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03/03/2016
Fundamental Analysis
Thursday, March 03, 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%
Thursday, March 03, 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
“The review has to be seen against the background of increased downside risks to the earlier outlook amid heightened uncertainty about emerging market economies' growth prospects, volatility in the financial and commodity markets, and geopolitical risks” - Mario Draghi, ECB President
Thursday, March 03, 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
ECB to deploy fresh stimulus measures next week to combat weak inflation
High
The Euro zone’s growth and inflation prospects have weakened and policy makers should take these developments into account when deciding on monetary policy. Inflation across the 19-country currency bloc slid into negative territory in February, virtually ensuring the ECB will unveil additional stimulus when it reviews policy on March 10. Meanwhile, Bank of France Governor Francois Villeroy de Galhau said that he ECB is ready to deploy fresh stimulus measures to underpin worryingly low inflation. The central bank’s tools include targeted loans to commercial banks, more asset purchases and providing more details about how long the ECB plans keep rates at low levels. Mr. Villeroy de Galhau noted that the brief period of negative inflation does not mean the arrival of a more prolonged period of falling prices. Inflation should turn positive again later this year with the stabilization of oil prices. At the same time, ECB Board Member Benoit Coeure also dropped a clear hint that the central bank would ease monetary policy this month, after underscoring the necessity of stimulating economic growth and pushing inflation up. However, Mr. Coeure noted that the central bank is well aware of negative rate impact on bank profits. Money markets now price at least two rate cuts this year, taking the deposit rate to –0.55% from the current –0.3% by the end of 2016.
02.03 open price 02.03 close price % change
EUR/USD 1.0868 1.0868 0.00%
EUR/GBP 0.77891 0.77193 -0.90%
EUR/CHF 1.08405 1.08325 -0.07%
EUR/JPY 123.9 123.33 -0.46%
USD
“It's a very strong report. The labor market is healthy” - Mark Zandi, chief economist at Moody's Analytics
Thursday, March 03, 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 private sector adds 214K jobs in February High
US private sector created more jobs than expected in February, another sign that the US job market remains resilient despite economic weakness overseas and volatility in financial markets. According to payroll processor ADP, US private companies hired 214,000 workers last month, whereas economists had expected a gain of 190,000 jobs. Private payroll gains in January were revised down to 193,000 from an originally reported 205,000 rise. The ADP data come ahead of the US Labor Department’s more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment. Economists are forecasting total non-farm employment to have grown 190,000 in February, while the unemployment rate is predicted to remain unchanged at 4.9%. In addition to that, the ISM will deliver the potential market-moving indicator for the US when it publishes its non-manufacturing index for February on Thursday. Earlier in the week, the ISM reported that US manufacturing activity continued to shrink in February for the fifth consecutive month. The ISM 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.
02.03 open price 02.03 close price % change
AUD/USD 0.7175 0.7295 +1.67%
USD/CHF 0.9974 0.9968 -0.06%
USD/JPY 114.01 113.48 -0.46%
NZD/USD 0.6629 0.6675 +0.69%
GBP
“The marked slowdown in the housebuilding sector, which once led the way in terms of growth, is of chief concern” - Kalpana Padhiar, construction specialist at Euler Hermes
Thursday, March 03, 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 construction PMI declines to 10-month low High
Business activity in Britain’s construction sector unexpectedly slowed to the lowest level in ten months in February, but remained firmly in expansion territory for the 34th month in a row. The Markit/CIPS UK construction PMI declined to 54.2 in the reported month, down from 55.0 in January, compared with economists projection of 55.5. Housebuilding rose at the slowest pace since June 2013, when the UK economy started to recover, while construction firms hired staff at the weakest rate since August 2013. Optimism among companies about business activity for the year ahead dropped to the lowest level since December 2014. The latest official data showed construction output dropped in the fourth quarter of 2015, and remained 4.1% below the pre-crisis peak. Despite a weaker final quarter, and high volatility in the sector, construction sector performance improved throughout 2015 compared with the preceding year. The data followed the manufacturing PMI report, which showed manufacturing growth declined to near a three-year low in February due to a drop in new orders. Markit factory index declined to 50.8 last month, down from 52.9 in January, marking the lowest level since April 2013. Markets will now await fresh PMI data on the services sector due on Thursday. Expectations ahead suggest activity slowed slightly in February.
