Time | Country | Event | Period | Previous value | Forecast |
---|---|---|---|---|---|
00:30 | Australia | National Australia Bank's Business Confidence | September | 1 | |
00:30 | Australia | ANZ Job Advertisements (MoM) | September | -2.8% | 2.8% |
01:45 | China | Markit/Caixin Services PMI | September | 52.1 | 52.9 |
04:00 | United Kingdom | BOE Gov Mark Carney Speaks | |||
05:00 | Japan | Eco Watchers Survey: Current | September | 42.8 | 42.4 |
05:00 | Japan | Eco Watchers Survey: Outlook | September | 39.7 | 44.2 |
05:45 | Switzerland | Unemployment Rate (non s.a.) | September | 2.1% | |
06:00 | Germany | Industrial Production s.a. (MoM) | August | -0.6% | -0.3% |
06:45 | France | Trade Balance, bln | August | -4.6 | -4.529 |
12:15 | Canada | Housing Starts | September | 226.6 | 215 |
12:30 | Canada | Building Permits (MoM) | August | 3% | -2% |
12:30 | U.S. | PPI excluding food and energy, m/m | September | 0.3% | 0.2% |
12:30 | U.S. | PPI excluding food and energy, Y/Y | September | 2.3% | 2.3% |
12:30 | U.S. | PPI, y/y | September | 1.8% | 1.8% |
12:30 | U.S. | PPI, m/m | September | 0.1% | 0.1% |
17:35 | U.S. | FOMC Member Charles Evans Speaks | |||
18:30 | U.S. | Fed Chair Powell Speaks | |||
21:00 | U.S. | FOMC Member Kashkari Speaks |
Time | Country | Event | Period | Previous value | Forecast |
---|---|---|---|---|---|
00:30 | Australia | National Australia Bank's Business Confidence | September | 1 | |
00:30 | Australia | ANZ Job Advertisements (MoM) | September | -2.8% | 2.8% |
01:45 | China | Markit/Caixin Services PMI | September | 52.1 | 52.9 |
04:00 | United Kingdom | BOE Gov Mark Carney Speaks | |||
05:00 | Japan | Eco Watchers Survey: Current | September | 42.8 | 42.4 |
05:00 | Japan | Eco Watchers Survey: Outlook | September | 39.7 | 44.2 |
05:45 | Switzerland | Unemployment Rate (non s.a.) | September | 2.1% | |
06:00 | Germany | Industrial Production s.a. (MoM) | August | -0.6% | -0.3% |
06:45 | France | Trade Balance, bln | August | -4.6 | -4.529 |
12:15 | Canada | Housing Starts | September | 226.6 | 215 |
12:30 | Canada | Building Permits (MoM) | August | 3% | -2% |
12:30 | U.S. | PPI excluding food and energy, m/m | September | 0.3% | 0.2% |
12:30 | U.S. | PPI excluding food and energy, Y/Y | September | 2.3% | 2.3% |
12:30 | U.S. | PPI, y/y | September | 1.8% | 1.8% |
12:30 | U.S. | PPI, m/m | September | 0.1% | 0.1% |
17:35 | U.S. | FOMC Member Charles Evans Speaks | |||
18:30 | U.S. | Fed Chair Powell Speaks | |||
21:00 | U.S. | FOMC Member Kashkari Speaks |
Deutsche Bankэы analysts list the major economic events and data releases that are going to have maximum impact on the direction of markets for the week ahead.
According to CFTC Commitment of Traders Report, USD net longs edged higher for a sixth consecutive week, holding at their highest levels since April 2017, notes analysts at Rabobank.
Analysts at BNP Paribas note that China’s economic growth continues to slow, so they have cut their GDP forecasts since June.
Han de Jong, the chief economist at ABN AMRO, notes that the UK's PM Boris Johnson has so far failed to produce Brexit proposals to the rest of the EU that are acceptable in the eyes of the European parliament.
Analysts at Deutsche Bank note the latest U.S. NFP report, which was released on Friday and followed jarringly poor ISM surveys earlier last week, ended up being a bit of damp squib with something for both the bulls and the bears.
Analysts at BNP Paribas note that the U.S. growth is slowing and this trend is expected to continue under the influence of corporate investment (slower profits growth, uncertainty) and housing (declining trend of affordability).
Rabobank's analyst supposes that the Battle of Brexit is to be fought in Westminster, not in Brussels as the EU and the UK are treading carefully to avoid any blame when things go wrong, but it remains highly unlikely that a deal will be reached in the next two weeks.
