Good afternoon traders. And welcome to the market analysis video for week ending the fourth Of March 2016. As I mentioned in the final midday report of the week, a little bit earlier, that I'm getting the video over to you because I have to shoot off in a few hours time. And I will be traveling for the majority of the weekend. So this is really my only window to get the video recorded, which is absolutely fine because it gives you a few hours extra to obviously get your head around what's gone on last week, which we'll do by having a look back at the calendar and also next week where we got some big chunky events from from a central bank perspective. We have the ECB, we have the Bank of Canada and we have the rbnz the kiwi central bank so lots going on next week to look forward to so want to get you well prepared for that.

So started March has been fairly solid and in terms of a steady state stream of trading opportunities. Throughout the weeks, there's been some good things going on. And some follow over from what we talked about in last week's video. I know last week's video we we looked at all the Aussie data and said, Look, let's try and build a theme. Even though the Aussie is neutral from a long term perspective, we'll the abundance of data that's coming out, build a short term sentiment on it. And that's done exactly that.

And really, some of the best opportunities this week have come on the likes of Ozzie pears off the back of some very impressive data. And it's obviously been great to hear that many of you have taken full advantage of that because many of the the Aussie data points have come out in the late us session. So given many of you opportunities to trade that even though you may not be able to trade your during the European session. So without further ado, we're going to go back through last week's calendar, then have a look at next week's I have now posted the majority of the trades that I've taken this week. So you can go through them in your own time check those out because I don't want to add any extra time on this video than we already have, because most videos are normally an hour in length.

So you can go through those in your own time, because they are important for you to go through because it's always going through the why I'm taking them trades. Now hopefully, you're starting to really get in tune with this now because of the reports, essentially explaining why I take these trades, but those y's are going to become the same reasons that you take similar trades in the future. So it's important that you don't forget to watch those trade videos because they are very, very important from your learning perspective, because they talk you through the reasons why I personally took them. But what has been nice to see is that many of you have been taking very similar trades to what I've been taking as well. So the week kicked off with the final day of the month, as I mentioned to you, I wasn't looking to trade unless something absolutely screamed out at me because I was up have the mindset to preserve capital that have been made in the month of February rather than take any undue risks that weren't really necessary on the last day of the month.

However, I was tempted in to a euro based trade based on this data here. We know that inflation data is important out of the Eurozone. Why is that? Well, Mr. Draghi at the ECB, the Central Bank of Europe have openly stated time and time and time again that their number one priority is getting inflation back on track. So the fact that inflation the latest inflation for the eurozone region, we obviously saw some nice moves lower on the euro. The week prior based on the poor German figures, this was now the eurozone as a whole.

The Flash estimate came in as or the headline came in at minus naught point two so they've actually entered deflationary territory. The previous was also revised down which was a negative, and it was lower than what the market was expecting. The market was expecting a flat reading and it got a deflationary Reading or negative reading the same on the cork is cause important as well because we need to discount the massive downward pressure that the fallen oil has had. So energy prices are removed from the core reading. Even that came down by point two of a percentage expected at naught point nine came in at naught point seven. Now remember that the ECB has a 2% annual target on the core reading and they are well sure of that.

And they've actually moved further away from it. So we saw some euro weakness. Why do we see some euro weakness? Well, it raised the expectations of further action from the ECB at their meeting next Thursday. So the Euro at the start of the week. Well, really, for the majority of the week, it was fairly heavy up until we got some recent comments which I'll discuss shortly from the ECB, and that created a little bit of positivity on the Euro, but for the majority of the week, that's the main capital.

Behind the weakness in the Euro, and that's why I've been using the weak euro against the stronger counterparts in the early part of the week because of this reading here. Now I didn't take many pips from this particular trade because I was just a bit nervous because it was the last day of the month I just wanted to, to really close out so I took a small a small profit there so it was it was a nothing trade, there were more pips to be had. And no doubt you'd have taken a little bit more by holding the position a little bit longer than what I did. But that was the main reason why we got a move lower in the euro. Now it for me this is a red impact event because of how much emphasis the ECB have placed on inflation. Inflation readings should all be red flag.

So why this is still amber I don't know. But obviously, that's the beauty of having the videos because I can point the sort of things out. Inflation data at the eurozone is massively important because the market will react to it because they know that the central bank is most concerned By it a bit like how inflation data out of the UK and the US is more market moving than other data points because the respective central banks have communicate to the market saying these are the things that are going to influence us and our monetary policy going forward. And that's the things that the market concentrates on everything else is, is not that it's not important. It's just it hasn't got as much it doesn't Garner as much attention from the big institutional traders so we get less of a reaction or get mixed reactions to other data points.

Our job is to understand what the central bank is focused on, and then concentrate on trading those events because they lend themselves to greater and more high probability trading opportunities. So that was quite interesting and does sit next week's event, Thursday's event up very, very nicely indeed. So really looking forward to that because I really, really keen to know what's going to happen and how the the ECB are likely to act especially Because of what happened in December when they failed to deliver against the markets expectations, and we saw the Euro boom, the last thing that the ECB want now is to see a stronger euro, because that will put further downward pressure on inflation, which is the last thing they want to see. So it's gonna be really, really interesting. And they may have used some tactics on Friday, I might as well go through the comments that came out this morning.

