Daily Market Outlook by Kate Curtis from Trader's Way

katetrades · January 14, 2019, 8:40am

Forex Major Currencies Outlook (Jan 14 – Jan 18)

USD

December non-manufacturing PMI came in at 57.6 vs 59.0 as expected with prior reading being 60.7. Reading is a five-month low and the only bright point is that new orders ticked up higher.

FED members Bostic and Evans (Evans is a voting member in 2019) have been bit more dovish than expected. Evans stated that “FED has the capacity to wait and take stock of incoming data” and added that H1 of 2019 would be the key for deciding on future rake hikes. Dollar bulls didn’t like the sound of that and dollar was trading lower across the markets. FOMC minutes showed that officials felt that timing and extent of rate hikes is less clear. FED should assess the impact of risks that have become more pronounced in recent months. Chairman Powell said that there is no specified amount of rate hikes. Vice Chair Clarida stated that the economy can tolerate inflation above 2%, effectively saying that there is no need to rush with rate hikes.

Trade balance data from US have been delayed due to the government shutdown. In 2013 when the government shutdown lasted 16 days GDP was slashed 0.6%. We are currently at the day 20. CPI for the month of December came in at 1.9% y/y as expected with core CPI at 2.2% y/y as expected and 0.2% m/m. Average weekly earnings came in at 1.2% y/y as expected. All numbers came in line with expectations.

This week we will have data on consumption, housing and industrial production as well as FED Beige Book. Please note that the US government is still partially closed so in the case that it opens fully during this week we will have plethora of data that were delayed, for example trade balance data, durable goods orders, new home sales, etc.

Important news for USD:

Wednesday:

– Retail Sales
– FED Beige Book

Thursday:

– Building Permits
– Housing Starts

Friday:

– FED Industrial Production

EUR

Eurozone Retail Sales for the month of November came in at 0.6% m/m vs 0.2% m/m as expected and same as the previous month. This puts yearly figure at 1.1% y/y vs 0.4% y/y as expected. This is one positive reading coming from Eurozone showing that spending and consumption can remain elevated in Q4.

The unemployment rate in the Eurozone dropped to 7.9% from 8.1%. This is a 10-year low for unemployment showing that the labour market continues to tighten. Now, if these numbers can translate to wage growth, inflation picture for Eurozone will be much brighter.

This week we will have data on trade balance and current account, industrial production as well as inflation from both Germany and Eurozone. Full year GDP data for 2018 for Germany will be published on Tuesday.

Important news for EUR:

Monday:

– Industrial Production

Tuesday:

– Trade Balance
– GDP (Germany)

Wednesday:

– CPI (Germany)

Thursday

– CPI

Friday:

– Current Account

GBP

Vote on the Brexit deal in Parliament is set for Tuesday January 15. Prime Minister May has indicated yesterday that if Parliament rejects the deal, she is prepared to lead the UK out of the EU on March 29 in any event. MPs voted in favour of demanding that the government comes up with an alternative plan to Brexit within three working days if it loses the meaningful vote next week.

November GDP came in at 0.2% m/m vs 0.1% m/m as expected. Index of services came in at 0.3% m/m vs 0.1% m/m as expected and that pushed the GDP figure higher since factory data was disappointing with industrial production coming in at -1.5% y/y vs -0.7% y/y as expected and manufacturing production coming in at -1.1%. y/y vs -0.7% y/y as expected. Goods trade balance came in at -£12.0bn vs -£11.4 as expected with the prior reading showing -£11.9bn while the total trade balance deficit declined to -£2.904bn. Total exports rose by 0.4% while the imports increased by 0.1%.

This week the Brexit Parliament Vote will take the centre stage. Pound will be heavily influenced by the outcome. It is expected that the deal will not pass so the government will have to provide plan B within three working days which puts the deadline at January 21. We will have data on consumption and inflation later in the week.

Important news for GBP:

Tuesday:

– Brexit Parliament Vote

Wednesday:

– CPI

Friday:

– Retail Sales

AUD

Manufacturing PMI for the month of December fell to 49.5 vs 51.3 the previous month. This is the first time in 26 months that the reading shows contraction. October’s PMI was above 58, thus this reading shows sharp decline and generally weaker conditions in the Australian economy. Six out of seven activity indexes fell, most notably production, employment and exports. New orders index rose but it is still in contraction territory, below 50.

The November Trade Balance number came in at 1.925bn AUD vs 2.175bn AUD as expected. Slightly weaker than expected reading but encouraging fact is that exports rose 1% m/m. Building permits dropped 9.1% in November for the largest monthly decline since 1980 thus enhancing Australia’s housing problem. Retail Sales came in at 0.4% m/m vs 0.3% m/m as expected.

This week we will have Chinese trade balance data.

Important news for AUD:

Monday:

– Trade Balance (China)

NZD

Building permits for the month of November came in at -2% m/m vs 1.5% m/m the previous month. Overall trend is still to the upside. NZD has been very strong this week profiting from the rise in risk appetite and USD weakness.

Important news for NZD:

Monday:

– Food Price Index

Tuesday:

– GDT Price Index
– Electronic Card Retail Sales

Thursday:

– Business NZ Manufacturing Index

CAD

Canadian Ivey PMI data for the month of December came in at 59.7 vs 57.2 the previous month and 58.1 as expected. Although the overall number is higher, the employment index decreased for the second consecutive month.

Trade balance data for the month of November came in at -2.06bn CAD vs -2.15bn CAD as expected with the prior reading showing -1.17bn CAD. Better than expected numbers but the deficit widens. Exports have fallen more than expected at -1.8% while imports fell only -0.3%. This is the fourth consecutive month of falling exports with 8 of 11 sectors reporting decline. The energy sector led the way with decrease of 9.2%, mostly due to the lower prices.

BOC has left the overnight rate unchanged at 1.75% as widely expected. They stated that pace of rate hikes will depend on oil and housing and added that housing activity and consumption are weaker than expected. They acknowledged slowdown in global economic growth and see the signs that US – China trade war is weighing in on global demand and commodity prices. The drop in global oil prices has a material impact on the Canadian outlook, resulting in lower terms of trade and national income. Forecast for 2018 GDP has been lowered to 2% vs 2.1% prior and it is expected that inflation will be below for the most of 2019 due to lower gas prices. The inflation will return to 2% by late 2019 as transitory effects unwind. As stated in statement “there is no pre-set course” for future rate decisions and “it’s all about the data”.

This week we will get inflation data from Canada and OPEC report on oil.

Important news for CAD:

Wednesday:

– EIA Cushing Crude Oil Stocks Change

Thursday:

– OPEC Monthly Oil Market Report

Friday:

– CPI

JPY

Labour cash earnings came in at 2% y/y vs 1.2% y/y as expected with real cash earnings coming in at 1.1% y/y vs 0.4% y/y as expected. Nice beat on the data and perhaps higher wages will feed into inflation to bring it back closer to the BOJ target of 2%.

BOJ governor Kuroda stated in his speech that Japan’s economy is expanding moderately and that overseas risks are heightening. He assessed Japan’s financial system as stable and added that BOJ will maintain QQE with yield curve control for as long as needed to achieve targeted 2% inflation in stable manner.

Household spending for the month of November came in at -0.6% y/y vs -0.1% y/y as expected. This number is down for the third consecutive month while wages are rising and consumer confidence is positive. Trade balance data came in at 1348.7bn JPY vs – 612.6bn JPY as expected.

This week we will have national inflation data and data on industrial production.

Important news for JPY:

Friday:

– CPI
– Industrial Production

CHF

November retail sales data came in at -0.5% y/y vs -0.6% y/y as expected and the unemployment rate came in at 2.4% as expected. CPI data came in at -0.3% m/m vs -0.2% m/m as expected and 0.7% y/y vs 0.8% y/y as expected. Core CPI came in at 0.3% y/y vs 0.2% y/y as expected. Although the core inflation measure ticked higher, it is still too close to 0% level. If headline inflation continues its downtrend, things can get messy for the economy.

katetrades · January 21, 2019, 8:55am

Forex Major Currencies Outlook (Jan 21 – Jan 25)

On Monday most banks and financial institutions will be closed in the US due to Martin Luther King’s day so liquidity in the markets will be thinner than usual, causing higher spreads and more volatile movements.

USD

FED’s George, who is the most hawkish member of the FED, also acknowledged that FED can be patient and wait with rate hikes. He added that a pause in the normalisation process would provide time to exercise the economy. This supports the general view they may pause until June. FED’s Williams stated the need for “prudence, patience and good judgement”. He added that FED doesn’t see worrying signs of inflation pressures and that FED will reassess the balance sheet policy if conditions change. US GDP growth will be about 2.0-2.5% in 2019 vs 3% in 2018.

This week we expect to get data on housing, preliminary PMIs and Durable Goods, however due to the ongoing government shutdown some data may be delayed. The shutdown has already cost $3.5 bn according to S&P Global ratings. This is the longest government shutdown in US history, lasting almost a month now.

Important news for USD:

Tuesday:

– Existing Home Sales

Thursday:

– Markit Manufacturing PMI
– Markit Services PMI
– Markit Composite PMI

Friday:

– Durable Goods
– New Home Sales

EUR

Industrial production for the month of November for entire Eurozone came in at -1.7% m/m vs -1.5% m/m as expected. Worse than expected reading reflecting previously published German and French industrial production data signalling further slowdown of economic activity in the Q4. The first release of German GDP data came in at 1.5% y/y as expected for the 2018. Both exports and imports came in lower in 2018 than in 2017 reflecting a slowdown for German products, resulting from slowing economic growth and lower domestic demand.

Eurozone trade balance for the month of November showed a surplus of €15.1 bn vs €12.6bn as expected. However slight inspection under the hood of these numbers shows that higher surplus was achieved by both falling exports and falling imports. Exports fell 1% m/m and imports fell 1.9% m/m. As for trade with the US, the year-to-date November 2018 trade surplus stands at €129.0 bn and that is far greater than the year-to-date November 2017 trade surplus of €107.4 bn. Final CPI reading was in line with the expectations with headline CPI showing 1.6% y/y and core CPI showing 1% y/y.

ECB president Draghi came in as dovish with his remarks that further substantial stimulus is needed. This warning comes as a response to the slew of weak data from EU that were acknowledged by Draghi as weaker than expected. He added that there is no room for complacency which could lead to a dovish statement at next week’s ECB meeting.

This week centre stage will be taken by ECB interest rate decision and monetary policy conference headed by the president Draghi. Changes in the rate are not expected, however due to weaker economic data coming from the EU it is possible that Draghi will be more dovish in his statement shifting the assessment of risks from “broadly balanced” to “tilted to the downside”. Additionally, we will have data on business conditions in EU and Germany as well as preliminary PMIs.

Important news for EUR:

Tuesday:

– ZEW Economic Sentiment Indicator (EU and Germany)
Thursday:
– Markit Manufacturing PMI (France, Germany and EU)
– Markit Services PMI (France, Germany and EU)
– Markit Composite PMI (France, Germany and EU)
– ECB Interest Rate Decision
– ECB Monetary Policy Press Conference

Friday:

– Ifo Business Expectations (Germany)
– Ifo Business Climate (Germany)

GBP

The Brexit deal was voted down with 230 votes difference (202-432). This is the biggest loss for UK Government in history. Leader of the Labour Party Jeremy Corbyn immediately seized the opportunity and called for a no-confidence vote. PM May survived the no-confidence vote with a narrow margin of 19 votes (325-306). The vote can be repeated in the near future, and if PM May does anything that DUP party doesn’t like they will likely abandon support for her. PM May stated that she will get together with all parties to prepare a way forward. A motion on government’s next steps regarding Brexit will be brought before Parliament on January 21 and debate on the motion will be held on January 29.

December CPI came in at 0.2% m/m as expected and 2.1% y/y as expected with the prior reading showing 2.3%. Fall in the headline inflation is contributed to falling fuel, lubricant and petrol prices. Core CPI came in at 1.9% y/y vs 1.8% y/y as expected. Rise in core inflation shows that real inflationary pressures are holding steady. Retail sales came in at -0.9% m/m vs -0.8% m/m as expected. Retail Sales are 3% y/y. Consumers shaken by the Brexit uncertainties and the fact that most of the Christmas shopping was done on Black Friday in November caused a very weak reading showing the worst December performance in a decade.

This week we will have a Plan B regarding the Brexit from PM May. There are several possibilities: a second referendum, a Norway-style partnership, or a permanent customs union. From a strictly economic prospective we will have data on wages and employment.

Important news for GBP:

Monday:

– Plan B regarding the Brexit

Tuesday:

– Average Weekly Earnings
– Unemployment Rate

AUD

Chinese trade balance for the month of December came in at CNY 395bn vs CNY 345bn as expected. Exports came in at 0.2% y/y vs 6.6% y/y as expected with the prior reading showing 10.2% y/y. Imports came in at -3.1% y/y vs 12.0% y/y as expected with the prior reading showing 7.8% y/y. In USD terms exports fell 4.4% y/y while imports plunged 7.6% y/y. Both export figures and import figures were huge misses showing that the trade war is taking its toll, along with global slowdown (exports) and demand in China is slowing (imports). The Chinese government announced a new stimulus, tax cuts and lowering of the RRR rate, so the country can continue with high paced economic growth.

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

Important news from AUD:

Monday:

– GDP (China)
– Retail Sales (China)
– Industrial Production (China)

Thursday:

– Employment Change
– Unemployment Rate
– Participation Rate

NZD

Food prices for the month of December came in at -0.2% m/m vs -0.6% m/m the previous month. Lesser fall of prices than in the previous month can be positive for inflation and NZD in general. GDT Price Index came in at 4.2% for a fourth consecutive positive auction. NZD was unchanged on this news possibly because of the overwhelming market themes (Brexit). Electronic card spending for the month of December came in at -2.3% m/m vs -0.4% m/m as expected for a huge miss. This data accounts for about 70% of NZD retail sales data so we can expect a weak number coming in next week. House sales dropped 12.9% y/y. Business NZ manufacturing PMI for the month of December came in at 55.1 vs 53.5 the previous month.

This week we will have inflation data from New Zealand.

Important news for NZD:

Tuesday:

– CPI

CAD

CPI for the month of December came in at 2% y/y vs 1.7% y/y as expected. Positive beating immediately reflected in CAD strength across the markets." A month-over-month increase in the air transportation index (+21.7%) reflected higher prices for travel during the holiday season," Statistics Canada reported. Core common and Core trimmed numbers came in at 1.9% y/y, the same as the prior reading while Core median ticked down to 1.8% y/y from 1.9% y/y the previous month. BOC just got new ammunition to continue with its hawkish rhetoric.

This week we will have data on wholesale trade as well as manufacturing and retail sales.

Important news for CAD:

Tuesday:

– Manufacturing Sales
– Wholesale Trade

Wednesday:

– Retail Sales

JPY

Deputy governor Amamiya said in his speech at G20 symposium that ageing population of Japan can negatively affect future economic activity and that it is an important risk factor for the economy. He stated that “given the appropriate policy response, it can also have a positive impact on the economy” and added that ageing is a common policy challenge for all G20 members. National CPI for the month of December came in at 0.3% y/y as expected. CPI excluding fresh food and energy also came in at 0.3% y/y as expected. Far cry from the targeted 2%. Governor Kuroda stated that he expects US-China trade war to be resolved this year.

This week we will have the BOJ interest rate decision, followed by the outlook report, monetary policy statement and press conference will take the centre stage. Changes in the rate are not expected, however revision down of inflation forecasts in outlook report is possible, especially after national CPI data, which means that loose policy will remain for a longer period of time and that is negative for JPY. Additionally, we will see data on trade balance as well as preliminary manufacturing PMI and inflation data for the Tokyo area.

Important news for JPY:

Wednesday:

– Trade Balance
– Exports
– Imports
– BOJ Interest Rate Decision
– BOJ Outlook Report
– BOJ Monetary Policy Statement
– BOJ Press Conference

Thursday:

– Nikkei Manufacturing PMI

Friday:

– Tokyo CPI

CHF

SNB governor Jordan acknowledged that economic uncertainties have increased in recent months. He stated that negative interest rates make life difficult for pension funds and affect the property markets but increasing rates would negatively affect the economy and that would also have a negative impact on pensions. According to him there is no risk of Swiss inflation rising in the near future.

katetrades · January 28, 2019, 8:45am

Forex Major Currencies Outlook (Jan 28 – Feb 1)

USD

IMF cut the global growth forecast to 3.5% for 2019 which is the lowest in 3 years; they see growth in 2020 to be at 3.6%. They maintain USD growth forecast at 2.5% for 2019 and 1.8% for 2020. Risk to global growth are tilted to the downside according to them and further escalation of trade tensions remains the key risk factor.

The Government shutdown has been suspended for three weeks until February 15th, by which time President Trump expects Congress to come to an agreement on the budget, otherwise he has stated that he will let the shutdown begin once again.

The overall consensus is that there will be no damage to the US economy in the long run since the state will reimburse workers for their lost salaries. All back-pay during the one-month shutdown is scheduled to be paid during this week. If the government shuts down again, the longer it lasts, the more of a chance the growth of Q1 2019 will be affected. For every week that the government is closed, a little more than 0.1% of GDP is slashed. So far conservative estimates are that the shutdown has cost at least 0.7% of GDP.

This week we will have data on consumer confidence, housing and final PMI numbers. An interest rate decision is expected to stay unchanged. Big event will be Nonfarm payrolls. It is expected that the number will be around 170k, which is a big drop from the December figure. Again, more eyes will be drawn to the average hourly earnings numbers, although the kneejerk reaction will be on the headline NFP number.

Important news for USD:

Tuesday:

– Consumer Confidence Index

Wednesday:

– ADP Nonfarm Employment Change
– Pending Home Sales
– FED Interest Rate Decision
– FOMC Statement

Friday:

– Nonfarm Payrolls
– Unemployment Rate
– Average Hourly Earnings
– Markit Manufacturing PMI
– ISM Manufacturing PMI

EUR

IMF cut the Eurozone growth forecast for 2019 to 1.6% from 1.9% projected in October. Bank of Italy cut its GDP growth forecast to 0.6% for 2019 from 1% in December and to 0.9% for 2020 from 1.1% previously. ZEW survey of current situation in Germany plunged to 27.6 vs 45.3 as expected. With Germany being the leading economy in the EU survey shows bleak situation.

Preliminary European PMIs came weaker than expected across the boards. They are still in expansionary territory however manufacturing PMI that came in at 50.5 is weakest since November 2014, services PMI that came in at 50.8 is weakest since August 2013 and composite PMI that came in at 50.7 is weakest since July 2013. Everything points to a stall in EU growth. French composite and services PMI slumped deeper into contraction while a dropdown in German manufacturing PMI, showing contraction due to issues with auto industry and slowing China demand, was offset with a rise in services PMI which lead to expansionary composite PMI reading. According to the PMI data, EU Q1 GDP is 0.1%.

ECB Draghi delivered a message that represents fine balance between risks and confidence during the press conference. Incoming data have continued to be weaker than expected and slowdown is due to fall in external demand as well as some country specific reasons. According to him: “The risks surrounding the euro area growth outlook have moved to the downside on account of the persistence of uncertainties related to geopolitical factors and the threat of protectionism, vulnerabilities in emerging markets and financial market volatility.” Confidence in the outlook is based on continued growth and strong employment and financial conditions are favorable with very low likelihood of recession. The only assessment of the current situation was done in this meeting while new forecasts will be done in March.

This week we will have data on sentiment in the EU as well as preliminary inflation and unemployment from both Germany and EU, preliminary Q4 GDP and final PMI numbers.

Important news for EUR:

Wednesday:

– Business Climate Indicator
– Economic Sentiment Indicator
– CPI (Germany)

Thursday:

– Unemployment Rate (Germany)
– GDP
– Unemployment Rate

Friday:

– Markit Manufacturing PMI (Eurozone, Germany, France)
– CPI

GBP

Average hourly earnings came in at 3.4% 3m/y vs 3.3% 3m/y as expected. This is the highest reading since July 2008 and if it can turn into consumption it will be great boost for the UK economy. Unemployment ticked down to 4% vs 4.1% as expected.

