Daily Market Outlook by Kate Curtis from Trader's Way

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

katetrades · June 10, 2019, 3:27pm

Forex Major Currencies Outlook (June 10 – June 14)

USD

ISM manufacturing index came in at 52.1 vs 53 as expected. This is the lowest reading in 31 months. On the back of the reading and falling 2-year and 10-year bond yields odds of a rate cut in the July meeting have jumped to 50%. St Louis FED president Bullard was the first FED official to state the possibility of rate cut scenario. Bullard is a well-known dove but he is a voting member. He stated that main reason would be to “prop up inflation”. FED chairman Powell stated that likelihood that rates will fall to effective lower bound in a downturn is much higher, indicating that if the trade war continues or escalates a rate cut can be appropriate. Market participants are now pricing in a 92% probability of a rate cut by the September meeting.

ISM non-manufacturing index for the month of May came in at 56.9 vs 55.4 as expected. Employment category jumped to 58.1 from 53.7 the previous month. All categories were well over the 50 mark with inventories making the highest jump after the employment. The New Order category climbed to 58.6 from 58.1 the previous month. Trade balance for the month of April came in at -$50.8bn vs -$50.7bn as expected. Both exports and imports came in at -2.2%. Main culprit in exports were aircraft, the issue with Boeing, while on the import side chemicals, cars and semi-conductors showed the biggest decline.

NFP number came in at 75k vs 175k as expected. The lowest estimates were for an 80k increase. The unemployment rate and participation rate stayed the same at 3.6% and 62.8% respectively. Average hourly earnings came in at 3.1% y/y vs 3.2% y/y. Misses on the headline number and earnings pushed USD lower. This is the second month of the year with below a 100k NFP number, although the 4-month average is 127k. Will the FED brush off this reading or will it give significance and hint toward rate cut is yet to be seen.

This week we will have inflation and consumption data.

Important news for USD:

Wednesday:

– CPI

Friday:

– Retail Sales

EUR

The final manufacturing PMI for the Eurozone in the month of May came in at 47.7 as preliminary reading showed. German and French PMIs remained the same while Spanish dropped and Italian jumped coming in at 49.7, almost back into the expansion territory. Services PMI came in a bit better at 52.9 vs 52.5 preliminary with composite reading showing 51.8 vs 51.6 preliminary. Revisions up were done in Spain, Italy and German while French PMIs were revised slightly to the downside.

Preliminary CPI for the month of May came in at 1.2% y/y vs 1.3% y/y as expected. Previous month it was 1.7% y/y and a drop was expected since higher inflation was achieved due to Easter holiday. Core CPI came in at 0.8% y/y vs 0.9% y/y as expected signalling that inflation pressures are still very weak in the EU and that they will continue to pose problems for ECB. The unemployment rate for the month of April ticked down to 7.6%. Retail sales for the month of April came in at -0.4% m/m vs -0.5% m/m as expected while coming at 1.5% y/y as expected.

ECB has left the key rates unchanged as expected. They see rates at the present levels at least through H1 2020. New TLTRO is priced at MRO + 10bps. The main refinancing operations (MRO) rate is the interest rate banks pay when they borrow money from the ECB for one week. Consensus for TLTRO was MRO – 20bps so new TLTRO rate is hawkish decision that will help financial institutions in EU area and it propped EUR higher. GDP forecast for 2019 has been revised up to 1.2% and downgraded to 1.4% from 2020 and 2021. Inflation for 2019 is seen at 1.3%, for 2020 at 1.4% and for 2021 at 1.6%.

This week we will have data on industrial production and since German industrial production data was terrible, we can expect a miss.

Important news for EUR:

Thursday:

– Industrial Production

GBP

The manufacturing PMI for the month of May came in at 49.4 vs 52.2 as expected. This is a huge miss, a drop into contraction territory for the first time July of 2016. Previous stockpiling due to Brexit uncertainties has eased and we got a big drop in the reading. New orders component fell to 46.2 which is lowest reading since October 2014. Construction PMI came in at 48.6 vs 50.6 as expected. The drop was led by the fall in the employment component which fell to the lowest since November 2012. Return to contraction territory for the construction PMI putting another PMI into the contraction territory. Services PMI came in at 51 vs 50.5 as expected thus beating the expectations and moving further into the expansion territory.

This week we will have monthly GDP data, data on trade balance, industrial and manufacturing production as well as construction output, employment and wages data and speech by governor Carney.

Important news for GBP:

Monday:

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

Tuesday:

– Unemployment Rate
– Claimant Count Change
– Average Weekly Earnings

Friday:

– BOE Governor Carney Speech

AUD

Caixin manufacturing PMI for the month of May came in at 50.2 vs 50 as expected. This is the third consecutive month above 50. New orders accelerated rapidly according to Caixin and new export orders rebounded significantly to high levels. Caixin services PMI came in at 52.7 vs 54.5 the previous month and composite PMI came in at 51.5 vs 52.7 the previous month.

Retail sales for the month of April came in at -0.1% m/m vs 0.2% m/m as expected. The weak stream of data from Australia continues, however reaction in the markets was missing because everyone was concentrating on the rate decision. RBA delivered rate cut of 25bp putting the cash rate to 1.25% which is a record low. The decision to cut rates was primarily motivated by desire to support job growth and make progress towards inflation target. They acknowledged household consumption as main domestic uncertainty and April’s numbers confirmed their thesis. Downside risks from trade tensions have increased. Markets had this move priced at 100% and text of the statement did not leave room for speculations about further rate cuts so there were no volatile movements. Later during the day governor Lowe stated that future rate cuts are “not unreasonable” and that RBA will be data dependent. UBS reckons that the unemployment rate should be higher than 5.4% in order for future rate cuts to be made in July.

Q1 GDP came in at 0.4% q/q vs 0.5% q/q as expected and 1.8% y/y as expected. Growth rate is slowest in 5 years. Government spending was the main contributor to the growth. Household spending slowed and contributed a 0.1% to growth. Investment continued to detract and housing market continued to slow down. Trade balance for the month of April came in at AUD4.871bn vs AUD 5bn as expected. Exports were up 2.5% m/m and staggering 17.2% y/y while imports were up 2.8% m/m and 5.4% y/y.

This week we will have employment data from Australia as well as trade balance, inflation, consumption and industrial production data from China.

Important news for AUD:

Monday:

– Trade Balance (China)
– Exports (China)
– Imports (China)
Wednesday:
– CPI (China)

Thursday:

– Employment Change
– Unemployment Rate

Friday:

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

NZD

GDT price index came in at -3.4% at latest auction making it second straight auction with falling dairy prices. After an impressive run of 11 straight rising auctions we see a pullback in prices.

This week we will have data on consumption via electronic cards.

Important news for NZD:

Wednesday:

– Electronic Card Retail Sales

CAD

Manufacturing PMI for the month of May came in at 49.1 vs 49.7 the previous month. This is the seventh consecutive month of dropping numbers with final reading being lowest since December of 2015 and plunging deeper into the contraction territory. Output and new orders category continued their decline while employment category came better than previous month. Global slowdown and trade tensions takes its toll on Canadian manufacturers. Trade balance for the month of April came in at -$0.97bn vs -$2.80bn as expected. Exports rose 1.3% while imports dropped -1.4%. Decline in trade deficit will have positive effect on Q2 GDP.

Employment change came in at 27.7k vs 5k as expected. All of the employment came in from full-time employment. The unemployment rate dropped to 5.4% from 5.7% the previous month and it is the lowest since 1976. Annual hourly wages accelerated to 2.8% from 2.5% in April and were steady at 2.6% for permanent employees. Another strong report from Canada indicating tight labour market conditions.

This week we will have housing data.

Important news for CAD:

Monday:

– Housing Starts
– Building Permits

JPY

The final manufacturing Nikkei PMI for the month of May came in at 49.8 vs 49.6 preliminary and 50.2 the previous month. Output and new orders dropped for the fifth consecutive month. Domestic and external demand conditions are getting weaker while the firms slow down on hiring and production. Services PMI came in at 51.7 vs 51.8 the prior month and composite was 50.7 vs 50.8 the previous month. Japan’s economy proves resilient in the wake of trade wars and other headwinds.

Labour cash earnings for the month of April came in at -0.1% y/y vs -0.7% y/y as expected. Household spending came in at 1.3% y/y vs 2.6% y/y as expected. Low wages, missing wages even, cannot prop up spending. Real wages came in at -1.1% y/y, falling for the fourth consecutive month.

This week we will have final Q1 GDP and industrial production data.

Important news for JPY:

Monday:

– GDP

Friday:

– Industrial Production

CHF

Headline inflation for the month of May came in at 0.3% m/m as expected while core CPI surprised to the upside and came in at 0.6% y/y vs 0.5% y/y prior. Seasonally adjusted unemployment rate came in at 2.4% as expected.

