Key Fundamental Factors This Week (9/22 – 9/26)

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Key Fundamental Factors This Week (9/22 - 9/26)

Last week, the main fundamental factors that moved the markets was the FOMC meeting where the FOMC showed the projected time-line for rate hikes, and Scotland’s independence vote, which resulted in a “NO”. This week is light, but has a few sprinkles of fundamental factors from European and US that might move the market in the short-term.

Monday (9/22)

European Central Bank President Mario Draghi is scheduled to testify before the European Parliament’s Economic and Monetary Committee. Traders will be keen on what he says about stimulus measures currently implemented and still considered.

Tuesday (9/23)

China HSBC Flash Manufacturing PMI (September)
Forecast: 50.0
Previous 50.2
Can Chinese manufacturing continue growing? I has been hugging the 50.00 expansion/contraction level. A drop below 50 can cause some risk aversion which would boost the USD and CHF, and maybe even the JPY in the very short-term.
HSBC China Manufacturing PMI

(click to enlarge; source: forexfactory.com)

German Flash Manufacturing PMI (September)
Forecast: 51.3
Previous: 51.4 (revised from 52.0)
German Flash Services PMI (September)
Forecast: 54.6
Previous: 54.9 (revised down fro 56.4)
Manufacturing and services PMIs for Germany needs to remain above 50 or traders will put even more pressure on the euro.

Wednesday (9/24)

German Ifo Business Climate (September)
Forecast: 105.9
Previous 106.3
This index has peaked in February at 111.3, which was the highest since July 2011. The trend has been negative this year, and the 105.9 forecast would be another low in the index. The euro might consolidate, but with German data deteriorating, any bullish attempts in the euro should be limited.
German IFo Business Climate

(click to enlarge; source: forexfactory)

US New Home Sales, annualized (August)
Forecast: 432K
Previous: 412K
Home sales data have been a bit volatile in 2014 and in general. The readings have been declining for 2 straight months, but is expected to have grown in August. Going back to 2009, we can see a snail pace improvement, at least when compared to the decline during the sub-prime crisis.
new home sales US

(click to enlarge; source: forexfactory.com)

Reserve Bank of Australia Governor Glenn Stevens will speak in Melborne Economic Forum. Stevens has already used his “AUD is too strong” card. The market is used to him jawboning about the AUD. In fact, if he does NOT address the “overvalued” AUD, we can see some room for AUD to rally.

Thursday (9/25)

US Durable Goods m/m (August)
Forecast: -17.7%
Previous: 22.6%
Core Durable Goods m/m (August)
Forecast: 0.7%
previous: -0.7%
Durable goods was bound to fall after July’s readings ballooned on the back of aircraft purchases. The headline reading is expected to be volatile and shows a -17.7% reading. The market will probably focus on core reading, which is expected to show growth, at 0.7%. If the core reading is also negative, we might see a little resistance to further USD strength, at least during the session.

Jobless Claims (this week)
Forecast: 294K
Previous: 280K
Jobless claims numbers are staying below 300K and that is a great sign. But the FOMC will be more focused on job growth, labor participation rate, and wage growth instead of how many people are leaving unemployment benefits.

Friday (9/26)

US Final GDP q/q, annualized (Q2)
Forecast: 4.6%
Previous estimate: 4.2%
Q1: -2.9%
A revision higher is expected for Q2’s GDP. The forecast annualized rate of 4.6% would be the strongest since Q4 2009, when it was at 5.6%
US GDP Q3 2014

(click to enlarge; source: forexfactory.com)

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