Welcome to the weekly review where we look back over the results of some of the previous week’s economic indicators. It gives us the chance to reflect on how much expectations were met or missed and to examine a successful trade you could have made this week.
Event: EU Market Services, Manufacturing and Composite PMI (October)
Date: Tuesday 24 October 2017 at 08:00 GMT
Markets affected: EUR/USD, EUR/GBP
Trending hashtags: #eur, #pmi
Mixed data in on Monday from the Eurozone saw the EUR/USD trade in a narrow range as investors waited on ECB President Mario Draghi’s speech on Thursday. The Flash Manufacturing PMI grew to 58.6 in October, 0.5 better than forecasts. However, Flash Services PMI fell to 54.9 in October from September’s 55.8. The Composite Index which is based on a large number of business executives in the manufacturing and services sector also disappointed at 55.9 when the markets were expecting 56.5.
Event: Australia Consumer Price Index (Q3)
Date: Wednesday 25 October 2017 at 00:30 GMT
Markets affected: AUD/USD, AUD/NZD
Trending hashtags: #aud, #cpi
The Australian Bureau of Statistics published the consumer price index for the third quarter showing that inflation increased 0.6% against the previous quarter but missed on expectations. On an annualised basis inflation came in at 1.8% against the forecasted 2%. The central bank’s trimmed mean CPI, a measure of core inflation, remained at the 1.8% mark on an annualised basis, again missing the expected 2% reading for Q3. The aussie dollar fell to a three-month low following the release of the report with the AUD/USD down 0.8% to 0.7717 at one point.
Event: UK Gross Domestic Product (preliminary)
Date: Wednesday 25 October 2017 at 08:30 GMT
Markets affected: GBP/USD, EUR/GBP
Trending hashtags: #gbp, #gdp
There were no real surprises for the preliminary estimates of the third quarter GDP report for the UK. Similar to the second quarter of this year, the UK economy expanded 1.5% on a yearly basis, a little above the market expectation of a 1.4% increase. On a monthly basis GDP fared a little better than in the previous month with 0.4% increase versus 0.3%. The UK economy is slowing thanks to uncertainty around the Brexit negotiations with Europe.
Event: Bank of Canada Interest Rate Report
Date: Wednesday 25 October 2017 at 14:00 GMT
Markets affected: CAD/USD
Trending hashtags: #cad, #interestrate
The Canadian dollar fell to a three-month low, following very dovish statements from the Bank of Canada. The central bank maintained interest rates at the current level of 1%. There were two rate hikes this year following positive economic data but recent indicators have not been as positive and the bank has stated that it will be cautious in making any future increases.
Event: New Zealand Trade Balance (September)
Date: Wednesday 25 October 2017 at 21:45 GMT
Markets affected: NZD/USD, AUD/NZD
Trending hashtags: #nzd, #trade
New Zealand’s trade deficit for September narrowed less than what the market was expecting coming in at $1.14 billion for the month. Imports and exports both increased to $4.92 billion and $3.78 billion respectively. On an annualised basis, the trade deficit sits at -$2.9 billion, a significant improvement on the previous year’s -$3.15 billion. The kiwi dollar fell on the news but recovered most of the ground it lost fairly quickly.
Event: ECB Interest Rate Decision
Date: Thursday 26 October 2017 at 11:45 GMT
Markets affected: EUR/USD, EUR/GBP
Trending hashtags: #eur, #interestrate
While the European Central Bank decided to maintain the current interest rate at 0%, they will reduce the quantitative easing programme starting January 2018. The bond buying programme will be slashed to 30 billion euro a month against the current 60 billion. Even so, it seems traders were expecting more fiscal tightening as the euro dropped half a cent to 1.176 against the US dollar following the news. The central bank plans to keep QE in place another nine months or more if needed.
Trade of the Week
Time in: Wednesday 25 October 2017 at 14:00 GMT
Market : CAD/USD
Investment: $500 with 200:1 leverage
Time out: Wednesday 25 October 2017 at 20:00 GMT
If you had sold CAD/USD with a $500 margin at the price of 0.79 and closed the deal once after the BOC Interest Rate Report on Wednesday at 14:00 GMT which saw CAD drop 1.21%, you might have made $1,217. Note this example does not take into account spread.