Friday 13-10-2017 Lookback

Welcome to the weekly review where we look back over the results of some of the previous week’s economic indicators. It gives us the chance to reflect on how much expectations were met or missed and to examine a successful trade you could have made this week.

 

Event: German Trade Balance

Date: Tuesday 10 October 2017 at 06:00 GMT

Markets affected: EUR/USD, EUR/GBP

Trending hashtags: #eur, #trade

 

The euro gained on the back of the positive Trade Balance data out of Germany on Monday. The German trade surplus in August increased to 21.6 billion euro, surpassing expectations by 0.8 billion. Exports grew by 3.1% with the annual rate of growth dropping 7.2%, which was 0.8% worse than the previous reading in July. Imports also increased by 1.2%. Trade figures from Europe’s largest economy have significant impact on the region’s overall economic health and on the euro itself.

 

Event: UK Manufacturing Production (August)

Date: Tuesday 10 October 2017 at 08:30 GMT

Markets affected: GBP/USD, EUR/GBP

Trending hashtags: #gbp

 

The Sterling got a boost following the release of UK manufacturing production figures for August. Manufacturing doubled expectations by growing 0.4% for the month and 2.8% on an annualised basis. Industrial production grew 1.6% and the trade balance was at -2.872 billion. Good news continued for the British pound as wages grew 2.4% in the second quarter of this year against the 1.6% growth in the previous reading. Confidence in the Bank of England tightening monetary policy increased and we may be in for more rate hikes going into 2018.

 

Event: UK Inflation Report

Date: Wednesday 11 October 2017

Markets affected: GBP/USD, EUR/GBP

Trending hashtags: #gbp, #inflation

 

Inflation in the UK continues to be of concern as it reached its highest point in five years in August. Petrol and clothing price rises are two of the main protagonists behind the rise in inflation which is measured by the consumer price index which hit 2.9% in August – up from 2.6% in July. Rising prices are due to the devaluation of the sterling following the Brexit referendum.

 

Event: FOMC Meeting Minutes

Date: Wednesday 11 October 2017 at 18:00 GMT

Markets affected: EUR/USD, USD/JPY

Trending hashtags: #usd, #fomc

 

The FOMC meeting minutes from their last September meeting showed that the Federal Reserve will begin to unwind its balance sheet this month and reduce its bond portfolio. The impact of hurricanes Harvey and Irma has been taken in stride and Fed Chair Janet Yellen confirmed that more rate hikes are due in the future. Though some members expressed concern over low inflation and suggested that QE should stay in focus as they monitor inflation figures.

 

Event: Westpac Consumer Confidence – Australia

Date: Wednesday 11 October 2017 at 23:30 GMT

Markets affected: AUD/USD, AUD/NZD

Trending hashtags: #aud

 

Consumers in Australia were a lot more optimistic in October than pessimistic for the first time in 11 months according to the Westpac Consumer Confidence survey. The Sentiment indicator increased by 3.6% to 101.4 for the month versus the September reading of 97.9. Trade workers were particularly confident as residential building increased. Business confidence in a separate survey also showed the highest levels in 10 years, but last month’s disastrous retail sales figures show concern over the local economy. Last year Australia experienced only 2% growth and the Reserve Bank of Australia is expecting 3% for 2018.

 

Event: ECB Industrial Production (August)

Date: Thursday 12 October 2017 at 10:00 GMT

Markets affected: EUR/USD, EUR/GBP

Trending hashtags: #eur

 

The euro fell on Thursday against the greenback despite positive news from the Industrial Production Index which grew by 1.4% in August. Expectations were for just 0.5% increase and July’s figure was revised up from 0.1% to 0.3% growth. Pulling back to a yearly view, industrial production increased 3.8% against the same time last year, again beating expectations of 2.5%. The previous report was also revised upwardly from 3.2% to 3.6%. The failure of the EUR/USD price to reflect the good news from the Eurozone was possibly due to a good reading of the PPI in the US on the same day and the increased expectation of another rate hike this year.

 

Trade of the Week

Time in: Wednesday 11 October 2017 at 19:00 GMT
Market : AUD/USD
Investment: $500 with 200:1 leverage
Time out: Thursday 12 October 2017 at 09:00 GMT

P&L: $707

 

If you had bought the AUD/USD with a $500 margin at the price of 0.7775 and closed the deal after the Australian Westpac Consumer Confidence report on Wednesday at 23:30 GMT which saw the currency pair rise 0.7%, you might have increased your investment with a tidy $707 profit. Note this example does not take into account spread.

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