PM May’s Plan B seems to rest on convincing the European Commission to make some concession on the Irish backstop, which keeps the UK in the customs union until a new agreement is struck. Cross-party alliance is emerging for the House of Commons to take control over Brexit if there is no deal by the end of February 26. Additionally, around 40 members of the government threaten to resign next week if the Tory MPs are banned from voting on a plan to prevent a no-deal exit. Hints that Brexit will be delayed from the end of March are pushing GBP higher across the markets.

This week we will have Parliament voting on PM May’s plan B for Brexit, speech from governor Carney and final PMI number.

Important news for GBP:

Tuesday:

– Voting on plan B in the Parliament

Wednesday:

– BOE Governor Carney Speech

Friday:

– Manufacturing PMI

AUD

Chinese Q4 GDP data came in at 6.4% y/y as expected ticking down a notch from 6.5% y/y the previous month. GDP for the full year is 6.6% as expected, readings were in line with expectations, however GDP is the lowest in 28 years and Q4 GDP was the lowest in a decade. Industrial production came in at 5.7% y/y vs 5.3% y/y as expected for a very nice beat and retail sales followed the suit coming in at 8.2% y/y vs 8.2% y/y as expected. IMF cut China’s growth forecast for 2019 and 2020 to 6.2% and warned that economic activity may fall short of the expectations if trade tensions persist.

The employment report for the month of December showed that employment change came in at 21.6k vs 18k as expected. The Unemployment rate fell to 5.0% and participation rate ticked down to 65.6%. All employment change came through part time employment which is concerning, however it shows that labour market conditions are tight. Preliminary PMIs for the month of January came in mixed. Manufacturing ticked higher to 54.3 while services went lower a lot to 51.0 thus dragging the composite lower to 51.5. Weak start for the Australian economy in 2019. Turns in Manufacturing can lead to turns in the Services by two months.

This week we will have inflation data from Australia as well as PMI data from China.

Important news for AUD:

Wednesday:

– CPI

Thursday:

– Manufacturing PMI (China)
– Non-Manufacturing PMI (China)
– Caixin Manufacturing PMI (China)

Sunday:

– Caixin Services PMI (China)

NZD

Services PMI for the month of December came in at 53.0 vs 53.5 the previous month. New orders sub index improved from November to 59.2 but activity/sales continued to drop and posted 52.2. Growth in the service sector has been slower over the past six months but this reading shows that growth is slowly stabilising and not deteriorating further.

Inflation in Q4 surprised to the upside coming in at 1.9% y/y vs 1.8% y/y as expected. Uptick is more surprising given the weak credit card spending data from New Zealand from the last week. NZD reacted very favourably to the number and strengthened across the markets against various currencies.

This week we will have trade balance data.

Important news for NZD:

Monday:

– Trade Balance
– Exports
– Imports

CAD

Manufacturing sales for the month of November came in at -1.4% vs -1% as expected. Wholesale trade data came in at -1% vs -0.3% as expected. Misses on both fronts signalling a slowdown in the Canadian economy due to the slump in country’s oil sector and generally weaker economic growth. Retail Sales for the month of November disappointed coming in at -0.9% m/m vs -0.6% m/m as expected. Ex autos category came in at -0.6% m/m vs -0.4% m/m as expected. Consumer spending has slowed down in Canada noticeably.

BOC Governor Poloz said in Davos that oil prices will contribute to a drop in GDP of 0.4bp. He emphasized the dangers of the trade war and concluded that it would be a disaster if it escalated. The Canadian economy is in good shape and the pace of future rate hikes will be data dependant. After this week’s retail sales data a rate hike will be pushed further in the future for sure.

This week we will have GDP data as well as final PMI number.

Important news for CAD:

Thursday:

– GDP

Friday:

– Markit Manufacturing PMI

JPY

Trade balance data for December came in at -JPY55.3 bn vs – JPY42.3bn as expected. Exports fell -3.8% y/y vs -1.8% y/y as expected for the sharpest fall in 2 years while imports rose 1.9% y/y vs 4% y/y as expected. Misses on all fronts showing that the trade war and global slowdown have impacted Japan’s exporters and that domestic demand is not as strong as expected. Exports to China came in at -7% y/y and they were the biggest contributor to export declines.

BOJ left the interest rate unchanged and monetary policy unchanged as expected. The Median Core CPI forecast for the FY 2019/20 has been slashed down to 0.9% vs 1.4% projected in October. Median Real GDP forecast for fiscal 2019/20 is at 0.9% vs 0.8% as projected in October. Governor Kuroda stated that the drop in oil prices is the key reason for downgrades in the price outlook. He added that it is appropriate to continue with current easing policies and that he doesn’t see a big change in economic fundamentals.

Tokyo area CPI came in at 0.4% y/y vs 0.2% as expected and CPI excluding food, energy came in at 0.7% y/y vs 0.6% y/y as expected. Positive beats for a much-needed rise in inflation to make BOJ encouraged.

This week we will get minutes from the latest meeting of the monetary policy comity, consumption data, industrial production data and employment numbers.

Important events for JPY:

Monday:

– BOJ Monetary Policy Meeting Minutes

Wednesday:

– Retail Sales

Thursday:

– Industrial Production

Friday:

– Unemployment Rate
– Jobs to Applicants Ratio

CHF

SNB Zurbruegg assessed the outlook for the Swiss economy as favourable. He added that the situation on Forex market remains fragile and that heightened uncertainty, highly valued Frank, low inflation pressure and global low rates warrant expansive policy. SNB Machlear added that negative rates and market interventions are needed to prevent a rise in CHF. SNB Governor Jordan stated that they still have room to maneuver on interest rates and added that there is no need for any change to SNB monetary policy.

This week we will have data on trade and consumption.

Important news for CHF:

Tuesday:

– Trade Balance
– Exports
– Imports

Friday:

– Retail Sales

katetrades · February 4, 2019, 8:26am

Forex Major Currencies Outlook (Feb 4 – Feb 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.

This week we will have data on household spending, earnings as well as goods trade balance.

Important news for JPY:

Tuesday:

– Nikkei Services PMI

Friday:

– Household Spending
– Goods Trade Balance
– Labour Cash Earnings

CHF

Trade balance data for the month of December came in at CHF1.9bn vs CHF4.74bn the prior month. Large drop in the main figure was caused by exports which fell 5% m/m. Imports rose 3.7% m/m. Drop in exports is worrying and indicates far fetching reach of global slowdown. Rise of imports is a positive thing indicating that domestic demand holds steadily.

This week we will have employment data.

Important news for CHF:

Friday:

– Unemployment Rate

katetrades · February 18, 2019, 8:35am

Forex Major Currencies Outlook (Feb 18 – Feb 23)

Please note that President’s day is on Monday Feb 18, financial institutions will not be working therefore liquidity in the markets will be lower which can lead to volatile movements.

USD

CPI for the month of January came in at 1.6% y/y vs 1.5% y/y as expected with prior reading being 1.9% y/y and 0% m/m vs 0.1% m/m as expected. CPI excluding food and energy came in at 2.2% y/y vs 2.1% y/y as expected and 0.2% m/m as expected. Average weekly and hourly earnings have beaten expectations coming in at 1.9% y/y vs 1.4% y/y as expected and 1.7% y/y vs 1.3% y/y as expected respectively. Rise in wages is very encouraging for the US economy, however it is not sufficient enough to cause FED to consider immediate rate hikes. CPI has ticked a bit higher but monthly figure stayed unchanged due to the energy prices.

The US budget or the month of December shows a higher than expected deficit of -$13.5bn vs -$11bn as expected. US fiscal 2019 year-to-date deficit is -$319bn versus comparable fiscal 2018 deficit of -$225bn. For the fiscal year to date, corporate income tax receipts are down -17.3%, individual tax receipts are down -3.5%. On the other hand, Social Security receipts are up 6.1% while customs duties are up a staggering 88.7%. Overall tax cuts introduced last year are dragging receipts lower and are not offset fully by receipts from the higher growth or cuts in spending. US national debt has risen to the record of $22 trillion.

Retail sales for the month of December came in at -1.2% m/m vs 0.1% m/m as expected for the worst monthly reading since 2009. Control group reading came in at -1.7% vs 0.4% as expected which is the worst reading since 2000. The reading was delayed due to the shutdown and it shows that holiday shopping has been done during Black Friday. The numbers are very bad and USD felt the pressure immediately losing its ground against all majors. GDP projections for Q4 have been lowered due to the abysmal retail sales numbers. Atlanta FED sees it now at 1.5% vs 2.7% estimate on February 6. Industrial production came in at -0.6% m/m vs 0.1% m/m as expected. Bad releases keep on piling up. After a few more bad releases questions about health of US economy will be raised.

Compromise seems to have been reached to avoid another government shutdown. President Trump stated that he will sign the funding bill to keep the government open and then he would use executive action to declare a national emergency which will get him $8bn for a border wall. Chinese president Xi confirmed that trade negotiations will continue in Washington this coming week.

This week we will have FOMC minutes from the latest FOMC meeting where FED opted for patience, durable goods orders for the month of December, due to the shutdown that data was delayed, preliminary PMIs for the month of February and housing data.

Important news for USD:

Wednesday:

– FOMC Minutes

Thursday:

– Durable Goods Orders
– Markit Manufacturing PMI
– Markit Services PMI
– Markit Composite PMI
– Existing Home Sales

EUR

Industrial production in EU continues to weaken coming in at -0.9% m/m vs -0.4% m/m as expected and -4.2% y/y vs -3% as expected. Year on year reading us the worst since 2009 bringing the Eurozone back to the dark times.

Germany’s preliminary Q4 GDP came in at 0% q/q vs 0.1% q/q as expected. Technical recession of two consecutive quarters with negative GDP has been barely avoided with Q4 GDP staying flat but growth remains very weak which is not encouraging for the EUR. Eurozone second reading of Q4 GDP came in at 0.2% q/q and 1.2% y/y as expected.

This week we will have surveys on economic sentiment, consumer confidence and business climate as well as preliminary PMIs for the month of February along with final Q4 GDP data for Germany.

Important news for EUR:

Tuesday:

– ZEW Economic Sentiment Indicator (Germany and EU)

Wednesday:

– Consumer Confidence Index

Thursday:

– Markit Manufacturing PMI (France, Germany and EU)
– Markit Services PMI (France, Germany and EU)
– Markit Composite PMI (France, Germany and EU)
– Monetary Policy Meeting Accounts

Friday:

– GDP (Germany)
– Ifo Business Climate (Germany)
– CPI

GBP

Preliminary Q4 GDP figures came in at 0.2% q/q vs 0.3% q/q as expected. The main drag on the number was the total business investment category which came in at -1.4% q/q vs -1% q/q as expected showing the reluctance of UK business to invest while uncertainties around Brexit hover in the air. This is the fourth straight quarter of falling business investments. Car production was another drag on GDP as it fell 4.9% q/q which is the worse result since Q1 2009. Industrial and manufacturing production as well as construction output all came in worse than expected and in the negatives adding more to the mounting Brexit pressures. Exports in the last quarter have risen 0.9% q/q vs 1/% q/q as expected and imports rose to 1.3% q/q vs 1% q/q as expected showing that domestic demand is still robust. Household spending kept the economy on the right path.

CPI for the month of January came in at -0.8% m/m vs -0.7% m/m as expected and 1.8% y/y vs 1.9% y/y as expected. This figure is the lowest for two years and the Office for National Statistics attributed the drop to cheaper gas, electricity and petrol prices, partly offset by cheaper ferry tickets and air fares. Core CPI held steadily at 1.9% y/y. Retail sales came in at 1% m/m vs 0.2% m/m as expected and 4.2% y/y vs 3.4% y/y as expected. Positive beating was spurred by strong clothing store sales.

Britain and Switzerland have a signed trade continuity agreement which allows them to trade freely without any new tariffs. Meaningful vote on Brexit in the Parliament has been postponed by PM May and it is expected that it will be held on February 27.

This week we will have data on employment and wages as well as continuation of Brexit negotiations.

Important news for GBP:

Tuesday:

– Average Hourly Earnings
– Unemployment Rate

AUD

The Australian housing sector continues to worsen. Data on home loan approvals came in at -6.1% m/m vs -2% m/m as expected. This represents the fourth straight month of falling home loan approvals and adds fuel to the speculations of rate cut toward the end of the year.

Chinese trade balance data for the month of January came in at $39.16bn vs $34.3bn as expected. Exports rose 9.1% y/y vs -3.3% y/y as expected for a huge beat while imports came in at -1.5% y/y vs -10.2% y/y as expected. Due to the lunar new year holidays there is some distortion in the figures. When the data for the February comes out, we will have a better picture. That being said, exports coming in from China are very encouraging while imports although better than expected pose a bit of concern. Trade surplus with USA has dropped to $27.3bn vs $29.87bn the previous month with exports falling -2.4% y/y and imports collapsing staggering -41.2% y/y. Chinese CPI came in at 1.7% y/y vs 1.9% y/y as expected. Slowdown in food inflation was the main drag on inflation.

This week we will have RBA meeting minutes from the last RBA meeting along with wage and employment data.

Important news for AUD:

Tuesday:

– RBA Meeting Minutes

Wednesday:

– Wage Price Index

Thursday:

– Employment Change
– Participation Rate
– Unemployment Rate

NZD

RBNZ has left OCR unchanged at 1.75% as widely expected. With their new projections they see the rate rising to 1.84% in December of 2020 and 2.36% in March of 2022. Annual CPI will be at 1.7% by March of 2020. Core CPI is expected to gradually rise to 2%. Continued supportive monetary policy is needed to raise CPI to 2% level. Next cash rate move could be up or down. Markets were prepared for dovish RBNZ and when they acknowledged that next rate move could be also up NZD was sent upwards. Manufacturing PMI for the month of January came in at 53.1 vs 55.1 the previous month. New orders sub index came in at 52.2 for a third consecutive falling month and lowest reading in past 13 months.

This week we will have GDT auction and data on consumption at the end of the week.

Important news for NZD:

Tuesday:

– GDT Price Index

Sunday:

– Retail Sales

CAD

Manufacturing sales for the month of December came in at -1.3% m/m vs 0.4% m/m. Unexpected drop in factory sales for the last month of 2018. This is the second month in a row of negative reading and it sent CAD falling against majors including USD who had bad retail sales data published at the same time. Housing price index came in at 0% m/m as expected for another lacklustre data from Canada. Five consecutive months of flat readings for the index. Existing home sales came in at 3.6% m/m vs -0.6% m/m as expected.

This week we will have data on wholesale, speech by governor Poloz and data on consumption.

Important news for CAD:

Thursday:

– Wholesale Trade
– BOC Governor Poloz Speech

Friday:

– Retail Sales

JPY

GDP data for the Q4 came in at 0.3% q/q vs 0.4% q/q as expected and 1.4% y/y as expected. GDP deflator which is an inflation measure came in at -0.3% y/y vs -0.4% y/y. Consumer spending was 0.6% q/q vs 0.7% q/q as expected and business spending was 2.4% q/q vs 1.8% q/q. Headline number is weaker than expected but it shows that Japan’s economy managed to recover after GDP being negative in Q3 due to natural disasters. Business spending was the main input in the GDP figure with a healthy beat of the expectations. Exports didn’t show expected recovery, mainly due to lower imports from China.

This week we will have trade balance data, preliminary PMI for the month of February and national inflation data.

Important news for JPY:

Wednesday:

– Trade Balance
– Exports
– Imports

Thursday:

– Nikkei Manufacturing PMI

Friday:

– CPI

CHF

January CPI came in at -0.3% m/m vs – 0.2% m/m as expected, however the core CPI jumped to 0.5% y/y vs 0.3% as expected which is a five-month high and it shows that core inflationary pressures are rising. However, with global slowdown it is interesting to see how long will those pressures maintain.

This week we will have data on trade balance as well as on industrial production.

Important news for CHF:

Tuesday:

– Trade Balance
– Exports
– Imports

Friday:

– Industrial Production

katetrades · February 25, 2019, 9:29am

Forex Major Currencies Outlook (Feb 25 – Mar 1)

USD

FED’s Williams stated that rates are already at neutral level. It is a sign that the FED will be in no rush to hike. Policymakers are increasingly pointing to risks abroad as a justification to wait. That means that even months of positive US economic data may not be enough to put the Fed back on a hiking path. FOMC minutes showed that almost all FED officials were in favour of ending the balance sheet reduction before the year ends. Positive domestic outlook was emphasized along with concerns regarding soft European and Chinese growth.

Durable goods for the month of December came in at 1.2% vs 1.7% as expected. Main drag was the non-defence ex-air component which came in at -0.7% vs 0.2% as expected. Philadelphia FED business index came in at -4.1 vs 14 as expected with new orders index and shipments plummeting to -2.4 vs 21.3 the previous month and -5.3 vs 12.3 the previous month respectively.

This week’s main data will be the first reading of Q4 GDP. Atlanta FED lowered forecast from 1.5% to 1.4% due to weak durable goods and retail sales data. If the number surprises to the downside it could lead to USD weakness. Additionally, we will get data on housing, trade balance, PCE and final manufacturing PMI.

Important news for USD:

Tuesday:

– Housing Starts
– Building Permits
– Consumer Confidence Index

Wednesday:

– Goods Trade Balance
– Factory Orders
– Pending Home Sales

Thursday:

– GDP

Friday:

– Final day of US – China trade war treat
– PCE
– Personal Spending
– Personal Income
– Markit Manufacturing PMI
– ISM Manufacturing PMI

EUR

ZEW current situation survey for Germany came in at 15 vs 20 as expected with prior reading showing 27.6. This is the lowest reading since December of 2014 and it shows continued deterioration of the German economy. ZEW does not see chances for “rapid recovery” of slumping German economy. Economic sentiment showing expectations about the future of the economy improved slightly to -13.4 vs -15 the previous month for Germany and -16.6 vs -20.9 for the entire Eurozone, however those numbers are still in the negatives.

Preliminary PMI reading for the Eurozone showed manufacturing PMI at 49.2 vs 50.3 as expected. Manufacturing dropped into contraction pushed by huge drop in German manufacturing PMI that came in at 47.6 with export orders component falling to lowest levels in over six years. Brexit, China slowdown and potential tariffs from US on German car makers all pushed the number down. Services PMI and composite PMI beat expectations coming in at 52.3 and 51.4 respectively. ECB minutes showed that EU growth could be below potential for several quarters and that although possibility of recession is low, levels of uncertainties are high. Market pricing for rate hike is accurate meaning that ECB is still on the path to raise rates this year.

This week we will have data on sentiment and climate in EU, inflation, unemployment and final reading of manufacturing PMI.

Important news for EUR:

Wednesday:

– Business Climate Indicator
– Economic Sentiment Indicator
– Consumer Confidence Index

Thursday:

– CPI (Germany and France)

Friday:

– Markit Manufacturing PMI (Germany, France, Spain, Italy and EU)
– CPI
– Unemployment Rate

GBP

Average weekly earnings for the month of December came in at 3.4% 3m/y vs 3.5% 3m/y as expected. The unemployment rate stayed at 4% as expected and employment change came in at 167k vs 151k as expected. An additional strong labour report coming from UK shows tight labour market conditions. Wage growth ticked a bit to the downside but it is not of a great concern. Due to the current circumstances this report falls second to the ongoing Brexit situation.

Deadline for PM May to convince parliament members of her plan is February 26. Brexit debate continues on February 27. Reuters reported, citing EU diplomats, that Brexit formal text may be agreed in mid-March.

This week we will have continuation of Brexit debate in the Parliament as well as manufacturing PMI data.

Important news for GBP:

Tuesday:

– PM May presents her plan in the Parliament

Wednesday:

– Brexit debate continues

Friday:

– Markit Manufacturing PMI

AUD

RBA meeting minutes showed that significant uncertainties were seen by the board members and that the next rate move can be either up or down. There is no need for a near-term move in rates as current policy should allow for progress on unemployment and inflation. Outlook for consumption was characterized as “key uncertainty” for policy. Labour market data are stronger than other economic data and they noted that downside risks to global economy had increased with China growth slowing more than GDP figures show. With this statement RBA is taking more of “data dependent” approach, waiting for further clear signs before taking a firmer stance.

