Feb 6, 2018 - Commodity Weekly: After the support of weak dollar commodities seem to join selloff

After a supportive week of depreciating dollar commodities are getting hit by sell off in equities and overall negative sentiment in risk assets. While the dollar should have been helping commodities rise, it wasn’t entirely the case even last week and the air was filled with tension especially after the FOMC meeting on Wednesday where the Fed noted inflation is on track. The most negative impact was on the Energy sector, Grains are holding relatively well and Sugar had also a few good days as investors were probably liquidating some of their shorts.

Oil

The more aggressive central bank outlook scared investors all over the market place and made them scale back on the positions built in the last year. Oil traders joined the crowd in selling their positions although the selloff wasn’t that aggressive as in equities ahead of a series of monthly report. Tuesday we have EIA and next Monday Opec and Tuesday IEA Monthly oil reports will give us a hint how these institutions see the development of market fundamentals.

Corn

The sector of grains saw a good week after news about drought in South America (corn and soybeans) and Kansas, Oklahoma (winter wheat) made traders liquidate a huge part of their shorts. However the magnitude of short covering increased the likelihood of additional selling if negative news will not be confirmed.

Sugar

The huge short that was built up during the last year is the biggest obstacle ahead of the bears despite the negative fundamentals persist. The raw sugar #11 traded in New York could not break the 13 cents psychological support last week and this changed the sentiment into more bullish, or at least less bearish. The prices rallied recently up to 13.90 that was most probably caused by the liquidation of some of the shorts at least. We will know more before the week end.

Good Luck and remember to watch your risk and be consistent

Mr. Tech Man

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 ©2016-2018. 

Contact: landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com

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Aug 14, 2017 - Weekly Commodity: Risk off sentiment and bearish reports hit commodities

It was a week of swings in the commodity markets with several reports and events driving the market sentiment. The Bloomberg commodity index first jumped 1.4% and then dropped to close the week with only half percent gain. While precious metals and coffee where among the biggest winners, oil and especially grains lost the most.

Crude

According to the IEA, OPEC’s compliance rate dropped in July to a new low of this year at 75 percent. Year-to-date compliance within OPEC is 87 percent while non-OPEC countries were at 67 percent last month. The 22 signatories reduced in July about 470,000 bpd above the combined level they have committed to keep, according to the IEA. After the OPEC meeting that failed to deliver significant proof that the compliance with the cut will improve, the EIA reported another massive 6.5 mil. barrels decline in US crude inventories while Gasoline inventories on the other hand increased by 3.4 mil. barrels. Both are in the upper half of the average range. An upcomming longer term declining trend in crude inventories is also supported by the disappearance of contango in the Crude market which will result that the „buy now - store - sell in the future“ strategy won’t be profitable any more as longer expiries are at the same level as spot prices.

From technical perspective the WTI rejected the $50/brl resistance and the outside day 2 weeks ago and the negative sentiment due to the tension on the Korean peninsula, the Thursday red candle on high volume was especially warning. However while the market tried to break lower on Friday, despite the overall risk off mode it could hold levels $48 and bounced back which is a positive sign but for a few more weeks I expect range trading btw $47-50 (or wider $45-52) before oil will take off on the declining supplies, and the rally could be eventually triggered by Venezuela.

Corn

The weekly crop progress report showed little weekly worsening of the corn condition while compared to the last year the numbers are much weaker. However in the WASDE report there was a huge bearish surprise when the USDA decreased its estimated average corn yield only by 1.2 bushels. And if this wouldn’t be enough, the report suggested higher or unchanged production from the biggest players in the global markets like Russia, Ukraine and Brazil. The slump in corn prices was partially caused by wheat which got a hit from Russia where the USDA expect record production. According to some brokers however, are sceptic regarding corn and soybean data as according to their calculations the yields should come much lower. I think however bulls should be cautious at this point.

