The holiday season is upon us, which means that most traders are off enjoying their vacations and that liquidity is slowly drying up. As I pointed out a couple of days ago, this means that a single piece of data could potentially result in a strong one-way move. There are still a bunch of catalysts on the economic schedule for this week so let’s take a look at which reports could rock the markets in the next few days.
Hollers from the Central Banks
The Reserve Bank of Australia and the Bank of Japan will be participating in the season of giving when they share their monetary policy meeting minutes this week.
The RBA will print its monetary policy meeting minutes on Tuesday at 12:30 am GMT. Recall that the RBA left its interest rates at 4.75% in December, so the report would probably show optimism for the economy in the near-term, with lingering concerns on the Euro zone’s debt problems.
Meanwhile, the Bank of Japan will also make headlines on Tuesday when it releases its interest rate decision and conducts a press conference on the same day. Many expect the BOJ to keep its interest rates at rock bottom at less than 0.1% as the yen’s rapid appreciation and global debt concerns continue to plague its markets.
In its interest rate decision last month, the BOJ detailed its plans to inject money in the economy. We heard about its plans to buy government bonds, exchange-traded funds, and the like. Will it increase its efforts this month, or will it just wish the markets a merry Christmas? Stick around to find out!
GDP: Economic Report Cards
New Zealand’s quarterly GDP
On Wednesday, New Zealand is scheduled to publish its GDP for Q3, which, according to RBNZ Governor Allan Bollard, should show a growth of around 0.8% quarter-on-quarter. That’s quite a bold prediction considering that Q2 only grew by 0.2%, far below the 0.9% growth the central bank had predicted.
This release is particularly interesting to catch because it comes with significant downside risks.
First, July and August both posted retail sales well below expectations. Adding to that, New Zealand’s trade deficit expanded rapidly during the third quarter and failed to match any of the optimistic figures forecasted. As you know, private consumption and net exports are huge contributors to GDP, so it’s only natural to expect GDP to fall short just as its components had.
In any case, be sure to tune in at 9:45 pm GMT on Wednesday. You don’t want to miss an opportunity to bag massive pips, do you? I thought so!
Canada’s monthly GDP
On Thursday at 1:30 pm GMT Canada will be publishing its own monthly GDP figures, right before the world takes off to celebrate the holidays. In the last four reports, we witnessed Canada’s GDP rise and fall month to month. Most recently, it posted a 0.1% decline in September.
What will it be this time around? Remember, weak demand from the U.S., its largest trading partner, has been a pain in the neck for Canada’s export-oriented economy, so it’s hard to imagine a strong GDP figure.
But take note that since this report is published on a monthly basis, it tends to have a milder impact compared to quarterly GDP reports. That being said, you might be interested in trading Canadian retail sales and CPI data as well.
At 12:00 pm GMT on Tuesday, we’ll see if inflation picked from last month’s 0.4% month-on-month increase. The CPI has been trending up since August. The question is if it can sustain this momentum and give the BOC more reason to hike rates.
We’ll also have the retail sales data on tap on Tuesday. If October can surpass September’s 0.6% increase, then CAD may find reason to rally. Don’t forget – the retail sales report is the primary gauge of consumer spending, which contributes to GDP, so this release might just give us a clue on how the GDP report will turn out the following day.
Data from Good Ole Uncle Sam
Y’all know how the U.S. economic reports tend to rock the markets so better stay on your toes when Uncle Sam releases its housing data and durable goods orders this week.
Housing Market Reports
Let’s start with the reports from the U.S. housing market. Home sales reports are usually considered leading indicators of economic activity because home-buying is often followed by more purchases. A home ain’t a home without furniture, appliances, and a well-stocked fridge, right?
That’s why you need to stay tuned for the release of the existing home sales report on Wednesday 3:00 pm GMT and the new home sales report on Thursday 3:00 pm GMT. Upbeat figures are expected for these reports since existing home sales are projected to climb from 4.43 million in November to 4.73 million in December while new home sales could rise from 283,000 to 300,000 during the month.
Durable Goods Orders
Another important set of reports from the U.S. is the durable goods orders and its core version, which are due Thursday 1:30 pm GMT. After sliding down by 3.4% in October, durable goods are expected to post a smaller decline of 0.5% in November. Meanwhile, core durable goods are estimated to rebound by 1.6% after its 2.7% drop in October.
Rising orders for durable goods such as automobiles, appliances, and computers, imply that manufacturers will have to step up production in order to meet increasing demand. This means that strong figures would be good for future economic activity while weak readings would spell meager prospects for the economy. If you’ve been paying attention in the Fundamental Analysis lesson in the School of Pipsology, you’d know what this means for the U.S. dollar!
So before you take off on your well-deserved vacation from the markets, don’t pass up the chance to grab more pips this week. Oh, before I forget, y’all might wanna stay tuned for some special holiday surprises I have in store!