Employment change for the month of January came in at 39.1k vs 15k as expected for a huge beat. Full time employment change came in at 65.4k which is a massive result. The unemployment rate stayed the same at 5% and participation rate ticked higher to 65.7%. Wage price index for Q4 2018 came in at 0.5% q/q vs 0.6% q/q as expected. RBA stated consumption as “key uncertainty” and this reading will not help. They want to see faster wage growth than this and see it spilling into consumption so it can spur economic growth. AUD was sent higher on the great jobs report and then Westpac came out with changes to its forecasts regarding the Australian economy and stated that they see two rate cuts in 2019. This immediately put a lot of pressure on AUD which was then pressured even more when Chinese port Dailan limited import of Australian coal as a response to Australia’s ban on Huawei.

This week we will have PMIs from both China and Australia.

Important news for AUD:

Thursday:

– Manufacturing PMI (China)
– Non-Manufacturing PMI (China)
– AIG Manufacturing Index

Friday:

– Caixin Manufacturing PMI (China)

NZD

Services PMI for the month of January comes in at 56.3 vs 53.2 the previous month. A healthy jump in the reading was provided by new orders and activity as well as drop in inventory. GDT price index rose 0.9% at the latest auction. This is the sixth consecutive auction with rising prices but rise was weaker than on any previous rising auctions.

This week we will have trade balance data along with housing and business confidence data.

Important news for NZD:

Tuesday:

– Trade Balance
– Export
– Import

Thursday:

– Business Confidence
– Building Permits

CAD

Canadian retail sales for the month of December came in at -0.1% m/m vs -0.3% m/m as expected. Ex autos category came in at -0.5% m/m vs -0.3% m/m as expected. Better than expected reading but still in the negative. Lower oil prices are responsible for a large part of the decrease. Weaker sales at gasoline stations were largely to blame. Holiday season in Canada was weak and didn’t manage to propel retail sales into positive territory, thus confirming weakening contribution to GDP from households. Wholesale sales came in at 0.3% m/m vs -0.2% m/m as expected.

This week we will have data on inflation and GDP along with manufacturing PMI.

Important news for CAD:

Wednesday:

– CPI

Friday:

– GDP
– Markit Manufacturing PMI

JPY

Governor Kuroda stated in his speech that they will react if JPY appreciation hurts the economy. They can react by buying more assets or lowering the rates. This more dovish approach pushed JPY lower across the markets.

Trade balance for the month of January came in at -JPY1415.2bn vs -JPY1029.1 bn as expected. Exports plummeted -8.4% y/y vs -5.7% y/y as expected. Exports to China and Asia contributed most to the decline. Exports to China fell -17.4% y/y and will continue to decline in February due to the holiday period. Imports came in at -0.6% y/y vs -3.5% y/y as expected. Preliminary manufacturing PMI for the month of February came in at 48.5 vs 50.3 the prior month. This is the first time that data fell into contraction since August 2016. Output expectations turned negative for the first time in over six years. Slowdown in China presents itself as a main drag on the Japanese economy with both new orders and new export orders continuing to decrease.

National CPI data for the month of January came in line with the expectation. Headline figure came in at 0.2% y/y and ex food, energy came in at 0.4% y/y. Inflation ex food, which is how Japan measures its core rate came in at 0.8% y/y vs 0.7% the previous month. Still a long way from targeted 2% and with recent global slowdown it doesn’t look like it will pick up any time soon.

This week we will have data on consumption, industrial production, inflation from Tokyo area and unemployment.

Important news for JPY:

Thursday:

– Retail Sales
– Industrial Production

Friday:

– Tokyo CPI
– Unemployment Rate
– Jobs to Applicants Ratio
– Nikkei Manufacturing PMI
– Consumer Confidence

CHF

January trade balance figures came in at CHF3.04bn vs CHF1.9bn the prior month. Exports rose 0.6% m/m showing demand for Swiss goods outside Switzerland. Imports rose 4.8% m/m showing that domestic demand is still robust.

This week we will have data on employment, GDP and consumption.

Important news for CHF:

Monday:

– Employment level

Thursday:

– GDP

Friday:

– Retail Sales

katetrades · March 4, 2019, 8:49am

Forex Major Currencies Outlook (Mar 4 – Mar 8)

USD

Over the weekend President Trump has opted to postpone a tariff hike on Chinese imports stating that positive progress has been made in on-going negotiations.

Housing starts for December came in at 1078k vs 1256k as expected with a drop of -11.2 m/m. This is the lowest number since September 2016. Dreadful housing data shows pains of the housing market in the US and gives more sign to the FED that they cannot continue with rate hikes. Consumer confidence came in at 131.4 vs 124.9 showing a strong belief in US economy by consumers and easing the worries from the end of 2018. Advanced goods trade balance came in at -$79.5bn vs -$73.9bn as expected for the record high deficit. Factory orders in December came in at 0.1% m/m vs 0.6% m/m as expected and revision lower to core durable orders from -0.7% to -1% adds further worry to a poor durable goods report.

GDP for Q4 came in at 2.6% q/q vs 2.2% as expected and 3.1% y/y. GDP for 2018 was 2.9% which is highest since 2015. Personal consumption was 2.8% and business investment (capex) added 6.2% to GDP for a nice beat of the expectations. Inventories contributed as well to the GDP while Net exports subtracted from GDP less than expected. Regarding inflation data, the GDP price index came in at 1.8% q/q vs 1.7% q/q as expected with prior reading being 1.8% q/q and core PCE came in at 1.7% q/q vs 1.6% q/q as expected with prior showing 1.6% q/q.

FED Chairman Powell reaffirmed a patient approach toward monetary policy in his testimony before Senate. He also added that FED sees favourable economic outlook with some cross-currents. Recent economic data has ‘softened’ but 2019 expected to be ‘solid’ although slower than 2018. There are some signs of stronger wage growth. The balance sheet reduction program could end by the year which is exactly what the markets’ want to hear.

This week we will have more PMI data, housing and trade balance data with NFP on Friday as the prime event. The labour market is very strong in the US so it is expected for that trend to continue. Earnings will be of bigger importance as an increase in earnings leads to a higher standard of living and potentially can add to upward pressures on inflation.

Important news for USD:

Tuesday:

– Markit Services PMI
– Markit Composite PMI
– New Home Sales
– ISM Non-Manufacturing PMI
– Federal Budget Balance

Wednesday:

– ADP Nonfarm Employment Change
– Trade Balance
– Exports
– Imports
– FED Beige Book

Friday:

– Nonfarm Payrolls
– Unemployment Rate
– Participation Rate
– Average Hourly Earnings

EUR

Eurozone consumer confidence for the month of February came in at -7.4 as expected. Industrial confidence shows a decline while services, overall economic confidence and business climate indicator show a slight improvement. They are however all on the weak side showing a growth slowdown in the region. The unemployment rate has ticked down to 7.8% continuing its trend downwards. Preliminary CPI for the month of February came in at 1.5% y/y as expected, prior reading was 1.4% y/y. Core CPI however slipped to 1% y/y vs 1.1% y/y as expected. The rise in headline inflation can be attributed to rising oil prices, but fall in core CPI will give headache to ECB.

This week we will have final PMI readings along with consumption data and third reading of Q4 GDP. Main event will be ECB interest rate decision followed by press conference. It is expected that interest rate will stay unchanged but language of the statement will be closely monitored since data coming in from EU lately has not been encouraging.

Important news for EUR:

Tuesday:

– Markit Services PMI (EU, Germany, France)
– Markit Composite PMI (EU, Germany, France)
– Retail Sales

Thursday:

– ECB Interest Rate Decision
– ECB Monetary Policy Press Conference
– Employment Change
– GDP

GBP

Meaningful vote in Parliament will be postponed until March 12 at the latest while PM May continues to seek concessions from the EU. If PM May’s deal doesn’t go through Parliament will seek to take control of the process. They will most likely ask for a delay in the process and remove No Deal Brexit from the table which will strengthen the GBP. PM May confirmed in parliament that a second meaningful vote will be held by March 12. If government loses the meaningful vote, a new vote on leaving the EU without a deal will be held. The UK will only leave without a deal on explicit consent of parliament. If parliament rejects deal and no-deal, a new vote will be held on March 14 to vote on limited Article 50 extension.

This week we will have final services PMI data along with speech from governor Carney. Brexit talks will continue and they can have a high impact on GBP, however meaningful vote will be next week.

Important news for GBP:

Tuesday:

– Markit Services PMI
– BOE Governor Carney Speech

AUD

Construction work done in the Q4 of 2018 came in at -3.1% q/q vs 0.5% q/q as expected. A huge miss and continuation of the downward spiralling trend since Q3 was at -2.8% q/q. Expected bounce back in Q4 has not occurred. Total construction work has fallen for three quarters and other components of construction sector show multi-quarter falling trend. This data will have negative impact on Q4 GDP. Capex for Q4 came in at 2% q/q vs 1% q/q as expected suggesting positive investment outlook and it will partially offset abysmal construction data.

Chinese Manufacturing PMI for the month of February came in at 49.2 vs 49.5 as expected for a third consecutive month of contraction (below 50). This is a three-year low. Since China is the main importer of Australian metals this reading is worrisome for AUD. Non-Manufacturing PMI came in at 54.3 vs 54.5 as expected and composite PMI came in at 52.4 vs 53.2 the previous month. Caixin Manufacturing PMI came in at 49.9 vs 48.5 for a hefty beat although barely in the contraction territory. New orders rose to 50.2, back into expansion.

This week we will have very busy calendar for AUD. RBA interest rate decision will take centre stage. Rate is expected to stay unchanged so the text of the statement and speech by governor Lowe will be closely monitored for further guidance on monetary policy. We will also have housing, trade balance and consumption data as well as Q4 GDP. Additionally, we will have PMI, inflation and trade balance data from China.

Important news for AUD:

Monday:

– Building Approvals

Tuesday:

– RBA Interest Rate Decision
– RBA Rate Statement
– Caixin Services PMI (China)
– RBA Governor Lowe Speech

Wednesday:

– GDP

Thursday:

– Trade Balance
– Exports
– Imports
– Retail Sales

Friday:

– Trade Balance (China)
– Exports (China)
– Imports (China)

Saturday:

– CPI (China)

NZD

Retail sales data for Q4 came in at 1.7% q/q vs 0.5% q/q as expected. This is the highest reading since Q1 of 2017 and it is an impressive beat, especially taking into consideration how poorly retail sales data were for other countries. Trade balance for the month of January came in at -NZD914m vs -NZD300m as expected. Exports came in lower than expected while imports were higher than expected resulting in higher than expected trade balance deficit.

This week we will have bi-weekly GDT auction, manufacturing sales and consumption data.

Important news for NZD:

Tuesday:

– GDT Price Index

Thursday:

– Manufacturing Sales

Sunday:

– Electronic Card Retail Sale

s

CAD

CPI for the month of month of January came in at 1.4% y/y vs 1.5% y/y as expected with prior reading being 2% y/y. CPI common, trim and core came in in-line with the expectations with first two coming at 1.9% y/y and core at 1.8% y/y. Q4 GDP came in at 0.4% q/q vs 1% q/q as expected and -0.1% m/m vs 0% m/m as expected. Horrible GDP data and it was released earlier so there was no immediate huge spike on CAD pairs but it continues to weaken across the boards. Business investment data show huge drop led by residential investment of -14.7%.

This week we will have trade balance data and employment data on Friday which will be published at the same time as NFP data. BOC Rate decision is not expected to bring a rate change and we will see if the statement continues with hawkish tone after abysmal GDP data.

Important news for CAD:

Wednesday:

– BOC Interest Rate Decision
– BOC Rate Statement
– Trade Balance
– Exports
– Imports

Friday:

– Employment Change
– Unemployment Rate
– Participation Rate

JPY

Retail sales for the month of January came in at -2.3% m/m vs -0.8% m/m. This is a huge miss and troubling data. If consumption continues to fall deeper into negative territory inflation will never reach target of 2%. Industrial production was also a big miss coming in at -3.7% m/m vs -2.5% m/m as expected for a third consecutive month of falling output. Data can be distorted in January and February due to Chinese Lunar New Year, however this is such a huge miss that it cannot be attributed solely to the usual distortions and it will certainly not deter BOJ from further easing.

Headline inflation for Tokyo area came in at 0.6% y/y vs 0.4% y/y as expected. Core CPI came in at 1.1% y/y vs 1% as expected so at least inflation in Tokyo area is picking up. The unemployment rate ticked higher to 2.5% and the job to applicant ratio stayed at 1.63 as expected. Manufacturing PMI fell into contraction territory for the first time since August of 2016, coming in at 48.9. Output component fell most heavily to 47.7 from 54.4 in January.

This week we will have final Q4 GDP reading as well as data on household spending and trade balance.

Important news for JPY:

Friday:

– GDP
– Household Spending
– Current Account
– Goods Trade Balance

CHF

GDP figures for Q4 came in at 0.2% q/q vs 0.4% q/q as expected with prior reading showing -0.3% q/q. Bounce back was softer than expected, but a technical recession was avoided since Q4 GDP came in positive. Retail sales number came in at -0.4% y/y vs 0.4% y/y as expected. Consumption continues to hinder economic confidence.

This week we will have data on inflation and employment.

Important news for CHF:

Tuesday:

– CPI

Thursday:

– Unemployment Rate

TradersWay · March 11, 2019, 12:59pm

Forex Major Currencies Outlook (Mar 11 – Mar 15)

USD

ISM Non-Manufacturing index came in at 59.7 vs 57.4 as expected with prior reading showing 56.7. This is a strong result for the service sector lead by highest jump in new orders since 2005. Trade balance for the month of December came in at -$59.8bn vs -$57.9bn as expected. Trade deficit continues to widen and is the highest since October 2018. Exports have fallen -1.9% while imports have risen 2.1%. Goods deficit is -$81.54bn while services had a surplus of $21.77bn. US-China trade deficit came in at -$36.83bn vs -$37.86bn the previous month. December was the first month of tariff suspension.

NFP number unpleasantly surprised everyone by coming at 20k vs 180k as expected. Government shutdown and extremely cold weather had an impact on the jobs market but it is yet to be discerned how much of this abysmal number is due to those two factors. The unemployment rate ticked down to 3.8% vs 3.9% as expected. Participation rate stayed the same at 63.2%. Average hourly earnings grew 0.4% m/m vs 0.3% m/m as expected and 3.4% y/y vs 3.3% y/y as expected. The broader U-6 unemployment rate takes discouraged people and those who want full-time jobs but work only part-time into account and it plunged to 7.3% vs 8.1% the previous month. Apart from the terrible headline number this is overall a very favourable report for US economy.

This week we will have data on consumption, inflation, durable goods, housing and consumer sentiment.

Important news for USD:

Monday:

Retail Sales
Business Inventories

Tuesday:

CPI

Wednesday:

Durable Goods

Thursday:

New Home Sales

Friday:

Industrial Production
Michigan Consumer Sentiment
Michigan Consumer Expectations

EUR

Final services PMI for the month of February came in at 52.8 vs 52.3 as expected with all of the main countries showing expansion in services sector thus temporarily removing those dark clouds that hover above the EU economy. Retail sales came in at 1.3% m/m as expected for a nice bounce from -1.4% m/m the previous month.

ECB has left key rates unchanged as expected but they have made changes to forward guidance regarding interest rates and announced new TLTROs (TLTRO III) that will start in September of 2019 and end in March of 2021. Full details of the new TLTRO will be announced in June. Governor Draghi stated that hikes will not be raised until December of 2019 although some members of the Governing Council believe that rate hike should be delayed until 2020. The slowdown is largely due to slower external demand but also country-specific factors. Risks to economic outlook is still tilted to the downside. ECB forecasts for 2019 GDP is now at 1.1% vs 1.7% in January and inflation in 2019 is now at 1.2% vs 1.6% the previous month. Big slashes in projections and since ECB already lowered projections in December, this is the second downgrade in less than 3 months. EURUSD has fallen below 2018 lows after Draghi’s presser.

This week we will have data on industrial production and inflation.

Important news for EUR:

Wednesday:

Industrial Production

Friday:

CPI

GBP

Markit construction PMI for the month of February came in at 49.5 vs 50.5 as expected. The reading dropped into contraction territory, housing and commercial projects are being delayed due to the ongoing Brexit situation. Services PMI came in at 51.3 vs 49.9 thus strongly pushing it away from contraction.

Reports state that Attorney General Cox presented two ideas to EU’s Barnier regarding the Brexit deal and they were both rejected. Seems that PM May will face imminent defeat in Parliament.

This week we will have data on industrial and manufacturing production, January GDP as well as trade balance. Additionally, we will have the meaningful vote that will put some clarity on further direction in the Brexit process, although it can cause a great volatility for GBP.

Important news for GBP:

Tuesday:

Meaningful vote in the Parliament
GDP
Industrial Production
Manufacturing Production
Trade Balance

AUD

Caixin Services PMI came in at 51.1 vs 53.5 as expected for a huge miss. Main culprit is the new businesses index which dropped indicating slowing growth in demand across the services sector. Employment measure also edged down but stayed in expansion. Trade balance for the month of February came in at CNY34.46bn vs CNY252.3bn as expected. Exports were down -16.6% y/y while imports came in at -0.3% y/y. These are awful numbers caused by the trade war, however due to the Lunar new year holidays in January and February data tends to be distorted.

RBA has left rates on hold as expected with comment that low rates are supporting of the economy. They characterized the outlook for household spending and effect of falling housing prices as main uncertainties. Central scenario for underlying inflation is 2% in 2019, and 2.25% in 2020. Labour market remains strong and further fall in the unemployment rate to 4.75% is expected. Wage growth is expected to gradually pick up and central scenario for growth is around 3% this year. RBA continues with their story although data from Australia has constantly fell short of the expectations.

Q4 GDP data came in at 0.2% q/q vs 0.3% q/q as expected and 2.3% y/y vs 2.6% y/y as expected for a big miss. Government spending and inventories were positives while negatives where household consumption, residential construction, business investments and exports. Markets are gradually pricing in a greater chance of a rate cut in the second half of the year with some banks preaching for 2 rate cuts in total of 50 bps with the first being in August.

Trade balance data for the month of January came in at AUD4549m vs AUD2750m as expected. Exports rose 5% m/m while imports rose 3% m/m for the 13th straight month of surplus. However, AUD was hit by the weak retail sales data which came in at 0.1% m/m vs 0.3% m/m as expected. Although it is a decent bounce back from the prior month of -0.4% m/m.

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

Important news for AUD:

Tuesday:

Home Loans
Westpac Consumer Confidence

Thursday:

Retail Sales (China)
Industrial Production (China)

NZD

The commodity price index for the month of February came in at 2.8% m/m vs 2.1% m/m the previous month. Main contributors were dairy prices and GDT auction showed 3.2% rise in prices. This is the seventh consecutive auction of rising dairy prices which will bode well for exports and GDP figures.

This week we will have data on Food Price Index which is expected to beat the expectations due to positive GDT auction and rise in dairy prices.

Important news for NZD:

Tuesday:

Food Price Index

CAD

Trade balance data for the month of December came in at -CAD4.59bn vs -CAD2.8bn as expected. This is the biggest trade deficit in at least 20 years. Exports have fallen for the fifth consecutive month and came in at -3.8% while imports rose 1.6%. Falling oil prices had a colossal impact on these abysmal numbers with export of energy products falling 21.7%. They can mean that Q4 GDP is very close to negative.

BOC has left interest rate unchanged at 1.75% as was widely expected. BOC stated that recent data suggest that the slowdown in the global economy has been more pronounced and widespread than forecasted in January, trade tensions and uncertainty are weighing heavily on confidence and economic activity. BOC is projecting a temporary slowdown in late 2018 and early 2019, mainly because of last year’s drop in oil prices, the slowdown in the fourth quarter was sharper and more broadly based. It now appears that the economy will be weaker in the first half of 2019 than projected in January.

Canadian net change in employment came in at 55.9k vs 1.2k as expected for a healthy beat. The unemployment rate remained at 5.8% as expected. Hourly wage rate rose to 2.2% vs 1.7% as expected. Participation rate also rose to 65.8 vs 65.6 the previous month. Full-time employment change came in at 67.4k vs 0.8k as expected. More people were employed in professional, scientific and technical services; public administration; natural resources; and agriculture. Very strong report that will give BOC some comfort seeing that tight labour market conditions persist.

