Your weekly fundamental view (Nov 21-25)

November 21, 2016 11:56

Need to know

This week is not so data-heavy on important fundamental releases, but still there are important events that we should mention. In our opinion, the main focus is on the FOMC Meeting Minutes. The US Treasuries are pricing a 25bps rate hike in the near term, but US CPI is still below 2% and Mr Trump has not been officially inaugurated as president, which he will be on 20 January 2017. This week's meeting minutes should possibly give us hints on the future path of interest rates. Other important events that traders should be paying attention to are listed below.

Coming up

EUR Mario Draghi the head of ECB speaks on Monday, 21 November. Mr Draghi should speak at the European Parliament in Strasbourg. Why should traders care? Volatility is often experienced during his speeches as traders attempt to decipher interest rate clues.

CAD Core retail sales on Tuesday, 22 November. Usually released monthly, about 50 days after the month end this data represents the change in the total value of sales at the retail level, excluding automobiles. Why should traders care? This is the gauge of spending trends. Consumer spending is linked to overall confidence in a nation's economy.

GBP forecast statement is due on Wednesday, 23 November. Released annually, this statement should provide a preview of the government budget, expected spending and borrowing levels plus various financial objectives. Why should traders care? All data contained within the statement is important for the nation's economy, while domestic government spending and borrowing have a huge impact on the UK economy and an underlying fiscal position.

US unemployment claims are released on Wednesday, 23 November. These claims are the earliest national economic data, representing the number of individuals who filed for insurance for the first time during the past week. If the actual result comes weaker than the forecast, it would be deemed good for the currency. Why should traders care? The number of unemployed people is an important signal of the overall economic health and could hint at the future monetary policy steps.

FOMC Meeting minutes are out on Wednesday, 23 November. FOMC Meeting minutes are scheduled eight times per year and are generally considered either hawkish or dovish. Why should traders care? Why two of the policy makers voted to hike rates at the November meeting, compared to three in September? Will there be any rate hikes in the near term? FOMC Meeting minutes should provide the answers. This event could be volatile.

German Ifo Business Climate is released on Thursday, 24 November. Large sample size and historic correlation with German and Eurozone economic conditions make this report very important for eurozone and currency. EUR currency basket usually moves with the release of the report. Why should traders care? Any change to market conditions might be an early signal of any future economic activity, such as spending or investment.

Chart: German Ifo Business Climate yearly change

GBP GDP growth rate YoY 2nd estimate comes on Friday, 25 November. This data represents the change in the inflation-adjusted value of all goods and services produced by the economy. Why should traders care? There are three different versions of GDP. Preliminary, second estimate and final. Preliminary is the earliest and may haves the most impact, though investors and traders do pay attention to the second estimate due to its importance for the economy's health.