This week we will have SNB interest rate decision followed by monetary policy assessment. It is expected that the rate will stay the same but we could see some dovish comments intended to weaken the currency since CHF is appreciating, according to its safe heaven role, due to global tensions.

Important news for CHF:

Thursday:

– SNB Interest Rate Decision
– SNB Monetary Policy Assessment

katetrades · June 17, 2019, 3:28pm

Forex Major Currencies Outlook (June 17 – June 21)

USD

President Trump has stated over the weekend that deal with Mexico was reached thus delaying tariffs indefinitely. This brought a risk on effect in the markets, making gold and USDCAD gap on the opening.

Headline CPI for the month of May came in at 1.8% y/y vs 1.9% y/y as expected. Core CPI dipped down to 2% y/y vs 2.1% y/y as expected. Core CPI has been at or above 2% for 15 months now. Average hourly and weakly earnings both came higher than previous month coming in at 1.3% and 1% respectively. Although CPI is not FEDs preferred inflation measure, a drop in inflation, especially core one, may add more fuel to the fire of rate cuts. Markets are already pricing almost 80% probability of rate cut in July.

Advanced retail sales for the month of May came in at 0.5% m/m vs 0.6% m/m as expected with prior reading being revised to 0.3%. Control group came in at 0.5% m/m vs 0.4% m/m as expected with prior reading being revised to 0.4%. Revisions give additional boost to the reading, especially satisfying is the beating on control group reading since it is a component of GDP. This will lead to increase in estimates for Q2 GDP. Industrial production came in at 0.4% m/m vs 0.2/% m/m as expected to add more strength to the USD and US economy. Latest data may prevent FED from going too dovish at the meeting next week.

This week we will have housing data and preliminary PMI numbers for the month of June. The main event of the week will be FED’s interest rate decision. FOMC may leave the rate unchanged but signal future rate cuts via changes in the dot plot projections.

Important news for USD:

Tuesday:

– Housing Starts
– Building Permits

Wednesday:

– FED Interest Rate Decision
– FOMC Press Conference

Friday:

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

EUR

Inflation expectation continue to fall. The Euruzone 5 year inflation swap forward, which is the key gauge of long-term inflation expectations in the Eurozone, has fallen to new record low of 1.16% thus breaking the 2016 low. Industrial production in Eurozone for the month of April came in at -0.5% m/m as expected on the backs of a notable drop in German industrial production.

This week we will have wage data, ZEW economic sentiment, final inflation data for the month of may and preliminary consumer confidence as well as PMI data for the month of June.

Important news for EUR:

Monday:

– Wage Costs

Tuesday:

– ZEW Economic Sentiment Indicator (EU and Germany)
– CPI
– Trade Balance

Thursday:

– Consumer Confidence

Friday:

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

GBP

GDP data for the month of April came in at -0.4% m/m vs -0.1% m/m as expected. Worst month on month reading since March of 2016. Manufacturing production came in at -3.9% m/m vs -1.4% m/m as expected and industrial production came in at -2.7% m/m vs -1% m/m as expected. Huge drops in data. Effects of Brexit stockpiling start to show dragging down growth. ONS notes that the weak April reading can also be attributed to the “dramatic fall” in UK car production, which fell 24% m/m, due to planned shutdowns linked to Brexit uncertainty. Trade balance deficit narrowed coming in at -£12.1 bn vs -13bn as expected. Digging into the numbers we get some ugly data. Exports fell -8.4% m/m while imports fell -12.7% m/m adding more worries to the state of UK economy.

Average weekly earnings came in at 3.1% 3m/y vs 3% 3m/y as expected. The unemployment rate stayed at the historic lows of 3.8%. The employment change came in at 32k vs 4k as expected and claimant count came in at 23.2k. Overall a solid report with unemployment holding low and wages rising plus it gave some nice news from UK economy after abysmal GDP and production data.

Boris Johnson reiterated that he is not aiming for no-deal Brexit and that UK must leave EU on October 31. He expects that it will be done on the better negotiated Brexit deal. The first ballot of the conservative leadership race shows Boris Johnson firmly in the lead with 114 votes followed by Jeremy Hunt in distant second with 43 votes and Michael Gove in third place with 37 votes. Andrea Leadsom, Mark Harper and Esther McVey did not gather enough votes (17) and they are out of the race.

This week we will have inflation and consumption data as well as interest rate decision by BOE. No changes are expected due to the Brexit uncertainties. On the political docket we will have the continuation of the race for PM with minimum votes required for going into the next round raised to 33.

Important news for GBP:

Wednesday:

– CPI

Thursday:

– Retail Sales
– BOE Interest Rate Decision
– BOE MPC Meeting Minutes

AUD

Chinese trade balance for the month of May came in at $41.65bn vs $23.2bn as expected. Trade surplus almost doubled. Exports have risen 1.1% y/y vs -3.8% y/y as expected while the imports have fallen -8.5% y/y vs -3.3% y/y as expected. Domestic demand has eased down but exports are still rising despite the trade war. Inflation came in at 2.7% y/y as expected. Food inflation was the main pusher of overall inflation coming in at 7.17% y/y due to the outbreak of African swine flu, thus increasing pork prices. Non food component came in at 1.6% y/y. Industrial production came in at 5% y/y vs 5.4% y/y as expected. Lowest reading since February of 2002. Retail Sales were up 8.6% y/y vs 8.1% y/y as expected. Consumption is holding very strong. A drop in fixed asset investments along with a drop in industrial production may lead to further easing by the authorities to prop up the economy. National stats bureau came out and stated that month-to-month economic data fluctuations are normal thus implicitly saying that there is no need for concern.

Employment change for the month of May came in at 42.3k vs 16k as expected. Another big beat on the headline number. The unemployment rate stayed at 5.2% but it was projected for it to drop to 5.1% however participation rate has risen to 66% from previous and expected 65.8%. Full time employment change came in only at 2.4k so this will offset otherwise strong number, since majority of employment change was part time. Underemployment rate ticked up to 8.5% which is worrisome.

This week we will have minutes from the latest RBA meeting and speech from governor Lowe.

Important news for AUD:

Tuesday:

– RBA Meeting Minutes

Thursday:

– RBA Governor Lowe Speech

NZD

Electronic card retail sales came in mixed, it came -0.5% m/m vs 0.5% m/m as expected and 3.2% y/y vs 1.6% y/y as expected. Electronic card retail sales are big component of core retail sales so according to the monthly reading we may have a drop in core data. Manufacturing PMI for the month of May showed a huge drop coming in at 50.2 vs 53 the previous month. Lowest level since 2012 with production sub index coming in at 46.4 way below expansion territory.

This week we will have services PMI, hopefully they will not be as bad as manufacturing PMI, GDT price index and Q1 GDP data. Potential weakness in GDP could signal more rate cuts from RBNZ.

Important news for NZD:

Monday:

– Services PMI

Tuesday:

– GDT Price Index

Thursday:

– GDP

CAD

Building permits came in at 14.7% vs 1.8% as expected. A huge beat but it was caused due to new regulations in British Columbia so the builders were seeking permits ahead of the new regulations. Building permits actually were down for the month in other provinces. New home prices came in at 0% for the third month.

This week we will have inflation and consumption data.

Important news for CAD:

Wednesday:

– CPI

Friday:

– Retail Sales

JPY

The final GDP data for Q1 of 2019 came in at 0.6% q/q vs 0.5% q/q preliminary. Business capex came in at 0.3% y/y and it is up from the preliminary reading, however personal consumption came in at -0.1% q/q and GDP deflator, a measure of inflation, dropped down to 0.1% y/y. Consumption and inflation remain the biggest problem for BOJ. There are calls for more easing from BOJ at their September meeting. Core machinery orders rose 5.2% m/m and 2.5% y/y for the first positive y/y reading in 2019. Looks like capital spending begun Q2 on a strong note. The final industrial production data for April came in at 0.6% m/m and -1.1% y/y as expected. Improvement on the month, down for the year.

This week we will have trade balance, manufacturing PMI and national inflation data. The main event will be BOJ rate decision. No change is expected but pressures are mounting and more easing could be on the table. Press conference will be important as markets will look for any signs of more easing to come.

Important news for JPY:

Wednesday:

– Trade Balance
– Exports
– Imports

Thursday:

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

Friday:

– CPI
– Nikkei Manufacturing PMI

CHF

SNB has left sight deposit interest rate unchanged at -0.75% as widely expected. They reiterated their view that Franc is highly valued and that they will intervene in FX market if necessary. They also added that there is still room for more expansionary policy. Swiss government raised 2019 GDP projection to 1.2% from 1.1% previously while SNB keeps its projection of 2019 GDP at 1.5%.

