European Outlook: Asian stock markets were mixed overnight, with Japan outperforming as a weaker Yen underpinned exporters. Yesterday’s weakness in U.S. durable goods orders saw Treasury yields declining and risk appetite waning as investors starting to fret again about the health of the world economy. Oil prices are holding above USD 43 per barrel, but Hang Seng, CSI 300 and ASX are all slightly in the red as are U.K. and U.S. stock futures. This should keep Bund and Gilt futures underpinned and core yields down, especially as Draghi once again defended the ECB’s stimulus measures. Today’s data calendar has Italian confidence data as well as the U.K. CBI Retailing Survey. The ECB is hosting its annual forum in Portugal.
FX Update: The dollar majors remained in fairly narrow ranges, though there has been some movement. AUDUSD logged a one-week high of 0.7609, while USDJPY logged a five-week high at 112.07 before turning lower, to around 111.70. The retreat in USDJPY came after the U.S. said that it had detected preparations by the Syrian regime for another chemical attack, with the White House warning that Damascus would pay a “heavy price” in the event it launched another chemical attack. The oil price rebound flagged, and the global stock market rally sputtered in Asia, a backdrop conducive for yen buying. Elsewhere, EURUSD has continued to gravitate toward the 1.1200 level, with the market lacking directional ambition, despite lower U.S. yields following weaker headline durables data yesterday, and a softening in the price indicators in the Dallas Fed index. Cable has been settled in the lower 1.27s, below yesterday’s eight-day high at 1.2759. USDCAD has settled near 1.3250, above yesterday’s 1.3212 low.
US Reports: The U.S. durables report revealed a 1.1% May headline orders drop with a 3.4% transportation orders decline and a 0.1% ex-transportation rise that tracked our estimates. We saw a 10.2% May defense orders plunge, mixed equipment data, a lean 0.2% inventory gain and a firm 0.8% durable shipments rise that was in line with our 2.4% Q2 GDP estimate, after an assumed Q1 trimming to 0.9% from 1.2%. U.S. Chicago Fed National Activity Index dropped to -0.26 in May after jumping to 0.57 in April (that was the highest point since 0.59 from March 2014; the index was as low as -0.84 in July 2013). Additionally, yesterday U.S. Dallas Fed manufacturing index slipped to 15.0 in June after edging up to 17.2 in May from 16.8 in April. The rise to 24.5 in February put the level at its highest since early 2006. It was generally in negative territory from January 2015 through September 2016. Despite the headline declines, it’s still a pretty solid report.
Draghi raises concerns over Greek debt sustainability. The central bank head said in a letter to an EU lawmaker that “until sufficient detail has been provided on the debt measures, serious concerns persist regarding the sustainability of Greece’s public debt”. Currently ECB staff is not “in a position to complete a fully-fledged debt-sustainability analysis of Greece’s public debt”. Greece has been pushing for the ECB to include Greek debt in QE purchases, but Draghi’s comments highlight again that that is still unlikely in the near future.
Main Macro Events Today
ECB’s Draghi – ECB’s President Draghi speaks today at the ECB forum in Central Bank in Portugal at 08:00 GMT. BOE – Financial stability Report is out today for the 1st time this year from BOE. Meanwhile Gov Carney is due to speak today about Stability Report in London at 10:00 GMT U.S. Consumer Confidence – June consumer confidence data should reveal a dip in the headline to 116.0 from 117.9 in May and 119.4 in April. Confidence measures are still hovering near post-recession highs but there is some downside risk to the release as we saw a decline in the first Michigan headline to 94.5 from 97.1 last month. AUS Gov. G. Debelle – Deputy Governor Guy Debelle speaks at the Global FX Code of Conduct Launch (via video link). The Reserve Bank of Australia next meets on July 4th. We expect no change to the current 1.50% rate setting. Fedspeak – Fedspeak will resume with Chair Yellen atop the roster this week, as she will take part in a conversation with Lord Nicholas Stern, president of the British Academy on “Global Economic Issues” today from 13 ET. SF Fed’s Williams speaks on “The Global Growth Slump” from Australia at 4:05 ET, followed by Philly Fed’s Harker on the economic outlook and trade from 11:15 ET and Minneapolis Fed’s Kashkari takes town hall Q&A from 17:30 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.
European Outlook: Asian stock markets mostly headed south, with Australia’s ASX a notable exception. Elsewhere markets followed Wall Street lower, after the delay to a U.S. healthcare reform vote and with Draghi’s comments yesterday serving as a reminder that central bank support has peaked and that rates will trend higher. Losses in Nikkei and Hang Seng seemed more muted though and the ASX actually managed to move higher, as oil prices hold above USD 44 per barrel. Equally, the uptick in long yields looked less severe in Asia and with the first round of preliminary June inflation data out of the Eurozone today likely to show a drop in the headline rate, even Eurozone markets, which were knocked off balance by Draghi yesterday, should start to settle. Lower inflation numbers over the next days and likely comments from officials trying to play down the impact of Draghi’s remarkets should see bonds settling again. The calendar has EMU M3, preliminary Italian HICP, US Pending Home Sales and US Crude Oil Inventories.
U.S. reports: revealed June gains for both consumer and business confidence, as the various “soft” measures continue to overshoot “hard” data forecasts despite modest pull-backs from Q1 highs. For consumer confidence, we saw a June bounce to 118.9 from 117.6 (was 117.9) in May, leaving a fourth consecutive reading above what was once the 16-year high of 116.1 in February, versus the new 16-year high of 124.9 in March. The Richmond Fed index bounced to 7.0 in June from 1.0 in May, versus a 7-year high of 22.0 in March, while the ISM-adjusted Richmond Fed bounced to 54.0 from 51.7 in May, versus a 7-year high of 59.2 in March. Yesterday’s Dallas Fed index bucked the trend thanks to recent oil price declines, with a June drop to 15.0 from 17.2 in May, while the ISM-adjusted Dallas Fed dropped to 53.0 from a 2-year high of 55.4 in May.
Fed Chair Yellen: reiterated the Fed’s commitment to price stability. Policymakers want to avoid making too-low of an inflation rate to become ingrained. She noted that household inflation expectations have slipped some, and added that many on the Committee do believe that a low jobless rate will boost inflation. She did say though that aid there are reasons to believe rates will remain low for some time. Layoffs at brick-and-mortar stores will continue. Asset values are somewhat rich by traditional metrics. She stressed, however, that the FOMC is not targeting asset prices. The markets have well anticipated a gradual rate hike path, especially as the Fed has made it clear rates will rise only gradually. She cautioned to expect uncertainty over how Brexit will unfold. She declined to comment on her relationship with President Trump, but said there is a long tradition of the Fed working with administrations and added that the administration has respect for the Fed’s independence. On the other hand, Fed’s Harker still backs another rate hike this year, he said in comments from a conference London. He believes growth should average about 2.3% this year, but he’s pushed back his view of inflation hitting the 2% target into the start of 2018 versus the end of 2017.
German May import price inflation fell back to 4.1% y/y from 6.1% y/y in the previous month, with prices down -1.0% m/m. A stronger than expected dip, which, however, is largely due to base effects from energy prices and the currency. At 4.1% y/y import price inflation remains at high levels, but with headline rates also coming off highs and June figures likely to fall back further below the 2% limit, the data will back the ECB’s cautious approach to tightening steps, although that the ECB is heading for tapering next year is pretty clear.
Main Macro Events Today
ECB’s Forum – ECB’s President Draghi speaks today at the ECB forum in Central Bank in Portugal at 13:30 GMT along with BOC Gov. Poloz, BoE Gov. Carney and BoJ Gov Koruda. U.S. Pending Home Sales & Oil Inventories – Pending home sales from the NAR are expected to rise 0.7% in May to 110.6 and EIA inventories are due after sparking recent bouts of crude oil selling. JPY Retail Trade – Retail sales are projected at 2.6% y/y in May from 3.2% y/y in April. The projection is for a 0.5% y/y dip in May large retailer sales following the 1.1% rate of increase 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: Stock markets stabilized yesterday, after “ECB sources” played down Draghi’s comments on possible policy changes and after Eurozone peripherals bounced back during the PM session, Wall Street also closed higher, followed by broad gains on Asian markets overnight. U.K. stock futures are also up, after the FTSE 100 underperformed yesterday on hawkish Carney comments. That doesn’t seem to have curtailed the wider bounce back in risk appetite. Eurozone yields also came off the highs seen in the wake of Draghi’s original comments and Bund futures moved sideways during after hour trade. Gilts moved higher again yesterday and even if there are periods of stabilization, yields are likely to continue to trend higher as global central banks cautiously eye exit steps. Today’s will give both doves and hawks something to argue with as EMU ESI confidence is seen rising again, while German June HICP inflation is expected to fall back further below the 2% mark. The U.K. has BoE lending data.
US reports: U.S. pending home sales fell 0.8% to 108.5 in May following the 1.7% decline in April to 109. This is a third straight monthly decline and the index has fallen in four of the five months of 2017 to date. The National Association of Realtors blames much of the weakness in sale to a lack of inventory. U.S. goods trade deficit narrowed to -$65.9 in May, surprising forecasts for little change, after widening to -$67.1 bln in April. May exports increased 0.4% to $127.1 bln after dropping 0.9% to $126.6 bln in April. Imports dipped 0.4% to $193.0 bln following the prior 1.0% increase to $193.8 bln. The data suggest upside risk to GDP forecasts. Lastly, U.S. MBA mortgage market index sank 6.2% in data released earlier, along with a 4.1% drop in the purchase index and a 8.6% plunge in the refinancing index for the week ended June 23. Yet the average 30-year fixed rate mortgage was unchanged at 4.13%. That could be a risky omen considering that home prices remain elevated and inventories low, even as the Fed continues to push on a string in terms of interest rates.
ECB officials suggest markets misjudged Draghi comments. According to a Bloomberg reports citing unnamed ECB policy makers Draghi’s speech yesterday was intended to strike a balance between recognizing economic strength and warning that monetary support is still needed. So after Draghi’s reference to possible policy changes served as a reminder that tapering announcements were merely postponed, not cancelled at the last meeting, we are now likely to get more comments from officials referencing Dragh’s insistence that any change will be prudent and gradual and that in times of strengthening growth, this could still mean that the degree of stimulus will remain unchanged. Draghi clearly remains eager to dampen the impact of tapering talk, despite yesterday’s comments
Main Macro Events Today
Eurozone ESI – ESI Economic Confidence is seen rising slightly to 109.5 from 109.2, after better than anticipated preliminary consumer confidence data and as PMI readings suggested improving manufacturing confidence and a soberer assessment in the services sector. German HCPI – Italian HICP readings suggest downside risks to the remaining June inflation numbers, so German HICP expected to come with a downside bias of 1.3% y/y. Still, the ECB has already acknowledged the fact that oil prices are lower and adjusted its inflation projections accordingly. U.S. GDP, Jobless Claims – US Q1 GDP may stay unchanged on the third revision at 1.2%. Similarly, initial jobless claims expected to slightly drop to 240K from 241K. JPY CPI, Jobless Rate, Prel. Industrial Production – CPI is expected to reveal ongoing sluggishness in Japan’s inflation backdrop, consistent with no change in BoJ accommodation for quite some time yet. May consumer prices are seen improving to a 0.5% y/y rate of increase from 0.4% in April. May unemployment is anticipated at a 2.8%, identical to April. PCE is expected to post a 0.8% y/y decline in May after the 1.4% April drop. Industrial production is pegged to reverse 3.2% m/m in the preliminary report for May after the 4.0% final gain for 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: Markets are back in the grip of risk aversion and Asian stock markets headed south after losses on Wall Street and Europe yesterday. Eurozone stocks in particular sold off Thursday after the unexpected rise in German HICP rekindled ECB tapering concerns. Quarter end positioning that saw tech shares leading declines added to pressure on stock markets, while central bank concerns means bond futures are falling in tandem with stocks. Eurozone spreads blew out yesterday again and with global central banks eying exit steps yields are likely to continue to trend higher going ahead. Today’s busy calendar has June inflation data for France and the Eurozone, French consumer spending, the Swiss KOF leading indicator as well as German labour market data and the final reading of U.K. Q1 GDP.
US reports: revealed an upside Q1 GDP surprise led by big upward consumption and net export revisions and a downward set of deflator adjustments that also lifted Q1 “real” growth. We also saw surprising Q1 inventory weakness that boosts prospects for GDP growth in Q2 and Q3, though we will keep these estimates at 2.8% and 3.4% respectively. We saw a disappointing 2k uptick in initial claims to 244k to leave a relatively elevated start to the annual vehicle sector retooling period, which we still think will depress initial claims into mid-July, and the weekly Bloomberg consumer comfort index fell to 48.6 from 49.4.
Japan’s core CPI improved to an 0.4% y/y pace in May from the 0.3% growth rate in April. The modest pick-up was roughly as expected. National CPI grew at a 0.4% y/y clip in May, matching the 0.4% rate in April. But Tokyo core CPI (ex-fresh food, but energy is included in Japan “core”) was flat (0.0%) in June after the 0.1% gain in May. Tokyo CPI was also flat in June on the heels of the 0.2% y/y gain in May. The lack of growth in both measures of Tokyo CPI during June suggests a similar sputtering of national CPI growth in June, which could further distance the BoJ from the hawkishness that has gripped the BoC, Fed and ECB recently. The unemployment rate rose to 3.1% in May from 2.8% in April. Household spending dipped 0.1% y/y in May following the 1.4% drop in April. Industrial production tumbled 3.3% m/m in May (preliminary) after a 4.0% rise in April. USD-JPY saw minimal movement on the reports — the pair ticked above 112.0 from just below, reversed at 112.11 to slip back to 112.0 currently. The Nikkei 225 is 1.1% lower, taking its cue from the losses on Wall Street during New York’s session Thursday.
German May retail sales came in a tad better than anticipated, with sales rebounding 0.5% m/m, after falling -0.2% m/m in April. The three months trend rate rose to 1.1% from 1.0% in the three months to April. The annual rate still fell back to 1.2% y/y from 1.4% y/y. Nevertheless, a robust number, although official retail sales are a volatile indicator and only cover a part of consumption. Consumer confidence indicators meanwhile have been buoyant, suggesting ongoing support from private consumption to domestic demand and overall growth.
Main Macro Events Today
UK Final GDP & Current Account – The final release of Q1 GDP, expect to come in unrevised at 0.2% q/q and 2.0% y/y (medians same). The Current Account for Q1 expected at £-17.250 B from £-12.088B. EU CPI – A slight deceleration expected in the Eurozone headline rate to 1.2% y/y from 1.4%. The ECB already scaled down its inflation projections thanks to lower oil prices and even if there is an upside surprise, as with the German numbers yesterday, it won’t change the ECB policy path, as the QE schedule is already laid out for the rest of the year and tapering is widely expected to start in January 2018. CAD GDP – GDP expected to improve 0.2% m/m in April after the 0.5% run-up in March. Projection is a notable slowing from the 3.7% growth rate in Q1, it would equate to still solid momentum in Canada’s economy. An as-expected report will underpin the Bank’s “encouraging” narrative on the economy, supportive of the BoC’s aggressively hawkish turn this month. US PCE, Chicago PMI & UoM Sentiment (Revised) – Personal income is set to rise 0.3% in May from 0.4%, while PCE spending rises 0.1% from 0.4%. Also out are Chicago PMI, which may dip to 58.0 in June from 59.4, with Michigan sentiment (final) June read seen steady at 94.5. 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 surprisingly hawkish tone from core central banks recently has weighed sharply on bonds and stocks, with losses exacerbated Friday amid duration and portfolio shifts into quarter-end. Yet, the combination of weaker than expected U.S. data, especially on the inflation front, and the FOMC’s hints that it could slow rate hikes when it begins its balance sheet unwind, has pushed out tightening expectations beyond the November 1 policy decision. Given all the holiday disruptions this week, trading may be a bit disjointed. But, the FOMC minutes midweek could provide a window into Fed thinking and the week could end with a bang as the June payrolls release is on tap Friday.
United States: No one is projecting any rate action in the U.S. at this month’s FOMC meeting (25, 26), according to our Survey Median. But upcoming data may help refine the outlook with respect to the trajectory of monetary policy through the rest of the year. The June employment report will take center stage (Friday) for the holiday-abbreviated week, as the first major jobs reading since the last Fed hike, though the Fed already feels comfortable with its job mandate for the most part. The economic calendar will be split by the July 4th holiday (Tuesday), but kicks off (Monday) with the ISM manufacturing index seen nudging up to 55.0 in June from 54.9 in May, while construction spending may rebound 0.3% in May from -1.4% after April showers. Data resumes (Wednesday) with the MBA mortgage market report and factory goods orders forecast to sink 0.8% in May from -0.2% in April. June ADP employment survey (Thursday) should post a 190k gain for the month, though below the solid May figure of 253k. The May trade deficit is expected to narrow slightly to -$46.3 bln from -$47.6 bln, initial jobless claims may dip 13k to 231k for the July 1 week and ISM Non-Manufacturing index may ease to 56.5 in June vs 56.9 in May.
Canada: In Canada markets are closed on Monday for the Canada Day holiday (happy 150th birthday). Two important economic reports are out this week: May trade and June employment. The trade deficit (Thursday) is expected to narrow to -C$0.1 bln in May from -C$0.4 bln in April. Exports are seen improving 1.0% m/m in May after the 1.8% gain in April, but risk is skewed to the downside on our exports estimate given the erosion in oil prices in May relative to April. Employment (Friday) is projected to grow 20.0k in June after the 54.5k surge in May, as Canada’s labour market continues to tighten. Unemployment is expected at 6.6% in June, matching the 6.6% in May. Yet another tame reading for earning growth is anticipated, as average hourly wage growth dips to a 1.2% y/y pace in June from 1.3% in May. Building permit values (Thursday) are expected to slip 0.5% m/m in May after the 0.2% dip in April. The Ivey PMI (Friday) is seen rising to 55.0 in June from 53.8 on a seasonally adjusted basis, which would leave the index above 50.0 for the thirteenth consecutive month. The June Markit manufacturing survey is due Tuesday. After a flurry of game-changing appearances over the past two weeks, the BoC is silent during the first week of July.
Europe: The Eurozone goes into the second half of the year looking much stronger than expected. This week’s data releases are unlikely to change this assessment substantially. Final Eurozone PMI readings for June are expected to confirm preliminary numbers – i.e. a manufacturing PMI (Monday) of 57.3 and services reading (Wednesday) of 54.7, suggesting robust expansion across both sectors. Markit also reported ongoing strong job creation, which is expected to be reflected in another dip in the Eurozone unemployment rate (Monday) to 9.2% from 9.3%. Germany has manufacturing orders data for May (Tuesday), where a rebound of 2.0% m/m from the -2.1% m/m is anticipated, with the latter likely to have impacted also by the later timing of Easter, which fell into April this year. May industrial production (Friday), meanwhile, is seen rising 0.3% m/m, after 0.8% m/m in April. The calendar also has Eurozone retail sales and producer price inflation. Supply comes from Germany, which sells 5-year Bobls on Wednesday and the ECB publishes its latest bank lending survey on Thursday.
UK: Sterling rallied by an average 2.5% versus the G3 currencies last week as BoE Governor Carney appeared to show himself as a potential fifth member on the eight-person Monetary Policy Committee that could vote for a rate hike next month, or soon thereafter. The calendar this week is highlighted by the June PMI surveys. The manufacturing PMI (Monday) has us expecting an ebb to a 56.4 reading after 56.7 in May, which would still indicate a decent pace of expansion in the sector, which has benefited since the pound plummeted following last year’s Brexit vote. The construction PMI (Tuesday) anticipated to come in at 55.0 after 56.0 in the previous month, and the services PMI (Wednesday) to soften to 53.6 after 53.8 in May. Production and trade numbers for May are also up this week (Friday), where industrial output seen to ticking up by 0.4% m/m and by 0.2% y/y.
Australia: Australia has Reserve Bank of Australia meeting (Tuesday), expected to reveal no change in the current 1.50% rate setting. Melbourne Institute inflation index and ANZ job ads are due Monday. Building approvals (Monday) are expected to rise 1.0% m/m in May after the 4.4% gain in April. Retail sales (Tuesday) are seen 0.3% m/m firmer in May after the 1.0% bounce in April. The trade surplus (Thursday) is seen improving to A$2,000 mln in May from A$555 mln in April.
New Zealand: New Zealand’s calendar does not have any top tier data this week. However, the calendar has June QV House Prices (Wednesday), ANZ job ads (Wednesday). The Reserve Bank of New Zealand’s next meeting is on August 10. No change is expected to the current 1.75% rate setting through year-end.
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.
European Outlook: Asian stock markets traded mixed overnight. Hang Seng and CSI 300 underperformed with losses of 1.7% and 1.0% respectivelyas after falling below the support line of 25500. The Yen strengthened as North Korea test fired a missile, which weighed on Nikkei and Topix together with fresh pressure on tech giants, while the ASX rallied and is up more than 1.5% as the central bank left rates unchanged. U.K. as well as U.S. futures are also heading south after broad gains in Europe yesterday, which were led by Eurozone markets after a source story suggesting the ECB is not ready to lift the implicit easing bias on QE. Oil prices have halted their winning streak and are down on the day. Today’s data calendar is quiet, with only Spanish unemployment and EMU PPI, as well as the U.K. Construction PMI. ECB’s Praet and Nowotny speak and the Riksbank is expected to keep the repo rate unchanged in its latest policy assessment.
FX Update: The Australian dollar dove following the RBA announcement, with Governor Lowe’s statement giving a mixed prognosis of the economy and, in particular, highlighting that an “appreciating exchange would complicate” the transition of the economy from the mining investment boom. AUDUSD fell over 0.6% in making a four-session low at 0.7604, and AUDJPY shed over 1% in making a low at 85.85, which is also a four-session nadir. The RBA left the cash policy rate unchanged at 1.5%, as had been widely anticipated. Elsewhere, USDJPY tipped back under 113.00, putting in some space from yesterday’s seven-week high at 113.47. EURJPY and other yen crosses have seen a similar price action, with AUDJPY having led the way. EURUSD declined for a fourth-straight session following ECB efforts to correct its tapering message. The pair logged a four-session low at 1.1336.
US reports: revealed a June ISM pop to a 3-year high of 57.8, with a jobs index rise to a sturdy 57.2 that leaves upside risk for our 185k June nonfarm payroll estimate on Friday. Yet, we also saw a weak round of May construction spending data after annual revisions that lifted historic levels but that left a weaker entry into Q2, hence the Q2 GDP forecast trimmed to 2.4% from 2.6% with likely flat Q2 growth for both residential and nonresidential construction. The revised data show an even more dramatic home improvement surge since Q1 of 2016 despite some flattening in these gains in Q2, alongside a significant slowing in nonresidential construction growth since last August after a strong prior climb. Available vehicle sales figures suggest a June repeat of the 16.6 mln May pace, versus 16.8 mln in April, and an 18.3 mln cycle-high pace in December. A flat June headline and ex-auto retail sales figures can be assumed, with hits to sales from an estimated 4% June drop in gasoline prices and restraint in sales of building materials from a winter-boost.
The UK June manufacturing PMI came in much weaker than expected, at 54.3 in the headline reading, down from 56.3 in May, which itself was revised lower from 56.7. The new export orders component ebbed to a five-month low of 52.6 from 53.2 in the prior month, which is disappointing given the health of international economies and the significantly more competitive level of sterling following the Brexit vote last year. The pound and UK yields dipped on the data. Sterling markets are now looking to the services PMI survey for June (Wednesday) to better gauge any potential slowing in the broader economy that the manufacturing report might have portended, with the data arriving with BoE MPC members becoming increasingly eager to hike the repo rate from its record low rate of 0.25%.
Main Macro Events Today
UK Construction PMI – The UK Construction PMI expected to come in at 55.0 after 56.0 in the previous month. ECBspeak – Executive Board member Praet, who has been stalling attempts to change the guidance more decisively, is due to speak today, while on the opposite end of the spectrum, head of the Austrian central bank, ECB’s Nowotny is scheduled to discuss the future of the Euro in Vienna. CAD Manuf. PMI – The markets reopened, but the U.S. is closed for the July 4th holiday. The June Markit manufacturing survey is due today. 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: Asian stock markets are narrowly mixed, with investors assessing the impact of North Korea’s test launch of an intercontinental ballistic missile. Telecommunication shares weighed on markets in Japan and Hong Kong. The Nikkei is up 0.06%, the Hang Seng managed to climb 0.55%, after yesterday’s harp loss and the ASX is down -0.36% as geopolitical concerns make a come back and markets await the reaction of U.S. markets, which were closed yesterday. U.S. stock futures are narrowly mixed, while FTSE 100 futures are slightly down, pointing to ongoing caution on equity markets, which should keep bond futures underpinned. ECB Executive Board member Praet urged caution and patience, which suggests the ECB remains reluctant to commit to policy changes just yet and thus add support especially to peripheral EMU bond markets. Today’s data calendar focuses on Services PMI readings out of the Eurozone and the U.K.. The Eurozone also has retail sales data for May.
FX Update: The dollar majors have been directionally challenged so far today, with narrow ranges prevailing. EURUSD has settled around 1.1350, modestly above the five-session low posted yesterday at 1.1336. USDJPY has been trading on either side of 113.00 over the last day, holding in a consolidation pattern after logging a seven-week high at 113.47 on Monday, itself the culmination of a three-week rally. Emerging Asian currencies have been steady, as has been the Canadian dollar, which has traded slightly softer today after rallying yesterday on fresh hawkish BoCspeak, and the Australian dollar, which took a tumble yesterday after the RBA signalled out exchange rate gains as been an impediment to the post-mining boom transition of the economy. A joint U.S. and South Korean missile test, in response to North Korea’s launching of its first an intercontinental ballistic missile yesterday, has upped the geopolitical ante in that part of the world, but to little forex market impact, while contributing to choppy trade on Asian equity bourses (although South Korea’s KOSPI still managed a gain of 0.4%). Today’s release of the FOMC minutes from the mid-June will be a big focus for markets as they should detail justification for the Fed’s unexpected resolve toward normalizing policy.
Eurozone producer price inflation fell back to 3.3% y/y in May from 4.3% y/y in the previous month. The deceleration was mainly due to base effects and not unexpected after national data, but it will help the arguments of the doves at the ECB, who remain cautious about moving too quickly towards tapering steps. Still, while the doves can point to the marked decline in the number, the hawks will stress that the headline rate remains quite high.
Division at the BoE’s Monetary Policy Committee, with member McCafferty having advocated a rate hike while Vlieghe argued that hiking too soon would be worse than hiking too late. McCafferty, who was one of the three (out of eight) MPC members who voted to hike the repo rate by 25 bp in June, said that “the economy has not slowed to the extent we feared” in the wake of the Brexit vote last June, and with inflation having been high “there is a need for change” and reverse the 25 bp rate cut of last August. This would take the repo back to 0.50% from the present historic low of 0.25%. Vlieghe, meanwhile, argued that the “consumption slowdown is here, it’s not over” that that he doesn’t think there’s going to be “sufficient offset from investment and net exports to compensate.”
Main Macro Events Today
FOMC minutes – The minutes to the June 13-14 policy meeting will be interesting for any additional insight the report may provide on the Fed’s hawkish gradual stance. Recall, the Committee generally overlooked weaker real sector data and a “transitory” slowing in inflation in recent months, and instead showed unexpected resolve toward normalizing policy. The minutes may provide some context, as well as the support behind that decision. Of course, the big question now for the markets heading into the second half of 2017 is whether the Fed will get cold feet on the doorstep of the balance sheet unwind, and if it will have the nerve to hike the funds rate for a third time this year. EU Final PMI – Final Eurozone Services PMI readings for June are expected to confirm preliminary numbers – i.e. services reading of 54.7, suggesting robust expansion across both sectors. UK PMI – The UK services PMI expected to soften to 53.5 after 53.8 in May. US Factory Goods – May factory orders are expected to be -0.5% from -0.2% 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.
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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 Japan and Hang Seng down as the stronger Yen weighed on exporters and lower oil prices hit energy producers. the front end Nymex futures picked up a bit after supply concerns hit prices once again, but remains below USD 46 per barrel. The ASX is managing marginal gains. FTSE 100 futures are also marginally higher, despite the rise in Sterling after BoE’s Saunders warned of rate hikes ahead. This should continue to see Gilts underperforming versus Bunds, although a stronger Pound also reduces inflation risks going ahead. In the Eurozone yields also continue to trend higher as the ECB is cautiously heading for exit steps, and while the 10-year Bund closed slightly lower yesterday, Italian and Spanish bond as well as stock markets underperformed, and market jitters will back the doves at the council. Today’s calendar has German manufacturing orders at the start of the session as well as ECB minutes and Swiss inflation data.
FOMC minutes showed most officials said “idiosyncratic factors” were responsible for the softer trend in inflation, though several were concerned that the progress on inflation may have slowed. A couple of policymakers, however, saw rising inflation risk from the “undershooting of the jobless rate.” They also noted some financial market conditions had eased even as policy accommodation was being reduced. Committee members were divided over when to begin the balance sheet unwind, expressing a range of views. There were no clear insights in the minutes to better assess the timing of the balance sheet unwind. But, given the Committee decided to announce the balance sheet details at this meeting suggests the start could begin, as Yellen said, “sooner.” The Fed continues to believe a well telegraphed, and gradual approach to shrinking the balance sheet will limit market reaction. The Fed is also expected to delay rate hikes when it initiates the shrinkage of the portfolio, and that will give the data time to improve and hence support views that it’s idiosyncratic factors weighing. The minutes didn’t materially add to the markets’ body of knowledge on the normalization path.
US reports: Disappointing U.S. factory goods data, with price-led May declines for shipments, orders, and inventories of nondurable goods after small downward April revisions, alongside small upward adjustments in the available durables data for orders, shipments, and equipment, though with weaker inventories. The May data still showed a transportation and defense-led orders drop with lean inventories and resilient shipments. Inventories have yet to recover from the big 2015-2016 petro-hit, beyond last year’s Q3-Q4 bounce that was mostly reversed in Q1.
Eurozone: services PMI revised up to 55.4 with the final reading for June from 54.7 in the preliminary estimate, but still down from 56.3 in May. This saw the composite PMI revised up to 56.3 from 55.7 and versus 56.8 in May. Despite the drop in June, Markit reported that the Eurozone economy enjoyed its best quarter for just over six years in Q1 and while output growth slowed slightly in June, “continued robust inflows of new work and elevated business confidence kept the pace of job creation among the best seen over the past decade”. The average reading over the second quarter was the best since Q1 2011. Good news then that will back the ECB’s increasingly optimistic view of the economy, although with inflation still low and key players like Draghi and Praet insisting that this is largely thanks to the ECB’s expansionary policy, the central bank is not ready yet to commit to QE tapering. The UK June services PMI missed expectations slightly, dipping to a 53.4 headline reading after 53.8 in May.
