MORNING ROLL CALL
The French (first round) presidential election round result, the UK’s pending election, inflation and GDP data for leading economies, are likely to dominate FX markets this week
The Euro enjoyed a relief rally, rising by circa 1.8% versus major peers in early trading, as the French presidential election polls now predict moderate candidate Macron to win, when the second round of voting takes place, in two weeks time. EUR/USD gained by up to 1.8% percent in early trading in Auckland, reaching $1.0923, the highest level seen since November 2016.
Monday witnesses the publication of several (April) German IFO surveys on: business climate, expectations and the current assessment. The consensus forecast is for close on no change, for all three readings. The ECB reveals the Eurozone’s government debt to GDP ratio, currently at 90.4%, investors will be monitoring the release to ensure the debt level stays significantly below the 100% level. With the UK’s general election looming, the CBI’s: business optimism, total orders and selling prices surveys will be scrutinised for any negative Brexit effects, particularly coming shortly after the collapse of retail sales indicated by last week’s UK’s ONS data. All three readings are anticipated to reveal a sharp fall; with business optimism forecast to fall to 12, from 14.
On Tuesday we begin the day with the UK’s ONS publishing various data readings on the state of Britain’s finances, such as public sector net borrowing. In Europe the government debt and deficits are published for the last quarter of 2016. In the USA house prices are predicted to have risen by 0.3% in the month of March from zero in Feb. The Case Shiller annual house price rise is predicted to be 5.8% YoY. New home sales in the USA are forecast to have fallen to -1.4%, from the 6% previously recorded, based on the recent below forecasts for building permits and housing starts data. USA consumer confidence is expected to have fallen to 122.5, from 125.6. The Richmond Fed manufacturing index is forecast to have fallen to 16 in April, from 22 in March.
Early Wednesday morning Australian CPI data is published, expected to show a YoY rise to 2.2%, from 1.5% previously. Later in the Asian session, Japan’s all industry activity for Feb is published, as is the small business confidence index, predicted to have fallen marginally. Mid morning UK time, the USA MBA mortgage application data is released, an improvement from last week’s fall of -1.6% is expected. Canadian retail sales are forecast to have fallen to 0.2% in the month of Feb, from the previous month’s 2.2% reading. The weekly publication of the various USA oil and gas inventories will be published, which will be eagerly anticipated, given the recent (circa) 7% fall in the price of WTI over recent weeks.
Thursday’s significant economic calendar news begins with a series of soft data sentiment/confidence readings for the Eurozone economy, with most data forecast to remain close on unchanged. The UK’s CBI reports retail data sales, expected to reduce to a reading of 6 in April, from 9 previously. The ECB’s interest rate decisions are forecast to reveal no change, from the current 0% and -0.4% for the deposit facility. The monthly asset purchase programme is expected to reduce to €60b, from €80b. German CPI is predicted to have gone negative to -0.1% in April, from 0.2% positive in March.
Attention then turns to USA data, with March’s trade deficit forecast to come in marginally worse at -€65.5b, durable goods orders are predicted to have slipped to 0.3%, from 0.4% previously. Weekly jobless claims are forecast at 242k for the week, having risen to 244k previously. Monthly pending home sales for March are expected to have fallen to -1%, from a 5.5% rise in Feb.
In late evening a raft of Japanese economic calendar data is published from 23:30pm onwards, the standout publications being the annual CPI data, forecast at no change at 0.3% YoY, consumer spend at -0.3%, an improvement from the -3.8% experienced in Feb. Retailers sales are anticipated to have improved to -1% in March, from -2.7% previously. Industrial production for March is forecast to have fallen into negative territory at 0.8% in March, from 3.2% in Feb.
On Friday we receive French GDP data, anticipated at 0.9% YoY. German data includes annual retail sales, expected to come in at 2.2%. The UK’s GDP figure is expected to reveal a first quarter’s reduction to 0.4%, however, YoY GDP is forecast at 2.3%, up from 1.9% previously. Eurozone CPI is expected in at 1.8% YoY.
Attention then turns to North American data, Canada’s GDP expected up; 2.6% from 2.3% in Jan, whilst the USA annualised GDP reading (for the first quarter of 2017), is expected in at 1.1%, from 2.1% previously. Personal consumption in the USA is predicted to have shrunk to 0.9% in the first quarter of 2016, from 3% previously. The USA Chicago purchasing manager index is anticipated to reveal a one point fall to 56.7. The university of Michigan confidence index is forecast to remain unchanged at 98.
Economic Calendar (all times are BST)
Monday, 24th April
09:00 – German Ifo Business Climate
16:30 – FOMC member Kashkari due to speak
Tuesday, 25th April
All day – Italy, New Zealand and Australia bank holidays
09:30 – UK public sector net borrowing
15:00 – US CB consumer confidence, new home sales
Wednesday, 26th April
02:30 – Australia CPI inflation
13:30 – Canada core retail sales
15:30 – US crude oil inventories
Thursday, 27th April
Tentative – Bank of Japan monetary policy statement
07:00 – Spanish unemployment rate
08:00 – Spanish flash CPI inflation
12:45 – ECB interest rate decision
13:00 – German preliminary CPI inflation
13:30 – ECB press conference
13:30 – US core durable goods orders
Friday, 28th April
00:30 – Japan household spending, national core CPI, Tokyo core CPI, unemployment
00:50 – Japan preliminary industrial production, retail sales
09:30 – UK preliminary Q1 GDP reading
10:00 – Eurozone flash CPI estimate
13:30 – US advance Q1 GDP reading
14:45 – US Chicago PMI
15:00 – Revised UoM consumer sentiment.
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