Date : 19th MAY 2016.
MACRO EVENTS & NEWS OF 19th MAY 2016.
FX News Today
European Outlook: Global stock markets are pressured after the Fed minutes seemed to back June rate hike backs, with Asian stock markets mostly lower, and U.S. and U.K. stock futures also in the red. Yields are rising as the end to ever expanding monetary policy accommodation is coming into sight and the front end WTI future has fallen back below USD 48 per barrel Bund futures already extended losses in after hour trade yesterday and are likely to remain under pressure. UK markets underperformed yesterday as reduced Brexit bets boosted Sterling, and while GBP has eased somewhat it remains above 1.46 against the USD. The European calendar today as Eurozone current account and U.K. retail sales and the CBI industrial trends survey.
FOMC minutes showed a June hike was “likely”: If data improved as expected. Officials wanted to keep options open for June. But there was a range of views on whether the economic numbers would be adequate to support a tightening next month. Consistent with the April 27 policy statement, many officials noted global risks needed to be closely monitored, with some noting specific worries over China’s currency and Brexit. However, “many” officials continued to see downside risks to the outlook, even as “some” saw global risks as having diminished. Meanwhile, a “few” officials (the more hawkish members) were talking about an April hike. The minutes certainly do set the stage for a tightening next month, though of course data will have to cooperate. Our call for a June hike is supported by the minutes to the April 26, 27 policy meeting.
Australia Adds Jobs: More new jobs were added to the Australian economy last month with the unemployment level remaining at 30 month lows. The unemployment rate remained unchanged at 5.7% (expectations increase to 5.8%); Employment rose 10,800 for March; Full-time jobs fell by 9,300; part-time employment rose by 20,200; Participation rate, a measure of labor force as a share of the population, dropped to 64.8%. It shows that low interest rates are helping sectors such as construction and tourism, however the fall in participation rates and the rise of part-time workers shows suggests only tepid growth.
BoJ seen expanding stimulus by July: According to the consensus view from the latest Reuters survey. 19 of the 22 respondents expect a move by July, with 7 anticipating a move in June and 12 predicting that the stimulus boost will come at the policy meeting in July, which would coincide with BoJ economic forecast updates. The three remaining respondents opted for the two-day meeting ending on Nov-1. 80% of respondents expect a combination of cutting negative rates further and upping the QQE program (two of PM Abe’s three arrows economic-revival plan), although the prevailing -0.1% rate isn’t expected to be touched until Q4. Note that the survey was conducted over the six days to yesterday, thereby missing today’s initial release of Q1 GDP data out of Japan, which smashed expectations at +1.7% q/q, well up on the median forecast for a 0.3% rise. On this, however, caveats apply. As the FT points out, first-estimate GDP data are apt for potentially big revisions in Japan. The report also highlighted that falling investment chopped 0.9 of a percentage point of GDP in Q1, which is seem largely as a consequence of the impact of yen strength on major Japanese businesses. This should maintain Japanese policymakers’ desire to weaken the yen, though don’t expect much jawboning on this until the upcoming G7 meetings have come and gone.
Main Macro Events Today
US Philly Fed Manufacturing Index: May Philly Fed is out on Thursday and should reveal a headline to increase to 5.0 (median 3.0) from -1.6 in April and 12.4 in March. The already released Empire State Index for May posted a dramatic drop to -9.0 from 9.6 which could spell downside risk to the Philly Fed release. However, we expect some improvement in broad producer sentiment in May with the ISM-adjusted average of all measures ticking up to 52 from 51 last month and 53 in March.
US Initial Jobless: Claims data for the week of May 14th are out today and should reveal a 297k (median 275k) headline following a 294k headline last week and 274k in the week prior. There is a chance that the big jump in claims last week was the result of spring break in NY public schools so there could be an unwind this week. We expect claims to average 275k in May from 259k in April and 264k in March. This would accompany an anticipated 190k nonfarm payroll headline for the month.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click
HERE to access the full HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click
HERE to register for FREE!
Click HERE to READ more Market news.
Stuart Cowell
Chief Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.