Leading commodities prices have changed direction and tumbled down during last week: Oil, gold and silver plummeted last week after they had rallied during most of August. The highly anticipated FOMC meeting will take place this week and could stir up the financial markets including forex, commodities and stocks. Will the FOMC start tapering QE3? How will the financial markets react to this news? Besides the FOMC meeting, there are additional reports and events that may affect the financial markets. These include: EU CPI, German ZEW economic sentiment, U.S core CPI, Philly fed survey, Japan’s trade balance, German elections, U.S housing starts, Canada’s manufacturing sales, GB CPI, U.S existing home sales, minutes of RBA, and U.S. jobless claims. Here is an economic outlook for the week of September 16th to September 20th regarding the U.S, Euro Area, GB, Canada, Japan, Australia and Great Britain.
(All times GMT):
Monday, September 16th
10:00 – Euro Area CPI: According to the recent update the annual CPI remained at 1.6%, which is still below ECB’s target inflation; if the inflation will pick up, it could reduce the odds of ECB cutting again its cash rate;
14:15 –U.S Industrial Production: This report will present the monthly developments in the industrial production as of August; as of July, the production remained flat; this report may affect the USD currency;
00:30 – Minutes of Reserve Bank of Australia’s Monetary Policy Meeting: The Reserve Bank of Australia left its interest rate at 2.50%; the minutes of the recent monetary policy meeting may offer some insight behind its latest decision; this news may affect the Australian dollar and consequently oil and gold prices;
Tuesday, September 17th
09:30 – GB CPI (August 2013): In the previous report regarding July 2013, the CPI inched down to an annual rate of 2.8%; if the inflation rate continues to fall, it may eventually affect the decision of BOE regarding its monetary policy;
10:00 – German ZEW economic sentiment: The upcoming report will pertain to the ZEW indicator of economic sentiment for Germany for August. In July, the ZEW indicator for Germany bounced back to 42 points; if Germany’s economic sentiment will keep improving, the Euro will plausibly strengthen against other currencies including the US dollar;
13:30 – Canada Manufacturing Sales (July 2013): This report refers to manufacturing sales in Canada as of July. It may affect the USD/CAD currencies pair, which is strongly linked with commodities. In the recent report regarding June 2013, manufacturing sales decreased by 0.5%;
13:30 – U.S Core Consumer Price Index: This monthly report pertains to the main developments in the core consumer price index for August 2013. Based on the U.S Bureau of Labor statistics, during July, the CPI inched up by 0.2% (month-over-month); the core CPI also edged up by 0.2%; the core index increased over the past twelve months by 1.7%.
14:00 – U.S. TIC Long Term Purchases: The Treasury International Capital monthly report will present the changes the purchases and sales of US long term treasuries for July 2013. In the recent report regarding June 2013, the net foreign sales of U.S Treasuries longer-term notes reached a deficit of $66.9 billion;
Wednesday, September 18th
09:30 –MPC Asset Purchase and Rate Votes: In the recent MPC meeting, the Bank kept the rate flat at 0.5% and the asset purchase program at £375 billion; this vote count will present how many MPC members voted on any changes to the asset purchase program or interest rate;
13:30 – U.S. Housing Starts: The U.S Census Bureau will publish its U.S housing starts monthly update for August 2013; this report was historically correlated with gold price – as housing starts rise, gold prices tended to decline the next day (even when controlling to the U.S dollar effect); in the recent monthly report, the adjusted annual rate reached 896,000 in July 2013, which was 5.9% above June’s rate;
13:30 – U.S. Building Permits: In the latest update, during June building permits rose by 2.7% (M-o-M) as the adjusted annual rate of building permits reached 943,000. If building permits continue to rise, it may indicate that the U.S housing market’s recovery (from this aspect) is pulling up (the recent U.S building permits update);
15:30 – U.S Crude Oil Stockpiles Weekly update: the EIA (Energy Information Administration) will come out with its weekly update on the U.S oil and petroleum stockpiles for the week ending on September 14th;
19:00 – FOMC Meeting and Press Conference: The highly anticipated sixth FOMC meeting this year will take place during September 17th and 18th. The FOMC will decide whether it will start taper QE3. Many analysts expect the FOMC to start taper its long term treasury bonds purchase program by $15 billion a month. The total asset purchase program, in this case, will remain at $70 billion a month. Considering the little effect the treasury bonds purchase program has had on the economy and the slow progress of the labor market, the FOMC might decide to take different measures to stimulate the economy, such as revising up the inflation target, increasing the mortgage backed securities purchase program, or pegging the long term interest rates (10 years) at 2.5%. If the Fed introduces new measures, this could drag back down the USD. If the Fed only reduces QE3, it is likely to pull up USD and drag down gold and silver prices. If the Fed won’t introduce any changes to its monetary policy, gold and silver prices might bounce back. In any case, the FOMC’s statement, outlook and press conference that follow are likely to move the forex, stocks and commodities markets;
23:50 – Japanese Trade balance: In July 2013 the Japanese trade balance deficit bounced back by 42.3% compared to June, and reach 944 billion yen (roughly $9.48 billion) deficit (seasonally adjusted figures). This rise in deficit was due to the increase in imports (by 2.7%) and the fall in exports (by 1.8%). Japan is among the leading importers of commodities, including crude oil and silver; its trade balance could offer information regarding Japan’s changes in demand for goods and services;
Thursday, September 19th
08:30 – Libor Rate of Swiss National Bank: The Swiss National Bank will come out with 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 – GB Retails Sales (August 2013): This report presents the developments in the retails sales in Great Britain for August 2013. It may affect the British Pound currency. In the recent report regarding July 2013, retails sales increased by 1.1%;
13:30 – U.S. Jobless Claims Weekly Report: This weekly update will refer to the changes in the initial jobless claims for the week ending on September 14th; in the recent report the jobless claims plunged by 31k to reach 292k; the next weekly report may affect the U.S dollar and consequently commodities and equities markets;
15:00 – U.S. Existing Home Sales: This report presents the developments in U.S. existing home sales during August 2013; in the previous report regarding July 2013 the number of homes sold rose to a seasonally adjusted annual rate of 5.39 million houses; if this trend persist, it might affect the U.S dollar;
15:00 – Philly Fed Manufacturing Index: This monthly survey projects the growth of the US manufacturing sectors. In the latest survey regarding August, the growth rate fell from +19.8 in July to +9.3 in August. If the index continues to slowdown, it may positively affect not only U.S Dollar but also U.S equity markets and commodities (the recent Philly Fed review);
15:30 – EIA U.S. Natural Gas Storage: The EIA weekly report of the U.S. natural gas market will pertain to the recent developments in natural gas production, storage, consumption and prices as of September 14th;
Friday, September 20th
Tentative – Bank of Japan’s Kuroda Speaks: Bank of Japan Governor will speak at the Kisaragi-kai meeting, in Tokyo. Kuroda’s words could influence traders especially considering the recent weakening of Japanese yen in recent weeks;
13:00 – Canada’s core CPI: This report pertains to the CPI and core consumer price index (controlling the volatile components such as energy, fruit and vegetables) for August 2013. According to the latest Canadian CPI report for July, the core CPI remained unchanged This report might affect the Canadian dollar, which is also strongly correlated with oil rates;
For further reading:
- Gold and Silver Outlook for September
- Is Gold Making a Comeback?
- QE3 Is Here, So Why Gold isn’t Pulling Up?
- Will Gold Recover from its Recent Fall?
- Choosing Between Gold and Silver
- Gold and Silver Yearly Outlook For 2013