Economic events of the Week

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Monday: November Retail Sales are due in Spain, following a Year over Year decrease of -0.6%, expectations are low for this one. The other side of the European continent expresses more optimism as December’s Italy Business Confidence is analyst surveyed to indicate a 0.9 point improvement. The day will conclude with the publishing of Consumer Price Indices in Russia.

Tuesday: The day will see mostly U.S. data, namely the publishing of the Chicago Purchasing Managers’ Index and the Consumer Confidence Index.

Wednesday: The first day of 2014 will see the publishing of the official Manufacturing Purchasing Managers' Index in China.

Thursday: The unofficial HSBC/Markit Manufacturing Purchasing Managers’ Index is due and is expected to present a more pessimistic image of Chinese economy with an analyst estimation of 50.5 points vs. the official PMI’s 51.2. The day will also see the publishing of Manufacturing Purchasing Managers’ Indices throughout the Eurozone, namely Italy, France, Germany and the U.K. U.S. Initial Claims, U.S. ISM Manufacturing and ISM Prices Paid are due later that day.

Friday: Europe will draw most of the day’s attention. The busy day will start as the nationwide House prices will be published in the U.K. Analysts expect the figure to be revised upwards from an annual increase of 6.5%, recorded last month, to no less than 7.1% on this month’s figure. Preliminary estimations of the Spanish CPI are also due. More attention will be taken by the U.K. real-estate sector with the publishing of November’s mortgage approvals – analysts expect this figure to continue increasing. Italian Consumer Price Index and Spanish Unemployment will also be published. 

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More signs of recovery

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The EUR/USD rate was not the only financial asset to set new records last week. On Friday, the U.S. 10-year yields finally surpassed the 3% landmark. This is quite a latent, but not entirely unexpected reaction to the previous week’s tapering. In spite of the 10 year yields already surpassing 3% in September 2013, that case is mostly attributed to volatile anticipation for tapering, but this time the tapering is a solid, given fact. The U.S. 10 year yield serves as a benchmark for numerous interest rates. These range from those affecting the real-estate market, such as mortgages, to those fueling equities such as corporate bonds. The low corporate bond interest rates have been regarded as catalysts of soaring equity prices lately. These led to the S&P 500 rising by nearly 30% since the beginning of the year. Likewise, the low mortgage rates in the U.S. may be regarded as primary contributors to the FHFA U.S. House Price Index recording an 8.2% annual increase in October. The affect higher U.S. Government bond yields would have on U.S. assets such as equities and real estate remains to be seen. Register at ANYOPTION and start trading TODAY!

Strong Euro weights down on Eurozone’s recovery

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As Christmas was celebrated by the Christian world last week, it also carried a considerable portion of market participates away from their trading screen, leading to the tradition annual decrease of volumes. Following a rather muted trading week, EUR/USD reached a 2.5 year peak on Friday. The record price was achieved after the EUR strengthened versus the USD by nearly 1.5% during the day, to approximately 1.389 USD. The current level represents nearly a 15% strengthening of the Euro versus the USD since July 2012’s 1.2 levels.

Consequently, the current EUR/USD levels are going to present a bigger problem for European exporters, as those would receive less Euros for their foreign currency to fund their operations. Alternatively, local producers might have a harder time competing with global supply. For example, Germany’s Import Price Index, published on Monday, indicated an annual -2.9% decrease. Undoubtedly, the strengthening Euro had some part in this. 

While the strengthening Euro may be regarded as an equal problem to all Eurozone members, a bigger issue might be the fact that not all of these members had equally recovered from the great recession. For instance, Germany’s GDP currently increases at an annual pace of 1.1%, supported by a quarterly increase of 0.1% in exports. The French GDP, however, was published last week and indicated a muted 0.2% increase, handicapped by a -1.3% decrease of exports during the last quarter. Evidently, not all shared sorrows are halved sorrows. 

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Strong Euro weights down on Eurozone’s recovery

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As Christmas was celebrated by the Christian world last week, it also carried a considerable portion of market participates away from their trading screen, leading to the tradition annual decrease of volumes. Following a rather muted trading week, EUR/USD reached a 2.5 year peak on Friday. The record price was achieved after the EUR strengthened versus the USD by nearly 1.5% during the day, to approximately 1.389 USD. The current level represents nearly a 15% strengthening of the Euro versus the USD since July 2012’s 1.2 levels.

Consequently, the current EUR/USD levels are going to present a bigger problem for European exporters, as those would receive less Euros for their foreign currency to fund their operations. Alternatively, local producers might have a harder time competing with global supply. For example, Germany’s Import Price Index, published on Monday, indicated an annual -2.9% decrease. Undoubtedly, the strengthening Euro had some part in this. 

