One Financial 12:22

8/10/2019 One Financial 12:22

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Weekly Sentiment Paper Distributed by: One FinancialForthe Week of: 12/21 through 12/27 Written by: Andrei Wogen

Email: [email protected]

A Christmas Message

2

Last Week in Review

2

Australian Dollar

3

New Zealand Dollar

4

Japanese Yen

6

China Renminbi; Onshore, Yuan

8

Euro Area: Euro

9

British Pound

11

Canadian Dollar

13

United States Dollar

14

Charts

17


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A Christmas Message

Last Week in Review

United Kingdom inflation falls again; month-over-month slips into negative territory

Euro Zone CPI stays steady but still weak overall

New Zealand Q3 GDP comes in mixed; year-over-year lower than expected but month-to-month better; household consumption, investment rose but forestry activity fell

German ZEW sentiment survey shows improvement in investor sentiment

US CPI slips as well; month-to-month falls into negative territory; Core CPI also slipslower

Swiss National Bank introduces negative rates while SNB Gov. Jordan gave a strongmessage that the SNB is committed to defending the cap they have set in place to helpdefend against deflation

I want to personally thank all of my readers who have faithfully read my reportthroughout this year. I hope that the info that is presented in these reports each week is

beneficial to your investment or trading, whichever you do. I wish you all a very MerryChristmas and Happy Holidays and as you gather with friends and family, rememberthe true Reason for the Season.Once again, thank you for your readership and I look forward to continuing to offer youmy knowledge and insight on the world and hte financial markets in the new year.Thank you and Merry Christmas!Andrei Wogen, Financial Market Speculator

P.S. Due to the holiday season there will be no report released until January 11th, 2015.


3/17

Australian DollarOverall Picture and Its Tone

Overall the Australian is weak economically. The weak points continue to be weak mining

sector and the employment sector while the consumer also remains weak and feels weak as

both retail sales and consumer sentiment have been lower respectively. As for the business

sector, manufacturing and services sectors continue to weaken as does business sentiment.

Politically speaking, the country is doing well but recent budget problems have caused the

government to cut down on spending and adjust policy in order to keep debt from rising too

much. This action has also caused consumer sentiment to weaken and there is likely more cuts

on the way as the mining industry continues to slow. Another thing that has caused some worry

from the government is the strong housing market. Prices continue to rise which is helping to

support consumers some but has caused the government to voice their disproval of these high

prices worrying about a bubble forming. As for the central bank they continue to remain neutral

to slightly dovish while continuing to keep rates at historical levels. They continue to say that

rates are the right level to foster growth and investment but they also continue to verbally talk

down the Australian Dollar which they say is too high. Still no actual intervention though.yet.

Overall then the tone of Australia is neutral to slightly negative

. Overall Sentiment of the Australian Dollar

As for the overall sentiment towards the Australian Dollar, this is now fully

negative overall.

Last Week in Review

Last week was a short week for data. New Motor Vehicle sales slipped lower as did the

Westpac Leading Index number. Also RBA FX Transactions came in lower than previous with no

sign of intervention by the RBA in the FX market to help bring down the Aussie Dollar. So at

this point any intervention is still all talk and no action. For now. The other event for the week

was the release of the RBA meeting minutes. In it, the RBA did their usual jawboning of thecurrency. The minutes also made mention that the RBA is aware of the markets expectations of

their being a rate hike sometime next year. However they also mentioned that the path for rates

is a period of stability. So it would appear at this point in time that the RBA is not getting

prepared to cut rates. They were also downbeat on their assessment of current growth and

consumption but were optimistic a bit on future growth and inflation. Things seem to be pretty


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much the norm at the RBA right now though as they appear to be comfortable with keeping

rates as they are and shifting little to nowhere in terms of policy.

The Week Ahead and Other Thoughts

With Christmas around the world this week, including in Australia, there is little to speak

of in terms of data releases from Australia with CB Leading Index numbers on Tuesday the onlyrelease. There is a good chance that the markets will take a break over this week due to the

holiday season but if Thanksgiving is any indication there could be some surprises nonetheless.

