15th January 2018 - 19th January 2018
On Monday, economic data out of the Eurozone is on the lighter side, limited to the Eurozone’s November trade balance. Following last week’s 1.44% rally, the EUR gave up $1.22 levels early in the Asian session this morning before rebounding strongly ahead of the Eurozone’s trade figures due out later this morning. Following Germany’s trade data, the Eurozone’s trade surplus is forecasted to widen from €18.9bn to €22.4bn in November, supporting the market’s sentiment towards the Eurozone economy and global demand for European goods. Any negative news could weigh on the EUR, though the markets will likely wait until more concrete details emerge. On Tuesday, as Britain stands out among developed countries by suffering from elevated inflation. Year over year CPI surpassed the 3% threshold in the reading for November, above the 1-3% range. Rising inflation has already triggered a rate hike in November, but the BOE seems reluctant to make additional tightening given the uncertainty resulting from Brexit and the slowing economy. Another rise in this important report that concludes 2017 may force the BOE to rethink. CPI is forecast to tick down to 3% y/y. Core CPI stood at 2.7% and is now predicted to slip to 2.6%. The Retail Price Index was higher at 3.9% with no change expected now. PPI Input rose by 1.8% and a smaller rise of 0.8% is on the cards. On Wednesday, Consumer Price Index from Germany will be released, followed by US reports that will certainly move the market with the Member Mester Speech, the highlight for this day will be the Bank of Canada releases the monetary policy report on a quarterly basis. It provides insight into inflation and the economic conditions in the view of the Bank. These are the key factors that would shape the monetary policy in the future and influence their decisions on interest rates. The Governor of the Bank of Canada generally holds a press conference for discussing the contents of the report approximately 45 minutes after the report is released. There are two parts to the press conference. In the first part, the Governor reads out a prepared statement. The second part is answering press questions. As the questions can lead to answers that are not scripted, heavy market volatility can be expected. The Bank of Canada releases the rate statement eight times in a year. The central bank uses it as a tool for communicating with investors as regards the monetary policy. In addition to containing the outcome of the members’ decision on interest rates, it also provides a commentary on the economic conditions that led to the decision. More importantly, the statement discusses the country’s economic outlook and provides clues on future outcomes. On Thursday, Housing Balance from UK will be released that shows the strength of the UK housing market, which can be considered as the economy as a whole, as the housing market is sensitive to the business cycle followed by the president of the German Bundesbank will make another public appearance. We know that he is a hawk, so making dovish remarks could have a bigger impact than hawkish ones. Nevertheless, his words could move markets. Lastly, Jobless Claims from US will be released the number of individuals who are unemployed and are currently receiving unemployment benefits. It presents the strength in the labor market. A rise in this indicator has negative implications for consumer spending which discourage economic growth. Both building permits and housing starts stood an annualized level of 1.3 million in November, both beating expectations and reaching new highs. The positive data helped the greenback at the time. Things are not always this way: at times, one figure came out above predictions while the other disappointed, making no market impact. Will we see new highs now? If the figures offset each other, the dollar could move by the other two noteworthy numbers released at the same time: jobless claims and the Philly Fed manufacturing index, but the housing indicators are of higher importance. Building permits are projected to slide to 1.29 million while housing starts are predicted to drop to 1.27 million units annualized. On Friday, as Producer price Index missed in November by rising by only 0.1%, breaking a streak of figures coming out ahead of forecasts. Inflation in the pipeline, as reflected by PPI, still seems stronger than CPI. A rise of 0.2% is expected. In the U.K., retail sales rose by 1.1 percent on a month-over-month basis in November last year after the reading for the prior month was revised upward to represent an increase of 0.5 percent. The reading for the month beat analysts’ expectation for 0.4 percent gain. This is the highest increase in retail sales ever since April last year. Retail sales were mainly driven by higher sales at textile, clothing and footwear stores; household goods stores; other stores; and food stores. Excluding automotive fuel, the increase in retail trade was 1.2 percent. This was also above analysts’ expectation of 0.5 percent.Monday
Tuesday
Wednesday
Thursday
Friday
