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26/10/2015 Fundamental Analysis
26/10/2015
Fundamental Analysis
Monday, October 26, 2015 7:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
Major events this week (October 26-30)
Day/Time (GMT) Flag Currency Event Period Actual Forecast Previous
MONDAY
9:00 am EUR German Ifo Business Climate October 108.5
9:45 pm NZD Trade Balance September -1035M
TUESDAY
9:30am GBP Prelim GDP QoQ Quarter 3 0.7%
12:30 pm USD Core Durable Goods Orders MoM September -0.2%
2:00 pm USD CB Consumer Confidence October 103.0
WEDNESDAY
12:30am AUD CPI QoQ September 0.7%
6:00 pm USD FOMC Statement
8:00 pm NZD RBNZ Rate Statement
THURSDAY
All day EUR German Prelim CPI MoM October -0.2%
12:30 pm USD Advance GDP QoQ Quarter 3 3.9%
12:30 pm USD Unemployment Claims October 24 259K
11:30 pm JPY Tokyo Core CPI YoY October -0.2%
FRIDAY
12:00 am NZD ANZ Business Confidence October -18.9
6:00 am JPY BOJ Outlook Report
10:00 EUR CPI Flash Estimate YoY October -0.1%
12:30 pm CAD GDP MoM August 0.3%
Monday, October 26, 2015 7:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
Euro zone The European Central Bank maintained interest rates unchanged at a record low 0.05% and kept the deposit rate and marginal lending rate at –0.2% and 0.3%, respectively. However, ECB President Mario Draghi said that the central bank is ready to deploy another big-bang stimulus package, which could include more bond purchases and a cut to the already negative deposit rate. Financial markets surged amid expectations of extra ECB stimulus measures, whereas the Euro plunged to the lowest level in two weeks versus the US Dollar of $1.1152. Draghi's statement concerning additional stimulus underscores the fragile state of the global economy. ECB President also revealed that some policy makers of the governing council had insisted on taking more action to underpin the region's economy immediately, blaming the downturn in the emerging markets, including China, for renewed weakness in the Euro bloc. Canada The Bank of Canada left its key overnight lending rate unchanged at 0.5% after cutting it twice this year, saying that nation's economy rebounded as predicted in July. Household spending continued to support economic activity and is projected to increase at a moderate pace. Non-resource sectors benefitted from the stimulative effects of previous monetary policy actions as well as depreciation of the Canadian Dollar. Meanwhile, lower commodity prices lowered Canada's terms of trade and dampened business investment and exports in the resource sector. This prompted the Bank of Canada to modestly downgrade growth forecasts for 2016 and 2017. The central bank expected the nation's economic output to increase by just over 1.0% in 2015 and 2.0% in 2016, compared with a July forecast of 2.3% growth next year. For 2017, growth is predicted to be 2.5% instead of 2.6%. Australia The Reserve Bank of Australia reiterated its view that a weak Australian Dollar and record low interest rates helped to rebalance the nation's economy and strengthen the labour market. Even though the central bank expected a period of sluggish economic activity ahead, meaning monetary policy is likely to stay loose for some time, the RBA looked to be in no mood to cut interest rates, the minutes of its October 6 policy meeting showed. The key risks to financial stability and to the Australian's economy overall revolve around developments in an overheated property market. House prices in major cities like Sydney and Melbourne have surged sharply over the last year, triggered by speculative investment, low interest rates and robust demand from overseas buyers. The RBA warned about an imbalance in lending and risks of potential house price falls.
Key highlights of the week ended October 23
EUR
“The PMI brings welcome news that the eurozone economy picked up some momentum in October” - Chris Williamson, chief economist at Markit
Monday, October 26, 2015 7:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
S&P/ASX 200 Index 0.29% 5,408.24
S&P/ASX 300 Index 0.28% 5,360.32
Trends* Q4 15 Q1 16 Q2 16
MAX 1.38 1.21 1.24
75% percentile 1.13 1.11 1.12
Median 1.09 1.07 1.07
25% percentile 1.06 1.05 1.03
MIN 0.96 0.97 0.95 * the data is based on international banks’ forecasts
Impact
ECB ready to undertake additional stimulus, Draghi says High
Activity in the Euro zone’s manufacturing sector grew at the same
pace as in September, with mixed data coming from the region’s
biggest economies, Germany and France. The flash manufacturing
PMI for the Euro bloc was at 52.0 points in October, remaining
unchanged from the preceding month. At the same time, the
region’s services PMI climbed to 54.2 points this month, compared
with 53.7 in September and analysts’ forecasts for a decline to 53.5.