New Zealand DollarOverall Picture and Its Tone

New Zealand as a whole continues to do well though has weakened some over the past

few months, economically speaking. Lower commodity prices, lower house prices and lower

inflation have been the main weaknesses for the New Zealand economy. Other weaknesses have

been a deteriorating trade balance, along with falling exports and a fall in business and

consumer sentiment which has also translated into lower consumer spending via retail sales

data. However all is not bad in New Zealand and actually things are pretty good despite these

negatives. Though business sentiment is low, it is still high in historical terms which has been

seen in the manufacturing sector in particular which remains strong as well as does the

industrial sector. As for trade, imports and exports are rising now again while the labor market

also remains strong with falling unemployment and increased employment overall. However,

as is the case around the world overall, wages continue to remain weak. Looking to the housing

market now, after rising prices from the beginning of this year, they have fallen now from their

highs after implementation of policy to help cool the housing market went into effect several

months back. This, and now weaker building permits, continue to cause the housing market to

weaken overall though in some parts, construction remains active overall. As for the

government, they continue to remain strong as pro-growth policies and increased government

spending continue to help support the economy and with the recent elections keeping the

incumbent prime minister in power for another term, there will likely be little change. In

regards to the central bank, after having tightened policy by raising rates three times this year

beginning in March, the central bank is now on hold indefinitely after falling commodity prices

and lower inflation have caused them to reassess their estimates of future inflation in the

country. This is a pretty big turnaround for them from just a few months ago when they were


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talking about seeing a need to raise rates pretty consistently due to what they used to see as

inflation pressures building. However these pressures have since diminished or left altogether

and so in response the central bank is expected to be on hold until at least the middle of next

year and possibly longer if inflation doesnt start to pick up soon. They have also voiced their

concerns about the high valuation of the New Zealand Dollar relative to other currencies. Thishas caused the RBNZ to intervene in recent months in the currency market to bring down the

value of the Kiwi. This is an obvious statement by the Bank that they are not willing to let the

currency stay too strong and will do something to help bring it down and so in light of this

there continues to be speculation that they will continue to intervene in the markets going

forward. Overall then, the tone for New Zealand remains in neutral territory overall.

Overall Sentiment of the New Zealand Dollar

The overall sentiment for the New Zealand dollar is neutral now as expectations

that the RBNZ will raise rates has come into play again helping to put some life in the

Kiwi.Last Week in Review

Third quarter GDP last week came in mixed. On a month-to-month basis growth came in

better than expected and previous but on a year-to-year basis, growth slipped lower than

expected and previous. As for the internals, investment rose, household consumption, mining

rose, agriculture was up and the manufacturing industry rose. The one weak spot was the

forestry and logging industry which is not so much a surprise given the fall in prices of these

things over the past few months, right along with dairy prices. Overall though, growth in New

Zealand continues to be strong. Other data for the week showed the current account improving

a bit while ANZ Business confidence slipped from last months reading. We also had visitorarrivals data last week which showed another increase in the amount of new migrants coming

to New Zealand and last weeks data was the second highest on record. Overall though the

New Zealand economy continues to chug along quite well at this point.


Another country that will have a slow week in terms of data. Just Westpac Consumer

survey on Sunday and Trade Balance data on Monday will be the two key data points for this

week to watch for. The overall trade balance has deteriorated in the past few months, slipping

into negative territory. Both exports and imports though continue to be healthy overall with

exports in particular improving again now over the past couple of months or so after a time of

decline. With recent, more optimistic rhetoric coming from the RBNZ and now with another

strong print in growth, market focus will be on when the central bank will be raising rates

again.


