18/05/2017

Fundamental Analysis

Major events this week (May 15 - 19)

Thursday, 18 May 2017 07:30 GMT

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Day/Time (GMT)

Flag Currency Event Period Actual Forecast Previ-ous

MONDAY

00:00 am NZD Retail Sales q/q Q1 2017 1.5% 1.1% 0.6%

12:30 pm USD Empire State Manufacturing Index May -1.0 7.2 5.2

07:00 pm GBP Prime Minister May Speaks

TUESDAY

01:30 am AUD Monetary Policy Meeting Minutes

08:30 am GBP CPI y/y April 2.7% 2.6% 2.3%

12:30 pm USD Building Permits April 1.23M 1.27M 1.27M

Tentative NZD GDT Price Index 3.2% 3.6%

WEDNESDAY

08:30 am GBP Average Earnings Index 3m/y Q1 2017 2.4% 2.4% 2.3%

12:30 pm CAD Manufacturing Sales m/m March 1.0% 1.1% -0.2%

02:30 pm USD Crude Oil Inventories Last week -1.8M -2.5M -5.2M

THURSDAY

01:30 am AUD Unemployment Rate April 5.7% 5.9% 5.9%

08:30 am GBP Retail Sales m/m April 1.2% -1.8%

12:30 pm USD Unemployment Claims Last week 240K 236K

FRIDAY

12:30 pm CAD CPI m/m April 0.5% 0.2%

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 research@dukascopy.com

Key highlights of the week ended May 12

United Kingdom

A monthly report released by IHS Markit showed that change of house prices in the UK did not justify analysts’ expectations. While majority of experts anticipated an increase of 0.1% in April, the revealed data showed the opposite result. Despite the minor fluctuations, UK house prices, in general, remained unchanged for the last three months. At its latest policy meeting, the Bank of England’s Monetary Policy Committee voted by a majority of 7-1 to leave the bank rate at 0.25%, with Kristin Forbes being the only one favouring an immediate hike in rates on the back of an uptick in pipeline inflation pressures that, in her opinion, has pushed the CPI to somewhat uncomfortable levels. Overall, the “no move” came as no surprise, as the vast majority of economists were not expecting to see any change in the monetary policy. United States

The US unemployment rate dropped unexpectedly last month, as companies created more jobs than expected. The Department of Labour reported that US firms added 211K jobs to the economy in April, following the preceding month’s revised down increase of 79K jobs and surpassing analysts’ expectations for a 194K gain. The number of job openings in the US rose in March, according to the JOLTS monthly report. Data from the US Bureau of Labour Statistics released on Tuesday showed that the US job openings increased to 5.74M over the course of March, following the previous month’s downwardly revised figure of 5.68M. The US Import Price Index managed to post a larger-than-expected gain over the course of April, official data revealed on Wednesday. The US Bureau of Labour Statistics reported that the price index for US imports tacked on 0.5% in April, following the upwardly revised 0.1% uptick registered in the preceding month and beating analysts’ expectations for a 0.2% increase. The seasonally adjusted Producer Price Index for final demand rose more than expected in April, official data showed on Thursday. According to the Bureau of Labour Statistics, US producer prices rose 0.5% for the month of April, following the preceding month’s 0.1% decline and surpassing analysts’ expectations for a 0.2% hike. Consumer prices in the United States advanced last month but less than analysts expected. The Labour Department reported on Friday that its CPI rose 0.2% in April, following the preceding month’s drop of 0.3% but missing expectations for a 0.3% gain. Furthermore, the so-called core inflation rate climbed 0.1% last month, compared to the previous month’s fall of 0.1%, whereas analysts anticipated an increase of 0.2%.

Canada

Canadian employment growth fell unexpectedly last month, whereas the unemployment rate hit its lowest level in nearly nine years. Statistics Canada reported on Friday that the Canadian economy created 3.2K jobs in April, following the preceding month’s climb of 19.4K and falling behind analysts’ expectations for a 20.0K job gain. The value of dwelling permits issued by Canadian municipalities slid for the second straight month, government data revealed on Tuesday. The report released by Statistics Canada showed building permits in Canada dropped 5.8% to a total of $7.0B over the month of March, following the downwardly revised 2.8% plunge registered in February and falling well behind the 4.2% gain eyed by most of the economists.

