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23/02/2016
Fundamental Analysis
Tuesday, February 23, 2016 08:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
Major events this week (February 22-26)
Day/Time (GMT) Flag Currency Event Period Actual Forecast Previous
MONDAY
9:00 am EUR Flash Manufacturing PMI February 51.0 52.1 52.3
9:00 am EUR Flash Services PMI February 53.0 53.4 53.6
TUESDAY
9:00 am EUR German Ifo Business Climate February 107.3
11:15 am CHF SNB Chairman Jordan Speaks
3:00 pm USD CB Consumer Confidence February 98.1
WEDNESDAY
11:00 am GBP CBI Realized Sales February 16
3:00 pm USD New Home Sales January 544K
THURSDAY
12:30 am AUD Private Capital Expenditure QoQ Quarter 4 -9.2%
9:30 am GBP Second Estimate GDP QoQ Quarter 4 0.5%
1:30 pm USD Core Durable Goods Orders MoM January -1.2%
11:30 pm JPY Tokyo Core CPI YoY February -0.1%
FRIDAY
All Day EUR German Prelim CPI MoM February -0.8%
1:30 pm USD Prelim GDP QoQ Quarter 4 0.7%
Tuesday, February 23, 2016 08:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
US Policy makers of the FOMC saw growing uncertainty over the outlook for inflation and growth, according to minutes of the January meeting, when the key lending rate was kept unchanged. US rate setters left the target range for federal funds rate on hold at 0.25% to 0.5%, after lifting it from near-zero in December. Many analysts are predicting further increases this year. While most of policy makers stuck to the expectation of 2% inflation over the medium-term, a number of members "viewed the outlook for inflation as somewhat more uncertain or saw the risks as being to the downside". However, the available data were not sufficient to assess the balance of risks to the economic outlook. Given the elevated risks, both external and domestic, some members wanted to see an evidence of inflation moving back to the 2% target before they were willing to consider further rate increases. UK Britain's inflation climbed to the highest level in a year in January as an increase in alcohol and clothing prices pushed up the cost of living. The annual consumer price index rose to 0.3% in January, up from 0.2% in the prior month. Alcohol and tobacco were the main contributors to the increase as they jumped 1.3% compared with January 2015. The ONS reported that inflation also rose as fuel and food prices declined less than they did a year ago. Core inflation, which strips out volatile components such as energy and food, slowed to 1.2%. Inflation is predicted to edge up slowly this year, as the impact of global oil plunge drops out of the headline rate. However, the Bank of England expects the price growth to remain below its 2% target until 2018. The central bank predicts consumer prices to rise to 0.5% by the summer. Euro zone The ECB President Mario Draghi said the central bank "is ready to do it part" in March if the financial market volatility or the pass-through effect of low oil prices reduces inflation expectations. Draghi also added that fiscal policies including public investment and lower taxation should put the Euro area's economy on a firmer ground. ECB President welcomed improvements in the banking sector, saying that Euro bloc's banks have significantly strengthened their capital positions. However, Draghi acknowledged that some parts of the banking sector still faced a number of challenges, including "uncertainty about litigation and restructuring costs in a number of banks working through a stock legacy assets. Last week saw renewed market volatility, particularly on Euro zone bank shares, which Draghi said was due to slowing growth in emerging markets and falling commodity prices, as well as anticipation that new financial regulations and lower interest rates would drag down bank profits.
Key highlights of the week ended February 19
EUR
“Not only did the survey indicate the weakest pace of economic growth for just over a year, but deflationary forces intensified. Economic growth is likely to slow below 0.3% in the first quarter unless we see a sudden uplift in March, which on the basis of the forward-looking components of the PMI seems unlikely” - Chris Williamson, Chief Economist at Markit
Tuesday, February 23, 2016 08:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
S&P/ASX 200 Index 0.29% 5,408.24
S&P/ASX 300 Index 0.28% 5,360.32
Trends* Q1 16 Q2 16 Q3 16
MAX 1.18 1.18 1.18
75% percentile 1.08 1.08 1.10
Median 1.05 1.05 1.05
25% percentile 1.03 1.01 1.02
MIN 0.99 0.95 0.95 * the data is based on international banks’ forecasts
Impact
Euro zone business growth weakens in February High
Growth in the Euro zone’s both the services and manufacturing sectors slowed in February, casting further doubts over the strength of the currency bloc’s recovery. The Euro zone’s composite PMI, which measure activity in the manufacturing and services sector, dropped to a 13-month low of 52.7 in February, down from a revised figure of 53.5 in January, coming in below expectations of 53.3. A separate survey showed the Euro zone’s manufacturing PMI slid to 51.0 in the current month, compared with 52.3 seen in January. At the same time, the gauge, measuring business activity in the services sector, dropped to 53.0, down from 53.6 in January. The European Central Bank will be concerned about the PMI output price sub-index, which dropped to a one-year low of 48.6, down from 48.9 in January. Inflation was just 0.4% in January. There is an even chance that the central bank will expand its size of its 60 billion euros-a-month asset-buying programme next month, and another deposit rate cut is almost certain, economists say. Manufacturing activity in Germany rose at a slower pace than in the preceding month. The PMI for the Euro zone’s number one economy’s industrial sector declined to 50.2 in February, the weakest level in 15 months. In France, however, the gauge booked 50.3 points in the current month, up from 50.0 points in January.
