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Overview of the main economical events of the current day - 08/10/2013
The USA Has No Budget for a Week, the Dollar Is Falling
The US dollar was traded moderately downwards on Monday to most major currencies amid no progress in fiscal crisis in the country. Most of all the dollar dropped against the yen on the back of continuing decline of Japanese stock market. The US government has been partially shut down for seven days. The US situation puts pressure on the dollar. Both parties on negotiations continue taking tough positions and don’t make compromise, which may jeopardize economic growth of the world’s largest economy.
Republicans still don’t intend to bring up for vote an issue about renewal of the government financing and national debt limit increase in the House of Representatives until the White House comes to terms in health insurance reform. The disagreements between the democrats and republicans seem to have intensified over the weekend. The leaders of the republicans increasingly insist on linking the attempts to resolve budget stalemate with the efforts to prevent debt default.
On Sunday the speaker of the House of Representatives John Boehner said that he couldn’t admit financing of the government or debt limit increase without negotiations on a wide cutdown in spending. The U.S. Secretary of the Treasury Jacob Lew said that the Congress was playing with fire if it didn’t raise debt ceiling till October 17. President Obama urged the Republicans to allow a free vote in the House of Representatives on spending bill. He believes that there can be enough votes in the House of Representatives for the bill to pass.
One of the largest banks of the USA, Bank of America lowered its forecast on US economic growth on Monday amid government shutdown. The forecast is lowered in the third quarter to +1.7% against +2.5% in the second quarter. The forecast for the fourth quarter is lowered to +2.0% from +2.5%. The analysts of the bank expect the Fed to start QE tapering off only in January 2014. Japan, the second largest holder of U.S. Treasuries, expressed its hope on Monday for a quick resolution of the US budget stalemate which can lead to a default on the national debt.
There were no significant macrostatistics data on Monday that could influence the markets. Sentix Investor Confidence fell unexpectedly in October to 6.1 p. from 6.5 p. in September although its growth to 10.9 p. was expected. According to the National Bureau of Statistics of Canada Building Permits slumped in August from a record reading of July – by 21.2% to 6.34 billion Canadian dollars against the expected decrease only by 2.4%. It is the lowest decrease of Building Permits since April, 2011.
The pound was traded upwards amid UK Economic Optimism growth which reached 17-year high in the third quarter, which proves the strength of British economy. According to the CBI and PwC opinion poll – companies of the UK financial service sector became more optimistic about the business outlook since 1996.
By MasterForex Company
Overview of the main economical events of the current day - 09/10/2013
Janet Yellen Will Be a New Chair of the Fed
The US dollar almost didn’t change on Tuesday by the end of the day amid still uncertain situation of the US fiscal crisis resolution. There is almost no progress in budget debates between democrats and republicans; government shutdown has been going on for eight days. The dollar strengthened a little on Tuesday against Canadian dollar and the yen. Trade deficit of Canada has widened. Factory orders in Germany also turned out worse than expected.
Tensions around budget problems in the USA that threaten with default continue growing but still there are no signs of active negotiations between the republicans and the White House on crisis overcoming. Some legislators’ initiatives intended to find a way to a compromise don’t get a wide support. Besides, the White House says that president Obama is still not ready for negotiations on Obamacare tapering in exchange for concessions of republicans about federal government financing.
The speaker of the U.S. House of Representatives republican John Boehner continued putting pressure on president Obama and the democrats on Tuesday. He said that he wouldn’t admit the US debt limit increase without concessions of the democrats and president Obama. The president risks leading the country to default if he doesn’t start realistic negotiations, said Boehner.
The democrats plan to hold a vote till the end of the week on the measures that would allow Obama to increase debt ceiling. On Thursday Finance Minister Jacob Lew will make a speech in the U.S. Senate Committee about finance issues and national debt limit. The US default on national debt can have more unpredictable consequences for financial markets than investment bank Lehman Brothers collapse in 2008, said Mohamed El-Erian, CEO of PIMCO.
The US data of nongovernmental agencies turned out worse than expected. NFIB Small Business Optimism dropped to 93.9 p. in September – the lowest reading for three months in comparison with 94.1 p. in August although its growth was expected. IBD/TIPP Economic Optimism fell by 16.5% in October to 38.4 p. compared with 46 p. in September. This IBD/TIPP index is a good leading indicator for U. of Michigan Consumer Sentiment which will be released on Friday.
