The Bank of Canada stepped aside and promised to return after observing economic statistics, so: retail sales and the consumer price index published on Friday seem to have pecked up all the crumbs that were supposed to help the regulator return to the path of tightening monetary policy.
Statistics put the Bank of Canada on standby
Canadian retail sales, as well as the consumer price index, showed a reduction:
CA CPI - Core [m/m] 0.1% (-0.2%) 0.3 %
CA CPI [m/m] 0.2% (-0.1%) 0.3 %
CA Retail Sales - Core [m/m] -0.7% (-1%) 0.3 %
CA Retail Sales [m/m] -0.3% (-0.8%) 0.5 %
And, if earlier the Bank of Canada declared that it had gone into the "observer" regime, then it seems that it is not worth waiting for its return to the hawk flock, and USDCAD goes to the whole pattern upwards at the time of this publication of the indicators.
Bank of England can be between the anvil and the hammer
The consumer price index remains at a significant distance from the target level of the Bank of England (2%), new data published on Tuesday recorded 3%.
Next (the same day), the governor of BoE, Mark Carney, made a speech and noted the acceptability of such an inflation rate, which, in his opinion, "will exceed a little more than 3 percent, as the price increase related to the Brexit will push the economy." At the same time, Carney noted the "slow" increase in wages in the country.
Most economists surveyed by Reuters believe that the Bank of England will conduct a number of changes in monetary policy at its next meeting in November, but most also said that it would be a mistake.
Wednesday somewhat calmed the pound and stopped its fall after Carney's speech on Tuesday: the increase in wages was published just above forecasts, and its previous release was also revised upwards.
UK Average Earnings [in. bonus] [3m/y] 2.2% (0.1%) 2.1 % 2.1%
But retail sales on Thursday started talking differently, a significant outflow even from the forecasted ones is 0.1%.
UK Retail Sales [m/m] -0.8% (-0.7%) -0.1 %
UK Retail Sales [ex. fuel] [m/m] -0.7% (-0.8%) 0.1 %
Merkel sends a positive message to Therese May in Brexit. The Prime Minister of Great Britain noted that she had made every effort in the Brexit negotiations, and now the turn for the EU. She also added: the EU and the UK should be optimistic and ambitious about what can be achieved as a result of Brexit. On Friday, EU leaders acknowledged that some progress had been made at the Brexit negotiations, and said the bloc should prepare to negotiate terms of trade with the Great Britain, which could begin in December.
Next week, the data of the UK GDP of the third quarter of 2017 will be presented: here the Bank of England may be between the anvil and the hammer, and we will also talk about this on this page.
The dollar was bored and "watched" for political news: last week, any important economic indicators were not planned and presented.
The US senators approved the country's budget for 2018 by a majority vote.
It is believed that this document makes it possible to conduct the tax reform in the country which was promised by the President of the United States Donald Trump.
The nearest interesting blow to quotes on the part of statistics may turn out to be on Friday, October 27, when the GDP data for the third quarter of 2017 will be presented.
The service life of J. Yellen as head of the Federal Reserve expires in early February. According to sources, on Thursday, D. Trump held a meeting with the current chairman of the Fed, Janet Yellen, and he has not yet made a final decision.
According to the futures version from the CME Group, the probability of an increase in the Fed's interest rate for the week increased by 9%
Mario Draghi fell silent before the storm
The market response was tepid in relation to the speech of the head of the European regulator Mario Draghi at the ECB conference devoted to structural reforms in the euro area. He did not make any comments on the monetary policy but noted that the ECB's low rates not only do not hinder but also stimulate the implementation of reforms.
Spain will suspend the autonomy of Catalonia in response to the threat of independence. According to the information of the Spanish press, Catalonia postponed the declaration of independence until next week.
Oceania remains neutral
The quarterly increase in the consumer price index (inflation) of New Zealand is slightly above the level of the forecast:
NZ CPI [q/q] 0.5% (0.1%) 0.4 %
NZ CPI [y/y] 1.9% (0.1%) 1.8 %
And the situation on the labor market in Australia can be soon characterized as an optimistic one, statistics published on Thursday are above forecasts:
AU Unemployment Rate s.a. 5.5% (-0.1%) 5.6 %
AU Employment Change s.a. 19.8 (4.8) 15
If everything is not clear with the RBNZ, the Reserve Bank of Australia is more likely to be the first to signal a subsequent tightening of its monetary policy. We will wait for the quarterly publication of the Australian CPI next week...
Report on transmitted trading signals
Additional general comments on trading signals with the purpose of increasing the understanding that occurs among subscribers to trading signals.
The deviation of the news from its forecast was + 0.1%, which caused the purchase by the trigger of the first level. This scenario, in the previous weekly review, was determined by rfr as "pessimistic" (the movement for sale could be better), here's what we wrote in the review: “Since NZDUSD showed unjustified growth this week, CPI data below the forecast may be the most pleasant for volatility, which can significantly knock down the NZD. The sales scenario on this trading signal will be perceived by us as optimistic one.” As you can see, liquidity turned out to be extremely low for purchase, and most of those who wished to use the trigger + 0.1% were in a very unsuccessful position.
