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What is Programmed in the Forex Calendar for Next Week?

By Razvan Mihai

The week that has just passed did not bring any big surprises for the Forex Market. Monday the European Flashes PMI came above expectations for the services sector but disappointed for the manufacturing sector. Great Britain’s final GDP was in line with expectations. USA’s GDP was expected to rise 2.7%, but it only rose 2.5%. This bad news was equilibrated by a very good Unemployment Claims.

Last week was a lot of speeches from Mario Draghi and from the FOMC members. The ECB president reiterated the Central Bank’s position regarding the monetary policy. While a bigger number of FOMC members that spoke last week were expecting a tapering of the QE program in October, Evans said that he will not be surprised if Federal Reserve will continue not taking any action.

Date

Currency

Forecast

Previous

MonSep 30

NZD

 Building Consents m/m

-0.80%

JPY

 Prelim Industrial Production m/m

-0.20%

3.40%

JPY

 Retail Sales y/y

1.10%

-0.30%

NZD

 ANZ Business Confidence

48.1

AUD

 Private Sector Credit m/m

0.40%

0.40%

CNY

 HSBC Final Manufacturing PMI

51.2

51.2

EUR

 German Retail Sales m/m

0.90%

-1.40%

GBP

 Net Lending to Individuals m/m

1.6B

1.3B

EUR

 CPI Flash Estimate y/y

1.30%

1.30%

CAD

 GDP m/m

0.60%

-0.50%

CAD

 RMPI m/m

3.20%

4.20%

USD

 Chicago PMI

54.5

53

TueOct 1

JPY

 Household Spending y/y

0.20%

0.10%

JPY

 Tankan Manufacturing Index

7

4

JPY

 Tankan Non-Manufacturing Index

14

12

CNY

 Manufacturing PMI

51.6

51

AUD

 Retail Sales m/m

0.30%

0.10%

JPY

 Average Cash Earnings y/y

-0.20%

0.10%

AUD

 Cash Rate

2.50%

2.50%

AUD

 RBA Rate Statement

EUR

 Spanish Manufacturing PMI

51.6

51.1

CHF

 SVME PMI

54.9

54.6

EUR

 Italian Manufacturing PMI

51.2

51.3

EUR

 German Unemployment Change

-5K

7K

GBP

 Manufacturing PMI

57.5

57.2

EUR

 Unemployment Rate

12.10%

12.10%

USD

 ISM Manufacturing PMI

55.3

55.7

WedOct 2

AUD

 HIA New Home Sales m/m

-4.70%

AUD

 Building Approvals m/m

-0.70%

10.80%

AUD

 Trade Balance

-0.45B

-0.77B

EUR

 Spanish Unemployment Change

12.3K

0.0K

GBP

 Halifax HPI m/m

0.60%

0.40%

GBP

 Construction PMI

60.1

59.1

EUR

 German 10-y Bond Auction

2.06|1.3

EUR

 Minimum Bid Rate

0.50%

0.50%

USD

 ADP Non-Farm Employment Change

177K

176K

EUR

 ECB Press Conference

USD

 Crude Oil Inventories

2.6M

USD

 FOMC Member Rosengren Speaks

USD

 Fed Chairman Bernanke Speaks

ThuOct 3

CNY

 Non-Manufacturing PMI

53.9

EUR

 Spanish Services PMI

50.9

50.4

EUR

 Italian Services PMI

49.3

48.8

GBP

 Services PMI

60.4

60.5

EUR

 Retail Sales m/m

0.30%

0.10%

EUR

 French 10-y Bond Auction

EUR

 Spanish 10-y Bond Auction

4.50|2.0

USD

 Unemployment Claims

315K

305K

USD

 ISM Non-Manufacturing PMI

57.2

58.6

USD

 Factory Orders m/m

0.20%

-2.40%

USD

 FOMC Member Powell Speaks

FriOct 4

JPY

 Monetary Policy Statement

EUR

 German PPI m/m

0.10%

-0.10%

JPY

 BOJ Press Conference

USD

 Non-Farm Employment Change

179K

169K

USD

 Unemployment Rate

7.30%

7.30%

USD

 Average Hourly Earnings m/m

0.20%

0.20%

USD

 FOMC Member Dudley Speaks

USD

 FOMC Member Stein Speaks

CAD

 Ivey PMI

52.6

51

The calendar for next week will be full of important economic releases. On Monday Canada will publish its GDP. Tuesday Australia will have its Cash Rate and the monetary policy, from the Euro Area there will be published the Manufacturing PMIs for Italy and Spain and the unemployment rate. Wednesday (this time) the ECB will have its monetary policy and the press conference, and US will report the ADP. Thursday Great Britain will release its retail sales and US will publish its unemployment claims. On Friday BOJ will have its monetary policy and US will release the Non-Farm Employment Change.

All these data will be accompanied by the debt ceiling discussions. We are expecting a week with high volatility on the Forex market. We recommend traders to adjust their strategy for the new conditions and keep an eye on the market news.

Filed Under: Forex Analysis Tagged With: , , , , ,

FOMC About To Change Its Perspectives

By Silvia Gabor

As Willian C. Dudley indicated in his last speech, the FOMC members decided that the time to discuss the tapering of the QE3 program has come. Even if there are still doubts concerning this decision, FOMC members decided that risks of an economic downturn have diminished since the Fed started to run this bold program. Yesterday, Moody’s Investors Service started the positive data string with revising its outlook to stable from negative, decision that has been postponed for 5 years before being implemented.