Main Macro Events Today
ECB minutes – ECB Monetary Policy Meeting Accounts have be scheduled for 11:30 GMT today. U.S. Initial Jobless Claims – Initial claims data for the week of July 1 is out today and a dip to 232k is expected from 244k last week and 242k in the week prior. Claims are always volatile this time of year as we move through auto sector retooling season and this year there are additional risks from the big build up in auto inventories. Fedspeak – SF Fed’s Williams (non-voter) will be in Australia (03:45 ET) and Governor Powell is set to discuss housing finance reform from Washington (10:00 ET), while VC Fischer will speak from Washington on “Government Policy and Labor Productivity” (11:00 ET). Focus will then turn to Fed Chief Yellen from next week’s policy testimony before the House next Wednesday (10 ET), as her Q&A will follow-up her written testimony’s public release this Friday (11 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.
European Outlook: Asian stock markets headed south, following sell offs in Europe and on Wall Street yesterday. Risk aversion and concerns about the withdrawal of monetary stimulus continue to weigh on markets as yields spike after hawkish comments from ECB and BoE yesterday. FTSE 100 futures are in the red while U.S. futures are slightly higher. Bund yields are at the highest level since early 2016 and the 10 year Gilt closed above 1.3% as markets adjust to to the fact that global central bank support has peaked. Today’s calendar has industrial production data U.K. as well as U.K trade data, but markets will be looking ahead to U.S. Payroll data in the PM session.
US reports: revealed modest undershoots for trade and job market indicators but an upside June ISM-NMI surprise that left a neutral read for the economy on net. The trade deficit narrowed to $46.5 bln in May to leave a gap that was just $0.2 bln wider than indicated by the “advance” report, with service-led upside surprises in both exports and imports. For claims, we saw a 4k rise to 248k that bucked the usual auto retooling downdraft, though a claims drop is likely next week. ADP posted a lean 158k June rise, though we’ve seen a solid 218k average ADP increase thus far in 2017 that signals upside risk for our 185k June nonfarm payroll estimate. The ISM-NMI popped to 57.4 in June to leave that measure just below the 16-month high of 57.6 in February, with a firm 57.4 ISM-adjusted reading and a solid 55.8 employment index figure.
Canada: Yesterday’s reports continued the run of upbeat data, but we remain unconvinced that the Bank will hike rates next week. Base case remains for a 25 bp increase in October. Canada’s May trade report bodes well for Q2 GDP, as a 2.0% m/m gain in export volumes followed the 1.3% rise in April. Import volumes expanded 1.7% in May after the 0.3% gain in April. The mix of faster export growth relative to import growth in the May trade report is consistent with projection for a positive contribution from net exports to Q2 GDP after the hefty drag exerted in Q1. Hence, while Canada’s economic data remains strongly suggestive of a sustained uptrend in activity that will eventually deliver the return to full capacity and 2% inflation that is the Bank’s goal, the economy is not wildly outpacing the Bank’s scenario from the April MPR.
ECB’s: Weidmann joined the chorus of more hawkish sentiment as he noted that the recovery in Europe is opening the door to ECB normalization. This isn’t a surprise from the well known hawk, who was discussing the “Future of the Euro” with Austria’s Nowotny. Weidmann added that the timing of action and the pace of normalization is dependent on the sustainability of inflation. “For the credibility of monetary policy, it is decisive that the expansionary monetary policy is ended when it becomes necessary from a price-stability perspective.” The threat of downward price spirals has retreated, he said, lessening the need for the emergency bond purchase tactic to remain in place. However, he concluded that “for the moment, an expansionary monetary policy is justified to support the economic recovery and thus inflation,” though there are “different opinions on how much we need to step onto the stimulus accelerator and which instruments we should use.
Germany: Industrial production stronger than expected. Production rose 1.2% m/m in May, much more than anticipated after the correction in orders data the previous month. Energy production remained strong, while manufacturing growth picked up after two weak month, which helped to compensate for the correction in construction production. The annual rate improved to 5.0% y/y and data confirm expectations for a strong second quarter GDP growth rate, leaving Germany on course for an ongoing robust recovery. The euro remain underpinned following the fresh bout of hawkish-leaning remarks from ECB policymakers yesterday, which has been followed by an above-forecast 1.2% rise in German industrial production, which was well up on the median expectation for 0.3%
Main Macro Events Today
UK Man. Production & BOE – Production and trade numbers for May are also up today, where manufacturing output expected ticking up by 0.5% m/m and by 0.2% y/y. Also BOE Governor Carney is due to speak today regarding the economic impact of climate change at the G20 meeting. U.S. Employment – June employment data is out today and should post a 180k headline for the month following 138k in May and 174k in April. The unemployment rate should hold steady at 4.3% from May, down from 4.4% in April. Canadian Employment Data – Employment is projected to grow 20.0k in June after the 54.5k surge in May, as Canada’s labour market continues to tighten. Unemployment is expected at 6.6% in June, matching the 6.6% in May. The Ivey PMI is seen rising to 55.0 in June from 53.8 on a seasonally adjusted basis, which would leave the index above 50.0 for the thirteenth consecutive 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.
The FOMC’s decision to outline its balance sheet unwind last month kicked off the beginning of the end for the central banks’ emergency QE programs. Other central banks, including the BoE, ECB, and BoC have been following suit now too. The shift in tone was surprising given the downtrend in global inflation pressures and this will be a challenge going forward. But central bank-speak suggests policymakers are willing to look through that dynamic, especially as growth remains relatively solid. Right on cue, inflation and growth data will dominate global calendars, while Fed chair Yellen will give her semi-annual Humphrey Hawkins testimony.
United States: U.S. markets will have a lot on their plates this week as they continue to assess the June jobs data, global developments in the aftermath of the G20 meeting, while looking ahead to Fed chair Yellen’s Humphrey Hawkins testimony and a batch of key data on inflation, sales, and production. There are several important data releases on the calendar, though not until Friday, which could help clarify the near-term picture for the Fed and the markets. The June CPI report will be the focus, with the headline expected to fall 0.2% thanks to the drop in energy prices, while the core edges up 0.1%. The annual pace should slow to 1.5% y/y from 1.9% y/y on the overall reading, while the core remains steady at 1.7% y/y. The Fed remains disappointed by the sluggishness, but the comments from the June minutes that the slowdown is a function of “idiosyncratic” factors suggests officials will continue to look through the data and concentrate more on economic growth. June retail sales will be the other report of note and are expected to post an unchanged reading overall .Other data over the week includes consumer sentiment from the University of Michigan (Friday), the June NFIB small business survey is on tap (Tuesday), along with a Yellen favorite, JOLTS (Tuesday). Jobless claims and PPI, along with the June budget, are due (Thursday).
Fedspeak: Yellen’s testimony before the House Financial Services Committee (Wednesday) and the Senate Banking Committee (Thursday) will highlight. Her comments will be scrutinized for any sign that the timing could be accelerated, with an announcement on the portfolio at the upcoming July FOMC, with the start of the shrinkage in September. Or given the weaker trend in inflation, we will listen to hear any indication the slowdown in inflation is giving her cold feet on further normalization, pushing off action on the balance sheet and rate hikes further into year end, or even 2018. Fedspeak from various others on the Committee will be of interest too. SF Fed’s Williams speaks from Australia (Monday 23:05 ET). Governor Brainard’s remarks on monetary policy (Tuesday 12:00 ET) will be closely monitored too. On the other end of the hawk-dove spectrum is KC’s George who will discuss the balance sheet and the economic outlook (Wednesday 14:15ET). Chicago Fed’s Evans (a voter) also will speak on monetary policy and the economy (Thursday11:30 ET). The hawkish Dallas Fed’s Kaplan attends and speaks at a conference on monetary policy (Friday 09:30 ET). The Beige Book (Wednesday) will be overlooked in favor of Yellen’s testimony, and won’t deviate from the moderate growth outlook.
Canada: In Canada, the Bank of Canada’s policy announcement, Monetary Policy Report and press conference (Wednesday) comprise the main event this week. A hawkish U-turn by the Bank via several recent appearances and interviews by Governor Poloz and Senior Deputy Governor Wilkins have left a widespread expectation that the Bank will increase rates by 25 basis points to 0.75%.The data calendar is lean this week. Housing starts (Tuesday) are seen improving to a 200k pace in June from the 194.7k clip in May. The June Teranet/National HPI (Wednesday) and the May new home price index are also due this week.
Europe: European bond yields continue to rise, while Eurozone spreads are widening as ECB officials continue to mull exit strategies, despite the fact that the Bank still has an easing bias on QE and that tapering won’t start until early next year. This week’s data round is unlikely to settle the argument over inflation one way or the other as there’s unlikely to be an major revisions to final price data for June. German HICP (Tuesday) is expected to be confirmed at 1.5% y/y, the French reading (Tuesday) at just 0.8% y/y, the Italian at 1.2% y/y and finally the Spanish at 1.2%. Those would all be sufficiently soft to back the doves’ arguments who maintain that the inflation remains too low and that the economy still needs a substantial degree of monetary support. Meanwhile, the hawks can find solace in May production numbers, which are expected to rise 1.2% m/m, more than doubling the 0.5% pace from April, supported by very strong German and French numbers. The data calendar also has German and Eurozone trade numbers. Germany issues 10-year Bunds (Wednesday).
UK: UK data has been flagging an onset of a stagnation in economic growth, with last week bringing unexpected weakness in production, trade, and house prices, and in all three of the PMI sector surveys. The new minority government, meanwhile, has managed to survive the early weeks of its existence, and negotiations with EU counterparts on Brexit will continue as planned. The “Great Repeal” bill will start to be debated in the coming weeks. The calendar this week is relatively quiet, highlighted by June labor data (Wednesday). The report is expected to show the unemployment rate holding steady at the cycle low of 4.6% in May. A key focus for policymakers and the markets alike, will be average household earnings, as any fresh signs of weakness will provide an offset to the hawkish stance of the BoE. The BRC June report on retail sales is also due (Monday), which will also be scrutinized for signs of weakness as incomes have tipped into negative growth in real terms in recent months.
Japan: In Japan, June PPI (Wednesday) is forecast slipping to 1.9% y/y from 2.1%, while the May tertiary index (Wednesday) is expected to fall 0.5% after rising 1.2% in April. Revised May industrial production will be released on Friday.
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: Equity markets remained in a positive mood in Asia overnight, with Hong Kong stocks heading for another gain of more than 1%, led by insurers and banks. The Nikkei is up 0.57%, with exporters underpinned by a weaker Yen. U.K. and U.S. futures are also moving higher, pointing to another positive session in Europe, where Eurozone markets in particular found solace yesterday in ECB comments suggesting that the ECB won’t tweak its forward guidance again until September. Oil prices are slightly higher on the day and the front end Nymex future is trading at USD 44.48 per barrel. The European calendar remains pretty light. Released overnight U.K. BRC like for like retail sales came in much better than expected at 1.2%. Still to come Italy releases industrial production data for May.
US reports: U.S. consumer credit surged $18.4 bln in May, following the upwardly revised $12.9 bln April gain (was $8.2 bln). Non-revolving credit continued to lead the strength, rising $11.0 bln versus $11.8 bln previously. Revolving credit increased $7.4 bln after edging up $1.2 bln in April. For Q1, credit climbed $45.5 bln and was up $57.8 bln in Q4. Also, U.S. Fed’s Labor Market Conditions index rose 1.5 points in June following an upwardly revised 3.3-point May increase (was 2.3) and a 3.8-point April jump. This is a 13th straight monthly gain. The index is heavily weighted by the unemployment rate, and the rise to 4.357% from 4.294% in Friday’s jobs report was a factor behind the gain. The LMCI, a favorite of chair Yellen, is a composite indicator comprised of 19 already released variables and corroborates the view of a solid labor market.
ECB’s: ECB seen steady over the summer. Comments from Bank of France governor Villeroy over the weekend seem to confirm that the central bank will refrain from policy and guidance changes at the July meeting and wait until September, when the next set of forecasts are due to decide on whether to tweak its stimulus settings. At the same time ECB Chief Economist Praet said in a newspaper article that “we still need a long period of accommodative policy”, in what looks like a fresh attempt to calm the nerves of investors, after some hawkish comments saw Eurozone yields rising last week. Yesterday we also saw a release of Eurozone Sentix Investor confidence which fell back in July, with the total reading declining to 28.3 from 28.4 in the previous month. The indicator for the current situation still improved to 37.3 from 36.0, but the expectations index fell back to 19.8 from 21.0, the first decline since February.
Germany: Germany posted a sa trade surplus of EUR 20.3 bln in May, slightly higher than the EUR 19.7 bln in the previous month. Exports rose 1.4% m/m on a seasonally adjusted basis, up from 0.9% m/m in April, while import growth stagnated at 1.2% m/m. The three months accumulated figure eased slightly, is is now below the total for Q1, which suggests trade is not making much of a contribution for Q2 GDP. Indeed, accumulated data for the first five months of the year show the total current account surplus falling back to EUR 98.0 bln from EUR 110.3 bln last year, while the trade surplus narrowed to EUR 100.1 bln from EUR 104.8 bln in the corresponding period 2016. Fresh signs then that the recovery this time around is not so much driven by external demand, but consumption and the domestic economy.
Main Macro Events Today
UK MPC Speeches – MPC Member Haldane is due to speak today at the ‘Essentials of Numeracy’ launch event, in London. Today as well, MPC Member Broadbent Speaks in Aberdeen at the Scottish Council for Development and Industry. Canada Housing Starts – Housing starts are seen improving to a 201.5k pace in June from the 194.7k clip in May. US NFIB & JOLTS – The June NFIB small business survey is on tap today, along with a Yellen favorite, JOLTS. NFIB expected to stay quite stable at 104.4 from 104.5 last time, while JOLTS job Openings expected to fall at 5.89M from 6.044M in April. Fedspeak – Governor Brainard’s remarks on monetary policy at 12:00 ET will be closely monitored. She’s a voter and one of the more dovish on the Committee, though she has tacitly supported the Fed’s tightening actions. 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 Nikkei and ASX underperforming and heading south as the Dollar weakened ahead of Yellen’s testimony today. FTSE 100 futures are moving higher U.S. stock futures are mixed as markets remain in the ban of central bank comments. Yields rose again across Europe and with central banks eying exit trend occasional dovish comments are unlikely to provide more than a brief halt in the uptrends in yields. Today’s data calendar has U.K. labor market data as well as Eurozone May production numbers. Germany auctions a new 10-year Bund.
US reports: revealed U.S. NFIB small business optimism index fell to 103.6 in June from 104.5 in May. It’s the lowest since the 98.4 in November. The index was as high as 105.9 in January, which was the best since the 106.1 print from December 2004. The all-time high is 107.4 from November 2004. The percentage of firms reporting plans to hire fell to 15% from 18%. On the other hand, U.S. JOLTS report showed job openings slumped 301k in May to 5,666k after rising 182k to 5,967k in April. The rate slid to 3.7% from 3.9%. But, hirings increased 429k to 5,472k, rebounding from the 261k drop to 5,043k. The rate improved to 3.7% from 3.5%. And quitters increased 177k to 3,221k after falling 94k to 3,044k. The rate inched up to 2.2% from 2.1%. The headline figure is disappointing, but the quit numbers, a Yellen favorite, should offset. Lastly, the U.S. wholesale report revealed a disappointing 0.5% May wholesale sales drop after a 0.3% (was 0.4%) April decline, though we saw a 0.4% May inventory rise that beat the 0.3% climb in the advance indicators report after a 0.4% April drop. The May sales drop mostly reflected a 7.8% price-led petroleum plunge, though weakness was evident across the durables data as well.
BoE MPC member Broadbent kept mum on interest rates during a speech he delivered before the Scottish Council for Development and Industry earlier. Broadbent was among the majority of MPC members to vote for unchanged policy at the June meeting, which had been a surprise for markets as three of his colleagues voted for a 25 bp hike in the repo rate. He spoke mostly about his view on Brexit risks, concluding that “put simply, a significant curtailment of trade with Europe would force the UK to shift away from producing the things it’s been relatively good at, and therefore tends to export to the EU, and towards the things that it currently imports and is relatively less good at.” Broadbent argued that this, at least initially, would both lower income as trade shifts away from services exports, which the UK has a comparative advantage in, while raising costs as production shifted more towards food and machinery, areas where the UK has a comparative disadvantage. Sterling took a 15-20 pip tumble versus the G3 currencies, with markets appearing to take Broadbent’s words as meaning that he won’t vote for a tightening at the next MPC meeting on August 3.
Fed Governor Brainard: it’s “appropriate soon” to start balance sheet shrinkage, she said in her speech on Cross-Border Spillovers of Balance Sheet Normalization. That’s consistent with the messages from the June policy state, the minutes, and the SEP, though it’s important that the dovish governor echoed that sentiment. The Fed will continue to assess inflation, especially in light of the recent softening, before deciding on the rate path. Policymakers want to move cautiously on further rate increases. She also noted that the currency markets could be more sensitive to the Fed’s rate actions than on the balance sheet.
Main Macro Events Today
UK Labor Data -The U.K. labour market report for May is expected to show the unemployment rate holding steady at the cycle low of 4.6%. A key focus for policymakers and the markets alike, will be average household earnings, as any fresh signs of weakness will provide an offset to the hawkish stance of the BoE. Fed Yellen – Yellen’s testimony today before the House Financial Services Committee and the Senate Banking Committee (Thursday) will highlight .Her comments will be scrutinized for any sign that the timing could be accelerated, with an announcement on the portfolio at the upcoming July FOMC, with the start of the shrinkage in September. Or given the weaker trend in inflation, we will listen to hear any indication the slowdown in inflation is giving her cold feet on further normalization, pushing off action on the balance sheet and rate hikes further into year end, or even 2018. BOC Statement – The Bank of Canada’s policy announcement, Monetary Policy Report and press conference comprise the main event today. A hawkish U-turn by the Bank via several recent appearances and interviews by Governor Poloz and Senior Deputy Governor Wilkins have left a widespread expectation that the Bank will increase rates by 25 basis points to 0.75%. 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 cautiously higher overnight and are heading for a strong week, for Hong Kong the best of the year, helped by a rally in banks and underpinned by cautious comments from Yellen, who doesn’t seem to be in a rush to tighten policy. Central banks remain the key focus and the announcement that Draghi will be speaking at Jackson Hole shortly before the September policy meeting has sparked speculation that he will use the chance to lay out the ECB’s tapering plans, coupled with remarks from BoE’s MacCafferty that the BoE should revisit the guidance on the unwinding of QE sent European yields higher yesterday afternoon, while capping gains in Eurozone equities and seeing the FTSE 100 closing in the red. Stock futures are pointing to a rebound in the FTSE 100, and Yellen’s comments may help bond yields to come off highs at the end of the week. The European calendar has Eurozone trade data as well as final Italian HICP readings.
Fed Chair Yellen: has concluded her testimony yesterday. There wasn’t an attempt to walk back from the cautiously optimistic tone from yesterday’s testimony where she hedged the softer inflation dynamics. Other than her comment that the balance sheet is unwound is likely to push up rates at the long end, there weren’t any big revelations yesterday. That indication has seen the 30-year yield jump 5 bps to 2.925%, with the 5s-30s spread has steepened to 101.6 bps from 100.9 bps yesterday. It was as narrow as 93.5 bps on July 3. She said Q2 GDP growth should be “significantly stronger” versus Q1, but reaching a 3% pace would be “quite challenging.” Yellen on the balance sheet said that their intention is to shrink the balance sheet in a “slow, gradual, and predictable way. Fed has set out a detailed plan on how it will achieve that. Once triggered, the unwind is expected to run in the background. The run off should result in some increase in long term rates compared to the front end, she acknowledged, and the FOMC will take that into account as it sets the funds rate. She expects the funds rate to remain the principal tool of monetary policy. She repeated that the balance sheet and the quantity of reserves will be reduced over the next several years, but won’t go back to the pre-crisis levels.
U.S. reports: revealed a smaller than expected PPI downdraft into mid-year despite falling oil prices, with a lift from rising food prices thanks to hot and dry weather in the upper midwest. We also saw sustained lofty initial claims levels into the holiday week of July that defied the usual auto retooling headline, likely thanks to ongoing vehicle sector weakness and some extended summer plant shutdowns. For PPI, the 0.1% June headline and core price gain beat estimates thanks to a smaller than expected 0.5% energy price drop alongside a 0.6% food price rise. For claims, a 3k downtick to a still-elevated 247k trimmed a 6k rise to 250k (was 248k) in the prior week. Claims are averaging 247k in July, following lean prior averages of 243k in June, 241k in May, and 243k in April. Next week’s BLS survey week reading should lie within the mix of 242k in June, 233k in May, and 243k in April, though the recent up-tilt may imply an overshoot.
Main Macro Events Today
EU Trade Balance – May Trade Balance for expected to post an increase at 20.3B from 19.6 B last month. US Retail Sales – The June retail sales report expected to be a flat with the ex-autos figure up 0.2% This follows respective May figures of -0.3% for both the headline and ex-autos and 0.4% for both figures in April. There is possible downside risk from the recent declines in auto sales as well as declines in gasoline prices. Meanwhile. June CPI should post a flat headline as well with a 0.2% increase for the core. This compares to the May figures which had the headline down 0.1% and the core up 0.1% and April where the headline was 0.2% and the core 0.1%. An anticipated dip in gasoline prices could weigh on the release too. US CPI and Industrial Production – June industrial production data is out today and should post a 0.3% increase for the headline following a flat rate in May and a 1.1% bounce in April. Capacity utilization should tick up to 76.8% from 76.6% in May and 76.7% in April. Mining and factory employment both climbed in the June which could provide a tailwind to the release. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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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 conundrum of improved growth and slowing inflation continues to bedevil central bankers as the opposing dynamics lead to conflicting policy prescriptions on normalization. But there’s a new wrinkle as QT, quantitative tightening, comes into view, alongside the more traditional tool of rate management, each of which have differing implications for bond markets. And the differing views of hawks and doves have resulted in a clash of commentary that’s done more to confuse and vex the markets regarding the course of policy, rather than provide stability through transparency. The markets will remain hypersensitive to policy actions and policy-speak near term, while keeping a close eye on inflation and growth data.
United States: U.S. markets will continue to assess Fed Chair Yellen’s testimony last week, where she remained optimistic on growth, but hedged on “transitory” inflation outlook. Headlining the data slate will be June housing starts, July PMIs and trade prices, none of which will be crucial for trading. Housing starts (Wednesday) are forecast rising to a 1,190k pace in June following the 5.5% drop to 1,092k in May. However, a rise in construction jobs last month suggests upside risk. The July Empire State index (Monday) is seen falling back to 15.0 after jumping 20.8 points to 19.8 in June (which was the highest since September 2014). Also, the July Philly Fed index (Thursday) should dip to 24.0 following the 11.2 slide to 27.6 in June. The 43.3 print from February was the highest going back to January 1984. The June trade price data (Tuesday) will be of interest. Import prices are forecast falling 0.5% after dipping 0.3% in May, with petroleum the main factor behind the weakness. Export prices should edge up 0.1% following a 0.7% drop in May where declines in food and ag prices weighed. Other releases on this week’s calendar are the NAHB homebuilder survey for July (Tuesday), May Treasury capital flows (Tuesday), and weekly initial jobless claims (Thursday).
Canada: Canada’s calendar has a healthy helping of economic data this week, but nothing from the Bank of Canada. However, the economic data could influence expectations for the September announcement. The June existing home sales report is expected to be released on Monday, with a 5.0% y/y drop projected for total sales. Manufacturing (Wednesday) is seen rising 1.0% m/m in May after the 1.1% improvement in April. Retail sales (Friday) are projected to grow 0.3% m/m in May after the 0.8% gain in April. CPI is expected to dip 0.1% in June (m/m, nsa) after the 0.1% rise in May, leaving a slowing in the annual growth rate to 1.0% in June from the 1.3% y/y pace in May. But the June CPI is of little importance to the near-term policy outlook, given that the BoC is looking through the temporary factors (decline in auto prices and electricity costs) that are holding back total and core inflation growth. CPI will become more important later this year, when the temporary nature of the presumed factors restraining inflation will be tested.
Europe: All eyes will be on the ECB this week as traders look to the central bank for direction. Conflicting messages from ECB officials exacerbated volatility in recent weeks, and nerves are likely to remain high. The ECB is widely expected to be heading for tapering early next year, although Praet and Draghi are wary of committing prematurely to exit steps and have been instrumental in keeping the QE easing bias in place. Data releases this week are unlikely to add further ammunition to the arguments of the hawks at the council. The final reading of Eurozone June HICP inflation (Monday) is widely expected to be confirmed at just 1.3% y/y from 1.4% y/y in May, and clearly below the ECB’s 2% limit for price stability. However, base effects from energy prices are actually largely to blame for the slowing versus May, and core inflation ticked higher in the June preliminary to 1.2% y/y from 1.0%, as did the German headline rate. Still, with German PPI inflation seen slowing in May, the doves around Praet and Draghi will continue to argue that the low inflation environment still warrants a substantial degree of monetary stimulus. The ECB has acknowledged though, that growth is strengthening and that adverse deflation scenarios are no longer looking likely. That prompted the move to a neutral stance on rates in June. And, the expected further improvement in Eurozone consumer confidence (Thursday) to -1.1 from -1.3 should back expectations for ongoing robust growth going ahead. German ZEW investor confidence (Tuesday) meanwhile is likely to reflect market concerns about the impact of tapering as global central banks eye exit steps. The Eurozone also has current account data for May (Thursday), and there’s a German 30-year Bund sale (Wednesday). The ECB releases its bank lending survey (Tuesday).
UK: This week’s schedule brings the June inflation report (Tuesday), where expected headline CPI to remain at 2.9% y/y, a four-year high. The sharp y/y weakening in sterling following the Brexit vote in June last year has kindled inflation, and at least three of the current eight-member MPC committee (normally nine, with one position currently vacant) are now itching to reverse last August’s 25 bp cut in the repo rate. Official retail sales for June (Thursday) has us expecting a 0.2% m/m rebound after the sharp 1.2% contracting on May.
Japan: Japan is closed on Monday for Marine Day holiday. The BoJ meeting (Wednesday, Thursday) will be a focal point given the world-wide interest in all things central banking. No changes in policy are expected in either rates or stimulus. The Bank may, however, downgrade its inflation outlook, while upping expectations for the economy, consistent with recent global patters and according to recent market chatter. Data includes the June trade report which expected the balance to flip to a JPY 500.0 bln surplus, from the JPY 204.2 bln shortfall in May. The softer yen likely supported a bounce in exports after three months of weakness. The May all-industry index (Thursday) should fall 1.0% m/m based on declines in retail sales and industrial production, after the prior 2.1% increase.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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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 even as rate hike expectations are being pushed out, as investors turn their focus on U.S. politics and rising doubts over Trump’s reform agenda. In China markets continued to fret about the prospect of tighter regulations and Sunac China Holdings Ltd came under pressure in Hong Kong amid media reports that banks are looking into the company’s credit risk. A stronger Yen meanwhile weighed on exporters as markets re-opened after a long weekend, although it was the AUD that outperformed. U.K. and U.S. stock futures are also down, while oil prices are holding marginally above USD 46 per barrel. Today’s calendar has German ZEW investor sentiment as well as the ECB’s bank lending survey, while the U.K. has inflation numbers for June. The ECB meeting on Thursday continues to hang over Eurozone markets, with investors concerned that Draghi may already drop the easing bias on QE.
U.S. reports: U.S. Empire State manufacturing index dropped 10.0 points to 9.8 in July, lower than expected, after rebounding 20.8 points to 19.8 in June. The latter was the highest since September 2014. Declines were broad-based. The employment component fell for a third consecutive month, sliding to 3.9 from 7.7, with the workweek at unchanged from 8.5. New orders fell to 13.3 from 18.1. But, prices paid edged up to 21.3 from 20.0, with prices received at 11.0 from 10.8. The 6-month general business outlook index eased to 34.9 from 41.7, with employment at 11.8 from 12.3. The future new order index was 33.4 from 42.2, with prices paid at 30.7 from 33.1 and prices received at 15.7 from 13.8. Capital expenditures are at 15.0 from 20.8, with technology spending at 11.8 from 11.5.
Final June EMU HICP inflation was confirmed at 1.3% y/y, in line with the preliminary number and down from 1.4% y/y in May. The breakdown confirmed that the deceleration in the headline rate was mainly due to lower energy price inflation, which dropped back to just 1.9% y/y from 4.5% y/y in the previous month. Services price inflation meanwhile accelerated to 1.6% y/y. Still, while core inflation moved up from the 0.9% y/y in May, at 1.1% y/y it remains far below the ECB’s 2% limit for price stability and prices for non-energy industrial goods rose just 0.4% y/y, so plenty there for the doves at the ECB to argue with. Against that background Draghi is likely to stick to the message from June at this week’s council meeting and try to calm tapering nerves ahead of the summer break.
Main Macro Events Today
German ZEW – ZEW investor confidence today is likely to reflect market concerns about the impact of tapering as global central banks eye exit steps. A slight decline in the headline July number to 18.3 is expected from June’s 18.6. Those are still strong level, indicating that optimists outnumber pessimists, and so should not spark fresh growth concerns, although after some disappointing U.S. data and cautious comments from Yellen, it will underpin the halt in the rise in yields. UK PPI & CPI – The June inflation report expected with headline CPI to remain at 2.9% y/y, a four-year high. The sharp y/y weakening in sterling following the Brexit vote in June last year has kindled inflation, and at least three of the current eight-member MPC committee (normally nine, with one position currently vacant) are now itching to reverse last August’s 25 bp cut in the repo rate. The PPI for June expected to decrease at -1.0% from -1.3% last month. BoE Gov. Carney – BoE Governor Carney will give a speech today at the unveil of the new £10 note, in Hampshire. US Trade Data & NAHB – The June trade price data will be of interest. Import prices are forecast falling 0.5% after dipping 0.3% in May, with petroleum the main factor behind the weakness. Export prices should edge up 0.1% following a 0.7% drop in May where declines in food and ag prices weighed. Other releases for today are the NAHB homebuilder survey for July and May Treasury capital flows . 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 mostly higher, as USD steadied. The ASX is outperforming despite ongoing strength in AUD and FTSE 100 futures are rising in tandem with U.S. futures. Long yields picked up in the U.S. and Japan, but the September Bund contract moved higher in after hour trade yesterday, suggesting opening gains in Bund futures, after yesterday’s sharp drop in European yields. Oil prices are slightly down, but the front end WTI future is holding above USD 46 per barrel. Today’s European calendar is quiet, with a German 30-year auction and Eurozone construction output the only highlights, leaving the focus firmly on U.S. political events and the ECB meeting tomorrow.