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7/17

feeling better overall. The outlook in particular that manufacturers have in Japan continues to

get weaker. Speaking of manufacturing data too, manufacturing index number weakened for

the month of December. Trade balance data for the month of November was also released last

week and showed an improvement in the deficit but yet more weakening in both exports and

imports with the latter slipping into negative territory for the month of November showing acontinued weakness in the consumer of Japan. Other data showed a decline in the All Industry

Activity data from previous while the Coincident index number strengthened compared to the

previous months release. The main event for the week last week was the BoJs monthly rate

decision, meeting, statement and press conference. The Bank left rates alone as well as their QE

amount that they are committed to doing. In their statement they sounded a bit more optimistic

on the economy including the export and industrial sectors as well as sounding more optimistic

on inflation. During the press conference, Kurodas rhetoric was nothing new saying that the

BoJ will adjust policy without hesitation if risks occur and saying that they expect inflation will

move to their target though also saying in pretty much the same breath that he expects inflation

to fall a bit further beginning next year. Overall though it is pretty much the same message as

the Bank of Japans last meeting. The minutes too showed a majority of 8-1 voting in favor of

the BoJs current policy with one decent. The decenter said that he believed that the policy

before the BoJs surprise increase in their QE amount was the best policy, in general. It is

interesting to me too though that the BoJ continues to strike a more optimistic tone on the

economy and inflation than the current data is showing. Will be interesting to see who is right

over the next few months going into the next year.


This week is a bit busy for the week in terms of data as Japan will not be taking off for

Christmas. So as for the data this week, CPI data on Thursday will be the highlight of the week.

Inflation continues to fall in Japan along with the rest of the world and I expect this to continue.

Also on Thursday we will get our monthly dose of household spending, unemployment data,

industrial production and retail trade data for the month of November. Expectations are that

industrial production will fall further, that the unemployment rate will rise and that household

spending will fall as well. So overall, pretty dismal expectations and expectations that I agree

with too as the industrial sector continues to weaken and household consumption is still weak

overall, as seen recently in growth data released a couple of weeks ago. Other data for the week

will be Housing starts data and the BoJ Meeting Minutes both being released on Wednesday.

The main focus for the week though will be whatever the government decides to do by the end

of Friday in Japan. About two weeks ago or so a top government official stated that the

government is to push through some sort of major reforms by the end of this year. By the 27th of

December to be exact. What they will push through is anyones guess but you can be sure the

markets will be paying attention. This could also mean yet another busy holiday for some

market participants; much like Thanksgiving was. Overall though the Japanese economy


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continues to be very weak and so whatever reform or law is pushed through this week, if there

is, by the government will have to be a good one.

China Renminbi; Onshore, Yuan Overall Picture and Tone

Overall China is weak right now economically and is changing politically and socially. As

for the economic picture, this has been weakening over the past few months. Inflation continues

to move lower which also includes food prices which continue to move lower. As for the

consumer, Consumer Confidence is improving some again after deteriorating over the past fewmonths while retail sales continue to move lower. As for the business side of things, the services

sector, manufacturing sector and industrial sector as well as business confidence all continue to

weaken overall. As for the employment picture this remains mixed to weak as labor costs

continue to weaken and the number of unemployed persons continues to move higher

highlighting the struggle of the Chinese economy to move from a strictly manufacturing based

economy to more of a services based country in terms of their main revenue and GDP growth

source. As for the housing market, prices continue to move lower as does loan growth putting

pressure on the consumer and the economy as a whole. With lower housing prices the demand

for existing and new housing is slowing and with the real estate market being such a big driverof growth in China, this is putting a strain on its overall growth. On the government side of

things they continue to work on pushing through reforms to move the economy form a

centrally, government controlled economy, to a more market baed economy. During their recent

Fourth Plenum meeting they highlighted these reforms they are and want to implement

especially focusing on making the law system freer. As for the central bank, they continue to

implement reforms and easing measures to help revive the economy including reserve ratio for

certain banks and other reforms to help rural regions and the real estate market improve

including rate cuts recently. Interest rate liberalization is also one of the main things on the

central banks agenda in terms of reforms they want to implement. Overall then the tone ofChina is a more negative one right now as reforms being implemented by the government and

central bank continue to cause weakness in the economy while overall global growth being

weak is causing the manufacturing industry to be weak right now.

Overall Sentiment of the Chinese Yuan (Onshore)

The overall sentiment for China is negative but as the Yuan is controlled by the


9/17

PBoC right now, the movements in their are not true in many ways. However, the Yuan

has now been weakening versus the USD over the past few weeks and continued to do

so last week as well.

