CPI Posts on Forex Blog
Early Morning FX Data Recap
Aug 12, 2008
GBP
Today' trade balance and CPI data came in worse than expected.
CPI jumped to 4.4% vs expectations for a more modest rise to 4.1%. Even worse, core CPI (which excludes food, energy, and tobacco) rose unexpectedly 1.9% vs expectations of 1.7%.
This inflation data handcuffs the Bank of England, as they are unlikely to cut rates from 5.0% while inflation continues to rise.
OTOH, the UK economy is going to be in bad shape when they finally do cut rates. More evidence for this came in today's trade balance. The June trade balance came in at -£4.414 billion vs expectations for a total deficit of -£4.200 billion.
The GBPUSD tested 1.8970 twice overnight, recovering each time.
EUR
All signs point down for the Euro.
In perhaps the most important news, ECB member Bini Smaghi and Axel Weber indicated that Q2 GDP will be bad for the Euro-zone and Germany.
Mr. Weber indicated that the German economy is expected to experience a "dry spell" in the coming months, while avoiding a recession. His comments also downgraded German GDP expectations to 2% for 2008 and 1% for 2009. Previous projection placed 2008 GDP at 2.3% and 2009 GDP at 1.4%.
Mr. Smaghi warned the Euro-zone will "may have a phase of protracted weakness" in the next few quarters. However, he was quick to tow the party line, stressing it is "important to understand that in this phase inflation is the enemy of growth"
Their you have it, GDP should deteriorate in the Euro-zone and Germany, but the ECG remains focused on inflation and is thus unlikely to cut or raise rates.
The EURUSD is off morning lows but remains below 1.4900.
USD
The US trade balance unexpected narrowed in June to $56.8 billion. This significantly beat market expectations for a rise in the trade gap to $61.5 billion.
Additionally, May was revised lower from $59.7 billion to $59.2 billion.
CPI, trade balance, EUR, comments, GBP, USD
Forex Calendar Aug 10 - Aug 15
Aug 9, 2008
The theme for this week in forex trading will be international GDP, CPI and trade balance reports. In all, continuing global economic deterioration could mean positive gains for the US Dollar.
Tuesday morning has several UK reports which may be Pound negative.
Tuesday night has 3 key reports from Japan - Trade Balance, GDP, and GDP annualized.
Thursday morning is laden with Euro-zone reports, including GDP and CPI for Germany (2am) France (2:45am) and the entire region (5am).
Sunday August 10
9:30pm Reserve Bank of Australia Monetary Statement
Monday August 11
4am Italy Consumer Price Index MoM (expect 0.5%, previous 0.5%)
4:30am UK July Producer Price Index Output Core MoM (expect 0.4%, previous 0.3%)
4:30am UK July Producer Price Index Output Core YoY (expect 6.5%, previous 6.4%)
4:30am UK Trade Balance (expect -£4.20. billion , previous -£4.25 billion )
8:30am Canada June Housing Starts (expect 0.1%, previous 0%)
7pm UK RICS July House Price Survey (expect -90%, previous -88%)
7:50pm Japan July Corporate Price Index MoM (expect 0.8%, previous 0.8%)
7:50pm Japan July Corporate Price Index MoM (expect 5.7%, previous 5.6%)
9:30pm National Australia Bank Business Survey
Tuesday August 12
2:45am France June Current Account
2:45am France July Consumer Price Index MoM (expect -0.2%, previous +0.4%)
2:45am France July Consumer Price Index YoY (expect 3.7%, previous 3.6%)
4:30am UK July Consumer Price Index MoM (expect -0.2%, previous +0.7%)
4:30am UK July Consumer Price Index YoY (expect 4.2%, previous 3.8%)
4:30am UK July Core Consumer Price Index YoY (expect 1.7%, previous 1.6%)
8:30am US June Trade Balance (expect -$61.9 billion, previous -$59.8 billion)
6:45pm New Zealand Q2 Producer Prices
7:50pm Japan June Trade Balance (expect ¥293.6 billion, previous ¥529.4 billion)
7:50pm Japan Q2 GDP (expect -0.6%, previous 1.0%)
7:50pm Japan Q2 GDP Annualized (expect -2.3%, previous 4.0%)