While the strengthening Euro may be regarded as an equal problem to all Eurozone members, a bigger issue might be the fact that not all of these members had equally recovered from the great recession. For instance, Germany’s GDP currently increases at an annual pace of 1.1%, supported by a quarterly increase of 0.1% in exports. The French GDP, however, was published last week and indicated a muted 0.2% increase, handicapped by a -1.3% decrease of exports during the last quarter. Evidently, not all shared sorrows are halved sorrows. 
 
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Strong Euro weights down on Eurozone’s recovery

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As Christmas was celebrated by the Christian world last week, it also carried a considerable portion of market participates away from their trading screen, leading to the tradition annual decrease of volumes. Following a rather muted trading week, EUR/USD reached a 2.5 year peak on Friday. The record price was achieved after the EUR strengthened versus the USD by nearly 1.5% during the day, to approximately 1.389 USD. The current level represents nearly a 15% strengthening of the Euro versus the USD since July 2012’s 1.2 levels.

Consequently, the current EUR/USD levels are going to present a bigger problem for European exporters, as those would receive less Euros for their foreign currency to fund their operations. Alternatively, local producers might have a harder time competing with global supply. For example, Germany’s Import Price Index, published on Monday, indicated an annual -2.9% decrease. Undoubtedly, the strengthening Euro had some part in this. 

While the strengthening Euro may be regarded as an equal problem to all Eurozone members, a bigger issue might be the fact that not all of these members had equally recovered from the great recession. For instance, Germany’s GDP currently increases at an annual pace of 1.1%, supported by a quarterly increase of 0.1% in exports. The French GDP, however, was published last week and indicated a muted 0.2% increase, handicapped by a -1.3% decrease of exports during the last quarter. Evidently, not all shared sorrows are halved sorrows. 
 
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Economic events of the week

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Monday: In Japan, the Tankan Large Enterprises All Industries Index will be released. In France, preliminary figures for the Purchasing Managers’ Indices in the Manufacturing and Services sectors will be released. Later that day, similar Purchasing Managers’ data will be published for Germany and the Eurozone’s aggregate. In the U.S., Empire Manufacturing Survey will shed some light on how manufacturing executives in the state of New York see the future of the economy. Additionally, U.S. November Industrial Production data will be published, while analysts currently estimate these to revert to positive territory, following last month’s -0.1% decline.

Tuesday: Producer Prices will be published in the U.K., followed by Consumer Prices, both are expected to present moderate to negative figures. German Industry will later take the focus with the publishing of the ZEW surveys, both “expectations” and “current situation”. The Eurozone’s aggregate CPI will also see light, but these are not expected to draw the most market attention, as it follows a previous annual figure indicating only a 0.9% increase. U.S. Consumer Prices and Current Account balance are due to conclude the day.

Wednesday: The day will kick off with Japan releasing its trade balance figures, which may cause some volatility in the USD/JPY. Later the day, IFO surveys will be published in Germany: “Business Climate”, “Current Assessment” and “Expectations”. U.K. labor data will see light in the form of Jobless Claims Change and the ILO Unemployment rate. The U.S. will see some housing data in the form of MBA Mortgage Applications, as well as Housing Starts. Later that day, the Fed is due to release its FOMC rate decision, that will hopefully provide some forward guidance on the future of its monetary policy.

Thursday: The All Industry Activity Index will be released in Japan. This will be followed by some Retails Sales data in the U.K. and then the U.S. Initial Jobless Claims, in hope of recovering from last week’s negative figure. 

Friday: Eurozone Consumer Confidence Figures are due. 

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The shutdown deal hit markets

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What started as a rather drowsy week, quickly escalated into something more upbeat, when on Wednesday a deal was reached in Washington: the Republican-dominated House of Representatives passed a two-year compromise-spending plan, aimed to prevent shutdowns in the future. The plan entailed a cut in the U.S. Government budget, leading to a reduced budget deficit. On the surface, this was good news for the markets, as the previous shutdown has had quite a devastating effect on the U.S. economy as a whole, and specifically the U.S. labor market. However, as the Fed is probably aware of the former fact and the brighter path it paves for U.S. employment, it was also natural to assume tapering is closer at hand.

