13/04/2016

Fundamental Analysis

Wednesday, April 13, 2016 08:30 GMT

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

Major events this week (April 11-15)

Day/Time (GMT) Flag Currency Event Period Actual Forecast Previous

MONDAY

1:30 am CNY CPI YoY March 2.3% 2.4% 2.3%

1:30 am CNY PPI YoY March -4.3% -4.6% -4.9%

TUESDAY

1:30 am AUD NAB Business Confidence March 6 3

8:30 am GBP CPI YoY March 0.5% 0.3% 0.3%

WEDNESDAY

12:30 pm USD Core Retail Sales MoM March -0.1%

12:30 pm USD PPI MoM March -0.2%

2:00 pm CAD BOC Rate Statement

THURSDAY

1:30 am AUD Unemployment Rate March 5.8%

Tentative CNY Trade Balance March 210B

11:00 am GBP MPC Official Bank Rate Votes 0-0-9

12:30 pm USD Core CPI MoM March 0.3%

FRIDAY

2:00 am CNY GDP Q/Y Quarter 1 6.8%

2:00 am CNY Industrial Production YoY March 5.4%

12:30 pm CAD Manufacturing Sales MoM February 2.3%

2:00 pm USD Prelim UoM Consumer Sentiment April 91.0

Wednesday, April 13, 2016 08:30 GMT

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

US Fed Chair Janet Yellen said that the US central bank did not make a mistake in hiking interest rates in December, a move that was followed by massive turbulence in financial markets and further weakening of the global economy. Yellen said that as the US economy remains on a solid ground with some signs of inflation. Moreover, seven years after the severe financial crisis, the US labour market was now close to full employment, arguing that inflation would not be held down much longer by a strong US Dollar and low oil prices. Therefore, the Fed remains on track for further interest rate increases. The Fed lifted its benchmark policy rate in December, the first increase in nearly a decade, to between 0.25% to 0.5%. A number of private economists believe the next hike will not occur until June. Japan Bank of Japan Governor Haruhiko Kuroda reiterated the central bank's readiness to take additional monetary easing steps if needed to reach its 2% inflation goal. BoJ Governor Haruhiko Kuroda's comments come more than two months after the central bank adopted a negative interest rate strategy aimed at stemming deflationary expectations and spurring a revival in demand. Kuroda said that the BoJ would take additional easing steps in the form of quantity, quality of asset buying, or interest rates if needed. Australia The Reserve Bank of Australia kept the official cash rate at a record low 2% for a 10th consecutive meeting, but warned that the recent strong rise in the Australian Dollar could "complicate" the economy's transition. Australia's Trade-Weighted Index recently hit the highest level in nine months, with the Aussie Dollar also reaching a June-2015 high versus the US counterpart in March. However, RBA Governor Glenn Stevens said low inflation would facilitate another rate cut if that were necessary. In the final quarter of 2015 Australia's consumer inflation climbed an annualized 1.7%, the sixth straight quarter that headline inflation was below the RBA's 2-3% target range. March-quarter inflation data are due on April 27. Bets on future rate cuts declined slightly, with markets pricing in a 29% possibility of a cut at the May meeting, moving up to a 58% chance in July.

Key highlights of the week ended April 8

USD

“My sense is that the less leisurely but still gradual pace of target rate increases that FOMC participants submitted at year-end is still more likely to be appropriate” - Jeffrey Lacker, Richmond Fed President

Wednesday, April 13, 2016 08:30 GMT

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

S&P/ASX 200 Index 0.29% 5,408.24

S&P/ASX 300 Index 0.28% 5,360.32

Trends* Q1 16 Q2 16 Q3 16

MAX 130 132 135

75% percentile 127 127 128

Median 125 125 125

25% percentile 122 123 122

MIN 115 115 113 * the data is based on international banks’ forecasts

Impact

Two Fed bank heads support rate hike High

The heads of two regional Federal Reserve banks backed an interest rate increase ahead of the Fed's March meeting as an strengthening economy added to sentiment to tighten monetary policy. The heads of the Richmond and Kansas City Fed supported a quarter point lift in the main lending rates for banks "in light of continued improvements in labour market conditions and expectations that inflation would rise," according to minutes of the Fed's March meeting. Recent signs that US inflation is accelerating lay the groundwork for the US central bank to hike interest rates, Richmond Fed President Jeffrey Lacker said. The Fed should proceed with its earlier plan to raise interest rates four times this year. The Richmond Fed president said the Fed has often reacted to financial market developments that turned out, with hindsight “to be false signals.” Lacker added that the negative financial market developments that led the Fed to pause in March have largely reversed. Lacker is a non-voting member of the FOMC this year. He is seen as one of the more hawkish Fed officials, having pressed the US central bank to hike interest rates last fall. Minutes of the last Fed policy meeting showed a growing divergence in views over when to hike rates next. Though an increase is considered unlikely when the Fed meets this month, steady improvement in the job market and strengthening growth could set the stage for a hike in June.

