30/03/2016

Fundamental Analysis

Wednesday, March 30, 2016 08:30 GMT

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Major events this week (March 28-April 1)

Day/Time (GMT) Flag Currency Event Period Actual Forecast Previous

MONDAY

12:30 pm USD Personal Spending MoM February 0.1% 0.2% 0.1%

11:50 pm JPY Retail Sales YoY February 0.5% 1.6% -0.2%

TUESDAY

2:00 pm USD CB Consumer Confidence March 96.2 93.9 94.0

3:30 pm USD Fed Chair Yellen Speaks

WEDNESDAY

All Day EUR German Prelim CPI MoM March 0.6% 0.4%

12:15 pm USD ADP Non-Farm Employment Change March 194K 214K

THURSDAY

12:00 am NZD ANZ Business Confidence March 7.1

07:00 am GBP BOE Gov Carney Speaks

8:30 am GBP Current Account Quarter 4 -21.8B -17.5B

12:30 pm CAD GDP MoM February 0.3% 0.2%

12:30 pm USD Unemployment Claims March 26 269K 265K

FRIDAY

1:00 am CNY Manufacturing PMI March 49.3 49.0

8:30 am GBP Manufacturing PMI March 51.3 50.8

12:30 pm USD Average Hourly Earnings MoM March 0.3% -0.1%

2:00 pm USD ISM Manufacturing PMI March 50.8 49.5

Wednesday, March 30, 2016 08:30 GMT

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New Zealand Earlier this month the Reserve Bank of New Zealand slashed the official cash rate to a record-low 2.25% as dairy prices were continuing to fall and it seemed longer for inflation to reach the central bank's 1-3% target range. Most economists expect the RBNZ to cut the interest rates once more this year, following up its surprise cut to a record-low 2.25% with another by June. However, ASB's economist team is now predicting two more OCR cuts this year, forecasting that the RBNZ will not meet its inflation target otherwise as the effect of the RBNZ's cut earlier this month has not been fully passed on to borrowers and the New Zealand Dollar has since appreciated. Euro zone German business confidence strengthened for the first time in four months, in a sign that domestic demand is shielding German companies from sluggish global growth. The Ifo institute's business climate index climbed to 106.7 in March, up from 105.7 in the preceding month. German businesses have increased their dependence on domestic demand as a China-driven downturn in emerging markets curtails exports. At the same time, the ZEW Center for European Research in Mannheim reported its index of investor expectations, which aims to predict economic developments in the coming six months, surged to 4.3 in March from 1 in the previous month. The gauge rebounded from a 16-month low after market turmoil calmed and the European Central Bank launched fresh monetary stimulus. Japan Japan's consumer inflation remained flat in the year to February as low energy costs and weak consumption restrained price growth, keeping the Bank of Japan under pressure to introduce additional stimulus even after easing policy less than two months ago. A separate BoJ index, which strips out the effects of energy and fresh food prices, showed consumer inflation at 1.1% in the year to February, unchanged from January. Core consumer prices in Tokyo, a leading indicator of nationwide prices, recorded the biggest annual decline in nearly three years in March, suggesting that inflation will remain tepid amid weak demand as the world's third-largest economy stands on the edge of recession. The core CPI for the Tokyo metropolitan area slid 0.3% in March, after declining 0.1% in February. The data reinforces a dominant market opinion that the central bank will be forced to cut its inflation forecasts and push back the timing for reaching its 2% price target at a quarterly review of its projections next month.

Key highlights of the week ended March 25

USD

“Given the risks to the outlook, I consider it appropriate for the Committee to proceed cautiously in adjusting policy” - Janet Yellen, Fed Chair

Wednesday, March 30, 2016 08:30 GMT

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S&P/ASX 200 Index 0.29% 5,408.24

