Previous week: 04 September 2017 – 08 September 2017
US Crude oil inventories—10.30 pm 30 August 2017 Wednesday
US crude inventories increased by +4.58 million barrels on the expectation of +4 million drop. Baker Hughes US oil rig count decreased by 3 from 759 to 756. Oil production was 8781 barrels per day for week ending 01/09/2017, a whopping decrease from 9530 barrels per day in the previous week. This massive drop in oil production was due to Texas going offline during Hurricane Harvey.
Image taken from Zerohedge:
Reserve Bank of Australia Cash Rate, Rate Statement—12.30pm 5 September 2017
The Reserve Bank of Australia left cash rate unchanged at +1.50%. A nothing burger.
Main points from Monetary Policy Statement:
- Conditions in the global economy are continuing to improve (Labour and Growth).
- Wage growth remains low in most countries, as does core inflation.
- The recent data have been consistent with the Bank’s expectation that growth in the Australian economy will gradually pick up over the coming year.
- Employment growth has been stronger over recent months and has increased in all states.
- Wage growth remains low.
- The Australian dollar has appreciated over recent months, partly reflecting a lower US dollar. The higher exchange rate is expected to contribute to the subdued price pressures in the economy. It is also weighing on the outlook for output and employment. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.
- Conditions in the housing market continue to vary considerably around the country.
- The low level of interest rates is continuing to support the Australian economy.
Bank of Canada Overnight Rate, Rate Statement—10pm 6 September 2017
Bank of Canada Overnight Rate, Rate Statement—10pm 6 September 2017
Though not surprising, the Bank of Canada raised the overnight rate by 25 basis points to 1%.
Key points taken from Bank of Canada’s press release:
- Recent economic data have been stronger than expected, supporting the Bank’s view that growth in Canada is becoming more broadly-based and self-sustaining (strong employment and income growth leading to strong consumer spending, business investments, exports).
- The global economic expansion is becoming more synchronous with stronger-than-expected indicators of growth.
- Significant geopolitical risks and uncertainties around international trade and fiscal policies remain, leading to a weaker US dollar against many major currencies.
- While inflation remains below the 2 per cent target, it has evolved largely as expected in July. There has been a slight increase in both total CPI and the Bank’s core measures of inflation, consistent with the dissipating negative impact of temporary price shocks and the absorption of economic slack.
European Central Bank minimum bid rate, press conference—7.45pm 07 September 2017
Key points from ECB press release on Monetary Policy Decision dated 07 September 2017:
- The ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.
- Regarding non-standard monetary policy measures, the Governing Council confirms that the net asset purchases, at the current monthly pace of €60 billion, are intended to run until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.
Key points from prepared remarks by ECB Mario Draghi on Monetary Policy Decision dated 07 September 2017:
- Measures of underlying inflation have ticked up slightly in recent months but, overall, remain at subdued levels. Therefore, a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline inflation developments in the medium term.
- This autumn we will decide on the calibration of our policy instruments beyond the end of the year, taking into account the expected path of inflation and the financial conditions needed for a sustained return of inflation rates towards levels that are below, but close to, 2%.
- Annual rates of headline inflation are likely to temporarily decline towards the turn of the year, mainly reflecting base effects in energy prices. At the same time, measures of underlying inflation have ticked up moderately in recent months, but have yet to show convincing signs of a sustained upward trend. Underlying inflation in the euro area is expected to rise gradually over the medium term, supported by our monetary policy measures, the continuing economic expansion, the corresponding gradual absorption of economic slack and rising wages.
- Foresee annual HICP inflation at 1.5% in 2017, 1.2% in 2018 and 1.5% in 2019. Compared with the June 2017, the outlook for headline HICP inflation has been revised down slightly, mainly reflecting the recent appreciation of the euro exchange rate.
- Euro area real GDP increased by 0.6%, quarter on quarter, in the second quarter of 2017, after 0.5% in the first quarter. Survey data point to continued broad-based growth in the period ahead.
- These projections foresee annual real GDP increasing by 2.2% in 2017, by 1.8% in 2018 and by 1.7% in 2019. Compared with the June 2017, the outlook for real GDP growth has been revised up for 2017, reflecting the recent stronger growth momentum, and is broadly unchanged thereafter.