Our proposal is very fair and reasonable
Philippe Dauba-Pantanacce, the senior economist at Standard Chartered, suggests that political risk has become a dominant market driver as it spreads across multiple geographical and political contexts.
CFTC Positioning Report for the week ended October 1 notes that USD net longs extended the uptrend and are now in levels last seen in late April 2017.
Analysts at TD Securities note that German factory orders were weak, posting a 0.6% m/m contraction in August, driven by capital goods.
FX strategists at ING suggest that the reason for the dollar’s resilience is the lack of attractive alternatives. And in a world of secular stagnation, no one wants a stronger currency right now.
Greece’s government is forecasting 2.8% economic growth in 2020, putting the country on track to meet a primary surplus target it agreed on with creditors while still enacting tax relief measures.
The creditors, however, have warned that the cost of polices Prime Minister Kyriakos Mitsotakis’s government has committed to will create a shortfall of up to 900 million euros toward meeting the target of a primary surplus at 3.5% of gross domestic product for 2020.
Greece’s finance ministry insists the target will be met and sees a primary surplus of 3.56% of GDP next year.
The two sides are set to continue talks to bridge the gap until October 15, when Greece and other European Union members must submit budget plans for 2020.
The government’s budget plan “secures fiscal space to reduce taxes and promote growth while at the same time covering the fiscal gap inherited by the new government for 2020 (as well as this year),” Deputy Finance Minister Theodoros Skylakakis said.
Unemployment is expected to decline further, to 15.6% in 2020 from 17.4% in 2019, while investment is expected to increase by 13.4%. Private consumption is seen rising 1.8%.
The Rabobank Research Team provide the near-term outlook on the Turkish Lira, in the wake of rising geopolitical tensions surrounding Turkey and Syria. Earlier this morning, Turkish President Erdogan said that he hopes to visit US President Trump in the first half of next month.
“The Turkish lira was the weakest link in the EM space in the early hours of trading as Turkey’s incursion into northern Syria seems imminent. If it wasn’t for President Erdogan convincing Trump that Turkey cannot wait any longer to create a bigger buffer with Syria (as Turkey has reached its limits for hosting refugees), USD/TRY would have been trading significantly higher, i.e. at least around 6.00. Initial market reaction so far today has been therefore relatively restrained. That said, the path of the least resistance in the short-term is skewed to the upside in USD/TRY as a military conflict is never positive for the markets.”
Chinese officials have significantly narrowed the scope of issues they’re willing to discuss at upcoming trade negotiations with the U.S., Bloomberg News reported.
The leader of China’s trade delegation, Vice Premier Liu He, recently told dignitaries that China will not commit to reforming industrial policies or government subsidies — two of the Trump administration’s main complaints — Bloomberg reported.
Experts believe China may be gaining the upper hand in trade negotiations as President Donald Trump gets caught up in impeachment proceedings and U.S. economic data continues to weaken, the report said. U.S. and Chinese negotiators are scheduled to hold trade talks in Washington this week.
The U.S. economy is actually looking “quite robust” thanks to a healthy labor market and higher consumer spending, Steve Schwarzman, the co-founder, chairman and CEO of Blackstone Group, told CNBC.
A slew of disappointing economic data last week suggested the ongoing U.S.-China trade war was starting to take its toll, fueling concerns of a possible recession. On Tuesday, a gauge of U.S. manufacturing showed the lowest reading in more than 10 years for September.
But Schwarzman noted that manufacturing accounts for about 11% of the U.S. economy. “The U.S. consumer is around 70%, maybe even a little more, of the U.S. economy …. (and) the 70% is doing quite well,” he told.
“Why is that? Because we have full employment in the U.S. — 3.5% unemployment it’s the lowest since 1969 — that’s pretty amazing. This shortage of labor is starting to create higher wages for workers …. (and) what people are doing with that money is they’re spending it. So, we have 70% of the economy that is quite robust. The only thing, I think, that’s going to disturb that is some kind of geopolitical problem,” Schwarzman said.
“I don’t see a normal business cycle taking the U.S. into a recession,” he added.
According to the report from Sentix, there is no positive reaction to the central banks' aid measures, and economic assessments are broadly negative in October. At -16.8 points, the sentix overall economic index for the Euro area marks the lowest level since April 2013. The recovery of expectations from the previous month has thus completely evaporated. In addition, the assessment of the current situation gives cause for concern. For the eurozone, this falls by 6 points to a 5-year low, and for Germany the value drops for the fifth time in a row at a rapid pace.
