US-China trade war

Daily Brief, Sep 16: Economic Events Outlook – Brace to Trade Risk-Off Sentiment

Posted Monday, September 16, 2019 by
Arslan Butt • 2 min read

Good morning, fellas.

The forex market opened with a massive gap as traders felt uncertain about the market amid recent drone strikes on Saudi Arabia’s oil processing facilities.

To be more precise, on Saturday, drones bombed an oil processing plant at Abqaiq and another one around Khurais area, tapping out daily 5.7 million barrels of crude production. Around 50% of the kingdom’s oil output has been impacted by these attacks.

Secondly, investors are eyeing the FOMC and Fed rate decision. Last week, the European Central Bank shook the market dramatically via dovish policy decisions. Since the Eurozone’s GDP hardly rose in the second quarter of 2019 and economic growth slipped to 0.2% in the second quarter of 2019, versus 0.4% in the first quarter of the year, the ECB decided to cut the deposit rate and introduce stimulus program.

With that, the Federal Reserve has also come under pressure and is expected to cut the interest rate this week. That’s why we see buying trend in gold and bearish bias for the US dollar.

Watchlist – Economic Events Outlook 

CNY – Industrial Production y/y 

The Asian session has begun with Chinese Industrial Production. The National Bureau of Statistics of China released a figure representing the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities.

China’s industrial production extension slipped to its slowest pace in 17 1/2 years in August, growing just 4.4% year-on-year, indicating additional vulnerability in the economy. The trade war seems to hit the market hard. As a result, GOLD is trading bullish, and stock markets are trading lower.

CAD – Foreign Securities Purchases -12:30 GMT 

Statistics Canada is due to release Foreign Securities Purchases figures at 12:30 GMT. Fellas, it represents a total value of domestic stocks, bonds, and money-market assets purchased by foreigners during the reported month.

Lately, the buying of Canadian Foreign Securities has dropped to -3.98B vs. 6.55B beforehand. Mostly, Statistics Canada don’t release its forecast as the data isn’t top tier one. 

Why it’s Important

Demand for national securities and currency demand are directly associated as foreigners must buy the local currency to acquire the nation’s securities. Therefore, a drop in Foreign Securities purchase can also trigger a dip in the value of the Canadian dollar.

USD – Empire State Manufacturing Index – 12:30 GMT

The Federal Reserve Bank of New York will be releasing the Empire State Manufacturing Index with a forecast of 4.1 vs. 4.8. Fellas, just like the usual manufacturing index, the Empire State Manufacturing is a leading indicator of economic health.

Businesses react promptly to market circumstances, and variations in their sentiment can be an immediate sign of future economic activity such as spending, hiring, and investment. Above 0.0 indicates improving conditions, below means worsening conditions.

That’s pretty much it for today, as the market will be looking to price in Fed rate cut sentiments and uncertainties related to attacks on one of the biggest oil exporters, Saudi Arabia.

Good luck and stay tuned for technical analysis & trade setups today.

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