Weekly Outlook of Financial Markets for July 15-19

The commodities markets are heating up again: Last week leading commodities such as oil, gold and silver prices sharply increased. Moreover, leading currencies including Euro, Japanese yen and Canadian dollar also appreciated against the US dollar during last week. Will the USD continue to pull back? Will commodities markets heat up again? This week several reports, testimonies, decisions and events may affect the financial markets. These include: Bernanke’s testimonies, , U.S core CPI, Philly fed survey, China’s GDP for the second quarter, U.S housing starts, minutes of RBA’s meeting, Canada’s retail sales, GB CPI, U.S retail sales, German ZEW economic sentiment, G20 Summit, and U.S. jobless claims.  Here is an economic outlook for the week of July 15th to July 19th regarding the U.S, Euro Area, Canada, China, Australia, and Great Britain.   

(All times GMT):

Monday, July 15th

03:00 –China First Quarter GDP 2013: during the first quarter of 2013, China grew by only 7.7% in annual terms; China’s economy grew by 7.6% in the second quarter of 2012. The current expectations are that the second quarter of 2013 grew in annul terms by a slower pace than in the last quarter; if the growth rate will continue to dwindle, this may adversely affect commodities prices;

13:30 –U.S. Retail Sales Report: this report will present the monthly changes in the retail sales and food services for June; in the recent report regarding May, the retail sales slightly rose by 0.3% from the last month; gasoline stations sales slipped by 0.2% in May compared to April 2013; this report could signal the developments in U.S’s gasoline demand and thus may affect oil prices in the U.S;

00:30 – Minutes of Reserve Bank of Australia’s Monetary Policy Meeting: The Reserve Bank of Australia left its interest rate unchanged at 2.75%; the minutes of the latest monetary policy meeting may offer some information regarding behind the decision; this news may affect the Australian dollar and consequently commodities prices;

Tuesday, July 16th

09:30 – GB CPI (June 2013): This report may affect the British Pound currency. In the last report regarding May 2013, the CPI rose to an annual rate of 2.7%;

Tentative – Bank of England Inflation Letter: this report will come out only if the annual inflation falls below 1% or above 3%;

10:00 – German ZEW economic sentiment: The upcoming report will pertain to the ZEW indicator of economic sentiment for Germany for June. In May the ZEW indicator for Germany slightly increased to 38.5 points; if Germany’s economic sentiment will keep rising, the Euro will plausibly strengthen the Euro against other currencies such as the US dollar;

10:00 – Euro Area CPI: according to the latest update the annual CPI rose to 1.4%, which is still well below ECB’s target inflation; if the inflation will change direction and decline, it could raise the odds of ECB cutting again its cash rate;

13:30 – Canada Manufacturing Sales (May 2013): This report will refer to the manufacturing sales in Canada as of May. It may affect the USD/CAD currencies pair, which is strongly linked with commodities prices. In the previous report regarding April 2013, manufacturing sales fell by 2.4%;

13:30 – U.S Core Consumer Price Index: This monthly report will refer to the main developments in the core consumer price index for June 2013. According to the U.S Bureau of Labor statistics, during April, the CPI inched up by 0.1% (month-over-month); the core CPI slightly rose by 0.2%; the core index increased over the past twelve months by 1.7%.

14:00 – U.S. TIC Long Term Purchases: The Treasury International Capital monthly report will present the changes the purchases and sales of US long term treasuries for May 2013. In the recent report regarding April 2013, the net foreign sales of U.S Treasuries longer-term notes reached a deficit of $37.3 billion;

Wednesday, July 17th

09:30 – Great Britain Claimant Count Change: This report will show the changes in the number of unemployed in GB; as of last month’s report this figure had declined by 8.6k; the rate of unemployment remained unchanged at 7.8%;

09:30 –MPC Asset Purchase and Rate Votes: in the latest MPC meeting, the Bank kept the rate unchanged at 0.5% and the asset purchase program at £375 billion; this vote will shows how many MPC members voted on any changes to the asset purchase program or interest rate;

Tentative – German 10 Year Bond Auction: the German government will have its monthly bond auction; in the previous bond auction, which was held at the middle of June, the average rate reached 1.55% – its highest level since January 2013;

