Thursday’s macro calendar is almost bursting at the seams. The vast amount of information, including the Australian employment report, two central banks (BoE, ECB), American initial and continuing jobless claims, Canadian building permits and PMI (Ivey index). Should we expect high volatility? It all depends on how hard the Bank of England and European Central Banks will surprise us.
In the night the Australian labor market report was published. Employment change heavily disappointed – forecast at 12,000, prev. 15,900, act. -300. Unemployment rate also ranked adversely – consensus 6.0% (prev. the same) while the actual reading was 0.4bp higher. AUD pairs (in particular Aussie and EUR/UAD) recorded very strong movements, which are still continuing. AUD/USD fell by 800 points and EUR/UAD by more than 1250.
08:00 (CET) brought readings from Germany – industrial production on a monthly basis (seasonally adjusted). Publication failed and was worse than forecast (1.3%) at 0.3%. Noticeable reaction in the markets was tender and the EUR/USD slipped delicately.
“The real fun” begins however, at 13:00 (CET) when the first of today’s central banks – BoE – will take a decision on asset purchase (consensus and previous value 375 billion pounds) and its main interest rate (consensus consistent with the previous level 0.5%). We must remember that BoE is definitely “closer than further” when it comes to policy tightening. Market will focus not on the naked data, but more on the statement – very likely that GBP will go up after it. The opposite situation may occur only if the bank surprises negatively, informing about significant postpone of interest rate hike decision.
The next in line is European Central Bank (13:45 CET decision on interest rates and 14:30 CET monetary policy statement + press conference). The European economy is now too weak to support any changes. We can expect forward guidance regarding further easing, which will adversely affect the euro. EUR/USD has recently been so tightly compacted, that is the best to look for sell opportunities after upward rebounds and not to chase down after-data-movements.
Now it is time for Canada! At 14:30 (CET) building permits reading will be published. Consensus says about significant decrease in comparison to June (13.8%) to -2.0%. Every reading above this level will have favorable impact on strengthening the Canadian dollar. At the end of the macro calendar day (16:00 CET) Ivey will publish its Canadian PMI index – prev. 53.00pts., consensus 46.90pts.
We should closely watch also the American initial jobless claims – Forecast says about 305,000, prev. 302,000. After the recent NFP readings, today’s initial jobless claims should not however, have a major impact on the markets.
Get ready for some razzle-dazzle!
