Fundamental Analysis

Weekly Roundup Report 14/07/2017

• July 18, 2017

EVENT RECAP: WEEK ENDING 14^th JULY 2017

North America The headline event of last week was the decision by the Bank of Canada to raise interest rates by 25 basis points. The Overnight rate had not been raised in 7 years resulting in an instant appreciation of the Canadian dollar, as the market interpreted the policy move as a signal of the strength in the economy. In the U.S., consumer data was disappointing, despite a rise in producer prices. The rise in PPI did not translate to CPI with the index barely registering growth at 0.1%. Similarly, retail sales contracted by 0.2% indicating a tail off in consumer spending, which may translate into second quarter economic growth. Janet Yellen had to clarify earlier statements in her speech on Wednesday, which indicated that she thought there would not be another “financial crisis in our lifetime.” She stated that that the comment referred to the work the Fed has done to strengthen the banking system; however, there could be no guarantee that a crisis would not take place.  She believes the regulations introduced make another ‘Great Recession’ less likely to reoccur.   Asia Pacific China CPI disappointed, missing expectations with a rise of 1.5% as producer prices met expectations. The National Bureau of Statistics reported that there had been no change in consumer prices since May. The result indicates that there is moderate demand from consumers. Trade Balance data later in the week showed that China’s trade surplus had widened in June to 294 billion Yuan, outstripping expectations for a 273 billion Yuan surplus. The Eco Watchers Survey for June indicated that Japanese consumers were feeling more optimistic about the economy, with the first expansion recorded in the survey since January.   United Kingdom The U.K. labour market has been strengthening in the first and second quarters, according to Office for National Statistics. The number of people employed has increased and the number of people unemployed has decreased, taking the unemployment rate to 4.5%.   Europe It was business as usual for Europe’s largest economy, with Trade Balance data showing healthy export growth for Germany despite the recent surge in the Euro. Eurozone Industrial production rose by 4% year-on-year in May.