Your Weekly Fundamental View (Dec 12-16)

Dezember 12, 2016 13:15

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Need to know

This week's main focus is on FOMC statement. Market expects a hike of 0.25 % (from 0.50% to 0.75%). Any deviation from expected result will move the USD heavily.

Coming up

Chinese Industrial Production is released on Tuesday, 13 December.

Industrial production represents the change in the total inflation-adjusted value of output produced by manufacturers, mines and utilities.

Why should you care? Chinese data has a strong impact on equities and the Australian dollar. Chinese impact on the world's economy is very strong.

GBP CPI is coming up on Tuesday, 13 December.

The report measures the change in the price of goods and services purchased by consumers.

Why should you care? This is considered the UK's most important inflation data because it is used as the central bank's inflation target.

GBP Average Earnings and Claimant Count Change are out on Wednesday, 14 December.

Average earnings data is the overall change in the price businesses and the government pay for labour, with all bonuses included. Claimant count change represents the number of people claiming unemployment-related benefits during the previous month.

Why should you care? Both reports are released at the same time on Wednesday. Average earnings is a leading indicator of consumer inflation as when businesses pay more for labour, the higher costs are usually passed on to the consumer. Claimant count data is good if the actual result is below the forecast, as it is the earliest indication of the employment situation.

FOMC Statement and Fed Interest Rate decision comes on Thursday, 15 December.

The market is almost certain that the central bank will raise its Fed funds corridor from 0.5% to 0.75%. Additionally, investors expect an accelerating US economic expansion under the incoming administration of Donald Trump.

Why should you care? This statement is the primary tool the Fed uses to communicate about the economic and monetary projections to investors. Traders will look for clues regarding future monetary guidance and the outcome of future votes. This event should be highly volatile.

Source: Federal Funds Rate historical chart

CHF Libor Rate and SNB Press Conference is due on Thursday, 15 December.

Libor rate measures the London interest rate for three-month Swiss franc deposits. No rate change is expected.

Why should you care? Traders look at most other indicators merely to predict how rates will change in the future. Questions posed during SNB conference might lead to straight answers that could create market volatility.

GBP Official Bank Rate decision comes out on Thursday, 15 December.

The rate decision is usually priced in the market, so it tends to be overshadowed by the Monetary Policy Summary that happens simultaneously.

Why should you care? The report contains the outcome of their vote on interest rates and other policy measures, along with the commentary about the economic conditions that influenced their votes. Additionally, it discusses the economic outlook and offers clues on the outcome of future votes.

US Building Permits are on Friday, 16 December.

The report represents an annualised number of new residential building permits issued during the previous month.

Why should you care? If the actual number exceeds the forecast, it is deemed to be good for the currency. If the report comes worse than expected, the USD might initially drop.