7.2% in April to a still-lean 1.93 mln. Existing home sales are on track for a 5% rise in 2017, following a 3.9% increase in 2016 and a 6.5% rise in 2015, but a 2.9% 2014 post “taper-tantrum” drop.
Bank of Canada: left policy unchanged, as widely expected, though there were some changes in the statement that generated some market volatility. The BoC altered the key final line to say the current degree of monetary stimulus is appropriate “at present” versus April’s “still appropriate.” The Bank of Canada maintained its cautiously constructive outlook for growth and inflation, as expected. An ongoing improvement in domestic and global growth suggests further satisfaction with the evolution of the recovery. A change in verbiage on the current degree of monetary stimulus to “appropriate at present” from “still appropriate” prompted a fresh reading of the tea leaves, but did not change the outlook for monetary policy.
FOMC minutes indicated a hike could be seen “soon.” However, there was a caveat that it “Members generally judged it would be prudent” to wait to ensure the Q1 slowing was temporary before tightening further. The minutes also included a staff outline of a plan on the balance sheet which would showed gradually increasing run-off caps every three months which would eventually hit fully phased in levels which would then be held at that level until the size of the balance sheet was normalized. Nearly all policymakers supported this plan. The minutes indicated that the Q1 slowing was likely “transitory” and participants generally agreed that the medium term outlook on the economy was little changed — but again there was that caveat noted above. A June hike is widely expected, and another in September, but the outlook over the rate path in 2H is a little more uncertain considering the potential for balance sheet roll off to begin later in 2017.
Main Macro Events Today
UK Prelim. GDP Q1 – The second estimate of the Q1 GDP report is out today and it is anticipated to come in unrevised at 0.3% q/q and 2.1% y/y.
OPEC – OPEC meets today and is expected to extend its agreement to curtail output.
US Unemployment Claims – Initial claims data for the week of May 20 are out today and an increase is expected in the headline to 238k from 232k last week and 236k in the week prior to that. Claims are poised to average a stronger 236k in May, down from 243k in April and 251k in Marc.
Fedspeak – Fed’s Brainard will participate in a panel discussion on the global economy at 14:00 GMT, in Washington DC.
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.
Andria Pichidi
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 May 2017.
FX News Today
European Outlook: Asian stock markets headed south as oil prices fell amid disappointment over the OPEC’s decision to prolong supply cuts for nine months, with investors hoping for more than an extension of current measures. The front end WTI future is trading at just USD 48.62 per barrel and lower than expected oil prices, coupled with a strong EUR also mean the ECB could well cut back its inflation forecast at the June meeting. More ammunition then for the likes of Constancio, who yesterday evening once again stressed that inflation is not yet on a sustainable path towards desired levels. UK100 futures are little changed, after managing to post a marginal gain yesterday against losses on Eurozone bourses. Today’s calendar remains quiet, with only Italian confidence data and after public holidays in many Eurozone countries yesterday many have taking today off for a long weekend, so that trading conditions may well be quieter again than normal.
US reports: revealed an array of downside disappointments in the April advance indicators report for the trade deficit, and wholesale and retail inventories, though we also saw another round of super-tight initial claims figures that capped the damage. Inventory revisions in the March data trimmed our Q1 GDP estimate for today’s report to 0.8% from 0.9%, versus a 0.7% advance figure. The tight 234k claims figure for the third week of May suggests upside risk for May nonfarm payroll estimate.
ECB’s Constancio: Overall risks remain tilted to the downside, stressing once again that “monetary stimulus remains important to ensure a sustainable adjustment of the inflation process towards levels consistent with the ECB price stability objective”. The central bank’s Vice President clearly pushed back against calls to start signaling exit steps and stressed that “a sustainable adjustment” of inflation has not yet occurred, even as inflation is starting to adjust towards desired level. At the same time, he suggested that negative rates could become part of the “conventional toolkit of central banks for fighting recessions”
UK Q1 GDP data was unexpectedly revised lower in the second estimate. This compares to the 0.7% q/q growth seen in Q4, and also shows the UK economy to be underperforming the Eurozone’s growth rate of 0.5%. The data shows the UK economy has started the year on a weaker than expected footing, and while April PMI survey data tentatively portended a rebound in early Q2, the backdrop of negative household income growth and a May CBI retail sector survey showing a sharp slowing in consumer activity suggests that the UK is set for a relatively rocky path this year. The BoE has been anticipating weakness, having trimmed its 2017 GDP forecast to 1.9% from 2.0% in its quarterly inflation report in early May.
Main Macro Events Today
US Durable Goods – Durable orders are seen dropping to -1.4%, erasing the 1.7% in March, and ending a string of three straight monthly gains.
UoM Consumer Sentiment – The final reading on May consumer confidence from the University of Michigan survey is seen at 97.5 from, 97.7.
US Prelim. GDP – Q1 GDP is expected to be revised up to a 0.9% rate of growth from the 0.7% Advance report.
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.
Andria Pichidi
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 May 2017.
FX News Today
Despite a lot of zigs and zags in global equities in recent weeks, the markets are solidly in the green for May, as well as over the last six months. Supporting the gains have been real improvement in most key economies, and hopes for accelerating growth over 2H. Curiously, most longer dated sovereign bonds have rallied too, supported in part by ongoing central bank accommodation and now safe haven and month-end flows.
United States: The U.S. calendar reboots on Tuesday after the long Memorial Day weekend with a variety of data on tap and all roads leading to the May payrolls report, which could have a profound impact on the Fed’s immediate outlook for another “gradual” rate hike in June that has been largely (80%) priced in. April nonfarm payrolls (Friday) are expected to increase by 182k, with a 98k private payroll gain, which would keep the policy trajectory on track. The unemployment rate is expected to hold steady from 4.4% last month and the workweek is expected to hold at 34.4 for a third month. Initial claims should average 243k in April from 251k in March. Ahead of the payrolls release April personal income (Tuesday) is forecast to rise 0.4%, while spending is seen up 0.6% and core PCE prices are set to rise just 0.2%. MBA mortgage market report (Wednesday) will be accompanied by May Chicago PMI, seen slipping to 57.5 from 58.3, along with April NAR pending home sales steady at 111.4. Data really gets crammed (Thursday) after the holiday break, as the ADP employment survey is set to rise 190k in May from 177k. Also on tap (Thursday) are no less than productivity, initial jobless claims, construction spending, ISM, auto sales and EIA energy inventories. The week rounds out with the full trade report (Friday) after the payrolls report.
Canada: Canada’s economic calendar is packed with data this week. The Q1 GDP and March GDP reports (both Wednesday) highlight, while April trade (Friday) will also be on considerable interest. The trade balance (Friday) is seen improving to a C$0.1 bln surplus from the -C$0.1 bln deficit in March. Labor productivity (Friday) is expected to expand 1.1% in Q1 (q/q, sa) after the 0.4% gain in Q4. The IPPI (Tuesday) is projected to surge 1.0% m/m in April following the 0.8% rise in March. The current account deficit (Tuesday) is anticipated to worsen to -C$11.5 bln in Q1 from -C$10.7 bln in Q4. The May Markit manufacturing PMI is due Thursday. Dealer reported vehicle sales are anticipated Thursday or Friday. There is nothing from the Bank of Canada this week, with the next event the release of the Financial System Review on June 8th.
Europe: The battles for direction at the ECB seem to be in full swing even ahead of the June 8 council meeting and after Coeure suggested that gradualism is falling out of favor even at the Executive Board. The heavy weights Draghi and Praet hit back last week, stressing that inflation is still not on a sustainable path toward the target. So, this month’s solid round of confidence data, which will be rounded off by the ESI sentiment indicator on Tuesday, may confirm that the recovery continues to strengthen and broaden. A slight improvement in the ESI is expected, which would leave the May round of confidence data again confirming that growth continues to strengthen. PMIs also suggest that the companies are taking on more staff and with German Ifo readings jumping higher this month, the German jobless number expected to decline a further -15K, in May which would leave the jobless rate at the record low of 5.8%. The April Eurozone unemployment rate meanwhile is seen falling to 9.4%. Eurozone inflation numbers are expected to fall back in May, after the Easter fueled jump in April. A German headline rate (Tuesday) of 1.7% y/y down from 2.0% y/y in the previous month, while overall Eurozone HICP (Wednesday) is seen falling to 1.5% y/y from 1.9% y/y, arguably below the ECB’s definition of price stability as below but close to 2%. Data releases also include Eurozone M3, German retail sales and French consumer confidence, Italian HICP, as well as German import price inflation and French and Eurozone PPI readings.
UK: London markets are closed today for a UK public holiday. The calendar thereafter brings April lending data from the BoE (Wednesday) and the first two of the three PMI surveys for May, with manufacturing (Thursday) and construction (Friday), which are due ahead of the services report (due out the following Monday). The lending data has us expecting a GBP 1.5 bln tally for net consumer credit, which would be near underlying trend.
Japan: In Japan, things kick off on Tuesday with April unemployment, where the jobless rate is seen steady at 2.8%. The job offers/seekers ratio likely held steady at 1.45. April personal income and PCE are due Tuesday. April retail sales (Tuesday) should be flat versus -0.8% y/y for large retailers, and slow modestly to a 2.0% y/y clip from up 2.1% overall. April industrial production (Wednesday) is penciled in accelerating to a 3.0% y/y rate from 1.9% previously. April housing starts and construction orders are also due Wednesday, with the former seen dropping to a 1.0% y/y pace of contraction from the previous 0.2% rate. The May Nikkei/Markit manufacturing PMI (Thursday) is expected steady at 52.7. April auto sales are due Thursday.
Australia: Australia’s calendar features private capital expenditures (Thursday), expected to rebound 1.0% in Q1 (q/q, sa) after the 2.1% tumble in Q4. Retail sales (Thursday) are seen recovering 0.1% m/m in April after the 0.1% dip in March. Building approvals (Tuesday) are projected to bounce 5.0% m/m in April after the 13.4% plunge in March. The Reserve Bank of Australia is silent this week. The next event is the Reserve Bank Board Meeting on June 6.
New Zealand: New Zealand’s calendar has April building permits (Tuesday) and the Q1 terms of trade (Thursday). But the main event this week is the release of the Reserve Bank of New Zealand’s Financial Stability Report.
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.
Andria Pichidi
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 May 2017.