This week we will have data on manufacturing sales.

Important news for CAD:

Friday:

Manufacturing Sales

JPY

Nikkei Services PMI came in at 52.3 vs 51.6 the previous month and composite PMI came in at 50.7 vs 50.9 the previous month. Services are in expansionary territory for 29 straight months. New businesses index rose 54.5 vs 52.1 the previous month. This is the highest since May 2013 and it pushed services higher. Drop in composite PMI is caused by drop in manufacturing PMI.

Final GDP numbers for Q4 came in at 0.5% q/q vs 0.3% q/q preliminary and 1.9% y/y vs 1.4% y/y preliminary. GDP was pushed higher by rise in capex and household spending. Household spending came in at 2% y/y vs -0.5% y/y as expected for a huge beat. Current account showed a rise in surplus to JPY600.4bn boosted by lower than expected trade balance deficit which came in at -JPY964.8bn. Although trade balance deficit came in lower than expected it is still the largest in 5 years.

This week we will have BOJ rate decision as the highlight of the week. There will be no changes in the bank rate so more emphasis will be placed on statement and press conference. We have had mixed data coming in from Japan so more clarification on monetary policy measures will be very welcomed. Additionally, we will have trade balance data.

Important news for JPY:

Friday:

BOJ Interest Rate Decision
BOJ Monetary Policy Statement
BOJ Press Conference
BOJ Governor Kuroda Speech
Trade Balance
Exports
Imports

CHF

CPI for the month of February came in at 0.4% m/m as expected for a nice rebound from -0.3% m/m the previous month, however core CPI has ticked down and came in at 0.4% y/y vs 0.5% y/y as expected. SNB’s Zurbruegg says central bank is ready for Brexit and that they are prepared to take measures if needed. The unemployment rate came in at 2.7% as expected ticking down from 2.8% the previous month.

katetrades · March 19, 2019, 8:30am

Forex Major Currencies Outlook (Mar 18 – Mar 22)

USD

Advanced retail sales form the month of January came in 0.2% m/m vs 0% as expected. Ex auto category came in at 0.9% m/m vs 0.3% m/m as expected and control group, which has influence on inflation, came in at 1.1% m/m vs 0.6% m/m as expected. Encouraging numbers but reaction in USD was lackluster. USD debt soared to new record highs of over $22 trillion.

CPI for the month of February came in at 1.5% y/y vs 1.6% y/y as expected and 0.2% m/m as expected. Core CPI came in at 2.1% y/y vs 2.2% y/y as expected. Small misses on the numbers which weakened USD across the boards. Durable goods for the month of January came in at 0.4% m/m vs -0.4% m/m as expected. Capital goods orders nondefense ex air 0.8% m/m vs 0.2% m/m as expected. Better than expected reading especially considering weak numbers in previous months, but there is still a lot of ground to be covered for it to be characterized as healthy. Core durable goods came in at -0.1% m/m vs 0.1% m/m as expected.

This week FED will publish updated economic projections known as the “dot plot”. Fed has pledged patience on interest rates since January so the focus is now on how it translates into the updated projections. Additionally, we will have housing and factory data as well as preliminary PMI numbers.

Important news for USD:

Tuesday:

– Factory Orders

Wednesday:

– FOMC Interest Rate Decision
– FOMC Statement
– FOMC Economic Projections
– FOMC Press Conference

Friday:

– Markit Manufacturing PMI
– Markit Services PMI
– Markit Composite PMI
– Existing Home Sales

EUR

Industrial production for the month of January came in at 1.4% m/m vs 1% m/m as expected. Decent and much needed beat for EU data. Ifo institute has slashed German GDP forecast from 1.1% to 0.6%. CPI data came in line with preliminary reading, headline CPI at 1.5% y/y and core CPI at 1% y/y.

This week we will have trade balance data, economic sentiment data from ZEW as well as preliminary PMI numbers. Additionally, EU Summit will be held on March 21-22.

Important news for EUR:

Monday:

– Trade Balance

Tuesday:

– ZEW Economic Sentiment Indicator (Germany and EU)
– Wage costs

Thursday:

– EU Leaders Summit
– Consumer Confidence

Friday:

– EU Leaders Summit
– Markit Manufacturing PMI (Germany, France, EU)
– Markit Services PMI (Germany, France, EU)
– Markit Composite PMI (Germany, France, EU)

GBP

GDP for the month of January came in at 0.5% m/m vs 0.2% m/m as expected. Excellent start of the year for UK’s economy propped up by factory activity data. Manufacturing, industrial and construction have all beaten the expectations with construction output coming in at 2.8% m/m vs 0.8% m/m as expected. The economy is standing on the firm grounds, however Brexit is the main culprit influencing movements of GBP and for now pushes the data into the bacground.

Attorney General Cox has stated that legal risk remains unchanged and that UK will not have lawful means of exiting agreement. On March 12 PM’s Brexit deal was defeated in Parliament by whooping result of 391–242. On March 13 Parliament voted 312-308 in favour of never leaving the EU without a Brexit deal, this vote is non-binding, so there is a chance of UK could still face a no-deal Brexit. Parliament voted 321-278 in favour of not leaving the EU without a deal on 29 March. On March 14 Parliament voted 413-202 for extension on Article 50 effectively delaying the exit post March 29. Early indications show that EU may offer 1-2 year extension.

This week we will have data on employment, earnings and inflation. BOE is expected to keep interest rate unchanged so minutes will provide us with more insight on how BOE accesses Brexit uncertainties. Third meaningful vote will be held on March 20 and due to happenings surrounding the Brexit process higher than usual volatility can be expected on all GBP pairs. That volatility can be easily triggered by any Brexit related news so we would caution you to lower your lot sizes when trading GBP pairs.

Important news for GBP:

Tuesday:

– Average Hourly Earnings
– Unemployment Rate
– Claimant Count Change

Wednesday:

– CPI

Thursday:

– BOE Interest Rate Decision
– BOE MPC Meeting Minutes
– Third meaningful vote in the Parliament

AUD

China CPI came in at 1.5% y/y as expected although PPI came in slightly weaker than expected. Retail sales came in at 8.2% y/y vs 8.1% y/y as expected. Fixed asset investment came in at 6.1% y/y vs 6% y/y as expected and property investment rose 11.6% y/y vs 9.5% y/y the previous month while industrial production came in at 5.3% y/y vs 5.6% y/y as expected. Chinese economy was generally steady in period January-February, however downward pressures still exist. Industrial production has fallen to its lowest in 17 years.

Westpac consumer confidence for the month of March plunged to -4.8% m/m vs 4.3% m/m the previous month. A number of weak data coming from Australia lowered the confidence of consumers which in turn pressures the AUD down.

This week we will have minutes from the latest RBA meeting. Markets expect them to be dovish. Any excessive dovishness may push AUD downwards. We will also get employment data.

Important news for AUD:

Tuesday:

– RBA Meeting Minutes

Thursday:

– Employment Change
– Unemployment Rate

NZD

Food price index for the month of February came in at 0.4% m/m vs 1% m/m the previous month. This is a bit surprising reading considering the strong GDT auctions. Food price index comprises around 19% of the CPI. Manufacturing PMI for the month of February came in at 53.7 vs 53.1 the previous month. Production and new orders sub indexes contributed most to the number.

This week we will have regular bi-weekly GDT auction data on current account and Q4 GDP data which may influence RBNZ decision to cut interest rates later in the year.

Important news for NZD:

Tuesday:

– GDT Price Index
– Current Account

Wednesday:

– GDP

CAD

New housing price index for the month of January came in at -0.1% m/m vs 0% m/m as expected. Existing home sales for the month of February came in at -9.1% m/m vs -4% m/m as expected. Abysmal numbers showing price uncertainty present in Canadian housing market. Manufacturing sales in January have jumped to 1% m/m vs 0.4% m/m as expected with prior reading showing -1.3% m/m. Good number that will offset mainly poor data coming from Canada, apart from employment reports.

This week we will have data on wholesale trade, inflation and consumption.

Important news for CAD:

Thursday:

– Wholesale Trade

Friday:

– CPI
– Retail Sales

JPY

BOJ has left interest rate unchanged as expected. They concluded that Japan’s economy is expanding moderately but exports and output are affected by slowdown overseas. No changes in monetary policy and downgrades to the economic outlook were expected by the market and BOJ delivered. Governor Kuroda stated that momentum towards achieving 2% inflation target is maintained and emphasized that it is necessary to reach the target in order to achieve stable prices.

This week we will have trade balance data, minutes from the latest BOJ meeting, national inflation data and preliminary manufacturing PMI number for the month of March.

Important news for JPY:

Monday:

– Trade Balance
– Exports
– Imports
– Industrial Production

Wednesday:

– BOJ Monetary Policy Meeting Minutes

Friday:

– CPI
– Nikkei Manufacturing PMI

CHF

Important news for CHF:

Tuesday:

– Trade Balance
– Exports
– Imports

Thursday:

– SNB Interest Rate Decision

This week we will have trade balance data and interest rate decision. SNB will not make any changes as they patiently follow moves from ECB.

katetrades · March 25, 2019, 8:25am

Forex Major Currencies Outlook (Mar 25 – Mar 29)

USD

FED has left the interest rate unchanged as expected. Labour market has remained strong and on average job gains have been solid. They will begin to slow balance sheet runoff in May and will end it in September if the economy evolves as expected. Economic growth has slowed from a solid rate in Q4 and indicators are pointing to slowing growth in household consumption and business investment. New dot plot forecast revealed that 11 out of 15 US policy makers no longer believe that a rate hike is necessary this year which is a serious downgrade from the 2 rate hikes that were previously expected. GDP growth for 2019 has been cut from 2.3% to 2.1% and to 1.9% in 2020 from 2%.

This week we will have a great number of housing data, consumer confidence, trade balance data, final Q4 GDP reading and PCE inflation data.

Important news for USD:

Tuesday:

– Housing Starts
– Building Permits
– Consumer Confidence Index

Wednesday:

– Trade Balance
– Exports
– Imports

Thursday:

– GDP
– Pending Home Sales

Friday:

– PCE
– New Home Sales

EUR

Trade balance data for January came in at EUR17bn vs EUR15bn as expected. Both exports and imports rose with first coming in at 0.8% m/m and latter 0.3% m/m. ZEW survey of economic sentiment came in at -2.5 vs -18.7 as expected signalling that although the reading is in negative territory there are hopes that the worst is behind us as major economic risks are viewed as less dramatic now.

Preliminary manufacturing PMI for the Eurozone in March came in at 47.6 vs 49.5 as expected. The huge plunge in the number was driven by devastating manufacturing PMI from Germany that came in at 44.7 vs 48 as expected for the lowest reading since August 2012. French manufacturing PMI dipped into contraction coming in at 49.8. Services PMI came in as expected while composite was dragged lower by manufacturing data. EUR is lower across the markets against all of the majors as worries about the health of EU economy mount. Yields on German 10-year bond turn negative for the first time since October 2016.

This week we will have data on consumer confidence and sentiment for the EU as well as inflation, consumption and employment data from Germany.

Important news for EUR:

Monday:

– Ifo Business Climate (Germany)

Thursday:

– Economic Sentiment Indicator
– Consumer Confidence Index
– CPI (Germany)

Friday:

– Retail Sales (Germany)
– Unemployment Change (Germany)
– Unemployment Rate (Germany)

GBP

Average weekly earnings came in at 3.4% 3m/y as the prior quarter but 3.2% 3m/y was expected so a nice beat there. The unemployment rate fell to 3.9% vs 4% as expected for an additional beat. Employment change came in at 222k vs 120k for a fantastic beat. Jobless claims change came in at 27k vs 14.2k the previous month for the only dent in strong employment report. In the normal circumstances this report would bump BOE toward raising the rates and push GBP higher, however due to uncertainties surrounding Brexit this report will not have that effect.

Inflation number for the month of February came in at 0.5% m/m as expected and 1.9% y/y vs 1.8% y/y. Core CPI came in at 1.8% y/y vs 1.9% y/y as expected. Data came in-line with expectations with small uptick in headline inflation being offset by small dip in core reading. Retail sales for the month of February came in at 0.4% m/m vs -0.4% m/m as expected. On the yearly level they are now at 4% y/y vs 3.3% y/y as expected. Another batch of stronger than expected data that will not have the desired effect due to the Brexit concerns. BOE has left the official bank rate unchanged as expected noting concerns regarding the Brexit process.

Parliament speaker John Bercow has ruled out the third meaningful vote stating that the UK government could not bring the same exact Brexit deal for another vote. PM May has written to EU seeking extension of Brexit until June 30 and officially announced it on Wednesday. That proposal was not accepted and Brexit is pushed back to at least April 12. This gives PM May a chance to organize a third meaningful vote and if it succeeds the UK will leave EU on May 22. If the vote fails new plan for leaving the EU has to be proposed by April 12. Alternatively, hard Brexit or long delay followed by new leadership can occur.

This week we will have final Q4 GDP reading and business investment as well as possible third meaningful vote on Brexit deal.

Important news for GBP:

– Third Meaningful Vote (tentative)

Friday:

– GDP
– Business Investment

AUD

RBA meeting minutes noted “significant uncertainties” on the economic outlook. Scenarios for the rate moves are more evenly balanced than they had been last year and there is no strong case for near-term move in rates. Labour market continues to improve and unemployment is seen falling to 4.75%. Consumption outlook is uncertain due to the risk of further fall in housing prices.

Employment change showed 4.9k vs 15k as expected for a miss but the number was quickly offset by fall in the unemployment rate to 4.9% which is a huge positive since it moves toward RBAs projection. On the negative side we have a miss in the headline number, the fact that the number of full-time workers dropped and that rise in employment change was all due to part time employment change. Participation rate also ticked down to 65.6%.

This week on Sunday manufacturing and non-manufacturing data from China will be published.

Important news for AUD:

Sunday:

– Manufacturing PMI (China)
– Non-manufacturing PMI (China)

NZD

GDT price index came in at 1.9% for the eighth straight auction with higher prices. Q4 GDP came in at 0.6% q/q as expected with 2.3% y/y vs 2.5% y/y as expected. Main contributor to the GDP growth were service industries at 0.9%. Slowdown in the economy in H2 2018 is visible but it is not as big, therefore a rebound can be expected in Q1 2019 which pushes potential rate cut further in time.

This week we will have trade balance data, housing data and main event of the week will be RBNZ rate decision. It is expected that rate will stay the same. Recent data have indicated to the market that a possible rate cut will not come soon and now we will have a chance to hear RBNZ assessment of the incoming data.

Important news for NZD:

Monday:

– Trade Balance
– Exports
– Imports

Wednesday:

– RBNZ Interest Rate Decision
– RBNZ Rate Statement

Thursday:

– Building Permits

CAD

Canadian budget projections see this year’s deficit at CAD$14.9bn vs CAD$18.1bn the previous projection. GDP growth for 2019 is assumed at 1.8% for 2019 and 1.6% for 2020. There will be incentives on mortgage costs in an attempt to boost the falling housing market. Revenues will be used for social programs and transfers, including skill training, support for seniors and greater prescription coverage.

Wholesale trade in January came in at 0.6% m/m as expected with prior reading showing 0.3% m/m. January retail sales came in at -0.3% m/m vs 0.4% m/m as expected. Much weaker than expected reading with sales falling in 4 of 11 subsectors representing 52% of total retail trade. The main culprit for the drop in retail sales were motor vehicles and parts which dropped 1.5%. CPI for the month of February came in at 0.7% m/m vs 0.6% m/m as expected and 1.5% y/y vs 1.4% y/y as expected. All three core measures came in as expected: common and core at 1.8% y/y and trimmed at 1.9% y/y. Inflation figures can deter BOC for considering rate cuts, but now limelight is on growth which makes next week’s GDP reading all the more important.

This week we will have trade balance data and GDP for the month of January.

Important news for CAD:

Wednesday:

– Trade Balance
– Exports
– Imports

Friday:

– GDP

JPY

Trade balance data for the month of February came in at JPY339bn vs JPY305.1bn as expected. Nice beat on the reading but it was caused by imports falling faster than exports. Imports fell -6.7% y/y which is a biggest drop in last 2 years while exports fell -1.2% y/y which although still negative is a big improvement from the prior month when they were -8.4% y/y. Cars and semiconductors were the main culprit for falling exports. Exports to US, China and Europe all rose, exports to Asia fell. Industrial production for the month of January came in at -3.4% m/m vs -3.7% m/m as expected and 0.3% y/y vs 0% y/y as expected. Slightly better figures but still very weak reading.

National inflation for the month of February came in at 0.2% y/y vs 0.3% y/y as expected. Ex-food came in at 0.7% y/y vs 0.8% y/y as expected and ex-food and energy came in at 0.4% y/y as expected. All are miles away from targeted 2%. Preliminary manufacturing PMI came in unchanged at 48.9. Slowing demand from domestic and international markets caused the sharpest cutback in output volumes in almost three years. New orders component plunged as well.

This week we will have data on inflation from Tokyo area, employment and consumption data as well as industrial production data.

Important news for JPY:

Friday:

– Tokyo area CPI
– Unemployment Rate
– Jobs to Applicants Ratio
– Retail Sales
– Industrial Production

CHF

February trade balance came in at CHF3.13bn vs CHF3.04bn the previous month. Exports rose 1.3% m/m while imports fell -3% m/m. Steady rise in exports is satisfying.

SNB has left interest rate unchanged as expected. They stated that CHF remains highly valued and that situation in FX markets remains fragile. Downgrades have been made to inflation and it is now seen at 0.3% for 2019 and 0.6% for 2020. Governor Jordan stated that negative rates remain an important instrument for the foreseeable future.

katetrades · April 1, 2019, 7:24am

Forex Major Currencies Outlook (Apr 1 – Apr 5)

USD

The US yield curve is inverted and according to the past evidence it points to a recession. The 10-year yield was lower than the 3m yield. After yield curve inverts it can take substantial time, usually more than 11 months, for the recession to occur. Boston FED President Eric Rosengren suggested a change in the Fed’s reinvestment policy in order to fight the yield curve. In his opinion FED should be buying the short end of the curve in order to push short-term borrowing lower and long-term financing higher.

Consumer confidence dropped in March to 124.1 vs 132.5 as expected, rather big drop and widely unexpected. Present situation came in at 160.6 vs 173.5 and expectations slid down to 99.8 vs 103.4 as expected. This is the largest one month drop since 2008. One of the leading indicators painting not so bright picture which can trigger risk off mode in the markets.

Trade balance for the month of January came in at -$51.5bn vs -$57bn as expected. Exports were up 0.9% m/m while imports were down -2.6% m/m. Goods deficit was $73.29bn while services surplus came in at $22.14 bn. Trade balance deficit with China came in at $34.47bn vs $36.83bn the previous month. Slowing imports are not that satisfying but lowering of deficit overall and with China in particular is positive for USD. Services surplus has smashed expectations.

Final reading of Q4 GDP for 2018 came in at 2.2% q/q vs 2.3% q/q as expected and 3% y/y vs 3.1% y/y as expected. Growth was mainly fuelled by president Trump’s tax cuts which resulted in corporate profits after tax of 16.2%. Core PCE number came in at 1.8% y/y vs 1.9% y/y as expected. The FED pays special attention to core PCE so miss is worrying. Personal income and personal spending also came in lower as expected.

This week we will have data on consumption, durable goods, business inventories, final PMI data and on Friday the big event, NFP. This time headline number will be monitored closely due to very low number from the previous month. Expected number is 170k.

Important news for USD:

Monday:

– Retail Sales
– ISM Manufacturing PMI
– Business Inventories

Tuesday:

– Durable Goods

Wednesday:

– ADP Nonfarm Employment Change
– ISM Non-Manufacturing PMI

Friday:

– Nonfarm Payrolls
– Unemployment Rate
– Average Hourly Earnings

EUR

Germany IFO business climate index for the month of March came in at 99.6 vs 98.5 as expected. Both expectations and current assessment beat the expectations coming in at 95.6 and 103.8 respectively. This is a breath of fresh air for the data coming in from Europe after abysmal PMI data last week. These figures support German GDP growth forecast of 0.6% for 2019. Although numbers indicate that the worst is behind Germany and forward-looking picture looks brighter than expected weak GDP forecast still looms. Germany inflation data for the month of March came in at 1.5% y/y vs 1.6% y/y as expected. Lower than expected inflation can drag down the inflation of the EU as a whole. Retail Sales in the month of February for Germany came in at 0.9% m/m vs -1% m/m as expected adding further support to Q1 GDP from consumption. German unemployment rate dropped to 4.9% from 5% the previous month indicating tighter labour market conditions.

