June 5, 2017 - (Weekly Tech Overview) USDJPY (updated), AUDUSD - RBA next, USDCAD buy dips

Hi all,
Three charts below and we do think they might be very interested from both - bullish and bearish - perspective:

USDJPY Weekly chart (updated ): are bears in control ? close below 110 would help a lot. What bulls have to do ? Close above 112,00/40 asap.

AUDUSD Weekly chart: not clear as bears were in rush to sell AUD... RBA next...

USDCAD Weekly chart: will look to buy dips towards 1,3250 for now...

Please don't hesitate to contact Us should you have additional questions.
We are here to help you, just contact us at: landoftradingATgmailDOTcom.

Happy Trading

Mr Price Action

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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Feb 5, 2017 - Weekly Macro W6 (RBA and RBNZ rate decisions, trade balance Ger, UK, US, CA, China and IEA Oil Report)

The coming week won’t be boring at all and there are plenty of events to follow. First of all we have the RBA and the RBNZ rate decisions. Despite no change is expected in MPs  we will get a hint how policy makers see the economy in the light of recent development (new US policy, metal rally stalling etc.). We have plenty of trade balance figures, most importantly Germany, UK, US and Chinese trade data. The oil traders will be on alert as after the regular weekly API and EIA oil stocks we have on Friday the IEA Monthly Oil Market Report (and Monthly OPEC report on Monday).

Monday

After midnight the Australian Retail sales will be released. After the huge volatility in 2009-2010 the growth has stabilized in the range between -0.1% and 0.7% last year with only one negative month. Later the session the Chinese Caixin Services PMI could be a market mover after last weeks disappointing manufacturing figures. The German Factory Orders will kick start the European session which fell rapidly in January more or less in line with the seasonal pattern. Analysts expect a modest rise btw 0.5-0.6%. In the afternoon the Feds' Labor market Conditions index will be released but as the components are already known, only minor effect is expected. The US Mortgage Deliquencies will be published this week, but no date or time is known yet. The indicator is declining since 2010 and no major change is expected.

Tuesday

Pretty busy day ahead starting with RBA rate decision. The central bank is in a rather difficult situation given the strengthening AUD and overheated housing market. While industrial metals has seen a bit of a rally at the end of last year which definitely helps the economy, the booming housing market can cause problems in the medium term. Although Gov. Lowe is not really keen to join the QE race, the Rate Statement will give us a picture how the policymakers see the current developments. European morning will be quiet with only French trade balance and UK monthly HPI. Canadian trade balance will be released in the afternoon. Last month it reached positive levels for the first time since 2015 and further rise is expected. US JOLTS labour market summary will be released in the afternoon, but only minor impact is expect given the current cycle of the US job market. As the first oil report of the week the API oil stocks will give us a hint if the rising trend in inventories continues. The GDT dairy price index from New Zealand will be released during the evening but ahead of RBNZ rate decision, I expect only minor impact unless there is a huge surprise.

Wednesday

We can have a little rest in the middle of the week as the European morning is almost empty. Keep in mind that Chinese trade data and FDIs can be released anytime in the second half of the week. The afternoon could be interesting for Loonie traders as we have housing starts from Canada and later on the EIA Crude inventories.  The evening will be busy for Kiwi traders as the RBNZ is scheduled to deliver its rate decision with MP statement, followed by the RBNZ News conference an hour later.

Thursday

Chinese trade data and FDIs could be released in the morning if not released a day before. At the early Asian session New Home Sales from Australia will give us an insight in the housing market. A few minutes later the RBNZs governor Wheeler is due to testify on MP before the Finance and Expenditure Select Committee in Wellington. The European morning session is empty on the data front and the first important data will come from overseas, namely the Canadian house price index and the US jobless claims.

Friday

Again, keep in mind Chinese data could be released if it not happened the previous days. The RBA Monetary Policy Statement will be published which will be likely in line with the rate decision statement, just with a little more details, still could have impact on AUD crosses. The most important data of the European morning will be the IEA Monthly Oil Market Report, which will give us a hint how the OPEC report may look like on Monday. The members of the cartel participating in the agreement claimed repeatedly they take the cut seriously, however it would be for the first time that there will fail to deliver on their promises. Let’s see… We have also an Extraordinary EU Summit from which rumours may eventually hit the market during the whole day. In the afternoon the Canadian job report and the result of the Consumer Confidence Survey done by University of Michigan may be the main market movers.

