economic events

Everybody tries to follow all the news coming from Eastern Europe and some wonders it’s interactions with the economics. Having that in mind, let’s follow to a brief highlights of tomorrow events. Economic Calendar by FXMAG.COM - 03/03/2022 Great Britain As many use to work from 9 to 5 they’ll probably miss the GBP Composite PMI (prev. 60.2) and Services PMI (60.8) release which are presented at 9:30 a.m. Europe At 12:30 p.m. it’s good to keep an eye on ECB which publishes Account of Monetary Policy Meeting. There’s no doubt it’s surely crucial to follow this one in times of fluctuations of the single currency. USA After this worthwhile visit in Old Continent we propose a travel to the USA, where Initial Jobless Claims are presented at 1:30 p.m. However it’s not the most important event tomorrow, as Jerome Powell (FED) speaks at 3 p.m. ISM Non-Manufacturing PMI (59.9) is released the same time. Data: Investing.com Time: GMT

A positive start to the week in Asia is helped by easing movement restrictions in China, but US payrolls and quantitative tightening could test that resolve later on... Source: shutterstock Macro Outlook Global: It is the US Memorial day holiday today (Monday), and equity markets rallied into the long weekend, providing a positive tone at the start of this week in Asia markets. News channels this morning noted that the equity rally took place on thin volumes, which is a bit of an exaggeration, though volumes were a bit below average, while the sell-offs recently seem to have more conviction. News stories trying to pinpoint the bottom for markets are still talking about equities approaching average forward P/E valuations. Though surely just touching an average from above is not sufficient to call a trough – averages don’t work that way – at least not if they are stationary. What are they teaching people in maths classes these days? Aside from the rally in stocks, most markets were fairly rangebound on Friday. EURUSD remained at about 1.0727, though looked to push above 1.0770 and below 1.0700 – both without success. AUD has clambered back to 0.7158, and there were also widespread gains amongst the Asian FX pairs, led by the KRW and CNY. Treasury yields were little changed on the previous day’s close. This week we get US non-farm payrolls, which could stir things up a bit. We also get the start of “Quantitative Tightening” (QT) from mid-week on, as the US Fed starts to draw down on its bloated balance sheet at a $30bn monthly rate for Treasuries and $17.5bn monthly rate for agency MBS. This will show just what impact (if any) actual selling has on the market, or whether this is entirely in the price. We also get Eurozone CPI inflation for May tomorrow (Tuesday). Consensus sees this rising to 7.8%YoY from 7.5% in April. And yet the ECB is still purchasing assets and is not expected to start raising rates until July. Enough said.  China: Shanghai announced approval for the resumption of work and production as a sign that it is lifting its lockdowns. However, workers still need a pass to leave their homes for work. Currently, permission is only granted to leave home a few times a week. This situation will change, but it will need to change quickly to be consistent with the resumption of work. In Beijing, the lockdown has been relaxed in the Chaoyang CBD area. The same problem is that workers who do not live in Chaoyang may not be able to get to their workplaces. Meanwhile, other cities are adopting regular and frequent Covid testing to try to detect positive cases early enough to stop the chain of transmission of the virus. As for stimulus measures, in addition to last week's national-level stimuli, Shanghai has offered more incentives, mainly to boost consumption, especially on pure electric vehicles. What to look out for: US non-farm payrolls Philippines bank lending (30 May) Fed Waller speech (30 May) South Korea industrial production (31 May) Japan retail sales and job-applicant ratio (31 May) China PMI manufacturing (31 May) Thailand trade balance (31 May) US Conference board expectations (31 May) Fed Williams speech (1 June) South Korea trade (1 June) Regional PMI manufacturing (1 June) Australia 1Q GDP (1 June) US ISM manufacturing (1 June) Fed Bullard speech (2 June) Indonesia CPI inflation (2 June) Australia trade balance (2 June) US ADP jobs, initial jobless claims, durable goods orders (2 June) South Korea CPI inflation (3 June) US non-farm payrolls and ISM services (3 June) Fed Mester speech (3 June) Read this article on THINK TagsEmerging Markets Asia Pacific Asia Markets Asia Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

