Happy with what he has
AUD is an interesting currency and this week it hits the headlines with its latest Bank Rate revelation (Tuesday 3rd 5.30am GMT). The Bank Rate has stood steady at 1.50% since it dropped by 0.25% in August 2016. While the economy has been trying to get itself back on its feet not many pundits have expected any changes.
But as things start looking better more voices are wondering when the next rise will happen. Could it be this week? Unlikely, depending on who you talk to. This means all action will be around the Rate Statement (Tuesday 3rd 5.30am) to see what the bank rate committee had to say and if change is coming on the horizon. Expect market changes for the Aussie dollar as traders analyse the comments and try to forecast where the national interest rates will go and when. It looks like they’ll be happy with things staying pretty much the same.
The week ends with a bang as Bank of England Mark Carney addresses an international climate risk conference in Amsterdam (4.15pm GMT Friday 6th). The clamour for a rate rise in the UK is growing but the mixed forecast has Bank representatives sitting on the fence. GBP traders could change their positions as the week closes if Carney drops any hints in the speech.
Federal Reserve newcomer Jermone Powell gives a speech and answers questions at the Economic Club of Chicago (Friday 6th 6.30pm GMT). If his comments look hawkish that is usually seen as good for the currency. It’s a busy week for USD traders so this could see them planning their action for Monday rather than any big changes as the week closes for trading on Friday.
Interest rates have such a crucial effect on currency value expect fluctuations around both events and enjoy your Friday afternoon trades.
One happy Trumpster
Can the US do it again? Last month’s Non-Farm Employment Change (Friday 6th 1.30pm GMT) went up by over 30% – increasing by 312K from the 239K rise in February. What makes this more impressive is that analysts saw a drop in the employment rise. This month they see an increase of 190k on the cards, which will make a solid run of 6 months of employment growth.
Forecasts also indicate growth in the Average Hourly Earnings (Friday 6th 1,30pm GMT) from 0.1% to 0.3%, which will be welcome news for US citizens struggling with high living costs and debts. The ISM Manufacturing PMI (Monday 2nd 3pm GMT) and ISM Non-Manufacturing PMI (Wednesday 4th 3pm GMT) are both looking healthy with scores safely above the 50 line between positive and negative outlooks – 60.1 and 59.2 respectively. Even if they waver, they’re unlikely to move far.
Overall, there is a positive outlook for the US economy when looking at this week’s data. But don’t forget the looming trade war sparked by Trump’s steel tariffs. Keep an eye on his Twitter feed and watch for responses from the EU, China, India and other major trading partners.
Carzy like cat
Canada’s GDP suffered a decline in growth from 0.4% to 0.1% at the start of March. With its second data release in a month giving it a blue moon quality, does anyone expect things to get better? Nope – well, maybe one or two pundits. But CAD may just go a little crazy. Check out the action on Thursday 29th March at 1.30pm GMT.
Canada hasn’t had the best month. Trump openly admitted to making up stats in a meeting with Trudeau while Crude Oil has given the Loonie a good ride. Talk at the moment suggests a rate hike could be on the cards next week; inflation hit a 3-year high and Trump’s new deadline for NAFTA puts both Mexico and Canada under threat of steel tariffs.
The dollar jumped half a cent as the week closed on Friday 24th and markets are likely to be choppy as local markets open on Monday 27th.
Just your average American Joe
A lot has changed since last month’s CB Consumer Confidence on Tuesday 27th at 3pm GMT. Not least Trump’s steel tariff that threatens to start a global trade war with traditional trade partners like Europe etc. So has this potential trade disaster affected consumer confidence?
Forecasts suggest the American public feel just great with the index rising from 130.8 to 131.2. To be fair, asking 5,000 average Joes with limited access to expert data or even international news what they think will happen to employment rates, business conditions and the overall economic outlook isn’t necessarily the best way to judge what will really happen. But traders love it so it will affect the markets.
Also big on the USD markets this week is Final GDP, out Wednesday 28th at 1.30pm GMT. Dropping towards target by 0.1% to 3.2% in December, forecasts are for another drop to 2.7%, though this is a rise of 0.2% from the actual Preliminary GDP results a few weeks ago. Smack in the middle of the healthy range, this data is likely to boost the dollar.
Finally, Crude Oil Inventories on Wednesday 28th at 3.30pm GMT should be interesting. Last week saw the first drop in a while by -2.6M barrels and oil saw the biggest gains in 8 weeks. OPEC discussions about ending their agreement to cut production indicate they could actually keep that going until 2020, though seeing the US make the most gains from their reductions must be galling.
Time for a plan
New Zealand’s trade deficit is forecast to shrink by a massive 466 million to -100M if forecasts are correct for 10.45pm GMT on Sunday 26th March. That should set the mood for this week’s Kiwi trading, but the highlight will actually be the ANZ Business Confidence index, out Wednesday 1am GMT. Plan your week’s trade around it.
Business Confidence has been in the doldrums for months though it perked up in February, climbing to -19 (the best it’s been since last September – it’s been seriously depressed). The range of opinions about where it goes from here could be down to who’s wearing their rose-tinted glasses, but a slim majority of pundits see another drop this week. The threat of Trump’s trade war with China would put New Zealand in the middle and NZD could be turbulent.
