Weekly Outlook: 2014, September 21 - September 28

G20 Meetings, Mario Draghi’s speech, German Ifo Business Climate, US New Home Sales, US Durable Goods Orders, US Unemployment Claims are the main highlights this week. Here is an outlook on the major events coming our way.

Last week Scotland voted NO on independence from the UK in the historic referendum. The NO campaign’s victory was more decisive than the opinion polls had suggested, leaving the 307-year union in place. UK’s Prime Minister David Cameron acknowledged the Scots’ demand to have more power in the UK legislation and form a new constitutional settlement for the entire UK. Markets reacted with relief, bank shares climbed sharply after the market opened. Sterling initially gained in reaction to the result, rising 0.3 % higher to $1.6442, but later fell back against the dollar. Will the UK economy speed up growth in the coming months?

1. G20 Meetings: Sat-Sun. Finance ministers from the G20 countries gathered in Australia to discuss measures to improve economic growth in the Eurozone by an additional two per cent by 2018. Measures to fight black money and tax avoidance were also discussed in this forum. Last week’s meeting resolutions will initiate the next meeting at Brisbane in November.
2. Mario Draghi speech: Monday, 13:00. ECB President Mario Draghi is scheduled to testify before the European Parliament’s Economic and Monetary Committee, in Brussels. Draghi may talk about the need for investments alongside Governmental aid. Volatility is expected.
3. German Ifo Business Climate: Wednesday, 8:00. German business sentiment declined for a fourth straight month in August down to 106.3 from 108 in July, amid concerns about the Ukraine crisis and the impact of sanctions imposed by the Eurozone against Russia. The value of German shipments to Russia plunged 15.5% to 15.3 billion euros in the first six months of the year, with major declines in car and machinery shipments. Exports also fell due to smaller orders from Russia. Economists expected a higher reading of 107.1. The lukewarm growth in the Euro area also contributed to the decline in German business sentiment. Another drop to 105.9 is expected now.
4. US New Home Sales: Wednesday, 14:00. Sales of new single-family homes declined for a second straight month in July to a seasonally adjusted annual rate of 412,000, from 422,000 posted in the previous month. Nevertheless, the housing market is on a growth trend. Larger stock of properties and tame prices will help boost demand in the coming months. New homes sales data is considered volatile, despite the decline new home sales were up 12.3 from July last year. Sales of new single-family homes is expected to rise to 432,000.
5. US Core Durable Goods Orders: Thursday, 12:30. U.S. durable goods orders surged in July by a seasonally adjusted 22.6%, after a revised gain of 2.7% in the previous month while core orders declined unexpectedly by 0.7% following a 1.9% increase in June. The mixed data confused markets. Commercial aircraft orders hit the roof with a 318% increase, after Boeing signed a record number of contracts for new jetliners in July. Cars and trucks sales went up 10.2%. However, core durable goods orders, excluding volatile transportation items, missing forecasts for a 0.5% gain. Core durable goods orders rose by 3% in June. U.S. durable goods orders is expected to plunge 17.7% while Core orders are predicted to rise 0.7%.
6. US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits plunged unexpectedly last week to 280,000 from 316,000 in the prior week, indicating the lukewarm figures in August were a temporary relapse. Economists expected a small decline to 312,000. US economy has broad-based growth including the housing sector. The number of layoffs continue to fall. The four-week moving average declined by 4,750 to 299,500. The number of jobless claims is expected to reach 294,000 this week.