After the
last week when all central banks acted in line with expectations investors and
traders are expecting Fed to raise its benchmark rate by 25 bps as
economic data keep improving and the outlook for more fiscal stimulus will
increase the inflationary pressures in the coming years. We will have also SNB
and BoE rate decisions during the week and both are expected to stay on hold
but analysts are curious how the central bankers assess the current conditions.
Chinese investment and industrial data
as well as Japanese industry data will be coming out during the week with
tentative dates and times.
Monday:
It‘s going
to be another “lazy Monday” with very few data. In the early morning the
Japanese Tertiary Industrial Activity will be released which represents practically the Service sector. The last 2 releases were at zero or slightly
lower and the consensus expects a little increase in October data. The
FDI in China will be release this week but we have no exact date or time. The US Federal Budget Balance will also be watched by Republicans in the light of the planned fiscal
expansion in the US, mostly which is responsible for the
current “Trump rally”. There are concerns that the space for increased fiscal
spending will be limited due to raising interest rates in the coming years.
Tuesday:
We start the
day with the quarterly index of home prices in 8 state capitals of Australia,
where the analyst expect a 2% jump after the slight decline in the second
quarter. This will be followed by the Chinese Industrial and Fixed Asset
Investments, in both cases no change is expected as both are in kind of
consolidation phase. We will start the European session with some inflation
data, first will be Germany where no change is expected in both monthly and
annual data, followed by the UK CPI expected to rise and UK PPI which is
expected to fall. Later in the morning the German Zew Sentiment index is scheduled and it is expected to jump confirming the better economic outlook. In the afternoon US
import prices may cause minor rise of volatility but the effect will be muted
given the expected FOMC rate decision next day.
Wednesday:
It will be the Fed
rate decision day so expect low liquidity as market is waiting for the results
from the 2-day FOMC meeting. The European morning will be however, busy for
pound traders as UK job data will be released. We will look at the UK Jobless
Claims which is expected to decline, and the Unemployment Rate along with the
Average earnings, both expected to stay unchanged. In afternoon the volatility
could be increased by the US Core Retail Sales and US Core PPI, as market
participants may adjust their positions after the data release ahead of the rate
decision. A little later we have US industrial production and Capacity
Utilization rate with minor effect expected. As the Non-OPEC countries lead by
Russia agreed during the WE to follow the cartel and cut production by 600 barrels
a day, the crude got some support from these news. The regular EIA Crude oil
report scheduled for Wednesday afternoon may add some more momentum to the rally,
but be careful as the supply glut is still a reality and as the prices rise, more and more rigs will be reopened. The last big event of the day and
probably also in 2016 will be the FOMC meeting. Can we expect any bad surprise
from Yellen and team? The probability of a 25 bps rate hike to 0.75%
level is around 95% in other words it is widely expected. The good
US data, the rise in bond yields as well as inflation expectations and a
bullish stock markets, all these factors seem to be supporting the case. Please
read more about the event in this article from my colleague Mr Hawk link .
Thursday
We will
start early Asian session with Aussie job figures. The employment growth is slowing
down since May 2016. A negative trend behind the data is the increasing share
of part time employment which jumped from 31.1% to 32% in October. Therefore
the stable unemployment rate at 5.6% couldn’t be considered positive in these
circumstances. Hopefully the rising base material prices will help to revive
the mining industry, which may help to change this negative trend. The Swiss
National Bank will announce its monetary policy and key benchmark rate in the European
morning at the same time with German PMI followed by the Eurozone PMI figures. Both
regions experienced an increase in sentiment during the last months but no huge jump is expected. According to analysts the surprise spike in UK Retail
sales was rather a one-time event and the consensus is for stabilization
instead. The week pound however could
give some support before the Christmas. The BoE will announce its rate decision and assessment of the economy at
lunchtime. The Benchmark rate is not expected to be changed as the bank needs
to keep some gun powder dry ahead of triggering the Article 50 and the start of the formal talks about the Brexit conditions. However the Monetary
policy statement will tell us how the policy makers see the shape of the British
economy. In the afternoon the US inflation, Jobless Claims and Philly and NY
Manufacturing PMIs may increase the volatility along with Canadian
Manufacturing sales, the later for the CAD crosses. A less followed but
interesting housing market indicator will be release later afternoon, the
NAHB housing market index which is a leading indicator of the construction sector. After a surprise
jump in the summer the index is slowly declining and no change is expected ahead of Christmas.
Friday
The last
day of the week will be rather boring as the market will be digesting the
events of the week and waiting for next weeks‘ BoJ rate decision. The Final European
CPI numbers however may move the markets in the morning. In the afternoon the US
housing data will add some volatility as some leading indicators will be
release, namely the Building permits and Housing starts. In both cases we
saw a positive surprise in the last month however despite the overall
optimism after Trump's presidential victory, the economists expect a slight decline.
Always 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
Posts
0 comments:
Post a Comment