15 Jul 2014
We have a busy day ahead - Rabobank
FXStreet (Guatemala) - Analysts at Rabobank noted the key events surrounding developments to come in the FX space.
Key Quotes:
“Today’s first focus is more ‘unmoved movers’, with the RBA’s July meeting minutes, which will be looked at carefully for any shift in stance. There has been little change from the “we are on hold but are leaning towards the next move being up” stance for months now. However, over the weekend Governor Stevens gave an interview where he underlined the likely disruption in the markets when the Fed does eventually raise rates, and while generally optimistic (he is both a central banker and Australian after all) did mention that there remains “legitimate uncertainty about how smooth” the ongoing transition away from the mining boom will prove to be. Given that recent Aussie trade data have been awful, and so have retail sales, that suggests we might see a shift towards a slightly more dovish stance in the minutes today. (Note that we still believe, as we have for some time, that the global context makes the next RBA rate move more likely to be down than up – though the Chinese borrowing data out today are likely to suggest that the authorities there are now back-pedaling to try to support growth".
"In the UK there are both CPI and PPI. Neither headline nor core CPI should worry the BoE in YoY terms. However, pressures to hike have not been inflation-led: if that were the case they would arguably have been leaned on far more heavily by now given CPI was above the 2.0% target virtually the whole time since 2007. The irony is that only now, as recovery starts, does it fall well below!"
"The German ZEW survey is also out and is seen steady at 67.4 and 28.2 for expectations. Will the World Cup have any impact, one wonders? The final victory won’t be covered, but the 7-1 should be".
"In the US there are retail sales, seen +0.6% MoM and +0.5% ex-autos and gasoline. May was disappointing, and any failure to bounce back here will see Q2 GDP projections revised lower despite the shocking -2.9% Q1 print. Meanwhile, Fed Chair Yellen gives the first of her semi-annual testimonies to Congress. This is obviously the major focus for the week for markets given that we are deep into the new normal where the decisions of ‘unmoved movers’, not fundamentals, is driving market direction. Yellen will therefore have the very delicate task of being Goldilocks enough to get it “just right” in terms of optimism over the economy (which is strong, honest!), combined with an unwillingness to raise rates aggressively in response (which is not needed, honest!), or targeting asset bubbles (which aren’t even there, honest!). Let’s hope it all ends Happily Ever After".
"The BOJ also release their monetary policy statement, where no change is expected. They still see the Japanese data cup as half full, but we continue to think they will change their tune in time".
Key Quotes:
“Today’s first focus is more ‘unmoved movers’, with the RBA’s July meeting minutes, which will be looked at carefully for any shift in stance. There has been little change from the “we are on hold but are leaning towards the next move being up” stance for months now. However, over the weekend Governor Stevens gave an interview where he underlined the likely disruption in the markets when the Fed does eventually raise rates, and while generally optimistic (he is both a central banker and Australian after all) did mention that there remains “legitimate uncertainty about how smooth” the ongoing transition away from the mining boom will prove to be. Given that recent Aussie trade data have been awful, and so have retail sales, that suggests we might see a shift towards a slightly more dovish stance in the minutes today. (Note that we still believe, as we have for some time, that the global context makes the next RBA rate move more likely to be down than up – though the Chinese borrowing data out today are likely to suggest that the authorities there are now back-pedaling to try to support growth".
"In the UK there are both CPI and PPI. Neither headline nor core CPI should worry the BoE in YoY terms. However, pressures to hike have not been inflation-led: if that were the case they would arguably have been leaned on far more heavily by now given CPI was above the 2.0% target virtually the whole time since 2007. The irony is that only now, as recovery starts, does it fall well below!"
"The German ZEW survey is also out and is seen steady at 67.4 and 28.2 for expectations. Will the World Cup have any impact, one wonders? The final victory won’t be covered, but the 7-1 should be".
"In the US there are retail sales, seen +0.6% MoM and +0.5% ex-autos and gasoline. May was disappointing, and any failure to bounce back here will see Q2 GDP projections revised lower despite the shocking -2.9% Q1 print. Meanwhile, Fed Chair Yellen gives the first of her semi-annual testimonies to Congress. This is obviously the major focus for the week for markets given that we are deep into the new normal where the decisions of ‘unmoved movers’, not fundamentals, is driving market direction. Yellen will therefore have the very delicate task of being Goldilocks enough to get it “just right” in terms of optimism over the economy (which is strong, honest!), combined with an unwillingness to raise rates aggressively in response (which is not needed, honest!), or targeting asset bubbles (which aren’t even there, honest!). Let’s hope it all ends Happily Ever After".
"The BOJ also release their monetary policy statement, where no change is expected. They still see the Japanese data cup as half full, but we continue to think they will change their tune in time".