Monday 23-10-2017 Outlook

Welcome to the weekly outlook starting this Monday 23 October. We’ll be looking at the week’s key economic events on the financial calendar covering Monday to Thursday. As you’ll read below, it’s an active economic news week with releases coming from all major economies around the globe. On Friday, we also get inflation figures from the US with the Consumer Price Index for October due at 12:30 GMT.

 

Event: EU Market Services, Manufacturing and Composite PMI (October)

Date: Tuesday 24 October 2017 at 08:00 GMT

Markets affected: EUR/USD, EUR/GBP

Trending hashtags: #eur, #pmi

 

Business executives in the Eurozone manufacturing and services sectors showed confidence in the common region last month with the PMI releases by Markit Economics confidently above the 50 mark which shows confident growth. Markit Services came in at 55.8, the Markit Manufacturing PMI was 58.1 while the combined Markit PMI Composite showed an improvement on previous months with 56.7.

 

Event: Australia Consumer Price Index (Q3)

Date: Wednesday 25 October 2017 at 00:30 GMT

Markets affected: AUD/USD, AUD/NZD

Trending hashtags: #aud, #cpi

 

Important inflation data is due out for Australia on Wednesday. The aussie dollar experienced volatility last week with retail sales below expectations but then seeing the lowest unemployment rate for a number of years. The Reserve Bank of Australia will be closely following the release of the consumer price index which saw 0.2% growth in the second quarter from the first quarter and an annualised growth of 1.9%.

 

Event: UK Gross Domestic Product (preliminary)

Date: Wednesday 25 October 2017 at 08:30 GMT

Markets affected: GBP/USD, EUR/GBP

Trending hashtags: #gbp, #gdp

 

Estimates for third quarter GDP are due out for the UK. The economy grew 0.3% on a quarterly basis during the second quarter with 1.5% annualised growth. Analysts are expecting a slight improvement for the third quarter at 1.8%. With a number of challenges facing the UK economy around the Brexit negotiations, the Bank of England will be on the lookout for signals to consider tightening monetary policy again.

 

Event: Bank of Canada Interest Rate Report

Date: Wednesday 25 October 2017 at 14:00 GMT

Markets affected: CAD/USD

Trending hashtags: #cad, #interestrate

 

While the Canadian economy has been outperforming it’s G7 counterparts, the Bank of Canada may take caution in making any changes to its current 1% interest rate. Last week retail sales fell by 0.3% in August and inflation has only grown 0.2% in September – both figures missed forecasts and may deter the central bank on making any modifications to the benchmark rate at this time.

 

Event: New Zealand Trade Balance (September)

Date: Wednesday 25 October 2017 at 21:45 GMT

Markets affected: NZD/USD, AUD/NZD

Trending hashtags: #nzd, #trade

 

Trade data is due out for New Zealand which will be key in helping the struggling kiwi. The NZD took a tumble last week as the NZ First party threw its support behind the Labour Party and raising fears of increased spending on housing and wages taking a toll on the country’s debt level. Imports last month came in at $4.92 billion with exports at only $3.69 billion. With a monthly balance of $-1,235 million the overall year’s level is currently sitting on$-3.2 billion.

 

Event: ECB Interest Rate Decision

Date: Thursday 26 October 2017 at 11:45 GMT

Markets affected: EUR/USD, EUR/GBP

Trending hashtags: #eur, #interestrate

 

One of the main events in this week’s calendar comes on Thursday with the European Central Bank’s decision on interest rates which are currently 0% and deposit rate at -0.4%. ECB President, Mario Draghi, has commented on a reduction on the monthly bond purchasing programme which has been in place for three years now. The Markets will be on the lookout for any further news on that front.

 

https://www.fxstreet.com/economic-calendar
http://www.nzadviseronline.co.nz/news/dollars-falls-on-labour-news-242599.aspx

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Is it a bird? Is it a plane? No it’s Angela Merkel

German Chancellor backs up UK PM May

When you are down there is nothing like a friend who can give you a helping hand to give you a lift.

Yesterday, Theresa May who is in a fight to save her job and keep her shattered Conservative Party together, got the support she greatly needed and from an unlikely source.

