Daily Market Outlook by Kate Curtis from Trader's Way

Discussion in 'Fundamental Analysis' started by katetrades, Feb 13, 2013.

  1. TradersWay

    TradersWay Active Trader

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    Forex Major Currencies Outlook (Sep 2– Sep 6)

    NFP, Swiss and Australian Q2 GDP along with BOC and RBA rate decisions will be main data points to look at in the coming week.

    USD

    In his speech at Jackson Hole FED chair Powell stated that the bank would “act as appropriate” and removed the phrase “mid-cycle adjustment” thus implying that potential rate cuts are coming. Markets have increased the probability for a September rate cut based on the statement and thus the USD suffered.

    Preliminary durable goods for the month of July came in at 2.1% m/m vs 1.2% m/m as expected. The headline number is very strong, but digging deeper we find less reason to be joyful. Core orders came in at 0.4% m/m vs 0% m/m as expected but the beating was made based on the previous month revision from 1.5% m/m down to 0.9% m/m. Capital goods shipments fell -0.7% m/m vs 0.1% m/m as expected adding more to the slowdown and influencing lower Q3 GDP forecasts. US consumer confidence has jumped to 135.1 vs 129 as expected with the present situation jumping as well to 177.1 vs 170.9 the previous month for the highest reading since 2000. Expectations however have declined to 107 vs 112.2 the previous month indicating that consumers have some doubts about the future due to trade wars.

    Second reading of Q2 GDP came in at 2% q/q as expected, down from 2.1% q/q as preliminary reading showed. Personal consumption has been revised up to 4.7% from 4.3%. Home investment and exports were the main drags on GDP. According to the reading, US economy is very dependent on US consumer as it contributed 3.1% to the growth. A small drop in personal consumption can push GDP below 2%. Core PCE came in as expected at 0.2% m/m and 1.6% y/y. Personal spending rose to 0.6% from 0.3% the previous month while personal income fell to 0.1% from 0.4% the previous month.

    This week we will have ISM PMI data for the month of August, July trade balance data and on Friday the NFP. Projections are for the number of around 155k with the unemployment rate ticking down to 3.6% while average hourly earnings remain at 0.3%. New tariffs will be imposed starting from September 1.

    Important news for USD:

    Tuesday:
    • --ISM Manufacturing PMI
    Wednesday:
    • --Trade Balance
    • --Exports
    • --Imports
    Thursday:
    • --ADP Nonfarm Employment Change
    • --ISM Non-Manufacturing PMI
    Friday:
    • --Nonfarm Payrolls
    • --Unemployment Rate
    • --Average Hourly Earnings
    EUR

    German Ifo business climate dropped down to 94.3 vs 95.1 as expected making it the weakest reading since November of 2012. Situation in German economy continues to deteriorate according to numerous surveys and it points toward technical recession. Ifo economist stated that industrial sector is in a recession with services now following. He acknowledged that latest trade war escalation, rising of tariffs by both China and US, was not reflected in the latest survey, thus indicating that future survey data from Germany could paint even grimmer picture. Final Q2 GDP reading confirmed negative growth of -0.1% q/q.

    Final consumer confidence came in at -7.1 as preliminary reading showed down from -6.6 the previous month. Economic confidence and business climate indicator rebounded coming in at 103.1 vs 102.7 the previous month and 0.11 vs -0.12 the previous month. Although the numbers are still at the 2016 low levels small relief for Euro area will be welcomed. The unemployment rate came in unchanged at 7.5% as expected. Preliminary August CPI came in at 1% y/y as expected, tick down from 1.1% y/y the previous month while the core CPI came in at 0.9% y/y vs 1% y/y as expected but unchanged from previous month. Inflation continues to stay in place which pushes ECB to act at their next meeting.

    This week we will have final August PMI numbers, consumption and employment data as well as final reading of Q2 GDP which is expected to be lowered.

    Important news for EUR:

    Monday:
    • --Markit Manufacturing PMI (Germany, France, EU)
    Wednesday:
    • --Markit Services PMI (Germany, France, EU)
    • --Markit Composite PMI (Germany, France, EU)
    • --Retail Sales
    Friday:
    • --Employment Change
    • --GDP
    GBP

    PM Johnson sought legal advice on how to close the Parliament in order to prevent them from stopping his plans of UK leaving the EU on October 31. He is looking to extend the recess period from September 9 to October 14, when Queen will give her speech which is needed to set out legislative programme, meaning that Parliament will start work next week on September 3 but they will work for one or two weeks before going back to recess. In this way he diminishes chances of Parliament blocking hard Brexit. The Queen has prorogued the Parliament no earlier than September 9 and no later than September 12 to October 14. The main plan for the opposition now remains a vote of no-confidence.

    This week we will have PMI data and Parliament is returning from recess on Tuesday. There will be heated debates in the Parliament that can seriously impact GBP, especially now that it will be open for about a week.

    Important news for GBP:

    Monday:
    • --Markit Manufacturing PMI
    Tuesday:
    • --Markit Construction PMI
    Wednesday:
    • --Markit Services PMI

    AUD

    Private capital expenditure (capex) for the Q2 came in at -0.5% q/q vs 0.4% q/q as expected. A huge miss on expectations but better than the Q1 reading which showed -1.7% q/q. Building permits for the month of July plunged and came in at -9.7% m/m vs 0% m/m as expected. Although the monthly data is very volatile the yearly reading also shows the huge drop to -28.5% y/y vs -22.2% y/y as expected. The housing market is still facing problems and effects of lower rates still do not produce desired effects on the housing due to low wages and high household debt.

    This week we will have consumption and trade data with RBA rate decision taking the central stage. Expectations are for RBA to leave the rate unchanged but to acknowledge the concerns in Australian and global economy which could lead to cut in October. We will also get Caixin PMI and trade data from China.

    Important news for AUD:

    Monday:
    • --Caixin Manufacturing PMI (China)
    Tuesday:
    • --RBA Interest Rate Decision
    • --RBA Rate Statement
    • --Retail Sales
    Wednesday:
    • --GDP
    • --Caixin Services PMI (China)
    Thursday:
    • --Trade Balance
    • --Exports
    • --Imports
    Sunday:
    • --Trade Balance (China)
    • --Exports (China)
    • --Imports (China)

    NZD

    Trade balance for the month of July came in at -NZD685m vs -NZD254m as expected. Exports came in lower at 5.03bn vs 5.05bn as expected while imports surged to 5.71bn vs 5.2bn as expected and up from 4.65bn the previous month. A small consolation is that domestic demand is keeping strong hence the rise in imports. ANZ business confidence for the month of August further deteriorated to -52.3 vs -44.3 the previous month for a 11-year low. Inflation expectations also dropped down to 1.7% from 1.81% the previous month. RBNZ has stated that they will follow inflation closely so this reading puts additional downward pressure on NZD.

    This week we will have bi-monthly GDT auction.

    Important news for NZD:

    Tuesday:
    • --GDT Price Index
    CAD

    Q2 GDP smashed the expectations and came in at 3.7% q/q vs 3% q/q as expected. Exports rose 13.4% in Q2 thus making the fastest rise since 2014 and making trade contribute to GDP with 4.1pp. Household savings rate climbed to 1.7% from 1.3% the previous quarter. Business non-residential investment and household consumption were the low points of the reading with former coming in at -16.2%, thus cutting GDP by 1.64pp, and latter coming at 0.5% for the weakest reading since 2012.

    This week we will have trade balance and employment data. The employment report will be published at the same time as NFP so it may cause greater volatility in the markets. We recommend caution in trading. Highlight of the week will be BOC rate decision. We have not had communication from BOC since their last meeting but markets are pricing mere 14% chance of a rate cut.

    Important news for CAD:

    Wednesday:
    • --Trade Balance
    • --Exports
    • --Imports
    • --BOC Interest Rate Decision
    • --BOC Rate Statement
    Friday:

    • --Employment Change
    • --Unemployment Rate
    JPY

    There have been numerous data points coming from Japan with mixed results. The unemployment rate in July ticked down to 2.2% vs 2.3% previously and as expected. Tokyo CPI for the month of August came in at 0.6% y/y as expected but down from 0.9% y/y previously. CPI excluding food and energy came in at 0.7% y/y as expected but also down from 0.8% y/y previously. Retail sales in July were the weakest data point. They came in at -2% y/y vs -0.7% y/y as expected. Slow wage growth has impacted Japanese consumers so they refrained from spending. On the other hand, preliminary reading for the same month of industrial production shows a great beat on expectations coming in at 0.7% y/y vs -0.6% y/y as expected giving push to the Q3 GDP.

    This week we will have final August PMI data, speech from governor Kuroda and data on spending and wages.

    Important news for JPY:

    Monday:
    • --Manufacturing PMI
    Wednesday:
    • --Services PMI
    • --BOJ Governor Kuroda Speech
    Friday:
    • --Household Spending
    • --Labour Cash Earnings
    CHF

    CHF has benefited from the risk off sentiment caused by uncertainties around US – China trade war and Brexit. It has strengthened based on its safe haven appeal. SNB has sporadically intervened in open markets just to ease the appreciation of the CHF. Member of SNB governing board Machler stated that they still have a lot of room to intervene in the forex market and added that she is satisfied with the way that negative rates are working.

    This week we will have consumption and inflation data as well as Q2 GDP reading. Additionally, we will have a speech from SNB Chairman Jordan which will be closely monitored since CHF has strengthened a lot in the past month and SNB is surely not fond of that.

    Important news for CHF:

    Monday:
    • --Retail Sales
    Tuesday:
    • --CPI
    Thursday:
    • --GDP
    • --SNB Chairman Jordan Speech
     
  2. katetrades

    katetrades Master Trader

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    Forex Major Currencies Outlook (Sep 9– Sep 13)

    ECB rate decision will be the highlight of the week followed by consumption data from US and employment reports from UK and Australia.

    USD

    ISM manufacturing PMI for the month of August came in at 49.1 vs 51.2 as expected. This is the first time in 3 years that PMI has fallen below 50 level into contraction territory. New orders and employment categories plunged from 50.8 and 51.7 to 47.2 and 47.4 respectively. New export orders category also saw a huge drop from 48.1 to 43.3. The reading had increased the chance of a 50bp rate cut in September to 20%. July trade balance came in at -$54bn vs -$53.4bn as expected with prior month’s reading showing -$55.5bn. Exports were up 0.6% m/m while imports were down -0.1% m/m. US-China trade deficit was increased despite the tensions due to the trade war. ISM non-manufacturing PMI came in at 56.4 vs 54 as expected. New orders component smashed expectations coming in at 60.3 while employment came in weaker than previous month.

