Forex Market Outlook For The Week December 02 – 06, 2019

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Last week, which included this year’s Thanksgiving holiday, witnessed a clash between the US and China over the Hong Kong bill. President Donald Trump put his signature and turned into law. The greenback gained some ground after Jerome Powell, Chairman, Federal Reserve, said that he would view the US economy as “glass half full.” Further, the economic data released in the US mostly beat analysts’ expectations.

Third-quarter GDP was upgraded to an annualized 2.1 percent and durable goods orders pointed to a jump in investments in October. Moreover, the housing data came in positive, but the preferred inflation figure of the Federal Reserve, the core PCE, disappointed. In the elections in the UK, the all-important YouGov MRP poll showed a landslide victory for the Conservative Party of Prime Minister Boris Johnson. However, the pound did not gain much. Finally, the Euro-zone core inflation also surprised amid raging central bank debate.

The upcoming week, the first week of this year’s last month is packed with the release of top-tier data from around the world. The week will be closed with the release of the all-important Non-Farm Payrolls data from the US. Having said that here is an outlook on a few top releases:

#1: Australia Building Approvals (12/02/2019 Monday 00:30 GMT)

forex market outlookIn Australia, the approval for dwellings rose by 7.6 percent on a month-over-month basis in September, reversing the previous month’s downward revision to a decline of 0.6 percent. The reading for the month beat analysts’ expectations for a gain of 0.5 percent. September’s data marked the first monthly increase in building approvals ever since May. Approvals for private sector houses rebounded. Additionally, approvals for private sector dwellings other than houses surged.

Forecast for October 2019: Building approvals are expected to decline 0.1 percent

#2: China Caixin Manufacturing PMI (12/02/2019 Monday 01:45 GMT)

In China, manufacturing PMI decreased to the 50.20 level in November from the 51.70 level registered in the prior month.

Forecast for December 2019: 51.5

#3: Euro Area ECB President Christine Lagarde Speaks (12/02/2019 Monday 14:00 GMT)

Christine Lagarde, President of the European Central Bank, is scheduled to testify before the European Parliament in Brussels. Markets often turn volatile during her speeches. This is because traders make an attempt to attempt to understand the direction of interest rates.

#4: United States ISM Manufacturing PMI (12/02/2019 Monday 15:00 GMT)

In the United States, the Manufacturing PMI reported by ISM rose to the 48.3 level in October from the 10- year low of 47.8 registered in the prior month. The reading for the month missed analysts’ expectations of 48.9 and pointed to contraction for the third month in a row in the manufacturing sector. Output fell faster and employment and new orders decreased at a slower pace.

Forecast for November 2019: 49.2

#5: Australia Interest Rate (12/03/2019 Tuesday 03:30 GMT)

In the meeting held in October, the Reserve Bank of Australia decided to leave the official cash rate steady at the record low level of 0.75 percent as widely expected by analysts. Policymakers assessed the impact of the interest rates that were cut three times since June. They also said that it can be reasonably expected that the interest rates will remain at the lowest levels for an extended period of time because of global developments and availability of spare capacity in the economy. Only then it is possible to achieve the desired employment levels and the inflation target. Policymakers also noted that they will keep monitoring the labor market and will ease monetary policy as required to ensure full employment, sustainable growth, and the achievement of targeted inflation levels over time.

Forecast for December 2019: 0.75 percent

#6: Australia RBA Rate Statement (12/03/2019 Tuesday 03:30 GMT)

Released on the first Tuesday of every month, except January, the Rate Statement is the primary tool of the RBA for communicating with investors as regards the monetary policy. It contains the outcome of the members’ decision on setting interest rates and commentary on the economic conditions that impacted their decision. More importantly, the statement discusses the country’s economic outlook and provides clues on future outcomes.

#7: Australia GDP (12/04/2019 Wednesday 00:30 GMT)

On a seasonally adjusted basis, Australia’s economy advanced 0.5 percent in the second quarter, the same rate as the upwardly revised reading for the prior period. The reading for the month was in line with analysts’ expectations. Net exports and an increase in government spending because of a restrained household consumption compensated the slump in investment dwellings.

Forecast for the third quarter of 2019: 0.5 percent

#8: United States ADP Non-Farm Employment Change (12/04/2019 Wednesday 13:15 GMT)

In the United States, private businesses hired 125,000 workers in October after the figure for September was revised downward to 93,000. The reading for the month was higher than analysts’ expectations of 120,000. The service-providing sector hired 138,000 workers, driven by education and health; trade, transportation, and utilities; leisure and hospitality; professional and business; financial activities; information; and other services. On the other hand, the goods-producing sector lost 13,000 jobs, mainly in construction, natural resources and mining, and manufacturing.

Forecast for November 2019: 140,000

#9: Canada BOC Rate Statement (12/04/2019 Wednesday 15:00 GMT)

The Bank of Canada releases the Rate Statement 8 times in a year. The central bank uses it as a tool for communicating with investors as regards the monetary policy. It provides the outcome of members’ decisions on setting interest rates and a commentary on the economic conditions that impacted their decision. More importantly, it provides the country’s economic outlook and clues on future decisions.

