Key Fundamentals This Week

18 Sep 2017 02:08 PM

After a week full of economic releases, geopolitical tensions and high volatility, another week comes in with many key economic releases and events, which likely to have a notable impact on the markets.
The first trading day of the week is very calm, as Japanese banks were closed in observance of Respect-for-the-Aged Day. In addition, there were no significant economic releases in Europe. Furthermore, no significant economic figures will be released during the US session today.
German ZEW Economic Sentiment
On Tuesday, we will be watching many economic releases during the day. However, one of the most important economic figures will be released during the European session, including the German ZEW Economic Sentiment and the Euro Zone Economic Sentiment.
Estimates are encouraging, the German ZEW is set to rise to 12.3 after the sharp decline back to 10.0 last month, while the Euro Zone ZEW is set to post the first increase in two months.


US Session on Tuesday
It will be all about the housing market for the US on Tuesday, as we will be waiting for the Building Permits and the Housing Starts, in addition to the Current Account and the Import Prices.


The Main Event Of The Week
On Wednesday, traders will be watching some economic releases from New Zealand, Japan and Australia during the Asian session. In addition, the UK Retail Sales will be released during the European session.
However, forget about all the above, the main event will be during the US session. It’s the Federal Reserve decision day, which includes the FOMC Economic Projections, FOMC Statement, Federal Funds Rate and the FOMC Press Conference.
The estimates points to no change, when it comes to the Federal Funds Rate, which is expected to remain at 1.25%. Yet, there is a slight possibility for a rate hike surprise by 25bps, especially after the recent rise in inflation.
Yet, even if the Federal Reserve decided to raise the Fed Fund Rate the most important part of the Fed event is the Federal Reserve Chair Janet Yellen press conference, which should give us more clues about the future of the Federal Reserve’s balance sheet.


Bank of Japan Decision
On Thursday and during the Asian session, all eyes will turn to the Bank of Japan decision, which likely to have a notable impact on the markets, especially if the bank decided to give the market another hint for a possible tapering in the coming months.
Over the past few weeks, many of the BoJ members hinted that the current policy is unlikely to continue for a long time and that the current QE program is likely to be reduced soon. If so, the Japanese Yen might be one of the biggest gainer of this week.


Manufacturing and Services PMI’s in Europe
On Friday, eyes will turn toward the European session, as we will be focusing on the Manufacturing and the Services PMI data from France, Germany and the Euro Zone.
Estimates are mixed for the month of September but mostly lower than it was back in August. Yet, Mario Draghi is due to speak at the Trinity College in Dublin, which may have a notable impact on the markets, especially if he hinted for a possible reduction of the current QE in its upcoming meeting.
Later that day, there are no economic releases from the US, while we will be watching the Canadian inflation data, which likely to have a notable impact on the markets, especially if it comes with another positive surprise.
Don’t Over React To Data
Despite the fact that we have many economic releases throughout the week. Yet, traders are advised not to overreact to these figures.
The main event for this week is the Federal Reserve decision, which will have a major impact on the markets, for few days if not weeks, depends on what the Federal Reserve’s statement and intentions.

Edited by:

Nour Eldeen Al-Hammoury

Market Analyst

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