Moving on from there to the Cable, The GBP lost ground against other currencies as Brexit fears take centre stage again; The PMI’s (PURCHASING MANAGERS INDEX) for Manufacturing and Service fell below expectations in February coming out at 54.6 and 53.3 respectively, partly reflecting consumer caution. The sub-indices of new orders, output and production though showed expansion nevertheless declined from last month showing uncertainty and diminishing confidence. If the UK fails to come up with a smooth transition plan before the Article 50 is triggered on March 31st it could cause a massive decline in the POUND (GBP).
Furthermore the BOC (Bank of Canada) released their rate decision, we anticipated a hawkish comment come in from the Bank Instead we had a dovish comment as the MPC downplayed the CPI result that was above 2% by saying it was transitional and that there was still Material excess capacity in their Economy. The LOONIE, AUSSIE and KIWI is expected to weaken further into the week.
Lastly, the THE HEADLINE INFLATION gauge for the BOJ for the first time since October 2015 traded above 0% meaning we should be expecting further news from Japanese Inflation headlines.
We are starting off the week with the Australian retail sales data for January, although a positive outcome is expected @ 0.4% nevertheless we may see a feed through of consumer lag, after the pre-festive season shopping.
We kick-start Tuesday with the RBA rate decision, though we have improving data coming in from the AUSSIE and we also expect the GOVERNOR PHILLIP LOWE to be upbeat about the economy especially since Q4 GDP came out at 1.1%, nevertheless because Q4 inflation fell below expectations we expect a neutral stance almost bordering on dovish. Implying rather than appreciate we may see a sell-off on the AUSSIE.
CAD: (2.30PM) TRADE BALANCE;
Although excessive economic slack was cited in the last BOC statement all the-same there’s been a positive growth trend of surplus in the Trade Balance since November, we may see a feed through of the Festivities into this data as well. Positive outcome expected.
NZD: (TENTATIVE) GDT (GLOBAL DAIRY TRADE) PRICE INDEX;
Most times this data is released at about 3.00PM, this data is like crude Oil is to Nigeria, meaning it’s so important to the NEWZELAND economy, it’s a bi-Monthly data. We have been seeing an uptrend in this data underscoring global economic growth, even though we atimes have some negative blips in this data nevertheless we are seeing overall growth, a positive data outcome should cause the kiwi to strengthen.
CAD: (4.00PM) IVEY PMI;
The outcome of this data can be a pointer to the employment data come Friday, a critical look at the employment sub-index of the IVEY PMI can foretell the headline employment data release on Friday.
The outcome of this data will have a spill over effect on Australia, seeing that Aussie benefits more from China Imports than any other economy.
GBP: (1.30PM) ANNUAL BUDGET RELEASE;
Insight into likely government spending would have a strong impact on the UK considering the recent exit from EUROPE, Investors would be looking out for Potential government plan to salvage the UK from going into possible recession.
USD: (2.15PM) ADP NON-FARM EMPLOYMENT CHANGE;
The ADP though not highly correlated with the Governments NFP release, is the closest thing that can give an insight into the Fridays’ NFP release. The outcome of this data would rock the market considering the recent hint by the FED reserve bank Chairlady for a possible hike in March.
CAD: (2.30PM) LABOUR PRODUCTIVITY;
In the BOC statement last week, the MPC cited material economic slack in CANADA, this data will give us a heads up as to the views of the Governing body, and an improved data would mean that the slack is beginning to reduce.
USOIL: (4.30PM) CRUDE OIL INVENTORIES;
The Crude Oil inventories though still positive has dropped in the big numbers that was released in the last 2 months, we will be looking out for this data to confirm that stock piles are declining, else it could mean a temporal set-back and we could see a rebound in US Crude Oil stockpiles.
THURSDAY: CNY: (2.30AM) CPI y/y;
We have been seeing an improvement in Chinese inflation figures, we look out for continuity to further strengthening the case for tightening of Policies in China.
EUR: (1.45PM) MINIMUM BID RATE;
The Interest rate decision is expected to remain same, furthermore we expect to see upbeat comments come in from the ECB nevertheless the Governor has downplayed rising inflation figures and declared his interest in Core CPI as his benchmark for growth in inflation and consumer demand, so we may see a sell-off on the EURO.
EUR: (2.30PM) ECB PRESS CONFERENCE;
A neutral stance is expected, the press conference may lead to whipsaw or further downward pressure on the EURO relative to its level technically.
FRIDAY: GBP: (10.30AM) MANUFACTURING PRODUCTION;
The Brexit fears is expected to creep into Economic releases coming in from the UK, therefore we expect the outcome to be either same as forecasted or worse. Nevertheless it’s believed that however this data comes out it should have a negative impact on the cable.
CAD: (2.30PM) EMPLOYMENT DATA;
The outcome of this data is important because it will help us see if material slack is reducing in the CANADIAN Economy.
USD: (2.30PM) NON-FARM PAYROLL;
A Strong outcome is expected in this data release, with the ISM Manufacturing and ISM Non-Manufacturing at all-time highs, the Employment sub-index for Manufacturing though falling short by 1.9% is still giving a strong case for a positive outcome,