Meanwhile, the White House says President Obama intends to nominate Federal Reserve Vice Chairwoman Janet Yellen to chair the Federal Reserve. The Wall Street Journal also says that the Fed's vice chair, Janet Yellen would replace Ben Bernanke. If this information is confirmed, Yellen will be the first woman to head the U.S. central bank.
The Canadian dollar was traded downwards amid Canadian foreign trade weak data. Trade deficit in August rose to 1.31 billion Canadian dollars from 1.19 billion in July – while a decrease of deficit to 0.70 billion was expected. The imports rose by 2.1% m/m and considerably exceeded the expectations.
The euro also couldn’t show a stable growth on the back of unexpected decrease of Factory Orders in Germany which fell in August for the second month in a row. Factory Orders in the largest economy of the euro-zone fell by 0.3% m/m due to a sharp decrease of foreign orders while a growth by 1.1% was expected. German Trade Balance n.s.a. for August and Current Account also turned out worse than forecasted.
By MasterForex Company
Overview of the main economical events of the current day - 10/10/2013
The Pound Fell After Weak Industrial Output Data
The US dollar rose to most major currencies before the publication of September FOMC Meeting Minutes where it was decided not to taper off QE – and reached 3-week high according to the dollar index. British pound dropped at weak industrial output data and trade balance; the euro also fell. Japanese yen weakened amid Japanese stock market growth which showed the best growth since late September. Canadian dollar reached a monthly low according to the US dollar, AUD and NZD looked slightly better.
FOMC Meeting Minutes showed that FOMC members who voted against QE3 reduction explained their decision with weak economic statistics, worsening financial conditions and fiscal risks. However, many Fed leaders still would like to start QE3 tapering off by the end of the year and finish this program by the middle of 2014. The decision to put off QE reduction was taken be a few votes. It increases the possibility of bond purchase reduction within next several months.
President Obama said on Wednesday about the nomination of Janet Yellen for the Fed chair. According to The Wall Street Journal the budget conflict and the republican opposition can delay the appointment of a new Fed chair. Meanwhile, the US conflict between the white House and the republican opposition is still going on; state institutions still don’t work and there are no signs of exit from this situation yet. President Obama announced that the American economy risked going into a deep recession if the Congress didn’t agree to a government financing recovery and didn’t increase debt limit – and he urged the opponents to refuse from blackmailing.
The pound fell on Wednesday to 3-week low Vs the dollar after the release of weak industrial output data and UK trade balance. Industrial output decrease rate turned out the highest for almost a year. Industrial output unexpectedly fell by 1.1% Vs the prior month, manufacturing production – by 1.2% while its growth was expected. Although Total Trade Balance Deficit fell in August from 3.4 billion pounds to 3.3 billion but it turned out worse than expected decrease to 2.1 billion.
The euro followed the pound and updated October lows having no reaction to German industrial output data that turned out a little better that forecasted due to car production increase by 13.6%. German industrial output rose by 1.4% in August in comparison with the prior month against the expectations of growth by 1%. The decrease in July was less than reported before. Bundesbank marks that extremely good consumer sentiment supports German economy.
apanese yen and Swiss franc weakened on Wednesday against the dollar amid the nomination of Janet Yellen as a Fed chair. Yellen is famous for her adherence to a mild monetary policy and her support of further measures on economy stimulation can favor the growth of risk assets and decrease the demand for safe-haven assets such as the yen and franc.
By MasterForex Company
Overview of the main economical events of the current day - 11/10/2013
USA: Breakthrough in the Stalemate
The US dollar rose on Thursday Vs the yen and slightly changed Vs other major currencies having added about 0.16% according to the dollar index amid the first signs of the US fiscal crisis resolution. The yen weakened significantly on the back of the decrease of defensive assets demand and the growth of inclination to risk. The pound and euro almost didn’t change by the end of the day amid the finished meeting of the Bank of England and weak industrial output data in France and Italy.
There appeared the first signs that the US lawmakers are moving towards an agreement on national debt limit increase. On Thursday it was announced that republican leaders in the House of Representatives were going to introduce an offer to the U.S. President Barack Obama about temporary debt limit increase for six weeks amid a more extensive plan of budget discussion. It may become a breakthrough in the stalemate which led to a partial shutdown of the government and put the USA on the brink of a debt default.