    Nonfarm payrolls for the month of August came in at 130k vs 160k as expected. Although the headline is below estimate and below three-month average of 156k, other data point to rather good reading with participation rate ticking up to 63.2% from 63% previously and the unemployment rate stayed the same at 3.7%. Average hourly earnings came in at 0.4% m/m vs 0.3% m/m as expected and 3.2% y/y vs 3% y/y as expected. A rise in wage growth is always a good sign and if it manages to translate to inflation FED will be overwhelmed.

    This week we will have inflation and consumption data.

    Important news for USD:

    Thursday:
    • CPI
    Friday:
    • Retail Sales

    EUR

    Final manufacturing PMI for August for Eurozone came in at 47 and with services coming in at 53.5 this put composite at 51.9. Services are holding the EU economy with manufacturing well below 50 but question remains if and when will there be a spillover from manufacturing to services. July retail sales came in -0.6% m/m as expected. Final Q2 GDP came in at 0.2% q/q as preliminary and 1.2% y/y vs 1.1% y/y preliminary.

    This week we will have data on industrial production, trade balance and wages. Main event will be ECB rate decision. Additional stimulus is widely expected but it is yet to be seen in which form will it be delivered (rate cuts, QE). Tiering system would help commercial banks deal with bigger negative rate cuts.

    Important news for EUR:

    Thursday:
    • Industrial Production
    • ECB Interest Rate Decision
    • ECB Monetary Policy Press Conference
    Friday:
    • Trade Balance
    • Wage Cost

    GBP

    Manufacturing PMI for the month of August came in at 47.4 vs 48 the previous month thus continuing with declines. Output component and business confidence fell to the lowest readings ever recorded. New export orders also continued to plunge. Political and economic uncertainties weigh heavily on manufacturing all around the World and UK is not exempt from that. Construction PMI came in at 45 vs 46.5 as expected and down from 45.3 the previous month. Services PMI came in at 50.6 vs 51 as expected. This is a hard hit since UK is service oriented economy. Markit added that based on current observations, the UK economy is expected to contract by 0.1% q/q in Q3 thus putting UK in recession.

    Cable fell below 1.20 on Brexit fears before Parliament started their session. A conservative MP has switched sides and thus the government lost the majority in the Parliament. Parliament voted to seize control of the House agenda and block no deal until at least January 31, 2020 which leads us closer to the general election. 21 Conservative MPs voted against the government. PM Johnson wants to set it for October 15 while opposition parties want for Brexit delay bill to be passed before the election is called. According to the law Government can change the election date, thus there is a fear that PM Johnson can move the election after October 31 in order to push no deal Brexit. Early election vote proposition has been defeated but if the bill to block no deal Brexit gains Royal Assent, the Labour will support the next election vote thus making it pass and sending Britain to the polls.

    This week we will have trade balance, industrial, manufacturing and construction data as well as employment data. Recess in Parliament should also begin.

    Important news for GBP:

    Monday:
    • Trade Balance
    • Manufacturing Production
    • Industrial Production
    • Construction Output
    Tuesday:
    • Claimant Count Change
    • Unemployment Rate
    • Average Weekly Earnings

    AUD

    Retail sales in July came in at -0.1% m/m vs 0.2% m/m as expected with prior month’s reading showing 0.4% m/m. A weak start of Q3 for Australian consumers. Q2 GDP came in at 0.5% q/q as expected. Public spending and net exports were positives, pushing the GDP up while construction, retail and wholesale trade were drags. With yearly GDP of 1.4% it is a slowest pace since GFC. Trade balance came in at AUD7.268 bn vs AUD7 bn as expected. With exports rising 1% m/m and imports 3% showing increase in domestic demand.

    RBA has left the cash rate unchanged at 1% as was widely expected. In their statement they have stated that they will ease policy further if the need arises to support sustainable growth and that extended period of low rates is reasonable for lowering the unemployment and pushing inflation toward the target. Inflation is likely to remain subdued according to RBA and consumption remains the main uncertainty in the domestic economy, as the latest retail sale reading showed. They have praised strong employment growth and easy global credit conditions. Although the statement shows that RBA is not in a hurry to further cut interest rate, markets are still pricing in around 89% of a rate cut by the end of the year with around 62% chance of a cut at the October meeting.

    Official PMI data from China for the month of August show manufacturing at 49.5 vs 49.7 the previous month. This is the fourth consecutive month that the reading is in contraction territory and after creeping slowly back to 50 the previous month it has again turned away and went deeper into contraction. Trade wars and slower domestic demand are persistent negatives. Services PMI came in at 53.8 vs 53.7 the previous month and composite PMI came in at 53. Caixin manufacturing PMI returned to expansion with 50.4 vs 49.8 as expected. The improvement was driven by the recovery in production with production sub index rising to a five-month high, which signals improving market demand. Employment sub index jumped almost to the 50 level while new orders sub index remained in expansion territory. On the other hand, new export orders sub index remained below 50 and fell to the lowest levels for the year indicating declining foreign demand due to escalations in US-China trade war. Caixin services PMI rose to 52.1 from 51.6, and the composite rose to 51.6 from 50.9 for the second consecutive monthly increase.

    This week we will have employment data from Australia and inflation and PPI data from China

    Important news for AUD:

    Tuesday:
    • CPI (China)
    • PPI (China)
    Friday:
    • Employment Change
    • Unemployment Rate

    NZD

    GDT price index came in at -0.4% for a third consecutive auction with negative numbers. Chinese buyers are the largest participants in the auction while the prices are in USD and with fall in Yuan auctions produce weaker results.

    This week we will have data on manufacturing and electric card retail sales.

    Important news for NZD:

    Monday:
    • Manufacturing Sales
    Tuesday:
    • Electronic Card Retail Sales

    CAD

    July trade balance came in at -CAD1.12 bn vs -CAD0.35 bn as expected. Back to the deficit and last month’s surplus has been revised down to -CAD0.06 bn. Imports rose 1.2% m/m while exports dropped -0.9% m/m with exports falling in 6 out of 11 categories. Surplus was achieved in trade with US while deficit was in trade with the rest of the World. Slow start of Q3 in regards to the trade.

    BOC has left the rate unchanged at 1.75% as widely expected. They reiterated that current level of monetary stimulus remains appropriate. Uncertainty caused by trade wars is weighing in on Canadian and global economy and its Governing Council will pay more attention on its influence over growth and inflation in Canada. They acknowledged that wages rose but consumer spending has been unexpectedly soft and business investment fell sharply due to trade uncertainties. Canada’s economy is operating close to potential and inflation is on target.

    Employment report for August showed a net change in employment of 81.1k vs 20k and back into positive territory from -24.2k the previous month. The unemployment rate stayed the same at 5.7% while participation rate increased to 65.8% from 65.6% the previous month. Full time employment amounted to 23.8k. Hourly wages dropped to 3.8% from 4.5% the previous month but still shows very healthy rise.

    This week we will have housing data.

    Important news for CAD:

    Tuesday:
    • Building Permits

    JPY

    Capex data for Q2 came in at 1.9% y/y vs 1.7% y/y as expected. Small beating on the expectations will have positive impact on Q2 GDP. On the other hand, company profits came in at -12%, very disturbing number for future capex and GDP data. Final services PMI in August came in at 53.3 vs 51.2 the previous month bringing some good news. Household spending came in line with expectations at 0.8% y/y while labour earnings missed and came in at -0.3% y/y vs 0.7% y/y as expected. Wage growth will not be able to sustain the spending especially with October’s retail sales tax hike.

    This week we will have final Q2 GDP reading, machinery orders and final July industrial data.

    Important news for JPY:

    Monday:
    • GDP
    Thursday:
    • Machinery Orders
    Friday:
    • Industrial Production

    CHF

    Retail sales in July came in at 1.4% y/y vs -0.7% y/y the previous month. CPI for the month of August came in unchanged vs -0.1% m/m as expected and 0.3% y/y as expected with core reading coming in at 0.4% y/y as expected. Inflation continues to be stubbornly low which may prompt additional stimulus from SNB at their next meeting. Q2 GDP came in at 0.3% q/q vs 0.2% q/q as expected with household consumption leading the way and trade being the biggest drag.

    This week we will have employment data.

    Important news for CHF:

    Monday:
    • Unemployment Rate
     
  3. katetrades

    katetrades Master Trader

    2,354
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    Forex Major Currencies Outlook (Sep 16– Sep 20)

    The week of central banks, no less than 4 central banks will decide on interest rates and future monetary policy actions with FED leading the way as most important and most watched risk event of the week.

    USD

    August CPI came in at 1.7% y/y vs 1.8% y/y as expected but core CPI came in at 2.4% y/y vs 2.3% y/y as expected. Average weekly earnings also added to the shine of the report coming in at 1.2% y/y vs 0.9% y/y as expected with real hourly earnings coming in at 1.5% y/y vs 1.4% y/y as expected. Advanced retail sales came in at 0.4% m/m vs 0.2% m/m as expected. Control group came in at 0.3% m/m as expected. US consumer continues to be the main driving force of the US economy giving the FED reason to be more bullish.

    President Trump stated that planned increase in tariffs from 25% to 30% on $250bn worth of Chinese goods will be delayed for 2 weeks from October 1 to October 15. He stated that this was done as a sign of goodwill. In response China said that it may allow companies to resume purchases of US farm products ahead of the October talks indicating that relationship begins to improve and markets liked it with risk on mover, AUD up and JPY down.

    This week we will have industrial production and housing data. FOMC rate decision is the highlight of the week. Markets are expecting 25bp cut with almost 100% certainty. Economic projections, dot plot, will give us more insight regarding expected future moves by FOMC. FED’s view on trade war will also be scrutinized.

    Important news for USD:

    Tuesday:
    • Industrial Production
    Wednesday:
    • Housing Starts
    • Building Permits
    • FOMC Interest Rate Decision
    • FOMC Statement
    • FOMC Economic Projections
    • FOMC Press Conferece
    Thursday:
    • Existing Home Sales

    EUR

    Ifo has cut the German GDP growth for 2019 to 0.5% from 0.6% and to 1.2% from 1.7% for the year 2020. They expect Q3 GDP to fall to -0.1% q/q with possible slight recovery in Q4. This would mark second consecutive quarter of negative GDP, thus indicating a technical recession. They also noted that weakness from the industrial sector is starting to spread to other sectors which is particularly worrisome. Industrial production for the Eurozone in July came in at -0.4% m/m vs -0.1% m/m as expected with all the major economies showing a decline in industrial activity. Trade balance came in at EUR19 bn vs EUR17.5 bn as expected. Exports were up 0.6% m/m while imports were flat.

