Week 17 Review – Forex Traders Weekly Wrap : Mon 24th to Fri 28th April 2017


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Welcome to TradingHUB’s ALL NEW BEFORE & AFTER FORMAT. In our exclusive in-house analysis we review what happened last week by currency, data point and outcome. This enables you to tally the expectations issued in last Sundays Week Ahead Traders Calendar with the actual data released. From this you can clearly see what data beat or missed expectations, and correlate that outcome with the price action you see on your charts. Simple yet brilliant !

Overview

As I write this it has been 100 days since Pres Trump took office, and in that 100 days he finally managed to start a war, however, perhaps not the war everybody was anticipating.

Trump shocked a number of people early last week by imposing trade tariffs on Canadian lumber coming into the US and thus setting the tone for his forthcoming trade “negotiations”. This was a fairly surprising move with 24% tariffs and we have seen the Canadian dollar tumbling against the USD ever since. We also saw some disappointment this week with the announcement of his tax reforms which, while headlines were released, contained minimal supporting information about how it was going to be achieved. The biggest headline was a cut in corporation federal income tax from 35% to 15% as well as cutting the tax brackets down from 7 down to 3, but with a projected $20 trillion loss in revenue over the next 20 years many remain sceptical.

We also saw the 1st round of the French elections last weekend which as expected delivered a Macron and Le Pen run-off which sent a sigh of relief across Europe. Essentially Macron is a long way ahead in the polls of his right wing counterpart and therefore the expectation is that the Federalist will ease into the presidential position removing risks of a Euro meltdown and Frexit.

USD

Tuesday 25th April

CB Consumer Confidence – Prior 124.9 | Expected 123.7 | Actual 120.3

Thursday 27th April

Core Durable Goods Orders – Prior 0.5% | Expected 0.4% | Actual -0.2%

Friday 28th April

Advance GDP – Prior 2.1% | Expected 1.3% | Actual 0.7%

USD Summary: Not a great week for the USD with all 3 key indicators coming in below expectations.Most notable is the advance reading for GDP which is the 1st measure of Q1 output. While it’s unlikely to have a material impact on monetary policy at present (as the Fed tends to concentrate more on labour conditions) should we see a continued succession of misses it certainly would have more of an impact. The one positive note is that the previous GDP figure for Q4 was revised upwards. It’s a similar story with the CB’s consumer Confidence and Durable Goods Orders.

EUR

Monday 24th April

German IFO Business Climate – Prior: 112.3 | Expected 112.4 | Actual 112.9

 Thursday 27th April

Minimum Bid Rate – Prior 0% | Expected 0% | Actual 0%

Friday 28th April

CPI Flash Estimate – Prior 1.5% | Expected 1.8% | Actual 1.9%

EUR Summary: In contrast to the USD the Euro had a good week with the most prominent release being inflation which rose by 1.9% last month against an expected 1.8%, much better than the 1.5% from last month. On the day before ECB President Draghi had maintained a relatively dovish outlook in the monthly press conference, and the ECB will want to see sustained evidence that inflation is moving towards the 2% target. Core inflation also rose to 1.2% from 0.7%, this suggests that we could see a gradual shift in rhetoric and monetary policy at the next June council meeting.

GBP

Friday 28th April

Preliminary GDP – Prior: 0.7% | Expected 0.4% | Actual 0.3%

 GBP Summary: There was limited news for the GBP last week although it continued to strengthen on the back of the snap election announcement and increased confidence in a significant Conservative majority leading to stronger EU negotiations. Preliminary GDP did disappoint and was one of the weakest release since Brexit, and this could dampen any likelihood of a shift in monetary policy at the next meeting. I personally think the biggest concern the UK economy has at the moment is increasing inflation and decreasing growth, which if continues long-term, poses significant issues.

JPY

Thursday 27th April

Monetary Policy Statement/Outlook/Interest Rate

JPY Summary: Bank of Japan kept monetary policy unchanged as the world’s 3rd largest economy continued to benefit from rising exports. In addition, they also revised their economic growth with a forecast of 1.6% growth this financial year, higher than the 1.5% predicted in January. However, the bank also lowered its forecast for core CPI. 

CAD

Wednesday 26 April

Core Retail Sales – Prior: 2.3% | Expected — | Actual -0.1%

GDP – Prior 0.6% | Expected 0.1% | Actual 0%

CAD Summary: Core Retail Sales came in better than expected and more positive still is the significant revision for last month’s print, up from 1.7% to 2.3%. GDP also came in unchanged from last month which was in line with expectations from the Bank of Canada. The Bank had commented that it expected a slowdown in Q1 following positive growth in January. The big risk to the Canadian economy at present is the trade dispute over lumber with the US, continued volatility in oil prices and rhetoric that President Trump is looking to withdraw from NAFTA. The general feeling is that this is unlikely and it is negotiating tactic, but even so we have seen weakness in the Canadian dollar over the threat.

AUD

Wednesday 26 April

CPI – Prior: 0.5% | Expected 0.6% | Actual 0.5%

AUD Summary: Although slightly below expectations the 0.5% increase actually means a 2.1% year-on-year inflation rate for Australia. This is just within the RBA’s target and some analysts are now suggesting that it could be a quarter point rate hike in December, of which there is a 30% chance priced into the market according to Bloomberg. The RBA will be keen to increase interest rates to tackle the overheating housing market which has been raising concerns about financial stability for some time, however is predicting that the 1st cycle of tightening won’t begin until core CPI reaches the 2% to 3% target.

Source: Content written by Andi Thornton, TradingHUB Chief Analyst – www.TradingHUB.co.uk


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