Technically the market seemed to be more determined about the direction than last weeks, with volumes rising slightly. The market closed below the 61.8% retracement from recent tops however the last price was still pretty close so there is still some hope for the bulls which may hold for the next WASDE and first harvest reports. However the disillusionment of traders could be very painful.

Sugar

The sweetener was also hit by global risk off mode and record production added to the pain. Brazilian Cane industry group Unica reported 9.5% y-on-y increase in sugar production in the Centre South, the region that accounts for 90% of the country’s sugar output. The dry weather that allowed an unusually early start to cane crushing season is now seems to be a problem. The prolonged period without rain is the main source of concerns together with prices below the ethanol parity. Both can result in drop in sugar production for the rest of the crushing season. According to Brazil industry leader Cosan, the current drop in prices is temporary and the company is expecting sugar to rebound from lows. The company’s hedging activity is declining on the other hand however it’s increasing interest in biofuel sector through its energy venture which could be another way of hedging against price drop.

Technically the inverse head and shoulders formation failed as prices dropped below the neckline testing right shoulder. The 13 cents level will be key whether prices will rebound and take another attempt to reach 16 cent levels. However if this support will not hold the next stop is 12.53 and then 12.00 where the end of our target zone from earlier this year stands. In this case we will have to look at the historical lows of 2015, 10.80-11.10 first long term support and 10.00-10.13 will serve as second support zone.

Good Luck and remember to watch your risk and be consistent

Mr. Tech Man

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: landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com

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July 24, 2017 – Weekly Commodity : Opec meeting and Crop Progress report today will be crucial

The holiday mood (and liquidity) was felt all over the commodity markets. Traders are chasing news and this is bringing volatility which is however quickly fading and volumes are declining. The Bloomberg Commodity index increased 0.3% the last week with precious metals and the part of the soft sector among the biggest winners, while the energy and grain sectors were searching for direction.

Crude oil

While crude inventories in the US are on decline, price of crude oil dropped on Friday on reports that OPEC Production could have increased in July by 145K bpd mainly driven increased supplies from Saudi Arabia, UAE and Nigeria. As OPEC having problem with compliance traders will watch closely the OPEC Monitoring Committee meeting and its outcome on Monday. There are rumours that Saudi Arabia could be pushed to cut their crude export to the whole world by 1mil bpd to make room for Libya and Nigeria. This could be hugely supportive for both WTI and Brent.

Last week the US field crude production increased again and it’s approaching the 2015 summer peaks. While rig count declined marginally, the increasing oil production is still bad news for producers. Money managers were increasing their net long for the last few weeks which is the result of liquidating shorts mainly. Is it a major change in the direction or just a preparation for another bear run, I think we will see in a few day or maybe 2 weeks. For bullish confirmation MM definitely need to increase longs too.

Technically no change for now, despite ugly daily chart where a double top formed recently.

Corn

Grain traders are awaiting the USDA Crop Progress report Monday ET 4PM where the main number will be the quality grades for each crop. Due to the above average temperature the main concern in that the USDA corn yield estimate last week was too optimistic and there will be a drop much below 170 b/a. This with an already decrease acreage for the crop could mean a significant reduction in the ending stocks for 2017/2018 marketing year.

Sugar

The sweetener was trading sideways due to lack of news and stable to higher production data from Brazil. In India, which is the largest sugar consumer of the world, the production is set to rebound as the above average monsoon rains are supporting the growth of sugar cane started to be crushed from October. Corrective upside move toward 16.50-17.00 possible based on technical but overall negative outlook medium term (1 year).

Good Luck guys and remember to watch your risk and be consistent. Oh, one more thing! If you are now on vacation, please enjoy your holiday and don’t trade… rest, and regain energy, you’ll need it when you’re back.