Last Week in Review

Last week was a slower week in terms of data from China. HSBC Manufacturing data

slipped below the contraction/expansion level and now is in contraction mode. So yet more

signs of a weakening manufacturing sector in Japan. The other weak data release last week was

house price data which slipped further into negative territory highlighting yet more weakness

in the Chinese economy. It should be noted though that with the recent strength in the Chinese

stock market, this is likely a part of the reason for the falling house prices as investors move

their money out of real estate and into equities. Positive data last week was Business sentiment

data which showed improvement from last month and Foreign Direct Investment which also

rose from last month, though not really mitigating completely the fall into negative territory

that occurred last month.The Week Ahead and Other Thoughts:

This will be another thin week in terms of data, at least based on what is planned at this

point. The only data release will be CB Leading Economic index data being released on Monday.

This data set has been steady over the past couple of months or so. Besides that, there is ever a

watchful eye of the market on the government and central bank of China and what new laws

and reforms they announce. They seem to be on a role recently announcing several new law

changes recently. This will likely only increase in amount and importance as the months go by

now and as the Chinese government moves closer to their objective of opening the markets and

economy up to be more free.

Euro Area: Euro Overall Picture and Its Tone

The overall conditions of the Euro Zone are and continue to be very weak and negative.

Overall growth continues to move lower with some countries, including Germany, slipping into

negative growth in the most recent quarter. As for the business side of the economy, the services

and manufacturing and industries sectors all continue to move into weak territory while

business sentiment also continues to deteriorate. As for the consumer, consumption remains low

as seen in continued weakening retail sales data while sentiment also continues to move lower.


10/17

The labor market is also very weak with high unemployment, especially youth unemployment,

and wages continue to be low. Trade also remains weak with imports falling while exports are

actually remaining fairly supported. As far as the loan and money sector goes, loan growth

continues to be weak to both businesses and consumers. On the government side of things debt

levels remain very high and there is little ambition from some Euro Zone members to bringthose high debt levels down. In fact the recent budget presented by Italy to the European

Commission showed little in the way of actual reforms to bring down their debt level and was

accepted by the Commission showing once again, that these debt levels in the Euro Zone will

continue to rise until a day of reckoning comes and these countries have to default. Another

thing of continued concern continues to be the political divide between political members and

regions of the Euro Zone especially, now, in terms of how the ECB is allowed to deal with the

low growth and inflation. However disagreement and divide are also continuing to be present

in light of continued rising debt and lack of reforms from different countries, namely Italy and

France. As for the central bank, they continue to remain very dovish, recently implementing a

sort of QE program with the purchases of covered bonds and ABS assets in a bid to help revive

the Euro Zones struggling loan and banking industry in order to therefore revive economic

growth. They also have cut rates quite a good amount since about June of this year with one of

their rates now in negative territory. So overall the tone of the Euro Zone is negative.

Overall Sentiment of the Euro

The overall sentiment for the Euro currency is currently still negative overall but

this negativity has weakened over the past week or so.

Last Week in Review

Lsat week showed some improvement in the data coming from the Euro Zone and EuroZone nations. Manufacturing data from Germany and the Euro Zone came in better than

expected with Germanys manufacturing sector improving out of contraction territory. Services

data also showed improvement in France and the Euro Zone while Germanys service industry

weakened further. Other data that showed improvement was German ZEW sentiment survey

numbers which improved while the Euro Zone ZEW sentiment number came in lower than

expected and previous. The other sentiment data for the week was German GfK number which

improved for the month of January over the previous month. So mixed results in terms of

investor sentiment towards the Euro Zone right now while consumer confidence may be

starting to improve a bit more. Also IFO investor sentiment numbers showed improvementoverall from Germany, showing an improvement in business sentiment in Germany at least. The

other data of interest last week was CPI data from the Euro Zone which came in as expected

and overall as previous though month-to-month slipped lower yet again. Labor cost data for the

third quarter also slipped lower which is not good news for wages in the Euro Zone.