Meanwhile, on Thursday weak statistics on US labor market was released. Unemployment Claims rocketed by 66 thousand last week to 374 thousand although its growth by 4 thousand was expected. Weekly growth is the largest for almost a year. However the data were not quite true-to-life – it was influenced by government shutdown and a failure of computer systems. Labor Department announced that about a half of new claims was due to California which shifts to a new computer system and two previous weeks it gave incomplete data. And only 15 thousand of claims were aroused by government shutdown.
The pound and the euro almost didn’t change by the end of the day. The Bank of England, as it was supposed, kept the key interest rate and Asset Purchase Facility unchanged. French industrial output in August reached the forecasts and rose only by 0.2% against the expected growth by 0.5%. Italian industrial output fell by 0.3% in August while its growth by 0.6% was expected. ECB President Mario Draghi making speech on Thursday in New York said that the ECB would follow mild policy to help the recovery.
The yen weakened significantly on Thursday amid stock indexes and risk inclination growth and decrease of demand for defensive assets. DJIA rose by 2.18% having shown the highest growth since this January. Core Machinery Orders in Japan rose by 5.4% m/m in August and reached the highest level for almost 5 years, which favored Japanese stock market growth. The Bank of Japan will do everything that is required to overcome deflation, said the head of Japanese central bank, Haruhiko Kuroda in New York. However, he refused discussing extra measures of reaching this goal.
Australian dollar was traded downwards after the release of labor market mixed data but then recovered its losses. Despite unexpected decrease of unemployment rate in September from 5.8% to 5.6% - employment rate rose only by 9.1 thousand and didn’t reach the forecast of 15 thousand. Participation Rate reached its low for almost 7 years – 64.9% of labor force against 65% in August.
New Zealand dollar fell slightly amid Business Manufacturing Index decline to 3-month low. Business NZ Manufacturing Index dropped to 54.3 p. in September in comparison with 57.5 p. prior month.
By MasterForex Company
Overview of the main economical events of the current day - 14/10/2013
The Main Events of the Week
The US dollar was traded on Friday moderately downwards Vs most major currencies amid US consumer sentiment decrease to the lows of the beginning of this year. The euro rose moderately while the pound fell insignificantly amid the UK construction activity decrease. The yen continued weakening having fallen to almost 2-week low Vs the dollar. The Canadian dollar rose after the labor report of Canada which showed an unexpected fall of unemployment rate to its low since December, 2008.
Preliminary U. of Michigan Consumer Sentiment fell in October more than expected (76 p.) to 75.2 p. compared with 77.5 p. in September. Current assessment was kept almost unchanged while economic outlook index fell significantly. Consumers are more pessimistic about economic outlook in terms of unsolved budget problems and the US national debt limit increase issues.
By the end of the week the dollar had risen by 0.3% according to the dollar index having shown the first weekly growth after four weeks of decrease. The dollar rose Vs the Japanese yen (+1.13%), Canadian dollar (+0.55%), Swiss franc (+0.53%), British pound (+0.34%) and the euro (+0.11%). The dollar dropped only against Australian dollar (-0.35%) and New Zealand dollar (-0.06%).
The dollar was supported by FOMC Meeting Minutes published last week which showed the intentions of most FOMC members to start QE tapering off by the end of this year; and also a seemed exit from the US fiscal crisis. Opposed parties started negotiations although no real results are reached yet.
This week the markets will still pay attention to the USA where the negotiations between the democrats and republicans on budget issue resolution and the US debt limit increase are going on. A bowling point comes on October 17 and quite probably the agreement between the parties will be reached at the very last moment. This week there will be a release of RBA Meeting Minutes; inflation data (UK, euro-zone, New Zealand, Canada, China); retail sales (UK and China), labour market (UK); and a large Chinese information block at the end of the week.
Monday is a day off in the USA (and Canada). On Tuesday Empire State Manufacturing Index is released, on Wednesday - NAHB Housing Market Index and Fed economic survey Beige Book, on Thursday - Philadelphia Fed Manufacturing Index and on Friday - CB Leading Index. Consumer Price Index will be released on Wednesday; Industrial Output, Building Permits and Housing Starts are unlikely to be published on Thursday.
In euro-zone industrial output will be released on Monday, on Wednesday – final Consumer Price Index and Trade Balance, and on Thursday – Current Account. On Tuesday euro-zone and German ZEW Economic Sentiment is released – investor sentiment seems to stay almost unchanged in October amid political tensions in the USA and Italy.
