Markets ended the week with a generally choppy and sideways session on Friday, mostly ignoring the stronger than expected US CPI figures for August, with the real focus turning towards the upcoming Fed Meeting, Wednesday. US CPI rose by 0.4% mm in August, above expectation of 0.3% mm, while the Core figure rose by 0.4% mm, above expectation of 0.2% mm. Annually, the headline CPI accelerated to 1.3% yy, up from 1.0% yy and beat the expectation of 1.2% yy.
Stocks ended mixed, with the DJI mildly firmer, the S+P flat and the Nasdaq a little lower by the end of the session, while commodities generally tracked the stock moves and consequently ended the day with little change. Oil actually put on 0.75% on the session but ended down by more than 10% over the past fortnight, as higher-than-expected inventory figures surprised traders who were caught long and were already concerned about fuel demand with the peak US driving season now behind us.
The FX markets were also choppy and directionless although the slide in Sterling, seen in the last couple of sessions, was at least halted into the weekend.
The Euro was underpinned early in Friday’s session after the ECB meeting left traders with the impression that the current level of the Euro was of no concern but then gave up a little ground, to finish in line with the previous week’s close, as the dollar found some buyers after the US CPI release. Sterling chopped around either side of 1.2800, while US$Jpy was confined to a 25 point range. The commodity currencies looked firm in Europe but then drifted towards session lows after the US data release, ahead of a mild bounce, to finish mid-range into the weekend close.
The coming week will be loaded with data almost every session, with 3 Central Banks, most notably the Fed (Wed) but also both the BOE and the BOJ (both Thur), due to make Interest Rate Decisions. All eyes will be on the Fed though; who are expected to leave the interest rate unchanged, and the interest is more likely to lie in their outlook for new growth, inflation, and unemployment forecasts, with the surprise fall in the unemployment rate, to 8.4% in August, likely produce an upgrade. The other question will be about US economic output – and when the Fed sees a return to pre-pandemic levels. We shall have to wait till Wednesday (early Thursday in Asia) to find out.
The BOE and the BOJ are expected to leave policy unchanged. The BOE could increase its current bond buying scheme beyond the current £750bio, which would likely underpin Sterling although Brexit headlines are likely to swamp anything that the BOE announce on Thursday.
While it will be the Fed that takes most of the limelight this week, there will be plenty of other items on the agenda which could produce some volatility although Monday will be relatively quiet with very little going on, although the UK Inflation Report Hearing may produce some swings in Sterling.
Things gear up on Tuesday with the release of the RBA Minutes and the China Retail Sales & Industrial Production figures for August, while Europe will feature the UK August Unemployment figures and the German/EU ZEW Economic Sentiment Survey, while the US will look to the Capacity Utilisation and Industrial Production for guidance (both August). Wednesday will see little action until the Fed decision, with the market likely to largely ignore the NZ Q2 Current Account , Australian New Home Sales and the UK CPI, PPI, RPI, along with the other data due from the US prior to the Fed decision; this being the August Retail Sales, Business Inventories, Capacity Utilisation and NAHB Housing Market Index. Thursday will kick off with the NZ Q2 GDP and the Australian August Unemployment, which comes ahead of both the BOJ and then the BOE Meetings, along with the EU CPI figures for August. From the US, Thursday sees the Building Permits, Housing Starts, Weekly Jobless Claims and Philadelphia Fed Mfg Survey, while Friday will be relatively quiet, with the Japan August CPI, UK Retail Sales EU PPI and the US Michigan Consumer Sentiment Index being the only real items on the agenda. Have a good week.