13:30 – U.S. Housing Starts: the U.S Census Bureau will publish its U.S housing starts monthly update for June 2013; this report was historically correlated with gold price – as housing starts rise, gold prices tended to fall the next day (even when controlling to the U.S dollar effect); in the previous monthly report, the adjusted annual rate reached 914,000 in May 2013, which was 6.8% below April’s rate;

13:30 – U.S. Building Permits: in the previous update, building permits fell during May by 3.1% (M-o-M) as the adjusted annual rate of building permits reached 974,000. If building permits will continue to fall, it may indicate that the U.S housing market’s recovery (from this aspect) is slowing down (the recent U.S building permits update);

15:00 – Bank of Canada’s Overnight Rate: The Bank of Canada will decide the Canadian overnight rate, which remained unchanged at 1%. The BOC may keep its policy and maintain its interest rate at 1%; the economic developments in Canada might prompt BOC to change its cash rate;

15:00 – Bernanke’s Testimony: Bernanke will testify in the U.S. House of Representatives before the Committee on Financial Services. The title of the speech is “Semiannual Monetary Policy Report to the Congress “. Following Bernanke’s remarks from last week and the minutes of the FOMC meeting, this testimony could offer some additional information regarding the future steps of the Fed. If this testimony will change the current market expectations regarding the timing as to when will the FOMC start tapering QE3, this could affect commodities prices and the direction of the US dollar;

15:30 – U.S Crude Oil Stockpiles Weekly Update: the EIA (Energy Information Administration) will publish its weekly report on the U.S oil and petroleum stockpiles for the week ending on July 12th; in the recent report for July 12th, stockpiles fell again by 7.2 ml bl to reach 1,818.0 ml bl.

15:30 – Bank of Canada’s Monetary Policy and Press Conference: The Bank of Canada will publish its quarterly monetary policy update and will also have a press conference; if there will be big headlines in this press conference it could affect the Canadian dollar;

Thursday, July 18th

09:30 – GB Retails Sales (June 2013): This report will show the changes in the retails sales in Great Britain for June 2013. It may affect the path of the British Pound currency. In the previous report regarding May 2013, retails sales changed direction and rose by 2.1%;

Tentative – Spanish 10 Year Bond Auction: Spain will issue its monthly with bond auction; in the last bond auction, which was held at the middle of June, the average rate rose to 4.77% – the highest rate since March 2013;

13:30 – U.S. Jobless Claims Weekly Report:  this weekly update will refer to the changes in the initial jobless claims for the week ending on July 13th; in the last report the jobless claims bounced back by 16k to reach 344k; the next weekly report may affect the U.S dollar and consequently commodities and equities markets;

15:00 – Bernanke’s Testimony: Bernanke will also testify this time before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate. The title of the speech is the same as in the testimony given in Congress. The big issue will be the answers Bernanke will give to the Committee and how his answers may affect the market’s perspective on the Fed’s next steps;

15:00 – Philly Fed Manufacturing Index: This monthly survey projects the growth of the US manufacturing sectors. In the last survey regarding June, the growth rate bounced back from -5.2 in May to +12.5 in June. If the index will continue to rally, it may positively affect not only U.S Dollar but also U.S equity markets and commodities (the previous Philly Fed review);

15:30 – EIA U.S. Natural Gas Storage: the EIA weekly update of the U.S. natural gas market will pertain to the latest developments in natural gas production, storage, consumption and prices as of July 12th; in previous weekly report, natural gas storage increased by 82 Bcf to 2,687 Bcf;

Friday, July 19th

13:00 – Canada’s core CPI: This report will refer to the CPI and core consumer price index (controlling the volatile components such as energy, fruit and vegetables) for June 2013. Based on the recent Canadian CPI report for May, the core CPI edged up by 0.2%. This report might affect the direction of the Canadian dollar, which is also strongly correlated with crude oil prices;

All Day (two days) – G20 Summit: this is a two day Summit; if the G20 countries will come up with big headlines from this Summit it may affect financial markets. This G20 Meeting could revolve the policies of U.S, Canada, China, UK and Japan.

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