In Germany, the Euro zone number one economy, the
manufacturing sector activity declined to the lowest level in five
months of 51.6. Yet, the reading remained in green territory.
Meanwhile, the services sector improved in the reported month,
with the corresponding reading coming in at 55.2 points. In France,
the bloc's second biggest economy, both sectors remained in
expansion territory, with the flash manufacturing PMI edging up
further to 50.7 points and the flash services PMI hitting 52.3 points
after September’s 51.9.
Last week ECB President Mario Draghi said that the central bank is
ready to deploy another big-bang stimulus package to support the
economy, which could include more bond purchases and a cut to
the already negative deposit rate.
23.10 open price 23.10 close price % change
EUR/USD 1.1109 1.1018 -0.82%
EUR/GBP 0.72165 0.71944 -0.31%
EUR/CHF 1.08104 1.07823 -0.26%
EUR/JPY 134.07 133.84 -0.17%
USD
“A lightening of the mood in the goods-producing sector was perhaps best reflected in the rebound in job creation, which points to manufacturers having increased confidence that the current upturn will be sustained” - Chris Williamson, chief economist at Markit
Monday, October 26, 2015 7:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
S&P/ASX 200 Index 0.29% 5,408.24
S&P/ASX 300 Index 0.28% 5,360.32
Trends* Q4 15 Q1 16 Q2 16
MAX 132 135 136
75% percentile 125 127 128
Median 123 125 125
25% percentile 121 122 123
MIN 86 110 112 * the data is based on international banks’ forecasts
Impact
US manufacturing activity rises to 5-month high in October
High
US manufacturing activity unexpectedly rose to the highest level in
five month in October, suggesting possible improvement in the
sector, which is suffering from a strong US Dollar and sluggish global
demand. According to the data provider Markit, the US flash
purchasing managers’ index climbed to 54.0 from 53.1 last month,
which was close to the lowest level in two years. The robust start to
the final quarter of the year indicates the world’s number one
economy may be gathering speed again after slowing in the three
months through September, for which the PMI surveys estimated
annualized GDP growth of 2.2%. The faster growth of export sales is
particularly good news and will help to fan fears that the US
economy is being hurt by the stronger Dollar and slower growth in
China.
At the same time, Americans’ expectations for the economy
deteriorated to a 13-month low in October. The monthly measure
tracking the economic outlook declined to 42 from a September
reading of 44.5, according to the Bloomberg Consumer Comfort
Index. Some 39% of respondents said the US economy was
deteriorating, up from 36% in September. In contrast, 23% said it
was improving, the smallest number in 13 months.
23.10 open price 23.10 close price % change
AUD/USD 0.7208 0.7216 +0.11%
USD/CHF 0.9732 0.9786 +0.55%
USD/JPY 120.69 121.47 +0.65%
NZD/USD 0.6793 0.6753 -0.59%
GBP
“If we think there is a prospect, a possibility - that's a possibility not a certainty - of rate rises, then that is far, far better to let the British people know so they can prepare” - Mark Carney, BoE Governor
Monday, October 26, 2015 7:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
S&P/ASX 200 Index 0.29% 5,408.24
S&P/ASX 300 Index 0.28% 5,360.32
Trends* Q4 15 Q1 16 Q2 16
MAX 1.77 1.65 1.71
75% percentile 1.56 1.58 1.59
Median 1.54 1.54 1.54
25% percentile 1.51 1.51 1.51
MIN 1.34 1.41 1.37 * the data is based on international banks’ forecasts
Impact
UK rate hike is not certain, as households remain vulnerable to higher borrowing costs
High
While a hike of the UK’s ultra-low interest rates is not certain,
households should be ready for higher borrowing costs, Bank of
England Governor Mark Carney said. Around 4% of mortgage
holders remain vulnerable to higher interest rates as they pay out
more than 40% of their household income to service their debts.
