Last week’s jobs report failed to impress the investors and there is just about two weeks left before the Federal Reserve meeting in December. Though the investors were happy note that there was increase in the number of jobs, the growth was less than 200,000 and was accompanied by a decline in average hourly earnings. The Fed may still hike the interest rates this month as the unemployment rate has dropped to the lowest level since 2006, but a follow-up increase is not likely because of the subdued non-farm payrolls report. The USD did not fall a great deal after posting gains during the course of last week, but the ten-year Treasury yields did drop by as much six basis points. This signals the possibility of more profit taking in the coming week.
There are no major data releases from the US in the coming week, but some of key releases that can cause some movements in the currency market include the Italy referendum, Australia cash rate and GDP, Canada overnight rate, ECM minimum bid rate, China trade balance, and US crude oil inventories, jobless claims and UoM consumer sentiment.
#1: Italian Constitution Amendment Vote (12/04/2016 Sunday)
Italy is scheduled to vote on a referendum for reforming the parliament’s upper house. It involves cutting down the number of senators elected to the house from 315 to 95. The reform would eliminate the upper house’s control over some of the policy areas if the outcome is in favor of the referendum. The reform includes elimination of the ability of the upper house in ousting governments by just passing a no confidence motion. It is expected that the result will be projected – on the basis of exit polls and early vote counts – prior to announcement of the official vote count.
#2: UK Services PMI (12/05/2016 Monday 9:30 GMT)
The IHS/Markit/CIPS Services PMI rose to 54.5 in October from 52.6 in the previous month. The reading for the month which beat analysts’ expectation of 52.4 is the highest since January this year. Rising demand, a weaker pound, promotional campaigns and improving market confidence boosted new business activity. Though the job growth slowed down a little bit, price inflation rose to the highest level since 2011. Services PMI, reported by Markit Economics, for the month of November is expected to come in at 54.2.
#3: US ISM Non-Manufacturing PMI (12/05/2016 Monday 15:00 GMT)
In October, the ISM Non-Manufacturing PMI index dropped to 54.8 from 57.1 in the previous month. The reading came in below the market expectation of 56 as business activity, employment and new orders grew at a slower than expected pace, while prices rose for the seventh month in a row. Non Manufacturing PMI, reported by Markit Economics, is expected to rise to 55.3 in the month of November.
#4: Australia Cash Rate (12/06/2016 Tuesday 3:30 GMT)
As expected, the Australian central bank decided not to change the cash rate, which is at its record low at 1.5 percent, at the monetary policy committee meeting that was held on November 1, 2016. The central bank said that the prevailing low interest rate has been contributing to increasing domestic demand and policymakers projected that the economy is expected to grow very close to its potential rate during the next year. They also said that the inflation is likely to pick up over the next couple of years in a gradual manner. Analysts’ expectation is that the Reserve Bank of Australia will maintain the cash rate at 1.5 percent during the meeting scheduled for Tuesday.
#5: Australia Central Bank Rate Statement (12/06/2016 Tuesday 3:30 GMT)
Following the cash rate announcement, the Reserve Bank of Australia releases a rate statement. The Reserve Bank Board uses the statement to communicate to investors as regards the outcome of the meeting and how they arrived at the interest rate decision. It also provides a commentary about the economic aspects that had an influence on their decision. It discusses, most importantly, the country’s economic outlook and provides clues on future interest rate decisions. If the tone of the statement is hawkish, it is good for the Australian dollar.
#6: Canada Trade Balance (12/06/2016 Tuesday 13:30 GMT)
In the month of September, Canada’s trade deficit was C$4.1 billion after the trade deficit for the previous month was revised upward to C$1.99 billion. The reading for September is the highest deficit on record. The reason for the record deficit was due to a one-off machinery import for an oil project. Trade deficit forecasted for October is C$2.1 billion.
#7: New Zealand GDT Price Index (12/06/2016 Tuesday 12:00 GMT)
The global dairy trade price index, which indicates sentiment in the international dairy market, rose 4.5 percent in the auction held on November 15, 2016. The index rose to its highest reading since July 2014 with the increase recorded in the last auction. Prices of dairy products have risen for the seventh time in as many as eight auctions, following supply decreases. The GDT price index rose to US$3,519 from US$3,327 at the previous auction.
#8: New Zealand Central Bank Governor Wheeler Speaks (12/06/2016 Tuesday 22:00 GMT)
The governor of the Reserve Bank of New Zealand Graeme Wheeler is scheduled to testify in Wellington before the Finance Select Committee. If he makes hawkish remarks, it is good for the domestic currency. Markets often remain volatile during his speeches because traders make an attempt to understand the direction of the interest rate in the future.