Now, while we're on this point, is we've got some comments. They were source comments, so it wasn't confirmed as to whether they were actual, actually from the ECB, but the source comments which essentially have the same impact rumors can have the same impact as actual reality. So this was source comments from supposedly the ECB saying that next week, all they're going to do is make a small minor deposit rate cut. And that was taken as less bearish because if you'd have been reading the reports, the article that I sent out yesterday where it was a Reuters poll Many of the analysts or the market expectations are for quite a deep cut. So point four, or point five of a cut to the deposit rate and an expansion of the current QE program, ie making their current QE program larger. So the fact that then the source comments came out and said, we're only going to cut rates a little bit is the market was going oh, well, that's a bit disappointing because my expectations were this.

And they are underneath my expectations. So the Euro actually rallied this morning and provided some provided the currency with some strength, especially against most of its other counterparts, which were doing nothing as we lead into FM FOMC. Sorry, not FOMC, the NFP data point, the big jobs data point. So the Euro was decidedly strong off the back of those comments. And that's because it's all about comparing expectations to reality, the expectations of the market were one thing and then the reality which came out from these source comments was actually no, they're not going to be as aggressive now, I'll I personally feel that this is just the way of managing or bringing down the markets expectations because what they wouldn't have liked in December is seeing the Euro strengthened so much. And that's because they did a horrendous job managing the expectations of the market Mr. Draghi, the head of the ECB came out several weeks before the actual December meeting, I'm saying we're going to do all it takes we're going to do all it takes so the market was expecting them to throw the kitchen sink at the issue.

And they only got a small implementation. So the market was massively disappointed. It didn't not mean that the ECB have all of a sudden turn bullish. It just meant that the market was very disappointed. So all of a sudden the heavily bearish market, just liquidated all their euro sell positions. And that inevitably created some euro strength.

So the markets going to need impressing next week. So what the ECB could be doing with those comments. planting a few seeds saying actually, we're not going to be as aggressive as you think. But then follow through and actually give the market more than what they're expecting. So those comments would have rained in the markets expectations. So they have more emphasis next Thursday to deliver a surprise, which for me would be the preference because I would prefer to be selling the Euro on a big surprise.

And actually, the ECB just coming out and giving the market what it was expecting is that slightly trickier to trade? So that was very, very interesting. That's what on earth the the the the short term euro CAD trade this morning, it was those positive comments, which were a surprise because the market was expecting one thing and then all of these, all of a sudden these comments came out, and were suggesting something other so they were fresh, they were new and gave the Euro, some love. And that's why I traded by trade on euro CAD because at the time the CAD was quite weak because oil was pushing down so it did on Earth a nice trading opportunity, but it was very, very short term because as we get ever closer to next week's meeting, the markets going to be very nervy of taking any fresh Europe positions because of the threat of further action.

So we need to be a little bit wary of Euro positions going into that meeting but a meeting should provide some fireworks. So it's going to be very, very interesting. We'll recap that when we look at next week's calendar, then Apart from that, not much else finish the month very, very pleased with the month of February. delighted to hear a number of you have also squeezed out a another profitable month following on from January which was also excellent in terms of taking advantage of the risk off theme which was at its most, most pertinent. What we have seen is there's a gradual, you'll notice that the risk on risk off is starting to die down now that we're getting further away from that, from that initial catalyst or the initial fear that the risk on risk of themes have started to common throughout the majority of this week.

It's generally been more As the China worries are a little bit further in the past, and that was illustrated by the fact that even though we got some worse than expected Chinese data, the market did not overreact to it. And I think that's because now the markets going, Okay, I've accepted the fact that China's slowing down when we first got the the poor data in January was a bit of a shock. So that's what caused my uncertainty. But now that we've got used to it, we've digested it. It's really old news now. So I'm, I'm not as concerned as I was previously.

And that's why I said in the report, be careful trading the news directly. So rather than just jumping in straight after the news, wait to see the reaction and the reaction was pretty tepid, and so did not spark any clear risk off panic and uncertainty. So we couldn't really take advantage of that. But it was quite interesting because it said actually, now the market is less concerned about The Chinese, the Chinese slowdown doesn't mean they can't become concerned again in the future. But this data did not spark any real risk off sentiment. And generally speaking throughout this week, we've seen a fairly positive, upbeat risk on tone as the market as the market regains its confidence in the economic outlook.

So both data points did come in a touch lower, nothing drastic, but it still does suggest that China is slowing. But the markets now just taking this as as old news. Now in regards to the Australian cash rate and statement, it was fairly along the lines of what we were expecting. cash rate, no change there and RBA statement came in, in its usual neutral term and tonality. The RBA said yep, international concerns remain but domestically speaking we are happy and we did actually see the As he strengthen off the back of that, because there had been a few analysts that were expecting the RBA, to use this opportunity to at least start talking down the currency by being a little bit more on the bearish side of neutral, but the fact that they weren't, they were probably more on the they're on the more upbeat side of neutral.

So this was the starting point of the Australian dollar strength that we've seen this week from a short term perspective. So no real change in terms of the stance from the RBA. But because they were not as bearish as they could have been. This was seen as slightly positive and the Aussie did from this point remain on the strongest I will effectively was the strongest currency this week based on the gradual buildup of positive tones running through the currency. So it has been a standout currency this week. So interesting to note that we didn't get any throw up from the Chinese data.

