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Pepperstone Partners with Australian Charity ‘Street Swags’ to Benefit Homeless and Victims of Domestic Violence

Pepperstone Partners with Australian Charity ‘Street Swags’ to Benefit Homeless and Victims of Domestic Violence

Financial Donation will provide emergency support for 250 Australians in need throughout Queensland and the Northern Territory.

MELBOURNE, AUSTRALIA., Apr. 06 /CSRwire/ -A new substantial financial commitment from Pepperstone  to Street Swags Australia  will provide emergency bedding to homeless people across Australia, the majority of those being mothers and children.

Street Swags Australia will provide its custom version of the iconic Australian ‘Swag’ a canvass tent-mattress hybrid to homeless through drop-in centres and soup kitchens across the country. The effort is part of Pepperstone’s 2015 Corporate Social Responsibility commitment to military veterans, homelessness and indigenous Australians.

“This year, Street Swags will distribute more than 5,000 swags across Australia, bringing the total since Jean Madden designed the swag and started the charity to just over 36,000. Unfortunately, it’s a drop in the ocean when you consider that on any given night, 1 in 200 Australians are homeless and tens of thousands are sleeping rough.”

Street Swags are manufactured at Woodford Correctional Centre and other correctional centres throughout Australia, to give prisoners work readiness skills along with tertiary qualifications.

“We are proud to pledge our support to Street Swags and provide the iconic Australian Swag to homeless in need” said Owen Kerr, CEO of Pepperstone.

“I would call on other members of the Financial Community to do more for the underprivileged in our society, in particular the tackling of youth, family and indigenous homelessness across Australia. By providing emergency accommodation in the form of a Swag, we can assist our homeless get back on their feet and back into mainstream society” 

Families with Children are the fastest growing group of people experiencing homelessness in Australia. Every day, almost 80 percent of families seeking immediate accommodation from the homeless service system are turned away. The aim of Street Swags is to reduce the amount of illness and the number of deaths in Australia attributed to homelessness sand sleeping outdoors without adequate protection from the elements.

About Street Swags

Street Swags Limited provides practical support to alleviate the hardships of homeless people by offering a comfortable and durable form of bedding to every person in need.

Street Swags Limited is a Queensland Based Charity that provides holistic support to the homeless and vulnerable.

Find More information at  streetswags.org and https://www.facebook.com/streetswagsforhomeless/

Market Preview – Australian Employment Change

Market Preview - Australian Employment Change

With analysts expecting a rate cut by the RBA at the May meeting, traders will have a keen eye on today’s Employment Change and Unemployment Rate – due for a release at 04:30 server time. The ABS data series has become volatile since budget cuts have reduced the quality of the data sample, leading to some large variations against economist forecasts – such volatility in the number can result in some large initial price shocks as the headline figure is released, only to later normalise as the data is processed in more detail.

Australian unemployment has been on a steady increase as the end of the mining boom and slowdown in China weigh on hiring; the Unemployment Rate has so far peaked at 6.4% before returning to 6.3% currently, however there is no certainty that the worsening in conditions is over yet (Source: ABS, RBA, ANZ):

Market Preview - Australian Employment Change

Leading indicators in the form of Job Advertisements have actually been on a positive trend for some time now, but this is yet to filter through in to a stabilisation in the ABS employment series itself. While the trend appears to be positive for now, the latest Job Advertisement release from ANZ this month showed a fall of -1.4% on a month on month basis – indicating that the improvement may have hit a speed bump for now.

When the figures are released today, expectations are for:

  • An Employment Change of +15,000, slightly below the 15,600 added last month.
  • The Unemployment Rate to remain steady at 6.3%

However, given the increased noise in the data series recently, traders are advised to watch out for the potential of a surprise against forecasts.