Take care

Mr. Tech Man

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: landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com

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May 21, 2017 - Weekly Commodity - Oil traders waiting for Opec, rain challenging US crops , sugar rejected ethanol parity

Last week the US and Brazilian politics were making the main headlines. Continuous weakening of US dollar supported commodities while the depreciation of Real had a negative effect on sugar, coffee and soybeans. The weak Brazilian real caused a liquidation of 5mil. tone of soybean stocks in only one day. Raw sugar got extra support on Friday from the rains forecasted for the cane crushing regions of Brazil. Crude oil prices supported by oil minister statements (Saudi Arabia and Russia) regarding OPEC production cut extension. The US farmers keep fighting their battle with cold weather and high moisture, corn sowing still below average. 

Crude Oil

The oil market is now focusing on the upcoming OPEC meeting (25th May) where countries producing oil and Russia are expected to agree on an extension of the production cut by 6-9 months. The expected positive outcome of a production cut extension and the increasing demand are the 2 main factors that can help to recover the oil prices. The production cut up to now however didn’t decrease supplies as OPEC members  were emptying their oil reserves which are much lower now. This means the extension would bring a real drop in oil supply this time and in combination with the expected increase in demand for 2H this could cause a signficant rise in oil prices. I will publish a deeper, fact digging article later this week ahead of the OPEC meeting.

Technically WTI closed the week above psychological $50 level and if you are not log yet, probably you could still think about going long or start to build a long positions as in case extension the price can easily break out from the flag and reach new highs in the $60/b area. The tricky part here is the impact of US shale producers hedging activity usually pushing prices down. Even this will effect mostly the longer expiries (1+ year from now) I would probably take some profits around January highs ($50/b) if the closest contracts reach it.

Corn

The grain market is focusing on the North American weather still as current moisture is hitting two crops the same time. While the wheat harvest is just starting, the rain and cold weather may cause potentially yield and quality problems as well as spreading crop disease. However it's hard to assess the damage at this phase. Corn sowing is slowed down by moisture and as I mentioned earlier there are fears if the rains will not stop the farmers will eventually switch from corn to soybean which could be planted a little later.  This could result in jump in corn prices and further drop in soybean. Also don't forget the huge corn net short in hedge fund positioning, which could result in a short coverage and jump in prices.

Technically we saw a false break to the downside from the triangle on Corn chart. There is a higher short squeeze potential in the corn makret (MM increase their already huge net short positions more than expected) that could be triggered by further sowing delay and hence farmers shifting potentially to soybeans. This may also trigger a bear run in Soybeans breaking down through the October lows.

Sugar

The last week in the Sugar market was more about Government crisis in Brazil than the fundamentals. Due to the weakening of Brazilian real the Sugar prices slid down toward 15 cents levels. However at the end of the week sugar prices recovered above 16 cents again due to further rain forecasted in the cane growing regions of Brazil. The other supporting case for sugar is that the market reached the 15 cent ethanol parity zone in Brazil below which it’s more economic for mills to produce ethanol instead of sugar.This could eventually result in less sugar production as expected.

Technically there is some upside potential short term to retest the H&S neckline and the last low before the sell-off at 18 cents. There is a high probability of range trading for several weeks between 15-17 cents until the market start to sell again. The Brazilian ethanol parity will provide strong support @15 cents until the cane crush season is over.

Good Luck and remember to watch your risk and be consistent

Mr. Tech Man

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: landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com

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Apr 2, 2017 - Weekly Commodity: Strong dollar, Crude inventories, Opec and USDA report the main topics last week

Strong dollar was a key factor in commodity markets the last week along with Crude oil inventories, OPEC statement and USDA Prospective Planting report. Overall we could see a rather bearish market as a result but if we look at commodities separately, we got a mixed picture.

The Crude oil bears felt the pain when WTI closed above key resistance $50 despite rising inventories as OPEC sources mentioned potential extension of production cut. The expected seasonal decline in inventories in April supported the surge.

Grains had an important week as traders were waiting for USDA Prospective Planting report . Soybeans were sold of heavily due to increase in planned planted area, while Wheat couldn’t get too much upside momentum. Corn, one of the most shorted grain was a different story, as massively closed up the last week testing the earlier broken uptrend line.

