Jan 29, 2017 - Weekly Macro W5

The coming week will be very busy and not only on the central bank front. We have BoJ Fed and BoE plus the Chinese PMIs which is considered being a leading indicator to the global growth. The end of the week will be about the US employment figures which can always move the market so be ready.... 

Monday

The first important data is the German CPI especially after speculation about eventual tapering appeared some time ago. Most of the analyst expect the CPI to rise to 2% year on year from 1.7% despite the expected monthly deceleration of -0.6%. In the afternoon the US data will be in the focus starting with Core PCE index and Personal spending, both expected the increase modestly. Later the afternoon US Pending Home Sales could spread some light on the housing market. Despite analyst expect growth between 0.5 and 1.6% I’m a little skeptical about any increase as historically January did not bring positive number in the past 5 years except last year. Let’s see...

Tuesday

We start with BoJ rate decision and monetary policy during Asian session, but no change is expected. However as always if there is a press conference that could add to volatility. After European open we have German Retail sales expected to rise modestly followed by ECB Draghi’s opening speech at joint conference of ECB and EC. In the afternoon loonie traders should keep an eye on Canadian monthly GDP and Raw Material Price Index both of them expected to increase. Later afternoon the Chicago PMI and CB Consumer confidence and while PMI is expected to rise the Consumer confidence should decline moderately after the last month jump. The oil currencies should be sensitive to the API Crude Oil Stock report in the evening. We finish the day with New Zealand labor market statistics where a moderate improvement is expected.

Wednesday

It’s a PMI morning and FOMC afternoon. At the beginning of the day we have very important PMIs from China and as these are kind of leading indicators to global growth, should be watched carefully (or at least traders should adjust position size due to gap risk). Manufacturing PMI is expected to decline slightly despite the improving Chinese figures. During European morning we have plenty of European manufacturing PMIs from Spain, Italy, France the Eurozone and the UK and most cases no change or slight decline is expected, but all should hold around 53-56 zone. In the afternoon we will focus on US, especially ADP Employment change and ISM Manufacturing PMIs. In the evening FOMC rate decision and Monetary policy statement without press conference, could add volatility although no significant change is expected in MP. However given the seemingly fragile dollar strength we could experience some fireworks.

Thursday

We will begin the day with Australian Trade balance and Building approvals. As both being very important part of the economy they will be crucial in assessing the next possible move of the RBA. The central bank is in a hold and wait mood after the last rate cut and the leadership change, the next meeting scheduled for February. The European morning will be about the United Kingdom as BoE will release Inflation report, Benchmark Rate and Monetary policy summary. No changes are expected but the volatility will likely increase in pound crosses, especially be ready during Carneys‘ speech. In the afternoon we will have another set of US job market data, most important Jobless Claims and Productivity. The increasingly tight labor market will sooner or later lead to increased wages and this will not add to the productivity. Don’t forget, this is still a key concern of FOMC.

Friday

Markit’s Chinese Manufacturing PMI will kick start the last day of this busy week. Likely there is only minor impact as it’s released few days after the official PMIs unless it would bring a huge surprise as it’s expected to hold at or near previous level. During the first half of the European session UK Services PMI can move the GBP crosses. If the PMI will increase this would be the fourth consecutive growth. This would mean the Service sector is much more relaxed about the UK leaving the EU despite the threat of London losing its European financial center status. The US employment situation report will be released in the afternoon with NFP, Average hourly earnings and Unemployment rate. We need to see here stability in NFP and increasing wages helping inflation to pick up, nothing more to add here. We will end the week with ISM Non-Manufacturing PMI and Factory orders and while PMI is expected to decline moderately, the factory orders should pick up after the drop in the data from November.

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. 

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