The RBA, we're on the slightly more optimistic side of neutral but still neutral. And that gave the Aussie a bit of a boost. In terms of all the UK data that came out this week, we can effectively ignore it because it's just so so tricky trading the pound right now, I just think that the uncertainty around the Brexit is keeping many institutional traders on the sidelines. And this has no meaning that there's no clarity in its movement. Now, one of the articles I sent out to you guys recently was very, very interesting, because it said that a lot of the big hedge fund bank traders etc, are still uncertain, and are still yet to make bad judgments on what the Brexit means for the UK economy. So because of that we haven't got institutional traders driving the power right now.

It's everyone else, and they are a lot more sporadic and unpredictable. And that's why all of my reports are saying look, I urge you to stay away from it because that's exactly what I'm doing. So what I want the reports and the videos to do to not only help pinpoint the best trading opportunities or trading events is to also warn you of potential events that you could get caught out by, because what we want to do is trade the very, very best to give ourselves a high probability of making some good pit returns, but then not give it back by trading port events or events that are lower probability. And that will really, really help with your consistency. So I hope that you did stay out. I didn't really hear from too many of you that did actually trade it.

So that was good to hear. So I presume that not many of you traded the UK data this week, because it's just a bit of a mess on the pound right now. That's because institutional traders are not getting involved at this stage. Will that change? Of course it will at some point, but we've just got to tune in on a week by week basis, until we can see clarity in the movement. The one trade that did spark some good opportunities was the Canadian GDP because this can mean better than expected.

Now remember, with all Canadian data, it's really, really important that we know what the short term directional bias is. And unlike with the pound, we were able to get a very clear sentiment or directional bias from a short term perspective, based on looking at what's happening in oil. And oil throughout the majority of the week has been very buoyant. As we move into the month, March, where many market participants are expecting a emergency meeting to take place between the major producers somewhere between the 20th and the end of the month to agree upon a solution to the overall supply issue. And that's now front of mind because that's fresh, all of these builds in oil. So all inventories coming in higher.

That's been happening for so long now it's become old news. So what's replaced that is the fact that the market is now focusing in on the fact that we now have an emergency meeting in this month. Where potentially there is going to be an agreement to either freeze or cut supply, which is then going to have a positive impact on the price of oil and a positive impact on the Canadian dollar. So, in the report again, it was trying to pinpoint what we needed to have or the scenario we wanted to see play out before we'd consider trading and it was like, okay, make sure you know what's going on with oil before then trading the CAD data, but making sure that the CAD data supports what's happening in oil, so oil is going up. So that's good for the Canadian dollar. So we wanted to see a good GDP reading.

So it came in at naught point two, and also the yearly figure came in better. So that was excellent. And that owner some opportunities, the CAD did get stronger from not only the oil price surging, but also the fact that the data came in good and that continued for the majority of the afternoon and provided some very, very nice opportunities on CAD based pairs. So, again, all the videos or the majority of the videos are posted on the Cool, so you can go and check those out and how I traded them. But great to hear many of you did also take some pips from these CAD based news events. GDT Price Index that's price of milk wasn't great to trade because it didn't come in negative.

And it didn't really come in high enough than the expectations because that I think the market was expecting a build of around about 5%. So the fact that it came in at 1.4 was lower than expected. So the key did weaken a little bit but wasn't massive because it wasn't as low as last time out. So it was a positive reading, but not as positive as what the market was expecting. So for me that was a very mixed reading and not great data point to have traded the kiwi dollar so I'm not really much going on there with the latest GDT Price Index. I like to see bigger jumps either large jumps above expectations, to see a bit of a relief rally in the kiwi or a big jump underneath the low of x. affectations because the market is getting used to just like we're seeing with oil inventory data, it's getting used to negative declines in the milk.

So we need quite extreme numbers to get the market excited enough to jump in to the trade. I said manufacturing data out of the US came in slightly better than expected but still in contraction territory, not really giving us any clear bias on the US dollar. And the main reason we don't really want to be trading manufacturing right now is because the Fed really aren't interested in manufacturing. It is an important sector. Absolutely. But there's more important things that they are focused in on inflation, first, jobs data, including wages second, and then GDP, which is obviously growth, and that's to elude any fears or overcome any fears of the global slowdown or to exacerbate any fears of the global slowdown, so manufacturing data, not really Great data points to trade because the markets not as interested in the data as it is with the aforementioned data points.

And that's all to do with what the Fed is concentrating on. This data point here was very, very good to trade. So Nice, nice, very, very clear high probability trade GDP. So we've obviously seen some positivity on the Aussie from the slightly more upbeat RBA. We also had very much a risk on sentiment stocks performing well, commodities performing well. So generally when there's a risk off the risk on theme that promotes more buying of the riskier scene currency, so the Australian economy is linked heavily to commodities and exports.

So it's seen as a riskier currency, which people are more prepared to buy during times of certainty and confidence and risk on so the fact that we had a nice risk on sentiment and some positivity flowing through the Aussie from the day, the previous day's RBA announcement meant that there was Good conditions fruitful conditions for a buy trade on the Ozzie so long as the data came in better than expected, so it came in at naught point six, the previous was also revised up quite healthily. So all in all, it was a very, very good reading. Also, you'll notice that the time of the release, they gave you a yearly figure and the Euro on your auto came in higher than expected. So really, this just furthers the case or backs up the argument that the RBA is staying on hold and very, very unlikely to cut rates anytime soon.