    ECB has decided to cut the deposit facility rate by additional 10bp thus putting it at -0.50%. Reintroduction of QE in the amount of EUR20 bn starting from November 1. There is no time frame regarding duration of purchases, they will stop them shortly before raising rates. Tiering system will be introduced. ECB president Draghi stated that risks are tilted to the downside and urged for a looser fiscal policy. Global uncertainties are hitting the eurozone manufacturing hard while services show resilience. Both GDP and inflation forecasts were lowered with former now seen at 1.1% for 2019 and 1.2% for 2020 and the latter at 1.2% for 2019 and 1% for 2020. The baseline scenario does not take into account the escalation of trade tensions. All measures ECB takes are intended to raise inflation close to but below 2%. The fact that QE does not have a perceived end date gives dovish note to the decision although the amount is far lower than feared, EUR60 bn.

    This week we will get ZEW reading, final inflation data for August as well as preliminary consumer confidence data for September.

    Important news for EUR:

    Tuesday:
    • ZEW Economic Sentiment Indicator (Germany and EU)
    Wednesday:
    • CPI
    Friday:
    • Consumer Confidence Index

    GBP

    GDP in July came in at 0.3% m/m vs 0.1% m/m as expected and thus surprised to the upside with services output being the biggest contributor. The headline number shows a good start for the Q3, at least there is a great possibility of avoiding the recession, but ONS states that weakening growth is still present. Factory data also beat the expectations with manufacturing coming in at 0.3% m/m vs -0.3% m/m as expected, industrial production at 0.1% m/m vs -0.3% m/m as expected and construction at 0.5% m/m vs 0.2% m/m as expected. Very strong month for the UK economy.

    July employment report showed wages continuing their rise to 4% 3m/y vs 3.7% 3m/y as expected for the highest reading since June 2008. Real total wages increased by 2.1% y/y which is the fastest pace since Q3 of 2015. The unemployment rate dropped to 3.8% from 3.9% the previous month. The employment change came in at 31k vs 55k and claimant count rate rose to 3.3% to put some shade on the report, but wage rise is the highlight. BOE will be satisfied with the reading, however Brexit dominates the UK so all data plays second fiddle to it.

    MPs have voted against a motion to hold elections prior to the October 31 and Parliament was prorogued at the end of the day according to the Queen’s decision. They will continue with their sessions on October 14. Reports state that UK and the EU could agree to maintain Northern Ireland under the European customs regime thus avoiding the backstop issue which gave GBP a boost.

    This week we will get inflation and consumption data for August as well as BOE rate decision. Due to the Brexit uncertainties BOE has its hands tied but their input on the economy will be highly valuable. No change in interest rate is expected.

    Important news for GBP:

    Wednesday:
    • CPI
    Thursday:
    • Retail Sales
    • BOE Interest Rate Decision
    • BOE MPC Meeting Minutes

    AUD

    Trade balance data from China in August missed expectations coming in at CNY299.3 bn vs CNY310.26 bn as expected. Exports were up 2.6% y/y vs 6.3% y/y as expected and down from 10.3% y/y the previous month. Exports to the US were down 16% y/y. Global slowdown and US tariffs combined to put a heavy toll on Chinese exporters. Imports came in at -2.6% y/y vs -3.1% y/y as expected. A drop in imports indicating slower domestic demand will be feared by all exporting countries who have China as their main market, namely Germany. CPI came in at 2.8% y/y while PPI plunged deeper into negative territory coming in at -0.8% y/y. Low PPI reading will impact business profits which will in turn lead to halts in employment and business investment. China has already cut their reserve ratio rate in order to stimulate economy and will evaluate if further stimulus is still needed but with such low PPI reading, we can expect more stimulus in the future.

    This week we will get RBA meeting minutes and employment data from Australia as well as consumption, industrial production and investment data from China.

    Important news for AUD:

    Monday:
    • Retail Sales (China)
    • Industrial Production (China)
    • Fixed Asset Investment (China)
    Tuesday:
    • RBA Meeting Minutes
    Thursday:
    • Employment Change
    • Unemployment Rate

    NZD

    Manufacturing sales and activity were both down in Q2 coming in at -0.7% q/q vs 1% q/q the previous quarter and -2.7% q/q vs 2% q/q the previous quarter respectively. Drops in meat and dairy manufacturing were the main drags and concerns. Analysts are lowering their projections for Q2 GDP. Electronic card retail sales and spending overall came in better than expected at 1.1% m/m and 1.3% m/m respectively. Positive impact on private consumption.

    This week we will have bi-monthly GDT auction as well as Q2 GDP data.

    Important news for NZD:

    Tuesday:
    • GDT Price Index
    Thursday:
    • GDP

    CAD

    Housing starts in August came in at 226.6k vs 212.5k as expected and building permits rose to 3% m/m vs 2% m/m as expected and up from -3.1% m/m the previous month indicating improving conditions in the housing market.

    This week we will have manufacturing sales, inflation and consumption data.

    Important news for CAD:

    Tuesday:
    • Manufacturing Sales
    Wednesday:
    • CPI
    Friday:
    • Retail Sales

    JPY

    Final Q2 GDP came in at 1.3% y/y and 0.3% q/q as expected but down from preliminary readings of 1.8% y/y and 0.4% q/q. The number was revised down due to lower business investment. Private consumption is still the main driver of GDP and it came at 0.6% q/q. Core machinery orders, a good proxy for capex six to nine months in the future, came in for the month of July at -6.6% m/m vs -8% m/m as expected and 0.3% y/y vs -3.7% y/y as expected. Although the data was weaker than the previous month and it is very volatile in its nature it beat the expectations. The final industrial production data for July came in line with preliminary readings at 1.3% m/m and 0.7% y/y for a good start of Q3.

    This week we will have trade balance and national inflation data along with BOJ rate decision. According to Reuters survey most economists expect BOJ to ease further with their next move due to JPY strength caused by global slowdown, but they are not in agreement whether the move will be at this meeting.

    Important news for JPY:

    Wednesday:
    • Trade Balance
    • Exports
    • Imports
    Thursday:
    • BOJ Interest Rate Decision
    • BOJ Monetary Policy Statement
    Friday:
    • CPI

    CHF

    Seasonally adjusted unemployment rate in August came in at 2.3% as expected. The unemployment rate continues to be at the lows but it still does not influence inflation pressures so talks about more easing from SNB at their meeting in two weeks are intensifying.

    This week we will have trade balance data and SNB rate decision. CHF has strengthened a lot during the past month and with ECB easing further we can see SNB taking further easing measures.

    Important news for CHF:

    Thursday:
    • Trade Balance
    • Exports
    • Imports
    • SNB Interest Rate Decision
    • SNB Monetary Policy Statement
    Please note that there will be no reports for the following two weeks and we will return for the second week of October.
     
  4. TradersWay

    TradersWay Active Trader

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    Forex Major Currencies Outlook (Oct 7– Oct 11)

    This week is crucial for the Brexit negotiations since the EU ambassadors have set a deadline of October 11 for the two sides, US-China trade talks will resume on October 10 while Canadian employment report and US inflation will be most closely watched economic events.

    USD

    ISM manufacturing index for the September came in at 47.8 vs 50 as expected. This is a 10-year low reading, continuation of a downtrend and plunging deeper into contraction. Slowing global demand and trade war tensions have been labelled as main culprits for the disastrous reading. Employment subindex fell the most to 46.3 while new orders basically came unchanged with new export orders tumbling down to 41. ISM non-manufacturing index came in at 52.6 vs 55.0 as expected and down from 56.4 the previous month. The reading represents a new three-year low. Most visibly new orders category collapsed to 53.7 from 60.3 the previous month. Employment category came just above expansion level at 50.4, down from 53.1 the previous month for a five-year low. Poor ISM readings moved probability of an October rate cut to over 80% from 39% at the beginning of the week. Trade balance for August came in at -$54.9bn vs -$54.5bn as expected. Exports rose 0.2% m/m while imports rose 0.5% m/m. Deficit in trade with China was lowered by little more than $1bn which will make president happy ahead of all-important meeting on October 10. After abysmal ISM data rumours about possible interim deal intended to provide short-term economic relief to US economy are gaining more traction. However, interim deal could damage the chances of striking a “real” deal in the near future.

    US treasury announced that it will impost new tariffs of 10% on EU aircraft and 25% on EU agricultural and industrial goods such as French wine and cheese, Spanish olive oil, Scotch whiskey and German knives, scissors and metalwork tools. These tariffs will take effect on October 18 and they have been imposed in retaliation to WTO Airbus aircraft subsidies case. There is a possibility for tariffs to be avoided if both sides can reach a deal, but so far there were no serious negotiations and both sides blame each other.

    September NFP came in at 136k vs 145k as expected, up slightly from 130k the previous month but the number was revised up to 168k. The unemployment rate was the highlight of the report as it slipped down to 3.5% from 3.7% while the participation rate stayed the same at 63.2%. Additionally, the U6 underemployment level, which accounts for people who work part-time and seek a full-time job, has dropped to 6.9% from 7.2%. Wage data missed with average hourly earnings coming in flat vs 0.2% m/m as expected and 2.9% y/y vs 3.2% y/y as expected.

    This week we will have minutes from the latest FOMC meeting and CPI inflation data.

    Important news for USD:

    Wednesday:
    • --FOMC Minutes
    Thursday:
    • --CPI

    EUR

    The unemployment rate continues to shrink and it came in at 7.4% from 7.5% the previous month. Final manufacturing PMI for the September came in at 45.7 vs 45.6 preliminary with output and new orders subindexes falling further. Core CPI came in at 1% as expected showing that inflation still holds at the low levels. Final services PMI came in at 51.6 vs 53.5 the previous month which dragged down the composite to 50.1. Weakness from manufacturing sector is transferring to services sector. Retail sales in August came in at 0.3% m/m as expected, up from -0.5% m/m the previous month.

    This week we will have manufacturing data from Germany.

    Important news for EUR:

    Monday:
    • --Factory Orders (Germany)
    Tuesday:
    • --Industrial Production (Germany)

    GBP

    Q2 GDP came in at -0.2% q/q as expected with yearly number ticking up at 1.3% y/y vs 1.2% y/y as expected. Manufacturing PMI in September surprised to the upside by coming at 48.3 vs 47 as expected with “Stocks of purchases, input buying volumes rise as some UK manufacturers have restarted Brexit preparations”. Services PMI came in at 49.5 vs 50.3 as expected and brought down composite to 49.3, both readings back into contraction territory. Construction PMI continues to plunge coming in at 43.3 vs 45 the previous month. Data points to contraction of UK economy in Q3.

