Your Weekly Fundamental View (Mar 06–Mar 10)

March 06, 2017 13:17

Need to know

The main focus of this week is on mostly on NFP and EUR Bid Rate decision. With the market expectation of 3 rate hikes this year by the Fed, all eyes will be on this week's NFP numbers. The key test for the Fed is to ensure that inflation is improving and full employment is maintained. However, if NFP is bulging above 200k, then it may give incentive to hike sooner rather than later. ECB is not expected to change the rate at this point.

Coming up

AUD Cash Rate and Rate Statement is released on Tuesday, 7 March.

The statement of the official cash rate is important in the overall currency evaluation. We usually see the official rate priced in the markets, so it tends to have less initial impact than this statement and related press conference. The statement is the primary tools of RBA Board communication with investors about monetary policy.

Why should you care? Short-term interest rates create immediate, short-term impact in the markets, by providing cues in the currency evaluation and short-term trade setups. Through the statement, traders can get a hint of future outcomes.

NZD GDT Price Index is out on Tuesday, 7 March.

GDT measures the change in the average price of dairy products sold at auction.

Why should you care? It's a leading indicator of the nation's trade balance with other countries.

CAD Trade Balance is released on Tuesday, 7 March.

Most Canadian exports are purchased by the US. If the number is positive, it means that more goods were exported than imported.

Why should you care? Export demands and currency demands are directly linked because foreigners must buy the domestic currency to pay for the nation's exports.

ADP Non-Farm Employment Change is due on Wednesday, 8 March.

The ADP National Employment Report measures levels of non-farm private employment. The report is based on the actual payroll data from about 24 million employees processed by the Automatic Data Processing, Inc. It represents the estimated change in the number of employed people during the previous month, excluding the farming industry and government.

Why should you care? Job creation is an important leading indicator of consumer spending. ADP data usually predict weaker or stronger NFP reading.

CNY Trade Balance is out on Wednesday, 8 March.

Export demand and currency demand are directly linked because foreigners usually buy the domestic currency to pay for the nation's exports.

Why should you care? Chinese economy has the strong impact on equities and Forex movement. Traders might want to pay attention to possible news spike trading of this release.

USD Crude Oil Inventories are due on Wednesday, 8 March.

A build-up in crude oil inventories usually signals decreasing demand from refiners. On the other hand, a drop would signal that refiners are still producing at elevated levels and the inventory overhang in oil products could continue.

Why should you care? This is primarily a US indicator, but it also affects CAD due to Canada's huge energy sector. Previous data showed a 1.5m barrels increase.

CNY CPI is out on Wednesday, 8 March.

The CPI data represents the change in the price of goods and services purchased by consumers.

Why should you care? This may be the most important inflation-related release due to its earliness and broad scope. This is among the few non-seasonally adjusted numbers and consumer prices account for a majority of overall inflation.

EUR Minimum Bid Rate Decision is due on Thursday 9 March.

The rate decision is usually priced into the market, and it tends to be overshadowed by the ECB Press Conference but nevertheless the EUR currency basket might get volatile.

Why should you care? Short term interest rates are very important factor in currency valuation. The decision and press conference might predict how rates will change in the future.

Non-Farm Employment Change and Average Hourly Earnings are released on Friday, 10 March.

Source: NFP employment change

NFP data represents the overall change in the number of employed people during the previous month, excluding the farming industry while Average Hourly Earnings represent the change in the price businesses pay for labour, excluding the farming industry.

Why should you care?

The Federal Open Market Committee and traders usually pay more attention to the core data. If the actual report comes better than the forecast, it will be good for the currency. This is possibly the most traded news release. The key test for the Fed is to ensure that inflation is improving and full employment is maintained, however, if NFP is bulging above 200k, then it may give incentive to hike sooner rather than later.