Weekly review for 24 to 30 October 2016 by Liteforex
As we already know the ECB did not change interest rates and ECB President Mario Draghi said that the ECB may extend its asset purchase program, which is now 80 billion euro. Since the beginning of the month the Euro has dropped significantly in the market. The pair EUR/USD fell by over 350 points, or 40%.
Active sales in the pair EUR/USD, which is most traded pair in the world, has led to the rise in the USD against major currencies. According to CME Group probability of the rate hike in the USA in December, is 74%, which also contributes to the rise in the USD.
Recent comments of the Fed officials also indicate that the Fed can raise interest rates before the end of this year.
The news and macro-economic statistics of this week are as follows:
10:00 (GMT+3) – Markit business activity index in the manufacturing and the services sectors of Germany (purchasing managers’ index (PMI)) for October. PMI is an important indicator of business conditions and state of economy. If the index exceeds 50, it is a positive factor for EUR.
11:00 – Markit PMI index in the manufacturing and services sectors of Eurozone in October.
15:30 – Chicago Fed’s index of national activity, which estimates economic activity and inflation risks.
16:05 – Speeches by the US Fed representatives William Dudley and James Bullard.
16:45 – PMI in the U.S. manufacturing sector for October. The index is an important indicator of the state of the U.S. economy as a whole. A month ago the index was at the level of 51.5.
18:15 – Speech of the head of the SNB Thomas Jordan. His speech usually increases volatility in the CHF, as traders await indications of the future plans for monetary policy by the SNB. The Central Bank has consistently adheres to the soft monetary policy in the country and believes that the national currency is overvalued. The Bank reserves the right to intervene into the currency market, if the rate of the national currency begins to rise sharply. The SNB never notifies about interventions neither before nor after the event. Recently, the franc has partly lost the status of safe haven currency. And the threat of intervention hinders the rise in franc.
20:30 – Speech of the Fed representative Charles Evans.
21:00 – Speech of the Fed representative Jerome Powell. Volatility in the financial markets can increase at this time.
11:00 – IFO indices of business optimism and economic expectations in Germany for October. These indices are leading indicators of current conditions and expectations in the business environment of Germany. The rise in the indices usually triggers bullish trend in the EUR.
16:00 – Housing price index in USA for August.
17:00 – US consumer confidence index for October. The forecast is 102.0.
17:30 – Speech by the head of the Bank of England Mark Carney. It is possible that after Brexit British economic growth will slow down and the deficit of the balance of payment will increase. On the other hand, economic indicators in the UK are improving and the British economy is positive. It is not clear what actions will the Bank of England undertake in future. Market participants expect that Mark Carney will shed light on this issue. Volatility during his speeches usually rises sharply.
18:30 – Speech by the ECB Governor, Mario Draghi. Usually volatility in the financial markets increases after his comments, which follows after the meetings of the ECB on monetary policy. Other speeches, as a rule, cause less volatility. However, in any case, it is necessary to be very careful when trading in the currency market.
23:30 – American Petroleum Institute (API) will issue report on changes to the oil stocks in the USA for last week.
03:30 – Australian major inflation indices for Q3 (consumer price index and index of core inflation). These indices have strong impact on the interest rate decision by RBA. High level in the indices is a positive factor for the AUD. The forecast is 1.1% on monthly basis and 1.7% on the annual basis.
09:00 – German consumer confidence index for November.
15:30 – US trade balance for September. The increase in exports and the fall in imports will show the rise in surplus, which is a positive factor for the USD.
16:45 – Markit US composite business activity index and business activity index in the service sector for October.
17:00 – New home sales in the US in September.
17:30 – Weekly report of the US Department of Energy on stocks of oil and oil products.
00:45 – New Zealand’s data on export/import and trade balance for September.
09:00 – UBS consumption index of Switzerland for September. This index consists of five components: sales of new cars, activity level in the retail sector, number of nights booked in hotels of Switzerland, consumer confidence level and the volume of credit card transactions.
11:30 – British preliminary GDP for Q3. The rise in GDP is a positive factor for the GBP. British GDP remains one of the highest in the world on annual basis. It is expected that index will rise by 2.1% on the annual basis. The leading sector of the British economy is the service sector (75% of GDP), financial services account for 27.7 % of GDP. The country is one of the world's financial centers, providing 10% of the world’s export of services (banking, insurance, brokerage, advisory, software). The drop in GDP may force the Bank of England to make a decision to lower interest rates in the UK. In this case pressure on the pound will increase. The main factors that can force the Bank of England to lower the rate is decline in GDP and labour market and low inflation in the UK.
15:30 – U.S. Department of labor will issue weekly report on the number of primary requests for unemployment benefits. If the data increases the forecast, it will be a negative factor for the USD. The previous index was at the level of 260 000.
15:30 – Orders for durable goods in the U.S. in September. The forecast is +1.0%.
17:00 – report on pending home sales in the US in September.
02:30 – Japanese macro-economic statistics including consumer price index for October, unemployment rate in September (forecast is 3.1%), household spending for September (forecast is 3.0%). It is expected that volatility will sharply increase in the market. 03:00 – RBNZ index of business optimism for October. The increase in the indicator will show the increase in the business investments, which has a positive effect on economic growth in the country.
04:00 – New home sales in Australia in October. The indicator assesses the housing market. The increase in sales may keep the RBA from lowering interest rates; therefore it is a positive factor for AUD and Vice versa.
04:30 – Producer price index of Australia for Q3.
09:45 – French GDP for Q3.
10:00 – KOF index of leading indicators in Switzerland for October.
10:00 – Spanish GDP for Q3.
12:00 – Consumer confidence index, indices of business optimism and sentiment in Eurozone for October.
15:00 – Preliminary consumer price index of Germany for October.
15:30 – US annual GDP in Q3. The forecast is +2.7%. US GDP price index for Q3. This is an inflation indicator affecting interest rate decision. The forecast is +1.3%. Price index of personal consumption expenditures and the main index of personal consumption expenditures in the U.S. in Q3, which are important indicators of inflation. Forecast +1.3% and +1.6%, respectively.
20:00 – Oilfield services company Baker Hughes report on the number of active drilling rigs in the USA, which is an important indicator of the state of the US oil sector, which has a significant impact on the oil prices. Currently, the number of active drilling rigs in the USA is 443.