    PM Johnson will have to ask for extension of Article 50 if a deal is not approved by October 19. His latest proposal that was dubbed “two borders, four years” because it would instate two borders, one on the side of Republic of Ireland and one on the side of Northern Ireland with time frame of four years received support from Brexit supporters and was not outright rejected by EU. However, EU remains unconvinced by the new plan which pushed the pound down after it shoot up on initial deal optimism. Finally, the EU has rejected the plan which dragged pound to new lows. PM Johnson seems to have a plan B which is based on time limit on the backstop.

    This week we will have GDP, trade balance and production data.

    Important news for GBP:

    Thursday:
    • --GDP
    • --Trade Balance
    • --Manufacturing Production
    • --Industrial Production
    • --Construction Output

    AUD

    RBA has once again cut the cash rate this year by 25 bp, this time down to 0.75%. They have stated that they will ease further if needed and that it is reasonable to expect extended periods of low rates., however they have added that “gentle turning point has been reached” thus leaving investors guessing. RBA governor Lowe stated that progress on employment and inflation goals is slower than liked and that rate cut should help in achieving those goals. Retail sales for August came in weaker than expected at 0.4% m/m vs 0.5% m/m as expected but much better than the previous reading of -0.1% m/m.

    Official manufacturing PMI from China for September came in at 49.8 vs 49.5 the previous month. It is a small and welcomed bounce back but the reading still stays in the contraction territory, for the fifth consecutive month. Caixin manufacturing PMI showed a great jump to 51.4 vs 50.4 the previous month. New orders and output subindexes improved significantly while new export orders improved but stayed in the contraction territory indicating that demand for manufacturing products was driven by the domestic market.

    This week we will have RBA report on financial stability and Caixin services PMI data from China.

    Important news for AUD:

    Tuesday:
    • --Caixin Services PMI (China)
    Friday:
    • --RBA Financial Stability Review

    NZD

    ANZ business confidence continues to drop, now coming in at -53.5 vs -52 previously. There is also a drop in activity outlook to -1.8 which shows activity at its lowest levels since the crisis of 2008/09. Investment and profit expectations continue falling along with inflation expectations. Yet another data point weighing on kiwi increasing chances for additional rate cut by the end of the year. Talks about NZDUSD below 0.60 mark are also heating. GDT price index came in at 0.2% for some positive kiwi news.

    This week we will have data on electronic card spending.

    Important news for NZD:

    Thursday:
    • --Electric Card Retail Sales

    CAD

    GDP for July came in flat vs 0.1% m/m as expected and 1.3% y/y vs 1.4% y/y as expected. Wholesale trade was the biggest contributor to the GDP while oil and gas were the biggest drag with drop of -3.5% for a largest decline in more than 3 years. Trade balance deficit in August fell to -CAD0.96 bn vs -CAD1.2 bn as expected. Both exports and imports rose with former rising 1.8% m/m and latter 1% m/m indicating good conditions. Trade deficit with China was lowered by around CAD300 million.

    This week we will have housing and employment data.

    Important news for CAD:

    Tuesday:
    • --Building Permits
    • --Housing Starts
    Friday:
    • --Employment Change
    • --Unemployment Rate

    JPY

    Retail sales for August came in at 4.8% m/m vs 2.4% m/m and 2% y/y vs 0.7% y/y as expected thus smashing expectations. New sales tax, raising the rate to 10% from 8%, was introduced on October 1 so the increase most likely shows the purchases made to avoid additional taxes. Preliminary industrial production for August came in at -1.2% m/m vs -0.5% m/m as expected. Projections show that production will pick up in September. Jobless rate continues to impress and it fell to 2.2%.

    Important news for JPY:

    Tuesday:
    • --Household Spending
    • --Labour Cash Earnings

    Thursday:
    • --Core Machinery Orders

    CHF

    Retail sales in August reversed and came in at -1.4% y/y vs 1.4% y/y the previous month while CPI for September came in at -0.1% m/m vs 0.1% m/m as expected lowering inflation to meekly 0.1% y/y.

    Important news for CHF:

    Tuesday:
    • --Unemployment Rate
     
  5. katetrades

    katetrades Master Trader

    2,354
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    Forex Major Currencies Outlook (Oct 14 – Oct 18)

    The strength of the US consumer, employment data from UK and Australia, slew of economic data from China headlined by Q3 GDP and European Council summit will be the highlights of the week.

    USD

    FED Chairman Powell reiterated the FED’s data-dependency stance and stated that they will closely monitor incoming data and adjust monetary policy accordingly. He also added that global economic slowdown and geopolitical risks are a factor that impacts policy decisions. In addition, FED will buy Treasury bills in order to calm the money market and although this will expand FED’s balance sheet, it should not be viewed as another round of QE.

    FOMC meeting minutes showed increased concern by members regarding global economy and trade tensions. Labour market and overall economy are strong according to the readings. There was a division within with several policymakers favouring keeping the rates steady while couple of policymakers stated that a rate cut might be too much insurance.

    September CPI came in at 1.7% y/y vs 1.8% y/y as expected with core CPI staying the same at 2.4% y/y. Earnings data came weaker than expected with average weekly earnings at 0.9% y/y vs 1.1% y/y as expected and average hourly earnings 1.2% y/y vs 1.5% y/y as expected. The small drop in headline number as well as drops in wages could add additional reason for the rate cut at the end of the month. Odds of an October rate cut rose to almost 82%

    This week we will have consumption, housing and industrial data.

    Important news for USD:

    Wednesday:
    • Retail Sales
    Thursday:
    • Housing Starts
    • Building Permits
    • Industrial Production

    EUR

    Factory orders from Germany for August came in at -0.6% m/m and -6.7% y/y indicating further deterioration in the manufacturing sector. Foreign orders were up and previous numbers have been revised up so that is a small positive from the report, but data will continue to deteriorate until there is some sort of an agreement in US-China trade war. German industrial production surprised to the upside by coming in at 0.3% m/m vs -0.1% m/m as expected. Positive news was welcomed by the markets and EUR strengthened on the news, however EURUSD stayed below 1.10 level. Later on, during the week 1.10 level was breached due to weaker USD.

    ECB accounts from the September policy meeting showed that although re-introduction of QE had a “clear majority” some members were against it on the basis of it not being an efficient instrument given low yields. Some policy members argued for a 20 bps rate cut if no QE was introduced. Rate tiering had “majority” while 10 bps rate cut had “very large majority”. Divisions within ECB are shown also with some members questioning growth forecasts that were too optimistic according to them.

    This week we will have industrial and inflation data, ZEW economic sentiment reading and summit of the European council where talks about the Brexit situation will be the main subject.

    Important news for EUR:

    Monday:
    • Industrial Production
    Tuesday:
    • ZEW Economic Sentiment Indicator (EU and Germany)
    Wednesday:
    • CPI
    • Thursday and Friday:
    • European Council Summit

    GBP

    GDP figure for August came in at -0.1% m/m vs flat as expected. Reading from previous month was revised up to 0.4% m/m which pushed 3m/3m figure to 0.3% vs 0.1% as expected. According to the latest reading UK will most likely avoid technical recession, but Q3 outlook is not rosy. Manufacturing and industrial production data dropped from the previous month and came in weaker than expected at -0.7% m/m vs 0.2% m/m as expected and -0.6% m/m vs 0.1% m/m as expected respectively. Construction output was a bright spot coming in at 0.2% m/m vs -0.4% m/m as expected. Trade balance data showed a deficit of -£9.8bn vs -£10bn as expected with imports increasing by 0.1% m/m due to Brexit stockpiling while exports fell -0.5% m/m. Markets were not moved by the data as Brexit developments continue to drive the pound.

    The UK government plans to challenge Parliament's effort to block a no-deal exit with the Supreme Court. PM Johnson will have to make a deal by October 19, otherwise he would have to ask EU for an extension of Brexit by January 31 according to the newly created parliament bill. Government stance is still that UK will leave EU on October 31. The risk of no deal has been postponed but it still lingers. Parliament is currently suspended until the Queen delivers her speech on Monday. Talks between PM Johnson and Irish PM Leo Varadkar were on the positive side with comments such as that they “see a pathway to a possible deal”. Markets accepted it and pushed GBPUSD some 250 pips in about 3 hours of trading. Overall the optimism in the markets is elevated as more and more financial institutions go bullish on GBP.

    This week we will have employment, inflation and consumption data but all of that will be topped by the approaching deadline date for requesting an extension regarding the Brexit date.

    Important news for GBP:

    Tuesday:
    • Average Weekly Earnings
    • Unemployment Rate
    Wednesday:
    • CPI
    Thursday:
    • Retail Sales

    AUD

    Caixin services PMI for September came in at 51.3 vs 52 as expected thus making composite at 51.9 vs 51.6 the previous month due to strengthened growth in the manufacturing sector. New business sub index rose to the highest reading since the beginning of 2018 which reflects a stable demand in services sector. Employment sub index also rose on the back of rise in new orders.

    This week we will have RBA minutes from the latest meeting as well as employment data from Australia and trade balance, inflation, consumption and industrial data capped with Q3 GDP reading from China.

    Important news for AUD:

    Monday:
    • Trade Balance (China)
    • Exports (China)
    • Imports (China)
    Tuesday:
    • RBA Meeting Minutes
    • CPI (China)
    • PPI (China)
    Thursday:
    • Employment Change
    • Unemployment Rate
    Friday:
    • GDP (China)
    • Retail Sales (China)
    • Industrial Production (China)

    NZD

    Electronic card retail sales, precursor for the retail sales reading as it attributes with up to 70% to retail sales, in September came in weaker than expected. Readings showed 0.4% m/m and 0.3% y/y vs 0.5% expected in both readings. Manufacturing PMI came in at 48.4, same as the previous month for the third consecutive month of contraction. New orders sub index returned to expansion with 50.1 but due to the weak readings in previous months it pulled production down to 46.2 which is the lowest reading since April of 2012.

    This week we will have bi-monthly GDT auction as well as inflation data for Q3.

    Important news for NZD:

    Tuesday:
    • GDT Price Index
    • CPI

    CAD

    The September employment report smashed all expectations. Employment change came in at 53.7k vs 7.5k as expected, the unemployment rate dropped to 5.5% vs 5.7% as expected and hourly wages jumped to 4.3% vs 3.8% the previous month. All the important categories handily beat the expectations and as icing on the cake full time jobs rose by 70k. This very strong report should drop rate cut expectations for the end of month to 0 and keep CAD supported during the week. Housing starts in September came in line with expectations at 221.2k. Building permits surprised to the upside with a huge beat coming in at 6.1% vs 1% as expected.

