Daily Morning Market Overview by Comparic Staff

[ComparicCom]

On Tuesday there will be 3 things worth watching – German IfFO Business Climate, US Housing Price Index and Consumer Confidence. More details in our Market Overview.

What should we expect?

First data came up just few minutes ago. German Busines Climate published by IFO was better than expected – 110.5 pts vs 109.5 expected, prior 109.5.

We have to wait few hours more for S&P Case-Shiller publishing Housing Price Index. So far it was very volatile on monthly basis but YoY it was more stable. Analytics expect slowing down of the housing market what can weaken USD.

The last important information – US Consumer Confidence – will show up an hour later. Despite index is far from rejection levels more and more data indicates that it will be slowing down. The first sign of that should be seen today – according to market sentiment it will slow down from 104.1 pts to 101.0 pts.

Poloz in front of House of Commons

Yesterday in the evening we were following Stephen Poloz (gov of BOC) testimony in front of House of commons Financial Committee. The most important thing he said and what caused CAD movement:

‘We have to consider risk connected with longer waiting against cost of doing something faster. Our best plan for the moment is to wait another 18 months or so’.

Markets treated these words as a lack of determination to cut rates in the next 18 months. As a result USDCAD moved down over 100 pips in the end of the session. When next session started bulls managed to reject almost all this movement.

On the D1 there is still a fight with upper bound of the patter. Close above it will let to break from narrow area which created since May.

 

[ComparicCom]

Late on Wednesday markets got to know New Zealand’s trade balance. Early in the morning Haruhiko Kuroda was speaking about Japanese monetary policy. Today there is only some interesting data in the calendar, more details below!

New Zealand with negative trade balance

Trade deficit in New Zealand is a little higher and now is $3.4B. It was caused e.g. by drop of export in these branches:

• Consumer goods: -4.8%, now $12B
• Meat products: -15%, now $235M

At the same time there was increase of costs in few sectors what deepened the deficit. Below you can see highlights of the New Zealand’s trade balance:

Kuroda: Any weakening of JPY will mean FX intervention

During Kuroda speech in front of Japanese parliament we heard a lot of similar postulates he has been saying for the last few months. What’s worth noticing?

• No need to change target for short term and long term interest rates
• Yield curve moves according to forecasts
• There is still a lot of JGB (Japanese Government Bonds) on the market to buy by BOJ
• BOJ will not reduce JGB position
• There is a risk that bonds will end eventually but not in the nearest time
• BOJ cannot buy foreign bonds because of current law
• Any try to weaken JPY should be taken as FX intervention

What are we still waiting for?

For next important data we have to wait until 1:30 PM (GMT). We will know US initial jobless claims and durable goods orders. An hour and half later there will be publication of US pending home sales: