Weekly Review and Outlook 24th July 2017

Mark NugentJuly 2017, Trading Plan

Weekly Forex Review – Week Commencing 17th July 2017

Economic Calendar

Over the weekend:

US Baker Hughes Oil Rig Count (Jul) W/W 765 (Prev. 763).

Monday

Positive Chinese data this morning with Industrial Production and Retail Sales beating expectation and GDP on target.

EUR Final CPI (Headline and Core) hit target.

NZD CPI missed at 0.0% vs 0.2% expectation.

US Republican Senators Moran and Lee are to vote against Senate Healthcare Bill. (Newswires)

Tuesday

AUD Monetary Policy Minutes from July 4th meeting stated that the steady policy stance is consistent with growth and inflation targets. The Minutes also stated Underemployment is still elevated and wage pressures subdued, and fiscal policy is to be more expansionary in 2017/18 than previously expected. (Newswires)

GBP CPI missed at 2.6% vs 23.9%.

Wednesday

Crude oil inventories saw a bigger drawdown than expected.

Thursday

Bank of Japan:

• Kept rates at -0.10%, 10yr JGB yield target at 0.00% and annual pace of JGB holdings at JPY 80tln.
• Increased Real GDP forecasts for FY17, 18 and 19.
• Decreased Core CPI forecasts for FY17, 18 and 19

BoJ Governor Kuroda reiterates that risks to prices and the economy are tilted to the downside.

UK Retail Sales beat expectations (0.6% vs 0.4%) and the rpior number was revised up (-1.1% vs -1.2%).

The key issue of the day was the ECB interest rate decision and Draghi’s press conference.

The ECB kept rates unchanged at 0.00%. Draghi’s press conference led to significant EUR appreciation as it was felt that an unwinding of QE was coming soon and the broadly expected dovishness did not materialise. The ECB said, at 1810, that “tapering of asset purchases may be a decision that could be made in October”.

Friday

RBA Deputy Governor Debelle stated no automatic reason to conform to recent hikes abroad.

New Zealand Finance Minister Joyce stated NZ firms are coping well with NZD at current levels, added NZD reflects strong NZ economy.

USD bears have once again benefited from US disputes, as news that Special Investigator Mueller is said to be looking at probe for President Trump’s business transactions, further weighing on the dollar.

Finally, CAD CPI was on target at -0.1% and Core Retail Sales missed (-0.1% vs 0.0%).

Market Reaction

USD drops as the Healthcare bill seems likely to fail and more Trump-related allegations surface. US and UK equities are up on the week. The Euro50 is down due to the likelihood of QE unwinding. Japan225 and AUS200 consolidate. Oil is down on the week as gold rises. US 10 Year yields drop over the week. The tone was mostly risk on, despite the damage to the USD. The EUR strengthens on the prospect of less QE. The JPY consolidates. The GBP drops to support, reflecting a poor CPI number and EUR strength. The CAD is jammed to resistance. The AUD rises then falls, all due to RBA pronouncements. The NZD falls and then rises, due to a CPI miss and then RBNZ pronouncements.

Trading Plan

Two trades closed last week. Trade 45 (EURUSD long) closed at breakeven. Trade 46 (FTSE250 long) closed for a gain of +0.97%. Trade 47 is a second bite at EURUSD long and remains open with approximately 0.8% gain locked in. Month-to-date performance (excluding Trade 47) is +0.71% and year-to-date performance is +10.2%.

Weekly Forex Outlook – Week Commencing 24th July 2017

Economic Calendar

Over the weekend:

Nothing.

In the news:

German auto maker’s cartel?

Mon – nothing.

Tues – JPY Monetary Policy Meeting Minutes.

Wed – AUD CPI; RBA Gov Lowe speaks; GBP Prelim GDP; USD Crude Oil Inventories; USD Fed Funds Rate and FOMC Statement.

Thurs – nothing.

Fri – JPY Tokyo Core CPI; BOJ Summary of Opinions; CAD GDP.

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Here is your Weekly Review and Outlook video.

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