This week we will have data on trade balance.

Important news for CHF:

Thursday:

– Trade Balance
– Exports
– Imports

katetrades · June 24, 2019, 4:28pm

Forex Major Currencies Outlook (June 24 – June 28)

Dovish tones continue to dominate statements from major Central Banks.

USD

FOMC voted to leave rates unchanged at 2.25% to 2.5%. The rate vote was not unanimous, St. Louis FED president Bullard, the biggest dove, voted for the rate cut while only one member, presumably George, president of Kansas City FED, expects a rate hike in 2019. The FOMC statement changed the wording on future policy changes. The change was from “patient” to ‘closely monitor the implications of incoming information”. The phrase “act as appropriate sustain the expansion” was also added to the statement. For the first time, Dot Plot signals interest rate cut with 8 out of 17 members seeing rate cut this year and 7 of those favour two rate cuts. The biggest change to projections was made regarding PCE inflation. Core PCE has been downgraded to 1.8% this year from 2% and to 1.9% next year from 2%. Chairman Powell stated at the press conference that “The case for somewhat more accommodative policy has strengthened” adding that they want to see more deteriorating data and want to react to genuine trends, not one or two data points or swings in sentiment. After the statement was released and press conference was held FED funds futures showed a 100% probability of a rate cut at the July meeting.

This week we will have housing data, consumer confidence data, final reading of Q1 GDP and PCE inflation. FED has downgraded their projections for inflation so data on personal spending and income will be closely monitored. G20 Summit starts on Friday with long awaited Trump – Xi meeting. Investors will be hoping for some warming in the relationship between two states.

Important news for USD:

Tuesday:

– New Home Sales
– Consumer Confidence Index

Wednesday:

– Durable Goods Orders

Thursday:

– GDP
– Pending Home Sales

Friday:

– PCE
– G20 Summit

EUR

The ECB President Mario Draghi has said that cutting interest rates remains part of the bank’s repertoire and added that negative rates have proven to be a very important tool. He added that if the outlook does not improve additional stimulus will be needed and not only in the form of rate cuts. Is there a possibility of re-entering the QE program? Markets are now pricing in additional 10bp rate cut in September of 2019 moving it closer from December of 2019. The ECB Vice President Luis de Guindos supports rate cuts if the inflation outlook does not improve.

German ZEW survey of current situation came in at 7.8 vs 6.1 as expected, but expectation component has plummeted to -21.1 vs -5.6 as expected and -2.1 the previous month. Expectation for Eurozone have also sunk coming in at -20.2 vs -1.6 the previous month. Trade balance for the Eurozone in the month of April came in at 15.3bn EUR vs 17bn EUR as expected. Exports were down 2.4% while imports were down 0.8%. Advanced consumer confidence continues to drop in the month of June with preliminary reading coming in at -7.2 vs -6.5 as expected. Preliminary June PMI data came in stronger than previous month. Manufacturing PMI came in at 47.8 vs 47.7 the previous month on the back of strong French reading with German reading also showing an improvement coming in at 45.4. Services PMI came in at 53.4 vs 52.9 the previous month and composite PMI came in at 52.1 vs 51.8 the previous month.

This week we will have data on business climate from EU and Germany and preliminary inflation data for the month of June.

Important news for EUR:

Monday:

– Ifo Business Climate (Germany)

Thursday:

– Business Climate Indicator
– Economic Sentiment Indicator

Friday:

– CPI

GBP

Inflation for the month of May came in at 0.3% m/m and 2% y/y as expected. A slight drop in the headline inflation from 2.1% y/y while core CPI came in better than expected, thus falling less from the previous month than expected, at 1.7% y/y. Retail sales came in at -0.5% m/m as expected but 2.3% y/y vs 2.7% y/y as expected. A bit softer reading on the yearly basis is concerning. ONS notes that the slightly softer figures here can be attributed to a drop in clothing sales. Fall in retail sales will negatively impact GDP growth in Q2.

BOE has left the bank rate unchanged at 0.75% with. The decision was made unanimously with all 9 members voting for no change. BOE has cut the Q2 GDP forecast to 0 from 0.2% q/q previously. Inflation will likely fall below 2% later this year but inflation expectations remain well-anchored. There are increasing signs that wage growth rates might level off. Downside risks have increased since May as global trade tensions intensify. Although it was acknowledged that “ongoing tightening of monetary policy at gradual and limited pace is needed” hawkish bias of BOE is being slowly deflated.

The final result of the voting for Tory leadership are: Boris Johnson 160 votes and Jeremy Hunt 77 votes. Almost 160 000 Tory party members will now cast their votes via post for one of the two candidates. New leader and PM will be announced on July 22.

This week we will have final Q1 GDP data and data on business investment.

Important news for GBP:

Friday:

– GDP
– Business Investment

AUD

Latest RBA meeting minutes show that monetary policy board agreed that “more likely than not” further easing of monetary policy would be appropriate. The role of labour market has been characterized as “particularly important” for the future decisions regarding easing. The lower rates would push down value of AUD thus reducing household debt repayments. The board is aware that lower rates will hurt savers, but they would also stimulate the overall economy.

This week we will have speech from governor Lowe and PMI data from China.

Important news for AUD:

Monday:

– RBA Governor Lowe Speech

Sunday:

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

NZD

After last week’s huge drop in manufacturing PMI services PMI for the month of May improved and came in at 53.6 vs 52 the previous month. All sub-indices were over 50 with inventory making the highest jump from 48.5 to 56.8 this month. GDT price index came in at -3.8% making it a third consecutive negative auction. Q1 GDP came in at 0.6% m/m as expected and 2.5% y/y vs 2.3% y/y as expected. RBNZ was the first one to cut the rates and this data point will ease the need for further cuts. They can afford to be patient and decide based on more incoming data.

This week we will have trade balance data and RBNZ interest rate decision. After good GDP data it is expected that rates stay on hold.

Important news for NZD:

Tuesday:

– Trade Balance
– Exports
– Imports

Wednesday:

– RBNZ Interest Rate Decision
– RBNZ Rate Statement

CAD

Manufacturing sales for the month of April missed by a big margin. They came in at -0.6% m/m vs 0.4% m/m as expected. The drop was due to lower car sales. New orders also dropped due to temporary assembly plant shutdowns. Retail sales for the month of May came in at 0.1% m/m vs 0.2% m/m as expected but prior month’s reading was revised higher to 1.3% m/m. Ex autos component came in at 0.1% m/m vs 0.4% m/m as expected but prior month’s reading was revised higher to 1.8% m/m. Small misses have been offset by revisions higher for previous month. Higher sales at gasoline stations, along with new cars, food and beverage stores contributed to the increase.

CPI for the month of May surprised to the upside and came in at 2.4% y/y vs 2.1 % y/y as expected. This is the highest reading in the last seven months. Prices increased in all 8 major components with food leading the way at 3.5%. Prices of fresh vegetables rose 16.7% y/y. Core CPI measures show that Median came in at 2.1% vs 1.9% as expected, Common came in at 1.8% vs 1.9% as expected and Trim came in at 2.3% vs 2.1% as expected. These numbers will be very well received by BOC, showing that their monetary policy is effectively stimulating economy. Counties worldwide are struggling with inflation while all major components in Canada showed an increase in prices.

This week we will have data on wholesale trade and GDP for the month of April as well as OPEC meeting that will impact the price of oil, closely related to the value of CAD.

Important news for CAD:

Tuesday:

– OPEC Meeting
– Wholesale Trade

Wednesday:

– OPEC Meeting

Friday:

– GDP

JPY

Trade balance for the month of May came in at -JPY967bn vs -JPY1200bn as expected. Exports were down -7.8% y/y vs -8.2% y/y as expected caused by drops in exports to China -9.7% y/y and Asia -12.1% y/y. Imports came in at -1.5% y/y vs 1% y/y as expected. Lowering of trade deficit was achieved due to falling imports which can’t be a good sign regarding domestic demand. Exports fell less than expected but trade wars and global slowdown weigh in heavily. Chips and auto parts were main culprits for decline in exports.

BOJ has left the short-term interest rate at -0.1% as widely expected. The forward guidance has been left unchanged and they confirmed that low rates will be kept at least through spring of 2020. Japan’s economy is expanding moderately as a trend although exports and output are affected by overseas slowdown. Assessments are kept unchanged.

