Financial Market Forecast for September 15 -19

The financial markets could stir up again this week as there are many news items on the agenda mainly the next FOMC meeting and the Scottish referendum.  Last week, precious metals and oil resumed their downward trend, while the USD rallied against the yen and Aussie dollar. Other reports and events to unfold this week include: GB CPI, Philly Fed index, U.S CPI, FOMC Chair Yellen speaks, Canada’s manufacturing PMI, U.S industrial production, U.S PPI, BOJ governor Kuroda speaks, GB employment report, U.S housing starts, G20 Summit, and German ZEW economic sentiment.  So let’s break down the economic colander for the week of September 15th to 19th.  

(All times GMT):

Monday, September 15th

14:15 –U.S Industrial Production: This report will present the monthly shifts in the U.S industrial production during August; as of July, the production slightly rose again by 0.4%;

00:30 – Minutes of Reserve Bank of Australia’s Monetary Policy Meeting: The Reserve Bank of Australia kept its interest rate unchanged at 2.5%; the minutes will provide some additional information regarding the last decision;

Tuesday, September 16th

06:30 –BOJ Governor Kuroda Speaks: The governor of Bank of Japan will hold a press conference in Osaka;

09:30 – GB CPI: According to the previous report, the CPI declined to an annual rate of 1.6% during July. The changes in Great Britain’s inflation could impact BOE’s monetary policy;

10:00 – German ZEW economic sentiment: The next report will pertain to the ZEW indicator of economic sentiment for Germany for August. During July, the ZEW indicator for Germany dropped to 8.6 points; if Germany’s economic sentiment keep dwindling, the Euro could plausibly weaken against leading currencies;

13:30 – Canada Manufacturing Sales: In the recent update regarding July 2014, manufacturing sales rose by 0.6%;

13:30 – U.S. Producer Price Index: This report presents the inflation rate from the producers’ side; it will refer to August 2014. In the last report regarding July, this index for finished goods inched up by 0.1% compared with June’s level; the core PPI rose again by 0.2%; this news might impact the USD;

14:00 – U.S. TIC Long Term Purchases: The Treasury International Capital monthly report will show the developments the purchases and sales of US long term treasuries for July 2014. In the previous report regarding June 2014, the net foreign sales of U.S Treasuries longer-term notes reached a deficit of $18.7 billion;

16:15 –BOC Governor Poloz Speaks: The Governor is due to hold a press conference at the Drummondville Economic Development Society;

Wednesday, September 17th

09:30 – Great Britain Average Earnings Index 3m/y: This report examines the change in the price businesses and the government pays for labor force; in the past report, this index slipped by 0.2%;

09:30 – Great Britain Claimant Count Change: As of the previous month, the number of unemployed in GB declined again by 33.6K; the rate of unemployment edged down to 6.4%;

09:30 –MPC Asset Purchase and Rate Votes: In the previous MPC meeting, the Bank kept its cash rate at 0.5% and the asset purchase program at £375 billion; in the last meeting however the vote wasn’t unanimous at 2-0-7. This could indicate a show shift in the direction of BOE especially considering the upcoming Scottish referendum;

10:00 – EU CPI (final): According to the latest report, the CPI dropped to an annual rate of 0.4% as of August. The developments in EU’s inflation could affect ECB’s monetary policy;

13:30 – U.S Core Consumer Price Index: This monthly report refer to the main changes in the core consumer price index for August 2014. According to the U.S Bureau of Labor statistics, during July, the CPI inched up by 0.1%; the core CPI also grew by the same rate; this report could impact the USD and the FOMC’s monetary policy;

15:30 – U.S Crude Oil Stockpiles Weekly update: The EIA (Energy Information Administration) will release its weekly report on the U.S oil and petroleum stockpiles for the week ending on September 12th;

19:00 – FOMC Meeting and Press Conference: This highly expected FOMC meeting will take place between September 16th and 17th. This time, the FOMC will release an update to its economic outlook and FOMC Chair Yellen will hold a press conference. The FOMC is expected to announce its seventh tapering decision of its QE3 program by another $10 billion to $15 billion a month. The FOMC may also refer to any potential future changes to its future monetary policy in the press conference that follows the statement release, i.e. the timing of raise its cash rate. Even though the labor market is improving the past couple NF payroll report weren’t too impressive; also, the inflation remains stable around 2%; the GDP picked up in the second quarter but the economy is still growing at a slow pace, and a rate hike or even a hint of such a hike could have an adverse impact on the markets; this could mean in the press conference Yellen will deflect any questions about the rate hike. Conversely, she could talk about the exit strategy following the huge rise in the Fed’s balance sheet; if the tone of the press release and press conference remain slightly more hawkish, this could bring further down gold and silver prices;

Thursday, September 18th

07:35 –BOJ Governor Kuroda Speaks: The governor of Bank of Japan is due to speak at the National Securities Industry Convention, in Tokyo;

08:30 – Libor Rate of Swiss National Bank: The Swiss National Bank will release its Libor rate decision; this decision could affect not only currencies markets but also commodities markets, assuming, the bank changes its Libor rate;

09:30 – Great Britain Retail Sales: According to last month’s report, retail sales in Great Britain edged up by 0.1%;

13:45 –FOMC Chair Yellen Speaks: Janet Yellen is expected to deliver a speech at the Corporation for Enterprise Development’s 2014 Asset Leaning Conference in Washington DC, via satellite. The title of the speech is “The Importance of Asset Building for Low and Middle Income Households;

15:00 – Philly Fed Manufacturing Index: This monthly survey projects the growth of the US manufacturing sectors. In the last survey regarding August, the growth rate rallied from +23.9 in July to +28 in August. If the index further increases, it may positively impact not only U.S Dollar but also U.S equity markets and commodities (the recent Philly Fed review);

All Day –Scottish Independence Vote: This is the highly anticipated Scottish referendum to decide on whether Scotland will choose to become independent of GB; the outcome of this referendum could have a strong impact on the British pound; currently, the polls show a very close call;

13:30 – U.S. Housing Starts: The U.S Census Bureau will publish its U.S housing starts monthly update for August 2014; in the previous report, housing starts grew to 1090K houses;

13:30 – U.S. Building Permits: In the last report, during July, building permits rose to 1050K houses. If building permits continues to rise, it may indicate that the U.S housing market is slowing recovering (the recent U.S building permits update);

13:30 – U.S. Jobless Claims Weekly Report:  This weekly report will refer to the changes in the initial jobless claims for the week ending on September 12th; in the last report the jobless claims rose to 315K;

15:30 – EIA U.S. Natural Gas Storage: The EIA weekly update of the U.S. natural gas market will refer to the recent shifts in natural gas production, storage, consumption and rates as of September 12th;

Friday, September 19th

13:30 – Canada Core CPI: This monthly report will present the changes in the CPI and core CPI of Canada for July; in the previous report, the core CPI edged down by 0.2%;

13:30 – Canada Wholesale Sales: In the last report regarding June 2014, wholesale sales rose by 0.6%;

All Day – G20 Meeting: The finance ministers of the top 20 economies are expected to meet and talk about the burning global economic issues on the agenda such as the ongoing conflict between Russia and Ukraine;

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