Economic data highlights will include:
Mon: NZ Visitor Arrivals, Business PSI, China House Price Index, Foreign Direct Investment, Japan Industrial Production, Capacity Utilisation, Tertiary Industry Index, EU Industrial Production, UK Inflation Report Hearing,
Tue: NZ REINZ House Price Index, WBC Consumer Survey, RBA Minutes, House Price Index, China Retail Sales, Industrial Production, Fixed Asset Investment, NBS Press Conference, UK Unemployment, German/EU ZEW Economic Sentiment Survey, US New York State Empire Mfg Index, Import/Export Index, Industrial Production, Capacity Utilisation API Weekly Crude Oil Stock Inventory, Global Dairy Trade Index
Wed: NZ Current Account, Australia New Home Sales, WBC Leading Index, UK CPI, PPI, RPI, EU Trade Balance, US Retail Sales, NAHB Housing Market Index, Business Inventories, EIA Weekly Crude Stocks Change, FOMC Meeting – Interest Rate Decision/Press Conference/Statement/Projections
Thur: NZ Q2 GDP, Australian Unemployment, RBA Bulletin, BOJ Interest Rate Decision/Press Conference/Statement, EU CPI, BOE Meeting/Statement/Minutes/Vote Count/APP Facility, US Building Permits, Housing Starts, weekly jobless claims, Philadelphia Fed Mfg Survey,
Fri: Japan CPI, UK Retail Sales, German PPI, EU Current Account, US Current Account, Michigan Consumer Sentiment Index
Market moves, in brief:
FX: DXY 93.25 (-0.10%)
Bonds: US10Y; 0.667% (-2.83%), German 10Y; -0.480% (-3.99%), UK 10Y; 0.181% (-21.26%), Australian 10Y; 0.921% (-2.09%), NZ 10Y; 0.615% (-1.85 %), China 10Y; 3.143% (+1.07%)
Stock Indices: DJI; +0.48%, S+P; +0.05%, NASDAQ; -0.60%, EUStoxx50; +0.09%, FTSE100; +0.48%, Shanghai Composite; +0.79%, ASX200SPI: +0.19%
Metals: Gold $1940 oz (-0.28%), Silver $26.75 oz (-0.52%), Copper $3.042 lb (+1.47%), Iron Ore $127.81 per tonne (NYMEX) (+0.76%),
Oil: WTI $37.30pb (+0.79%)
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No suggestions today. It looks as though we may be stuck i a narrow range while awaiting the Fed on Wednesday/Thursday.
|1 Hour||Turning Neutral||Turning Neutral||Turning Higher||Turning Neutral||Turning Neutral||Neutral|
|4 Hour||Turning Neutral||Turning Neutral||Possible Basing Formation||Turning Neutral||Turning Neutral||Turning Neutral|
|1 Day||Neutral – Turning Lower?||Turning Neutral||Turning Lower||Turning Neutral||Neutral – Turning Lower?||Turning Neutral|
|1 Week||Possible Topping Formation||Turning Neutral||Possible Topping Formation||Possible Basing Formation||Up||Possible Topping Formation|
|1 Hour||Turning Neutral||Neutral – Turning Higher?||Turning Neutral||Turning Neutral||Turning Neutral||Turning Neutral|
|4 Hour||Turning Neutral||Turning Lower||Neutral – Turning Higher?||Turning Neutral||Turning Neutral||Turning Higher|
|1 Day||Turning Higher||Turning Lower||Neutral||Turning Neutral||Turning Lower||Neutral – Turning Lower?|
|1 Week||Possible Basing Formation||Overbought – Turning Lower?||Turning Neutral||Overbought – Turning Lower?||Up||Turning Neutral|
|1 Hour||Turning Neutral||Turning Lower||Turning Higher||Turning Neutral||Turning Neutral||Turning Neutral|
|4 Hour||Turning Neutral||Up – Overbought||Down – Oversold||Turning Neutral||Turning Neutral||Turning Neutral|
|1 Day||Turning Lower?||Neutral – Turning Higher?||Turning Lower||Turning Neutral||Turning Neutral||Turning Neutral|
|1 Week||Turning Higher||Turning Neutral||Turning Neutral||Possible Topping Formation||Turning Neutral||Possible Topping Formation|