ACA reform: A smattering of healthcare headlines in wake of the ACA reform abandonment and now chorus of outright repeal calls suggests the debate appears to be disintegrating further. Republican senators Collins, Portman and Capito indicated that they would vote against a repeal without a replacement plan. In contrast, Vice President Pence said he and Trump would “fully support” leader McConnell’s decision to move forward with a bill that only repeals Obamacare in a “fresh start.” Pence warned that congressional inaction “is not an option and congress needs to do their job.” Senate Democratic leader Schumer said an Obamacare repeal without replacement would be a “disaster.” Meanwhile, House Budget Chairwoman Black said she expects the Republican budget to pass the panel and full House vote. Trump’s postscript on ACA reform was aired live and he confirmed that he was “disappointed” that after hearing repeal/replace on healthcare for 7-years that the votes weren’t there. He didn’t consider the renegade votes “disloyal,” but said that more effort would need to take place to get more Republicans in seats in 2018. Trump then reiterated his fallback plan of letting Obamacare fail and predicted the Dems would come back at that point to replace it or come up with something else.
U.S. reports: import prices fell 0.2% in June, with export prices off 0.2% as well. The 0.3% decline in May import prices was revised up to -0.1%, while May export prices were nudged to -0.5% from -0.7% previously. Petroleum import prices dropped another 2.2% (a fourth straight monthly slide) versus -1.2% previously (revised from -3.9%). As for export prices, agriculture prices dropped 1.5% from -1.6%, with foods, beverages at -1.6% from -2.0%, with industrial supplies flat from -1.3%. Excluding ag, export prices were flat. Slowing inflation remains the theme into the summer months and that should support Treasury gains. U.S. NAHB homebuilder sentiment index fell 2 points to 64 in July, below expectations, after falling 3 points to 66 in June (revised from 67). It’s the lowest since 63 in October, and below the 67 6-month average, but it is well up from the 58 a year ago. The current single-family sales index dropped 2 points 70 from 72 last month. The future sales index also declined 2 points to 73 from 75. The index of prospective buyer traffic slid to 48 after dropping 2 ticks to 49 previously. The NAHB indicated tariffs on Canadian lumber are weighing.
Eurozone: UK June CPI unexpectedly softened to 2.6% y/y after May’s cycle-high rate of 2.9% y/y. The median forecast had been for an unchanged 2.9% outcome. The ebb is in sync with the directional pattern seen in inflation readings in other key economies in June, although price pressures in the UK remain relatively more elevated due to the inflationary consequences of the sharp y/y sterling decline following the Brexit vote at the end of June last year. A decline in motor fuels was a key factor driving the headline rate lower, along with the prices of recreational and cultural goods and services. German ZEW investor confidence weaker than expected, with the expectations reading falling back to 17.5 in July from 18.6 in the previous month. Expectations had been for a correction in sentiment amid the realization that global central bank support has peaked, but the dip is still more pronounced than anticipated, especially as the current conditions indicator also fell back. More arguments then for the doves at the ECB who are eager not to let markets price in tapering steps too early and we expect Draghi to try and calm nerves at this week’s council meeting, which will be the last ahead of a summer break, with the next meeting only scheduled for September.
Main Macro Events Today
US Housing Starts – Housing starts are forecast rising to a 1,160k pace in June following the 5.5% drop to 1,092k in May. However, a rise in construction jobs last month suggests upside risk. Canada Manufacturing – Manufacturing shipments, due today, are expected to reveal a 1.0% m/m gain in May after the 1.1% rise in April. Forecast is supported by a 1.3% improvement in export values during May. However, gold shipments to the U.K. were a driver of total exports, suggesting some downside risk for our manufacturing shipments projection. An as-expected rebound in shipments would be supportive of the “improving” narrative for Canada’s economy this year, and hence underpin expectations for one more rate hike this year. Japanese Trade – Data includes the June trade report. The balance expected to flip to a JPY 500.0 bln surplus, from the JPY 204.2 bln shortfall in May. The Exports and Imports expected to fall by 5.4% and 3.2% respectively. 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, led by Japan, as the BoJ kept its accommodative policy unchanged and the Yen weakened. FTSE 100 futures are also higher, while U.S. futures are narrowly mixed. The eyes are now turning to the ECB, which is expected to follow the BoJ’s lead and keep not only current policy, but the forward guidance unchanged. There is some lingering concern that the central bank could already drop the easing bias on QE at today’s meeting, so Bunds could get a boost from Draghi’s attempts to calm tapering nerves ahead of the summer break. The European data calendar has U.K. retail sales, as well as Eurozone current account and BoP data for May.
U.S. reports:. housing starts rebounded 8.3% to a 1.215 mln pace in June, better than forecast, after the 2.8% decline in May to 1.122 mln. The gain breaks a string of three straight monthly declines, and it’s only the second increase of the year. Single family starts rose 6.3% versus -2.9% previously, while multifamily starts jumped 13.3% from -2.4%. Building permits increased 7.4% to 1.254 after falling 4.9% to 1.168 mln. Regionally, starts surged in the Northeast (83.7%) and in the Midwest (22.0%), and were up in the West (1.6%), while they declined in the South (-3.8%). Housing completions improved 5.2% to 1.203 mln after increasing 4.2% to 1.144 mln.
Canada: manufacturing shipment values grew 1.1% in May, as expected, but after a sharp downward revision in April to a 0.4% gain (was +1.1%). A 4.2% gain in transport equipment sales and a 2.4% rise in chemical sales drove the increase total manufacturing shipments during May. Manufacturing sales slipped 0.1% when motor vehicles, parts and accessories are excluded. A total of 16 out of 21 industries reported an improvement in sales values. Durable goods sales grew 2.2% while non-durables dipped 0.3%. Notably, lower prices knocked petroleum and coal industry sales values 3.4% lower in May. Manufacturing sales volumes expanded 1.1% m/m in May, supportive of continued momentum in May GDP. A 0.2% m/m gain in May GDP is expected after the 0.2% rise in April. The report is supportive of the Bank’s upbeat growth outlook, in turn underpinning projections for a near term rate hike. Another 25 bp move is expected in October after no change in September.
German: PPI inflation fell back to 2.4% y/y in June, from 2.5% y/y in the previous month. A tad higher than anticipated, but still continuing the recent downtrend as oil prices turn out to be weaker than previously thought. Headline Eurozone inflation also fell back in June as energy price inflation eased, so there is no really new message from the German PPI numbers, although at 2.4% y/y, the numbers remain elevated.
Main Macro Events Today
UK Retail Sales – Official retail sales for June expected at a 0.2% m/m rebound after the sharp 1.2% contracting on May. ECB Rate Decision, Monetary Policy statement & Conference – After the ECB removed the easing bias on rates in June, but still maintained an easing bias on QE, the central bank expected to keep policy parameters unchanged at today’s council meeting, which will be followed by a longer summer break. The message today is likely to remain that the economy may be improving but still needs a substantial degree of monetary support and cautious remarks from Draghi should underpin bonds, even if a no-change outcome is widely expected. US Jobless Claims – U.S. initial jobless claims are expected to be 245k in the week-ended July 15. Meanwhile the July Philly Fed index should dip to 24.0 following the 11.2 slide to 27.6 in June. 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.
European Outlook: Asian stock markets are slightly down, as banks and carmakers weighed on the index and the Yen held gains while investors look with some concern to political events in the U.S. In Europe, Draghi failed to calm tapering nerves yesterday and the EUR surged higher in the wake of the press conference, which saw Eurozone stock markets closing in the red. After the tumultuous afternoon, yesterday the GER30 seems to be heading for a quiet end to the week. The FTSE 100 outperformed yesterday and managed slight gains, amid a weak pound and could get some support today from reports that the government is accepting the need for a transitional period that will see the U.K. remaining in the single market and customs union for some time after 2019. Today’s data calendar is quiet, focusing on U.K. public finance data, although the ECB’s survey of professional forecasters could also attract some attention.
FX Update: The euro has been in consolidation mode after rallying strongly yesterday in the wake of the ECB’s policy announcement, which has left markets anticipating a tapering in QE, even it is still some way down the road. EURUSD has been settled in the mid-to-low 1.16s, below the 23-month high logged yesterday at 1.1658, although lifting somewhat in early European trade. EURJPY managed to edge out a fresh 10-day high, at 130.32. EURGBP has plied a narrow range just of yesterday’s eight-month peak 0.8977, weighed on slightly by a bid in Cable, which has lifted above 1.2980, putting in a little distance from the five-session low it saw yesterday at 1.2933. The UK’s international trade secretary, Fox, said that he is not planning on leaving the EU in 2019 without a deal, although the prime minster and other ministers had formerly used this “cliff edge” threat as an apparent bargaining tool in pre-negotiation salvos. Fox said that could be a two-year “implementation phase,” or transition period. His remarks help allay market concerns of divisions in the government’s approach to Brexit.
ECB’s President Draghi: Yesterday’s ECB meeting didn’t bring any real surprises. Rates and forward guidance were left unchanged and Draghi was eager to calm nerves ahead of the summer break as he tried to explain and clarify his comments from Sintra, which sent yields sharply higher at the end of last month. As Draghi said the last thing the ECB wants is for financing conditions to tighten prematurely and against that background, the central bank is not just keeping the easing bias on QE in place, but also remains reluctant to commit not just to actual tapering, but to the timing of the decision on the future of asset purchases. Also, yesterday Eurozone consumer confidence unexpectedly fell back to -1.7 in July from -1.3 in the previous month. Expectations had been for another improvement as labour markets continue to stabilise and inflation falls back again, but it seems lingering concern remains U.S. equities rolled over from highs coinciding with a surge in the euro through 1.16 and another whipsaw on yields. The presumption is that the ECB/euro/bund axis is still driving the volatile trade, but there was also a US AG Sessions presser expressing his wish to continue with his job at the Justice Department, along with others, despite criticism from President Trump.
U.S. reports: revealed a big Philly Fed drop to a still-solid 19.5, following a 7-month stretch of oddly robust levels, while initial claims tightened by 15k to 233k in the BLS survey week after lofty readings as we entered the July auto retooling period. We also saw a 0.6% leading indicators surge that left a 10-month string of gains. The Philly Fed drop accompanied an Empire State July decline to 9.8 from a 3-year high of 19.8 in June, while the ISM-adjusted Empire State fell to 53.3 from a 6-year high of 56.2, leaving a resumption of the drop-back in the available producer sentiment figures after an unexpected June bounce. The mix left a neutral signal for 190k July nonfarm payroll estimate, and an assumed GDP growth bounce to 2.6% in Q2 and 3.1% in Q3 after a 1.4% Q1 rate.
Main Macro Events Today
CAD CPI – The CPI, expected, to dip 0.1% in June (m/m, nsa) after the 0.1% rise in May, leaving a slowing in the annual growth rate to 1.0% in June from the 1.3% y/y pace in May. Gasoline prices pulled back in June compared to May, which drives forecasts. The three core CPI measures remained tame in May, and are expected to be subdued in June.
CAD Retail Sales – The Retail sales, expected to rise 0.3% gain in May after the 0.8% bounce in April. The ex-autos sales aggregate is seen improving 0.1% in May following the 1.5% surge in April. Gasoline prices tumbled 4.0% m/m in May after the 9.5% gain in April, according to the CPI. Hence, gasoline station sales should exert only a hefty drag on total and ex-autos retail sales. But vehicle sales were solid in May, which should support total sales.
UK Public Finance data – June’s Public borrowing data is also up today, and expected to go down to 4.80B from 5.99B last time.
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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.
Both the ECB and BoJ met expectations as each left policy unchanged last week, though the outlook for ECB remains under the dark cloud of future QE tapering, while the BoJ gave up the ghost on its inflation target near-term. The FOMC is set to follow suit and kick the policy can down the road this week, though the markets will remain highly attuned to any hints over the outlook on inflation, the economy, and the balance sheet unwinding timing/
United States: In the U.S., the FOMC is not likely to make any policy changes at the July 25-26 meeting. The slowing in inflation is likely to keep the Fed on the sidelines. Meanwhile, there has been some speculation the Fed could announce the start of QT (quantitative tightening) this week. The economic calendar resumes with existing home sales (Monday) forecast to rise 0.4% to a 5.64 mln unit pace in June. Various May home price indices are due (Tuesday), including the Case-Shiller and FHFA readings. Consumer confidence is also on tap (Tuesday), but expected to slip to 117.0 for July from 118.9, while the Richmond Fed index is seen steady at 7. The MBA mortgage market indices are due (Wednesday), along with the EIA energy inventory report and new home sales may decrease 2.5% to a 595k pace in June. Durable goods orders are forecast to snap back 2.7% in June vs -0.8% in May (Thursday). Advance Q2 GDP should be boosted to 2.6% from 1.4% in Q1 (Friday), given upside risk on consumption, while Q2 ECI is forecast to rise 0.5% from 0.8% and final Michigan sentiment may be revised up to 93.5 from 93.1 previously. Fedspeak continues to run silent into the FOMC decision midweek before Minneapolis Fed’s dovish dissenter Kashkari breaks the ice with a moderated Q&A Chamber of Commerce event from 13:20 ET (Friday)
Canada: In Canada GDP for May (Friday) is the centerpiece of this week’s calendar. An 0.2% m/m gain is projected for May, which would match the 0.2% increase revealed in April. An as-expected improvement in May GDP would leave real GDP growth on track for a roughly 3% gain following the 3.7% surge in Q1, which would match the BoC estimate for Q2 GDP and hence be supportive of the already widespread projection for a near tear rate hike. Wholesale trade (Monday) is seen improving 0.7% after the 1.0% gain in April. The report typically has little lasting impact on the market, but will be the final input into the May GDP projection. May average weekly earnings and the CFIB’s Business Barometer index of small and medium sized business sentiment are both due on Thursday.
Europe: The ECB went into the summer break with a parting shot that once again acknowledged stronger growth while stressing that substantial monetary accommodation remains necessary and that inflation is not where the ECB wants to it see yet. This week brings the first key GDP readings for Q2 and French growth seen steady, while Spanish growth is expected to come in unchanged at 0.8% q/q. A robust second quarter would tie-in with improved confidence indicators, although looking ahead, it may feel as though that is as good as it gets for now, with July confidence indicators expected to fall back slightly. A decline in the manufacturing PMI to 57.2 expected and a marginally better service reading of 55.4 which would leave the July composite PMI unchanged at 56.2. Risks are to the downside though, considering the second consecutive dip in German ZEW investor confidence and as the euphoria over Macron’s election victory fades and political risks ease. July Eurozone Economic Confidence is expected to have eased to 110.9 from 111.1 in June.
Inflation, meanwhile, remains far below the ECB’s definition of price stability and July preliminary HICP readings from Germany, France and Spain are likely to indicate that this won’t change soon. Growth forecasts may have been revised up, but inflation forecasts are being scaled back with the latest surge in the EUR doing nothing to change the picture that a strong currency and weaker than projected oil prices will keep headline inflation subdued.
UK: The calendar this week features the first release of Q2 GDP (Wednesday), which it is expected to rise 0.3% q/q and by 1.7% y/y, which would follow respective Q1 figures of 0.2% and 2.0%. The quarterly pace of growth likely remained relatively lackluster in Q1 compared to growth in the Eurozone and the U.S., and the same picture looks likely to be painted again this quarter. Weakness in sterling following the Brexit vote last June has fed a secular rise in UK inflation, which in turn has eroded household incomes and consumer spending, which in recent years of government austerity has been the main driver of the economy. Other data releases include the CBI’s July surveys, with the industrial trends report (Tuesday) seen ebbing to 11 in the headline total orders reading after 16 in the prior month, while the distributive trades report (Thursday) is expected to fall to a reading of 10 in the headline realized sales figure after 12 in June.
Japan: Japan’s docket gets under way on Wednesday, with June services PPI due. Prices expected at 0.5% y/y versus the previous 0.7% outcome. The remainder of the calendar comes on Friday, starting with CPI data. June national prices are seen slowing to 0.3% y/y from 0.4% overall, and up 0.3% y/y from 0.4% on a core basis. June unemployment is seen falling a tenth to 3.0%, while the job offers/seekers ratio is expected at 1.50 from 1.49. June personal income and PCE are due, with the latter forecast to have risen 0.5% y/y from -0.1% previously. June retail sales are penciled in at a 0.5% y/y rate from -0.6% for larger retailers, and up 3.0% y/y from 2.1% overall
Australia: In Australia, the Q2 CPI (Wednesday) takes center stage given the global focus on inflation. The latter was discussed at the July 4 policy meeting. Trade prices (Thursday) are seen rising 1.0% in Q2 (q/q, sa) for imports and falling 6.0% for exports. The Q2 PPI is due Friday. Reserve Bank of Australia Governor Lowe speaks on the Labor Market and Monetary Policy (Wednesday) form Sydney.
New Zealand: New Zealand’s calendar has June trade (Wednesday), expected to reveal a NZ$150 mln surplus following the NZ$103 mln surplus in May.
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Please note that times displayed based on local time zone and are from time of writing this report.
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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 sideways, fluctuating between gains and losses ahead of the Fed meeting. Asia’s equity benchmark remains near the highest level since 2007, and the ASX managed a nearly 0.9% gain so far, despite a stronger AUD as oil prices moved higher. The Fed is likely to remain on hold this week and could push out further action on rates, but markets are still cautious, with U.S. stock futures also moving sideways, although the FTSE 100 future is managing gains, as the pound retreats. The EUR meanwhile is on the rise again and Mersch’s comments on reflation and his more optimistic view on inflation and growth could also see fresh pressure on Bund futures. The 10-year cash yield already moved up from lows in late trade yesterday and closed above 0.50% and indeed, while Draghi may have been eager to calm nerves ahead of the summer, tapering is still on the agenda for next year.
US Data: U.S. Markit manufacturing PMI jumped 1.2 points to 53.2 in the July preliminary print after falling 0.7 points to 52.0 in June. It was 52.9 a year ago. This is a 14th consecutive month of expansion. Also, the bounce breaks a string of declines going back to the start of the year after the gauge hit 55.0 in January, reflecting increased momentum as the second half of the year begins after the slowing in Q1 and Q2. The index hit a recent low of 50.7 in May 2016. The preliminary July services index was unchanged at 54.2 after rising 0.6 points in June 53.6 in May. It was 51.4 a year ago. It’s a 17th straight month of expansion and has been fairly stable in the 53.5 area all year since hitting a high of 55.6 in January. Employment rose to 54.4 from 52.8 previously and is the highest reading since December. Prices charged fell. The flash composite index rose 0.3 points to 54.2 in July from 53.9 in June and is the highest reading since January. It was 51.8 a year ago. Employment and new orders improved.
SNB’s Jordan: CHF still significantly overvalued. The central bank head said in an interview with Le Temp, conducted last week and published late yesterday that this means the SNB is sticking with its policy of low interest rates and intervention on forex markets if needed. Jordan added that inflation remains low with production capacity not fully exhausted. He stressed that the central bank still has enough room to manoeuvre to expand the balance sheet if necessary. The USDCHF was relatively unmoved and trades at 0.9464 down from overnight highs of 0.9476
FX Update:. Narrow ranges have been the order of the day so far, with a combo of a dearth of fresh directional cues, summertime thinness, and the looming proximity of the Fed’s policy announcement (tomorrow) fostering a noncommittal market. USDJPY dipped back under 111.00, reflective of a broad though moderate bid in the yen, which has been seen since just after the Tokyo fix. Stock markets in Asia have seen little direction. EURUSD has continued to oscillate around the 1.1650 level for a second day, holding below the 23-month high at 1.1684 that was pegged in the Asia session on Monday. AUDUSD continued to consolidate the sharp gains the pair saw last week. Cable has remained buoyant above 1.3000, though off yesterday’s four-session peak at 1.3058.
Main Macro Events Today
German Ifo Business Climate – After yesterday’s disappointing July PMI readings, the German Ifo index tomorrow also comes with a risk to the downside. We had been looking for a drop to 114.9 (med same) from 115.1 in the previous month, but the risk is that the headline number comes in even weaker. Like the PMIs, the Ifo reading is likely to remain at high levels, indicating a robust start to Q3, but after what looked like another strong quarterly growth rate in Q2 it seems with regard to survey indicators this may have been as good as it gets. That doesn’t mean the recovery is abandoned or at risk, but the euphoria that seem to hit sentiment in the wake of the Macron victory is giving way to a more sober assessment. The good news though is that the PMIs point to ongoing improvements on labour markets, so companies continue to invest into the recovery and while the data will back Draghi’s reluctance to commit to QE just yet, it is clear that monthly asset purchases will be scaled back with the new program that will start next year. US Consumer Confidence – June Consumer Confidence is expected to fall to 117.0 from 118.9, this compares to a low of 25.3 in February of 2009. Forecast risk: downward, given the decrease in the Michigan headline and Market risk: downward, as weaker data could impact rate hike timelines. Confidence continues to benefit from reduced gasoline prices and is now experiencing a post-election lift. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
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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: Positive leads from the U.S., including corporate earnings, and broad-based gains in commodities helped the global stock move higher to continue in Asia overnight at least in the first part of the session. The CSI 300 is in the red, however, and the Hang Seng underperforming with a meagre 0.17% gain, and Japanese markets are down from early highs while FTSE 100 and U.S. stock futures are in the red. So, some caution is settling in again ahead of the Fed announcement today with some speculation that the Fed could announce the start of quantitative tightening as early as today. In Europe, the ECB is still far away from reducing its balance sheet, and while QE tapering is on the cards for 2018, Nowotny yesterday argued against committing to an end to asset purchases. Today’s calendar focuses on the first reading of Q2 GDP from the U.K, while all eyes will be on the Fed’s post FOMC meeting announcement and guidance. The big question is whether the central bank will detail plans to unwind QE, though we think not as inflation data has been benign and there hasn’t been any rhetorical prepping by members for such a policy shift since the issue was brought up at the June policy meeting.
Australia: Earlier today, the Aussie dollar took a rap following sub-forecast CPI data out of Australia, which came in at 1.9% y/y in Q2 versus the median forecast for 2.2% y/y, while the underlying rate remained stubbornly below the RBA’s target range. AUDUSD is just off its lows, at 0.7884 bid presently, showing a 0.7% decline on the day as the London interbank market take to their seats. The Aussie is showing a similar magnitude of decline versus the yen and euro, too.
U.S. reports: revealed upside July surprises for both consumer confidence and the Richmond Fed, alongside a firm but largely seasonal 0.8% May rise for the S&P Case Shiller. For consumer confidence, we say a July pop to 121.1 from 117.3 (was 118.9) that left this measure at its strongest level since the 16-year high of 124.9 in March, with a rise in the current conditions index to a 147.8 new cycle-high, despite drops in other July confidence measures. For Richmond Fed, we saw a rise to 14.0, after revisions that lifted recent levels to 11.0 (was 7.0) in June and 3.0 (was 1.0) in May, versus a 7-year high of 19.0 (was 17.0) in February. This increase bucked declines in other producer sentiment measures, though the ISM-adjusted average of the major surveys should still tick down to 55 in July from 56 in June, 55 in May, 56 in April, and a 57 cycle-high in February and March. Nevertheless, yesterdayU.S. Senate voted to move ahead on repealing Obamacare. Initially fifty GOP senators voted yes, with two voting no, for a total of 50, while not a Democrat voted for the measure. Hence Vice president Mike Pence as Reuters reported, forced to cast the tie-breaking vote. The EURUSD had retreated from 1.1712 highs, after failing to take out the August 2015 high of 1.1714. Profit taking out of London had reportedly been in play, with the pairing dipping to 1.1657 lows.
ECB’s Nowotny against committing to end date for QE: Nowotny said in an interview yesterday that he considers it “wise to step of the gas slowly”, adding that “the U.S. central bank also implemented tapering without committing to a definite timetable”. The QE program currently runs until the end of the year and the ECB iw widely expected to reduce monthly purchase targets again with a follow up program, but Nowotny’s comments suggest that the ECB may not yet lay out a full-time table for a final end to QE and indeed given Draghi’s very cautious stance so far, it seems more likely that the ECB won’t commit to a fixed data for the end of QE. The IMf also urged the ECB to maintain stimulus as underlying inflation and wage growth remains weak and with inflation expected to ease again next year, Draghi seems to have room for a gradual approach.
German Jul Ifo index unexpectedly jumped to 116.0 from 115.2. Expectations had been for a slight correction in the headline reading, especially after Monday’s disappointing PMI readings. The breakdown showed that the overall improvement was entirely due to a sharp rise in the current conditions indicator, while the more forward-looking expectations index stagnated. So the message is not unlike that of the PMIs, which showed ongoing robust growth, but a slowdown in the pace of expansion. A strong German Ifo figure, upbeat ECBspeak and the release of the BoJ minutes from the mid-June meeting all failed to stir markets, with participants looking to tomorrow’s policy announcement and communication from the Fed as the next key risk event. The yen has been following its often-seen inverse correlation with global stock markets, which have been mostly buoyant this week, underpinned by incoming corporate earnings and guidance, yesterday’s record print in the latest German Ifo indicator, and expectations for the Fed to affirm its slow-go approach to tightening following the conclusion of the FOMC meeting today. The minutes from the BoJ’s mid-June policy meeting, released yesterday, meanwhile showed that members discussed the idea of QE tempering, but were still worried about the persistence of well below target inflation.
Main Macro Events Today
FOMC – FOMC began day 1 of its 2day meeting. No major changes are expected in Wednesday’s announcement (14 ET). The Fed is widely expected to leave its 1.00% to 1.25% rate band in place due to the slowing in inflation. Committee members have also indicated they want more evidence of a pick-up in growth after the disappointing 1.4% Q1 pace, though recent data should be fulfilling that need.
US Home sales, MBA & EIA – The MBA mortgage market indices are due today, along with the EIA energy inventory report and new home sales may decrease 2.5% to a 595k pace in June, down from 610k in May.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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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 Fed’s reluctance to commit to a time for QT beyond “relatively soon” and the fact that the Fed appeared to be moderately more concerned that the decline in inflation pressures could be a little more durable than previously thought has given bond as well as stock markets a fresh boost. Equities moved mostly higher in Asia overnight (China’s CSI 300) once again a notable exception, with commodities still underpinned as oil prices hold clearly above USD 48 per barrel. Bund futures already jumped higher in after hour trade yesterday and European stock futures are rising in tandem with U.S. futures, pointing to broad gains on European markets at the start. ECB’s Nowotny may have repeated his support for reduced asset purchases again, but that the ECB will start to taper next year is pretty much expected and Nowotny yesterday urged caution when the ECB starts to “take the foot of the gas”. Today’s calendar has Eurozone M3 and the U.K. CBI distributive trade survey.
German GfK consumer confidence surges to record high of 10.8 from 10.6 in the previous month. The unexpected jump higher ties in with record Ifo readings and confirms that the German recovery remains firmly on track. More arguments for the ECB to take the “foot off the gas” and reduce monthly asset purchases. The full GfK breakdown, which is only available until July showed also falling price expectations though, alongside improved economic confidence and the willingness to buy dipped despite a sharp drop in the willingness to save. Hence, some mixed signals and somethings for the doves, who continue to fret about low inflation and wage growth.
FOMC: held rates steady and gave no firm date on the balance sheet unwind. However, the policy statement did indicate the run-off will begin “relatively soon,” versus this year in the June statement, though it basically reiterated comments from Fed Chair Yellen in her recent testimony. The decision was unanimous. The Fed said the economy has been rising moderately while job gains have been “solid.” On inflation, the Fed said overall and core prices have “declined and are running below 2 percent; survey-based measures of longer-term inflation expectations are little changed, on balance.” Inflation developments will continue to be monitored “closely.” One important change versus the June statement was the elimination of word “recently,” referring to the decline in inflation, suggesting there’s some concern the weakening will be more long lasting.
U.S. reports: revealed rise in MBA mortgage market index at 0.4%, alongside a 2.2% drop in the purchase index and a 3.4% rise in the refinancing index for the week ended July 21. The average 30-year fixed mortgage rate sank 5 basis points to 4.17% after yields drifted lower last week with Europe. Also, U.S. new home sales edged up 0.8% to 0.610 mln in June. That follows the 4.9% rebound to 0.605 mln in May after the 9.6% April drop to 0.577, for a net -27k revision. New home sales hit a cycle high of 0.638 mln in March amid mild winter weather and hopes for Trump stimulus. The months’ supply of homes moved up to 5.4 from 5.3. The median sales price declined 4.2% to $310,800 following the 4.8% rise to $324,300 in May. Prices are down 3.4% y/y in June versus a 9.6% y/y gain previously.
Main Macro Events Today
US Durable goods, Jobless claims – Durable goods orders are forecast to snap back 3.0% in June vs -0.8% in May, while the advanced trade gap may narrow to-$65 bln from -$66.3 bln and initial jobless claims are set to rebound 8k to 241k for the week ended July-22.
UK CBI distributive trade & Gfk – The distributive trades report is expected to fall to a reading of 10% in the headline realized sales figure after 12% in June.The GfK Group Consumer Confidence index is expected to fall to a reading of -11 after -10 in June.
Japanese Data – The calendar features the CPI data. June national prices are seen unchanged at 0.4% overall, and same for a core basis. June unemployment is seen falling a tenth to 3.0%, while the job offers/seekers ratio is expected at 1.50 from 1.49. June personal income and PCE are due, with the latter forecast to have risen 0.6% y/y from -0.1% previously. Lastly, June retail sales are penciled in at a 0.1% y/y rate from -0.6% for larger retailers, and up 2.3% y/y from 2.1% overall..
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.
European Outlook: Risk appetite turned negative during the Asian session, with equity markets, including U.S. index futures, turning lower from record highs. This backdrop will likely put pressure on EGB yields from the open. The European calendar today features a flood of data releases, highlighted by advance Q2 GDP figures out of France and Spain, and preliminary inflation figures for July from various key economies out of the Eurozone, which will be a big focus for markets given the ECB’s course to taper QE. French HICP is expected unchanged at 0.8% y/y, and German HICP is seen at holding at 1.5% y/y, which would also be unchanged from the previous month. Data in line with our expectations would not likely elicit much market reaction. The Eurozone also has the latest business climate survey for July, where the headline is expected at 100.9, down from 111.1 in the previous month.
