Weekly Outlook of Financial Markets for August 12-16

The commodities markets are starting to pull up: Last week leading commodities including gold and silver rallied. Further, leading currencies including Aussie dollar and Japanese yen also appreciated against the US dollar during last week. Will the US dollar continue to weaken? Will commodities further advance their rally? This week several reports and events may affect the financial markets. These include: BOE rate decision, U.S core CPI and PPI, Philly fed survey, Japan’s GDP for the second quarter, U.S housing starts, Canada’s manufacturing sales, GB CPI, U.S retail sales, U.S federal budget update, German ZEW economic sentiment, and U.S. jobless claims.  Here is an economic outlook for the week of August 12th to August 16th regarding the U.S, Euro Area, Canada, Japan, and Great Britain.   

(All times GMT):

Monday, August 12th

00:50 –Japan Second Quarter GDP 2013 (preliminary): During the first quarter of 2013, Japan’s GDP grew by 4.1% in annual terms. The current expectations are that the second quarter of 2013 grew in annul terms at a faster pace than in the preceding quarter; if the growth rate will continue to rise, this may positively affect commodities prices;

19:00 –U.S. Federal Budget Balance: This upcoming report will refer to July 2013; this report indicates the government debt growth and thus may affect the changes in U.S dollar. In the recent report regarding June the deficit fell by $116.5 billion; if the deficit will continue to contract, it could influence U.S policymakers their decision about future budget cuts;

Tuesday, August 13th

00:50 – Minutes of Bank of Japan’s Monetary Policy Meeting: Bank of Japan didn’t change it monetary policy. The minutes may offer insight regarding behind the future plans of BOJ; this news may affect the Japanese yen and consequently commodities prices;

09:30 – GB CPI (July 2013): In the previous report regarding June 2013, the CPI increased again to an annual rate of 2.9%; if the inflation rate will continue to advance it may eventually affect the decision of BOE regarding changes to its monetary policy;

10:00 – German ZEW economic sentiment: The forthcoming report will refer to the ZEW indicator of economic sentiment for Germany for July. In June, the ZEW indicator for Germany decreased to 36.3 points; if Germany’s economic sentiment will keep falling, the Euro will plausibly weakened against other currencies including the US dollar;

10:00 –EU Industrial Production: this report will show the monthly changes in the industrial production as of July; as of June, the production fell by 0.3%; this report may affect the euro/usd;

13:30 –U.S. Retail Sales Report: this monthly report presents the developments in retail sales and food services for July; in the recent report regarding June, the retail sales rose again by 0.6% from the last month; gasoline stations sales also increased by 0.7% in June compared to May 2013; this report could signal the developments in U.S’s gasoline demand and thus may affect U.S oil prices;

Wednesday, August 14th

09:30 – Great Britain Claimant Count Change: As of last month, the number of unemployed in GB had declined by 21.2k; the rate of unemployment remained flat at 7.8%;

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

10:00 –EU Second Quarter GDP 2013 (preliminary): In the first quarter of 2013, the EU economy contracted by 0.2%. If the EU economy will continue to contract, this could drag down the Eur;

Tentative – German 10 Year Bond Auction: the German government will have its monthly bond auction; in the last bond auction, which was held at the middle of July, the average rate reached 1.57% – its highest level since this year;

13:30 – U.S. Producer Price Index: This report will present the developments in the PPI during July 2013, i.e. the inflation rate from the producers’ side. In the last report regarding June, this index for finished goods rose by 0.8% compared with May’s level and the core PPI by 0.2%; this news might affect commodities prices;

15:30 – U.S Crude Oil Stockpiles Weekly Update: the EIA (Energy Information Administration) will publish its weekly update on the U.S oil and petroleum stockpiles for the week ending on August 9th;

Thursday, August 15th

09:30 – GB Retails Sales (July 2013): This report shows the changes in the retails sales in Great Britain for July 2013. It may affect the path of the British Pound currency. In the previous report regarding June 2013, retails sales slightly rose by 0.2%;

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 August 9th; in the last report the jobless claims rose by 5k to reach 333k; the next weekly report may affect the U.S dollar and consequently commodities and equities markets;

13:30 – U.S Core Consumer Price Index: This monthly report will refer to the main developments in the core consumer price index for July 2013. According to the U.S Bureau of Labor statistics, during June, the CPI rose by 0.5% (month-over-month); the core CPI edged up by 0.2%; the core index increased over the past twelve months by 1.6%.

14:00 – U.S. TIC Long Term Purchases: The Treasury International Capital monthly report will present the shifts the purchases and sales of US long term treasuries for June 2013. In the recent report regarding May 2013, the net foreign sales of U.S Treasuries longer-term notes reached a deficit of $27.2 billion;

15:00 – Philly Fed Manufacturing Index: This monthly survey estimates the growth of the US manufacturing sectors. In the recent survey regarding July, the growth rate rose again from +12.5 in June to +19.8 in July. If the index will continue to recover, 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 marketwill pertain to the latest developments in natural gas production, storage, consumption and prices as of August 9th;

Friday, August 16th

10:00 – Euro Area CPI: Based on the latest update the annual CPI rose to 1.6%, which is still below ECB’s target inflation; if the inflation will continue to rise, it could lower the odds of ECB cutting again its cash rate;

13:30 – Canada Manufacturing Sales (June 2013): This report will refer to the manufacturing sales in Canada as of June. It may affect the USD/CAD currencies pair, which is strongly correlated with commodities. In the previous report regarding May 2013, manufacturing sales increased by 0.7%;

13:30 – U.S. Housing Starts: The U.S Census Bureau will come out with its U.S housing starts monthly update for July 2013; this report was historically linked with gold price – as housing starts falls, gold prices tended to rise the next day (even when controlling to the U.S dollar effect); in thelatest monthly report, the adjusted annual rate reached 836,000 in June 2013, which was 9.9% below May’s rate;

13:30 – U.S. Building Permits: In the previous update, during May building permits declined by 7.5% (M-o-M) as the adjusted annual rate of building permits reached 911,000. If building permits will continue to dwindle, it may indicate that the U.S housing market’s recovery (from this aspect) is slowing down (the recent U.S building permits update);

14:55 – UoM Consumer Sentiment (preliminary):University of Michigan will publish its preliminary consumer sentiment monthly report; this survey could offer information regarding the latest developments in U.S consumers’ sentiment; According to the previous update, the sentiment index rallied to 83.9.

 

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