12.04 open price 12.04 close price % change

AUD/USD 0.7595 0.7684 +1.17%

USD/CHF 0.9542 0.9552 +0.10%

USD/JPY 107.94 108.54 +0.56%

NZD/USD 0.6858 0.6924 +0.96%

GBP

“The economy's movement away from deflation resumed after stalling in February” - Capital Economics

Wednesday, April 13, 2016 08:30 GMT

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

S&P/ASX 200 Index 0.29% 5,408.24

S&P/ASX 300 Index 0.28% 5,360.32

Trends* Q1 16 Q2 16 Q3 16

MAX 1.61 1.62 1.66

75% percentile 1.55 1.56 1.56

Median 1.51 1.51 1.52

25% percentile 1.49 1.48 1.47

MIN 1.41 1.28 1.25 * the data is based on international banks’ forecasts

Impact

UK inflation hits 15-month high in March, boosted by airfares

High

UK consumer price inflation jumped to 15-month high, rising to 0.5% from previous 0.3% this month, according to the Office for National Statistics. The reason for such an increase was a rise in the cost of air fares over Easter and more expensive spring and summer clothing ranges hitting stores. Air fares advanced 22.9% month-on-month this March, compared with increase of 2.7% in March 2015. Meanwhile, City analysts were surprised to see such a data release, since they had expected inflation to stay near zero or climb to 0.4%. However, other analysts emphasised that the longest periods of low inflation in a generation is likely to come to an end over the coming months, since higher petrol and import prices along with the rising average wages from the low Pound fed into the figures. In addition to that, an unexpected increase in the UK CPI is likely to effect on the Bank of England’s decision on its monetary policy. The central bank is widely expected to keep its policy rate unchanged at 0.5% on Thursday's monetary meeting, but some analysts say the recent firming of inflation is laying the groundwork for tightening in the months ahead. In the meantime, very important data on core inflation performance showed the measure rose to 1.5% in annual terms. This increase is to further put a pressure on the BoE policy monetary policy decision.

12.04 open price 12.04 close price % change

GBP/USD 1.424 1.4275 +0.25%

EUR/GBP 0.8011 0.79766 -0.43%

GBP/CAD 1.8365 1.8214 -0.82%

GBP/JPY 153.698 154.94 +0.81%

CNY

“Even with this rebound, first-quarter trade is still quite weak” - Standard Chartered Bank

Wednesday, April 13, 2016 08:30 GMT

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

S&P/ASX 200 Index 0.29% 5,408.24

S&P/ASX 300 Index 0.28% 5,360.32

Trends* Q1 16 Q2 16 Q3 16

MAX 0.78 0.82 0.84

75% percentile 0.65 0.65 0.65

Median 0.63 0.62 0.62

25% percentile 0.62 0.61 0.60

MIN 0.58 0.55 0.55 * the data is based on international banks’ forecasts

Impact

China’s exports increase in March for the first time in nine months

High

China’s exports increased in March for the first time in nine months, mildly boosting an economy that is struggling to regain strength. Economists, however, warned that the export rise, after months of declines, partly reflects a seasonal gain after the Lunar New Year holiday in February and is unlikely to be sustained in light of moribund global demand. Exports soared 11.5% in March year-over-year in Dollar terms, according to the General Administration of Customs. This compared with February’s 25.4% plunge and exceeded a median 8.5% increase expectations. At the same time, imports in March dropped by a less-than-expected 7.6%, following February’s 13.8% decrease. As a result, China’s trade surplus shrank last month to $29.86 billion from February’s $32.5 billion. China’s March data came one day after the International Monetary Fund downgraded its global outlook. The IMF lowered its 2016 global growth outlook to 3.2%, from 3.4%. A day earlier, the World Bank downgraded its global forecast to 2.5% from 2.9% due to concerns over a US interest rate hike and a broad-based economic slowdown in emerging economies. Later this week China will release its much-anticipated growth data for the first quarter. The forecast is for a growth of 6.8% for the three months to March.

