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25 May 2015
Key events for the week ahead - Nomura
FXStreet (Bali) - David Fritz, FX Strategist at Nomura, breaks down the key headline events for the upcoming week, with US GDP Q1, Canada/Switzerland GDP Q1, BoC policy rate, Japanese inflation and US durable goods in focus.
Key Quotes
"In the US, main data releases include durable goods and capital goods orders on Tuesday. Here our economists are below consensus, with durable goods expected to show a decrease for the month of April of 0.7% versus a consensus expectation of a decrease of 0.5% (+0.2% Nomura versus +0.4% consensus for durables ex transportation). Orders have been weak generally due to low energy prices, strong dollar and West Coast port disruptions, and transportations are expected to be weak as nondefense aircraft and parts orders declined, offsetting an increase in motor vehicle assemblies. The US GDP estimate on Friday is expected to show a revision lower from 0.2% to -0.9%."
"UK GDP data is expected to show an unrevised 0.3% q-o-q growth rate, but our economists note that there are upside risks to this estimate. Namely, there has been stronger construction data released, which if mirrored in other sectors of the economy could bring the total estimate higher (see UK wrap, 22 May 2015). In other UK news, we have “Brexit” risk, as next week we might learn of the EU referendum date. Cameron will publish the EU referendum bill one day after Queen's speech. As such, next week following the Queen's speech, it sounds very likely that we will have the proposed dates for the EU referendum bill. The state opening of parliament and the Queen's speech are next Wednesday (27th) and according to the Guardian, on Thursday (28th) we will get more details on the EU Referendum and perhaps the date that it will take place."
"Canada will have its rate decision on Wednesday, where no change is expected. More interesting might be the GDP figures released on Friday. The Bank of Canada (BoC) has noted that it is satisfied with the current level of monetary policy given the economic performance, yet our Canadian economists have noted downside risks to this outlook. If the GDP figures released Friday (monthly for March and quarterly for Q1 – neither of which the BoC will have had prior to its rates decision) show sluggish growth, then this could impact the expectations for further easing."
"Japanese CPI data will be released overnight on Friday morning. This includes the national CPI for April and the May inflation for Tokyo. Our Japanese economics team has changed expectations for Japanese monetary policy because of the weak pickup in inflation (they note the BoJ has moved expectations of achieving the 2% inflation target to FY16H1 from FY15, see Japan Economic Weekly, 19 May 2015). Weak inflation numbers could shift expectations again. Our expectations for core inflation are 0.2% (down 0.1% when excluding the 0.3% residual impact in April from the consumption tax hike, see The Economy Next Week, 22 May 2015). This is in line with market expectations. Note: May will not require an adjustment for the consumption tax hike."
Key Quotes
"In the US, main data releases include durable goods and capital goods orders on Tuesday. Here our economists are below consensus, with durable goods expected to show a decrease for the month of April of 0.7% versus a consensus expectation of a decrease of 0.5% (+0.2% Nomura versus +0.4% consensus for durables ex transportation). Orders have been weak generally due to low energy prices, strong dollar and West Coast port disruptions, and transportations are expected to be weak as nondefense aircraft and parts orders declined, offsetting an increase in motor vehicle assemblies. The US GDP estimate on Friday is expected to show a revision lower from 0.2% to -0.9%."
"UK GDP data is expected to show an unrevised 0.3% q-o-q growth rate, but our economists note that there are upside risks to this estimate. Namely, there has been stronger construction data released, which if mirrored in other sectors of the economy could bring the total estimate higher (see UK wrap, 22 May 2015). In other UK news, we have “Brexit” risk, as next week we might learn of the EU referendum date. Cameron will publish the EU referendum bill one day after Queen's speech. As such, next week following the Queen's speech, it sounds very likely that we will have the proposed dates for the EU referendum bill. The state opening of parliament and the Queen's speech are next Wednesday (27th) and according to the Guardian, on Thursday (28th) we will get more details on the EU Referendum and perhaps the date that it will take place."
"Canada will have its rate decision on Wednesday, where no change is expected. More interesting might be the GDP figures released on Friday. The Bank of Canada (BoC) has noted that it is satisfied with the current level of monetary policy given the economic performance, yet our Canadian economists have noted downside risks to this outlook. If the GDP figures released Friday (monthly for March and quarterly for Q1 – neither of which the BoC will have had prior to its rates decision) show sluggish growth, then this could impact the expectations for further easing."
"Japanese CPI data will be released overnight on Friday morning. This includes the national CPI for April and the May inflation for Tokyo. Our Japanese economics team has changed expectations for Japanese monetary policy because of the weak pickup in inflation (they note the BoJ has moved expectations of achieving the 2% inflation target to FY16H1 from FY15, see Japan Economic Weekly, 19 May 2015). Weak inflation numbers could shift expectations again. Our expectations for core inflation are 0.2% (down 0.1% when excluding the 0.3% residual impact in April from the consumption tax hike, see The Economy Next Week, 22 May 2015). This is in line with market expectations. Note: May will not require an adjustment for the consumption tax hike."