Big week opens with N.Korea missile test.
Why didn’t I think of that? Along with political posturing, economic reports and interest rate decisions, military tensions have now been added to the melting pot.
Overnight, North Korea’s launch of four test missiles, three of which landed in the Japanese economic zone added to the factors that will drive currencies over the next two weeks. The fact that these were the first such launches of Donald Trump’s Presidency added further spice. It is certain that Trump will pass comment, if not judgement, and he is sure to be more hawkish than his predecessor!.
The dollar corrected further following its fall on Friday to trade at a low of 113.65 from its close close to 114.40.
Fridays market had been dominated by a speech from Janet Yellen in which she all but confirmed a rate hike next week. She used her “get out” of waiting for data to confirm the path of the economy but traders took her words to be the final piece in the jigsaw. The dollar (naturally) fell, as traders took profit on weak long positions that had been building over the previous couple of weeks.
Factory orders should be consistent with recent data releases showing a rise of 1.2%. A little lower than January but not likely to blow the FOMC off course.
Today we have also already seen inflation data from Australia. Prices actually fell by 0.3% in February but with inflation unchanged from a year ago, tomorrow's RBA meeting should leave rates unchanged. Important data releases this week from China will likely have a greater effect on the AUD.
The Peoples Bank of China meets tomorrow to agree on interest rates with no change expected. It also releases trade, producer and consumer numbers this week with the AUD, the markets proxy for the CNY likely to see a busy few days.
Trump in danger of becoming “market clown”
Trump’s wiretap nonsense is just so much background noise adding to the market perception that he is such a loose cannon that policy is something a long way from the top of his list of priorities and that the FOMC should just get on with running the economy.
The “finger on the nuclear button” has never been more flaky and he is exhibiting exactly how he gained his “maverick businessman” reputation. The whole demeanour of his presidency os serving to illustrate perfectly the dearth of true statesmen in U.S. politics who are able to advise in a calm effective manner.
Where are the likes of Kissinger, Christopher, Baker Powell Albright and Rice when you need them? Their politics varied bit their abilities were unquestioned!.
Friday’s employment report will produce a number of “column inches” this week as analysts and commentators (not this one) jockey to be the one who has the luckiest guess at the final number. The headline is almost becoming so impossible to predict, possibly due to the patchy way the economy is growing, that it is the revisions that should be gaining the most attention.
Along with Australia and China, we also have an interest rate decision from the ECB this week. There will be no change but Mario Draghi’s press conference will be interesting to traders who will want to know just how the ECB plans to deal with what is becoming a two stage recovery. It isn’t quite Germany and the rest but even though the ECB mandate only covers the region as a whole, the influence of the Bundesbank is there for all to see.