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As for most of the rest of the world, this will be a slow week in terms of data due to

Christmas. German Retail sales on Tuesday along with quarter three GDP data from France on

the same day and Consumer Confidence for the Euro Zone Monday will be the data releases of

most interest for the week. As for consumer confidence this has taken a beating over the past

few months and so any improvement in the number will be encouraging on some small leveland whether consumer sentiment will follow last weeks investor and business sentiment

numbers which improved a bit. As for growth data from France, this reading will be the final

reading of this data with expectations of no change to the preliminary reading. Any more

weakness though will be taken notice of and increase expectations for more easing from the

ECB.

British Pound Overall Picture and Its Tone

The overall economic picture is one of strong growth while some weakness has been seen

recently in some sectors. The recent weakness has been seen in particular in the manufacturing

and services industries with the latter being of some concern as the UKs economy is so

dependent on this sector for its growth. Other weakness has been seen in the countrys exports,

though not too surprising there as the Pound continues to be strong overall. Imports also havefallen some over the last few months. As for the consumer, consumption has moved lower as

seen in recent weakening in Retail Sales data while sentiment numbers have begun to weaken.

This weakness in consumer sentiment has stemmed in part from a weakening housing market

as house prices fall as well as construction activity. As far as inflation goes, this also continues to

move lower as the UK follows the rest of the world (or a large part of it) into a world-wide

deflationary trend, in some respects. This low inflation and weaker growth has also kept the

BoE at bay in terms of them raising rates. They continue to be neutral on that fact and the

market is currently expecting them to keep rates on hold and not raise them until the middle

part of next year at the very least. Another concern of the BoE, which has kept them fromraising rates at this point is the low wage growth. However the labor market as a whole

continues to improve as the number of newly employed continues to rise and the number of

unemployed continues to fall. Overall then the tone of the United Kingdom is neutral to slightly

positive.

Overall Sentiment of Pound Sterling

Overall the sentiment for the Pound Sterling is neutral to negative.


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Last Week in Review

Inflation data for last week showed yet another drop in prices for the month of November

with month-to-month data slipping into negative territory. This fall in prices is mainly due right

now to the fall in energy prices as oil in particular continues to weaken. Some good news

though for price data was PPI data which rose for the month of November but somecomponents of the PPI data, including output and import data continue to be in negative

territory. Retail prices also fell with month-to-month slipping into negative territory from the

last months reading and so it would appear that energy is not the only thing that is falling in

price though it continues to remain a main driver of lower prices right now. The other main

event last week was the release of the BoE meeting minutes. Overall there was no real change in

the tone of the BoE towards rate increases as the voting tally remained the same, two for rate

increases and seven against, while the tone in the statement pointed to a central bank that is fine

with leaving rates as they are for now. However they did show optimism on growth for the UK

but not for inflation. They also though expect that the low prices in oil right now will be a goodthing overall for the UK economy. So a mixed message coming from the BoE right now but still

the Bank is optimistic for growth. Other data for the week showed that house prices took

another fall from two sources of data as did consumer confidence for December. Positive data

for the week though was seen in the employment sector and retail sales sector. The employment

sector showed yet another drop in the number of unemployed in the UK and more than

expected while wages showed improvement as well with wages including and excluding

bonuses both improving for the month of October. An encouraging sign then as low wages have

been a concern of the BoE over the past few months. The one weakness in the employment data

was the unexpected rise in the unemployment rate. The other positive data from last week was

retail sales data which came in much better than expected overall both headline and core

numbers. However this could very well be due in part of holiday shopping as Christmas is right

around the corner.


This week in the UK will be another slow week for data however we will get the final

reading on third quarter GDP. Expectations are for a better reading than the preliminary reading

and if this is the case we could see the Pound gain again some more. This data will be released

on Tuesday along with the final reading of business investment. Services data and mortgage

approvals data will be released on the same day as well. But other than that, after Tuesday,things will likely slow quite a bit with Christmas just a couple of days later.