Precious metals were led by gold selling which is in correction mode after failed to break above 200 day moving average and the main reason of the weakness is the strengthening dollar, while medium term the European elections (France, Germany) as well as the Brexit theme along with Greece could bring support. Technically a double top is forming and could be traded aggressively at relatively low risk.

Among soft commodities Sugar continued to suffer due to expected sharp recovery in Indian production and still pending theme of Indian imports. On the other side Cocoa found support and seems to be gradually trending higher from the multiyear lows reached earlier this year.

 WTI chart

Corn chart

Sugar chart

Good Luck and remember to watch your risk and be consistent

Mr. Tech Man

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: landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com

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Feb 23, 2017 - Market Update

Short recap

Asian stocks took a breather

Europe opened mixed

FOMC Minutes showing cautiousness (not to forget that the meeting took place right after Trump inauguration that was accompanied with huge uncertainty)

But lots has happened since then

May rate hike priced at 50%

10-yr US Trys yield at 2.40% after FOMC

FR elections: Bayrou pulling out and expressing support for Macron

GE-FR spreads down by 10 bps as a reaction

Demand for Bunds (politically driven vs strong momentum in stocks from good macro data)…something fishy here

EURUSD – experienced short squeeze on the news but jump was more about hitting strong support around psychological 1.0500 level

AUDUSD – not sure about the direction

Reflation and commodity story to push higher

Rate spreads to weight on the cross

Nissan Motors – Carlos Ghosn to step down as CEO after 15 yrs with the company

Airbus looking at easing penalties from EU govs for delay in military aircraft contract

Tesla to start Model 3 production in Sep, reporting smaller loss

Bayer expecting agri products (pesticides) business flat this year

Focussing on Monsanto takeover completion (USD 66 bln)

More HFs warning about Trump stock rally being overdone

While EU political risks not priced in

UK Brexit – Australia and Israel to expand trade and investments

US Trs Sec Mnuchin making vague comments about effects of strong USD

UK and Canadian regulators to assist FinTech

Goldman Sachs expecting crude oil stocks to keep falling

OPEC is tightening but US shale production is rising on better effectiveness and cheap funding

Don’t really see the signs of improved demand

Commodities need more real demand & lower inventories to rally further

Most vulnerable are copper and longs in oil

Data

GE: Gfk Consumer Climate Index – out slightly higher

UK: CBI Distributive Trades Index as a leading indicator for retail spending should point slightly higher

US: Initial/Continuing weekly unemployment claims – expected marginally higher

US: Chicago Fed National Activity Index – expected slightly higher

US: FHFA House Price Index

US: Kansas City Fed Manufacturing Index

ECB Praet speaking (0855)

Atlanta Fed Lockhart speaking (1335) – likely to provide a recap of his 10 yrs at Fed as he retires soon

Dallas Fed Kaplan (voter) speaking (1800)

Good luck Champs!

Mr Hawk

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: landoftradingATgmailDOTcom

  

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Feb 14, 2017 - Market Update

Short recap

EU markets opening lower

Oil staying range bound on OPEC cut compliance vs non-OPEC production rising

The cut primarily by Saudis only

WTI very range bound 52-54/54.50

Negative bias on US shale oil production rise prevails in the market

Another blow to Trump after immigration ban legal issues as his security advisor Flynn was forced to resign on allegation of discussing lifting sanctions against Russia before Trump becoming officially a president

Trump not looking at major trade overhaul with Canada, likely just few adjustments here and there (marketing wise likely)

Lloyds Banking Group close to moving its EU operations to Berlin in order to keep access to single market

Apple at record highs on expectations of better sales figures from new iPhone (10^th anniversary) launch and customer demand

Closed at USD 133.29, what brings its market value toUSD 699.3 bln

All time high at USD 134.54 (Apr 2015)

Ivanka Trump branded production being dropped more and more

EURUSD below 21 DMA

Below rising medium term support line (now at 1.0620) connecting lows of Mar/Dec 2015

Through 38.2% Fibo

Next ones of interest are 1.0585 and 1.0530

Below just cycle low around 1.0340

Should we start to talk about parity on political risks in EU and yields divergence again?