FX Update: The Swiss franc tumbled for a four-straight session, driving EURCHF to a 1.1363 high, a level not seen since the SNB abandoned its former 1.2000 floor in January 2015. USDCHF, meanwhile, rallied to a one-month peak, at 0.9721. The price action affirms the sentiment sea-change that’s been afoot this week, underpinned by a combo of a more confident euro outlook coupled with a -0.75% deposit rate in Switzerland. Elsewhere, EUR-USD has been playing a narrow range in the upper 1.16s, roughly a big figure below the 30-month high that was seen yesterday at 1.1776. USDJPY settled back near 111.00, a level that has seemingly been exerting gravitation pull over the last week or so, with attempted rebounds failing to sustain during the week. The six-week low seen on Monday at 1110.62 remains in the frame. A tumble in equity markets, with Asian bourses and U.S. equity index futures down today, provided the yen some support. A flood of data out of Japan were mostly encouraging, though CPI remained low, with the BoJ-monitored core figure coming in at just 0.4% y/y, unchanged from May and meeting the median forecast.
U.S. reports: revealed upside surprises for the durable goods and advance indicators reports for trade and inventories that boosted Q2 GDP estimates to 3.0% from 2.6%, though another lofty initial claims reading suggests that auto retooling is unlikely to boost this year’s July data. For durables, we saw a 6.5% June orders pop thanks to a 19.0% Boeing-led transportation orders surge, though we saw a 0.2% ex-transportation rise that tracked estimates. The report was robust thanks to strong equipment data. For the advance indicators, we saw an export-led $1.0 bln upside June trade surprise and big 0.6% June gains for both wholesale and retail inventories. Initial claims rose 10k to 244k in the fourth week of July, leaving what is now a 242k July average, following similar prior averages of 243k in June, 241k in May, and 243k in April. The July nonfarm payroll forecast remains at approximately 190k.
Main Macro Events Today
U.S. GDP & ECI – The first release on Q2 GDP is out today and should reveal a 2.6% headline for the quarter following a 1.4% pace in Q1. Consumption looks poised for stronger growth during the quarter and expected a 1.2%, up from 2.4% in Q1. Q2 employment cost data expected at 0.6% headline that follows a 0.8% clip in Q1. This would have the y/y pace of growth at 2.3%, down from 2.4% in Q1. Wages and salaries as well as benefit costs are both expected to expand at a 0.5% clip for the quarter from 0.8% and 0.7% respectively in Q1. Prel. German Inflation – Eurozone inflation remains far below the ECB’s definition of price stability and July preliminary HICP readings from Germany, France and Spain are likely to indicate that this won’t change soon. We see headline readings unchanged from June at 1.5% y/y in Germany, 0.8% y/y in France and 1.6% y/y in Spain, which would point to a steady Eurozone reading (due next week) of 1.3% in July. Canada GDP – GDP is expected to improve 0.2% m/m in May after the 0.2% improvement in April. An 1.1% rise in May retail sales volumes followed a 1.1% rise in manufacturing volumes. There was a 0.8% gain in wholesale shipment volumes during May. But housing starts tumbled to 195.0k in May from 214.8k in April, suggestive of a negative contribution from construction. The outlook for mining, oil and gas production is negative. Energy export values fell 9.0% m/m in May after growing 3.9% m/m in 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.
A lot has been digested in recent weeks, including monetary policy decisions, a plethora of earnings reports, data, and supply, with geopolitics thrown in for good measure. Stocks have generally focused on the positives of continued central bank largess, generally bullish earnings news, and signs of improved economic activity, and they’ve left core indexes at or near record highs. There were no surprises from the recent FOMC and ECB policy decisions. Rates were left unchanged with QE kept intact, for now. Of the three central bank meetings this week, with the BoE, RBA, and RBI, steady to easier policy is expected. That should continue to underpin bonds and stocks near term.
United States: This will be another busy week in the U.S. as August begins. Earnings will remain a factor ahead after strength the Blue Chips boosted the Dow to yet another record peak, though surprising weakness in tech shares and disappointing reports from FANG (Facebook, Amazon, Netflix and Google) shares rattled the NASDAQ. For the month-to-date, however, core Wall Street indexes are between 2% and 3.8% higher. As for data, another employment report is at hand and it will be closely monitored since it will help determine the start time for quantitative tightening, QT. Strong numbers will increase the risk that QT is announced at the next FOMC meeting on September 20, 21. July nonfarm payrolls (Friday) are expected to show a 182k following the better than expected 222k June gain, with the unemployment rate dipping again to 4.3% from 4.4%. Average hourly earnings are seen rising 0.3% (median 0.3%) versus the prior 0.2%. The workweek is expected to dip back to 34.4 (median 34.5) from 34.5. The as-expected acceleration in Q2 GDP to a 2.6% growth clip supports forecasts of decent job gains. Earnings will be a focus as the inflation aspect is important for the Fed view. Other major reports this week include the July manufacturing ISM (Tuesday), estimated dipping to 55.5 (median 56.4) after jumping a surprising 2.9 points to 57.8 in June, which was the highest since the August 2014. The nonmanufacturing ISM (Thursday) is also expected to slide to 56.8 in July after rising 0.5 points to 57.4 last month. June personal income and consumption (Tuesday) will help fine tune the GDP outlook. We’re forecasting a 0.4% income gain (median 0.4%), with spending up 0.1% (median 0.1%). July vehicle sales will provide more clues on spending. Domestic car sales (Tuesday) are seen at a 4.5 mln pace (median 4.5 mln), with trucks at 8.5 mln (median 8.6 mln).
Canada: releases are due this week with the July employment and June trade numbers reported (Friday). We expect employment to rise 25.0k in July after the 45.3k gain in June. The unemployment rate is projected at 6.5% in July, matching June. A widening in the trade deficit to -C$1.3 bln in June from -C$1.1 bln in May is projected. A 0.5% m/m gain in exports is seen following the 1.3% rise in May, as the tumble in crude oil prices weighs on the value of Canada’s total exports. The IPPI (Monday) is projected to fall 0.6 m/m in July after the 0.2% decline in May, as weaker energy and commodity prices and a sharp firming in the value of the loonie relative to the greenback drive the index lower. The Markit manufacturing PMI for July is due Tuesday. The seasonally adjusted Ivey PMI for July (Friday) is expected to improve to 63.0 from 61.6 in June.
Europe: This week’s round of data releases are likely to confirm the picture of robust growth, but still low inflation. Data have confirmed that the Eurozone recovery remained relatively robust in the second quarter and we expect official Q2 Eurozone GDP numbers (Tuesday) to show a quarterly growth rate of 0.6% q/q (median 0.6%), unchanged from Q1. Though these are backward looking numbers, the upcoming round of July confidence indicators (to be completed with the final PMI readings) suggest that momentum remained strong at the start of Q3. We expect the final manufacturing PMI (Tuesday) to be confirmed at the preliminary 56.8 (median 56.8) and the services reading (Thursday) at 55.4, leaving both sectors firmly in expansion mode. Confidence data aside, German manufacturing orders growth (Friday) has remained robust and we are looking for another solid June number, even if the quarterly rate is likely to have fallen back to 0.3% m/m (median 0.5%) from 1.0% m/m in May. Against that background, we expect the German seasonally adjusted jobless total (Tuesday) for July to have dropped a further -2K (median -6K), which would leave the sa jobless number unchanged at a very low 5.7%. The overall Eurozone unemployment rate for June meanwhile (Monday) is seen falling to 9.2% (median 9.2%) from 9.3% in May.
Japan: Industrial production report (Monday), which we expect will come in at a 5.0% y/y pace, slowing from the 6.5% in May. June housing starts (Monday) are penciled in at -0.3% y/y, unchanged from May. June construction orders are also due Monday. July manufacturing PMI (Tuesday) should improve to 52.5 from 52.4. July auto sales are also on tap Tuesday. July consumer confidence (Wednesday) is expected to dip to 43.2 from 43.3 in June. July services PMI is due Thursday.
Australia: The Reserve Bank of Australia meeting is center stage (Tuesday). We expect no change to the current 1.50% policy setting. The RBA also releases the Statement on Monetary Policy (Friday). Economic data is relatively abundant this week. Building approvals (Wednesday) are seen rising 3.0% in June after the 5.6% drop in May. The trade surplus (Thursday) is seen narrowing to A$2.0 bln in June from the A$2.5 bln surplus in May. Retail sales (Friday) are projected to edge 0.1% higher in June after the 0.6% m/m rise in May.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Stuart Cowell 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 moved higher, with a rally in banks underpinned by earnings reports and helping to offset pressure on exporters and automakers. The ASX outperformed after the RBA left rates on hold and warned the strong currency will impact growth and inflation.100 and U.S. stock futures are also moving higher. The FTSE already managed to rescue slight gains into the close yesterday, while Eurozone markets mostly ended in the red. With the EUR above 1.18 against the dollar and political pressure on German carmakers mounting, the DAX is likely to continue to struggle. Bund yields ended little changed yesterday, while Gilt yields climbed ahead of tomorrow’s BoE announcement and positive sentiment on stock markets should keep core yields underpinned. Eurozone spreads narrowed as peripheral markets outperformed, so at least so far Draghi is managing to keep tapering nerves under control. Today’s local calendar has final Eurozone manufacturing PMI readings for July which are not expected to bring any revisions and German Jul jobless numbers. Preliminary Eurozone Q2 GDP is seen steady at 0.6% q/q and the calendar also has the U.K. manufacturing PMI for July.
FX Action: USDJPY has eased to new trend lows after reports that newly minted White House communications director Scaramucci is out of a job after just 10-days. The pairing fell under 110.00, before recovering to 110.20. The EURUSD continues to edge higher to north of 1.1830. Initial market take is the U.S. administration is off the rails, though the W.H. staff move may ultimately be a positive, perhaps indicating that new Chief of Staff Kelly is in charge.
US Data Yesterday: U.S. Chicago PMI dropped 6.8 points to 58.9 in July, more than giving back the surprising 6.3 point jump to 65.7 in June. The latter was the highest since the 66.1 from May 2014. The 2017 low is 50.3 from January. The index was at 51.8 in October. The 3-month moving average edge up to 61.3 from 61.1. U.S. pending home sales index bounced 1.5% to 110.2 in June, better than expected, after tumbling 0.7% to from 108.6 in May (revised from 108.5). The high for the year was hit in February at 112.3 with the low at 106.4 from January (with the cycle high at 113.6 on April 2016 and a low of 76.4 from June 2010). The index is still well off the all-time peak of 127.0 from July 2005. Lack of inventory remains a problem. On an annual basis, the index is up 0.7% y/y, the same as in May. U.S. Dallas Fed manufacturing index rose 1.8 points to 16.8 in July after sliding 2.2 points to 15.0 in June. The latter was the weakest since the 12.5 in November. Note that the index was at 0.6 in October and had been basically in negative territory from January 2015 through September 2016. It hit a cycle high of 24.5 in February.
Main Macro Events Today Eurozone Q2 GDP – The preliminary reading of Q2 GDP is expected to show a quarterly growth rate of 0.6% q/q, unchanged from the previous quarter. Consumption remains supportive for growth as the labour market continues to recover and low inflation is underpinning real disposable income. At the same time investment is starting to pick up as spare capacity shrinks and PMI readings, while starting to level off, suggests still high orders and a backlog of work. So a robust start to the third quarter that underpins the ECB’s cautious move towards exit steps, although remaining risks and modest wage growth mean Draghi is still keeping his options open for now. U.S. Manufacturing ISM – The July ISM is expected to tick up to 55.5 from 57.8 in June. Forecast risk: upward, given strong component data in early month sentiment. Market risk: downward, as weakening in data could impact rate hike timelines. The ISM has shown a recent high of 60.0 in February ’11 and a low of 33.1 in December of 2008. 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 moved mostly higher overnight, after positive leads from Wall Street and Europe, which managed broad gains. The ASX, which outperformed yesterday, dropped against the trend, as oil, iron ore and base metals dropped and commodity stocks came under pressure. Earnings reports from Apple and Honda among others underpinned markets. In Europe the DAX finally managed to outperform amid a buoyant market as economic data in Europe and the U.S. dampened tightening concerns, and FTSE 100 futures are rising further in tandem with U.S. futures, while the Bund futures, which rose in tandem with the DAX yesterday, extended gains in after hour trade. European indices remain below recent highs, leaving room to catch up with the surge in the Dow Jones. Still, central bank concerns as well as geopolitical risks and Trump’s challenges all mean investors reserve a degree of caution. Released overnight, the U.K. BRC shop price index dropped -0.4%. Still to come are Eurozone producer prices, the U.K. Construction PMI and the Swiss manufacturing PMI. The BoE starts its meeting ahead of tomorrow’s announcement.
FX Action: The dollar majors have traded mixed so far today in relatively narrow ranges. One mover of note has been USDCAD, which has lifted to a 12-day high at 1.2586, with the pair in process of constructing its biggest rebound since early May. A drop in oil prices, with the WTI benchmark tumbling today below $49.0, which continued yesterday’s correction from the 10-week highs seen above $50.0, provided a cue to put the squeeze on Canadian dollar long positions. USDJPY rebounded to near 111.00 after briefly foraying below the 110.00 level yesterday, leaving a seven-week low at 109.93. A bullish tone in global equity markets, propelled by encouraging earnings reports from bellwether companies, has weighed on the yen. EURUSD has remained in a fairly tight range below the 30-month high it saw on Monday at 1.1846, and has seen good demand on dips under 1.1800. AUDUSD edged out a two-session low at 0.7941, weighed on by a drop in commodity prices.
US Data Yesterday: revealed a weak trajectory for personal income into mid-year following big downward revisions already revealed in last week’s GDP report, leaving a remarkably steep decline in the savings rate to just 3.8% in June. We also saw a big 1.3% June construction spending plunge led by a 5.4% public construction decline after big downward revisions. The mix lowered our GDP estimates to 2.4% from 2.6% in Q2, and to 3.3% from 3.5% in Q3. Consumption mostly tracked estimates, with modest overshoots to the chain price data, and incoming auto data suggest a 2% y/y vehicle sales rise to a 16.7 mln pace. We saw a surprisingly firm 56.3 ISM figure for July, though this marked a decline from a 3-year high of 57.8 in June. The income, retail sales, payroll, and inventory data remain remarkably weak in 2017, though the factory, industrial production, confidence and sentiment data remain strong.
Main Macro Events Today
ADP Numbers – The ADP private payroll number for July today is expected to show an increase of 187,000 from 158,000 last month.
Crude Oil Inventories – The weekly EIA official inventories are expected to show a drawdown of 3.2 million barrels from last week’s significant 7.2 million barrels. However, yesterday the US fuel inventories actually rose unexpectedly, and USOil prices fell over 1% from the psychological $50.00 level.
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 pulled back from recent highs, with investors assessing the flood of earnings reports and for now holding back ahead of the next batch. The MSCI Asia Pacific retreated from the highest level since December 2017 and U.S. stock futures are also heading south, although FTSE 100 futures are higher ahead of the BoE announcement. The BoE is widely expected to keep rates on hold even if there are likely to remain a couple of dissenters and the inflation report could bring a slight downward revision to growth projections. Gilt yields still picked up yesterday, and the 10-year gained 2.3 bp while the Bund yield fell back -0.6 bp as Eurozone spreads widened. Some caution then in U.K. markets ahead of the announcement, although at least U.K. stocks seem to be on course to recover yesterday’s losses. The calendar has services PMI readings from the U.K. and the Eurozone as well as the ECB’s economic bulletin.
FX Action: EURUSD has settled lower after hitting a new 31-month high at 1.1910 after the London interbank close yesterday. The pair has since ebbed under 1.1850, opening in London with a softening bias. EURCHF has seen a similar price action, also hitting a 31-month peak yesterday, at 1.1524, before coming off the boil. Ditto for EURJPY, which made a 19-month peak 131.40. The new highs are the culmination of a rally the common currency has been seeing for most of the year, one which has accelerated over the last month or so. The euro had been trading at a discount since the Eurozone financial crisis erupted in 2010, in the face of existential threats and struggling member economies. Reserve and forex fund managers are now viewing the euro has having come through the woods, at least to a significant enough degree. Key currency today remains the GBP with risk of selling pressure following a no-change announcement , and downgrades to growth and inflation. I remain long EURGBP to 0.9000.
Fedspeak: Williams, September might be appropriate for an announcement on the start of the balance sheet unwind, He also said the median dot plot path (1 more hike in 2017 and 3 in 2018) still makes sense. He’s frustrated with the low rates of inflation but said the trend is still positive. The decline in the dollar isn’t a big factor in the inflation outlook. And he suggested the economy might need to slow a bit to keep price pressures in check. The gist of these comments suggests the markets might be too complacent with respect to another tightening this year. Fed funds futures are only showing about a 38% chance for one more hike this year. Rosengren hinted at a September balance sheet announcement, according to statements in a WSJ interview, where he said the markets are appropriately anticipating such. He added that the tight job market justifies rate hike plans as well. There is “reasonable risk” that the unemployment rate falls below 4% over the next two years. Mester supports gradual rate hikes despite weak inflation, reiterating her views on the topic. She views inflation weakness as due to “special factors” (drop in cost of prescription drugs and cell phone services) and not a general downtrend, but it may take a couple months to see an uptick in prices. Mester sees three rate hikes per year as appropriate to avoid overheating and reaching for yield, and anticipates further hikes and bond run-off as the economy grows “somewhat above 2%.” Bullard said he’s concerned over soft inflation, and added he does not support further rate hikes at this point. “I think for now we should remain on pause,” he said, waiting for data evidence of a turnaround in inflation. Further tightening at this point would likely “inhibit” prices from moving up toward the 2% target. Bullard is not a voter this year and this is not a new position for him.
Main Macro Events Today BoE – Three of the then eight MPC members voted for a 25bp hike in the repo rate at the last meeting in June (there are normally nine members, but one position was then temporarily vacant), and expectations are for 6-3 vote spilt this time around in favour to leave interest rates unchanged. With June CPI having undershot expectations, at 2.6% y/y after 2.9% y/y in May, and with concerns about the health of the key consumer sector, more dovish arguments will likely continue to prevail. There is risk of a downward nudge in growth forecasts in the Inflation Report, too, while inflation projections are likely to remain near unchanged. Carney in the press conference afterwards is always an interesting follow up. The data is at 11.00 GMT with the Governor on 30 minutes later. Initial Jobless – The weekly Initial jobless claims for the week of July 29 and should post a 238k headline, down from 244k last week but above the 234k headline in the week preceding that. Claims in July are poised to average 243k, steady from June and above the 241k average in May. U.S. Factory Orders – June factory goods should reveal a 2.7% increase for orders with shipments unchanged and inventories up 0.2% for the month. This follows May figures which had orders down 0.5%, shipments up 0.2% and inventories down 0.1% in that 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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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 traded narrowly mixed overnight, with investors eying U.S. politics and jobs data. Hong Kong posted gains, after better than expected profits from Suzuki Motor Corp. While Commonwealth Bank of Australia weighed on the Asian index after accusations of a breach of money laundering laws. Oil prices are slightly down on the day and below the USD 49 per barrel mark. FTSE 100 futures are down, after the BoE induced rally yesterday, while U.S. futures are narrowly mixed. The BoE announcement, which saw a lower number of dissenters and downward revisions to growth and inflation forecasts saw European yields heading south, led by a sharp drop in the Gilt, but the BoE maintained its tightening bias and warned that little more growth may be needed to prompt a rate hike. So not as dovish a message as headlines suggested and there could be a correction along the line. Deputy BOE Governor has reiterated the MPC’s position on the BBC this morning. Cable 1.3140, EURGBP 0.9040 (39 week highs).
German manufacturing orders stronger than expected: Orders rose 1.0% m/m, while May was revised up slightly to 1.1% m/m from 1.0% m/m. The annual rate jumped to 5.2% y/y from 3.9% y/y. Expectations had been for a more muted uptick and the stronger than expected number at Domestic capital goods orders, a gauge for future investment, rebounded strongly from a drop in May and were up 7.5% m/m. Overall domestic orders rose 5.1% m/m, after falling in the previous month, while foreign orders inflow remains volatile on a monthly basis and fell -2.0% m/m, after rising 2.2% m/m. With most of the decline due to a drop in orders from other Eurozone countries, the strong EUR is not to blame, however.
FX Update: The dollar majors have been plying narrow ranges for the most part. EUR-USD held in the upper 1.18s, below the 31-month high logged midweek at 1.1910, and Cable settled in the mid 1.31s, consolidating the sharp losses seen yesterday in the wake of the BoE’s guidance yesterday, which largely kicked expectations for a 25 bp rate hike into 2018. USD-JPY’s downtrend re-asserted, with the pair logging a new six-week low at 109.84 during the Tokyo session, which by our data surpassed the low seen in late New York trade yesterday by 1 pip. Japanese data today included a big miss in June wages data, but, as is often the case, to little impact on the yen. AUD-USD remained buoyant, despite the RBA’s SMP noting that a further exchange rate appreciation would lower both economic growth and inflation, though Australian June retail sales beat expectations, rising 0.3% m/m. Market participants have been hunkered down ahead of today’s U.S. July payrolls release.
Main Macro Events Today US Employment – July employment data should post a 185k (median 182k) headline following a 222k headline in June and 152k in May. There is still upside risk to the report from the strength in the mining and factory sectors that’s also shown up in firm producer sentiment figures during the first half of the year. The tight ADP number on Wednesday offers caution to the upside risk. Canadian Employment – It is expected to rise 25k in July after the 45.2k gain in June. Canada employment has been on an uptrend since August of last year as the economy expands. Expectations are for an annual average weekly earnings growth to expand at a 1.3% y/y pace in July, matching the 1.3% growth rates in May and June. While that would again be above the multi-year low 0.7% pace in April, it would still leave a historically tame pace for compensation growth. The unemployment rate is expected at 6.5% in July, matching June.
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.
The July U.S. employment report provided some solace for the Fed on the growth front, but no major smoking gun on inflation. Headline payrolls growth came in a hair above expectations, with small net tweaks on back revisions. Hours worked were steady but were up from May, though average hourly earnings came in a little hot. The jobless rate ticked down once again and gave the Fed some more surety in nominal terms that it is getting closer to full employment even as the participation rate ticked up.
United States: Consumer credit is forecast to increase $17.0 bln in June (Monday) amid upside risk. NFIB small business optimism and JOLTS job openings (Tuesday) will be mulled. MBA mortgage market data is due (Wednesday), along with Q2 productivity (preliminary) seen rising 0.5% right in line with unit labor costs and wholesale trade seen rising 0.5% alongside a 0.6% gain in inventories. Initial jobless claims are forecast to dip 2k to 238k (Thursday) for the week ended August 5, while July PPI may rise 0.1% or 0.2% ex-food and energy. The Treasury budget gap is set to narrow to -$65.0 bln in July from -$90.2 bln, which was a big blowout in June. The week will round out with the July CPI event, seen rising 0.2% headline and 0.1% core for a tame 1.7% y/y core reading.
Fedspeak returns with a flurry of activity this week starting (Monday) with Bullard and dissenter Kashkari. Dudley will open and take part in a panel discussion on New York economic trends (Thursday). Kaplan will take part in a Q&A session (Friday) and Kashkari will be back to do the same at a community bankers conference.
The earnings season is dying down, though there are still several heavy-weights ahead. Generally solid reports have helped the Dow climb over the 22,000 level, and to eight straight record closes.
Canada: The holiday truncated week is heavy on housing data. July housing starts (Tuesday) are expected to fall to 200.0k from the 213.2k annual pace in June. A 5.0% m/m drop in the value of building permits during June (Wednesday) is seen following the 8.9% gain in May. The new house price index (Thursday) is projected to rise 0.4% m/m in June after the 0.7% bounce in May. There is nothing scheduled from the Bank of Canada this week. Our projection remains for a follow-up 25 basis point rate hike in October, taking rates to 1.00% from the current 0.75% setting.
Europe: The ECB is effectively on holiday and data releases this week will be mostly backward looking, so it should be a relatively quiet week for markets. Draghi has remained very cagey even about the timing of the next QE announcement and this week’s data releases are unlikely to change the outlook and there are no key speeches on the immediate agenda.
German June industrial production (Monday) is expected rising 0.8% m/m (median 0.4%), after the strong orders number and the very strong Ifo reading. We are looking for a pretty stable June trade surplus (Tuesday) of EUR 20.0bln leaving Q2 GDP on course to remain steady around 0.6% q/q. Industrial production data also comes from France (Thursday) and Italy (Wednesday), although unlike Germany both countries have already released preliminary Q2 GDP numbers, so unless there are major surprises it shouldn’t impact the overall picture. Final July HICP rates from Germany, France, Spain and Italy (all Friday) are expected to confirm preliminary data, which should leave national HICP rates ranging from 1.7% y/y in Spain, over 1.5% in Germany to just 0.8% y/y in France and the final Eurozone rate (due the following week) at 1.3% y/y.
UK: Sterling posted losses against all three of the G3 currencies last week for the first time since the first week of June. The culprit was the BoE stance at its August 2-3 policy meeting, with dissenters on the Monetary Policy Committee in favor of hiking falling to two from three at the prior meeting in June, and with the central bank downwardly nudging both growth and inflation forecasts. The economic calendar this week brings the BRC retail sales report for July (Monday), where we expect the headline same store comparison rising by 0.6% y/y, after a 1.2% gain in June. Warm weather has been underpinning sales, along with strong employment levels, though the squeeze on real wages remains a concern for the retail sector in the months ahead. Production data for June are also up (Thursday), where we forecast a 0.1% m/m contraction but 0.1% y/y expansion. June trade data are also due on Thursday.
China: The calendar picks up on Tuesday with the July trade report, where the surplus is expected to $48.0 bln from $42.8 bln. July price indicators (Wednesday) are seen accelerating slightly. CPI is seen picking up to a 1.6% y/y clip from 1.5%, while PPI is forecast rising to 5.6% y/y from 5.5%, respectively. July loan growth and new yuan loans (Thursday) should show the latter at CNY 1,000.0 bln from 1,540.0 bln previously.
Japan: The June current account surplus (Tuesday) is expected to shrink to JPY 800.0 bln from 1,653.9 bln previously. July bank loan figures are also due Tuesday. June machine orders (Thursday) are seen bouncing 4.0% from the 3.6% decline in May. July PPI (Thursday) is forecast to climb to a 2.5% y/y pace from 2.1%, while the June tertiary index (Thursday) is penciled in edging up 0.2% after the prior 0.1% decline.
Australia: The data docket is thin this week. The only main reports are ANZ job adds (Monday) and housing finance (Wednesday), expected to expand 0.5% m/m in June from May’s 1.0% gain. The RBA are due before parliament on Friday following last weeks downgrade to growth and inflation targets and the comments on the firm AUD are expected to be reiterated.
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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 equity markets pared some of their recent gains after Chinese export and import data fell short of expectations, and investors ponder the global growth and central bank outlook while taking profits. Mixed earnings reports meanwhile weighed on the TSE and a stronger Yen is adding to pressure. Oil prices are holding above USD 49 per barrel but seem to be trending lower again after briefly rising above USD 50 per barrel at the start of the month. U.S. and U.K. stock futures are also heading south, pointing to a correction in the FTSE 100, which outperformed yesterday, as the DAX underperformed and closed in the red, while other European markets nudged higher. Eurozone spreads also narrowed. Released overnight, U.K. BRC retail sales rose 0.9% y/y on a same store basis, down from 1.2% y/y in May, while Swiss sa unemployment remained steady at 3.2%.
German exports slump in June, but trade surplus improves. In line with the Chinese trade report, German export and import growth disappointed, with exports falling -2.8% m/m and imports -4.5% m/m. The sa trade surplus though improved to EUR 21.2 bln from EUR 20.3 bln, leaving the total for the second quarter at EUR 61.3 bln, up from EUR 59.9 bln in the second quarter of the year. Like yesterday’s production numbers then the data point to a robust Q2 GDP growth rate, with net exports underpinning the German recovery, which orders suggest remains on track in the third quarter, even if automaker’s woes and the strong EUR are seeing investors turning cautious on German stocks.
Fedspeak: Yesterday there was a relatively dovish view from the nonvoting president, Fed’s Bullard, who continues to twist between a hawkish and dovish outlook, largely on the winds of inflation. Fed’s Bullard believes current rates are about appropriate for the near term. But, he’s a bit worried about the still low inflation rate, as recent data have “surprised to the downside and call into question the idea that U.S. inflation is reliably returning toward target.”. Of importance, though is his disagreement with the Phillips Curve orthodoxy that suggests low unemployment contributes to higher inflation, saying there is little relationship. He expects the economy to grow at about a 2% rate, but noted the pick-up in global growth. Those factors, including improved European activity and the potential for a more hawkish ECB, have weighed on the dollar. He supports getting going on QT, meanwhile he concurs with the general FOMC sentiment that the balance sheet unwind will be very slow and there shouldn’t be any big market impact. Fed’s Kashkari gave a speech as well yesterday in South Dakota, where he said he hasn’t seen wages growing very quickly in a Q&A session. The economy is doing pretty well, he added while noting the largest U.S. banks are still too-big-to-fail.
U.S. reported: consumer credit at $12.4 bln in June following the $18.3 bln May increase (revised from $28.4 bln). Non-revolving credit increased $8.3 bln, continuing to lead the strength in consumer borrowing, after the $11.4 bln jump in May (revised from $11.0 bln). Revolving credit was up $4.1 bln versus the prior $6.9 bln gain (revised from $7.4 bln). Credit slowed a bit in Q2, rising $42.9 bln (4.5%), after the $447.1 bln (5.0%) Q1 increase.
Main Macro Events Today
U.S. JOLTS & NFIB – JOLTS and the NFIB small business optimism survey today, will be mulled. The JOLTS expected to stay nearly unchanged with just a small drop to 5.660 M from 5.666M in May. The NFIB Business Optimism Index expected to be unchanged as well at 103.6.
CAD Housing starts – July housing starts are expected to fall to 200.0k from the 213.2k annual pace in June.
RBA Assistant Gov. Kent – RBA Assistant Governor Kent is due to speak today at the Bloomberg Address in Sydney.
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Please note that times displayed based on local time zone and are from time of writing this report.
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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.
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MACRO EVENTS & NEWS OF 27th June 2017.
FX News Today
European Outlook: Asian stock markets were mixed overnight, with Japan outperforming as a weaker Yen underpinned exporters. Yesterday’s weakness in U.S. durable goods orders saw Treasury yields declining and risk appetite waning as investors starting to fret again about the health of the world economy. Oil prices are holding above USD 43 per barrel, but Hang Seng, CSI 300 and ASX are all slightly in the red as are U.K. and U.S. stock futures. This should keep Bund and Gilt futures underpinned and core yields down, especially as Draghi once again defended the ECB’s stimulus measures. Today’s data calendar has Italian confidence data as well as the U.K. CBI Retailing Survey. The ECB is hosting its annual forum in Portugal.