    This week we will have inflation data and data on manufacturing sales.

    Important news for CAD:

    Wednesday:
    • CPI
    Thursday:
    • Manufacturing Sales

    JPY

    Wages keep being negative, although they improved from the previous month. They came in as expected in August, labour cash earnings at -0.2% y/y and real cash earnings at -0.6% y/y. With absence of a wage rise, inflation will stay low and with a new October sales tax hike it will have a detrimental effect on retail sales readings. Household spending for the same month came in at 1% y/y vs -1% y/y as expected, for the ninth month of y/y gains, reflecting potentially increased spending due to the sales tax hike. Spending on food, furniture, household utensils, and clothing and footwear were higher according to the report. Core machinery orders, reading that is a good indicator of capex for 6 to 9 months in the future, in August came in at -2.4% m/m vs -1% m/m as expected and -14.5% y/y vs -8.4% y/y as expected for the biggest drop in almost 10 years.

    This week we will have final industrial production reading for August and national inflation rate for September.

    Important news for JPY:

    Tuesday:
    • Industrial Production
    Friday:
    • CPI

    CHF

    The unemployment rate in September stayed at 2.1% as previously. One of the lowest unemployment rates in the world is still not contributing to the rise in inflation, so talks about further easing measures from SNB are becoming louder.

    This week we will have trade balance data.

    Important news for CHF:

    Thursday:
    • Trade Balance
    • Exports
    • Imports
     
  6. katetrades

    katetrades Master Trader

    2,354
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    84
    Forex Major Currencies Outlook (Oct 21– Oct 25)

    ECB interest rate decision and preliminary PMIs along with durable goods from US will be the highlights of the low volume week in terms of the economic data.

    USD

    Advanced retail sales in September came in at -0.3% m/m vs 0.3% m/m as expected. Previous month’s data was revised up to 0.6% m/m and it is the only bright spot in the report. Control group came in flat vs 0.3% m/m as expected. The report shows the first drop in retail sales in seven months. Since the US consumer is the main driver of the US economy this will be a blow. Projections for Q3 GDP by Atlanta Fed have been downgraded to 1.7% and it will add more pressure on the Fed to act at their October meeting. Housing starts came in at 1256k vs 1320k as expected, they are down on the month -9.4% m/m. Building permits came in at 1.387m vs 1.35m as expected, down from the previous month but better than expected.

    This week we will have housing and durable goods data.

    Important news for USD:

    Tuesday:
    • Existing Home Sales
    Thursday:
    • New Home Sales
    • Durable Goods

    EUR

    Industrial production in August came in at 0.4% m/m vs 0.3% m/m as expected on the back of stronger than expected reading from Germany. However, the yearly reading continued to deteriorate coming in at -2.8% y/y vs -2.5% y/y as expected and down from -2.1% y/y the previous month. German ZEW survey of current situation in October came in at -25.3 vs -23.6 as expected. The expectations component came in better than expected at -22.8 vs -26.4 although still at the lowest level since 2010. The data continue to paint a grim picture of German economy that is headed toward the recession. Final CPI for September came in at 0.8% y/y vs 0.9% y/y as preliminary reported with core CPI stayed at 1% y/y as preliminary reading showed.

    This week we will have preliminary consumer confidence and PMI readings for October. We will also get the final ECB monetary policy press conference with Mario Draghi as governor. He will be succeeded in November by Christine Lagarde. No policy changes are expected.

    Important news for EUR:

    Wednesday:
    • Consumer Confidence Index
    Thursday:
    • Markit Manufacturing PMI (EU, Germany, France)
    • Markit Services PMI (EU, Germany, France)
    • Markit Composite PMI (EU, Germany, France)
    • ECB Interest Rate Decision
    • ECB Monetary Policy Press Conference
    Friday:
    • Ifo Business Climate (Germany)

    GBP

    August employment report came on the weaker side with employment change showing a decline of 56k while the expectations were for the rise of 26k. This has nudged the unemployment rate to tick higher at 3.9% vs 3.8% previously. In addition, the average weekly earnings have dropped to 3.8% 3m/y from 4% 3m/y the previous month but they are still holding very strong. CPI for September came in at 0.1% m/m vs 0.2% m/m as expected and 1.7% y/y vs 1.8% y/y as expected. Motor fuel and second-hand car prices fell while furniture and household appliances held headline inflation number. Core CPI came in at 1.7% y/y as expected and up from 1.5% y/y the previous month, a welcoming sign. Retail sales came in flat vs -0.2% m/m as expected and 3.1% y/y vs 2.6% the previous month. A better than expected result was achieved on the back of rising sales in food stores but sales in department stores continued their decline according to ONS. It pushed retail sales in Q3 up 0.6%.

    UK and EU have struck a Brexit deal. The deal avoids the border on Emerald island and puts it in the Irish sea, thus making a customs border between Northern Ireland and UK. The Parliament voted on Saturday in favour of Letwin amendment thus forcing Johnson to seek extension with EU before October 31. The letter to EU will be sent on Monday and Withdrawal Bill will be presented for voting on Tuesday.

    AUD

    The week of big releases from China started with September’s trade balance data which showed a rise in surplus to $36.65bn vs $34.75bn as expected. However, the reading also showed that both exports and imports fell more than expected, with the former falling -3.2% y/y vs -2.6% y/y as expected and latter falling -8.5% y/y vs -6% y/y as expected. A big drop in imports indicates slowing domestic demand which will have a devastating impact on exporting countries around the Globe while adding to the existing slowdown. Exports to US are down 10.7% y/y while imports from the US are down enormous 26.4% y/y.

    Chinese CPI for September came in at 3% y/y vs 2.9% y/y as expected. This is the fastest rise in 6 years and it is led by food inflation which rose 11.2% y/y. Swine flu has cut swine population in about half thus creating record high for pork prices which rose amazing 69.3% y/y. PPI fell -1.2% m/m vs -0.8% m/m as expected for the sharpest decline in more than 3 years which will reflect badly on corporate profits.

    Chinese Q3 GDP came in at 6% y/y vs 6.1% y/y as expected and down from 6.2% y/y the previous quarter. The reading shows the slowest GDP rise in almost 30 years, but taking into account the size of the economy this rate is still impressive. Industrial production in September came in at 5.8% y/y vs 4.9% y/y and such a huge beat will cover up any disappointment due to fall in GDP. Retail sales came in at 7.8% y/y as expected and up from 7.5% y/y the previous month.

    RBA meeting minutes showed readiness of the board to add additional easing if needed to support growth and jobs. It is reasonable to expect prolonged periods of lower rates. There are no signs yet that household consumption is responding to rate cuts and tax rebates. Leading indicators point to slowdown in the job’s growth in the upcoming quarter. US-China trade war has been deemed as significant downside risk to the global outlook. RBA continued with its dovish stance in hopes of pushing AUD lower to help Australian economy and markets expect one more rate cut by the end of the year.

    Employment report for the month of September showed a small miss in employment change 14.7k vs 15k as expected but the unemployment rate has ticked down to 5.2% from 5.3%. Participation rate also slipped to 66.1% from 66.2% which tampers with the drop in the unemployment rate. Additional bright spot in the report is rise in the full-time employment of 26.2k. RBA will be happy with this report and it will diminish the chances of a rate cut in the near future.

    NZD

    CPI for the Q3 came in at 0.7% q/q vs 0.6% q/q as expected and 1.5% y/y vs 1.4% y/y as expected. Better than expected reading propelled NZD higher however, CPI was 1.7% y/y the previous quarter and deputy governor Bascand pushed it lower hinting that there was a reasonable chance of another rate cut to stimulate growth and inflation. Markets are pricing a 25bp cut at the next month’s RBNZ meeting. GDT price index came in at 0.5% thus making it a third straight auction of rising prices.

    This week we will have trade balance data.

    Important news for NZD:

    Tuesday:
    • Trade Balance
    • Exports
    • Imports

    CAD

    September CPI came in at 1.9% y/y same as previous month but expectations were for a rise of 2.1% y/y. The main drag on CPI were gasoline prices which fell -10.4% y/y. Median and Trim core numbers came within expectations with former at 2.2% y/y and latter at 2.1% y/y while Common CPI nudged higher to 1.9% y/y vs 1.8% y/y as expected. With no changes in core inflation and it being close to the BOC target it only lowered further already low chances of additional easing. Manufacturing sales for August came in at 0.8% m/m vs 0.7% m/m as expected and up from -1.3% m/m the previous month thanks to the rise of motor vehicle sales.

    This week we will have data on consumption and wholesale with federal elections being held on Monday.

    Important news for CAD:

    Monday:
    • Federal Election
    Tuesday:
    • Retail Sales
    Wednesday:
    • Wholesale Trade

    JPY

    Final industrial production reading for August came in line with preliminary readings of -1.2% m/m and -4.7% y/y painting the weakness in factory activity for Q3 which will have a detrimental effect on Japanese economy. National CPI in September continued to decline coming in as expected at 0.2% y/y but down from 0.3% y/y the previous month. This is a new 30 month low. CPI excluding fresh food came in at 0.3% y/y as expected but down from 0.5% y/y the previous month. These are very troubling data, pushing inflation almost into negative territory, deflation. BOJ hints that it will act and provide more easing but they have not yet taken that step. Possibly they will provide further easing at their meeting at the end of the month.

    This week we will have trade balance data with government emphasizing the fear of falling exports and preliminary October PMI figures.

    Important news for JPY:

    Monday:
    • Trade Balance
    • Exports
    • Imports
    Thursday:
    • Markit Manufacturing PMI
    • Markit Services PMI

    CHF

    Trade balance in September rebounded to CHF4.02 bn vs CHF1.72 bn the previous month. Exports have risen 2.5% m/m from -3.9% m/m the previous month while the imports dropped -1.3% m/m and they were at 1% m/m the previous month.
     
  7. katetrades

    katetrades Master Trader

    2,354
    7
    84
    Forex Major Currencies Outlook (Oct 28 – Nov 1)

    BOJ and BOC meetings, preliminary Q3 GDP readings from US and EU, NFP and Q3 CPI from Australia make the line-up for this jam-packed week headlined by Fed’s interest rate decision.

    USD

    Durable goods in September came in at -1.1% m/m vs -0.7% m/m as expected and down from 0.5% m/m the previous month. Core component came in at -0.5% m/m vs -0.1% m/m with previous month’s reading being revised down to -0.6% m/m. An additional weak report from the US manufacturing sector and US economy as a whole. Fed will be pressed even more to react at their next week’s meeting after the incoming slew of weak data. They have already increased their injections into the repo market.

