Jan 22, 2017 - Weekly Macro W4 (PMIs, CPIs, GDPs, and UK Supreme Court ruling on triggering Article 50)

We have plenty of interesting data next week among other PMIs, CPIs, GDPs and US housing. However Brexit could steal the headlines again as the UK Supreme Court is due to decide whether the government may use Royal Prerogative to trigger Article 50. The ongoing earnings season is also worth to watch with a lot of big names among others McDonald's, Banco Santander, Alibaba, Alphabet, UBS, Microsoft and many others. Investors will also follow closely first days of Donald Trump in the office as he promised many radical steps right from the start of his presidency.

Monday

Japan will kick-start the week with Industrial activity and Leading Economic index. Both of minor importance but as beginning of the week is usually “data-free”, there could be some moves sparked by these. In the afternoon we have Canadian Wholesale Sales, but as it is quite volatile indicator, only a big surprise may have significant impact. If you would consider to keep positions open O/N don’t forget about Mr. Draghi in the evening speaking in Italy.

Tuesday

It’s going to be a PMI day starting with Japan, then France, Germany and EZ and in the afternoon US PMIs but as last week the Brexit will be in the spotlights. Very important will be the UK Supreme Court Brexit ruling about the government appeal against the High Court ruling which blocked the Royal Prerogative being used to trigger Article 50. If the Supreme Court ruling blocks the RP, this would mean that Ms. May will have to leave the decision about triggering Article 50 for the parliament. In extreme situation that could turn Brexit into Bremain … so be ready for eventual fireworks. In the afternoon US Existing Home Sales which last month hit more than 6 years high and it’s definitely a positive sign. The analysts forecast a slight seasonal drop which wouldn’t however mean reversal of the positive trend. In the evening the first of the regular Crude reports. The API Crude oil stock could move the Crude and oil currency crosses like CAD, NOK.

Wednesday

We start the day with Australian consumer inflation (CPI) after midnight. The quarterly data ticked up recently and this could mean a challenge for the RBA aiming to boost the economy and curb the housing bubble the same time. Analyst doesn’t expect any major change but a surprise could easily move AUD crosses both directions. In Europe, the German Ifo Business Climate will be released in the morning and actually the index is higher than it was in 2007-2008, just before the crises. Germans seems to be optimistic despite the risk on the horizon: Britain out, Trump in … and elections all over Europe where the traditional parties will be challenged by anti-establishment forces. However business leaders in Europe’s strongest economy do not seem to care. In the afternoon, we have EIA Crude inventories and later the evening, CPI from New Zealand which is still stubbornly low.

Thursday

We will not have anything from Asia and the first notable data will be the Spanish Unemployment that could be much more closely watched given the speculations about eventual ECB tapering. Unemployment rate in Spain dropped in October below 20% but analysts don’t expect further decline. Definitely the weak euro helps the southern countries to boost their economies. Later in the morning, we will get the UK Prelim GDP figures with minor monthly slowdown expected. The afternoon will be about the US, most important data weekly Unemployment Claims (which probably can’t go much lower, although the employment rate is still 5% below the highs in 2000) and the New Home Sales (which is in stable uptrend despite a few weaker months recently). Around midnight the Statistics Bureau of Japan will release national and Tokyo Core CPI which is declining from 2015 – one of the major problems of the BoJ.

Friday

For comparison the BoJ will release its own Core CPI and even though this indicator is not sub-zero the downtrend in the rate of price level change seems to be very strong. The main data of the day is the first estimate of the US growth. The US Advance GDP will show whether the surprisingly good figure from last quarter was a one-time shot or the economy is accelerating much stronger than most of the analysts predicted at the beginning of the last year. At the same time we have Durable Goods Orders number which is expected to stabilise around 0.5%. As the last significant data will be the results of the consumer survey provided by the University of Michigan, it has several components, but the most watched is Consumer Sentiment. As the optimism of US consumers skyrocketed after Donald Trump won the presidential election, the indicator is expected to hold close to its maximum levels. 

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. 

Contact: landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com

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Weekly Macro Overview - Week 30

After the failed Turkish coup attempt market started the week in quiet tone. Despite it was an ECB week the EURUSD was stuck in 100 pts range most of the week but closing Friday below the 1.0980 as light negative momentum seems to be prevailing. Two most interesting moves of the week were the USDJPY sell off on Thursday after a release of a rather old interview with Kuroda, were he rejected the idea of helicopter money. The second was on Friday caused by the record weak UK Services PMI followed by a 180 pts sell off in cable.

Monday - The New Zealand CPI came out little worse than expected but better than previous (0.4% vs exp. 0.5%, prev 0.2%) stopped the selloff from the record highs of the previous 14 months. The main upward contributor was Petrol, also real estate prices rose. The Quarterly inflation is in an uptrend this year after the 4Q dip of -0.5%. Also from Monday there were news that Italy is working on setting up a bad bank to clean up the banking sector. According to Fitch rating agency, Japan may face fiscal risks after activating planned government stimulus package.

