The Federal Reserve raised the benchmark interest rate last week, saying that the American economy was witnessing a healthy expansion. The central bank also surprised the market when it hinted that further hike is possible. This move boosted the US dollar and it soared against the yen and the euro. The dollar hit a 14-year high against the euro and surged past the 118 mark against the yen in spite of Yellen’s efforts to downplay the change in the dot-plot.
The economic data scheduled to be released this week include Japan interest rate decision; New Zealand, Canada and US GDP data; and US durable goods orders. Here is the outlook on these main releases for the week:
#1: German Ifo Business Climate (12/19/2016 Monday 9:00 GMT)
The business climate in Germany remained almost the same in November from the reading for the previous month. The index stood at 110.4 in the month of November. This suggested that business owners were not unduly affected by the victory of Donald Trump in the just concluded US elections. Though there was an improvement in the current business conditions, the outlook for the next six months was a little bit less upbeat. As a result of mild forecast for exports, there was a deterioration of sentiment among manufacturers. Economists are of the view that the impact of Brexit vote and Trump’s victory will be felt only on a later date. The German Ifo Business Climate index expected to come in at 110.7 in December.
#2: Australia Monetary Policy Meeting Minutes (12/20/2016 Tuesday 00:30 GMT)
The Reserve Bank of Australia publishes the minutes of the monetary policy committee meeting two weeks after the announcement of the Cash Rate. It provides details regarding the most recent meeting and in-depth insight into the economic conditions that influenced their decision. Traders look out for hints about future decisions.
#3: Australia Mid-year Fiscal and Economic Outlook (12/20 2016 Tuesday Tentative)
Released annually, the document provides growth forecasts, updated economic outlook and compares the fiscal performance of the government with the strategy outlined in the previous Annual Budget. Traders look for information on domestic government spending as well as borrowing that impact the economy.
#4: Japan Interest Rate Decision (12/20/2016 Tuesday 3:00 GMT)
Japan’s central bank maintained the interest rate at -0.10 percent at the meeting in November in spite of postponing its inflation target deadline once again. The BoJ said that it would maintain the interest rate unless some drastic occurrences threaten to derail the country’s fragile economic recovery. In addition, the central bank warned that there are fresh downside risks because of the weakening of price momentum. Governor Haruhiko Kuroda noted that the time required to combat deflation is much more than what was initially planned and that inflation target will be reached only in 2018. Forecast for December is 0.10 percent.
#5: Japan Monetary Policy Statement (12/20/2016 Tuesday)
The monetary policy statement is a tool that the BOJ employs to inform investors about monetary policy. It indicates the outcome of the members’ decision on asset purchases and the economic situation in the country that influenced their decision. It also projects the country’s economic outlook and provides clues on future votes.
#6: Japan Central Bank Press Conference (12/20/2016 Tuesday)
In the press conference that is held after the announcement of the interest rate, the main speaker is the BoJ governor. He covers aspects such as factors that impacted the most recent decision, overall economic outlook, inflation, and clues ab future monetary policy. Volatility can be expected.
#7: New Zealand GDT Price Index (12/20/2016 Tuesday 14:00 GMT)
Dairy prices for the fourth successive time in Fonterra’s fortnightly Global Dairy Trade auction. The increase in the GDT price index was 3.5 percent to US$3,622 (NZ$5,097) per metric ton in the auction held on December 6, 2016.
#8: US Crude Oil Inventories (12/21/2016 Wednesday 15:30 GGMT)
Crude inventories in the US declined by 2.6 million barrels during the week ended December 9, exceeding a decline of 1.4 million barrels estimated by analysts. According to economists, the reading does not have any bearing on the actual inventory status because most declines were in PADD 5, which was dominated by the West Coast. Gulf Coast imports showed an increase.
#9: New Zealand GDP (12/21/2016 Wednesday 21:45 GMT)
New Zealand’s economy expanded 0.9 percent in the second quarter, but the growth was a little less than what was forecasted. Exports grew by 4 percent and domestic demand increased by 3.6 percent. Analysts’ expectation was that the economy would grow by 1.1 percent on quarter-on-quarter basis and 3.7 percent on year-on-year basis. These figures, however, indicate that the Reserve Bank of New Zealand would not cut interest rates anytime soon. It is expected that New Zealand’s economy will grow at the rate of 0.8 percent in the third quarter.
#10: Canada Core CPI (12/22/2016 Thursday 13:30 GMT)
In October, the core consumer price index (excluding energy and food) increased by 0.2 percent from the previous month. The index stood at 124.5 in the month of October.
#11: Canada Core Retail Sales (12/22/2016 Thursday 13:30 GMT)
Core retail sales, which excludes automobiles, remained flat in the month of September from the previous month against economists’ forecast for an increase of 0.5 percent. In terms of volume, sales rose 0.6 percent in September. Forecast for October is that retail sales will increase by 0.7 percent.
#12: US Durable Goods Orders (12/22/2016 Thursday 13:30 GMT)
Orders for durable goods rose by 4.8 percent in October, driven by strong demand in the commercial aircraft sector. The reading was more than the forecast of 3.3 percent increase made by analysts. However, excluding the auto and aircraft sectors, core durable goods orders increased one percent in October. These positive data indicate that manufacturing activity is picking up. Economists expect that core durable goods orders would rise by 0.2 percent in November.
#13: US GDP data (12/22/2016 Thursday 13:30 GMT)
The US economy expanded at 3.2 percent on an annualized basis in the third quarter, up from the 1.4 percent growth registered in the previous quarter. The reading was, however, better than the 2.9 percent growth recorded in the advance estimate. This is the highest growth in two years, driven by consumer spending, investment in structures and exports. However, as per the second estimate fixed investment fell more. The final reading is expected to come in at 3.3 percent.
#14: US Unemployment Claims (12/22/2016 Thursday 13:30 GMT)
The number of new people filing for unemployment benefits from the state dropped 4,000 to 254,000 on a seasonally adjusted basis for the week ended December 10. The number of new unemployment claims has remained below the 300,000 mark for 93 weeks in a row, indicating a strong labor market. Jobless claims in the US are expected to come in at 255,000 this week.
#15: UK Current Account (12/23/2016 Friday 9:30 GMT)
The current account deficit of UK widened to GBP 28.7 billion in the second quarter from the deficit for the previous quarter which was revised downward to GBP 27 billion. However, the reading came in lower than the market estimates for a deficit of GBP 30.5 billion. For the third quarter, the current account deficit is expected to come in at GBP 28.3 billion.
#16: Canadian GDP Data (12/23/2016 Friday 13:30 GMT)
Canadian GDP expanded 0.3 percent in September following an increase of 0.2 percent in August. In the third quarter, the Canadian economy rebounded, recording a growth of 3.5 percent on an annualized basis, driven by an increase in energy exports. On a quarterly basis, the gain registered during the three months to September was 0.9 percent following the 0.3 percent decline recorded in the previous quarter. According to the Bank of Canada, the economy will grow at an overall rate of 1.1 percent in 2016 and 2 percent in 2017. It is expected that the Canadian GDP will expand by 0.1 percent in October.