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All three Central Banks confirmed their expectations, only Poloz made some rustle

All three Central Banks confirmed their expectations, only Poloz made some rustle

Transmitted Signals of the last week:

NO CORE INFLATION [M/M] [Buy 1], EURNOK went 35 pips after signal.

UK CPI [Y/Y] [Buy 1], GBPUSD went 15 pips after signal.

US CPI - CORE [M/M] [Sell 1], USDJPY went 10 pips after signal.

AU EMPLOYMENT CHANGE S.A. [Buy 1], AUDUSD went 10 pips after signal.

UK RETAIL SALES [M/M] [Buy 2], GBPUSD went 14 pips after signal.

US RETAIL SALES [M/M] [Buy 1], USDJPY went 10 pips after signal.

Christmas and New Year are approaching on the calendar, which significantly affected the frequency of important publications this week: they were moved together more densely (which positively affected the number of trading signals). Despite the dominance of the Central Banks, holding a meeting, only Stephen Poloz managed to achieve a real movement in the quotations of its currency.

USD: The Fed will continue tightening next year

On December 13, a meeting of the FOMC Committee, a part of the US Federal Reserve, took place. The result of the meeting is the increase of the key rate to the level of 1.5%. Thus, the rate in 2017 increased for the third time, which indicates positive changes in the US economy. Fed executives did not significantly change their forecasts for a key interest rate or inflation, although they now expect the economy to grow faster than anticipated in the forecasts published in September. In addition, they believe that the situation in the labor market will continue to improve.

On Wednesday, official data on the November US inflation were published. According to the report of the country's trade department, the CPI (the indicator showing the consumer price index) increased by 0.4% compared to October values, - exactly as expected by investors. At the same time, the basic price index for goods sold at retail was increased by only 1.7% on a year-on-year basis (forecast statements - an increase of 1.8%).

On Friday, the dollar collided with a new round of political pressure. Republican senators proposed to change the tax bill reform in the US, proposed by the president Donald Trump.

The dollar continues to be under pressure, which began in the past weeks.

The US Federal Reserve announced the continuation of the program of phased increases in the key rate, after which the indicator could grow up to 2.5% by the end of 2018. The pace will be maintained at the current level, which means that we can expect three more increases in the interest rate in 2018. Political risks are still significant and remain relevant.

EUR: Everything is stable enough

The ECB’s interest rate, as it was widely assumed, remained at zero level.

Also, the deposit rate in the European zone remained the same. The ECB Board did not raise it from the current level of -0.4%. And the marginal lending rate remained at 0.25%.

Heads of the ECB again confirmed that they will act in accordance with the decision taken in October and beginning from January they will reduce the volume of asset purchases to 30 billion euros. The program itself will be in effect until September 2018 or longer.

GBP: The next Brexit frontier has been overcome

On Tuesday, December 12, data on inflation in the UK were published.

According to the report, the growth of prices for consumer goods in November was 0.3%, and the basic consumer index for 11 months increased by 2.7%.

Thus, by the end of the year, the target inflation rate in the UK will be exactly exceeded. Recall that in 2017, the inflation of the British pound, according to the instruction of the country's treasury, was to be 2%.

The Bank of England predicts a gradual reduction in inflation in 2018, but there is also the opinion that this process may be faster than anticipated, which significantly reduces the need for a subsequent increase in the interest rate of the Bank of England.

Negotiations on Brexit overcame one more frontier: on Friday, EU leaders decided to proceed to a discussion of future relations between the Great Britain and the EU. May and the leaders of her party must decide which EU trade rules and standards will operate in the UK. Close matching of the rules may help to achieve a successful trade agreement and solve some difficulties, for example, how to avoid a tight border with Ireland.

NZD: New head of the central bank of the country has been appointed

Since March 27, 2018, in New Zealand, the Governor of the Reserve Bank will be changed. This post will be replaced by the current deputy governor, Adrian Orr, instead of the finalizing Grant Spencer.

According to Grant Robertson, who heads New Zealand's financial department, Orr is an excellent candidate for this position. According to the head of the Ministry of Finance, Adrian Orr, during his time as deputy governor, acquired the necessary experience and sufficiently acquainted with the actual economic agenda for New Zealand.

Members of the Reserve Bank Board associate themselves with G. Robertson. During the voting for the candidature of Adrian Orr, 100% of the vote was cast.

The markets reacted to the news about the change of the head of the RBNZ. Within an hour after the publication of the news, quotes in the pair NZD/USD rose from $0.6854 to $0.691.

CAD: I misunderstood the Governor of the Bank of Canada

On Thursday, the Canadian rose to the whole pattern against his American opponent as a result of the speech of Stephen Poloz, the manager of the Bank of Canada. The market reacted sharply with USDCAD sales to the phrase "Bank of Canada more confident less stimulus needed. I summarize Stephen's speech, market participants came to the conclusion that there will be the next series of increases in the interest rates, but Poloz hurried to cool down his ardor and gave an interview for the press in which he was already more "cold": the myth of the soon rate increase was somewhat debunked.

 

 

In any case, in 2018, there will be fluctuations in this plane, in the moods of rate increases, which will affect volatility.

All last important publications of this year will be held next week

Wednesday-Thursday-Friday, these three days will be spent the outgoing year 2017 homeward, as in these days the last important statistics of this year will be published. The first trade of 2018 will be held on Tuesday, January 2.

In the trading signals calendar for the next week, be sure to pay attention to:

NZ GDP - quarterly GDP growth data for New Zealand, Wednesday/Thursday

CA CPI - Canadian inflation data, Thursday 

Joint publication on Friday CA Retail Sales - Core and CA GDP

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