FX News Today
European Outlook: Asian stocks didn’t manage to make much headway. Hong Kong was on holiday and Chinese markets remained shut for a second day. Japan’s indices moved sideways swinging between gains and losses and the ASX is currently up a modest 0.33%. A stronger Yen weighed on Japanese markets and comments from ECB President Draghi yesterday that the Eurozone economy still needs substantial monetary support may have been designed to dampen tapering speculation, but also seem to have rekindled growth concerns especially as talk of early elections in Italy sparked a fresh wave of risk aversion and political concerns. Italian bond and stock markets underperformed, EMU spreads widened and the EUR remains under pressure as U.K. and U.S. return from their holidays and the data calendar heats up. Ahead of the June council meeting today’s Eurozone ESI confidence reading and the preliminary German HICP number will be watched very carefully. The busy calendar also has French consumption and final Q1 GDP, as well as Spanish inflation and Swedish GDP.
Draghi: Economy still needs extraordinary ECB support. Draghi said the ECB “remains firmly convinced that an extraordinary amount of monetary policy support, including through our forward guidance, is still necessary”. Speaking at his hearing before the European Parliament, Draghi said domestic cost pressures, notably from wages, are still insufficient to support a durable and self-sustaining convergence of inflation toward our medium-term objective”. More indications then that the ECB heavy weights are pushing back against a too drastic change of the forward guidance at the June policy meeting.
ECB’s Weidmann: Exit Debate legitimate given price outlook. The Bundesbank President said late yesterday that “in light of subdued price pressures, an expansionary monetary policy continues to be appropriate in principle”, but added that “given the continued economic recovery and a – by all forecasts predicted – inflation rate of just below 2 percent in the year 2019, it is indeed legitimate to ask when the ECB council should consider a monetary policy normalization”. Weidmann admitted that inflation will slow in the second half of the year as base effects from energy prices fall out of the equation and that despite stronger growth “price stability beyond traditionally very volatile energy costs are still quite muted”.
Main Macro Events Today
Eurozone ESI – Eurozone Economic Confidence is expected to rise slightly to 110.1 in May from 109.6. Preliminary consumer confidence came in better than expected, while EMU PMIs moved sideways at very high levels, and against that background a slight improvement in the ESI is expected, which would leave the May round of confidence data again confirming that growth continues to strengthen.
German May HICP – Eurozone inflation numbers are expected to fall back in May, after the Easter fueled jump in April. The German headline rate expected at 1.6% y/y down from 2.0% y/y in the previous month.
US Data – April personal income is forecast to rise 0.4%, while spending is seen up 0.6% and core PCE prices are set to rise just 0.2%. S&P Case-Shiller home prices are expected to rise 0.5% in March and May consumer confidence is projected to hold at an elevated 120.1 vs 120.30 in April.
Canada Current Account – The current account deficit, is expected to widen to -C$11.5 bln in Q1 from -C$10.7 bln in Q4.
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.
Andria Pichidi
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 May 2017.
FX News Today
European Outlook: Asian stock markets are narrowly mixed. Chinese stocks initially moved higher after returning from holiday and following better than expected PMI readings, which showed steady expansion in the manufacturing sector and improvement in non-manufacturing. But Hang Seng and CSI 300 are now marginally in the red and the Nikkei is down -0.27%, while the ASX is clinging on to a marginal gain. Not much enthusiasm amid investors then in Asia, although FTSE 100 and U.S. futures are moving higher. Sterling remains under pressure as the election gets nearer and May’s lead in the polls declines, but that is supporting the FTSE 100, which is dominated by large multinationals. Better than expected consumer confidence data overnight, also adds support. And so far the weaker Pound hasn’t hurt Gilts, which outperformed again yesterday. In the Eurozone, yesterday’s source story suggesting that the ECB will up its growth assessment in June helped to counterbalance Draghi’s dovish comments from Monday, which had rekindled concerns about the health of the economy, and that helped Bund futures to come back from lows and spreads to come in and today’s expected decline in the Eurozone HICP reading to just 1.4% will add further support. The data calendar also has French and Italian inflation numbers, as well as German retail sales and labour market data.
FX Update: Sterling took a 0.5% clobber on a UK election poll form YouGov suggesting that the support for the Tory party had fallen again, to the point that the governing party would loose its majority at the June-8 election and leave Britain with a hung parliament (with the Tories at 310 seats, down from the 330 seats it presently has and below the 326 level needed for a majority, and versus 257 seats for Labour). The poll does contrast other surveys pointing to the Conservatives wining, though will likely see sterling continue to underperform into the election. Cable logged a 1.2787 low, bringing last week’s near six-week low at 1.2774 back into scope. Elsewhere, the narrow USD index is showing a modest gain on the day after falling yesterday following a mixed-bag of U.S. data. EURUSD lifted above 1.1100 during the Asia session before settling in the upper 1.10s, up on yesterday’s 13-day low at 1.1066. USDJPY popped back above 111.0 during Tokyo trade, extending the rebound from yesterday’s 13-day low at 110.66. Japanese industrial production rose 4% m/m in the preliminary estimate for April, up form the 1.9% m/m decline in March but below the Reuters median forecast for a 4.3% growth outcome.
U.S. reports: revealed a firm April round of personal income figures with a strong trajectory of consumption into Q2, though the report also incorporated big downward Q2-Q3 income revisions seen in Friday’s GDP report. We saw a May consumer confidence drop to a still-robust 117.9 from 119.4 in April and a 16-year high of 124.9 in March, leaving confidence above prior readings of 116.1 in February and 111.6 in January. The Dallas Fed index rose 17.2 from 16.8 in April, versus an 11-year high of 24.5 in February, while the ISM-adjusted Dallas Fed rose more sharply to a 2-year high of 55.4 from 53.8 in April, with a 6-year high of 15.7 for the workweek.
Main Macro Events Today
Eurozone HICP – The Eurozone number is expected to fall to 1.5% y/y from 1.9% y/y in April. If this is confirmed this would be once again firmly below the ECB’s 2% limit for price stability and thus give Draghi and Praet, who remain cautious with regard to any changes in the forward guidance something to argue with at the June meeting. Growth may be stabilising and strengthening, but the inflation trajectory still looks subdued, especially as oil price forecasts on which the March ECB staff projections were based, turned out to be too high.
Canada Q1 GDP – Q1 GDP expected to accelerate to a 3.9% pace (q/q, saar) from the 2.6% growth rate in Q4. The expected gain would be close to the BoC’s estimate of 3.8% but well short of the 4.5% pace implied by the monthly GDP series.
US Chicago PMI and Pending Homes – May Chicago PMI, seen slipping to 57.0 from 58.3, along with April NAR pending home sales at 0.3% rise from -0.8%.
Fedspeak & Fed’s Beige Book – Dallas Fed hawk Kaplan (voter) will speak on international economics at 12 GMT. Additionally, the Beige Book for the June 13-14 FOMC will be released and should retain the modest-to-moderate mantra with reference to growth, with all 12 Districts likely repeating gains
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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Andria Pichidi
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 June 2017.
FX News Today
European Outlook: Asian stock markets mostly moved higher on the first day of June, led by Japanese stocks, which rallied amid a weaker Yen. Chinese stocks underperformed after China’s private manufacturing PMI disappointed, which revived concerns about the health of the Chinese economy. Yesterday’s official PMIs came in better than expected and investors are waiting for more data out of Europe and the U.S. to get a clearer picture of the outlook for the world economy. The CSI is marginally lower, but the Hang Seng is up 0.45%. U.S. and FTSE 100 futures are also posting gains. Most European markets closed in the red yesterday, after a mixed session, that saw the FTSE 100 reaching new record highs, before falling back again. The DAX managed to claw on to a 0.13% gain at the close, but mixed messages from ECB officials are unsettling investors and Eurozone spreads blew out again in late trade, as peripheral yields backed up. Gilt yields also jumped higher as Sterling remains under pressure ahead of the June 8 election. Already released Swiss GDP numbers came in weaker than expected at just 0.3% q/q and 1.1% y/y. The rest of the calendar focuses on manufacturing PMI readings.
US reports: U.S. Chicago PMI presented an increase to 59.4 in May from April’s 58.3. The number was originally reported as an unexpectedly large decline to 55.2 which was a real turn around and puts the index at its highest level since November 2014. U.S. pending home sales index dropped 1.3% to 109.8 in April following the 0.9% decline to 111.3 in March after jumping 5.5% in February to 112.3
BoC Outlook: Steady policy remains the base-case scenario, as the 3.7% gain in real Q1 GDP was a nearly perfect match to the BoC’s 3.8% estimate. However, despite the positive data, yesterday WTI crude fell to four-session lows of $48.30/bbl into the N.Y. open, with oversupply concerns remaining in place. Libya production has been the weight on oil today, which is not constrained by the OPEC/NOPEC output cut deal, and has recently upped its production to nearly 800k bpd, up from about 550k bpd in April, according to OPEC data. Increased Libya output, plus ever-increasing U.S. shale production, has offset a good bit of OPEC production cuts, weighing on oil prices.
Eurozone unemployment falls more than expected to 9.3% in April, while March was revised down to 9.4% from 9.5% reported initially. The number comes at the heel of a record low German jobless rate for May and ties in with PMI reports suggesting that companies continue to take on more staff. So the economy continues and growth is strengthen and clearly boosting the outlook for the labour market, but jobless rates remain very uneven across countries, youth unemployment remains far too high and most importantly for the ECB, wage growth on a Eurozone aggregate level remains quite low.
Main Macro Events Today
EU Manufacturing PMI – EMU manufacturing PMI expected to be unchanged, while in UK, a moderate correction in the PMI headlines is expected, forecasting 56.5 in the manufacturing survey following April’s 57.3 reading, and a 52.5 outcome in the construction PMI after 53.1 in the month prior. The manufacturing sector has been holding up solidly since the Brexit vote last June.
US Manufacturing PMI – The May ISM should post a rise to 54.7 from 54.8 in April and 57.2 in March. Despite some divergent headline swings in the early month reports the component data was firm which should pose some upside risk to the release.
Cad. Manufacturing PMI – The May Markit manufacturing PMI is due today.
US ADP, Jobless Claims & Oil Invent. – Claims data for the week of May 27 should reveal a 239k headline following 234k last week and 233k in the week prior. ADP employment survey is set to rise 185k in May from 177k. Oil inventories for last week expected to fall to -2.7M from the -4.4M barrels 2 weeks ago.
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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Andria Pichidi
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 June 2017.