Wednesday August 13
5:30am Bank of England Quarterly Inflation
8:30am US July Retail Sales (expect 0.4%, previous 0.1%)
8:30am US July Retail Sales excluding Autos (expect 0.7%, previous 0.8%)
10:35am US Crude Inventories
9pm Australia Consumer Inflation Expectation
Thursday August 14
2am Germany Q2 GDP (expect -0.8%, previous 1.5%)
2am Germany July Consumer Price Index MoM (0.6%, previous 0.6%)
2am Germany July Consumer Price Index YoY (3.3%, previous 3.3%)
2:45am France Q2 GDP (expect 0.1%, previous 0.5%)
2:45am France Q2 Non Farm Payrolls (expect 0.2%, previous 0.4%)
5am Euro-zone GDP (expect -0.2%, previous 0.7%)
5am Euro-zone July Consumer Price Index MoM (expect -0.1%, previous 0.4%)
5am Euro-zone July Consumer Price Index YoY (expect 4.1%, previous 4.0%)
8:30am US July Consumer Price Index MoM (expect 0.4%, previous 1.1%)
8:30am US July Consumer Price Index YoY (expect 5.2%, previous 5.0%)
8:30am US July Core Consumer Price Index MoM (expect 0.2%, previous 0.3%)
8:30am US July Core Consumer Price Index YoY (expect 2.4%, previous 2.4%)
6:45pm New Zealand June Retail Sales MoM
Friday August 15
9am US Treasury International Capital (TIC)
10am US August Preliminary University of Michigan Consumer Confidence (expect 62.0, previous 61.2)
10:30am US Chicago Fed President Charles Evans to Speak on Economic Outlook
Euro, GDP, CPI, Yen, upcoming reports, Pound
Euro, US Numbers In Line
Jul 31, 2008
Key economic indicators out of Europe and the US this morning fell within range of expectations.
At 5am, Eurozone CPI registered 4.1% as expected. While that is 2% better than the ECB mandate of 2% CPI, chances for an ECB rate hike next month appear slim. Deteriorating economic conditions across much of Europe has led the bank to conclude demand will naturally fall off and thus curb price pressures.
This view was further bolstered by a slight up tick in Eurozone unemployment (7.3% vs expected 7.2%) and German employment losses (down 20k jobs).
In the US, Q@ GDP came in an initial reading of 1.9%. However, the big news was a downward revision in 2007 Q4 from 0.6% to -0.2%. Q1 2008 GDP was also revised lower from 1.0% to 0.9%.
The combined events initially sent the EURUSD above 1.56. However, the pair has declined below 1.56 ahead of the Non farm Payroll Report.
Euro, GDP, CPI, jobs report, USD
EURUSD Preview
Jul 30, 2008
The EURUSSD pair could see significant action the next 2 days.
To recap, the pair remains in a 5 month range of 1.53 - 1.60. In early July, as the Indy Mac collapse and fears over Fannie Mae and Freddie Mac swept through markets, the pair briefly went above 1.60.
In the last 2 weeks, as various levels of the US government moved to shore up banking, and oil has decline some 15%, the greenback has recovered.
Today, despite a 3% rise in crude oil futures, US stocks and the Dollar remained strong. The Dollar came within 66 pips of the the very important 1.55 support. Since April, every trend that has passed through 1.55 has been sustained for no less than 2 weeks.
As the week ends, the EURUSD pair can move on 3 key events.
Thursday
At 5am eastern Eurozone CPI and unemployment will be released.
On CPI, the number is likely to come in as expected (4.1%), as German CPI came in as expected Tuesday. Given recent drops in consumer confidence and growing signs of a slowdown spreading across Europe, the CPI would have to come in sharply higher to justify any speculation of a further ECB rate hike.
The monthly decline in French employment may signal some weakness in the unemployment. Though, any miss is likely to be very narrow at this stage.
At 8:30 am, US Q2 Annualized GDP will be released
Expectations are all over the map on this one. I have seen calls from 1.0% to 4%. Given the impact of stimulus checks and a jobs number that has stubbornly held below 5.8%, annualized 2% or better seems likely.