Yellen definitely needs to confirm the Fed’s hawkishness

If she confirms 3 rate hikes this year, starting in June may be too late

Bear in mind that she might be geopolitical risk sensitive

US 10-yr Trys yield steady at 2.43%

10-yr Bunds yield steady at 0.33%

Data

GE: ZEW Economic Sentiment Index – to print slightly lower

US: Small Business Optimism Index – to print slightly lower after strong Dec

China PPI up to 6.9% y/y

Is it going to push EZ prices higher?

Fed can reach its 2% inflation target pretty soon as US imports cost more and rising prices for service are more evident.

Good luck Champs!

Mr Hawk

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: landoftradingATgmailDOTcom

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Feb 9, 2017 - Data Alert: IEA Monthly oil report Feb 10 at 09:30 GMT

This is a long awaited week for the oil traders as the Monthly Oil Report from IEA will be released on Friday. The report will give us the first information about how compliant were the OPEC members in January with the production cut agreement. As this will be released as the first monthly oil report it could be more important than the Monthly report from OPEC which will be released on Monday. If trading Crude or oil currencies (CAD, NOK etc.) be ready for some extra volatility. So let’s look at some key points from the last report + positioning data and what could be expected.

IEA Monthly oil report 10th February GMT 09:30

OPEC oil report 13th February 

OPEC Oil Supply

The supply from OPEC fell from record highs in December  by 320 kb/d  to 33.09 mb/d after lower output from Saudi Arabia and Nigeria. The key will be to see more cuts in January as the OPEC members follow the agreement on production cut.

World Oil Supply

As the coordinated production cut raised prices, this stimulated rincreased production in US and other non OPEC countries (even some of Non-OPEC producers agreed to join the cartels production cut). This together with increasing supply from Iran, Libya and Nigeria will be the major headwind for any rise in oil prices in the medium term.

Oil Demand

The demand for crude was increasing in December 2016 driven by colder weather and rapid industrial growth in Asia. On the other hand the market expects a decline in 2017 from 1.5mb/d to 1.3mb/d due to higher products prices and warmer weather conditions. Demand had important role in depressed crude prices even this side attracted less headlines.

Money Manager positioning

This will be key the coming weeks despite the bullish charts and the eventually bullish news. According to CFTC COT report the hedge funds are positioned extremely onesided as net longs are at record highs. Furthermore this net long has risen recently rapidly despite growing inventories. This wouldn´t be the first time the last 12 months to see hedge funds being trapped. Remember, these traders are very flexible, ready to exit the trades quickly to cut losses therefore any bad news can lead to a huge long liquidation. The other side of the coin is, if all of them are long (with a little exaggeration)… who will buy and push the market higher if the news are good? Well, we'll see, obviously there is always some money out there waiting for opportunities. Nevertheless, be ready to sell if the market shows signs of weakness as it could become a carnage at the end.

Producer positioning

On the other side of the barricades the producers increased their hedging activity in the last weeks growing their net short to record highs. For most of the US shale oil producers the prices close to 60 dollars are enough to make production profitable and the increasing rig count also shows that the capacities are reopening which will offset part of the OPEC production cut.

Good Luck and remember to watch your risk and be consistent

Mr. Tech Man

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: landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com

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Feb 5, 2017 - Weekly Macro W6 (RBA and RBNZ rate decisions, trade balance Ger, UK, US, CA, China and IEA Oil Report)

The coming week won’t be boring at all and there are plenty of events to follow. First of all we have the RBA and the RBNZ rate decisions. Despite no change is expected in MPs  we will get a hint how policy makers see the economy in the light of recent development (new US policy, metal rally stalling etc.). We have plenty of trade balance figures, most importantly Germany, UK, US and Chinese trade data. The oil traders will be on alert as after the regular weekly API and EIA oil stocks we have on Friday the IEA Monthly Oil Market Report (and Monthly OPEC report on Monday).