At a working lunch the UK Prime Minister made a plea to her fellow leaders that she needed back up from them to get a deal so that could sell it to the Euro skeptics and the populous in Great Britain.  She also underlined that they will have to do the same with their own people.  She reminded them of her recent Florence speech where she mentioned the UK willingness to discuss the so called UK’s divorce bill which seems to be the main stumbling block for the negotiations team on both sides.

To the rescue came German Chancellor Angela Merkel who admitted it was up to both the UK and the EU to move forward together before we see the end of 2017.   Merkel also mentioned there were “encouraging” signs that progress was being made with the Brexit talks and that “from my side there are no indications at all that they won’t succeed”.

This gesture of support will give May something to take back to the UK and the power to attempt to move negotiations along.  This also gives hope to the UK negotiating team that trade talks can indeed start in December.

Having attended the Thursday gathering of EU leaders, May will now head home leaving the remaining EU leaders to discuss the Brexit without her but she must have more confidence knowing she has a friend still there in the form of Angela Merkel.

Though the general consensus is that the EU leaders will highlight that the general feeling is that “insufficient progress” has been made with the Brexit talks, clearly there are now signs that the EU summit will not be a total disaster for the UK and that chances for trade talks to officially start in December are looking like a possibility.

Marketwise, Merkel’s rescue of May has done very little for the sterling which appears to still be stinging from yesterday’s lower than expected UK Retail sales ( -0.8% vs -0.1% expected, ouch!) as at the time of writing the GBP/USD is trading at 1.31436.

 

Source: http://www.bbc.com/news/uk-politics-41684111

 

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Diving into Traders Psychology, What is It and How to Use It

Trader’s psychology is a frequently used term, for good reason too – it is a collection of multiple characteristics that are important to be able to follow your trading strategy and achieve your investment goals. Let’s take a look at those characteristics:

 

Trader’s Psychology

  • Trading Discipline
  • Perspective
  • Mental Fortitude
  • Stress management
  • Risk Management

 

Trading Discipline

  • Adhere to your plan
  • Keep your investment goals in mind
  • Don’t react impulsively or greedily – emotions are the enemy!
  • Channel the robot

 

Most experts agree that the first facet of traders’ psychology is discipline. One of the best scenarios as a case demostrating discipline is retracement/reversal. Frequently instruments will experience a temporary reversal of their price movement, but see a correction shortly after or before the end of the trading day. This retracement could cause a trader to exit a position/trade which hasn’t gone into full reversal ultimately causing losses or breaking away from a strategy that hedged an instrument against another. If you’re perplexed about the ‘channel the robot’ phrase above – robots are emotionless and only react to input of data. Get it now?

 

Perspective

  • What are your long-term investment goals?
  • How high and how low is your risk aversion in the context of your strategy?
  • Reality check – reward always comes with risk

 

Having a realistic point of view about trading is crucial. No matter what the type of investment, there is always a risk/reward ratio. How much will you be rewarded for a defined level risk. The higher the risk the higher the potential reward (but remember the lower the chance you will receive it). The lower the risk, the lower (or slower) the reward inversely.

 

Mental Fortitude

Being able to see the red arrows on your terminal and thumbing your nose at it is not as easy as you think, the biggest reason is that most traders realize those are assets. Their assets. The problem is that exiting a position too soon, can have similar psychological results to losing a trade. Psychologically speaking it might even be more damaging, as exiting too soon and then seeing your previous position  go into correction and then grow make you hold on to trades beyond your predetermined stop-loss, causing you to be on the losing side of that trade. Resilience and being able to bounce back is another characteristic that is important. Take this as an example: a flexible sapling can touch the ground and return to its original state allowing it to grow large enough to resist being bent.  If that sapling was rigid it would snap and never grow to the size necessary to not be bent.

 

Stress Management

  • Every trading day is a new trading day
  • Leave the baggage at the gate
  • Knowledge is a stress reliever
  • A cliché but worth mentioning – Keep your cool

 

This point segues beautify from mental fortitude, in actuality there might even be a little bit of overlap. Managing stress especially after a losing trade can be extremely challenging, but if you want to reach your investment goals its crucial. Instead of seeing a loss like Stress is frequently the result of a lack of knowledge, knowing the instrument you are trading, the market you are trading it on and the historical data behind it – can help alleviate stress.