Tomorrow seems to hold 3 scenarios (Note: I have listed them in the order I think most likely to occur)
- If numbers come in as expected, look for the pair to hover around 1.55 as traders wait for the Non Farm payroll report Friday.
- If US GDP comes in over 2% and Eurozone CPI reads 4.1% or lower, look for the US Dollar to break the 1.55 support.
- Should Eurozone CPI come in extremely hot (4.3% or more) and the US GDP disappoint, look for the Euro to push up to 1.57 resistance.
Friday
At 8:30am US Nonfarm payrolls and Unemployment Rate will be released
While the ADP report can be widely inaccurate, last month, the number was foretelling (coming in at -79k vs -74k in the NFP). Today, the ADP came in at +9k, suggesting the NFP will beat expectations. With initial claims dipping below 400k, and the 4 week average declining, their is definitely room for optimism. Right now, markets expect a reading of -75k.
Should the NFP beat expectations, it will definitely be dollar bullish and expectations for a Fed hike in late 2008 are likely to increase.
At this point, I do think the EURUSD is likely to close below 1.55 this week.
Euro, GDP, CPI, jobs report, EUR, USD
Forex Preview July 27 - Aug 1
Jul 27, 2008
Save for a whirlwind of activity on Tuesday, this week is largely devoid of major macroeconomic reports.
The key macroeconomic themes will once again be
a) European CPI (Germany, Italy, the Eurozone, and Switzerland)
b) US Nonfarm payrolls Friday
With oil falling 15% over the last 3 weeks, European CPI and may come in as expected. A slight stunner considering the recent series of higher than expected readings.
Monday July 28
7:30pm Japan Household Spending
7:50pm Japan Retail Sales and Trade
Tuesday July 29
Germany CPI (expect 0.5% MoM, 3.2% YoY)
2:40am France Consumer Confidence (expect -47)
2:45am France PPI (expect 0.8% MoM, 7.3% YoY)
4am UBS Switzerland Consumption Indicator
8am Germany IFO Business Climate Survey
9am US Case Shiller Home Price Index
10am US Consumer Confidence (expect 50)
7:50pm Japan Industrial Production
11pm German Retail Sales
Wednesday July 30
4am Italy PPI (expect 0.9% MoM, 8.2% YoY)
5am Eurozone Consumer Confidence (expect -18)
9:30pm Australia Trade Balance (expect a drastic shrinking from -965 million to -100 million)
9:30pm Australia Retail Sales
Thursday July 31
1:45am Swiss CPI (expect -0.4% MoM, 4.0% YoY)
5am Italy CPI (expect 0.4% MoM, 4.0% YoY)
5am Eurozone CPI Estimate (expect 4.1%)
5am Eurozone Unemployment (expect 7.2%)
8:30am US Q2 GDP (expect annualized 2.0%)
8:30am Personal Consumption (expect 1.4%, core 2.0%)
Friday August 1
2:30 am Australia RBA Commodity Index
8:30am US Nonfarm Payrolls (expect -75k)
8:30am US Unemployment Rate (expect 5.6%)
10am US ISM (expect 49.2 Manufacturing)
1pm Italy Government Budget
CPI, jobs report, AUD, EUR
FX Preview July 13 - July 18
Jul 12, 2008
The economic calendar is chokingly full of events this week,
The early part of the week will be dominated by CPI reports, with data coming out from New Zealand (Mon) Italy, UK (Tue), Germany, France, the Eurozone, and US (Wed).
The back half of the week will be dominated by US bank earnings reports from JPMorgan Chase, Merrill Lynch (Thu), and Citigroup (Fri).
Monday night may see some big movement in the AUDNZD, with New Zealand's Consumer Prices and the RBOA minutes reported 15 minutes apart.
