Forex Market Outlook for the Week November 30 – December 04, 2020

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In the upcoming week, the focus will be on Fed Chair Jerome Powell’s testimony before the Congress next week and the jobs report, which is likely to point towards a further slowdown in the recovery of the labor market. Other key economic data releases scheduled for the week include GDP data from Australia, ISM manufacturing PMI from the US, and monetary policy decision by the RBA. Having said that here is an outlook on a few important announcements from around the world:

#1: OPEC Meetings (11/30/2020 Monday)

The Organization of the Petroleum Exporting Countries’ or OPEC’s 179th meeting was held through videoconference on June 6, 2020. The meeting was chaired by HE Mohamed Arkab, OPEC’s President and Algeria’s Minister of Energy as well as Head of the nation’s Delegation. The reports from the Secretary-General, the Economic Commission Board, and various other administrative matters were considered in the Conference. Further, the Conference took cognizance of the developments in the oil market ever since the last meeting in Vienna in March and reviewed its outlook for the rest of 2020 and into next year.

It was also noted that the adjustments in production in May, the gradual relaxation in many of the COVID-19 lockdown restrictions across the globe, and a pickup in economic activity contributed to a moderate recovery and improved oil market stability. However, consolidation of the gradual recovery requires intensified efforts and continued commitment from all major oil-producing countries and DoC Participating Countries.

The 180th OPEC Meeting is scheduled to be held in Vienna, Austria, on November 30 via video conference.

#2: Australia Cash Rate (12/01/2020 Tuesday 03:30 GMT)

forex market outlookIn the meeting held in November, the Reserve Bank of Australia decided to lower the cash rate to the all-time low level of 0.1 percent from 0.25 percent. This move on the part of the central was widely expected by analysts. Policymakers also said that they would buy government bonds with maturities ranging from 5 to 10 years in a six-month period starting from December 3, 2020, Thursday. Further, the RBA cut the target rate for the three-year bond yield to 0.1 percent from 0.25 percent in order to align it with the cash rate. Additionally, policymakers pledged that the cash rate will remain at this level until inflation is sustained within the 2 to 3 percent target band. Moreover, the RBA board mentioned that they expect GDP growth to be positive in the third quarter in spite of the restrictions imposed in Victoria.

Forecast for December 2020: 0.10 percent

#3: Australia RBA Rate Statement (12/01/2020 Tuesday 03:30 GMT)

The Reserve Bank of Australia releases the Rate Statement on the first Tuesday of every month, excluding January. The RBA uses it as a tool for communicating with investors as regards the monetary policy. In addition to containing the outcome of the members’ decision on setting interest rates, it also provides commentary on the economic conditions that impacted their decision. More importantly, it projects the nation’s economic outlook and provides clues on future decisions.

#4: United States Fed Chair Jerome Powell Testifies (12/01/2020 Tuesday 15:00 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to testify before the Committee on Banking, Housing, and Urban Affairs on the CARES Act in Washington DC. There are two parts to the testimony. In the first part, he reads out a prepared statement. This is followed by a question-answer session. As the questions are never revealed beforehand, there can be some unscripted answers. This often leads to heavy volatility in the market.

#5: United States ISM Manufacturing PMI (12/01/2020 Tuesday 15:00 GMT)

In the United States, the Manufacturing PMI reported by the Institute for Supply Management jumped to the 59.3 level in October from the 55.4 level in September. The reading for the month beat analysts’ expectations of 56.4 and registered the highest growth in manufacturing activity ever since September 2018 amid increased new domestic and export orders, production, and a rebound in employment and inventories. Further, price pressures intensified.

Forecast for November 2020: 57.7

#6: Australia RBA Governor Philip Lowe Speaks (12/02/2020 Wednesday 00:00 GMT)

Philip Lowe, Governor of the Reserve Bank of Australia, is scheduled to testify before the Standing Committee on Economics of the House of Representatives in Canberra. Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#7: Australia GDP (12/02/2020 Wednesday 00:30 GMT)

Australia’s GDP shrank 7.0 percent on a quarter-on-quarter basis in the June quarter, following the 0.3 percent decline in the prior quarter. The reading for the quarter came in worse than analysts’ expectations for a 5.9 percent fall. The economy contracted for the second quarter in a row. This is also the sharpest contraction on record. With this, Australia entered into a recession for the first time in 30 years due to the impact of the coronavirus pandemic. Household consumption slumped and gross fixed capital formation shrank at the sharpest rate ever since the fourth quarter of 2000. Further, inventories fell, driven by trade and manufacturing. However, government spending increased the most ever since the fourth quarter of 1995 in order to contain the spread of the coronavirus. Exports declined, while imports fell at a faster rate. On the production front, most sectors registered contraction, except mining, financial and insurance, and education and public administration.

