ThinkForex - Analytics


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    The week ahead: 6th May 2016

    Trade balance, inflation reads and production for industry and manufacturing are just a few of the potential market movers for global traders next week. 

    RBA: Cut rates to historic low of 1.75%
    AUDUSD: RBA pull the floor from under AUD with lower inflation outlook
    GOLD: Gold vulnerable to a shakeout in week/s ahead
    AUDUSD: Doves continue to shake bulls out of their Aussie longs
    CHINA: China Services PMI moves in lockstep with global reads
    ISM: Manufacturing ticks higher to 50.8
    EURO: PMI's follow the trend - softer yet stronger
    EURO: Sentiment dips across the board

    Labor market conditions have contracted the past two months and is suggesting may see weakness on NFP data further down the track. Quite why the FED do not reference this at all, despite inventing it to keep a closer eye on employment conditions, is beyond me. 

    Retail sales dipped last month unexpectedly and now the focus has shifted to Q2 GDP then retail sales becomes even more important. 


    Trade balance data will likely show that the German current account remains 'sticky' to add unwanted upside appreciation to the Euro. Having said that, judging from the losses seen in EURUSD these past two sessions we may find there has been a significant shift in trade data. 

    Eurozone industrial production has been yet another indicator struggling to climb but of contraction with 8 of the last 12 reads being negative. However, the real focus will be on Eurozone's GDP data for Q1 to see if it can gather any momentum. I have low hope for this one. 

    Friday will finish with retail sales, consumer sentiment, industrial production and PPI which could have an impact on any revised DP data next month.

    We are extremely unlikely to see any rate changes form the bank, even without taking into account the looking Brexit vote. The same can be said for any changes from MPC voting, so traders will have to rely on industrial production, manufacturing production and GDP estimates to for any domestic catalysts. 

    Another big week of China data includes the highly anticipated trade balance data, consumer and producer inflation, retail sales and industrial production. Whilst trade data is over the weekend it does provide an insight into money flow in and out of the country, so will be highly scrutinised by fund managers and analysts all over, particularly if they still suspect a devaluation. 

    The cash cut, lower inflation forecasts and potential for USD strength will likely weigh on AUD for the foreseeable future and I doubt home loans data will change that sentiment much, so AUD moves will be driven by negative sentiment and oversees events next week. 

    Wednesday sees the RBNZ financial stability report, along with two speeches by their Governor Greg Wheeler. They appeared to 'ease off' from their immediate easing bias but we may glean more information form this set of data. 

    Business PMI, a leading indicator for the economy may continue to help support the outlook as long as it remains above 50 (and ideally 54). However recent trends from major economies suggest we may see a softer rate of expansion. 


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