FX News Today
European Outlook: Asian stock markets are mostly higher, with Japan outperforming. The Nikkei 225 breached the 20000 mark for the first time since December 2015, amid a weaker yen and positive economic data including U.S. auto sales yesterday, which showed positive reports for Japan’s car makers. The background of positive corporate profits is attracting investors and helped to underpin the rebound since the low on April 14. Hang Seng and ASX 200 are moved higher after Europe and Wall Street closed with gains on Thursday, but the CSI underperformed and declined as the offshore Chinese yuan hit its highest level since October yesterday. Looking ahead U.S. and U.K. futures are extending gains this morning with investors looking to U.S. employment data, amid a pretty quiet calendar in Europe, which includes the U.K. Construction PMI as well as Eurozone Producer Prices. With risk appetite coming back and stock markets continuing to trend higher, core yields are likely to extend their move higher.
White House: President Trump will pull the U.S. out of the Paris climate accord. The administration was saying the agreement was a “bad deal” for all Americans as it front loaded costs. President Trump is keeping his campaign promise with this decision. Oil prices slumped to the $48.30 area from about $49.20 earlier. Also, Wall Street remained firm near the day’s highs with the Dow hovering in the 21,110 regions.
US reports: revealed firm May ISM and ADP readings of 54.9 and 253k respectively, with an ISM jobs index rise to 53.5 from 52.0, that added upside risk to our 195k May payroll estimate. The Initial claims bounce to 248k that still left a lean 238k May average. There were some disappointing April construction spending figures as the sector gave back some of its winter weather-boost, and though the Q1 figures were revised higher on net, most of the boost was in the home improvement component that doesn’t directly enter GDP. We more importantly saw downward nonresidential construction revisions that weakened the path for that sector. Early May vehicle sales data are showing a tiny uptick to a 16.9 mln clip from rates of 16.8 mln in April and 16.5 mln in March, leaving a likely 0.1% May retail sales drop with a 0.2% ex-auto auto decline, thanks to an estimated 7% May slide in gasoline prices and likely restraint in sales of building materials.
ECB Focus Remains on Inflation Not Growth. Despite the confusion over Draghi’s dovish comments at the start of the week, central bankers seem to agree that the recovery is looking increasingly strong and balanced. But while the ECB is likely to up its assessment on the growth outlook at next week’s meeting, headline inflation fell back to just 1.4% this month and updated set of inflation projections could likely to be scaled back, as oil prices are lower than anticipated in March and the EUR stronger.
Main Macro Events Today
U.S. NFP, Trade Deficit, Unemployment Rate – The April trade data is out today and we expect to see a 7.5% expansion in the deficit to -$46.1 bln from -$43.7 bln in March and -$43.8 bln in February. Also, May employment data is should post a 185k headline from 211k in April and 79k in March. The unemployment rate should hold steady at 4.4% for a second month, down from 4.5% in March.
Canada Productivity – The trade balance is seen improving to a C$0.1 bln surplus from the -C$0.1 bln deficit in March. Exports are seen rising 1.0% in April after the 3.8% surge in March. Imports are expected to rise just 0.5% m/m in April after the 1.7% gain in March. Labor productivity is expected to expand 0.2% in Q1 (q/q, sa) after the 0.4% gain in Q4.
UK PMI Construction – The construction PMI expected to fall at 52.7 from 53.1 last month.
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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Andria Pichidi
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 June 2017.
FX News Today
United States: The May U.S. nonfarm payroll report and its modest 138k rise in jobs, along with the 66k downward revision to March and April, and the 147k gain in private payrolls, disappointed expectations for much stronger increase, especially on the heels of the robust 253k surge from the ADP survey. Nevertheless, the Dow rallied 0.3% to climb to a fresh record high of 21,206. This week’s calendar is slim and the few reports won’t impact market outlooks or views of the FOMC. The ISM nonmanufacturing index for May (Monday) will highlight the week. It’s forecast dipping to 56.5 after rising 2.3 points to 57.5 in April (which was the highest since October 2015). Revised Q1 productivity (Monday) is expected to improve to a 0.1% pace of growth from the initial 0.6% contraction rate. Labor costs are seen revised to a slower 2.3% pace from 3.0%. April factory orders (Monday) are expected to be unchanged from the revised 0.9% gain previously. The Fed’s LMCI is also due (Monday). April JOLTS (Tuesday), a favorite of Chair Yellen, will nevertheless be overlooked as the report is two months in arrears, and Friday’s jobs report told us all we need to know for now. Other data this week includes April consumer credit (Wednesday), weekly jobless claims (Thursday) and April wholesale trade (Friday).
Canada: The employment report (Friday) is the main event this week. We expect a 20.0k gain in new jobs during May following the 3.2k rise in April, as the solidly expanding Canadian economy continues to create jobs. The unemployment rate is seen rising to 6.6% in May from 6.5% in April, as the participation rate rebounds following the tumble to 65.6 in April from 65.9 in March. The capacity utilization rate (Friday) is seen jumping to 83.7% in Q1 from 82.2% in Q4, as Canada’s rapid 3.7% Q1 real GDP growth rate brought previously unused capacity back into play. May housing starts (Thursday) are expected to moderate to a 200.0k pace from 213.1k in April, as activity further unwinds from the lofty 252.3k rate in March.
Europe: The week starts with a holiday in Germany (Monday), which will leave European markets somewhat quieter than usual, though trading could thin ahead of the ECB meeting and U.K. election (both Thursday), and after the weekend terror incidents in London on Saturday. After the sharp deceleration in headline inflation in May, which backed the ECB’s steady stance, this week’s final composite PMI and Q1 GDP will give the hawks something to argue with. The services PMI reading (Monday) is expected to be confirmed at 56.8 and the composite at 56.2, both suggesting ongoing robust expansion with Markit also reporting a pick-up in job creation and rising underlying price pressures. At the same time final Q1 GDP data for the Eurozone is likely to bring an upward revision to the quarterly growth rate to 0.6% q/q (median same) from 0.5% q/q, after strong revisions to French and especially Italian and Greek numbers. Other real rate in the form of German production (Thursday) and orders (Wednesday) numbers should be mixed, with the Easter effect still having some impact.
UK: It’s general election week, with the country heading to the polls on Thursday. The incumbent Conservative looks likely to win, though by a much smaller majority that was looking to be the case just a couple of weeks ago. The weekend terror attacks could sway voters more conservatively, however. A U.K. poll from Ipsos Mori (Friday) showed the Conservatives’ margin falling to just 5 percentage points over the Labor Party. Respective support stood at 45% and 40%, with Labor up 6%. The narrowing of the Conservative Party’s lead over the last couple of weeks has been nothing short of dramatic, with many pundits blaming a poor campaign performance by PM May (who refused, amid widespread condemnation, to take part in a TV debate last week, and then made a gaffe on health care proposals). The Conservative’s lead had been 20 points at the time that prime minister called the election in April. The FT’s poll of polls still has the Conservatives with 44% support versus 35% for Labor. The currency will be the vulnerable link in sterling markets to a weak Conservative victory outcome, or a hung parliament. The calendar features the May services PMI survey (Monday), which will be a big focus following above-forecast outcomes in the PMI surveys for the construction and manufacturing sectors, and with the big services sector (which accounts for nearly 80% of GDP in the UK) having driven Q1 GDP to just 0.2% q/q growth after 0.7% q/q growth in the previous quarter.
China: The May trade report (Thursday) is expected to reveal a $45.0 bln surplus versus $38.1 bln in April. May CPI and PPI (Friday), are penciled in at 1.4% y/y from 1.2%, and 5.5% y/y from 6.4%, respectively. Japan revised Q1 GDP (Thursday) is likely to be revised slightly higher given the stronger than expected capex. April current account and May bank lending are also on tap (Thursday)
Japan: Revised Q1 GDP (Thursday) is likely to be revised slightly higher given the stronger than expected capex. April current account and May bank lending are also on tap (Thursday), with the latter having held at 3.0% y/y over the past couple of months. The April tertiary index (Friday) has been little changed to weaker over the past twelve months.
Australia: The Reserve Bank of Australia’s meeting (Tuesday), expected to reveal no change in the current 1.50% rate setting. The economic data docket is busy this week. Q1 GDP (Wednesday) is seen rising just 0.2% (q/q, sa) after the 1.1% gain in Q4. The current account deficit (Tuesday) is seen narrowing to -A$1.0 bln in Q1 from -A$3.9 bln in Q4. The trade surplus (Thursday) is projected to narrow to A$2.0 bln in April from A$3.1 bln in March Housing finance (Friday) is anticipated to rise 0.5% m/m in April after the 0.5% dip in March.
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
Senior 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 June 2017.
FX News Today
European Outlook: Asian stock markets are mostly posting losses. Japanese stocks dropped as the Yen surged to the highest level in more than a month, but it was Australia’s ASX that posted the sharpest losses, as the RBA left rates on hold as expected and highlighted that “slow growth in real wages” is weighing on consumption. Hang Seng and CSI 300 managed to move higher, underpinned by developers. U.S. and U.K. stock futures, however, are also heading south. After a long run, higher equity markets are turning cautious amid lingering concerns over the global growth outlook and ahead of key monetary policy decisions in Europe and the U.S. as well as the U.K. election on Thursday, with the latter looking tighter than expected. Oil extended declines as traders shrugged off the impact of Qatar’s isolation. The front end WTI future is currently trading at USD 47.12 per barrel.
US reports: revealed a firm round of May ISM-NMI figures, while March U.S. factory goods data fell slightly short of assumptions in April after small upward March revisions across factory orders, shipments and inventories to leave a neutral report. The April data for factory orders, shipments, and inventories were a tad light, and though the expected Q1 productivity boost to a flat figure from a 0.6% decline, there was also a huge downwards Q4 revisions in hourly compensation and unit labor costs that were a bit bigger than expected after the last income report. For the ISM-NMI, the headline slipped to a still-firm 56.9 in May from 57.5, while the ISM-adjusted ISM-NMI fell slightly to 56.3 from an 18-month high of 56.5.
Eurozone May composite PMI confirmed at 56.8, as expected, with the services reading revised up slightly to 56.3 from 56.2 reported initially. The services PMI still fell back slightly in April, but the composite held steady not just versus the preliminary number but also April. Readings suggest a consolidation of overall growth at high levels, with growth continuing to run at the fastest pace in six years and supported by strong growth of incoming new business, which will add to the arguments of the hawks at the ECB on Thursday. Germany and France were the main driver, with German growth underpinned by a robust manufacturing sector and French growth driven by the services sector. Both countries also reported stronger rates of overall job creation, which is encouraging, and suggests companies continue to invest in the recovery.
