Weekly Outlook of Financial Markets for January 21-25

Major commodities prices including gold, silver and oil rose during last week. Will this rally continue? Next week several reports and speeches may affect the financial markets. These include: U.S new home sales, Mario Draghi’s speech, Euro-group meetings, Canada’s retail sales, Australia’s CPI, minutes of MPC meeting, China’s flash manufacturing PMI, BOC rate decision, German manufacturing PMI, Spain’s unemployment rate auction, and U.S. jobless claims. Here is an economic news calendar projection for January 14th to January 18th regarding the U.S, EU, Canada, China, Japan, Australia and Great Britain.   

(All times GMT):

Monday, January 21st

All Day – EU Economic Summit (two days meetings): EU ministers of finance and ECB President will meet in Brussels. The President of Euro-Group Jean-Claude Juncker will step down upon the conclusion of the meetings. In this Summits the EU ministers will also discuss the future progress of the EU economy and perhaps start the talks over the multi-year EU budget;

Tentative – Bank of Japan – Rate Decision and Monetary Policy Statement: Bank of Japan will announce its interest rate and monetary policy for January. BOJ raised the asset purchase program in three of the last four meetings. The current monetary easing is at over 100 trillion yen.  In the previous meeting, BOJ kept the interest rate unchanged at 0 to 0.1 percent. Following the recent steps taken by newly elected Prime Minster Shinzo Abe to stimulate the economy, it is likely that BOJ will step up its monetary easing program and augment the asset purchase program. In such a case, the Japanese yen will further weaken against the USD;

Tuesday, January 22nd

10:00 –German ZEW economic sentiment: The upcoming report will refer to the ZEW indicator of economic sentiment for Germany for January. In December the ZEW indicator for Germany rose to reach 6.9 points; if Germany’s economic sentiment will further expand, the Euro will plausibly strengthened against other currencies including the USD;

Tentative – GB 10 Year Bond Auction: the British government will have another monthly bond auction; in the previous bond auction, which was held during the second week of December, the average rate reached 1.8% – a slightly lower rate than in the previous auction;

13:30 – Canada Retails Sales (November 2012): This report will pertain to the retails sales in Canada as of November. It may affect the direction of USD/CAD currency pair, which is strongly correlated with commodities prices. In the previous report regarding October 2012, retails sales rose by 0.7%;

15:00 – U.S. Existing Home Sales: This report will refer to the changes in U.S. existing home sales for December 2012; in the previous report regarding November 2012 the number of homes sold rose to a seasonally adjusted annual rate of 5.04 million houses sold; if this trend will continue it may pull up the U.S dollar.

18:00 – ECB President Speaks: Mario Draghi will give a speech in the New Year’s Reception in Frankfurt. He is likely to refer to the progress of the EU economy.  If the ECB President will refer to ECB’s monetary policy this might affect the Euro to US dollar currency pair;

00:30 – Australia’s CPI for Q4 2012: This quarterly report will refer to the changes in the consumer price index. In the recent report regarding the third quarter, the CPI rose by 1.4% compared to the second quarter and by 2% compared to Q3 2011; this report could affect the Aussie dollar which is linked with commodities prices;

Wednesday, January 23rd

09:30 – Minutes of MPC Meeting: in the previous MPC meeting, the Bank kept the rate flat at 0.5% and the asset purchase program at £375 billion; the MPC still has concerns regarding GB’s inflation rate. The minutes of the latest meeting might offer some insight behind this decision;

14:00 – Bank of Canada’s Overnight Rate: The Bank of Canada will publish its decision on the Canadian overnight interest rate, which remained flat at 1% as of the recent decision. The BOC may continue its policy and keep the interest rate at 1%; on the other hand, the recent slowdown in Canada’s economy might prompt BOC to cut the rate;

15:30 – Bank of Canada’s Monetary Policy and Press Conference: The Bank of Canada will publish its monetary policy report and also hold up a press conference; if there will be big headlines in this press conference it could affect the Canadian dollar;

15:30 – U.S Crude Oil Stockpiles Report: the EIA (Energy Information Administration) will be publish its weekly report on the U.S oil and petroleum stockpiles for the week ending on January 18th; in the recent update for January 11th, stockpiles increased by 3.7 ml bl to reach 1,799.1 ml bl.

02:45 – China flash Manufacturing PMI: this index will cover 800 companies in 20 industries in China; based on the HSBC Manufacturing PMI report regarding December 2012 the Manufacturing PMI inched up to 50.9; this index indicates the developments in China’s manufacturing sectors growth rate; if the index will further increase, this may positively affect commodities prices;

Thursday, January 24th

08:00 – Spain’s unemployment Change: the rate of unemployment of the Spain increased again to 25%. This mean, the employment situation in Spain isn’t improving. If in the upcoming report this trend will continue, it may negatively affect the Euro;

08:30 – Flash German, French and Euro Zone Manufacturing PMI: In the previous report regarding December 2012, the German PMI slipped to 46 i.e. the manufacturing conditions are contracting at a slightly faster rate. This report serves as an indicator to the economic shifts of the Euro Area’s leading economies’ manufacturing conditions; this news, in turn, may affect the Euro/USD currency pair and consequently also major commodities rates;

13:30 – U.S. Jobless Claims Weekly Report:  this report will pertain to the weekly shifts in the initial jobless claims for the week ending on January 18th; in the recent report the jobless claims declined by 37k to reach 335k; this upcoming weekly report may affect the U.S dollar and consequently commodities;

15:30 – EIA U.S. Natural Gas Storage Update: the EIA weekly report of the U.S. natural gas market will refer to the recent changes in natural gas production, storage, consumption and rates as of January 18th; in recent weekly report, natural gas storage declined by 148 Bcf to 3,168 Bcf;

Friday, January 25th

09:00 – German Business Climate Survey: This survey analyzes the developments (on a monthly basis) of the business climate of Germany. In the recent report for December 2012, the business climate index increased from 101.4 in November to 102.4 in December; if this trend will continue, it might positively affect the Euro;

09:30 – Flash GB GDP Q4 2012: This report will present the first estimate of the quarterly growth rate of the British economy during the fourth quarter of 2012; during the third quarter the GB economy expanded by 1% (Q-2-Q);

13:00 – Canada’s CPI: This report will pertain to the CPI and core consumer price index (controlling the volatile components such as energy, fruit and vegetables) for December 2012. According to the Canadian CPI report for November 2012, the core CPI remained flat during the month. This report might affect the Canadian dollar, which is also strongly linked with commodities rates;

15:00 – U.S. New Home Sales: This report will refer to December 2012; in the previous report (for November), the sales of new homes rose to an annual rate of 377,000 – a 4.4% gain (month over month); if the number of home sales will rally, it may indicate a sign of some recovery in the U.S real estate market which may also affect the strength of the USD.

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