Inflation on national level for the month of May came in at 0.7% y/y as expected but down from 0.9% y/y the previous month. Excluding fresh food component came in better than expected at 0.8% y/y vs 0.7% y/y as expected but also down from the 0.9% y/y the previous month. Struggle with inflation continues in Japan, one month it is on the right track, the other it turns back down. We are still far away from the targeted 2% level. This will give BOJ more reasons to ease further. Preliminary manufacturing PMI for the month of June came in at 49.5 vs 49.8 the previous month. New orders component showed the biggest fall in three years. Disappointingly low sales led to largest accumulation of finished goods inventories for more than six and-a-half years.

This week we will have minutes from the latest BOJ meeting, consumption data, inflation data from Tokyo area, employment data and preliminary industrial production data for the month of May. BOJ summary of opinions will provide more information whether board members discussed about expanding the stimulus program.

Important news for JPY:

Tuesday:

– BOJ Monetary Policy Meeting Minutes

Thursday:

– Retail Sales

Friday:

– CPI
– Unemployment Rate
– Jobs to Applicants Ratio
– BOJ Summary Of Opinions
– Industrial Production

CHF

Trade balance data for the month of May came in at CHF3.41bn vs CHF2.29bn the previous month. Exports were down -1.2% m/m reflecting difficulties caused by global trade tensions. Domestic demand is holding stable with imports coming in at 0.7% m/m.

katetrades · July 1, 2019, 3:28pm

Forex Major Currencies Outlook (July 1 – July 5)

Final PMI readings across the world will dominate throughout the week, RBA rate decision and highlight will be NFP on Friday.

USD

New home sales in May missed expectations coming in at 626k vs 684k as expected, down from the April number of 673k. Consumer confidence dropped significantly in the month of June coming in at 121.5 vs 131 as expected. Prior number was revised down to 131.3 but it does not improve the picture by much. Both present situation and expectations categories missed expectations and came much weaker than the numbers in the previous month even with downward revisions. Jobs hard-to-get category showed a huge jump which is worrying since labour market is a bright spot in the US economy. FED chairman Powell hinted that there will be only one cut and emphasised the strength of US economy.

Durable goods orders for the month of May came in at -1.3% m/m vs -0.2% m/m as expected. Headline number looks abysmal butt core number, capital goods orders non-defence ex air, shows a much better number coming in at 0.4% m/m vs 0.1% m/m as expected. Advanced goods trade balance came in at -$74.5bn vs -$71.8bn as expected. Exports were down -2.5% y/y while imports were up 2.6% y/y presumably because importers look to boost their inventories before another batch of tariffs. Core PCE came in at 1.6% y/y vs 1.5% y/y as expected. Personal income came in at 0.5% m/m vs 0.3% m/m as expected while personal spending came in at 0.4% m/m vs 0.5% m/m as expected with previous month being revised up to 0.6% m/m. Since spending constitutes almost 70% of US GDP these numbers are very encouraging. Rise in personal income is also a welcoming sign for future inflation and additional spending.

This week we will have final PMI data for the month of June, trade balance data and big event on Friday will be NFP. NFP number is expected to bounce back to 176k and with all the talks about rate cuts FED will base their future decisions on this data. Average hourly earnings data will also be taken into the account by FED.

Important news for USD:

Monday:

– Markit Manufacturing PMI
– ISM Manufacturing PMI

Wednesday:

– Markit Services PMI
– Markit Composite PMI
– ISM Non-manufacturing PMI
– Trade Balance
– Exports
– Imports
– ADP Nonfarm Employment Change
– Factory Orders

Friday:

– Nonfarm Payrolls
– Unemployment Rate
– Average Hourly Earnings

EUR

German Ifo Business climate index came in at 97.4 as expected continuing a drop from 97.9 the previous month. Expectations category also showed a decline painting a grim picture of the German economy. Current assessment of the economic situation improved a bit. Global slowdown is hitting export and manufacturing oriented German economy very hard. The US-China trade dispute is the main cause of uncertainty while Brexit and the Iran conflict are not playing a dominant role at the moment according to the Ifo economist.

Final consumer confidence for the month of June came in at -7.2 as the preliminary reading showed. However, all other indicators, business climate indicator, economic, industrial and services confidence, dropped. Economic confidence fell lowest since August of 2016. Preliminary CPI for the same month came in at 1.2% y/y as expected but core CPI came in at 1.1% y/y which is stronger than 1% y/y as expected and 0.8% y/y the previous month. The rise in core inflation will be welcomed by ECB as they very closely monitor it, however they need to see that this is a trend and not just one-month thing.

This week we will have final PMI data for the month of June, employment data and consumption data.

Important news for EUR:

Monday:

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

Wednesday:

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

Thursday:

– Retail Sales

GBP

Final Q1 GDP data came in at 0.5% q/q and 1.8% y/y as the preliminary reading showed. Total business investment dipped a bit to 0.4% q/q from 0.5% q/q preliminary and -1.5% y/y vs -1.4% y/y preliminary. Strength of Q1 GDP reading was achieved due to stockpiling ahead of Brexit which will not be transferred to Q2 strength as recent economic data showed.

This week we will have PMI data for the month of June.

Important news for GBP:

Monday:

– Markit Manufacturing PMI

Tuesday:

– Markit Construction PMI

Wednesday:

– Markit Services PMI

AUD

RBA Governor Lowe said that it is legitimate to ask how effective monetary easing would be globally and added that the exchange rate effect of cutting rates is offset if everyone cuts.

This week we will have PMI data from China, trade balance data and consumption data. The main event will be RBA interest rate decision and markets are pricing around 80% probability for a rate cut.

Important news for AUD:

Monday:

– Caixin Manufacturing PMI (China)

Tuesday:

– RBA Interest Rate Decision
– RBA Rate Statement

Wednesday:

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

Thursday:

– Retail Sales

NZD

Trade balance data for the month of May show a trade surplus of $264m vs $250m as expected. Exports beat expectations and prior month data coming in at $5.81bn which is an all-time high. The leading contributor to the rise was exports of milk powder, butter, and cheese. Imports, as well, beat expectations and prior month data coming in at $5.54bn. Majority of imports were crude oil imports.

RBNZ has left the official cash rate at 1.5% as expected. They have acknowledged weaker global economic growth and risk of prolonged subdued domestic growth. Given the downside risks around the employment and inflation outlook, a lower OCR may be needed over time. RBNZ took a dovish stance opening more room for the rate cuts as soon as August. OIS markets are now pricing about 80% chance of a rate cut in August. ANZ business confidence for the month of June dropped down to -38.1 from -32 the previous month. The economy is facing credit and cost headwinds while the global outlook is deteriorating. Such a drop in the data adds more certainty to future rate cuts, possibly even two cuts this year.

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

Important news for NZD:

Tuesday:

– GDT Price Index
– Building Permits

CAD

Wholesale sales for the month of April came in at 1.7% m/m vs 0.2% m/m as expected. This is the fifth consecutive monthly increase. Wholesale sales climbed in five of seven major categories representing 86% of total receipts. GDP for the month of April came in at 0.3% m/m vs 0.2% m/m as expected. Better than expected resulted was achieved due to rise in oil and gas. Along with wholesale trade GDP added another strong data point from Canadian economy. BOC cannot follow suit of other central banks and start with dovish rhetoric after incoming strong data similar to this signalling recovery in Q2 of 2019.

This week we will have OPEC meeting where there will be talks about cutting production in order to prop up the oil price. Additionally, we will have trade balance data and employment data on Friday which will be released at the same time as NFP so they might cause increased volatility.

Important news for CAD:

Monday:

– OPEC Meeting

Tuesday:

– OPEC Meeting

Wednesday:

– Trade Balance
– Exports
– Imports

Friday:

– Employment Change
– Unemployment Rate

JPY

Retail sales for the month of May came in at 0.3% m/m vs 0.6% m/m as expected but a beat of -0.1% m/m the previous month and 1.2% y/y as expected with 0.5% the previous month. Slow moves in the right direction but nothing suggests that these movements are sustainable. The unemployment rate stayed the same at 2.4% as expected. CPI for the Tokyo area came in same as previous month at 1.1% y/y vs 1% y/y as expected. Excluding food and energy category came in at 0.8% y/y vs 0.7% y/y as expected. Small improvement in the core reading toward the 2% target but still far away from it. Industrial production showed a great beat in May coming in at 2.3% m/m vs 0.7% m/m as expected and -1.8% y/y vs -2.9% y/y as expected.

This week we will have final PMI data for the month of June, Tankan data, data on consumer confidence as well as data on household spending.

Important news for JPY:

Monday:

– Nikkei Manufacturing PMI
– Tankan Manufactures Index
– Consumer Confidence

Wednesday:

– Nikkei Services PMI

Friday:

– Household Spending

CHF

Due to geopolitical risks and general risk-off mode in the markets CHF has appreciated as a safe haven currency. SNB does not think that too strong CHF is good for the economy so they might intervene in the markets which in turn keeps market participants wary of adding more to their CHF positions.

