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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Sept 20, 2016 - New Zealand and the next challenge for its Central bank

We are heading towards the super Wednesday which will be the rate decision day for BoJ, Fed and RBNZ. About the first two there were lots of analyses and opinions but RBNZ didn`t get that much of a spot light due to lower global impact. The story is however quite interesting…

The Success story

The Kiwi had a great year so far when following the failure of a double top formation in January the NZDUSD rallied more than 15%... this would be a nice gain even for a blue chip. The economy is in great conditions with above average growth rate at 3.6%, employment close to maximums with full time employment skyrocketing while part time employment also growing steadily. The government budget was in surplus equalling 0.2% of the GDP in the fiscal year 2014/2015.

The problems

The housing market is struggling with insufficient stocks of available houses and house prices are rising 6% p.a. based on seasonally adjusted data of REINZ. The Real Estate Institute of New Zealand (REINZ) spokesperson Bryan Thomson said recently, “The underlying trends indicate that the struggle for stock is the single biggest factor driving market behaviour and price expectations across the country, as we await Spring listings“. Simply the economy seems to be too strong to cut the rate. But then why did the RBNZ the cut the benchmark rate in August.

The problems to solve are the inflation which is stubbornly low and the deficit of the Current account which is more than 3% of GDP but well compensated by capital inflows. The Core CPI is below 2% since late 2011 however since 2015 it’s in a rising trend. Actually this rising trend of inflation is the main reason some analyst are saying there is no need for further rate cut even RBNZ said they will continue with the easing. The other reason is the competitiveness of the economy due to strong NZD. One of the key areas are dairy products which are one of the key export products of the country.  With a strong currency one of the key industries of the country can get into big trouble which may have long term negative consequences on the country.

Conclusion

However the economy seems to be simply too strong to cut the rates at this point without risking an overshooting of inflation targets and further inflating the housing bubble. There are other tools from fiscal policy to support key industries which could be used. However in the current sick policy environment on global level the politicians are reluctant to act as necessary.

We strongly believe there will be no cut this time but due to the strong dairy lobby we will see further cut later this year or at the beginning of next year. For comparison please find below some macro data by country. The red highlight means long term unsustainable, the yellow means OK short/medium term and the green means long term positive.

Don´t forget to watch you 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: landoftradingATgmail.com

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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.

All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Weekly Macro Overview 32W

This week’s Macro Overview is a little shorter due to holidays. We saw 2 rate cuts in the Commonwealth last week, both well expected. The first came from Royal Bank of Australia on Tuesday and the later from the Bank of England on Thursday. Traders were also watching the US employment data in the second half of the week, which were in general better than expected pushing the USD higher.

Monday:

It was a PMI day but the traders mostly didn’t get what they were expecting. The Chinese numbers were rather mixed and the Spanish, UK and US numbers were worse than expected.

Tuesday:

Tuesday early morning the RBA cut its benchmark rate by 25 bps. After the initial depreciation of AUD the traders reversed the direction as the wording of the Rate Statement suggested this could be the end of the easing. The AUDUSD rallied above 0.7600. Later in the morning the UK construction sector PMI was better than expected. In the afternoon the US PCE Price Index came out at 0.1% vs previous 0.2% and the unchanged Personal Spending couldn’t help the dollar which reached 1.1200.

Wednesday:

After the boring morning with only an unchanged UK services PMI we had ADP employment from the US. The improving data (also upward revision of the last figures) gave us a hint that the NFP Friday won’t be as low as expected. The dollar started the appreciation and this was probably the key moment of the week however, the Friday’s confirmation was still needed to let the dollar bulls run.

Thursday:

The worse than expected Australian Retail Sales didn’t really stop the bulls but managed to slow down the momentum after the Tuesday disappointing Rate Statement. The BoE cut the key rate as expected by 25 bps, also increasing the Asset purchase by GBP 60 bln, raising the questions whether this step wasn’t premature. The GBPUSD fell 200 bps in reaction to Carney’s speech half an hour later. In the afternoon, the US jobless claims came out more or less in-line with expectations and with muted reaction prior to US NFPs on Friday.

Friday:

After a sleepy morning the awaited job data caused the USD strengthening around 100 points against most of its peers despite the unchanged Unemployment Rate. The NFPs were worse than the previous (which was revised to the upside) but was much better than expected. Also the Average Earnings improved by 0.3% vs. forecasted 0.2% and previous 0.1%, what creates a better ground for an increase of the inflation.

Next week

Monday:

The only thing worth to watch is the Chinese trade balance, but not much of a change is expected. Maybe later the Canadian housing data could give some hint which direction the loonie will take.

Tuesday:

During Tokyo session, the Chinese inflation data can spur some volatility and later in the European session, the UK manufacturing will give us some hint, regarding the impact of the Brexit vote to the British economy. In the afternoon keep an eye on US job market data.

Wednesday:

The JOLTS job openings from the US will be released in the afternoon. They are expected to support the last week’s improvement in NFPs. The kiwi traders should be vigilant in the evening, as RBNZ may follow the RBA and cut the benchmark rate.

Thursday:

The regular US jobless claims and the New Zealand retail sales could be the only important data but don’t expect too much volatility around unless there is a huge surprise.

Friday:

Early in the morning, the Chinese Industrial production will be released with no change expected. We have also flash GDP from Europe later in the morning (Eurozone and Germany) which may have impact mainly on EUR crosses. In the afternoon, the Retail sales data and PPI are expected to be released in the US (expecting all worse than the previous set of data). However, given the rejection of the resistance in EURUSD (former support of the uptrend line) last week, a positive outcome could give a nice boost to the dollar bulls.

Have a successful week and don’t forget:

Watch you risk and be consistent in your trading!

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: landoftradingATgmail.com

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