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31 Jan 2016
We have a busy week ahead - Nomura
FXStreet (Guatemala) - Analysts at Nomura offered a break-down of the week aheads' headline Events (all times are GMT).
Key Quotes:
"1. US: Personal Income and Spending (Monday 13:30), Employment report (Friday 13:30), Trade balance (Friday 13:30) 2. China: Manufacturing PMI (Monday 01:00), FX Reserves (Sunday) 3. Europe: UK PMI (Monday and Wednesday), Germany factory orders (Friday 07:00) 4. Central banks: RBA (Tuesday 03:30), Kuroda speech (Wednesday 02:30), Draghi speech (Thursday 08:00), BOE (Thursday 12:00)"
"A data heavy week for the U.S. with data on employment, prices, trade and consumer spending. We forecast ADP private employment gained an additional 180k jobs in January, implying that total NFP should gain around 185k jobs. Furthermore, we expect the unemployment rate to tick down by 0.1pp to 4.9% and average hourly earnings to grow by a solid +0.31% m-o-m, providing some payback from weakness in the prior month. NFP increased by almost 300k in December, but with flat average hourly earnings, we forecast a steadying in the growth of personal income to 0.4% in December.
"In addition to the 0.3% decline in core retail sales in December, there was likely a sizable drop in energy spending due to lower than usual heating demand from a warm winter, probably weighing further on services spending (we forecast personal spending was flat for the month of December). On the trade balance, our economists forecast a slight narrowing of the deficit to -$42.0bn in December, from -$42.4bn in November, driven primarily by container data suggesting imports remained weak in December."
"In the UK, we expect both Manufacturing and Services PMI to fall. A drop in new orders drove the decline in headline manufacturing index last month, and because the reduced order book is also likely to weigh on output in January, we expect PMI Manufacturing to fall again by 0.3 points to 51.6. On Services, new business and business expectations softened slightly in December, which suggests some further weakness in January (we expect the headline index to shrink to 55.2 from 55.5 in December)."
"On central banks, we have the RBA, and our assessment suggests that the cash rate will remain unchanged, in line with consensus. We expect the Bank to retain its easing bias in its statement and should reiterate that low inflation provides scope for a lower cash rate."
"We think a weaker AUD has been a central part of the RBA’s thinking, so tracking any comments around the only modest decline in AUD and AUD TWI since the last meeting will be particularly interesting. Yesterday’s import and export price data imply an approximate further 5% fall in Australia’s ToT in Q4."
"On the BoE’s inflation report, we believe a disinflationary oil price shock has little effect on the 2-3yr horizon that policy influences, but that the shock still affects policy. The MPC is looking to spot price/wage inflation numbers for confirmation that the underlying pressures are becoming too strong; however, a longer period of low prices dissuades a hawkish signal. Inflation forecasts under Carney are consistently close to 2% in two years, irrespective of news or market pricing. We doubt things will be different this time."
"In China, we believe headline FX reserves fell by USD96bn to USD3.2trn in January, although after adjusting for FX and coupon effects, we estimate a slightly larger decline of around USD100bn. Given signs of still weak growth momentum from the falling MNI business sentiment index and our proprietary China indices, we expect official manufacturing PMI to edge down to 49.6 in January from 49.7 in December."
Key Quotes:
"1. US: Personal Income and Spending (Monday 13:30), Employment report (Friday 13:30), Trade balance (Friday 13:30) 2. China: Manufacturing PMI (Monday 01:00), FX Reserves (Sunday) 3. Europe: UK PMI (Monday and Wednesday), Germany factory orders (Friday 07:00) 4. Central banks: RBA (Tuesday 03:30), Kuroda speech (Wednesday 02:30), Draghi speech (Thursday 08:00), BOE (Thursday 12:00)"
"A data heavy week for the U.S. with data on employment, prices, trade and consumer spending. We forecast ADP private employment gained an additional 180k jobs in January, implying that total NFP should gain around 185k jobs. Furthermore, we expect the unemployment rate to tick down by 0.1pp to 4.9% and average hourly earnings to grow by a solid +0.31% m-o-m, providing some payback from weakness in the prior month. NFP increased by almost 300k in December, but with flat average hourly earnings, we forecast a steadying in the growth of personal income to 0.4% in December.
"In addition to the 0.3% decline in core retail sales in December, there was likely a sizable drop in energy spending due to lower than usual heating demand from a warm winter, probably weighing further on services spending (we forecast personal spending was flat for the month of December). On the trade balance, our economists forecast a slight narrowing of the deficit to -$42.0bn in December, from -$42.4bn in November, driven primarily by container data suggesting imports remained weak in December."
"In the UK, we expect both Manufacturing and Services PMI to fall. A drop in new orders drove the decline in headline manufacturing index last month, and because the reduced order book is also likely to weigh on output in January, we expect PMI Manufacturing to fall again by 0.3 points to 51.6. On Services, new business and business expectations softened slightly in December, which suggests some further weakness in January (we expect the headline index to shrink to 55.2 from 55.5 in December)."
"On central banks, we have the RBA, and our assessment suggests that the cash rate will remain unchanged, in line with consensus. We expect the Bank to retain its easing bias in its statement and should reiterate that low inflation provides scope for a lower cash rate."
"We think a weaker AUD has been a central part of the RBA’s thinking, so tracking any comments around the only modest decline in AUD and AUD TWI since the last meeting will be particularly interesting. Yesterday’s import and export price data imply an approximate further 5% fall in Australia’s ToT in Q4."
"On the BoE’s inflation report, we believe a disinflationary oil price shock has little effect on the 2-3yr horizon that policy influences, but that the shock still affects policy. The MPC is looking to spot price/wage inflation numbers for confirmation that the underlying pressures are becoming too strong; however, a longer period of low prices dissuades a hawkish signal. Inflation forecasts under Carney are consistently close to 2% in two years, irrespective of news or market pricing. We doubt things will be different this time."
"In China, we believe headline FX reserves fell by USD96bn to USD3.2trn in January, although after adjusting for FX and coupon effects, we estimate a slightly larger decline of around USD100bn. Given signs of still weak growth momentum from the falling MNI business sentiment index and our proprietary China indices, we expect official manufacturing PMI to edge down to 49.6 in January from 49.7 in December."