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    The week ahead: Commodity Currency cash rate week

    RBA and RBNZ will likely dominate the currency commodity sentiment next week as we decide which, if either of the Central Banks continue with their easing biases. 

    Recent events:
    BACK TO THE FUTURES: JPY and AUD shed longs
    Japan's industrial production extends decline
    Broad Euro-sentiment ticks higher - UK sends mixed signals
    CHINA: Caixin and NBS PMI's continue to tell two tales
    GOLD slams down to $1200
    'No' camp rattles Sterling
    Australian GDP the highest since 2012
    ISM manufacturing expands for 3rd month
    Kiwi crosses align to suggest larger pending moves
    Australian Trade balance beats expectations






    USD: As discussed in the NFP preveiew series we have noted the potential for NFP data to follow suit with the labor market conditions index. Whilst not considered a tradable release it is worthy monitoring to assess the longer-term trend for NFP in future. 

    CAD: Canada's equivalent to NFP is out on Friday. The unemployment rate near-term trend suggests it may continue higher over the medium term, so we will closely monitor the employment index within the Ivey PMI for further clues, especially having seen it dip below 50 last months to 49.9.






    EUR: GDP for Eurozone is a revision so we do not expect any significant surprises form this release. That said, larger moves can occur if revisions are beyond the consensus expectation so still a release worthy of noting. Germany's GDP has not tracked below that of the Eurozone, so inflation data becomes even more important to provide clues of future price pressures and growth. 

    GBP: The Brexit polls are likely to be the bigger driver for GBP in the next couple of weeks, with Sterling likely to twitch each time the no or yes camp appear ahead. However industrial production data can provide some background fundamentals for when Brexit is no longer in the forefront of the media’s and public attention.  





    China: China's trade balance continues to be of upmost importance as it helps analysts put together a picture of global demand, or lack of it seems. Traders will assess imports from key trading partners such as New Zealand and Australia to help gauge their related export markets. CPI and PPI continue to diverge, with the former remaining elevated at 2.3% whilst producer prices (still negative) are decreasing their rate of decelerating to denote potential price pressures. 

    JPY: We expect to see economic outlook weaken from the economy watcher’s survey on Wednesday. The headline figure, currently at 45.5 was joined by the employment component which crossed below the 50 threshold last month in the 'future expectations' survey. 






    Cash rate decisions for RBA and RBNZ of particular interest next week. We suspct both will remain on hold for Q2 but easing pressures certianly remain in Q3 and Q4. 

    AUD: Inflation expectations will glean more attention than per usual following the RBA's severe cut to their own inflation forecasts. 
    Construction PMI will confirm it can continue to brighter outlook alongside recent PMI reads of manufacturing and services. However, all three need to remain above for and at an increasing rate for sustained periods before we can expect this to filter through to the real economy.
    We will cover the cash rate in far more detail next week but fur us, the focus will likely be on the statement as we do not foresee a cut taking into account recent GDP growth and trade balance (exports).

    NZD: The rate decision from RBNZ is a closer call but we also suspect rates to remain on hold until Q3. That said RBNZ have proven their ability to surprise and get ahead of the curve so we eagerly await the outcome of this cash rate decision as it could make or break the analysis for a stronger NZD over the near-term. 


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