So that was seen as slightly positive because the RBA have been touted as potentially needing to cut rates again, but this data for further negates the need to cut rates. So it just backs up everything they're saying. They've said that domestically, the data is very, very good. So we don't need to think about changing our policy. The fact that GDP the latest growth figures came in better than expected, overcomes the fear of any global slowdown because saying, okay, it's not as good as last quarter, but we still got better than expected. So that is a positive thing.

So the Aussie strengthened once again, specially against its weak counterparts, some nice pips to be had from that particular data point. Again, same scenario with the pound worse than expected data, a little bit of weakness, then we saw some strange strength just all over the place really not interested in UK data right now. ADP, non farm employment change again, is seen as the smaller brother of NFP but really doesn't really create much of a reaction. And we saw a better figure but the dollar was fairly unmoved. Nothing too great to get our teeth into from that. And then finally was the crude oil inventory data.

So this is really really interesting and shows you how the tide has started to turn or the market's focus has started to turn more on the positivity of the emergency meeting, rather than the current oversupply issue. Now if if there was In an emergency meeting planned, and if all of the big producers of oil, were still denying that there was a problem with oversupply, and that they didn't need to tackle it, this would have probably seen a large fall on crude oil and a large oil in the Canadian dollar. Instead, it didn't. We got a massive, massive build of 10.4 million barrels. But the oil price actually shot up quite aggressively. Very, very strange reaction.

But that's what it did. And the main reason for that is because the night before we got the American version, which came in at 9.9 million, so the markets expectations for a big build was managed quite well. So the market was coming into that data, expecting not 2.5 but actually a lot larger than that because what had happened in America the night before. But also one thing that was very, very interesting that although there was a built in barrels of oil in storage, the actual crude outputs dropped week on week. So the output of crude oil had dropped, signaling that potentially oil producers are starting to take note and are starting to reduce their output, which is a positive thing. So the market focused more on the output fall than the build in oil inventories.

I didn't trade it, because it was a little bit mixed because the oil inventory data came in massive, which is oil negative, but the production or the output of oil actually dropped. The market decided because of the fact that we're in the month of this emergency meeting. And that's a positive thing. They focused more on the fact that the output had reduced and if a deal is agreed at this emergency meeting, then output is probably going to fall even more. So that's the market or the oil market. And the major players in it are wanting to tackle the oversupply issue which has been the main driver of the oil weakness over the last 24 months.

So we are starting to see the tide Turn, which could all unravel if they if we get to this emergency meeting and they come out saying no, no one wants to budge, no one can agree which could happen, then obviously, we were likely to see oil prices start to fall quite sharply again. But if they come up with a fully ratified agreement, and everyone's involved in that agreement, then we're likely to see potentially the end of the decline in oil and start to see more of a more of an upbeat, upbeat trend, and that's likely to have a positive spillover on the Canadian dollar. So an interesting scenario, we are potentially seeing the tide turn for it to fully turn. And for me to change my opinion on oil completely from bullish from bearish to bullish, I would want to see a fully ratified agreement from the major producers that they are going to tackle oversupply.

For now I'm just going to use short term drivers of which at the minute there's some positive short term sentiment on the likes of oil. So looking to buy the cat with positive Data every week, we start fresh with a blank slate, and we look to build up. If we are neutral on a currency from the long term, we look to build up reasons why we can either buy it or sell it on the short term perspective exactly like what we did with the Aussie this week. The exception to that is the pound in terms of is not much that's come out recently that overcomes the jitters or the nerves of the institutional traders to get involved with the parent right now. So that's just one currency that I'm putting to one side, all else, all others. I'll be looking to build up a short term momentum unless I have a clear long term directional bias.

So as we moved into Thursday, trade balance figures out of Australia, this came in better as well. So another great data point to trade wasn't massive move, but we did see the Australian Dollar strengthened throughout the whole of the night against its weaker counterparts. So the overall figure came in at a lower deficit which was good, but also you'll have noticed in the Forex live reports out The commentator would have also back this up, they would have mentioned the exports, which was the key element. Rose 1%. Why is that important? Well, it shows that demand from international markets, ie China has picked up, which is a good thing for the local economy and a good thing for the currency as well.

And also if there are more people buying goods from Australia, what do they need to buy in the local currency so big international trade partners such as China will need to buy material in Aussie dollar so they'll need to buy the Australian dollar so that's why it's exacerbated the Aussie dollar strength this week. Services PMI which is the slightly more important of the data out of the UK this week again came in lower than expected what happened we saw the pound for temporarily and then started to surge again, very tricky trading the pound right now because the institute institutional traders are not getting involved because of the political economic uncertainty and structural uncertainty that a Brexit may bring an insert of whether the outcome or income is more likely, there hasn't really been anything out this week that's built the argument for one or the other.

