Your Weekly Fundamental View (Jan 30–Feb 03)

Janvier 30, 2017 14:13

Need to know

This week is extremely rich with important fundamental releases. Volatility should be very high. The main focus is on FOMC Statement and Federal Funds Rate for US as well as BOJ Monetary Policy statement, report and press conference. We don't expect any change in the interest rate at the next FED meeting and we think there might be some cues about raising rates at the next meeting in March. As Trump has already made big changes in policies, the FED is probably waiting to see what will come off all those new changes and act accordingly.

Coming up

German Preliminary CPI is released on Monday, 30 January.

These news represent a change in the price of goods and services purchased by consumers.

Why should you care? Consumer prices make up for a majority of overall inflation. Some traders prefer to trade news spike on lower time frames. General consensus is that if the actual result comes higher than the forecast, the EUR will appreciate versus USD. If the actual result comes worse than the forecast, the EUR/USD could initially drop.

BOJ Monetary Policy Statement and Press Conference is due on Tuesday, 31 January.

Source: Historical data on interest rate

The report usually contains the outcome of their decision on asset purchases and commentary about the economic conditions that influenced their decision. Additionally it projects the economic outlook. Monetary Policy Statement is accompanied by BOJ Interest rate decision which is forecast to remain the same (-0.1%). In the end, the BOJ Governor Kuroda will hold a presser that should be volatile for the Yen.

Why should you care? Any deviation from the forecast may likely move Yen by huge extent.

ECB President Draghi speaks on Tuesday, 31 January.

He will speak on a joint conference by the European Central Bank and the European Commission in Frankfurt.

Why should you care? Whenever the head of central bank speaks, traders might expect volatility.

CAD GDP is due on Tuesday, 31 January.

GDP is the primary gauge of the economy's health.

Why should you care? Any deviation from the forecast number could be volatile for the CAD.

NZD Unemployment rate is released on Tuesday, 31 January.

This data contains the percentage of total work force that is unemployed and was actively seeking employment during the previous quarter.

Why should you care? Traders could possibly trade NZD on this news report.

USD Crude Oil Inventories are due on Wednesday, 1 February.

A build-up in crude oil inventories usually signals decreasing demand from refiners. On the other hand, a drop would signal that refiners are still producing at elevated levels and the inventory overhang in oil products could continue.

This is primarily a US indicator, but it also affects CAD due to Canada's huge energy sector. Previous data showed a 2.8M barrels increase.

Why should you care? The price of petroleum products influences inflation, which impacts oil-dependent industries. CAD is hugely affected by this report.

FOMC Statement and Interest Rate Decision will be issued on Wednesday, 1 February.

Source: Historical data on interest rate

The rate decision is usually priced into the market, and it has the lesser impact on USD volatility than the FOMC Statement.

Why should you care? The world's leading economy and their safe haven currency is very susceptible to major events like this. Investors read between the lines and look at other indicators in order to predict how rates will change in the future.

ADP Non-Farm Employment Change is due on Wednesday, 1 February.

The ADP National Employment Report measures levels of non-farm private employment. The report is based on the actual payroll data from about 24 million employees processed by the Automatic Data Processing, Inc. It represents the estimated change in the number of employed people during the previous month, excluding the farming industry and government.

Why should you care? Job creation is an important leading indicator of consumer spending. ADP data usually predict weaker or stronger NFP reading.

GBP Official Bank Rate Decision comes on Thursday, 2 January. The rate decision is usually priced in the market, so it tends to be overshadowed by the Monetary Policy Summary that happens simultaneously.

Why should you care? The report contains the outcome of their vote on interest rates and other policy measures, along with commentary about the economic conditions that influenced their votes. Additionally, it discusses the economic outlook and offers clues on the outcome of future votes.

US Unemployment Claims are released on Thursday, 2 January.

These claims are the earliest national economic data, representing the number of individuals who filed for insurance for the first time during the past week. If the actual result comes weaker than the forecast, it would be deemed good for the currency.

Why should you care? The number of unemployed people is an important signal of the overall economic health and could hint at future monetary policy steps.

Caixin Manufacturing PMI is due on Friday, 3 February

The data represent the level of a diffusion index based on surveyed purchasing managers in the manufacturing industry and is a leading a leading indicator of economic health.

Why should you care? This data impacts bot equities and currencies as it is linked to CNY.

Non-Farm Employment Change and Average Hourly Earnings are released on Friday, 3 February

NFP data represents the overall change in the number of employed people during the previous month, excluding the farming industry while Average Hourly Earnings represent the change in the price businesses pay for labour, excluding the farming industry.

Why should you care? The Federal Open Market Committee and traders usually pay more attention to the core data. If the actual report comes better than the forecast, it will be good for the currency. This is possibly the most traded news release.