 

Risk Management

Although risk management is usually referenced when talking about trading strategies, it can also offer a certain comfort knowing for example that your stop-loss level is in line with your risk appetite. Other risk management tools that can help are alerts to inform you when your instrument goes over or under a certain price level, which is a feature most platforms support.

 

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U.K. Inflation Is at 5-Year Highs, but Why is the Pound Dropping?

British inflation is surging, and the Bank of England (BOE) is seriously considering raising interest rates sooner rather than later. So then why is the British pound failing to pick up speed? The answer lies in Mark Carney’s latest warning on Brexit.

 

The U.K.’s consumer price index (CPI) reached 3% in the 12 months through September, the Office for National Statistics reported this week. That was the highest level since April 2012. What’s more, it can still go higher, according to BOE Governor Carney. That was the risk the Bank took when it slashed interest rates in 2016 following the Brexit referendum.

 

The latest pickup in consumer prices all but guarantees a rate hike in the coming months, as policymakers seek to begin normalizing monetary policy. In fact, rates could rise as early as next month if all the stars align.

 

Although rates may rise very soon, a warning by Carney has prompted a mass exodus from Faced with the possibility of failed Brexit talks, the central bank chief warned of grave risks to the nation’s outlook.

 

In testimony to lawmakers in British parliament, Carney said the European Union (EU) risks destabilizing the region’s financial sector should it call off Brexit talks.

 

“The entire economic impacts are greater for the U.K. but…from a financial stability perspective they are greater for the EU than for the U.K.,” Carney said on 17 October, as reported by The Wall Street Journal.

 

“It is absolutely in the interests of the EU27 to have a transition agreement,” he added.

 

Last week, EU leaders said that Brexit progress has been insufficient for talks to move to the next phase. That’s because EU lawmakers are looking to settle the divorce before moving on to free trade talks. Thorny issues tied to mobility rights are still unresolved despite five rounds of negotiations.

The British pound has declined roughly 200 pips against the dollar this week. Markets were under pressure on Friday, as cable briefly fell below the 1.3100 handle.

Sterling is extremely sensitive to Brexit speculation. The vote to leave the EU in June 2016 triggered the pound’s biggest drop in over three decades.

[1] BBC News (17 October 2012). “UK inflation at highest since April 2012.”

[2] Graeme Wearden and Nick Fletcher (17 October 2017). “Bank of England’s Mark Carney says inflation hasn’t peaked yet after hitting 3% today – as it happened.” The Guardian.

[3] Jason Douglas (17 October 2017). “BOE’s Carney Issues Stark Warning on Brexit Risks.” The Wall Street Journal

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Friday 20-10-2017 Lookback

Welcome to the easyMarkets weekly review where we look back over the results of some of the previous week’s economic indicators. It gives us the chance to reflect on how much expectations were met or missed and to examine a successful trade you could have made this week. Later today we have Canada’s CPI figures due at 12.30 GMT and the Fed’s Janet Yellen will be speaking at 23:15 GMT.

 

Event: UK Consumer Price Index

Date: Tuesday 17 October 2017 at 08:30 GMT

Markets affected: GBP/USD, EUR/GBP

Trending hashtags: #gbp, #cpi, #inflation

 

The sterling bulls were pleased with Monday’s consumer inflation data which came in at 3.0% for September. The CPI rose 0.1% on last month’s reading and increased the possibility of the Bank of England looking to raise interest rates. BOE Governor, Mark Carney, failed to comment on any changes to the central bank’s monetary policy in his speech at parliament during the day.

 

Event: EU Consumer Price Index (September)

Date: Tuesday 17 October 2017 at 09:00 GMT

Markets affected: EUR/USD, EUR/GBP

Trending hashtags: #eur, #cpi, #inflation

 

Inflation in the Eurozone for September saw a 0.4% change from the previous month as was expected and Core CPI hit 0.4% on a monthly basis. On an annualised basis, consumer prices increased 1.5%, with Core CPI for the year coming in a little above the forecast at 1.3%. The price of the euro fell during the session also due to the disappointing release from ZEW Economic sentiment index which fell to 26.7 against the 34.2 forecast and the previous month’s 31.7.

