Weekly Review and Outlook 21st November 2016

Mark NugentNov 2016, Trading Plan


Weekly Forex Review – Week Commencing 14th November 2016

Economic Calendar

Monday saw OPEC still divided over an output cut, after a weekend of meetings but are seeking to narrow Saudi Arabia’s difference with Iran and Iraq. Furthermore, OPEC have begun their final push to remedy oil cut divisions and are said to be making the utmost effort to secure an output deal ahead of the next official meeting at the end of this month, according to sources (ZeroHedge).

Early on Tuesday, RBA minutes from Nov 1st meeting stated risk around local inflation forecasts were more balanced and that maintaining policy at the meeting would be consistent with sustainable economic growth as well as achieving the inflation target over time. RBA also stated that consumption growth had been below average in the June quarter, while growth in Australia’s major trading partners had been a little below average over the prior year and is expected to decline a little over the following two years (ZeroHedge). German Preliminary GDP q/q misses at 0.2% vs an expectation of 0.3%. UK CPI y/y missed (0.9% vs 1.1%). US Core and Headline Retail Sales both exceeded expectations. New Zealand Global Dairy was positive at 4.5%. A UK Supreme Court Judge has stated that Brexit could be delayed by up to 2 years amid suggestions it would take ‘comprehensive’ legislation to trigger Article 50 (ZeroHedge). OPEC Secretary General Barkindo said OPEC countries are all hands-on deck to achieve November 30th target and that OPEC and non-OPEC members are conducting extensive consultations (ZeroHedge).

Wednesday saw UK Average Earnings Index 3m/y meet expectations at 2.3%. There are calls for fiscal stimulus from Japanese cabinet advisor Fuji and from two Fed members (Harker and Kashkari).

Thursday had UK Retail Sales m/m jump by 1.9% vs expectation of 0.5% and prior was revised up to 0.1% from 0.0%. US Core CPI m/m missed at 0.1% vs 0.2%. Yellen’s testimony does not trouble the news services.

Friday sees Canadian Core CPI m/m disappointing at 0.2% vs expectation of 0.3%.

Market Reaction

The Trump bounce continued with the USD adding a further 5 up days to the previous 5 up days. The S&P500 ground upwards to all time highs and the Dow 30 consolidated at all time highs. The Nasdaq reclaimed most of the ground lost to global trade concerns. US 10-year treasuries saw yield gains on the expectation of government expenditure driving up inflation. On the other side of the coin, the JPY weakened in 4 of the last 5 candles, as sentiment was buoyant. The EUR closed flat on the week and the GBP consolidated. CAD rose on oil price hopes.

Trading Plan

No trades closed this week. I am in two trades. Trade 77 (Euro50 short) moves into a small profit at week close, stop loss at original position. Trade 78 (EURUSD short) moves into profit at Friday’s close, also with the stop loss at the original position. Month-to-date performance is +2.2% and year-to-date is +33.2%.

Weekly Forex Outlook – Week Commencing 21st November 2016

Economic Calendar

Over the weekend Iraq Oil Minister al-Luaibi is said to put forward three new proposals regarding OPEC production cut at next week’s Vienna meeting, which will be in-line with current OPEC policies.Iranian oil minister stated that USD 55/bbl is a possibility if OPEC and Non-OPEC producers work together on output reductions but also stated that Iran will continue to raise its output. Russian President Putin said that he cannot state if an oil production freeze is 100% certain, although there is a high possibility. UK PM May is to announce a new industrial strategy today which is expected to include a pledge of spending billions on science, tech and research to support doing business in the country (all ZeroHedge).

Mon – ECB President to testify about the European Central Bank’s Annual Report before the European Parliament, in Strasbourg
Tues – NZ Retail Sales; Canadian Core Retail Sales
Wed – FOMC Meeting Minutes (7pm GMT)
Thurs – US Holiday; Japan – Tokyo Core CPI (1130pm GMT)
Fri – UK Second Estimate GDP

Financial News

French Thatcherite upends 2017 race pledging to shrink the state
Currency vigilantes ready to strike again as Italian vote looms
Why doing the math misses the point for Saudi oil policy and OPEC
Day of reckoning arrives for European balance sheet basket cases-european-balance-sheet-basket-cases

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