Market Preview – ECB Press Conference

Market Preview - ECB Press Conference

The ECB will meet today to decide on monetary policy for the Euro zone; the central bank will announce its interest rate decisions at 14:45 server time followed by a Press Conference at 15:30 server time. Economists are expecting no change in interest rates from previously:

  • Deposit Facility: -0.20%
  • Main Refinancing Operations: 0.05%
  • Marginal Lending Facility: 0.30%

However, the press conference itself is usually more open to interpretation and the volatility that accompanies uncertainty. When Mario Draghi speaks today, analysts and traders will be looking for clues on a number of matters:

1) An updated economic outlook since the previous meeting – since last month, developments in the Euro zone (minus Greece) have been broadly positive; with the uptake of a new round of T-LTRO surprising to the upside (97.8 billion vs. 40 billion expected); sentiment surveys are mostly positive across the economic bloc; and inflation coming back stronger than expected with the CPI Flash Estimate released March 31st showing inflation at -0.1% vs. expectations of -0.3%. Today the ECB will provide an updated assessment of the situation, which could be less bearish than the last meeting. Notably the Euro has also stabilised since the start of the QE program, and Draghi may make comment on this.

2) The progress of QE – traders will want to know how the ECB is judging the early success of its QE program, and any expectations it has for altering the path of its purchases. Some journalists are likely to question whether there are enough assets for the ECB to actually buy to make its 3 trillion Euro target, and if negative yields on a large portion of the available assets will factor in to any decision making. Despite some early concerns about the pace of purchases, the ECB has embarked on a steady increase in its balance sheet and looks set to gradually reach its target:

Market Preview - ECB Press Conference

3) Greek concerns – though it may not be a direct determinant of monetary policy, concerns over a Greek default are rising again, and it is likely that Draghi will be forced to comment on this during the Q & A session. There are fears that Greece is preparing a default on its debt if negotiations with creditors fail to come to a positive resolution; it would be the second time that Greece has defaulted or restructured its debt in the last few years, and could spell Greece leaving the Euro.

As always, the ECB meeting has the potential to be one of the largest market moving events in the economic calendar. Those trading over the event might wish to keep an eye on Draghi’s press conference, as any mention of an altered purchase program could send the markets in to a frenzy. More minor indications such as the updated economic outlook are also likely to influence the Euro and European Indices.

Market Preview – US Retail Sales

 

Market Preview - US Retail Sales

Economists are expecting a rebound in Retail Sales figures – to be released today at 15:30 server time – after 3 months of strong declines in spending by the US consumer. Expectations are for an increase in retail spending of 1.1%, after a decline of -0.6% in the previous release. The Core Retail Sales number is expected to come in at 0.7% after -0.1% last month.

The recent falls in the retail spending have been largely driven by the strengthening of the US dollar and the corresponding decline in energy prices. As gasoline purchases at gas stations are a component of retail spending, double-digit percent declines in the price each month have pushed final consumption spending lower. With oil and gas prices finally making a small recovery in recent weeks, economists are anticipating a rosier outlook for this release:

Market Preview - US Retail Sales

As the retail sales figure is not adjusted for this decline in price, the total spending by the consumer has plummeted – in recent data releases analysts have underestimated the strength of the decline in spending and the market has consistently surprised to the downside against forecasts. However, with WTI Oil prices rebounding from around $45 a barrel to around $53, gasoline prices have gained by around 20% from the lows – which is expected to help boost consumption in dollar terms. Traders may wish to keep an eye on the economic calendar around the release – as a bad figure could, yet again, catch traders and analysts by surprise.

Market Preview - US Retail Sales

Market Preview – RBA Rate Decision

Market Preview – RBA Rate Decision

Once again it’s the time of month when the RBA meets to decide on the future of interest rate policy, after teasing traders with a no-change decision at last month’s meeting. At the first meeting of 2015 – in February – the RBA lowered interest rates by 25 basis points to 2.25% after holding rates steady at 2.5% for over a year. Expectations were high for another rate cut last month, but the RBA chose to sit on its hands to better gauge the situation – though the door for further easing was left ajar:

“At today’s meeting the Board judged that, having eased monetary policy at the previous meeting, it was appropriate to hold interest rates steady for the time being. Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target. The Board will further assess the case for such action at forthcoming meetings.”

