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Australian Bank Job Action

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Robbery fail.

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No, not breaking news of a Aussie heist but a week where two Australian banks tease the markets with subtle hints and tips that will send them into a mini frenzy followed by data about job creation and job losses Down Under.

Monday 12th 11.30pm – Reserve Bank of Australia speech

Christopher Kent, the Assistant Governor responsible for economics, is due to speak at the Bloomberg breakfast address, in Sydney. Traders will be interested as he often drops hints about potential policy changes.

A little less subtle than Kent, I'd guess

A little less subtle than Kent, I’d guess

Tuesday 2.30am NAB Business Confidence

Just a few hours after the RBA point the way about future economic policy, the National Australia Bank (NAB) release a figure indicating the current state of the health of the economy. Above 0 is good, below 0 means things are looking less rosy. Based on a survey of around 350 businesses, traders use it as an early warning signal of impending growth or contraction in the economy.

Wednesday 10.50am Reserve Bank of Australia speech

Another assistant governor, another speech. This time Guy Debelle is going to talk at the TradeTech FX Europe Conference in London. Responsible for advising RBA Board members about the financial markets, Guy may confirm hints dropped by Chris Kent on Monday or confuse matters by seeming to contradict him. Either way, traders will be listening with bated breath and give our players the chance to ride some volatility. At times like this, the markets feel a bit like the rodeo, but with less chances of a broken bone.

rodeo-corgi

Thursday 2.30am Employment Change and Jobless Rate

Employment Change: vital economic data released shortly after the month ends, last month’s 26.2K change is forecast to drop to 15.2K and the markets may not like it. Fewer new jobs may mean less cash sloshing around the economy and a tightening of belts across the country. This isn’t good for any economy so this early announcement can pack a punch.

Unemployment Rate/Jobless Rate: this has been steady at around 5.7/5.8% since March but any change can impact the markets, especially if fewer new jobs were created at the same time. More people laid off and fewer people finding jobs means less ringing of the tills in the shops, and this has a dampening effect on the economy. Traders will want to know if the steady forecast 5.7% comes true.

Trade-making action for GBP/USD (13-15th Sept)

If nothing makes you happier than surfing the waves of a classic FOREX pair then let us give you the nod on the key events giving GBP/USD a little bang for your buck this week.

While Monday 12th is light on action for this Forex pair, Tuesday more than makes up for it with some rather delicious opportunities. Take the British Consumer Price Index, for example.

miserable-men-shopping-with-their-ladies-meme

Are the Brits shopping or are these guys waiting for a bus?

Tuesday

Widely felt to be the UK’s most important inflation data because it’s used as the central bank’s inflation target, the UK CPI monthly figures released at 9.30amGMT Tuesday regularly cause a surge in trade action. Recent data has been close to predictions and figures have been inching upwards, but recent UK news reports indicate falling import prices and that could mean the current 0.6% may be a peak.

Also at 9.30GMT Tuesday the UK Producer Price Index (PPI) and Retail Price Index (RPI) figures are released. The PPI figures have risen steeply in recent months meaning it’s costing UK producers more for their raw materials. Rising costs should lead to rising prices in the shops and ergo inflation, but the RPI indicate manufacturers are absorbing some of the costs as the data doesn’t match. That can’t go on forever so an adjustment up for inflation may be on the cards.

To cut Tuesday’s story short, the CPI may suggest deflation but the PPI and RPI may indicate inflation. With such a contradiction, it’s anyone’s guess which way the markets will take the pound. But one thing is sure – it will take a ride on this data.

Wednesday

Wednesday provides more engagement for traders with a GBP/USD interest. At 9.30amGMT there are 3 currency-changing events.

unemployed-bad-joke

This time the focus is on employment and earnings – a country with good levels of employment and pay has a more robust domestic market strengthening the currency. The monthly UK Average Earnings Index report shows wages have been rising fairly steadily at around 2% compared to wages a year ago. Wednesday’s 9.30am GMT Claimant Count Change lends support to traders’ views on the likelihood of inflation change. If the number drops this is good as it indicates more people are staying in employment while a rise could affect retail sales. Forecasts suggest a rise of around 1.7K despite last month’s 8.6K% decrease. Event number three is the closely-connected Unemployment Rate. This has hovered around 5% for some months. Pundits predict no change at 4.9%.

Thursday

Thursday rounds off the main GBP/USD action with the monthly Retail Sales figures at 9.30pmGMT. Leading indicators suggest there may be a drop in the rate to only 0.4% increase from last month’s far stronger 1.4%. This would add strength to the idea that inflation is slowing.

More interesting though is the raft of announcements at 12.00pm GMT about the Monetary Policy Committee Official Bank Rate at the Bank of England.

nemo-vote

How the vote should be decided (IMO)

First up is the Members Vote, if you set up well earlier in the week and did your homework on the Bank’s members, you might predict which way the vote is going to go and even have plans on where you’re going exit your trade to make the best of the action. With one new member of the Committee (Michael Saunders replaced Martin Wheadle on 9th August) and a change in the number of votes down from monthly to 8 per year, this vote may yet offer some surprises for the markets.