FX Update: The dollar majors remained in fairly narrow ranges, though there has been some movement. AUDUSD logged a one-week high of 0.7609, while USDJPY logged a five-week high at 112.07 before turning lower, to around 111.70. The retreat in USDJPY came after the U.S. said that it had detected preparations by the Syrian regime for another chemical attack, with the White House warning that Damascus would pay a “heavy price” in the event it launched another chemical attack. The oil price rebound flagged, and the global stock market rally sputtered in Asia, a backdrop conducive for yen buying. Elsewhere, EURUSD has continued to gravitate toward the 1.1200 level, with the market lacking directional ambition, despite lower U.S. yields following weaker headline durables data yesterday, and a softening in the price indicators in the Dallas Fed index. Cable has been settled in the lower 1.27s, below yesterday’s eight-day high at 1.2759. USDCAD has settled near 1.3250, above yesterday’s 1.3212 low.
US Reports: The U.S. durables report revealed a 1.1% May headline orders drop with a 3.4% transportation orders decline and a 0.1% ex-transportation rise that tracked our estimates. We saw a 10.2% May defense orders plunge, mixed equipment data, a lean 0.2% inventory gain and a firm 0.8% durable shipments rise that was in line with our 2.4% Q2 GDP estimate, after an assumed Q1 trimming to 0.9% from 1.2%. U.S. Chicago Fed National Activity Index dropped to -0.26 in May after jumping to 0.57 in April (that was the highest point since 0.59 from March 2014; the index was as low as -0.84 in July 2013). Additionally, yesterday U.S. Dallas Fed manufacturing index slipped to 15.0 in June after edging up to 17.2 in May from 16.8 in April. The rise to 24.5 in February put the level at its highest since early 2006. It was generally in negative territory from January 2015 through September 2016. Despite the headline declines, it’s still a pretty solid report.
Draghi raises concerns over Greek debt sustainability. The central bank head said in a letter to an EU lawmaker that “until sufficient detail has been provided on the debt measures, serious concerns persist regarding the sustainability of Greece’s public debt”. Currently ECB staff is not “in a position to complete a fully-fledged debt-sustainability analysis of Greece’s public debt”. Greece has been pushing for the ECB to include Greek debt in QE purchases, but Draghi’s comments highlight again that that is still unlikely in the near future.
Main Macro Events Today
ECB’s Draghi – ECB’s President Draghi speaks today at the ECB forum in Central Bank in Portugal at 08:00 GMT.
BOE – Financial stability Report is out today for the 1st time this year from BOE. Meanwhile Gov Carney is due to speak today about Stability Report in London at 10:00 GMT
U.S. Consumer Confidence – June consumer confidence data should reveal a dip in the headline to 116.0 from 117.9 in May and 119.4 in April. Confidence measures are still hovering near post-recession highs but there is some downside risk to the release as we saw a decline in the first Michigan headline to 94.5 from 97.1 last month.
AUS Gov. G. Debelle – Deputy Governor Guy Debelle speaks at the Global FX Code of Conduct Launch (via video link). The Reserve Bank of Australia next meets on July 4th. We expect no change to the current 1.50% rate setting.
Fedspeak – Fedspeak will resume with Chair Yellen atop the roster this week, as she will take part in a conversation with Lord Nicholas Stern, president of the British Academy on “Global Economic Issues” today from 13 ET. SF Fed’s Williams speaks on “The Global Growth Slump” from Australia at 4:05 ET, followed by Philly Fed’s Harker on the economic outlook and trade from 11:15 ET and Minneapolis Fed’s Kashkari takes town hall Q&A from 17:30 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.
MACRO EVENTS & NEWS OF 28th June 2017.
FX News Today
European Outlook: Asian stock markets mostly headed south, with Australia’s ASX a notable exception. Elsewhere markets followed Wall Street lower, after the delay to a U.S. healthcare reform vote and with Draghi’s comments yesterday serving as a reminder that central bank support has peaked and that rates will trend higher. Losses in Nikkei and Hang Seng seemed more muted though and the ASX actually managed to move higher, as oil prices hold above USD 44 per barrel. Equally, the uptick in long yields looked less severe in Asia and with the first round of preliminary June inflation data out of the Eurozone today likely to show a drop in the headline rate, even Eurozone markets, which were knocked off balance by Draghi yesterday, should start to settle. Lower inflation numbers over the next days and likely comments from officials trying to play down the impact of Draghi’s remarkets should see bonds settling again. The calendar has EMU M3, preliminary Italian HICP, US Pending Home Sales and US Crude Oil Inventories.
U.S. reports: revealed June gains for both consumer and business confidence, as the various “soft” measures continue to overshoot “hard” data forecasts despite modest pull-backs from Q1 highs. For consumer confidence, we saw a June bounce to 118.9 from 117.6 (was 117.9) in May, leaving a fourth consecutive reading above what was once the 16-year high of 116.1 in February, versus the new 16-year high of 124.9 in March. The Richmond Fed index bounced to 7.0 in June from 1.0 in May, versus a 7-year high of 22.0 in March, while the ISM-adjusted Richmond Fed bounced to 54.0 from 51.7 in May, versus a 7-year high of 59.2 in March. Yesterday’s Dallas Fed index bucked the trend thanks to recent oil price declines, with a June drop to 15.0 from 17.2 in May, while the ISM-adjusted Dallas Fed dropped to 53.0 from a 2-year high of 55.4 in May.
Fed Chair Yellen: reiterated the Fed’s commitment to price stability. Policymakers want to avoid making too-low of an inflation rate to become ingrained. She noted that household inflation expectations have slipped some, and added that many on the Committee do believe that a low jobless rate will boost inflation. She did say though that aid there are reasons to believe rates will remain low for some time. Layoffs at brick-and-mortar stores will continue. Asset values are somewhat rich by traditional metrics. She stressed, however, that the FOMC is not targeting asset prices. The markets have well anticipated a gradual rate hike path, especially as the Fed has made it clear rates will rise only gradually. She cautioned to expect uncertainty over how Brexit will unfold. She declined to comment on her relationship with President Trump, but said there is a long tradition of the Fed working with administrations and added that the administration has respect for the Fed’s independence. On the other hand, Fed’s Harker still backs another rate hike this year, he said in comments from a conference London. He believes growth should average about 2.3% this year, but he’s pushed back his view of inflation hitting the 2% target into the start of 2018 versus the end of 2017.
German May import price inflation fell back to 4.1% y/y from 6.1% y/y in the previous month, with prices down -1.0% m/m. A stronger than expected dip, which, however, is largely due to base effects from energy prices and the currency. At 4.1% y/y import price inflation remains at high levels, but with headline rates also coming off highs and June figures likely to fall back further below the 2% limit, the data will back the ECB’s cautious approach to tightening steps, although that the ECB is heading for tapering next year is pretty clear.
Main Macro Events Today
ECB’s Forum – ECB’s President Draghi speaks today at the ECB forum in Central Bank in Portugal at 13:30 GMT along with BOC Gov. Poloz, BoE Gov. Carney and BoJ Gov Koruda.
U.S. Pending Home Sales & Oil Inventories – Pending home sales from the NAR are expected to rise 0.7% in May to 110.6 and EIA inventories are due after sparking recent bouts of crude oil selling.
JPY Retail Trade – Retail sales are projected at 2.6% y/y in May from 3.2% y/y in April. The projection is for a 0.5% y/y dip in May large retailer sales following the 1.1% rate of increase 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.
MACRO EVENTS & NEWS OF 29th June 2017.
FX News Today
European Outlook: Stock markets stabilized yesterday, after “ECB sources” played down Draghi’s comments on possible policy changes and after Eurozone peripherals bounced back during the PM session, Wall Street also closed higher, followed by broad gains on Asian markets overnight. U.K. stock futures are also up, after the FTSE 100 underperformed yesterday on hawkish Carney comments. That doesn’t seem to have curtailed the wider bounce back in risk appetite. Eurozone yields also came off the highs seen in the wake of Draghi’s original comments and Bund futures moved sideways during after hour trade. Gilts moved higher again yesterday and even if there are periods of stabilization, yields are likely to continue to trend higher as global central banks cautiously eye exit steps. Today’s will give both doves and hawks something to argue with as EMU ESI confidence is seen rising again, while German June HICP inflation is expected to fall back further below the 2% mark. The U.K. has BoE lending data.
US reports: U.S. pending home sales fell 0.8% to 108.5 in May following the 1.7% decline in April to 109. This is a third straight monthly decline and the index has fallen in four of the five months of 2017 to date. The National Association of Realtors blames much of the weakness in sale to a lack of inventory. U.S. goods trade deficit narrowed to -$65.9 in May, surprising forecasts for little change, after widening to -$67.1 bln in April. May exports increased 0.4% to $127.1 bln after dropping 0.9% to $126.6 bln in April. Imports dipped 0.4% to $193.0 bln following the prior 1.0% increase to $193.8 bln. The data suggest upside risk to GDP forecasts. Lastly, U.S. MBA mortgage market index sank 6.2% in data released earlier, along with a 4.1% drop in the purchase index and a 8.6% plunge in the refinancing index for the week ended June 23. Yet the average 30-year fixed rate mortgage was unchanged at 4.13%. That could be a risky omen considering that home prices remain elevated and inventories low, even as the Fed continues to push on a string in terms of interest rates.
ECB officials suggest markets misjudged Draghi comments. According to a Bloomberg reports citing unnamed ECB policy makers Draghi’s speech yesterday was intended to strike a balance between recognizing economic strength and warning that monetary support is still needed. So after Draghi’s reference to possible policy changes served as a reminder that tapering announcements were merely postponed, not cancelled at the last meeting, we are now likely to get more comments from officials referencing Dragh’s insistence that any change will be prudent and gradual and that in times of strengthening growth, this could still mean that the degree of stimulus will remain unchanged. Draghi clearly remains eager to dampen the impact of tapering talk, despite yesterday’s comments
Main Macro Events Today
Eurozone ESI – ESI Economic Confidence is seen rising slightly to 109.5 from 109.2, after better than anticipated preliminary consumer confidence data and as PMI readings suggested improving manufacturing confidence and a soberer assessment in the services sector.
German HCPI – Italian HICP readings suggest downside risks to the remaining June inflation numbers, so German HICP expected to come with a downside bias of 1.3% y/y. Still, the ECB has already acknowledged the fact that oil prices are lower and adjusted its inflation projections accordingly.
U.S. GDP, Jobless Claims – US Q1 GDP may stay unchanged on the third revision at 1.2%. Similarly, initial jobless claims expected to slightly drop to 240K from 241K.
JPY CPI, Jobless Rate, Prel. Industrial Production – CPI is expected to reveal ongoing sluggishness in Japan’s inflation backdrop, consistent with no change in BoJ accommodation for quite some time yet. May consumer prices are seen improving to a 0.5% y/y rate of increase from 0.4% in April. May unemployment is anticipated at a 2.8%, identical to April. PCE is expected to post a 0.8% y/y decline in May after the 1.4% April drop. Industrial production is pegged to reverse 3.2% m/m in the preliminary report for May after the 4.0% final gain for 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 30th June 2017.
FX News Today
European Outlook: Markets are back in the grip of risk aversion and Asian stock markets headed south after losses on Wall Street and Europe yesterday. Eurozone stocks in particular sold off Thursday after the unexpected rise in German HICP rekindled ECB tapering concerns. Quarter end positioning that saw tech shares leading declines added to pressure on stock markets, while central bank concerns means bond futures are falling in tandem with stocks. Eurozone spreads blew out yesterday again and with global central banks eying exit steps yields are likely to continue to trend higher going ahead. Today’s busy calendar has June inflation data for France and the Eurozone, French consumer spending, the Swiss KOF leading indicator as well as German labour market data and the final reading of U.K. Q1 GDP.
US reports: revealed an upside Q1 GDP surprise led by big upward consumption and net export revisions and a downward set of deflator adjustments that also lifted Q1 “real” growth. We also saw surprising Q1 inventory weakness that boosts prospects for GDP growth in Q2 and Q3, though we will keep these estimates at 2.8% and 3.4% respectively. We saw a disappointing 2k uptick in initial claims to 244k to leave a relatively elevated start to the annual vehicle sector retooling period, which we still think will depress initial claims into mid-July, and the weekly Bloomberg consumer comfort index fell to 48.6 from 49.4.
Japan’s core CPI improved to an 0.4% y/y pace in May from the 0.3% growth rate in April. The modest pick-up was roughly as expected. National CPI grew at a 0.4% y/y clip in May, matching the 0.4% rate in April. But Tokyo core CPI (ex-fresh food, but energy is included in Japan “core”) was flat (0.0%) in June after the 0.1% gain in May. Tokyo CPI was also flat in June on the heels of the 0.2% y/y gain in May. The lack of growth in both measures of Tokyo CPI during June suggests a similar sputtering of national CPI growth in June, which could further distance the BoJ from the hawkishness that has gripped the BoC, Fed and ECB recently. The unemployment rate rose to 3.1% in May from 2.8% in April. Household spending dipped 0.1% y/y in May following the 1.4% drop in April. Industrial production tumbled 3.3% m/m in May (preliminary) after a 4.0% rise in April. USD-JPY saw minimal movement on the reports — the pair ticked above 112.0 from just below, reversed at 112.11 to slip back to 112.0 currently. The Nikkei 225 is 1.1% lower, taking its cue from the losses on Wall Street during New York’s session Thursday.
German May retail sales came in a tad better than anticipated, with sales rebounding 0.5% m/m, after falling -0.2% m/m in April. The three months trend rate rose to 1.1% from 1.0% in the three months to April. The annual rate still fell back to 1.2% y/y from 1.4% y/y. Nevertheless, a robust number, although official retail sales are a volatile indicator and only cover a part of consumption. Consumer confidence indicators meanwhile have been buoyant, suggesting ongoing support from private consumption to domestic demand and overall growth.
Main Macro Events Today
UK Final GDP & Current Account – The final release of Q1 GDP, expect to come in unrevised at 0.2% q/q and 2.0% y/y (medians same). The Current Account for Q1 expected at £-17.250 B from £-12.088B.
EU CPI – A slight deceleration expected in the Eurozone headline rate to 1.2% y/y from 1.4%. The ECB already scaled down its inflation projections thanks to lower oil prices and even if there is an upside surprise, as with the German numbers yesterday, it won’t change the ECB policy path, as the QE schedule is already laid out for the rest of the year and tapering is widely expected to start in January 2018.
CAD GDP – GDP expected to improve 0.2% m/m in April after the 0.5% run-up in March. Projection is a notable slowing from the 3.7% growth rate in Q1, it would equate to still solid momentum in Canada’s economy. An as-expected report will underpin the Bank’s “encouraging” narrative on the economy, supportive of the BoC’s aggressively hawkish turn this month.
US PCE, Chicago PMI & UoM Sentiment (Revised) – Personal income is set to rise 0.3% in May from 0.4%, while PCE spending rises 0.1% from 0.4%. Also out are Chicago PMI, which may dip to 58.0 in June from 59.4, with Michigan sentiment (final) June read seen steady at 94.5.
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 3rd July 2017.
FX News Today
The surprisingly hawkish tone from core central banks recently has weighed sharply on bonds and stocks, with losses exacerbated Friday amid duration and portfolio shifts into quarter-end. Yet, the combination of weaker than expected U.S. data, especially on the inflation front, and the FOMC’s hints that it could slow rate hikes when it begins its balance sheet unwind, has pushed out tightening expectations beyond the November 1 policy decision. Given all the holiday disruptions this week, trading may be a bit disjointed. But, the FOMC minutes midweek could provide a window into Fed thinking and the week could end with a bang as the June payrolls release is on tap Friday.
United States: No one is projecting any rate action in the U.S. at this month’s FOMC meeting (25, 26), according to our Survey Median. But upcoming data may help refine the outlook with respect to the trajectory of monetary policy through the rest of the year. The June employment report will take center stage (Friday) for the holiday-abbreviated week, as the first major jobs reading since the last Fed hike, though the Fed already feels comfortable with its job mandate for the most part. The economic calendar will be split by the July 4th holiday (Tuesday), but kicks off (Monday) with the ISM manufacturing index seen nudging up to 55.0 in June from 54.9 in May, while construction spending may rebound 0.3% in May from -1.4% after April showers. Data resumes (Wednesday) with the MBA mortgage market report and factory goods orders forecast to sink 0.8% in May from -0.2% in April. June ADP employment survey (Thursday) should post a 190k gain for the month, though below the solid May figure of 253k. The May trade deficit is expected to narrow slightly to -$46.3 bln from -$47.6 bln, initial jobless claims may dip 13k to 231k for the July 1 week and ISM Non-Manufacturing index may ease to 56.5 in June vs 56.9 in May.
Canada: In Canada markets are closed on Monday for the Canada Day holiday (happy 150th birthday). Two important economic reports are out this week: May trade and June employment. The trade deficit (Thursday) is expected to narrow to -C$0.1 bln in May from -C$0.4 bln in April. Exports are seen improving 1.0% m/m in May after the 1.8% gain in April, but risk is skewed to the downside on our exports estimate given the erosion in oil prices in May relative to April. Employment (Friday) is projected to grow 20.0k in June after the 54.5k surge in May, as Canada’s labour market continues to tighten. Unemployment is expected at 6.6% in June, matching the 6.6% in May. Yet another tame reading for earning growth is anticipated, as average hourly wage growth dips to a 1.2% y/y pace in June from 1.3% in May. Building permit values (Thursday) are expected to slip 0.5% m/m in May after the 0.2% dip in April. The Ivey PMI (Friday) is seen rising to 55.0 in June from 53.8 on a seasonally adjusted basis, which would leave the index above 50.0 for the thirteenth consecutive month. The June Markit manufacturing survey is due Tuesday. After a flurry of game-changing appearances over the past two weeks, the BoC is silent during the first week of July.
Europe: The Eurozone goes into the second half of the year looking much stronger than expected. This week’s data releases are unlikely to change this assessment substantially. Final Eurozone PMI readings for June are expected to confirm preliminary numbers – i.e. a manufacturing PMI (Monday) of 57.3 and services reading (Wednesday) of 54.7, suggesting robust expansion across both sectors. Markit also reported ongoing strong job creation, which is expected to be reflected in another dip in the Eurozone unemployment rate (Monday) to 9.2% from 9.3%. Germany has manufacturing orders data for May (Tuesday), where a rebound of 2.0% m/m from the -2.1% m/m is anticipated, with the latter likely to have impacted also by the later timing of Easter, which fell into April this year. May industrial production (Friday), meanwhile, is seen rising 0.3% m/m, after 0.8% m/m in April. The calendar also has Eurozone retail sales and producer price inflation. Supply comes from Germany, which sells 5-year Bobls on Wednesday and the ECB publishes its latest bank lending survey on Thursday.
UK: Sterling rallied by an average 2.5% versus the G3 currencies last week as BoE Governor Carney appeared to show himself as a potential fifth member on the eight-person Monetary Policy Committee that could vote for a rate hike next month, or soon thereafter. The calendar this week is highlighted by the June PMI surveys. The manufacturing PMI (Monday) has us expecting an ebb to a 56.4 reading after 56.7 in May, which would still indicate a decent pace of expansion in the sector, which has benefited since the pound plummeted following last year’s Brexit vote. The construction PMI (Tuesday) anticipated to come in at 55.0 after 56.0 in the previous month, and the services PMI (Wednesday) to soften to 53.6 after 53.8 in May. Production and trade numbers for May are also up this week (Friday), where industrial output seen to ticking up by 0.4% m/m and by 0.2% y/y.
Australia: Australia has Reserve Bank of Australia meeting (Tuesday), expected to reveal no change in the current 1.50% rate setting. Melbourne Institute inflation index and ANZ job ads are due Monday. Building approvals (Monday) are expected to rise 1.0% m/m in May after the 4.4% gain in April. Retail sales (Tuesday) are seen 0.3% m/m firmer in May after the 1.0% bounce in April. The trade surplus (Thursday) is seen improving to A$2,000 mln in May from A$555 mln in April.
New Zealand: New Zealand’s calendar does not have any top tier data this week. However, the calendar has June QV House Prices (Wednesday), ANZ job ads (Wednesday). The Reserve Bank of New Zealand’s next meeting is on August 10. No change is expected to the current 1.75% rate setting through year-end.
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 4th July 2017.
FX News Today
European Outlook: Asian stock markets traded mixed overnight. Hang Seng and CSI 300 underperformed with losses of 1.7% and 1.0% respectivelyas after falling below the support line of 25500. The Yen strengthened as North Korea test fired a missile, which weighed on Nikkei and Topix together with fresh pressure on tech giants, while the ASX rallied and is up more than 1.5% as the central bank left rates unchanged. U.K. as well as U.S. futures are also heading south after broad gains in Europe yesterday, which were led by Eurozone markets after a source story suggesting the ECB is not ready to lift the implicit easing bias on QE. Oil prices have halted their winning streak and are down on the day. Today’s data calendar is quiet, with only Spanish unemployment and EMU PPI, as well as the U.K. Construction PMI. ECB’s Praet and Nowotny speak and the Riksbank is expected to keep the repo rate unchanged in its latest policy assessment.
FX Update: The Australian dollar dove following the RBA announcement, with Governor Lowe’s statement giving a mixed prognosis of the economy and, in particular, highlighting that an “appreciating exchange would complicate” the transition of the economy from the mining investment boom. AUDUSD fell over 0.6% in making a four-session low at 0.7604, and AUDJPY shed over 1% in making a low at 85.85, which is also a four-session nadir. The RBA left the cash policy rate unchanged at 1.5%, as had been widely anticipated. Elsewhere, USDJPY tipped back under 113.00, putting in some space from yesterday’s seven-week high at 113.47. EURJPY and other yen crosses have seen a similar price action, with AUDJPY having led the way. EURUSD declined for a fourth-straight session following ECB efforts to correct its tapering message. The pair logged a four-session low at 1.1336.
US reports: revealed a June ISM pop to a 3-year high of 57.8, with a jobs index rise to a sturdy 57.2 that leaves upside risk for our 185k June nonfarm payroll estimate on Friday. Yet, we also saw a weak round of May construction spending data after annual revisions that lifted historic levels but that left a weaker entry into Q2, hence the Q2 GDP forecast trimmed to 2.4% from 2.6% with likely flat Q2 growth for both residential and nonresidential construction. The revised data show an even more dramatic home improvement surge since Q1 of 2016 despite some flattening in these gains in Q2, alongside a significant slowing in nonresidential construction growth since last August after a strong prior climb. Available vehicle sales figures suggest a June repeat of the 16.6 mln May pace, versus 16.8 mln in April, and an 18.3 mln cycle-high pace in December. A flat June headline and ex-auto retail sales figures can be assumed, with hits to sales from an estimated 4% June drop in gasoline prices and restraint in sales of building materials from a winter-boost.
The UK June manufacturing PMI came in much weaker than expected, at 54.3 in the headline reading, down from 56.3 in May, which itself was revised lower from 56.7. The new export orders component ebbed to a five-month low of 52.6 from 53.2 in the prior month, which is disappointing given the health of international economies and the significantly more competitive level of sterling following the Brexit vote last year. The pound and UK yields dipped on the data. Sterling markets are now looking to the services PMI survey for June (Wednesday) to better gauge any potential slowing in the broader economy that the manufacturing report might have portended, with the data arriving with BoE MPC members becoming increasingly eager to hike the repo rate from its record low rate of 0.25%.
Main Macro Events Today
UK Construction PMI – The UK Construction PMI expected to come in at 55.0 after 56.0 in the previous month.
ECBspeak – Executive Board member Praet, who has been stalling attempts to change the guidance more decisively, is due to speak today, while on the opposite end of the spectrum, head of the Austrian central bank, ECB’s Nowotny is scheduled to discuss the future of the Euro in Vienna.
CAD Manuf. PMI – The markets reopened, but the U.S. is closed for the July 4th holiday. The June Markit manufacturing survey is due today.
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 5th July 2017.
FX News Today
European Outlook: Asian stock markets are narrowly mixed, with investors assessing the impact of North Korea’s test launch of an intercontinental ballistic missile. Telecommunication shares weighed on markets in Japan and Hong Kong. The Nikkei is up 0.06%, the Hang Seng managed to climb 0.55%, after yesterday’s harp loss and the ASX is down -0.36% as geopolitical concerns make a come back and markets await the reaction of U.S. markets, which were closed yesterday. U.S. stock futures are narrowly mixed, while FTSE 100 futures are slightly down, pointing to ongoing caution on equity markets, which should keep bond futures underpinned. ECB Executive Board member Praet urged caution and patience, which suggests the ECB remains reluctant to commit to policy changes just yet and thus add support especially to peripheral EMU bond markets. Today’s data calendar focuses on Services PMI readings out of the Eurozone and the U.K.. The Eurozone also has retail sales data for May.
FX Update: The dollar majors have been directionally challenged so far today, with narrow ranges prevailing. EURUSD has settled around 1.1350, modestly above the five-session low posted yesterday at 1.1336. USDJPY has been trading on either side of 113.00 over the last day, holding in a consolidation pattern after logging a seven-week high at 113.47 on Monday, itself the culmination of a three-week rally. Emerging Asian currencies have been steady, as has been the Canadian dollar, which has traded slightly softer today after rallying yesterday on fresh hawkish BoCspeak, and the Australian dollar, which took a tumble yesterday after the RBA signalled out exchange rate gains as been an impediment to the post-mining boom transition of the economy. A joint U.S. and South Korean missile test, in response to North Korea’s launching of its first an intercontinental ballistic missile yesterday, has upped the geopolitical ante in that part of the world, but to little forex market impact, while contributing to choppy trade on Asian equity bourses (although South Korea’s KOSPI still managed a gain of 0.4%). Today’s release of the FOMC minutes from the mid-June will be a big focus for markets as they should detail justification for the Fed’s unexpected resolve toward normalizing policy.
Eurozone producer price inflation fell back to 3.3% y/y in May from 4.3% y/y in the previous month. The deceleration was mainly due to base effects and not unexpected after national data, but it will help the arguments of the doves at the ECB, who remain cautious about moving too quickly towards tapering steps. Still, while the doves can point to the marked decline in the number, the hawks will stress that the headline rate remains quite high.
Division at the BoE’s Monetary Policy Committee, with member McCafferty having advocated a rate hike while Vlieghe argued that hiking too soon would be worse than hiking too late. McCafferty, who was one of the three (out of eight) MPC members who voted to hike the repo rate by 25 bp in June, said that “the economy has not slowed to the extent we feared” in the wake of the Brexit vote last June, and with inflation having been high “there is a need for change” and reverse the 25 bp rate cut of last August. This would take the repo back to 0.50% from the present historic low of 0.25%. Vlieghe, meanwhile, argued that the “consumption slowdown is here, it’s not over” that that he doesn’t think there’s going to be “sufficient offset from investment and net exports to compensate.”
Main Macro Events Today
FOMC minutes – The minutes to the June 13-14 policy meeting will be interesting for any additional insight the report may provide on the Fed’s hawkish gradual stance. Recall, the Committee generally overlooked weaker real sector data and a “transitory” slowing in inflation in recent months, and instead showed unexpected resolve toward normalizing policy. The minutes may provide some context, as well as the support behind that decision. Of course, the big question now for the markets heading into the second half of 2017 is whether the Fed will get cold feet on the doorstep of the balance sheet unwind, and if it will have the nerve to hike the funds rate for a third time this year.
EU Final PMI – Final Eurozone Services PMI readings for June are expected to confirm preliminary numbers – i.e. services reading of 54.7, suggesting robust expansion across both sectors.
UK PMI – The UK services PMI expected to soften to 53.5 after 53.8 in May.
US Factory Goods – May factory orders are expected to be -0.5% from -0.2% 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
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 July 2017.
FX News Today
European Outlook: Asian stock markets are narrowly mixed, with Japan and Hang Seng down as the stronger Yen weighed on exporters and lower oil prices hit energy producers. the front end Nymex futures picked up a bit after supply concerns hit prices once again, but remains below USD 46 per barrel. The ASX is managing marginal gains. FTSE 100 futures are also marginally higher, despite the rise in Sterling after BoE’s Saunders warned of rate hikes ahead. This should continue to see Gilts underperforming versus Bunds, although a stronger Pound also reduces inflation risks going ahead. In the Eurozone yields also continue to trend higher as the ECB is cautiously heading for exit steps, and while the 10-year Bund closed slightly lower yesterday, Italian and Spanish bond as well as stock markets underperformed, and market jitters will back the doves at the council. Today’s calendar has German manufacturing orders at the start of the session as well as ECB minutes and Swiss inflation data.
FOMC minutes showed most officials said “idiosyncratic factors” were responsible for the softer trend in inflation, though several were concerned that the progress on inflation may have slowed. A couple of policymakers, however, saw rising inflation risk from the “undershooting of the jobless rate.” They also noted some financial market conditions had eased even as policy accommodation was being reduced. Committee members were divided over when to begin the balance sheet unwind, expressing a range of views. There were no clear insights in the minutes to better assess the timing of the balance sheet unwind. But, given the Committee decided to announce the balance sheet details at this meeting suggests the start could begin, as Yellen said, “sooner.” The Fed continues to believe a well telegraphed, and gradual approach to shrinking the balance sheet will limit market reaction. The Fed is also expected to delay rate hikes when it initiates the shrinkage of the portfolio, and that will give the data time to improve and hence support views that it’s idiosyncratic factors weighing. The minutes didn’t materially add to the markets’ body of knowledge on the normalization path.
US reports: Disappointing U.S. factory goods data, with price-led May declines for shipments, orders, and inventories of nondurable goods after small downward April revisions, alongside small upward adjustments in the available durables data for orders, shipments, and equipment, though with weaker inventories. The May data still showed a transportation and defense-led orders drop with lean inventories and resilient shipments. Inventories have yet to recover from the big 2015-2016 petro-hit, beyond last year’s Q3-Q4 bounce that was mostly reversed in Q1.
Eurozone: services PMI revised up to 55.4 with the final reading for June from 54.7 in the preliminary estimate, but still down from 56.3 in May. This saw the composite PMI revised up to 56.3 from 55.7 and versus 56.8 in May. Despite the drop in June, Markit reported that the Eurozone economy enjoyed its best quarter for just over six years in Q1 and while output growth slowed slightly in June, “continued robust inflows of new work and elevated business confidence kept the pace of job creation among the best seen over the past decade”. The average reading over the second quarter was the best since Q1 2011. Good news then that will back the ECB’s increasingly optimistic view of the economy, although with inflation still low and key players like Draghi and Praet insisting that this is largely thanks to the ECB’s expansionary policy, the central bank is not ready yet to commit to QE tapering. The UK June services PMI missed expectations slightly, dipping to a 53.4 headline reading after 53.8 in May.
Main Macro Events Today
ECB minutes – ECB Monetary Policy Meeting Accounts have be scheduled for 11:30 GMT today.