Germany: Climate discussion
The economic climate in Germany is eroding at record speed, and the overall index for the former economic engine in Europe in October marks the lowest level since July 2009! Pressure is building up, and the first mover among the leading indicators is sending a clear signal to the people involved that the economic slowdown requires a rapid and courageous reaction.
The other regions of the world are also descending. The US overall index marks its lowest level since August 2012, which is also pushing the index for the global economy massively downwards. There is nothing to be seen of the autumn upswing.
Analysts at Danske Bank offer a brief preview of the key event risks to be watched out for in the week ahead.
“Focus this week will turn to the 13th round of high-level trade talks between the US and China taking place in Washington on Thursday and Friday. If we get an interim deal we expect a short-term relief in equity markets, see US-China Trade - 60% probability of an interim deal, 2 October 2019. On the other hand, a failure to reach such a deal should put risk appetite under pressure again as US tariffs on USD250bn of Chinese goods are then set to move up from 25% to 30% on 15 October (next week). Another important topic to follow will be the development in the Brexit drama. French President Macron has said negotiations must be concluded by the end of this week (same signals were sent by EU ambassadors last week).”
Research team at Nordea Markets - in the monthly Financial Forecast report - expects the Fed to cut interest rates in both October and December.
"Especially the deteriorating macro momentum and the fear of tightening financial conditions too much should weigh in the Fed’s decision-making, while the inflation picture is more mixed. We do, however, see late-cycles warnings linked to the inflation outlook and the slightly de-anchored inflation expectations as clear factors speaking in favour of more easing ahead. We believe the current cycle is comparable with the mid-90s, when after a cumulative 300 bp of rate hikes, the Fed cut rates by 75 bp and managed to fend off a recession. This time, the Fed has hiked by a cumulative 225 bp plus delivered additional tightening via the normalisation of the balance sheet. Acting pre-emptively with two more cuts in October and December could prevent a recession and extend the current expansion. We do, however, still expect the US economy to slow further from here, with the risk of a recession being non-negligible", Nordea Markets said.
According to the report from Halifax Bank of Scotland, UK house prices in September were 1.1% higher than in the same month a year earlier. Economists had expected a 1.6% increase. On a monthly basis, house prices fell by 0.4%. Economists had expected a 0.1% increase. In the latest quarter (July to September) house prices were 0.4% higher than in the preceding three months (April to June).
Russell Galley, Managing Director, Halifax, said: “Annual house price growth slowed somewhat in September, rising by just 1.1% over the last year. Whilst this is lowest level of growth since April 2013, it remains in keeping with the predominantly flat trend we’ve seen in recent months. Underlying market indicators, including completed sales and mortgages approvals, continue to be broadly stable. Meanwhile for buyers, important affordability measures – such as wage growth and interest rates – still look favourable. Looking ahead, we expect activity levels and price growth to remain subdued while the current period of economic uncertainty persists.”
The National Association for Business Economics said in a survey released Monday that US GDP growth next year will drop below 2% for the first time since 2016. In the previous survey, the consensus expectation for next year was 2.1% — now it has dropped to 1.8%.
Although the 54 economists surveyed don't yet expect a recession, the dour forecast is the latest example that a slowdown is no longer merely an expectation. It's here now, and it's likely to stay.
Last week, an Institute for Supply Management report found the manufacturing sector contracted for the second straight month in September. One index measured the industry's monthly growth at its lowest since June 2009. The services sector, too, unexpectedly slowed.
The Fed has raised interest rates twice so far this year to keep growth going. But expectations for monetary policy in the remainder of 2019, are all over the place. The NABE economists are split, with 40% anticipating another rate cut this year. Three-quarters of them expect a rate cut by the end of 2020. By comparison, market expectations call for a 78% chance of a quarter percentage point cut this month, and a nearly 90% chance for a decrease in December, according to the CME FedWatch Tool.
Credit Suisse discusses AUD/USD technical outlook and maintains a bearish bias pending a close back above 0.6776/84.
"Big picture, below the .6677 low for the year is expected in due course to resolve the range to the downside for a resumption of the core bear trend with little in the way of meaningful support not seen until the potential uptrend from the 2001 low, currently at .6552. Big picture, we see more important starting at the .6249 low of 2009 and stretching down to .6009, the 2008 low. Above .6776/84 is needed to mark a near -term base, with resistance then at .6806 initially," CS adds.