S&P/ASX 300 Index 0.28% 5,360.32

Trends* Q1 16 Q2 16 Q3 16

MAX 130 132 135

75% percentile 127 127 128

Median 125 125 125

25% percentile 122 123 122

MIN 115 115 113 * the data is based on international banks’ forecasts

Impact

Yellen cautious on interest rate hikes amid global uncertainty

High

Fed Chair Janet Yellen insisted on a slower path and more cautious approach to interest rate hikes amid global economic and financial uncertainties, which pose risks to the world’s number one economy. In her comments, Yellen said inflation has not yet proven durable against the backdrop of still low oil prices and concerns over China. However, Yellen expected headwinds from slowdown abroad, low oil prices and uncertainty over China to wane and allow the US economy to continue recovering and justify gradual series of rate hikes. Fed policy makers kept interest rates on hold at their March 15-16 meeting and sharply reduced their projected path of interest rate increases this year, foreseeing a total rise of half a percentage point, down from the full percentage point hike they expected in December. Meanwhile, US consumer confidence recovered in March, as Americans turned positive about the short-term outlook for the US economy. The Conference Board’s index of consumer confidence climbed to 96.2 in March from an upwardly revised 94.0 in the prior month. ADP private payrolls report later in the sessions is expected to show that 200,000 positions were added in March, compared with the 205,000 projected for the government's nonfarm payrolls Friday.

29.03 open price 29.03 close price % change

AUD/USD 0.7545 0.7627 +1.09%

USD/CHF 0.9738 0.9668 -0.72%

USD/JPY 113.45 112.7 -0.66%

NZD/USD 0.6723 0.685 +1.89%

JPY

“The slump in industrial output in February suggests that manufacturing activity will contract this quarter” - Capital Economics

Wednesday, March 30, 2016 08:30 GMT

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

S&P/ASX 200 Index 0.29% 5,408.24

S&P/ASX 300 Index 0.28% 5,360.32

Trends* Q1 16 Q2 16 Q3 16

MAX 145 150 148

75% percentile 134 135 136

Median 131 131 131

25% percentile 129 127 128

MIN 121 117 117 * the data is based on international banks’ forecasts

Impact

Japan’s industrial production plunges as weak exports curtail demand

High

Japan’s industrial production declined the most since March 2011 earthquake as declining exports curtailed demand and amid a nationwide output shutdown at Toyota Motor Corp. Industrial output plunged 6.2% in February from the previous month, according to the Ministry of Economy. The government expects that output will increase 3.9% this month and 5.3% in April. Yet, the decline in output was likely exaggerated by Japan's largest automaker stopping production at all its factories in Japan between Feb. 8-13. Toyota halted output due to a problem with parts supplies stemming from an explosion at a steel maker Aichi Steel Corp. on Jan. 8. Nevertheless, the data suggest industrial production is undermining growth in the first quarter, adding to signs of weakness in the world’s third biggest economy in early 2016, after a 1.1% annualized contraction in real GDP in the last three months of 2015. Economists predict the Japanese economy to grow 0.6% in the January-March period. However, if Japan’s GDP contracts again, that would be the sixth quarterly contraction and second recession since Shinzo Abe returned as prime minister in December 2012. A number of economists already expect the BoJ to announce an expansion of the asset-buying programme or to lower interest rates further, having already deployed a negative interest rate strategy in January.

29.03 open price 29.03 close price % change

AUD/JPY 85.586 85.959 +0.44%

CAD/JPY 86.034 86.201 +0.19%

EUR/JPY 127.02 127.25 +0.18%

USD/JPY 113.45 112.7 -0.66%

Wednesday, March 30, 2016 08:30 GMT

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

Major events this week (March 21-25)

Day/Time (GMT) Flag Currency Event Period Actual Forecast Previous

MONDAY

2:00 pm USD Existing Home Sales February 5.08M 5.32M 5.47M

TUESDAY

5:30 am AUD RBA Gov Stevens Speaks

9:00 am EUR German Ifo Business Climate March 106.7 106.1 105.7

9:30 am GBP CPI YoY February 0.3% 0.4% 0.3%

10:00 am EUR German ZEW Economic Sentiment March 4.3 6.3 1.0

WEDNESDAY

9:45 pm NZD Trade Balance February 339M 75M 13M

THURSDAY

09:30 am GBP Retail Sales MoM February -0.4% -0.7% 2.3%

10:15 am EUR Targeted LTRO 7.3B 24.3B 18.3B

12:30 pm USD Core Durable Goods Orders MoM February -1.0% -0.2% 1.7%

FRIDAY

12:30 pm USD Final GDP QoQ Quarter 4 1.0%

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

Chart SMA (55) – Simple Moving Average of 55 periods SMA (200) – Simple Moving Average of 200 periods Forecasts

EXPLANATIONS

Third Quartile – separates 25% of the highest forecasts

Second Quartile – the median price based on the projections of the industry

First Quartile – separates 25% of the lowest forecasts

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

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