Monday

After midnight the Australian Retail sales will be released. After the huge volatility in 2009-2010 the growth has stabilized in the range between -0.1% and 0.7% last year with only one negative month. Later the session the Chinese Caixin Services PMI could be a market mover after last weeks disappointing manufacturing figures. The German Factory Orders will kick start the European session which fell rapidly in January more or less in line with the seasonal pattern. Analysts expect a modest rise btw 0.5-0.6%. In the afternoon the Feds' Labor market Conditions index will be released but as the components are already known, only minor effect is expected. The US Mortgage Deliquencies will be published this week, but no date or time is known yet. The indicator is declining since 2010 and no major change is expected.

Tuesday

Pretty busy day ahead starting with RBA rate decision. The central bank is in a rather difficult situation given the strengthening AUD and overheated housing market. While industrial metals has seen a bit of a rally at the end of last year which definitely helps the economy, the booming housing market can cause problems in the medium term. Although Gov. Lowe is not really keen to join the QE race, the Rate Statement will give us a picture how the policymakers see the current developments. European morning will be quiet with only French trade balance and UK monthly HPI. Canadian trade balance will be released in the afternoon. Last month it reached positive levels for the first time since 2015 and further rise is expected. US JOLTS labour market summary will be released in the afternoon, but only minor impact is expect given the current cycle of the US job market. As the first oil report of the week the API oil stocks will give us a hint if the rising trend in inventories continues. The GDT dairy price index from New Zealand will be released during the evening but ahead of RBNZ rate decision, I expect only minor impact unless there is a huge surprise.

Wednesday

We can have a little rest in the middle of the week as the European morning is almost empty. Keep in mind that Chinese trade data and FDIs can be released anytime in the second half of the week. The afternoon could be interesting for Loonie traders as we have housing starts from Canada and later on the EIA Crude inventories.  The evening will be busy for Kiwi traders as the RBNZ is scheduled to deliver its rate decision with MP statement, followed by the RBNZ News conference an hour later.

Thursday

Chinese trade data and FDIs could be released in the morning if not released a day before. At the early Asian session New Home Sales from Australia will give us an insight in the housing market. A few minutes later the RBNZs governor Wheeler is due to testify on MP before the Finance and Expenditure Select Committee in Wellington. The European morning session is empty on the data front and the first important data will come from overseas, namely the Canadian house price index and the US jobless claims.

Friday

Again, keep in mind Chinese data could be released if it not happened the previous days. The RBA Monetary Policy Statement will be published which will be likely in line with the rate decision statement, just with a little more details, still could have impact on AUD crosses. The most important data of the European morning will be the IEA Monthly Oil Market Report, which will give us a hint how the OPEC report may look like on Monday. The members of the cartel participating in the agreement claimed repeatedly they take the cut seriously, however it would be for the first time that there will fail to deliver on their promises. Let’s see… We have also an Extraordinary EU Summit from which rumours may eventually hit the market during the whole day. In the afternoon the Canadian job report and the result of the Consumer Confidence Survey done by University of Michigan may be the main market movers.

Good Luck and remember to watch your risk and be consistent

Mr. Tech Man

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: landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com

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Nov 20, 2016 - Weekly Macro Overview W47

The beginning of the week will be pretty quiet, only ECB's Draghi may cause some moves as he testifies before the European Parliament. Tuesday Kiwi and Canadian retail sales may move the relevant crosses. For Wednesday are scheduled US Durable Goods Orders and FOMC Minutes and also the regular weekly EIA Crude Inventories especially important due to OPEC negotiations on production cut will be watched by market participants. Thursday the German IFO Business confidence is due, which spiked to pre-crisis highs in September. Friday we have the release of the second estimate of the UK GDP.

But for a while let's go back to the last week which was not bad at all for Asia. The biggest surprise was the Japanese GDP, which really surprised on Sunday night. On quarterly basis the growth rate in Q3 increased to 0.5% from 0.2% in Q2 what was the third quarter of expansion in the Economy of the Rising Sun. Compared to the same quarter of the last year the GDP increased by 0.9%. However, the annualized growth rate made the headlines as it jumped to 2.2% (1980-2016 average was 2.04%).