In opinion of FX Strategists at UOB Group, EUR/USD could attempt a move to 1.10 in the very near term.
24-hour view: “We highlighted last Friday EUR “could retest the 1.1000 level” and added, “the next resistance at 1.1025 is unlikely to come into the picture”. EUR rose briefly during NY hours and touched 1.0997 before easing off quickly and subsequently traded mostly sideways. From here, the underlying tone still appears to be on the firm side but while EUR could edge above 1.1000, the next resistance at 1.1025 is still unlikely to be challenged. Support is at 1.0955 but only a move below 1.0935 would suggest the current mild upward pressure has eased”.
Next 1-3 weeks: “The consolidation phase that started last Thursday (03 Oct, spot at 1.0960) is still in the early stages and we continue to expect EUR to trade sideways for a while more. However, as highlighted last Friday (04 Oct, spot at 1.0970), looking forward, the top of the expected 1.0890/1.1025 range appears to be more ‘vulnerable’. To put it another way, if EUR were to register a NY closing above 1.1025, it would suggest last Monday’s (30 Sep) low of 1.0877 could be a more significant bottom than currently expected”.
China's foreign exchange reserves declined in September, figures from the People's Bank of China showed.
Forex reserves totaled $3.092 trillion at the end of September compared to $3.107 trillion in August. The expected level was $3.105 trillion.
The currency exchange rate and changes in asset prices affected the level of foreign exchange reserves. Martin Lynge Rasmussen, an economist at Capital Economics, said the central bank relied on state banks during August to contain forex volatility, but the latest forex reserves figures suggests that last month this may have been either replaced with, or supplemented by, direct forex sales by the PBoC.
Based on provisional data, the Federal Statistical Office (Destatis) reports that price-adjusted new orders in manufacturing had decreased in August 2019 a seasonally and calendar adjusted 0.6% on the previous month. Economists had expected a 0.3% decrease. For July 2019, revision of the preliminary outcome resulted in a decrease of 2.1% compared with June 2019 (provisional: -2.7%). Price-adjusted new orders without major orders in manufacturing had decreased in August 2019 a seasonally and calendar adjusted 0.3% on the previous month.
Domestic orders decreased by 2.6% and foreign orders increased by 0.9% in August 2019 on the previous month. New orders from the euro area were up 1.5%, new orders from other countries rose 0.4% compared to July 2019.
In August 2019 the manufacturers of intermediate goods saw new orders increase by 1.1% compared with July 2019. The manufacturers of capital goods showed decreases of 1.6% on the previous month. For consumer goods, a decrease in new orders of 0.9% was recorded.
The price-adjusted turnover in manufacturing in August 2019 was up a seasonally and calendar adjusted 1.3% on the previous month. For July 2019, the corrected figure showed a decrease of 1.2% to June 2019, (provisional: -0.9%).
EUR/USD
Resistance levels (open interest**, contracts)
$1.1116 (2890)
$1.1092 (2048)
$1.1074 (576)
Price at time of writing this review: $1.0980
Support levels (open interest**, contracts):
$1.0913 (3282)
$1.0876 (3256)
$1.0834 (2877)
Comments:
- Overall open interest on the CALL options and PUT options with the expiration date November, 8 is 61076 contracts (according to data from October, 4) with the maximum number of contracts with strike price $1,0800 (3506);
GBP/USD
Resistance levels (open interest**, contracts)
$1.2542 (738)
$1.2516 (115)
$1.2473 (168)
Price at time of writing this review: $1.2324
Support levels (open interest**, contracts):
$1.2261 (1170)
$1.2211 (227)
$1.2170 (639)
Comments:
- Overall open interest on the CALL options with the expiration date November, 8 is 31288 contracts, with the maximum number of contracts with strike price $1,3300 (3788);
- Overall open interest on the PUT options with the expiration date November, 8 is 17331 contracts, with the maximum number of contracts with strike price $1,2000 (1603);
- The ratio of PUT/CALL was 0.55 versus 1.15 from the previous trading day according to data from October, 4
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
Pare | Closed | Change, % |
---|---|---|
AUDUSD | 0.67677 | 0.37 |
EURJPY | 117.366 | 0.09 |
EURUSD | 1.09773 | 0.07 |
GBPJPY | 131.843 | -0.01 |
GBPUSD | 1.23311 | -0.04 |
NZDUSD | 0.63132 | 0.23 |
USDCAD | 1.33063 | -0.2 |
USDCHF | 0.99511 | -0.34 |
USDJPY | 106.904 | 0.03 |
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