So the institution trade is pretty sad thinking I'm not touching the power right now, because clearly it could go either way. And so I don't really want to be holding any money in pounds right now, because of this uncertainty. And as you move to the afternoon, not a lot going on, although we did see a lot of dollar weakness, but there was no real reason for the dollar weakness. As I mentioned in my report, what can generally happen when you go into big a big risk event such as NFP, which is specifically related to the dollar, what you can find is on the Thursday, large institutional trades. Again, try and put yourself in the position or the mindset of a large institutional trader, hedge fund or bank trader. That's got a lot of a lot of dollars.

Long dollar positions, for example, and they're going into one of the big risk events. What are they going to be thinking? Well, I'm nervy, I don't know what this next day's events going to bring. But it's certainly going to have some volatility on the dollar, some of it nervous about that. So what they'll generally do is they'll not necessarily close out all of their position, but they may just close out a proportion of it just to reduce their risk going into that risk event. So what you'll do is that maybe someone's in a very large dollar CAD position, for example.

So what they would have done to have entered that trade that a bought dollars and sold Canadian dollars to exit it, it's the other way round, you buy Canadian dollars and you sell us dollars, and that that process creates the weakness that we saw on Thursday. So there's no real fundamental drivers, other than what it's called position squaring, so you've got big institutional traders that will try and square themselves up going into a big risk event. Then as we moved into Friday, the the theme of Good data out of Australia ended with a slightly lower than expected figure. It's still better than last month, but nothing really tradable there. The Aussie dollar was fairly unmoved because it was lower than expected, but not bad enough to cause a sell off on the Aussie. And also remember that the flow or the tide was for a strong Aussie dollar.

So we wanted to see naught point five or higher to then initiate a high probability trade buying the Aussie against its weaker counterparts. The fact that came in lower is not a signal to sell it because you'd be swimming against the short term tide, which is always harder to do. Then, as we moved into the afternoon, which was a couple of hours ago, was a very mixed employments released from the US as we know, this hour average hourly earnings or wage growth is the most important of the three. Even though the headline for some strange reason seems to garner the most attention. We know more intelligently because of what the Fed have been communicating to us that this is the most important element. So the headline broke.

And it was an impressive headline 242,000, which was almost nearly above the high of the range, but not quite, but absolutely smashed what they expected was, and we did see some dollar strength based on the headline, I did not trade it. I did not trade it. And I hope you didn't trade it either. Unless you were prepared to take the prepared to take a more aggressive low probability trade. And you may be done. Okay, if you'd have been an in and out quite quickly buying the dollar, but my concern was this.

It's showing that there's no real consistency in wage growth. We're jumping from very low to very high. So there's no consistency and that's going to concern the Fed. They want to see slow and steady growth in wages because that's going to give people more money to spend in the wider economy and create upwards pressure on inflation, which is the number one, a data point to the Fed. So the fact that it came in minus is showing that after a stellar wage growth last month, it's now going backwards into negative territory. So very, very frustrating.

And, and for me personally, like I was thinking, Okay, we could see the dollar sell off off the back of that. But I think the fact that this was so good, they they balance themselves out, the unemployment rate stayed the same, which was very impressive at 4.9%. So, for me, that is a very mixed event, the most important data point coming in much worse than expected, but the headline coming in much higher than expected, so I didn't trade it. And although we did see some dollar strength for around about 15 minutes, we did see it fade quite quickly, and actually the dollar started to weaken and that's because this one here has tarnished an otherwise good reading. And that's why the devil is in the detail. Now you're probably thinking Well, you could have Squid Squid.

Some pips out from buying the dollar on the headline. Yes, on this occasion, it all looks great in hindsight you could have bought, maybe sold the euro dollar or pound dollar. Both fell quite strongly. And however it's very, very hard to predict. And in hindsight, it looks nice, but we can't trade in hindsight. Remember last month, the jobs report how the headline came in lower than expected.

But the wage growth more important came in higher than expected. So you've got people trying to sell the dollar by just looking at the headline, and all of a sudden the dollar strengthens and they're going Why is the dollar strengthening and that's because the headline was more important. So even though we did see some temporary dollar strength that faded after around about 1520 minutes, because the market is more concerned or the big institutional traders are very concerned about this, which is showing that wage growth is going backwards. Rather than forwards which was the case last time out, so little bit mixed, knowing not to finish on a on a strong point with a good trade on NFP. But the last two readings remember that were wage growth has come in better than expected has provided us with some great pips. We're not going to get that every single event Unfortunately, this is one of the occasions where the data is so mixed that it's just best sat on your hands.

So that wraps up the week. The first week of March has got us off to a fairly good start with some some decent opportunities. And now we're going to look to next week because it's all about continuing to bank some pips and to keep topping up overall monthly performance. Okay, so as we go into Monday, we've got Mr. Kuroda speaking in the early hours, not expecting him to say too much different to what he's been saying lately. He is Mr. doom and gloom a bit like Mr. Draghi but he's his comments on having much of an impact on the yen because he says the same things almost every single time a bit like the Swiss National Bank, Jordan, when you hit the same things, the markets not going to react to it because it's old news. So not expecting him to move the market unless he comes out and says, actually scrap that everything we've been doing for these last three, four years to try and weaken the end.

We no longer have that mindset. We're going to raise rates, but that is not going to happen. So for him to move the yen he has to talk completely out of line with his recent retort and his recent rhetoric is are we concerned about inflation, we're going to continue to do QE. We're happy with cutting rates. So he is on the bearish side. But because he says the same things every time he is unlikely to move the yen.