The decision of the rating agency doesn’t necessarily reflect a real improvement of the economy. Actually, it reflect an impulse given to an economy that recovers at a slower pace that before (the labour market started to recover, but not as expected). Economists keep being positive and expect an improvement in the second half of this year, but is difficult to ignore real facts that make these expectations difficult to be accomplish. Thus, high prices on oil, slow growth in exports and increased mortgage rates represents factors that will most probably lead to a poor growth of the economy. Concerning the outlook for the inflation, the  oppininons are devided. The highly accommodative monetary policy supproters (that now had remained less) believe that the inflation is far from reaching the target, while other oppinions are reflecting big expectations about a suitable inflation in short time. Follow the reports on the U.S.’s economy for the next short term in order to understand if the QE3 will be reduced by the end of this year or by the middle of 2014 but, in all cases, this program will be over soon.

Filed Under: Finance News Tagged With: , , ,

Reaction to the Bank of England’s News

By Silvia Gabor

Considering the stagnation that characterized United Kingdom last year, this year we cannot expect miracles to happen. Thereby, the recovery is expected to be slow, with the inflation staying around the values of 3% (CPI inflation rose at 2.9% in June).

Even if the outlook for the U.K.’s economy becomes increasingly positive from one quarter to another, the wounds left by the under target productivity which in turn caused a decrease in demand and also the inflation above target, determines the economists to be realistic and to give time to the economy in order to recover. Here comes the BoE, saying that is ready to intervene so as to make the economy get up and run again at the fastness registered before 2005. Maintaining its focus on price stability, BoE engaged to keep the highly stimulative monetary policy at the current pace for the next 3 years and to maintain the forward guidance as well, with a stable interest rate at the value of 0.5% until the unemployment rate drops to 7% (currently at 7.8%). Proving caution and responsability, BOE affirmed that is liable to intervene and change any of the above mentioned measures in case the inflation’s value will remain 0.5% above the 2% target for next 2 years and if the actual monetary policy will prove to seriously affect the financial stability or price stability.

Assuming that this context is being maintained, United Kingdom will get back to growth, perspective that boosted the investors’ confidence to buy the British pound today, as it was the top mover. The fact that Governor Mark Carney decided to clearly express the BoE’s plans for the future recovery has inspired even more confidence that this growth will really happen. In fact, is extremely important not to neglect the overall image of the Euro zone economy since it is really significant how it handles the current situation which affects all the member states.

Filed Under: Finance News Tagged With: , , ,

The Australian Dollar, on the Right Path?

By Silvia Gabor

Today, the Australian dollar was one of the top movers as the Central Bank decided to cut again the interest rate, reducing it to an historical low, at 2.5%. Even if this decision makes the Aussie dollar depreciate and therefore makes it less attractive for the investors, it is intended to help the economy get back to growth. Lately, Australians have had a less encouraging economic climate as the country’s economy kept deteriorating. One of the major concerns is the growing unemployment rate which pointed to 5.7% as well as a serious breakdown of the mining industry.

As two of the core industries are the coal and iron ore, a slowdown of one of them is seriously affecting the overall picture. China is at fault for these negative news, as its economy is cooling. If previously they used to invest significant amounts of money in their infrastructure and building factories, increasing the demand of natural resources from Australia, now, the leaders of China would rather not to boost the economy for a while. The slowing down of the mining industry is expected to cause further damages like: increasing the unemployment rate, reducing the investments, affecting the exports and the price of these resources. On the medium term (until the final of 2013), the Australian economy will be closely watched before additional measures will be taken, as they are not excluded.

Filed Under: Finance News Tagged With: , ,

Obama Gives Hope to the Middle Class

By Silvia Gabor

President Obama expressed his satisfaction regarding the evolution of the American economy and highlighted the importance of the wellness of the middle class in order to have the economy running at optimal parameters. Also, the creation of jobs represents the main concern, giving the fact that creating jobs is the nucleus of the American economy. If Americans work hard, every field of the economy will run smoothly. In order to rich this point, reforms are needed and consumers need to understand and accept further changes in this regard.

As the spotlight is the unemployment rate problem, further measures are considered: a revolution of the manufacturing industry, a new tax credit, plans for rebuilding the infrastructure, simplifying of the tax code , simplifying the procedures for investments and starting small businesses, large investments in renewable energy (wind and solar energy), rising the minimum wage.

On the other side of the planet, the interest rate of Australia is likely to be lowered again, the second time this year, as the latest inflation data doesn’t look disturbing (currently 2.4%, dropping from 2.5% in the second quarter of the year). The governor of RBA believes that there is still room for this move and further depreciation of the currency is not a surprise. The consumption still needs to be stimulated and the consumers need to trust their economy enough to start investing in more risky assets. As a measure of fighting the decreasing trend that the Australian economy is following lately, especially because its main exporter China is slowing as well, the Central Bank is willing to boost employment by residential constructions. Today, the building approvals were reported down to -6.9% a considerable drop that seems to darken the overall picture.

Filed Under: Finance News Tagged With: , ,