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02/03/2016
Fundamental Analysis
Wednesday, March 02, 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 29-March 4)
Day/Time (GMT) Flag Currency Event Period Actual Forecast Previous
MONDAY
12:00 am NZD ANZ Business Confidence February 7.1 23.0
10:00 am EUR CPI Flash Estimate YoY February -0.2% 0.0% 0.3%
1:30 pm CAD Current Account Quarter 4 -15.4B -16.8B -15.3B
TUESDAY
3:30 am AUD RBA Rate Statement
9:30 am GBP Manufacturing PMI February 50.8 52.3 52.9
1:30 pm CAD GDP MoM December 0.2% 0.1% 0.3%
3:00 pm USD ISM Manufacturing PMI February 49.5 48.5 48.2
WEDNESDAY
12:30 am AUD GDP QoQ Quarter 4 0.6% 0.5% 1.1%
9:30 am GBP Construction PMI February 55.0
1:15 pm USD ADP Non-Farm Employment Change February 205K
THURSDAY
12:30 am AUD Trade Balance January -3.54B
9:30 am GBP Services PMI February 55.6
3:00 pm USD ISM Non-Manufacturing PMI February 53.5
FRIDAY
12:30 am AUD Retail Sales MoM January 0.0%
1:30 pm CAD Trade Balance January -0.6B
1:30 pm USD Unemployment Rate February 4.9%
Wednesday, March 02, 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]
UK The UK economy slowed sharply last year, but managed to recover modestly in the final quarter of 2015. Britain's gross domestic product rose 2.2% last year, compared with the 2.9% growth in 2014. In the three months though December, the economy grew 0.5%, compared with the third quarter, when economic output increased 0.4%. The UK was the second fastest growing major economy in 2015. Among the G7 nations only the US showing a stronger performance with growth of 2.4%. According to the ONS, trade made a negative contribution to the UK growth in the December quarter. Furthermore, business investment fell in the fourth quarter, signalling a slackening of activity. Business investment in volume terms dropped 2.1% in the fourth quarter. On an annual basis, the measure advanced 4.7%, the largest increase since 2010. The services sector was again the only upward driver of the nation's economic growth. The Index of Services rose 0.7% in the reported period. US The Fed policy makers remain divided on future interest rate hikes. Jeffrey Lacker, Richmond Fed President, said that the US central bank still has room to lift rates further in the coming months, as there are no signs that recession is imminent. Even though inflation remains below the Fed's 2% target, inflation indicators suggest a possible move back toward the goal over the medium term, Lacker said. The official added that economic analysis indicates that inflation could average 1.9% in the period between 5 years to 10 years from now. Yet, Lacker is not a voting member this year. Moreover, the new head of Minneapolis Fed, Neel Kashkari, said that he is optimistic about the US economy, which continues to grow moderately as the year progresses, adding that he sees both upside and downside risks to the growth outlook. Meanwhile, Robert Kaplan, Dallas Fed President, said that he does not expect the US economy to enter recession this year. Kaplan is among Fed officials advocating a patient and cautious approach to policy normalization given the global headwinds. Switzerland While several central bankers are keen to highlight that stimulus that monetary policy can provide are limitless, Swiss National Bank President Thomas Jordan disagrees with this view. Mr. Jordan stressed that unconventional measures cannot be used endlessly to achieve desirable monetary conditions. Central banks cannot cut interest rates infinitely without risking fuelling a flight to cash. Mr. Jordan added that policy makers should continuously assess the effects of their monetary policies, which are likely to weaken over time. If instruments are no longer providing the desired effect, monetary policy should be reconsidered. Mr. Jordan concluded that monetary policy cannot cushion the fallout of every negative development in the world's economy or international financial markets. Mr. Jordan reiterated that the Swiss Franc remains overvalued to the Euro, adding that the SNB stands ready to intervene on the forex market if needed, as the strong Franc continued to hurt Swiss exporters and retailers.
