Despite the Dollar strength concerns raised by The Trump led administration, we saw a stellar performance from the buck towards the end of the week.
In an unexpected move, President Trump while having a meeting with stakeholders in the aviation industry promised to visit on the tax matter in the next two to three weeks, it wasn’t clear if he was specifying the tax levies in the Aviation Sector or The Economy as a whole, nevertheless the market interpreted it as being for the whole economy.
It will be re-called that Donald Trump, while campaigning for the Elections promised 3 major things: Tax Cuts; Deregulation and Infrastructural Spending, and all these are inflammatory policies that would cause the FEDZ to raise rates faster than expected to curb inflationary pressures.
Last week, the Commodity currencies took centre stage as the RBA and RBNZ released their MPC report, the RBA removed dovish comments from the MPC report and cited improving growth conditions this made the AUSSIE appreciate against the greenback. Going to the RBNZ, the Governor Greame Wheeler; maintained his dovish stance against improving inflation and Inflation expectations, the kiwi dropped about 150 points to end the week at the December 2005 highs.
The LOONIE, appreciated against the buck with the release of a stellar employment change and the unemployment rate dropping by 0.1 points at 6.8%.
Going into the new week, we will be looking at growth data that is the quarterly GDP for the EURO area and JAPAN and CPI data for CHINA, UK and the US, also the retail sales figure for New-Zealand, the UK and the US.
JPY: (12.50AM) PRELIM GDP q/q; This would be the first data for the week beginning and could set the tone for Volatility for the week, The Japanese economy will release their growth data for Q4, A better than expected data should see the Yen strengthen, howbeit temporarily seeing the over-all trend still remains up.
CNY: (2.30AM) CPI y/y; The first Inflation data from China showed a pick-up in inflation, we want to know if it’s a temporal spike or if inflation has come to stay, we should know from the release of this data. It could lead to talks of tightening from Beijing.
EUR: (8.00AM) GERMAN PRELIM GDP q/q; this data is forecasted to come in at 0.5%, we already have a clue for this outcome, Since the Single-Bloc economy has released its Q4 GDP and it came out better than forecasted, we should see either a better than forecasted outcome or exactly as expected
GBP: (10.30AM) CPI y/y; The CPI data is expected to be better than expected underscoring the weak exchange rate and rising crude oil prices, we should be poised for a possible buy on this one.
EUR: (8.00AM) EUR FLASH GDP q/q; A figure has been released already, that’s the Prelim GDP, most times we really don’t get a deviation, therefore we expect a muted impact from this data.
USD: (4.00PM) FED CHAIRLADY SPEAKS; Expectations is positive as she stands to give her testimony on the Semi-annual Monetary policy report before the Senate Banking Committee. Expect dollar strength
GBP: (10.30AM) CLAIMANT COUNT CHANGE/ AVERAGE EARNINGS INDEX; As Brexit fears increases and as we get nearer to triggering article 50, its expected that Companies will become wary of employing until the impact of the exit become clearer, in this light we may see a disappointing data release, nevertheless, besides the employment sub-index for Service PMI falling to a 5 month low the employment sub-index of both construction and Manufacturing held up nicely, even staying at the post-brexit high.
CAD: (2.30PM) MANUFACTURING SALES; Reporting For December, we should see the spill-over effect of the yuletide season flow into the outcome of this data, Upbeat data expected.
USD: (2.30PM) CPI y/y; with headline inflation returning to the target inflation range, the case for series of rate hikes this year becomes stronger, we will look out for this outcome to determine what next from the FEDZ, I expect a positive outcome reflecting basically higher energy prices.
USOIL/WTI: (4.00PM) CRUDE OIL INVENTORIES; Crude oil inventories is at an all-time high at 13.8M bpd, the API (AMERICAN PETROLEUM INSTITUTE) report a day earlier can be a pointer as to how this data will look like.
AUD: (1.30AM) EMPLOYMENT DATA; Last month’s data showed an improvement in full time jobs, this shows an improving Private sector confidence in the expanding economy as Private organisations are creating full time Jobs, probably due to rising commodity prices and improving global growth outlook. With a strong ANZ Job Advert at 4.0% and improving Employment sub-index in both the Service and Manufacturing PMI, we should see a good outcome in this release.
EUR: (1.30PM) ECB MONETARY POLICY ACCOUNTS; In this concise report we will get to see why the Governor of ECB Mario Draghi downplayed the rising inflation in the Euro-area, this may make the EURO weaken.
NZD: (10.45PM) RETAIL SALES q/q; This quarterly data has a penchant for moving the market, a worse than expected outcome will see the kiwi sell-off otherwise we should see an appreciation in the Kiwi.
GBP: (10.30AM) RETAIL SALES m/m; We will look out for this data outcome as the week comes to an end, this will be the only risk even data on Friday.
That’s all folks, as always stay safe out there.