Forecast for the third quarter of 2020: 2.4 percent

#8: United States Fed Chair Jerome Powell Testifies (12/02/2020 Wednesday 15:00 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to testify before the House Financial Services Committee on the CARES Act in Washington DC. There are two parts to the testimony. In the first part, he reads out a prepared statement. This is followed by a question-answer session. As the questions are never revealed beforehand, there can be some unscripted answers. This often leads to heavy volatility in the market.

#9: Canada Employment Change (12/04/2020 Friday 13:30 GMT)

Canada hired 83,600 workers in October, below analysts’ expectations for a 100,000 job addition. In September, the economy added 378,200 jobs. Full-time work increased the most, while self-employment rose for the very first time since the onset of the pandemic. Increases in employment were observed in five provinces – Ontario, British Columbia, Newfoundland and Labrador, Prince Edward Island, and Alberta. Meanwhile, employment growth remained stalled in warehousing and transportation, and in construction. However, hiring resumed in retail stores.

#10: Canada Unemployment Rate (12/04/2020 Friday 13:30 GMT)

In Canada, the unemployment rate fell to the 8.9 percent level in October from the 9.0 percent level in the prior month. Analysts expected the jobless rate to come in at 8.8 percent. With this, the unemployment rate has fallen for the fifth month in a row. The jobless rate has declined from the all-time high level of 13.7 percent hit in May because of the imposition of the lockdown measures imposed to contain the spread of COVID-19, but it is still above the 5.6 percent level reported in February. The labor force participation rate rose to the 65.2 percent level from the 65.0 percent level in September. Analysts expected the rate to come in at the 65.0 percent level. The youth jobless rate dropped to the 18.8 percent level from the 18.9 percent level in the prior month.

#11: United States Average Hourly Earnings (12/04/2020 Friday 13:30 GMT)

In the United States, the average earnings per hour for all workers on private nonfarm payrolls increased by 0.1 percent on a month-on-month basis in October after remaining steady in September. The reading for the month came in below analysts’ expectations for an increase of 0.2 percent. The average hourly earnings of nonsupervisory and production employees in the private sector increased to US$24.82. The large fluctuations in employment over the last several months, specifically in industries with workers who are paid lower wages, complicated the analysis of trends in average hourly earnings.

Forecast for November 2020: 0.1 percent

#12: United States Non-Farm Employment Change (12/04/2020 Friday 13:30 GMT)

The United States added 638,000 jobs in October after the reading for the prior month was revised upward 672,000. The reading for the month came in above analysts’ expectations that 600,000 jobs will be added. However, it is still the smallest employment addition ever since the recovery of the job market started in May from the record loss of 20.787 million jobs in April. The highest job gains were reported by leisure and hospitality, business and professional services, retail trade, and construction. In the meanwhile, employment in the government sector declined 268,000. The labor market outlook continues to remain challenging as only 12 million jobs have been recovered out of the loss of 22 million in March and April. Further, a new stimulus bill is not likely to be approved anytime soon.

Forecast for November 2020: 5000,000

#13: United States Unemployment Rate (12/04/2020 Friday 13:30 GMT)

In the United States, the unemployment rate fell to the 6.9 percent level in October from the prior month’s 7.9 percent. Analysts had expected the jobless rate to come in at 7.7 percent. The number of jobless persons dropped 1.5 million to 11.1 million and employment increased 2.2 million to 149.8 million. However, the jobless rate continues to remain above the pre-pandemic levels of 3.5 percent. This is because the recovery of the labor market from the COVID-19 shock started slowing amid due to the lack of any fiscal stimulus and increasing new coronavirus infections.

Forecast for November 2020: 6.8 percent

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