02.03 open price 02.03 close price % change
GBP/USD 1.3952 1.4078 +0.90%
EUR/GBP 0.77891 0.77193 -0.90%
GBP/CAD 1.871 1.8888 +0.95%
GBP/JPY 159.069 159.755 +0.43%
AUD
“The good news, from an exporter perspective, is spot iron ore prices have rallied more than 30 per cent from January's lows, while production volumes are also forecast to creep higher” - Tom Kennedy, JP Morgan economist
Thursday, March 03, 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 trade deficit unexpectedly narrows in January, led by resource exports
High
Australia’s trade deficit narrowed more than expected in January as imports declined, while resource exports showed surprising resilience. The nation’s trade shortfall contracted from a revised $3.52 billion in December to a seasonally adjusted $2.94 billion in January, according to the Australian Bureau of Statistics, beating economists forecast of a $3.22 billion gap. Exports increased 1% on month to $25.55 billion, led by a surge in non-rural exports such as minerals. At the same time, imports dropped 1.0% to $28.49 million. Precipitous downturn in global commodity prices hit hard Australia’s terms of trade. Prices of iron ore, one of Australia’s biggest export commodities, plunged from more than $180 per tonne in 2011 to around $40 per tonne in recent months. However, the depreciation of the Australian Dollar and a rebound in mineral resource exports has helped soften the effect on the nation’s economy from the commodities downturn. Yet, the sharp decline in mining investment continues to drag on economic growth. Data released earlier in the week showed the South Pacific economy expanded 0.6% in the final quarter of 2015, supported by household consumption. Measured on an annual basis, Australia’s economic output surged 3.0% last quarter, far outpacing the 2.5% rate predicted by analysts.
02.03 open price 02.03 close price % change
AUD/JPY 81.802 82.779 +1.19%
AUD/USD 0.7175 0.7295 +1.67%
EUR/AUD 1.51473 1.4899 -1.64%
GBP/AUD 1.9447 1.93 -0.76%
CHF
“No one would have expected these results a year ago” - Cornelia Luchsinger, Zuercher Kantonalbank economist
Thursday, March 03, 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 1.15 1.18 1.23
75% percentile 1.05 1.08 1.08
Median 1.03 1.04 1.05
25% percentile 1.00 1.01 1.00
MIN 0.83 0.82 0.81 * the data is based on international banks’ forecasts
Impact
Switzerland’s economy accelerates in Q4; exports improves
High
Switzerland’s economy unexpectedly accelerated, while exports showed signs of resilience in 2015, despite a strong Swiss Franc, migrant crisis and adverse external environment undermined the country’s performance. The Swiss economy expanded 0.4% in the fourth quarter of 2015, supported by consumption expenditure from private households and the public sector, according to the State Secretariat for Economic Affairs. Quarterly estimates suggest a provisional GDP growth rate of 0.9% for 2015, compared with 1.9% in 2014. The economic outlook for the Alpine country is clouded, as the loss of competitiveness resulting from the currency cap removal and subsequent Swiss Franc appreciation is likely to have a negative effect. The Franc spiked more than 25% versus the Euro in a single day. The economic slowdown in Switzerland during 2015 is also the result of sluggish private domestic demand which is expected to remain negative also in 2016. Household consumption is also expected to remain lacklustre as both employment and nominal wages are under pressure in the light of the appreciating Swiss Franc and as consumers become more downbeat about the economic prospects.
02.03 open price 02.03 close price % change
AUD/CHF 0.7156 0.7271 +1.61%
EUR/CHF 1.08405 1.08325 -0.07%
GBP/CHF 1.3917 1.4032 +0.83%
USD/CHF 0.9974 0.9968 -0.06%
Thursday, March 03, 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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