However, given tightening of the labour market and wage growth,
which was uneven across the economy, interest rates would
increase gradually and slowly rather than decrease, after staying at
all-time low since March 2009. According to the recent BoE report,
the number of mortgage approvals rose the most since January 2014
to 71,030 in August, compared with an upwardly revised 69,010 a
month before. Meanwhile, net lending for house purchases
increased by 3.4 billion pounds, the highest level since May 2008.
This compares to 26,700 approved during the 2008 financial crisis
peak in November 2008, and a surge to 135,200 approved before
the financial downturn in November 2003.
Carney has previously said that a decision about the timing of a rate
hike would become clearer around the turn of the year. Investors do
not expect a first BoE move until late 2016 or early 2017 amid
China's economic slowdown, Britain's near-zero inflation rate and
the Fed’s cautious approach about raising rates.
23.10 open price 23.10 close price % change
GBP/USD 1.5394 1.5314 -0.52%
EUR/GBP 0.72165 0.71944 -0.31%
GBP/CAD 2.0149 2.0162 +0.06%
GBP/JPY 185.8 186.003 +0.11%
CNY
“With the economy losing momentum, deflation embedded in the corporate sector and rebalancing making limited headway, the central bank is being directed to ease monetary policy further. And of course, this isn’t the end of the road yet” - George Magnus, a senior independent economic adviser to UBS Group AG
Monday, October 26, 2015 7:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
S&P/ASX 200 Index 0.29% 5,408.24
S&P/ASX 300 Index 0.28% 5,360.32
Trends* Q4 15 Q1 16 Q2 16
MAX 0.82 0.78 0.82
75% percentile 0.65 0.64 0.65
Median 0.63 0.62 0.61
25% percentile 0.61 0.60 0.60
MIN 0.59 0.56 0.55 * the data is based on international banks’ forecasts
Impact
PBoC cuts interest rates, reserve ration to combat slowdown
High
The People Bank of China cut interest rates for the sixth time in less
than a year, and it lowered the amount of cash that banks must hold
as reserves in an attempt to kick-start growth in its slowing
economy. The central bank lowering the one-year benchmark bank
lending rate by 25 basis points to 4.35%, effective from October 24.
The one-year benchmark deposit rate was also cut by 25 basis points
to 1.50%. Reserve requirements for all banks were slashed by 50
basis points, with an additional 50 basis point reduction for some
institutions.
The expansion of the monetary easing underscores Beijing’s
determination to meet its 2015 growth target of about 7% in the
light of deflationary pressures, overcapacity and sluggish global
demand. China’s sixth rate cut since November comes as the
European Central Bank President signals more policy easing and
amid expectations for extra stimulus from the Bank of Japan. China’s
gross domestic product increased 6.9% in the three months through
September from a year earlier, according to the National Bureau of
Statistics, overshooting economists’ estimates for 6.8%. With
consumer inflation at about half of Beijing’s target and a persistent
slump in producer prices, policy makers had room for additional
easing.
23.10 open price 23.10 close price % change
AUD/NZD 1.0609 1.0686 +0.73%
EUR/NZD 1.6351 1.6318 -0.20%
GBP/NZD 2.2661 2.2671 +0.04%
NZD/USD 0.6793 0.6753 -0.59%
CAD
“The forces weighing against headline inflation will prove transitory” - Derek Holt, Scotiabank economist
Monday, October 26, 2015 7:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
S&P/ASX 200 Index 0.29% 5,408.24
S&P/ASX 300 Index 0.28% 5,360.32
Trends* Q4 15 Q1 16 Q2 16
MAX 1.40 1.41 1.42
75% percentile 1.35 1.36 1.36
Median 1.33 1.34 1.33
25% percentile 1.30 1.31 1.30
MIN 0.88 1.18 1.10 * the data is based on international banks’ forecasts
Impact
Canada’s inflation cools in September amid sharp fall in gasoline prices
High
Canada’s inflation cooled more than expected in September amid a
steep fall in gasoline prices. The consumer price index climbed 1%
last month from a year earlier, marking the tenth consecutive month
it has been below the Bank of Canada’s 2% inflation target, Statistics
Canada said. Gasoline prices plummeted by 18.8% in the 12 months
to September following the 12.6% plunge in August. In the prior two
months, the gauge rose 1.3%. The core inflation, which excludes
volatile components such as gasoline, tobacco and mortgage
interest remained at 2.1%. Weaker price growth is likely to build
pressure on the Canadian Dollar, pushing it downward versus the US
namesake. Yet, the effects of the lower Loonie are continuing to
support the sectors included in the core measure, such as food,
which rose 3.5% in September over the past year. Measured on a
monthly basis, total inflation slid 0.2% in September and the core
rate climbed 0.2%.
