A review of the week past and the week ahead 2018 October 8th

What mattered last week:

• The U.S. and Canada agreed a deal for Canada to remain in a free trade pact with the US and Mexico. The new deal has been labelled USMCA and replaces NAFTA.
• U.S. yields continued higher as various Fed speakers including Fed Chairman Jerome Powell said the central bank could eventually boost its benchmark rate past the neutral level.
• Also supporting the move higher in U.S. yields was another round of strong economic data in the U.S., including ISM business conditions and labour market data with the unemployment rate falling to 3.7%, its lowest level since 1969!!
• U.S. - China relations continued to deteriorate with the white house highlighting the U.S. defence industry as being too dependent on China and vulnerable to hacking. Bloomberg reported a Chinese chip hack has affected 30 U.S. companies.
• Chinese stock and onshore currency markets were closed for the week-long National Day holiday.
• Crude Oil surged to new highs ahead of the start of sanctions against Iran which commence in early November.
• The ASX 200 finished the week flattish, while the AUDUSD made fresh lows and closed the week near .7050.

For the week ahead, the key events are:

Australia: NAB business confidence (Tuesday), Westpac consumer confidence (Wednesday) the RBA Financial Stability Review (FSR) and housing finance (Friday).

• Consumer confidence is expected to recover after a drop in August which followed the uncertainty created by Liberal Party leadership challenge.

• The RBA’s FSR will be watched post the delivery of the interim report into the Financial Services Industry by the Hayne Royal Commission with concerns the fallout may cause a credit crunch of sorts. Keep in mind Australian dwelling prices have now fallen for 12 months in a row and with banks continuing to tighten lending standards, this trend may continue.

New Zealand: Business NZ PMI (Friday).

China: Caixin PMI (Monday), balance of trade (Friday)

Japan: Machinery orders (Tuesday), PPI (Thursday).

U.S: PPI (Wednesday), CPI (Thursday), import prices and preliminary University of Michigan consumer sentiment (Friday).

• Core CPI was surprisingly soft in August, and the market is expecting a rise of +0.2% in September with core CPI rounded up to 2.3% y/y.

Fed speakers include Bullard, Williams, Harker, Evans and Bostic.

September quarter earnings reports commence this week with corporate tax cuts and strong economic conditions expected to see solid earnings growth.

Canada: Housing starts (Tuesday), building permits (Wednesday), new housing price index (Thursday).

Euro Area: German industrial production (Monday), German balance of trade (Tuesday), Euro Area IP (Friday).

UK: Balance of trade, industrial production, monthly GDP (Wednesday). Also, on Wednesday, Bank of England’s Chief Economist Andy Haldane is scheduled to speak.

Disclaimer

TECH-FX TRADING PTY LTD (ACN 617 797 645) is an Authorised Representative (001255203) of JB Alpha Ltd (ABN 76 131 376 415) which holds an Australian Financial Services Licence (AFSL no. 327075)

Trading foreign exchange, futures and CFDs on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, futures or CFDs you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss in excess of your deposited funds and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange, futures and CFD trading, and seek advice from an independent financial advisor if you have any doubts. It is important to note that past performance is not a reliable indicator of future performance.

Any advice provided is general advice only. It is important to note that:

• The advice has been prepared without taking into account the client’s objectives, financial situation or needs.
• The client should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation or needs, before following the advice.
• If the advice relates to the acquisition or possible acquisition of a particular financial product, the client should obtain a copy of, and consider, the PDS for that product before making any decision.