    This week we will have housing data, preliminary Q3 GDP data, ISM manufacturing PMI and Fed’s preferred PCE inflation data. Fed’s interest rate decision will be the highlight of the week. Opinions are still polarized but most analyst expect a rate cut, especially after weaker incoming data. In the case of a cut many analysts think that it will be the last one for the year. NFP will be an additional highlight of the week and it is expected to come out around 172k with the unemployment rate staying at 3.5% and average hourly earnings climbing to 3.4%.

    Important news for USD:

    Tuesday:
    • Pending Home Sales
    Wednesday:
    • GDP
    • Fed Interest Rate Decision
    • FOMC Press Conference
    Thursday:
    • PCE
    • Personal Spending
    Friday:
    • NFP
    • Unemployment Rate
    • Average Hourly Earnings
    • ISM Manufacturing PMI

    EUR

    Preliminary manufacturing PMI in October came in at 45.7 same as the previous month vs 46 as expected. French PMI data were published first and EUR rallied on the back of better than expected results showing expansion (50.5 for manufacturing and 52.9 for services). Afterwards German PMI data were published and it came worse than expected (41.7 for manufacturing and 51.2 for services), showing spill overs from the recession in manufacturing sector hitting German services sector which pushed EUR back down. EU services PMI came in at 51.8 vs 51.9 as expected and it helped keep composite PMI in the expansion territory, but just barely with 50.1 pushing composite to 50.2. Start of the Q4 continues the weak path of Q3.

    ECB has left the key interest rate unchanged at -0.50% as widely expected. Rates will be at present or even lower levels until inflation outlook converges to a target level of 2%. Bond purchases will start from November 1 and will continue for as long as necessary. They will be stopped shortly before raising rates. ECB Governor Draghi stated in his last press conference on this post that risks to the economic outlook remain on the downside. He added that the latest data show further weakening of the economy as well as that negative rates have positive impact on the economy. Overall the markets interpreted this as possibility of further rate cuts and pushed the EUR down. ECB results of professional forecasters show downgrades in inflation and GDP. Inflation is now seen at 1.2% in 2019 vs 1.3% previously while GDP for the same year has been downgraded to 1.1% vs 1.2% previously.

    This week we will have data on business and final consumer confidence, preliminary Q3 GDP reading, inflation and employment data.

    Important news for EUR:

    Wednesday:
    • Economic Sentiment Index
    • Business Climate Indicator
    • Consumer Confidence Index
    Thursday:
    • GDP
    • CPI
    • Unemployment Rate

    GBP

    Withdrawal Act Bill was passed in principle in Parliament but MPs voted down the motion that would expedite the process needed to implement the new agreement. Now the ball is in the EU’s court as extension date is expected. The most likely date mentioned is January 31, 2020 which will open up the possibility of General Election in December. However, France is taking the firm stance that the extension period should be shorter. PM Johnson is pushing for a General Election because, according to the recent polls, Tories enjoy support from 37% of voters. Probability of a no-deal Brexit is diminishing but Labour leader Corbyn insists that he will not support election until possibility of no-deal is completely removed. According to Fixed Term Parliament Act a 2/3 majority of the House of Commons is required to support an election.

    This week we will have continuation of Brexit saga, we will see if the extension is granted and for how long. October 31 is the date PM Johnson stated as the day UK will leave EU with or without the deal.

    AUD

    In the absence of important economic news coming from Australia, AUD has had strong beginning of the week on the back of risk appetite only to fall back down at the tail end of the week with AUDUSD finishing the week where it started with a 70 pip range.

    This week we will have Q3 inflation data from Australia as well as official PMIs and Caixin manufacturing PMI from China.

    Important news for AUD:

    Wednesday:
    • CPI
    Thursday:
    • Manufacturing PMI (China)
    • Non-Manufacturing PMI (China)
    Friday:
    • Caixin Manufacturing PMI (China)

    NZD

    Trade balance data in September came in at -NZD1242m vs -NZD1400m as expected. The lowering of trade deficit was achieved with higher exports which is always a good sign. Exports came in at NZD4.47 bn vs NZD4.30 bn as expected while imports came in line with NZD5.7bn.

    This week we will have data on building consents and ANZ business confidence, a very important indicator. RBNZ is monitoring this indicator and until now it has been relentlessly falling. Continuation of a downtrend, in combination with other weaker incoming data, may prompt RBNZ to react and cut at their next meeting.

    Important news for NZD:

    Wednesday:
    • Building Consents
    Thursday:
    • ANZ Business Confidence

    CAD

    Liberal party of PM Trudeau has won 157 seats while 170 seats is necessary for majority, therefore Trudeau will have to form a minority government. The markets were prepared for this outcome and it will not have a major impact on CAD.

    Retail sales in August came in at -0.1% m/m vs 0.4% m/m as expected with prior month’s reading being revised up to 0.6% m/m. New car dealers were the best category while the biggest drag were clothing and food and beverage stores. Wholesale trade sales came in at -1.2% m/m vs 0.3% m/m as expected and down from downward revised 1.4% the previous month. Sales declined in 5 out of 7 sectors. Biggest contributors to the negative reading were declines in private and household goods as well as declines in machinery, equipment and supplies. Inventories showed the first decline in 12 months.

    This week we will have monthly GDP for August and BOC interest rate decision. Although retail sales came in weaker than expected, data from Canada has been good and there will be no change in interest rate, however change in tone is possible so the monetary policy report will be closely followed.

    Important news for CAD:

    Wednesday:
    • BOC Interest Rate Decision
    • BOC Monetary Policy Report
    • BOC Monetary Policy Report Press Conference
    Thursday:
    • GDP

    JPY

    Trade balance data in September came in weaker than expected at -JPY123 bn vs JPY54 bn. Exports surprised to the downside coming in at -5.2% y/y vs -3.6% y/y as expected. On the other hand, imports came in at -1.5% y/y as expected but still negative on the year. Exports in US and Asia showed the biggest drops, coming in at -7.9% and -7.8% respectively. Preliminary manufacturing PMI for the month of October came in at 48.5 vs 48.9 the previous month. Deterioration of conditions in the manufacturing sector continues with the worst reading in over 3 years. New orders and output categories continued to decline with the fastest fall in new orders since 2012. Services PMI came in above 50 at 50.3 down from 52.8 the previous month and it put the composite reading into contraction territory at 49.8. Credit rate agency Moody’s affirmed Japan’s A1 credit rate stating that stable outlook is maintained.

    This week we will have inflation from the Tokyo area, consumption, employment and industrial production data. BOJ will meet this week to discuss monetary policy and produce an outlook report. A weak PMI reading may push BOJ to further ease monetary policy and revise their economic forecast down.

    Important news for JPY:

    Tuesday:
    • Tokyo CPI
    Wednesday:
    • Retail Sales
    Thursday:
    • Industrial Production
    • BOJ Interest Rate Decision
    • BOJ Monetary Policy Report
    • BOJ Outlook Report
    Friday:
    • Unemployment Rate
    • Markit Manufacturing PMI

    CHF

    Uneventful week saw the Swissie weaken across the markets. Weaker CHF will be beneficial for Swiss economy.

    This week we will have speech from Chairman Jordan, inflation and consumption data.

    Important news for CHF:

    Thursday:
    • SNB Chairman Jordan Speech
    Friday:
    • CPI
    • Retail Sales
     
  8. TradersWay

    TradersWay Active Trader

    742
    0
    37
    Forex Major Currencies Outlook (Nov 4 – Nov 8)

    USD


    The US Congressional Budget Office lowered its estimates of the US fiscal deficit for the 2019 fiscal year. They now see the deficit at $897 billion compared to the $981 billion deficit in the April estimate. That's 4.2% of GDP instead of 4.6%. The cost of government shutdown has been projected at $11bn.

    FED has left rates unchanged at 2.25-2.50% as expected. Vote on keeping the rates on hold was unanimous. They stated they will be “patient” on future moves and that they are prepared to adjust any details for completing balance sheet normalization in light of economic and financial developments. Economic activity rising at “solid” rate (previously it was “strong” rate, downgrade from previous statement). Dovish statement sent USD quickly 50 pips down against the majors. FED moved from hawkish to neutral stance effectively halting any talks of raising rates.

    FED Chairman Powell stated in press conference that growth has slowed in foreign economies and noted the effects of the shutdown. He explained that FED has seen crosscurrents and conflicting signals so they decided for the “patient, wait and see approach”. He is satisfied with progress in balance sheet discussions but no exact number was stated since according to him FED is not at that point yet. FED thinks that the outlook is favourable in general. Continuation of the dovish statement sent stocks to the new highs.

    ADP employment change came in at 213k vs 175k as expected with 145k in services and 68k in the goods-producing sector. Job growth was seen in almost every industry with manufacturing adding the most jobs in more than four years. NFP headline number came in at 304k vs 165k as expected for a 100th consecutive month of job gains. Average hourly earnings came in at 3.2% y/y as expected and this is where the good news end since they came 0.1% m/m vs 0.3% m/m as expected. Previous NFP number was revised to the downside from 312k to 220k for a full 90k jobs.The unemployment rate rose to 4% due to the increase in participation rate to 63.2% vs 63% as expected. Underemployment rate rose to 8.1% vs 7.6% the previous month. Overall it is a mixed report that will send USD lower in the first few hours after its announcement.

    This week we will have PMI numbers and due to shutdown delayed factory orders data as well as trade balance data.

    Important news for USD:

    Monday:
    • Factory Orders
    Tuesday:
    • Trade Balance
    • Exports
    • Imports
    • Markit Services PMI
    • Markit Composite PMI
    • ISM Non-Manufacturing PMI

    EUR

    Consumer confidence for the month of January came in at -7.9 as expected while Economic, Industrial and Service confidence data have all decreased showing the declining confidence in Eurozone economy as a whole. German economy ministry has cut German 2019 growth forecast to 1% from 1.8% citing external risks, Brexit, trade conflicts and external tax environment, as main reasons for lower number. German retail sales for the month of December were abysmal coming in at -4.3% m/m vs 0.6% m/m as expected.

    Eurozone preliminary Q4 GDP came in at 0.2% q/q and 1.2% y/y as expected with the unemployment rate coming at 7.9% also as expected. Troubling sign is that preliminary Q4 GDP from Italy came in at -0.2% q/q vs -0.1% q/q thus showing negative GDP for the second consecutive quarter indicating that Italy slips into recession. Italy’s DiMaio has said that this contraction shows failure of previous governments. PM Conte said that recession is only temporary due to US-China trade war and that economy will recover in 2019.

