Weekly Outlook of Financial Markets for September 17-21

During the previous week, the prices of commodities continued their rally mainly after the FOMC decided to launch another Quantitative Easing Plan (QE3) in which the Fed will purchase mortgage backed securities at a rate of $40 billion per month, this time, as oppose to the QE1 and QE2, there is no time limit on the plan. The Fed also extended its pledge to keep short term rates low until mid-2015. The FOMC stated that if the U.S economy won’t show signs of recovery it will consider additional monetary measures. This news is likely to have some lingering effects on the prices of commodities mainly gold and silver in the weeks to follow. During last week, the Euro also hiked against the USD. Further, the major stock indexes also traded up. The German High Courts ruled in favor of EMS which also helped rally commodities and Euro. There are several important publications, speeches and events that may affect the financial markets such as: China’s manufacturing PMI, U.S Philly Fed survey, Spanish bond auction, U.S housing starts, Japan’s trade balance, EU manufacturing PMI, Japan’s rate decision, Great Britain CPI, and U.S. jobless claims. Here is an economic news calendar outlook for September 17th to September 21st regarding the U.S., GB, Japan, Australia, China, EU, and Canada.   

(All times GMT):

Monday, September 17th

00:30 – Minutes of Australia’s Bank Monetary Policy Meeting: The minutes of the recent monetary policy meeting of the Reserve Bank of Australia will pertain to the main factors that affected the board’s decision to keep the basic interest rate flat at 3.5%; the minutes of this meeting may affect the Australian dollar exchange rate and consequently commodities prices including crude oil and gold rates;

Tuesday, September 18th

09:30 – Great Britain CPI: this report will refer to the yearly rate of GB’s consumer price index as of August 2012; some expect the July inflation will further decline; in the recent report regarding July the annual CPI increased from 2.4% to 2.6%; this news may affect the British pound;

10:00 –German ZEW economic sentiment: The upcoming publication will refer to the ZEW indicator of economic sentiment for Germany for September. During August the ZEW indicator for Germany fell to -25.5 points; if Germany’s economic sentiment will continue to dwindle, the Euro will plausibly remain weak against other currencies;

Tentative – BOE Inflation Estimate: this report will present the yearly rate of GB’s inflation according to Bank of England and will be published as a letter only if the inflation is above 3% or below 1%;

14:00 – U.S. TIC Long Term Purchases: The Treasury International Capital report will show the shifts in the purchases and sales of US long term treasuries in July 2012. In the previous report regarding June 2012, the net foreign sales of U.S Treasuries longer-term notes reached $9.3 billion;

00:45 – FOMC member Lacker’s Speech: Following last week’s FOMC decision to issue QE3, in which Lacker was the only member that opposed this decision, it will be interesting to see his position in regards to the FOMC’s decision. The title of the speech is “Maximum Employment and Monetary Policy “;

Tentative – Bank of Japan – Rate Decision and Monetary Policy Statement: Bank of Japan will announce its interest rate and monetary policy for the September. Up to now, BOJ left the interest rate unchanged at 0 to 0.1 percent. If the BOJ will introduce a new monetary stimulus plan, it could affect the Yen, other currencies and commodities rates;

Wednesday, September 19th

09:30 – MPC Meeting Minutes: in the previous MPC meeting it was announced the rate will keep the rate at 0.5% and the asset purchase program at £375 billion; the MPC still has concerns about inflation. The minutes of the recent meeting might offer some insight behind this decision;

13:30 – U.S. Housing Starts: the U.S Census Bureau will publish the U.S housing starts update for August 2012; this report was historically correlated with gold price – as housing starts decreased, gold prices tended to rise the next day (even when controlling to the U.S dollar effect); in the previous report, the adjusted annual rate reached 754,000 in July 2012, which was 1.1% below June’s  rate;

13:30 – U.S. Building Permits: The latest report building permits rose by 6.8% (M-o-M) in the adjusted annual rate of building permits and reached 812,000 in July 2012. If this report will continue to rise in the building permits rate, it may indicate that the U.S housing market (from this aspect) is pulling up (the recent U.S building permits update);