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Canadian Dollar Overall Picture and Its Tone

The Canadian economy continues to be mixed overall. The positive side of things is that

inflation continues to be relatively stable and high, though this has likely changed now with oil

moving so low. Overall growth too continues to be supported. As for the consumer this is where

some of the weakness lies as spending remains subdued as seen via retail sales data. As for the

business side of things, this remains supported overall. Oil production also continues to

increase but with prices as low as they are, they are not helping the economy any right now. As

for the housing sector, this remains strong with high prices and good building activity both

being supported by low interest rates. As for trade, exports have started to increase some

recently especially as the US continues to bounce back. As for the labor market, this seems to be

improving as new jobs continue to increase in number and the unemployment rate continues to

move higher while wages remain weak, as seems to be norm right now. As for the central bank

they remain neutral to dovish in their tone towards the Canadian economy though they are

starting to sound a bit more optimistic now as the US economy, which Canada is very

dependent on, continues to improve. However, they continue to see recent inflation levels as

being just temporary and still continue to expect weaker growth for a while going forward.

Overall then the tone of Canada as a whole is neutral in relation to the monetary policy in

particular.

Overall Sentiment of the Canadian Dollar

Overall the sentiment for the CAD is currently neutral to negative.

Last Week in Review

The key data last week was inflation data for the month of November which came in

lower overall. The weaker number was driven by lower gasoline prices while other energy

prices actually rose, namely electricity and natural gas prices. This lower inflation data also give

some credence to the BoCs recent and continued message that the rise and steady height in the

inflation data in Canada has been just noise. However, what I find rather interesting, is that

while the rest of the worlds inflation data has been falling overall, Canadas has been staying

steadily high and rising in fact over the past few months. This to me tells me that there could be

more inflation pressures in Canada than some realize or than the BoC wants to admit. Also too,

with oil prices as low as they are and with as much as they have fallen in the last couple of

months, one would think that inflation would have come in even weaker. But it didnt a huge

amount this month. Something to watch then in my opinion. The other data of importance from


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last week was retail sales data which came in mixed. Year-over-year came in weaker than

expected and previous while month-to-month came in better than expected but also weaker

than previous. Overall not a good message in terms of consumer demand in Canada. However

this data was from October and so we could see a pickup in in the following two months data

due to holiday shopping. Also last week, manufacturing shipments fell for October which doesnot bode well for the manufacturing sector of Canada. Overall though the CAD continue to

move lower overall right now driven mostly by lower oil but also a weaker domestic economy

and a neutral to slightly dovish central bank.


Yet another country that will have sparse data this week. GDP data for the month of

October will be the one and only scheduled economic data release for this week and that is

scheduled for release on Tuesday. Expectations are for a lower number than previous. Besides

that oil will likely continue to be a main driver of the Loonie as both continue to move lower

overall right now.

United States Dollar Overall Picture and Its Tone

The overall picture of the US one of positive growth overall, a central bank that is (very

slowly) turning more hawkish while the government has been pushed to one side in many

respects as it continues to wrangle with its differences and division. As for the economy: it

continues to improve overall though there has been some weakness seen recently, particularly

in the manufacturing sector due to the increasing value of the US Dollar. However this sector, as

well as the industrial and services sectors continue to grow. Business sentiment also remains

strong. The employment sector continues to be good overall with rising employment and falling

unemployment. However problems remain as long term unemployed people continue tostruggle to find jobs and the skills gap continues to widen as fewer and fewer have the skills

necessary to do high tech jobs that are so vital to a nations growth. As for the consumer, they

also remain pretty good though weak wage growth continues to be a problem and consumption

is down some now looking at retail sales data. Sentiment though for the consumer remains

strong overall. Trade continues to do well with both exports and imports strong though the

deficit in the US continues to deepen. As for inflation, this continues to stay steady, but steadily


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below the Feds target. As for housing, after a good start this year this sector has weakened

some in the past few months as rate hike expectations continue to be in focus for this industry.

As for rates, and the Fed, in light of the overall US economic picture they have begun to turn

more hawkish in their tone and in their policy recently exiting their QE program completely in a

bid to begin to slowly tighten policy. The tone from the Fed is also changing, though alsochanging as they are sounding more optimistic on the economy and jobs and so on but are still

concerned about low inflation. Looking to the government, this part of the US continues to be in

a wrangle with itself failing to pass any meaningful laws or policy changes to help the economy

grow. Recent mid-term elections have given some people some hope as the Republicans now

control both the House and Senate though with a stubborn President at the helm of things, little

will likely change until after presidential elections in two years. However we will have to see.