UK Election: Conservatives lead at 11 points according to the latest survey by ICM, with support for the Conservative Party’s at 45% versus 34% for the Labour Party. The survey was conducted between Friday and Sunday, with some of the response coming after the terrorist attack on Saturday night in London. The outcome is down 12 point lead that the previous ICM poll showed, though is well up on the poll by Survation that showed the Conservatives with only a 6 point advantage over Labour, and is more consistent with the FT’s poll tracker, which shows the Conservatives at 44% versus Labour’s 36%.
Main Macro Events Today
US JOLTS – April JOLTS, a favorite of Chair Yellen, will nevertheless be overlooked as the report is two months in arrears. April JOLTS, expected at 5.650M from 5.743M reported for March.
Canadian Ivey PMI – The Ivey PMI is expected to improve to a seasonally adjusted 62.0 in May from 62.4 in April.
NZD GDT – New Zealand’s Q1 manufacturing report may be of some interest today, which expected to present a 0.3% rise from 0.8% presented last time.
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.
Andria Pichidi
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 7th June 2017.
FX News Today
European Outlook: Asian stock markets are mostly posting modest gains. Japanese indices managed to recover losses as the Yen dipped. Mainland Chinese markets outperformed and rallied led by consumer shares. After underperforming recently amid government efforts to boost deleveraging, it seems there is some value buying in the CSI 300, which is up 1.22%, while the Hang Seng is up a mere 0.01% and ASX and Nikkei around 0.20%. U.K. and U.S. futures are also higher and the move back into stocks could see yields coming up from yesterday’s lows. However, investors are likely to remain cautious and take a wait and see stance ahead of tomorrow’s ECB meeting, U.K. election and Comey testimony in the U.S. Today’s calendar will start U.K. house price data and Italian retail sales as well as the OECD’s economic outlook for the Eurozone.
FX Update: The dollar found its feet against most currencies, firming up modestly from recent lows. USDJPY settled around 109.50 in Tokyo after logging a six-week high at 109.22 yesterday, which was the culmination of a three-session tumble from the upper 111.0s. EURUSD ebbed to around 1.1260-65. AUDUSD was an exception to the dollar-finding-a-footing story, as the Aussie buck rallied on the release of the Australian Q1 GDP report, which came in with 0.3% q/q growth, well off the 1.1% q/q growth seen in the previous quarter and matching economists’ median expectation, although there had been some market fears of a negative print (following weak retail sales and capex data over the quarter). The Australian economy hasn’t seen a recession in 103 quarters now (just one quarter shy of 26 years), which apparently matches the Netherland’s growth run (according to Reuters). AUDUSD gained 0.5% in making a 0.7543 peak, which is the loftiest level seen since May 2.
German April manufacturing orders clumped -2.1% m/m, more than anticipated and driven mainly by a -3.4% m/m drop in export orders. After two very strong months, the correction, still saw the annual rate jumping to 3.3% y/y from 2.4% y/y. So again something for both the doves and the hawks at the ECB to argue with, especially as confidence data for May already suggest a rebound ahead.
US Reports: U.S. JOLTS 259k up to 6,044k in April, a new record high, after rising 103k to 5,785k in March. The job opening rate rose to 4.0% from 3.8%. Openings are up 401k from a year ago. However, hirings dropped 253k to 5,051k following a 55k gain to 5,304k. The rate slid to 3.5% from 3.6%. That could be a function of a lack of skilled labor. Meanwhile, separations declined 225k to 4,973k after bouncing 190k to 5,198k previously. The rate dropped to 3.4% from 3.6%. Also, quitters declined 111kk to 3,027k after rebounding 102k to 3,138k. The rate also dipped to 2.1% from 2.2% (revised from 2.1%). The mix of data support notions of a strong labor market.
Main Macro Events Today
UK House Prices – May’s Halifax bank of Scotland will be released today the change in house prices, which is expected to be unchanged quarterly and monthly as well.
US Consumer Credit – April consumer credit is expected to increase $17.0 bln after an $16.4 bln gain in March. Increases in non-revolving credit are leading the largest series of gains since 2001. Market risk is minimal, as consumer credit data is typically ignored by the market.
Oil Inventories – Oil inventories from US will be out today as well and expected to reduce to -3.4M from -6.4M last week.
Canadian Building Permits – Building permits values are projected to rebound 2.4% m/m in April after the 5.8% drop in March.
Japanese GDP – Japan revised Q1 GDP is likely to be revised slightly higher at 0.6% from 0.5% given the stronger than expected capex. April current account and May bank lending are also on tap, with the latter having held at 3.0% y/y over the past couple of months.
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.
Andria Pichidi
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 8th June 2017.
FX News Today
European Outlook: Asian stock markets are mostly slightly higher, with Japanese markets underperforming and marginally in the red, as the Yen strengthened and GDP data missed expectations by a wide margin. U.K. and U.S. futures are also up after Comey’s written statement ahead of today’s testimony helped to underpin U.S. markets Wednesday. In Europe markets await the ECB meeting and the U.K. general election, although first results are not expected until after market close. Bund futures were initially boosted yesterday by reports that the ECB will cut its inflation forecast today, but quickly started to head south again and while Draghi and Praet may be eager to keep any changes to the forward guidance to a minimum today, this won’t change the fact that the ECB is heading for tapering next year. In the U.K. the outcome of the election will have an impact for Brexit talks and while latest polls still give PM May the lead, her majority may not be as large, as she hoped when she called the election and the outside risk of a hung parliament would hurt U.K. markets.
FX Update: Super Thursday is here and caution is in the air in forex markets. The dollar majors and most of the main cross rates have been plying narrow ranges into the London interbank open. EURUSD has settled in the mid 1.12s, up from the low seen at 1.1204 yesterday in the wake of the Bloomberg report citing officials suggesting that the ECB will lower inflation forecasts. We still anticipant that the central bank will at its meeting today neuter the easing bias. USDJPY has ebbed back to the mid 109.0s during the Asian session today after briefly taking a look above 110.00. Aside from the ECB meeting, we have the UK election (were there is an outside risk of there being a hung parliament), and the testimony of ex-FBI director Comey (where markets will be alert for any devil in the detail following the unexpected publication of the written testimony yesterday, which didn’t really tell us anything new). We recommend fading any gains in USDJPY.
German April industrial production rose 0.8% m/m, more than expected and with March revised up to -0.1% m/m from -0.4% m/m reported initially. Production was mainly boosted by energy, which rebounded 5.7% m/m, after a slump of -4.3% in March, as a late spell of cold weather hit the country in April. Similarly, to orders data yesterday, the annual rate actually improved marginally and now stands at 2.8% y/y, up from 2.2% y/y in the previous month. Manufacturing was up 0.4% m/m and 2.1% y/y and together with robust survey numbers the data still sees the recovery intact and Germany heading for solid growth in Q2.
Main Macro Events Today
UK Elections – UK Elections are due today, although first results are not expected until after market close.The outcome of the election will have an impact for Brexit talks and while latest polls still give PM May the lead, her majority may not be as large, as she hoped when she called the election and the outside risk of a hung parliament would hurt U.K. markets.
ECB Preview – The ECB is widely expected to leave interest rates unchanged and confirm the QE schedule for the rest of the year. The key question is if and how far the ECB will tweak its forward guidance and whether the easing bias will finally be scrapped. Leaked ECB reports yesterday confirmed what it is expected, that the updated set of forecasts tomorrow, will bring downward revisions to the inflation forecast, which means Draghi and Praet will have good arguments when they urge for caution to changes in the central bank’s communication and forward guidance.
EU GDP – The final Q1 GDP data for the Eurozone is likely to stay unchanged at 0.5%
US Jobless Claims – Initial claims data should decline to 240k from 248k last week and 235k in the week prior.
Canadian Housing Stats & Gov. Poloz Speech – May housing starts are expected to moderate to a 200.0k pace from 213.1k in April, as activity further unwinds from the lofty 252.3k rate in March. The April new home price index is also due today, while BOC Governor Poloz is due to speak today, in Ottawa.
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.
Andria Pichidi
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 9th June 2017.
FX News Today
European Outlook: Of yesterday’s key events it was the U.K. election that brought the biggest bombshell, with the U.K. heading for a hung parliament according to the latest projections. The Pound slumped, but FTSE 100 futures are moving higher, after a largely positive session in Asia, and modest gains on Wall Street yesterday. The Hang Seng was underperforming as U.K. linked shares dipped, but Hong Kong’s index is still heading for a weekly gain amid fears of overheating. Eurozone markets got a boost yesterday from the ECB’s dovish tone, which should put a rest to tapering talk at least for now. Reports that there won’t be an early election in Italy helped Italian bonds and stock markets to outperform. However, political uncertainty in the U.K. will also hang over Brexit talks and EU officials will likely rather want clarity about the U.K.’s negotiating positions as talks are set to start this month. JP Morgan previously argued that a hung parliament could ultimately support the pound if it leads to a coalition that takes a softer approach to Brexit, for now though the slump in the Pound should weigh on Gilts, while Bund futures continued to rise in after hour trade yesterday and should remain underpinned by the ECB’s cautious approach to exit steps. Today’s data calendar started with German trade early in the session, and French production, while later on we will see U.K. production and trade numbers.
UK election delivered an unexpected hung parliament outcome, based on projections with 600 of the 650 seats having been declared The Conservative Party is set to come in short of the 326-majority threshold with 316 seats, while Labour is set to come in with 265 (gaining 33), the LibDems with 13 (up five), and the SNP (Scottish National Party) with 34 seats (down 22). The pound lost 2% following exit polls last yesterday which accurately portended this outcome. A period of political deal making now lies ahead in the UK, which may be complicated by an uncertain fate of the prime minister, May, who has lost a lot of political capital after calling the snap election back in April and has seen a 20-point poll lead evaporate. The most obvious alliance would be a Tory-LibDem coalition, as was seen following the 2010 election, which would likely result in a net softer stance on Brexit. Uncertainty now looms., and the June 19 start date for EU exit negotiations looks to be in jeopardy. One takeaway forms the election is that a second Scottish independence referendum now looks a lot less likely, with the SNP having lost 22 seats.