#9: Australia GDP (12/07/2016 Wednesday 00:30 GMT)
Australia’s gross domestic product grew by 0.5 percent, in terms of volume, in the second quarter on a seasonally adjusted basis from the previous quarter. While the final consumption expenditure rose by 0.8 percent, the operating surplus from private non-financial corporations increased by 2.9 percent and employees compensation improved 0.5 percent. Analysts expect the economic growth to slow down a little to 0.2 percent in the third quarter.
#10: UK Manufacturing Production (12/07/2016 Wednesday 9:30 GMT)
In the UK, the manufacturing production increased by 0.6 percent September from the 0.2 percent gain recorded in August. The reading for September, however, beat market expectations that manufacturing production would increase by 0.4 percent. On year-on-year basis, manufacturing production increased by 0.2 percent in September. Forecast for October is that manufacturing production will increase by 0.2 percent.
#11: Canada Overnight Rate (12/07/2016 Wednesday 15:00 GMT)
In the monetary policy committee meeting held in the month of October, the Bank of Canada decided to keep the benchmark overnight rate steady at 0.5 percent, as analysts expected, because policymakers felt that the outlook for growth is lower than what was projected due to slowing down of exports and housing resale activity. Further, inflation remained below expectations. In the meeting scheduled for this month, it is widely expected that the central bank will maintain the overnight cash rate at current level itself.
#12: Canada Central Bank Rate Statement (12/07/2016 Wednesday 15:00 GMT)
Following overnight rate announcement the Bank of Canada will release a rate statement for the purpose of communicating with the investors as regards the monetary policy. The statement will provide the reasons for arriving at the decision on overnight rates, current status of the economy and clues on future decisions. Markets often remain volatile during the time.
#13: US Crude Oil Inventories (12/07/2016 Wednesday 15:30 GMT)
In the US, crude oil stocks fell by as much as 884,000 barrels during the week ended November 25, 2016. The oil stocks have declined for the second time consecutively in the last five weeks. The analysts had the crude oil inventories to rise by 636,000 barrels. Gasoline stocks increased by 2.097 million barrels, which was much higher than analysts’ expectations of a gain of 1.156 million barrels.
#14: China Trade Balance (12/08/2016 Thursday 2:00 GMT)
According to the General Administration of Customs, China’s trade surplus widened in October, rising to 325 billion yuan from 278.4 billion in the previous month. The reading for October beat economists’ expectation that the trade surplus would widen to 300 billion yuan. While imports declined 1.4 percent, continuing its multi-year downtrend, exports dropped more than expected (7.3 percent on an annualized basis) following the 10 percent decline in the previous month. Trade surplus forecasted for November is 307 billion yuan.
#15: European Central Bank Minimum Bid Rate (12/08/2016 Thursday 12:45 GMT)
The European Central Bank decided to leave the minimum bid rate at 0 percent in the meeting held on October 20, 2016. With this decision, the central bank has left the interest rates unchanged for six straight months now. The ECB’s decision was as analysts expected. The deposit and lending rates were also left unchanged at -0.4 percent and 0.25 percent, respectively. According to policymakers, the key interest rates are likely to remain at the current levels or move to lower levels in the near future. The central bank also confirmed that the purchases of assets worth €80 billion on a monthly basis will continue till March 2017. Further, it may be extended, if required. During the meeting on December 12, 2016, the ECB is not likely to change the minimum bid rate.
#16: European Central Bank Press Conference (12/08/2016 Thursday 13:30 GMT)
About 45 minutes after the announcement of the minimum bid rate, the ECB President and Vice President participate in a press conference, which includes reading out a prepared statement and a press question answer session. Markets experience volatility during this period.
#17: US Unemployment Claims (12/08/2016 Thursday 13:30 GMT)
The number of American people filing for jobless benefits rose by 17,000 to 268,000 during the week ended November 26, 2016 from the previous reporting period when it was 251,000. The reading for the week ended November 26 is the is the highest since June last week. The reading was also above market expectation that the number of jobless claims will be 253,000 for the period. With this, the initial claims have remained below the 300,000 mark for 91 months consecutively. Forecast for the next reporting period is 272,000.
#18: US Preliminary UoM Consumer Sentiment (12/09/2016 Friday 15:00 GMT)
The University of Michigan’s consumer sentiment index for the month of November rose to 93.8 (final reading) from the preliminary and final figures of 91.6 and 87.2, respectively in October. The reading for November was the highest since May 2016. The strong reading indicates that the consumers’ expectations as regards prospects for the nation’s economic growth and personal finances has improved sharply. Forecast for December: 94.3.