April 16, 2021 | by sandeep
5 Issues to Look Out for this Week – 19/4/21
By Mateo Jarrin Cuvi
Inflation, a speech by ECB President Christine Lagarde and manufacturing indices are on the cards this week. So are earning reports from pharma and oil & gas giants and tech-heavy index NASDAQ.
Plenty of movement coming your way!
Will Inflation Remain Stable for the Kiwis?
It’s time to trade one of your favorites, the NZD.
Inflation has remained stable in New Zealand, sitting at 1.4% for the year with the CPI moving up by 0.5% in Q4 2020.
This Q4 increase was spurred by a hike in the prices of domestic accommodation services, such as hotels and AirBnB rentals, home building and used cars.
As a result of the COVID-19 pandemic and the restrictions imposed, New Zealanders who would have previously traveled during their summer holidays opted instead to vacation locally and invest in new cars, furniture and electronics.
For instance, the price of cars surged by 4.6% in Q4 2020, their highest increase since the summer of 1997, while the cost of furniture, electronics and telecomm gear moved up by 7.2, 12 and 8%, respectively.
Will annual inflation stay steady for Q1 2021 or will prices push further upward as more Kiwis spend on local travel and big-ticket goods?
Tune in on Tuesday, April 20th at 10:45 pm GMT for New Zealand’s latest figures on CPI and roll out your NZD trades!
Two-for-One: CPI for Canada and the UK on the Same Day
Both Canada and the UK will release their latest CPI data this week, making this a prime time opportunity for you to trade either or both currencies.
For the month of February, Canada’s CPI rose to 1.1% year over year as a result of a 5% increase in the price of gasoline, which in turn led to a 1% surge in the price of consumer goods.
According to Statistics Canada, this price spike “comes amid a gradual recovery in global demand for gasoline, crude oil supply cuts in major oil-producing countries and weather-related shutdowns in the southern United States.”
As for the UK, the Office of National Statistics reports that inflation “rose by 0.7% in the 12 months to February 2021, down from 0.9% to January.”
A drop in the prices of games, toys, clothing and used cars contributed to the 0.2% CPI decrease seen in February.
How will inflation fare for both Commonwealth nations in March? Will we see prices tread north as their economies recover from the COVID-19 pandemic and their vaccination campaigns move forward?
Join in on the fun on Wednesday, April 21st at 6:00 am GMT for UK CPI and 12:30 pm GMT for Canada CPI.
And let’s see if both countries’ inflation continues to hover around 1% or (tradable) surprises are in store!
When the ECB Speaks, You Listen
It’s time for you to pay close attention. The European Central Bank (ECB) is about to speak.
Why is this important, you ask?
The ECB’s Governing Council takes the lead in setting interest rates and, therefore, defining inflation for the Eurozone.
These rates are then applied by central banks across the region when it comes to determining the minimum bid, deposit and marginal lending rates to be applied to commercial transactions.
Additionally, the ECB can decide to pump money into the economy during times of crisis to jumpstart business activity and boost sales.
Obviously, interest rates and inflation have a significant impact on currency pairs, stocks, commodities and other instruments, so traders are always on the lookout for what the ECB and other central banks like the US Fed, for that matter, have to say.
Therefore, there should be ample opportunities for you to trade EUR right after ECB President Christine Lagarde speaks on Thursday, April 22nd at 12:30 pm GMT.
Mark your calendar and prepare those EUR trades!
The Tale of Two PMIs
March witnessed vast improvements for the Purchasing Managers’ Index (PMI) in both the EU and the UK.
The EU’s manufacturing PMI moved into the positives for the first time since September, hitting 52.5 on the back of “a record surge of factory production in Germany.”
Germany’s upturn from 51.1 in February to 56.8 in March marked the economy’s highest leap in just over three years.
Outside of France, whose manufacturing PMI declined for a seventh month in a row, IHS Markit explains that “the rest of the region saw a modest return to growth for the first time since last July (composite index at 50.6 versus 48.2 in February).”
Unfortunately for Europe, the region’s services PMI is still lagging behind, an effect of the recent rise in COVID-19 cases and the many lockdowns currently in place to curtail its spread.
On the other hand, the UK, which has performed better as a result of its effective vaccination policy, saw its manufacturing PMI jump from 55.1 to 57.9 and its services PMI move into the positive from 49.5 to 56.8, its highest level in the past seven months.
According to IHS Markit, this significant jump in the UK “was fuelled by a rise in new orders for the first time since September 2020, which survey respondents attributed to a rebound in sales ahead of easing lockdown measures, alongside stronger consumer confidence and a surge in demand for residential property services.”
Will April’s figures stay true to this trend or will the EU’s recent struggles with vaccinations and COVID-19 contagion send the two in opposite directions?
Find out on Friday, April 23rd at 8:00 am GMT and 8:30 am GMT for the EU and UK PMIs, respectively.
Time to Trade Pharma, Oil & Gas and NASDAQ!
Earnings report season is in full swing and here are some of this week’s main trading opportunities at your fingertips.
Who: Johnson & Johnson (.JNJ.N)
Day: Tuesday, April 20th
Time: 11:40 am GMT
Note: Despite some recent mishaps, J&J’s vaccine rollout was successful during Q1 2021, which should contribute to solid results for Q1 2021. Earnings per share (EPS) is predicted to be $2.31.
Who: NASDAQ (Index)
Day: Wednesday, April 21st
Time: 12:00 pm GMT
Note: NASDAQ is at an all-time high. Its revenues for 2020 grew by 15% compared to 2019 and signs point to more to come, making this a prime opportunity to trade this index.
Who: Schlumberger (.SLB.N)
Day: Friday, April 23rd
Time: 11:50 am GMT
Note: Despite oil consolidating at around $60 per barrel, a reopening of the EU and impetus from both China and the US in terms of their infrastructure goals should push the price of oil upwards. Hence, Schlumberger should be able to build on its 5% increase in revenues seen for Q4 2020. EPS for Q1 2021 is expected to be around $0.19.
Add these releases to your personal calendar and prepare your trades!
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