This week’s Macro Overview is a little
shorter due to holidays. We saw 2 rate cuts in the Commonwealth last week, both
well expected. The first came from Royal Bank of Australia on Tuesday and the
later from the Bank of England on Thursday. Traders were also watching the US
employment data in the second half of the week, which were in general better
than expected pushing the USD higher.
Monday:
It was a PMI day
but the traders mostly didn’t get what they were expecting. The Chinese numbers
were rather mixed and the Spanish, UK and US numbers were worse than expected.
Tuesday:
Tuesday early morning the RBA cut its benchmark rate by 25 bps. After the initial
depreciation of AUD the traders reversed the direction as the wording of the Rate Statement suggested this could be
the end of the easing. The AUDUSD rallied above 0.7600. Later in the morning
the UK construction sector PMI was
better than expected. In the afternoon the US
PCE Price Index came out at 0.1% vs previous 0.2% and the unchanged Personal Spending couldn’t help the
dollar which reached 1.1200.
Wednesday:
After the boring morning with only an unchanged UK services PMI we had ADP employment from the US. The
improving data (also upward revision of the last figures) gave us a hint that
the NFP Friday won’t be as low as expected. The dollar started the appreciation
and this was probably the key moment of the week however, the Friday’s
confirmation was still needed to let the dollar bulls run.
Thursday:
The worse than expected Australian
Retail Sales didn’t really stop the bulls but managed to slow down the
momentum after the Tuesday disappointing Rate Statement. The BoE cut the key rate as expected by 25 bps,
also increasing the Asset purchase by GBP 60 bln, raising the questions whether
this step wasn’t premature. The GBPUSD fell 200 bps in reaction to Carney’s
speech half an hour later. In the afternoon, the US jobless claims came out more or less in-line with expectations
and with muted reaction prior to US NFPs on Friday.
Friday:
After a sleepy morning the awaited job data caused the USD
strengthening around 100 points against most of its peers despite the unchanged Unemployment Rate. The NFPs were worse than the previous
(which was revised to the upside) but was much
better than expected. Also the Average
Earnings improved by 0.3% vs. forecasted 0.2% and previous 0.1%, what
creates a better ground for an increase of the inflation.
Next week
Monday:
The only thing worth to watch is the Chinese trade balance, but not much of a change is expected. Maybe
later the Canadian housing data
could give some hint which direction the loonie will take.
Tuesday:
During Tokyo session, the Chinese inflation data can spur some volatility and later in the
European session, the UK manufacturing
will give us some hint, regarding the impact of the Brexit vote to the British
economy. In the afternoon keep an eye on US
job market data.
Wednesday:
The JOLTS job openings
from the US will be released in the afternoon. They are expected to support the
last week’s improvement in NFPs. The kiwi traders should be vigilant in the
evening, as RBNZ may follow the RBA and
cut the benchmark rate.
Thursday:
The regular US
jobless claims and the New Zealand
retail sales could be the only important data but don’t expect too much
volatility around unless there is a huge surprise.
Friday:
Early in the morning, the Chinese Industrial production will be released with no change
expected. We have also flash GDP from
Europe later in the morning (Eurozone and Germany) which may have impact mainly
on EUR crosses. In the afternoon, the Retail
sales data and PPI are expected
to be released in the US (expecting all worse than the previous set of data).
However, given the rejection of the resistance in EURUSD (former support of the
uptrend line) last week, a positive outcome could give a nice boost to the
dollar bulls.
Have a successful week and don’t forget:
Watch you risk and be consistent in your trading!
Mr. TechMan
DISCLAIMER: This material was created
for informational purposes only and represents the Land of Trading team’s view
of the past and current economic and capital market environment. It is not an
investment advice and should not be viewed that way at all, and the creators of
this material cannot be held liable for any potential losses resulting from
trading, where despite this disclaimer someone would consider this material as
an investment advice. All rights reserved ©2016. Contact:
landoftradingATgmail.com
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