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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Jan 13, 2017 - Central Banks Calendar for 2017 (FED, ECB, BOC, BOE, BOJ, RBNZ, RBA)

It's important to know when big news can hit the market. One set of these news are the regular Monetary Committee Meetings of different central banks. Below you can find a quick overview of some important Central bank meetings for 2017. Please feel free to use it for your trading preparation.

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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Dec 05, 2016 - Story of the Week : Mixed outlook for Australian GDP

If we compare Australia with major economies of the world we see a very nice picture. The country has low unemployment rate, low inflation and low government spending accompanied with one of the fastest growing GDP. However, there could be a storm coming as we can already spot the dark clouds if we look closer at the main factors that moved the Aussie economy the last year…

The next release of GDP will available on 7th of December, the day after the rate decision. Altough we will get some hints from the RBA Rate Statement tonight, many traders are asking what to expect? So lets look at few details.

Despite generally bad outlook at the beginning of 2015 the Australian economy managed to perform well in 2015/2016 financial year although worrying signs are still in place. 

While the year on year GDP growth measured by comparing same quarters of 2 years grew to 3.3%, the growth slowed down in the second quarter from 1% (downward revision from 1.1%) to only 0.5% in the Q2. In order to be able to make an estimate or just to have a feeling about the upcoming GDP, we can look at the key sectors contributing the most to the growth of the economy. Mining and Construction both making up a significant part of the Gross Domestic Product trend.

In Q2 the growth was supported mainly the Mining sector which added 0.8% while Construction, a  0.2% while also financial and insurance services had a high 0.5% impact. 
The impact of mining could be positive this year as it came mostly from mineral exploration which was caused by the increase in Commodity prices this year which keep rising massively.

The overall mineral exploration activity was flat in the second quarter but gold and iron ore bounced from the first quarter bottom as you can see from the chart below. As the prices of these two continued rising  in the third quarter, this can have again large positive affect on the GDP growth. Also RBA expects the investmnets in the industry to pick up soon. 

However, before we get overoptimistic, let’s look at the Housing market too which is the key concern of the policy makers currently. The figures released in November shows that these concerns have a good base as all the housing components show negative or flat trend, except maybe Home Loans. 

One of the most followed housing indicator is the Construction output due to its complexity and as it covers a whole quarter of production. In the third quarter the finished construction works fell by 4.9%. To have an idea how serious it is, the construction output didn’t fell so much in a quarter the last 16 years...

What is worse, the future doesn’t look brighter either. While housing prices in major cities started to rise again in the second quarter, the demand for owner occupied housing is declining. This will likely cause further decline in construction output in the coming months if investment housing will not be able to compensate this outage in demand.

The change in the trend of demand is clearly visible in dwelling commitments. The dwellings commitments were falling rapidly in the summer. Despite the overall housing commitments rebounded in September 2.3% the problem is visible if we break down the numbers. The investment housing increased by 4.6% compared to the number of owner occupied dwelling which increased only by 0.9%.

The change in the number of commitments is showing us the story behind. One of the best value indicators are owner occupied house and apartments purchases. While the increase in the number of these dwellings was the same 0,9% as the percetual increase of value of this housing, the number of investment housing increased only by 2.0 % compared to the increase in the value at 4.6%. This indicates a shift in demand toward a more expensive or even luxurious housing investments.

Another great indicator is the mood among builders, which is definitely not optimistic either. While in September the Construction Index published by AIG rose above the key 50 points level, it fell again sharply in October. This indicates, that the construction companies already feel the pain and in this environment they will likely be reluctant to start new development projects. 

According to the AIG report one of the reason behind the worsening sentiment are the new orders. These were falling overall in the construction business but the demand for houses and appartments declined significantly the last few months. 

As we went quickly through two major GDP components, it seems that the very positive outlook in mining may be mostly offset by the problems in the Construction sector. This sector can also influence the Financial services in a negative way. This sector  is also a signifcant part of the country's GDP so the effect could be stronger. 

I expect a significant decline in the quarterly growth rate despite the supporting efect of rising commodity prices on mining activity. The reason for this decline is the fact that the two sectors will compensate each other hence the effect would be neutral, which is equal to no or minimum growth in the two sectors together. It seems that market is still not really priced in this possible change and therefore be prepared to sell the fact after the release.