Main points from Zerohedge:
- ECB SEES 2017 ECONOMIC GROWTH AT 2.2% VS 1.9%
- SEES 2018 ECONOMIC GROWTH AT 1.8% VS 1.8%
- SEES 2019 ECONOMIC GROWTH AT 1.7% VS 1.7%
- DRAGHI: UNDERLYING INFLATION PRESSURES REMAIN SUBDUED
- DRAGHI SAYS ECB TO DECIDE ON POLICY CALIBRATION IN FALL
- DRAGHI SAYS SURVEY DATA POINT TO BROAD BASED GROWTH
- EUROPE’S STOXX 600 SPIKES HIGHER AS ECB’S DRAGHI SPEAKS, NOW UP 0.5 PCT
- DRAGHI URGES OTHER POLICY ACTORS TO CONTRIBUTE MORE DECISIVELY
- DRAGHI SAYS STRUCTURAL REFORMS MUST BE STEPPED UP SUBSTANTIALLY
- DRAGHI SAYS DOMESTIC COST PRESSURE IN LABOR MARKETS ARE SUBDUED
- DRAGHI SAYS INFLATION REVISION DUE TO EXCHANGE RATE MOVEMENTS
- DRAGHI SAYS RECENT EURO VOLATILITY SOURCE OF UNCERTAINTY
- DRAGHI SAYS NEED TO MONITOR FX
- DRAGHI SAYS NOTHING WILL DERAIL ECB’S WILL TO DELIVER INFLATION
Image of Eurozone inflation from Zerohedge:
Coming week: 11 September 2017 – 15 September 2017
UK CPI y/y—Tuesday 12 September 2017 4.30pm
Expectation is for a rise in CPI to +2.8% for the month of August. CPI for month of July was +2.6%.
US Crude oil inventories—10.30 pm 13 September 2017 Thursday
Another draw in inventories? Will oil production recover from Hurricane Harvey?
BOE official bank rate, monetary policy summary, vote count—14 September 2017 7pm Thursday
|Mark Carney||0 to increase, 45 to maintain, 1 to reduce||Dove|
|Ben Broadbent||0 to increase, 70 to maintain, 1 to reduce||Dove|
|Sir Jon Cunliffe||0 to increase, 41 to maintain, 1 to reduce||Dove|
|Sir David Ramsden||No record (first meeting)||Moderate??|
|Andrew Haldane||0 to increase, 34 to maintain, 1 to reduce||Dove|
|Ian McCafferty||13 to increase, 42 to maintain, 1 to reduce||Hawk|
|Michael Saunders||2 to increase, 6 to maintain, 0 to reduce||Hawk|
|Silvana Tenreyro||BOE: 0 to increase, 1 to maintain, 0 to reduce
Bank of Mauritius: 0 to increase, 8 to maintain, 3 to reduce
|Dr Gertjan Vlieghe||0 to increase, 18 to maintain, 2 to reduce||Dove|
There is not much on Sir David Ramsden. But for now, I would classify him as a moderate because of his stances of not joining the single currency (Euro) while backing to remain in the European Union.
From Financial Times:
- Persuading then prime minister Tony Blair and chancellor Gordon Brown with a voluminous file of technical work that joining the euro “would not be in the national economic interest”.
- It is Sir Dave who has been at the forefront of the chilling studies of Brexit’s impact that Mr Osborne has wielded to batter the Leave campaign’s economic credibility.
US CPI—8.30pm 14 September 2017 Thursday
Probably another weak inflation figure for the month of August
US Retail Sales—8.30pm 15 September 2017 Friday
Retail sales had a good bounce last month, breaking the downward trend that started in early 2017.
EUR/USD short to watch
EUR/USD is currently at 1.20 which is a strong resistance level.
WTI short to watch
WTI rallied up to $49 on the back of Hurricane Harvey but failed to break through downward sloping resistance. With Hurricane Harvey having passed by, focus will now shift back to US and OPEC’s production.
As much as I would like to do a deep research into cryptocurrencies, I acknowledge that I am far from competent in this subject. A friend of mine works at Lykke and shared with me a report their firm wrote.