The Vote is a 3 figure statement showing how members voted e.g. 0-0-9 The first number is how many voted for an increase, the second number is how many wanted to decrease the rate, the third number shows the members who wanted to leave the rate unchanged. For many months the vote has been united behind a no-change vote (0-0-9), except in July when 1 member bucked the trend and wanted a decrease (0-1-8). Expectations are for the vote to support no change again but that doesn’t mean it won’t happen.

Following shortly after 12.00GMT is the official BoE Monetary Policy Summary, which offers tidbits on the economic outlook and potential clues on the outcome of future votes. Then the Official Bank Rate is announced. This is currently 0.25% and expectations are for that to continue.

To add a little something extra to the mix ,the total value of money the BoE will create and use to purchase assets in the open market is also announced at 12.00GMT. The Asset Purchase Facility, commonly known as Quantitative Easing, basically tells us how much money the Bank is going to be printing to prop up the currency but as everyone is doing it, apparently that’s okay. It was at 375B for months but jumped to 435B in August with the aftershocks of Brexit. Could September bring another increase, a drop back or will they keep things steady?

Finally, also at 12.00GMT the Monetary Policy Committee Vote on the Asset Purchase Facility is revealed letting us know whether the decision was unanimous or not. Last month everyone thought the Committee would keep things steady with a 0-0-9 vote but in a shock move 6 members voted for an increase against 3 staying the same (6-0-3). This change of heart may keep traders wondering what will happen this time and send a few ripples through the market.

Euro interested in trading (8th Sept 2 key events)

Interested in interest

Interested in interest

A little insider know-how goes a long way. One hot tip is to follow interest rates for currencies you want to trade. Interest rates directly affect currency. So traders get excited when there are big rate announcements. Thursday 8th September gives us two biggies to get Forex traders going with the Euro.

12.45pm GMT European Central Bank Minimum Bid Rate

Also known as ECBMBR (just kidding – try saying that after a few swift ones) the minimum bid rate is how much the Central Bank charges banks in member states to borrow money. It’s been at 0.00% for a very long time but it’s a key rate for the EUR/USD pair as it has a knock-on effect on other banking interest rates across the Euro-zone. With the recent G20 summit, a change in the rate is a slight possibility and a cut would send the markets into a selling spree. But far more likely is no change and little movement in the markets… for 45 minutes anyway.

1.30pm GMT ECB Press Conference

Heads up, people. This is where the action happens. When the ECB big boss makes the official statement about the earlier rate announcement, the press get the chance to ask questions. Traders have the conference running live poring over every nuance of the chief’s answers in case of any market-changing revelations. It can be common to see a spike in trades during the conference. The trick is deciding which way those trades will go.

G20 – what TIQL players need to know

The 11th G20 summit is happening on Sept 4th/5th in Hangzhou, Zhejiang, China.

mountain summit

G20 – important but not as cool as this summit

The summit is one of the main forums for international economic cooperation. Countries attending include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United States and the European Union. So it’s clear traders will be watching closely and poring over any press releases sending potential shockwaves through the markets.

The leaders will be discussing many issues such as anaemic global growth, decline in potential for output, increasing volatility in financial markets, weakening global trade and investment, high levels of unemployment and inequalities. But they will all also have domestic agendas to push and their interests are not always aligned.

There’s a potential battle ahead as the US is pushing for a growth plan against the current popularity of austerity in places like the UK. Not sure how sporting it will be…

sword fight

An agreed change of policy by this powerful group of countries could send shockwaves through the markets. Some countries are already leaning in this direction with China itself, a number of EU countries, Canada, South Korea and others taking measures designed to boost their economies instead of focusing on reducing costs. Germany and UK look to be against this move as both still favour an austerity budget though post-Brexit May could be about to relax that stance.

The G20 finance watchdog the Financial Stability Board (FSB) headed by Mark Carney, governor of the Bank of England, has a direct steer on monetary policy throughout the year but it also feeds its advice in to the main summit this weekend so traders will be keeping a close eye on updates from the FSB and Carney.

According to Carney, the main market issue is the perceived effect on liquidity that regulations introduced post-Lehman collapse have had. This told banks to carry more capital to cover potential losses but there seems to be a backtrack happening as Carney says the regulators are committed to ensuring banks don’t have to significantly change the amount of capital they hold. So which is it then? More or not more?

On the plus side, rules already implemented showed their strength in the wake of Brexit when no institutions actually collapsed despite major hysterics. The fear now is that the banks influence will gradually undo the restrictions and allow them to put themselves at risk again.

So whether you are playing FOREX or other indexes, the G20 summit will rev up the markets. So roll up your sleeves, the holidays are over and the markets are back in business. September’s here.