ECB drops easing bias on rates, while leaving current policy rates and QE schedule unchanged. Draghi finally admitted that deflation risks have disappeared and removed the easing bias on rates, the doves are keeping a joker up their sleeves and maintain that QE can still be extended in duration or size. So not quite a neutral stance yet, despite the improvements noted for the growth outlook. In US on the other hand, the major event yesterday was Comey’s Testimony, which turned US Markets negative with both stocks and bonds. Comey started his testimony saying that defamation of him and the FBI by Trump publicly were outright “lies, plain and simple.”Trump lawyer Kasowitz released a press statement following Comey testimony, saying the testimony confirms Trump never sought to impede the Russia investigation, while Trump never directed or suggested Comey stop investigating anyone, including Flynn. Further, Trump never told Comey “I need loyalty” in form or substance. He also attacked Comey for admitting leaking “privileged communications” with Trump. Markets remain of two minds, wanting a relief rally on stocks, but cautious ahead of UK election returns.
Main Macro Events Today
UK PM May Speech – UK Prime Minister Teresa May expected to give a speech today in London, about the UK general Elections.
UK Production & trade Balance – April’s production data are out today, with Manufacturing Production anticipated to rise for April at 0.9% versus the -0.6% last month. Industrial data expected to rise as well at 0.8 % from -0.5 %. Goods trade Balance should increase slightly to -12B from -13.4B.
Canadian Labour Data – May Employment Change for Canada should post a 11K headline, from 3.2K in April and down from 19.4K in March. The unemployment rate expected at 6.6% up from 6.5% in April.
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.
Andria Pichidi
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 June 2017.
FX News Today
The FOMC decision and projections will be front and center this week. The ebb of inflation pressures and cooling of policy expectations will be food for thought for the FOMC. But, that shouldn’t deter the Committee from hiking rates by 25 bps Wednesday to 1.00-1.25%. However, with the slowing in U.S. inflation dynamics, the downward revision in the ECB’s inflation outlook, alongside the drop in energy prices, the political morass and latent tech volatility will give Fed doves more ammo to argue for a less aggressive normalization path, especially amid the likely delays in tax reform and other fiscal measures.
United States: The U.S. economic calendar may be overshadowed by the FOMC meeting, but there will be several relevant data releases that could give the markets and Fed pause by impacting views of the future, especially CPI and retail sales. Headline CPI (Wednesday) may slump 0.1% from 0.2%. Retail sales (Wednesday) are forecast to drop 0.1% in May or flat ex-auto, still struggling to regain lost momentum. Headline May PPI (Tuesday) is seen sinking 0.2% from 0.5%; core may rise 0.2% vs 0.4% or 2.0% y/y. Business inventories are also on tap (Wednesday), projected to sink 0.2% in April. The Treasury budget gap (Monday) is expected to hit -$87 bln for May, a 66% deterioration from -$52.5 bln a year ago. After the FOMC decision on Wednesday there will be a rash of data (Thursday) after the fact. Philly Fed index is seen falling to 22.0 in June from 38.8; Empire State may rebound to 6.0 in Jun from -1.0; import prices are seen flat in May, export prices may rise 0.2%; initial jobless claims are expected to dip 6k to 239k for the June 10 week; industrial production is forecast to be flat in May, while capacity use holds steady at 76.7%. NAHB housing market index may slip to 69 in June from 70.
Canada: The Canadian calendar is relatively thin after the busy start to the month. The manufacturing report (Thursday) is the main data feature this week, with shipment values expected to rise 0.7% m/m in April after the 1.0% gain in March. Another installment of housing data is due, with May existing home sales (Thursday) and the Teranet/National Bank HPI (Wednesday) scheduled for release. The April international securities transactions report will be available on Friday. Bank of Canada Senior Deputy Governor Wilkins delivers a speech titled “Canadian Economic Update: Strength in Diversity.” Monday’s speech is scheduled for release at 13:20 ET.
Europe: This week’s set of data releases, focuses mainly on final inflation data for May, which are unlikely to bring major surprises. The most important number will be German ZEW investor confidence (Tuesday) for June. A modest rise expected in the headline reading to 21.0 from 20.6 in the previous month, backed by the ECB’s cautious approach to exit steps and the improved overall economic outlook, which has been underpinning stock markets. Inflation data should confirm the German HICP rate at 1.4%, the French at 0.9% and the overall Eurozone number (Friday) at 1.4% y/y. The ECB already cut back its inflation projections at the July meeting as oil price developments mean the trajectory is lower than previously thought and while growth is improving and employment picking up, this has at least so far not led to a broad rise in wages. So the central bank can afford to take a relaxed stance on exit steps, even as growth forecasts are being revised up. Other data releases include Eurozone production and trade data for April. Germany will sell 10-year Bunds on Wednesday.
Japan: In Japan, the MoF June business outlook survey (Tuesday) is expected at 0.6 from 1.1 previously. Wednesday brings revised April industrial production. The BoJ will announce its policy intentions on Friday, with the two-day meeting unlikely to result in any changes, though reports last week indicated the Bank may upgrade its economic outlook, while lowering its inflation forecasts.
China: In China, May industrial production (Wednesday) is expected to slip to a 6.3% y/y pace from 6.5% in April, while May retail sales (Wednesday) should tick up to 10.8% y/y from 10.7%. May fixed investment (Wednesday) is estimated up 8.7% y/y from 8.9%. India May CPI (Monday) is expected to dip to 2.3% y/y from 3.0%, while April industrial production (Monday) should remain steady at 2.7% y/y. The May trade deficit (Wednesday) is set to narrow to $12.0 bln from $13.2 bln, as May WPI (Wednesday) is forecast to fall to 2.9% y/y from 3.9%
Australia: Australia’s calendar has May employment (Thursday), projected to expand 15.0k after the 37.4k gain in April. The unemployment rate is expected at 5.7%, identical to the 5.7% in April. There are two speeches by Reserve Bank of Australia Deputy Governor Debelle this week: The first speech is on Monday to the Global FX Code of Conduct Launch in Hong Kong (by video.) The second speech is on Thursday, at the Thomson Reuters Industry event in Sydney.
New Zealand: New Zealand’s calendar is highlighted by Q1 GDP (Thursday), expected to improve 0.9% after the 0.4% gain in Q4 (q/q, sa). The current account (Wednesday) is seen improving to a NZ$1.3 bln surplus from the -NZ$2.3 bln deficit in Q4. The Reserve Bank of New Zealand meets on June 22.
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.
Andria Pichidi
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 13th June 2017.
FX News Today
European Outlook: Asian stock markets mostly moved higher, although Nikkei and CSI remained marginally in the red, while Hang Seng and especially ASX moved higher, led by Commonwealth Bank of Australia. The tech rout that hit markets yesterday has started to calm down as the Nasdaq 100 managed to pare losses going into yesterday’s close. Investors remained largely defensive though in Japan ahead of the Fed meeting, but U.S and FTSE 100 futures are moving up. Oil prices are also higher on the day and the front end Nymex future is trading at USD 46.33 per barrel. Today’s calendar has inflation readings from Spain, Sweden and the U.K., with the latter seen falling back slightly to 2.6% y/y (med 2.7%) from 2.7% in April. German ZEW investor confidence meanwhile is expected to rise to 21.0 (med 21.5) from 20.6 in May. Meanwhile there are reports that Labour and Conservative MPs are “plotting” to force PM May to take a soft Brexit stance, while the Prime Minister continues to reshuffle her team and politics.
U.S. reports: Budget deficit widened to $88 bln in May just wide of median $87.0 bln, a large deterioration from the $53 bln deficit in May of last year. This estimate roughly aligns with the CBO Monthly Budget Review released June 7 as a change in the corporate tax deadline appeared to pull those dollars into April.
UK: Moody warned yesterday that UK’s minority government poses a “credit negative” risk. The prime minister’s Conservative Party is forming a government with Northern Ireland’s DUP, with the combined seat total standing at a weak 328 out of 650 parliamentary seats. Things have settled yet, just one week ahead of the start of EU exit negotiations, as there is pressure on the prime minister to resign following a disastrous election campaign. A snap poll of 700 member of the UK’s Institute of Directors found a “dramatic drop” in confidence following the hung parliament outcome of the election last Thursday.
Main Macro Events Today
UK CPI – Data is highlighted by May inflation figures today, where CPI expected to stay unchanged after logging a 2.7% cycle high in April. This would fit the BoE view. The central bank has clearly signaled that it is looking through the current phase of above-target inflation, anticipating a return to 2.0% target next year.
German ZEW – After slightly mixed survey data in May, German ZEW investor confidence for June expected to rise in the headline reading to 21.5 from 20.6 in the previous month, backed by the ECB’s cautious approach to exit steps and the improved overall economic outlook, although with the ECB meeting as well as the U.K. election last Thursday much could depend on when the answers got in and uncertainty about Brexit prospects, global political events and the prospect of further rate hikes in the U.S. will likely weigh on sentiment.
US PPI – Headline May PPI is seen sinking 0.0% from 0.5%; core may rise 0.2% vs 0.4% or 2.0% y/y.
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.
Andria Pichidi
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 June 2017.
FX News Today
European Outlook: Asian stock markets were mixed, with Chinese stocks under pressure as financial and developers headed south. The CSI 300 lost more than 1% and the Hang Seng is down 0.2%, while Nikkei and ASX are moving higher. Financials also weighed on Japan’s stock markets, while defensive stocks gained ahead of the FOMC announcement, leaving the Nikkei up a modest 0.2%, while the ASX 200 gained 0.8%. FTSE 100 futures are up, as Sterling is under pressure again, while U.S. futures are down ahead. All eyes are on the Fed which is expected to hike rates by 25 bp, but may not give details on balance sheet normalization yet. There is speculation that China’s central bank may follow, which is adding to pressure on Chinese markets. China industrial production and retail sales growth were unchanged from the previous month. The European calendar has U.K. labour market data and EMU production numbers.
FX Update: The dollar majors have been settled in narrow ranges into the Fed’s policy announcement and statement. EURUSD has been orbiting 1.1200 and USDJPY has continued to oscillate around the 110.00 level. Sterling has steadied after rebounding some of the ground lost since last week’s UK election, with markets buoyed by prospects for a softer Brexit stance, though concerns about the viability of the new, fragile minority government, along with the prime minister’s future, remain. As for the Fed, a 25bp hike is widely expected while there is a degree of uncertainty about what tone the central bank’s guidance will take. The Fed expected to stick with its tightening bias but may signal a lowered pace of policy normalization, which will be accompanied with reduced growth forecasts. Overall, much of this will have been discounted by markets, though we see some risk for dollar gains on the view that the Fed leaves the door open for another 25bo rate hike before year-end.