    Final manufacturing PMI for the Eurozone came in at 50.5 as expected. Italy’s PMI came in at 47.8 vs 48.8 preliminary showing deeper plunge of Italian economy. Preliminary CPI for the month of January came in at 1.4% as expected with prior reading of 1.6% y/y. Core CPI came in at 1.1% vs 1% as expected. Rise in the core reading is encouraging, showing that inflationary pressures are still present.

    This week we will have final PMI data as well as consumption data from the EU along with industrial and trade balance data from Germany.

    Important news for EUR:

    Tuesday:
    • Markit Services PMI (Germany, France, EU)
    • Markit Composite PMI (German, France, EU)
    • Retail Sales
    Wednesday:
    • Factory Orders (Germany)
    Thursday:
    • Industrial Production (Germany)
    Friday:
    • Trade Balance (Germany)
    • Exports (Germany)
    • Imports (Germany)

    GBP

    Voting in Parliament ended with a mandate for PM May to return to Brussels to renegotiate the so-called “backstop” that aims to prevent a hard border between Northern Ireland and the independent Irish Republic. The EU was strict that it will not change the deal currently on the table. Manufacturing PMI came in at 52.8 vs 53.5 as expected. Purchase of stock volumes has reached record high of 56.3 signalling stockpiling ahead of Brexit number and without it the PMI number would be even weaker.

    This week we will have BOE interest rate decision followed by minutes from the MPC meeting and speech by governor Carney. It is expected that rate will stay unchanged so greater importance will be given to minutes and speech, that is where markets will look for more guidance. Additionally, every news regarding Brexit will be closely monitored.

    Important news for GBP:

    Monday:
    • Markit/CIPS Construction PMI
    Tuesday:
    • Markit/CIPS Services PMI
    Thursday:
    • BOE Interest Rate Decision
    • BOE MPC Meeting Minutes
    • BOE Governor Carney Speech

    AUD

    China’s industrial profits for the month of December came in at -1.9% y/y vs -1.8% y/y the previous month. Another data pointing to the slowdown in Chinese economy that will impact broader markets. Non-manufacturing PMI for the month of January came in at 54.7 vs 53.8 as expected. Composite PMI came in at 53.2 vs 52.6 as expected. Manufacturing PMI came in at 49.5 vs 49.3 as expected for the second consecutive month in contraction. Caixin Manufacturing PMI came in at 48.3 vs 49.6 as expected. Falling deeper into contraction territory with dropping output subindex signalling softer demand. New orders fell for the second consecutive month at a faster pace.

    Headline inflation numbers came in at 0.5% q/q vs 0.4% q/q as expected and 1.8% y/y vs 1.7% y/y as expected with prior reading showing 1.9% y/y. Trimmed mean, which is a core measure came in at 0.4% q/q and 1.8% y/y in line with the expectations. AUD was sent higher immediately on better than expected headline number and rise in iron ore prices.

    This week centre stage will be taken by RBA and their interest rate decision followed by rate statement. Rate is expected to stay the same so all eyes will be on the accompanying statement. Additionally, we will have data on housing, trade balance and consumption. We will also get monetary policy statement.

    Important news for AUD:

    Monday:
    • Building Approvals
    Tuesday:
    • RBA Interest Rate Decision
    • RBA Rate Statement
    • Trade Balance
    • Exports
    • Imports
    • Retail Sales
    Wednesday:
    • RBA Governor Lowe Speech
    Friday:
    • RBA Monetary Policy Statement

    NZD

    Trade balance data for the month of December came in at NZD264m vs NZD150m as expected with previous month showing deficit of NZD861m. Exports rose NZD5.4bn for a beat vs NZD5bn as expected. Imports came in lower than expected at NZD5.22bn. Exports have been growing for 5 consecutive months and this is the strongest reading since December 2017. However, although markets have embraced these numbers and pushed NZD higher annual trade deficit for 2018 is deficit of NZD5.9bn. S&P leaves NZ rating unchanged at AA but raises outlook to positive.

    This week we will have GDT auction as well as employment data.

    Important news for NZD:

    Wednesday:
    • GDT Price Index
    • Employment Change
    • Unemployment Rate
    • Participation Rate

    CAD

    November GDP figures came in at -0.1% m/m as expected and 1.7% y/y vs 1.6% y/y as expected. Raw materials price index came in at 3.8% m/m. Construction activity was down for the sixth consecutive month and came in at -0.3%. Along with the weaker retail sales it represents the biggest concern for Canadian economy. Manufacturing PMI came in at 53.0 vs 53.6 as expected. Wrong direction for the manufacturing but at least it is in the positives unlike with some European countries.

    This week we will have data on trade balance and employment as well as Ivey PMI.

    Important news for CAD:

    Tuesday:
    • Trade Balance
    • Exports
    • Imports
    Wednesday:
    • Ivey PMI
    Friday:
    • Employment Change
    • Unemployment Rate
    • Participation Rate

    JPY

    Meeting minutes for the December BOJ meeting saw members stating that it is appropriate to continue easing persistently and that CPI will likely gradually increase toward the target of 2%. Overall assessment was that "The Japanese economy is recovering at a moderate pace." Japan’s Cabinet Office has cut its evaluation of exports for the month of January citing the trade war between US and China as a main culprit.

    Retail sales for the month of December came in at 0.9% m/m vs 0.4% m/m as expected and 1.3% y/y vs 1% y/y as expected. Much needed beats on retail sales data. If the effects spill over to the inflation it can push it up in the right direction, towards the magical 2% level. Preliminary Industrial production reading for the month of January came in at -0.1% m/m vs -0.5% m/m as expected. Outlook is for it to rise to 2.6% m/m in February. Unemployment rate came in at 2.4% vs 2.5% as expected with Job-to-applicant ratio coming in at 1.63 as expected.
     
  9. katetrades

    katetrades Master Trader

    2,354
    7
    84
    Forex Major Currencies Outlook (Nov 11– Nov 15)

    RBNZ interest rate decision, preliminary Q3 GDP readings from UK and Japan, second Q3 GDP reading from Europe, consumption data from US and Australian employment data keep the week stacked with news events.

    USD

    ISM non-manufacturing index for October came in at 54.7 vs 53.5 as expected. A decent rebound in the reading from the 52.6 the previous month. New orders and employment indices showed a significant rebound and with plunging inventories brought strength to the report. Trade balance in September came in at -$52.5bn as expected, an improvement from -$55bn the previous month. Exports were down -0.9% while imports were up -1.7%. Trade deficit with China narrowed while US now has trade surplus with OPEC, thus making US less reliant on OPEC oil.

    This week we will have inflation, consumption and industrial production data.

    Important news for USD:

    Wednesday:
    • CPI
    Friday:
    • Retail Sales
    • Industrial Production

    EUR


    Final manufacturing PMI came in at 45.9 vs 45.7 preliminary. The small improvement was made by all major economies (Germany and France). Although every improvement is a welcoming sign it is still far away from the 50 expansion level. PMI is deep in the contraction territory, especially in Germany where it is at 42.1. Final services PMI came in at 52.2 vs 51.8 preliminary pushing the composite up to 50.6 vs 50.2 preliminary. Retail sales in October dropped to 0.1% m/m from 0.3% m/m previously but still beat the expectations of being flat pushing them to 3.1% y/y vs 2.4% y/y as expected.

    This week we will have data on industrial production, second reading of Q3 GDP, final inflation data for October as well as trade balance data.

    Important news for EUR:

    Tuesday:
    • ZEW Economic Sentiment Situation (EU and Germany)
    Wednesday:
    • Industrial Production
    Thursday:
    • GDP
    Friday:
    • CPI
    • Trade Balance

    GBP

    BOE has left the bank rate unchanged at 0.75% as widely expected but vote number showed that 2 members voted for a rate cut. Their reasoning for the rate cut proposal was that labour market conditions are turning and that global risks are prominent to the downside. Inflation expectations have been slashed to 1.51% in one year, 2.03% in two years and 2.25% in three years. Unemployment is projected to tick up to 3.8% in two years. Brexit uncertainties are weighing particularly heavily on business investment. This is the last BOE meeting headed by Carney as Governor. His replacement is still not announced. BOE is following the suit of other major central banks and takes dovish stance in the wake of ongoing global slowdown.

    Election campaign is under way. Current polls show Conservatives at 36% and Labour at 25% which means that an absolute majority by PM Johnson is out of reach.

    This week we will have preliminary Q3 GDP reading, employment, inflation and consumption data.

    Important news for GBP:

    Monday:
    • GDP
    • Trade Balance
    • Industrial Production
    • Manufacturing Production
    • Construction Output
    • Business Investment
    Tuesday:
    • Employment Change
    • Unemployment Rate
    • Average Weekly Earnings
    Wednesday:
    • CPI
    Thursday:
    • Retail Sales

    AUD


    Retail sales in September came in at 0.2% vs 0.4% as expected. The food category was the biggest contributor with 0.1% while apparel and department stores were the biggest drags coming in respectively at -0.5% and -0.2%. Trade balance in September came in at AUD7180m vs AUD5050m as expected on the back of rising imports to 3% m/m from -3% the previous month. Imports also rose 3% m/m thus making the trade surplus rise with both rising imports and rising exports which is the best possible result.

    RBA held the cash rate at 0.75% as widely expected. They expect underlying inflation to be close to 2% in 2020 and little above this in 2021. The central scenario is for economy to grow at 2.25% this year and then for growth to rise up to around 3% in 2021. Global risks are tilted to the downside. Unemployment is expected to drop below 5% in 2021. Statement ends with: "The easing of monetary policy since June is supporting employment and income growth in Australia and a return of inflation to the medium-term target range" which suggests a pause in rate cuts. RBA said that they are prepared to ease further but for now it seems that they are satisfied with the effects of rate cuts.

    Chinese trade balance data in October came in at $42.81bn vs $40.1bn as expected. The growth of trade surplus was achieved by smaller than expected drop in both exports and imports coming in at -0.9% y/y and -6.4% y/y respectively. Surplus with US from the start of the year is at $247.7bn. China continues to not be as affected by trade war with US as the surplus shows, however the drop in imports is concerning for every export-oriented nation, Germany primarily.

    This week we will have employment data from Australia and consumption, employment and industrial production data from China.

    Important news for AUD:

    Thursday:
    • Employment Change
    • Unemployment Rate
    • Retail Sales (China)
    • Industrial Production (China)
    • Unemployment Rate (China)

    NZD


    The unemployment rate in Q3 was higher than expected coming in at 4.2% vs 4.1% and up a lot from 3.9% in the previous quarter, although in line with Q1 numbers. Participation rate also went higher than expected to 70.4% from 70.2% in the previous quarter. Employment change came in as expected at 0.9% y/y but weaker than in the previous quarter when it was 1.4% y/y. Average hourly earnings disappointed coming in at 0.6% vs 1% as expected and 1.1% the previous quarter. The probability for a rate cut climbed to 60% after the report.