Maybe Congress will be able to pull a rabbit out of its hat after all. Overall though the tone of

the US economy is neutral to positive overall due to a more optimistic Federal Reserve and

stronger economic growth that continues to get stronger.

Overall Sentiment of the US Dollar

Overall the sentiment for the USD continues to be positive overall but this positiveness

has weakened a bit the past week or so.

Last Week in Review

Last week, inflation data showed yet another dip in prices in the US as both year-over-

year and month-to-month headline inflation came in lower than expected and previous while

core also slipped lower. Month-to-month headline data in fact fell into negative territory, so

weakness in prices are present overall right now. Other data for the week were building permits

and housing starts data, both coming in lower tan expected and previous. As for the

manufacturing sector, this continued to show more weakness as Markit Manufacturing PMI and

Philly Fed data both came in weaker than expected and previous as the manufacturing part of

the US continues to weaken on the back of a stronger dollar and falling oil prices. As for the

internals for both these sets of data a couple of key internals was employment and prices paid,

both which fell for both sets of data. Services data also slipped lower for the month of

December. The main event last week though was the Feds monthly rate decision, rate statement

and last press conference of the year. Expectations going into the release were that the Fed

would remove the considerable time phrase from their statement signaling to the markets

that they were getting closer to their first rate hike. Well turns out they did remove it...or didnt

remove it...or both. Its all quite confusing; same as the market is right now after the release of

the statement. Basically, all the central bank did was move the considerable time phrase down

one sentence. Replacing the considerable time phrase was the word patience. Overall the

market took this as a hawkish move though the stock market too it as a more dovish tone as the

stock market rose quite a bit in response to the statement. Personally though, I am not seeing

how this shift in language is hawkish. To me it is just confusing and shows that the Fed is


16/17

confused as well and doing whatever they can to NOT raise rates. To me, the Fed is no closer to

raising rates any more than last months statement and in fact, I think the risk has increased that

the Fed will actually wait a bit longer than what the markets are expecting to raise rates after

last weeks rate statement release. During the press conference though, Yellen mentioned that

policy moves do not have to happen during press conference and that a couple means two interms of when policy could change to support rate hikes, i.e., a removal of the considerable time

and patience messages. As for the Feds growth and employment forecasts, growth was revised

higher overall both for this year and for three years from now while the unemployment rate

forecasts moved a bit lower. The Feds Dot forecasts remained pretty much the same but one

member did adjust their forecast to show that rates will be at 3% in September of 2015. So

overall a bit more hawkish tone to the forecasts. Could help explain the Dollar bid after the

statement released. All in all though, as I said I am not so sold on the idea that the Fed will be

raising rates when the markets expect they will; sometime within the first half of next year is

what the market expects at this point.


This week, leading up to the Christmas holiday break, things will be a bit busy in terms of

data for the US. The highlight of the week will be Durable Goods orders on Tuesday.

Expectations are for a better release than last months which showed some weakness in this part

of the US economy and which put some people in an uneasy state in terms of what fourth

quarter and year-end growth could likely be for the US. However, with the manufacturing

sector in particular having slowed as much as it has in the past couple of months or so, I am not

so optimistic on the Durable Goods orders data. I think there is a good amount of risk for a

weaker than expected number and possibly even weaker than previous. The other big data

release this week, also on Tuesday and on going with the growth theme, final reading of third

quarter GDP will be released. But, as the Durable Good orders is more forward looking this will

likely get more interest. Also for the week, and again on Tuesday, New Home Sales, Personal

Income, Personal Spending and Personal Consumption Expenditure data will be released. Other

data for the week will be existing home sales data on Monday and then weekly jobs claims

numbers and mortgage applications data on Wednesday. Then, after Wednesdays half-day

close of the markets, things should slow down for the rest of the week.


17/17

Charts

AUD/USD Weekly Chart - continues its decline...any correction coming?

Oil -- is a correction in the cards after weeks of declines?

One Financial 12:22

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Transcript of One Financial 12:22