The start of economic data driving volatility for both the AUD and CHF pairs is on Tuesday really early (or Monday really late). We will see a couple of data releases coming out that could impact the markets, as they have done so in the past.
In the case of Australia, home sales and the potential spill over into the economy are on everyone’s minds. Therefore, home loan approvals are an indicator lots of people are following. On the Swiss side, we get another look at their unusual employment situation with the release of their March unemployment rate.
If you are trading AUD and/or CHF pairs, here are some things to keep in mind to help set up your trades in the lead up to these volatility-inducing events.
Australian Schedule and Expectations
We start with the Australian data at 03:30 CET (which is 21:30 the day before EST). The only bit of economic insight we’re expecting for the day is the month over month change in home loan approvals and total monthly change in housing investment.
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The consensus among analysts is for the number of mortgages in Australia approved to decrease again by 0.4%. However, this would be an improvement over the -2.4% registered last month and the fourth consecutive negative reading. Last month’s data was already a not as negative figure from the prior month. However, home loans have been negative for over a year (with just two exceptions).
Australia Market Moves
The data that the market moves on is usually the number of approved home loans. This considers only the number of mortgages granted for own use, and not for investment, resale or renting. It’s a more accurate reflection of the “core” market since it typically excludes “speculative” house buying.
However, if we are worried about a housing bubble bursting, then the investment in housing loans is the figure we should be looking at. This is because speculatory buying is usually the first to hit an impending housing crisis. On this front, the data has been coming in much more negative and for a longer time than home buying. While this is unlikely to move the market in the immediate term, this is a good gauge of capital flows into the country for investment purposes. And it ought to be watched closely for long-term trends in capital flows.
Swiss Schedule and Expectations
Switzerland’s SECO will be publishing the country’s unemployment rate at 07:45 CET (or 1:45 EST). This is before the European equity markets are open (and most European major traders are at their desks). Projections are for the figure to drop a decimal to 2.3% from the current 2.4%.
We’ve talked at length previously about how Switzerland has an unusual employment situation. During our analysis, we covered why an otherwise small change such as just a decimal (as projected in this case) has an outsized effect on its interpretation by the markets.
The unemployment rate in Switzerland has been tracking steadily at 2.4% since November. It has also been keeping pace with expectations. The rate has been declining for years, and a further decimal tick down would be well within the trend.
The issue is that employment is usually the last indicator to be affected during economic difficulties. And, given the concerns about the economy among Switzerland’s neighbors and largest clients, a tick down in the rate (an improvement) would likely be seen as a relief for the market. A move higher wouldn’t be all that surprising. And it would help fuel, counterintuitively, strength in the Franc as investors seek a safe haven.