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Four rate increases in 2018

Four rate increases in 2018

USD: Probably Housing starts return to the main reports table

Against the backdrop of speeches by the Fed’s representatives as well as against the backdrop of incoming statistics from the US economy, we are already observing the appearance of stable forecasts of Fed's interest rate increase in 2018: thus, Goldman Sachs sees four interest rate increases next year.

Williams (FRS), making the speech, noted that central banks are returning to normal monetary policy, and the Fed should continue its actions to normalize monetary policy.

US Retail Sales - Core [m/m]       0.1% (-0.1%)      0.2 %

US Retail Sales [m/m]    0.2% (0.2%)        0 %

The publication of retail sales is stable-neutral.

US CPI [y/y]       2%          2 %

US CPI - Core [y/y]          1.8% (0.1%)        1.7 %

The consumer price index is stable.

It is interesting to pay attention to the “forgotten” New Houses Starts indicator, which, perhaps, will still have its say in 2018. So, its fresh Friday publication was able to raise USDJPY by a dozen points, but here it is worthwhile to be cautious since such a reaction can only testify to the restoration of the real estate sector after a number of hurricanes in the USA.

AUD: Labor market growth can refute the IMF's opinion

The International Monetary Fund believes that interest rates in Australia may remain unchanged for at least 1 year, and there are also prerequisites for accelerating the economic growth of the country.

AU Unemployment Rate s.a.      5.4% (-0.1%)      5.5 %

AU Employment Change s.a.      3.7 (-13.8)           17.5

Labor market data is in the conflict but the percentage of unemployment is still decreasing.

EUR: On politics ...

The Eurozone remains under political pressure: Catalonia, Brexit and the unsuccessful formation of a coalition following the results of the German elections held in September.

Draghi continues cautiously talking about inflation and denies any need to raise the ECB interest rates at this stage: progress on the inflation front seems incomplete, while employment in the Eurozone has reached the highest level in history. 

CAD: Attention to CPI and Derivatives

Stephen Poloz, the Governor of the Bank of Canada, is in a positive mood with regard to the prospects for inflation in the country. Published on Friday, the consumer price index can not yet strongly support the vision of the head of the bank but does not refute it:

CA CPI [m/m]    0.1%      0.1 %

CA CPI [y/y]       1.4%      1.4 %

CA Bank of Canada CPI Core [y/y]            0.9%  0.9%

Canadian statistics promises good CAD responses if it deviates from expectations.

GBP: No letter

The two main themes for the pound remain topical: Brexit negotiations continue and the inflation remains high, but progress is also being made on the first and second points ...

Thus, Hammond, the Chancellor of the Exchequer of Great Britain began talking about serious progress in the negotiations with the EU, and Fox, the Minister of Trade, believes that all trade agreements of the rest of the EU countries will be smoothly re-signed directly with the United Kingdom.

As for inflationary pressures, contrary to the expectations of economists, the level of the consumer price index for the month did not exceed 3%, which automatically would “make” Mark Carney “write a report” on the causes of inflation and describe measures to overcome it for the government of the country.

Fact (deviation), forecast.

UK CPI [y/y]       3% (-0.1%)          3.1 %

UK CPI - Core [y/y]          2.7% (-0.1%)      2.8 %

UK CPI [m/m]    0.1% (-0.1%)      0.2 %

The figures were well accepted by the markets and the pound lost 40 points against the dollar at the time of publication.

Labor market data, published on Wednesday (November 15), also did not show negative trends: there is an easy increase in wages along with a stable-neutral indicator of initial jobless claims.

UK Average Earnings [in. bonus] [3m/y] 2.2% (0.1%)        2.1 %

UK ILO Unemployment Rate [3m]            4.3%      4.3 %

UK Claimant Count Change         1.1 (-1.2)             2.3

The data of retail sales is not super but it is slightly higher than forecasts:

UK Retail Sales [m/m]    0.3% (0.2%)        0.1 %

Transmitted trading signals of last week

UK CPI, Sell 1, -0.1%

The fact of the data, which is below the publication just by -0.1%, is well worked out on the GBPUSD by a fall in the pair by an order of 40 points. All thanks to critical 3%. Exceeding this indicator attracts additional attention since it automatically causes some actions of the Bank of England, at least in that the regulator should write an “explanatory note”.

The remaining indicators failed to break the expectations of economists and the fact of the news did not differ significantly from the forecast for the appearance of a trading signal.

It should be noted that the calendar is favorable to us, and the joint publication of Canadian retail sales statistics (CA Retail Sales - Core) was postponed to next Thursday, which defused the conflict with CA CPI, which was already published separately last week.

Special opinions on upcoming signals

Thanksgiving Day will be on Thursday, which means that Christmas holidays are on the horizon, which are traditionally held according to the scheme:

The end of November is the most boring, and all important statistics for the last month of the year will be published from December 1 to December 15.

So this week is not logically marked by outstanding publications, Thursday is the US holiday (Thanksgiving Day), and on Friday everyone will be busy with Black Friday sales (which will also be held in our country).

UK GDP, on Thursday, the second release of small volatility

CA Retail Sales - Core, Thursday, may be interesting

A full calendar of trading signals.