U.S. Initial Jobless Claims – Initial claims data for the week of July 1 is out today and a dip to 232k is expected from 244k last week and 242k in the week prior. Claims are always volatile this time of year as we move through auto sector retooling season and this year there are additional risks from the big build up in auto inventories.
Fedspeak – SF Fed’s Williams (non-voter) will be in Australia (03:45 ET) and Governor Powell is set to discuss housing finance reform from Washington (10:00 ET), while VC Fischer will speak from Washington on “Government Policy and Labor Productivity” (11:00 ET). Focus will then turn to Fed Chief Yellen from next week’s policy testimony before the House next Wednesday (10 ET), as her Q&A will follow-up her written testimony’s public release this Friday (11 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.
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 July 2017.
FX News Today
European Outlook: Asian stock markets headed south, following sell offs in Europe and on Wall Street yesterday. Risk aversion and concerns about the withdrawal of monetary stimulus continue to weigh on markets as yields spike after hawkish comments from ECB and BoE yesterday. FTSE 100 futures are in the red while U.S. futures are slightly higher. Bund yields are at the highest level since early 2016 and the 10 year Gilt closed above 1.3% as markets adjust to to the fact that global central bank support has peaked. Today’s calendar has industrial production data U.K. as well as U.K trade data, but markets will be looking ahead to U.S. Payroll data in the PM session.
US reports: revealed modest undershoots for trade and job market indicators but an upside June ISM-NMI surprise that left a neutral read for the economy on net. The trade deficit narrowed to $46.5 bln in May to leave a gap that was just $0.2 bln wider than indicated by the “advance” report, with service-led upside surprises in both exports and imports. For claims, we saw a 4k rise to 248k that bucked the usual auto retooling downdraft, though a claims drop is likely next week. ADP posted a lean 158k June rise, though we’ve seen a solid 218k average ADP increase thus far in 2017 that signals upside risk for our 185k June nonfarm payroll estimate. The ISM-NMI popped to 57.4 in June to leave that measure just below the 16-month high of 57.6 in February, with a firm 57.4 ISM-adjusted reading and a solid 55.8 employment index figure.
Canada: Yesterday’s reports continued the run of upbeat data, but we remain unconvinced that the Bank will hike rates next week. Base case remains for a 25 bp increase in October. Canada’s May trade report bodes well for Q2 GDP, as a 2.0% m/m gain in export volumes followed the 1.3% rise in April. Import volumes expanded 1.7% in May after the 0.3% gain in April. The mix of faster export growth relative to import growth in the May trade report is consistent with projection for a positive contribution from net exports to Q2 GDP after the hefty drag exerted in Q1. Hence, while Canada’s economic data remains strongly suggestive of a sustained uptrend in activity that will eventually deliver the return to full capacity and 2% inflation that is the Bank’s goal, the economy is not wildly outpacing the Bank’s scenario from the April MPR.
ECB’s: Weidmann joined the chorus of more hawkish sentiment as he noted that the recovery in Europe is opening the door to ECB normalization. This isn’t a surprise from the well known hawk, who was discussing the “Future of the Euro” with Austria’s Nowotny. Weidmann added that the timing of action and the pace of normalization is dependent on the sustainability of inflation. “For the credibility of monetary policy, it is decisive that the expansionary monetary policy is ended when it becomes necessary from a price-stability perspective.” The threat of downward price spirals has retreated, he said, lessening the need for the emergency bond purchase tactic to remain in place. However, he concluded that “for the moment, an expansionary monetary policy is justified to support the economic recovery and thus inflation,” though there are “different opinions on how much we need to step onto the stimulus accelerator and which instruments we should use.
Germany: Industrial production stronger than expected. Production rose 1.2% m/m in May, much more than anticipated after the correction in orders data the previous month. Energy production remained strong, while manufacturing growth picked up after two weak month, which helped to compensate for the correction in construction production. The annual rate improved to 5.0% y/y and data confirm expectations for a strong second quarter GDP growth rate, leaving Germany on course for an ongoing robust recovery. The euro remain underpinned following the fresh bout of hawkish-leaning remarks from ECB policymakers yesterday, which has been followed by an above-forecast 1.2% rise in German industrial production, which was well up on the median expectation for 0.3%
Main Macro Events Today
UK Man. Production & BOE – Production and trade numbers for May are also up today, where manufacturing output expected ticking up by 0.5% m/m and by 0.2% y/y. Also BOE Governor Carney is due to speak today regarding the economic impact of climate change at the G20 meeting.
U.S. Employment – June employment data is out today and should post a 180k headline for the month following 138k in May and 174k in April. The unemployment rate should hold steady at 4.3% from May, down from 4.4% in April.
Canadian Employment Data – Employment is projected to grow 20.0k in June after the 54.5k surge in May, as Canada’s labour market continues to tighten. Unemployment is expected at 6.6% in June, matching the 6.6% in May. The Ivey PMI is seen rising to 55.0 in June from 53.8 on a seasonally adjusted basis, which would leave the index above 50.0 for the thirteenth consecutive 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.
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 10th July 2017.
FX News Today
The FOMC’s decision to outline its balance sheet unwind last month kicked off the beginning of the end for the central banks’ emergency QE programs. Other central banks, including the BoE, ECB, and BoC have been following suit now too. The shift in tone was surprising given the downtrend in global inflation pressures and this will be a challenge going forward. But central bank-speak suggests policymakers are willing to look through that dynamic, especially as growth remains relatively solid. Right on cue, inflation and growth data will dominate global calendars, while Fed chair Yellen will give her semi-annual Humphrey Hawkins testimony.
United States: U.S. markets will have a lot on their plates this week as they continue to assess the June jobs data, global developments in the aftermath of the G20 meeting, while looking ahead to Fed chair Yellen’s Humphrey Hawkins testimony and a batch of key data on inflation, sales, and production. There are several important data releases on the calendar, though not until Friday, which could help clarify the near-term picture for the Fed and the markets. The June CPI report will be the focus, with the headline expected to fall 0.2% thanks to the drop in energy prices, while the core edges up 0.1%. The annual pace should slow to 1.5% y/y from 1.9% y/y on the overall reading, while the core remains steady at 1.7% y/y. The Fed remains disappointed by the sluggishness, but the comments from the June minutes that the slowdown is a function of “idiosyncratic” factors suggests officials will continue to look through the data and concentrate more on economic growth. June retail sales will be the other report of note and are expected to post an unchanged reading overall .Other data over the week includes consumer sentiment from the University of Michigan (Friday), the June NFIB small business survey is on tap (Tuesday), along with a Yellen favorite, JOLTS (Tuesday). Jobless claims and PPI, along with the June budget, are due (Thursday).
Fedspeak: Yellen’s testimony before the House Financial Services Committee (Wednesday) and the Senate Banking Committee (Thursday) will highlight. Her comments will be scrutinized for any sign that the timing could be accelerated, with an announcement on the portfolio at the upcoming July FOMC, with the start of the shrinkage in September. Or given the weaker trend in inflation, we will listen to hear any indication the slowdown in inflation is giving her cold feet on further normalization, pushing off action on the balance sheet and rate hikes further into year end, or even 2018. Fedspeak from various others on the Committee will be of interest too. SF Fed’s Williams speaks from Australia (Monday 23:05 ET). Governor Brainard’s remarks on monetary policy (Tuesday 12:00 ET) will be closely monitored too. On the other end of the hawk-dove spectrum is KC’s George who will discuss the balance sheet and the economic outlook (Wednesday 14:15ET). Chicago Fed’s Evans (a voter) also will speak on monetary policy and the economy (Thursday11:30 ET). The hawkish Dallas Fed’s Kaplan attends and speaks at a conference on monetary policy (Friday 09:30 ET). The Beige Book (Wednesday) will be overlooked in favor of Yellen’s testimony, and won’t deviate from the moderate growth outlook.
Canada: In Canada, the Bank of Canada’s policy announcement, Monetary Policy Report and press conference (Wednesday) comprise the main event this week. A hawkish U-turn by the Bank via several recent appearances and interviews by Governor Poloz and Senior Deputy Governor Wilkins have left a widespread expectation that the Bank will increase rates by 25 basis points to 0.75%.The data calendar is lean this week. Housing starts (Tuesday) are seen improving to a 200k pace in June from the 194.7k clip in May. The June Teranet/National HPI (Wednesday) and the May new home price index are also due this week.
Europe: European bond yields continue to rise, while Eurozone spreads are widening as ECB officials continue to mull exit strategies, despite the fact that the Bank still has an easing bias on QE and that tapering won’t start until early next year. This week’s data round is unlikely to settle the argument over inflation one way or the other as there’s unlikely to be an major revisions to final price data for June. German HICP (Tuesday) is expected to be confirmed at 1.5% y/y, the French reading (Tuesday) at just 0.8% y/y, the Italian at 1.2% y/y and finally the Spanish at 1.2%. Those would all be sufficiently soft to back the doves’ arguments who maintain that the inflation remains too low and that the economy still needs a substantial degree of monetary support. Meanwhile, the hawks can find solace in May production numbers, which are expected to rise 1.2% m/m, more than doubling the 0.5% pace from April, supported by very strong German and French numbers. The data calendar also has German and Eurozone trade numbers. Germany issues 10-year Bunds (Wednesday).
UK: UK data has been flagging an onset of a stagnation in economic growth, with last week bringing unexpected weakness in production, trade, and house prices, and in all three of the PMI sector surveys. The new minority government, meanwhile, has managed to survive the early weeks of its existence, and negotiations with EU counterparts on Brexit will continue as planned. The “Great Repeal” bill will start to be debated in the coming weeks. The calendar this week is relatively quiet, highlighted by June labor data (Wednesday). The report is expected to show the unemployment rate holding steady at the cycle low of 4.6% in May. A key focus for policymakers and the markets alike, will be average household earnings, as any fresh signs of weakness will provide an offset to the hawkish stance of the BoE. The BRC June report on retail sales is also due (Monday), which will also be scrutinized for signs of weakness as incomes have tipped into negative growth in real terms in recent months.
Japan: In Japan, June PPI (Wednesday) is forecast slipping to 1.9% y/y from 2.1%, while the May tertiary index (Wednesday) is expected to fall 0.5% after rising 1.2% in April. Revised May industrial production will be released on Friday.
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 11th July 2017.
FX News Today
European Outlook: Equity markets remained in a positive mood in Asia overnight, with Hong Kong stocks heading for another gain of more than 1%, led by insurers and banks. The Nikkei is up 0.57%, with exporters underpinned by a weaker Yen. U.K. and U.S. futures are also moving higher, pointing to another positive session in Europe, where Eurozone markets in particular found solace yesterday in ECB comments suggesting that the ECB won’t tweak its forward guidance again until September. Oil prices are slightly higher on the day and the front end Nymex future is trading at USD 44.48 per barrel. The European calendar remains pretty light. Released overnight U.K. BRC like for like retail sales came in much better than expected at 1.2%. Still to come Italy releases industrial production data for May.
US reports: U.S. consumer credit surged $18.4 bln in May, following the upwardly revised $12.9 bln April gain (was $8.2 bln). Non-revolving credit continued to lead the strength, rising $11.0 bln versus $11.8 bln previously. Revolving credit increased $7.4 bln after edging up $1.2 bln in April. For Q1, credit climbed $45.5 bln and was up $57.8 bln in Q4. Also, U.S. Fed’s Labor Market Conditions index rose 1.5 points in June following an upwardly revised 3.3-point May increase (was 2.3) and a 3.8-point April jump. This is a 13th straight monthly gain. The index is heavily weighted by the unemployment rate, and the rise to 4.357% from 4.294% in Friday’s jobs report was a factor behind the gain. The LMCI, a favorite of chair Yellen, is a composite indicator comprised of 19 already released variables and corroborates the view of a solid labor market.
ECB’s: ECB seen steady over the summer. Comments from Bank of France governor Villeroy over the weekend seem to confirm that the central bank will refrain from policy and guidance changes at the July meeting and wait until September, when the next set of forecasts are due to decide on whether to tweak its stimulus settings. At the same time ECB Chief Economist Praet said in a newspaper article that “we still need a long period of accommodative policy”, in what looks like a fresh attempt to calm the nerves of investors, after some hawkish comments saw Eurozone yields rising last week. Yesterday we also saw a release of Eurozone Sentix Investor confidence which fell back in July, with the total reading declining to 28.3 from 28.4 in the previous month. The indicator for the current situation still improved to 37.3 from 36.0, but the expectations index fell back to 19.8 from 21.0, the first decline since February.
Germany: Germany posted a sa trade surplus of EUR 20.3 bln in May, slightly higher than the EUR 19.7 bln in the previous month. Exports rose 1.4% m/m on a seasonally adjusted basis, up from 0.9% m/m in April, while import growth stagnated at 1.2% m/m. The three months accumulated figure eased slightly, is is now below the total for Q1, which suggests trade is not making much of a contribution for Q2 GDP. Indeed, accumulated data for the first five months of the year show the total current account surplus falling back to EUR 98.0 bln from EUR 110.3 bln last year, while the trade surplus narrowed to EUR 100.1 bln from EUR 104.8 bln in the corresponding period 2016. Fresh signs then that the recovery this time around is not so much driven by external demand, but consumption and the domestic economy.
Main Macro Events Today
UK MPC Speeches – MPC Member Haldane is due to speak today at the ‘Essentials of Numeracy’ launch event, in London. Today as well, MPC Member Broadbent Speaks in Aberdeen at the Scottish Council for Development and Industry.
Canada Housing Starts – Housing starts are seen improving to a 201.5k pace in June from the 194.7k clip in May.
US NFIB & JOLTS – The June NFIB small business survey is on tap today, along with a Yellen favorite, JOLTS. NFIB expected to stay quite stable at 104.4 from 104.5 last time, while JOLTS job Openings expected to fall at 5.89M from 6.044M in April.
Fedspeak – Governor Brainard’s remarks on monetary policy at 12:00 ET will be closely monitored. She’s a voter and one of the more dovish on the Committee, though she has tacitly supported the Fed’s tightening actions.
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 12th July 2017.
FX News Today
European Outlook: Asian stock markets were mixed, with Nikkei and ASX underperforming and heading south as the Dollar weakened ahead of Yellen’s testimony today. FTSE 100 futures are moving higher U.S. stock futures are mixed as markets remain in the ban of central bank comments. Yields rose again across Europe and with central banks eying exit trend occasional dovish comments are unlikely to provide more than a brief halt in the uptrends in yields. Today’s data calendar has U.K. labor market data as well as Eurozone May production numbers. Germany auctions a new 10-year Bund.
US reports: revealed U.S. NFIB small business optimism index fell to 103.6 in June from 104.5 in May. It’s the lowest since the 98.4 in November. The index was as high as 105.9 in January, which was the best since the 106.1 print from December 2004. The all-time high is 107.4 from November 2004. The percentage of firms reporting plans to hire fell to 15% from 18%. On the other hand, U.S. JOLTS report showed job openings slumped 301k in May to 5,666k after rising 182k to 5,967k in April. The rate slid to 3.7% from 3.9%. But, hirings increased 429k to 5,472k, rebounding from the 261k drop to 5,043k. The rate improved to 3.7% from 3.5%. And quitters increased 177k to 3,221k after falling 94k to 3,044k. The rate inched up to 2.2% from 2.1%. The headline figure is disappointing, but the quit numbers, a Yellen favorite, should offset. Lastly, the U.S. wholesale report revealed a disappointing 0.5% May wholesale sales drop after a 0.3% (was 0.4%) April decline, though we saw a 0.4% May inventory rise that beat the 0.3% climb in the advance indicators report after a 0.4% April drop. The May sales drop mostly reflected a 7.8% price-led petroleum plunge, though weakness was evident across the durables data as well.
BoE MPC member Broadbent kept mum on interest rates during a speech he delivered before the Scottish Council for Development and Industry earlier. Broadbent was among the majority of MPC members to vote for unchanged policy at the June meeting, which had been a surprise for markets as three of his colleagues voted for a 25 bp hike in the repo rate. He spoke mostly about his view on Brexit risks, concluding that “put simply, a significant curtailment of trade with Europe would force the UK to shift away from producing the things it’s been relatively good at, and therefore tends to export to the EU, and towards the things that it currently imports and is relatively less good at.” Broadbent argued that this, at least initially, would both lower income as trade shifts away from services exports, which the UK has a comparative advantage in, while raising costs as production shifted more towards food and machinery, areas where the UK has a comparative disadvantage. Sterling took a 15-20 pip tumble versus the G3 currencies, with markets appearing to take Broadbent’s words as meaning that he won’t vote for a tightening at the next MPC meeting on August 3.
Fed Governor Brainard: it’s “appropriate soon” to start balance sheet shrinkage, she said in her speech on Cross-Border Spillovers of Balance Sheet Normalization. That’s consistent with the messages from the June policy state, the minutes, and the SEP, though it’s important that the dovish governor echoed that sentiment. The Fed will continue to assess inflation, especially in light of the recent softening, before deciding on the rate path. Policymakers want to move cautiously on further rate increases. She also noted that the currency markets could be more sensitive to the Fed’s rate actions than on the balance sheet.
Main Macro Events Today
UK Labor Data -The U.K. labour market report for May is expected to show the unemployment rate holding steady at the cycle low of 4.6%. A key focus for policymakers and the markets alike, will be average household earnings, as any fresh signs of weakness will provide an offset to the hawkish stance of the BoE.
Fed Yellen – Yellen’s testimony today before the House Financial Services Committee and the Senate Banking Committee (Thursday) will highlight .Her comments will be scrutinized for any sign that the timing could be accelerated, with an announcement on the portfolio at the upcoming July FOMC, with the start of the shrinkage in September. Or given the weaker trend in inflation, we will listen to hear any indication the slowdown in inflation is giving her cold feet on further normalization, pushing off action on the balance sheet and rate hikes further into year end, or even 2018.
BOC Statement – The Bank of Canada’s policy announcement, Monetary Policy Report and press conference comprise the main event today. A hawkish U-turn by the Bank via several recent appearances and interviews by Governor Poloz and Senior Deputy Governor Wilkins have left a widespread expectation that the Bank will increase rates by 25 basis points to 0.75%.
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 July 2017.
FX News Today
European Outlook: Asian stock markets moved cautiously higher overnight and are heading for a strong week, for Hong Kong the best of the year, helped by a rally in banks and underpinned by cautious comments from Yellen, who doesn’t seem to be in a rush to tighten policy. Central banks remain the key focus and the announcement that Draghi will be speaking at Jackson Hole shortly before the September policy meeting has sparked speculation that he will use the chance to lay out the ECB’s tapering plans, coupled with remarks from BoE’s MacCafferty that the BoE should revisit the guidance on the unwinding of QE sent European yields higher yesterday afternoon, while capping gains in Eurozone equities and seeing the FTSE 100 closing in the red. Stock futures are pointing to a rebound in the FTSE 100, and Yellen’s comments may help bond yields to come off highs at the end of the week. The European calendar has Eurozone trade data as well as final Italian HICP readings.
Fed Chair Yellen: has concluded her testimony yesterday. There wasn’t an attempt to walk back from the cautiously optimistic tone from yesterday’s testimony where she hedged the softer inflation dynamics. Other than her comment that the balance sheet is unwound is likely to push up rates at the long end, there weren’t any big revelations yesterday. That indication has seen the 30-year yield jump 5 bps to 2.925%, with the 5s-30s spread has steepened to 101.6 bps from 100.9 bps yesterday. It was as narrow as 93.5 bps on July 3. She said Q2 GDP growth should be “significantly stronger” versus Q1, but reaching a 3% pace would be “quite challenging.” Yellen on the balance sheet said that their intention is to shrink the balance sheet in a “slow, gradual, and predictable way. Fed has set out a detailed plan on how it will achieve that. Once triggered, the unwind is expected to run in the background. The run off should result in some increase in long term rates compared to the front end, she acknowledged, and the FOMC will take that into account as it sets the funds rate. She expects the funds rate to remain the principal tool of monetary policy. She repeated that the balance sheet and the quantity of reserves will be reduced over the next several years, but won’t go back to the pre-crisis levels.
U.S. reports: revealed a smaller than expected PPI downdraft into mid-year despite falling oil prices, with a lift from rising food prices thanks to hot and dry weather in the upper midwest. We also saw sustained lofty initial claims levels into the holiday week of July that defied the usual auto retooling headline, likely thanks to ongoing vehicle sector weakness and some extended summer plant shutdowns. For PPI, the 0.1% June headline and core price gain beat estimates thanks to a smaller than expected 0.5% energy price drop alongside a 0.6% food price rise. For claims, a 3k downtick to a still-elevated 247k trimmed a 6k rise to 250k (was 248k) in the prior week. Claims are averaging 247k in July, following lean prior averages of 243k in June, 241k in May, and 243k in April. Next week’s BLS survey week reading should lie within the mix of 242k in June, 233k in May, and 243k in April, though the recent up-tilt may imply an overshoot.
Main Macro Events Today
EU Trade Balance – May Trade Balance for expected to post an increase at 20.3B from 19.6 B last month.
US Retail Sales – The June retail sales report expected to be a flat with the ex-autos figure up 0.2% This follows respective May figures of -0.3% for both the headline and ex-autos and 0.4% for both figures in April. There is possible downside risk from the recent declines in auto sales as well as declines in gasoline prices. Meanwhile. June CPI should post a flat headline as well with a 0.2% increase for the core. This compares to the May figures which had the headline down 0.1% and the core up 0.1% and April where the headline was 0.2% and the core 0.1%. An anticipated dip in gasoline prices could weigh on the release too.
US CPI and Industrial Production – June industrial production data is out today and should post a 0.3% increase for the headline following a flat rate in May and a 1.1% bounce in April. Capacity utilization should tick up to 76.8% from 76.6% in May and 76.7% in April. Mining and factory employment both climbed in the June which could provide a tailwind to the release.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
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 July 2017.
FX News Today
The conundrum of improved growth and slowing inflation continues to bedevil central bankers as the opposing dynamics lead to conflicting policy prescriptions on normalization. But there’s a new wrinkle as QT, quantitative tightening, comes into view, alongside the more traditional tool of rate management, each of which have differing implications for bond markets. And the differing views of hawks and doves have resulted in a clash of commentary that’s done more to confuse and vex the markets regarding the course of policy, rather than provide stability through transparency. The markets will remain hypersensitive to policy actions and policy-speak near term, while keeping a close eye on inflation and growth data.
United States: U.S. markets will continue to assess Fed Chair Yellen’s testimony last week, where she remained optimistic on growth, but hedged on “transitory” inflation outlook. Headlining the data slate will be June housing starts, July PMIs and trade prices, none of which will be crucial for trading. Housing starts (Wednesday) are forecast rising to a 1,190k pace in June following the 5.5% drop to 1,092k in May. However, a rise in construction jobs last month suggests upside risk. The July Empire State index (Monday) is seen falling back to 15.0 after jumping 20.8 points to 19.8 in June (which was the highest since September 2014). Also, the July Philly Fed index (Thursday) should dip to 24.0 following the 11.2 slide to 27.6 in June. The 43.3 print from February was the highest going back to January 1984. The June trade price data (Tuesday) will be of interest. Import prices are forecast falling 0.5% after dipping 0.3% in May, with petroleum the main factor behind the weakness. Export prices should edge up 0.1% following a 0.7% drop in May where declines in food and ag prices weighed. Other releases on this week’s calendar are the NAHB homebuilder survey for July (Tuesday), May Treasury capital flows (Tuesday), and weekly initial jobless claims (Thursday).
Canada: Canada’s calendar has a healthy helping of economic data this week, but nothing from the Bank of Canada. However, the economic data could influence expectations for the September announcement. The June existing home sales report is expected to be released on Monday, with a 5.0% y/y drop projected for total sales. Manufacturing (Wednesday) is seen rising 1.0% m/m in May after the 1.1% improvement in April. Retail sales (Friday) are projected to grow 0.3% m/m in May after the 0.8% gain in April. CPI is expected to dip 0.1% in June (m/m, nsa) after the 0.1% rise in May, leaving a slowing in the annual growth rate to 1.0% in June from the 1.3% y/y pace in May. But the June CPI is of little importance to the near-term policy outlook, given that the BoC is looking through the temporary factors (decline in auto prices and electricity costs) that are holding back total and core inflation growth. CPI will become more important later this year, when the temporary nature of the presumed factors restraining inflation will be tested.
Europe: All eyes will be on the ECB this week as traders look to the central bank for direction. Conflicting messages from ECB officials exacerbated volatility in recent weeks, and nerves are likely to remain high. The ECB is widely expected to be heading for tapering early next year, although Praet and Draghi are wary of committing prematurely to exit steps and have been instrumental in keeping the QE easing bias in place. Data releases this week are unlikely to add further ammunition to the arguments of the hawks at the council. The final reading of Eurozone June HICP inflation (Monday) is widely expected to be confirmed at just 1.3% y/y from 1.4% y/y in May, and clearly below the ECB’s 2% limit for price stability. However, base effects from energy prices are actually largely to blame for the slowing versus May, and core inflation ticked higher in the June preliminary to 1.2% y/y from 1.0%, as did the German headline rate. Still, with German PPI inflation seen slowing in May, the doves around Praet and Draghi will continue to argue that the low inflation environment still warrants a substantial degree of monetary stimulus. The ECB has acknowledged though, that growth is strengthening and that adverse deflation scenarios are no longer looking likely. That prompted the move to a neutral stance on rates in June. And, the expected further improvement in Eurozone consumer confidence (Thursday) to -1.1 from -1.3 should back expectations for ongoing robust growth going ahead. German ZEW investor confidence (Tuesday) meanwhile is likely to reflect market concerns about the impact of tapering as global central banks eye exit steps. The Eurozone also has current account data for May (Thursday), and there’s a German 30-year Bund sale (Wednesday). The ECB releases its bank lending survey (Tuesday).
UK: This week’s schedule brings the June inflation report (Tuesday), where expected headline CPI to remain at 2.9% y/y, a four-year high. The sharp y/y weakening in sterling following the Brexit vote in June last year has kindled inflation, and at least three of the current eight-member MPC committee (normally nine, with one position currently vacant) are now itching to reverse last August’s 25 bp cut in the repo rate. Official retail sales for June (Thursday) has us expecting a 0.2% m/m rebound after the sharp 1.2% contracting on May.
Japan: Japan is closed on Monday for Marine Day holiday. The BoJ meeting (Wednesday, Thursday) will be a focal point given the world-wide interest in all things central banking. No changes in policy are expected in either rates or stimulus. The Bank may, however, downgrade its inflation outlook, while upping expectations for the economy, consistent with recent global patters and according to recent market chatter. Data includes the June trade report which expected the balance to flip to a JPY 500.0 bln surplus, from the JPY 204.2 bln shortfall in May. The softer yen likely supported a bounce in exports after three months of weakness. The May all-industry index (Thursday) should fall 1.0% m/m based on declines in retail sales and industrial production, after the prior 2.1% increase.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
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 July 2017.
FX News Today
European Outlook: Asian stock markets headed south even as rate hike expectations are being pushed out, as investors turn their focus on U.S. politics and rising doubts over Trump’s reform agenda. In China markets continued to fret about the prospect of tighter regulations and Sunac China Holdings Ltd came under pressure in Hong Kong amid media reports that banks are looking into the company’s credit risk. A stronger Yen meanwhile weighed on exporters as markets re-opened after a long weekend, although it was the AUD that outperformed. U.K. and U.S. stock futures are also down, while oil prices are holding marginally above USD 46 per barrel. Today’s calendar has German ZEW investor sentiment as well as the ECB’s bank lending survey, while the U.K. has inflation numbers for June. The ECB meeting on Thursday continues to hang over Eurozone markets, with investors concerned that Draghi may already drop the easing bias on QE.
U.S. reports: U.S. Empire State manufacturing index dropped 10.0 points to 9.8 in July, lower than expected, after rebounding 20.8 points to 19.8 in June. The latter was the highest since September 2014. Declines were broad-based. The employment component fell for a third consecutive month, sliding to 3.9 from 7.7, with the workweek at unchanged from 8.5. New orders fell to 13.3 from 18.1. But, prices paid edged up to 21.3 from 20.0, with prices received at 11.0 from 10.8. The 6-month general business outlook index eased to 34.9 from 41.7, with employment at 11.8 from 12.3. The future new order index was 33.4 from 42.2, with prices paid at 30.7 from 33.1 and prices received at 15.7 from 13.8. Capital expenditures are at 15.0 from 20.8, with technology spending at 11.8 from 11.5.
Final June EMU HICP inflation was confirmed at 1.3% y/y, in line with the preliminary number and down from 1.4% y/y in May. The breakdown confirmed that the deceleration in the headline rate was mainly due to lower energy price inflation, which dropped back to just 1.9% y/y from 4.5% y/y in the previous month. Services price inflation meanwhile accelerated to 1.6% y/y. Still, while core inflation moved up from the 0.9% y/y in May, at 1.1% y/y it remains far below the ECB’s 2% limit for price stability and prices for non-energy industrial goods rose just 0.4% y/y, so plenty there for the doves at the ECB to argue with. Against that background Draghi is likely to stick to the message from June at this week’s council meeting and try to calm tapering nerves ahead of the summer break.
Main Macro Events Today
German ZEW – ZEW investor confidence today is likely to reflect market concerns about the impact of tapering as global central banks eye exit steps. A slight decline in the headline July number to 18.3 is expected from June’s 18.6. Those are still strong level, indicating that optimists outnumber pessimists, and so should not spark fresh growth concerns, although after some disappointing U.S. data and cautious comments from Yellen, it will underpin the halt in the rise in yields.
UK PPI & CPI – The June inflation report expected with headline CPI to remain at 2.9% y/y, a four-year high. The sharp y/y weakening in sterling following the Brexit vote in June last year has kindled inflation, and at least three of the current eight-member MPC committee (normally nine, with one position currently vacant) are now itching to reverse last August’s 25 bp cut in the repo rate. The PPI for June expected to decrease at -1.0% from -1.3% last month.
BoE Gov. Carney – BoE Governor Carney will give a speech today at the unveil of the new £10 note, in Hampshire.
US Trade Data & NAHB – The June trade price data will be of interest. Import prices are forecast falling 0.5% after dipping 0.3% in May, with petroleum the main factor behind the weakness. Export prices should edge up 0.1% following a 0.7% drop in May where declines in food and ag prices weighed. Other releases for today are the NAHB homebuilder survey for July and May Treasury capital flows .
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 19th July 2017.
FX News Today
European Outlook: Asian stock markets moved mostly higher, as USD steadied. The ASX is outperforming despite ongoing strength in AUD and FTSE 100 futures are rising in tandem with U.S. futures. Long yields picked up in the U.S. and Japan, but the September Bund contract moved higher in after hour trade yesterday, suggesting opening gains in Bund futures, after yesterday’s sharp drop in European yields. Oil prices are slightly down, but the front end WTI future is holding above USD 46 per barrel. Today’s European calendar is quiet, with a German 30-year auction and Eurozone construction output the only highlights, leaving the focus firmly on U.S. political events and the ECB meeting tomorrow.
