PFXS news for week ahead

Since we do not expect any major releases during Monday, let’s immediately talk about highlights on Tuesday.

Tuesday – China is to release its Industrial Production which is expected to accelerate to +6.3% from previous reading of +6.0%. Also, we get China’s Retail Sales growth rate forecasted to remain on hold at +9.0%. As we already know, China announced new tariffs on US products and tripled its products. On other side, on European morning, we can expect the German GDP expected to move higher to +2.6% since previous +1.6%. We can also get the German CPI rate forecasted to remain on hold at +0.3%. Then we get the UK’s Unemployment rate for June who is expected to remain on hold at +4.2%. This highlight can affect to create volatility for GBP pairs. British Pound has weakened because of Brexit events and if this “No Brexit Deal” is confirmed we can expect GBP dropping even further. From the Euro-zone we can get the German ZEW Economic sentiment expected to drop from previous read of -24.7 to -19.1. (This happening can be very important and good news for EUR).

Wednesday – We get Australia’s Wage Price Index. The figure is forecasted to advance to +0.6% from previous +0.5% (Asian session). If this news happens, we could see the AUD and NZD strengthening. The main reasons behind a possible strengthening of the Aussie and the Kiwi, would be Australia’s wage growth continues to be low and stable across most industries in Australia. In statement in August 2018 we see a possible strengthening of the Aussie and the Kiwi, would be Australia’s wage growth continues to be low and stable across most industries in Australia. The UK Inflation data is to be released. The CPI figure is forecasted to increase from previous +2.4% to 2.5% (European session). The monthly figure is forecasted to drop to -0.1% from previous +0.4%. Also, we get the American Core Retail sales and the Retail sales both for July. The Core Retail sales are expected to remain on hold at +0.4%, and the Retail sales are expected to decelerate to +0.3% (US session). If the outcome is released as forecasted we could see a weakening of the USD. On the other side, we get UK Retail Sales which are expected to accelerate to +0.2% from previous reading of -0.5% (European session).

Thursday – We get Australia’s Unemployment Rate. The rate is widely expected to remain At +5.4% (Asian session). After that, we get the US Housing Starts for July. The indicator is expected to increase to 1.250 M (American session). The USD seemed to regaining some strength it lost at the beginning of the week. USD is superior over emerging market currencies! (Even we have actual trade war).

Friday – We can get Canadian Core CPI rate for July. Expected level is 0.1%.

PFXS news for week ahead

  • On Monday, we get Australia’s retail sales growth rate for April.
  • On Tuesday, Australia’s Current Account balance for the first quarter of 2018 and UK’s services PMI for May could move the market, but the star of the day should be RBA’s interest rate decision.
  • On Wednesday, the release of Australia’s GDP growth rate for the first quarter of 2018, the US and Canada’s trade balance figures for April could form the main themes of discussion.
  • On Thursday, Australia’s trade balance figure for April and Eurozone’s GDP growth rate for Q1 will be released.
  • On Friday, Japan’s current account for April and GDP growth rate for the first quarter of 2018, China’s trade balance figure for May, as well as Canada’s employment data for May could get the market’s attention.
  • On Saturday, China’s inflation data could keep markets on overtime.

 

On Monday, during the Asian session we get Australia’s retail sales growth rate for April. The rate is forecasted to accelerate and reach +0.2% month on month compared to previous reading of 0.0% mom. Should the actual growth rate meet the forecast, we could see the Aussie strengthening as such an acceleration could at least indirectly, support household consumption which was one of RBA’s worries in the latest accompanying statement.

On Tuesday, during the Asian session we get Australia’s Current account balance for the first quarter of 2018. The figure is forecasted to be a narrowed deficit reaching as low as -9.95 billion AUD compared to previous month’s reading of -14 billion AUD. Should the actual figure meet the forecast we could see the AUD strengthening as it would be the first narrowing of the deficit after four consecutive times of widening of the deficit in previous months. Later on, in the Asian session we get RBA’s interest rate decision. The bank is widely expected to remain on hold at +1.50% as AUD Overnight Indexed Swaps, currently, imply a probability for the bank to remain on hold of 99.65%. Hence the market’s focus could turn to the accompanying statement. Considering the unemployment rate rising and reaching 5.6%, despite the banks predictions in the latest accompanying statement and the wage price index growth rate remaining at low levels, it could be the case that the bank will issue an accompanying statement with a rather dovish tone. On the other side a possible improvement of the GDP growth rate and the retail sales growth rate could provide a tone of optimism. Overall, we could see the market reacting negatively to the interest rate decision, weakening the Aussie or have a rather muted reaction the announcement, as it did at the previous decision. In the European session we get UK’s Services PMI for May. The indicator is forecasted to rise and reach 53.0 compared to previous reading of 52.8. Should the actual reading meet the forecast we could see the GBP strengthening as the increase in the indicator’s reading could imply an improvement of UK’s largest economy sector, especially in the turmoil of the Brexit negotiations.