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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Dec 04, 2016 - Weekly Macro W49

After the weekend we will first see the results of the Italian referendum which may materialize in EUR selling or… EUR buying if voters would surprise the markets being rational this time. In the beginning of the week also European politicians will assess the progress of reforms in Greece. We also have the first central bank meetings of December scheduled (RBA, BoC and ECB) so we definitely won’t be bored at all… 

Weekend events: early Monday morning we will have the final results of two major European political events. The short term more important is Italy and the Constitution Amendment Referendum where the voters are not only voting for a simpler and more effective Italian political system, but de facto the faith of PM, Mario Renzi (and maybe the EU), who claimed earlier he would resign providing the referendum would not go through. This would mean new elections in which very likely the country’s rising populist, Eurosceptic party, the Five Star Movement would be the winner.The second event is the Austrian Presidential Election, where the results may have a longer term impact starting a new trend in European eladership. The voters in Austria may elect a president who would be the first far right president in Western Europe since the WWII. Norbert Hofer, the candidate of the far right Freedom Party of Austria lost to Alexander Van der Bellen, the leader of the Green party only by a thin margin. However, the result were annuled by the Consitutional Court on 1st of July due to election irregularities and this Sunday it is a repeated second round of the election. T

Next Week Macro

Monday: We start the week with two Services PMI, from China and UK. Both are expected to hold close to the previous levels well above the 50 points expansion threshold. During the day European politicians will discuss the Greek reforms and what’s the next step to save the troubled South European country. In the afternoon the ISM Non-Manufacturing PMI will shed some light on the post-election mood in the US Service Sector.

Tuesday:The main event of the Asian session will be the Australian Rate Decision which shouldn’t bring any surprise cut. After the change in the leadership at RBA, the new governor, Lowe is not a big fun of rate cuts or any QE. He will have to be eventually “forced” to cut rates by actions of other central banks (or by no action of politicians). In the afternoon we will see if there is any sign of change in the negative trend in the Canadian Trade Balance. In September the huge increase in exports came from one $2.9bil offshore oilrig module from South Korea and analysts expect that Trade balance deficit should have tightened in October. From US we have Productivity, Trade balance and Factory orders in the afternoon. The evening will be about API oil stock and New Zealand. RBNZ governor, Wheeler is scheduled to testify before the Finance Select Committee and the next GDT price index will be released too. The GDT index reached recently new highs after the historical bottom in August 2015. Further increase is expected and this is good news for the trade balance of the country which is one of the main problems of the economy.

Wednesday: We start with a key Aussie data, quarterly GDP. As most probably the rate decision will be a non-event on Tuesday, the GDP can move the market. The key sectors to watch are Construction (which is cooling down and will likely pull down the GDP figures) and Mining (strong rally in commodity prices is helping the sector to recover) which will most probably offset each other’s effect. We don’t expect the country can increase the pace of growth and it will most probably decline to or slightly below 3%. In the UK Manufacturing production we saw a surprise jump in November and analyst expect increase again, though smaller this time. The BoC rate decision is the next big event and it is not expected to cut the rates even during last meeting the policy makers discussed seriously this possibility.They decided to wait due to uncertainties and these reasons to be on hold are still in place. The risks increased after the US elections despite the increase in oil prices, being oil exploration a key sector of the country. The same time the US JOLTS Job openings will be also released and a modest growth is forecasted by the analysts. The EIA Crude Inventory report will be released later afternoon with a moderate increase expected. As yen crosses are currently driven by the USD mostly, the release of Japanese GDP is expected to have only a medium impact on the yen crosses.

Thursday: Two Trade balance figures will be released overnight. The first, Australian Trade balance, will have more local impact and as the Mining sector reviving further tightening of the trade deficit is expected. A surprise drop in Chinese Trade surplus in September was caused by a significant decline in exports. In October the economy didn’t manage to come back to the summer levels and now another drop is expected for November. The main event of the day is the ECB rate decision and while no major change or cut is expected, the press conference min later can give us a hint about the plans of the bank. There were rumors the last 2 months that ECB may start to taper its monetary expansion the next year which were however not confirmed yet. The Canadian Building permits may have a bigger impact than usually if the BoC the other day will not act due to the situation in housing market which is a key concern of policymakers.