Equity markets retorted with a swift, albeit moderate, nudge downwards; The S&P500 lost about -0.5% as the news spread. The same pessimistic sentiment continued to provide negative pressure on equity prices throughout the day. However, that was haled on Thursday as the Department of Labor’s Initial Jobless Claims surged to 368K, an increase of 68K from the previous week's revised figure of 300K. For reference, the last time Initial Claims saw such levels was nearly two months ago, on the week ending October 4th, shortly after the Government shutdown. Needless to mention, the hike of initial claims pushed markets back towards "taper off", at least for the time being. Not only that, Retails Sales figures also presented an allegedly positive 0.7% Month over Month increase, but this seems to be mostly the result of Auto sales, as Retail Sales (Less Autos) presented a more moderate 0.4% increase… so that also helped ease tapering concerns. 

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Trading the taper

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On Monday, Europe received an alarming reminder that the great recession is still with us. The Greek GDP presented a Year over Year decrease of a rather depressing -2.9%. Analyst expectations anticipated a much moderate -1.7% decrease. Moreover, breaking down the change of different components in the index helped support the belief that weak demand factors were among those leading to the negative print; Durables such as Furnishing presented a -1.4% monthly decrease, while Clothing and footwear presented a -9.8% decline.

Tuesday supplied some more weak-demand evidence, but this time on the U.S. front. The U.S. Census Bureau revealed that day that Wholesalers Inventories presented a whopping 1.4% monthly increase in October, much larger than analyst estimation, which predicted a more moderate 0.3% increase. While the figure will necessarily trickle down to the US Q4 GDP, when it will be released, it is hard to believe that this is the way hoped to exit the great recession. 


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Economic events of this week

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Monday: Consumer and Producer Price Indices are due in China. Analysts expect further expanding of the two price indices as strong local private demand continues pushing the CPI higher amid moderate global demand. Industrial Production is also due in Germany.

Tuesday: The October Tertiary Industry Activity index is due in Japan. Industry activity will also be monitored by the release of Industrial Production in China, France, Italy and the U.K. China will also publish that size of its money stock.
 
Wednesday: Machine Orders data will be released in Japan – Analysts predict that Abe’s efforts will put us on a 15.1% increase versus last year. Domestic Corporate Good prices will also be published in Japan, with a previous print of Year over Year increase of 2.5% and analysts’ expectations for 2.7% to be published on Wednesday, Japan seems further away from the liquidity trap. The final estimation of the Consumer Price Index in Germany will also see light. 

Thursday: The French CPI is scheduled to see light, but the stagnant state of the local economy will make it quite difficult for prices to rise much higher. U.S. Initial Claims will make their weekly appearance. 

Friday: The Consumer Price Index will be released in Spain and in the U.S. 

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On both sides of the Atlantic

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Wednesday sported an opportunity for U.S. data to shake the markets. Initially, the ADP employment change was released, and presented a very impressive increase of 215,000 jobs in the U.S. economy during November. When the promising data started advocating the tapering of QE3, it also sent the USD to strengthen nearly 0.5% versus the EUR. However, the day did not stop there, as the ISM Non-Manufacturing Composite Index was released shortly after, with less appeasing results. The negative 53.9 figure dispersed some of the QE3 tapering concerns, weakening the USD back to the 1.36 levels versus the EUR, where it started at. Equity reiterated their example for the “Bad news is good for stocks” paradigm, as the S&P500 gained approximately 0.7%.

Thursday saw a rather expected decision by the Bank of England to keep the official bank rate at 0.5%. The day’s protagonist, on the other hand, is probably the Department of Labor’s Initial Jobless Claims report, which indicated only 298,000 Initial Claims were submitted during the previous week. The last time this occurred was September and the figure has since surged to as high as 737,000, due to the Government’s shutdown. However, it seems that optimism regarding the labor data was already priced in the markets, as a result of the previous day’s positive ADP figure. Evidently, markets saw little change following the print.

Friday was somewhat of a different story. The day started with very positive indications regarding the U.S. labor market. These included U.S. Nonfarm Payrolls adding 203,000 Jobs in November, and perhaps more importantly U.S. Unemployment dropping to a level of 7.0%. Stock derivatives’ immediate response was to lose about 0.5%. Taper-induced trading was also evident in gold which took quite a blow and of course the USD which strengthened by almost 0.3% versus the EUR. Interestingly, things did not stop there - when the official trading started market opening was on average a tad higher than the previous day’s close. However, soon after that euphoria spread around equity markets, which lead both the Dow and S&P 500 to close their trading days more than a percentage point higher than the previous day’s close. 