U.S. reports: Flat May U.S. PPI headline with a 0.3% core price increase beat estimates with a largely expected 3.0% drop for the goods component. There were no revisions to April’s 0.5% headline jump and the 0.7% surge in the ex-food and energy component. On an annual basis, PPI slowed to 2.4% y/y compared to 2.5% y/y for April. But the core rate rose to 2.1% y/y versus 1.9% y/y. Goods prices declined 0.5% on the month, versus the prior 0.5% rise, with energy tumbling 3.0% and food costs dipping 0.2%. Services prices rose 0.3% following the 0.4% April gain, with trade prices climbing 1.1% and transportation/warehousing costs falling 0.5%. The PPI report isn’t usually a market mover, however U.S. equities have recovered somewhat to start the session in the wake of the 0.3% core PPI rise, following a shallow recovery in global stocks after two days of U.S. tech sector liquidation.
Final May German HICP inflation was confirmed at 1.4% y/y, as expected and down from 2.0% y/y in April. The Easter effect was largely to blame for the sharp swings over the past months, with holiday related prices spiking in April only to fall back again after the end of the Easter holidays. Energy prices increases also fell back again in May and added to the drop in the annual rate, as gas prices declined -3.4% y/y and prices for heading rose 11.7% y/y, down from 30.1% y/y in the previous month. The German economy may be steaming ahead and the labour market looking increasingly tight, but so far at least that has not led to a substantial uptick in wages, which is what is also keeping the ECB on hold, despite stronger growth numbers.
Main Macro Events Today
US CPI – May CPI data should reveal a -0.1% headline with the core rate up 0.2%. This follows April figures which had the headline up 0.2% and the core up 0.1%. If data in line with forecast would leave the headline y/y rate slowing to 1.9% from 2.2% in April and the core y/y rate ticking down to 1.8% from 1.9% in the month prior.
US Retail Sales – May retail sales data is out today and should post a 0.1% headline decline a flat ex-autos figure. This follow the April report which revealed a 0.4% headline and a 0.3% core pace. The report faces downside risks from the weak auto sales data and an anticipated decline in gasoline prices which could weigh on gas station sales.
FOMC Meeting – The Fed began its 2-day meeting, with widespread expectations for a 25 bp increase in the rate band to 1.0% to 1.25%. What will be crucial for the markets is the tone of the statement and what policymakers suggest about the path of normalization. The Committee is likely to leave its dot forecast of three tightenings this year unchanged, as the tight labor market should offset the slowing in Q1 growth and the softening in inflation. While the risks to the economy should remain balanced, it will be interesting if the tone is a little more dovish given the slowing in Q1 and other more recent 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.
Andria Pichidi
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 June 2017.
FX News Today
European Outlook: Asian stock markets headed south, after the Fed hiked rates and tweaked reinvestments. Financials and exporters were under pressure, while defensive stocks held up. There is speculation that the BoJ could make some inference to exit strategies at its upcoming meeting, which could boost the Yen and hurt exporters. Still, the -0.35% drop in the Nikkei is modest, compared to the sell offs in Hang Seng and ASX 200, which both lost more than 1%. Investors trying to place funds into superannuation accounts in a bid to avoid regulatory changes coming into effect on July 1 were said to have underpinned yesterday’s rally in the ASX, but with AUD on the rise, stocks are under pressure. U.K. and U.S. stock futures are also down. The Fed may have been less dovish than some expected, while U.S. data release yesterday were disappointing and sparked fresh concerns about the health of the global economy. With the Fed turns out of the way, the focus turns to BoE and SNB meetings today, with both central banks expected to keep policy steady. The data calendar has final May HICP from France and Italy, as well as U.K. retail sales and EMU trade data.
FOMC hiked the funds rate band by 25 bps, as widely expected, to a 1.00% to 1.25% band. In a surprise, however, the Fed outlined details on balance sheet normalization, stating it intends to start the unwinding process this year if the economy evolved as anticipated, Yellen said that the Fed could implement the balance sheet unwind “fairly soon,” if the economy continues to perform as expected. The Fed also outlined it’s initial cap sizes. The dot plot was also little changed from March, and suggests yet one more tightening this year. The statement noted the economy continues to expand moderately, and while job gains have moderated, they have been solid nevertheless. Household spending has picked up, and business investment has continued to expand. The Fed noted the recent decline in inflation, but said it’s expected to stabilize around the 2% objective over the medium term. Risks are roughly balanced but the Committee will monitor inflation closely. The dove Kashkari dissented in favor of an unchanged stance. The tone of the statement, and the fact that the Committee still plans to start balance sheet normalization this year, is a tad less dovish than the market had priced in after the CPI and retail sales data.
U.S. reports: revealed a weak round of May retail sales and CPI data. The US May CPI drop by 0.1% while U.S. retail sales underperformed with a 0.3% May headline and ex-auto drop, following tiny revisions that were upward in April but downward in March. We also saw a 0.2% April business inventory drop, though this decline was expected. For retail sales, we saw 0.3% May headline and ex-auto drops after small prior tweaks that should allow an uptick in the savings rate to 5.4%, as consumers remain reluctant to spend despite heightened confidence. For CPI, a 0.1% May headline drop with a 0.1% core price rise rounded up from respective figures of -0.144% and 0.063%, with weakness in apparel and medical care alongside the expected 2.7% energy price drop.
Main Macro Events Today
UK Retail Sales & BoE MPC’s Policy meeting – The Old Lady of Threadneedle Street is widely expected to leave policy settings unchanged. The tone of the minutes will interest, and given the tricky political backdrop will likely show a stepped-up degree of dovishness while remaining in the bounds of an overall neutral policy stance. We will see also today retail sales contracting by -0.8% m/m in official May data, after a stellar 2.3% m/m gain in April.
CAD Manufacturing Shipments – Shipments expected to expand 0.7% m/m in April after the 1.0% gain in March. Manufacturing employment was nearly flat in April (-0.6k) after a 24.4k rise in March, while the latest jobs report revealed a 25.3k bounce in May.
US Data – May trade price data is out today and should show import prices unchanged while export prices rise by 0.1% on the month. WTI prices decline by 5.1% in May which should weigh on import prices. Philly Fed index is seen falling to 24.0 in June from 38.8. Initial jobless claims are expected to dip 3k to 242k for the June 10 week; industrial production is forecast to be flat in May, while capacity use holds steady at 76.7%. NAHB housing market index may slip to 69 in June from 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.
Andria Pichidi
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 June 2017.
FX News Today
European Outlook: After BoE and Fed spooked markets, the BoJ’s decision to keep policy on hold and maintained its promised for ongoing stimulus. Banks and financial were underpinned and the Nikkei is currently up 0.67% on the day, the Hang Seng gained 0.33% and the ASX 0.11%, while the CSI remained slightly in the red. U.K. and US stock futures are also moving higher and Bund futures started to stabilize in after hour trade yesterday, suggesting that bond and stock markets are starting to settle after the sell off yesterday. Today’s European calendar is quiet, with only final Eurozone HICP numbers, leaving markets to ponder the implications of this month’s round of central bank announcements.
U.S. reports: revealed surprisingly robust June figures for Empire State and Philly Fed, alongside an 8k initial claims drop to a lean 237k, while industrial production revealed the expected May growth pause from factory and vehicle sector setbacks despite robust mining and utility sector growth, with May trade price weakness that accompanied downside surprises in the May CPI report. For producer sentiment, the figures are refusing to meaningfully unwind the big Q1 surge, as the Empire State index popped to a 3-year high of 19.8 while the ISM-adjusted measure rose to a 6-year high of 56.2, alongside a June Philly Fed dropped to a still-robust 27.6 alongside a June repeat of the solid 59.2 ISM-adjusted figure from May. The GDP data remain poised for a Q2-Q3 bounce despite the downdraft recent retail sales and inflation reports.
BoE Spooks Markets, SNB Firmly on Hold: The BoE left rates unchanged, but still managed to shock markets. After reacting to last year’s Brexit referendum with further easing, it seemed reasonable to assume that the BoE would take a cautious approach in the wake of the “election” chaos especially after recent data releases disappointed and showed still weak wage growth. In the event though, it seems the “hung parliament” hasn’t dented the “smooth Brexit” assumption that was the base of the May inflation report and the number of those opting for rate hikes rose to 3 from just one at the previous MPC meeting. SNB keeps policy on hold, as expected. The central bank confirmed its expansionary policy, with interest on sight deposits unchanged at -0.75% and the mid point Libor target also at -0.75%. At the same time the central bank confirmed its commitment to “remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration”. The CHF remains “significantly overvalued”, according to the central bank. And while the SNB acknowledged that the global economy strengthened further and the new baseline scenario “anticipates that economic developments will remain favorable”.
Main Macro Events Today
EU Final HICP – Inflation data should confirm today the overall Eurozone number at 1.4% y/y.
U.S. Michigan Consumer Sentiment – The first release on June Michigan Sentiment is out today and a slight increase is expected to 97.3 from 97.1 in May and 97.0 in April.
US Housing Starts and Building Permits – May housing starts data is out today and a climb to a 1,215k is anticipated in May from 1,172k in April and 1,203k in March. Permits are seen at 1,250k from 1,228k in April and completions should improve to a 1,140k pace from 1,106k in April.
Fedspeak – Dallas Fed moderate hawk Kaplan (voter) plans to take part in a panel discussion today at the Rotary Club from 12:45 ET.
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.
Andria Pichidi
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 19th June 2017.
FX News Today
The FOMC shocked the markets with a more hawkish than expected stance last week. So too did the BoE, while recent comments from the ECB and BoC also indicate they are starting to move toward the exit. Policymakers are still focusing on inflation and growth dynamics as their guides. But with the traditional Phillips Curve relationship seemingly broken, it could be a bumpy ride for central bankers and the markets as exit strategies are mapped out.