This week we will have final PMI data, preliminary inflation data for the month of March, employment and consumption data as well as factory and industrial production data from Germany and accounts from the latest monetary policy meeting.

Important news for EUR:

Monday:

– Markit Manufacturing PMI (EU, Germany, France)
– CPI
– Unemployment Rate

Wednesday:

– Markit Services PMI (EU, Germany, France)
– Markit Composite PMI (EU, Germany, France)
– Retail Sales

Thursday:

– Factory Orders (Germany)
– ECB Monetary Policy Meeting Accounts

Friday:

– Industrial Production (Germany)

GBP

Brexit happenings dominated the week. Parliament and the government battle for control of Brexit and several indicative votes have been organized although none of them are binding. None of the amendments got a clear majority in the Parliament so PM May continued to push for the third meaningful vote on her proposal, but Speaker John Bercow insists it must be meaningfully different from previously defeated versions. PM May offered her resignation after her deal passes. In order to get her deal to pass for voting PM May has split it in half. First half is a withdrawal agreement and second half is the political declaration. If Parliament approves of her withdrawal agreement Brexit date will be moved to May 22 giving her more time to find satisfying solution. The deal has been defeated with 286-344 and GBPUSD fell below 1.30. This is the third time that PM’s deal did not pass in the Parliament.

This week we will have final PMI data as well as continuation of Brexit saga.

Important news for GBP:

Monday:

– Second Round of Indicative Votes
– Markit Manufacturing PMI

Tuesday:

– Markit Construction PMI

Wednesday:

– Markit Services PMI

AUD

Industrial profits in China for the months of January-February (they are combined in order to smooth the out distortions caused by China’s Lunar New Year) came in -14% y/y. This is the biggest fall since 2011 and cause of great concern not only for Australia due to its proximity to China but to whole World as it adds more to the ongoing global slowdown. The situation can improve in Q2 thanks to monetary easing and stimulus, but it is yet to be seen if it will.

This week we will have Caixin PMIs from China, housing data, consumption and trade balance data. Main event will be RBA’s rate decision and given the RBNZ’s dovish decision markets will expect for RBA to follow the suit. Global slowdown, declining consumption and falling housing market may spur RBA to react by announcing that next move will likely be lower.

Important news for AUD:

Monday:

– Caixin Manufacturing PMI (China)

Tuesday:

– RBA Interest Rate Decision
– RBA Rate Statement
– Building Approvals

Wednesday:

– Trade Balance
– Exports
– Imports
– Retail Sales
– Caixin Services PMI (China)
– Caixin Composite PMI (China)

NZD

Trade balance data for the month of February came in at NZD12m vs -NZD200m as expected. Modest surplus but better than expected deficit. Exports rose to NZD4.82bn vs NZD4.7bn for always good news keeping NZD supported ahead of RBNZ rate decision.

RBNZ has kept the cash rate at 1.75% as widely expected however they said that next rate move is likely down. This change from previously neutral stance has caused NZD to plunge across the markets. Inflation and outlook risks have shifted to the downside according to RBNZ and it is necessary to keep low interest rates in order to support economic growth in 2019. Increased government spending and investment will work along with low interest rates in attaining that goal. The next RBNZ meeting is in May and markets start to price in rate hike for November’s meeting and some banks predict first cut in August. Business confidence and activity outlook data put additional pressure on kiwi coming in respectively at -38 vs -30.9 the previous month and 6.3 vs 10.5 the previous month.

This week we will have bi-weekly GDT auction.

Important news for NZD:

Tuesday:

– GDT Price Index

CAD

Trade balance for the month of January came in at -CAD4.25bn vs -CAD3.55bn as expected. Trade deficit shrank from the previous month but still came worse than expected. Exports rose 2.9% m/m and imports rose 1.5% m/m. The largest positive contributor to exports was the energy sector that came in at 14% m/m. Exports are up 3.1% y/y while imports are up 8.3% y/y.

January GDP came in at 0.3% m/m vs 0% m/m as expected and 1.6% y/y vs 1.3% y/y as expected. Goods producing sectors contributed with 0.6% and services producing sectors contributed with 0.2%. Manufacturing came in at 1.5% offsetting losses in previous months and construction rose 1.9% for largest expansion since July 2013. The reading beat the markets expectations and CAD has strengthened against all majors.

This week we will have final PMI readings as well as employment data on Friday. Please note that Canadian employment data will be released at same time as US employment data which can cause increased volatility on USDCAD pair.

Important news for CAD:

Monday:

– Markit Manufacturing PMI
– BOC Governor Poloz Speech

Thursday:

– Ivey PMI

Friday

– Employment Change
– Unemployment Rate

JPY

Tokyo area inflation for the month of March came in line with expectations at 0.9% y/y. CPI excluding fresh food came in at 1.1% y/y as expected. The unemployment rate dropped down to 2.3% from 2.5%. Retail sales missed coming in at 0.2% m/m vs 1% m/m as expected and 0.4% y/y vs 1% y/y as expected. With this kind of low consumption chances of inflation rising are very slim. Industrial production for the month of February came in at 1.4% m/m as expected.

This week we will have Tankan indices, manufacturing and services PMI and household spending data.

Important news for JPY:

Monday:

– BOJ Tankan Large Manufacturing Index
– BOJ Tankan Large Non-Manufacturing Index
– Nikkei Manufacturing PMI

Wednesday:

– Nikkei Services PMI

Friday

– Household Spending
– Labour Cash Earnings

CHF

Investor sentiment for the month of March, which measures expectations on the Swiss economy and other economic expectations over the next 6 months, fell to -26.9 vs -16.6 the previous month.

This week we will have consumption and inflation data.

Important news for CHF:

Monday:

– Retail Sales

Tuesday:

– CPI

katetrades · April 8, 2019, 7:25am

Forex Major Currencies Outlook (Apr 8 – Apr 12)

USD

February retail sales came in at -0.2% m/m vs 0.3% m/m as expected. Ex autos category came in at -0.4% m/m vs 0.3% m/m as expected. ISM manufacturing PMI for the month of March came in at 55.3 vs 54.5 as expected. Beating on the reading and higher than previous number of 54.2. New orders, employment and prices paid components of the reading all heftily beat the previous reading. ISM non-manufacturing PMI came in at 56.1 vs 58 as expected. Considerable drop in new orders but the index is still at very high levels. Preliminary February durable goods came in at -1.6% vs -1.8% as expected. Non-defence ex air category came in at -0.1% vs 0.1% as expected. Mixed bag of data with numbers close to expectations.

NFP headline for the month of March came in at 196k vs 177k as expected, above 6-month average of 190k showing that February number was just a one-off. The unemployment rate stayed at 3.8%. Participation rate dropped to 63% from 63.2 the previous month and average hourly earnings dropped as well to 3.2% y/y from 3.4% y/y the previous month. Employment in manufacturing sector came in negative 6k vs 10k as expected for the first decline in the sector since October 2016. Drop in earnings will have negative impact on USD.

This week we will have data on factor orders, inflation, budget balance and FOMC minutes that should give us more insight into FED’s decision process.

Important news for USD:

Monday:

– Factory Orders

Wednesday:

– CPI
– FOMC Minutes
– Federal Budget Balance

EUR

Preliminary CPI for the month of March came in at 1.4% y/y vs 1.5% y/y as expected. Core CPI number came in at 0.8% y/y vs 0.9% y/y as expected with prior reading showing 1% y/y. Inflation is moving in the opposite direction from the targeted 2% rate. Drop in core reading is especially worrisome. The unemployment rate came in as expected at 7.8% but the fall in unemployment is still not translating into a rise in inflation as the figures above demonstrate. Final services PMI for the EU came in at 53.3 vs 52.7 preliminary. Better reading was propped by big gains in Italy and Spain. February retail sales came in at 0.4% m/m vs 0.3% m/m as expected and 2.8% y/y vs 2.3% y/y as expected giving some uplift to Q1 economic conditions. German factory orders came in at -4.2% m/m vs 0.3% m/m as expected. Abysmal reading showing the biggest drop in last 2 years. German GDP growth forecast was cut by the leading five economic institutes in Germany to 0.8% from previous forecast of 1.9%. ECB minutes show that ECB’s view was that solid growth will return later in 2019. Industrial production came in at 0.7% m/m vs 0.5% m/m as expected due to the jump in construction activity alleviating some pressures from German economy.

This week we will have data on industrial production, European Summit deciding on Brexit extension and centre stage will be taken by ECB interest rate decision and press conference by Governor Draghi later on. Interest rate is expected to stay the same but due to mixed data coming in from the EU (Services PMIs and retail sales are up, inflation, manufacturing PMI and German factory orders are down) we may see further downgrades to economic outlook.

Important news for EUR:

Wednesday:

– European Summit
– ECB Interest Rate Decision
– ECB Monetary Policy Press Conference

Friday:

– Industrial Production

GBP

Manufacturing PMI for the month of March came in at a whopping 55.1 vs 51.2 as expected. On the surface it looks like a huge beat however stockpiling due to Brexit uncertainty produced this high reading. Stocks of purchases component came in at 66.2 which is a new G7 record. Services PMI dropped to contraction territory coming in at 48.9 vs 50.9 as expected which brought composite PMI down to 50. Right on the edge.

According to the model created by Goldman Sachs that measures costs has UK suffered due to Brexit, they amount to £600m per week since 2016 referendum and total nearly 2.5% of GDP. Parliament voted in favour of a bill that would block a no-deal Brexit (by one vote) suggesting that PM May will have to ask for an extension beyond April 12. EU will not accept another short extension of Article 50. The options from EU standpoint are to accept current deal or to take a long extension until the end of the year or March 2020. PM May has sent a letter to the EU proposing a Brexit extension until June 30 with an option for terminating the period early if any deal regarding UK leaving is ratified before this date.

This week we will have data on GDP, industrial, manufacturing and construction output as well as trade balance. We will also have continuation of Brexit saga in last week before the deadline on Friday April 12.

Important news for GBP:

Wednesday:

– GDP
– Industrial Production
– Manufacturing Production
– Construction Output
– Trade Balance

AUD

Official manufacturing PMI for the month of March came in at 50.5 vs 49.6 as expected while services came in at 54.8 vs 54 as expected. Caixin manufacturing PMI for the month of March came in at 50.8 vs 50 as expected. Manufacturing goes back to expansion after 4 months which is great news indicating that stimulus measures are producing an impact. Caixin services PMI came in at 54.4 vs 52.3 for a big jump which also pulled composite PMI to 52.9.

RBA has left cash rate at 1.5% as widely expected citing strong labour market and dropping of the unemployment rate to 4.9% which led to some increase in growth of wages. Continued improvement in the labour market is expected to lead to further rises in wages, although this is expected to be a gradual process. They state that global growth has slowed down and that downside risks have increased. Rather weak growth in household consumption is caused by periods of weakness in real household income and the adjustment in housing market.

The budget for 2019-20 has been announced and it shows a surplus of AUD7.1bn. GDP growth is seen at 2.75% and CPI is seen at 2.25%. There is a proposal for AUD158bn in tax cuts over the next 10 years to provide some help for Australian consumer.

Retail sales for the month of February came in at 0.8% m/m vs 0.3% m/m as expected for a huge beat. Seems like RBA had this info so they decided not to go for dovish stance in their statement. Trade balance for the same month came in at AUD4.81bn vs AUD3.7bn. Surplus continues to grow but it was spurred by lower imports that came in at -1% m/m while exports were unchanged.

This week we will have RBA financial stability review and speech from deputy governor Debelle. From China we will get data on inflation and trade balance.

Important news for AUD:

Wednesday:

– RBA Deputy Governor Debelle Speech

Thursday:

– CPI (China)

Friday:

– Trade Balance (China)
– Exports (China)
– Imports (China)
– RBA Financial Stability Review

NZD

GDT price index came in at 0.8% for a ninth consecutive auction with gains in a row.

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

Important news for AUD:

Friday:

– Electronic Card Retail Sales
– BusinessNZ Manufacturing Index

CAD

Governor Poloz emphasized BOC data dependence when it comes to a decision regarding rates. Current data shows a “mixed picture” that must be carefully monitored. Outlook continues to warrant rates that are below neutral range. BOC is not forecasting a recession and we may need to get accustomed to seeing curve inversion more often. He considers core inflation close to 2% a big success. Ivey PMI for the month of March came in at 54.3 vs 50.6 the previous month. Another beating from Canadian data.

Net change in employment for the month of March came in negative 7.2k vs 6k as expected. Both full-time and part-time employment were negative with former coming in at -6.4k and later coming in at -0.9k. Average hourly rate came in at 2.3% y/y vs 2.2% y/y as expected. This was the first drop in employment change in 7 months with private sector leading the way with -17.3k jobs. Rising wages will be welcomed by BOC.

This week we will have data on housing.

Important news for CAD:

Monday:

– Housing Starts
– Building Permits

JPY

Tankan survey results came in worse than expected showing that sentiment among the largest producers softened while capex barely beat the forecast. Final Nikkei manufacturing PMI for the month of March came in at 49.2 vs 48.9 preliminary. Demand remains weak pulling the output lower. Nikkei services PMI also came in weaker than expected at 52.0.

Household spending for the month of February came in at 1.7% y/y vs 1.9% y/y due to dreadful earnings. Labour cash earnings came in at -0.8% y/y vs 0.9% y/y as expected for the second straight y/y drop. Real cash earnings came in at -1.1% y/y vs 0.8% y/y as expected. Downward spiral of lower earnings which leads to lower consumption will not be able to lift inflation towards magical target of 2%.

This week we will have data on consumer confidence and machinery orders as well as speech from BOJ governor Kuroda.

Important news for JPY:

Monday:

– Consumer Confidence

Wednesday:

– BOJ Governor Kuroda Speech
– Machinery Orders

CHF

Retail sales in February came in at -0.2% y/y vs -0.4% y/y as expected and 0.3% m/m. Overall consumption remains sluggish, not showing much confidence in Swiss economy. SNB has reiterated their pledge to intervene in the FX market if necessary and added that negative rates are essential for Swiss economy. Both headline and core CPI for the month of March came in at 0.5% y/y vs 0.4% y/y as expected. This small beating will be well received by SNB, especially rise in the core number, however numbers are still far from targeted 2% level.

This week we will have employment data.

Important news for CHF:

Tuesday:

– Unemployment Rate

katetrades · April 16, 2019, 7:25am

Forex Major Currencies Outlook (Apr 15 – Apr 19)

Please note that Friday 19 is Good Friday, due to the holiday liquidity will be thin and volatile moves are possible.

USD

IMF cut global growth for 2019 to 3.3% from 3.5% for the weakest expected growth in a decade. They left the 2020 projection at 3.6% citing US-China war and Brexit as main uncertainties. US growth is cut to 2.3% from 2.5% while forecast for 2020 growth is raised to 1.9% from 1.8%. Eurozone growth is cut to 1.3% from 1.6% while China’s remains above 6% at 6.3% for 2019 and 6.1% for 2020. Projected growth for advanced economies is 1.8% while emerging economies will grow at rate of 4.4%.

March CPI inflation came in at 1.9% y/y vs 1.8% y/y as expected with prior reading showing 1.5% y/y. Beating on the headline number but core number dropped to 2% y/y vs 2.1% y/y as expected. Wages also dropped down to 1.3% y/y vs 1.9% y/y the previous month. Fall in core inflation and wages will give sign to FED that there is no need to rush with rate hikes. FOMC minutes showed majority of policy makers preaching patience. They see no need to raise rates in 2019.

This week we will have data on industrial production, balance of trades, consumption and housing data and preliminary PMI data for the month of April.

Important news for USD:

Tuesday:

– FED Industrial Production

Wednesday:

– Trade Balance
– Exports
– Imports

Thursday:

– Retail Sales
– Markit Manufacturing PMI
– Markit Services PMI
– Markit Composite PMI

Friday:

– Housing Starts
– Building Permits

EUR

German trade balance for the month of February came in at EUR17.9bn vs EUR16bn as expected. On the surface a great result, beating the expectation, however it was achieved with both exports and imports falling. Exports came in at -1.3% m/m vs -0.5% m/m as expected reflecting higher negative impact of global slowdown. Imports came in at -1.6% m/m vs -0.6% m/m as expected posing questions about weakening domestic demand. Italy’s debt to GDP ratio continues to expand and it is now projected to be at 132.6% for 2019.

ECB left interest rates unchanged as expected stating that rates should stay unchanged at least until the end of 2019. ECB will keep rates low for as long as necessary to ensure sustained convergence of inflation toward the 2% target. Governor Draghi stated in opening statement that inflation will likely decline in the coming months but will increase in the medium term. Ample degrees of stimulus are still needed. Employment gains and wages underpin economy, other data continues to be weak, especially in manufacturing. During press conference Draghi stated that it is too early to decide on tiered negative rates, further analysis is needed. The outlook is worsening growth however risk of Eurozone recession remains low. Draghi reiterated that ECB is ready to use all instruments at their disposal which is a very dovish message. Markets took it as such and EUR fell against the majors.

This week we will have data on sentiment in EU and Germany, final inflation rate for the month of March, trade balance data and preliminary PMI data for the month of April.

Important news for EUR:

Tuesday:

– ZEW Economic Sentiment Indicator (EU and Germany)

Wednesday:

– CPI
– Trade Balance

Thursday:

– Markit Manufacturing PMI (EU, Germany, France)
– Markit Services PMI (EU, Germany, France)
– Markit Composite PMI (EU, Germany, France)

GBP

February GDP number came in at 0.2% m/m vs 0% m/m as expected and 0.3% 3m/m vs 0.2% 3m/m as expected. Encouraging beats signalling that UK’s economy is holding on in the midst of Brexit uncertainties. Both manufacturing and industrial output beat the expectations, however main cause of these good results is stockpiling due to the Brexit. Stockpiling is giving a boost to the economy now but it can be dangerous in the long run.

EU leaders have given an extension to the UK until October 31 with review in June. This is longer than PM May was hoping for but shorter than initial EU offering so compromise has been struck. This also means that UK will participate in EU elections, which are to be held in late May, unless a deal is struck before May 22. Extension shows that neither sides are willing to go for no deal Brexit. However, this six months extension puts more uncertainty for business, particularly decisions on investments or expansions and can have potentially devastating effects on UK economy.

This week we will have employment and wages data as well as data on inflation and consumption. Since Brexit is delayed and Parliament will be on recess due to Easter holidays next week we can expect higher weight to be given to the economic data.

Important news for GBP:

Tuesday:

– Claimant Count Change
– Unemployment Rate
– Average Weekly Earnings

Wednesday:

– CPI

Thursday:

– Retail Sales

AUD

RBA deputy governor Debelle assessed jobs market as surprisingly strong adding that leading indicators are strong. Tension between strength in jobs and weakness in output data is present not only in Australia but in many developed economies as well. Consumption growth was “considerable slower” in H2 of 2018 then RBA has expected and higher wages are needed for achieving inflation target. RBA could lower rates if the situation calls for it. This last statement suggests that RBA is in no rush to cut rates which has prompted Nomura to lower the probability of a rate cut. RBA Financial stability review showed that risks have increased in household sector and that consumption outlook is uncertain. Household debt levels remain high. Housing risks are considered manageable but they would increase in case of rise in the unemployment rate.

Chinese CPI for the month of March came in at 2.3% y/y as expected. Prior reading was 1.5% and jump in the CPI number was due to higher food prices, especially pork. Rising oil prices have also contributed to the jump in inflation. Trade balance surplus came in at $32.64bn vs $7.05bn as expected on the backs of rising exports (14.2% y/y vs 7.3% y/y as expected) and falling imports (-7.6% y/y vs -1.3% y/y as expected).