Friday: Chinese inflation figures were pretty impressive last 2 months and again a more than 2% CPI and PPI is expected to be release on Friday. The recent depreciation of the Yuan and the awakening of fiscal policies around the globe should have a positive effect on the Chinese economy and this could push the price levels higher. During European morning the UK Goods Trade Balance could increase the volatility in the pound crosses. The trend is very negative as the deficit grew to almost a record 13bil pound recently despite the cheap pound which still didn’t manage to bring the expected positive effect on the trade balance of the country. The last data of the week will be the University of Michigan Consumer Sentiment index. Despite the unexpected jump last month it’s still in a negative trend though  economists expect a further increase which could mean a change in the downtrend trend in the consumers’ mood.

So as you can see, there will be plenty of events and opportunities to make some money as decent volatility is expected. But never forget 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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Nov 1, 2016 - (Chart of The Day) AUD - pre RBA: AUDUSD, EURAUD, AUDJPY

It's a RBA Day during Tokio session today ( and BOJ as well :) ), so we went through few AUD charts.
Please check below weekly AUDUSD and EURUSD charts for possible bulls/bears scenarios:

Video AUDJPY analysis available here.

AUDUSD Weekly chart:

EURAUD Weekly chart:

Please let us know should you have any additional questions or you would like to discuss other crosses as well. We are here to help you, just contact us at: landoftradingATgmailDOTcom.

Happy Trading
Mr Price Action


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: landoftradingATgmail.com

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Oct-31, 2016 Weekly Macro W44

This is going to be a hard core central bank week, we have altogether 4 rate decisions from major central banks RBA, BoJ, FED, BoE. We will however start the week with some inflation figures from the Eurozone (Flash CPI), Canada (RMPI) and the USA (monthly PCEPI). Also don’t forget about Chinese PMIs on Tuesday and the NFP as part of the US employment report on Friday.

After the last weeks bombshell announcement of the FBI director about his bureau’s review of emails potentially related to Hillary Clinton one may wonder what else could come before the election. Last Friday FBI head, James Comey has broken the longstanding DoJ and FBI practice not to comment publicly about politically sensitive investigation within 60 days of an election. Is this a signal that we should not rely on the history that Fed never hiked rates in the year of election? Well, Wall Street is definitely in a better relationship with the Clintons than the FBI, but one could never be sure…

Below you find few comments on each day macro figures but please look at the attached Event risk calendar too as I couldn’t mention everything, eventually feel free to print it out for a quick overview during the day. You can also check out our Live Trading Room register here

This weeks Live Tradin Room schedule is here:

Tuesday: GMT 12:00 AM

Wednesday: GMT 09:00 AM

Monday:

The first day of the week will be mainly about inflation but we start the morning with German retail sales at GMT 7:00 which was mostly below expectations this year. The Eurozone Core CPI could reach 1% since March but we could see a bounce in headline CPI the last few months. Market is expecting a rise in CPI to 0.5% which we haven’t seen since June 2014. In the afternoon we will be watching overseas data, the same time is released the raw material inflation from Canada and the monthly measurement of US PCE price index (the quarterly data came out on Friday with Advance GDP showing a decline in consumption price levels in Q3). We end the day Chicago PMI.

Tuesday:

Data heavy day for almost full 24 hours, so just the most important ones... After midnight we start with the Official Chinese PMI followed by the Markit’s PMI. The expectations are rather sober with no big improvement on the radar of most of the analyst. There is no rate hike expected from RBA Rate decision as GDP is probably above the nations potential still growing at 3.3%, the house prices as increasing strongly in the last quarter especially in the Sydney, Melbourne and Canberra, the inflation picked up recently (core inflation unchanged) and Unemployment rate declined to 5.6%. The BoJ Rate decision will follow but as the last meeting showed us a change in the CBs focus to the yield curve rather than the benchmark interest, the statement and the press conference may bring some volatility if additional measures will or won’t be announced by Kuroda. Later the morning the UK Manufacturing PMI may give some support for the week GBP as the uncertainty around the Brexit amounts.  In the afternoon after Canadian GDP the US ISM manufacturing PMI will be worth to watch after surprise bounced from the sub 50 levels. In the evening the API Crude inventory report may move oil market and the oil currencies ahead of the November OPEC meeting and later kiwi traders should follow the employment figures and GDT price index from New Zealand.