15:00 – U.S. Existing Home Sales: This report will refer to the changes in U.S. existing home sales for August 2012; in the previous report regarding July 2012 the number of homes sold slightly rose: the seasonally adjusted annual rate of 4.47 million home sales; if this trend will continue it may help rally the U.S dollar;

15:30 – U.S Crude Oil Stockpiles Report: the EIA (Energy Information Administration) will publish its weekly update on the U.S oil and petroleum stockpiles for the week ending on September 14th; in the previous weekly update for September 7th, stockpiles rose by 2.3 million bl to 1,790 million bl;

00:50 – Japanese Trade balance: The Japanese trade balance deficit for July 2012 rose by 2.5% compared to June, and reach 325 billion YEN (roughly $4.11 billion) deficit (seasonally adjusted figures). This rise is due to the drop in imports by 0.9%, and a decline in exports by 1.1%. Japan is among the leading importing countries of commodities, including crude oil and gold; its trade balance could provide some information about Japan’s developments in demand goods and services;

03:30– China flash Manufacturing PMI: this survey covers 800 companies in 20 industries in China; according to the HSBC Manufacturing PMI flash report for August 2012 the Manufacturing PMI fell to 47.8, which means the manufacturing conditions are still contracting in China; if this negative index will continue, this may adversely affect commodities prices, unless China will act to stimulate its economy;

Thursday, September 20th

09:00 – Flash German, French and Euro Area Manufacturing PMI: In the previous report regarding August 2012, the German PMI rose to 45.1 i.e the manufacturing conditions are still contracting but at a slightly slower pace. This report will provide an indicator to the economic progress of the Euro zone and the leading economies’ manufacturing conditions; this news, in turn, might affect the Euro/USD exchange rate and consequently also major commodities rates;

09:30 –Retails Sales GB (August 2012): This report examines the changes in the retails sales in Great Britain during August 2012. It may affect the direction of the British Pound currency. In the previous report regarding July 2012, retails sales edged up by 0.3%;

Tentative – Spanish 10 Year Bond Auction: the Spanish government will issue another bond auction; in the recent bond auction, which was held at the first week of August, the average rate reached 6.65%;

13:30 – U.S. Jobless Claims Weekly Report:  this update will refer to the weekly changes in the initial jobless claims for the week ending on September 14th; in the recent report the jobless claims rose by 15k to 382,000; this upcoming weekly report may affect the U.S dollar and consequently the rates of commodities;

14:30 – FOMC member Lockhart’s Speech: The title of the speech is ” The future of Workforce Development “;

15:00 – Philly Fed Manufacturing Index: This monthly survey shows an estimate for the changes of the US economy; it measures the manufacturing conditions. In the previous August survey, the growth rate rose from -12.9 in July to  -7.1  in August. If the index will remain negative it may adversely affect not only U.S Dollar but also American stock indexes, and commodities prices (the recent Philly Fed review);

15:30 – EIA U.S. Natural Gas Storage Update: the EIA weekly review of the U.S. natural gas market will pertain to the recent developments in natural gas production, storage, consumption and rates as of September 14th; in the previous weekly report, natural gas storage rose by only 27 Bcf to 3,429 Bcf;

17:00 – ECB President Speech: Mario Draghi is likely to refer to the recent German Court ruling, and he may also refer to the future monetary steps the ECB will take in order to jump start the EU economy and lower the borrowing costs of the struggling EU economies such as Spain and Italy. This speech might affect the Euro to US dollar exchange rate;

Friday, September 21st

09:30 – Great Britain Net borrowing: this report will present the monthly developments in the public sector net borrowing for August 2012; as of July 2012, the net borrowing was £0.6 billion;

13:00 – Canada’s Core CPI: This report will pertain to the core consumer price index for August 2012 and controlling the volatile components such as energy, fruit and vegetables. According to the Canadian CPI report for July 2012, the CPI rose by 1.3% during the past 12 month up to July – this is a slightly lower rate than in June. This report might affect the Canadian dollar, which is also strongly correlated with commodities prices;

17:40 – FOMC member Lockhart’s Speech: He is expected to speak about the Fed’s monetary policy and his projection for the U.S economy.

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