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.
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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