World events such as the Consumer Price Index (CPI), the Producer Price Index (PPI), and the US Initial Jobless Rate (IJR) can have an impact on companies stock prices and the stock market as a whole.
BoE Gov Bailey Speaks (on July 09): Bank of England (BOE) Governor Andrew Bailey (Mar 2020 – Mar 2028) is to speak. As head of the BOE’s Monetary Policy Committee (MPC) which controls short term interest rates, Bailey has more influence over sterling’s value than any other person. Traders scrutinize his public engagements for clues regarding future monetary policy. His comments may spark a short-term positive or negative trend.
German CPI (MoM) (Jun) (July 11): The Consumer Price Index (CPI) measures the change in the prices of goods and services from the perspective of the consumer. As Germany has the largest output of any country in the euro-zone, the European Central bank pays very close attention to this figure in its role of maintaining price stability. A reading that is stronger than forecast is generally supportive (bullish) for the EUR, while a weaker than forecast reading is generally negative (bearish) for the EUR.
US Core CPI (MoM) (Jun) (July 12): The Core Consumer Price Index (CPI) measures the changes in the price of goods and services, excluding food and energy. The Central bank pays very close attention to this figure in its role of maintaining price stability. Because the Fed believes that core inflation is a better gauge of underlying price pressures, it is more closely watched than overall inflation which tends to be more volatile. A reading that is stronger than forecast is generally supportive (bullish) for the USD, while a weaker than forecast reading is generally negative (bearish) for the USD.
BoC Interest Rate Decision (July 12): The Bank of Canada (BOC) publishes its decision on where to set the benchmark interest rate. As short term interest rates are an important determinant of currency valuation, traders watch interest rate changes closely. A reading that is weaker than forecast is generally supportive (bullish) for the CAD, while a stronger than forecast reading is generally negative (bearish) for the CAD.
Crude Oil Inventories (July 12): The Energy Information Administration’s (EIA) Crude Oil Inventories measures the weekly change in the number of barrels of commercial crude oil held by US firms. The level of inventories influences the price of petroleum products, which can have an impact on inflation. If the increase in crude inventories is more than expected, it implies weaker demand and is bearish for crude prices. The same can be said if a decline in inventories is less than expected. If the increase in crude is less than expected, it implies greater demand and is bullish for crude prices. The same can be said if a decline in inventories is more than expected.
Britain Manufacturing Production (MoM) (May) (July 13): Manufacturing Production measures the change in the total inflation-adjusted value of output produced by manufacturers. Manufacturing accounts for about eighty percent of overall Industrial Production. A reading that is stronger than forecast is generally supportive (bullish) for the GBP, while a weaker than forecast reading is generally negative (bearish) for the GBP.
Britain GDP (MoM) (May) (July 13): Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health. A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP.
GDP (YoY) (May): Gross Domestic Product (GDP) measures the change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health. A reading that is stronger than forecast is generally supportive (bullish) for the JPY, while a weaker than forecast reading is generally negative (bearish) for the JPY.
US PPI (MoM) (Jun) (July 13): The Producer Price Index (PPI) measures a change in input prices of raw, semi-finished or finished goods and services. If input costs rise, some will be absorbed by the producer and some passed on to the consumer. Conversely, if input costs fall, some of the decline will be enjoyed as wider profit margins by the producer and some will be passed on to the consumer in the form of lower prices. Because PPI impacts consumer prices, it is watched by central bankers as part of fulfilling their mandate of price stability. A reading that is stronger than forecast is generally supportive (bullish) for the USD, while a weaker than forecast reading is generally negative (bearish) for the USD.
US Initial Jobless Claims (July 13): Initial Jobless Claims measures the number of people who filed for unemployment insurance for the first time during the past week. This is the most timely U.S. economic data, but the market impact varies from week to week. A reading that is higher than forecast is generally negative (bearish) for the USD, while a lower than forecast reading is generally supportive (bullish) for the USD.
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Updated: 09 Jul 2023, 07:33 PM IST