    This week we will have interest rate decision by RBNZ. Although the chances of a rate cut have increased after the jobs report, the decision is still not clear cut. We expect them to keep the rates at current levels for this year and act in February of 2020 when they will have more data to work with.

    Important news for NZD:

    Wednesday:
    • RBNZ Interest Rate Decision
    • RBNZ Monetary Policy Statement
    • RBNZ Press Conference

    CAD

    Trade balance in September came in at -CAD0.98 bn vs -CAD0.65 bn as expected. August reading was revised down to -CAD1.24 bn. Exports fell -1.3% with gold, oil and Canola leading the way while imports fell -1.7%. In addition, the surplus in trade with US has narrowed while the deficit in trade with China increased. BOC has announced that they expect a decline in exports in H2.

    Canadian net change in employment in October came in at -1.8k vs 15k as expected. Both the unemployment rate and the participation rate were unchanged and came in at 5.5% and 65.7% respectively. The fall in full time employment was -16.1k which makes this report on the soft side, adding some worries to BOC, however during past months Canadian job market was booming so we will see if this is a trend or one-of report.


    JPY

    Final services PMI for October came in at 49.7 vs 50.3 preliminary for the first drop below the 50 level in three years. This has also pushed composite reading down to 49.1 vs the 49.8 preliminary. The devastating typhoon pushed the index down, but questions arise such as whether the reading shows a spillover effect from the manufacturing sector as well as effect of October’s hike of sales tax. Labour cash earnings in September came in at 0.8% y/y vs 0.1% y/y as expected, up from -0.1% y/y the previous month which in combination with sales tax hike lead to household spending jumping to 9.5% y/y from 1% y/y the previous month.

    This week we will have BOJ summary or opinions, machinery orders data, final industrial production data and preliminary Q3 GDP data. GDP is expected to slow down due to a fall in net exports, but private consumption and capital investment are expected to keep it positive.

    Important news for JPY:

    Monday:
    • BOJ Summary of Opinions
    • Core Machinery Orders
    Thursday:
    • GDP
    Friday:
    • Industrial Production

    CHF

    The unemployment rate in October ticked up to 2.2% from 2.1% previously. CHF has lost the ground this week due to increased in risk appetite, produced by trade optimism, which saw it weaken against all pairs.
     
  10. katetrades

    katetrades Master Trader

    2,354
    7
    84
    Forex Major Currencies Outlook (Nov 18– Nov 22)

    FOMC minutes, preliminary PMI data from Europe and Japan as well as Canadian inflation and consumption data will mark the weak ahead of us.

    USD

    CPI for the month of October came in at 1.8% y/y vs 1.7% y/y. The energy contributed for more than a half of the increase while healthcare and food also contributed. On the other hand, motor vehicle prices and apparel were the biggest drag. Core CPI came in at 2.3% y/y vs 2.4% y/y as expected. Both real average weekly and hourly earnings came weaker than previous month at 0.9% y/y and 1.2% y/y respectively.

    Retail sales in October came in at 0.3% m/m vs 0.2% m/m as expected for a rebound from -0.3% m/m the previous month. Core retail sales came in as expected at 0.3% m/m. Home furnishings were the biggest drag followed by sales at food service and drinking places while online shopping and auto dealers contributed the most to the reading. US consumer starts the Q4 on an elevated note and with high consumer confidence it promises a healthy holiday shopping season (Black Friday and Christmas).

    This week we will have housing data and minutes from the last FOMC meeting.

    Important news for USD:

    Tuesday:
    • Building Permits
    • Housing Starts
    Wednesday:
    • FOMC Minutes
    Thursday:
    • Existing Home Sales

    EUR

    ZEW survey of the current situation in German economy came a bit better than the previous month at -24.7 vs -25.3, however big improvements were made in expectations category with German expectations coming in at -2.1 vs -13 as expected and up from -22.8 the previous month. EU expectations came in at -1 vs 23.5 the previous month. Although the readings are still in the negative and significant rebound in global economy is farfetched expectations paint a picture of optimism. Industrial production for September nudged up to -1.7% y/y vs -2.3% y/y and added more optimism regarding slow recovery. Final core CPI in October came in unchanged at 1.1% y/y.

    Preliminary German Q3 GDP came in at 0.1% q/q vs -0.1% q/q as expected. The surprisingly positive reading helped Germany avoid a technical recession in 2019. Second reading of EU Q3 GDP came in unchanged at 0.2% q/q but yearly figure was a bit stronger at 1.2% y/y vs 1.1% y/y preliminary.

    This week we will have preliminary November readings for consumer confidence and PMIs.

    Important news for EUR:

    Thursday:
    • Consumer Confidence Index
    Friday:
    • Markit Manufacturing PMI (EU, Germany, France)
    • Markit Services PMI (EU, Germany, France)
    • Markit Composite PMI (EU, Germany, France)

    GBP

    Preliminary Q3 GDP came in at 0.3% q/q vs 0.4% q/q as expected, up from -0.2% q/q in Q2. UK has managed to avoid a technical recession in 2019. Total business investment came in flat vs -0.5% q/q as expected while private consumption came in line with the expectations at 0.4% q/q. Manufacturing and industrial production came in weaker than expected with former coming in at -0.4% m/m vs -0.2% m/m and latter at -0.3% m/m vs -0.1% m/m. All of the data points to the economy that is just dragging along, still watching for clarifying signs regarding Brexit. GDP growth of 1% y/y is the lowest in almost a decade.

    Employment change in September came in at -58k vs -102k as expected, better than expected but the number of employees continues to drop and it is a biggest drop in 4 years. Average weekly earnings came in at 3.6% vs 3.8% 3m/y as expected, slowing down but still staying high. The claimant count, which is the number of people claiming unemployment benefits, rose to 33k, almost doubling from the previous month and reaching the highest level in two years. CPI for October came in at 1.5% y/y vs 1.6% y/y as expected and down from 1.7% y/y the previous month which is a new three-year low. Energy prices were the main drag on the reading. Core CPI held at 1.7% as expected. Retail sales came in at -0.1% m/m vs 0.2% m/m as expected. Jobs, inflation and consumption all show increasingly bad situation in UK’s economy which could push BOE more toward rate cuts in the future.

    Nigel Farage has stated in his campaign that his Brexit party will not contest the 317 seats Tory party won in 2017 and will fight Labour candidates in election. This will increase chances of Tory party to have the majority in the Parliament and GBP has risen on the comments. The Brexit party has also announced that it will step down from fighting for 43 non-Tory seats which additionally increases chances of Tory majority and GBPUSD really liked this news. Latest polls show a double-digit lead for the Tory party with some polls going even up to 14-point lead (42-28).

    AUD

    Chinese CPI in October came in at 3.8% y/y which is a 7-year high. The rise in food prices, mainly pork due to the swine flu epidemic, pushed inflation higher. PPI data continued their decline and came in at -1.6% y/y vs -1.2% y/y. The drop in PPI will make industrial profits suffer which in turn will have negative impact on the economy as a whole. Industrial production came in at 4.7% y/y vs 5.4% y/y as expected and 5.8% y/y the previous month. This is a substantial miss and shows the negative effects of the trade war on the external sector. Vehicles and smartphones recorded the biggest drops. Retail sales were also weaker than expected coming in at 7.2% vs 7.8%.

    Australian employment change came in -19k vs 15k as expected for a huge miss. This led to the unemployment rate rising to 5.3% vs 5.2% previously. RBA wants to push the unemployment rate down to 4.5% so this reading shows that not only are they far away from the desired level, but they are moving in the opposite direction. Full time employment change saw a loss of 10.3k. Participation rate dropped to 66% from 66.1% while chances for RBA cut in December rose.

    This week we will have minutes from the last RBA meeting.

    Important news for AUD:

    Tuesday:
    • RBA Meeting Minutes

    NZD

    As predicted in our last week’s article, RBNZ has left the cash rate on hold at 1%. This was seen as a surprise move by the markets, especially after inflation expectations data fell to 1.8% from 1.86% previously and NZD strengthened. RBNZ stated that they will continue monitoring economic developments and will act if required. Interest rates will remain at lower levels for a prolonged period of time and additional stimulus will be added if necessary. The weak NZD has helped offset the weaker global economic environment. Employment remains at around maximum sustainable level and inflation is within the target range, although it is below 2%. Governor Orr stated that the decision to leave the rate unchanged was unanimous and he expects thd economy to pick up the following year adding that current policy is very stimulatory.

    This week we will have bi-monthly GDT auction.

    Important news for NZD:

    Tuesday:
    • GDT Price Index

    CAD

    BOC governor Poloz stated that wage inflation is above 4% in most measures, pointing out the strong wage growth. This month has been tough on CAD so far with the currency dropping against USD in almost every session. Risk off flows have been hurting CAD pushing it down, although by the end of the week it seems that USDCAD stabilised on the back of optimism surrounding the USMCA deal.

    This week we will have manufacturing sales, inflation and consumption data.

    Important news for CAD:

    Tuesday:
    • Manufacturing Sales
    Wednesday:
    • CPI
    Friday:
    • Retail Sales

    JPY

    Core machinery orders, which are a good indicator for capex down the road (6 to 9 months), came in September at -2.9% m/m vs 0.9% m/m as expected and 5.1% y/y vs 8.1% y/y as expected. Preliminary Q3 GDP came in at 0.1% q/q vs 0.2% q/q as expected and down from 0.3% q/q the previous quarter. Private consumption came in at 0.4% q/q vs 0.6% q/q the previous quarter. Business spending came in at 0.9% q/q as expected and up from 0.2% q/q the previous quarter for a positive note in the weak reading. Net exports were a drag on the reading with 0.2pp due to exports falling 0.7% q/q. Final industrial production in September has seen improvement since preliminary readings and came in at 1.7% m/m and 1.3% y/y.

    This week we will have trade balance and national inflation data as well as preliminary PMIs.

    Important news for JPY:

    Wednesday:
    • Trade Balance
    • Exports
    • Imports
    Friday:
    • CPI
    • Markit Manufacturing PMI
    • Markit Services PMI
    • Markit Composite PMI

    CHF

    SNB chairman Jordan stated that CHF is highly valued and reiterated readiness to intervene in the markets if necessary. The danger of deteriorating international situation remains large. SNB Maechler added that SNB wants to limit the burden of negative rates for banks.

    This week we will have trade balance data.

    Important news for CHF:

    Tuesday:
    • Trade Balance
    • Exports
    • Imports
     

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