While that doesn’t sound great, turbulence can bring its reward if you judge the market mood well and play it right. Are you going to play minute by minute or across the week? Options, options. Currency trading can certainly be fun.
CAD just about staying afloat
CAD sank to its lowest level against the dollar since June 2017 at the end of last week (76.41cents) signalling troubling times for the north American currency.
Clashes over oil stockpiles between OPEC and the States have ricocheted sending the Looney (CADs alter ego) into a spiral. Deeply dependent on their oil reserves, Wednesday’s Crude Oil Inventories at 2.30pm GMT, could change its fortunes again.
But oil isn’t the half of it. Unhappy grumblings about the NAFTA in Canadian economic circles and the potential looming trade war with their southern neighbour weren’t helped by Trump’s glibly delivered false news data in his meeting with Trudeau. Admitting he made up details about a trade deficit, Trump seems to have no qualms about upsetting the States’ friends around the world.
A speech by Reserve Bank of Canada’s Senior Deputy Governor Wilkins could have a few tidbits to entice traders to make a call on how to close the week at 6.45pm GMT on 22nd. But CAD investors will be watching two key figures apart from Trudeau and Trump this Friday.
Rocky CPI figures (23rd 12.30pm GMT) will be watched hoping for another gain after the surprisingly large 0.7% against the 0.4% predicted last month. Core Retail Sales, Friday 23rd March at 12.30pm GMT, are more volatile heading down to -1.8% against 0.1 gain predicted last month. This month it could go either way but another negative would sting Looney bulls badly.
HMS GBP in the markets this week
Mark Carney, Chair of the Bank of England, has his moment in the sun on Thursday 22nd March 12pm GMT as the Official Bank Rate is revealed. Pundits have priced a rise in for May, but there are mutterings of an early rise that could shake a few foundations. Nothing is off the cards this week.
The MPC Official Bank Rate Votes (Thursday 22nd March 12pm GMT) has held steady at 0-0-9 since the rise in November, but many expect to see that change as some voices express concerns about the health of the economy. The question is how many want a rise and how many think that would be a disaster. The Policy Summary, also Thursday at 12pm GMT, should give traders a good view of the Bank’s view of the economy.
Before they cast their votes, the CPI and PPI monthly data should give the Monetary Policy Committee more to think about on Tuesday 20th 9.30am GMT. CPI has been rising above inflation targets at 3% or more since September 2017, while PPI is volatile making forecasts difficult. The Average Earnings Index is another one to chuck in the mix on Wednesday 21st at 9.30am GMT. Finally climbing to more than 2% last August, the current 2.5% could jump again depending on who you talk to.
With more multinationals shifting operations to the continents and the ‘subsidiary’ offices in Frankfurt, Rotterdam and elsewhere taking shape, London’s status looks set to take a battering. Will a rate rise depress the currency like the iceberg for Titanic, or could the domestic boost be the life raft the sinking ship has been floundering for?
We will be making some important changes here at TIQL in the way we operate which we wanted to share with you.
Our mission is to offer the world the chance to trade with the lowest cost and lowest risk. After considerable research we have made the difficult decision not to renew our operating licence. This means that we must close all TIQL US$ accounts in April. Naturally, your TIQL US$ balance will be refunded. TIQL will then continue in a free-to-play mode while we work on new regulatory options for real money trading, but that will likely take another few months.
TIQL US$ trading stops on April 6th and from April 9th TIQL will no longer be regulated by the Isle of Man Gambling Supervision Commission. If you have TQD in your account you will be able to trade but you will not be able to convert your TQDs into US$, until further notice. We will not charge for withdrawals starting on April 5th, to help you with this. If you do not request a withdrawal yourself before April 8th we will attempt to refund your current balance to the most recent deposit method we have on file for you (this may take up to a week to be processed). We advise you to make sure that your details are correct to avoid problems.
We apologise for the downtime and hope that you will join us once we are up and running again!
This is it. Never mind the threat of global war with Russia kicking off in Europe, markets sense a rate rise of 0.25% from the FOMC (Wednesday 21st 6pm GMT) and everyone has an opinion about it.
Expect massive volatility as things go wild during the Press Conference (Wednesday 21st 6.30pm GMT) as Jerome Powell faces the press. No matter what he does, raise rates or leave them be, the stock, currency and commodities markets want to know why.
Trump is slapping trade tariffs on countries like parking tickets, threatening trade wars with every continent that could knock the domestic economy for six. China is the latest in the firing line and we can’t see that ending well.
It’s got to be said that GDP is coming in close to Trump’s 3% target and his Twitter feed shows his usual modesty around that. Of course, stock market gains and recent improvements in small business confidence are largely powered by his much-touted Tax Cuts and Jobs Act slashing business rates from 35% to 21%, rather than actual growth, but some argue his policies are actually leading to massive debt. The sums don’t add up, depending on who you’re asking.
So, long story short, Powell is in a very hot seat and needs to steer the Reserve Bank’s fiscal policy to help calm the economic waters. Plan your in and out points and enjoy the USD ride this week.