22.02 open price 22.02 close price % change
EUR/USD 1.1124 1.103 -0.85%
EUR/GBP 0.77868 0.77948 +0.10%
EUR/CHF 1.10111 1.10243 +0.12%
EUR/JPY 125.21 124.52 -0.55%
USD
“U.S. factories are reporting the worst business conditions for over three years. Every indicator from the flash PMI survey, from output, order books and exports to employment, inventories and prices, is flashing a warning light about the health of the manufacturing economy” - Chris Williamson, chief economist at Markit
Tuesday, February 23, 2016 08:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
S&P/ASX 200 Index 0.29% 5,408.24
S&P/ASX 300 Index 0.28% 5,360.32
Trends* Q1 16 Q2 16 Q3 16
MAX 130 132 135
75% percentile 127 127 128
Median 125 125 125
25% percentile 122 123 122
MIN 115 115 113 * the data is based on international banks’ forecasts
Impact
US manufacturing activity unexpectedly slows in February High
The US manufacturing activity unexpectedly slowed in February, with US factories reporting the worst business conditions for over three years. The flash manufacturing PMI dropped to 51.0 in the current month, down from 52.4 in January. Back in December, the reading dropped to the lowest level since October 2012. American manufacturers have been struggling with headwinds blowing from appreciation of the US Dollar, China’s economy slowdown, as well as a volatile stock market. In addition to that, lower oil prices have hit hard manufacturers tied to the energy industry, undermining domestic production, lowering demand for steel, drilling equipment and other manufactured products used in the industry. As the manufacturing sector accounts for a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic health of the US. Last week, the Labor Department’s report showed that the US underlying inflation surged to the highest level in more than four years in January, led by increasing rents and medical costs, a sign that price pressures started to build that could allow the Fed to gradually hike interest rates this year. The consumer price index, excluding the volatile food and energy components, increased 0.3% last month. That was the biggest surge since August 2011 and followed a 0.2% rise in December.
22.02 open price 22.02 close price % change
AUD/USD 0.7152 0.7227 +1.05%
USD/CHF 0.9901 0.9997 +0.97%
USD/JPY 112.7 112.92 +0.20%
NZD/USD 0.6638 0.6699 +0.92%
GBP
“The challenging outlook for the manufacturing sector has stabilized a little, with sterling having depreciated…” - Rain Newton-Smith , CBI director of economics
Tuesday, February 23, 2016 08:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
S&P/ASX 200 Index 0.29% 5,408.24
S&P/ASX 300 Index 0.28% 5,360.32
Trends* Q1 16 Q2 16 Q3 16
MAX 1.61 1.62 1.66
75% percentile 1.55 1.56 1.56
Median 1.51 1.51 1.52
25% percentile 1.49 1.48 1.47
MIN 1.41 1.28 1.25 * the data is based on international banks’ forecasts
Impact
British manufacturing stabiles somewhat in February amid weaker Sterling
High
The recent weakening in the Sterling helped the British manufacturing sector to stabilise somewhat in February. According to the Confederation of British Industries, the overall balance of total orders declined to –17%, meaning more companies reported their activity below normal than above. Businesses, however, had expected output to grow in the coming quarter, with 30% predicting expansion, and 19% a decline, resulting in a balance of +11%. The UK manufacturing sector has been struggling due to a strong Sterling, slow growth in the Euro zone, the key trading partner, and external headwinds. Moreover, increased international competition, slow take up of technology, unsupportive ecosystems and out-dated business models also pose a threat to the UK’s manufacturing industry. According to the official data, factories’ output dropped 0.2% between November and December, marking the third consecutive decline since September 2015. The total industrial production was revised down in the fourth quarter to a 0.5% fall. The first official estimate of the fourth-quarter GDP growth showed the British economy expanded 0.5%, while the annual rate of quarterly growth decelerated to 1.9%. Revision of both industrial and construction sectors had negative impact of as much as 0.06 percentage points of Q4 GDP.