Wednesday

The markets will be in digesting mode during the early trading hours as still waiting for the main course the FOMC rate decision. The Australian Building approvals and later the German Employment change may bring minor pick up in volatility. The UK Construction sector is doing better than expected after the Brexit vote, and in the morning the Purchasing managers (PMI) of the sector will give their opinion on the housing market. The expectation are lower than the previous reading but given the current momentum it could be easily much better which would support the cable. Even the focus in the afternoon is on the FOMC, the ADP employment data could increase trading activity as investors will adjust their positions. The EIA Crude inventories are the last data ahead of FOMC. And finally we will see the results of the 2 day meeting of the Federal Open Market Committee – rate decision. The likelihood of a November rate hike is only around 5% but it’s still there, don’t forget this. If you are a fan of conspiracy theories you probably noted the surprise Clinton investigation announcement from FBI. A rate hike at current fragile market sentiment could cause the perfect storm ahead of the US elections to give maximum support to Trump.

Thursday:

The Bank of England rate decision is supposed to be a non-event with practically no chance to hike the rates as Carney was already criticized by the MPs the BoE acted too early. However the assessment of the economy in the BoE inflation report will be more interesting 4 month after the Brexit vote. In the afternoon first part of US employment figures will be released with the jobless claims. It’s not likely we will see a positive surprise close to full employment. On the other hand q/q productivity is expected to increase after 3 negative quarters and as this is the first release it may have bigger impact. According to Fisher despite this part of the equation is uncontrollable by the Fed, it is one of the key indicators to monetary policy. We will finish the day with ISM Non/Manufacturing PMI which surprised traders last month with much better than expected figure.

Friday:

The RBA Monetary policy statement will be released after the rate decision at the end of the week together with Australian Retail Sales. The European session will be almost data free and the first notable figures will be released in the afternoon from Canada (Employment and Trade balance) at the same time as the US Employment report. While the NFP are expected to marginally increase and the Unemployment Rate to get below 5% the Labor Force Participation Rate is at 4 decade lows. The key question is if the negative trend in participation rate bottomed out this year or the downtrend will continue. The Feds broader Labor Market Condition Index released next Monday will give us a complete picture about the US Labor Market trends.

 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

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Oct 2, 2016 - Weekly Macro Outlook 40W

Among few important economic data the last week was mostly about Deutsche bank, its ability to pay the US fine and the OPEC meeting where members finally agreed on production cut.  Next week we have PMIs (UK, US) and RBA rate decision but the most watched data will be the US Employment report including Non-Farm payrolls.

Previous week

European business sentiment seems to be improving as the German Ifo Business Confidence unexpectedly spiked 3.2 pts above forecasted 106.3 points on Monday. The economic activity in the Eurozone will likely expand at moderate pace in the coming months, however, there is a number of risk factors that can offset the medium term positive view.

The US consumer confidence showed a similar pattern when it jumped above the hundred points level where it was last time a year ago. The US final GDP grew a little faster (at 1.4% vs 1.1%) than initially expected, but still well below the last years growth. One component of the GDP, residential investments are slowing and the decline in housing activity is expected to continue in Q3. If you look at the housing data released in September (overview below), the picture is far from optimistic. On the other hand according to NAHB, the construction companies see an increased interest from prospective buyers supported by still low interest rates.

The last topic from previous week is oil and the OPEC meeting in Algeria. The members of the cartel managed to surprise the markets by announcing an agreement to cut production, but… the planned cut 740,000 barrels/day is yet mainly the only detail we have and Iran, Niger and Lybia’s  will enjoy an exception. Their rising production can largely compensate the cut. Other challenges are the US shale production which is getting more and more efficient and production recovery after the fights eased in the African countries. The shares of each member state on the production cut has to be still agreed on the November meeting and it’s important that other large producers outside the cartel, like Russia will follow the decision to cut the output. Conclusion, modest positive outlook but nothing decided yet so be cautious in bets until the November meeting.

Next week

Monday

We focus on the UK manufacturing PMI which surprisingly spiked last month which could be a result of the weak pound which will help the country big time in the coming months if there is no significant change. Later the day the US manufacturing PMI can give us a little colour if the last surprise dip below 50 pts was a one-time event or the US manufacturing sector still feel the pain from the strong dollar and low commodity prices.