Then as we move through Monday, not much going on in terms of data. What could be interesting to listen into is these two guys here fed members. Main reason for that is because we've now had the latest NFP so it'll be interesting to hear hear their responses to the dropping wages, if they specifically identify that as a concern, this could just give the dollar some temporary weakness as the market starts to again, start get some start starts to get some jitters again going well, the wage growth doesn't give the Fed more confidence he actually gives them less confidence to raise rates again in 2016. I think the market is now well managed in terms of not expecting the four rate hikes that were promised at the start of the year. I think that's a given now. So the markets thinking, will they or will they not raise rates?

And so data is going to be really really key to determine that and the NFP was a bit mixed but the wage growth which the Fed have said is important to them, because it has upward pressure on inflation will be a concerns that slightly reduces the potential for another rate hike anytime soon, which is on the slightly negative side for the dollar. So any question confirmation of that via their speeches could see the dollar come under a little bit of pressure. We also have RBA Deputy Governor low speaking which I'm not expecting too much from him mainly because the RBA have only just come out with their latest communication. So last week, or this week on Tuesday, we heard their communication so I'm not expecting him to deviate from that so close to their latest communication because it'll just make them look a little bit silly.

On the M front final GDP, which is Amber for a reason because it's the phone or readings a GM really doesn't deviate. And because the markets already had two readings before they're normally pretty well managed from that. All it does say is if it comes into negative territory, it's another quarter in with negative growth, which is not good for the Japanese economy and not good for the Japanese yen but because it's a final reading, I don't expect it to have too much of an impact unless it's a massive daeviation to the downside, we could see some yen weakness, or it comes back in positive territory. And that could potentially see some Japanese yen strength but unlikely to see a major deviation because it is the final reading. Chinese trade balance on Tuesday could be a move up of the likes of the Aussie. And the kiwi main reason for that is it will show any increases or decreases in imports.

So it's the other way round to how we looked at the Aussie trade balance. Last time. When we looked at the Aussie trade balance this week, it was all about exports. We want them selling lots to China and America and international partners. So if exports increase, great, that's good for their economy. They're selling lots demand is good GDP should rise and be better for the overall economy and the local currency with China because they are the trade partner of the likes of New Zealand and Australia is now we want to see it the other way around.

We want to see an increase in imports. So we want to see them importing more goods into the nation, because that will be positive for the likes of Australia and New Zealand. So a better than expected trade balance where the imports is the more important of the two readings because trade balance is just the difference between imports and exports. Imports, if they're growing, that will be a good thing for the Aussie and should give it a little bit more strength and the key weight and vice versa, if it comes in worse than expected, but as we know, be good to make sure that you're tuning in and understanding what the short term sentiment is on the likes of the Aussie and the kiwi going into that Chinese data. Then as we move into Wednesday, manufacturing production out of the UK avoid at all costs unless something's happened on Monday or Tuesday to give us a very clear, short term directional bias, but if we don't, we want to stay away from it because the pound is just too temperamental at the minute and so hard to predict.

And we do not want to be risking our hard earned money on unpredictable currency so we stay away from the power right now. In the reports, I am able to explain to you that we do have a short term bias, but that will come in the daily reports. Then we have the first of the central bank meetings and rate decisions. So the Bank of Canada Bank of Canada on the on the Wednesday afternoon, we get that rate statement and we get their rate decision. So, the statement right now is expected based on tuning into the the latest comments out of the Bank of Canada and also having a look at the data and also having a look at the price of oil. So many expect including myself, the rate statement to remain in neutral stance so that lately they've been very dismissive of the issues with oil and the slowdown in their overall economy, saying that it was temporary now they are starting to be proved right.

Correct because we have seen oil start to recover and we had seen, we have seen data out of Canada also start to recover. So last week's GDP came in better than expected and oil prices generally have been quite buoyant. So now there's further reason for them to stay neutral. Had you asked me last month I would have been certainly expecting them to turn more bearish and potentially cut rates. Now, over the last few weeks, we have seen a bounce in oil which is good for the Canadian economy because they are so heavily reliant on oil exports and data has shown that as well so there's no real evidence or extra information for them to turn bearish and cut rates. So I expect the right to remain on hold and the statement to remain neutral.

So it could be a fairly non event. Now we cannot rule out a rate cut because the Bank of Canada do like to surprise the market. And and so we cannot rule out a rate cut. I do not expect the rate hike because things Canada still down out the they're not out of the woods just yet we have, even though we've seen a better or a recovery in oil, we can't ignore the fact that oil is still in a massive bear trend. And that has hurt the Canadian economy. So even though things have improved over the last month, and that's why I expect the Bank of Canada to remain neutral, there is no reason why they can't surprise the market.

And that would be wonderful if they cut interest rates when the market is not expecting it, that will lead to more aggressive Canadian dollar weakness. So it's important that we tune in and we watch it just in case but expectations are of the fact that they are going to remain fairly neutral and keep rates on hold. Crude oil inventories normally gone as attention but because of what's happening at three o'clock, the Canadian dollar is going to be more driven by what's happening by the central bank that takes precedence rather than crude on adventures. Now if the two come in line, so let's say they cut interest rates, you're going to be selling the Canadian dollar against its strong counterparts. Anyway, if then crude oil inventories supports the directional bias you have, then yes, we can look to trade it, I'd be concerned more over these two elements than the crude oil inventories.