22.02 open price 22.02 close price % change
GBP/USD 1.4331 1.415 -1.26%
EUR/GBP 0.77868 0.77948 +0.10%
GBP/CAD 1.968 1.9395 -1.45%
GBP/JPY 161.125 159.755 -0.85%
JPY
“The BoJ’s negative interest rate approach is expected to stimulate the economy later this year, however, Japan is currently feeling the aftershocks of the global crunch” - Donald Levit, a strategist at EconomicCalendar.com
Tuesday, February 23, 2016 08:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
S&P/ASX 200 Index 0.29% 5,408.24
S&P/ASX 300 Index 0.28% 5,360.32
Trends* Q1 16 Q2 16 Q3 16
MAX 145 150 148
75% percentile 134 135 136
Median 131 131 131
25% percentile 129 127 128
MIN 121 117 117 * the data is based on international banks’ forecasts
Impact
Japan’s manufacturing activity weakens in February High
Growth in Japan's manufacturing activity slowed sharply in February as new export orders fell at the fastest pace in three years, a worrying sign that external demand is weakening rapidly as China's economy slows. The Markit/Nikkei Flash Japan Manufacturing PMI dropped to 50.2 in February on a seasonally adjusted basis, down from a final 52.3 in January. However, the reading remained above the 50 threshold that separates contraction from expansion for the 10th straight month. The sub-index for new export orders declined to a preliminary 47.9 from 53.1 in January, which would indicate the biggest drop since February 2013 if confirmed. Exports in January tumbled by the most since the global financial crisis, in a clear indication that financial market turmoil and slowing emerging market economies have undermined demand abroad. The report is a sign that businessmen are not confident that the government and the Bank of Japan’s moves to support the economy are effective, not even the BOJ’s January decision to cut the interest rate it charges banks to below zero. While analysts expect a moderate recovery this year, stagnant wages, sluggish consumer price growth and faltering global growth have raised fresh doubts about Prime Minister Shinzo Abe's mix of stimulus policies aimed at kick-starting the world’s third biggest economy .
22.02 open price 22.02 close price % change
AUD/JPY 80.533 81.593 +1.32%
CAD/JPY 81.766 82.37 +0.74%
EUR/JPY 125.21 124.52 -0.55%
USD/JPY 112.7 112.92 +0.20%
Tuesday, February 23, 2016 08:30 GMT
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
Major events this week (February 15-20)
Day/Time (GMT) Flag Currency Event Period Actual Forecast Previous
MONDAY
Tentative CNY Trade Balance January 406B 389B 382B
2:00 pm EUR ECB President Draghi Speaks
9:45 pm NZD Retail Sales QoQ Quarter 4 1.2% 1.4% 1.6%
TUESDAY
12:30 am AUD Monetary Policy Meeting Minutes
9:30 am GBP CPI YoY January 0.3% 0.3% 0.2%
10:00 am EUR German ZEW Economic Sentiment February 1.0 0.1 10.2
1:30 pm CAD Manufacturing Sales MoM December 1.2% 0.9% 1.2%
WEDNESDAY
9:30 am GBP Average Earnings Index 3m/y December 1.9% 1.9% 2.1%
7:00 pm USD FOMC Meeting Minutes
THURSDAY
12:30 am AUD Unemployment Rate January 6.0% 5.8% 5.8%
1:30 pm USD Unemployment Claims February 13 262K 275K 269K
FRIDAY
9:30 am GBP Retail Sales MoM January 2.3% 0.8% -1.4%
1:30 pm CAD Core CPI MoM January 0.3% 0.2% -0.4%
1:30 pm USD Core CPI MoM January 0.3% 0.2% 0.1%
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
Chart SMA (55) – Simple Moving Average of 55 periods SMA (200) – Simple Moving Average of 200 periods Forecasts
EXPLANATIONS
Third Quartile – separates 25% of the highest forecasts
Second Quartile – the median price based on the projections of the industry
First Quartile – separates 25% of the lowest forecasts
Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 [email protected]
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