 

Event: US Industrial Production (September)

Date: Tuesday 17 October 2017 at 13:15 GMT

Markets affected: EUR/USD, USD/JPY

Trending hashtags: #usd, #industry

 

The EUR/USD remained under pressure on Tuesday with a better than expected result for Industrial Production in the US which came in at 0.3% for September. According to the Federal Reserve, the slowdown in activity due to hurricanes Harvey and Irma has been compensated for as rebuilding has begun.

 

Event: EU Extraordinary Economic Summit

Date: Wednesday 18 October 2017 at 07:00 GMT

Markets affected: EUR/USD, EUR/GBP

Trending hashtags: #eur, #ecb

 

The euro slipped back on Wednesday following the Eurozone’s economic summit where ECB President, Mario Draghi, commented that the central bank’s monetary policy shouldn’t be holding back member countries from carrying out reforms. There was no mention of the ECB’s bond buying programme which is currently at €60 billion a month nor on the interest rate that is still sitting on a low 0%.

 

Event: US Housing Data (September)

Date: Wednesday 18 October 2017 at 12:30 GMT

Markets affected: EUR/USD, USD/JPY

Trending hashtags: #usd, #housing

 

The euro got a respite on Wednesday and corrected upwards following housing data releases from the US which failed to meet expectations. Housing starts in September fell to 1.13 million against the 1.18 million forecasted and building permits for the same month dropped to 1.22 million against the expected 1.25 million.

 

Event: Australia Employment Data (September)

Date: Thursday 19 October 2017 at 00:30 GMT

Markets affected: AUD/USD, AUD/NZD

Trending hashtags: #aud, #jobs

 

Australia saw 19,800 new jobs added in September, not coming anywhere near August’s spectacular 53,000 new jobs, but still beating expectations of 15,000. The unemployment rate however did drop to 5.5% against the previous months (and expected figure of) 5.6% and reached the lowest it’s been in four years. The jobs market in Australia has grown for 12 months in a row now, the longest continuous growth it’s seen since 1994.

 

Event: China Gross Domestic Product (Q3)

Date: Thursday 19 October 2017 at 02:00 GMT

Markets affected: AUD/USD, CNH/USD

Trending hashtags: #cnh, #gdp

 

Gross Domestic Product for China in the third quarter of this year grew 6.8% on an annualised basis according to the national statistics bureau. The second quarter had surpassed expectations by coming in at 6.9% while this quarter’s results met analysts’ expectations bang on. On a quarterly basis, GDP has been growing steadily at 1.7% for the last 2 quarters as the markets had been expecting. Retail sales in China grew to 10.3% year on year and industrial production surpassed expectations with 6.6% growth according to official data.

 

Trade of the Week

Time in: Date: Wednesday 18 October 2017 at 23:55 GMT
Market : AUD/USD
Investment: $500 with 200:1 leverage
Time out: Thursday 19 October 2017 at 01:35 GMT

P&L: $331

 

If you had bought AUD/USD with a $500 margin at the price of 0.7846 and closed the deal after Australia’s Employment Data on Thursday at 00:30 GMT which saw the currency pair gain by 0.3%, you might have made $331. Note this example does not take into account spread.

 

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Breaking News: Spain moves to suspend Catalonia’s autonomy

Having missed the 8pm GMT deadline to renounce its claims to Independence, the Catalonia Government now faces losing all its powers as Spain moves forward in suspending Catalonia’s autonomy.

 

Prime Ministers Rajoy’s government has confirmed that they will implement Article 155 of the constitution restoring full control of Catalonia to Madrid.

 

The Catalan Parliament has also warned that if there is no dialogue between the two Governments on the matter they will push ahead with a formal declaration of independence.

 

Fear that these latest developments will likely cause more unrest in the region sent Spanish stocks lower with the EUR/USD initially coming under pressure when the 8pm GMT deadline was missed dropping to 1.17686 levels before bouncing back about 1.1800.  At the time of writing the EUR/USD is currently trading at 1.18047.

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British Pound’s Flash Crash: One Year Later

Last October, the British pound experienced a mysterious flash crash that wiped 10% from its value. This included a more than 6% drop in the span of two minutes, bringing sterling to its lowest level in 31 years. Baffled by what transpired, market participants have given several theories about what caused the dramatic drop.

Rogue computer trades, an accidental “fat finger” and harsh comments from French President Francois Hollande on Brexit negotiations were all blamed.