In the UK on Tuesday there will be a release of Producer and Consumer Price Index, on Wednesday – labour market data, and on Thursday – retail sales. In Australia on Tuesday there will be a release of the Reserve Bank of Australia Meeting Minutes and New Motor Vehicle Sales, and on Thursday - NAB Quarterly Business Confidence. Consumer Price Index of New Zealand will be released on Wednesday, and on Friday – of Canada. In China on Monday there will be also a release of inflation data, and on Friday – a large information block (GDP, industrial output, retail sales, fixed asset investment).
By MasterForex Company
Overview of the main economical events of the current day - 15/10/2013
Industrial Output Rate Reached 2-Year High in the Euro-Zone
The US dollar was traded moderately downwards Vs most major currencies amid broken hopes for a progress in negotiations of lawmakers on budget and national debt which again came to the deadlock on weekend – three days before the debt ceiling is reached. The euro was supported by the euro-zone industrial output data which turned out a little better than expected. New Zealand dollar rose on the back of positive housing market and service sector data. Japanese yen lost all its growth amid stock markets bounce.
During the weekend the U.S. President Obama didn’t manage to come to an agreement with the republican majority in the House of Representatives. The leaders of the parties in the Senate held their own negotiations but they also couldn’t reach any progress. The U.S. present debt ceiling will be reached soon after October 17. The US federal government works in a reduced volume since October 1 due to the lack of budget, which has a more clearly negative impact on the economy.
The dollar reduced its losses at the end of the day amid new hopes that the lawmakers would manage to reach a progress in the crisis resolution. The U.S. Senate leaders said that an agreement on debt limit increase and the recovery of the government work was coming. The White House put off the meeting of President Obama with lawmakers to give the Congress leaders more time to work out an agreement.
According to The Wall Street Journal the Fed will probably continue stimulating economy by quantitative easing to cover losses from the US government shutdown and intense debates over debt limit increase. According to the results of the last poll of economists held by WSJ last week, none of 46 respondents expect QE tapering off at the meeting on October 29-30. 37 of 46 economists expect QE tapering in December or in January. However, many say that the Federal Reserve can escape it even till the end of the first quarter 2014 or probably even longer. Meanwhile, the analysts of many leading banks decrease its estimates of the U.S. dollar rate Vs major currencies by the end of the year.
The euro rose moderately on Monday, which was favored by published industrial output data of the euro-zone which turned out a little better than expected. Industrial output grew by 1% m/m in August having covered the same 1% decline which was recorded in July. A growth only by 0.8% was forecasted. Monthly growth became the largest for two years although it became possible due to a sharp decline in July. At an annual rate industrial output dropped by 2.1% against the expected decrease by 2.5%.
The Australian dollar opened with a decrease after the release of Chinese trade balance data on Saturday which showed a fall of Chinese trade balance surplus, the main trade partner of Australia. But then AUD covered its losses and even closed with an increase amid weak dollar and risk inclination growth. Chinese trade balance surplus fell to $15.2 billion in September from $28.5 billion prior month having exceeded the expectations considerably. The exports fell by 0.3% at an annual rate against the expected growth by 5.5%.
Weak economic data on Chinese exports in September aroused concerns about GDP for the 3d quarter in China which will be released on Wednesday. Chinese inflation accelerated in September while New Yuan Loans exceeded expectations. Consumer Price Index rose by 3.1% in September from 2.6% in August having exceeded the expected growth by 2.8% - which turned out the highest growth rates for 7 months. Chinese inflation growth can limit central bank of China in actions aimed at stimulation of economic growth.
New Zealand dollar reached almost 3-week high on Monday Vs the US dollar amid positive statistics. Housing prices continued growing - REINZ Housing Price Index rose by 0.8% in September Vs August. REINZ House Sales rose by 19% at an annual rate. Housing market in New Zealand revived before the introduction of mortgage limits announced by the Reserve Bank of New Zealand. Performance Services Index on New Zealand increased to 55.6 p. in September compared with 53.3 p. in August.
By MasterForex Company
Overview of the main economical events of the current day - 16/10/2013
Dollar Strengthened Amid Hopes for Political Stalemate Resolution
The US dollar strengthened on Tuesday amid the hopes for an agreement in Washington which would allow overcoming a political stalemate and recovering federal government work – but then it lost a part of its growth after a shutdown of negotiations in the Senate. The euro weakened on the back of German mixed ZEW economic confidence data. Swiss franc also reached almost 4-week low Vs dollar. The pound was supported by inflation and housing market data and the Australian dollar was supported by the Reserve Bank of Australia Meeting Minutes.
