Not just a quiet start to the trading week for fundamental news, but a positively comatose one. In fact anyone checking the economic calendar today must wonder if there is an error on the screen!! So here is a breakdown of the major items for the remainder of the week.
Japan
The only item on Tuesday is the release of the monetary policy minutes following the recent BOJ meeting and if this is more hawkish than expected should be good for the Japanese Yen. Wednesday’s major news item for Japan is the trade balance data which measures the difference between imports and exports with a forecast of 0.51T against a previous of 0.52T – so relatively unchanged. Again if the actual is better than forecast this should be Yen positive. With no news on Thursday there is a raft of minor news on Friday, including Tokyo Core CPI, preliminary industrial production, and retail sales. These are all second tier announcements and the Yen is more likely to be influenced by equities and the US dollar this week rather than by any significant fundamental news on the economic calendar.
New Zealand
Tomorrow morning sees the release of inflation data which provides us with a view of the change in the price of goods and services over the next two years. There is no forecast but the last quarter’s figure was 2.6% and this has been steadily rising throughout 2009 from a low of 2.2%. The impact of this release is always seen in the NZD/JPY as any hint of a rise in interest rates by New Zealand usually heralds a further bout of carry trade speculation.
Thursday sees the release of the NBNZ confidence indicator, a diffusion index based on a survey of firms and service providers with a figure above zero indicating an optimistic view of the economy. Towards the end of last year this began to fall away from a peak of 49.1 and shows a steady decline in confidence. Once again there is no forecast and the figure last time was 38.5. Later in the trading session we have both building consents and trade balance data and again no forecast has been offered for either but of the former this moved from positive to negative last time suggesting that any recovery remains fragile for the time being.
Australia
Several second tier announcements for Australia during the week before we get to Thursday with the release of the private capital expenditure numbers which are currently forecast at 1.5% against a previous of -3.9% so a significant shift in sentiment from the last time. Should the forecast prove correct, and indeed better than expected, this should propel both Aussie Dollar and Aussie Yen higher.
Switzerland
All second tier announcements this week other than on Friday where we have the KOF economic barometer – a composite index which predicts the direction of the economy over the next 6 months and is therefore considered a leading indicating. The forecast is for 1.81 against a previous of 1.77 – watch out for any SNB intervention – usually seen in the EUR/CHF and dollar swiss. The second tier announcements include on Tuesday UBS consumption indicator and the employment level on Thursday with the figures expected to remain flat at 3.95m.
Europe
Tuesday’s main number for the eurozone is the German IFO data – a very important release which is a composite index based on a survey of businesses across many different sectors. It is a highly respected indicator and markets react very quickly to the release as it is based on a survey of around 7000 respondents. The forecast is for 96.2 against a previous of 95.8 and this has been climbing steadily since it collapsed at the end of 2008 and is now around half way towards the peak levels of 2007 where it achieved 108.6. Look for reaction in the eurodollar and European equities.
Wednesday sees some second tier announcements including GFK German consumer climate data, German final GDP (expected flat at 0%) and Italian retail sales, also expected to come in flat at 0%, with the final number for Wednesday being industrial new orders which are expected to move from a positive 2.7% to a negative -1.2%. This last release could impact the euro.
Thursday’s numbers are all second tier announcements once again with German unemployment change, marginally up, M3 money supply moving from negative to positive, and finally private loans expected to be marginally higher at 0.3%.
Friday rounds off the week with further second tier data with German preliminary CPI released throughout the day as the various states report, and the forecast is for 0.5% against a previous of -0.6%.
Do remember that the Greek debt problems still linger and keep a watch on the bond spreads.
United Kingdom
A number of important releases this week for the UK which starts on Tuesday with the inflation reports from BOE Gov King and the MPC members who are testifying before the Treasury Committee. With the current bad feeling between the BOE and the government expect to see the markets react to any comments from Mr King which are generally considered a fairer reflection of the economic reality rather than the airbrushed view offered by the “Prime Monster” – ooops I mean the Prime Minister, G Brown!! At the same time we have BBA mortgage approvals which are forecast to show a decline from the last time, marginally lower at 45.3k.
Thursday sees BOE Gov King back in the limelight once again as he is due to testify about the future of the banking industry at a commission hearing in London and his comments will be closely watched by the markets. Later in the London trading session we have CBI realized sales, a diffusion index based on a survey of retailers and wholesalers. Any number above zero indicates increasing sales and the forecast is -1 against a previous of -8 so whilst an improving picture, still far from positive.
Friday sees 2 level one announcements: the first is the Nationwide HPI housing data which is forecast at 0.4% against a previous of 1.2% – suggesting a decline in house prices and that the present “recovery” is far from certain and that the UK is heading towards a double dip recession. Finally we have the revised GDP figures which are expected to be revised upwards to a startling 0.2% from 0.1% and no doubt will be seized upon the government as evidence that “Things can only get better”!
Finally for the UK keep a watch on gilt yields as the news on the wires is that the bond vigilantes are riding out!
USA
The key number tomorrow for the US is the CB consumer confidence, a composite index based on householder surveys, and forecast to come in 55 against a previous of 55.9 so a minor decline. If the number is better than forecast then this should help the dollar. Wednesday’s key fundamental news centres on Fed Chairman Bernanke as he testifies before the House Financial Services Committee on the topic of Monetary Policy. The testimony comes in two parts, the first of which is a pre-prepared statement followed by a Q&A session which is where we are likely to see market volatility. At the same time we have the release of the new home sales which are expected to show a modest improvement, rising to 350k against a previous of 342k. If these come in as expected then again this should add further to positive dollar sentiment.
Thursday has three key items of news: starting with core durable goods orders, forecast at 1.2%, marginally lower than last month’s 1.4% coupled with the unemployment claims at 466k, down fractionally from 473k last time. The US trading session rounds off with another day of testimony from Ben Bernanke, this time before the Housing and Urban Affairs Committee. The week for the US ends with a big number, the preliminary GDP data forecast at 5.6% against a previous of 5.7%.
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