Also pay attention to the output reading. So although they will be giving you the inventory data, how many barrels of oil are in storage, it's also important to pay attention to the output has output for them week on week again, which would be positive oil. And also what happened the night before with the American reading because that will often manage the expectations of the market as well in terms of how many barrels of oil are in storage. Then as we move later on in the evening, it's all about the rbnz said, this is going to be interesting because it's almost like the key has been a bit under the radar. There's not really been too much for us to get our teeth into from a key economic perspective. Now, we remain of the mindset That the kiwi is bearish because the week because the rbnz fed still have been threatening further rate hikes at rate cuts and they still remain bearish and they still want to see the kiwi dollar weaker.

So we do remain long term bearish on the kiwi but it hasn't been much lately for us to sell the key we on. So be interesting to hear what the latest view of the rbnz rate is, and the market is expecting a hold. So if there is any outside chance of a rate move it's going to be to the downside. So if we do get a cup just like we saw, just like we discussed with the Canadian rate decision that would come as a surprise and would create further weakness based on the shock and the surprise element. So a cut would be fantastic because the market is not expecting it. So we have to wait and see on that front.

Can they justify cutting rates will data hasn't been too bad out of New Zealand? prices continue to fall, which is going to be a bit of a concern to them. The Kiwi dollar hasn't been the weakest. So we know that the strength of the kiwi is a concern to the rbnz as well. So there are arguments for and against cutting rates. So for this one, we'll have to just wait and see if they do keep rates on hold.

It'll all be about the rate statement and whether they explicitly continue to threaten further rate cuts and concerns. Stress concerns over the strength of the kiwi dollar. If they do that, then we could see the kiwi come back on the pressure. So it's all about the the aggressive nature of how they communicate the future outlook on the kiwi dollar so if they cut rates, of course that's going to be an obvious sell on the kiwi against the stronger counterparts. But if they don't, it all comes down to the statement and what they say and if they are more bearish or as bearish as last time right where they're saying we are going to cut rates Again, we need to, and the key is to to strong right now we want to see it low. If they continue to talk the kiwi down aggressively, then we're likely to see the kiwi weaken.

If they toned down that aggressive nature and start to rein in the threats over there further rate cuts in the future, then we could actually see the kiwi strengthen off the back of that bear in mind that we will have a press conference Five minutes later, where they'll be giving us an update on the overall economic outlook for the for the nation, and that will have its influence as well. So our job is to really clearly define the stance of the rbnz said, explicitly bearish, we'd look to sell the kiwi dollar against its strong counterparts and if they actually tone down their if they tone down their threats and their language then potentially we could see a bit of a relief rally on the key so hard to determine because there are pros and cons to a rate cut. So it's not as clean cut this time out, which would make for a much better move on the kiwi lower if we did get a surprise rate cut.

So a couple of central bank meetings here which could go either way they're not, they're not certain to remain on hold. And if they do move on rates, both central banks are more likely to cut them raise rates because there is no justification for them to raise rates at this stage. But there is a slight justification for them to cut rates. The fact that the market is not expecting cuts from either of these central banks means that if we get one, it should provide us with a very high probability opportunity selling the respective currencies against their stronger counterparts. Then as we move into Thursday, inflation data of China not really interested the market is more concerned about the growth in China inflation data is not important to the market right now. So don't expect that spooking the market or giving the market much more confidence and one thing that's going to Be very, very lively and have reverberations in the FX markets specifically to the Euro is the ECB meeting.

Now this is a little bit more clean cut in terms of we are expecting the ECB to take action to implement further policy measures to weaken the euro and to help stimulate growth in the Eurozone and to stimulate inflation in the Eurozone. So because of the latest Eurozone inflation figures falling short and the German equivalent falling short, the market is now expecting the ECB to take some form of action. Now from reading the reports, you will know that many analysts and market participants are expecting a deposit rate cut. So this is the the interest charged now because it's a negative figure. It's the interest charged with large scale large scale deposits were not Talking about consumers here we're talking about large scale institutions, if they want to go and deposit money in European banks, they will be charged for it. So the deposit rate, so to put a deposit in a European Bank, they will be charged for that.

So if they cut rates again, so make the deposit rate cut even lower, then that will mean that people or large institutions are getting charged more so every day that they hold euros in a European Bank, buy and hold euros in a European Bank, they will get charged for it. So that's to do two things. One is to disincentivize. money being held in banks, so to get it out into the economy, given to businesses to help thrive the economy and help boost the economy and put fire underneath, put fuel underneath the fire of the economy. So it's to disincentivize money being held in the banks and free to go out into the wider economy and habits now. Actual positive impacts on the economy.

And but also because of doing that when what they want to also disincentivizes people buying and holding euros, because that strengthens the euro. So if you buy and hold your your cash in euros in a bank that's just going to lead to euros getting or the Euro getting stronger. What they want to do is encourage or incentivize these large scale institutional traders to sell the euros, get rid of them, and to weaken the euro. So it's it's a two fold approach, which is aimed to weaken the Euro to help stimulate growth and to help stimulate inflation which is the key objective of the ECB. So it's not the minimum bid rate, it's actually deposit rate. So we saw a cut in the deposit rate in December, but it was around about what the market was expecting.