Economic data, news & events ■ UK: Monthly GDP contracted by 0.5% mom in July, reversing the rise of 0.5% in the prior month. The main downward contribution came from services, where output fell 0.5% mom in July. Within services, the largest downward contribution came from healthcare activity, where industrial action increased. But there were also falls in industrial production and construction in July. Monthly GDP has been particularly volatile recently due to: 1. an additional bank holiday in May; 2. exceptionally warm weather in June, which boosted hospitality, tourism and construction; and 3. Industrial strike action. Looking instead at the less volatile 3M/3M growth rate, GDP rose 0.2% in July, unchanged from June. We continue to expect the economy to enter a recession around the turn of the year. ■ EU: Today, European Commission President von der Leyen will deliver her speech on the State of the Union 2023 during the European Parliament plenary session in Strasbourg. She is expected to outline the main priorities and flagship initiatives for the year to come, based on the EU’s achievements of the past years (9:00 CET). ■ Eurozone: We forecast a 0.7% mom decline in industrial output for July, following a contraction of 1% qoq in 2Q23. The expected contraction will have come about in a difficult environment for the industrial sector, which faces weak global demand for goods and fading support from backlogs of orders. The latest surveys of industrial activity do not point to a turnaround any time soon. The manufacturing PMI and its gauges of output and new orders remain stuck far below the expansion threshold (11:00 CET). ■ US: Headline monthly CPI inflation likely jumped to 0.6% mom in August, from 0.2% mom in July. In yearly terms, CPI inflation likely rose to 3.6%, from 3.2%. Such an acceleration was likely entirely driven by energy prices, as we estimate that gasoline prices rose by around 10% mom in seasonally adjusted terms and utility (piped) gas prices probably followed wholesale prices higher. Core inflation, on the other hand, is likely to come in at 0.2% mom for a third consecutive month, taking the yoy rate down to 4.4% from 4.7% in the prior month. We expect the disinflation process continued in housing, while inflation for core-goods and for non-housing core services (referred to as supercore) likely continued to moderate (14:30 CET).

Analyzing Thursday's trades: GBP/USD on 30M chart   On Thursday, GBP/USD showed a more interesting, and most importantly, a downward movement. While the euro remained mostly stagnant throughout the day, the pound resumed its decline, as we have warned before. We expect the dollar to rise and the pound to fall, as the bullish correction that has been developing in the last month may have finally come to an end. Therefore, in the near future, we expect the pair to fall to the previous week's lows, located near the level of 1.2107. As for the fundamentals and macroeconomics, the only interesting event was Federal Reserve Jerome Powell's speech. He said that the key rate may rise again if the situation requires it. He also noted that the inflation target of 2% remains unchanged, but the central bank is currently taking a more cautious position, trying to find a balance between overly tight and overly loose monetary policy. His words can be interpreted as "moderately hawkish," which could contribute to the US dollar's strength in the second half of the day.   On the 5-minute chart, many trading signals were generated. The pair showed volatility of almost 100 pips, but throughout the day, it repeatedly changed direction, working through all available levels from all sides. Therefore, although we saw a good amount of movement, it is not necessarily good for traders. The first two signals brought profit to beginners, but just a small profit of about 20 pips. Then there were two false signals near the level of 1.2270, but you couldn't even set a stop loss to breakeven. All subsequent signals, considering the nature of the pair's movement, should not have been executed. Trading tips on Friday: On the 30-minute chart, we had been anticipating a proper upward correction cycle for the GBP/USD pair for quite some time, and it has finally materialized. However, at this point, it seems that this correction is already coming to an end. If that's the case, we expect the downtrend to resume. The pair has breached the 1.2270 mark, so the downtrend will likely follow. The key levels on the 5M chart are 1.1992-1.2010, 1.2052, 1.2089-1.2107, 1.2164-1.2179, 1.2235, 1.2270, 1.2310, 1.2372-1.2394, 1.2457-1.2488, 1.2544, 1.2605-1.2620, 1.2653, 1.2688. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Friday, a couple of reports will be released in the UK. We can highlight the quarterly GDP and industrial production in September. It's not certain that the market will find these reports interesting, but it's still something. In the US, we can look to the secondary consumer sentiment index. Basic trading rules: 1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal. 2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded. 3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading. 4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed. 5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel. 6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.   How to read charts: Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them. Red lines represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction. The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source. Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend. Beginners should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.      

GBP: More downside room for EUR/GBP EUR/GBP continues to press the 0.8700 support after what has been a very eventful week in the UK. The tax cuts announced by the Treasury are, on paper, a sterling-positive. They are both pro-growth and pro-inflation and do not seem to have excessively unnerved the bond market – especially when compared to those announced previously under former prime minister Liz Truss. PMIs also came in stronger than expected yesterday, with the services and composite indices moving back above the 50.0 mark. Markets have priced out around 20bp of cuts in the September 2024 contract in the past week. We expect GBP to keep its decent momentum, especially in EUR/GBP, which we expect to make a decisive break below 0.8700 in the coming days. We are still expecting some USD resilience and see a capped upside for Cable.