A few months later, the Bank for International Settlement (BIS) found there was no single trigger for the colossal drop.

 

The flash crash wasn’t a new phenomenon,” the BIS said in a report that was released the following January. “Rather, it represents an additional data point in what appears to be a series of flash events occurring in a broader range of fast, electronic markets than was previously the case, including those markets whose size and liquidity used to provide some protection against such event”.

 

For all the mystery surrounding the flash crash, there certainly wasn’t any secret behind the pound’s woes. Just three-and-a-half months prior, Britons voted to leave the European Union (EU) in a watershed moment that would reshape the future of the pan-European project. Although the pound has rebounded some 1,400 pips since the flash crash of last October, it’s nowhere near pre-Brexit levels.

With the Bank of England (BOE) signaling for higher interest rates, the probability of another crash in the pound is slim. Meanwhile, the prospect of a hard Brexit has sorely diminished following Prime Minister Theresa May’s election gaffe. As a matter of fact, EU talks are breaking down before our eyes, leaving the British pound safe from any other politically charged selloffs.

 

Pound sterling has also benefited this year from a whimpering U.S. dollar. The greenback is one of the world’s worst-performing currencies of 2017, having declined more than 8% year-to-date.

 

Although investors shouldn’t get ahead of themselves with respect to the pound, there doesn’t seem to be any impetus for a repeat of last October’s selloff anytime soon. Of course, the forex market is highly unpredictable, so it’s best to keep your wits about you.

 

Rob Davies (7 October 2016). “What caused the pound’s flash crash?” The Guardian.

Stefania Spezzati (13 January 2017). “Pound Flash Crash Had No Single Trigger, BIS Investigation Finds.” Bloomberg.

Tim Ross (16 October 2017). “U.S. Fears Collapse of Brexit Talk Within Weeks.” Bloomberg.

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Monday 16-10-2017 Outlook

Welcome to the weekly outlook starting this Monday 16 October. We’ll be looking at the week’s key economic events on the financial calendar covering Monday to Thursday. This is shaping up to be an action-packed week full of key economic indicator releases across the globe. We’ll be getting inflation data out of the UK and Europe, industrial production and housing from the US, jobs data from Australia and GDP figures for China.

 

Event: UK Consumer Price Index

Date: Tuesday 17 October 2017 at 08:30 GMT

Markets affected: GBP/USD, EUR/GBP

Trending hashtags: #gbp, #cpi, #inflation

 

With inflation in August hitting a five year high at 2.9% many will be closely following Monday’s report on key inflation data in the form of the consumer price index. A falling UK pound has left its mark with higher petrol and clothing prices. The CPI figure will be closely watched by the Bank of England as it considers its next move regarding interest rates.

 

Event: EU Consumer Price Index (September)

Date: Tuesday 17 October 2017 at 10:00 GMT

Markets affected: EUR/USD, EUR/GBP

Trending hashtags: #eur, #cpi, #inflation

 

August’s CPI for the Eurozone came in at a 0.3% month on month change and 1.5% on an annualized basis. Core CPI, which strips away volatile food and energy figures, was also 0.3% for last August and saw 1.1% year on year growth. Inflation is still a little below the 2% target for the European Central Bank’s liking but it is unlikely to stop the planned reduction of their asset buying programme.

 

Event: US Industrial Production (September)

Date: Tuesday 17 October 2017 at 13:15 GMT

Markets affected: EUR/USD, USD/JPY

Trending hashtags: #usd, #industry

 

Industrial production in August fell by -0.9% against the previous month due to activity being stalled by the hurricanes that ripped through the US. Expectation is for the industry to get back on track for September and increase by 0.3% as rebuilding will be needed due to the destruction caused by the extreme weather.

 

Event: EU Extraordinary Economic Summit

Date: Wednesday 18 October 2017 at 07:00 GMT

Markets affected: EUR/USD, EUR/GBP

Trending hashtags: #eur, #ecb

 

Eurozone leaders will gather on Wednesday to discuss concerns and issues facing the common region. Analysts are expecting that Brexit and Catalan’s drive for independence will be part of the discussions. The euro will be looking for mentions of further monetary tightening before it makes moves in any direction.

