Image via International Monetary Fund/Flickr
The markets continue to remain in a risk aversion mode with the Japanese Yen gaining 3.70% for the week followed by 3.23% gains in the Swiss Franc. The safe haven currencies continue to outperform and gained strongly especially last week as the US Dollar declined sharply during the week. The Yen erased all the losses from a week earlier when the BoJ announced its negative rates. The Australian dollar and the US Dollar were the laggards last week. The US January jobs report, released on Friday was a mixed bag with the headline print missing estimates. However the US unemployment rate fell to a 7-year low and helped support the US Dollar in the process.
The week ahead is relatively quiet in comparison to last week which was busy with PMI data and Central Bank meetings. Data from China is soft, besides the markets being closed for the most part of the week on account of the Lunar holiday.
Fundamentals for the Week 08/02 – 12/02
|JPY||BOJ Summary of Opinions|
|JPY||Bank Lending y/y||2.20%|
|All Day||CNY||Bank Holiday|
|03:30||JPY||Average Cash Earnings y/y||0.70%||0.00%|
|07:00||JPY||Economy Watchers Sentiment||48.5||48.7|
|09:00||EUR||German Industrial Production m/m||0.20%||-0.30%|
|11:30||EUR||Sentix Investor Confidence||7.2||9.6|
|15:30||CAD||Building Permits m/m||-19.60%|
|17:00||USD||Labor Market Conditions Index m/m||2.9|
|09-Feb||01:50||JPY||M2 Money Stock y/y||3.10%||3.00%|
|02:30||AUD||NAB Business Confidence||3|
|08:00||JPY||Prelim Machine Tool Orders y/y||-25.70%|
|09:00||EUR||German Trade Balance||19.4B||19.7B|
|13:00||USD||NFIB Small Business Index||94.6||95.2|
|USD||Wholesale Inventories m/m||-0.10%||-0.30%|
|10-Feb||01:30||AUD||Westpac Consumer Sentiment||-3.50%|
|02:00||AUD||HIA New Home Sales m/m||-2.70%|
|09:45||EUR||French Industrial Production m/m||0.20%||-0.90%|
|10th-16th||CNY||M2 Money Supply y/y||13.50%||13.30%|
|11:00||EUR||Italian Industrial Production m/m||0.30%||-0.50%|
|11:30||GBP||Manufacturing Production m/m||0.00%||-0.40%|
|GBP||Industrial Production m/m||-0.10%||-0.70%|
|17:00||GBP||NIESR GDP Estimate||0.60%|
|USD||Fed Chair Yellen Testifies|
|17:30||USD||Crude Oil Inventories||7.8M|
|11-Feb||02:00||AUD||MI Inflation Expectations||3.60%|
|02:01||GBP||RICS House Price Balance||52%||50%|
|17:00||USD||Fed Chair Yellen Testifies|
|12-Feb||00:30||AUD||RBA Gov Stevens Speaks|
|02:30||AUD||Home Loans m/m||2.90%||1.80%|
|09:00||EUR||German Prelim GDP q/q||0.30%||0.30%|
|EUR||German Final CPI m/m||-0.80%||-0.80%|
|EUR||German WPI m/m||0.20%||-0.80%|
|09:45||EUR||French Prelim Non-Farm Payrolls q/q||0.10%||0.00%|
|11:00||EUR||Italian Prelim GDP q/q||0.30%||0.20%|
|11:30||GBP||Construction Output m/m||2.10%||-0.50%|
|12:00||EUR||Flash GDP q/q||0.30%||0.30%|
|EUR||Industrial Production m/m||0.30%||-0.70%|
|15:30||USD||Core Retail Sales m/m||0.00%||-0.10%|
|USD||Retail Sales m/m||0.10%||-0.10%|
|USD||Import Prices m/m||-1.40%||-1.20%|
|17:00||USD||Prelim UoM Consumer Sentiment||92.6||92|
|USD||FOMC Member Dudley Speaks|
|USD||Business Inventories m/m||0.10%||-0.20%|
|USD||Prelim UoM Inflation Expectations||2.50%|
Currencies/Events to Watch this Week
AUD: After last week’s busy calendar, the AUD is looking to a rather slow week as far as economic data from Australia is concerned. Most of the data is tier-2 and unlikely to bring any major changes to the AUD. RBA Governor Stevens is due to speak on Friday followed by home loans data later, which is expected to rise 2.90%, up from 1.80% previously.
JPY: Data from Japan this week includes the average cash earnings which are expected to rise 0.70% on a year on year basis. Cash earnings stayed flat previously. A pick up in cash earnings is seen as a gauge in consumer prices picking up and if the actual print fails to meet estimates, the BoJ could start looking into further ways to stoke inflation. Besides the average cash earnings data, there are no other major releases from Japan this week.
EUR: Flash GDP numbers from Eurozone will take precedence this week but expectations are for a 0.30% growth, same the previous quarter. The EU commission, which released its forecasts last week, expects Eurozone GDP to stay flat for 2016. Germany’s GDP numbers are also due including French industrial production numbers. The Euro, however, is unlikely to be moved by the data this week and the focus would turn more to the US economic data instead.
GBP: UK trade balance and manufacturing production numbers are due this week and ones which will take importance. Manufacturing and industrial production continues to remain weak in the UK over the past few months. Expectations for this week’s release is for an unchanged print of 0.0% for manufacturing production while industrial production is expected to fall -0.10% after declining -0.70% previously.
CAD: Data from Canada is soft this coming week with housing starts and building permits due. Expectations are for housing starts to have increased 185k up from 173k from the previous month. The CAD, however, is likely to look to Crude Oil prices for cues in light of softer economic data.
USD: This week is another busy week for the US Dollar. Janet Yellen is due to give her semi-annual testimony to the US Congress this week on Wednesday and Thursday. In light of recent dovish comments from Fed officials and a dovish FOMC statement in January, the markets will be very eager to hear Ms. Yellen’s views. Besides the Fed speak, US retail sales numbers are due, with nearly flat expectations and UoM consumer sentiment and inflation expectations make up for the remainder of the week.