Weekly Outlook: 2016, November 06 - November 13

US Presidential Election, Crude Oil Inventories, Unemployment Claims, Prelim UoM Consumer Sentiment, Rate decision in New Zealand. These are the main highlights of this week.

1. US Presidential Election: Tuesday. US Presidential election attracts worldwide attention offering many surprises and uncertainties. The question is how the election would impact the economy and the markets. History suggests that the markets respond better to predictable outcomes than to uncertainties. The fact that Obama isn’t running may create a void badly affecting financial markets. Investors are not familiar with the candidates’ ability to “run the show”. Furthermore the party affiliation does not offer easy clues about which candidates might help or hurt investments. However, markets are expected to respond well to proposals from a front-runner to reduce U.S. corporate tax rates, which at the current 39% are the highest in the developed world. Moreover, analysts may look forward to a possible haven in 2017, after a new president takes over.
2. US Crude Oil Inventories: Wednesday, 15:30. Analysts do not expect imports will remain strong in the coming weeks.
3. NZ rate decision: Wednesday, 20:00.
4. US Unemployment Claims: Thursday, 13:30. The number of new claims are expected to register a 267,000 gain.
5. US Prelim UoM Consumer Sentiment: Friday, 15:00. U.S. consumer confidence is expected to rise to 87.4 this time.
6. Stephen Poloz speaks: Friday 15:00. BOC Governor Stephen Poloz will speak in Santiago. In a recent talk, Poloz said risks from household debt and the housing market will be better addressed by macroprudential policies than by adjusting interest rates.

the source

EUR/USD managed to recover as November began. Updated EU forecasts and some German data stand out, as Americans go to the polls. Volatility is going to be high. Here is an outlook for the highlights of this week.

1. Eurogroup meetings: Monday, with the wider Ecofin on Tuesday. European finance ministers convene to discuss business. Comments come out throughout the day.
2. German Factory Orders: Monday, 7:00. A rise of 0.2% is on the cards.
3. Retail PMI: Monday, 9:10. A similar figure is likely now.
4. Sentix Investor Confidence: Monday, 9:30. A tick up to 8.7 is on the cards.
5. Retail Sales: Monday, 10:00. A slide of 0.3% is expected.
6. US elections: Tuesday, with the first results coming on Wednesday at 00:00 GMT and into the early hours of the morning. Markets usually prefer Republican pro-business, pro-market presidents, but Donald Trump is a different kind of candidate. The self-proclaimed billionaire is seen as extremely erratic and anti-trade. His rival, Hillary Clinton, is unexciting but cannot be characterized as anti-market per-se. Fear of a Trump victory hurt the US dollar while better chances for a Clinton victory helped the greenback. The race has tightened recently, pushing the dollar lower against the euro, but the euro is not a classic safe-haven currency, therefore it could join commodity currencies in losing and not the yen in winning upon a Trump victory. A Clinton victory is not fully priced in, but the reaction will not be as strong as a Trump victory.
7. German Industrial Production: Tuesday, 7:00. A slide of 0.4% is predicted.
8. German Trade Balance: Tuesday, 7:00. A wider surplus of 23.4 billion euros is on the cards.
9. French Trade Balance: Tuesday, 7:45. Contrary to Germany, France has a deficit. A more narrow deficit of 4.1 billion euros is projected.
10. EU Economic Forecasts: Wednesday, 10:00.
11. French Industrial Production: Thursday, 7:45. A correction could come now but economists expect +0.3%.
12. German inflation data: Friday, 7:00. The Wholesale Price Index (WPI) is expected to rise by 0.2% after 0.4% last time.

the source

Monday
British lawmakers will debate the implications of Brexit, after the High Court said that Parliament must give its approval before the country can move forward with its split from the European Union.

Tuesday
It’s election day.

Wednesday
Goldman Sachs is expected to announce which of its top employees have achieved partner status. It does this every two years and in 2014 named 78 people to the position. The partnership ranks are tough to break into and represent fewer than 2% of the firm’s workers.

Thursday
Starbucks CEO Howard Schultz, activist investor Bill Ackman, Goldman Sachs CEO Llyod Blankfein and others will speak at The New York Times’ Dealbook conference.

Friday
Bond markets are closed for Veteran’s Day. The stock market will keep its normal hours.

the source

The CAC 40 has rallied this morning, significantly bouncing from Monday’s lows at 4,347.50. So far the Index is trading up +0.18% for Tuesday’s session. Top CAC 40 winners include Credit Agricole (+5.80%), Societe Generale (+1.11%) and BNP Paribas trading up (+0.86%) for the session. Top losers on the exchange include ArcelorMittal (-4.58%) and Solvay (-2.94%).

Technically, the CAC 40 is still trading in an ascending price channel. With prices bouncing yesterday near support, it may suggest a continued rally for the CAC 40 towards resistance. Currently the ascending line of resistance, depicted below, is found just under 4,600.00. Alternatively, in the event the Index is rejected at present levels, it may reopen the CAC 40 to test previous values of support.

CAC 40, Daily Channel

In the short term, traders may look for resistance near 4,481.92. This area is represented in the graph below as a 200 period Moving Average, and a rejection at this point would open the CAC 40 to first retest daily lows at 4,445.80. Other intraday values of support include 4,425.00 and 4,385.00. A move beyond 4,3850.00 should be considered significant as it opens the Index to trade towards new weekly lows under 4,347.50.
It should also be noted that in the event that prices breakout higher, next resistance may be found near 4,502.50. A move beyond this point would solidify this morning’s rally, and open the Index to test the previously mentioned values of daily resistance.


more...