Crazy season in the markets

Ah friends, I hate to be the one to break it to you but silly season is upon us. The end of August with the UK Bank Holiday on Monday 29th and then Labor Day the following Monday in the US sees many traders heading off to the country for a few days R&R. Fewer announcements that affect the markets happen around this time, but with junior left in the driving seat the markets can get a little… cray-cray. crazydancing

But let’s not be glum – after all, one man’s trash is another man’s treasure and this week, let’s treasure hunt. Here’s what you should be watching to get the most of the markets.

USD

Last week the dollar index was up 1% after Yellen’s Friday speech at Jackson Hole hinted at a possible September rate rise. Some pundits think it won’t happen until December so it doesn’t affect November’s presidential election but this week’s Non-Farm Payroll on Friday coupled with Tuesday’s CB Consumer Confidence and a few other US figures due out this week could give the Fed a positive reason to hike rates sooner rather than later. Both key announcements follow two months of higher than predicted figures. If this trend continues this week, the US economy will look stronger to the markets. It’s worth noting that not everyone agrees – one major bank was shorting the dollar two days before Jackson Hole.

Oil

Last week, oil declined around 3% after an initial 9% rise so ended approx 6% up on the previous week. The midweek Crude Oil Inventories figures will stimulate movement but the trick is knowing which way to jump. Last week’s surprise 2.5M increase evened out the previous -2.5M decline so things could go either way on Wednesday 31st.

EUR

When you play EUR FX pairs, you watch the Germans. That could be spotting when the towels go down around the pool, or if Greta and Oskar are spending much in the shops. This week the Germans reveal their monthly Retail Sales figures. If they have been splashing out, then all is well, but if not, the EUR could take a hit. This announcement could be as early as Monday but the date’s not yet fixed so keep an ear out for updates.

GBP

Monday is a Bank Holiday and the country is closed. This is no joke. The country is closed…

empty tube

The City of London is empty

Happily Thursday and Friday give us some GBP action with two key events – Thursday 9.30am sees the Manufacturing PMI figures (after 3 months of positive movement July saw a decline) and Friday 9.30am gives us the Construction PMI (after 3 months of negative numbers July saw an increase). This conflict gives our players lots to work with on the FX GBP pairs.

AUSD

Tuesday 2.30am GMT sees the monthly Building Approvals figures. You know and I know they’ve been shocking with two months of pretty steep decline. The markets will be looking for a turnaround in the numbers or they could lose faith, but there are lots of factors at play for the value of AUD this week. Wednesday 2.00am GMT the Assistant Governor of the RBA speaks in Singapore and may drop hints about future policy. Traders love nothing more than reading too much into the nuances of speeches like this. Then Thursday 2.30am brings Private Capital Expenditure  and Retail Sales monthly figures. Both have declined and the recent apparent strength of AUSD could be about to wobble.

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Jackson Hole Symposium

Landscape_of_Jackson_Hole_October_2010

Jackson Hole, Wyoming

From 25-27 August, Kansas City Federal Reserve hosts the biggest US monetary policy event of the calendar in Jackson Hole, Wyoming. Since 1978, the world’s most influential central and commercial bankers, finance ministers and economic academics have packed their suntan lotion and gathered round the BBQ to chew the fat about economic issues, implications, and policy options connected to the biggest economic policy question of the year in the world’s biggest economy.

This year that question is “Designing Resilient Monetary Policy Frameworks for the Future.” What this means to you and me is that they will mull over whether or not the current system and the beliefs that underpin it work and if they don’t, what it could be replaced with. This is the finance world’s version of Olympics with a touch of naval-gazing thrown in – are we the best at what we do? if we are not, how should we change? and, how can we keep on top?

Speculation is rampant among financial pundits. With the next Fed policy statement due on Sept 14th, traders will be agog to see if a rate hike is on the cards or even a complete overhaul of monetary policy. San Fran’s Fed president, John Williams, has called for an increase in inflation targets while other Fed presidents have called for caution. The contradictory statements coming out of the Fed in recent days has left traders bewildered and frustrated. So it’s clear something has to change. A failure to increase rates will be seen as an admission that current policies are failing and could send markets plunging though maybe more like John Smith and less like Chen Aisen.

Improved household spending and last week’s better than forecast employment figures could give Yellen reason to hint at a rate rise on the 14th and a wide range of media pundits support this view though the Federal Funds futures doesn’t agree with only an 18% probability rate rise priced in.

Across the media there is a sense that there are two routes ahead – either a rate hike in response to improved conditions, or a major rethink on monetary policy if that’s not seen as a good enough indicator of improved economic health. The Fed’s own San Fran president John Williams has stated he wants to see a revised inflation target.

With attendees from major financial institutions across the globe, traders will be paying close attention to news updates from the Symposium across all three days. Expect lots of movement on USD FX pairs as well as the USD index and other US-based market indexes across the week. If you’re busy elsewhere then cancel during Yellen’s speech on Friday as well as first thing on Monday 29th as there will probably be a reaction when markets open.

There are certainly plenty of bears around Jackson Hole so let’s see if the markets go the same way when they hear what the world’s finance bigwigs have to say.

jackson hole bears

A Jackson Hole bear