#10: Canada Overnight Rate (12/04/2019 Wednesday 15:00 GMT)

In the meeting held in October, the Bank of Canada decided to leave the benchmark interest rate steady at the 1.75 percent level as analysts widely expected. This is the highest interest rate ever since December 2008. Policymakers noted that they will continue to monitor the extent to which the global slowdown spreads in order to consider the appropriate monetary policy. The Committee also added that they would closely watch global developments. The economy’s resilience is likely to be tested because of uncertainty and persistent trade conflicts. The Central Bank also maintained the deposit rate at 2.0 percent and 1.50 percent, respectively.

Forecast for December 2019: 1.75 percent

#11: United States ISM Non-Manufacturing PMI (12/04/2019 Wednesday 15:00 GMT)

In the United States, the ISM Non-Manufacturing PMI increased to the 54.7 level in October from the near three-year low level of 52.6 reported in the prior month. The reading for the month came in above analysts’ expectations of 53.5. Employment, business activity, and new orders grew at a faster rate.

Forecast for November 2019: 54.5

#12: New Zealand RBNZ Governor Orr Speaks (12/05/2019 Thursday 00:00 GMT)

Adrian Orr, Governor of the Reserve Bank of New Zealand, is scheduled to hold a press conference to discuss the decisions from the bank capital review in Wellington. Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#13: Australia Retail Sales (12/05/2019 Thursday 00:30 GMT)

In Australia, retail sales increased by 0.2 percent on a month-over-month basis in September, slowing down from the 0.4 percent rise recorded in August. However, the reading for the month missed analysts’ expectations for a 0.5 percent increase in retail sales. Sales at food retailing stores increased at a slower pace, but sales declined for footwear, clothing, and personal retailing accessory and department stores. Further, sales at household goods retailing stores remained unchanged after registering a 0.4 percent increase in the prior month. Meanwhile, sales at other retailing stores increased. Sales at restaurants, cafes, and takeaway food outlets rebounded.

Forecast for October 2019: Retail sales are expected to increase by 0.3 percent

#14: Australia Trade Balance (12/05/2019 Thursday 00:30 GMT)

Australia registered an increase in trade surplus to A$ 7.18 billion in the month of September after the previous month’s surplus figure was revised to A$ 6.62 billion. Analysts had expected a trade surplus of A$ 5.0 billion. Exports reached an all-time high level in September. Imports came in at the second-highest level on record.

Forecast for October 2019: Trade surplus is expected to come in at A$ 6.5 billion

#15: OPEC Meetings (12/05/2019 Thursday and Friday 12/06/2019)

The OPEC meetings are scheduled to be held in Vienna on Thursday and Friday. Several crosscurrents are expected to be in play because members are likely to raise crude oil prices. The crude oil prices have struggled to rebound following last year’s dive.

Analysts believe that the cartel and the top nonmembers might extend the current production cuts. However, they are not likely to deepen them. OPEC, on the other hand, is planning to rein in producers that are cheating on their specified quotas. Russia is likely to carve out an exception for itself, while Saudi Arabia would want to raise the odds for the blockbuster Aramco IPO. The U.S. shale companies might look for a lifeline.

#16: Canada Employment Change (12/06/2019 Friday 13:30 GMT)

Canada shed 1,800 jobs in October after adding 53,700 jobs in the prior month. Analysts had expected the nation to hire as many as 15,900 workers. Full-time jobs dropped by 16,100 but part-time jobs rose by 14,300. Employment fell in the manufacturing and construction sectors. Employment rose in public administration, finance, insurance, rental, real estate, and leasing. Employment declined for men in the age group of 25 to 54. However, employment increased for men aged 55 and above.

Forecast for November 2019: Canada is expected to add 10,000 jobs

#17: Canada Unemployment Rate (12/06/2019 Friday 13:30 GMT)

In Canada, the unemployment rate came in at 5.5 percent in the month of October. The unemployment rate was unchanged from the prior month. The reading was also in line with analysts’ expectations. This is the lowest jobless rate ever since June.

Forecast for November 2019: 5.5 percent

#18: United States Average Hourly Earnings (12/06/2019 Friday 13:30 GMT)

In the United States, the average hourly earnings of all employees that are on private nonfarm payrolls increased by 0.2 percent on a month-on-month basis in October after remaining unchanged in the previous month. The reading for the month came in slightly below analysts’ expectations for a 0.3 percent increase. In October, the average hourly earnings of production and nonsupervisory staff in the private sector increased by 4 cents to $23.70.

Forecast for November 2019: an increase of 0.3 percent is on the cards

#19: United States Non-Farm Employment Change (12/06/2019 Friday 13:30 GMT)

In the United States, nonfarm payrolls rose by 128,000 in October after the reading for the prior month was revised upward to 180,000. The reading for the month beat analysts’ expectations for an increase of 89,000 in nonfarm payrolls. Drinking places and food services, financial services, and social assistance reported notable employment gains. However, employment in the manufacturing sector fell the most in ten years because of a strike at Michigan and Kentucky plants of General Motors.

Forecast for November 2019: Nonfarm payrolls are expected to increase by 189,000

#20: United States Unemployment Rate (12/06/2019 Friday 13:30 GMT)

In the United States, the unemployment rate rose to 3.6 percent in the month of October from the 3.5 percent level in the prior month. The reading for October was in line with analysts’ expectations. The number of jobless persons rose by 86,000 and the labor force participation rate increased slightly to the 63.3 percent level from the 63.2 percent level in September.

Forecast for November 2019: 3.6 percent

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