United States: This week’s Fedspeak will be especially interesting after the 180 degree shift from the FOMC where policymakers took a decidedly hawkish spin despite soft inflation and real sector data. The Fed showed surprising resolve in its actions as it looked past the recent data disappointments after the tepid 1.2% GDP growth clip in Q1. The contingent of speakers includes several FOMC voters. On the data front, housing numbers will be scrutinized after the larger than expected 5.5% drop in housing starts in May. Existing home sales for May (Wednesday) are forecast rising 0.9% to a 5.620 mln rate after tumbling 2.3% to 5.570 mln in April. New home sales (Friday) for April are projected rebounding to a 0.580 mln rate after plunging 11.4% to 0.569 mln in April. Other data this week includes the Q1 current account (Tuesday), with the deficit expected to fall to -$128.6 bln from Q4’s -$112.4 bln. There’s also the April FHFA home price index (Thursday), the Markit manufacturing PMI (Friday), the KC Fed manufacturing survey (Thursday), and weekly jobless claims.
Canada: Canada’s calendar has wholesale trade (Tuesday), with shipment values expected to expand 0.5% m/m in April after the 0.9% bounce in March. Retail sales (Thursday) are seen growing 0.4% m/m in April. Higher gasoline prices should support retail sales, but weaker vehicle sales will weigh. The CPI (Friday) is expected to slow to a 1.4 y/y pace in May from the 1.6% growth rate that was in place during March and April. CPI is projected to grow 0.1% m/m in May after the 0.4% gain in April, as a drop-in gasoline prices weighs. There is nothing on the BoC’s schedule this week. The CPI report could impact, although Wilkins appeared unworried by the weakness in the core CPI, blaming it on past activity. Hence, another round of soft core inflation would not challenge the widespread perception that rate hikes will come sooner than had previously been expected.
Europe: The start of official Brexit negotiations has finally arrived. Today Michael Barnier, the European Commission’s Chief Negotiator and David Davis, Secretary of State for Exiting the European Union, will launch Article 50 negotiations. EU 27 leaders will meet on June 22 to review the latest developments in the negotiations and in the margins of this meeting. The start of the talks may be dominated by political posturing, ultimately a hard approach from either side would only hurt the whole of Europe and an amicable deal will be in everybody’s interest. However the data calendar is pretty quiet. Preliminary Markit June PMI readings (Friday) will be the main highlights. Eurozone current account and BoP data are slated, along with preliminary consumer confidence for June. There’s also German PPI, and the final print on French Q1 GDP, expected to be confirmed at 0.4% q/q, as well as the national business confidence report. Supply comes from Germany, which issues 30-year Bunds on Thursday. The ECB’s latest economic bulletin meanwhile is likely to give merely a more detailed account of the ECB’s latest economic projections, which Draghi already presented at the last policy meeting.
UK: Data last week had shown a more acute negative growth figure, while recent sterling gains and weaker oil prices should help curb inflationary pressures, potentially offsetting hawkish arguments at the BoE. There is also the issue of a delicate political backdrop, with a much-weakened prime minister having to cobble together a deal with the DUP, a small party, in an attempt to make her minority government work. Brexit is yet another uncertainty, with negotiations due to begin on Monday. The UK calendar this week is fairly quiet. Monthly government borrowing data are due (Wednesday), while the June CBI industrial trend survey (Thursday)will highlight. A dip to a reading of +7 is expected in the total orders headline of the CBI survey, after +9 in the month prior.
Japan: The May trade report (Monday) is expected to reveal a surplus of JPY 100.0 bln, versus the JPY 481.1 bln previously. The April all-industry index (Wednesday) should rise 1.0% m/m from the prior 0.6% decline. Also, the BoJ releases the minutes to its April 26, 27 meeting (Wednesday), and Governor Kuroda will speak at the annual meeting of the National Association of Shinkin Banks. Deputy Governor Iwata will speak at a meeting of business leaders (Thursday).
Australia: Australia’s calendar is sparse this week. The Reserve Bank of Australia releases the minutes to the June meeting (Tuesday), where rates were held steady at 1.50%. The lack of change was expected, while the Bank maintained a note of optimism on the inflation and unemployment outlook. RBA Governor Lowe participates (Monday) in a discussion panel at the 2017 Crawford Australian Leadership Forum in Canberra. The Q1 Housing Price Index is due Tuesday, and will be of interest.
New Zealand: New Zealand’s calendar is highlighted by the Reserve Bank of New Zealand’s meeting (Thursday). No change is expected to the current 1.75% rate setting. It’s been at this level since the predicted easing on November 10.
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.
Andria Pichidi
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 June 2017.
FX News Today
FX News
European Outlook: Asian stock markets are mixed, with Japan outperforming and the Nikkei up more than 1%, after the S&P 500 rose to a fresh record high and Fed’s Dudley said that U.S. expansion has “a long way to go”. Hang Seng and CSI were little changed in cautious trade ahead of the MSCI decision on the inclusion of Chinese shares in the index. The ASX meanwhile was weighed down by property shares. U.K. and U.S. stock futures are also moving higher, suggesting that yesterday’s rally will be extended today. The DAX is starting to eye the 12900 marks again and the FTSE 100 is firmly above 7500. With stock markets eying new highs core yields are likely to continue to nudge higher, while? Eurozone peripheral bond markets should continue to benefit from the improvement in sentiment. Yesterday’s first official meeting of Brexit negotiators brought a conciliatory tone, but little detail apart from a time table and the confirmation that there won’t be talks on a post-Brexit trade deal alongside the divorce agreements. The calendar today remains quiet, with only Eurozone current account and BoP data.
EU and U.K. agree timetable for Brexit talks, with initial negotiating groups tackling first Citizens’ rights, financial settlement and finally other separation issues. An additional dialogue on Ireland/Northern Ireland has been launched, but there was no mention of a post-Brexit trade deal which the U.K. initially wanted to negotiate alongside the divorce terms. Nothing further really happened yesterday at the first talks between chief negotiators Barnier and Davis and the next round of talks will start on July 17, with further rounds scheduled for the weeks starting August 28,September 18 and October 9. There reportedly wasn’t an offer from the U.K. yet on the rights for the EU citizens in the U.K.
Canada U.S. lumber dispute simmers, underpinning export uncertainty: a Bloomberg article from yesterday summarizes the viewpoints of the two sides in the dispute, with the U.S. upbeat for a quick resolution while Canada is cautious. The lumber dispute is among a variety of trade issues between the two nations, but is the most prominent and dates back to the Obama administration. Other industries remain at risk of increased tariffs, with Globeandmail.com reporting that the U.S. could add steel pipe makers to its target list of Canadian industries. The ongoing jockeying for tariff protections by various U.S. industries is a timely reminder of one of the key uncertainties facing Canada’s growth outlook. Wilkins, in her speech last week that shook up the BoC policy outlook, acknowledged the political uncertainty surrounding the Trump administration. That uncertainty shows few signs of diminishing, which we suspect will help keep the current monetary policy rate intact for a while longer.
Germany: The Producer Price inflation falls back to 2.8% y/y in April from 3.4% y/y in the previous month. This is a tad lower than anticipated, with the decline in oil prices from the highs earlier in the year one of the factors bringing both producer and import price inflation down again. The ECB has already cut back its inflation projections due to a revised oil price forecast. so the data doesn’t change the ECB outlook.
Main Macro Events Today
CAD Wholesale trade – Canada’s calendar has wholesale trade, with shipment values expected to expand 0.5% m/m in April after the 0.9% bounce in March.
US Current Account – The Q1 current account deficit is expected to widen to -$124 bln. As a percentage of nominal GDP, the gap is expected to widen to -2.6% from -2.4%.
SNB Jordan Speech – SNB Governing Board Chairman Thomas Jordan will be at the opening of Swiss International Finance Forum, in Bern, in which it will also be involved in a panel titled “Moving away from the expansive monetary policy: what are the effects on financial markets and the real economy?”.
Fedspeak – VC Fischer and non-voter Rosengren will be at the podium at a conference on macro-prudential policy at the Riksbank. Also, the moderate hawkish voter Kaplan discusses monetary policy and the economy at a Commonwealth Club event. Governor Powell testifies on fostering economic growth before the Senate Banking Committee.
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.
Andria Pichidi
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 June 2017.
FX News Today
European Outlook: Asian stock markets mostly headed south, after losses on Wall Street and in Europe yesterday. MSCI finally decided to include 222 large Chinese companies in its 2018 Emerging Markets Index, and the CSI is outperforming with a 0.28% gain, while the Hang Seng is down -0.38% and the Nikkei -0.32%, with the latter weighed down by a stronger Yen. The ASX underperformed and lost more than 1% as oil prices remain under pressure. The DAX rallied to new record highs yesterday, before profit taking and a broad mover lower in global equity markets as commodity supply concerns amid rising oil production in Libya and Nigeria cast fresh doubt on the efficacy of the OPEC oil agreement while a 26% drop in Chinese steel exports added to concerns about the global growth outlook. U.K. and U.S. stock futures are also down and the fresh bout of risk aversion will keep a lid on bond yields. For the Eurozone, the good news though is that peripheral yield spreads over the German benchmark didn’t blow out yesterday. Today’s data calendar remains quiet, with only U.K. public finance data and a German 30-year Bund sale.
London clearing remains bone of contention. After the EU proposal that called for greater EU oversight of clearing houses based in foreign jurisdictions and included the option of enforced relocation, BoE’s Carney yesterday suggested improved cross-border oversight of clearinghouses that should be based on “deep cooperation” between jurisdictions, adding that a clearing deal would help to keep the financial system resilient. ECB’s Coeure meanwhile stressed that the EU’s clearing regime was “never designed to cope” with major clearing houses operating outside of the EU, adding that moving clearing to within the EU’s jurisdiction would be justified if they pose a major risk to stability, as so far, the regime provides “EU authorities with very limited tools for obtaining information and taking action in the event of a crisis”. The ECB has long tried to get London clearing under its own control and while London fought back with backing from a European court, the issue is back on top of the agenda as Brexit draws nearer.
Fedspeak: Yesterday Fed’s Rosengren said low rates pose financial stability issues, in his comments at the Riksbank macroprudential conference. The Boston Fed president (not a voter this year) turned decidedly hawkish about a year ago and has maintained that outlook ever since. He believes low rates put intermediaries and economies at risk, make fighting future recessions more difficult, and make it more likely central banks will have to resort to non-traditional policies. Additionally, Fed Evans was speaking yesterday as well. Chicago Fed dove Evans said inflation needs to rise and the target should not been seen as a cap but a symmetric target, though he’s voted for rate hikes given improvement in the economy. He’s still ambivalent about the timing of the next hike, which could take place later in the year, while the global environment appears to be holding back inflation, which could allow for a shallower path of rate increases. Otherwise the economy bounced back after the election, with “quite good” fundamentals, which give inflation a chance to get back to 2%. He sees 3% growth as achievable in the short-term, but sustaining it given labor and productivity constraints is another thing, while the U.S. is fast approaching its natural rate of unemployment.