ACA reform: A smattering of healthcare headlines in wake of the ACA reform abandonment and now chorus of outright repeal calls suggests the debate appears to be disintegrating further. Republican senators Collins, Portman and Capito indicated that they would vote against a repeal without a replacement plan. In contrast, Vice President Pence said he and Trump would “fully support” leader McConnell’s decision to move forward with a bill that only repeals Obamacare in a “fresh start.” Pence warned that congressional inaction “is not an option and congress needs to do their job.” Senate Democratic leader Schumer said an Obamacare repeal without replacement would be a “disaster.” Meanwhile, House Budget Chairwoman Black said she expects the Republican budget to pass the panel and full House vote. Trump’s postscript on ACA reform was aired live and he confirmed that he was “disappointed” that after hearing repeal/replace on healthcare for 7-years that the votes weren’t there. He didn’t consider the renegade votes “disloyal,” but said that more effort would need to take place to get more Republicans in seats in 2018. Trump then reiterated his fallback plan of letting Obamacare fail and predicted the Dems would come back at that point to replace it or come up with something else.
U.S. reports: import prices fell 0.2% in June, with export prices off 0.2% as well. The 0.3% decline in May import prices was revised up to -0.1%, while May export prices were nudged to -0.5% from -0.7% previously. Petroleum import prices dropped another 2.2% (a fourth straight monthly slide) versus -1.2% previously (revised from -3.9%). As for export prices, agriculture prices dropped 1.5% from -1.6%, with foods, beverages at -1.6% from -2.0%, with industrial supplies flat from -1.3%. Excluding ag, export prices were flat. Slowing inflation remains the theme into the summer months and that should support Treasury gains. U.S. NAHB homebuilder sentiment index fell 2 points to 64 in July, below expectations, after falling 3 points to 66 in June (revised from 67). It’s the lowest since 63 in October, and below the 67 6-month average, but it is well up from the 58 a year ago. The current single-family sales index dropped 2 points 70 from 72 last month. The future sales index also declined 2 points to 73 from 75. The index of prospective buyer traffic slid to 48 after dropping 2 ticks to 49 previously. The NAHB indicated tariffs on Canadian lumber are weighing.
Eurozone: UK June CPI unexpectedly softened to 2.6% y/y after May’s cycle-high rate of 2.9% y/y. The median forecast had been for an unchanged 2.9% outcome. The ebb is in sync with the directional pattern seen in inflation readings in other key economies in June, although price pressures in the UK remain relatively more elevated due to the inflationary consequences of the sharp y/y sterling decline following the Brexit vote at the end of June last year. A decline in motor fuels was a key factor driving the headline rate lower, along with the prices of recreational and cultural goods and services. German ZEW investor confidence weaker than expected, with the expectations reading falling back to 17.5 in July from 18.6 in the previous month. Expectations had been for a correction in sentiment amid the realization that global central bank support has peaked, but the dip is still more pronounced than anticipated, especially as the current conditions indicator also fell back. More arguments then for the doves at the ECB who are eager not to let markets price in tapering steps too early and we expect Draghi to try and calm nerves at this week’s council meeting, which will be the last ahead of a summer break, with the next meeting only scheduled for September.
Main Macro Events Today
US Housing Starts – Housing starts are forecast rising to a 1,160k pace in June following the 5.5% drop to 1,092k in May. However, a rise in construction jobs last month suggests upside risk.
Canada Manufacturing – Manufacturing shipments, due today, are expected to reveal a 1.0% m/m gain in May after the 1.1% rise in April. Forecast is supported by a 1.3% improvement in export values during May. However, gold shipments to the U.K. were a driver of total exports, suggesting some downside risk for our manufacturing shipments projection. An as-expected rebound in shipments would be supportive of the “improving” narrative for Canada’s economy this year, and hence underpin expectations for one more rate hike this year.
Japanese Trade – Data includes the June trade report. The balance expected to flip to a JPY 500.0 bln surplus, from the JPY 204.2 bln shortfall in May. The Exports and Imports expected to fall by 5.4% and 3.2% respectively.
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 July 2017.
FX News Today
European Outlook: Asian stock markets moved broadly higher, led by Japan, as the BoJ kept its accommodative policy unchanged and the Yen weakened. FTSE 100 futures are also higher, while U.S. futures are narrowly mixed. The eyes are now turning to the ECB, which is expected to follow the BoJ’s lead and keep not only current policy, but the forward guidance unchanged. There is some lingering concern that the central bank could already drop the easing bias on QE at today’s meeting, so Bunds could get a boost from Draghi’s attempts to calm tapering nerves ahead of the summer break. The European data calendar has U.K. retail sales, as well as Eurozone current account and BoP data for May.
U.S. reports:. housing starts rebounded 8.3% to a 1.215 mln pace in June, better than forecast, after the 2.8% decline in May to 1.122 mln. The gain breaks a string of three straight monthly declines, and it’s only the second increase of the year. Single family starts rose 6.3% versus -2.9% previously, while multifamily starts jumped 13.3% from -2.4%. Building permits increased 7.4% to 1.254 after falling 4.9% to 1.168 mln. Regionally, starts surged in the Northeast (83.7%) and in the Midwest (22.0%), and were up in the West (1.6%), while they declined in the South (-3.8%). Housing completions improved 5.2% to 1.203 mln after increasing 4.2% to 1.144 mln.
Canada: manufacturing shipment values grew 1.1% in May, as expected, but after a sharp downward revision in April to a 0.4% gain (was +1.1%). A 4.2% gain in transport equipment sales and a 2.4% rise in chemical sales drove the increase total manufacturing shipments during May. Manufacturing sales slipped 0.1% when motor vehicles, parts and accessories are excluded. A total of 16 out of 21 industries reported an improvement in sales values. Durable goods sales grew 2.2% while non-durables dipped 0.3%. Notably, lower prices knocked petroleum and coal industry sales values 3.4% lower in May. Manufacturing sales volumes expanded 1.1% m/m in May, supportive of continued momentum in May GDP. A 0.2% m/m gain in May GDP is expected after the 0.2% rise in April. The report is supportive of the Bank’s upbeat growth outlook, in turn underpinning projections for a near term rate hike. Another 25 bp move is expected in October after no change in September.
German: PPI inflation fell back to 2.4% y/y in June, from 2.5% y/y in the previous month. A tad higher than anticipated, but still continuing the recent downtrend as oil prices turn out to be weaker than previously thought. Headline Eurozone inflation also fell back in June as energy price inflation eased, so there is no really new message from the German PPI numbers, although at 2.4% y/y, the numbers remain elevated.
Main Macro Events Today
UK Retail Sales – Official retail sales for June expected at a 0.2% m/m rebound after the sharp 1.2% contracting on May.
ECB Rate Decision, Monetary Policy statement & Conference – After the ECB removed the easing bias on rates in June, but still maintained an easing bias on QE, the central bank expected to keep policy parameters unchanged at today’s council meeting, which will be followed by a longer summer break. The message today is likely to remain that the economy may be improving but still needs a substantial degree of monetary support and cautious remarks from Draghi should underpin bonds, even if a no-change outcome is widely expected.
US Jobless Claims – U.S. initial jobless claims are expected to be 245k in the week-ended July 15. Meanwhile the July Philly Fed index should dip to 24.0 following the 11.2 slide to 27.6 in June.
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 July 2017.
FX News Today
European Outlook: Asian stock markets are slightly down, as banks and carmakers weighed on the index and the Yen held gains while investors look with some concern to political events in the U.S. In Europe, Draghi failed to calm tapering nerves yesterday and the EUR surged higher in the wake of the press conference, which saw Eurozone stock markets closing in the red. After the tumultuous afternoon, yesterday the GER30 seems to be heading for a quiet end to the week. The FTSE 100 outperformed yesterday and managed slight gains, amid a weak pound and could get some support today from reports that the government is accepting the need for a transitional period that will see the U.K. remaining in the single market and customs union for some time after 2019. Today’s data calendar is quiet, focusing on U.K. public finance data, although the ECB’s survey of professional forecasters could also attract some attention.
FX Update: The euro has been in consolidation mode after rallying strongly yesterday in the wake of the ECB’s policy announcement, which has left markets anticipating a tapering in QE, even it is still some way down the road. EURUSD has been settled in the mid-to-low 1.16s, below the 23-month high logged yesterday at 1.1658, although lifting somewhat in early European trade. EURJPY managed to edge out a fresh 10-day high, at 130.32. EURGBP has plied a narrow range just of yesterday’s eight-month peak 0.8977, weighed on slightly by a bid in Cable, which has lifted above 1.2980, putting in a little distance from the five-session low it saw yesterday at 1.2933. The UK’s international trade secretary, Fox, said that he is not planning on leaving the EU in 2019 without a deal, although the prime minster and other ministers had formerly used this “cliff edge” threat as an apparent bargaining tool in pre-negotiation salvos. Fox said that could be a two-year “implementation phase,” or transition period. His remarks help allay market concerns of divisions in the government’s approach to Brexit.
ECB’s President Draghi: Yesterday’s ECB meeting didn’t bring any real surprises. Rates and forward guidance were left unchanged and Draghi was eager to calm nerves ahead of the summer break as he tried to explain and clarify his comments from Sintra, which sent yields sharply higher at the end of last month. As Draghi said the last thing the ECB wants is for financing conditions to tighten prematurely and against that background, the central bank is not just keeping the easing bias on QE in place, but also remains reluctant to commit not just to actual tapering, but to the timing of the decision on the future of asset purchases. Also, yesterday Eurozone consumer confidence unexpectedly fell back to -1.7 in July from -1.3 in the previous month. Expectations had been for another improvement as labour markets continue to stabilise and inflation falls back again, but it seems lingering concern remains U.S. equities rolled over from highs coinciding with a surge in the euro through 1.16 and another whipsaw on yields. The presumption is that the ECB/euro/bund axis is still driving the volatile trade, but there was also a US AG Sessions presser expressing his wish to continue with his job at the Justice Department, along with others, despite criticism from President Trump.
U.S. reports: revealed a big Philly Fed drop to a still-solid 19.5, following a 7-month stretch of oddly robust levels, while initial claims tightened by 15k to 233k in the BLS survey week after lofty readings as we entered the July auto retooling period. We also saw a 0.6% leading indicators surge that left a 10-month string of gains. The Philly Fed drop accompanied an Empire State July decline to 9.8 from a 3-year high of 19.8 in June, while the ISM-adjusted Empire State fell to 53.3 from a 6-year high of 56.2, leaving a resumption of the drop-back in the available producer sentiment figures after an unexpected June bounce. The mix left a neutral signal for 190k July nonfarm payroll estimate, and an assumed GDP growth bounce to 2.6% in Q2 and 3.1% in Q3 after a 1.4% Q1 rate.
Main Macro Events Today
CAD CPI – The CPI, expected, to dip 0.1% in June (m/m, nsa) after the 0.1% rise in May, leaving a slowing in the annual growth rate to 1.0% in June from the 1.3% y/y pace in May. Gasoline prices pulled back in June compared to May, which drives forecasts. The three core CPI measures remained tame in May, and are expected to be subdued in June.
CAD Retail Sales – The Retail sales, expected to rise 0.3% gain in May after the 0.8% bounce in April. The ex-autos sales aggregate is seen improving 0.1% in May following the 1.5% surge in April. Gasoline prices tumbled 4.0% m/m in May after the 9.5% gain in April, according to the CPI. Hence, gasoline station sales should exert only a hefty drag on total and ex-autos retail sales. But vehicle sales were solid in May, which should support total sales.
UK Public Finance data – June’s Public borrowing data is also up today, and expected to go down to 4.80B from 5.99B 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 22nd July 2017.
FX News Today
Both the ECB and BoJ met expectations as each left policy unchanged last week, though the outlook for ECB remains under the dark cloud of future QE tapering, while the BoJ gave up the ghost on its inflation target near-term. The FOMC is set to follow suit and kick the policy can down the road this week, though the markets will remain highly attuned to any hints over the outlook on inflation, the economy, and the balance sheet unwinding timing/
United States: In the U.S., the FOMC is not likely to make any policy changes at the July 25-26 meeting. The slowing in inflation is likely to keep the Fed on the sidelines. Meanwhile, there has been some speculation the Fed could announce the start of QT (quantitative tightening) this week. The economic calendar resumes with existing home sales (Monday) forecast to rise 0.4% to a 5.64 mln unit pace in June. Various May home price indices are due (Tuesday), including the Case-Shiller and FHFA readings. Consumer confidence is also on tap (Tuesday), but expected to slip to 117.0 for July from 118.9, while the Richmond Fed index is seen steady at 7. The MBA mortgage market indices are due (Wednesday), along with the EIA energy inventory report and new home sales may decrease 2.5% to a 595k pace in June. Durable goods orders are forecast to snap back 2.7% in June vs -0.8% in May (Thursday). Advance Q2 GDP should be boosted to 2.6% from 1.4% in Q1 (Friday), given upside risk on consumption, while Q2 ECI is forecast to rise 0.5% from 0.8% and final Michigan sentiment may be revised up to 93.5 from 93.1 previously. Fedspeak continues to run silent into the FOMC decision midweek before Minneapolis Fed’s dovish dissenter Kashkari breaks the ice with a moderated Q&A Chamber of Commerce event from 13:20 ET (Friday)
Canada: In Canada GDP for May (Friday) is the centerpiece of this week’s calendar. An 0.2% m/m gain is projected for May, which would match the 0.2% increase revealed in April. An as-expected improvement in May GDP would leave real GDP growth on track for a roughly 3% gain following the 3.7% surge in Q1, which would match the BoC estimate for Q2 GDP and hence be supportive of the already widespread projection for a near tear rate hike. Wholesale trade (Monday) is seen improving 0.7% after the 1.0% gain in April. The report typically has little lasting impact on the market, but will be the final input into the May GDP projection. May average weekly earnings and the CFIB’s Business Barometer index of small and medium sized business sentiment are both due on Thursday.
Europe: The ECB went into the summer break with a parting shot that once again acknowledged stronger growth while stressing that substantial monetary accommodation remains necessary and that inflation is not where the ECB wants to it see yet. This week brings the first key GDP readings for Q2 and French growth seen steady, while Spanish growth is expected to come in unchanged at 0.8% q/q. A robust second quarter would tie-in with improved confidence indicators, although looking ahead, it may feel as though that is as good as it gets for now, with July confidence indicators expected to fall back slightly. A decline in the manufacturing PMI to 57.2 expected and a marginally better service reading of 55.4 which would leave the July composite PMI unchanged at 56.2. Risks are to the downside though, considering the second consecutive dip in German ZEW investor confidence and as the euphoria over Macron’s election victory fades and political risks ease. July Eurozone Economic Confidence is expected to have eased to 110.9 from 111.1 in June.
Inflation, meanwhile, remains far below the ECB’s definition of price stability and July preliminary HICP readings from Germany, France and Spain are likely to indicate that this won’t change soon. Growth forecasts may have been revised up, but inflation forecasts are being scaled back with the latest surge in the EUR doing nothing to change the picture that a strong currency and weaker than projected oil prices will keep headline inflation subdued.
UK: The calendar this week features the first release of Q2 GDP (Wednesday), which it is expected to rise 0.3% q/q and by 1.7% y/y, which would follow respective Q1 figures of 0.2% and 2.0%. The quarterly pace of growth likely remained relatively lackluster in Q1 compared to growth in the Eurozone and the U.S., and the same picture looks likely to be painted again this quarter. Weakness in sterling following the Brexit vote last June has fed a secular rise in UK inflation, which in turn has eroded household incomes and consumer spending, which in recent years of government austerity has been the main driver of the economy. Other data releases include the CBI’s July surveys, with the industrial trends report (Tuesday) seen ebbing to 11 in the headline total orders reading after 16 in the prior month, while the distributive trades report (Thursday) is expected to fall to a reading of 10 in the headline realized sales figure after 12 in June.
Japan: Japan’s docket gets under way on Wednesday, with June services PPI due. Prices expected at 0.5% y/y versus the previous 0.7% outcome. The remainder of the calendar comes on Friday, starting with CPI data. June national prices are seen slowing to 0.3% y/y from 0.4% overall, and up 0.3% y/y from 0.4% on a core basis. June unemployment is seen falling a tenth to 3.0%, while the job offers/seekers ratio is expected at 1.50 from 1.49. June personal income and PCE are due, with the latter forecast to have risen 0.5% y/y from -0.1% previously. June retail sales are penciled in at a 0.5% y/y rate from -0.6% for larger retailers, and up 3.0% y/y from 2.1% overall
Australia: In Australia, the Q2 CPI (Wednesday) takes center stage given the global focus on inflation. The latter was discussed at the July 4 policy meeting. Trade prices (Thursday) are seen rising 1.0% in Q2 (q/q, sa) for imports and falling 6.0% for exports. The Q2 PPI is due Friday. Reserve Bank of Australia Governor Lowe speaks on the Labor Market and Monetary Policy (Wednesday) form Sydney.
New Zealand: New Zealand’s calendar has June trade (Wednesday), expected to reveal a NZ$150 mln surplus following the NZ$103 mln surplus in May.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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 July 2017.
FX News Today
European Outlook: Asian stock markets mostly moved sideways, fluctuating between gains and losses ahead of the Fed meeting. Asia’s equity benchmark remains near the highest level since 2007, and the ASX managed a nearly 0.9% gain so far, despite a stronger AUD as oil prices moved higher. The Fed is likely to remain on hold this week and could push out further action on rates, but markets are still cautious, with U.S. stock futures also moving sideways, although the FTSE 100 future is managing gains, as the pound retreats. The EUR meanwhile is on the rise again and Mersch’s comments on reflation and his more optimistic view on inflation and growth could also see fresh pressure on Bund futures. The 10-year cash yield already moved up from lows in late trade yesterday and closed above 0.50% and indeed, while Draghi may have been eager to calm nerves ahead of the summer, tapering is still on the agenda for next year.
US Data: U.S. Markit manufacturing PMI jumped 1.2 points to 53.2 in the July preliminary print after falling 0.7 points to 52.0 in June. It was 52.9 a year ago. This is a 14th consecutive month of expansion. Also, the bounce breaks a string of declines going back to the start of the year after the gauge hit 55.0 in January, reflecting increased momentum as the second half of the year begins after the slowing in Q1 and Q2. The index hit a recent low of 50.7 in May 2016. The preliminary July services index was unchanged at 54.2 after rising 0.6 points in June 53.6 in May. It was 51.4 a year ago. It’s a 17th straight month of expansion and has been fairly stable in the 53.5 area all year since hitting a high of 55.6 in January. Employment rose to 54.4 from 52.8 previously and is the highest reading since December. Prices charged fell. The flash composite index rose 0.3 points to 54.2 in July from 53.9 in June and is the highest reading since January. It was 51.8 a year ago. Employment and new orders improved.
SNB’s Jordan: CHF still significantly overvalued. The central bank head said in an interview with Le Temp, conducted last week and published late yesterday that this means the SNB is sticking with its policy of low interest rates and intervention on forex markets if needed. Jordan added that inflation remains low with production capacity not fully exhausted. He stressed that the central bank still has enough room to manoeuvre to expand the balance sheet if necessary. The USDCHF was relatively unmoved and trades at 0.9464 down from overnight highs of 0.9476
FX Update:. Narrow ranges have been the order of the day so far, with a combo of a dearth of fresh directional cues, summertime thinness, and the looming proximity of the Fed’s policy announcement (tomorrow) fostering a noncommittal market. USDJPY dipped back under 111.00, reflective of a broad though moderate bid in the yen, which has been seen since just after the Tokyo fix. Stock markets in Asia have seen little direction. EURUSD has continued to oscillate around the 1.1650 level for a second day, holding below the 23-month high at 1.1684 that was pegged in the Asia session on Monday. AUDUSD continued to consolidate the sharp gains the pair saw last week. Cable has remained buoyant above 1.3000, though off yesterday’s four-session peak at 1.3058.
Main Macro Events Today
German Ifo Business Climate – After yesterday’s disappointing July PMI readings, the German Ifo index tomorrow also comes with a risk to the downside. We had been looking for a drop to 114.9 (med same) from 115.1 in the previous month, but the risk is that the headline number comes in even weaker. Like the PMIs, the Ifo reading is likely to remain at high levels, indicating a robust start to Q3, but after what looked like another strong quarterly growth rate in Q2 it seems with regard to survey indicators this may have been as good as it gets. That doesn’t mean the recovery is abandoned or at risk, but the euphoria that seem to hit sentiment in the wake of the Macron victory is giving way to a more sober assessment. The good news though is that the PMIs point to ongoing improvements on labour markets, so companies continue to invest into the recovery and while the data will back Draghi’s reluctance to commit to QE just yet, it is clear that monthly asset purchases will be scaled back with the new program that will start next year.
US Consumer Confidence – June Consumer Confidence is expected to fall to 117.0 from 118.9, this compares to a low of 25.3 in February of 2009. Forecast risk: downward, given the decrease in the Michigan headline and Market risk: downward, as weaker data could impact rate hike timelines. Confidence continues to benefit from reduced gasoline prices and is now experiencing a post-election lift.
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 26th July 2017.
FX News Today
European Outlook: Positive leads from the U.S., including corporate earnings, and broad-based gains in commodities helped the global stock move higher to continue in Asia overnight at least in the first part of the session. The CSI 300 is in the red, however, and the Hang Seng underperforming with a meagre 0.17% gain, and Japanese markets are down from early highs while FTSE 100 and U.S. stock futures are in the red. So, some caution is settling in again ahead of the Fed announcement today with some speculation that the Fed could announce the start of quantitative tightening as early as today. In Europe, the ECB is still far away from reducing its balance sheet, and while QE tapering is on the cards for 2018, Nowotny yesterday argued against committing to an end to asset purchases. Today’s calendar focuses on the first reading of Q2 GDP from the U.K, while all eyes will be on the Fed’s post FOMC meeting announcement and guidance. The big question is whether the central bank will detail plans to unwind QE, though we think not as inflation data has been benign and there hasn’t been any rhetorical prepping by members for such a policy shift since the issue was brought up at the June policy meeting.
Australia: Earlier today, the Aussie dollar took a rap following sub-forecast CPI data out of Australia, which came in at 1.9% y/y in Q2 versus the median forecast for 2.2% y/y, while the underlying rate remained stubbornly below the RBA’s target range. AUDUSD is just off its lows, at 0.7884 bid presently, showing a 0.7% decline on the day as the London interbank market take to their seats. The Aussie is showing a similar magnitude of decline versus the yen and euro, too.
U.S. reports: revealed upside July surprises for both consumer confidence and the Richmond Fed, alongside a firm but largely seasonal 0.8% May rise for the S&P Case Shiller. For consumer confidence, we say a July pop to 121.1 from 117.3 (was 118.9) that left this measure at its strongest level since the 16-year high of 124.9 in March, with a rise in the current conditions index to a 147.8 new cycle-high, despite drops in other July confidence measures. For Richmond Fed, we saw a rise to 14.0, after revisions that lifted recent levels to 11.0 (was 7.0) in June and 3.0 (was 1.0) in May, versus a 7-year high of 19.0 (was 17.0) in February. This increase bucked declines in other producer sentiment measures, though the ISM-adjusted average of the major surveys should still tick down to 55 in July from 56 in June, 55 in May, 56 in April, and a 57 cycle-high in February and March. Nevertheless, yesterdayU.S. Senate voted to move ahead on repealing Obamacare. Initially fifty GOP senators voted yes, with two voting no, for a total of 50, while not a Democrat voted for the measure. Hence Vice president Mike Pence as Reuters reported, forced to cast the tie-breaking vote. The EURUSD had retreated from 1.1712 highs, after failing to take out the August 2015 high of 1.1714. Profit taking out of London had reportedly been in play, with the pairing dipping to 1.1657 lows.
ECB’s Nowotny against committing to end date for QE: Nowotny said in an interview yesterday that he considers it “wise to step of the gas slowly”, adding that “the U.S. central bank also implemented tapering without committing to a definite timetable”. The QE program currently runs until the end of the year and the ECB iw widely expected to reduce monthly purchase targets again with a follow up program, but Nowotny’s comments suggest that the ECB may not yet lay out a full-time table for a final end to QE and indeed given Draghi’s very cautious stance so far, it seems more likely that the ECB won’t commit to a fixed data for the end of QE. The IMf also urged the ECB to maintain stimulus as underlying inflation and wage growth remains weak and with inflation expected to ease again next year, Draghi seems to have room for a gradual approach.
German Jul Ifo index unexpectedly jumped to 116.0 from 115.2. Expectations had been for a slight correction in the headline reading, especially after Monday’s disappointing PMI readings. The breakdown showed that the overall improvement was entirely due to a sharp rise in the current conditions indicator, while the more forward-looking expectations index stagnated. So the message is not unlike that of the PMIs, which showed ongoing robust growth, but a slowdown in the pace of expansion. A strong German Ifo figure, upbeat ECBspeak and the release of the BoJ minutes from the mid-June meeting all failed to stir markets, with participants looking to tomorrow’s policy announcement and communication from the Fed as the next key risk event. The yen has been following its often-seen inverse correlation with global stock markets, which have been mostly buoyant this week, underpinned by incoming corporate earnings and guidance, yesterday’s record print in the latest German Ifo indicator, and expectations for the Fed to affirm its slow-go approach to tightening following the conclusion of the FOMC meeting today. The minutes from the BoJ’s mid-June policy meeting, released yesterday, meanwhile showed that members discussed the idea of QE tempering, but were still worried about the persistence of well below target inflation.
Main Macro Events Today
FOMC – FOMC began day 1 of its 2day meeting. No major changes are expected in Wednesday’s announcement (14 ET). The Fed is widely expected to leave its 1.00% to 1.25% rate band in place due to the slowing in inflation. Committee members have also indicated they want more evidence of a pick-up in growth after the disappointing 1.4% Q1 pace, though recent data should be fulfilling that need.
US Home sales, MBA & EIA – The MBA mortgage market indices are due today, along with the EIA energy inventory report and new home sales may decrease 2.5% to a 595k pace in June, down from 610k in May.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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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 27th July 2017.
FX News Today
European Outlook: The Fed’s reluctance to commit to a time for QT beyond “relatively soon” and the fact that the Fed appeared to be moderately more concerned that the decline in inflation pressures could be a little more durable than previously thought has given bond as well as stock markets a fresh boost. Equities moved mostly higher in Asia overnight (China’s CSI 300) once again a notable exception, with commodities still underpinned as oil prices hold clearly above USD 48 per barrel. Bund futures already jumped higher in after hour trade yesterday and European stock futures are rising in tandem with U.S. futures, pointing to broad gains on European markets at the start. ECB’s Nowotny may have repeated his support for reduced asset purchases again, but that the ECB will start to taper next year is pretty much expected and Nowotny yesterday urged caution when the ECB starts to “take the foot of the gas”. Today’s calendar has Eurozone M3 and the U.K. CBI distributive trade survey.
German GfK consumer confidence surges to record high of 10.8 from 10.6 in the previous month. The unexpected jump higher ties in with record Ifo readings and confirms that the German recovery remains firmly on track. More arguments for the ECB to take the “foot off the gas” and reduce monthly asset purchases. The full GfK breakdown, which is only available until July showed also falling price expectations though, alongside improved economic confidence and the willingness to buy dipped despite a sharp drop in the willingness to save. Hence, some mixed signals and somethings for the doves, who continue to fret about low inflation and wage growth.
FOMC: held rates steady and gave no firm date on the balance sheet unwind. However, the policy statement did indicate the run-off will begin “relatively soon,” versus this year in the June statement, though it basically reiterated comments from Fed Chair Yellen in her recent testimony. The decision was unanimous. The Fed said the economy has been rising moderately while job gains have been “solid.” On inflation, the Fed said overall and core prices have “declined and are running below 2 percent; survey-based measures of longer-term inflation expectations are little changed, on balance.” Inflation developments will continue to be monitored “closely.” One important change versus the June statement was the elimination of word “recently,” referring to the decline in inflation, suggesting there’s some concern the weakening will be more long lasting.
U.S. reports: revealed rise in MBA mortgage market index at 0.4%, alongside a 2.2% drop in the purchase index and a 3.4% rise in the refinancing index for the week ended July 21. The average 30-year fixed mortgage rate sank 5 basis points to 4.17% after yields drifted lower last week with Europe. Also, U.S. new home sales edged up 0.8% to 0.610 mln in June. That follows the 4.9% rebound to 0.605 mln in May after the 9.6% April drop to 0.577, for a net -27k revision. New home sales hit a cycle high of 0.638 mln in March amid mild winter weather and hopes for Trump stimulus. The months’ supply of homes moved up to 5.4 from 5.3. The median sales price declined 4.2% to $310,800 following the 4.8% rise to $324,300 in May. Prices are down 3.4% y/y in June versus a 9.6% y/y gain previously.
Main Macro Events Today
US Durable goods, Jobless claims – Durable goods orders are forecast to snap back 3.0% in June vs -0.8% in May, while the advanced trade gap may narrow to-$65 bln from -$66.3 bln and initial jobless claims are set to rebound 8k to 241k for the week ended July-22.
UK CBI distributive trade & Gfk – The distributive trades report is expected to fall to a reading of 10% in the headline realized sales figure after 12% in June.The GfK Group Consumer Confidence index is expected to fall to a reading of -11 after -10 in June.
Japanese Data – The calendar features the CPI data. June national prices are seen unchanged at 0.4% overall, and same for a core basis. June unemployment is seen falling a tenth to 3.0%, while the job offers/seekers ratio is expected at 1.50 from 1.49. June personal income and PCE are due, with the latter forecast to have risen 0.6% y/y from -0.1% previously. Lastly, June retail sales are penciled in at a 0.1% y/y rate from -0.6% for larger retailers, and up 2.3% y/y from 2.1% overall..
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 28th July 2017.
FX News Today
European Outlook: Risk appetite turned negative during the Asian session, with equity markets, including U.S. index futures, turning lower from record highs. This backdrop will likely put pressure on EGB yields from the open. The European calendar today features a flood of data releases, highlighted by advance Q2 GDP figures out of France and Spain, and preliminary inflation figures for July from various key economies out of the Eurozone, which will be a big focus for markets given the ECB’s course to taper QE. French HICP is expected unchanged at 0.8% y/y, and German HICP is seen at holding at 1.5% y/y, which would also be unchanged from the previous month. Data in line with our expectations would not likely elicit much market reaction. The Eurozone also has the latest business climate survey for July, where the headline is expected at 100.9, down from 111.1 in the previous month.
