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Weekly Market View

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Unwinding Carry Trades Roil the Markets

Mon, Sep 8 2008, 07:43 GMT
by Tatsuya Kawanishi

FXstreet.com

This week does have explosive events. On schedule , we have the central banks' interest rate decisions, followed by the RBA, the BoC, the BoE and the ECB. The RBA is expected to cut its benchmark rates by 25 bps (Current 7.25%). The BoE might also cut the interest rates to avoid getting caught in a serious downdraft despite the fact that high inflationary pressure is seen in the U.K. economy. The ECB would revise its monetary policy to keep the ongoing rates at 4.25 % as it keeps focusing on inflationary pressure in the Euro zone.
Also concerned about other events, ISM manufacturing and ISM Non Manufacturing are released on Tuesday and Thursday respectively. Furthermore “the Big Non-Farm payrolls” is waiting for us on Friday. These events are expected to generate excessive volatility for the USD against the other majors. We should keep on paying extra attention to the markets. Alright. Let's review them all. It is worth noting that the N.Y. Session is closed on Monday (Sept 1st) due to a national holiday (Labor Day).

On Sunday (Aug 31st) we have the following events to watch:
In Australia, Manufacturing PMI (Previous 46.9) is released at 23:30 GMT. The Index is expected to generate low volatility for the AUD.

On Monday (Sept 1st) Lobar Day in the U.S.
In Australia, Current Account (Previous -19.5 %) is released at 01:30 GMT.
In Switzerland, SVME PMI (Previous 54.1) is an event to watch.
In the Euro zone, Manufacturing PMI (Previous 47.5 %) is scheduled at 08:00 GMT.
In the U.K. Manufacturing PMI (Previous 44.3) and Mortgage Approval (Previous 36 K) are to be taken into account.

On Tuesday (Sept 2nd) we have the following events to watch:
In Japan, BoJ governor Shirakawa will have a press conference at 01:00 GMT. Keep an eye open for what the BoJ considers the current economic situation.
In Australia, the RBA Interest Rate Announcement (Current 7.25 %) is scheduled at 04:30 GMT. The markets expect “25 bps cut”. Be aware USD/AUD traders.
In Switzerland, Consumer Price Index (Previous -0.4 %) and Gross Domestic Product (Previous 0.3 %) are released at 05:45 GMT.
In the Euro zone, Producer Price Index (Previous 0.9%) is an event to monitor.
In the U.S. ISM Manufacturing Index (Previous 50.0) is a remarkable event to watch.
The Index considered as an early indicator for the non farm payrolls is a big event that is expected to generate moderate volatility for the USD against the other majors.
In the U.K, Nationwide Consumer Confidence (Previous 51) is released at 23:01GMT.

On Wednesday (Sept 3rd) we have the following events to watch:
In Australia, GDP (Previous 0.6 %) is released at 01:30 GMT.
In Germany, Retail Sales (Previous -1.4%) is a notable event to follow.
In the UK, BRC Shop Price Index (Previous 1.2 %) is scheduled at 09:30 GMT.
In the Euro-Zone, Retail Sales (Previous -0.6 %) and Gross Domestic Product (Previous -0.2%) are important events to follow.
In Canada, the BoC Interest Rate Announcement (Current 3.00 %) is released at 13:00 GMT.
In the U.S. Factory Orders (Previous 1.7%) is an important event to monitor.


On Thursday (Sept 4th) we have the biggest day of the week with the following events:
In Australia, Trade Balance (Previous 0.4B) is scheduled at 01:30 GMT.
In Switzerland, Unemployment Rate (Previous 2.6%) is an event to follow.
In Euro-Zone, the BoE Interest Rate Statement (Current 5.00% , at 11:00 GMT) and the ECB Interest Rate Announcement (Current 4.25%, at 11:45 GMT) are released in sequence.
The president of the ECB Trichet will have a press conference after the release of interest rates at 12:30 GMT. We should keep our eyes open on how the ECB considers inflationary pressure in the Euro zone and the recent value of the EUR.
In the US, ADP Non-Farm Employment Change (Previous 9K) is a remarkable event to follow. This event could serve as an indicator for the big non-farm payrolls as well.

On Friday (Sept 5th) we have the 2nd biggest day of the week with following events
In Germany, Industrial Production (Previous 0.2%) is an important event to monitor.
In Canada, Unemployment Rate (Previous 6.1%) and Ivey PMI (Previous 65.5) can not be missed to watch.
In the US, the Unemployment Rate (Previous 5.7%), Non-Farm Payrolls (the NFP. Previous -51K), the Average Hourly Earnings (Previous 0.3%) and the Average Weekly Earning are the events to watch, especially the "Non-Farm payrolls (NFP)", which is expected to generate excessive volatility for the USD against the other majors.
All of the events are released at 12:30 GMT.

Published on  Mon, Sep 8 2008, 07:43 GMT