The Senate leaders are coming to an agreement which will help to move a default threat for the US and recover a normal financing of the government – an appropriate bill may be approved by the senators in the nearest time. The dollar lost some positions at the end of the day after the negotiations in the Senate had been suspended – until the republicans in the House of Representatives become certain about future actions and introduce their own budget plan. The Senate and the House of Representatives work at different budget proposals.
Besides, the Fitch Ratings announced on Tuesday about a possible revision of the US credit rating “AAA” after the negotiations on debt limit increase and a stop of government shutdown came to a standstill – which according to the agency can harm the US dollar’s role credibility. Meanwhile, Empire State Manufacturing Index slumped to 5-month low against forecasted growth. Empire State Manufacturing Index dropped to 1.52 p. in October from 6.29 p. in September while a growth to 7 p. was forecasted. The decrease was due to a worsening situation with employment and prime costs.
The euro fell after the release of uncertain German ZEW economic confidence data. German ZEW Economic Sentiment rose in October to its high from April, 2010 – to 52.8 p. while the indicator was forecasted to stay unchanged at September level 49.6 p. German ZEW Current Situation fell to 29.7 p. in October compared with 30.6 p. in September – against expected growth to 31 p. Euro-Zone ZEW Economic Sentiment also didn’t reach the forecasted reading 59.4 p. and grew to 59.1 p. in October from 58.6 p. in September.
The pound also dropped but then recovered its loss, which was favored by Consumer Price Index which turned out better than expected and by official House Price change data. Consumer Price rate remained unchanged in September in comparison with August. Consumer Price Index rose by 0.4 m/m and 2.7% y/y having exceeded the expected growth by 0.3% m/m and 2.6% y/y respectively. ONS House Price Index increased by 3.8% in August having shown the highest price growth since October, 2010. The growth accelerated from July reading 3.3% and it was more significant than forecasted 3.4% growth. House Price Index reached a record level in the country’s history.
Australian dollar was traded upwards on Tuesday and reached the highest reading Vs dollar for almost four months – after the publication of RBA Meeting Minutes which turned out well-balanced. Though the Reserve Bank of Australia said that it didn’t exclude the possibility of further rate decrease, it marked that there was no urgent necessity in rate decline now.
By MasterForex Company
Overview of the main economical events of the current day - 18/10/2013
The Agreement Is Reached but the Dollar Slumped
The US dollar slumped on Thursday having shown the lowest daily drop for a month after the American lawmakers approved a bill on Wednesday evening which recovered government work and increased national debt limit. Unemployment Claims also turned out worse than expected. The pound growth was supported by retail sales data which exceeded the forecast. Business Confidence rose in Australia and Consumer one – in New Zealand.
The US technical default was managed to be prevented but the attention of the markets is shifted towards the damage made by the shutdown and also towards the fact that the Fed will have to put off the start of QE3 tapering off for a later period. Government shutdown caused a serious damage to economy, said President Obama.
FOMC member Evans said on Thursday that the Federal Reserve would probably keep stimulating for some time considering the lack of macroeconomic data for the estimate of economic state. FOMC member Fisher said that the Fed was not likely to taper QE3 at the nearest meeting on October 29-30.
The leaders of BlackRock and PIMCO investment funds believe that the Federal Reserve could put off asset purchase reduction till June, 2014 to support the economy after the political crisis. The expenditure for the US government recovery may turn out higher than the losses caused by a temporary shutdown - say the analysts polled by Bloomberg.
According to the Standard and Poor's, temporary government shutdown will lead to the US GDP decrease in the 4th quarter of this year by 0.6% and will cause serious negative consequences on consumer confidence. Bloomberg Consumer Sentiment fell to its low last week for almost two years. Americans became more pessimistic in estimating economic outlook amid aroused concerns that the political opposition could do harm to the economy.
China's credit rating agency Dagong has downgraded the U.S. rating from A to A- with a negative forecast. Although this step is rather symbolic – they say that the Fitch is going to follow Dagong soon. At the same time Moody's agency announced that the decrease of the US credit rating in the nearest 2 years was unlikely.