 

Event: US Housing Data (September)

Date: Wednesday 18 October 2017 at 12:30 GMT

Markets affected: EUR/USD, USD/JPY

Trending hashtags: #usd, #housing

 

Key housing data is due out of the US on Wednesday with Building Permits and Housing Starts reports. There were 1.300 million building permits last month and expectations are for 1.255 million for September. In August, housing starts saw a 1.180 million change and expectations for September are for 1.175 million. Housing data is important as it influences job growth and the overall GDP of the nation.

 

Event: Australia Employment Data (September)

Date: Thursday 19 October 2017 at 00:30 GMT

Markets affected: AUD/USD, AUD/NZD

Trending hashtags: #aud, #jobs

 

Last month’s employment data for Australia was much better than expected and gave a boost to the aussie. 54,200 new jobs were added in August far surpassing July’s 27,900 change and beating expectations. Expectations for September are for 23,800 jobs to be added. Unemployment for August remained pat with July’s figure of 5.6%, just as the markets were expecting. The Australian economy has been struggling on a number of levels but positive employment figures can only bode well for the future.

 

Event: China Gross Domestic Product (Q3)

Date: Thursday 12 October 2017 at 02:00 GMT

Markets affected: AUD/USD, CNH/USD

Trending hashtags: #cnh, #gdp

 

Last quarter the Chinese economy expanded by 1.7% on a quarterly basis and showed 6.9% growth on an annualised basis. The second quarter of the year showed the strongest growth for the economy for almost two years and surpassed the Government expectation of 6.5% growth for 2017. Analysts are expecting the third quarter of this year to see 1.4% growth quarterly and 6.7% improvement on this time last year.

 

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First Deadlock and then hope. Continuing story of the Brexit Negotiations.

Just like life, the currency market is like a roller-coaster. Take what happened yesterday with the Brexit talks.  First in the afternoon we had doom and gloom and then a few hours later we had hope.

 

Like with all divorces, one of the key areas that most lawyers will lock horns over is money.

And the Brexit negotiations is proving to be no different as Michel Barnier, EU ‘s chief negotiator said that there was a “deadlock” over the UK’s so called divorce settlement.

 

He also said that the lack of progress on this matter was “disturbing”.

 

The UK was hoping that they would make some headway and at least agree to start talks on a future trade deal before the crucial EU summit on the 19th and 20th October. But this has yet to happened.

In fact, Mr. Barnier has said that he felt he was not in the position to recommend to the European Council to start discussions on the “future relationship”.

With March 2019 fast approaching the lack of progress and the increased chances of the UK getting no deal sent shivers down the spines of sterling bulls with GBP crashing against both the USD and the Euro.  The the GBP/USD had fallen down to the 1.31310 levels and the EUR/GBP had risen to around 0.90184.

 

And then….

 

An internal draft document was leaked which hinted that the 27 European Union countries should prepare to discuss trade amongst themselves which will pave the way to start negotiating trade talks with the UK Government in December.  The paper also underlined Mr. Barnier’s earlier comments about a lack of progress but it also mentioned there had been developments on some key areas which would please many.

Though this draft can at any stage be revised, it does show a tiny a bit of hope that a deal could be made before the UK’s official exit.

 

How did the market react?

Sterling bulls rejoiced. GBP/USD skyrocketed back above 1.32 reversing its previous losses of the day and at the time of writing is currently trading around 1.3264.  The EUR/GBP did the opposite and crashed back down falling below 0.9000 levels and is currently trading around 0.8925.

What a difference a few hours make.

When Theresa May announced that Britain would indeed honour its financial commitments to the EU there was the belief that the fifth round of talks would finally bring some much needed clarity that a deal could indeed be made in time, but initially it looked like that the EU and UK were getting nowhere but this leak has showed there could be a bit of light at the end of the tunnel.

One thing for sure is we are still very much in unknown territory, but one thing that is mostly likely certain is that we will continue to get ups and downs with this roller-coaster called the Brexit.

 

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Friday 13-10-2017 Lookback

Welcome to the weekly review where we look back over the results of some of the previous week’s economic indicators. It gives us the chance to reflect on how much expectations were met or missed and to examine a successful trade you could have made this week.