This week we will have consumption and inflation data.

Important news for CHF:

Monday:

– Retail Sales

Thursday:

– CPI

katetrades · July 7, 2019, 9:05pm

Forex Major Currencies Outlook (July 8 – July 12)

BOC rate decision to dominate as we get more information about the thought process of lone neutral central bank.

USD

Presidents Trump an Xi met in Osaka at G20 meeting and agreed to forego new tariffs and restart trade negotiations. The ban for US companies from selling products to Huawei will be lifted. In turn China agreed to resume purchases of American goods and buy a “tremendous amount” of American food and agricultural products. The Trump administration is now turning towards Japan and Europe adding more tariffs on goods from Europe in order to fight against Europe’s “illegal” subsidies for Airbus.

The ISM manufacturing index for the month of June came in at 51.7 vs 51 as expected. It was down from 52.1 the previous month but still well in the expansion territory and when comparing with manufacturing PMI from other major economies it came immensely strong which gave USD a boost across the markets. The employment component rose to 54.7 while new orders dropped but still came in at 50. The ISM non-manufacturing index came in at 55.1 vs 56 as expected. Business activity, new orders and employment categories came in weaker than the previous month. Trade balance in May came in at -$55.5bn vs -$54bn as expected. Deficit continues to rise with imports (3.3%) coming in higher than exports (2%). Trade deficit with China widens to $30.2bn vs $26.9bn the previous month indicating China’s upper hand in the trade conflict.

NFP payrolls for the month of June beat the expectations and came in at 224k vs 160k as expected. Headline number was well monitored due to the poor reading of 75k the previous month which was revised down to 72k. The unemployment rate ticked up to 3.7% with participation rate also climbing to 62.9%. Average hourly earnings came in at 3.1% y/y vs 3.2% y/y as expected. Initial reaction on the headline number was USD strength. FED will not feel pressured to cut rates after the report so probability of a 50bp cut in July has drastically fallen. We could expect FED to stop with rate cuts after one 25bp rate cut in July.

This week we will have minutes from latest FOMC meeting, inflation and budget data.

Important news for USD:

Wednesday:

– FOMC Minutes

Thursday:

– CPI
– Federal Budget Balance

EUR

Final manufacturing PMI for the month of June came in at 47.6 vs 47.8 preliminary. Data was pushed down on the big miss from Spanish PMI which came in at 47.9 vs 49.5 preliminary which is weakest since April 2013. Italy’s PMI also came in weaker than preliminary reading showed while France and Germany had an improvement in the data compared to the last month but weaker than preliminary readings. Final services PMI came in at 53.6 vs 53.4 preliminary. The unemployment rate has slipped down to 7.5% vs 7.6% as expected again reflecting tight labour market conditions present in the EU. Retail sales in May came in at -0.3% m/m vs 0.3% m/m as expected with previous month being revised up to -0.1% m/m which is a bit of positive news from overall bad report.

Italy has forecast a smaller budget deficit in 2019. It has been reduced from 2.4% to 2.04%. This new projection will help in avoiding conflict with the European Commission at least after the summer when 2020 budget comes into the play. German retail sales in May came in at -0.6% m/m vs 0.5% m/m as expected. EU leaders have nominated candidates for the key institutions. Former IMF president Christine Lagarde has been nominated for the president of ECB, a successor to Mario Draghi. Lagarde stated in her recent blog posts with IMF that additional stimulus is needed to assist economies around the globe, she is considered a bigger dove than Draghi. The fact that she is a career politician and lawyer by education raises questions about political independence of ECB.

This week we will have data on industrial production.

Important news for EUR:

Monday:

– Eurogroup meeting
– Industrial Production (Germany)

Friday:

– Industrial Production

GBP

Manufacturing PMI for the month of June came in at 48 vs 49.5 as expected and down from 49.4 the previous month. Deeper plunge into contraction territory caused by a drop in the output component from 50.3 to 47.2. Construction PMI has plunged deeper into contraction territory coming in at a miserable 43.1 vs 49.2 as expected. This is the lowest reading in 10 years and shows just how deep uncertainties around Brexit hurt the construction sector. Services PMI rounded up weak PMI readings for the month of June coming in at 50.2 vs 51 as expected. Composite PMI was dragged into contraction territory and came in at 49.7. That is the first contraction since July 2016.

This week we will have data on industrial and manufacturing production, construction output and trade balance.

Important news for GBP:

Wednesday:

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

AUD

Official Chinese manufacturing PMI data for the month of June came in at 49.4, same as the previous month and still in contraction territory. New export orders category showed additional decline. Services PMI came in at 54.2 as expected, deep into expansion territory. Caixin manufacturing PMI came in at 49.4 vs 50.1 as expected and 50.2 the previous month. A drop into contraction territory led by new orders and new export orders categories. Sub index measuring sentiment toward future output plunged further, although staying in expansionary territory. Caixin services PMI came in at 52 vs 52.6 as expected and composite PMI was dragged down to 50.6 vs 51.5 the previous month. New export business dropped back to contraction territory, pointing to subdued foreign demand. The employment measure also fell further but remained in positive territory.

RBA has cut official cash rate by 25bp to 1% as widely expected. This is the lowest level for rates in history. The move was made in order to support job creation, reduce spare capacity and move inflation toward the target since inflation pressures remain subdued across much of the economy. Inflation is still anticipated to pick up and will be boosted in the June quarter by increases in petrol prices. The central scenario remains for underlying inflation to be around 2 per cent in 2020 and a little higher after that. The Global economic outlook remains reasonable and global financial conditions remain accommodative according to RBA. The Australian dollar is at the low end of its narrow range of recent times. Overall neutral statement since there are possibilities for further rate cuts, but they are not urgent. Employment, inflation and GDP will be closely monitored by RBA and they will influence their further moves.

Trade balance for May came in at AUD 5745m vs AUD 5250m as expected which is the new record surplus. Better than expected result and bigger surplus was achieved due to better exports, 4% m/m, while imports came in at 1% m/m still showing strong domestic demand for foreign goods. Retail sales came in at 0.1% m/m vs 0.2% m/m as expected but up from -0.1% m/m the previous month.

This week we will have inflation and trade balance data from China and data on business and consumer confidence from Australia.

Important news for AUD:

Tuesday:

– NAB Business Confidence

Wednesday:

– Westpac Consumer Confidence
– CPI (China)

Friday:

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

NZD

GDT price index came in at -0.4% for the fourth consecutive negative auction. NZD continues to follow market sentiment until major data givse more ammunition for monetary policy decisions.

This week we will have consumption and PMI data.

Important news for NZD:

Thursday:

– Electronic Card Retail Sales

Friday:

– Business NZ PMI

CAD

Trade balance in May came in at $0.76bn vs -$1.7bn as expected for the first trade surplus in almost 3 years. Imports were up 1% while exports were up staggering 4.6% for the record number of $53.1bn. Trade surplus with US jumped to $5.9bn vs $4.4bn the previous month, that is highest surplus in a decade. The main contributor to big export numbers was the automotive sector.
Employment number for the month of June was -2.2k vs 9.9k as expected. The unemployment rate ticked up to 5.5% while the participation rate stayed the same. Hourly wage for permanent employees came in at 3.6% vs 2.7% as expected, this is a huge beat and benefit for the workers. Full time employment came in at 24.1k for another positive sign.

This week’s main event will be BOC rate decision. It is widely expected that rate will stay the same, but due to the great recent data investors will be looking for hawkish statement or at least maintaining the neutral stance.

Important news for CAD:

Wednesday:

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

Thursday:

– OPEC Monthly Oil Market Report

JPY

Tankan report for the Q2 of 2019 showed worse than expected numbers in manufacturing sector. The large manufacturing index came in at 7 for the worst reading in 3 years showing the accumulated pressure of trade war and global slowdown. At the same time final Nikkei manufacturing PMI for the month of June came in at 49.3 vs 49.5 preliminary and down from 49.8 the previous month. There was a sharp decline in the new export orders category. Household spending in May surprised and came in at 4% y/y vs 1.5% y/y as expected.

This week we will have final data on industrial production.

Important news for JPY:

Friday:

– Industrial Production

CHF

Retail sales for the month of May came in at -1.7% y/y vs -0.7% y/y as expected. Consumption in Switzerland continues to deteriorate without noticeable effect on CHF. Manufacturing PMI for the month of June came in at 47.7 vs 49 as expected and down from 48.6 the previous month. Although manufacturing is not the main driver of the economy, drops like these are worrying. SNB’s vice president Zurbruegg stated that they have seen some pressure on the CHF and reiterated that SNB is ready to intervene to reduce attractiveness of the CHF. Headline CPI for June came in at 0.6% y/y vs 0.5% y/y as expected. There was also a very welcoming tick up in core CPI component which came in at 0.7% y/y vs 0.6% y/y as expected.