This week we will have meeting minutes from the latest RBA meeting as well as employment data. China will publish GDP and consumption data as well as data on industrial production and fixed investments.

Important news for AUD:

Tuesday:

– RBA Meeting Minutes

Wednesday:

– GDP (China)
– Retail Sales (China)
– Industrial Production (China)
– Fixed Asset Investment (China)

Thursday:

– Employment Change
– Unemployment Rate

NZD

Manufacturing PMI for the month of March came in at 51.9 vs 53.7 the previous month. Production and new order sub indexes were lower while employment sub index was higher. Electronic card sales came in at 0.7% y/y vs 3.4% y/y the previous month. Huge drop and considering that card sales constitute about 70% of core retail sales, this paints a bleak picture for the next retail sales as well as inflation report.

This week we will have bi-weekly GDT and inflation data.

Important news for NZD:

Tuesday:

– GDT Price Index

Wednesday:

– CPI

CAD

Housing starts for the month of March came in at 192.5k vs 194k as expected. Building permits came in at -5.7% m/m vs 2% m/m as expected. Second straight month of declining building permits. Canadian real estate is facing issues led by Toronto and Vancouver. New housing price index stayed at 0% m/m as expected.

This week we will have data on manufacturing sales, inflation, balance of trade and consumption.

Important news for CAD:

Tuesday:

– Manufacturing Sales

Wednesday:

– CPI
– Trade Balance
– Exports
– Imports

Thursday:

– Retail Sales

JPY

Current account for the month of February showed bigger than expected surplus coming in at JPY2676.8bn. Trade balance for the same period came in at JPY489.2bn vs JPY591.3bn as expected. Trade tensions have lowered exports and as a result trade balance suffered.

This week we will have data on balance of trade, industrial production, preliminary manufacturing PMI for the month of April and national inflation data.

Important news for JPY:

Wednesday:

– Trade Balance
– Exports
– Imports
– Industrial Production

Thursday:

– Nikkei Manufacturing PMI

Friday:

– CPI

CHF

The unemployment rate for the month of March came in at 2.4% as expected. Strong labour market, tight conditions still not transferring to inflation though.

This week we will have data on balance of trade.

Important news for CHF:

Thursday:

– Trade Balance
– Exports
– Imports

katetrades · April 22, 2019, 7:27am

Forex Major Currencies Outlook (Apr 22 – Apr 26)

Please note that Monday 22 is Easter Monday, due to the holiday liquidity will be thin and volatile moves are possible.

USD

Industrial production for the month of March came in at -0.1% m/m vs 0.2% m/m as expected. The miss that will not have great impact on USD although it doesn’t paint a bright picture about the US industrial complex. Trade balance for the month of February came in at -$49.4bn vs -$53.4bn as expected. Both exports and imports rose, 1.1% and 0.2% respectively. Goods deficit was $72.1bn while services surplus was $22.63bn. Trade deficit with China came in at -$24.76bn vs -$34.47bn deficit the previous month. Tariffs seem to work which will make president Trump very happy. Retail sales for the month of March came in at 1.6% m/m vs 1% m/m as expected. The reading was the strongest in 18 months. Control group was 1% m/m vs 0.4% m/m as expected. Initial jobless claims came in at 192k vs 205k as expected for a fresh new 50 year low.

This week we will have housing and durable goods data with Q1 GDP on Friday. Atlanta FED has raised its GDP forecast to 2.8% while J.P. Morgan Chase sees it at 2.9% on the back of strong rise in control group of retail sales.

Important news for USD:

Monday:

– Existing Home Sales

Tuesday:

– New Home Sales

Thursday:

– Durable Goods Orders

Friday:

– GDP

EUR

ZEW survey of current situation in Germany dropped to 5.5 from 11.1 the previous month while outlook improved to 3.1 from -3.6 the previous month. Improvement in the outlook is based on expectations that the global economy will recover in H2. Several ECB policymakers are said to doubt projections for growth rebound in H2 2019. They think that weakening growth in China, Brexit and trade tensions continue to weigh down.

Preliminary PMI data for the month of April failed to ease concerns about economies in EU zone. German manufacturing PMI came in at 44.5 vs 45 as expected. Almost a negligible improvement from the last month’s reading of 44.1. Eurozone manufacturing PMI came in at 47.8 vs 48 as expected, dragged down by the reading from Germany. Services PMI also came below expectations thus dragging composite to 51.3 vs 51.8 as expected.

This week we will have data on consumer confidence from EU and business climate in Germany.

Important news for EUR:

Tuesday:

– Consumer Confidence Index

Wednesday:

– Ifo Business Climate (Germany)

GBP

The employment report came within expectations. Average hourly earnings came in at 3.5% 3m/y as expected and the unemployment rate stayed at 3.9%. GBP was not moved on this numbers. March CPI data came in at 0.2% m/m as expected and 1.9% y/y vs 2% y/y as expected. Core CPI also dipped on the year to 1.8% y/y vs 1.9% y/y as expected. ONS reports that decline in clothes and food prices as well as slower increase in computer games’ prices offset the rise in fuel prices. Markets didn’t react to the drop in inflation signalling that Brexit still takes centre stage regarding all matters with UK. Retail sales for the month of March came in at 1.1% m/m vs -0.3% m/m as expected. On the yearly level it came at 6.7% y/y vs 4.5% y/y as expected. These are great beats and ONS notes that mild weather boosted sales in March as food shops recovered following a weak February reading.

The Parliament returns to work on Tuesday so there will be more talks about Brexit which could impact GBP.

AUD

RBA meeting minutes revealed that a rate cut would be “appropriate” if inflation stays low and the unemployment rate goes up. The board added that effects of lower rates will likely be smaller than in the past but they will add benefits to the economy via lower AUD and lower interest payments on loans. Since inflation is subdued, there is no need to raise rates in the near term and likelihood remains low.

The employment report showed strong numbers adding to the RBA rhetoric of a strong labour market. Employment change came in at 25.7k vs 15k as expected for a healthy beat. Full time employment change was 48.3k, a very healthy number. Participation rate was higher at 65.7% which led to rise in the unemployment rate to 5% from the previous 4.9% but all in line with expectations.

We had a large amount of data from China and none of them disappointed. Q1 GDP came in at 6.4% y/y vs 6.3% y/y. Retail sales for the month of March came in at 8.7% y/y vs 8.4% y/y as expected. Industrial production came in at 8.5% y/y vs 5.9% y/y as expected. Huge beat on the industrial production number pushed AUD higher. Positive readings show that government stimulus is producing effects. This may ease the worries around the Globe about China slowdown and it can support stumbling national economies.

This week we will have inflation data.

Important news for AUD:

Wednesday:

– CPI

NZD

Services PMI for the month of March came in at 52.9 vs 53.6 the previous month. New orders component dropped to the lowest since September 2012. After last week’s lower manufacturing PMI now, services are also weaker. RBNZ governor Orr confirmed that monetary policy easing bias remains due to softer economic conditions from Europe, US and China.

CPI for the Q1 of 2019 came in at 0.1% q/q vs 0.3% q/q as expected and 1.5% y/y vs 1.7% y/y as expected. Misses in inflation, much lower than expected, will add more fuel to the possibility of a rate cut in May.

This week we will have balance of trade data.

Important news for NZD:

Friday:

– Trade Balance
– Exports
– Imports

CAD

Existing home sales came in at 0.9% vs 2% as expected with prior reading showing -9.1%. Decent rebound from the previous month, but weaker than expected. Housing market continues to pose problems for the Canadian economy. Western Canada sales are “more than 20% below the 10-year average for the month”. BOC Q1 business outlook survey came in at -0.6 vs 2.2 in the previous reading. Future sales dropped to -6% which is lowest in three years. Inflation is expected to decline but will stay within the inflation control range. Lowering of inflation expectations will push back BOC’s intent to raise rates, potentially making a U turn and considering cutting them.

CPI numbers for the month of March came in as expected at 0.7% m/m and 1.9% y/y. Core median and core trim CPI number beat the expectations coming in at 2% y/y and 2.1% y/y respectively while core common came in at 1.8% y/y as expected. Swings up in core inflation were acknowledged in the market as CAD shot higher. Merchandise trade came in at -CAD2.9bn vs -CAD3.25bn as expected. More numbers adding to the CAD strength. Lower than expected trade deficit was achieved with both falling export (-1.3%) and falling imports (-1.6%). Retail sales for the month of February came in at 0.8% m/m vs 0.4% m/m as expected. This is the first positive reading after 8 months of negative or flat readings. Main driver for gains was gasoline. New car sales also contributed to the gains.

This week BOC will take the centre stage with their rate decision and monetary policy report followed by the press conference. No changes are expected in regards to interest rate however possibly more upbeat tone can be expected from BOC on the backs of rising wages and core inflation.

Important news for CAD:

Tuesday:

– Wholesale Trade

Wednesday:

– BOC Interest Rate Decision
– BOC Rate Statement
– BOC Monetary Policy Report
– BOC Press Conference

JPY

Trade Balance figures for the month of March came in at JPY528.5bn vs JPY363.2bn as expected. Exports fell -2.4% y/y vs -2.6% y/y as expected, not as bad as expected and imports missed coming in at 1.1% y/y vs 2.8% y/y as expected. Final industrial production data for the month of February came in at 0.7% m/m vs 1.4% m/m as expected. Preliminary manufacturing PMI came in at 49.5 vs 49.2 the previous month. New export index fell to the lowest reading in the last 3 years caused by trade tensions. The employment component came in higher compared to the previous month. Headline national CPI came in at 0.5% y/y as expected. CPI excluding fresh food ticked up to 0.8% y/y vs 0.7% y/y as expected.

This week we will have inflation data for the Tokyo area as well as employment and consumption data. The BOJ will also release its quarterly outlook and will probably downgrade its forecasts with bank possibly projecting inflation below 2% until 2022. Interest rate is expected to stay the same so outlook report will be of bigger importance.

Important news for JPY:

Thursday:

– BOJ Interest Rate Decision
– BOJ Monetary Policy Statement
– BOJ Outlook Report
– BOJ Press Conference

Friday:

– CPI
– Unemployment Rate
– Retail Sales

CHF

Over the weekend SNB chairman Jordan reiterated that there is no need to change monetary policy but that SNB has room to cut rates and intervene if the need arises. Trade balance for the month of March came in at CHF3.18bn vs CHF3.13bn the previous month. Exports were up 0.1% m/m while imports showed a drop of -3.2% m/m. Considering that imports were down -3% m/m the previous month there is a worrisome trend forming. Domestic demand continues to slump.

This week we will have speech by SNB chairman Jordan.

Important news for CHF:

Friday:

– SNB Chairman Jordan Speech

katetrades · April 30, 2019, 7:23am

Forex Major Currencies Outlook (Apr 29 – May 3)

Japan will be on a 10-day holiday which will lower liquidity in Asian session, thereby increasing chances of sudden volatile market movements, in addition most European markets will be closed on Wednesday due to Labour Day.

USD

Existing Home Sales dropped to 5.21 million in March vs 5.48 million the previous month. Building Permits and Housing Starts, that were published last week, both missed expectations. New Home Sales came in at 692k vs 649k for a nice beat. Median price of houses offered was lower than last year so housing market is not as strong as headline number shows.

Preliminary reading of durable goods for the month of March came in at 2.7% m/m vs 0.8% m/m as expected. This is a huge beat giving more support to the USD strength across the markets and demonstrating the health of the US economy. Capital goods orders non-defence ex air category came in at 1.3% m/m vs 0.2% m/m which is the highest reading since July 2017.

Preliminary Q1 GDP came in at 3.2% vs 2.3% as expected. Net trade which added 1.03 basis points to GDP (largest in six years) and inventories which added 0.65 basis points to the GDP were main contributors. Personal consumption came in at 1.2% vs 1% as expected. Government spending added 0.41 basis points to GDP. 2084 Q4 GDP was revised down to 2.2% from 2.6% and inflation data came in weaker than expected and way below the previous reading. Surprisingly low inflation contributed to the rise in GDP. USD was higher on the headline but upon further inspection it was determined that it was all about temporary factors and that underlying consumption and business investment were soft. That brings concerns about Q2 GDP and sent USD lower.

This week we will have inflation and housing data as well as PMI and trade balance data. We will have two main events of the week. First one is FOMC interest rate decision followed by press conference on Wednesday. Interest rate will not be changed however any new information on further guidance from FED will be closely monitored. The other event is NFP which traditionally comes every first Friday in the month. After abysmal data in February NFP has recovered in March and it is expected to continue on that pace with forecast lying at around 180k. Average hourly earnings are expected to rise to 3.4%.

Important news for USD:

Monday:

– PCE

Tuesday:

– Pending Home Sales
– Consumer Confidence Index

Wednesday:

– ISM Manufacturing PMI
– FOMC Interest Rate Decision
– FOMC Statement
– FOMC Press Conference

Thursday:

– Factory Orders

Friday:

– Nonfarm Payrolls
– Unemployment Rate
– Average Hourly Earnings
– ISM Non-Manufacturing PMI
– Goods Trade Balance

EUR

Consumer confidence for the month of April came in at -7.9 vs -7 as expected. Confidence continues to deteriorate further as consumers do not see the light at the end of the tunnel for the EU. German Ifo business climate index came in at 99.2 vs 99.9 as expected. Business climate index declined as well as expectations and current assessment categories. Ifo economists now see German growth below previous forecast of 0.8% stating troubles in industrial sector and Brexit as main drags on German economy.

This week we will have data on business conditions and consumer confidence, unemployment and final manufacturing PMI reading for the month of April. We will also have preliminary readings of Q1 GDP on Tuesday and inflation on Friday.

Important news for EUR:

Monday:

– Business Climate
– Consumer Confidence Index

Tuesday:

– GDP
– Unemployment Rate
– CPI (Germany)

Thursday:

– Markit Manufacturing PMI (EU, Germany, France)

Friday:

– CPI

GBP

The new rumours surrounding the Brexit state that top lawmaker from PM May’s party will tell her that she will have to quit by the end of the June or other party members will again try to oust her out. May survived the last leadership challenge back in December meaning that her position as a party leader cannot be challenged within a year. However, the reports say that the chair of the 1922 Committee, Graham Brady, may be in on this coup here to see that rule is changed allowing for another vote of no confidence. BBC reports that there is no plan to bring back a withdrawal bill for voting next week and House of Commons leader Andrea Leadsom confirmed that next week there will be no Brexit items on the agenda.

This week we will have PMI numbers and the main event will be the BOE interest rate decision accompanied by meeting minutes and speech by governor Carney. Interest rate is expected to stay the same so further assessment of the Brexit situation by BOE will be monitored.

Important news for GBP:

Wednesday:

– Markit Manufacturing PMI

Thursday:

– Markit Construction PMI
– BOE Interest Rate Decision
– BOE MPC Meeting Minutes
– BOE Governor Carney Speech

Friday:

– Markit Services PMI

AUD

Headline Q1 inflation came in at 0% q/q vs 0.2% q/q as expected and 1.3% y/y vs 1.5% y/y as expected. Core inflation, trimmed mean, came in at 0.3% q/q vs 0.4% q/q as expected and 1.6% y/y vs 1.7% y/y as expected. Unexpected drop in inflation may move RBA in the rate cut direction since inflation is below their targeted band. Expectations of a rate cut for May 7 have jumped and are now at almost 40%. Rate cut for July is around 80% probability.

This week we will have official PMI numbers from China as well as Caixin manufacturing PMI.

Important news for AUD:

Tuesday:

– Manufacturing PMI (China)
– Non-Manufacturing PMI (China)
– Caixin Manufacturing PMI (China)

NZD

Trade balance for the month of March came in at NZD922m vs NZD131m as expected. Exports rose to NZD5.7bn for a healthy beat while imports fell to NZD4.77bn. Imports will be classified as underwhelming throwing some shade to domestic consumption, however beating on exports will be welcomed.

This week we will have employment data.

Important news for NZD:

Wednesday:

– Employment Change
– Unemployment Rate

CAD

BOC has left the rate unchanged at 1.75% as expected. In the accompanying statement they have acknowledged that growth has slowed more than they previously forecast. Growth is expected to be slower than in H1 of 2019 than forecast. Investment and exports outside the energy sector have been negatively affected by trade policy uncertainty and the global slowdown. Weaker-than-anticipated housing and consumption also contributed to slower growth. BOC has removed hiking bias from their statement and slashed growth which sent CAD tumbling. Annualized Q4 GDP forecast was cut to 0.4% from 1.3%, Q1 GDP forecast was also cut to 0.3% from 0.8%
and 2019 GDP growth forecast was cut to 1.2% from 1.7%.

This week we will have GDP figure for the month of February along with manufacturing PMI.

Important news for CAD:

Tuesday:

– GDP

Wednesday:

– Markit Manufacturing PMI

JPY

BOJ left the rates unchanged at -0.1% as widely expected. BOJ stated that they will keep low interest rates for the extended period of time, at least through around spring of 2020 to support the economy. Median CPI forecast for 2019/20 stays at 1.1% while for 2020/21 it is lowered to 1.4% from 1.5% in the January. Median GDP forecast for 2019/20 is lowered to 0.8% from 0.9% projected in January and 2020/21 is seen at 0.9%, down from 1% from January. BOJ admitted they will not reach inflation target of 2% for three more years. They will consider the introduction of an Exchange-Traded Fund (ETF) lending facility, which would allow lending of ETFs that the Bank holds to market participants. Risks to price outlook and economic outlook are skewed to downside.

Headline Tokyo CPI number for the month of April came in at 1.4% y/y vs 1.1% y/y as expected with CPI ex fresh food rising to 1.3% y/y vs 1.1% y/y as expected. Good numbers that are used as guide for the national CPI which will be published in 3 weeks. Jobless rate for the month of March came in higher at 2.5% vs 2.4% as expected and 2.3% the previous month. Preliminary industrial production came in at -0.9% m/m vs 0% m/m as expected while retail sales came in at 0.2% m/m vs 0% m/m as expected.

CHF

SNB Jordan said in his speech that rates will eventually turn to positive and it depends on inflation and FX developments. Negative rates remain necessary and supportive of the economy. Raising rates at this moment would hurt the economy.

This week we will have data on consumption and all-important inflation.

Important news for CHF:

Thursday:

– Retail Sales

Friday:

– CPI

katetrades · May 6, 2019, 10:12am

Forex Major Currencies Outlook (May 6 – May 10)

USD

Core component of FED’s preferred inflation measure, PCE, for the month of March came in at 1.6% y/y vs 1.7% y/y as expected. Following the reading shown in the last week’s GDP inflation surprised to the downside. Personal income came in at 0.1% vs 0.4% as expected but despite that personal consumption came in at 0.9% vs 0.7% as expected.

FED has left the interest rate in the range of 2.25-2.50% as expected. Chairman Powell stated that incoming data, jobs and growth, has been better than expected while inflation was weaker than expected. FED attributed some transitory factors to inflation of 1.5% thus removing concerns about low inflation which gave strength to USD across the markets. It was assessed that global financial conditions have eased and risks around outlook have diminished. He also added that FED doesn’t see a strong case for moving rates in either direction.

Nonfarm payrolls for the month of April came in at 263k vs 190k as expected. The unemployment rate dropped to a historic low of 3.6% vs 3.8% previously but it was achieved on the back of a lower participation rate that came in at 62.8% vs 63% previously. Average hourly earnings were weaker than expected at 0.2% m/m vs 0.3% m/m as expected and 3.2% y/y vs 3.3% y/y as expected. The headline number smashed expectations and it sent USD higher, however upon closer inspection the markets did not take well lower than expected wages and it sent USD back down. Advanced goods trade balance for the month of March came in at -$71.4bn vs -$73bn. Total exports were up 1% while imports were also up 0.9%. Very good trade report showing a narrowing of deficit with both exports and imports rising.

This week we will have trade balance and inflation data.

Important news for USD:

Thursday:

– Trade Balance
– Exports
– Imports

Friday:

– CPI

EUR

Final consumer confidence number for April came in at -7.9 as expected while economic confidence continues to fall further coming in at 104 vs 105 as expected. Business climate and industrial confidence also fell short of expectations while services confidence came in lie with expectations at 11.5.

