Saturday, February 28, 2015

Fundamental Outlook for Mar 1 - Mar 8

This week is full of important events - NFP is released this Friday, and four central banks will decide on interest rates.


Last week's news has been mixed, but Federal Reserve chief Yellen made some hawkish noise, indicating that the next rate hike will depend on data.

24 Feb: CB Consumer confidence 96.4 vs 99.6 forecast - bearish
25 Feb: Yellen testimoney - rate hike dependent on jobs + inflation data - bullish
25 Feb: New home sales 481k vs 471k forecast - mildly bullish
26 Feb: CPI m/m -0.7% vs -0.6% forecast - mildly bearish
26 Feb: Core CPI m/m 0.2% vs 0.1% - mildly bullish
26 Feb: Unemployment claims 313k vs 288k forecast - bearish
27 Feb: Prelim GDP q/q: 2.2% vs 2.1% - mildly bullish

Overall news: Mildly bullish
Federal Resrve bias: Mildly hawkish
Outlook for this week: Mildly bullish

The biggest news item for this week will be NFP Friday. The last three NFP figures have beaten expectations, so another good number should send the USD soaring and strengthen probability of a rate hike.


The biggest EUR-related news has been the ongoing Greek drama. I'm still regarding the bailout extension as bearish for the EUR.

23 Feb: German IFO business climate 106.8 vs 107.4 forecast - mildly bearish
27 Feb: German prelim CPI m/m 0.9% vs 0.6% forecast - bullish
Whole week: Greek bailout extension - bearish

Overall news: Mildly bearish
Federal Resrve bias: Ultra-dovish
Outlook for this week: Bearish

The most important even for this week will be the ECB's interest rate decision on Thursday, March 5.


There were no major JPY events last week, and no major events for this week either. Very quiet for the JPY.

Overall news: Neutral
BoJ bias: Mildly dovish
Outlook for this week: Neutral


The Bank of England signaled some hawkishness last week, with Deputy Governor Shafik indicating the BoE's next move will most likely be an interest rate hike. I decided to upgrade the BoE's bias from marginally hawkish to mildly hawkish. Seems as if the BoE is preparing the market for an upward move.

24-25 Feb: BoE states confidence in bringing inflation to 2%, next move will likely be hike - bullish
26 Feb: Second estimate GDP q/q 0.5% vs 0.5% forecast - neutral

Overall news: Bullish
BoE bias: Mildly hawkish
Outlook for this week: Bullish

The BoE will decide on its interest rate on Thursday, March 5. 


News has been somewhat bullish last week. BoC Governor Poloz said in a statement that its recent interest rate cut was insurance, but it wasn't the central bank's job to eliminate risk. I interpreted this as a hawkish statement, and that the BoC is in no hurry to reduce interest rates further.

24 Feb: BoC Governor Poloz hawkish statement - bullish
26 Feb: Core CPI m/m 0.2% vs 0.1% forecast - mildly bullish

Overall news: Bullish
BoC bias: Dovish
Outlook for this week: Neutral

The BoC will decide on interest rates on Wednesday, March 4.


No really major AUD news last week.

25 Feb: CNY HSBC Flash Manufacturing PMI 50.1 vs 49.6 forecast - mildly bullish
26 Feb: Private capital expenditure q/q -2.2% vs -1.7% forecast - bearish

Overall news: Mildly bearish
RBA bias: Dovish
Outlook for this week: Mildly bearish

The RBA will decide on interest rates on Tuesday, March 3.


NZD news has been very positive. RBNZ Governor Wheeler expressed concern about the NZ housing bubble on 25 Feb, which is a hawkish statement.

25 Feb: RBNZ Governor Wheeler statement on housing prices - bullish
25 Feb: Trade balance 56m vs -162m forecast - bullish
27 Feb: ANZ Business confidence 34.4 vs 30.4 forecast - bullish

Overall news: Bullish
RBNZ bias: Marginally hawkish
Outlook for this week: Bullish

There aren't many major news event for the NZD this week.


Nothing happening with the CHF. There were no major events last week, and none for this week as well. CHF will probably be quiet, with a bearish bias.

Overall news: Neutral
SNB bias: Dovish
Outlook for this week: Mildly bearish



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