Global macro overview for 10/09/2018

Next week the most important events are CPI/production/sales from the USA, EBC, ZEW, BoE, CPI/production/sales from China, labor market from Australia, NAFTA.

In the US, the August inflation, (Thursday), retail sales and industrial production reports (Friday) will not change the Fed's bias and the risk of a determined interest rate hike on September 26. CPI and core inflation are above the 2% target, and the dynamics of production and sales will only confirm a strong recovery. This is nothing new to speed up the USD rally, but negative surprises can already drive up the dollar's losing streak. In addition, the USD will remain the currency of the first choice if the rhetoric of trade wars becomes more important. The escalation of disputes with China and Japan hangs in the air.

In the euro area, we have industrial production (avg), ECB meeting (Thursday) and German ZEW (Tuesday). The central bank will enjoy the greatest interest, however, where policy parameters are not expected to change. We will receive new economic forecasts that will take into account the effects of delays in the recovery of the recovery. The GDP path should decrease somewhat, but inflation forecasts will rather remain unchanged. If despite this, President Draghi maintains an optimistic language about the prospects for recovery, the meeting should be neutral. EUR remains the currency with no arguments for stronger strengthening and continues its drift.

In the UK, readings of industrial production (Monday) and wages will rather remain in the shadow of information on the progress of Brexit negotiations. Meeting of the Bank of England (Thursdays) may attract more attention, although we will get only a message, and until the agreement with the EU crystallizes, monetary policy remains on the autopilot. The market is still skeptical about how the future negotiations of the divorce agreement with the EU will go smoothly, but from this position new information has more potential for pound inflation.

Data from Japan should confirm a moderate pace of recovery without strong monetary policy implications. The revision of GDP for the second quarter (Mon) should bring an upward revision based on higher corporate investment expenditures, as evidenced by other reports. Industrial production for July (pt) may go down poorly, however, seasonal fluctuations are to blame. JPY will be more sensitive to market sentiment, as it is significantly strengthened as a safe haven.

In the face of the ongoing discussion on the extension of the list of Chinese goods subject to customs, data from China will be the center of attention. Data from foreign trade will probably indicate an increase in import and export dynamics, which, however, will be associated with the acceleration of order fulfillment in the event of customs duties. Industrial production (pt) may go down poorly, which is suggested by low PMI readings. If this is to weaken the dynamics of urban investments, the negative reaction of the Chinese stock market may set the tone for an escape from risk on external markets.

In Australia, it will be interesting to see consumer moods (wed) following announcements of raising mortgage rates by the three leading banks in the country. A negative reaction of households may affect the future inclination from consumption and the GDP growth outlook. The labor market report (Thursday) will probably show continued improvement, but this should not be a surprise for anyone. While maintaining the current climate, good data will be an opportunity to sell AUD at a better price. Aussie has become a barometer of sentiment towards Asian emerging markets, and the foundations are unfavorable (passive RBA, real estate market). The calendar from New Zealand is empty, and NZD has found itself in the cross because although the pressure on the Asian emerging markets is negative, the kiwi is countering the increase in sales to AUD / NZD.

It will be a peaceful week in Canada for data, as the only more important data is the construction of houses (Tuesday). More excitement will be provided by the finalization of NAFTA agreement negotiations (if it does not happen). The maintenance of the trade agreement will remove a significant risk premium from Canada and open the way for the Canadian Bank to another interest rate increase. The market is already optimistic enough for the final of talks, so the CAD appreciation potential may be limited. An obstacle may be a deterioration of the global sentiment, for which CAD is sensitive.

Let's now take a look at the USD/CAD technical picture at the H4 time frame. The market has bounced from the technical support at the level of 1.3113 and now is trading around the technical resistnace at the level of 1.3190. The momentum is still positive, but does not rise sharply. The market contition are neutral so far. The next important technical resistance is seen at the level of 1.3224.

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