For today’s meeting, which is scheduled for 07:30 server time, analysts are expecting another month of no change – meaning rates will stay on hold at 2.25%, with any expected cut to come at the May meeting. This expectation is slightly at odds with market expectations – which show a strong chance of a rate cut to 2.00%. Futures markets have moved from only around 50% probability of another cut, to around 75% in the space of a week; AUD/USD has also fallen drastically from recent highs of near 80 cents in the lead-up to this meeting, despite a boost from a weak US jobs figure. Inflation remains low and supportive of easing (sources: RBA, ABS)

Market Preview – RBA Rate Decision

Focus will be not only on the headline rate decision, but the wording of the statement that accompanies it. As always, the devil is in the details and the market may take its cues from the forward guidance in the statement as much as it does the actual interest rate. Although the median forecast from economists is for no change at this meeting, the market positioning in futures and the Australian Dollar suggests that a market surprise might come in the form of a no-change decision; such a move by the RBA might catch out traders for the second time in under a week on shorting anything that isn’t the US Dollar.

Market Preview – Non-Farm Payrolls

Market Preview - Non-Farm Payrolls

Liquidity will be very low in the FX market owing to the Easter long weekend bank holiday, so today’s US Non-Farm Payrolls release has the potential to move the market quite dramatically. The data is released at 15:30 server time and is the only data point of note in an otherwise quiet day of trading. With banks closed for the long weekend, moves in the market can be more pronounced than usual and traders should take note of the difference in trading conditions.

The US is currently in a ‘will-they or won’t-they’ holding pattern, where many observers are still undecided as to whether the economy is strong enough to justify raising interest rates – let alone Janet Yellen’s nerves. What has been supporting calls for the first interest rate rise since before the GFC has been a strong showing in the employment market. A steady improvement in both payrolls and the Unemployment Rate has seen the US return to near its health prior to the GFC:

Market Preview - Non-Farm Payrolls

Non-Farm Employment has settled in to a strong growth pattern, with the last employment ‘shocker’ (below 200,000 jobs) occurring 13 months ago from this release:

Market Preview - Non-Farm Payrolls

Economists are expecting another slight improvement in the economy, with the forecast employment change this month expected to be 247k according to a survey of analysts, and for the Unemployment Rate to hold steady at 5.5%. For most of the last year, forecasts for employment growth have settled in to a very stable range of 200-250k jobs in each report; this is likely representative of a widespread shift in the fundamental view the US economy – from being held back by crisis, to being the developed economy with the brightest near term future.

The other side of the coin is the recent collapse in energy prices, longer term bond yields declining and deflation taking over as the oil price is passed through the year on year inflation figures:

Market Preview - Non-Farm Payrolls

As well as this, much of the US data that has been positively surprising is of the soft data variety – surveys and sentiment indicators – rather than hard economic data; this may mean that the consumer is set to return and drive the economy forward soon, but the growth rate of GDP has yet to take off beyond the same range that it has tracked since the crisis:

Market Preview - Non-Farm Payrolls

The picture of the US economy is currently one of mixed fortunes, with employment positively trending and inflation moving away from target in the near term. The Non-Farm Employment change result today will not be likely to cause any direct changes in policy, as the Fed views data on a trend basis rather than on a single data point. However, the market tends to react violently to a NFP releases, and the added environment of banks being on holiday means that the potential for the price of USD pairs so spike rapidly is much higher, and spreads may be wider than normal – particularly if we see a deviation from trend recovery in Employment.

Market Preview – SNB Monetary Policy Assessment

Market Preview - SNB Monetary Policy Assessment

When Swiss National Bank meets for its Monetary Policy Assessments and the announcement of the Swiss Libor Rate, the affair is usually playing second place to more major banks such as the ECB and Federal Reserve. In the wake of the disastrous January meeting – in which the SNB suddenly revoked its support of an exchange rate cap – traders are unlikely to be caught unawares again at the first meeting since the event. The SNB will announce its decisions at 11:30 server time today, with a press conference to discuss any changes made.