Last week the Bank of Canada said slack in the economy will keep
inflation from reaching the central bank’s 2% target until around
mid-2017. The BoC expected the underlying inflation rate to be
around 1.5% to 1.7%.
23.10 open price 23.10 close price % change
AUD/CAD 0.9434 0.9506 +0.76%
CAD/CHF 0.7436 0.7433 -0.04%
EUR/CAD 1.45397 1.45055 -0.24%
USD/CAD 1.3088 1.3166 +0.60%
Monday, October 26, 2015 7:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
Major events this week (October 19-23)
Day/Time (GMT) Flag Currency Event Period Actual Forecast Previous
MONDAY
2:00 am CNY GDP Q/Y Quarter 3 6.9% 6.8% 7.0%
2:00 am CNY Industrial Production YoY September 5.7% 6.0% 6.1%
TUESDAY
12:30am AUD Monetary Policy Meeting Minutes
12:30 pm USD Building Permits September 1.10M 1.16M 1.16M
12:30 pm CAD Wholesale Sales MoM August -0.1% 0.2% 0.0%
WEDNESDAY
8:30am GBP Public Sector Net Borrowing September 8.6B 9.1B 10.8B
2:00 pm CAD BOC Rate Statement
THURSDAY
8:30 am GBP Retail Sales MoM September 1.9% 0.3% -0.4%
11:45 EUR Minimum Bid Rate 0.05% 0.05% 0.05%
12:30 pm CAD Core Retail Sales MoM August 0.0% 0.2% 0.1%
12:30 pm USD Unemployment Claims October 17 259K 266K 256K
FRIDAY
7:30 am EUR German Flash Manufacturing PMI October 51.6 51.8 52.3
12:30 pm CAD Core CPI MoM September 0.2% 0.3% 0.2%
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
Chart SMA (55) – Simple Moving Average of 55 periods SMA (200) – Simple Moving Average of 200 periods Forecasts
EXPLANATIONS
Third Quartile – separates 25% of the highest forecasts
Second Quartile – the median price based on the projections of the industry
First Quartile – separates 25% of the lowest forecasts
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
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Technical Indicator
The trade surplus in Switzerland contracted in August, as the strength of the Swiss Franc hit demand in the European Union and China. According
to the FSO, Switzerland's trade balance amounted to 2.87 billion francs in the August, compared with a downwardly revised 3.58 billion francs
registered in the previous month. However, the actual figure beat the market expectation of 2.75 billion francs surplus. The latest report also
showed that real exports slipped by 2.4% on a monthly basis in the reported period after decreasing a revised 2.3% in July. Year-on-year, exports
decreased by real 2.1% in August but slower than the 4.9% decline seen in July. Similarly, real imports declined 4% versus a 1.8% drop a month
ago. On an annual basis, imports slid 7.4%, reversing July's 1.7% increase.
Meanwhile, the Swiss foreign trade remains under the pressure due to the strengthening Franc and the recent SNB's monetary changes. The
appreciation in the Swiss Franc from mid-January has been reflected in sharp declines in both export and import prices. In the meantime, the SNB
kept its benchmark rate on hold last week at a record low of -0.75% and revised its inflation expectations downward, as a result of the drop in oil
prices.