There was no major change in Chinese data except the fact they had spent significant part of their reserves to support the Yuan, in other words they were selling US Treasuries … did you see where the US 10yr Treasury yields climbed over the last 2 weeks? It's clear it’s not only the market that priced in a rate hike and is too optimistic about the GDP growth during Trump presidency that makes Treasuries falling. Regarding the rate hike, the last week's US data weren’t super convincing even Yellen kept the doors open during the speech on Friday. As the focus of the market is on the FOMC meeting in December, I prepared the summary of significant US data from last week for a better overview:

Next week won’t be very busy as I wrote in the intro. Let’s look at some interesting data we can expect some volatility around.

Monday:

The inflation in Canada bottomed out in August and seems to be picking up momentum. The Wholesale Sales being the leading indicator to consumer spending and inflation can give us a hint what kind of consumer activity retailers expect – good indication ahead of Tuesday's Retail Sales. Later afternoon Mario Draghi will talk in the European Parliament and may be “grilled a little “especially by Germans due to the ECBs loose monetary policy. While we do not expect a change in the policy direction, any wrong or inaccurate wording from him (as we are used to) can cause a significant move.

Tuesday:

The day we start with New Zealand and the q/q Retail Sales. The headline figure at 0.9% seems to be leaked, but it’s not confirmed. However market participants will expect official figures at these levels and any difference could cause a nice move. Later in the morning RBA Kent will speak. In the afternoon Canadian Retail Sales are due which kept declining -0.1% the last three readings. Later afternoon the annualized sales figures of Existing Homes will be released in the US. The residential real estate purchase activity is still much lower than it was before the crisis. To have an idea, in most of 2005 this indicator was above 7 mln. This year we could hardly get above 5.5 mln... The last data of the day will be the API Oil Stocks which is a leading indicator to the EIA inventories next day.

Wednesday:

Construction Works Done, which is the first data of the day, was declining in Australia the last four quarters. Given Construction part of the GDP is at record highs this could be the sign that hard times are ahead the sector. The Kiwi PPI was also leaked as well as Retail Sales, so watch out if there will be any difference compared to the official data. The German Manufacturing PMI keeps beating expectations the last 2 months. The flash figures will give us a hint how manufacturers in the Eurozone’s strongest economy see the prospects of growth ahead of the Italian referendum. The afternoon will be full of US data like Durable Goods Orders and Unemployment claims, the two most important, Home price index, New Home sales, and Consumer confidence among the less watched ones. The FOMC Minutes are scheduled as the last event of the day, but no significant new facts are expected to appear from the notes. The EIA Crude Oil Inventories will be also released earlier, could be important for CAD, NOK and oil traders who are waiting for the outcome of OPEC production cut talks.

Thursday:

In the morning we will have the Final German GDP and a little later German Ifo Business Climate. The Later has been beating expectations since September but now the consensus is cautious this time and the forecasts are close to the last release. In the evening the monthly change of New Zealand Trade balance will be released. The deficit was at record high in the latest reading and this could be a serious problem at one point. The ongoing decline of NZD, as RBNZ joined the currency war, may be a part of the solution. The last data of the day will be the Japanese inflation if there is any… Or rather should we say the Japanese deflation figures? Well, let’s see but since mid 2015 the nation didn’t really record and increase in Core CPI, which proves the QE didn't have any effect without the support of the fiscal policy.

Friday:

A qiet day is ahead as except the Second Estimate of UK GDP and there will be nothing else really to watch. The UK's economy should have already got a boost from the weak pound but the effects are not yet fully visible. Maybe the US Flash Services PMI could bring some volatility after the Goods Trade Balance and the Wholesale Inventories which are relatively new indicators. But we do not expect any big change in ongoing trends.

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Remember to watch your risk and be consistent.

Mr Tech Man

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: landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com

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