Sunday July 13
6:45pm New Zealand Retail Sales (expect -0.1% MoM, 0.5% MoM excluding auto)
11pm Bank of Japan Rate decision (expect hold at 0.5%)
Monday July 14
4:30am UK PPI (expect 2.6% MoM, 29% YoY)
10:00am Fed Governors Vote on Mortgage Rules in Open Meeting (this is a set of new rules crafted by the Fed. The policy is for lending hundreds of billions of dollars to banks and other financial entities to ease a severe credit crunch. It is unclear how big a role the recently confirmed Elizabeth Duke, a Virginia banker with an insider perspective, played in crafting this policy.)
8:45pm New Zealand Consumer Prices
9:30pm Bank of Australia Minutes from July Meeting
Tuesday July 15
4:00am Italy CPI (expect 0.4% MoM, 3.8% YoY)
4:30am UK CPI (expect 0.4% MoM, 3.6% YoY)
5:00am German ZEW Survey (expect -55)
8:30am US PPI (expect 1.3% MoM, 8.7% YoY)
8:30am US Empire Manufacturing Index (expect -5)
8:30am Retail Sales (expect 0.5%, 1.0% excluding auto)
10:00am Fed Chairman Ben Bernanke testifies before the Senate
11:00pm Reserve Bank of Australia Governor Stevens Speaks
unknown time First Mariner Bank (FMAR) reports earnings (expect -0.21 a share, stock has plunged since Chuck Schumer's infamous letter)
Wednesday July 16
2:00am Germany CPI (expect 0.3% MoM, 3.3% YoY)
2:45am France CPI (expect 0.4% MoM, 3.6% YoY)
5:00am Eurozone CPI (expect 0.4% MoM, 4.0% YoY)
before 8:30am, Wells Fargo (WFC) reports 9expect 0.50 a share)
8:30am US CPI (expect 0.7% MoM, 4.5% YoY)
8:30am US CPI ex food and energy (expect 0.2% MoM, 2.3% YoY)
10:30am Crude Inventories
10:00am Fed Chairman Ben Bernanke testifies before the House
Thursday July 17
6:30 am JPMorgan Chase (JPM announces earnings (expect 0.47 a share)
before 8:30am MGIC Investment Corp (MTG) reports earnings (expect -0.61 a share)
10:00am US Philly Fed Index (expect -15.0)
4:00pm Merrill Lynch (MER) reports earnings (expect -1.91 a share,
Friday July 18
5:00am Eurozone Trade Balance (expect -€1.0 billion)
before 8:30am Citigroup (C) reports earnings (expect -0.59 a share)
ZEW Survey, CPI, Credit Crunch, upcoming reports
Asian Forex News: New Zealand Disappoints, Japanese Inflation Hits Decade High
Jun 26, 2008
All signs point to a rate cut for the Kiwi.
New Zealand's trade deficit grew by $196 million in May. This was far worse than the expected rise of $150 million. Thats nearly a $250 million swing!
Merchandise exports were up 11.2% year over year. However, merchandise imports were up 17.3%.
This comes on the heels of yesterday's current account deficit, which was an alarming $13.8 billion, 7.8% of GDP.
Considering the strength of the Tui oilfield and dairy prices, this is indeed worrying news for the Kiwis.
To top that off, New Zealand Q1 GDP was finalized at 1.9%, slightly worse than the expected 2.1%.
And the gloomy news kept on coming out of Asia.
Japan reported a jump in inflation from 0.9% in April to 1.5% in May. This is the largest month over month increase in a decade. However, traders need to keep some perspective. Japan reintroduced a fuel tax in May, which may account for some of the rise.
Separately, Food prices rose 2.4%, Like many other countries, japan excludes food when calculating CPI.
Japan's household spending also fell -3.2% in May, larger than the expected reading of -2.2%.
On the plus side, japanese unemployment remained flat at 4%, as expected.
Relevant Forex prices At 11:30pm est
USDJPY 106.970 (-0.990, -0.92%)
AUDJPY 102.35 (-1.20, -1.16%)
EURJPY 168.28 (-0.97, -0.57%)
NZDUSD 0.7565 (-0.0008, -0.11%)
NZDAUD 1.2636 (-0.0020, -0.16%)
EURNZD 2.0786 (+0.0091, +0.44%)
inflation, GDP, CPI, JPY, NZD, Yen, Kiwi
Make No Mistake, ECB is Hiking 25bps
Jun 23, 2008
He raises rates. He raises not. He raises rates...