Tuesday

We start the day with Australian Building approvals but the main event is the RBA rate decision (last rate cut was in august). The first monetary policy meeting under Philip Lowe governance will most likely not result in a rate cut as the recent comments from central bank officials had mainly neutral tone. Country’s main problem is the sub 2% inflation and large Current account deficit but the economy is rising and a solid 3.3% pace with unemployment at 5.6%. In the first half of the European session the UK Construction PMI is expected to hold close to the 49 pts level. Later the day the GDT diary price index is expected to be released from New Zealand which increased in the last 4 releases. For CAD and NOK traders the API weekly oil stocks are worth to watch. The Oil stocks keep declining which goes against the seasonal expectations and a surprise increase may put some pressure on the Crude and oil currencies as well.

Wednesday

In the first half of Tokyo session we have the Aussie retail sales and later on RBA Kent is due to speak and maybe give some insights on the background of the rate decision. The UK Services PMI In the afternoon follow the ISM services PMI from the US which declined last month but didn’t sink below the 50 pts level. The EIA Crude inventories will be also closely watched as they keep declining for the 4^th week despite the analysts expect seasonal rise each time...

Thursday

The Trade balance of Australia will be the first data of the day. As I mentioned earlier the international trade is one of the main problems of the economy and Australia needs weaker currency to boost exports. The last time the country had positive trade balance was in May 2014 and a there is no surplus in sight anytime soon if the AUD would strengthen. The Canadian building permits will be released with the US Initial jobless claims, the latter is close to historical lows and is expected to stay close to recent levels as US economy is close to maximum employment.

Friday

Since the Brexit vote Manufacturing production in UK is on decline and the question is whether we can see in the next august figures the positive effect of the weak pound. The data of the day will be however the US Employment situation report. No major changes are expected and close to full employment economist don’t expect the Non-farm payrolls won’t be higher than 171-176 as well the Unemployment rate should hold at 4.9%. The number worth to watch could be the Labour force participation rate, which is still below long term average 63% however a change in the declining trend seems to have started a year ago when the participation rate bounced from 62.4 which was the lowest level since the seventieth. Another interesting part of the data will be the change of the Average hourly earnings, which could be a leading indicator of inflation. The more money in the pocket, the more could be spent...

Remember to watch your risk and be consistent

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. Contact: landoftradingATgmailDOTcom

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Sept 18, 2016 - Weekly Macro Outlook W38

Markets opened in rather negative mood after the sell-off in US equities at the end of the previous week but cautious optimism returned after dovish comments of Fed’s Brainard. The main event was US CPI with a big positive surprise the BoE and SNB rate decisions were non-events. We continue this week with the Central banks.  Wednesday BoJ, Fed and also RBNZ… 

Previous MONDAY we saw a moderate reversal in equities after the Rosenberg caused sell-off as another Fed speaker, Brainard this time, had some very dovish comments… No change in EURUSD. The only thing we should take from these two is the fact that also inside the Fed there are different opinions. Also the DOA WASDE report was due and the expected revision of the Corn yields was less significant as expected, the Wheat global stocks however fell due to weak European harvest. Hedge funds are shorting Wheat heavily, so a short covering could cause rally in the near term. TUESDAY the Chinese Industrial production, Fixed assets and Retails Sales all came out better than expected. If this is the sign of stabilising Chinese economy then the PBOC may start even think about a rate cut… however the real estate bubble will be a significant hurdle. Later that day the UK inflation put some pressure on the pound, worth to note home prices still grew at a pace of 8.3% y/y but the growth is slowing significantly. The EZ and German ZEW sentiment came worse than expected but little changed compared to the previous readings. The New Zealand Current Account went into deficit more than expected and put pressure on the kiwi. WEDNESDAY Average earnings figures in UK were better than estimated but still declined vs previous, however Jobless claims went up while revised down the fall of claim number from last months. We couldn’t see the expected rebound in oil stocks as crude inventories fell further.  Late night the New Zealand GDP q/q came worse than expected but the country economy is growing at incredible pace 3.6% year on year. THURSDAY we started with mixed Aussie employment data, while employment change went into negative as a big surprise, the unemployment rate declined to 5.7%. The AUDUSD didn’t reacted too much. In the morning the SNB rate decision and statement didn’t bring anything notable and the same we can say about the BoE. In the afternoon the US data flow came out worse than expected but after the EURUSD spiked up to 1.1280 the traders probably realised that it wasn’t actually that bad as most of the indicators were actually improving compared to last release (Core Retail Sales, PPI, Core PPI, Current account and Philly Fed and Empire State Manuf. Index…). What should cause concern was the Capacity utilisation, which declined… and as Fisher said this is a kind of key data which on the other hand the Fed can’t influence, this could be the next excuse why not to hike in September. FRIDAY supposed to be a quiet day even the US inflation figures had to be released. However the 0.2% increase CPI and 0.3% in Core CPI was a big surprise and the dollar started a steady appreciation with EURUSD down 100 pips EOD. The outcome from EU summit added weight on the EUR. Renzi rejected to hold a joint press conference with Merkel and Holland. As he explained from his point of view there was no progress in the migrant and austerity questions and if anything else is presented, its just “a flight of fantasy”…

