January 2017 Market Overview
The year started with improved ISM Manufacturing and Non-Manufacturing PMI, Average Hourly Earnings m/m and Unemployment Claims. Unemployment Rate came as expected. ADP Non-Farm Employment Change and Non-Farm Employment Change came well below expectations as did with Crude Oil Inventories. Most FOMC officials agreed that Trump’s policies may lead to economic growth and were considering faster interest rate increases.
Mid-month brought improved Unemployment Claims, PPI m/m, Crude Oil Inventories and Retail Sales m/m, while Core Retail Sales and Preliminary UoM Consumer Sentiment disappointed. CPI m/m and Core CPI m/m came as expected, Building Permits below expectations, while Filly Fed Manufacturing Index and Unemployment Claims improved.
Markets were choppy following Trump’s Inauguration with dollar easing and Indices breaking to a new All Time High. The month ended with disappointing Unemployment Claims and Advanced GDP q/q while Core Durable Goods Orders m/m came as expected.
USD Index: After reaching all-time high of 103.77 it descended in January some 400 Pips, now dancing on 100 support.
The month started with reduced Manufacturing PMI, while Caixin Manufacturing PMI came above expectations. CPI y/y came at 2.1%, below expectations of 2.2%. Trade Balance came at 275B, well below expectations. The second half of January saw GDP q/y better than expected, while Industrial Production y/y decreased.
ECB kept interest rates at 0% in line with expectations. German’s Ifo Business Climate came below expectation as did German ZEW Economic Sentiment. Final CPI y/y came as expected at 1.1%. M3 Money Supply y/y increased to 5%, above expected 4.9%.
EurUsd: after dancing on 1.036 in December and creating multiple bottoms below the Low of the two year Range, in January Euro ascended some 415 Pips passing 38.2 Fib level.
The year started with good news all around, with improved Manufacturing PMI, Construction PMI and Services PMI followed by improved Manufacturing Production m/m. Mid-month saw CPI at 1.6% which was above expectations, as was Claimant Count Change and Average Earnings Index 3m/y. Retail Sales were disappointing. EU Membership Court Ruled that Parliament approval is needed to trigger Article 50 to start the exit proceedings from the EU. The month ended with Preliminary GDP q/q above expectations.
GDPUSD came down to 1.1986, some 30 pips above all time low created in October, then rallied 690 PIPs in the second half of January, reversing near 1.27 Resistance.
Low on the news January saw disappointing Retail Sales, well-improved Employment Change and below expectations Unemployment Rate, CPI q/q and Trimmed Mean CPI q/q.
AudUsd ascended 430 Pips in January after dancing on 0.716 support. At present re-testing 0.75 level after breaking short term trendline.
Week ahead in the News
ADP Non-Farm Employment Change and Non-Farm Employment Change, CB Consumer Confidence, ISM Manufacturing and Non-Manufacturing PMI, FOMC Statement and Federal Funds Rate, Unemployment Claims and Unemployment Rate, Average Hourly Earnings m/m, Crude Oil Inventories.
Manufacturing PMI, Caixin Manufacturing PMI; EUR: ECB President Draghi speaks; GBP: BOE Inflation Report, Monetary Policy and Official Bank Rate, Manufacturing, Construction and Services PMI, CAD: GDP m/m, NZD: Employment Change q/q, Unemployment Rate.