MORNING ROLL CALL

Mar 27 • Morning Roll Call • 1474 Views • Comments Off on MORNING ROLL CALL

Sterling net shorts reach a record level, as the UK begins the process of leaving Europe, by invoking Article 50 on March 29thbetween-the-lines1

The Commodity Futures Trading Commission releases its weekly “Commitments of Traders” report each Friday. The report covers the positions major institutions, such as major banks and hedge funds, have in the markets. The net positions for being short sterling were reported as 107.8k on March 21st, a record high, up from 107.1k the previous week. Most notably the EUR net positive position has improved to -19.7k from -41k previously, whilst CAD has worsened dramatically; to -24.4k from 21.5k. SPX investors have increased their net short positions to 89.1k from 161.9k, at -72.7k representing the largest net change recorded for the week, whilst gold net speculative positions improved to 116.3k, from 106k previously.

The key economic high impact calendar event over the coming week is political change, as opposed to an orthodox, fundamental data release. The UK’s government is to invoke what’s termed “Article 50” on Wednesday 29th; the official notification to the rest of it’s (about to be divorced) European partners, that it’s finally leaving The European Union, as a consequence of the June 2016 referendum. Currency investors’ and analysts’ opinions on the effect for sterling differ widely; many believe that the damage to sterling’s value is already “baked in”. Others believe that sterling’s value will fall shortly after the invocation and thereafter only once the UK actually leaves and no longer receives the free movement trade tariffs and the overall benefits that come with being part of the European Union.

Monday is a relatively quiet day on the economic calendar, Germany’s data is the main focus as the IFO business climate readings are released, with no significant change anticipated. There are certain ECB and Fed officials who are speaking at various events and conferences in Madrid and Texas, whilst Australia’s central bank official Mr. Debelle holds court in Sydney.

Tuesday witnesses the USA’s advanced goods trade balance reported, expected to improve to -$66b from -$69b previously. The Case-Shiller house price index is predicted to remain unchanged at 5.6% annually. The latest USA consumer confidence reading is expected to come in at 113.7, a fall from 114.8 previously. Later in the day, during the New York trading session, the Bank Of Canada governor Poloz speaks at two events, then focus turns to Janet Yellen who also holds court. Japan’s govt. publishes the latest retail figures as the Wednesday Asian trading session begins.

Wednesday sees the publication of the latest import price increases for Germany, predicted to show increases of 7% year on year, up to Feb. Consumer credit in the UK is predicted to have fallen to £1.3b, from £1.4b in Feb. Net mortgage approvals in the UK are predicted to remain relatively unchanged at 69.5k for the month. USA mortgage approvals are predicted to make a modest improvement from -2.7% the previous week, whilst pending home sales for Feb in the USA are forecast to show improvement in Feb, from -2.8% to 2%. Crude oil inventory levels are also published.

Thursday morning at 9am London GMT time there are several European confidence and sentiment indices published. Thereafter, at midday Germany’s latest CPI data is revealed; expected to fall to 1.8%, from 2.2% previously. The USA GDP figure for the 4th Q is published at 12:30pm, the forecast is for a rise to 2% annually. Personal consumption in the USA is anticipated to have risen to 3.1%, up to and including the same period. Initial weekly unemployment claims rose to 261k last week, they’re expected to fall back to circa 245k this week.

Friday ends the week with the publication of Germany’s retail performance; forecast to come in at 0.4% up year on year, whilst their unemployment data is expected to show no change at 5.9% for an annualised figure. The UK’s current account deficit is expected in at -16b for the last Q in 2016, an improvement on the -24b, but still circa -64b on an annualised, forecast basis. The UK’s GDP is expected in at 2% year on year. Eurozone CPI is forecast to show a 1.8% rise annually, a fall from the 2% recorded up to Feb. Canada’s GDP is forecast to have fallen to 1.8%, from 2%, whilst personal income and spending in the USA are predicted to have remained unchanged, up 0.4% and 0.2% in Feb respectively.

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