This week we will have employment data.

Important news for CHF:

Tuesday:

– Unemployment Rate

katetrades · July 15, 2019, 9:37am

Forex Major Currencies Outlook (July 15 – July 19)

Inflation and consumption data will dominate the week in front of us.

USD

FED chairman Powell began his testimony to Congress with remarks that uncertainties and concerns about global economy since June meeting continue to weigh in on the US economic outlook. The FED will act as appropriate to sustain US growth. There is a risk weak inflation will be even more persistent than what FED currently anticipates. Current levels of wage growth are not enough to put upwards pressure on inflation. Concerns were raised about high and rising federal debt and relative stagnation of middle and lower incomes, also housing manufacturing looks to have dipped again in Q2. Overall dovish tone of the statement sent USD lower across the markets and all but cemented the rate cut in July.

CPI for the month of June came in at 1.6% y/y as expected down from 1.8% y/y the previous month while core CPI surprised to the upside coming in at 2.1% y/y vs 2% y/y as expected and as previous month. Real average hourly earnings climbed to 1.5% y/y vs 1.3% y/y the previous month and real average weakly earnings came in better than expected at 1.2% y/y. Rise in real earnings is a very encouraging sign for the US workers and US economy as a whole.

This week we will get consumption and housing data as well as data on industrial production.

Important news for USD:

Tuesday:

– Retail Sales
– Industrial Production

Wednesday:

– Building Permits

EUR

German industrial production for the month of May came in at 0.3% m/m vs 0.4% m/m as expected but yearly figure shows the full scope of the issue coming in at -3.7 y/y for a deep plunge. The drop in y/y reading indicates that recovery in the economy will not be achieved in Q2. After the drop in business investor confidence survey concerns about possible resumption of QE program started to mount. Industrial production in the Eurozone came in at 0.9% m/m vs 0.2% m/m as expected with -0.5% m/m for the previous month. Great rebound can be attributed to jump in French numbers which were boosted by Airbus aircraft production. Italy also published better than expected data.

European Commission has cut outlook for Euro Area citing rising downside risks in the form of trade tensions and political uncertainties. GDP growth for 2019 in unchanged but 2020 GDP is lowered for Eurozone as well as for Germany and France. For all the areas GDP has been lowered to 1.4% from 1.5% previously. Inflation in Eurozone has also been cut to 1.3% from 1.4% previously.

This week we will get economic sentiment data for both EU and Germany, trade balance and final inflation numbers for the month of June in the Eurozone.

Important news for EUR:

Tuesday:

– ZEW Economic Sentiment Indicator (EU and Germany)
– Trade Balance

Wednesday:

– CPI

GBP

GDP for the month of May came in at 0.3% m/m as expected. The main contributor to the headline reading was car production which bounced back from the lows of the previous month. However, due to the weak GDP reading in April it will take a June GDP reading of 0.8% m/m in order for Q2 GDP to turn flat and likelihood of that happening is very low. Therefore, we are in for a negative Q2 GDP reading. Manufacturing and industrial production as well as construction output missed the estimates but came in positive for the month thus showing a rebound from the previous month when all three categories were negative. Trade balance came in at -£11.5bn vs -£12.6bn as expected and -£12.8bn the previous month. Lowering of deficit was achieved with exports rising 3.5% and imports falling -0.6%.

Financial stability report published by BOE shows that the risk of a no-deal Brexit has risen and that it could cause a material economic disruption, however UK banks could withstand it. Governor Carney stated that UK financial system is ready for Brexit regardless of the form it takes. However, other parts of the UK economy still has more preparing to do for the Brexit.

This week we will have employment data as well as inflation and consumption data.

Important news for GBP:

Tuesday:

– Unemployment Rate
– Claimant Count Change
– Average Weekly Earnings

Wednesday:

– CPI

Thursday:

– Retail Sales

AUD

CPI from China for the month of June came in at 2.7% y/y as expected. The number is distorted since food prices have risen by 8.3% due to bad weather while non-food prices rose by mere 1.4% which represents third month in a row of easing pressures. PPI on the other hand came in flat at 0% y/y, lowest reading since August of 2016. These data add more wind to the idea that PBOC will further ease their policy. Chinese customs released trade balance data first for H1 and it showed trade surplus of 1.23 trillion Yuan. Exports were up 6.1% y/y while imports were up 1.4% y/y. Total trade with US was down 9% y/y but trade surplus increased by 12% y/y to 954.8bn Yuan on the back of plunging imports -25.7% y/y for H1 and lower exports -2.6% y/y. Monthly exports in June declined 1.3% while imports declined 7.3% vs 4.8% decline as expected for a surplus of $50.98bn vs $45bn as expected.

This week we will have GDP, consumption, industrial production and investment data from China. From Australia we will get RBA meeting minutes along with employment data. Since employment is one of RBA’s mandate it will be very closely monitored for decisions on possible future rate cuts.

Important news for AUD:

Monday:

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

Tuesday:

– RBA Meeting Minutes

Thursday:

– Employment Change
– Unemployment Rate

NZD

Card spending for the month of June came in flat at 0% m/m vs 0.7% m/m as expected with prior month showing -0.5% m/m. A decent rebound from the previous month, albeit weaker than expected and since card spending constitutes around 70% of core retail sales we can expect a rebound in the reading. BusinessNZ Manufacturing PMI came in at 51.3 vs 53.1 as expected but up from 50.2 the previous month. Less than expected rise in the reading which was achieved with huger rise in finished stocks which rose to 57.6.

This week we will have inflation data for Q2. Latest data incoming has not been encouraging and if inflation slips, we will increasing pressures for the rate cut in August. We will also get bi-weekly GDT price index which has been slipping for four consecutive months and services PMI.

Important news for NZD:

Monday:

– Services PMI

Tuesday:

– CPI
– GDT Price Index

CAD

BOC has kept the overnight rate at 1.75% as widely expected. In the statement they have acknowledged material effect on the global economic outlook produced by the trade tensions and added that trade conflicts between the United States and China, in particular, are curbing manufacturing activity and business investment and pushing down commodity prices. They feel that accommodation provided by current rate remains appropriate. Annual Q1 GDP has been raised to 0.4%, Q2 has been raised to 2.3% from 1.3% while Q3 GDP has been projected at 1.5%. Q2 growth came stronger than predicted due to temporary factors, including reversal of weather-related slowdowns and a surge in oil output. Key factors behind the improvement in Canada’s economy are jobs growth, wages growth, rebound in consumer spending, exports and business investment.

This week we will get inflation and consumption data as well as data on manufacturing sales.

Important news for CAD:

Wednesday:

– CPI
– Manufacturing Sales

Friday:

– Retail Sales

JPY

Wages data showed a drop in both cash earnings and real cash earnings in May with former coming in at -0.2% y/y vs -0.6% y/y as expected and latter coming in at -1% y/y vs -1.5% y/y as expected. Both categories came in better than expected but this is the fifth consecutive month of falling wages and it cannot act to spur any consumption and economic growth.

This week we will have trade balance data and national inflation data.

Important news for JPY:

Thursday:

– Trade Balance
– Exports
– Imports

Friday:

– CPI

CHF

The seasonally adjusted unemployment rate for the month of June slipped down to 2.3% indicating even tighter conditions in the labour market. These are the lowest numbers since April of 2002.

This week we will have trade balance data.

Important news for CHF:

Thursday:

– Trade Balance
– Exports
– Imports

katetrades · July 22, 2019, 9:50am

Forex Major Currencies Outlook (July 22 – July 26)

ECB rate decision will dominate the week ahead of us accompanied by preliminary PMI figures for the month of July, election of the new UK Prime Minister and US Q2 GDP data.

USD

Retail sales for the month of June came in at 0.4% m/m vs 0.2% m/m as expected with prior reading being revised down to 0.4% from 0.5%. Core retail sales were particularly strong coming in at 0.7% m/m vs 0.3% m/m as expected with prior reading being revised up to 0.6% from 0.4%. US consumers are still going strong and this reading will raise GDP projections for Q2 that will be published next week. Atlanta FED raised Q2 GDP forecast to 1.6% from 1.4% before the report.

FED’s Williams gave a speech with very dovish tones stating that it is better to react prematurely than late which weakened the dollar mentioning even neutral rates at 0.5%. FED funds futures were pricing in a 59% chance for 50 bps cut in July. Later on, the NY FED said that Williams’s speech was not about potential policy actions at the July FOMC meeting, it was an academic speech based on research which lowered the chances of 50 bps rate cut to around 42%.