Key highlights of the week ended February 26
EUR
“For a region in desperate need of lower unemployment, the near-stalling of jobs growth in the manufacturing sector comes as disappointing news” - Chris Williamson, Markit's chief economist
Wednesday, March 02, 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’s unemployment at multi-year low; Germany manufacturing falters
High
The Euro zone posted some mixed fundamentals, with the unemployment rate at multi-year low in January, while manufacturing activity in Germany, the Euro zone economy’s backbone, continued to falter. The Euro zone’s jobless rate dropped to 10.3% in January from 10.4% a month earlier, hitting the lowest level since August 2011. That reflected a 105,000 decrease in the number of people without jobs to 16.65 million. In Germany, the unemployment rate remained at its record low in February, as the number of unemployed people dropped 10,000 reaching total of 2,723 million in February. The jobless rate stood at 6.2% last month, but Germany saw a record influx of migrants last year and this data has so far not been reflected in the statistics. Meanwhile, the German manufacturing activity rose slightly in the reported month. The final PMI for Germany’s industrial sector climbed to 50.5 in February, compared with January’s 52.3. The Euro zone’s manufacturing sector rose at the slowest pace in twelve months in February, with the corresponding gauge falling to 51.2, down from 52.3 in January. In Italy, the Euro zone’s third biggest economy, annual economic output rose at the fastest pace in five years. Italy’s GDP grew 0.8% in 2015, compared with the revised –0.3% in 2014.
01.03 open price 01.03 close price % change
EUR/USD 1.0873 1.0868 -0.05%
EUR/GBP 0.78128 0.77891 -0.30%
EUR/CHF 1.08558 1.08408 -0.14%
EUR/JPY 122.53 123.9 +1.12%
GBP
“UK manufacturing to remain subdued ahead of the Brexit referendum” - Kallum Pickering, Berenberg's UK chief economist
Wednesday, March 02, 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
Britain’s manufacturing growth slows to 3-year low in February
High
Britain’s manufacturing growth decline to near a three-year low in February due to a drop in new orders, underscoring the fragility of the UK economy. Markit factory index declined to 50.8 last month, down from 52.9 in January, marking the lowest level since April 2013. UK manufacturing has been under pressure for months already, hit hard by a slowdown in demand from major overseas economies. The manufacturing sector cut jobs for a second consecutive month, though the decline was moderate. On top of that, companies reported that they reduced prices for goods for the sixth straight month, but the decline was slightly less sharp than in January. Moreover, recent data from the Office for National Statistics showed that the manufacturing sector dragged on Britain’s economic growth during the final quarter of 2015, with the economy reliant on the service sector and consumer spending. The total UK gross domestic product grew 0.5% in the December quarter, with the services sector and domestic consumption being the only two drivers supporting the economy. Markets will now await fresh PMI data on the services sector due on Thursday. Expectations ahead suggest activity slowed slightly in February.
01.03 open price 01.03 close price % change
GBP/USD 1.3917 1.3952 +0.25%
EUR/GBP 0.78128 0.77891 -0.30%
GBP/CAD 1.8845 1.871 -0.72%
GBP/JPY 156.832 159.07 +1.43%
USD
“The very good construction report for January is further proof that concerns about recession in the U.S. are far overblown” - Gus Faucher, deputy chief economist at PNC Financial
Wednesday, March 02, 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 continues to contract; construction spending rises
High
US manufacturing activity continued to shrink in February for the fifth consecutive month, underscoring strong headwinds that the nation’s assembly lines have recently faced. According to the Institute for Supply Management, the index of purchasing managers rose to 49.5 last month, compared with 48.2 in January. Even though, the figure represented the highest reading since September 2015, the gauge remained below the key 50-mark threshold, which indicates a contraction in manufacturing that accounts for 12% of the US economy. A strong Greenback, sluggish global demand and spending cuts by energy firms following a precipitous decline in crude oil prices had derailed the manufacturing sector. New orders sub-index stayed unchanged at 51.5 in February, while production sub-gauge climbed to 52.8, compared with January’s 50.2. The employment sub-index also inched up to 48.5, compared with January’s 45.9. At the same time, Markit’s final PMI declined to 51.3 in February, down from 52.4 seen in January. Jobs growth slowed to a five-month low, while factory gate prices declined the most since June 2012. A separate report showed construction firms boosted their spending by a robust 1.5% in January, to mark the biggest monthly increase since last May.