The coming week will be everything about the BoJ and Fed but some events may cause tradable moves. One of them is the series of housing data from US. Be prepared however for a light liquidity and hence a little more short term moves. It will be hard to trade these so be careful…

MONDAY

The National Association of Home Builders will release the results of their survey with the index of current and future single-home sales. They survey almost thousand homebuilders in the US monthly and therefore it makes a leading housing market indicator. Above 50 means good conditions in the sector. During 2009 it fell as low as 9 and during the previous boom high was at 72 index points.

TUESDAY

The RBA Monetary meeting minutes and Home price index (last Q unexpectedly fell into negative) will be AUD movers. At the first half of European session some light weight data from Europe are not expected to move the market. Building permits and Housing starts will take most of the spotlight in the afternoon. The first one is in a downtrend and far away from the levels of the last boom, here we need a positive surprise to give some additional boost to the USD. Again this is a leading indicator of the sector and gives a hint about the future building activity. The Housing starts is rather a medium term leading indicator of the economy due to activation of wide variety of jobs. In the evening the GDT price index will be watched by NZD traders and the API Crude stocks can prepare for CAD traders some excitement.

WEDNESDAY

We have three rate decisions this day, starting with BoJ. Before BoJ however the Australian Treasury will release its Mid-year Economic and Fiscal outlook. And even the BoJ will give the main tone in the Asian session, especially for Asian and Australian Currencies, this broad analyses will give us the idea, how the aussie government assess the economy and its own policy. The long awaited BoJ rate decision will take place before the Fed and this caused some speculations about the coordination of these two central banks. However if the BoJ wants to weaken the yen, they need to use Big Guns. We prepared a separate story on this with more details – link here. The following hours will be rather sleepy as everybody will be waiting for the Fed, but don’t forget that the EIA will release Crude oil inventories in the afternoon. As there was a huge decline 2 weeks ago, the question if there will be a significant correction is still alive. The speculations whether the FED will hike or not are skewed towards the no camp. From our point of view however, even the US economy is not in a perfect shape, there are no economic obstacles to hike the rate if we look at the targets of the Fed, Employment is close to its maximum and Core Inflation is well above 2 percent at 2.3% (although Core PCE is Fed inflation indicator). We have to keep in mind that it is also a political decision and the Fed up to now never hiked in the election year. Please check our detailed piece on FOMC – link here. The RBNZ will release his statement and rate decision later in the evening. Well, they have a huge problem over there. The economy is growing 3.6% y/y, capacity utilization at 92%, Household debt to income ratio at all time high but core inflation at only 0.5% and housing market in bubble which is the key obstacle to cut. Anyway the central bank alone can’t solve such a problem and the politicians need to do their job finally by creating longer-term sustainable housing market rules.

THURSDAY

We can call it “The Day After…” with most probably a hangover kind of mood. The afternoon could be important with Draghi speaking at European Systematic Risk Board. We have also Jobless claims and Existing home sales from the US in the afternoon but after the FOMC likely the reaction will be muted.

FRIDAY

It will be a PMI day starting with Flash manufacturing PMI from Japan and Chinese MNI Business sentiment which could be a good leading indicator prior the official PMIs. At the beginning of the European session there will be released the French, German and Eurozone PMIs. We will end the week with Canadian inflation and Retail sales, both sets of data are expected to increase.

  

 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.

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