 

On Wednesday, during the Asian morning we get Australia’s GDP growth rate for the first quarter of 2018. The rate is forecasted to accelerate to +0.8% quarter on quarter compared to previous reading of +0.4% qoq. Should the actual reading meet the forecast we could see the Aussie strengthening at the good news as an accelerated GDP growth rate could imply that the Australian economy is growing at a faster pace. In the American session the US trade balance figure for April is due out. The figure is forecasted to be a widened deficit of -51.0 B USD compared to previous reading of -49.0 B USD. Should the actual reading meet the forecast we could see the USD weakening as a widening of the deficit could spoil the nice picture by last month’s god figure.

Also the figure could get additional attention amid the trade disputes the US is currently in. At the same time, Canada’s trade balance figure is to be released. The figure is forecasted to be a narrowed deficit of -2.24 B CAD compared to previous deficit of -4.14B CAD.  A possible cutting in half of the Canadian trade deficit, could provide some support for the Loonie.

 

On Thursday, during the Asian session we get Australia’s trade balance figure for April. The figure is forecasted to be a lower surplus of +1.000 B AUD compared to previous figure of +1.527 B AUD. Should the actual figures meet the forecast we could see the Aussie weakening, as a reduced by almost a third surplus could imply a slowing down of the Australian economy. In the European session we get Eurozone’s GDP growth rate for the first quarter of 2018. The rate is forecasted to remain unchanged at +0.4% qoq compared to the respective preliminary release.

Should the actual rate meet the forecast we could see the common currency weakening as the rate remains at rather low levels compared to previous quarters.

On Friday, during the Asian morning we get Japan’s current account balance for April. The figure is forecasted to drop, reaching as low as 2.0965 trillion JPY compared to previous month’s reading of 3.1223 trillion JPY. If the forecast is realized we could see the JPY weakening as a slashing of the surplus by nearly a third, could have a negative effect on the intensely export oriented economy. At the same time, we get Japan’s GDP growth rate for the first quarter of 2018. The rate is forecasted to accelerate and reach +0.2% qoq compared to previous reading of -0.2% qoq. Should the actual reading meet the forecast we could see the JPY strengthening as the growth rate has a substantial acceleration and gets out of the red prints.

Later on, in the Asian session we get China’s trade balance figure for May, which is forecasted to be a reduced surplus of 24.70 billion USD compared to previous reading of 28.78 billion USD. Should the actual reading meet the forecast we could see the Aussie and the Kiwi weakening as the China’s imports are forecasted to decelerate to +16.0% compared to previous reading of 21.5% and the Australian and New Zealand economy are heavily exporting to China. In the American session, we get Canada’s employment data for May. The employment change figure is forecasted to rise and reach +17k compared to previous reading of -1.1k and the unemployment rate is forecasted to remain unchanged at 5.8%. Should the actual readings meet the forecast we could see the CAD strengthening as despite the unemployment rate remaining unchanged, the employment change increases and changes to a positive sign, implying a possibility for a tightening labour market. Also the unemployment rate, despite being unchanged it remains at rather low levels for the Canadian economy.

On Saturday, during the Asian session we get China’s CPI and PPI rate for May. Both rates are forecasted to tick up. Specifically, the CPI rate is set to reach +1.9% yoy compared to previous reading of +1.8% yoy and the PPI rate to reach +3.5%mom compared to previous reading of +3.4% mom. The upticks could provide some support on AUD and NZD at the Monday opening, as it could signal positive messages for the Chinese economy and consecutively for the two prementioned currencies, which their respective economies have tight links with the Chinese economy.

RBA remains on hold

RBA decided to remain on hold as it was widely expected by the market and kept its interest rate at +1.50%. The accompanying statement had an upbeat tone with comments for inflation being likely to remain low for some time, a gradual pick up of inflation is expected and it should reach a bit above +2.0% in 2018. The statement also spotted as continuing source of uncertainty the outlook for household consumption. Specifically, it mentioned that household incomes are growing slowly and debt levels are high. AUD/USD was practically not influenced by the RBA decision indicative of the neutral effect as the market was expecting the outcome.

AUD/USD began to trade yesterday in a sideways manner with a bullish tone, however dropped heavily as the later on during the US session breaking the 0.790 support level. The pair could continue to trade with some bearish tone, however we see the case for the pair to stabilize somewhat later on as the Relative strength index is already below 30, possibly signaling an overcrowded short position. Should the bears continue to have the upper hand we could see it breaking the 0.7782 support level and aim for the 0.7683 support barrier. On the other hand should the bulls take the driver’s seat, we could see them drive the pair beyond the 0.7900 resistance level, aiming for the 0.8000 resistance hurdle.