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

Register at ANYOPTION and start trading TODAY!

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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