Trading with point and figure

eurusd

161xijs.png
 
Morning all,

Nowt for me on EG today. My old friend .8750 has taken a good kicking and with Mario etc today and UK gdp tomorrow I think I'll be sitting on the sidelines.

See you next week:)
 
- Busy day for data accompanies ECB and Norges Bank rate meetings and
Trump at Davos; Sth Korea GDP and NZ CPI to digest, awaiting Ifo, UK
Mortgage Approvals, US Goods Trade balance, New Home Sales & Claims;
plenty more corporate earnings and US 7-yr sale

- Norges Bank: no change expected, watching rate trajectory projections

- ECB: no signal expected on end of QE, plenty of questions on EUR likely,
Draghi likely to stonewall, and encourage focus on political reforms

- US Trade Balance: last major data ahead of Q4 GDP, modest narrowing of
deficit seen, but petroleum and commodity prices may push wider

- US New Home Sales: reactive correction to Nov post-hurricane surge
seen, but shortage of existing homes may provide a boost

- Charts: WTI, EUR/NOK, EUR/CNY, CNY/JPY, EUR NEER FX, USD TWI,
German 10 yr US 2 yr spread

..........................................................................

********************
** EVENTS PREVIEW **
********************

While the data schedule is not short of potential market movers, it is the ECB council meeting, Trump's arrival at the Davos WEF, and ahead of that the Norges Bank rate decision, along with another raft of corporate earnings, which are likely to be the key influences on today's price action. Statistically there are the weak Sth Korea GDP and the headline CPI miss in New Zealand to digest along with Germany's strong GfK Consumer Confidence, while the Ifo Business Climate tops the run of surveys in Europe, the UK has UK Finance (aka BBA) Mortgage Approvals and the CBI Retail survey, while US Claims, New Home Sales and the KC Fed Manufacturing survey accompany Canadian Retail Sales, with tonight bringing Japanese CPI. The US concludes this week's refunding with $28 Bln of 7-yr Treasury Notes, and there are plenty more corporate earnings reports to digest, with Diageo, Fiat and LVMH featuring in Europe, while 3M, Caterpillar, Intel, Raytheon and Union Pacific will be among the headline grabbers in the US. A closer eye also needs to be given to UK political developments, with local media speculating about a Tory leadership challenge amid backbench unrest about PM May, and concerns about a poor outcome for the Conservatives at the 3 May local council elections.

** Eurozone - ECB council meeting **
- ECB 'sources' in their first outing for 2018, made it clear that the council will want sight of a fresh set of staff forecasts before it confirms an end date for its QE programme, currently assumed to be Q3 2018. Ironically, after a period in which the council appeared to take view that any EUR strength would be neutralized by rising energy prices, and thus made little reference to the Euro, both outgoing vice president Constancio and OeNB president Nowotny (both dovishly biased) recently observed that a rising Euro could prove to be a stumbling block to getting inflation back to target. Draghi's comments were rather more circumspect, suggest that EUR moves since the start of its QE programme were not 'statistically significant' and were a 'side effect' and not an objective of monetary policy. Indeed the key point on FX moves has always been that the ECB is not really concerned about absolute / specific levels of the currency, but rather the speed of moves. Indeed with US Treasury Secretary Mnuchin seemingly encouraging further USD weakness with his comments yesterday (a weaker USD "is good for us", even if has tried to roll back on these comment this morning), the key point is in fact that this is broad based USD weakness, and not EUR strength. A quick look at a chart of the EUR's nominal effective exchange (see attached) to realize that while Q3 saw a sizable appreciation, it has been modest of late. The issue then becomes one of assessing whether solid global growth, rising trade, and a weak USD feed into stronger raw materials prices (most of which are priced in USD) may actually imply a better trajectory for inflation. Indeed for the Fed, the concerns about a 'strong US dollar' that constrained their willingness to hike rates in 2015 and 2016 now turns into "are we going to end up 'behind the curve'?" Be that as it may, Draghi will probably be at pains to offer no fresh signals on policy, though he probably will want to try and steer the questioning towards potentially improving prospects for Eurozone reform, and exhort the Eurozone's politicians to effectively 'strike while the iron is hot' (i.e. growth backdrop favourable).

** Norway - Norges Bank rate decision **
- Unsurprisingly the consensus looks for no change in Norges Bank's Deposit Rate from the current 0.50%, and indeed the consensus is broadly in line with the central bank on a first rate hike happening in Q1 2019. A firmer NOK above all due to rising oil prices, headline and underlying inflation below target in the 1.4%-1.6% area, and an increasingly soggy housing market provide a large offset to the improvement in growth, both current and prospective. Be that as it may, if any of the northern non-Euro area central banks are to break from the yoke of the ECB, then it is most likely to be Norges Bank, and as such a close eye will need to be kept on any tweaks to its rate trajectory assumptions in coming months.

** U.S.A. - Dec Advance Trade Balance / New Home Sales **
- Today's relatively busy run of US data will clearly be overshadowed by US political developments and pronouncements, but the advance Trade data could force some last minutes tweaks to market projections for tomorrow's advance Q4 GDP report, while the release of inventories data has been pushed back to tomorrow, due to the govt shutdown earlier this week. The consensus on Trade sees a marginal narrowing of the Goods Trade balance to $-68.9 Bln from November's provisional $-69.7 Bln, which was later revised wider to $-70.9 Bln, the largest in nearly 10 years, with higher oil prices driving the petroleum deficit wider, though if this along with higher raw materials prices remains the primary driver, then this will have less of an impact in real terms. As with yesterday's Existing Home Sales, the 17.5% m/m November post hurricane surge is likely to see a sharp payback in December, with risks to the downside of the anticipated 7.9% m/m drop to what would still be a very high 675K. As with the Existing Home Sales data, stocks of houses for sale require attention, having dropped to a low 4.6 months in November, not as low as Existing inventories at a very thin 3.4 months, but nevertheless very low, with some risk that the latter's low level may see a faster pace of New Home Sales.


from Marc Ostwald
 
You must log in or register to reply here.

Similar threads

Michael Carr
  • Article
Equities Technical Analysis Testing Point & Figure Patterns
Replies
0
Views
4K
T2W Bot
T2W Bot
S
Point&Figure
2
Replies
39
Views
7K
subarashi
S
M
Point and Figure
Replies
2
Views
1K
Dentalfloss
Dentalfloss
A
Point and Figure box size for commodities
Replies
4
Views
4K
TWI
TWI
William Rafter
  • Article
Technical Analysis Point & Figure Gone High Tech
Replies
18
Views
9K
GruntnoWay
G
Top