Now the the expectations for the cut and the deposit rate are quite wide. I'll obviously tune you in more specifically in the morning report. On Thursday, but some analysts are expected. I think the average is between point three and point 5% of the cuts quite a sharp cut in the deposit rate to further disincentivize people holding money in banks in euros. So, the market is expecting that, although that expectation may have been reined in by the comments that were released today saying that potentially the ECB are only going to make a small deposit rate cut, so that might be reined in as we go through next week. But I'll bring you up to speed with that.

Anything larger than what the market is expecting. Let's say the market is expecting a nought point 3% deposit right cut and it gets a naught point six then obviously that is more bearish than expected. And we're likely to see the Euro fall However, if it's better than expected, so it comes in at naught point one of the cuts so it's less than expected or less bearish. We could actually see the Euro strengthened based on disappointment more than anything else. Coupled with that they could also So implement something else with their QE program. So that QE program is currently running at a certain size.

So 90 billion euro QE program every single month. what the market is also expecting is that they're going to expand that. So rather than 90 billion euros every month, it's 150, or whatever it may be, so the market is expecting them to increase it. And again, the analysts expectations do vary from 20 to 50 billion extra every single month. So again, it will come down to understanding the range of expectations that the market has, and then working out the reality when we get the physical press conference and the the overall communication from the ECB. So if they come out, and they cut rates more than expected and expand the QE program larger than expected, then yes, we can expect the Euro to weaken because the the ECB have been more aggressive or more bearish in their actions than what The market was expecting however vice versa, the market could kick its toys out the pram again, if they don't get what they're expecting.

So if they under deliver VCB under deliver once again, we could see some euro strength. Because that's the main reason is because the ECB have been so good at building up the expectations but not really backing it up that the market is now going to want to be impressed. So if they are not impressed, they are more than likely to kick their toys out the pram and we're going to see that via some euro strength. What my what my view is I share it with the guy that was in the report. One of the reports I sent out a little bit earlier today. My view is that the ECB comments that were released today were on purpose to rein in the expectations of the market and then they are going to over deliver with their policy implementation.

Next Thursday. Why do I think that will inflation is numero uno in terms of priority for the ECB, and it's going in the opposite direction to what they want to see. So I can see them taking more aggressive action than less aggressive action. Now I could be completely wrong. But that's my opinion right now is because the ECB have consistently stressed their concerns about inflation, and it's not improving, it's getting worse. So they do need to do more if they are going to achieve their objective of 2% inflation per annum because they are a million miles away from it.

So it's gonna be very, very interesting. And obviously, on the morning of Thursday, I will get new I will get you fully bought up to speed with everything that the markets expecting. So yeah, and then when we get the event, you can then compare the reality to what was expected and make your trading decisions off the back of that. We also get Mr. poloz Bank of Canada of the governor speaking but most of the direction will have been generated by Wednesday's rate decision and right statement, all his guns generally do is reconfirm that because if he says something completely opposite, it's going to look very, very stupid. So he's just going to repeat what happens or what's communicated on Wednesday, so I'm not expecting him to be very market moving at all. Then as we move into Friday, we get the key employment data from Canada.

Again, we'll do like we did with the Aussie this week in terms of we need to get a clearly defined short term sentiment, because if the Bank of Canada remain on hold of rates, and they remain decidedly neutral, we need to get some form of short term direction we're more than likely to get that short term direction by what's happening on oil. So make sure you're checking what oil is doing at the time. So if oil is strengthening, generally we would expect the CAD to strengthen so be looking for better than expected employment change and a lower than expected Did unemployment rate which is better for the likes of the which is better for the likes of the of the overall employment report? Or vice versa? If all was absolutely tanking, let's say for example, some comments have come out saying that the emergency meeting has now been canceled, and oil starts to fall.

And we've got a weaker Canadian dollar. And this comes in how would we want to see it, we want to see it come in worse than expected to give us the data to give us a catalyst in line with the short term sentiment. Now the only exception to this is if we actually get the Bank of Canada move off their neutral stance and potentially cut rates and become more bearish in their outlook. I don't expect that because there hasn't been enough enough justification over the last few weeks for them to do that. But in if they do do that, and the outside chance they become more bearish, then of course we then do Have a directional bias and we'd only be looking to trade in line with that directional bias or if they cut rates and become more bearish than what they were previously, then we'd only be looking to sell off bad employment data.

So it's important to get a directional bias either from a long term or a short term perspective. If we don't have the long term, then we need to obtain a short term perspective. Anyway, I am going to wrap up there because it's time for me to get ready to head off. And hopefully you guys will be doing a similar thing and not too distant future. I wish you well for the weekend. Have a lovely, lovely weekend, some time to relax, recuperate and get ready for what is another big week on the trading front next week and I look forward as ever to Monday where I can send you guys the first first report in regards to emails a few of you take take the opportunity of the weekend to whiz over a few emails.

Just to query things etc I won't be a speedy in my response this weekend. But I will come Sunday afternoon be responding to all your email so just bear with me for any emails that you do send I will respond to you on Sunday evening. Anyway, I'm gonna wrap up there. wish you well and I will catch up with you on Monday. All the best guys enjoy your weekend.