After the SNB made its surprise move on January 15th, the Swiss Franc appreciated rapidly as traders caught long tried to liquidate their holdings at the same time. The move saw the central bank red-faced as the exchange rate appreciated beyond all expectations. Since the event, USDCHF has retraced almost the entire move of well over 1000 pips:

Market Preview - SNB Monetary Policy Assessment

While a return to an exchange rate cap or a managed exchange rate would be a bold move given the circumstances, it is not impossible. According to rumour and analyst expectations, the more likely move would be to take the deposit rate further in to negative territory. If that were to be the case, there is a chance that – despite the dramatic movements since mid-January – the Swiss Franc would continue to sell off past its pre-SNB value and completely erase the movement. The deposit rate currently stands at -0.75%, so a move lower would mean a decrease to at least -1.0%.

Whether the SNB makes a move to further ease policy or not, traders will be looking for clarification as to what, if anything, is the official policy stance towards the currency now; if the SNB looks to give traders some insight in to this, they may need to further explain what motivated their previous decision. Traders may wish to make note of this meeting, in case the SNB decides to change policy again.

Market Preview – FOMC Statement and Press Conference

Market Preview - FOMC Statement and Press Conference

The FOMC meets to today to release its Statement on monetary policy – the first such release since January. The March meeting holds greater importance due to the simultaneous release of the FOMC’s Economic Projections and the Press Conference which is scheduled to follow half an hour after the release. The Statement and Projections are revealed to the public at 21:00 server time, with Janet Yellen’s Press Conference set to begin at 21:30 server time.   

Traditionally meetings that are accompanied by a press conference are an opportunity for changes to be implemented; there is a possibility to discuss and elaborate on what the change in policy or wording in the statement is supposed to mean. Because of this implied importance, market participants are more inclined to pay attention.

In the meeting today analysts are expecting a reasonable chance of a change to the statement wording, with expectations surrounding the removal of the word “patient” when describing the Fed’s policy stance towards interest rates. In December the FOMC decided to change the release to remove the phrase “considerable time” to indicate that the decision would be more data dependent rather than time dependent.

When Yellen was pressed about what time frame expected for rate increases, she explained that the current policy stance was unlikely to change for the next couple of meetings. With this being the second meeting since that discussion, expectations are that Yellen will begin to prepare the market for a rate increase by removing ‘patient’ from the statement altogether.

What has been clouding the Fed’s path in recent months has been the sudden and dramatic surge in the US Dollar on a trade weighted basis, with the accompanying collapse in energy prices:

Market Preview - FOMC Statement and Press Conference

However the Fed has indicated that it is comfortable raising interest rates in an environment of low inflation:

“If economic conditions continue to improve, as the Committee anticipates, and the Committee is reasonably confident that inflation will move back over the medium term toward 2 per cent, then it will soon be the case that an increase in the target range could be warranted at any meeting.”

This is despite inflation being in negative territory – and the lowest it has been since the GFC, when the Fed was cutting rates to zero to prevent a further collapse of the economy:

Market Preview - FOMC Statement and Press Conference

Indications are that the Fed would be comfortable with this move in a low inflation environment, as it is a move towards normalisation from a period of extraordinary stimulus rather than the start of a rapid tightening cycle to slow down an overheating economy. With the weight of expectations that the Fed will press ahead with its policy moves, the US dollar has been a natural beneficiary. Any deviation from the expected course could see a dramatic move in dollar pairs as shorts are squeezed. Other features of the release that will be closely watched will be the FOMC’s ‘dot’ plot and economic projections. The dot-plot reveals the FOMC’s view of the future path of interest rates, and any changes can shift bond market pricing.

Market Preview – RBNZ Rate Announcement

Market Preview - RBNZ Rate Announcement

The RBNZ will meet tonight at 23:00 server time to announce the Official Cash Rate for New Zealand. The cash rate currently stands at 3.50% with the RBNZ expected to hold steady again at this meeting, which would be the sixth consecutive month that the central bank has held rates at this level after indicating at previous meetings that further tightening could be warranted.