Preliminary Q1 GDP figures show growth of 0.4% q/q vs 0.3% q/q as expected and 1.2% y/y vs 1.1% y/y as expected. Much needed positive data from EU and in combination with unemployment data ticking down to 7.7% as it propped EUR higher. Spain GDP was the main driver coming in at 0.7% q/q and 2.4% y/y. Preliminary CPI figures came in at 1.7% y/y vs 1.6% y/y. Core CPI came in at 1.2% y/y vs 1% y/y as expected thus jumping to six-month high. There is a bit of an upside bias due to the Easter holiday so future reports will provide us more information whether inflationary pressures are sustainable.

Final EU manufacturing PMI for the month of April came in at 47.9 vs 47.8 preliminary and 47.5 in March for the first increase since July of 2018. Small beat was achieved on the back of better PMI from Spain, Italy and France with French PMI coming in at 50, escaping from contraction territory. German PMI number was a bit weaker than preliminary reading suggested indicating that it is still a drag on EU as a whole.

This week we will have final PMI readings for the month of April, consumption data as well as data on factory orders and industrial production from Germany.

Important news for EUR:

Monday:

– Markit Services PMI (EU, Germany, France)
– Markit Composite PMI (EU, Germany, France)
– Retail Sales

Tuesday:

– Factory Orders (Germany)

Wednesday:

– Industrial Production (Germany)

GBP

Brexit was taken off the agenda for the week which gave more significance to the economic data. In the cross-party talks between the Conservative and the Labour Party, Labour agreed to back second referendum if it can get changes to May’s deal or General Election. Priority will be to look for more concessions on a custom union within the deal and second priority will be holding of General Election.

Manufacturing PMI for the month of April came in at 53.1 as expected. It is down from 55.1 the previous month due to drop in stock purchases from the record highs. New export orders are falling indicating that stockpiling still has a major influence on the number. Construction PMI came in at 50.5 vs 50.3 as expected. Services PMI came in at 50.4 vs 50.3 escaping from contraction territory from the previous month thus pushing the composite PMI to 50.9 vs 50.6 as expected.

BOE left the bank rate unchanged at 0.75% with 0-0-9 votes (0 votes for rate hike, 0 votes for rate cut and 9 votes for no change) as expected. They acknowledge that Q1 GDP is likely boosted by stockpiling and that underlying growth is “slightly stronger” than expected in February. Forecasts for GDP growth have been moved up to 1.5% vs 1.2% previously for 2019, 1.6% vs 1.5% for 2020 and 2.1% vs 1.9% for 2021. Inflation on the other hand is expected to be lower than projected in one year’s time but higher than projected in three years’ time. Governor Carney stated in the press conference that although global tensions have eased UK domestic tensions still remain and added that if forecasts become true rate hikes will be required. Businesses are focused on short-term Brexit plans.

This week we will have Q1 GDP and trade balance data as well as data on construction, industrial and manufacturing production. Brexit will again not be debated in the Parliament.

Important news for GBP:

Friday:

– GDP
– Industrial Production
– Manufacturing Production
– Construction Output
– Trade Balance

AUD

RBA has said in April’s minutes that rate cut would be appropriate in case of "inflation did not move any higher and unemployment trended up.” Latest inflation data showed inflation falling and although unemployment ticked higher to 5%, it is still stable and trending down. There is about a 40% chance of a rate cut.

PMI data from China for the month of April missed the expectations. Official manufacturing PMI came in at 50.1 vs 50.5 as expected. Output prices and new export orders were only subcategories that were higher than the previous month. Services came in at 54.3 vs 55.0 as expected. Caixin PMI came in at 50.2 vs 50.9 as expected.

This week centre stage will be taken by the RBA rate decision. A rate cut is expected by analysts citing the fact that “inflation did not move higher and unemployment rate trended up”. Recent data coming from Australia were not satisfactory, however RBA is still not pressured to cut rates so they can leave them for now. We will also get trade balance and consumption data from Australia. There will also be Caixin services PMI as well as trade balance and inflation data from China which will provide more information about stimulus effects introduced by Chinese government.

Important news for AUD:

Monday:

– Caixin Services PMI (China)

Tuesday:

– RBA Interest Rate Decision
– RBA Rate Statement
– Trade Balance
– Exports
– Imports
– Retail Sales

Wednesday:

– Trade Balance (China)
– Exports (China)
– Imports (China)

Thursday:

– CPI (China)

Friday:

– RBA Monetary Policy Statement

NZD

Employment report for the Q1 showed employment change coming in at -0.2% q/q vs 0.5% q/q and 1.5% y/y vs 2.2% y/y as expected for a big miss. The unemployment rate ticked down to 4.2% from 4.3%. Participation rate dropped to 70.4 and that lead to drop in the unemployment rate. Average hourly earnings came in at 1.1% q/q vs 0.8% q/q as expected but private wages both including and excluding overtime fell.

This week’s main event will be the RBNZ rate decision. After the employment data rate cut expectations have risen to 55%. Additionally, we will have dairy auction and data on consumption via electronic cards.

Important news for NZD:

Tuesday:

– GDT Price Index

Wednesday:

– RBNZ Interest Rate Decision
– RBNZ Rate Statement
– RBNZ Press Conference

Friday:

– Electronic Card Retail Sales

CAD

February GDP data came in at -0.1% m/m vs 0% m/m as expected and 1.1% y/y vs 1.4% y/y as expected. Mining and quarrying excluding oil and gas contributed the most to the drop with -4.4%. Transportation and warehousing contributed with -1.6% which is the largest decline since June 2011. Manufacturing PMI for the month of April fell to 49.7 vs 50.5. Production, new orders and employment categories all fell below 50 expansion level. This is the first time Manufacturing PMI fell to contraction territory since February of 2016.

This week we will have speech from Governor Poloz, Ivey PMI, trade balance and employment data.

Important news for CAD:

Monday:

– BOC Governor Poloz Speech

Tuesday:

– Ivey PMI

Thursday:

– Trade Balance
– Exports
– Imports

Friday:

– Employment Change
– Unemployment Rate

JPY

Japan was on holiday for the entire week and will be back on Tuesday.

This week we will have PMI data, monetary policy meeting minutes, summary of options as well as data on household spending and earnings.

Important news for JPY:

Tuesday:

– Nikkei Manufacturing PMI

Wednesday:

– BOJ Monetary Policy Meeting Minutes
– Nikkei Services PMI

Friday:

– Household Spending
– Labour Cash Earnings
– BOJ Summary of Opinions

CHF

Retail sales for the month of March came in at -0.7% y/y vs -0.4% y/y as expected. SNB already said that the economy is too fragile for rate hikes and this data point will enforce that stance. Falling consumption will also negatively reflect GDP. Manufacturing PMI for April came in at 48.5 vs 51 as expected for a huge drop in manufacturing activity. This is first drop into contraction territory since December 2015. CPI for the month of April came in 0.2% m/m and 0.7% y/y as expected with core CPI coming in at 0.5% y/y also as expected.

This week we will have employment data.

Important news for CHF:

Wednesday:

– Unemployment Rate

katetrades · May 14, 2019, 7:27am

Forex Major Currencies Outlook (May 13 – May 17)

USD

President Trump announced over the weekend that tariffs on $200bn China goods will go up from 10% to 25% on Friday which made gaps on market opening. He added that further $325bn worth of goods will be tariffed “shortly”. China’s Minister of Commerce was quoted saying that “counter-measures” would be adopted if USA proceeds forward with the tariffs. On Friday tariffs have been raised and China replied that it is forced to retaliate. Tariffs are applied to goods that are coming out of Chinese ports from Friday May 10 which gives a 2 week period before they have effect on Chinese exports and US imports.

Trade balance for the month of March came in at -$50bn vs -$50.1bn as expected with prior reading showing -$49.4bn. Exports rose 1% while imports rose 1.1%. It shows that demand for US goods and services increased around the globe and that domestic demand for imported goods is still strong. US-China trade deficit has been lowered to $20.75bn. Goods deficit was $72.4bn while services surplus was $22.4bn. Headline CPI for the month of April came in at 2% y/y vs 2.1% y/y as expected with prior reading showing 1.9% y/y. Core CPI figure came in at 2.1% y/y as expected. Real average hourly earnings came in at 1.2% y/y vs 1.3% y/y the previous month while real average weekly earnings came in at 0.9% y/y vs 1.4% y/y the previous month. Drop in earnings is a cause for concern for US workers.

This week we will have consumption and housing data as well as data on industrial production. President Trump will make decision on auto tariffs on May 18.

Important news for USD:

Wednesday:

– Retail Sales
– Industrial Production
– Business Inventories

Thursday:

– Housing Starts
– Building Permits

EUR

Final services and composite PMI numbers came in a bit better than preliminary readings with services coming in at 52.8 and composite at 51.5. The improvement was reached on the back of stronger German services PMI while France, Spain and Italy services PMI came weaker than preliminary reading showed. Overall economic conditions stay subdued and Q2 rebound is still missing. Retail sales for the month of March came in flat at 0% m/m vs -0.1% m/m as expected.

This week we will have data on industrial production, second reading of Q1 GDP from EU and preliminary reading of Germany’s Q1 GDP as well as employment data, trade balance data and inflation data.

Important news for EUR:

Tuesday:

– Industrial Production
– ZEW Economic Sentiment (EU and Germany)

Wednesday:

– GDP (EU and Germany)
– Employment Change

Thursday:

– Trade Balance

Friday:

– CPI
– Construction Output

GBP

Pressures are building for PM May to resign. She is coming under increasing pressure to set a leaving date and it has been reported that Members of Parliament from her ruling Conservative Party are demanding a firm timetable for her departure. She has rejected to quit and stands firm with her decision to leave after first phase of Brexit is completed. Cross-party talks are still going nowhere as neither side is willing to move its red lines.

Preliminary Q1 GDP came in at 0.5% q/q as expected putting yearly figure at 1.8% as expected. Main contributor to the rise in GDP was stockpiling due to Brexit uncertainty. It contributed roughly 0.7% to the GDP figure. Total business investment have improved to 0.5% q/q vs -0.7% q/q as expected. This is a very welcoming surprise showing that businesses regain trust in the economy despite the surrounding Brexit uncertainties. Manufacturing and industrial production have beaten the expectations while construction output declined.

This week we will have employment and wages data and meeting of 1922 Committee that could potentially seal PM May’s future as PM.

Important news for GBP:

Tuesday:

– Claimant Count Change
– Unemployment Rate
– Average Weekly Earnings

AUD

China Caixin services PMI came in at 54.5 vs 54.2 as expected and composite PMI came in at 52.7 vs 52.9 the previous month. Effects of the reading were subdued by Trump’s message on tariffs. China has also eased its monetary policy by cutting reserve requirement ratio for small and midsized banks to 8%. This move is expected to improve lending conditions and thus add more stimulus to the economy. Trade balance for the month of April widely missed the expectations coming in at $13.84bn vs $34.56bn as expected. Exports were down on the year -2.7% y/y vs 3% y/y as expected, led by falls in smart devices as well as cars and related parts and imports beat the expectations by rising 4% y/y vs -2.1% y/y as expected. Imports were supported by crude oil. A huge drop in the trade surplus may prompt authorities to reconsider their position in negotiations with US. CPI for the month of April came in at 2.5% y/y as expected. It is an increase from 2.3% y/y the previous month and it was driven by food prices.

Trade balance came in at AUD4949m vs AUD4480m for a nice beat on the headline number but it was achieved by both falling exports and falling imports. Retail sales for the month of March came in at 0.3% m/m vs 0.2% m/m as expected. Retail sales excluding inflation for Q1 came in weaker than expected at -0.1% q/q and this will negatively reflect on Q1 GDP.

RBA has decided to leave the cash rate unchanged at 1.5%. They acknowledged that inflation is noticeably lower than expected and that further improvement in the labour market is needed in order to reach the inflation target. Conditions remain soft, especially in housing market and domestic uncertainty remains around household spending and falling housing prices. They expect economy to grow at 2.75% in 2019, lower than 3% previously and inflation to be 1.75% in 2019 from 2% previously and 2% in 2020 from 2.25% previously. Assessment is that outlook for global economy is reasonable with risks tilted to the downside.

This week we will have employment and wages data from Australia as well as consumption, industrial and investment data from China. Federal elections in Australia will be held on Saturday.

Important news for AUD:

Wednesday:

– Wage Price Index
– Retail Sales (China)
– Industrial Production (China)
– Fixed Asset Investment (China)

Thursday:

– Employment Change
– Unemployment Rate

NZD

The GDP price auction came in at 0.4% thus continuing impressive streak of 11 consecutive months of rising dairy prices. Electronic card spending for the month of April came in at 0.6% m/m vs 0.8% m/m as expected. This measure is the main measure of retail sales in New Zealand.

RBNZ has cut its cash rate 25bp to 1.50%. They now see official cash rate down to 1.38% in June of 2020 and 1.36% in September of 2020 thus making further rate cuts possible. Annual CPI is still seen at 1.7% by June 2020. Committee has reached the decision to cut rate by consensus due to weak domestic demand, projected growth and employment headwinds. Additional monetary stimulus is needed. Key downside risk was a larger than anticipated slowdown in global economic growth, particularly in China and Australia. Governor Orr stated that US – China war is one of RBNZ’s major concerns and he is surprised by weaker downturn in business sentiment and consumer spending.

This week we will have manufacturing PMI data.

Important news for NZD:

Friday:

– Business NZ Manufacturing PMi

CAD

Ivey manufacturing PMI came in at 55.9 vs 54.3 for a nice beat. Although it is notoriously volatile data it still shows positive results from Canadian economy. New housing price index came in at 0.1% y/y as expected. Trade balance for the month of March came in at -$3.21bn vs -$2.4bn as expected. Exports rose 3.2% with energy and motor vehicles as leaders while imports rose 2.5% on the back of consumer goods. Canada-US surplus widened to $3.6bn while deficit with the rest of the world widened to all time worst at $6.8bn.

Canadian employment report smashed expectations coming in at 106.5k vs 11.6k as expected, almost 10 times better than expected, for the biggest one-month jobs gain on record since 1976. Full-time employment came in at 73k while part-time employment came in at 33.6k. Participation rate climbed to 65.9% vs 65.7% the previous month and the unemployment rate ticked down to 5.7%. Drop in the unemployment rate is more impressive given the rise in the participation rate. Hourly wage for permanent employees came in at 2.6% vs 2.3% as expected.

This week we will have inflation data, manufacturing sales data and review of financial system from BOC.

Important news for CAD:

Wednesday:

– CPI

Thursday:

– Manufacturing Sales
– BOC Financial System Review

JPY

Final manufacturing PMI for the month of April came in at 50.2 vs 49.2 the previous months. This is a 3-month high and it puts the manufacturing sector back into expansionary territory. Business confidence continues to rise, however new orders and output fell. Services PMI dropped a bit to 51.8 but overall composite was higher at 50.8 vs 50.4 the previous month. Household spending for the month of March came in at 2.1% y/y vs 1.6% y/y as expected as for a beat, however wages dropped heavily coming in at -1.9% y/y vs -0.5% y/y as expected. Increase in household spending is positive for inflation but it cannot be sustained if wages continue dropping.

CHF

The unemployment rate came in at 2.4% as expected reflecting once again tight labour market condition in the Swiss economy.

katetrades · May 20, 2019, 8:05am

Forex Major Currencies Outlook (May 20 – May 24)

USD

President Trump has been touting China over Twitter to accept a deal and not to retaliate since things will only get worse. China has announced that it will impose import tariffs on $60bn worth of US goods starting from June 1 and they will range between 5% – 25%. It is reported that China may stop purchasing US agricultural products and energy, cut Boeing orders and restrict US service trade with China. Also, there are talks about dumping US Treasuries.

Advance retail sales for the month of April came in at -0.2% m/m vs 0.2% m/m as expected. Industrial production came in at -0.5% m/m vs 0% m/m as expected. The main culprit for the drop in industrial production was manufacturing output. Weaker than expected results lead Atlanta FED GDP tracker to lower growth in Q2 to 1.2% vs 1.6% as was previously seen. These data conflict with rhetoric about strong and robust US growth.

This week we will have housing data, FOMC minutes, preliminary PMI data for the month of May as well as durable goods.

Important news for USD:

Tuesday:

– Existing Home Sales

Wednesday:

– FOMC Minutes

Thursday:

– Markit Manufacturing PMI
– Markit Services PMI
– Markit Composite PMI
– New Home Sales

Friday:

– Durable Goods

EUR

ZEW survey of the current situation in Germany for the month of May rose for the first time in eight months to 8.2 vs 6.3 as expected, however expectations for the outlook in both Germany and EU dropped into negative territory on the back of new escalations in US – China trade war. Preliminary German Q1 GDP came in at 0.4% q/q as expected for a great rebound after 0% q/q GDP in Q4 of 2018. President Trump and US administration have delayed imposing auto tariffs for 180 days which gave a relief rally to EUR.

Trade balance for the month of March came in at EUR17.9bn vs EUR19.4bn as expected. Exports rose 0.9% m/m while imports rose 2.5% m/m which ultimately lead to the narrowing of the trade surplus. Rising exports amidst global tensions is a very welcoming sign for the EU economy. Final inflation numbers for the month of April came in at 1.7% y/y as expected while core CPI ticked to 1.3% y/y vs 1.2% y/y as expected. Rise in inflation is attributed to the Easter holiday.

This week we will have data on consumer confidence and preliminary PMI data for the month of May as well as final Q1 GDP reading and Ifo business climate data from Germany.

Important news for EUR:

Tuesday:

– Consumer Confidence

Thursday:

– GDP (Germany)
– Markit Manufacturing PMI (EU, Germany, France)
– Markit Services PMI (EU, Germany, France)
– Markit Composite PMI (EU, Germany, France)
– Ifo Business Climate (Germany)

GBP

Employment data came mixed. The unemployment rate has dropped down to 3.8% from 3.9% previously but employment change came in at 99k vs 140k as expected with prior reading showing 179k. Average weekly earnings came in at 3.2% 3m/y vs 3.4% 3m/y as expected. A drop in wages is not very concerning when compared to the wage growth in previous years. Strong labour conditions are still present in Britain and were there no Brexit uncertainties BOE would be hiking rates.

The cross-party talks are not progressing well, opposition party is hardening, with an increasing demand to hold a second referendum for any Brexit deal. Both main parties suffered in the local elections in early May and are set for humiliating results in the European Parliament polls on May 26 according to the recent survey. The government has officially announced a fourth vote on Brexit deal in the first week of June. Sir Graham Brady, chairman of an influential committee of backbench Tory MPs, confirmed that PM May is expected to resign whether or not the Brexit deal passes in June. She will resign after the results of the vote. A leadership election this summer is now certain. Labour party is looking more toward the second referendum claiming that cross-party talks have gone as far as they can.

This week we will have data on inflation and consumption.

Important news for GBP:

Wednesday:

– CPI

Friday:

– Retail Sales

AUD

Employment change came in at 28.4k vs 15k as expected. The unemployment rate came in higher at 5.2% vs 5% as expected while the previous figure was revised higher to 5.1%. Part of the jump in the unemployment rate can be attributed to rise in participation rate from 65.7% to 65.8%. Full time employment was -6.3k so the headline number was entirely made up from part time employment which came in at 34.7k. Overall not a bad report and RBA will not feel pressured to cut rates immediately. Market is pricing over 50% chance for a rate cut in June and many analysts call for rate cut in August. Wage price index for Q1 came in at 0.5% q/q vs 0.6% q/q as expected. Continuation of slow wage will keep inflation pressures low thus making inflation subdued.

Chinese data came out weaker than expected with fixed asset investments coming in at 6.1% y/y vs 6.4% y/y as expected. Industrial production came in at 5.4% y/y vs 6.5% y/y as expected and retail sales came in at 7.2% y/y vs 8.6% y/y. NBS has looked at this data and stated that “China will implement countercyclical adjustments to maintain steady healthy economic development” meaning more stimulus.

This week we will have minutes from the latest RBA meeting as well as Governor Lowe’s speech. Pressures are building for RBA to cut rates so the speech will be closely monitored in the markets.