Meanwhile, Philadelphia Fed Manufacturing Index turned out slightly better than forecasted (15 p.) and dropped in October to 19.8 p. in comparison with 22.3 p. in September. At the same time the US Unemployment Claims fell less than expected last week – by 15 thousand to 358 thousand against the expected decrease to 335 thousand.
The euro reached 8.5-month high Vs the dollar and the pound – almost 2-week. The UK retail sales rose in September by 0.6% against the expected growth by 0.4%. At an annual rate retail sales rose by 2.2% last month in comparison with the growth by 2.1% in August and the forecast of +2.0%. Retail sales growth for the third quarter accounted for 1.5% q/q – it is the highest quarterly growth from the first quarter of 2008.
Retail Sales Change in the UK and the USA (m/m)
Australian and New Zealand dollar continued growing and updated the heights of October on Thursday. NAB Quarterly Business Confidence rose to +3 in the third quarter compared with -1 in the second quarter – and reached the highest level for two years. ANZ Consumer Confidence Index rose by 2.9% in October to 122.3 p. in comparison with 118.8 p. in September. According to the Westpac report for the nearest 10 years on New Zealand economy, a stable growth will continue till 2015 and will start slowing down only in the second part of the decade.
By MasterForex Company
Overview of the main economical events of the current day - 21/10/2013
The Main Events of the Week
The US dollar almost didn’t change at the end of trade on Friday after a sharp decline on Thursday and amid lack of any significant macrostatistics. Canadian dollar had almost no reaction towards consumer price index data which in general coincided with the forecast. Australian dollar continued growing on the back of Chinese positive GDP and industrial output data. Chinese economic growth at an annual rate accelerated in the 3d quarter, which was recorded for the first time in three quarters.
Be the end of the week the dollar had lost 1.04% according to the dollar index amid the growth of expectations that the Fed would continue stimulus measures for a longer period of time after approving a temporary budget agreement in the USA. The highest growth Vs the dollar was shown by New Zealand dollar (+2.23%), Australian dollar (+2.20%) and British pound (+1.34%). After them go Swiss franc (+1.07%), euro (+1.06%), Japanese yen (+0.81%) and Canadian dollar (+0.62%).
On Wednesday the Congress and the White House came to an agreement which allowed to avoid the US debt default and recover government work after 16 days of shutdown. However, the problem is not solved and the crisis is just put off for three months. The agreement is valid only till January 15 and it means that the budget stalemate can happen in January again –when the debates about the budget and national debt limit increase return. Budget uncertainty will influence Fed decisions and it is unlikely to start QE tapering at October or even December meeting.
This week will be saturated. The US federal institutions started working from Thursday and this week some missed statistics data which haven’t been released for almost three weeks will be published. On Tuesday October, 22 there will be a release of Non-Farm Payrolls, on Wednesday – imports prices and on Thursday - JOLTS Job Openings. Missing Crude Oil Inventories for a week till October 11 will be published on Monday and Natural Gas Storage – on Tuesday.
Inflation data will be published in a week: PPI – on Tuesday, October 29, and CPI – on Wednesday, 30. Labour market report for October is likely to be released a week later – on November 8. The rest statistics data released on November also may be delayed.
Among the USA plan data - on Monday there will be a release of Existing Home Sales (a drop by 3.3% is expected – the lowest monthly decrease since June, 2012) and on Thursday - New Home Sales. On Tuesday - Richmond Manufacturing Index, on Wednesday - FHFA House Price Index, on Thursday - Flash Markit Manufacturing PMI and on Friday – Durable Goods Orders and Revised U. of Michigan Consumer Sentiment.
The main event in the euro-zone will be preliminary manufacturing and service PMI of France, Germany and the whole euro-zone which is released on Thursday; and also IFO Business Climate report on Friday. There is an expectation of index growth which will show euro-zone improving economic state. On Wednesday Flash Euro-Zone Consumer Confidence will be released, and on Friday – retail sales in Italy.
The main event in the UK will be a publication of preliminary GDP for the third quarter on Friday. It is expected that the economic growth rates have gathered pace in the third quarter to 0.8% q/q compared with 0.7% in the second quarter. On Tuesday state finance data will be released, on Wednesday – the Bank of England Meeting Minutes and BBA Mortgage Approvals; on Thursday - CBI Industrial Order Expectations; and on Friday - Index of Services.