 

Event: German Trade Balance

Date: Tuesday 10 October 2017 at 06:00 GMT

Markets affected: EUR/USD, EUR/GBP

Trending hashtags: #eur, #trade

 

The euro gained on the back of the positive Trade Balance data out of Germany on Monday. The German trade surplus in August increased to 21.6 billion euro, surpassing expectations by 0.8 billion. Exports grew by 3.1% with the annual rate of growth dropping 7.2%, which was 0.8% worse than the previous reading in July. Imports also increased by 1.2%. Trade figures from Europe’s largest economy have significant impact on the region’s overall economic health and on the euro itself.

 

Event: UK Manufacturing Production (August)

Date: Tuesday 10 October 2017 at 08:30 GMT

Markets affected: GBP/USD, EUR/GBP

Trending hashtags: #gbp

 

The Sterling got a boost following the release of UK manufacturing production figures for August. Manufacturing doubled expectations by growing 0.4% for the month and 2.8% on an annualised basis. Industrial production grew 1.6% and the trade balance was at -2.872 billion. Good news continued for the British pound as wages grew 2.4% in the second quarter of this year against the 1.6% growth in the previous reading. Confidence in the Bank of England tightening monetary policy increased and we may be in for more rate hikes going into 2018.

 

Event: UK Inflation Report

Date: Wednesday 11 October 2017

Markets affected: GBP/USD, EUR/GBP

Trending hashtags: #gbp, #inflation

 

Inflation in the UK continues to be of concern as it reached its highest point in five years in August. Petrol and clothing price rises are two of the main protagonists behind the rise in inflation which is measured by the consumer price index which hit 2.9% in August – up from 2.6% in July. Rising prices are due to the devaluation of the sterling following the Brexit referendum.

 

Event: FOMC Meeting Minutes

Date: Wednesday 11 October 2017 at 18:00 GMT

Markets affected: EUR/USD, USD/JPY

Trending hashtags: #usd, #fomc

 

The FOMC meeting minutes from their last September meeting showed that the Federal Reserve will begin to unwind its balance sheet this month and reduce its bond portfolio. The impact of hurricanes Harvey and Irma has been taken in stride and Fed Chair Janet Yellen confirmed that more rate hikes are due in the future. Though some members expressed concern over low inflation and suggested that QE should stay in focus as they monitor inflation figures.

 

Event: Westpac Consumer Confidence – Australia

Date: Wednesday 11 October 2017 at 23:30 GMT

Markets affected: AUD/USD, AUD/NZD

Trending hashtags: #aud

 

Consumers in Australia were a lot more optimistic in October than pessimistic for the first time in 11 months according to the Westpac Consumer Confidence survey. The Sentiment indicator increased by 3.6% to 101.4 for the month versus the September reading of 97.9. Trade workers were particularly confident as residential building increased. Business confidence in a separate survey also showed the highest levels in 10 years, but last month’s disastrous retail sales figures show concern over the local economy. Last year Australia experienced only 2% growth and the Reserve Bank of Australia is expecting 3% for 2018.

 

Event: ECB Industrial Production (August)

Date: Thursday 12 October 2017 at 10:00 GMT

Markets affected: EUR/USD, EUR/GBP

Trending hashtags: #eur

 

The euro fell on Thursday against the greenback despite positive news from the Industrial Production Index which grew by 1.4% in August. Expectations were for just 0.5% increase and July’s figure was revised up from 0.1% to 0.3% growth. Pulling back to a yearly view, industrial production increased 3.8% against the same time last year, again beating expectations of 2.5%. The previous report was also revised upwardly from 3.2% to 3.6%. The failure of the EUR/USD price to reflect the good news from the Eurozone was possibly due to a good reading of the PPI in the US on the same day and the increased expectation of another rate hike this year.

 

Trade of the Week

Time in: Wednesday 11 October 2017 at 19:00 GMT
Market : AUD/USD
Investment: $500 with 200:1 leverage
Time out: Thursday 12 October 2017 at 09:00 GMT

P&L: $707

 

If you had bought the AUD/USD with a $500 margin at the price of 0.7775 and closed the deal after the Australian Westpac Consumer Confidence report on Wednesday at 23:30 GMT which saw the currency pair rise 0.7%, you might have increased your investment with a tidy $707 profit. Note this example does not take into account spread.

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