Trading News to Watch Next Week (22 – 26 October 2018)

Next week, the star of the perpetual motion picture that is the global markets is, no doubt, the Bank of Canada. On Wednesday, the Bank is expected to hold a press conference meeting, as well as disclose a fair chunk of market-shifting information, such as:

– Main and overnight rate statements

– Detailed monetary policy report

Find out what else is hot on the economic radar in our detailed briefing of next week’s events below.

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Tuesday, 23 October 2018

 

EUR – German PPI m/m – 7:00 am (Low Impact)

Tracks the change in the price of goods sold by manufacturers. The PPI* is a leading indicator of consumer inflation—when manufacturers charge more for goods the higher costs are usually passed on to the consumer.

An actual price change of 0.3% slightly surpasses a 0.2% forecast.

*PPI – Producer Price Index

Wednesday, 24 October 2018

 

EUR – Flash Manufacturing PMI – 9:00 am (Medium Impact)

The PMI* tracks the level of a diffusion index based on a survey of about 3 000 purchasing managers in the manufacturing industry.

In it, respondents are asked to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.

The index is a leading indicator of economic health—businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy.

Above 50.0 indicates industry expansion, while below that indicates contraction. An actual index value of 53.3 slightly underperforms vs. a 54.4 forecast.

*PMI – Purchasing Managers’ Index

EUR – Flash Services PMI –9:00 am (Medium Impact)

Shows the Level of a diffusion index based on a survey of about 600 purchasing managers in the services industry.

In it, respondents are asked to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.

The index is a leading indicator of economic health—businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy.

Above 50.0 indicates industry expansion, while below that indicates contraction. An actual index value of 54.7 is slightly ahead of a 54.5 forecast.

CAD –  BOC Monetary Policy Report – 3:00 pm (High Impact)

This report by the Bank of Canada provides valuable insight into the bank’s view of economic conditions and inflation—the key factors that will shape the future of monetary policy and influence their interest rate decisions.

The BOC Governor usually holds a press conference to discuss the contents of this report about 75 minutes after release.

CAD –  BOC Rate Statement – 3:00 pm (High Impact)

Pictured: Canadian dollars with superimposed Canadian flag

Source: DF Markets

This statement is the primary tool the Bank of Canada uses to communicate with investors about monetary policy.

It contains the outcome of their decision on interest rates and commentary about the economic conditions that influenced their decision.

Most importantly, it discusses the economic outlook and offers clues on the outcome of future decisions.

CAD –  Overnight Rate – 3:00 pm (High Impact)

Shows the interest rate at which major financial institutions borrow and lend overnight funds between themselves. BOC Governing Council members come to a consensus on where to set the rate.

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 1.50% confirms a forecast of the same value.

USD – Crude Oil Inventories – 3:30 pm (Medium Impact)

Tracks the change in the number of barrels of crude oil held in inventory by commercial firms during the past week.

This report by the Energy Information Administration is the primary gauge of supply and demand imbalances in the market, which can lead to changes in production levels and price volatility.

An actual barrel count of 6.5M crushes a 1.6M forecast.

CAD – BOC Press Conference – 4:15 pm (High Impact)

The press conference is among the primary method the Bank of Canada uses to communicate with investors regarding monetary policy.

It covers in detail the factors that affected the most recent interest rate decision, such as the overall economic outlook and inflation. Most importantly, it provides clues regarding future monetary policy.

The press conference 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 – Trade Balance – 10:45 pm (Medium Impact)

Shows the difference in value between imported and exported goods during the reported month. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation’s exports. Export demand also impacts production and prices at domestic manufacturers.

A positive number indicates that more goods were exported than imported. An actual value of -1484M completely fails to measure up to a -930M forecast.

Thursday, 25 October 2018

 

EUR – Spanish Unemployment Rate – 8:00 am (Medium Impact)

Denotes the percentage of total workforce that is unemployed and actively seeking employment during the previous quarter.

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 workforce percentage of 15.3% beats a 15.8% forecast.

EUR – German Ifo* Business Climate – 9:00 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.

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 composite index of 103.7 slightly tops a 103.2 forecast.

*Ifo – Information and Forschung

EUR – Main Refinancing Rate – 12:45 pm (High Impact)

Shows the Interest rate on the main refinancing operations that provide the bulk of liquidity to the banking system.

The 6 members of the ECB Executive Board and 15 of the 19 governors of the Euro area central banks vote on where to set the rate via rotation. The split of votes is not publicly revealed.

An actual interest rate of 0.00% confirms a forecast of the same value.

EUR – ECB Press Conference – 1:30 pm (High Impact)

The press conference is the primary method the European Central Bank uses to communicate with investors regarding monetary policy.

It covers in detail the factors that affected the most recent interest rate and other policy decisions, such as the overall economic outlook and inflation. Most importantly, it provides clues regarding future monetary policy.

The press conference is about an hour long and has 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.

USD – Core Durable Goods Orders m/m – 1:30 pm (High Impact)

Shows the change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items.

Orders for aircraft are volatile and can severely distort the underlying trend. The Core data is therefore thought to be a better gauge of purchase order trends.

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

USD – Durable Goods Orders m/m – 1:30 pm (Medium Impact)

Shows the change in the total value of new purchase orders placed with manufacturers for durable goods. Durable goods are defined as hard products having a life expectancy of more than 3 years, such as automobiles, computers, appliances, and airplanes.

The 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 4.5% crushes a 1.9% forecast.

Friday, 26 October 2018

 

USD – Advance GDP q/q – 1:30 pm (High Impact)

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

An actual annual change of 4.1% slightly underperforms vs. a 4.2% forecast.

USD – Advance GDP Price Index q/q – 1:30 pm (Medium Impact)

Measures the annualised change in the price of all goods and services included in GDP.

The report is the broadest measure of inflation, encompassing all activities included in GDP, and is a primary instrument that the central bank uses to assess inflation.

An actual annual change of 3.0% slightly underperforms vs. a 2.3% forecast.

USD – Revised UoM Consumer Sentiment – 3:00 pm (Medium Impact)

Shows the level of a composite index based on a  survey of consumers which asks respondents to rate the relative level of current and future economic conditions. Financial confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity.

An actual composite index value of 100.1 slightly underperforms vs. a 100.5 forecast.

Missed our previous report? Follow this link 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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