Your weekly fundamental view (Oct 17-21)

October 17, 2016 15:46

Need to know

This week's main focus is Chinese GDP and ECB press conference that will also provide the information about minimum bid rate decision. Chinese data might cause overnight volatility on equities, Australian Dollar and Japanese Yen. Don't forget that CNY (Chinese) data usually have a large impact on most AUD and JPY pairs during Asian session, Frankfurt open and early London open. On the other hand, ECB conference should provide investors with guidance and cues about future ECB economic policy. Volatility in most EUR and USD pairs rise during the time of conference.

Coming up

NZD CPI is released on Monday, 17 October. Consumer prices are an important gauge of a nation's overall inflation. Why should traders care? Currency valuation always takes inflation into account as rising prices might lead central bank to raise interest rates.

GBP CPI is released on Tuesday, 18 October. This is considered the UK's most important inflation data due to the fact that it is used as the central bank's inflation target. Why should traders care? If the actual result comes out greater than the forecast, it should be good for currency and vice versa. Traders might trade this news in the form of spike trading.

USD Core CPI comes on Tuesday, 18 October. As the FOMC usually pays more attention to the Core CPI data than to CPI, this release is important to traders. Why should traders care? If the actual result comes out greater than the forecast, it should be good for currency and vice versa. Traders might trade this news in the form of spike trading.

CNY GDP will be released on Wednesday, 19 October. Chinese GDP data represents the quarterly value compared to the same quarter a year earlier. Chinese data might cause overnight volatility on equities, Australian Dollar and Japanese Yen. Why should traders care? China's influence on the global economy and investor sentiment is huge.

Crude oil inventories are released Wednesday, 19 October. 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 4.9m barrels increase. Why should traders care? The price of petroleum products influences inflation, which impacts oil-dependent industries.

CAD interest rate decision is released on Wednesday, 19 October. The Bank of Canada will release the information about overnight rate – the interest rate at which major financial institutions borrow and lend overnight funds between themselves. Why should traders care? Any result that is diverging from the forecast impacts the nation's economy and tends to create spikes on CAD currency basket.

ECB minimum bid rate decision with press conference are scheduled on Thursday, 20 October. ECB conference should provide investors with guidance and cues about the future ECB economic policy. Volatility in most EUR and USD pairs rise during the time of conference as the rate decision itself is usually priced into the market. Why should traders care? Minimum bid rate, also known as Refi or Repo rate, measures the interest rate on the main refinancing operations that provide the bulk of liquidity to the banking system.

US unemployment claims are released on Thursday, 20 October. 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 traders care? The number of unemployed people is an important signal of the overall economic health and could hint at the future monetary policy steps.

CAD Core retails sales on Friday, 21 October. This data measures the change in the total value of sales at the retail level, excluding automobiles which account for 20% of the retail sales. Why should traders care? Any big deviation from the forecast might bring volatility to CAD currency basket.