Large Speculators reported positions (data from CFTC)
The Greeback saw bullish traders increase their long exposure for the first time in three weeks leading up to the hawkish FOMC statement. At the same time Euro traders adjusted their net exposure by 43k short contracts, pushing the ratio down to its' lowest since August. The bearish EURUSD theme is very much alive and well and this large adjustment from large speculators could just be the beginning of the move.
China: Official data form China over the weekend shows that the manufacturing index, whilst still contracting, remained stable at 48.5. Helping to support the headline figure was new orders which climbed from 49.7 to 50.2, the production index (up to 52.3 vs 51.7 previous) and expected production (53.9 vs 54.1 previous). However new export orders, in hand orders and raw material prices continued to drag the index down. Up later today is the Caixin manufacturing PMI (and perceived as a more reliable assessment) which could confirm of deny the data from the weekend. Chinese stocks remained elevated around their 10yr highs whilst global (and local) sentiment piced up.
United States: The US didn't have a great data last week to back up the hawkish FOMC statement. Regardless, the FED are making the right noises for a rate rise on December but we really need the data to back this up between now and December (so don't hold your breath). IN a week of disappointment we saw Durable Goods contracts by 0.4%, consumer confidence down and advance GDP for Q3 at a mere 1.5% (compared to 1.6% expected and 3.9% previous). Whilst this is a lagging indicator it does set the tone for the weeks ahead, and any soft data from US will feed into the revised GDP data and form the basis for Q4 data. This week the calendar highlights are ISM PMI data for manufacturing and services (excellent leading indicator) and Nonfarm payroll which feed directly into growth and employment mandates for the FED rate rise (or not).
Europe: Economic sentiment continued to gather momentum for the Eurozone before the weekend, and data this week mainly consists of final PMI of manufacturing and services sectors. German factory orders is expected to expand 1.1% after two consecutive months of contraction, so a negative print here would point to further weakness ahead for the Eurozone's largest economy.
United Kingdom: Manufacturing and Construction PMI will be the calendar highlights this week. Obviously we should mentioned the BoE Bank rate decision but there is no changes expected here (for quite some time, in either direction). However the inflation report may warrant a look to see if there have been any changes to their projections in the months ahead.
Australia: Manufacturing expanded for a fourth consecutive month, seeing the PMI read at 50.2 down down from 51.7 to show the expansion is slowing. The read points to stability over impressive expansion, with exports and supplier deliveries adding to the bulk of the positive flow. Focus now shift to tomorrow's RBA Cash rate decision where many expect a rate cut is a strong possibility. I suspect RBA will hold rate for the remainder of the year but we may see some significant changes to the accompanying statement. Stevens and Lowe speak later in the week, which may be used as an opportunity to correct or refine any comments from this week's statement.
Canada: Canada release their employment data alongside US Nonfarm Payroll, which always makes it that little bit more interesting. However prior to this release is the Ivey PMI data which is showing positive signs for the Canadian economy. The Index has expanded since April's impressive 85.2 print (compared to the 47.9 contraction in March) and employment has also been expanding, which could feed into decent employment data on Friday for Canada.
New Zealand: Global dairy prices took an unexpected knock two weeks ago to contract for the first time in 5 month. This Wednesday we see if this trend continues) with lower dairy prices tending to push the Kiwi Dollar lower) or if the expansion continues and Kiwi Dollar continues to retrace against the losses sustained against the Greenback these past 18 months. Unemployment has expanded the previous 3 quarters since setting a multi-year bottom November last year. This is another sign that the economy has peaked and on Wednesday we will be presented with Q3 unemployment data.
WEEKLY WRAP: Another big data week ahead
With the December rate-rise from FED firmly in site, traders will not be disappointed with the heavy data loads which will see money flows adjusted in real-time as we reach the 2015 milestone.