FX Trading Tuesday March 8: China trade balance, German industrial production, BoE Gov Carney testimony

The following article is courtesy of Marshall Gittler, Head of Investment Research for FXPRIMUS.


Some in AM: China trade balance (Feb) In recent months, China’s exports have been falling at a faster pace than its imports, resulting in record-high trade surpluses despite the fact that exports are falling. The market expects that phenomenon to reverse somewhat in February, resulting in a smaller surplus. That might be AUD-positive if the market reads it as an indication that the decline in imports has bottomed.

Marshall Gittler Mar8

07:00 GMT German industrial production (Jan): German factory orders fell mom in January but nonetheless were better than expected, as yesterday’s data showed. That raises the possibility of an upside surprise in today’s industrial production figures, which could be EUR-positive.

08:15 GMT Swiss inflation (Feb): Switzerland remains in deep deflation but the rate of decline in prices appears to have bottomed. That trend is forecast to be intact in February as the yoy rate of decline is expected to decelerate somewhat. That may suggest the country has no need to lower its already-negative interest rates further. However, given that Switzerland has the lowest rates in recorded history (2- and 3-year yields around -1.0%, negative yields out to 15 years) it will be quite some time before CHF gets any support from interest rates. Apparently it doesn’t need it.

Marshall Gittler Mar8-2

09:15 GMT BoE Gov. Carney and Deputy Gov. for Financial Stability Cudliffe testify at the Treasury Parliamentary Committee on Britain’s referendum on EU membership. Last October, Carney made a speech supporting the UK’s continued membership in the EU. It can be expected that he would repeat comments along those lines in today’s testimony, perhaps with some warnings about what might happen if the UK votes to leave. That could raise sensitivity towards how a vote to exit the EU would affect Britain and could be GBP-negative.

13:15 GMT Canadian housing starts (Jan): Housing starts are falling as the housing market slows. House prices are still rising, but nowhere near as rapidly as they were a few years ago. A more sluggish housing market may leave the Bank of Canada room to ease later this year, which would be CAD-negative.

Marshall Gittler Mar8-3

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