April 12, 2021 | by sandeep
5 Issues to Look Out for This Week – 12/4/21
So what’s shaking in the markets this week?
We got plenty of action coming from the US and a little bit from Europe and China for a grand total of nine different trading opportunities at your fingertips.
Inflation on the Move in the Good ‘Ol USA
Following a 0.4% increase in prices during February, will US inflation continue its slow climb?
Figures suggest inflation is heading north.
For instance, in the 12 months through February, the CPI gained 1.7%, its largest spike since early 2020.
Some analysts believe that the Biden administration’s ambitious stimulus packages could lead to inflationary pressure down the road.
Combine this with the expected recovery of the US labor market, which was struck hard by the COVID-19 pandemic with close to 18 million Americans still receiving unemployment benefits, and you have signs pointing to an increase in prices.
TD Securities’ Jim O’Sullivan thinks employment will have a bigger say on inflation moving forward.
Talking to CNBC, O’Sullivan said, “Ample slack [in the labor market] will be a more important driver of inflation trends than a temporary surge in growth as the drag from COVID fades and the $1.9 trillion fiscal stimulus package kicks in.”
Additionally, our Head of Investment Research, Kaia-Reet Parv, believes supply chain disruptions will feed into CPI and PCE (the Fed’s preferred measure of inflation) figures at some point.
The Fed expects inflation to hit 2.9% by Q2 2021, putting some extra pressure on what has been a very strong US dollar.
Pay close attention to the latest release of the US CPI on Tuesday, April 13th at 12:30 pm GMT and prepare your trades in USD.
Let’s Kick Off Earnings Reports Season in Style!
Yes, it’s that time of the year again.
Companies will slowly start rolling out their earnings reports for Q1 2021.
This week’s featured few are none other than some of the world’s largest and most important investment banks.
Overall, 2020 was a great year for investment banking.
As explained by S&P Global Market Intelligence, once COVID-19 took hold of the world last year, “market volatility reached levels that had not been seen since the global financial crisis of 2008.”
These fluctuations, matched with huge levels of financial assistance afforded by governments throughout the world, “propelled global investment bank revenue to a five-year high in the first quarter of 2020” and “one of the strongest first-half revenue results in almost 10 years.”
For instance, Deutsche Bank registered its first profitable year in the last seven, following a solid performance from its investment banking sector. In 2020 alone, Deutsche Bank’s investment banking division saw its revenue jump to 9.28 billion euros, a 32% increase from the previous year.
Will these record-setting numbers hold true for 2021? Or will the market slow down?
Here’s a useful schedule for you to do your research and plan your trades based on when these banking giants issue their earnings reports for Q1 2021.
Who: JP Morgan Chase (.JPM.N)
Day: Wednesday, April 14th
Time: 12:00 pm GMT
Who: Goldman Sachs (.GS.N)
Day: Wednesday, April 14th
Time: 12:25 pm GMT
Who: Bank of America (.BAC.N)
Day: Thursday, April 15th
Time: 11:45 am GMT
Who: Citigroup (.C.N)
Day: Thursday, April 15th
Time: 1:00 pm GMT
Who: Morgan Stanley (.MS.N)
Day: Friday, April 16th
Time: 12:30 pm GMT
Set an alarm for each and get those trades going!
China Beats All Odds & Soars
China’s economic recovery from the COVID-19 pandemic has been nothing short of remarkable.
China solidified its position as the only major global economy to expand during last year’s chaos, growing by 6.5% in Q4 and 2.3% during all of 2020.
GDP was fueled by the country’s robust export sector and there’s hope domestic consumption, which has remained somewhat slow, will further boost China’s economy.
As you might recall, at the end of last year, China released its Dual Circulation strategy (DCS), which is aimed at strengthening local demand while continuing the country’s focus on exports.
According to Dezan Shira & Associates’ China Briefing, the government’s goal with DCS is “to achieve a more sustainable long-term economic growth of China and hedge against the impact of external shocks,” paying close attention to the development of “an unblocked “internal circulation” of domestic production, distribution, and consumption instead of over dependence on the “external circulation” of the global market.”
Since China’s massive economy has such an important impact on so many currencies and commodities, here’s your chance to trade AUD, NZD, USOIL and plenty of others.
Keep an eye out for China’s GDP figures for Q1 2021 to be released on Thursday, April 15th at 2:00 am GMT and trade your favorite currencies, commodities and indices based on the announcement.
Will March See More Shopping till Dropping?
US retail sales had a very disappointing month of February due to the brutal winter storms that rocked Texas and the southern states, falling by 3% and well below the expected 0.5% drop.
Besides an increase in grocery and gasoline sales, all other sectors suffered during the second month of 2021.
Auto (4.2%), department store (8.4%), online (5.4%), sporting goods (7.5%), and food and beverage (2.5%) sales dropped for the month.
But with the latest stimulus checks making their way into people’s wallets, retail sales for March are expected to swing back upwards.
ING’s Chief International Economist James Knightley, for example, expects retail sales in March and April to move back into the positive, “boosted by the latest $1,400 stimulus payment while the ongoing relaxation of Covid containment measures across many states will increase the opportunities to spend.”
Tune in on Thursday, April 15th at 12:30 pm GMT for the latest US retail sales figures.
This is yet another great opportunity to trade USD and benefit!
Europe’s Snail-Paced Inflation Lives On
Inflation in Europe for the month of February remained unchanged at 0.9% year-on-year with services, food, alcohol and tobacco, and non-energy industrial goods contributing the most to these small gains.
According to Eurostat’s Euroindicators, “the lowest annual rates were registered in Greece (-1.9%), Slovenia (-1.1%) and Cyprus (-0.9%),” while “the highest annual rates were recorded in Poland (3.6%), Hungary (3.3%) and Romania (2.5%).”
All in all, when compared to a month prior, “annual inflation fell in ten Member States, remained stable in three and rose in fourteen.”
Following several months of negative inflation rates, will prices continue to tread north in March?
Check the EU’s latest data on CPI to be released on Friday, April 16th at 9:00 am GMT and open a position or two!
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