Trading News to Watch Next Week (17-21 December 2018)

Important market news for 17-21 December

Abandon your Christmas shopping cart, grab a cup of coffee, and sit on your favourite couch, because next week is bringing an abundance of market events, including three monetary policy reports by the Federal Reserve, the Bank of Japan, and the Reserve Bank of Australia. Without further ado, let’s take a look at what the fuss is all about.

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Monday, 17 December 2018

 

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

Tracks 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 domestic stock value of 7.70B for the previous month crushed a 0.30B forecast.

Tuesday, 18 December 2018

 

NZD – ANZ Business Confidence – 1:00 am (High Impact)

Shows the level of a diffusion index based on a survey of about 1,500 businesses which asks respondents to rate the relative 12-month economic outlook. The business 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 0.0 indicates optimism, while below that indicates pessimism. An actual index value of -37.1 for November remained the same compared to October.

AUD – Monetary Policy Meeting Minutes – 1:30 am (High Impact)

It’s a detailed record of the RBA Reserve Bank Board’s most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates.

EUR – German Ifo Business Climate – 10:00 am (Medium Impact)

Shows the level of a composite index based on a survey of about 7,000 businesses which asks respondents to rate the relative level of current business conditions and expectations for the next 6 months. The survey acts as 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.

This survey is highly respected due to its large sample size and historic correlation with German and wider Eurozone economic conditions. It tends to create a hefty market impact upon release.

An actual index value of 102.0 for the previous month slightly fell behind a 102.3 forecast.

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

Shows the change in the total value of sales made by manufacturers. This monthly 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.

A sales value change of 0.2% for the previous month slightly beat a 0.1% forecast.

USD – Building Permits – 2:30 pm (Medium Impact)

Shows the annualised number of new residential building permits issued during the previous month. The report is an excellent gauge of future construction activity because obtaining a permit is among the first steps in constructing a new building.

A total of 1.26M issued permits for the previous month met a forecast of the same value.

NZD – Current Account – 10:45 pm (Medium Impact)

Tracks the difference in value between imported and exported goods, services, income flows, and unilateral transfers during the previous quarter. The report is directly linked to currency demand—a rising surplus indicates that foreigners are buying more of the domestic currency to execute transactions in the country.

An actual value difference of -1.62B for the previous quarter starkly underperformed vs. a -1.23B forecast.

Wednesday, 19 December 2018

 

GBP – CPI y/y – 10:30 am (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 sampling done a year earlier. This index is considered as the UK’s most important inflation data because it’s used as the central bank’s inflation target.

An actual price change of 2.4% for the previous month slightly fell behind a 2.5% forecast.

CAD – CPI m/m – 2:30 pm (High Impact)

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

An actual price change of 0.3% for the previous month slightly topped a 0.1% forecast.

USD – FOMC Economic Projections – 8:00 pm (High Impact)

This report includes the Federal Open Market Committee’s projection for inflation and economic growth over the next 2 years and, more importantly, a breakdown of individual FOMC members’ interest rate forecasts. This report is among the primary tools the Fed uses to communicate their economic and monetary projections to investors.

USD – FOMC Statement –  8:00 pm (High Impact)

Monetary Policy by Bank of Japan

Source: DF Markets

This statement is among the primary tools the FOMC uses to communicate with investors about monetary policy. It contains the outcome of their vote on interest rates and other policy measures, along with commentary about the economic conditions that influenced their votes.

Most importantly, it discusses the economic outlook and offers clues on the outcome of future votes. The FOMC usually changes the statement slightly at each release. It’s these changes that traders focus on.

USD – Federal Funds Rate –  8:00 pm (High Impact)

Tracks the Interest rate at which depository institutions lend balances held at the Federal Reserve to other depository institutions overnight. FOMC members vote on where to set the target rate. The individual votes are then published in the FOMC statement.

An actual interest rate of <2.25% for November remained unchanged compared to September’s rate policy.

USD – FOMC Press Conference –  8:30 pm (High Impact)

The press conference is about an hour long and consists of 2 parts—first a prepared statement is read, then the conference is open to press questions. The questions often lead to unscripted answers that create heavy market volatility.

NZD – GDP q/q – 10:45 pm (High Impact)

Tracks the change in the inflation-adjusted value of all goods and services produced by the economy. The index acts as the broadest measurement of economic activity and is the primary gauge of the economy’s health.

