Trading News to Watch Next Week (12 – 16 November 2018)

Important economic news for 12-16 November

The monetary policy season appears to be over… at least for now. But that doesn’t mean that the markets are standing still.

Au contraire, participants in the global economy should steal some extra time off their busy schedules as they will have to track multiple events at a time, some of which include:

– Year over year Consumer Price Index report (GBP);

– Unemployment rate statement (AUD);

– Month over month core retail sales report (USD).

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Tuesday, 13 November 2018

 

AUD – NAB* Business Confidence – 1:30 am (Medium Impact)

Shows the level of a diffusion index based on survey of about 350 businesses, excluding the farming industry. The survey asks respondents to rate the relative level of current business conditions.

The confidence report is a leading indicator of economic health—businesses react quickly to market conditions, and changes in their sentiment can be an early signal of future economic activity such as spending, hiring, and investment.

Above 0 indicates improving conditions, while below that indicates worsening conditions. An actual diffusion index value of 6 performs slightly better vs. a value of 5 for September.

*NAB – National Australia Bank

GBP – Average Earnings Index 3m/y – 10:30 am (High Impact)

Tracks the change in the price businesses and the government pay for labor, including bonuses. The data represents the 3-month moving average compared to the same period a year earlier.

It’s a leading indicator of consumer inflation—when businesses pay more for labor the higher costs are usually passed on to the consumer.

An actual price change of 2.7% slightly outperforms a 2.6% forecast.

GBP – Unemployment Rate – 10:30 am (Medium Impact)

The rate shows the percentage of total workforce that is unemployed and actively seeking employment during the past 3 months.

Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions.

Unemployment is also a major consideration for those steering the country’s monetary policy.

An actual value of 4.0% confirms a forecast of the same value.

EUR – German ZEW Economic Sentiment – 11:00 am (Medium Impact)

Tracks the level of a diffusion index based on a survey of about 300 German institutional investors and analysts. The survey asks respondents to rate the relative 6-month economic outlook for Germany.

Above 0.0 indicates optimism, while below that indicates pessimism. An actual diffusion index value of -24.7 greatly underperforms vs. a -12.3 forecast.

Wednesday, 14 November 2018

 

AUD – Wage Price Index q/q – 1:30 am (High Impact)

Shows the change in the price businesses and the government pay for labor, excluding bonuses.The index is a leading indicator of consumer inflation—when businesses pay more for labor the higher costs are usually passed on to the consumer.

An actual price change of 0.6% confirms a forecast of the same value.

CNY – Industrial Production y/y – 3:00 am (Medium Impact)

The report shows the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities.

It’s a leading indicator of economic health—production is the dominant driver of the economy and reacts quickly to ups and downs in the business cycle.

An actual value change of 5.8% slightly dips below a 6.0% forecast.

GBP – CPI* y/y – 10:30 am (High Impact)

Source: DF Markets
Pictured: London with superimposed candlechart graphic

Shows the change in the price of goods and services purchased by consumers. The index is considered the UK’s most important inflation data because it’s used as the central bank’s inflation target.

Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.

An actual price change of 2.4% slightly dips below a 2.6% forecast.

*CPI – Consumer Price Index

USD – CPI m/m – 2:30 pm (High Impact)

Shows the change in the price of goods and services purchased by consumers. The average price of various goods and services are sampled and then compared to the previous sampling.

Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.

An actual price change of 0.1% slightly dips below a 0.2% forecast.

USD – Core CPI m/m – 2:30 pm (High Impact)

Tracks the change in the price of goods and services purchased by consumers, excluding food and energy.  The FOMC* usually pays more attention to the Core data – so do traders.

Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.

An actual price change of 0.1% slightly dips below a 0.2% forecast.

*FOMC – Federal Open Market Committee

Thursday, 15 November 2018

 

AUD – Employment Change – 1:30 am (High Impact)

Shows the change in the number of employed people during the previous month. This is vital economic data released shortly after the month ends. The combination of importance and earliness makes for hefty market impacts.

Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.

An actual employment change of 5.6K starkly underperforms vs a 15.2K forecast.

AUD – Unemployment Rate – 1:30 am (High Impact)

Shows the percentage of the total workforce that is unemployed and actively seeking employment during the previous month.

Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions.

An actual unemployment rate of 5.0% tops a 5.3% forecast.

GBP – Retail Sales m/m – 10:30 am (High Impact)

Tracks the change in the total value of inflation-adjusted sales at the retail level. The report is the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

An actual value change of -0.8% underperforms vs. a -0.4% forecast.

USD – Core Retail Sales m/m – 2:30 pm (High Impact)

Monitors the change in the total value of sales at the retail level, excluding automobiles.

Automobile sales account for about 20% of Retail Sales, but they tend to be very volatile and distort the underlying trend.

The Core data is therefore thought to be a better gauge of spending trends.

An actual value change of -0.1% underperforms vs. a 0.4% forecast.

USD – Retail Sales m/m – 2:30 pm (High Impact)

Shows the change in the total value of sales at the retail level. The report is the earliest and broadest look at vital consumer spending data.

It’s the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

An actual value change of 0.1% underperforms vs. a 0.7% forecast.

Friday, 16 November 2018

 

GBP – Inflation Report Hearings – Tentative (High Impact)

Source: DF Markets
Pictured: Big Ben with charts and Bank of England coin imposed on top

During these hearings the BOE* Governor and several MPC* members testify on inflation and the economic outlook before Parliament’s Treasury Committee.

The hearings are a few hours in length and can create market volatility for the duration. Especially noted are the direct comments made about the currency markets.

BOE MPC members vote on where to set the nation’s key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy.

*BOE – Bank of England

*MPC – Monetary Policy Committee

CAD – Foreign Securities Purchases – 2:30 pm (Medium Impact)

Shows the total value of domestic stocks, bonds, and money-market assets purchased by foreigners during the reported month.

Demand for domestic securities and currency demand are directly linked because foreigners must buy the domestic currency to purchase the nation’s securities.

An actual value of 2.82B gravely underperforms vs. a 10.05B forecast.

CAD – Manufacturing Sales m/m – 2:30 pm (Medium Impact)

Shows the change in the total value of sales made by manufacturers. The report is a leading indicator of economic health—manufacturers are quickly affected by market conditions, and changes in their sales can be an early signal of future activity such as spending, hiring, and investment.

An actual value of -0.4% slightly outperforms vs. a -0.6% forecast.

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Missed our previous report? Then make sure to catch up on last week’s top news! While you’re at it, don’t forget to also visit our Economic Calendar for extra details regarding each event.

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