This is
going to be a hard core central bank week, we have altogether 4 rate decisions
from major central banks RBA, BoJ, FED, BoE. We will however start the week
with some inflation figures from the Eurozone (Flash CPI), Canada (RMPI) and
the USA (monthly PCEPI). Also don’t forget about Chinese PMIs on Tuesday and
the NFP as part of the US employment report on Friday.
After the
last weeks bombshell announcement of the FBI director about his bureau’s review
of emails potentially related to Hillary Clinton one may wonder what else could
come before the election. Last Friday FBI head, James Comey has broken the
longstanding DoJ and FBI practice not to comment publicly about politically
sensitive investigation within 60 days of an election. Is this a signal that we
should not rely on the history that Fed never hiked rates in the year of
election? Well, Wall Street is definitely in a better relationship with the
Clintons than the FBI, but one could never be sure…
Below you
find few comments on each day macro figures but please look at the attached
Event risk calendar too as I couldn’t mention everything, eventually feel free
to print it out for a quick overview during the day. You can also check out our
Live Trading Room register here
This weeks Live Tradin Room schedule is here:
Tuesday: GMT 12:00 AM
Wednesday: GMT 09:00 AM
Monday:
The first
day of the week will be mainly about inflation but we start the morning with German retail sales at GMT 7:00 which
was mostly below expectations this year. The Eurozone Core CPI could reach 1% since March but we could see a
bounce in headline CPI the last few
months. Market is expecting a rise in CPI to 0.5% which we haven’t seen since
June 2014. In the afternoon we will be watching overseas data, the same time is
released the raw material inflation from Canada and the monthly measurement of US PCE price index (the
quarterly data came out on Friday with Advance GDP showing a decline in
consumption price levels in Q3). We end the day Chicago PMI.
Tuesday:
Data heavy
day for almost full 24 hours, so just the most important ones... After midnight
we start with the Official Chinese PMI
followed by the Markit’s PMI. The expectations are rather sober with no big
improvement on the radar of most of the analyst. There is no rate hike expected
from RBA Rate decision as GDP is
probably above the nations potential still growing at 3.3%, the house prices as
increasing strongly in the last quarter especially in the Sydney, Melbourne and
Canberra, the inflation picked up recently (core inflation unchanged) and
Unemployment rate declined to 5.6%. The BoJ
Rate decision will follow but as the last meeting showed us a change in the
CBs focus to the yield curve rather than the benchmark interest, the statement
and the press conference may bring some volatility if additional measures will or
won’t be announced by Kuroda. Later the morning the UK Manufacturing PMI may give some support for the week GBP as the
uncertainty around the Brexit amounts.
In the afternoon after Canadian
GDP the US ISM manufacturing PMI will be worth to watch after surprise bounced
from the sub 50 levels. In the evening the API
Crude inventory report may move oil market and the oil currencies ahead of
the November OPEC meeting and later kiwi traders should follow the employment figures and GDT price index from New Zealand.
Wednesday
The markets
will be in digesting mode during the early trading hours as still waiting for
the main course the FOMC rate decision. The Australian Building approvals and
later the German Employment change
may bring minor pick up in volatility. The UK
Construction sector is doing better than expected after the Brexit vote,
and in the morning the Purchasing managers (PMI)
of the sector will give their opinion on the housing market. The expectation
are lower than the previous reading but given the current momentum it could be
easily much better which would support the cable. Even the focus in the
afternoon is on the FOMC, the ADP
employment data could increase trading activity as investors will adjust
their positions. The EIA Crude
inventories are the last data ahead of FOMC. And finally we will see the
results of the 2 day meeting of the Federal
Open Market Committee – rate decision. The likelihood of a November rate
hike is only around 5% but it’s still there, don’t forget this. If you are a
fan of conspiracy theories you probably noted the surprise Clinton investigation
announcement from FBI. A rate hike at current fragile market sentiment could cause
the perfect storm ahead of the US elections to give maximum support to Trump.
Thursday:
The Bank of England rate decision is
supposed to be a non-event with practically no chance to hike the rates as
Carney was already criticized by the MPs the BoE acted too early. However the
assessment of the economy in the BoE
inflation report will be more interesting 4 month after the Brexit vote. In
the afternoon first part of US
employment figures will be released with the jobless claims. It’s not
likely we will see a positive surprise close to full employment. On the other
hand q/q productivity is expected to
increase after 3 negative quarters and as this is the first release it may have
bigger impact. According to Fisher despite this part of the equation is
uncontrollable by the Fed, it is one of the key indicators to monetary policy.
We will finish the day with ISM
Non/Manufacturing PMI which surprised traders last month with much better
than expected figure.
Friday:
The RBA Monetary policy statement will be
released after the rate decision at the end of the week together with
Australian Retail Sales. The European session will be almost data free and the
first notable figures will be released in the afternoon from Canada (Employment and Trade balance) at
the same time as the US Employment
report. While the NFP are
expected to marginally increase and the Unemployment
Rate to get below 5% the Labor Force
Participation Rate is at 4 decade lows. The key question is if the negative
trend in participation rate bottomed out this year or the downtrend will
continue. The Feds broader Labor Market
Condition Index released next Monday will give us a complete picture about
the US Labor Market trends.
DISCLAIMER: This material was created
for informational purposes only and represents the Land of Trading teams view
on past and current economic and capital market environment. It is not and
shouldn´t been viewed as an investment advice and the creator of this material
shouldn´t be held
liable for any loss resulting from action where despite this disclaimer someone
would consider this material as an investment advice.
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