Thursday, 18 May 2017 07:30 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 research@dukascopy.com

GBP

Impact

British inflation-adjusted wage growth slows while jobless rate drops to four-decade lows

Medium

Pay growth in the United Kingdom dropped below inflation for

the first time in more than two years, official figures revealed

on Wednesday. The Office for National Statistics reported that

wage growth, excluding bonuses, advanced 2.1% on an

annual basis in the March quarter, the weakest gain since the

three-month period to July 2016. Thus, pay growth adjusted

for inflation dropped 0.2%, the first decline since the Q3 of

2014. Including bonuses, average hourly earnings increased

2.4% in the Q1 of 2017, after rising 2.3% in the three-month

period to February. Nevertheless, the unemployment rate fell

to 4.6%, the lowest in more than forty years, suggesting that

the British labour market remained strong despite weak wage

growth. Meanwhile, market analysts expected the jobless rate

to remain unchanged at 4.5% during the reported month.

However, the claimant count change rose a seasonally

adjusted 19.4K in April, following an upwardly revised climb of

33.5K in the preceding month. If pay growth remains below

inflation growth consumer spending will likely stop supporting

economic growth in Britain.

Trends* Q1 17 Q2 17 Q3 17

MAX 1.84 1.32 1.62

75% percentile 1.25 1.26 1.28

Median 1.22 1.22 1.24

25% percentile 1.20 1.20 1.18

MIN 1.07 1.03 1.02

* the data is based on international banks’ forecasts

17.05 open

price 17.05 close

price % change

GBP/USD 1.2918 1.2969 0.39%

EUR/GBP 0.8579 0.8603 0.28%

GBP/CAD 1.7576 1.7644 0.39%

GBP/JPY 146.12 143.74 -1.66%

Thursday, 18 May 2017 07:30 GMT

“It is now hard to see where a pay revival in Britain will come from.” — Martin Beck, Oxford Economics.

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 research@dukascopy.com

USD

Impact

Crude oil inventories drop 1.8M barrels last week Medium

Crude oil inventories in the United States dropped less than

expected last week, a weekly report showed on Wednesday.

The Energy Information Administration reported US crude

stockpiles fell 1.8M barrels in the week ending May 12,

following the preceding week’s drop of 5.2M barrels and falling

behind expectations for a 2.5M-barrel decline. US production

fell 9K barrels per day to 9.305M barrels per day, the first drop

in 13 weeks. Nevertheless, the production levels remained

below the EIA’s 2017 production target of 9.31M barrels per

day. Wednesday’s report also showed that US crude imports

climbed 577K barrels per day last week, whereas exports

advanced 400K barrels per day. Total US inventories decreased

3% to 520.8M barrels last week. The data suggested that the

OPEC production cut deal started bearing fruit at last. Thus, oil

prices jumped shortly after the release, with Brent futures

hitting $52.45 per barrel and WTI futures climbing to $49.50

per barrel. In the meantime, gasoline inventories declined

413K barrels during the same week, while analysts held forests

for a 731K-berrel plunge.

Trends* Q1 17 Q2 17 Q3 17

MAX 122 122 125

75% percentile 116 118 118

Median 114 114 115

25% percentile 110 109 110

MIN 98 100 100

* the data is based on international banks’ forecasts

17.05 open

price 17.05 close

price % change

AUD/USD 0.7426 0.7432 0.08%

USD/CHF 0.9859 0.9789 -0.72%

USD/JPY 113.12 110.83 -2.07%

NZD/USD 0.6883 0.6943 0.86%

Thursday, 18 May 2017 07:30 GMT

“The numbers beneath the surface were rather mixed with gasoline stocks falling only slightly on weaker demand and sharply higher imports suggesting sufficient availability of crude oil internationally despite OPEC cuts.” — Carsten Fritsch, Commerzbank AG

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 research@dukascopy.com

CAD

Impact

Canadian manufacturing rebound amid higher food and motor vehicle sales

Medium

Canadian manufacturing sales rebounded in March but less

than expected amid higher demand for motor vehicles and

higher sales in the food industry. Statistics Canada reported on

Wednesday that manufacturing sales rose 1.0% in March,

following the preceding month’s downwardly-revised fall of

0.6% and slightly missing analysts’ expectations for a 1.1%

gain. In volume terms, sales were up 0.2%. Data showed that

sales rose in 16 out of 21 industries in the reported month,

representing 71% of the total manufacturing sector output.