The double negative that hit the Euro this morning has fx traders changing their minds like a school yard kid debating their latest crush.
Make no mistake, the ECB is going to raise rates by 25bps July 3rd.
Why?
1. Trichet will not risk the credibility of the ECB.
2. ECB Governing Council member Nout Wellink said it himself last week. Traders are focusing on every little detail and ignoring midterm trends.
3. Euro-zone CPI comes out June 30. It is unlikely that number will dip month-over-month or year-over-year. With that report only 3 days before the ECB meeting, focus will remain on inflation.
4. Quietly, economists are fearing a housing crisis that spreads across the Eurozone. The ECB needs room to act should such an event occur.
While I am on this subject. I want to remind Forex traders, do NOT underestimate the FOMC! With Q1 GDP likely to be revised up to 1.2% on Thursday (from an original 0.6% and revised 0.9%), the Fed has plenty of room to act hawkish.
ECB, CPI, Trichet, rate hike, FOMC
Forex Events June 22 - June 25
Jun 22, 2008
This week will be dominated by US data. The key mover may be comments from the Fed rate decision at 2:15pm est Wednesday.
Events Monday and Friday are clearly Euro positive, Greenback negative. Watch for the Euro to test the 1.5800 resistance on Monday. If it finally breaks the range, we could see an end to the sideways trading of the last few months as the ECB is definitely going to hike rates July 3rd.
New Zealand and Japan, 2 key parts of the carry trade, report significant data late Wednesday evening. Surprises on either side could be an omen for future carry trade volatility.
All times eastern standard time
Monday June 23
4am German IFO - Current and Expectations
4am Euro-zone PMI Services (expect 50.4)
4am Euro-zone PMI Manufacturing (expect 50.2)
Tuesday June 24
4am Swiss UBS Consumption Indicator
9am Case Shiller Home Price Index (expect 168.8)
10am US Consumer Confidence (expect 56.7, a 16 year low)
7:50pm Japan Trade balance (exclude services)
Wednesday June 25
8:30am US Durable Good Orders (expect -0.9% excluding transport)
10am US New Home sales (expect 530k, a flat reading)
2:15pm Fed Rate Decision (expect hold at 2%)
6:45pm New Zealand Current Account (expect -7.5%)
Thursday June 26
7:30am US fed Vice Chairman Speaks at ECB
8:30am US Q1 GDP finalized (expect 1.2% from initial 0.6%, thats big folks. Note, upgraded from 0.6% to 0.9% previously)
10am US Existing Home Sales
6:45pm New Zealand Q1 GDP (expect 2.1%)
6:45pm New Zealand May Trade Balance (expect +150million)
7:30pm Japan CPI
7:50pm Japan Retail Trade (Domestic)
Friday June 27
2:50am France GDP (expect 2.2%)
4am Euro-zone Current Account
4:30am Great Britain Q1 GDP (expect 2.5%)
10:00am US university of Michigan Consumer Confidence (expect 56.8)
European Central Bank, CPI, Carry Trade, trade balance, housing, upcoming reports, consumer confidence, durable goods, Fed, IFO
Majors Roundup For June 16
Jun 16, 2008
The trading week got under way with events all over the world driving currency pricing.
The Pound rose on CPI speculation, and anticipation of a plan from Governor Meyer. The Euro rose on CPI data and ECB comments. The greenback fell early on Empire Manufacturing, an early spike in oil, and Lehman Brothers first quarterly loss. But the damage was slightly muted by a pull back in oil, Fed President Lacker, and foreign inflows of capital.
The GBP was driven up as traders geared up for an anticipated Year over Year CPI number of 3.2%. This will trigger significant commentary from the Bank of England's Governor Mervyn King. By law, the bank will have to present a letter explaining why inflation is above 2%, what will be done to bring inflation back in line, and when inflation is expected to come back in line. Despite signs of a slowing UK economy, the BOE is likely to suggest that rate hikes will be necessary to combat inflation.