01.03 open price 01.03 close price % change
AUD/USD 0.7141 0.7175 +0.48%
USD/CHF 0.9984 0.9974 -0.10%
USD/JPY 112.69 114.01 +1.17%
NZD/USD 0.659 0.6629 +0.59%
AUD
“And with the annual growth rate in the fourth quarter accelerating to a two-year high of 3 per cent, there's clearly a decent amount of momentum going into this year” - Paul Dales, Capital Economics' economist for Australia
Wednesday, March 02, 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 0.80 0.79 0.81
75% percentile 0.71 0.71 0.71
Median 0.69 0.68 0.68
25% percentile 0.68 0.67 0.66
MIN 0.64 0.64 0.61 * the data is based on international banks’ forecasts
Impact
Australia’s economic growth pleasantly surprises High
The Australian economy beat all expectations, growing at the fastest pace in almost two years in the final quarter of 2015, a sign the worst of the global commodity rout may be over. Australia’s gross domestic economy rose 0.6% in the fourth quarter from the July-September period, when the economy grew an upwardly revised 1.1%, outpacing economists’ forecast for a 0.4% growth, according to the Australian Bureau of Statistics. That propelled growth for the whole year to 3%, compared with 2.5% that had been expected by analysts. Consumers were the main driver of growth, with household consumption expenditure increasing 2.9% annually. Households spent more last year even though their wages rose just 2.2%, the slowest annual rate on record. The improvement of labour demand over the last year despite weak economic growth levels has been an important measure of the economy's strength through mining downturn, and something that surprised policy makers. While most economists expect last year’s GDP figure would diminish the RBA’s easing bias towards interest rates, some say low inflation could still force policy makers to act. The central bank estimates the worst of the drag from mining will be over this year, while all-time low rates, increasing house prices and a boom in home building continue to spur domestic demand.
01.03 open price 01.03 close price % change
AUD/JPY 80.483 81.802 +1.64%
AUD/USD 0.7141 0.7175 +0.48%
EUR/AUD 1.52251 1.51473 -0.51%
GBP/AUD 1.9487 1.9447 -0.21%
CAD
“Upside surprises for Canada have been few and far between over the past year, so this modest beat is certainly welcome” - Douglas Porter, BMO Financial Group
Wednesday, March 02, 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 1.42 1.41 1.43
75% percentile 1.37 1.37 1.36
Median 1.35 1.35 1.34
25% percentile 1.31 1.31 1.30
MIN 1.25 1.10 1.20 * the data is based on international banks’ forecasts
Impact
Canada’s economy slows the most among G-& nations in 2015
High
Canada’s economy slowed the most among the Group of Seven developed countries in 2015, highlighting the effect of the commodity-price shock on the trade-reliant country and the challenges its policy makers face in supporting growth. Canada’s gross domestic product increased 0.8% on annualized basis in the fourth quarter, down from the 2.4% growth rate in the July-September period, Statscan reported. The biggest drag on growth was business investment, which dropped 1.7% from the preceding three-month period and declined for the fourth straight quarter. In December, the Canadian economy grew 0.2% from the prior month, overshooting expectations for a 0.1% monthly gain amid robust gains in manufacturing and wholesale trade. In 2015, Canada’s oil-battered economy expanded just 1.2%, compared with 2.5% in 2014, marking the slowest growth pace since the 2009 recession, as plunging prices for oil and other commodities reduced national income, business investment and domestic demand. Economists are sceptical about the Canadian economy’s potential this year, saying that the economy is unlikely to pick up the pace. The average analysts’ estimate for GDP growth is 1.4%. Moreover, experts widely expect the Bank of Canada to hold its key rate steady at 0.5% and see little chance of a rate change this year.
01.03 open price 01.03 close price % change
AUD/CAD 0.967 0.9622 -0.50%
CAD/CHF 0.7373 0.7438 +0.88%
EUR/CAD 1.47226 1.45737 -1.01%
USD/CAD 1.354 1.341 -0.96%
Wednesday, March 02, 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 105.7 107.0 107.3
11:15 am CHF SNB Chairman Jordan Speaks
3:00 pm USD CB Consumer Confidence February 92.2 97.4 98.1
WEDNESDAY
11:00 am GBP CBI Realized Sales February 10 16 16
3:00 pm USD New Home Sales January 494K 522K 544K
THURSDAY
12:30 am AUD Private Capital Expenditure QoQ Quarter 4 0.8% -3.1% -8.4%
9:30 am GBP Second Estimate GDP QoQ Quarter 4 0.5% 0.5% 0.5%
1:30 pm USD Core Durable Goods Orders MoM January 1.8% 0.2% -1.0%
11:30 pm JPY Tokyo Core CPI YoY February -0.1% 0.0% -0.1%
FRIDAY
All Day EUR German Prelim CPI MoM February 0.4% 0.6% -0.8%
1:30 pm USD Prelim GDP QoQ Quarter 4 1.0% 0.4% 0.7%
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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