Your weekly fundamental view (August 15-19)

August 15, 2016 14:21

Need to know

The main focus of this week, are the USD CPI and Building Permits reports released Tuesday, August 16. Building Permits tell us about the annual number of new residential building permits issued during the previous month. Construction activity accounts for spending. More spending is good for currency and vice versa. Meanwhile, CPI represents the change in the price of goods and services purchased by consumers - which might lead the central bank to raise interest rates.

Coming up

The NZD Unemployment rate and PPI input, is released Wednesday, 17 August. Total workforce percentage unemployed and actively seeking employment during the previous quarter, is important for overall economic health. Previous data showed 5.7% , while the market is predicting 5.3% - a 0.4% drop in unemployment. PPI input measures change in the price of goods and raw materials purchased by manufacturers. Why should traders care? The unemployment rate is connected to consumer spending and PPI is the leading indicator of consumer inflation. If the result is better than forecast, it is good for currency.

UK's claimant count is released Wednesday, 17 August. Claimant count represents a shift in the number of people claiming unemployment-related benefits during the previous month. Why should traders care? Unemployment rate governs future monetary policy that Central banks decide upon. Previous result showed 0.4k change while the market predicts 5.2K change. If the actual result comes out lower than expected it will be good for the currency.

UK's average earnings are released on Wednesday, 17 August. Average earnings represent the change in the price businesses and the government pay for labour, including all the bonuses. Current forecast is 2.5% and if the actual result comes out better than expected, it will be good for currency. Why should traders care? When businesses pay more for labour, the higher costs are usually passed on to the consumer and this counts as an additional indicator of consumer inflation. Good data usually spikes GBP vs USD, which traders use for short term momentum trading.

FOMC meeting on Wednesday, 17 August. FOMC will give us cues about risks to the overall economic outlook. Why should traders care? A more hawkish statement is deemed to be good for currency, while a dovish statement usually tanks the US dollar.

Employment change in Australia, 18 August. Previous results showed 7.9k jobs were added in the last month, while the market predicts 10.2k additional jobs this month. Why should traders care? Consumer spending is another leading indicator of overall economic activity and job creation accounts for it. If the result is better than expected, it will be good for AUD.

Core CPI in Canada, 19 August. Consumer price index data is the main scheduled event risk for the CAD currency this week. It is important to note that CPI accounts for the majority of overall inflation. Core data is more important than the standard CPI report. Why should traders care? If the actual result is better than forecast, CAD should gain immediate strength against other currencies - especially the US dollar.