Tuesday – the UK inflation figures came out much better than expected. CPI y/y 0.5% vs exp 0.4% & prev. 0.3%. IMF again cuts world growth outlook for 2016 (3.1% from 3.2%) & 2017 (3.4% from 3.5%). The ZEW economic indicators were much worse than expected both for Germany and the EZ too mostly due to the uncertainty around Brexit, EURUSD had a delayed reaction 75pips to the downside. The US housing market was more or less in line with expectations while Housing starts seems to be stabilising around 1.2 mil the Building permits are in downtrend from last summer record highs, which could be a leading indicator of the slowing momentum of the economy. The GDT price index of diary auction in New Zealand was better at 0% than the previous months but still not indicating any growth momentum in the most important industry of the country no growth.

Wednesday – the main focus was on UK employment data. The Average earnings increased 2.3% in line with the expectations  while New claimants number went down to only 0.4k but the previous reading was revise to the upside from -0.4k to +12.2k. Unemployment rate was 4.9% vs exp/prev 5%. The Crude inventories declined more than expected.

Thursday – ECB day but we started with the economic outlook of RBNZ which dragged down the Kiwi (NZDUSD) after the CB clearly stated that the NZD exchange rate is too high, damaging the diary and manufacturing sector. The ECB didn`t change monetary policy as expected. Draghi stressed several times during the press conference that it too early to assess the Brexit effect but ECB is prepared to do whatever its needed inside his mandate to balance negative impact. Afternoon the US Unemployment claims came out better than expected and it seems to stabilize around 250k. The Philly manufacturing index couldn’t hold the positive pace from last month when dipped below zero. Existing home sales kept rising in June for the fourth consecutive month so overall we closed a USD positive day.

Friday – In the morning we saw several European PMIs coming out better than expected more or less in line with the consensus. The worst was the UK services PMI which hit the lowest level since April 2009 (at 47.4 from 52.3) followed by a 180 pts sell off on Cable in the next few hours. According to Reuters Greece eased slightly Capital Controls after creditors approval. The Canadian inflation data came out as expected (0% m/m 2.1% y/y) however lower than the previous month. The speculative net long in WTI keeps declining, last week at 289.6k from the peak in May at 368.8k.

Next week we have FOMC rate decision where no change is excepted in the wake of the shock vote for Brexit in the UK in June. However, traders will look for indication if there is any chance for a hike in the US this year. The Calendar is also full of prelim GDP figures from UK, EZ, Canada and US which can move the market.

Monday – in the morning the German Ifo Business Climate is expected to break its improving trend reflecting the worsening mood among managers, business owners after the UK voters decided to leave the EU. Late night the New Zealand trade balance figures could add some pressure on kiwi.

Tuesday – we have a few interesting data out from US starting with S&P home price index 1:00 PM and Flash Services PMI at 1:45 PM. However, the most important will be the Consumer Confidence published by the Conference Board Inc. which expected to maintain the downward trend from the beginning of last year. The same time the New Home Sales will give some hints what`s behind the declining trend of building permits but stable housing starts data.

Wednesday – in early morning the AUD traders may see some rock&roll as the quarterly CPI data may confirm the negative trend even a rebound is expected due to the higher commodity (mainly oil) prices. Later in the morning the forts GDP data of the week will be released in the UK, where the consensus expectation is slight increase to 0.5% from 0.4%. However due to the pre-Brexit negative sentiment could have caused some surprise. In the afternoon US Durable Goods orders and Pending Home sales will come out prior the FOMC. Even there are expected some improvement they will probably have diluted impact due to the upcoming rate decision in the evening where the Fed is expected to keep rates on hold and the statement will be the main driver. Don’t forget there will be no Press Conference this time.

Thursday – after FOMC the market will be digesting the news and therefore the early morning German CPI and Unemployment will not cause big moves. The main event will be the US jobless claims in the afternoon which seems to be stabilizing the last 3 months. Late night or for some early morning there will be a bunch of Japanese data in 20 mins starting with CPI, Unemployment, Retail sales and prelim industrial production mostly with medium importance.

Friday – early morning the Japanese Monetary Policy Statement and Rate Decision is due with the BOJ`s outlook report and press conf. Later European prelim GDP will be released at GMT 9:00 AM with An expected moderate 0.1% increase in the annual rate.  After the lunch break the markets will focus on Canadian and US GDP. While the Canadian monthly figures are expected to decline, the Quarterly US GDP is expected to rise annually to 2.6%. Keep in mind that this is the first US GDP release this used to have the most impact on the market.

One more thing, Friday late evening the European Bank Stress Test Results will come out and this could mean a significant risk if some big banks or several smaller players would fail. Italy will be in main focus due to the current discussions about the huge amount of NPLs in the country’s banks.

Watch your risk and be consistent.

Risk Event Calendar:

Mr. TechMan

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 www.landoftrading.com Contact: landoftradingATgmail.com

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