Friday 24-03-2017 Lookback

Welcome to the easyMarkets weekly review where we look back over the results of some of the previous week’s economic indicators. It gives us the chance to reflect on how much expectations were met or missed and to examine a successful trade you could have made this week.

Event: UK Consumer Price Index (YoY, February)

Date: Tuesday 21 March 2017 at 09:30 GMT

Markets affected: EUR/GBP, GBP/USD

Trending hashtags: #gbp, #cpi, #inflation

The Consumer Price Index surpassed the expectation of 2.1% to come in at 2.3% showing the biggest increase in inflation since June 2013. The costs of food and fuel have increased which is driving inflation. Brexit has given a pounding to the sterling, and as oil is priced in USD, the transport sector has been particularly affected. On the back of the CPI announcement, the pound surged to a three week high reaching 1% higher at $1.2478. Pound bulls were hoping the inflation news would push the Bank of England towards an interest rate increase in a bid to bring inflation down to its target rate of 2%. The BOE is expecting inflation to hit 2.8% in 2018 but Bank Governor, Mark Carney, is keeping a cool lid on the markets stating that one data point is not enough to react to.

Event: NZ Interest Rate Decision

Date: Wednesday 22 March 2017 at 20:00 GMT

Markets affected: EUR/NZD, AUD/NZD, NZD/USD

Trending hashtags: #nzd, #interestrate

The RBNZ’s Governor, Graeme Wheeler, maintained the cash rate at 1.75% under concerns over the global economy. The NZD fell 0.2% against the USD to $0.7028 as the bank continued to maintain the record-low rate, even though this was the expected result by analysts. Wheeler welcomed a lower dollar but noted that more depreciation is required to achieve balanced growth. He went on to note that the GDP for end of 2016 was weaker than expected with just a 0.4% expansion in the economy, well below the forecasted 1%.

Event: US Initial Jobless Claims

Date: Thursday 23 March 2017 at 12:30 GMT

Markets affected: EUR/USD, GBP/USD

Trending hashtags: #usd, #jobs, #unemployment

More Americans filed for unemployment benefits as jobless claims rose unexpectedly by 15,000 to 258,000 last week. This is a two month high which surpassed analysts’ expectations of 240,000 and the previous week’s figure of 241,000. The four week moving average, which is considered a more accurate measure on the health of the labour market, came in at 240,000 just slightly above the previous week’s moving average which was revised up to 139,000.

Event: US Fed Chair’s Speaks

Date: Thursday 23 March 2017 at 13:45 GMT

Markets affected: EUR/USD, GBP/USD

Trending hashtags: #usd, #yellen, #fed

Federal Reserve’s Chair, Janet Yellen, spoke in Washington on Thursday. Currently the Fed is debating what is acceptable for the economy as it heads towards 3% inflation. 2% is what most central banks around the world are targeting as a healthy figure – a steady rise in prices that doesn’t scare consumers or businesses. The US central bank, the Fed has been preparing consumers and the markets for increased inflation without pinpointing a firm figure. The inflation rate for the United States is 2.7% for the 12 months ended February 2017, as published on March 15, 2017 by the U.S. Labor Department.  Recent research is pointing the way to 3% as acceptable during high economic growth which should make up for lower inflation during leaner years. The Fed is not afraid to pass the 2% target for inflation and that should not see them change their direction on increasing interest rates gradually.

Trade of the Week

Time in: Tuesday 21 March 2017 at 08:00 GMT
Market : GBP/USD
Investment: $500 with 200:1 leverage
Time out: Tuesday 21 March 2017 at 10:00 GMT

P&L: $910

If you had bought GBP/USD with a $500 margin at the price of 1.23603 and closed the deal once after the UK inflation data on Tuesday at 09:00 GMT which saw GBP increase 0.91%, you might have made $910. Note this example does not take into account spread.

https://www.ft.com/content/97779dfc-0e1e-11e7-b030-768954394623

http://www.bbc.com/news/business-39337909

http://www.stuff.co.nz/business/money/90751089/reserve-bank-to-make-decision-on-official-cash-rate-today

https://www.ft.com/content/2801e12b-1e99-3c5f-bb01-49dfe1f84007

http://www.marketwatch.com/story/jobless-claims-climb-15000-to-258000-2017-03-23

http://www.cnbc.com/2017/03/23/reuters-america-refile-fed-research-signals-inflation-overshoot-possible-but-is-it-tolerable.html

http://www.usinflationcalculator.com/inflation/current-inflation-rates/

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