Saxo Bank’s head of FX strategy John Hardy takes a closer look at how global currencies are being affected by developments in the US - China trade war.
Article / 06 February 2013 at 5:53 GMT

3 Numbers to Watch: DE new ind. orders, CA Ivey PMI, US Oil Inv.

editor/analyst /
United States

The December update on new factory orders for Germany is due today, followed by the January report for Canada’s Ivey Purchasing Managers Index and the weekly update on US crude oil inventories.

German New Industrial Orders (11:00 GMT) In the previous update, factory orders in Germany slumped 1.8 percent in November versus October. Analysts are expecting something better for December. The consensus forecast sees a 1.0 percent rebound in the final month of last year. The stakes are moderately high at this juncture: a disappointment would call into question the upbeat surveys of late that suggest that Germany's economy has a new head of steam in the new year. The strong January gain in the Germany Composite Output PMI, for instance, implies that 2013's outlook is improving, according to Markit Economics (pdf).

Another drop in new orders in today’s December report would challenge that view. Or would it? Today’s data lags the revival in the Markit survey by a month. In any case, economists think that we’ll see new orders pop a bit today. If not, the recent confidence in the macro outlook for Germany (and therefore Europe) may face new questions and cast shadows over tomorrow’s update on industrial production for the Eurozone’s leading economy.


Canada Ivey Purchasing Managers Index (15:00 GMT) Today’s January update is expected to mount a rebound after three straight months of declines that left the benchmark in unadjusted terms well below the neutral 50 mark for December. If the consensus forecast is correct for this widely followed leading indicator, the Ivey PMI will rise to nearly 54—the first reading over 50 since October. (The seasonally adjusted counterpart is also projected to rise, albeit by a relatively modest amount and from a December level of 52.8, which already signals economic expansion.)

If the optimists are right, the Canadian dollar’s strength in recent sessions may find additional support. Indeed, the loonie is in rough parity with the US dollar once more. The optimistic outlook for today’s Ivey report follows last week’s news of an improving economy via a faster pace in GDP, according to Statistics Canada. The 0.3 percent annualised gain in output for the economy in November is the strongest increase in seven months, and a sign that Canada’s recent bout of macro weakness may be easing. Today's number will tell us if that notion has more room to run.


US Crude Oil Inventories (15:30 GMT) Is the rally in crude oil overextended? Today’s weekly update on oil inventories from the Energy Department may offer a clue. Stocks of crude have been climbing in recent weeks, but so have prices. But trading so far this week suggests that the USD 96/barrel level appears to be a short-term ceiling for the spot price of West Texas Intermediate (WTI), the US benchmark.

Prices are up handsomely from the USD mid-80s in December. But without a geopolitical incident to fire up the bulls, prices look frothy on a short-term basis, according to some energy analysts. All the more so if inventories keep climbing.

The market is expecting another rise in supplies in today’s report, which would be the third straight weekly increase. In that case, the supply/demand factor may resonate a bit louder, which means that the bears will have another data point on their side.



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