Wall Street earnings

 

Banks unofficially kicked things off last week and now earnings season on Wall Street gets into full stride. Financials make most of the running with Citigroup, Morgan Stanley, Bank of America, Goldman Sachs and Bank of New York Mellon all set to report quarterly earnings.

Of those Goldman is the only Dow Jones component, although American Express and UnitedHealth Group are also set to release earnings. You can read our US earnings preview here

Bank of Canada

 

With the latest labour market figures showing Canada’s unemployment rate at its lowest in 40 years, the country’s central bank is expected to raise rates this week.

Jobless numbers reveal slack in the labour market has diminished significantly even after the Bank of Canada begun raising rates last summer. The jobless rate declined to 5.7% in December, the lowest level since figures began in 1976. Meanwhile the BoC’s own quarterly business survey paints a picture of increasingly tight conditions for businesses.

This has left all six of Canada’s big commercial banks calling for a rate hike when policymakers meet on January 17th. Following two increases last year, there is now a firm chance that it will raise rates to 1.25% from the current 1%. This would take it back a level last seen in 2009 and will be seen as part of a global shift out of ultra-loose monetary policy as growth picks up across the world.

While the BoC has been worried about how changes to Nafta could dent business optimism and investment, it does not appear to be having an effect on confidence. Higher oil prices, which hit three-year highs last week, support the bullish case for CAD.

Firmer oil prices and expectations of tighter monetary policy has sent USDCAD to its best levels since last autumn when markets expected the central bank to follow through with more hikes. But the greenback is finding firm support at the 1.24 level and with a rate hike already expected it may take further hawkishness to drive more gains for CAD.

And a hike is not a done deal. Governor Stephen Poloz is wary about raising interest rates given Canada’s ‘high levels of debt’. Moreover, although growth last year was the best in six years, inflation remains stubbornly low.

 

UK inflation, retail sales

 

UK macro data will be in focus for forex traders again with monthly CPI inflation and retail sales numbers on tap. Consumer price inflation has held steady at 3% for the last three months and while economists agree it is likely to slide back over the course of 2018, most anticipate that the CPI number will remain at this elevated level when the data is released on Tuesday.  It is not expected that the inflation print will have much impact on expectations for interest rates, with forecasts for policymakers to hold off any further hikes until later in the year given the economic uncertainty for the UK in the middle of Brexit negotiations.

Following a mixed bag of results from retailers last week, monthly retail sales data on Friday will help illustrate just how resilient consumer spending has been.

GBPUSD rallied in the middle of last week amid a broad-based dollar selloff and remains in a year-long uptrend for the time being.

Crude oil inventories

 

Crude prices have risen to three-year highs as the extension of the OPEC production curbs and falling inventories conspire to drive up futures.

The US Energy Information Administration (EIA) raised its 2018 growth forecast for global oil demand by 100,000 barrels per day (b/d) last week, while API data showed a greater-than-expected decline in inventories that fuelled further buying.

However with higher prices expected to bring more US production on-stream it is unclear how long the rally in crude prices – which have risen around 13% since December – will last.

The IEA itself expects US shale output to accelerate faster than previously thought. It sees US production at 10.3m b/d in 2018, close to 1m more than 2017. Just a month ago it anticipated growth of 780,000 b/d this year. The agency expects production to reach 11m b/d by 2019.

China growth figures

 

After roiling debt and equity markets last week by signalling a move out of buying US Treasuries, China is the big focus again on the macro front with GDP numbers for the final quarter of 2017 due to be released on Thursday. World Bank figures released last week signal a slightly faster pace of economic expansion that previously expected.

Economic Calendar

(All times GMT)

Monday, 15 January

All day – US Martin Luther King bank holiday, changes to some market trading hours

21:00 – NZIER business confidence

23:00 – Japan PPI inflation

Tuesday, 16 January

07:00 – German final CPI inflation

09:30 – UK CPI and PPI inflation

13:30 – US Empire State manufacturing index

23:50 – Japan core machinery orders

Wednesday, 17 January

10:00 – Eurozone final CPI

14:15 – US capacity utilisation rate, industrial production

15:00 – Bank of Canada interest rate decision, rate statement, monetary policy report

16:15 – Bank of Canada press conference

19:00 – Fed beige book

Thursday, 18 January

00:30 – Australia employment change, unemployment rate

02:00 – China GDP, industrial production

13:30 – US building permits, housing starts, Philly Fed manufacturing index, weekly unemployment claims

16:00 – US crude oil inventories

21:30 – Business NZ manufacturing index

Friday, 19 January

07:00 – German PPI inflation

08:15 – Swiss PPI inflation

09:30 – UK retail sales

13:30 – Canada foreign securities purchases, manufacturing sales

15:00 – US preliminary UoM consumer sentiment

Corporate Calendar

 

Monday, 15 January

Watkins Jones (WJG) – final results

Tuesday, 16 January

Citigroup (C) – Q4/2016, EPS estimate 1.226

UnitedHealth Group (UNH) – Q4/2017, EPS estimate 2.507

K3 Capital Group (K3C) – interim results

NCC Group (NCC) – interim results

Dunelm Group (DNLM) – trading update

Wednesday, 17 January

Alcoa (AA) – Q4/2017, EPS estimate 1.254

Bank of America (BAC) – Q4/2017, EPS estimate 0.446

Goldman Sachs (GS) – Q4/2017, EPS estimate 4.994

US Bancorp (USB) – Q4/2017, EPS estimate 0.869

Thursday, 18 January

American Express (AXP) – Q4/2017, EPS estimate 1.543

Bank of New York Mellon (BK) – Q4/2017, EPS estimate 0.904

Morgan Stanley (MS) – Q4/2017, EPS estimate 0.771

William Hill (WMH) – trading update

Friday, 19 January

Schlumberger (SLB) – Q4/2017, EPS estimate 0.448

Sources: Bloomberg/Companies

or LOGIN as existing customer



Any information, analysis, opinion, commentary or research-based material on this page is for information purposes only and is not, in any circumstances, intended to be an offer of, or solicitation for, a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any person acting on it does so entirely at their own risk and ETX Capital accepts no responsibility for any adverse trading decisions. You should seek independent advice if you do not understand the associated risks.