12.04 open price 12.04 close price % change

AUD/NZD 1.1076 1.1097 +0.19%

EUR/NZD 1.6633 1.6444 -1.14%

GBP/NZD 2.0762 2.0617 -0.70%

NZD/USD 0.6858 0.6924 +0.96%

AUD

“Despite this disappointing read on sentiment we expect the RBA will keep rates on hold for another month” - Westpac

Wednesday, April 13, 2016 08:30 GMT

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

S&P/ASX 200 Index 0.29% 5,408.24

S&P/ASX 300 Index 0.28% 5,360.32

Trends* Q1 16 Q2 16 Q3 16

MAX 0.80 0.79 0.81

75% percentile 0.71 0.71 0.71

Median 0.69 0.68 0.68

25% percentile 0.68 0.67 0.66

MIN 0.64 0.64 0.61 * the data is based on international banks’ forecasts

Impact

Australia’s consumer confidence falls in April High

Australians were less confident about the economic outlook and their family finances in April. The survey of 1,200 respondents by the Melbourne Institute and Westpac Bank showed the consumer sentiment declined 4% to 95.1 this month from 99.1 in March, leaving the measure 1.1% down on April last year at 95.1, meaning pessimists outnumbered optimists. The sub-index tracking assessments of ‘family finances compared to a year ago’ decreased 3.8%, while the component tracking expectations for ‘family finances over the next 12 months’ fell by 6.6%. Australians were also worried about the economic outlook, with the component tracking views on ‘economic conditions over the next 12 months’ sliding 5.5% and the component tracking expectations for ‘economic conditions over the next 5 years’ slipping 5.9%. The deterioration in consumer sentiment underscores an increasing divergence between how businesses and consumers view the outlook for the economy. A similar survey of the business sector showed that Australian firms viewed business conditions as being at their best level since 2008 last month. The National Australia Bank Business Confidence Index surged from 3 in February to 6 last month, while the NAB Business Conditions Index soared 8 to 12, the highest reading since the global financial crisis.

12.04 open price 12.04 close price % change

AUD/JPY 81.999 83.401 +1.71%

AUD/USD 0.7595 0.7684 +1.17%

EUR/AUD 1.50166 1.48162 -1.33% GBP/AUD 1.8744 1.8577 -0.89%

Wednesday, April 13, 2016 08:30 GMT

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

Major events this week (April 4-8)

Day/Time (GMT) Flag Currency Event Period Actual Forecast Previous

MONDAY

1:30 am AUD Building Approvals MoM February 3.1% 2.1% -6.6%

1:30 am AUD Retail Sales MoM February 0.0% 0.4% 0.3%

8:30 pm GBP Construction PMI March 54.2 54.3 54.2

TUESDAY

1:30 am AUD Trade Balance February -3.41B -2.55B -3.16B

4:30 am AUD RBA Rate Statement

8:30 am GBP Services PMI March 53.7 53.9 52.7

3:30 pm USD ISM Non-Manufacturing PMI March 54.5 54.1 53.4

WEDNESDAY

6:00 pm USD FOMC Meeting Minutes

THURSDAY

12:30 pm USD Unemployment Claims April 2 267K 271K 276K

9:30 pm USD Fed Chair Yellen Speaks

FRIDAY

8:30 am GBP Manufacturing Production MoM February -1.1% -0.2% 0.7%

12:30 pm CAD Employment Change March 40.6K 10.4K -2.3K

12:30 pm CAD Unemployment Rate March 7.1% 7.3% 7.3%

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

Chart SMA (55) – Simple Moving Average of 55 periods SMA (200) – Simple Moving Average of 200 periods Forecasts

EXPLANATIONS

Third Quartile – separates 25% of the highest forecasts

Second Quartile – the median price based on the projections of the industry

First Quartile – separates 25% of the lowest forecasts

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

Disclaimer Everything in this article, including opinions and figures, is provided for informational purposes only and may not be interpreted as financial advice or solicitation of products. Dukascopy group assume no responsibility for the completeness or the accuracy of any data contained in this article. Financial figures indicated in this article have not been verified by the Dukascopy group. Views, opinions and analyses are those of the author of the article, and are not endorsed by the Dukascopy group. Dukascopy group waive any and all warranties, express or implied, regarding, but without limitation to, warranties of the merchantability or the fitness for a particular purpose, with respect to all information in this article. Dukascopy group shall under no circumstances be responsible for any direct, indirect, consequential, contingent or any other damages sustained in connection with the use of this article.

Newest releases and archive: Fundamental Analysis Technical Analysis Press Review Market Research Expert Commentary Dukascopy Sentiment Index Trade Pattern Ideas Global Stock Market Review Commodity Overview Economic Research Quarterly Report Aggregate Technical Indicator Additional information: Dukascopy Group Home Page Market News & Research FXSpider Live Webinars Dukascopy TV Daily Pivot Point Levels Economic Calendar Daily Highs/Lows SWFX Sentiment Index Movers & Shakers FX Forex Calculators Currency Converter Currency Index CoT Charts Social networks:

Fundamental Analysis Technical Analysis Press Review Market Research

Expert Commentary Dukascopy Bank Sentiment Index Trade Pattern Ideas Global Stock Market Review

Commodity Overview Economic Research Dukascopy Aggregate

Technical Indicator