The first level sales trigger is broken. You can also find a preliminary review in the weekly review, and the "pessimistic" scenario (in terms of news trade) was executed, however, the movement proved to be acceptable and very pleasant.
Trade on retail sales with the support of the consumer price index. Since both indicators were included in the conflict prevention system, the natural signal delay was followed (the trades are on the second publication, if there is no conflict from the first one, in the case if the publications are not simultaneous). Slippage is quite high for this reason; nevertheless, the pair overcame 100 reaction points (it was possible to take only about 30 points to the trade).
Conclusion: evaluate the market before the trade and try not only to use all available triggers but also to choose the most suitable for you and your broker. Begin at least by reading weekly reviews. Determine before trades what will be stronger with equal triggers: buy or sell. If you use two or more indicators for simultaneous trade, stay alert twice!
If you stopped your learning of our Forex course on the first module, you probably will not stay long at Forex. Apparently, you activated the autoclick only for the sake of "slippy clicking", respectively, and you click over faster... Autoclick is the oldest, attractive and simple additional strategy, but if you raise the hood and look there more closely, everything will be much more complicated (and interesting).
If you still have questions about transmitted or not transmitted signals, write your questions in the comments.
Calendar of upcoming trades
AU CPI, Wednesday, important, quarterly!
UK GDP, Wednesday, especially important, quarterly!
CA BOC Interest Rate, Wednesday, important, but the probability of a signal is minimal.
US EIA Crude Oil Stocks Change, only for those traders who "understand" oil
SE Riksbank Interest Rate, calls for special attention.
EU ECB Interest Rate Decision, the minimum probability of a signal, more attention to the Mario Draghi’s press conference.
US EIA Natural Gas Storage Change, not recommended for trade during the heating season
US GDP Annualized, especially important, quarterly.
The full calendar on the page of trading signals.
Note that there is a trading plan-description for each indicator on a separate page, which is available through the link from the calendar.
Special opinion: what to look for in the market sentiment trading next week
The pound may be somewhat "tricky". The fact is that the growth of inflation usually indicates the growth of the economy, the period when a fast economy pushes inflation, which is now absent in the Great Britain. The growth in the consumer price index is due to the fall of the pound after Brexit, nothing more, and despite pressure on the Bank of England from rising inflation, the feasibility of tightening monetary policy remains in doubt, although the Bank insists on raising rates. In view of this, it would not be a bad thing to really assess the state of the economy, and by the way, we will get a publication of the UK GDP for the third quarter of 2017 as early as this Wednesday, October 25 (moreover, on this day the Bank of England's latest quarterly inflation report will be published and heard ). Note that Mark Carney yet refuses to talk about specific terms for raising the interest rate. Accordingly, let them forgive us in London: the GDP output below the forecasts could be much more cheerful for us rather than vice versa.
Forthcoming meeting of the European Central Bank may turn out to be a turning point for the Euro, as markets are keenly awaiting a signal for the gradual completion of the ECB stimulus program. It is believed that the central bank will reduce the program for the purchase of assets up to 30 billion euros per month from the current level of 60 billion euros per month and extend it for nine months, starting in January. If Mario Draghi again starts to fawn upon by distracting the public from its expectations, the euro will be subject to a rally of sales. Although, the chance that the market will receive its expectations on the table remains. Earlier, the beginning of changes was expected in September, but the head of the ECB missed this turn. In the end, very carefully behave on Thursday, as the publication of the interest rate of the ECB is likely to be ignored by quotations, and the apogee will come during Draghi's speech, and there is such a double sensation that he can again "do out of". The argument of such an idea can be his sluggish extreme speech (in support of a low interest rate) and that we still have two whole months of 2017 before its end and there is "ambiguity" with Brexit + with Catalonia ...
The Reserve Bank of Australia stays neutral, which means that we can consider the forthcoming publication of the quarterly CPI with particular severity. It would be great if the AUD kept its positions until the release, and then we would get the fact below the forecast, it would be an optimist’s scenario (at least it seems to us now, on Friday, 20.10).
Quarterly GDP data of Great Britain may well annoy Mark Carney. Inflation is up to 3%, Mark promised to raise the interest rate. But if GDP is published in a negative way, then the economic canons will be suppressed. We will see a weak economy with high inflation, which means that the issue of raising the rate may not be as relevant as the market wants that now, and we will see a wonderful rally of GBP. So, this scenario will be called optimistic (in terms of news trading).
It is worth noting the completion of the powers of the head of the Federal Reserve in February next year, as well as the fact that there is no certainty that Janet Yellen will continue to stand at the wheel of the Fed. In terms of news trading, we are interested in replacing the head of the Fed (no matter how strange it sounded). Any instability is only an additional "plus" for volatility, and the "Doves" are at the wheel of the FOMC since the beginning of the era of Ben Bernanke - Janet Yellen, and this period has lasted too long... New blood and energy are welcome! The more changes, the more opportunities: just look at how many trading opportunities were opened by Brexit, Trump's unexpected victory, etc other little things...