An actual price change of 1.0% for the previous quarter slightly topped a 0.8% forecast.

Thursday, 20 December 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.

An actual employment change of 32.8K people for the previous month crushed a 19.9K 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% for the previous month slightly beat a 5.1% 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. This is a primary indicator of consumer spending, which accounts for the majority of overall economic activity.

An actual interest rate of -0.5% for November underperformed vs. a 0.2% forecast.

GBP – MPC Official Bank Rate Votes – 1:00 pm (High Impact)

The Bank of England’s Monetary Policy Committee (MPC) meeting minutes contain the interest rate vote for each MPC member during the most recent meeting. The breakdown of votes provides insight into which of the members are changing their stance on interest rates, as well as how close the committee is to enacting a rate change in the future.

The vote is reported in an ‘X-X-X’ format. The first number shows how many MPC members voted to increase interest rates, the second number shows how many voted to decrease rates, and the third shows how many voted to hold current rates.

An actual vote of 0-0-9 for November confirmed a forecast of the same value.

GBP – Monetary Policy Summary – 1:00 pm (High Impact)

The monetary policy is among the primary tools the MPC uses to communicate with investors about monetary policy. It contains the outcome of their vote on interest rates and other policy measures, along with commentary about the economic conditions that influenced their votes. Most importantly, it discusses the economic outlook and offers clues on the outcome of future votes.

GBP – Official Bank Rate – 1:00 pm (High Impact)

Shows the Interest rate at which the BOE lends to financial institutions overnight. Short-term interest rates are the paramount factor in currency valuation—traders look at most other indicators merely to predict how rates will change in the future.

An actual interest rate of 0.75% for November confirmed a forecast of the same value.

JPY – Monetary Policy Statement – Tentative (High Impact)

Monetary Policy by Bank of Japan

Source: DF Markets

The statement is among the primary tools the BOJ uses to communicate with investors about monetary policy. It contains the outcome of their decision on asset purchases and commentary about the economic conditions that influenced their decision. Most importantly, it projects the economic outlook and offers clues on the outcome of future votes.

JPY – BOJ Policy Rate – Tentative (High Impact)

Tracks the interest rate levied on excess current account balances held at the Bank of Japan. Short-term interest rates are the paramount factor in currency valuation—traders look at most other indicators merely to predict how rates will change in the future.

An actual interest rate of -0.10% for October remained unchanged compared to September’s rate policy.

JPY – BOJ Press Conference – Tentative (High Impact)

The press conference is among the primary methods the BOJ uses to communicate with investors regarding monetary policy. It covers the factors that affected the most recent interest rate decision, the overall economic outlook, inflation, and clues regarding future monetary policy.

Friday, 21 December 2018

 

GBP – Current Account – 10:30 am (High Impact)

Tracks the difference in value between imported and exported goods, services, income flows, and unilateral transfers during the previous quarter. The report is directly linked to currency demand—a rising surplus indicates that foreigners are buying more of the domestic currency to execute transactions in the country.

An actual value difference of -20.3B for the previous quarter fell short of meeting a -14.4B forecast.

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

Tracks 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 sales value change of 0.1% for the previous month slightly underperformed vs. a 0.3% forecast.

CAD – GDP m/m – 2:30 pm (High Impact)

Shows the change in the inflation-adjusted value of all goods and services produced by the economy. The index acts as the broadest measure of economic activity and the primary gauge of the economy’s health.

An actual value change of -0.1% for the previous month slightly underperformed vs. a 0.1% forecast.

USD – Core Durable Goods Orders m/m – 2:30 pm (High Impact)

Shows the change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items. This report is a leading indicator of production—rising purchase orders signal that manufacturers will increase activity as they work to fill the orders.

An actual value change of 0.1% for the previous month underperformed vs. a 0.4% forecast.

USD – Final GDP q/q – 2:30 pm (High Impact)

Shows the annualised change in the inflation-adjusted value of all goods and services produced by the economy. The metric is the broadest measure of economic activity and the primary gauge of the economy’s health.

An actual value change of 4.2% for the previous quarter confirmed a forecast of the same value.

CAD – BOC Business Outlook Survey – 4:00 pm (High Impact)

The survey includes 100 businesses and asks respondents to rate the relative level of general business conditions, such as sales growth, investment in machinery, employment, inflation expectations, and credit conditions. This report is highly respected given its source and timing in relation to interest rate decisions.

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Missed our previous report? Visit us here 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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