At the January 29th announcement, Governor Wheeler’s statement was altered to remove its tightening bias:

The high exchange rate, low global inflation, and falling oil prices are causing traded goods inflation to be very weak. Non-tradables inflation remains moderate, despite buoyant domestic demand and an improving labour market. Headline annual inflation is expected to be below the target band through 2015, and could become negative for a period before moving back towards 2 percent, albeit more gradually than previously anticipated.

In the current circumstances, we expect to keep the OCR on hold for some time. Future interest rate adjustments, either up or down, will depend on the emerging flow of economic data.

This wording is decidedly less hawkish than that of the preceding month – from the December statement:

With output projected to grow at or above capacity, CPI inflation is expected to approach the 2 percent midpoint of the Reserve Bank’s target range in the latter part of the forecast period. Some further increase in the OCR is expected to be required at a later stage. Further policy adjustments will depend on data emerging over the assessment period.

The change in the wording sparked a sell-off in the New Zealand dollar of almost 300 pips in the days that followed.

Since the last release, data has been mixed for New Zealand and commodity producers in general – with the RBA cutting interest rates by 25 basis points in February before both the RBA and BoC decided to hold rates steady this month. New Zealand data has changed little since the last meeting; Employment growth was strong at 1.2, however the Unemployment Rate ticked up quite sharply from 5.3% to 5.7%.

Because of this softness in the data and the ongoing commodity price sell-off, expectations are for another month of holding rates at the same level of 3.50%. As interest rates are not predicted to move, interest will be centred around any wording changes and the outlook on inflation. The Kiwi has been surprisingly resilient since the last meeting, despite the downgrade of forward guidance – so the market may be anticipating that the rhetoric towards oil price falls softens, as the bank looks through to an improving inflation outlook. Traders will likely be looking for a confirmation that the bank has changed its bias since the last statement.

 

Market Preview – ECB Monetary Policy Decisions

Market Preview - ECB Monetary Policy Decisions

The ECB meets today to announce its Monetary Policy Decisions at 15:30 server time; it is the first meeting since the central bank announced its long awaited Quantitative Easing program in January because the ECB is on a six-week meeting schedule as of 2015, as they consider the crisis to have eased somewhat. The meeting offers the ECB a chance to outline the finer details of its easing program after a month of preparation – the program is set to begin in March, with rumours of the 9th being the inception date.

There is no other policy change expected at this meeting, with all interest rates projected to be left on hold when released at 14:45 server time. What we are expecting to gather is the details or ‘modalities’ of the program such as:

  • The Target: Explicitly it might be said that the ECB has a balance sheet target, but previous QE programs have been sold on the premise of reducing longer term borrowing costs to stimulate the economy, stimulating credit demand and forcing people out further on the risk spectrum. As yields in much of Europe are already negative, or at least very low, the scope for further reductions is limited; asset markets are also considered frothy in the wake of several waves of stimulus measures from developed economies, and in this light further encouragement of risk-taking may not be warranted. Most likely the ECB’s goal here will focus on inflation, growth and the balance sheet rather than yields or risk assets.
  • The Assets: Given the small size of eligible assets available, as well as the concurrently running ABS and covered bond purchase program – the ECB will need to provide additional clarification about how it intends to meet its additional 50 billion Euros-per-month target without distorting markets too much. However, if the ECB’s QE is anything like that in the US – bond demand may actually fall and yields rise when the program begins, as bond holders seek the returns of risk assets and unload their holdings. Should this be the case, the ECB may have no problems achieving its purchase targets, but there are some sellers who are legally or traditionally bound to hold on to their fixed income allocation and would be very reluctant sellers to the ECB.

There are also other issues for the ECB to cover, such as the method of purchase and the risk sharing element of the program. The event is not expected to cause dramatic EUR volatility, given that the QE program is a known event and there is no expectation for other policy changes. However this meeting is important for overall direction in the market as it marks a new era in the Euro saga and will provide crucial details about a program that will be with us and in the headlines for the next 2 years.

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