In the Euro-zone, year over year CPI came in at 3.7% (above expectations for 3.6%). Additionally, ECB Governing Council member Nout Wellink seemed to confirm currency traders anticipation of an ECB rate hike. He stated that markets "should not react to every change in the environment ... They should look through the information to see the underlying trends"
Reading between the lines, trends have been to focus on fighting inflation, which means more rate hikes.
In the US, the Empire Manufacturing survey fell much further than expected, declining to -8.7 (vs -4.7 expected). Oil futures shot out of the gates to an all time trading high of $139.89 before falling $5 in the afternoon. Additionally, Robert Novak published an article stating anticipations for a rate hike were off base. On the credit crunch front, Lehman Bros reported their first ever quarterly loss of $2.87 billion.
However, not everything was doom and gloom for the USD. US Capital inflow increased to $60 billion (from -$48 billion). Lehman Brothers was able to reduce mortgage holdings by 20% and slash their balance sheet by $147 billion. Additionally, they were able to raise $6 billion in new capital during the quarter. And Richmond Fed President Lacker reiterated "The principal risk is that high overall inflation will become embedded in expectations"
The pessimistic outlook for an economic slowdown spread to Japan, as the government cut expectations. For the second time in a row, the government used the key word 'pause', saying the "recovery appears to be pausing". Backing this assessment, condominium sales fell 17.5% in May.
The big news will happen early tomorrow morning as, the UK CPI and Goldman Sachs reports will be released before US markets open.
At 1am est, the EURUSD is at 1.5522, the GBPUSD 1.96580, and the USDJPY is at 107.79.
ECB, European Central Bank, CPI, GBP, Pound, USD
Forex Events June 15 - June 20
Jun 15, 2008
Below is a summary of the major forex news of the week.
Cash believes the biggest events may have already occurred - a) the G8 did not intervene in the forex marketplace as some had speculated and b) flooding in the US Midwest has reduced corn and soybean crops significantly (see Bloomberg).
All times listed in eastern standard time
Monday June 16
5am
Eurozone CPI MoM (expect +0.6%)
Eurozone CPI YoY (expect +3.6%)
Eurozone Core CPI YoY (expect +1.8%)
8:30am
US Empire(NY) Manufacturing (expect -1.50
10am
Fed Chairman Bernanke Speaks before Senate
Lehman Brothers Reports Q2 Earnings (Cash expects negative news reminding everyone of last years credit crunch)
1pm
US Fed Lacker Speaks
9:30pm
Bank of Australia Minutes for June
Tuesday June 17
4:30am
UK CPI MoM (expect +0.4%)
UK CPI YoY (expect +3.2%)
UK Core CPI YoY (expect +1.5%)
5:00am
German ZEW Survey
Eurozone Trade Balance for April (expect -1.5 billion)
8:30am
US Housing Starts (expect 980k)
US Building Permits (expect 960k)
Wednesday June 18
4:30am
Bank of England Minutes for June
11am
Morgan Stanley Q2 Earnings
Thursday June 19
4:30am
UK Retail sales YoY (expect 4.1%)
UK Retail Sales MoM (expect -0.1%)
7am
Canadian CPI YoY (expect 1.9%)
Canadian CPI MoM (expect a sizzling 0.6%)
Canadian Core CPI YoY (expect 1.4%)
Canadian Core CPI MoM (expect 0.3%)
10am
US Philly Fed (expect a rise to -11.4)
Bank of England, BOE, CPI, RBA, Reserve Bank of Australia, minutes, upcoming reports, Fed
US Inflation Higher Than Expected
Jun 13, 2008
US Inflation numbers:
Year over year: 4.2%
May Headline inflation: 0.6%
May Core inflation (minus food and energy): 0.2%
IMO, this number all but guarantees a rate hike in the near future - no later than August.
The EURUSD has broken below 1.54 to 1.5339, the USDJPY has passed through 108 to 108.21
Greenback, inflation, CPI, USD
Greenback Moves on Retail Spending, Trading Flat Ahead of CPI
Jun 12, 2008
Bush and Congress can pat themselves on the back - at least temporarily. Consumers armed with extra cash from the stimulus package and a jump in energy prices sent retail sales higher in May.
