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Quite uncertain prospects for US inflation

Quite uncertain prospects for US inflation

December is approaching, and so is the Fed meeting: the prospects for a third raise of the Fed's interest rate are pretty bright, but the dollar is mired in a political fog for lack of other information from the weak calendar of last week, which was used by its major partners in quotes.

USD: Very uncertain

Next month there is an increase in the Fed’s interest rate of the (which will be the third increase this year) ... or will they not raise it? Futures contracts and CME Group are quite confident that the probability of a third interest rate increase is 92%



American statistics allow proceeding further, but inflation remains a weak link: on Wednesday Janet Yellen defined inflation prospects as “very uncertain”

A day after the announcement of retirement from the central bank of the US, scheduled for early February 2018, Yellen said that the Federal Reserve System is still close enough to its objectives and should continue to gradually increase interest rates to keep from uncontrolled falls of inflation and unemployment.

In general, the dollar remained and remains under political pressure.

GBP: Went to the Eastern Partnership Summit

On Thursday, updated data on GDP growth of the third quarter have been published at the forecast level:

UK GDP [y/y]     1.5%      1.5 %

UK GDP [q/q]    0.4%      0.4 %

Teresa May is at the Eastern Partnership summit, and we should follow the reports on Brexit.

“What I'm sure about is that we have to go forward together. The move to the next stage is important both for the Great Britain and for the European Union,” the British prime minister said.

In Bloomberg they believe that Ireland may well interfere with the negotiations of Britain on the exit from the EU.

It is necessary to check the news on the weekend, there is a chance of opening the pound with gap on Monday...

NZD and the strange publication of Retail Sales

From New Zealand, on Wednesday, they were preparing a retail sales report, but unfortunately, both the markets and economists of Bloomberg and Reuters diverged significantly in the forecasts, which even forced us to cancel the trading signal for this indicator. So, the growth forecast ran from 0.1% to as much as 1.5%, which significantly complicated the adequate reaction of quotes.

On the chart, we saw a spike and were pleasantly even more satisfied with our solution.



The Canadian received the retail sales figures below the forecast, which could not but affect the quotes, because the Bank of Canada is in the waiting mode of uncertainty, or rather, in the waiting for effect of its monetary decisions this year (the regulator raised the rate twice this year).

CA Retail Sales - Core [m/m]      0.3% (-0.7%)      1 %

CA Retail Sales [m/m]    0.1% (-0.8%)      0.9 %

In the coming Friday, the Canadian dollar will see new data on the labor market, this time without the neighboring American Non-Farm (which will be published later) but paired with data on GDP growth, which is also unpleasant in terms of security of news trading. We should be attentive.

Special opinion on the trading signals of the upcoming week

The last New Year's trading-active period of this year has come, the mainstream reports will be published for the next three weeks, and after about a week and a half of rest before the change of the calendar from 2017 to 2018 (approximately from 20ths it will be absolutely quiet until January 4-5). The full trading signals calendar

Please pay attention to the speech of the head of the Bank of Canada on Tuesday. Since the Regulator now at the crossroads, any mention of economic prospects can immediately affect CAD quotes.

SE GDP, Wednesday, a complex report due to the exotic nature of the trading pair.

US GDP Annualized, Wednesday is the second GDP publication, refining data, enough weak

UK Markit Manufacturing PMI, Friday, start of the series of headliner reports

CA GDP + CA Net Change in Employment the dual release of strong indicators can spoil trade by conflict or additional delays 

US ISM Manufacturing PMI, Friday, as Non-Farm Payrolls smoothly leaves for the next week, it may turn out to be interesting (fundamentally, pay attention to the indicator's employment component).