Your Weekly Fundamental View (Jan 09-13)

January 09, 2017 13:30

Need to know

This week's main focus is on CNY trade balance and USD retail sales on Friday. Chinese trade balance is important as we have seen CNY depreciation lately, and it represents the most important indicator of China's export machine.

This is important for CNY and major trading partners, including NZD and AUD.
USD retail sales will show the post Christmas/New Year sales details, normally a big trading period, and is the major component of US GDP's Consumption.

Coming up

Australian Retail Sales is released on Tuesday, 10 January.

These news represent a change in the total value of sales at the retail level.

Why should you care? It measures consumer spending that holds the majority of economic activity.

Chinese CPI is released on Tuesday, 10 January.

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

Why should you care? CPI is accounted for a majority of overall inflation. Central banks use inflation data to estimate interest rates. Rising prices should lead to raising interest rates.

GBP Manufacturing Production comes out on Wednesday, 11 January.

Manufacturing makes up the most of total Industrial Production and tends to dominate the market impact.

Why should you care? If the actual result comes out better than predicted, the GBP could bounce. The opposite is true if the result comes out worse than expected.

USD Crude Oil Inventories are due on Wednesday, 11 January.

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.

This is primarily a US indicator, but it also affects CAD due to Canada's huge energy sector. Previous data showed a -7.1M barrels decrease.

Why should you care? The price of petroleum products influences inflation, which impacts oil-dependent industries. CAD is hugely affected by this report.

US Unemployment Claims are released on Thursday, 12 January.

These claims are the earliest national economic data, representing the number of individuals who filed for insurance for the first time during the past week. If the actual result comes weaker than the forecast, it would be deemed good for the currency.

Why should you care? The number of unemployed people is an important signal of the overall economic health and could hint at future monetary policy steps.

USD Retail Sales and PPI are released on Friday, 13 January.

Retail sales represent a change in the total value of sales at the retail level while PPI is change in the price of finished goods and services sold by producers.

USD retail sales will show the post Christmas/New Year sales details, and is the major component of US GDP's Consumption. PPI is a leading indicator of consumer inflation.

Why should you care? Both reports should move the USD currency basket.

CNY Trade Balance comes out on Friday, 13 January.

Trade balance represents a difference in value between imported and exported goods during the previous month. Chinese trade balance is important as we have seen CNY depreciation lately, and it represents the most important indicator of China's export machine.

Source: Chinese Balance of Trade for last 5 years

Why should you care? Both reports could move AUD, NZD and Equities. Export demand impacts production and prices at domestic manufacturers.