Daily Insights Report 28/02/27

• 31 Mar 2017

28 Feb 2017

Japan’s industrial output fell 0.8% month-over-month in January 2017 after a 0.7% rise in December. The market predicted that there would actually be a gain of 0.3% of this data. This shows the first decline in six months. Output fell for transport equipment, chemicals, and generally any business oriented machinery.

The US President is set to make a speech to a joint session of Congress, this is the first such speech since assuming presidency. More information about the economic plan and fiscal policy changes may be revealed in this speech.

– The chance for a rate hike by the Federal Reserve for the March 14-15 meeting is now over 50%. A few days ago this was just less than 30%.

– The JPY fell less than 0.1% to reach 112.70 per Dollar.

– The Pound fell below the $1.24 level (a two week low) because of the chance of Scotland becoming an independent state. As a result, the Pound fell 0.2% on Monday.

Commodities

– Gold shadowed the value of gold yesterday and reached a highpoint of $1,263 per ounce before coming down $1,251 by the end of the day. The drop was about $5 for the whole day.

– West Texas Intermediate (WTI) crude futures were slightly up on Monday at $54.05. This is the highest level seen on these future contracts since July 2015.

Euro (EUR)

France – Household Consumption (January)

French household consumption likely increased by 0.8% month-over-month in January after losing 0.8% in December. Oil prices that have remained relatively low, combined with an improving labor market allowed France to increase consumption and show growth. The retail PMI rose to 53.1 in January from 50.4 in the previous month – at the same time employment rose at the fastest pace since 2011. While consumption has increased, the French savings rate remains high and close to 15% – arguably one of the highest in the region. As a result of that, even though spending have increased, they are not what the potential could be if the savings rate was lower.

Germany Unemployment (January)

Germany’s seasonally adjusted unemployment likely stayed at 5.9% through February for a second consecutive month. German businesses remain confident in the country’s future expansion. Details of this can be found in the Markit manufacturing PMI which showed the hiring accelerated at a rate that has not been seen since 2011. The weakening Euro, which has helped exports since the second half of last year and consequently increased the demand for German made products. It is likely that the employment rate has already reached its lowest point. This is because as the influx of refugees continues to rise, some will enter the German labor force and displace some who are already working.

Australian Dollar (AUD)

Balance of Payments (4Q)

The current account deficit in Australia likely narrowed in the quarter that ended in December. The rise in commodity prices has put upwards pressure on income outflows since companies are sending more of their profits abroad. The estimate for this data is a deficit of 9.56 Billion AUD.

United States Dollar (USD)

Conference Board Consumer Confidence (February)

The forecast for this data is 110.9. In December, this data reached a 15 year high. Confidence may not translate directly into consumer spending because the share of consumers who stated their preferences for buying durable goods was at a three year low. If income expectations remain strong, then spending on consumer goods and FMCGs will continue to grow.