Growth Vs. Trump

Daily Analysis - 26/01/2018

Growth Vs. Trump

growth


The 4th Quarter GDP’s are to be released for the UK and the USA, CPI for Japan and Canada plus Donald Trump

The Gross Domestic Product for the UK and the USA


Q4 UK and U.S. Gross Domestic Product (GDP) reports may generate headwinds for the sterling and the greenback respectively. During the European trading, the 1st estimate of the UK GDP for Q4 is due to be released. The forecast is for the economy to have grown at the same pace as in the 3rd Quarter (+0.4% QoQ). That said, the risks surrounding that forecast as skewed to the upside, considering that the NIESR estimate of GDP showed growth accelerating to +0.6% QoQ in the last three months of 2017. The 1st GDP estimate for Q4 from the US will also be released today. The forecast for economic growth suggest to have slowed to +3.0% QoQ, from +3.2% QoQ in the previous quarter. The risks could be tilted to the upside here as well. The Gross Domestic Product data is considered to be a lagging indicator, meaning it could either confirm or not the trend we have experienced in the previous quarter.

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JPY is gaining momentum


Japan has been known globally as an economy struggling to overcome long-standing deflation and deflationary mindsets since the late 1990s. Since the beginning of the year the Japanese Yen is appreciating as the economy’s performance is improving and data releases are watched closely as they can either support or contradict the improvement of the Japanese economic growth. Economists and investors look to all the measure changes in purchasing trends and inflation. The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer and is the key indicator for inflation. The Japans’ headline CPI was expected to have accelerated notably, to +1.1% (YoY) from +0.6% in November, while the core rate was expected to have remained unchanged at +0.8% (YoY). Today Japan's core consumer prices rose 0.9 percent in December from a year earlier, government data showed on Friday. The core consumer price index, which includes oil products but excludes fresh food prices, compared with economists' median estimate for a 0.9 percent annual gain. The minutes from the December BoJ meeting are also to be released, but given that on Tuesday, we get the outcome of the January meeting, we expect the market has priced in those minutes.

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Trump tried to boost the US Dollar.


Trump said on Thursday he ultimately wants the dollar to be strong, contradicting comments made by Treasury Secretary Steven Mnuchin on Wednesday. The dollar index against a basket of six major currencies was at 89.034. It had sunk to a three-year low of 88.438 on Thursday after Mnuchin comments welcoming a weaker greenback, which the markets initially took as Washington’s departure from its strong dollar policy. Even though Trump said he wanted a stronger dollar, he made no intention of changing his stance towards pursuing U.S. interest through trade policies. “Comments from U.S. top officials regarding the dollar are likely to continue lacking consistency going forward,” analysts said. The dollar slipped 0.2% to 109.42 yen, though it rebounded from a four-month low of 108.50 which was set yesterday. Today Donald Trump is going to speak at the World Economic Forum in Davos which could also draw the attention of investors and speculators.

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Upcoming Events

  • Time
  • Currency
  • Event
  • Forecast
  • Previous
  • 09:30 GMT
  • GBP
  • GDP (QoQ) (Q4)
  • 0.40%
  • 0.40%
  • 09:30 GMT
  • GBP
  • GDP (YoY) (Q4)
  • 1.40%
  • 1.70%
  • 13:30 GMT
  • USD
  • Core Durable Goods Orders (MoM) (Dec)
  • 0.50%
  • -0.10%
  • 13:30 GMT
  • USD
  • GDP (QoQ) (Q4)
  • 3.00%
  • 3.20%
  • 13:30 GMT
  • CAD
  • Core CPI (MoM) (Dec)
  • -0.10%

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