FX Update: The Swiss franc tumbled for a four-straight session, driving EURCHF to a 1.1363 high, a level not seen since the SNB abandoned its former 1.2000 floor in January 2015. USDCHF, meanwhile, rallied to a one-month peak, at 0.9721. The price action affirms the sentiment sea-change that’s been afoot this week, underpinned by a combo of a more confident euro outlook coupled with a -0.75% deposit rate in Switzerland. Elsewhere, EUR-USD has been playing a narrow range in the upper 1.16s, roughly a big figure below the 30-month high that was seen yesterday at 1.1776. USDJPY settled back near 111.00, a level that has seemingly been exerting gravitation pull over the last week or so, with attempted rebounds failing to sustain during the week. The six-week low seen on Monday at 1110.62 remains in the frame. A tumble in equity markets, with Asian bourses and U.S. equity index futures down today, provided the yen some support. A flood of data out of Japan were mostly encouraging, though CPI remained low, with the BoJ-monitored core figure coming in at just 0.4% y/y, unchanged from May and meeting the median forecast.
U.S. reports: revealed upside surprises for the durable goods and advance indicators reports for trade and inventories that boosted Q2 GDP estimates to 3.0% from 2.6%, though another lofty initial claims reading suggests that auto retooling is unlikely to boost this year’s July data. For durables, we saw a 6.5% June orders pop thanks to a 19.0% Boeing-led transportation orders surge, though we saw a 0.2% ex-transportation rise that tracked estimates. The report was robust thanks to strong equipment data. For the advance indicators, we saw an export-led $1.0 bln upside June trade surprise and big 0.6% June gains for both wholesale and retail inventories. Initial claims rose 10k to 244k in the fourth week of July, leaving what is now a 242k July average, following similar prior averages of 243k in June, 241k in May, and 243k in April. The July nonfarm payroll forecast remains at approximately 190k.
Main Macro Events Today
U.S. GDP & ECI – The first release on Q2 GDP is out today and should reveal a 2.6% headline for the quarter following a 1.4% pace in Q1. Consumption looks poised for stronger growth during the quarter and expected a 1.2%, up from 2.4% in Q1. Q2 employment cost data expected at 0.6% headline that follows a 0.8% clip in Q1. This would have the y/y pace of growth at 2.3%, down from 2.4% in Q1. Wages and salaries as well as benefit costs are both expected to expand at a 0.5% clip for the quarter from 0.8% and 0.7% respectively in Q1.
Prel. German Inflation – Eurozone inflation remains far below the ECB’s definition of price stability and July preliminary HICP readings from Germany, France and Spain are likely to indicate that this won’t change soon. We see headline readings unchanged from June at 1.5% y/y in Germany, 0.8% y/y in France and 1.6% y/y in Spain, which would point to a steady Eurozone reading (due next week) of 1.3% in July.
Canada GDP – GDP is expected to improve 0.2% m/m in May after the 0.2% improvement in April. An 1.1% rise in May retail sales volumes followed a 1.1% rise in manufacturing volumes. There was a 0.8% gain in wholesale shipment volumes during May. But housing starts tumbled to 195.0k in May from 214.8k in April, suggestive of a negative contribution from construction. The outlook for mining, oil and gas production is negative. Energy export values fell 9.0% m/m in May after growing 3.9% m/m in 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 31st July 2017.
FX News Today
A lot has been digested in recent weeks, including monetary policy decisions, a plethora of earnings reports, data, and supply, with geopolitics thrown in for good measure. Stocks have generally focused on the positives of continued central bank largess, generally bullish earnings news, and signs of improved economic activity, and they’ve left core indexes at or near record highs. There were no surprises from the recent FOMC and ECB policy decisions. Rates were left unchanged with QE kept intact, for now. Of the three central bank meetings this week, with the BoE, RBA, and RBI, steady to easier policy is expected. That should continue to underpin bonds and stocks near term.
United States: This will be another busy week in the U.S. as August begins. Earnings will remain a factor ahead after strength the Blue Chips boosted the Dow to yet another record peak, though surprising weakness in tech shares and disappointing reports from FANG (Facebook, Amazon, Netflix and Google) shares rattled the NASDAQ. For the month-to-date, however, core Wall Street indexes are between 2% and 3.8% higher. As for data, another employment report is at hand and it will be closely monitored since it will help determine the start time for quantitative tightening, QT. Strong numbers will increase the risk that QT is announced at the next FOMC meeting on September 20, 21. July nonfarm payrolls (Friday) are expected to show a 182k following the better than expected 222k June gain, with the unemployment rate dipping again to 4.3% from 4.4%. Average hourly earnings are seen rising 0.3% (median 0.3%) versus the prior 0.2%. The workweek is expected to dip back to 34.4 (median 34.5) from 34.5. The as-expected acceleration in Q2 GDP to a 2.6% growth clip supports forecasts of decent job gains. Earnings will be a focus as the inflation aspect is important for the Fed view. Other major reports this week include the July manufacturing ISM (Tuesday), estimated dipping to 55.5 (median 56.4) after jumping a surprising 2.9 points to 57.8 in June, which was the highest since the August 2014. The nonmanufacturing ISM (Thursday) is also expected to slide to 56.8 in July after rising 0.5 points to 57.4 last month. June personal income and consumption (Tuesday) will help fine tune the GDP outlook. We’re forecasting a 0.4% income gain (median 0.4%), with spending up 0.1% (median 0.1%). July vehicle sales will provide more clues on spending. Domestic car sales (Tuesday) are seen at a 4.5 mln pace (median 4.5 mln), with trucks at 8.5 mln (median 8.6 mln).
Canada: releases are due this week with the July employment and June trade numbers reported (Friday). We expect employment to rise 25.0k in July after the 45.3k gain in June. The unemployment rate is projected at 6.5% in July, matching June. A widening in the trade deficit to -C$1.3 bln in June from -C$1.1 bln in May is projected. A 0.5% m/m gain in exports is seen following the 1.3% rise in May, as the tumble in crude oil prices weighs on the value of Canada’s total exports. The IPPI (Monday) is projected to fall 0.6 m/m in July after the 0.2% decline in May, as weaker energy and commodity prices and a sharp firming in the value of the loonie relative to the greenback drive the index lower. The Markit manufacturing PMI for July is due Tuesday. The seasonally adjusted Ivey PMI for July (Friday) is expected to improve to 63.0 from 61.6 in June.
Europe: This week’s round of data releases are likely to confirm the picture of robust growth, but still low inflation. Data have confirmed that the Eurozone recovery remained relatively robust in the second quarter and we expect official Q2 Eurozone GDP numbers (Tuesday) to show a quarterly growth rate of 0.6% q/q (median 0.6%), unchanged from Q1. Though these are backward looking numbers, the upcoming round of July confidence indicators (to be completed with the final PMI readings) suggest that momentum remained strong at the start of Q3. We expect the final manufacturing PMI (Tuesday) to be confirmed at the preliminary 56.8 (median 56.8) and the services reading (Thursday) at 55.4, leaving both sectors firmly in expansion mode. Confidence data aside, German manufacturing orders growth (Friday) has remained robust and we are looking for another solid June number, even if the quarterly rate is likely to have fallen back to 0.3% m/m (median 0.5%) from 1.0% m/m in May. Against that background, we expect the German seasonally adjusted jobless total (Tuesday) for July to have dropped a further -2K (median -6K), which would leave the sa jobless number unchanged at a very low 5.7%. The overall Eurozone unemployment rate for June meanwhile (Monday) is seen falling to 9.2% (median 9.2%) from 9.3% in May.
Japan: Industrial production report (Monday), which we expect will come in at a 5.0% y/y pace, slowing from the 6.5% in May. June housing starts (Monday) are penciled in at -0.3% y/y, unchanged from May. June construction orders are also due Monday. July manufacturing PMI (Tuesday) should improve to 52.5 from 52.4. July auto sales are also on tap Tuesday. July consumer confidence (Wednesday) is expected to dip to 43.2 from 43.3 in June. July services PMI is due Thursday.
Australia: The Reserve Bank of Australia meeting is center stage (Tuesday). We expect no change to the current 1.50% policy setting. The RBA also releases the Statement on Monetary Policy (Friday). Economic data is relatively abundant this week. Building approvals (Wednesday) are seen rising 3.0% in June after the 5.6% drop in May. The trade surplus (Thursday) is seen narrowing to A$2.0 bln in June from the A$2.5 bln surplus in May. Retail sales (Friday) are projected to edge 0.1% higher in June after the 0.6% m/m rise in May.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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 1st August 2017.
FX News Today
European Outlook: Asian stock markets moved higher, with a rally in banks underpinned by earnings reports and helping to offset pressure on exporters and automakers. The ASX outperformed after the RBA left rates on hold and warned the strong currency will impact growth and inflation.100 and U.S. stock futures are also moving higher. The FTSE already managed to rescue slight gains into the close yesterday, while Eurozone markets mostly ended in the red. With the EUR above 1.18 against the dollar and political pressure on German carmakers mounting, the DAX is likely to continue to struggle. Bund yields ended little changed yesterday, while Gilt yields climbed ahead of tomorrow’s BoE announcement and positive sentiment on stock markets should keep core yields underpinned. Eurozone spreads narrowed as peripheral markets outperformed, so at least so far Draghi is managing to keep tapering nerves under control. Today’s local calendar has final Eurozone manufacturing PMI readings for July which are not expected to bring any revisions and German Jul jobless numbers. Preliminary Eurozone Q2 GDP is seen steady at 0.6% q/q and the calendar also has the U.K. manufacturing PMI for July.
FX Action: USDJPY has eased to new trend lows after reports that newly minted White House communications director Scaramucci is out of a job after just 10-days. The pairing fell under 110.00, before recovering to 110.20. The EURUSD continues to edge higher to north of 1.1830. Initial market take is the U.S. administration is off the rails, though the W.H. staff move may ultimately be a positive, perhaps indicating that new Chief of Staff Kelly is in charge.
US Data Yesterday: U.S. Chicago PMI dropped 6.8 points to 58.9 in July, more than giving back the surprising 6.3 point jump to 65.7 in June. The latter was the highest since the 66.1 from May 2014. The 2017 low is 50.3 from January. The index was at 51.8 in October. The 3-month moving average edge up to 61.3 from 61.1. U.S. pending home sales index bounced 1.5% to 110.2 in June, better than expected, after tumbling 0.7% to from 108.6 in May (revised from 108.5). The high for the year was hit in February at 112.3 with the low at 106.4 from January (with the cycle high at 113.6 on April 2016 and a low of 76.4 from June 2010). The index is still well off the all-time peak of 127.0 from July 2005. Lack of inventory remains a problem. On an annual basis, the index is up 0.7% y/y, the same as in May. U.S. Dallas Fed manufacturing index rose 1.8 points to 16.8 in July after sliding 2.2 points to 15.0 in June. The latter was the weakest since the 12.5 in November. Note that the index was at 0.6 in October and had been basically in negative territory from January 2015 through September 2016. It hit a cycle high of 24.5 in February.
Main Macro Events Today
Eurozone Q2 GDP – The preliminary reading of Q2 GDP is expected to show a quarterly growth rate of 0.6% q/q, unchanged from the previous quarter. Consumption remains supportive for growth as the labour market continues to recover and low inflation is underpinning real disposable income. At the same time investment is starting to pick up as spare capacity shrinks and PMI readings, while starting to level off, suggests still high orders and a backlog of work. So a robust start to the third quarter that underpins the ECB’s cautious move towards exit steps, although remaining risks and modest wage growth mean Draghi is still keeping his options open for now.
U.S. Manufacturing ISM – The July ISM is expected to tick up to 55.5 from 57.8 in June. Forecast risk: upward, given strong component data in early month sentiment. Market risk: downward, as weakening in data could impact rate hike timelines. The ISM has shown a recent high of 60.0 in February ’11 and a low of 33.1 in December of 2008.
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 2nd August 2017.
FX News Today
European Outlook: Asian stock markets moved mostly higher overnight, after positive leads from Wall Street and Europe, which managed broad gains. The ASX, which outperformed yesterday, dropped against the trend, as oil, iron ore and base metals dropped and commodity stocks came under pressure. Earnings reports from Apple and Honda among others underpinned markets. In Europe the DAX finally managed to outperform amid a buoyant market as economic data in Europe and the U.S. dampened tightening concerns, and FTSE 100 futures are rising further in tandem with U.S. futures, while the Bund futures, which rose in tandem with the DAX yesterday, extended gains in after hour trade. European indices remain below recent highs, leaving room to catch up with the surge in the Dow Jones. Still, central bank concerns as well as geopolitical risks and Trump’s challenges all mean investors reserve a degree of caution. Released overnight, the U.K. BRC shop price index dropped -0.4%. Still to come are Eurozone producer prices, the U.K. Construction PMI and the Swiss manufacturing PMI. The BoE starts its meeting ahead of tomorrow’s announcement.
FX Action: The dollar majors have traded mixed so far today in relatively narrow ranges. One mover of note has been USDCAD, which has lifted to a 12-day high at 1.2586, with the pair in process of constructing its biggest rebound since early May. A drop in oil prices, with the WTI benchmark tumbling today below $49.0, which continued yesterday’s correction from the 10-week highs seen above $50.0, provided a cue to put the squeeze on Canadian dollar long positions. USDJPY rebounded to near 111.00 after briefly foraying below the 110.00 level yesterday, leaving a seven-week low at 109.93. A bullish tone in global equity markets, propelled by encouraging earnings reports from bellwether companies, has weighed on the yen. EURUSD has remained in a fairly tight range below the 30-month high it saw on Monday at 1.1846, and has seen good demand on dips under 1.1800. AUDUSD edged out a two-session low at 0.7941, weighed on by a drop in commodity prices.
US Data Yesterday: revealed a weak trajectory for personal income into mid-year following big downward revisions already revealed in last week’s GDP report, leaving a remarkably steep decline in the savings rate to just 3.8% in June. We also saw a big 1.3% June construction spending plunge led by a 5.4% public construction decline after big downward revisions. The mix lowered our GDP estimates to 2.4% from 2.6% in Q2, and to 3.3% from 3.5% in Q3. Consumption mostly tracked estimates, with modest overshoots to the chain price data, and incoming auto data suggest a 2% y/y vehicle sales rise to a 16.7 mln pace. We saw a surprisingly firm 56.3 ISM figure for July, though this marked a decline from a 3-year high of 57.8 in June. The income, retail sales, payroll, and inventory data remain remarkably weak in 2017, though the factory, industrial production, confidence and sentiment data remain strong.
Main Macro Events Today
ADP Numbers – The ADP private payroll number for July today is expected to show an increase of 187,000 from 158,000 last month.
Crude Oil Inventories – The weekly EIA official inventories are expected to show a drawdown of 3.2 million barrels from last week’s significant 7.2 million barrels. However, yesterday the US fuel inventories actually rose unexpectedly, and USOil prices fell over 1% from the psychological $50.00 level.
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 3rd August 2017.
FX News Today
European Outlook: Asian stock markets pulled back from recent highs, with investors assessing the flood of earnings reports and for now holding back ahead of the next batch. The MSCI Asia Pacific retreated from the highest level since December 2017 and U.S. stock futures are also heading south, although FTSE 100 futures are higher ahead of the BoE announcement. The BoE is widely expected to keep rates on hold even if there are likely to remain a couple of dissenters and the inflation report could bring a slight downward revision to growth projections. Gilt yields still picked up yesterday, and the 10-year gained 2.3 bp while the Bund yield fell back -0.6 bp as Eurozone spreads widened. Some caution then in U.K. markets ahead of the announcement, although at least U.K. stocks seem to be on course to recover yesterday’s losses. The calendar has services PMI readings from the U.K. and the Eurozone as well as the ECB’s economic bulletin.
FX Action: EURUSD has settled lower after hitting a new 31-month high at 1.1910 after the London interbank close yesterday. The pair has since ebbed under 1.1850, opening in London with a softening bias. EURCHF has seen a similar price action, also hitting a 31-month peak yesterday, at 1.1524, before coming off the boil. Ditto for EURJPY, which made a 19-month peak 131.40. The new highs are the culmination of a rally the common currency has been seeing for most of the year, one which has accelerated over the last month or so. The euro had been trading at a discount since the Eurozone financial crisis erupted in 2010, in the face of existential threats and struggling member economies. Reserve and forex fund managers are now viewing the euro has having come through the woods, at least to a significant enough degree. Key currency today remains the GBP with risk of selling pressure following a no-change announcement , and downgrades to growth and inflation. I remain long EURGBP to 0.9000.
Fedspeak: Williams, September might be appropriate for an announcement on the start of the balance sheet unwind, He also said the median dot plot path (1 more hike in 2017 and 3 in 2018) still makes sense. He’s frustrated with the low rates of inflation but said the trend is still positive. The decline in the dollar isn’t a big factor in the inflation outlook. And he suggested the economy might need to slow a bit to keep price pressures in check. The gist of these comments suggests the markets might be too complacent with respect to another tightening this year. Fed funds futures are only showing about a 38% chance for one more hike this year. Rosengren hinted at a September balance sheet announcement, according to statements in a WSJ interview, where he said the markets are appropriately anticipating such. He added that the tight job market justifies rate hike plans as well. There is “reasonable risk” that the unemployment rate falls below 4% over the next two years. Mester supports gradual rate hikes despite weak inflation, reiterating her views on the topic. She views inflation weakness as due to “special factors” (drop in cost of prescription drugs and cell phone services) and not a general downtrend, but it may take a couple months to see an uptick in prices. Mester sees three rate hikes per year as appropriate to avoid overheating and reaching for yield, and anticipates further hikes and bond run-off as the economy grows “somewhat above 2%.” Bullard said he’s concerned over soft inflation, and added he does not support further rate hikes at this point. “I think for now we should remain on pause,” he said, waiting for data evidence of a turnaround in inflation. Further tightening at this point would likely “inhibit” prices from moving up toward the 2% target. Bullard is not a voter this year and this is not a new position for him.
Main Macro Events Today
BoE – Three of the then eight MPC members voted for a 25bp hike in the repo rate at the last meeting in June (there are normally nine members, but one position was then temporarily vacant), and expectations are for 6-3 vote spilt this time around in favour to leave interest rates unchanged. With June CPI having undershot expectations, at 2.6% y/y after 2.9% y/y in May, and with concerns about the health of the key consumer sector, more dovish arguments will likely continue to prevail. There is risk of a downward nudge in growth forecasts in the Inflation Report, too, while inflation projections are likely to remain near unchanged. Carney in the press conference afterwards is always an interesting follow up. The data is at 11.00 GMT with the Governor on 30 minutes later.
Initial Jobless – The weekly Initial jobless claims for the week of July 29 and should post a 238k headline, down from 244k last week but above the 234k headline in the week preceding that. Claims in July are poised to average 243k, steady from June and above the 241k average in May.
U.S. Factory Orders – June factory goods should reveal a 2.7% increase for orders with shipments unchanged and inventories up 0.2% for the month. This follows May figures which had orders down 0.5%, shipments up 0.2% and inventories down 0.1% in that 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.
Click HERE to access the full HotForex Economic calendar.
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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 4th August 2017.
FX News Today
European Outlook: Asian stock markets traded narrowly mixed overnight, with investors eying U.S. politics and jobs data. Hong Kong posted gains, after better than expected profits from Suzuki Motor Corp. While Commonwealth Bank of Australia weighed on the Asian index after accusations of a breach of money laundering laws. Oil prices are slightly down on the day and below the USD 49 per barrel mark. FTSE 100 futures are down, after the BoE induced rally yesterday, while U.S. futures are narrowly mixed. The BoE announcement, which saw a lower number of dissenters and downward revisions to growth and inflation forecasts saw European yields heading south, led by a sharp drop in the Gilt, but the BoE maintained its tightening bias and warned that little more growth may be needed to prompt a rate hike. So not as dovish a message as headlines suggested and there could be a correction along the line. Deputy BOE Governor has reiterated the MPC’s position on the BBC this morning. Cable 1.3140, EURGBP 0.9040 (39 week highs).
German manufacturing orders stronger than expected: Orders rose 1.0% m/m, while May was revised up slightly to 1.1% m/m from 1.0% m/m. The annual rate jumped to 5.2% y/y from 3.9% y/y. Expectations had been for a more muted uptick and the stronger than expected number at Domestic capital goods orders, a gauge for future investment, rebounded strongly from a drop in May and were up 7.5% m/m. Overall domestic orders rose 5.1% m/m, after falling in the previous month, while foreign orders inflow remains volatile on a monthly basis and fell -2.0% m/m, after rising 2.2% m/m. With most of the decline due to a drop in orders from other Eurozone countries, the strong EUR is not to blame, however.
FX Update: The dollar majors have been plying narrow ranges for the most part. EUR-USD held in the upper 1.18s, below the 31-month high logged midweek at 1.1910, and Cable settled in the mid 1.31s, consolidating the sharp losses seen yesterday in the wake of the BoE’s guidance yesterday, which largely kicked expectations for a 25 bp rate hike into 2018. USD-JPY’s downtrend re-asserted, with the pair logging a new six-week low at 109.84 during the Tokyo session, which by our data surpassed the low seen in late New York trade yesterday by 1 pip. Japanese data today included a big miss in June wages data, but, as is often the case, to little impact on the yen. AUD-USD remained buoyant, despite the RBA’s SMP noting that a further exchange rate appreciation would lower both economic growth and inflation, though Australian June retail sales beat expectations, rising 0.3% m/m. Market participants have been hunkered down ahead of today’s U.S. July payrolls release.
Main Macro Events Today
US Employment – July employment data should post a 185k (median 182k) headline following a 222k headline in June and 152k in May. There is still upside risk to the report from the strength in the mining and factory sectors that’s also shown up in firm producer sentiment figures during the first half of the year. The tight ADP number on Wednesday offers caution to the upside risk.
Canadian Employment – It is expected to rise 25k in July after the 45.2k gain in June. Canada employment has been on an uptrend since August of last year as the economy expands. Expectations are for an annual average weekly earnings growth to expand at a 1.3% y/y pace in July, matching the 1.3% growth rates in May and June. While that would again be above the multi-year low 0.7% pace in April, it would still leave a historically tame pace for compensation growth. The unemployment rate is expected at 6.5% in July, matching June.
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.
THE ECONOMIC WEEK AHEAD.
Main Macro Events This Week
The July U.S. employment report provided some solace for the Fed on the growth front, but no major smoking gun on inflation. Headline payrolls growth came in a hair above expectations, with small net tweaks on back revisions. Hours worked were steady but were up from May, though average hourly earnings came in a little hot. The jobless rate ticked down once again and gave the Fed some more surety in nominal terms that it is getting closer to full employment even as the participation rate ticked up.
United States: Consumer credit is forecast to increase $17.0 bln in June (Monday) amid upside risk. NFIB small business optimism and JOLTS job openings (Tuesday) will be mulled. MBA mortgage market data is due (Wednesday), along with Q2 productivity (preliminary) seen rising 0.5% right in line with unit labor costs and wholesale trade seen rising 0.5% alongside a 0.6% gain in inventories. Initial jobless claims are forecast to dip 2k to 238k (Thursday) for the week ended August 5, while July PPI may rise 0.1% or 0.2% ex-food and energy. The Treasury budget gap is set to narrow to -$65.0 bln in July from -$90.2 bln, which was a big blowout in June. The week will round out with the July CPI event, seen rising 0.2% headline and 0.1% core for a tame 1.7% y/y core reading.
Fedspeak returns with a flurry of activity this week starting (Monday) with Bullard and dissenter Kashkari. Dudley will open and take part in a panel discussion on New York economic trends (Thursday). Kaplan will take part in a Q&A session (Friday) and Kashkari will be back to do the same at a community bankers conference.
The earnings season is dying down, though there are still several heavy-weights ahead. Generally solid reports have helped the Dow climb over the 22,000 level, and to eight straight record closes.
Canada: The holiday truncated week is heavy on housing data. July housing starts (Tuesday) are expected to fall to 200.0k from the 213.2k annual pace in June. A 5.0% m/m drop in the value of building permits during June (Wednesday) is seen following the 8.9% gain in May. The new house price index (Thursday) is projected to rise 0.4% m/m in June after the 0.7% bounce in May. There is nothing scheduled from the Bank of Canada this week. Our projection remains for a follow-up 25 basis point rate hike in October, taking rates to 1.00% from the current 0.75% setting.
Europe: The ECB is effectively on holiday and data releases this week will be mostly backward looking, so it should be a relatively quiet week for markets. Draghi has remained very cagey even about the timing of the next QE announcement and this week’s data releases are unlikely to change the outlook and there are no key speeches on the immediate agenda.
German June industrial production (Monday) is expected rising 0.8% m/m (median 0.4%), after the strong orders number and the very strong Ifo reading. We are looking for a pretty stable June trade surplus (Tuesday) of EUR 20.0bln leaving Q2 GDP on course to remain steady around 0.6% q/q. Industrial production data also comes from France (Thursday) and Italy (Wednesday), although unlike Germany both countries have already released preliminary Q2 GDP numbers, so unless there are major surprises it shouldn’t impact the overall picture. Final July HICP rates from Germany, France, Spain and Italy (all Friday) are expected to confirm preliminary data, which should leave national HICP rates ranging from 1.7% y/y in Spain, over 1.5% in Germany to just 0.8% y/y in France and the final Eurozone rate (due the following week) at 1.3% y/y.
UK: Sterling posted losses against all three of the G3 currencies last week for the first time since the first week of June. The culprit was the BoE stance at its August 2-3 policy meeting, with dissenters on the Monetary Policy Committee in favor of hiking falling to two from three at the prior meeting in June, and with the central bank downwardly nudging both growth and inflation forecasts. The economic calendar this week brings the BRC retail sales report for July (Monday), where we expect the headline same store comparison rising by 0.6% y/y, after a 1.2% gain in June. Warm weather has been underpinning sales, along with strong employment levels, though the squeeze on real wages remains a concern for the retail sector in the months ahead. Production data for June are also up (Thursday), where we forecast a 0.1% m/m contraction but 0.1% y/y expansion. June trade data are also due on Thursday.
China: The calendar picks up on Tuesday with the July trade report, where the surplus is expected to $48.0 bln from $42.8 bln. July price indicators (Wednesday) are seen accelerating slightly. CPI is seen picking up to a 1.6% y/y clip from 1.5%, while PPI is forecast rising to 5.6% y/y from 5.5%, respectively. July loan growth and new yuan loans (Thursday) should show the latter at CNY 1,000.0 bln from 1,540.0 bln previously.
Japan: The June current account surplus (Tuesday) is expected to shrink to JPY 800.0 bln from 1,653.9 bln previously. July bank loan figures are also due Tuesday. June machine orders (Thursday) are seen bouncing 4.0% from the 3.6% decline in May. July PPI (Thursday) is forecast to climb to a 2.5% y/y pace from 2.1%, while the June tertiary index (Thursday) is penciled in edging up 0.2% after the prior 0.1% decline.
Australia: The data docket is thin this week. The only main reports are ANZ job adds (Monday) and housing finance (Wednesday), expected to expand 0.5% m/m in June from May’s 1.0% gain. The RBA are due before parliament on Friday following last weeks downgrade to growth and inflation targets and the comments on the firm AUD are expected to be reiterated.
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 8th August 2017.
FX News Today
European Outlook: Asian equity markets pared some of their recent gains after Chinese export and import data fell short of expectations, and investors ponder the global growth and central bank outlook while taking profits. Mixed earnings reports meanwhile weighed on the TSE and a stronger Yen is adding to pressure. Oil prices are holding above USD 49 per barrel but seem to be trending lower again after briefly rising above USD 50 per barrel at the start of the month. U.S. and U.K. stock futures are also heading south, pointing to a correction in the FTSE 100, which outperformed yesterday, as the DAX underperformed and closed in the red, while other European markets nudged higher. Eurozone spreads also narrowed. Released overnight, U.K. BRC retail sales rose 0.9% y/y on a same store basis, down from 1.2% y/y in May, while Swiss sa unemployment remained steady at 3.2%.
German exports slump in June, but trade surplus improves. In line with the Chinese trade report, German export and import growth disappointed, with exports falling -2.8% m/m and imports -4.5% m/m. The sa trade surplus though improved to EUR 21.2 bln from EUR 20.3 bln, leaving the total for the second quarter at EUR 61.3 bln, up from EUR 59.9 bln in the second quarter of the year. Like yesterday’s production numbers then the data point to a robust Q2 GDP growth rate, with net exports underpinning the German recovery, which orders suggest remains on track in the third quarter, even if automaker’s woes and the strong EUR are seeing investors turning cautious on German stocks.
Fedspeak: Yesterday there was a relatively dovish view from the nonvoting president, Fed’s Bullard, who continues to twist between a hawkish and dovish outlook, largely on the winds of inflation. Fed’s Bullard believes current rates are about appropriate for the near term. But, he’s a bit worried about the still low inflation rate, as recent data have “surprised to the downside and call into question the idea that U.S. inflation is reliably returning toward target.”. Of importance, though is his disagreement with the Phillips Curve orthodoxy that suggests low unemployment contributes to higher inflation, saying there is little relationship. He expects the economy to grow at about a 2% rate, but noted the pick-up in global growth. Those factors, including improved European activity and the potential for a more hawkish ECB, have weighed on the dollar. He supports getting going on QT, meanwhile he concurs with the general FOMC sentiment that the balance sheet unwind will be very slow and there shouldn’t be any big market impact. Fed’s Kashkari gave a speech as well yesterday in South Dakota, where he said he hasn’t seen wages growing very quickly in a Q&A session. The economy is doing pretty well, he added while noting the largest U.S. banks are still too-big-to-fail.
U.S. reported: consumer credit at $12.4 bln in June following the $18.3 bln May increase (revised from $28.4 bln). Non-revolving credit increased $8.3 bln, continuing to lead the strength in consumer borrowing, after the $11.4 bln jump in May (revised from $11.0 bln). Revolving credit was up $4.1 bln versus the prior $6.9 bln gain (revised from $7.4 bln). Credit slowed a bit in Q2, rising $42.9 bln (4.5%), after the $447.1 bln (5.0%) Q1 increase.
Main Macro Events Today
U.S. JOLTS & NFIB – JOLTS and the NFIB small business optimism survey today, will be mulled. The JOLTS expected to stay nearly unchanged with just a small drop to 5.660 M from 5.666M in May. The NFIB Business Optimism Index expected to be unchanged as well at 103.6.
CAD Housing starts – July housing starts are expected to fall to 200.0k from the 213.2k annual pace in June.
RBA Assistant Gov. Kent – RBA Assistant Governor Kent is due to speak today at the Bloomberg Address in Sydney.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HotForex Economic calendar.
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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.