Sales rose 1%, 1.2% excluding autos. That beat expectations for +0.5% (0.7% excluding auto) rise in retail sales.
The positive retail sales combined with InBev's $46 billion bid for Anheuser-Busch and continued down playing of ECB rate hikes across Europe lead to a strong daytime rally for the Greenback. (Notably, French Finance Minister Christine Lagard again took a pro USD stance suggesting a Euro rate hike might be off the table after this weekends G8 meeting).
The EURUSD fell to €1.542, the GBPUSD to £1.9477. On the other side, the greenback rose to $107.69 against the yen.
In early hours of the Asian session (1am est) the USD appears to be trading flat. The EURUSD (-0.09% to 1.5435) and GBPUSD (-0.06% to 1.9465) are trading slightly to the down side. The Yen is flat at 107.77.
Watch the inflation numbers at 8:30am EST! Headline year-over-year should come in at 4%, while core (excluding energy and food) should come in at 2.3%.
After your done trading the inflation report - you should probably get out of the market ahead of the weekend G8 meeting. Unless you have Trichet on speed dial, in which case, your probably not reading this blog.
G8 meetings can produce massive fundamental swings 5 factors strongly suggest a major policy shift this weekend.
1. A bullhorn like proclamation from the Fed and US govt that inflation is the top priority
2. The (not so) subtle backing down of the ECB from Trichet's comments last week
3. The dual storm of economic downturn + inflation numbers in the UK (and people worry about stagflation in the US!)
4. Softening of the Aussie and Kiwi economies.
5. The Gulf Cooperation Council's affirmation that they will peg to the Dollar when they form a monetary union.
Greenback, inflation, G8, CPI, USD
US Economic Calendar June 9 - June 13
Jun 8, 2008
Monday June 9
Pending Home Sales (expect 82.6, down 0.4)
NY Fed Governor Timothy Geithner Speaks About Economy (8:15am est)
Fed Chairman Ben Bernanke and Vice Chairman Donald Kohn Speak About Inflation (3:15pm)
Tuesday June 10
Manpower Employment Outlook for Q3
Imports (expect $209.1 billion, +$2.4 billion)
Exports (expect $149.7 billion, +$1.2 billion)
Trade Balance (expect -$59.4 billion, +1.2 billion)
Dallas Fed President Richard Fisher Speaks
Wednesday June 11
Quarterly Services for Q1
Beige Book for June 24-25 FOMC meeting
Fed Vice Chairman Donald Kohn speaks
Fed Governor Randolph Kroszner speaks
Thursday June 12
Retails Sales (expect -0.3%)
Retail Sales excluding Auto (expect +0.2%)
Friday June 13
CPI (expect +0.2%)
Core Index (expect +0.1% to 2.2%)
University of Michigan Preliminary Consumer Sentiment (expect 55)
CPI, trade balance, housing, upcoming reports, consumer confidence, Fed
Forex News to Watch for May 21
May 20, 2008
Forex traders will have their eyes firmly glued to their screens for 3 key pieces of news tomorrow.
First up, the bank of England will release the minutes from their May 8th meeting. As with the Fed, the BOE will have a mighty balancing act - as they try to fight 3% inflation rates AND a slowdown. The minutes will almost certainly contain 1 vote for a 25 basis point cut. Any more vote than that will likely lead to a sell off of the Sterling.
Next will be the Canadian CPI numbers. Canada has seen a severe deterioration in their markets, and CPI is only barely expected to inch up to 1.4%. They cut rates by 50 points in April. A low CPI will all but guarantee another cut in June.
Finally, the US Fed will release minutes from their April 30th meeting at 2pm est. Futures markets indicate the Fed is likely to hold firm in June, and possibly raise rates to 2.5% by early next year. Any change on inflation sentiment - up or down - may have a dramatic effect. Given CPI numbers, the 3% annual inflation, and the hawkish comments out of Europe, I would not be surprised if we see some commentary indicating inflation is becoming a greater concern than a slow down.
Bank of England, BOE, CPI, minutes, Fed
