Last week’s
central banks action was a concentrated disillusioning for the markets, so now
we can finally focus on the fundamental reality even though there will be
plenty of speakers. We will have OPEC, GDPs from US, UK and Canada this week together
with a heavy flow of other figures from US and we will end of the week with
Chinese PMIs…
We decided
in the team that we will cut the overview of the previous week to a minimum and
focus on the upcoming events. Please let us know your feedback via email. Thx.
But let’s go
back to the last week for a quick overview. The central banks confirmed two
things: first of all that the monetary
policy reached its limits in terms of easing (BoJ) and the governments
should wake up as they have never had such an opportunity to boost the economies
so cheap. The second proof we can take from last week is that how the politics influence the central banks
even in the US (maybe only indirectly) despite of the overall belief in its independence.
The simple reason is the fact that a necessary rate hike was postponed just
because there are elections taking place in a more than one month and the decision
may influence the results… But it comes back as boomerang back and will hit the
independence of the central bank and the results… well a hike 6-9 months later
as needed in a combination with the 1-1.5 year lagging effect of the inflation
creates a perfect policy failure set up. What will this bring to us? Hard to
say but I wouldn’t be surprised if the FOMC “will need to hike” at each meeting
after the inflation spiral will pick up momentum … obviously this will create a
new crisis.
The next
week is full of central bank speakers (altogether 14…ouch) to create a perfect confusing
mixture of noise. I have put all of them in the calendar, so you stay informed and eventually avoid trading or just minimize positions over these events. In the
below, I will focus on economic data only.
But before we actually start, please bear also in mind that OPEC meeting is taking place Mo-We (Sep 26-28, 2016). It seems to be pretty watched event (after the last meeting not yielding anything), as we had a proof on Friday when after Saudi Arabia comments about OPEC meeting being a discussion forum only and not expecting any outcome anyway, the oil prices felt like a stone.
Monday:
In the
morning the German Business Climate
will show us how the German business owners feel under the current economic
circumstances of strengthening euro and worries regarding the Brexit impact.
The last reading was a disappointment therefore many analysts are more cautious
with their estimates this time. The indicator is oscillating somewhere between
105.5 and 109.2 since December 2014. Expectations are rather similar to last
figures. In the afternoon the New Homes
Sales will complete the view of the US housing market. The previous several
readings showed rising momentum that explains the jump in NHBA housing market
index last Monday. I should be able to prepare a piece on this during the week.
The BoJ Monetary policy meeting minutes
are due late night also worth to follow for yen traders.
Tuesday:
After the
first Presidential election debate
in the US overnight the morning will be rather boring. Later after lunch we may
get some volatility from the US. First the price
index of single family houses will add another puzzle in the picture of US
housing. Since mid-2015 the index shows over 5% annual increase in house prices
however this year it started to trend lower and it will be important to see if
the momentum will pick up confirming the reported growing interest of
prospective home buyers. Later the Consumer
board will release the result of its consumer
confidence survey which is close to pre-crises peaks however it lost its
momentum this year. In the evening the API
Oil inventories data may move the oil currencies, typically CAD and NOK.
The recent data showed additional decline in inventories and it’s not clear
what caused it amid increasing import and declining refinery demand.
Wednesday:
The Durable Goods Orders from the US will
be the main data of the day and it’s typically weaker in August. Analysts
expect a decline in both core and total orders. We will have plenty of speaker
on Wednesday and don’t forget about the EIA
Crude oil report if you trade CAD or NOK.
Thursday:
After
Kuroda speech we will get Spanish CPI
and the change of the number of German
unemployed, which keeps decreasing this year. Some UK credit data may move the cable later the day, with net lending and mortgage approvals, both weakening recently. The afternoon will be
pretty stuffed with US data. The final annualized US GDP Q/Q growth rate for the Q2 is expected to increase slightly
compare to the 1st quarter but it won’t be enough to stop the
negative trend of annual GDP growth rate which the comparison to the growth in
the same Q of the previous year… The pending home sales will complete the
housing data set for September giving the final touch to the overall picture.
This figure can give us an explanation why the Existing home sales were
worse than expected also lower than the previous release. If there was an
increasing number of unfinished contracts this means the next month sales
figures could jump by the number of sales not closed in August.
Friday:
It’s the
last day of the month with quite heavy calendar. In the morning we will start
with HSBC China Manufacturing PMI,
the first PMI from China before the official PMI figures will be released on Saturday.
Watch if it can hold above 50 point level. In the morning the UK Current Account and GDP will give further hint what are the
Brexit vote effects to the UK. But to be honest with you, nobody knows how it
will look like after they trigger Article 50, however the market will react on
these and due to the cheap pound it should show a narrowing deficit. Following
this the Eurozone flash CPI is worth
to watch if there is any progress in inflation pressures. In the afternoon the Canadian GDP will be released at the same
time with the US PCE price index,
the main inflation indicator used by the Fed. The Chicago PMI is released with the University of Michigan Consumer sentiment data as the last US data
of the week, both came out worse than expected last month but the analysts
expect improvement on both fronts.
Saturday:
The
official Chinese PMIs will be
released during the weekend so there is not much to do except to prepare for
the Tokyo open and the reactions of the market to the index.
Don´t
forget 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
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