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Different news makes markets volatile

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Last week the PMI releases delivered on their highly anticipated comeback. It started with Manufacturing Purchasing Managers’ Indices showing mostly positive figures around the Eurozone. These included Italy, with a print of 51.4 versus the anticipated 50.8 and Germany with 52.7 versus expectations for 52.5, not to mention the U.K.’s PMI, which scored no less than 58.4 points, 2.3 more than analysts had predicted. Expectations for increased local demand seem to have weakened the Euro as it began trading at around 1.3540 USD soon after the release of the PMIs, 0.5% below the levels that were traded just before their release. 

The Euro’s upside, however, came from a rather unpredictable front, as Tuesday saw surprising pessimism in its equity market. The German DAX index lost nearly 2% during the trading day, while the Paris CAC 40 presented even higher losses. One asset’s pessimism is another’s opportunity, it seems; as the Euro’s weakness from the previous day diminished rather entirely, with EUR/USD trading back at around 1.3600 levels. 

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Economic Events of this week

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Monday: Japan’s third quarter Capital Investment data will be published, analysts expect it to indicate an annual 2.8% increase, versus a previous, completely muted figure. In China, “Fiscal forward guidance” will be provided by the HSBC Manufacturing Purchasing Managers’ Index. Manufacturing PMI survey results will be published in Italy, France, Germany, and the U.K. the U.S. will see the Markit, and the ISM PMIs being published. 


Tuesday: Japan’s Monetary Base will be published; following October’s figure indicating no less than a 45.8% annual increase of currency in circulation at the BoJ’s vaults. Spanish Unemployment data is also due that day. 


Wednesday: PMI Indices for the services sector will be published throughout the Eurozone. Additionally in the Eurozone, the Preliminary Q3 GDP figure will be published, as analysts expect a barely positive quarterly increase of 0.1%. In the U.S., MBA mortgage applications are due with much anticipation, given last week’s surge of building permits. Some U.S. labor data will be provided by the ADP National Employment report. Later that day, the U.S. Trade Balance data for October and U.S. New Home Sales data will be published. 


Thursday: The BoE will announce U.K.’s bank rate, currently set to 0.5%. Public interest will probably be drawn to the ECB’s rate announcement later that day. U.S. Initial Jobless Claims data will be published, as well as the U.S. 3Q GDP’s second estimate. The day will conclude with the U.S. Factory Orders data. 


Friday: Unemployment Rate will be published in the U.S., providing further guidance on when Bernanke\ Yellen will finally have justification to start tapering. U.S Consumer data is also due with the publishing of Personal Income and Spending figures for October, as well as the University of Michigan’s Consumer Confidence Sentiment. 

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Black Friday optimism

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Friday presented opportunity for market optimism on both sides of the Atlantic. The Eurozone saw positive data published regarding the demand side, with prices increasing by an estimated 0.9%. Unemployment also provided its fare share as it decreased to 12.1%. That supported the German DAX index and the Spanish IBEX35, closing the week at +1.6% and +1.1% weekly increases respectively. At first, U.S. markets didn’t appear to need any data derived support; Although no positive figure was released in the U.S. on Friday, markets opened with a positive trend, due to optimism based on what appeared to be strong "Black Friday" consumer demand. The S&P 500 gained +0.2% throughout the trading day and the NASDAQ and DJIA complimented with similar figures. This reverted, however, as reports from leading U.S. retailers suggested local demand wasn't as strong as it seemed, leading both the Dow, as well as the S&P to conclude the day in negative territory. Register at ANYOPTION and start trading TODAY!

Positive data-backed momentum

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Last week, equity trading provided another opportunity to admire the optimism recently present in the markets.

The week kicked off with the NASDAQ composite index topping over 4,000 points. Market belief that the Fed’s market supporting actions will continue was presented too – the increase of bidding over bonds offered by the U.S. Treasury led Monday’s Bids-to-Cover ratio up to 3.54, an impressive jump from October’s 3.09. Moreover, the interim deal concluded between the P5+1 and Iran over Iran’s nuclear program helped nudge oil prices downwards, which fueled corporations' expectations for cheaper forthcoming energy prices.

Tuesday, provided an opportunity for the NASDAQ to really shine as it passed the 4K mark again, and closed the trading day there, for the first time in 13 years. The positive trading day was backed by U.S. Building Permit statistics, which indicated that 1,034K annualized new permits were granted in October. On the one hand, this is the highest figure since January 2008. On the other hand, it could be a latent response to the recent Federal Government Shutdown, so it will be interesting to re-examine those figures in November.

 The day also saw the Conference Board's Consumer Confidence Index losing two points to a level of 70.4. The same positive momentum continued on Wednesday as Initial Jobless Claims dropped by 10K versus the previous week. 

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