The World Overall

One Financial | Andrei Wogen| finance.wogen@gmail.com|For the Week of: 09/20

(The opinions and analysis below are solely those of the author, Andrei Wogen. They do not in anyway represent the
views or beliefs or opinions of the second or third parties which are used to distribute this report)

Last Week in Review

USD So in some ways, we begin this week basically where we
started from last week with the Fed. Though not everything the Fed
said and did last week was expected. Rates were left on hold, which
was somewhat expected and somewhat not. Depending on who you
asked. What was not expected though was the Feds tone in their
statement. It was actually quite on the dovish side. The highlights that
the Fed gave in their statement that gave it a dovish tilt were in relation
to inflation and global developments. As for international
developments, the Fed is keenly watching them and in how they affect
both economic and financial market conditions.
EUR Inflation data for the month of August slipped further as shown
by data last week, highlighting the work the ECB and the Euro Zone
economies have to do to improve growth in the region. Core reading
also fell which is a big negative given that it outstrips the already low
energy prices. The other negative metric from the Euro Zone last week
was in the form of lower sentiment numbers with recent developments
in China seeming to have taken its toll on the business environment. On
the whole then the Euro Zone economy continues to be struggling
through and there is little indication yet of a sustainable improvement
in growth.
GBP Data was mixed last week from the UK. Price data, including
both inflation and producer price index (PPI) data, continued to show a
pretty dismal picture of the UK economy and its performance. The other
negative data last week was lower consumer spending data in the form
of retail sales. The one positive data last week continued to be
employment and wage data which both showed yet more improvement.
A good sign there then but I dont think it is enough to really change the
picture of the UK economy which is a lot like the US, only a bit weaker
in some parts. In light of this weakness in the UK economy, I am betting
that the BoE will not raise rates this year either despite their rhetoric
which has been on the hawkish side.
NZD Second quarter GDP data last week have increased bets that the
RBNZ will have to cut rates again as growth continues to be getting
weaker in New Zealand. With dairy and commodity prices continuing
to decline as well as Chinas economy, New Zealand is at risk of
becoming even weaker. As for the dairy market, prices continued their
rise at last weeks auction but this rise in prices recently is mostly due to
less supply being accepted. Therefore the data is a bit skewed right now
while the overall picture continues to be very weak. The question in my
mind is not if the RBNZ will cut rates but when. I personally expect that
they will do so this year but probably not until the end of the year.
Other possibilities are for interventions in the FX market to help lower
the Kiwis value in the hopes of reinvigorating the New Zealand
economy, especially in light of Chinas devaluation of the Yuan.

JPY The BoJ meeting last week showed no change in their policy or
their QE program but they did lower their assessments of exports,
output and emerging market economies. It was a pretty dovish tone
from the BoJ last week and I think, as does a lot of the market, that it is
getting us ready to increase their QE program. Most expect this to
happen in October and now with the Fed on hold for the time being, it
has probably increased the need for further easing given that the BoJ
can not count on the Fed to help them out, at least in terms of their
currency.
CAD Inflation data last week came in as expected but was a bit lower
than previous on the year-over-year Core data. On the whole though
inflation continues to be pretty stable in Canada and offers no reason for
more BoC easing.

What to Watch this Week

USD Data this week is thin on the scale of importance. The final
reading of second quarter GDP will be in focus at the end of the week as
will August durable goods orders being released a day before. After last
weeks events, this week will be a rather tame one as the markets
continue to digest the Fed decision last week. Being that the Fed
continues to be data dependent, data in general will be important for
the markets especially this weeks data already highlighted.
EUR As for data last week, manufacturing and services PMI data
from various countries will be in focus. Both sectors are improving a bit
but more needs to be done. The other key data will be new data on the
uptake in LTRO by the Euro Zone banks. Uptake has been pretty good
for both LTRO and TLTRO and so focus will be on this continuing. The
big event this week will be election results from Greece which will be
released after the publication of this report. Greece will be going to the
polls (again) to decide on a new govt but based on poll results towards
the end of last week, it was hard to tell who would come out on top. The
top two parties in the lead in the poll was New Democracy and Syriza.
The latter party is the incumbent party which has been at the forefront
of headlines over the past few months as they worked their way
through getting a new debt deal to keep their place in the Euro Zone
and from defaulting on their debt. It will be interesting to see what the
people decide, again, in relation to their government and then it will be
noteworthy to see what the new government does in terms of the
current debt bailout. There is risk my opinion that whichever new
government is elected into office, the current bailout package will be
challenged. Either Syriza will challenge what they have done already
with the mentality that they have gained the confidence and support of
the people. On the other hand, if a new government party is elected into
office it could also spark some challenges of the current debt bailout
given it is a new party. However, if New Democracy is elected they will
likely not challenge it given that the party voted in favor of the bailout
seeing it as the best option for Greece. But nonetheless there is a good
risk that Greece will be a risk yet again for the markets and the
geopolitical spectrum of things.
CNY Manufacturing and business sentiment data will be in focus
from China this week as the country continues to be one of the focuses
of the international markets. Also too, with the Fed out of the way for
the time being, the central authorities in China could step up action to
defend their markets and help improve the economy.

JPY Data in focus will be inflation data out of Japan this week as the
market continues to anticipate what the BoJ will likely do in terms of
policy. Inflation is still very low in Japan and so whatever data comes
out probably wont change things at all really but could give some
indication on if the BoJ will act to increase QE in October or whether
they will have some room to hold off for a meeting or two instead.

Longer Term Sentiment Indicator

Asset

Overall Sentiment

Strength Rating

US Dollar

Positive

Euro

Negative

-1

Pound

Positive

Canada Dollar

Negative

-2

Australian Dollar

Negative

-2

Japanese Yen

Negative

-4

New Zealand Dollar

Negative

-3

Economic Calendar
Region

Event/Data

Greece

Parliament Elections

United States

Existing Home Sales

Canada

Expected

Date

Time (EST)

09/19

24h

09/21

10am

BoC Gov. Poloz Speach

09/21

2:45pm

Australia

House Price Index q/q

09/21

9:30pm

United Kingdom

Public Sector Net Borrowing

09/22

4:30am

United States

Housing Price Index

09/22

9am

China

Caixin Manufacturing PMI

47.5

09/22

9:45pm

France

Manufacturing PMI

48.5

09/23

3am

France

Services PMI

51.5

09/23

3am

Germany

Manufacturing PMI

52.6

09/23

3:30am

Germany

Services PMI

54.7

09/23

3:30am

Euro Zone

Manufacturing PMI

52.1

09/23

4am

Euro Zone

Services PMI

54.2

09/23

4am

Euro Zone

ECB President Draghi

09/23

9am

New Zealand

Trade Balance y/y

-3,050M

09/23

6:45pm

Germany

GfK Consumer Confidence

9.8

09/24

2am

Germany

IFO Current Assessment

114.9

09/24

4am

Euro Zone

Targeted LTRO

09/24

5:15am

United States

Durable Goods Orders

-2%

09/24

8:30am

United States

Core Durable Goods Orders m/m

0.2%

09/24

8:30am

Japan

National CPI ex. Fresh Food y/y

-0.1%

09/24

7:30pm

Japan

Tokyo CPI Fresh Food y/y

-0.2%

09/24

7:30pm

United States

GDP Annualized Q2 - Final

3.7%

09/25

8:30am

United States

Core PCE q/q Q2

1.8%

09/25

8:30am

5.52M

8.65B