This week we will have housing data, preliminary PMI numbers for the month of July, data on durable goods and preliminary Q2 GDP reading.

Important news for USD:

Tuesday:

– Existing Home Sales

Wednesday:

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

Thursday:

– Durable Goods Orders

Friday

– GDP

EUR

Trade balance for the month of May came in at EUR20.2bn vs EUR17.8bn as expected and big jump from EUR15.7bn the previous month. Exports grew 1.3% m/m, always a good thing for export-oriented economies, while imports fell 1.1% m/m which raises some concerns about domestic demand. German ZEW survey of the current situation for the month of July came in at -1.1 vs 5 as expected and 7.8 the previous month. A drop into negative territory and weakest reading in almost a decade. Expectations for German economy dropped to -24.5 from -21.1 the previous month and Eurozone expectations slipped to -20.3 vs -20.2 the previous month. Pessimistic numbers for the start of Q3, signalling missing expected rebound in H2. Final CPI for the month of June came in at 1.3% y/y vs 1.2% y/y preliminary while core held its ground at 1.1% y/y as preliminary reading showed.

Ursula von der Leyen, former German minister of defence who is considered a key and close ally of Chancellor Angela Merkel, has been narrowly elected president of the EU Commission, becoming the first woman to fill the post and the first German at the helm in over half a century. She received 383 votes while 374 votes where needed to confirm her appointment.

This week we will have preliminary PMI numbers and consumer confidence for the month of July, ifo business climate from Germany and highlight of the week will be ECB rate decision. Overnight index swaps are showing that markets price in an 85 percent probability of a rate cut by the September meeting. Further talks about monetary easing are expected and they can drag the euro down.

Important news for EUR:

Tuesday:

– Consumer Confidence Index

Wednesday:

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

Thursday:

– Ifo Business Climate (Germany)
– ECB Interest Rate Decision
– ECB Monetary Policy Press Conference

GBP

Employment change for the month of May came in at 28k vs 45k as expected. The unemployment rate stayed at 3.8% while claimant count rose to 38k from 24.5k the previous month which is the highest number in a decade. Average weekly earnings beat the expectations coming in at 3.4% 3m/y vs 3.1% 3m/y as expected. When calculated in real terms, average weekly earnings came in at 1.4% 3m/y for the fastest growth since October 2015. The employment report was on the strong side but we have entered Q3 and Brexit uncertainties still loom over so its effect was not supportive of GBP.

Inflation came out flat in the month of June as was expected. CPI was 2% y/y as expected and core CPI was 1.8% y/y as expected and it ticked up from 1.7% y/y the previous month. ONS stated that motor fuel prices fell on the month but rose relative to a year ago thus helping to offset the decline in clothing prices and keep the inflation flat for the month. Retail sales beat expectations by coming in at 1% m/m vs -0.3% m/m as expected with reading from the previous month being revised down to -0.6% m/m. Year over year figure came in at 3.8% vs 2.6% as expected. ONS notes growth in non-food stores was the main contributors to the rise in retail sales. Retail sales excluding auto fuel were also very strong which means that underlying demand is robust. Food stores sales fell for the first time this year and department store sales continued to decline in Q2.

The race for the leader of Tory party and PM of the UK ends on July 23. Boris Johnson who will very likely become the new PM next week stated that plans to hold an early election “while Jeremy Corbyn is still around” thus considering Corbyn for an unfit opponent. The Benn amendment has been passed in Parliament. The Benn amendment will require parliament to be recalled in September and October thus preventing the possibility of no-deal Brexit by running out the clock until October 31.

This week on Tuesday July 23 we will find out who will be UK’s new Prime Minister, Boris Johnson or Jeremy Hunt. The new PM will have a tough task of navigating the country through the Brexit mess.

AUD

Apart from Q2 GDP which came in at 6.2% y/y as expected Chinese data came stronger than expected including quarterly measure of GDP which came in at 1.6% q/q vs 1.5% q/q as expected. Q1 GDP came in at 6.4% and reading of 6.2% represents the slowest growth in almost 30 years. Retail sales for the month of June came in at 9.8% y/y vs 8.5% y/y as expected. This is a big beat propped by rising car sales. Industrial production came in with a bang at 6.3% y/y vs 5.2% y/y. During increasing global tensions and global slowdown Chinese industrial production did not back down. Fixed asset investments came in at 5.8% y/y vs 5.6% y/y as expected.

RBA meeting minutes emphasized importance of labour market conditions when considering further rate cuts. Employment change for June came in at 0.5k vs 9k as expected. The unemployment rate and participation stayed the same at 5.2% and 66% respectively. Full time employment came in at 21.1k while part time employment was down 20.6k. A soft headline number but the steady unemployment rate buys RBA more time so they can wait with further rate cuts.

This week we will have Q2 inflation data which is expected to rise and speech from RBA governor Lowe.

Important news for AUD:

Thursday:

– CPI
– RBA Governor Lowe Speech

NZD

Inflation for the Q2 came in as expected at 0.6% q/q and 1.7% y/y. Prior readings showed 0.1% q/q and 1.5% y/y. The biggest contributor to the inflation were fuel prices. RBNZ’s core inflation reading came in at 1.7% y/y, same as the previous quarter. GDT price index came in at 2.7% thus breaking the trend of four consecutive negative auctions.

This week we will have trade balance data.

Important news for NZD:

Wednesday:

– Trade Balance
– Exports
– Imports

CAD

CPI for the month of June came in at 2% y/y as expected and down from previous month highs of 2.4% y/y due to drop in gasoline prices. If we exclude energy CPI came in at 2.6% y/y. The main contributors to inflation were food prices which came in 3.5% y/y, fresh vegetables rose 17.3% y/y. Regarding the core measures median came in at 2.2% y/y vs 2.1% y/y as expected, common came in at 1.8% y/y as expected while trimmed came in at 2.1% y/y vs 2.2% y/y as expected. Strong numbers that are in line with BOC’s expectations and while they will keep monetary policy makers happy as they will not make them stir away from the current course.

Manufacturing sales for the month of May came in at 1.6% m/m vs 2% m/m as expected but still up from -0.4% m/m the previous month. Sales were up in 12 of 21 industries, representing 66.2% of total Canadian manufacturing, with transportation equipment making the biggest turnaround coming in at 8.1% vs -5.8% the previous month. Inventory levels were up in 13 of 21 industries, with the largest increases being energy in storage. Retail sales came in at -0.1% m/m vs 0.3% m/m as expected thus making the first miss in the long line of data beating the expectations. Retail sales have risen in previous four months. Ex autos category came in at -0.3% m/m vs 0.3% m/m as expected. Sales were down in 4 of 11 subsectors. The biggest drop was in food and beverage stores which dropped 2%. Interestingly, sales at cannabis stores rose 14.8% marking the third consecutive month of double-digit growth.

This week we will have data on wholesale sales.

Important news for CAD:

Monday:

– Wholesale Sales

JPY

Trade balance for the month of June came in at JPY589.5bn vs JPY403.5bn and up from -JPY968.3bn the previous month. Exports fell -6.7% y/y vs -5.4% y/y as expected which is the seventh consecutive month of dropping exports. Imports plunged -5.2% y/y from -1.5% y/y the previous month. These numbers show very weak trading activity from Japan and only because of a huge drop in imports the balance showed a surplus.

National CPI for the month of June came in at 0.7% y/y as expected. CPI excluding fresh food came in at 0.6% y/y as expected but down from 0.8% y/y the previous month. CPI excluding fresh food and energy came in at 0.5% y/y as expected. Inflation remains stubbornly low, not moving in the desired direction towards the 2% target thus giving more incentives for further easing of monetary policy.

This week we will have preliminary PMI numbers for the month of July as well as inflation data for the Tokyo area.

Important news for JPY:

Wednesday:

– Markit Manufacturing PMI
– Markit Services PMI

Friday:

– CPI

CHF

Trade balance for the month of June came in at CHF4.1bn vs CHF3.4bn the previous month. Exports were up 0.1% m/m vs -1.2% m/m the previous month while imports were down -1.4% m/m vs 0.7% m/m the previous month. The rise in trade surplus was caused by slowdown in domestic demand.

katetrades · July 29, 2019, 9:01am

Forex Major Currencies Outlook (July 29 – Aug 2)

BOJ, BOE and FED will hold their meetings this week accompanied with NFP on Friday and slew of economic data worldwide.

USD

Preliminary durable goods for the month of June came in at 2% m/m vs 0.7% m/m as expected. Huge beating on the headline number has been dented by the revision down for the previous month to -2.3% m/m from -1.3% m/m. Capital goods orders non-defense ex-air (core durable orders) came in at 1.9% m/m vs 0.2% m/m as expected. Core orders also strongly beat expectations and there was only mild downward revision for the previous month to 0.0% m/m. Another data point that will strengthen belief in 25bps vs 50bps rate cut.

