Week Ahead: Trading Outlook

Key Events This Week: November 9th – November 13th 

Sun: CNY – Trade Balance
Mon: EUR – German Trade Balance, OECD Economic Outlook, EZ Investor Confidence, JPY – Trade Balance
Tue: CNY – Aggregate Financing, New Yuan Loans, CPI, CHF – Unemployment Rate
Wed: CNY – Industrial Production, GBP – Weekly Earnings, ILO Unemployment Rate, Jobless Claims,
Thu: AUD – Unemployment Rate, EUR – German CPI, USD – Monthly Budget Statement
Fri: EUR – German GDP, EZ GDP, USD – Advance Retail Sales, U. of Michigan Confidence.

Overview

  • USD Dollar bulls finally got some affirmation last week as NFP and unemployment data added to weight to the case for a December lift-off. The Fed themselves have said that the decision for lift-off will not hinge on any single release but players are clearly taking this as an encouraging sign. Key data this week comes on Friday with retail sales and U. of Michigan consumer confidence.
  • EUR The single currency was sharply lower last week following comments made by ECB’s Draghi that the ECB remain willing to act and have a range of options open to them, confirming that the ECB will reassess conditions in December with a view to increasing stimulus for the EuroZone economy noting that “external factors are creating downside risks to the outlook for growth and inflation.” Traders will turn to German CPI & EZ GDP as key data this week.
  • GBP Sterling was delivered heavily lower last week in response to the BOE’s Dovish “Super-Thursday”. Market participants were clearly caught somewhat offside as governor Mark Carney commented that the Bank could cut rates or further extend their quantitative easing program if downside risks persist. Earnings and jobs data this week will be key focus as traders will look to see if the recent positive trend can continue.
  • JPY The minutes from the Bank of Japan’s October 6th/7th meeting revealed that although members remain broadly upbeat about the domestic economy, concerns were growing over risks posed from China and emerging market economies.The Japanese yen was lower over the week as the US Dollar broke firmly to the upside. Trade balance data will be key domestic focus this week.
  • AUD Strength on the back of positive PMI data out of China was unwound last week with the Aussie trading lower as, despite keeping the headline interest rate unchanged, the RBA did leave the door open for further easing noting that “the outlook for inflation may afford scope for further easing of policy.” Traders will be closely watching key China data this week for any signs of further weakness in conditions there, likley to have a large impact on trading outlook for risk correlated pairs this week.
  • CAD The Canadian Dollar was sharply lower over last week, mimicking the decline in Oil prices which retreated from the $48 per barrel mark mid-week.Canadian unemployment data on Friday showed an unexpected decline, printing 7.0% against expectations of 7.1%.Lack of key domestic data will leave the Loonie driven by USD and Oil flows.
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