The largest gain of 2.1% was posted by the transportation

sector. The following increase of 2.1% was mainly driven by

highest sales of vehicles and vehicle part. Furthermore, food

sales climbed for the second straight time, rising 2.6% to a

record high of C$8.9B. Sales of meat and dairy products

contributed the most to the rise. New orders rose 2.6%,

marking the fourth consecutive increase. Wednesday’s data

also showed that inventories advanced 1.2% to a record high

of C$72.7B, with the inventory-to-sales ratio remaining

unchanged at 1.35.

Trends* Q1 17 Q2 17 Q3 17

MAX 1.42 1.45 1.45

75% percentile 1.37 1.38 1.40

Median 1.35 1.36 1.36

25% percentile 1.32 1.32 1.31

MIN 0.84 1.22 1.20

* the data is based on international banks’ forecasts

17.05 open

price 17.05 close

price % change

AUD/CAD 1.0104 1.0109 0.05%

CAD/CHF 0.7247 0.7196 -0.71%

EUR/CAD 1.5078 1.5179 0.67%

USD/CAD 1.3606 1.3602 -0.03%

Thursday, 18 May 2017 07:30 GMT

“The data overall should maintain confidence in the manufacturing sector, especially with a solid increase in new and unfilled orders.” — Tim Clayton, Economic Calendar

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 research@dukascopy.com

AUD

Impact

Australian jobless rate falls to 5.7% in April Medium

The Australian unemployment rate dropped unexpectedly last

month as companies created more new jobs. The Australian

Bureau of Statistics reported on Thursday that companies

added 37.4K new jobs to the economy in April, following a

downwardly revised gain of 60K in the previous month and

surpassing forecasts for an increase of 5,000 jobs. However,

they were all part-time, while full-time employment lost 11.6K

jobs in the reported month. Thus, the unemployment rate fell

to 5.7% in April, whereas analysts expected the jobless rate to

remain unchanged at 5.9%. The number of people looking for

a full-time job dropped 12.3K to 514.2K, whereas the number

of people looking for a part-time job fell 6,8000 to 218,000.

Moreover, the participation rate remained unchanged at

64.8% in April, beating expectations for a decrease to 64.7%.

Other data released by the Melbourne Institute showed that

consumer inflation would probably climb 4.0% year-over-year

in May, following the prior month’s 4.1%. Back in the Q1 of

2017, the Bureau Statistics reported that its CPI advanced

2.1% on an annual basis.

Trends* Q1 17 Q2 17 Q3 17

MAX 0.80 0.81 0.82

75% percentile 0.74 0.74 0.75

Median 0.73 0.72 0.72

25% percentile 0.71 0.71 0.70

MIN 0.68 0.63 0.60

* the data is based on international banks’ forecasts

17.05 open

price 17.05 close

price % change

AUD/JPY 84.01 82.37 -1.99%

AUD/USD 0.7426 0.7432 0.08%

EUR/AUD 1.4924 1.5016 0.61%

GBP/AUD 1.7394 1.7452 0.33%

Thursday, 18 May 2017 07:30 GMT

“For almost 18 months, the trend unemployment rate has been relatively stable, at around 5.7 to 5.8 per cent. We haven't seen this stability since the May 2007 to October 2008 period, when it remained around 4.2 to 4.3 per cent.” — Bruce Hockman, ABS Macroeconomic Statistics Division

Major events previous week (May 8 - 12)

Thursday, 18 May 2017 07:30 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 research@dukascopy.com

Day/Time (GMT)

Flag Currency Event Period Actual Forecast Previ-ous

MONDAY

06:00 am EUR Germany Factory Orders m/m March 1.0% 0.7% 3.5%

07:30 am GBP Halifax HPI m/m April -0.1% 0.1% 0.0%

TUESDAY

01:30 am AUD Retail Sales m/m March -0.1% 0.3% -0.2%

12:30 pm CAD Building Permits m/m March -5.8% 4.2% -2.8%

02:00 pm USD JOLTS Job Openings March 5.74M 5.67M 5.68M

WEDNESDAY

12:30 pm USD Import Prices m/m April 0.5% 0.2% 0.1%

09:00 pm NZD RBNZ Rate Statement

THURSDAY

11:00 am GBP Monetary Policy Summary

12:30 pm USD PPI m/m April 0.5% 0.2% -0.1%

FRIDAY

12:30 pm USD CPI m/m April 0.2% 0.3% -0.3%

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 research@dukascopy.com

EXPLANATIONS

Chart SMA (55) – Simple Moving Average of 55 peri-

ods SMA (200) – Simple Moving Average of 200

periods

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 research@dukascopy.com

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