GDP beat the expectations in Q2 coming in at 2.1% vs 1.8% as expected. Personal consumption led the way with 4.3% vs 4% as expected with prior reading showing 0.9%. Consumer spending on durables jumped to 12.9% vs 0.3% the previous quarter and consumption added 2.85bp to GDP. Trade balance and inventories were not as big of a drag to growth as expected but business and home investment dropped which is concerning. Although we can expect for housing investment to pick up in time with rising wages. Yet another data point that will lower the probability of a 50bps rate cut.

This week will have inflation, housing and trade balance data as well as final PMI numbers for the month of July. Main event of the week will be FED interest rate decision followed by FOMC press conference. A 25Bps rate cut is expected with some chances of 50bps cut, it will be important to see in press conference accompanying the decision if this is an insurance cut or beginning of a rate cut cycle. Nonfarm payrolls will be the second highlight of the week with headline number expected around 160k and the unemployment rate expected to drop to 3.6%.

Important news for USD:

Tuesday:

– PCE
– Pending Home Sales
– Consumer Confidence Index

Wednesday:

– ADP Nonfarm Employment
– FED Interest Rate Decision
– FOMC Press Conference

Thursday:

– Markit Manufacturing PMI
– ISM Manufacturing PMI

Friday:

– Nonfarm Payrolls
– Unemployment Rate
– Average Hourly Earnings
– Trade Balance
– Exports
– Imports

EUR

Preliminary consumer confidence reading for the month of July came in at -6.6 vs -7.2 as expected. Improvement in confidence did not bring strength to EUR as investors were expecting preliminary PMI numbers which came in weaker than expected. Manufacturing PMI for the Eurozone came in at 46.4 vs 47.6 the previous month on the back of French PMI dropping to 50 from 51.9 the previous month and German dropping down to 43.1 from 45 the previous month. This is the lowest reading from Germany in 7 years and it raises concerns about Germany falling into recession. Services PMI came in at 53.3 as expected supported by climb in German services. Composite PMI was dragged down by the manufacturing PMI to 51.5 vs 52.2 as expected.

German Ifo business climate index dropped down to 95.7 vs 97.2 as expected and down from 97.5 the previous month. Expectations and current assessment categories also missed the expectations and came lower than previous month indicating continuing weaknesses in German economy as we start Q3. Also, this reading adds more to the already raised concerns about Germany falling into recession.

ECB has left key interest rates unchanged at their July meeting with comment that they see rates at present or at lower levels at least through H1 of 2020. Statement said that ECB will examine options for tiering and potential reintroduction of QE program. EUR jumped on the initial no-rate-change news but was subsequently pushed lower after dovish comments on forward guidance and mentioning of additional easing measures. Governor Draghi stated that data points to somewhat weaker growth in Q3 and Q4 and characterized that weakness as due to softer global growth. He stated that outlook is getting “worse and worse” in manufacturing sector and added that “it is hard to be gloomy” as the current situation is of continued growth, emphasizing ongoing rises in wages. Significant monetary stimulus is needed and risks around growth outlook are still tilted to the downside. He said that he wants to see the next round of projections before taking action and added that risk of recession is pretty low. In this way he effectively postponed the decision for the September meeting. Overnight index swaps are pricing in an 85% probability of a cut by the September meeting. ECB released the results of its latest survey of professional forecasters and it showed inflation cut down in 2019 to 1.3% from 1.4% previously, down to 1.4% from 1.5% previously in 2020 and down to 1.5% from 1.6% previously in 2021. Long term inflation is at 1.7% from 1.8% previously.

This week we will have data on business climate, preliminary inflation reading and final manufacturing PMI for the month of July, preliminary Q2 GDP, employment and consumption data.

Important news for EUR:

Tuesday:

– Business Climate Indicator
– Economic Sentiment Indicator

Wednesday:

– CPI
– GDP
– Unemployment Rate (EU and Germany)

Thursday:

– Markit Manufacturing PMI (EU, Germany and France)

Friday:

– Retail Sales

GBP

Boris Johnson has become the new leader of the Tory party and thus the new prime minister of United Kingdom. He defeated Jeremy Hunt with 2/3 majority. Dominic Cummings is set to be named as senior adviser to Boris Johnson. He was the campaign director of Vote Leave during the Brexit referendum. Cummings is said to have stated that he will deliver Brexit by October 31 “however hard that is”. In addition, new PM has appointed pro-Brexit supporters at key positions. Dominic Raab is appointed as foreign secretary and Jacob Rees-Mogg as leader of the House of Commons. Sajid Javid is confirmed as Chancellor of the Exchequer which is a position of finance minister in other countries.

This week we will have PMI data and BOE interest rate decision. No change in the rate is expected but BOE may take more dovish stance in line with other central banks. The Parliament is set to observe a recess from 25 July until 3 September.

Important news for GBP:

Thursday:

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

Friday:

– Construction PMI

AUD

RBA governor Lowe stated that RBA is ready to further ease the monetary policy if demand disappoints. He also added that it is reasonable to expect an extended period of low interest rates. The board is “strongly committed” to making sure that inflation returns to range however it will take some time before the inflation returns within target range. According to Lowe it is highly unlikely that RBA will be contemplating higher interest rates until they are confident that inflation will return to around the midpoint of the target range. Underlying foundations of Australian economy have been characterized as strong.

This week we will have inflation and consumption data from Australia as well as official manufacturing and non-manufacturing PMIs from China. Caixin manufacturing PMI will also be published from China.

Important news for AUD:

Wednesday:

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

Thursday:

– Caixin Manufacturing PMI (China)

Friday:

– Retail Sales

NZD

Trade balance for the month of June came in at $365m vs $100m as expected which helped push the deficit down to -$4.94bn y/y. Unfortunately, the number was achieved on both falling exports ($5.01bn vs $5.29bn as expected and $5.81bn the previous month) and falling imports ($4.65bn vs $5.2bn as expected and $5.54bn the previous month). The decline in imports was led by a 39% drop in fuel and a 16% drop in vehicles. Overall exports in Q2 rose 1.5%, led by a rise in infant formula 18% and aluminium 15%.

This week we will have housing data and data on business confidence.

Important news for NZD:

Tuesday:

– Building Consents

Wednesday:

– ANZ Business Confidence

CAD

Wholesale sales for the month of May came in at -1.8% m/m vs 0.5% m/m as expected. This is the largest drop in the reading in more than 3 years and a reversal of 1.6% m/m from the previous month. Motor vehicles and parts were the main drag coming in at -4.3% m/m vs 2.7% m/m the previous month. The report breaks a five-month streak of increases and showed declines across a majority of industries, with six out of seven sub-sectors being lower. Also troubling is the rise in inventories since it can signal a weak demand. Average weekly earnings climbed 3.4% in May thus increasing purchasing power of Canadian consumers.

This week we will have GDP for the month of May, manufacturing PMI and trade balance data.

Important news for CAD:

Wednesday:

– GDP

Thursday:

– Markit Manufacturing PMI

Friday:

– Trade Balance
– Exports
– Imports

JPY

Preliminary PMI numbers for the month of July show manufacturing at 49.6 vs 49.3 the previous month, services at 52.3 vs 51.9 the previous month and composite climbed to 51.2 vs 50.8 the previous month. We can see slight improvements across the numbers but manufacturing is still in contraction territory for the third consecutive month. Tokyo CPI came in at 0.9% y/y vs 1% y/y as expected and 1.1% y/y the previous month. CPI excluding fresh food, energy came in at 0.8% y/y vs 0.7% y/y as expected. Inflation staying subdued at the beginning of Q3.

This week we will have consumption and employment data followed by preliminary industrial production data for the month of June and final manufacturing PMI for the month of July. The main event will be BOJ interest rate decision. BOJ is not expected to ease, however there are chances that they will reduce its inflation outlook down from current level of 1.1%. We will also get minutes from monetary policy meeting.

Important news for JPY:

Monday:

– Retail Sales

Tuesday:

– Unemployment Rate
– Jobs to Applicants Ratio
– Industrial Production
– BOJ Interest Rate Decision
– BOJ Outlook Report
– BOJ Press Conference

Thursday:

– Manufacturing PMI

Friday:

– BOJ Monetary Policy Meeting Minutes

CHF

Talks about intervention from SNB are intensifying. The CHF is already trading at its strongest level against the euro in two years and as the FT writes SNB would really prefer to intervene to prevent it from getting strong but fears repercussions from US president Trump.

This week we will have inflation data.

Important news for CHF:

Friday:

– CPI