WEEKLY MARKET SNAPSHOT 20/11-24/11| The U.K. chancellor delivers his autumn budget statement on Wednesday, expect sterling to react during the speech

Nov 17 • Is The Trend Still Your Friend • 102 Views • No Comments

With the U.K. chancellor due to deliver his budgetary autumn statement to the Houses of Parliament on Wednesday, we can expect sterling to rise and fall during the delivery of his statement. This speech is preceded by various U.K. governmental debt and borrowing figures published on Tuesday, which may also cause price action in sterling. Traders and investors will immediately put 2 + 2 together, to deduce how much slack chancellor Hammond has to increase fiscal spending, when the Tory party appears to avoid entering into fiscal stimulus spending programs at all costs.

It’s a big week for big personalities and those who occupy the highest positions in the rarified atmosphere of high finance; Janet Yellen delivers a speech to the Stern business school, one of her last appearances as the Fed chair. This appearance will come the day before the FOMC minutes from its November rate setting meeting are released. Thomas Jordan, the governor of the Swiss central bank the SNB, will speak in Basel. Mario Draghi and his team will publish its monetary statement regarding its most recent meeting.

There’s a raft of PMIs published for European countries and the USA. Although it must be noted that PMIs don’t appear to rank high in the USA, whereas the historically favored ISM readings do. Several IFO readings for Germany will be scrutinized, given the extremely positive hard data both Germany and the Eurozone has delivered lately, particularly the healthy GDP figures for Italy, France, Germany and the wider Eurozone.

The week starts on Sunday, with the latest Japanese’s data on: exports, imports and trade balance. It’s interesting to note that there was a time, when Japan was the global manufacturing engine, when such metrics would have been regarded as high impact. Whereas now, these low impact readings, only make markets for JPY move if they miss, or beat forecasts by some distance. Japan is forecast to maintain its current impressive export YoY growth of circa 14.1%.

Monday begins with the RBA governor Lowe delivering a speech in Sydney regarding the performance of the Australian economy. New Zealand’s monthly dairy auction price data is published, these are key metrics in an economy highly dependent on its exports of such products to Asia. As attention turns to the European markets’ open, the latest German producer price index is revealed, currently at 3.1% the expectation is for this level to be maintained. As is tradition Swiss sight deposits are published each Monday morning, thereafter a meeting of all European central bankers will take place in Vienna. The major economic calendar event in the USA concerns the USA leading index for October, forecast to rise to 0.5%, from the -0.2% recorded in September.

Tuesday’s calendar events begins with Australia’s central bank releasing its latest November rate setting minutes. New Zealand publishes credit card spending figures. A variety of Japanese metrics are published, the most prominent of which is the all activities index. As European markets open, Swiss trade balance figures will be published, then we receive a raft of official government borrowing data from the U.K. statistics agency. Coming so close to the U.K. chancellor’s budget, this could indicate just how much room he has to manoeuvre, in order to stimulate the economy from the fiscal side. As attention turns to the USA the latest (existing) home sales data will be delivered; expected to show a modest seasonal reduction to 0.3% in October. Late evening, as her tenure as the Fed chair begins to enter its last few months, Janet Yellen will deliver a speech at the Stern business school.

Wednesday sees the latest USA mortgage applications data published, at or around the same time the U.K. chancellor delivers his autumn statement to Parliament. Thereafter from the USA we receive the latest jobless claim numbers and continuing claims, which are forecast to remain relatively stable. Durable goods orders are forecast to rise by 0.6% in October, a fall from the 2.0% registered in October. The latest November Eurozone sentiment reading is published, an improvement from the previous month’s -1 reading is expected, whilst the University of Michigan sentiment reading for the USA is also published. Late evening the FOMC will publish its minutes for its meeting held in early November, investors will focus on these minutes in order to determine how unified and motivated the Feds are in relation to raising the key interest rate in December during their last meeting of the year and if any plans exist to begin to divest from the Fed’s $4.5 trillion balance sheet.

Thursday starts with Germany’s latest GDP figures being released, added to a compendium of other official statistics data, this could affect the value of the euro, depending on the hits or misses of the statistics. Markit Economics will publish their latest PMI readings for several Eurozone countries; France, Germany and the wider Eurozone. The ECB will publish its latest monetary policy meeting minutes. Early afternoon Canada will reveal its latest retail growth figures, coming in at a shock reading of -0.3% for August, investors will be seeking an improvement. Early evening the governor of the SNB, Thomas Jordan, will deliver a speech in Basel, presumably discussing the Swiss central bank’s monetary policy aims for 2018. The day closes with New Zealand’s latest trade balance figures, an improvement will be sought on the -2980m registered in September.

Friday begins with the U.K. CBI publishing its latest sales data, with U.K. retail sales now negative year on year (-0.3), this reading will be carefully monitored based on the importance retail sales has for the U.K. economy. Several IFO soft data readings for Germany are published early afternoon on Friday; business climate, expectations and current assessment, these readings are carefully monitored for signs of a weakening German economy, if the German economy falters, so does the Eurozone and wider Europe. The latest home loans data for the U.K. closes out Europe’s economic calendar news for the week. As attention turns to the USA, the latest Markit PMIs are the key readings, and finally the Baker Hughes rig count will be carefully monitored, due to the recent rise in the price of oil, and the sudden reversion its experienced during part of the week ending November 17th.

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