Important news for AUD:

Tuesday:

– RBA Meeting Minutes
– RBA Governor Lowe Speech

NZD

Manufacturing PMI for the month of April came in at 53 vs 52 the previous month. Deliveries index holds high at 56.3. All indices are above 50, showing expansion but new orders cooled off to 52.4 which can be worrisome.

This week we will have biweekly GDT auction, consumption data as well as trade balance data.

Important news for NZD:

Tuesday:

– GDT Price Index

Wednesday:

– Retail Sales

Friday:

– Trade Balance
– Exports
– Imports

CAD

CPI for the month of April came in at 2% y/y as expected for an uptick from 1.9% y/y the previous month. Core measures came in a bit weaker than expected with median coming in at 1.9% y/y vs 2% y/y as expected, common came in at 1.8% y/y as expected and trim came in at 2% y/y vs 2.1% y/y as expected. Weaker core numbers are not very concerning since they still hover around the 2% target. Year over year, the main upward contributor to the CPI were mortgage interest costs (8.2%) and the main downward contributor were traveller accommodation (-9.6%). Manufacturing sales for the month of March came in at 2.1% m/m vs 1.5% m/m as expected with prior reading showing -0.2% m/m.

This week we will have consumption data.

Important news for CAD:

Wednesday:

– Retail Sales

JPY

During the week JPY has played its safe heaven role, strengthening during risk off situation. Japan will host G20 Summit in June and they announced that they will not intervene to seek solutions to US-China trade frictions. Finance minister Aso stated that additional easing would help the economy and characterized the problem in economy as lack of demand. Governor Kuroda reiterated the need for rates to stay low for a long period of time in order to support the economy. Current conditions warrant low rates until Spring of 2020 however it is possible for BOJ to keep rates low even after that period if conditions call for it. The Japanese government confirmed that the next round of trade talks with US will take place on May 21 in Washington.

This week we will have preliminary Q1 GDP data, final industrial production data for the month of March, trade balance data, preliminary manufacturing PMI data for the month of May and national inflation data.

Important news for JPY:

Monday:

– GDP
– Industrial Production

Wednesday:

– Trade Balance
– Exports
– Imports

Thursday:

– Nikkei Manufacturing PMI

Friday:

– CPI

CHF

The CHF has benefited from risk off conditions and is up around 0.25% for the week.
This week we will have data on industrial production.

Important news for CHF:

Thursday:

– Industrial Production

katetrades · May 27, 2019, 8:01am

Forex Major Currencies Outlook (May 27 – May 31)

USD

Existing home sales for the month of April came in at 5.19m vs 5.35 as expected. The number came in weaker but it is still in the middle of this year’s range. New home sales also came in line expectations at 673k vs 675k as expected. Durable goods for the month of April came in at -2.1% vs 2% as expected with prior reading being revised down to 1.7%. Capital goods orders non-defence ex air (core) came in at -0.9% vs -0.3% as expected with previous reading being revised from 1% all the way down to 0.3%. A weak reading with very little to show for, with drop in core number particularly worrying.

The main message from FOMC May meeting was patience. The patient approach was characterized as appropriate for some time even if global conditions improved. Inflation was again characterized as transitory by many FED officials. Discussions about pros and cons of shortening bond portfolio maturity were held.

This week we will have data on consumer confidence, second estimate of Q1 GDP, goods trade balance, housing and inflation data.

Important news for USD:

Tuesday:

– Consumer Confidence Index

Thursday:

– GDP
– Goods Trade Balance
– Pending Home Sales

Friday:

– PCE
– Personal Spending
– Personal Income

EUR

Preliminary PMI numbers for the month of May came in at 47.7 vs 48.1 as expected for manufacturing, 52.5 vs 53.0 as expected for services and 51.6 vs 51.7 as expected for composite. Drop in the manufacturing PMI was due to a drop in Germany’s reading, which stays deep in contraction, while French manufacturing PMI moved up to 50.6. Conditions in the EU remain stable but rebound recovery in Q2 is still missing according to these data. Preliminary consumer confidence for the month of May came in at -6.5 vs -7.7 as expected. Better than expected reading, still in the negatives but moving in the right direction. German Ifo business climate index continues to drop coming in at 97.9 vs 99.2 the previous month. Ifo economists state that German export dynamic is very weak. Consumption and construction are the main pillars of support.

This week we will have data on sentiment and confidence from EU and results or EU parliamentary elections will be announced. Additionally, Germany will publish employment and inflation data.

Important news for EUR:

Tuesday:

– Economic Sentiment Indicator
– Business Confidence

Wednesday:

– Unemployment Change (Germany)
– Unemployment Rate (Germany)

Friday:

– CPI (Germany)

GBP

Inflation numbers for the month of April came in at 0.6% m/m vs 0.7% m/m as expected and 2.1% y/y vs 2.2% y/y as expected. Core CPI also came in a bit weaker than expected at 1.8% y/y vs 1.9% y/y as expected. All readings are higher than in March which can be attributed to seasonality, Easter holiday. ONS notes that energy bill prices were the biggest upwards driver of inflation in April. Inflation is still holding strong in the UK, however due to the Brexit uncertainties BOE will not be able to react. They will come out with hawkish statements on the back of inflation numbers and strong Labour market but a rate hike will not happen in the near-term. Retails sales for the same month came in at 0% m/m vs -0.3% m/m as expected. Consumption remains robust since the start of the year.

PM May is planned to include in withdrawal agreement bill requirement to vote on whether to hold a 2nd referendum, a vote on different customs arrangements with the EU and provide safeguards on the Northern Irish backstop as well as guarantees on workers’ rights and environmental protection. Leader of the Labour party Jeremy Corbyn stated that Labour cannot support new Brexit deal. Andrea Leadsom, leader of the House of Commons, resigned and in her statement said “I urge PM May to make the right decisions in interest of the country”. Then on Friday May 24 PM May announced that she will be stepping down as PM and leader of Conservative party on June 7. Nominations for new leader of the Conservative party will end in the week of June 10.

This week we will have data on consumer confidence as well as continuation of political saga as 1922 Committee reportedly said that they want May to stay in office while Tory leadership race takes place.

Important news for GBP:

Friday:

– Consumer Confidence

AUD

RBA meeting minutes showed that rate cut would be appropriate if there are no further improvements in the labour market. It was reiterated that there is “no strong case” for a near-term move in policy. The board recognized that lower rates would have less of an impact than in the past. Later on, governor Lowe made a speech in which he stated that RBA is considering a rate cut in June since lower rates would support employment and help lift inflation toward the target. Dovish words by the governor signalling a shift in RBA’s stance. After the Governor’s speech, the odds of rate cut in June (June 4) are around 70%.

Construction work done in Q1 came in at -1.9% q/q vs 0% q/q as expected. The weakening of activity was relatively broadly based, across housing, public works and private infrastructure. This data set will be included in Q1 GDP that will be published on June 5 and it will drag it down.

This week we will have housing and Q1 capex data from Australia along with PMI data from China.

Important news for AUD:

Thursday:

– Building Approvals
– Private Capital Expenditures

Friday:

– Manufacturing PMI (China)
– Non-Manufacturing PMI (China)

NZD

After rise in manufacturing PMI we have a drop in services PMI for the month of April as the reading came at 51.8 vs 52.3 the previous month, revised lower from 52.9. This is the third consecutive drop in the reading, now falling to the lowest since September of 2012. Activity/sales index and employment index, which is in contraction, dropped to the lowest since 2012. Retail sales excluding inflation for the Q1 of 2019 came in at 0.7% q/q vs 0.6% q/q as expected. Trade balance for the month of April came in at NZD433m vs NZD450m as expected. Lower than expected surplus was achieved on both beats in exports and in imports so it will be welcomed. Demand for products from New Zealand, mainly dairy, is still present around the Globe and domestic demand is still going strong.

This week we will have financial stability report along with housing data and budget release.

Important news for NZD:

Tuesday:

– RBNZ Financial Stability Report

Thursday:

– Building Consents
– Budget Release

CAD

Retail Sales for the month of March came in at 1.1% m/m vs 1.2% m/m as expected. Ex-auto category (core) has beaten the expectations by wide margin coming in at 1.7% m/m vs 0.9% m/m. Both headline and ex-auto numbers for the previous month have been revised higher. Sales rose in 7 out of 11 sectors. The largest contributor were gasoline stations with 0.64% while the largest contributor on the downside was new-car dealers -0.46%. Positive revisions gave CAD a boost pushing it up across the markets. Wholesale trade for the same month came in at 1.4% m/m vs 0.9% m/m as expected increasing for the fourth consecutive month and by fastest pace in two years. Wholesale trade rose in 6 out of 7 sectors with motor vehicles being the only one that declined. Prior month was revised lower to 0.2% m/m from 0.3% m/m and that eased the positive impact of this reading.

This week we will have GDP figures, monthly for March and quarterly for Q1 and all-important BOC interest decision. It is widely expected that BOC will keep rates on hold. After a strong jobs report and retail sales we can expect a change in the tone to more hawkish one.

Important news for CAD:

Wednesday:

– BOC Interest Rate Decision

Friday:

– GDP (monthly and quarterly)

JPY

Preliminary Q1 GDP came in at 0.5% q/q vs -0.1% q/q as expected and 2.1% y/y vs -0.2% y/y as expected. This is an unexpectedly huge beat. Digging deeper into the GDP numbers we find some troubling signs. Both consumer and business spending, capex, were down and the headline number was accomplished due to net positives from the trade, rising inventories and government spending, similarly to US Q1 GDP. Gains from trade are not sustainable and they were achieved with both a drop in exports -2.4% q/q and a drop in imports -4.6% q/q.

Trade balance for the month of April came in at JPY60.4bn vs JPY232.7bn as expected. Exports were a huge miss, coming in at -2.4% y/y vs -1.6% y/y as expected showing that trade wars take their toll on the Japanese exporters. This is the fifth consecutive month of falling exports. Imports came in at 6.4% y/y vs 4.5% y/y as expected demonstrating robust domestic demand.

Preliminary manufacturing PMI for the month of May came in at 49.6 vs 50.2 the previous month. Back into contraction territory. Outlook and new export orders fell at a faster rate dragging the number down. New export orders fell at the sharpest rate in four months. The continuation of US-China trade war increases concerns among Japanese goods producers which in turn reflects in the reading.

National inflation for the same month came in at 0.9% y/y as expected up from the 0.5% y/y the previous month. Core CPI excluding fresh food and energy came in at 0.6% y/y as expected from 0.4% y/y the previous month. Small movements in the right direction toward the 2% inflation target. Still a long way from there but at least on the right track.

This week we will have speech from governor Kuroda as well as inflation data for Tokyo area for the month of May, employment data, retail sales data and preliminary industrial production data for the month of April.

Important news for JPY:

Monday:

– BOJ Governor Kuroda Speech

Friday:

– Tokyo CPI
– Unemployment Rate
– Jobs to Applicants Ratio
– Retail Sales
– Industrial Production

CHF

SNB’s board member Moser reiterated that the central bank will intervene if it considers it to be appropriate. Q1 industrial output surprised with a huge beat coming in at 4.3% y/y vs -0.3% y/y as expected.

This week we will have employment data and Q1 GDP data as well as trade balance and consumption data.

Important news for CHF:

Monday:

– Employment Level

Tuesday:

– GDP
– Trade Balance
– Exports
– Imports

Friday:

– Retail Sales

katetrades · June 3, 2019, 12:51pm

Forex Major Currencies Outlook (June 3 – June 7)

USD

Consumer confidence for the month of May came in at 134.1 vs 130 as expected. This is the best reading of the year and it shows that US consumers are not phased with the trade war. Present situation and expectations both came out better than expected with jobs hard-to-get index falling to the lowest number since September of 2000. President Trump has announced 5% tariffs on all goods from Mexico starting on June 10. If Mexico does not do more to halt illegal immigration into the US the tariff will jump to 25% by October 2019. Jump will not be sudden; it will be done in steps.

Second reading of the Q1 GDP came in at 3.1% vs 3% as expected. Initial reading was 3.2%. Digging deeper into the numbers we can see that there was an unwelcome downgrade in business investment. Exports were revised up but overall there is no huge difference between initial and second reading. This drop in inflation can be worrisome if Q2 GDP comes in soft. Pending home sales for the month of April came in at -1.5% m/m vs 0.5% m/m as expected.

Core PCE came in at 1.6% y/y as expected. PCE deflator came in at 1.5% y/y vs 1.6% y/y as expected. Results are in line with the expectations and not as bad as feared. On the consumer side personal income came in at 0.5% vs 0.3% as expected and personal spending came in at 0.3% vs 0.2% as expected signalling strong consumer confidence reported earlier.

This week we will have PMI data, trade balance data and employment data. All-important NFP will be traditionally published on first Friday in the month. Projections are for a headline number of 170k, rise in average hourly earnings to 3.4% and rise in unemployment rate to 3.8% on the back of the rise in participation rate.

Important news for USD:

Monday:

– ISM Manufacturing PMI

Tuesday:

– Factory Orders

Wednesday:

– ADP Nonfarm Employment Change
– ISM Non-Manufacturing PMI

Thursday:

– Trade Balance
– Exports
– Imports

Friday:

– Nonfarm Payrolls
– Unemployment Rate
– Average Hourly Earnings

EUR

European Parliament elections have shown us the clear rise in support for nationalist parties. The leading example is Mateo Salvini’s Lega party in Italy which won about 30-35% of the votes thus making them the leading party in Italy. In France, Marrie Le Pen’s National Rally party took 24% of the votes and beat President Marcon’s party which garnered 22.5% of the votes. In the UK Nigel Farage’s Brexit party won around 1/3 of the votes.

Although nationalist achieved notable results, it will have more impact on a national level than in the European Parliament where existing EPP and S&D alliances still dominate. EPP’s total vote percentage will fall below 25% for the first time since 1989 and S&D had lowest support since first elections in 1979.

The European Commission is considering implementing the Excessive Deficit Procedure (EDP) in response to the Italy’s blatant disregard of European budget laws. Penalty can go up as high as $4bn. Italy’s Salvini continues to state that EU should not aim for budget deficit below 3% of GDP, but it should aim at cutting unemployment. Germany unemployment change came in at 60k signalling largest one month increase in unemployment in last 10 years. The unemployment rate ticked up to 5% from 4.9%.

This week we will have final PMI numbers for the month of May, inflation, employment and consumption data as well as final Q1 GDP estimate. Inflation is expected to dip down due to lower oil prices and the fact that rise in inflation in April was due to Easter holiday. Headline of the week will be ECB interest rate decision and press conference that follows it. There are no plans to change interest rate, it will stay the same, however the latest economic happenings and data will be assessed by ECB and markets will closely monitor it for further clues on development of monetary policy.

Important news for EUR:

Monday:

– Markit Manufacturing PMI (EU, Germany, France)

Tuesday:

– CPI
– Unemployment Rate

Wednesday:

– Markit Services PMI (EU, Germany, France)
– Markit Composite PMI (EU, Germany, France)
– Retail Sales

Thursday:

– Employment Change
– GDP
– ECB Interest Rate Decision
– ECB Monetary Policy Press Conference

GBP

Current president of EU commission Jean Claude Juncker stated that there will be no renegotiations of Brexit withdrawal agreement. Currently 11 Conservatives have announced their aspirations to become new party leader and PM. Boris Johnson has the best chances according to the polls. Jeremy Corbyn stated that first priority should be an election and pledged to support a second referendum on any Brexit deal put to Parliament. Some Labour MPs are opposed to second referendum leaving the opposition torn on the matter. A second referendum on Brexit could lead to a second referendum on Scottish independence.

This week we will have PMI data and it will be the last week of Theresa May in the role of the Prime Minister.

Important news for GBP:

Monday:

– Markit Manufacturing PMI

Tuesday:

– Markit Construction PMI

Wednesday:

– Markit Services PMI

AUD

Private capex data for the Q1 came in at -1.7% q/q vs 0.5% q/q for a huge miss. Global tensions, primarily the US-China trade war, were the main reason business withdrew from investing in Q1. Business approvals continue to slide with -4.7% m/m drop in the month of April. Chinese official manufacturing PMI dropped into contraction territory coming in at 49.4 vs 49.9 as expected and 50.1 the previous month. New export orders fell to 46.5 indicating negative effect trade war has on China’s economy. Non-Manufacturing PMI came in line with expectations at 54.3.

This week we will have PMI data from China, consumption, Q1 GDP and trade balance from Australia. RBA will take centre stage with their interest rate decision and rate statement. Markets are pricing an almost 95% chance of a rate cut. It is possible that rate cut has been completely priced in so we can see a surge in AUD, therefore we advise trading smaller lot sizes than usual.

Important news for AUD:

Monday:

– Caixin Manufacturing PMI (China)

Tuesday:

– Retail Sales
– RBA Interest Rate Decision
– RBA Rate Statement

Wednesday:

– Caixin Services PMI (China)
– GDP

Thursday:

– Trade Balance
– Exports
– Imports

NZD

Building approvals for the month of April came in at -7.9% m/m vs -7.4% m/m the previous month and -4.5% y/y. It is a volatile data, but the second month of falling data cannot be welcomed. Budget surplus forecast has been cut to NZD 1.3bn.

This week we will have bi-weekly GDT auction.

Important news for NZD:

Tuesday:

– GDT Price Index

CAD

BOC has left rates unchanged at 1.75% as widely expected. It is reiterated in the statement that accommodative policy interest rate continues to be warranted. BOC will stay data dependent and economic data are in line with projections. The oil sector is beginning to recover and housing is becoming more stable. Escalation of trade conflicts casts doubt on global outlook. Recent economic data from Canada have been very strong which reinforces BOC view that the slowdown in Q4 and Q1 was temporary and there is more evidence of a pick-up in Q2, however the lack of new and improved projections along with perceived shift in tone to neutral was a surprise which hurt CAD. Q1 GDP data came in at 0.4% q/q vs 0.7% q/q as expected. The main driver was household spending which grew the fastest since 2017. Exports declined while imports rose thus making net trade the biggest drag on growth.

This week we will have trade balance data, Ivey PMI and employment data. Employment data will be announced at the same time as NFP which can produce increased volatility on USDCAD pair so we would advise you to be cautious and use small lot sizes. BOC reiterated its data dependency which added additional importance to employment report.

Important news for CAD:

Thursday:

– Trade Balance
– Exports
– Imports
– Ivey PMI

Friday:

– Employment Change
– Unemployment Rate

JPY

Tokyo CPI for the month of May came in at 1.1% y/y vs 1.2% y/y as expected. Excluding food and energy CPI came in at 0.8% y/y as expected but down from 0.9% y/y from the previous month. Inflation is again heading in the wrong direction. The unemployment rate for the month of April ticked down to 2.4% as expected from 2.5% the previous month. Jobs to applicant ratio stayed at 1.63 as expected. Retail sales came in unchanged at 0% m/m vs 0.6% m/m as expected. A drop in consumption along with drop in inflation. Preliminary industrial production data came in at 0.6% m/m vs 0.2% m/m as expected. Japan’s industry was hit hard by trade war so this data is a great result.

This week we will have PMI data as well spending and earnings data.

Important news for JPY:

Monday:

– Nikkei Manufacturing PMI

Wednesday:

– Nikkei Services PMI

Friday:

– Household Spending
– Labour Cash Earnings

CHF

Q1 GDP data came in at 0.6% q/q vs 0.3% q/q as expected with prior Q4 reading being revised up to 0.3% q/q. A strong reading looking even better with positive revision of Q4 GDP. GDP is 1.7% y/y vs 1% y/y as expected. Rise in GDP has been achieved thanks to improvements in investments and consumption. The Swiss government stated that growth was achieved due to one-off factors and that negative factors affecting the economy are still present. They will not upgrade annual forecasts and general outlook for the economy remains murky. Trade balance for the month of April came in at CHF2.29bn vs CHF3.18bn the previous month. Exports came in at -0.6% m/m which is concerning but due to global tensions and overall slowdown not surprising and imports came in at 1.5% m/m showing that domestic demand is still robust. Retail sales came in at -0.7% y/y vs -0.8% y/y as expected. Consumption still stays on the weaker side.

This week we will have inflation and employment data.

Important news for CHF:

Monday:

– CPI

Friday:

– Unemployment Rate