Trade balance of Japan will be released on Monday and Consumer Price Index – on Friday. In Australia inflation report for the third quarter and CB Leading Index will be released on Wednesday. In New Zealand trade balance will be released on Wednesday. On Wednesday there will be announced a decision of the Bank of Canada on interest rate, there will be a release of BOC Monetary Policy Report and BOC Press Conference will be held. On Tuesday retail sales in Canada will be released. On Thursday there will be a release of HSBC Flash Manufacturing PMI.
By MasterForex Company
Overview of the main economical events of the current day - 22/10/2013
Dollar Stopped Falling Before Non-Farm Payrolls
The US dollar almost didn’t change at the end of trades on Monday according to the dollar index before the publication of important labour market data for September on Tuesday which can turn out good as it will reflect the period before the government shutdown. The dollar lost almost all its slight growth after the release of housing market data which turned out a little worse than forecasted. The yen fell amid weak trade balance data of Japan.
Non-Farm Payrolls which must have been released on October 4 will be published this Tuesday. The U.S. employment rate is expected to have risen by 180 thousand in September against 169 thousand prior month – and unemployment rate remained unchanged at 7.3%. Employment and unemployment growth rate is paid special attention as the Federal Reserve announced unemployment rate one of the Forward Guidance for monetary policy.
The US Existing Home Sales data for September are slightly worse than expected. According to the NAR – home sales decreased to 5.29 million at an annual rate against the forecasted decline to 5.30 million. However, prior month data were considerably revised for the worse – from 5.48 million to 5.39 million. Home sales dropped after reaching its height for four years.
FOMC member Charles Evans made speech on Monday supporting the continuation of monetary stimulation and repeated that the central bank would need at least a few months more to watch labour market data before taking decision on QE tapering. Evans said that a number of good labour market reports are required as well as confirmation of economic growth strengthening and a few months to estimate the trend. He marked that the Fed wouldn’t be able to make the decision on QE tapering in December confidently – amid the expectations of reviving debates on the US budget issues in January-February.
According to the economists polled by Bloomberg the decision on QE tapering from $85 billion to $70 billion will be made at Fed meeting only on March 18-19, 2014. By July, 2014 the Fed will have decreased asset purchases to $25 billion a month and will finish it in October. Besides, fiscal crisis in the USA will lead to economic growth rate decline in the current quarter by 0.3%.
Finance Minister Jacob Lew urged the members of the Congress to do everything possible to avoid another government shutdown and “almost default” situation. Meanwhile, according to The Wall Street Journal, frightening prospects of further reductions in the U.S. defense spending in the current fiscal year that began October 1, could push the Republicans and Democrats to a more rapid and efficient budget deal. However, the negotiations will be complicated due to political struggle before the elections to the Congress 2014.
The yen dropped on Monday against all major currencies after the release of trade balance which deficit decreased less than expected. Trade deficit fell to 932.1 billion yen in September from 962.8 billion in August – while a decrease to 918.6 billion was expected. Exports growth slowed down in September to 11.5% at an annual rate from 14.6% prior month, the imports grew from 16% to 16.5%. It is the 15th month in a row when the trade balance runs with deficit and it is the longest period of deficit since 1979. Extra pressure on the yen was put by the speech of the Bank of Japan governor Haruhiko Kuroda who promised to continue a soft monetary policy to reach a stable inflation. The Bank of Japan raised economic estimate of all nine regions of the country on Monday.
Germany Finance Ministry said on Monday that the country's economy will continue to grow in the second half of the year thanks to a strong industry, a large amount of investment and private consumption. Optimistic outlook marks a good momentum of Europe's largest economy, which grew by 0.7 % in the second quarter of this year. Last week the leading economic research institutes of the country reported that GDP growth this year will be 0.4 %, and next year it will increase to 1.8%. German government will publish a revised economic growth forecast on October 23.
According to analysts polled by Bloomberg, the chances of the euro to become an alternative to the dollar strengthened as the US budget crisis will probably occur every several months. On this background the situation in the euro-zone seems calm despite the problems of certain countries. This year the euro performs better among currencies of 10 developed countries. From the beginning of the year the euro rose by 5.8% to a basket of currencies of other nine developed countries, showing the best dynamics in the group while the dollar gained 1.5%. Before that the euro had been falling every year for four years: from 2009 to 2012 it dropped by 20%.
By MasterForex Company