The FED might even scrap rate hike plans today

Daily Briefing, July 9 – Economic Events Outlook, Fed Chair Powell in Highlights

Posted Tuesday, July 9, 2019 by
Arslan Butt • 2 min read

Welcome back, fellas.

On Tuesday, the greenback traded around three-week high against its peers, as traders diminished bets on US interest rate cuts ahead of the Federal Reserve chairman’s testimony to Congress on the economy. In addition to this, the investors’ focus is likely to stay on the Japanese Prelim Machine Tool Orders, Italian Retail Sales and the US NFIB Small Business Index. Here’s what to expect from the market today.

Watchlist – key Economist Events Today

JPY – Prelim Machine Tool Orders y/y – 6:00 GMT

The Japan Machine Tool Builders Association (JMTBA) is due to release an economic report on Japanese Machine tool orders. This particular report shows a change in the total value of new orders placed with machine tool manufacturers.

Since the Q4 of 2018, the Japanese economy is consistently having a drop in Japanese machine tools orders as the figure is coming down from +28% in April 2018 to -27.3% in May 2019. Considering the global economic slowdown, the US-China Trade War, and geopolitical tensions between the US and Iran, the economists are expecting another drop in the orders for the month of June 2019. Let’s keep an eye on USD/JPY.

EUR – Italian Retail Sales m/m – 8:00 GMT

The European Istat is due to release the economic figure at 8:00 GMT today. For all the new members, retail sales are one of the more important economic data as it’s considered as a primary gauge of consumer spending, which accounts for the majority of overall economic activity.

Italy isn’t only facing debt crises but is also struggling with its economic figures. Italy’s retail sales data has dropped consecutively for two months, however, this month’s forecast is positive. Retail sales are expected to surge from 0.0% to 0.2% which may help support the common currency Euro today.

USD – Fed Chair Powell Speaks – Tuesday, 12:45 GMT

The Federal Reserve Chair Jerome Powell is due to deliver opening remarks at an event hosted by the Federal Reserve Bank of Boston. As head of the central bank which controls short term interest rates, he has more influence over the nation’s currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy. Audience questions are expected.

CAD – Building Permits m/m – 12:30 GMT

Statistics Canada is due to release the figures about new building permits issued over the previous month. For amateurs, the building permits is an excellent measure of future construction activity as getting a permit is among the first steps in constructing a new building.

As per economists’ forecast, the Canadian Building permits are expected to sink by -10.0% vs. 14.7% beforehand. The figure is extremely weak and coming out just a day before the Bank of Canada monetary policy decision.

It can put pressure on BOC (Bank of Canada) to keep the monetary policy dovish. Although it takes time to see changes in monetary policy, the sentiments will play the trick. Good luck for today!

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