And we are finally
here… yes, we reached the probably most important event of the year, the US
Presidential Election. It is held on Tuesday 8th November and as the last week
has shown this is currently the main market mover. We expect low liquidity and
nervous trading ahead of the election and pretty high volatility afterwards (especially if Trump wins) so
additional caution should be in place when placing orders.
The last
week was mostly about the relaunched FBI investigation into Clintons emails and
as she was losing preferences in polls, the US dollar was weakening against all
major currencies. We had also 4 major central bank rate decisions but as we
expected one week ahead the US election the policymakers decided to wait for
the outcome.
On the Economic data front the last week we had the
following main figures:
Australia: as the building approvals fell on monthly
bases by 8.7% it may indicate that the housing market is cooling down. This added
to the strength of the Aussie dollar together with the decreased trade deficit.
The gold price has broken the 1300 level which could help the mining industry
which is one of the most important sectors of the country.
New Zealand: a flood of improving economic data came out
last week starting with +11.4% in Dairy Price index from GDT auction, higher
than expected increase in employment and an unexpected decline in Unemployment
rate below 4.9%. The inflation expectations are unchanged on quarterly bases
which supports the case of more stable benchmark rate. The advance of Kiwi was
also supported by the overall weakness of the USD of course.
Japan: Retail sales continued to decline at higher
than expected pace and prelim Industrial production was unchanged. Manufacturing
BMI and Consumer confidence declined which signals more troubles ahead of the
Economy
Europe: While the German retail sales declined
unexpectedly, the following CPI and GDP data from the Eurozone was unchanged or
in line with expectation. Later the week German and Spanich employment figures
where better than expected
UK: The Brexit process got a hit by a ruling that
that the government can’t trigger the Article 50 (formal beginning of exit
process from the EU) without an approval from the parliament. Construction and
Services PMIs where better than expected and the Manufacturing data was a
little worse than estimated.
USA: We saw plenty of data mostly in line with
expectations or little bit weaker. The worst were PMIs, especially Chicago PMI (strong
industry) fell unexpectedly almost 4 full points which could indicate a weaker
GDP in the future. On the other hand the average hourly earnings jumped 0.4%
with an upside revision of the previous month from 0.2% to 0.3%.
Canada: here we had a downside revision of GDP and
widening trade deficit with better than expected employment change. The oil
inventories grow rapidly also which could have negative effect on the CAD in
the coming weeks.
The upcoming
week will be mainly about the US election and we prepared an article about the
outcome and the implications here. Friday is a bank holiday in US so the week is a little shorter but more concentrated on the markets. On the data side we will have a soft week
but you can still grab 30-50 pips.
Monday:
In the morning
we have German Factory orders where little
change is expected but given it’s a notoriously volatile indicator, only bigger
surprise number will cause tradable moves. In the afternoon we have an
interesting index which is worth to follow. This is the Labor Market Condition Index constructed by the Fed in 2014 based
on 19 Labor market indicators. This was an attempt to give a full picture on
the situation and even the market is not really reacting on this, it’s worth to
follow as one of the Fed indicators.
Tuesday:
US Presidential Election Day, however, in the morning we will
start with Chinese Trade balance, a
very important figure related to the global macro picture. The expectations are
high but remember the last time, the weak export figures caused quite a sell-off in
risk assets and at the current nervousness due to US high volatility is
expected around these numbers. Polling stations open at GMT 11:00 in the east
cost states. In the afternoon we have US
JOLTS Job openings and after the last month surprise decline in the number
of open positions the consensus forecast is in the middle of the previous month’s
figures. In the evening we have also API
oil stock which jumped more than 9 mil barrels last week.
Wednesday:
The day
after? … Well, not exactly as during the Asian session the first state projections will
be made after GMT 00:00 AM, when the first polls start to
close. Meantime on the other side of the Pacific, Chinese inflation figures will be released. Both CPI and PPI surprised to the upside
last months. The increasing wages in China are creating a significant buying
power which are supportive to the inflation of course. On the other hand the
process will lead to more expensive exports which is not only a Chinese but also
a Global risk. The earliest time to estimate
the winner of the Presidential Election is around GMT 04:00. We have rate decision in New Zealand and a 25
basis point cut is forecasted by most of the analysts. Well, personally I think
it would be a mistake. This economy is currently in the best shape among the
countries I’m following and probably the best advice currently would be “Don’t touch
it!”… at least not through Monetary policy but via reforms. I know there is only one year to the next elections hence it’s unrealistic to think about it. But reforms with other words adjusting the rules of the game to the changing environment is a must for any government.
Thursday:
The morning
will be without any important data. The afternoon starts with the Canadian house price index as a key
sector showing signs of overheating. After the surprise jump in home
prices in the summer now the crowd expects a return back to the average pace of
price increase. The same time US unemployment
claims will be released and after a surprise rise last month a
stabilisation is expected, so more or less no change. You know, I don’t really
mention here speeches, but after the Presidential election it will be
interesting how the FOMC members will react, and Bullard will be the first to give some hints how they see the
developments.
Friday:
It will be a bank holiday in the US and only Stanley Fishers speech
and the University of Michigan Consumer
Sentiment should add to the volatility as the main topic of the year will
be over on Thursday, and the market will be digesting the results. Later
afternoon BOC Governors speech could
cause some isolated movements in CAD crosses too.
You can sign up for our Live Trading Room here, the schedule is below:
Tuesday: GMT 09:00 AM
Wednesday: GMT 01:00 PM
You can sign up for our Live Trading Room here, the schedule is below:
Tuesday: GMT 09:00 AM
Wednesday: GMT 01:00 PM
Good luck and remember to watch zour risk and be consistent
Mr. Tech Man
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.
All rights reserved ©2016 www.landoftrading.com, contact:
landoftradingATgmail.com
Posts