Canada: growth maintains momentum but uncertainties lurk, suggesting that while the time frame for rate hikes has been moved ahead, the Bank can maintain the current setting through mid-year at least. Of course, the upbeat (“hawkish”) view of the economy last week moved ahead expectations for lift-off, and even put the announcement next month in play. And the economic data since Wilkins/Poloz have supported the Bank’s view that the run of encouraging broad-based growth will prove sustainable. But other events have highlighted the uncertainties around Canada’s outlook. Most prominently, the plunge in WTI crude oil to a seven month low and the evolution of U.S. trade policy. The key line from Wilkins was that they are “assessing whether all of the considerable monetary stimulus presently in place is still required.” An assessment of the mix of firm economic data but weak oil/commodity and uncertain U.S. trade policy will likely keep them grounded until later this year, if not January of next year. There will be another round of BoC-speak next week (Poloz panel, Patterson speech), which will be looked to for fresh guidance on the policy outlook.
Main Macro Events Today
US Existing Home Sales – May existing home sales data is out today and should post a 0.7% increase to a 5.610 mln pace for the month after dropping 2.3% to a 5.570 mln pace in April. The NAHB did tick higher in May with a rise to 69 from 68 in April but housing starts disappointed with a decline in the headline pace to 1.092 mln from 1.156 mln in April.
UK Borrowing data – Monthly government borrowing data are due (today), for which a deduction to £7.3B is expected from £9.6 seen last month.
Speeches – BoE chief Economist Andy Haldane is due to give a speech today in Yorkshire.
RBNZ Meeting – New Zealand’s calendar is highlighted by the Reserve Bank of New Zealand’s meeting today. No change to the current 1.75% rate setting is expected. It’s been at this level since the predicted easing on November 10.
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.
Andria Pichidi
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 June 2017.
FX News Today
European Outlook: Asian stock markets stabilized in China’s CSI outperformed again helped by the inclusion of 222 mainland equities in the MSSCI index. The ASX, which tanked yesterday with oil also bounced back. The front end WTI future is little changed on the day at USD 42.53, U.K. and U.S. stock futures are also little changed The Reserve Bank of New Zealand held the policy rate unchanged, as expected. Bund and Gilt yields already moved higher yesterday, led by a jump in the 10-year Gilt above the 1% mark after hawkish comments from BoE’s Haldane, which sees a case for raising rates soon. Bunds outperformed, but the 10-year yield also nudged higher, while Eurozone spreads were mixed at the close with Portugal underperforming. Equity markets and oil prices remain in focus although the calendar is starting to pick up with French business confidence indicators as well as the U.K. CBI industrial trends survey and the ECB’s latest economic report. EU leaders will also start to gather for a 2-day Brexit summit, after chief negotiators from both sides met for the first time officially last Monday. The Eurozone also has preliminary consumer confidence data in the afternoon.
US Reports: A 1.1% U.S. May existing home sales bounce to a 5.62 mln rate trimmed the April drop to 5.56 mln from a 5.70 mln cycle-high in March to almost exactly track estimates, as sales gains moderate in Q2 after weather boosts in the prior two quarters. U.S. existing home sales came in on the perky side, but had little impact on forex markets. Existing home sales are on track for a 5% rise in 2017, following a 3.9% increase in 2016 and a 6.5% rise in 2015, but a 2.9% 2014 “taper-tantrum” drop. Additionally, U.S. MBA mortgage market index rose 0.6% in data released yesterday, in addition to a 1.0% drop in the purchase index and a 2.1% rise in the refinancing index for the week ended June 16. Yet the average 30-year fixed mortgage rate was unchanged at a low 4.13% last week after readily absorbing the Fed’s rate hike, projections and balance sheet reduction schedule announcements.
RBNZ: The Reserve Bank of New Zealand held the policy rate at 1.75%, as expected. Low for long remains in place, with Wheeler again saying, “Monetary Policy will remain accommodative for a considerable period.” And a dovish bias was retained, as the Governor concluded that “Numerous uncertainties remain, and policy may need to adjust accordingly.” This was the same as in May. In March he said “Numerous uncertainties remain, particularly in respect to the international outlook, and policy will need to adjust accordingly.” In other words, it looks like they won’t hesitate to add accommodation if downside risks to the economy manifest. The onus remains on the inflation and growth data, with additional undershoots setting the stage for further easing.
UK: The new UK government’s legislative goals have been announced in the Queen’s speech. Eight of the 24 outlined are Brexit related, which include bills to convert EU rules into UK law, and others concerning such issues as trade, immigration, agriculture and sanctions. A number of key manifesto pledges have been axed or delayed as a consequence of the Conservative Party having lost its majority at the elections earlier in the month. Chancellor Hammond on Monday said that the economy would be the priority in Brexit negotiations, which appears to be position shift away from prioritizing immigration. This could potentially be supportive of the pound, though issues about the fragility of the minority government (which is reportedly struggling in negotiations with Northern Ireland’s DUP) are likely to be the overriding concern for markets. BoE Chief Economist Haldane gave a speech as well yesterday in which he said he is ready to vote for a rate hike — notable as he voted to keep policy settings unchanged last week. His vote would bring the hawks in favour of hiking the repo rate by 25bp to four — which is half of the members on the Monetary Policy Committee.
Main Macro Events Today
US Initial Jobless Claims – Initial claims data for the week of June 17 should reveal a slight increase to 240k from 237k in the week prior and 245k in the week before that. Claims have been holding at very tight levels lately and the June average expected to be 236k, down from 241k in May and 243k in April.
Canadian Retail Sales – Retail sales are seen growing 0.9% m/m in April, while the ex-autos sales aggregate gains 0.7%. Higher gasoline prices should support retail sales, but weaker vehicle sales will weigh.
Fedspeak – Governor Powell testifies on fostering economic growth before the Senate Banking Committee.
MPC Forbes Speech – BOE MPC voting member Kristin Forbes is due to give a speech today at the London Business School.
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.
Andria Pichidi
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 June 2017.
FX News Today
European Outlook: Asian stock markets are narrowly mixed in tepid markets, as oil prices stalling below USD 43 per barrel. Fed speakers didn’t challenge the path to further rate hikes and markets are taking a wait and see stance. Mainland Chinese shares are fluctuating after outperforming yesterday, FTSE 100 futures are in the red, while U.S. futures are slightly higher. A very cautious end to a volatile week then, which should leave core bonds underpinned and yields remaining low. BoE’s Forbes may have added more force to her calls for a rate hike in a speech late yesterday saying she sees “some urgency” to tighten monetary policy, but this was her last speech as she is leaving the MPC. The EU summit with May on Brexit talks, saw the British PM making an offer for the rights of EU citizens, but the devil here lies as usual in the details and the future of citizens on both sides is far from secured. The issues were not discussed at the summit and it will be up to the negotiating team to hammer out a final deal. Today’s calendar brings preliminary June PMI readings, which we expect to move sideways at high levels. France has final Q1 GDP and Italy releases orders data for April.
US Reports: 3k U.S. initial claims uptick to 241k in the BLS survey week trimmed the prior 7k drop to 238k (was 237k) from 245k at the start of June and 255k in the final week of May. Claims have undershot the 2016 average of 263k in every week of 2017, and continue to oscillate around tight levels above the 44-year low of 227k in the President’s Day week. Claims are averaging 240k in June, versus a similarly tight 241k May average, and higher prior averages of 243k in April, 251k in March, and 241k in February. Today’s 241k BLS survey week reading was above May’s 233k figure but below prior survey-week readings of 243k in April, 261k in March, and 247k in February. U.S. FHFA home price index rose 0.7% in April to 248.2, after a 0.7% March gain to 246.6. That’s up 6.8% y/y. Seven of the 9 regions surveyed posted gains.
UK: Brexit Battle Finally Gets Underway One year after the Brexit referendum official talks finally got underway. There still isn’t any clarity on how the future relationship between the U.K. and the rest of the EU will look once the U.K. exits the block. But, a year on, both sides are in a very different situation, with the EU going into the discussions strengthened, while the U.K. government is looking increasingly fragile. Central banks on both sides cautiously look on as the direction and outcome of the talks will have major implications for rates going forward.UK hints at transition period for Brexit. Chancellor of the Exchequer Hammond yesterday suggested the prospect of a four-year transitional period, adding to signs that he is pushing for a softer Brexit stance. Hammond said in a radio interview that in his view a three to four-year transitional period might be necessary, after the U.K. officially exits the EU in 2019.
Canada: Canada’s retail sales yesterday improved 0.8% m/m in April after a downwardly revised 0.5% gain in March (was +0.7%), leaving a nearly as projected gain. But the ex-autos sales aggregate surged 1.5% m/m in April following a revised 0.1% dip in March (was -0.2%), which was well in excess of projections. Higher prices played a large role in lifting the value of total and ex-autos retail sales. Total retail sales volumes were up a modest 0.3% m/m in April after the 1.1% jump in March. While the ex-autos sale aggregate came in on the firm side of projections, the gain in total sales alongside the more modest rise in sales volumes was roughly as expected.
Main Macro Events Today
Eurozone & German PMI – A slight dip in the Eurozone manufacturing index is anticipated to 56.8 from 57.0, with a dip in the services reading to 56.2 from 56.3. Those would suggest ongoing robust activity but at a slightly slower growth pace. This scenario wouldn’t challenge the ECB’s main assumption of a recovery that is strengthening and broadening, and hence would have limited market impact. The German manufacturing index is anticipated to 59 from 59.5, with the services reading to 55.5 from 55.4.
CAD CPI – CPI is expected to edge up 0.1% m/m in May after the 0.4% m/m gain in April. Gasoline prices dropped in in May, which drives projection for a slowing in the pace of month comparable CPI growth. The CPI is seen moderating to a 1.4% y/y pace in May from the 1.6% y/y growth rate in April.
US PMI & New Home Sales – A slight increase in the US manufacturing index is anticipated to 53.0 from 52.7, with the services reading to 53.7 from 53.6. The New Home Sales number is also out today and an increase of 16.8% is anticipated from the -11.4% seen on April.
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.
Andria Pichidi
Market Analyst
HotForex
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